|
Maryland
(State or Other Jurisdiction of
Incorporation or
Organization)
|
|
26-4141646
(IRS Employer
Identification No.)
|
Large accelerated filer
o
|
|
Accelerated filer
o
|
|
Non-accelerated filer
o
(Do not check if a
smaller reporting company)
|
|
Smaller reporting company
ý
|
|
Index
|
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Page
|
|
|
|
|
||
|
||
|
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|
||
|
||
|
||
|
•
|
adverse economic conditions and the impact on the commercial real estate industry;
|
•
|
our ability to deploy capital quickly and successfully;
|
•
|
access to debt capital at rates that will allow us to meet our target returns;
|
•
|
our liquidity;
|
•
|
our use of leverage;
|
•
|
our ability to make distributions to our stockholders;
|
•
|
the effect of economic conditions on the valuation of our investments;
|
•
|
the effect of paying distributions to our stockholders from sources other than cash flow provided by operations;
|
•
|
the performance of our advisor, our sponsor and their respective affiliates;
|
•
|
our dependence on the resources and personnel of our advisor and our sponsor, including our advisor’s ability to source and close on attractive investment opportunities on our behalf;
|
•
|
the impact of NorthStar Realty Finance Corp.’s spin-off of its asset management business, which included our advisor;
|
•
|
the impact of adverse conditions effecting a specific asset class in which we have investments, such as limited partnership interests in real estate private equity funds and equity investments in office/retail, multifamily and student housing properties;
|
•
|
the lack of a public trading market for our shares;
|
•
|
performance of our investments relative to our expectations and the impact on our actual return on invested equity, as well as the cash provided by these investments;
|
•
|
the impact of economic conditions on the borrowers of the commercial real estate debt we originate and acquire and the commercial mortgage loans underlying the commercial mortgage backed securities in which we invest, as well as on the tenants of the real property that we own;
|
•
|
borrower or tenant defaults or bankruptcy;
|
•
|
illiquidity of investments in our portfolio;
|
•
|
our ability to complete securitization financing transactions on terms that are acceptable to us, if at all;
|
•
|
our ability to realize the value of the bonds and equity retained in our securitization financing transactions;
|
•
|
our ability to meet various coverage tests with respect to our securitization financing transactions;
|
•
|
our ability to realize current and expected return over the life of our investments;
|
•
|
any failure in our advisor’s and its affiliates due diligence to identify all relevant facts in our underwriting process or otherwise;
|
•
|
our ability to successfully complete a liquidity transaction on favorable terms, if at all;
|
•
|
environmental compliance costs and liabilities;
|
•
|
effect of regulatory actions, litigation and contractual claims against us and our affiliates, including the potential settlement and litigation of such claims;
|
•
|
competition for investment opportunities;
|
•
|
the possibility that the net asset value of interests in certain real estate private equity funds we acquired do not necessarily reflect the fair value of such fund interests or that the actual amount of our future capital commitments underlying such fund interests varies materially from our expectations;
|
•
|
regulatory requirements with respect to our business and the related cost of compliance;
|
•
|
the impact of any conflicts arising among us and our sponsor and its affiliates;
|
•
|
changes in laws or regulations governing various aspects of our business and non-traded real estate investment trusts, or REITs, generally, including, but not limited to, changes implemented by the Financial Industry Regulatory Authority, Inc.;
|
•
|
the loss of our exemption from the definition of an “investment company” under the Investment Company Act of 1940, as amended;
|
•
|
the effectiveness of our portfolio management techniques and strategies;
|
•
|
failure to maintain effective internal controls; and
|
•
|
compliance with the rules governing REITs.
|
|
September 30, 2014 (Unaudited)
|
|
December 31,
2013 |
||||
Assets
|
|
|
|
||||
Cash
|
$
|
57,427
|
|
|
$
|
119,595
|
|
Restricted cash
|
136,881
|
|
|
223,002
|
|
||
Real estate debt investments, net
|
1,282,411
|
|
|
1,074,773
|
|
||
Real estate debt investments, held for sale
|
