NorthStar REIT Inks $200 Million LOC, Elects New Board Member

NorthStar Real Estate Income Trust Inc. entered into a master repurchase and securities contract agreement with Morgan Stanley Bank N.A. The credit facility provides up to $200 million to finance first mortgage loans, senior loan participations and other commercial mortgage loan debt instruments secured by commercial real estate. It will act as a revolving credit facility that can be paid down and subsequently re-drawn.

Advances under the facility accrue interest at per annum rates ranging from the one-month London Interbank Offered Rate, plus a spread of 2.25 percent to 2.75 percent, and provides for advance rates of up to 80 percent of the value of the purchased asset, depending on the loan-to-value ratio and subject to adjustment.

The facility has an initial maturity date of October 13, 2018, with annual one-year extensions, which may be approved or denied at Morgan Stanley’s sole discretion.

NorthStar Income is required to maintain a minimum total equity of $300 million, a minimum liquidity of $20 million, a ratio of total borrowings to total equity not greater than 250 percent, and a ratio of EBITDA to fixed charges not greater than 140 percent. In addition, Morgan Stanley may stop making advances under the facility if any condition precedent to funding is not satisfied.

In other NorthStar Income news, on October 19, 2015, Charles Schoenherr notified the REIT that he would be resigning from his position as a member of the board of directors and as a member of its audit committee. According to the company, Schoenherr’s resignation was a personal decision and not the result of any disagreement with the company.

To replace Schoenherr, the board elected James Thomas to serve as an independent director and a member of the audit committee. Thomas will serve until NorthStar Income’s next annual meeting of stockholders and until his successor, if any, is elected and duly qualifies.

Thomas is a partner and a member of the executive committee of the law firm of Windels, Marx, Lane & Mittendorf LLP, where he has practiced since January 1985. His focus is on commercial real estate matters such as acquisition, disposition, financing, joint venture and equity investments, and he represents clients, including financial institutions, investors, real estate operators and developers, private equity firms, and venture capital funds, in a variety of commercial real estate debt and equity transactions. Thomas holds a bachelor’s degree from the St. Louis University in Missouri and juris doctor from Fordham University School of Law in New York City.

As an independent director, Thomas is entitled to receive, among other benefits, annual cash compensation of $90,000 for his service on the board, an initial grant of $75,000 in shares of the NorthStar Income’s restricted common stock upon his appointment, and a grant of $50,000 in shares of NorthStar Income’s restricted common stock in the event of his subsequent re-election to the board.

NorthStar Real Estate Income Trust Inc. was formed to originate, acquire and asset manage a diversified portfolio of commercial real estate debt, select equity and securities investments, predominantly in the United States. The company initially registered to offer up to 100 million shares in its primary offering to the public and up to 10,526,315 distribution reinvestment plan shares. In April 2013, the board of directors authorized the reallocation of shares available under the DRP to the primary offering. The primary offering (including 7.6 million shares reallocated from the DRP, was completed in July 2013 and all of the shares initially registered were issued. As a result of a registration statement to offer up to an additional 15 million shares pursuant to the DRP, the company continues to offer shares and has raised a total of $1.2 billion.