NEW YORK, Sept. 16, 2005 (PRIMEZONE) -- NorthStar Realty Finance Corp. (NYSE:NRF) announced the pricing on September 13, 2005 of $500 million of collateralized debt obligations to be issued by two subsidiaries of NorthStar Realty Finance Corp. -- N-Star Real Estate CDO V Ltd. and N-Star Real Estate CDO V Corp. ("CDO V"). The offering is the fifth CDO issuance sponsored by NorthStar, bringing its assets under management to $2.3 billion.
Approximately $462 million of investment grade-rated notes will be sold in CDO V, representing approximately 92% of the total capitalization of the CDO. NorthStar will retain all $20.8 million of the Income Notes, all $12.8 million of the Class F Notes which are BB rated, and $5 million of the Class E Notes which are rated BBB-. NS Advisors LLC, a subsidiary of NorthStar Realty, will be the collateral advisor for CDO V. The CDO is expected to close on or about September 22, 2005.
S&P and Fitch have given a AAA rating to $387 million, or approximately 77.3%, of CDO V. The CDO has an expected weighted average life of 9.4 years. The AAA rated Class A-1 Notes were priced at a floating rate of LIBOR plus 0.265%. The weighted average initial yield on $462 million of the notes sold to fund NorthStar's portfolio is LIBOR plus 0.36%. The portfolio is expected to have a weighted average credit rating of BBB, and to include approximately 88% investment grade securities.
The total collateral value of the portfolio is expected to be approximately $500 million and to consist of approximately 72% commercial mortgage backed securities, approximately 21% senior debt of real estate investment trusts, approximately 5% commercial real estate CDOs, and approximately 2% other commercial real estate-related securities.
"We are pleased with the weighted average pricing achieved for the CDO V notes. This very low funding cost enables us to improve the average credit rating of this portfolio while earning an investment return of over 20%, consisting of the yield on our CDO V retained securities and management fee streams," said David T. Hamamoto, Chief Executive Officer of NorthStar. He added, "CDO V reflects a continuation of our strategy to maximize the use of low cost, asset based financing vehicles that provide us with nonrecourse, long-term funding for our assets and, in the case of our more recent CDOs, include reinvestment flexibility."
The notes being offered 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 that makes fixed income, structured finance and net lease investments in commercial real estate assets. NorthStar Realty's business consists of three core business lines -- subordinate real estate debt, real estate securities and net lease properties. For more information about NorthStar Realty Finance Corp, please visit www.nrfc.com.
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 SEC reports. 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.