—
|
|
|
17,500
|
|
||
Investments in unconsolidated ventures (refer to Note 4)
|
191,249
|
|
|
156,616
|
|
||
Operating real estate, net
|
305,342
|
|
|
125,168
|
|
||
Real estate securities, available for sale
|
70,201
|
|
|
66,450
|
|
||
Receivables, net
|
22,572
|
|
|
30,500
|
|
||
Deferred costs and other assets, net
|
12,836
|
|
|
17,500
|
|
||
Total assets
|
$
|
2,078,919
|
|
|
$
|
1,831,104
|
|
Liabilities
|
|
|
|
||||
Securitization bonds payable
|
$
|
454,892
|
|
|
$
|
506,929
|
|
Mortgage notes payable
|
240,408
|
|
|
102,500
|
|
||
Credit facilities
|
201,033
|
|
|
28,323
|
|
||
Due to related party
|
7,912
|
|
|
3,076
|
|
||
Accounts payable and accrued expenses
|
13,149
|
|
|
3,843
|
|
||
Escrow deposits payable
|
118,362
|
|
|
172,623
|
|
||
Other liabilities
|
9,083
|
|
|
8,585
|
|
||
Total liabilities
|
1,044,839
|
|
|
825,879
|
|
||
|
|
|
|
||||
Equity
|
|
|
|
||||
NorthStar Real Estate Income Trust, Inc. Stockholders’ Equity
|
|
|
|
||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2014 and December 31, 2013
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 400,000,000 shares authorized, 117,099,735 and 114,536,134 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively
|
1,171
|
|
|
1,145
|
|
||
Additional paid-in capital
|
1,043,595
|
|
|
1,019,348
|
|
||
Retained earnings (accumulated deficit)
|
(43,055
|
)
|
|
(32,886
|
)
|
||
Accumulated other comprehensive income (loss)
|
15,864
|
|
|
13,044
|
|
||
Total NorthStar Real Estate Income Trust, Inc. stockholders’ equity
|
1,017,575
|
|
|
1,000,651
|
|
||
Non-controlling interests
|
16,505
|
|
|
4,574
|
|
||
Total equity
|
1,034,080
|
|
|
1,005,225
|
|
||
Total liabilities and equity
|
$
|
2,078,919
|
|
|
$
|
1,831,104
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net interest income
|
|
|
|
|
|
|
|
|
||||||||
Interest income
|
|
$
|
25,392
|
|
|
$
|
24,403
|
|
|
$
|
76,394
|
|
|
$
|
53,261
|
|
Interest expense
|
|
3,847
|
|
|
4,136
|
|
|
15,141
|
|
|
9,937
|
|
||||
Net interest income
|
|
21,545
|
|
|
20,267
|
|
|
61,253
|
|
|
43,324
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other revenues
|
|
|
|
|
|
|
|
|
||||||||
Rental and other income
|
|
6,834
|
|
|
—
|
|
|
17,312
|
|
|
—
|
|
||||
Total other revenues
|
|
6,834
|
|
|
—
|
|
|
17,312
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Expenses
|
|
|
|
|
|
|
|
|
||||||||
Asset management and other fees - related party
|
|
6,959
|
|
|
5,556
|
|
|
17,602
|
|
|
11,744
|
|
||||
Other interest expense
|
|
1,812
|
|
|
—
|
|
|
4,617
|
|
|
—
|
|
||||
Transaction costs
|
|
1,638
|
|
|
—
|
|
|
2,408
|
|
|
994
|
|
||||
Property operating expenses
|
|
4,020
|
|
|
—
|
|
|
9,264
|
|
|
—
|
|
||||
General and administrative expenses (refer to Note 8)
|
|
3,471
|
|
|
2,761
|
|
|
9,561
|
|
|
6,799
|
|
||||
Depreciation
|
|
1,660
|
|
|
—
|
|
|
4,263
|
|
|
—
|
|
||||
Total expenses
|
|
19,560
|
|
|
8,317
|
|
|
47,715
|
|
|
19,537
|
|
||||
Income (loss) from operations
|
|
8,819
|
|
|
11,950
|
|
|
30,850
|
|
|
23,787
|
|
||||
Equity in earnings (losses) of unconsolidated ventures
|
|
10,115
|
|
|
9,321
|
|
|
28,213
|
|
|
18,363
|
|
||||
Realized gain (loss) on investments and other
|
|
—
|
|
|
—
|
|
|
(175
|
)
|
|
—
|
|
||||
Net income (loss)
|
|
18,934
|
|
|
21,271
|
|
|
58,888
|
|
|
42,150
|
|
||||
Net (income) loss attributable to non-controlling interests
|
|
146
|
|
|
—
|
|
|
351
|
|
|
—
|
|
||||
Net income (loss) attributable to NorthStar Real Estate Income Trust, Inc. common stockholders
|
|
$
|
19,080
|
|
|
$
|
21,271
|
|
|
$
|
59,239
|
|
|
$
|
42,150
|
|
Net income (loss) per share of common stock, basic/diluted
|
|
$
|
0.16
|
|
|
$
|
0.19
|
|
|
$
|
0.51
|
|
|
$
|
0.46
|
|
Weighted average number of shares of common stock outstanding, basic/diluted
|
|
116,833,981
|
|
|
112,993,817
|
|
|
115,997,715
|
|
|
92,303,431
|
|
||||
Distributions declared per share of common stock
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income (loss)
|
$
|
18,934
|
|
|
$
|
21,271
|
|
|
$
|
58,888
|
|
|
$
|
42,150
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on real estate securities, available for sale
|
(626
|
)
|
|
5,029
|
|
|
2,820
|
|
|
7,016
|
|
||||
Total other comprehensive income (loss)
|
(626
|
)
|
|
5,029
|
|
|
2,820
|
|
|
7,016
|
|
||||
Comprehensive income (loss)
|
18,308
|
|
|
26,300
|
|
|
61,708
|
|
|
49,166
|
|
||||
Comprehensive (income) loss attributable to non-controlling interests
|
146
|
|
|
—
|
|
|
351
|
|
|
—
|
|||||
Comprehensive income (loss) attributable to NorthStar Real Estate Income Trust, Inc
.
