UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): October 20, 2014
 
 
NorthStar Real Estate Income Trust, Inc.
(Exact name of registrant as specified in its charter)
 
 
Maryland
 (State or other jurisdiction
of incorporation)
 
000-54671
(Commission File
Number)
 
26-4141646
(I.R.S. Employer
Identification No.)

399 Park Avenue, 18th Floor, New York, NY
 
10022
(Address of principal executive offices)
 
(Zip Code)
 
(212) 547-2600
(Registrant’s telephone number, including area code)
 
N/A
(Former name or former address, if changed since last report.)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o                                     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o                                     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 





Item 1.01. Entry into a Material Definitive Agreement .

On October 20, 2014, NorthStar Real Estate Income Trust, Inc. (“NorthStar Income”), through a subsidiary of its operating partnership, amended the terms of the Master Repurchase Agreement (as amended, the “Citi Facility”), dated as of July 18, 2012, with Citibank, N.A. (“Citibank”), extending the term during which NorthStar Income may borrow additional amounts under the Citi Facility for an additional two years, to October 18, 2016. All other terms governing the Citi Facility, and NorthStar Income's related limited guaranty (the "Guaranty"), remain the same.

The foregoing description does not purport to be complete and is subject to, and qualified in its entirety by, the Fourth Amendment to Master Repurchase Agreement, dated as of October 20, 2014, between NSREIT CB Loan, LLC, an indirect wholly-owned subsidiary of NorthStar Income, and Citibank, filed as Exhibit 10.1 to this Current Report on Form 8-K, and the Citi Facility and Guaranty that were filed as exhibits to the Current Report on Form 8-K filed on July 19, 2012 with the Securities and Exchange Commission (the “SEC”), which agreements are incorporated herein by reference.

8.01. Other Events

The Board of Directors (the “Board”) of NorthStar Income has adopted a modified investment allocation policy (the “Policy”), which sets forth the method for allocating investment opportunities among NorthStar Income as well as any other companies, funds or vehicles managed or advised by NorthStar Income’s advisor, NSAM J-NSI Ltd (the “Advisor”), an investment adviser registered under the Investment Advisers Act of 1940, as amended, and an affiliate of NorthStar Asset Management Group, Inc., NorthStar Income’s sponsor (the “Sponsor”), and the Advisor’s affiliated advisors and sub-advisors (the “NSAM Group”). The terms of the Policy are set forth below:

NorthStar Income’s investment strategy may be similar to that of, and may overlap with, the investment strategies of the other sponsored non-traded companies, NorthStar Realty Finance Corp. and any other future companies, funds or vehicles (collectively with NorthStar Income, the “NSAM Managed Companies”) managed or advised by the NSAM Group. Therefore, many investment opportunities that are suitable for NorthStar Income may also be suitable for other NSAM Managed Companies.

The NSAM Group will allocate, in its sole discretion, all investment opportunities to one or more of the NSAM Managed Companies, including NorthStar Income, or the Sponsor, for which the investment opportunity is most suitable. When determining the entity for which an investment opportunity would be the most suitable, the factors that the NSAM Group may consider include, without limitation, the following:

•
investment objectives, strategy and criteria;
•
cash requirements;
•
effect of the investment on the diversification of the portfolio, including by geography, size of investment, type of investment and risk of investment;
•
leverage policy and the availability of financing for the investment by each entity;
•
anticipated cash flow of the asset to be acquired;
•
income tax effects of the purchase;
•
the size of the investment;
•
the amount of funds available;
•
cost of capital;
•
risk return profiles;
•
targeted distribution rates;
•
anticipated future pipeline of suitable investments;
•
the expected holding period of the investment and the remaining term of the NSAM Managed Company, if applicable; and
•
affiliate and/or related party considerations.


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If, after consideration of the relevant factors, the NSAM Group determines that an investment is equally suitable for more than one company, the investment will be allocated on a rotating basis. If, after an investment has been allocated to a particular company, including NorthStar Income, a subsequent event or development, such as delays in structuring or closing on the investment, makes it, in the opinion of the NSAM Group, more appropriate for a different entity to fund the investment, the NSAM Group may determine to place the investment with the more appropriate entity while still giving credit to the original allocation. In certain situations, the NSAM Group may determine to allow more than one NSAM Managed Company, including NorthStar Income, and the Sponsor to co-invest in a particular investment. In discharging its duties under the Policy, the NSAM Group endeavors to allocate investment opportunities among the NSAM Managed Companies and the Sponsor in a manner that is fair and equitable over time.

