January 19, 2018 | James Sprow | Blue Vault
Worm eye view shot of businessmen handshaking.acquisition concept
Hey there! Big news in the real estate investment world! The stockholders of NorthStar Real Estate Income Trust, Inc. ("NorthStar I") and NorthStar Real Estate Income II, Inc. ("NorthStar II") have given their resounding approval for the mergers of the two companies. This merger will result in the formation of Colony NorthStar Credit Real Estate, Inc. ("CLNC"), a publicly traded REIT with a massive portfolio valued at $5.2 billion and equity worth $3.3 billion. Exciting stuff, right?
Creating a Real Estate Powerhouse
At the special meetings held on January 18, approximately 94% of NorthStar I stockholders and 93% of NorthStar II stockholders voted in favor of the proposed merger. This overwhelming support shows the confidence shareholders have in the potential of the combined entity.
The merger will also enable a liquidating trust to dispose of the remaining assets of NorthStar I as part of the consolidation process. With a portfolio worth an estimated $1.6 billion from Colony NorthStar, the newly formed CLNC is poised to become a formidable player in the real estate market.
The Way Forward
The merger is set to close on or about January 31, 2018. Shareholders of NorthStar I can expect each outstanding share of their common stock to be converted into the right to receive 0.3532 shares of CLNC Class A common stock. Similarly, shareholders of NorthStar II will receive 0.3511 shares of CLNC common stock for each outstanding share of Class A and Class T common stock they hold. No fractional shares will be issued, and cash will be provided instead.
Colony NorthStar Credit Real Estate plans to list its common stock on the New York Stock Exchange (NYSE) under the ticker symbol "CLNC." The listing, subject to approval, is projected to happen around February 1, 2018. This move towards listing, rather than an initial public offering, indicates the stability and confidence in the merged company.
Strong Foundations
NorthStar I had total assets of $2.44 billion and a diversified investment portfolio of operating real estate, debt, and securities as of September 30, 2017. Its offering closed in July 2013, raising an impressive $1.1 billion. With a distribution rate of 7.00% annualized based on the original offering price of $10.00 per share and a net asset value (NAV) per share of $9.92 as of December 31, 2016, NorthStar I has proven to be a solid investment.
As of September 30, 2017, NorthStar II boasted total assets of $1.81 billion. Its investment portfolio consists of 24 properties, CRE loans, private equity, and CMBS. NorthStar II raised $1.14 billion before its offering closed in November 2016. With a distribution rate of 7.00% annualized, based on the original offering price of $10.00 per share, and a NAV per share of $9.26 as of September 30, 2016, NorthStar II also presents a strong investment opportunity.
Conclusion
The merger of NorthStar I and NorthStar II into Colony NorthStar Credit Real Estate, Inc. is set to create a powerhouse in the real estate investment world. With a combined portfolio valued at $5.2 billion and equity worth $3.3 billion, the newly formed CLNC is ready to make its mark. The approval from shareholders and the planned listing on the NYSE demonstrate the potential of this merged entity. Stay tuned for more updates on this exciting development!
Learn more about Colony NorthStar, Inc. on the Blue Vault Sponsor Focus page.