|
$
|
18,454
|
|
|
$
|
26,300
|
|
|
$
|
62,059
|
|
|
$
|
49,166
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
(Accumulated
Deficit)
|
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
|
Total
Company’s Stockholders’ Equity |
|
Non-
controlling
Interests
|
|
Total
Equity
|
|||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||||||||||
Balance as of December 31, 2012
|
60,205
|
|
|
$
|
602
|
|
|
$
|
532,617
|
|
|
$
|
(15,935
|
)
|
|
$
|
458
|
|
|
$
|
517,742
|
|
|
$
|
4
|
|
|
$
|
517,746
|
|
Net proceeds from issuance of common stock
|
51,475
|
|
|
515
|
|
|
459,710
|
|
|
—
|
|
|
—
|
|
|
460,225
|
|
|
—
|
|
|
460,225
|
|
|||||||
Non-controlling interests - contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,824
|
|
|
4,824
|
|
|||||||
Proceeds from distribution reinvestment plan
|
3,438
|
|
|
34
|
|
|
32,615
|
|
|
—
|
|
|
—
|
|
|
32,649
|
|
|
—
|
|
|
32,649
|
|
|||||||
Shares redeemed for cash
|
(593
|
)
|
|
(6
|
)
|
|
(5,688
|
)
|
|
—
|
|
|
—
|
|
|
(5,694
|
)
|
|
—
|
|
|
(5,694
|
)
|
|||||||
Issuance and amortization of equity-based compensation
|
11
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
94
|
|
|||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,586
|
|
|
12,586
|
|
|
—
|
|
|
12,586
|
|
|||||||
Distributions declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(78,222
|
)
|
|
—
|
|
|
(78,222
|
)
|
|
—
|
|
|
(78,222
|
)
|
|||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
61,271
|
|
|
—
|
|
|
61,271
|
|
|
(254
|
)
|
|
61,017
|
|
|||||||
Balance as of December 31, 2013
|
114,536
|
|
|
$
|
1,145
|
|
|
$
|
1,019,348
|
|
|
$
|
(32,886
|
)
|
|
$
|
13,044
|
|
|
$
|
1,000,651
|
|
|
$
|
4,574
|
|
|
$
|
1,005,225
|
|
Non-controlling interests - contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,663
|
|
|
12,663
|
|
|||||||
Non-controlling interests - distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(381
|
)
|
|
(381
|
)
|
|||||||
Proceeds from distribution reinvestment plan
|
3,350
|
|
|
34
|
|
|
31,768
|
|
|
—
|
|
|
—
|
|
|
31,802
|
|
|
—
|
|
|
31,802
|
|
|||||||
Shares redeemed for cash
|
(797
|
)
|
|
(8
|
)
|
|
(7,615
|
)
|
|
—
|
|
|
—
|
|
|
(7,623
|
)
|
|
—
|
|
|
(7,623
|
)
|
|||||||
Issuance and amortization of equity-based compensation
|
11
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
94
|
|
|||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,820
|
|
|
2,820
|
|
|
—
|
|
|
2,820
|
|
|||||||
Distributions declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(69,408
|
)
|
|
—
|
|
|
(69,408
|
)
|
|
—
|
|
|
(69,408
|
)
|
|||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
59,239
|
|
|
—
|
|
|
59,239
|
|
|
(351
|
)
|
|
58,888
|
|
|||||||
Balance as of September 30, 2014 (unaudited)
|
117,100
|
|
|
$
|
1,171
|
|
|
$
|
1,043,595
|
|
|
$
|
(43,055
|
)
|
|
$
|
15,864
|
|
|
$
|
1,017,575
|
|
|
$
|
16,505
|
|
|
$
|
1,034,080
|
|
|
Nine Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
58,888
|
|
|
$
|
42,150
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
||||
Equity in (earnings) losses of unconsolidated ventures
|
(28,213
|
)
|
|
(18,363
|
)
|
||
Depreciation
|
4,263
|
|
|
—
|
|
||
Amortization of premium/accretion of discount and fees on investments and borrowings, net
|
2,011
|
|
|
2,292
|
|
||
Amortization of deferred financing costs
|
3,177
|
|
|
1,893
|
|
||
Interest accretion on investments
|
—
|
|
|
213
|
|
||
Distributions from unconsolidated ventures (refer to Note 4)
|
27,967
|
|
|
18,823
|
|
||
Realized (gain) loss on investments and other
|
175
|
|
|
—
|
|
||
Amortization of equity-based compensation
|
94
|
|
|
65
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Restricted cash
|
(1,713
|
)
|
|
99
|
|
||
Receivables, net
|
(48
|
)
|
|
(3,313
|
)
|
||
Deferred costs and other assets
|
927
|
|
|
—
|
|
||
Due to related party
|
3,563
|
|
|
2,870
|
|
||
Accounts payable and accrued expenses
|
6,604
|
|
|
28
|
|
||
Other liabilities
|
584
|
|
|
—
|
|
||
Net cash provided by (used in) operating activities
|
78,279
|
|
|
46,757
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Origination of real estate debt investments, net
|
(406,664
|
)
|
|
(507,914
|
)
|
||
Acquisition of real estate debt investments, related party
|
—
|
|
|
(79,095
|
)
|
||
Repayment on real estate debt investments
|
199,885
|
|
|
6,574
|
|
||
Proceeds from sale of real estate debt investments
|
17,325
|
|
|
—
|