While these are the current procedures for allocating investment opportunities, the NSAM Group may sponsor additional investment vehicles in the future and, in connection with the creation of such investment vehicles or otherwise, the NSAM Group may revise the Policy. The result of such a revision to the Policy may, among other things, be to increase the number of parties who have the right to participate in investment opportunities sourced by the NSAM Group, thereby reducing the number of investment opportunities available to NorthStar Income. Changes to the Policy that could adversely impact the allocation of investment opportunities to NorthStar Income in any material respect may be proposed by the NSAM Group and must be approved by the Board. In the event that the NSAM Group adopts a revised allocation policy that materially impacts NorthStar Income’s business, NorthStar Income will disclose this information in the reports NorthStar Income files publicly with the SEC, as appropriate.

The decision of how any potential investment should be allocated among NorthStar Income and other NSAM Managed Companies for which such investment may be most suitable may, in many cases, be a matter of highly subjective judgment which will be made by the NSAM Group in its sole discretion.

NorthStar Income’s right to participate in the investment allocation process described herein will terminate once NorthStar Income is no longer advised by the Advisor or an affiliate of the NSAM Group. The Advisor is required to inform the Board at least annually of the investments that have been allocated to NorthStar Income and other NSAM Managed Companies so that the Board can evaluate whether NorthStar Income is receiving its fair share of opportunities. Based on the information provided, the Board (including the independent directors) has a duty to determine that the Policy is being applied fairly. The NSAM Group’s success in generating investment opportunities for NorthStar Income and the fair allocation of opportunities among NorthStar Income and other NSAM Managed Companies are important factors in the Board’s determination to continue NorthStar Income’s arrangements with the Advisor.

Item 9.01    Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number
Description
10.1
Fourth Amendment to Master Purchase Agreement, dated as of October 20, 2014, by and among NSREIT CB Loan, LLC and Citibank, N.A.

Safe Harbor Statement

This Current Report on Form 8-K contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “will,” “may,” “plans,” “intends” or other similar words or expressions. These statements are based on NorthStar Income’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 Income can give no assurance that its expectations will be attained. Forward-looking statements are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying any forward-looking statements will not materialize or will vary significantly from actual results. Variations of assumptions and results may be material. Factors that could cause actual results to differ materially from NorthStar Income’s expectations include, but are not limited to, the ability of NorthStar Income to comply with the terms and conditions of the Citi Facility, future property values, the impact of any losses from NorthStar Income's investments on cash flow and returns, property level cash flow, changes in economic conditions generally and the real

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estate and debt markets specifically, availability of capital, the ability to achieve targeted returns, changes to generally accepted accounting principles, policies and rules applicable to REITs and the factors specified in in Part I, Item 1A of NorthStar Income’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, as well as in NorthStar Income’s other filings with the SEC. The foregoing list of factors is not exhaustive. All forward-looking statements included in this Current Report on Form 8-K are based upon information available to NorthStar Income on the date of this report and NorthStar Income is under no duty to update any of the forward-looking statements after the date of this report to conform these statements to actual results.

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SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
NorthStar Real Estate Income Trust, Inc.
 
 
 
 
Date: October 24, 2014
By:
/s/ Ronald J. Lieberman
 
 
Ronald J. Lieberman
 
 
Executive Vice President, General Counsel and Secretary

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EXHIBIT INDEX
 
Exhibit Number
Description
 
 
 
10.1
Fourth Amendment to Master Purchase Agreement, dated as of October 20, 2014, by and among NSREIT CB Loan, LLC and Citibank, N.A.
 




