NEW YORK, Feb. 16, 2006 (PRIMEZONE) -- NorthStar Realty Finance Corp. (NYSE:NRF) yesterday announced that it priced $450 million of a commercial real estate collateralized debt obligation to be issued by two of its subsidiaries -- N-Star REL CDO VI Ltd. and N-Star REL CDO VI Corp. (together, "CDO VI"). The offering is the sixth CDO issuance sponsored by NorthStar Realty and the first completed in 2006. NorthStar Realty's total assets under management at December 31, 2005 are approximately $2.8 billion.
Fitch Ratings, Moody's Investors Service and Standard & Poor's have all assigned investment grade ratings to approximately $348 million, or approximately 77%, of CDO VI's securities, with approximately $272 million, or 60%, rated Aaa/AAA/AAA. There were no split ratings on any of the classes issued. NorthStar Realty will initially retain all $102 million of the CDO VI securities rated below the Baa3/BBB-/BBB- level. NS Advisors LLC, a subsidiary of NorthStar Realty, will be the collateral advisor for CDO VI, and the CDO is expected to close on or about March 17, 2006.
The CDO has an expected weighted average life of seven years, and the weighted average interest rate on the $348 million of investment grade securities sold is approximately LIBOR plus 0.53%. The total collateral value of the portfolio securing CDO VI is expected to be approximately $450 million, with approximately 85% of the collateral identified at the time of the pricing. The initial collateral consists of approximately 36% whole loans, 16% B-notes, 21% mezzanine loans, 5% preferred equity and approximately 7% real estate CDO debt securities of the entire fully ramped CDO issuance. Over 60% of the initial collateral pool was directly originated by NorthStar Realty, which is consistent with the continued expansion of NorthStar Realty's real estate lending business evidenced by the recent acquisition of Timarron Capital (now NRF Capital).
David T. Hamamoto, CEO of NorthStar Realty, commented, "We are excited to announce the pricing of our second CDO secured by assets from our real estate lending business, and the fourth CDO issued by the Company since our IPO in October 2004. Not only is this consistent with our strategy of financing all of our business lines through match funded structures, but CDO VI, like CDO IV, has the added benefit of significant re-investment flexibility for the next five years and a structure that will allow us to continue to select the portion of the capital structure that provides the most attractive risk/return profile. Our consistent issuance in the CDO market, and the strong performance of the underlying collateral of our transactions, has resulted in the ability to significantly decrease the weighted average interest rate on CDOs of this type from approximately LIBOR plus 0.64% on CDO IV to approximately LIBOR plus 0.53% on CDO VI."
The securities being offered by CDO VI have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About NorthStar Realty Finance Corp.
NorthStar Realty Finance Corp. is an internally-managed REIT with three core business lines -- real estate debt, real estate securities and net lease properties. For more information about NorthStar Realty Finance Corp, please visit www.nrfc.com.
Forward Looking Statements
Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. NorthStar Realty can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from NorthStar Realty's expectations include, but are not limited, to changes in economic conditions generally and the real estate and bond markets specifically, legislative or regulatory changes (including changes to laws governing the taxation of REITs), availability of capital, interest rates and interest rate spreads, policies and rules applicable to REITs, the continued service of key management personnel, the effect of competition in the real estate finance industry, the costs associated with compliance and corporate governance, including the Sarbanes-Oxley Act and related regulations and requirements, and other risks detailed from time to time in NorthStar Realty's periodic reports filed with the Securities Exchange Commission. Such forward-looking statements speak only as of the date of this press release. NorthStar Realty expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.