|
||
Acquisition of operating real estate, net
|
(153,108
|
)
|
|
—
|
|
||
Improvement of operating real estate
|
(2,110
|
)
|
|
—
|
|
||
Investments in unconsolidated ventures (refer to Note 4)
|
(52,755
|
)
|
|
(202,338
|
)
|
||
Distributions from unconsolidated ventures (refer to Note 4)
|
28,585
|
|
|
15,498
|
|
||
Acquisition of real estate securities, available for sale
|
—
|
|
|
(23,285
|
)
|
||
Change in restricted cash
|
(8,227
|
)
|
|
—
|
|
||
Deferred costs and other assets, net
|
—
|
|
|
(637
|
)
|
||
Net cash provided by (used in) investing activities
|
(377,069
|
)
|
|
(791,197
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Net proceeds from issuance of common stock
|
—
|
|
|
460,048
|
|
||
Proceeds from distribution reinvestment plan
|
31,802
|
|
|
22,437
|
|
||
Shares redeemed for cash
|
(7,623
|
)
|
|
(3,896
|
)
|
||
Distributions paid on common stock
|
(69,491
|
)
|
|
(51,618
|
)
|
||
Repayment of mortgage notes
|
(75
|
)
|
|
—
|
|
||
Borrowings from mortgage notes
|
108,850
|
|
|
—
|
|
||
Borrowings from credit facilities
|
189,348
|
|
|
99,550
|
|
||
Repayment of credit facilities
|
(16,638
|
)
|
|
(197,549
|
)
|
||
Proceeds from securitization bonds
|
—
|
|
|
382,046
|
|
||
Repayment of securitization bonds
|
(52,015
|
)
|
|
—
|
|
||
Change in restricted cash
|
41,801
|
|
|
(42,607
|
)
|
||
Payment of deferred financing costs
|
(1,619
|
)
|
|
(5,842
|
)
|
||
Contributions from non-controlling interests
|
12,663
|
|
|
—
|
|
||
Distributions to non-controlling interests
|
(381
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
236,622
|
|
|
662,569
|
|
||
Net increase (decrease) in cash
|
(62,168
|
)
|
|
(81,871
|
)
|
||
Cash - beginning of period
|
119,595
|
|
|
213,727
|
|
||
Cash - end of period
|
$
|
57,427
|
|
|
$
|
131,856
|
|
|
Nine Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
||||
Escrow deposits payable related to real estate debt investments
|
$
|
54,261
|
|
|
$
|
102,931
|
|
Distribution payable
|
7,699
|
|
|
7,471
|
|
||
Accrued cost of capital
|
—
|
|
|
71
|
|
||
Non-cash related to PE Investments (refer to Note 4)
|
1,797
|
|
|
796
|
|
||
Accrued acquisition fee
|
1,127
|
|
|
—
|
|
||
CRE debt investment payoff due from servicer
|
14,580
|
|
|
—
|
|
||
Acquisition of operating real estate / assumption of mortgage notes payable
|
29,133
|
|
|
—
|
|
1.
|
Business and Organization
|
2.
|
Summary of Significant Accounting Policies
|
3.
|
Real Estate Debt Investments
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
Floating
Rate as
% of
Principal
Amount
|
|||||||||||||
Asset Type:
|
Number
|
|
Principal
Amount
(1)
|
|
Carrying
Value
(2)
|
|
Allocation by Investment Type
(3)
|
|
Fixed
Rate
|
|
Spread
over
LIBOR
(4)
|
|
Total Unleveraged
Current
Yield
|
|
||||||||||
First mortgage loans
|
24
|
|
$
|
1,072,526
|
|
|
$
|
1,048,358
|
|
|
80.5
|
%
|
|
12.00
|
%
|
|
6.25
|
%
|
|
6.36
|
%
|
|
98.9
|
%
|
Mezzanine loans
|
6
|
|
149,693
|
|
|
123,119
|
|
|
11.2
|
%
|
|
10.10
|
%
|
|
13.95
|
%
|
|
13.66
|
%
|
|
92.0
|
%
|
||
Subordinate interests
|
1
|
|
33,250
|
|
|
33,250
|
|
|
2.5
|
%
|
|
13.11
|
%
|
|
—
|
%
|
|
13.24
|
%
|
|
—
|
%
|
||
Preferred equity interest
(5)
|
1
|
|
76,727
|
|
|
77,684
|
|
|
5.8
|
%
|
|
10.00
|
%
|
|
—
|
%
|
|
10.00
|
%
|
|
—
|
%
|
||
Total/Weighted average
|
32
|
|
$
|
1,332,196
|
|
|
$
|
1,282,411
|
|
|
100.0
|
%
|
|
10.96
|
%
|
|
6.69
|
%
|
|
7.46
|
%
|
|
90.0
|
%
|
(1)
|
Includes future funding commitments of
$52.8 million
.
|
(2)
|
Certain CRE debt investments serve as collateral for financing transactions including carrying value of
$659.8 million
for Securitization Financing Transactions (including
$0.8
million of cash pending investment) and
$276.1 million
for Term Loan Facilities (refer to Note 7). The remainder is unleveraged.
|
(3)
|
Based on principal amount.
|
(4)
|
Includes a fixed minimum LIBOR rate (“LIBOR floor”), as applicable. As of
September 30, 2014
, the Company had
$979.8 million
principal amount of floating-rate loans subject to a LIBOR floor with the weighted average LIBOR floor of
0.74%
.
|
(5)
|
Represents a preferred equity interest originated through a joint venture with affiliates of RXR Realty LLC (“RXR”). The Company's proportionate interest of the loan is
90%
, representing
$69.1 million
. The Company consolidates the loan and records RXR's investment as a non-controlling interest.