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Exhibit 10.1

FOURTH AMENDMENT TO MASTER REPURCHASE AGREEMENT

FOURTH AMENDMENT TO MASTER REPURCHASE AGREEMENT dated as of October 20, 2014 (this “ Amendment ”), by and among NSREIT CB LOAN, LLC, a Delaware limited liability company (“ Seller ”), and CITIBANK, N.A., a national banking association (“ Buyer ”), and acknowledged and agreed to by NORTHSTAR REAL ESTATE INCOME TRUST, INC., a Maryland corporation (“ Guarantor ”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the MRA (defined below).
RECITALS
WHEREAS , Seller and Buyer are parties to that certain Master Repurchase Agreement, dated as of July 18, 2012 (“ Original MRA ”), as amended by that certain First Amendment to Master Repurchase Agreement, dated as of November 30, 2012, that certain Second Amendment to Master Repurchase Agreement and First Amendment to Limited Guaranty, dated as of April 18, 2013, and that certain Third Amendment to Master Repurchase Agreement, dated as of June 30, 2014 (as the same may be further amended, supplemented or otherwise modified from time to time, the “ MRA ”);
WHEREAS , in connection with the Original MRA, Guarantor entered into that certain Limited Guaranty dated as of July 18, 2012 (as the same may be amended, supplemented or otherwise modified from time to time, the “ Guaranty ”), in favor of Buyer, guaranteeing certain obligations of Seller;
WHEREAS , Seller and Buyer wish to amend the MRA as more particularly set forth herein, and Guarantor wishes to reaffirm the covenants made in the Guaranty.
NOW THEREFORE , in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer and Guarantor hereby agree as follows:
SECTION 1. Amendment to Master Repurchase Agreement .

(a) The following definition in Section 2 of the MRA is hereby deleted in their entirety and the following corresponding definition is substituted therefor:

“ Facility Availability Period ” shall mean the twenty-four month (24) period commencing on the date of this Amendment and ending on October 18, 2016.
SECTION 2. Omnibus Amendment to Transaction Documents . Any references to the MRA in the Transaction Documents shall hereinafter refer to the MRA as modified by this Amendment.

SECTION 3. Reaffirmation of Guaranty . Guarantor acknowledges the amendments and modifications of the MRA pursuant to this Amendment and hereby ratifies and reaffirms all of the terms, covenants and conditions of the Guaranty and agrees that the Guaranty remains unmodified by this Amendment and in full force and effect and enforceable in accordance with its terms.





SECTION 4. Due Authority . Each of Seller and Guarantor hereby represents and warrants to Buyer that, as of the date hereof, (i) it has the power to execute, deliver and perform its respective obligations under this Amendment, (ii) this Amendment has been duly executed and delivered by it for good and valuable consideration, and constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms subject to bankruptcy, insolvency, and other limitations on creditors’ rights generally and to equitable principles, and (iii) neither the execution and delivery of this Amendment, nor the consummation by it of the transactions contemplated by this Amendment, nor compliance by it with the terms, conditions and provisions of this Amendment will conflict with or result in a breach of any of the terms, conditions or provisions of (A) its organizational documents, (B) any contractual obligation to which it is now a party or the rights under which have been assigned to it or the obligations under which have been assumed by it or to which its assets are subject or constitute a default thereunder, or result thereunder in the creation or imposition of any lien upon any of it’s assets, other than pursuant to this Amendment, (C) any judgment or order, writ, injunction, decree or demand of any court applicable to it, or (D) any applicable Requirement of Law, in the case of clauses (A)-(C) above, to the extent that such conflict or breach is reasonably likely to result in a Material Adverse Effect.

SECTION 5. Counterparts . This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.

SECTION 6. GOVERNING LAW . THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PRINCIPALS.

SECTION 7. MRA and Transaction Documents in Full Force and Effect . Except as expressly amended hereby, Seller and Guarantor acknowledge and agree that all of the terms, covenants and conditions of the MRA and the other Transaction Documents remain unmodified and in full force and effect and are hereby ratified and confirmed in all respects.

[NO FURTHER TEXT ON THIS PAGE]




IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

 
 
 
BUYER :
 
CITIBANK, N.A.
 
By: /s/ Richard B. Schlenger
 
Name: Richard B. Schlenger
Title: Authorized Signatory
 
 

[signatures continued on next page]





SELLER :
NSREIT CB LOAN, LLC ,
a Delaware limited liability company
    By: NorthStar Real Estate Income Trust Operating
           Partnership, L.P., a Delaware limited
           partnership, its sole equity member

          By: NorthStar Real Estate Income Trust, Inc.,
                 a Maryland corporation, its general partner



                By: /s/ Ronald J. Lieberman
                Name: Ronald J. Lieberman
                Title: Executive Vice President, General Counsel
                         & Secretary

[signatures continued on next page]





 
 
 
ACKNOWLEDGED AND AGREED TO AS OF OCTOBER 20, 2014:

GUARANTOR :
 
NORTHSTAR REAL ESTATE INCOME TRUST, INC. ,
  a Maryland corporation
 
 
 
By: /s/ Ronald J. Lieberman
 
Name: Ronald J. Lieberman
Title: Executive Vice President, General Counsel & Secretary