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
Floating
Rate as
% of
Principal
Amount
|
|||||||||||||
Asset Type:
|
Number
|
|
Principal
Amount
(1)
|
|
Carrying
Value
(2)(3)
|
|
Allocation by Investment Type
(4)
|
|
Fixed
Rate
|
|
Spread
Over
LIBOR
(5)
|
|
Total Unleveraged
Current
Yield
|
|
||||||||||
First mortgage loans
|
29
|
|
$
|
915,380
|
|
|
$
|
904,918
|
|
|
80.6
|
%
|
|
12.96
|
%
|
|
6.86
|
%
|
|
7.26
|
%
|
|
94.6
|
%
|
Mezzanine loans
|
4
|
|
186,693
|
|
|
154,105
|
|
|
16.5
|
%
|
|
—
|
%
|
|
14.19
|
%
|
|
14.27
|
%
|
|
100.0
|
%
|
||
Subordinate interests
|
1
|
|
33,250
|
|
|
33,250
|
|
|
2.9
|
%
|
|
13.11
|
%
|
|
—
|
%
|
|
13.24
|
%
|
|
—
|
%
|
||
Total/Weighted average
|
34
|
|
$
|
1,135,323
|
|
|
$
|
1,092,273
|
|
|
100.0
|
%
|
|
13.02
|
%
|
|
7.97
|
%
|
|
8.43
|
%
|
|
92.4
|
%
|
(1)
|
Includes future funding commitments of
$44.6 million
and a
$17.5 million
mezzanine loan participation classified as held for sale.
|
(2)
|
Certain CRE debt investments serve as collateral for financing transactions including carrying value of
$711.5 million
for Securitization Financing Transactions (including
$42.6 million
of cash pending investment) and
$30.9 million
for Term Loan Facilities (refer to Note 7). The remainder is unleveraged.
|
(3)
|
Includes a
$17.5 million
mezzanine loan participation classified as held for sale.
|
(4)
|
Based on principal amount.
|
(5)
|
Includes a LIBOR floor. As of
December 31, 2013
, the Company had
$898.2 million
principal amount of floating-rate loans subject to a LIBOR floor with the weighted average LIBOR floor of
1.07%
.
|
|
Initial
Maturity
|
|
Maturity
Including
Extensions
(1)
|
||||
October 1 to December 31, 2014
|
$
|
37,641
|
|
|
$
|
—
|
|
Years Ending December 31:
|
|
|
|
||||
2015
|
334,600
|
|
|
—
|
|
||
2016
|
323,600
|
|
|
105,641
|
|
||
2017
|
252,300
|
|
|
341,600
|
|
||
2018
|
—
|
|
|
413,600
|
|
||
Thereafter
|
384,055
|
|
|
471,355
|
|
||
Total
|
$
|
1,332,196
|
|
|
$
|
1,332,196
|
|
(1)
|
Assumes that all debt with extension options will qualify for extension at such maturity according to the conditions set forth in the governing documents.
|
4.
|
Investments in Unconsolidated Ventures
|
PE Investment
|
|
Initial Closing Date
|
|
NAV Reference Date
(1)
|
|
Number of Funds
|
|
Purchase Price
|
|
Expected Future Contributions
(2)
|
|||||
PE Investment I
|
|
February 15, 2013
|
|
June 30, 2012
|
|
49
|
|
|
$
|
118.0
|
|
|
$
|
4
|
|
PE Investment II
|
|
July 3, 2013
|
|
September 30, 2012
|
|
24
|
|
|
75.7
|
|
|
1
|
|
||
Total
|
|
|
|
|
|
73
|
|
|
$
|
193.7
|
|
|
$
|
5
|
|
(1)
|
Represents the net asset value (“NAV”) date on which the Company agreed to acquire the respective PE Investment.
|
(2)
|
Represents the estimated amount of expected future contributions to funds as of
September 30, 2014
.
|
|
|
Carrying Value
|
|
Three Months Ended September 30, 2014
|
|
Nine Months Ended September 30, 2014
|
||||||||||||||||||||||||||
PE Investment
|
|
September 30, 2014
|
|
December 31, 2013
|
|
Equity in Earnings
|
|
Cash Distributions
|
|
Cash Contributions
|
|
Equity in Earnings
|
|
Cash Distributions
|
|
Cash Contributions
|
||||||||||||||||
PE Investment I
|
|
$
|
85.5
|
|
|
$
|
94.7
|
|
|
$
|
5.8
|
|
|
$
|
7.5
|
|
|
$
|
0.4
|
|
|
$
|
17.4
|
|
|
$
|
27.1
|
|
|
$
|
0.4
|
|
PE Investment II
|
|
52.3
|
|
|
61.9
|
|
|
3.0
|
|
|
8.7
|
|
|
—
|
|
|
8.6
|
|
|
19.3
|
|
|
1.1
|
|
||||||||
Total
|
|
$
|
137.8
|
|
|
$
|
156.6
|
|
|
$
|
8.8
|
|
|
$
|
16.2
|
|
|
$
|
0.4
|
|
|
$
|
26.0
|
|
|
$
|
46.4
|
|
|
$
|
1.5
|
|
|
|
Three Months Ended September 30, 2013
|
|
Nine Months Ended September 30, 2013
(1)
|
||||||||||||||||||||
PE Investment
|
|
Equity in Earnings
|
|
Cash Distributions
|
|
Cash Contributions
|
|
Equity in Earnings
|
|
Cash Distributions
|
|
Cash Contributions
|
||||||||||||
PE Investment I
|
|
$
|
6.4
|
|
|
$
|
7.6
|
|
|
$
|
0.3
|
|
|
$
|
15.6
|
|
|
$
|
31.2
|
|
|
$
|
7.8
|
|
PE Investment II
|
|
3.2
|
|
|
3.2
|
|
|
0.9
|
|
|
3.2
|
|
|
3.2
|
|
|
0.9
|
|
||||||
Total
|
|
$
|
9.6
|
|
|
$
|
10.8
|
|
|
$
|
1.2
|
|
|
$
|
18.8
|
|
|
$
|
34.4
|
|
|
$
|
8.7
|
|
(1)
|
The
nine months ended
September 30, 2013
represents activity from February 15, 2013 for PE Investment I and July 3, 2013 for PE Investment II.
|
5.
|
Operating Real Estate
|
Acquisition Date
|
|
Type
|
|
Description
|
|
Purchase Price
(1)
|
|
Properties
|
|
Units
|
|
State
|
|
Financing
|
|
Equity
|
|
Ownership Interest
|
|
Transaction Costs
|
|||||||||
April 2014
|
|
Student Housing
|
|
Student housing 2
|
|
$
|
20,385
|
|
|
1
|
|
590 beds
|
|
SC
|
|
$
|
12,933
|
|
|
$
|
5,643
|
|
|
80.0
|
%
|
|
$
|
336
|
|
May 2014
|
|
Student Housing
|
|
Student housing 3
|
|
24,319
|
|
|
1
|
|
700 beds
|
|
SC
|
|
16,200
|
|
|
6,067
|
|
|
80.0
|
%
|
|
391
|
|
||||
September 2014
|
|
Office/Retail
|
|
Office 1
|
|
149,352
|
|
|
7
|
|
884,304 sq ft
|
|
MO
|
|
108,850
|
|
|
34,852
|
|
|
95.0
|
%
|
|
1,595
|
|
||||
Total
|
|
|
|
|
|
$
|
194,056
|
|
|
9
|
|
|
|
|
|
$
|
137,983
|
|
|
$
|
46,562
|
|
|
|
|
$
|
2,322
|
|
(1)
|
Includes all transaction costs, escrows and reserves.
|
Assets:
|
|
|
||
Land
|
|
$
|
31,500
|
|
Buildings
|
|
274,009
|
|
|
Other assets acquired
(1)
|
|
26,071
|
|
|
Total assets acquired
|
|
$
|
331,580
|
|
Liabilities:
|
|
|
||
Mortgage notes payable
|
|
240,483
|
|
|
Other liabilities assumed
(2)
|
|
5,621
|
|
|
Total liabilities
|
|
246,104
|
|
|
Total NorthStar Real Estate Income Trust, Inc. stockholders’ equity
|
|
75,923
|
|
|
Non-controlling interests
|
|
9,553
|
|
|
Total equity
|
|
85,476
|
|
|
Total liabilities and equity
|
|
$
|
331,580
|
|
(1)
|
Primarily includes escrow amounts, as applicable.
|
(2)
|
Primarily includes prepaid rent and accrued expenses.
|
6.
|
Real Estate Securities, Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
||||||||||||||
|
|
|
Principal
Amount
(1)
|
|
Amortized
Cost
|
|
Cumulative Unrealized
on Investments
|
Fair
Value |
|
|
|
Unleveraged
Current
Yield
|
|||||||||||||||
CMBS:
|
Number
|
|
Gain
|
|
(Loss)
|
|
|
Coupon
(2)
|
|
||||||||||||||||||
September 30, 2014
|
8
|
|
$
|
104,542
|
|
|
$
|
54,337
|
|
|
$
|
16,564
|
|
|
$
|
(700
|
)
|
|
$
|
70,201
|
|
|
4.53
|
%
|
|
9.07
|
%
|
December 31, 2013
|
8
|
|
104,542
|
|
|
53,406
|
|
|
13,373
|
|
|
(329
|
)
|
|
66,450
|
|
|
4.53
|
%
|
|
9.07
|
%
|
(1)
|
Certain CRE securities serve as collateral for financing transactions including carrying value of
$17.5 million
for the CMBS Facilities (refer to Note 7). The remainder is unleveraged.
|
(2)
|
All CMBS are fixed rate.
|
7.
|
Borrowings
|
|
|
|
|
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||||||||||
|
Recourse vs. Non-Recourse
|
|
Final
Maturity
|
|
Contractual
Interest Rate
(1)
|
|
Principal
Amount
|
|
Carrying
Value
|
|
Principal
Amount
|
|
Carrying
Value
|
||||||||
Securitization bonds payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Securitization 2013-1
|
Non-recourse
|
|
Aug-29
|
|
LIBOR + 2.71%
|
|
$
|
368,056
|
|
|
$
|
367,646
|
|
|
$
|
382,700
|
|
|
$
|
382,250
|
|
Securitization 2012-1
|
Non-recourse
|
|
Aug-29
|
|
LIBOR + 1.86%
|
|
87,288
|
|
|
87,246
|
|
|
124,659
|
|
|
124,679
|
|
||||
Subtotal securitization bonds payable
|
|
|
|
|
|
|
455,344
|
|
|
454,892
|
|
|
507,359
|
|
|
506,929
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Mortgage notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Multifamily 1
|
Non-recourse
|
|
Dec-23
|
|
4.84%
|
|
43,500
|
|
|
43,500
|
|
|
43,500
|
|
|
43,500
|
|
||||
Multifamily 2
|
Non-recourse
|
|
Dec-23
|
|
4.94%
|
|
43,000
|
|
|
43,000
|
|
|
43,000
|
|
|
43,000
|
|
||||
Office 1
|
Non-recourse
|
|
Oct-24
|
|
4.47%
|
|
108,850
|
|
|
108,850
|
|
|
—
|
|
|
—
|
|
||||
Student housing 1
|
Non-recourse
|
|
Jan-24
|
|
5.15%
|
|
16,000
|
|
|
16,000
|
|
|
16,000
|
|
|
16,000
|
|
||||
Student housing 2
(2)
|
Non-recourse
|
|
Dec-20
|
|
5.27%
|
|
12,858
|
|
|
12,858
|
|
|
—
|
|
|
—
|
|
||||
Student housing 3
|
Non-recourse
|
|
Nov-16
|
|
5.84%
|
|
16,200
|
|
|
16,200
|
|
|
—
|
|
|
—
|
|
||||
Subtotal mortgage notes payable
|
|
|
|
|
|
|
240,408
|
|
|
240,408
|
|
|
102,500
|
|
|
102,500
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Credit facilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loan Facility 2
|
Partial Recourse
(3)
|
|
Oct-19
(4)
|
|
2.66%
(5)
|
|
63,750
|
|
|
63,750
|
|
|
—
|
|
|
—
|
|
||||
Loan Facility 3
|
Non-recourse
|
|
Jul-18
(6)
|
|
N/A
(7)
|
|
—
|
|
|
—
|
|
|
16,638
|
|
|
16,638
|
|
||||
Loan Facility 4
|
Partial Recourse
(8)
|
|
Mar-18
(9)
|
|
2.70%
(10)
|
|
125,598
|
|
|
125,598
|
|
|
—
|
|
|
—
|
|
||||
CMBS Facilities
|
Recourse
|
|
(11)
|
|
1.42%
|
|
11,685
|
|
|
11,685
|
|
|
11,685
|
|
|
11,685
|
|
||||
Subtotal credit facilities
|
|
|
|
|
|
|
201,033
|
|
|
201,033
|
|
|
28,323
|
|
|
28,323
|
|
||||
Grand Total
|
|
|
|
|
|
|
$
|
896,785
|
|
|
$
|
896,333
|
|
|
$
|
638,182
|
|
|
$
|
637,752
|
|
(1)
|
Represents the weighted average as of
September 30, 2014
.
|
(2)
|
Represents
two
separate senior mortgage notes with a weighted average maturity of
December 1, 2020
and weighted average interest rate of
5.27%
.
|
(3)
|
Recourse solely with respect to
25.0%
of the repurchase price for purchased assets with a lender debt yield equal to or greater than
10%
at the time of financing plus
100%
of the repurchase price for purchased assets with a lender debt yield less than
10%
at the time of financing.
|
(4)
|
The next maturity date is October 18, 2016, with
three
,
one
-year extensions available at the option of the Company, which may be exercised upon the satisfaction of certain customary conditions set forth in the governing documents.
|
(5)
|
The contractual interest rate depends upon asset type and characteristic and ranges from
one
-month LIBOR plus
2.0%
to
4.0%
. The Company entered into this facility in the third quarter 2012.
|
(6)
|
The initial maturity date is July 30, 2015, with
three
,
one
-year extensions available at the option of the Company, which may be exercised upon the satisfaction of certain customary conditions set forth in the governing documents.
|
(7)
|
The contractual interest rate depends upon asset type and characteristic and ranges from
one
-month LIBOR plus
3.95%
to
5.95%
.
|
(8)
|
Recourse solely with respect to the greater of: (i)
25.0%
of the financed amount of stabilized loans plus the financed amount of transitional loans; or (ii) the lesser of
$25.0 million
or the aggregate financed amount of
all
loans.
|
(9)
|
The initial maturity date is March 11, 2015, with
three
,
one
-year extensions available at the option of the Company, which may be exercised upon the satisfaction of certain customary conditions set forth in the governing documents.
|
(10)
|
The contractual interest rate depends upon asset type and characteristics and ranges from
one
-month LIBOR plus
2.5%
to
3.0%
. The Company entered into this facility in the
first
quarter
2013
.
|
(11)
|
The maturity dates on the CMBS Facilities are dependent upon asset type and will typically range from
two
to
three months
.
|
|
Total
|
|
Securitization
Bonds Payable
|
|
Mortgage Notes Payable
|
|
Credit
Facilities
|
||||||||
October 1 to December 31, 2014
|
$
|
11,685
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,685
|
|
Years Ending December 31:
|
|
|
|
|
|
|
|
||||||||
2015
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2016
|
16,200
|
|
|
—
|
|
|
16,200
|
|
|
—
|
|
||||
2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2018
|
125,598
|
|
|
—
|
|
|
—
|
|
|
125,598
|
|
||||
Thereafter
|
743,302
|
|
|
455,344
|
|
|
224,208
|
|
|
63,750
|
|
||||
Total
|
$
|
896,785
|
|
|
$
|
455,344
|
|
|
$
|
240,408
|
|
|
$
|
201,033
|
|
8.
|
Related Party Arrangements
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended
September 30, |
|
Due to Related Party as of
|
||||||||||||||||||
Type of Fee or Reimbursement
(1)
|
|
Financial Statement Location
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
September 30, 2014
|
|
December 31, 2013
|
||||||||||||
Fees to Advisor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset management
|
|
Asset management and other fees- related party
|
|
$
|
5,637
|
|
|
$
|
4,165
|
|
|
$
|
15,760
|
|
|
$
|
9,068
|
|
|
$
|
1,963
|
|
|
$
|
1,607
|
|
Acquisition
(2)
|
|
Real estate debt investments, net / Asset management and other fees- related party
|
|
3,200
|
|
|
2,334
|
|
|
6,689
|
|
|
7,657
|
|
|
2,450
|
|
|
—
|
|
||||||
Disposition
(2)
|
|
Real estate debt investments, net / Asset management and other fees- related party
|
|
1,367
|
|
|
162
|
|
|
2,174
|
|
|
177
|
|
|
291
|
|
|
10
|
|
||||||
Reimbursements to Advisor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating costs
|
|
General and administrative expenses
|
|
3,208
|
|
|
2,568
|
|
|
8,470
|
|
|
6,392
|
|
|
3,208
|
|
|
1,459
|
|
||||||
Organization
|
|
General and administrative expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62
|
|
|
—
|
|
|
—
|
|
||||||
Offering
|
|
Cost of capital
|
|
—
|
|
|
483
|
|
|
—
|
|
|
2,989
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,912
|
|
|
$
|
3,076
|
|
(1)
|
The Company incurred selling commissions / dealer manager fees of
$49.5 million
for the nine months ended
September 30, 2013
. These costs are recorded as cost of capital and are included in net proceeds from issuance of common stock in the Company’s consolidated statements of equity.
|
(2)
|
Acquisition/disposition fees incurred to the Advisor related to CRE debt investments are generally offset by origination/exit fees paid to the Company by borrowers if such fees are required from the borrower. Acquisition fees related to equity investments are included in asset management and other fees - related party in the consolidated statements of operations. The Advisor may determine to defer fees or seek reimbursement. From inception through
September 30, 2014
, the Advisor deferred
$0.5 million
of acquisition fees and
$0.3 million
of disposition fees related to CRE securities.
|
9.
|
Equity-Based Compensation
|
10.
|
Stockholders’ Equity
|
(1)
|
Represents distributions declared for the period, even though such distributions are actually paid to stockholders the month following such period.
|
11.
|
Non-controlling Interests
|
12.
|
Fair Value
|
Level 1.
|
Quoted prices for identical assets or liabilities in an active market.
|
Level 2.
|
Financial assets and liabilities whose values are based on the following:
|
a)
|
Quoted prices for similar assets or liabilities in active markets.
|
b)
|
Quoted prices for identical or similar assets or liabilities in non-active markets.
|
c)
|
Pricing models whose inputs are observable for substantially the full term of the asset or liability.
|
d)
|
Pricing models whose inputs are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability.
|
Level 3.
|
Prices or valuation techniques based on inputs that are both unobservable and significant to the overall fair value measurement.
|
|
September 30, 2014
|
|
December 31, 2013
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investments in private equity funds, at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
137,753
|
|
|
$
|
137,753
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
156,616
|
|
|
$
|
156,616
|
|
Real estate securities, available for sale
|
—
|
|
|
70,201
|
|
|
—
|
|
|
70,201
|
|
|
—
|
|
|
66,450
|
|
|
—
|
|
|
66,450
|
|
|
Nine Months Ended
|
|
Year Ended
|
||||
|
September 30, 2014
|
|
December 31, 2013
|
||||
Beginning balance
|
$
|
156,616
|
|
|
$
|
—
|
|
Purchases/contributions
|
1,477
|
|
|
204,924
|
|
||
Distributions
|
(46,395
|
)
|
|
(76,973
|
)
|
||
Equity in earnings
|
26,055
|
|
|
28,665
|
|
||
Ending balance
|
$
|
137,753
|
|
|
$
|
156,616
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||||||||||||||||||
|
Principal
Amount
|
|
Carrying
Value
|
|
Fair
Value
|
|
Principal
Amount
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||||||
Financial assets:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Real estate debt investments, net
|
$
|
1,279,428
|
|
(2)
|
$
|
1,282,411
|
|
|
$
|
1,430,953
|
|
|
$
|
1,073,189
|
|
(2)
|
$
|
1,074,773
|
|
|
$
|
1,197,383
|
|
Real estate debt investments, held for sale
|
—
|
|
|
—
|
|
|
—
|
|
|
17,500
|
|
|
17,500
|
|
|
17,500
|
|
||||||
Real estate securities, available for sale
(3)
|
104,542
|
|
|
70,201
|
|
|
70,201
|
|
|
104,542
|
|
|
66,450
|
|
|
66,450
|
|
||||||
Financial liabilities:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Securitization bonds payable
|
$
|
455,344
|
|
|
$
|
454,892
|
|
|
$
|
456,551
|
|
|
$
|
507,359
|
|
|
$
|
506,929
|
|
|
$
|
507,212
|
|
Mortgage notes payable
|
240,408
|
|
|
240,408
|
|
|
240,662
|
|
|
102,500
|
|
|
102,500
|
|
|
102,500
|
|
||||||
Credit facilities
|
201,033
|
|
|
201,033
|
|
|
201,033
|
|
|
28,323
|
|
|
28,323
|
|
|
28,323
|
|
(1)
|
The fair value of other financial instruments not included in this table is estimated to approximate their carrying value.
|
(2)
|
Excludes future funding commitments of
$52.8 million
as of
September 30, 2014
and
$44.6 million
as of
December 31, 2013
.
|
(3)
|
Refer to the “Determination of Fair Value” above for disclosure of methodologies used to determine fair value.
|
13.
|
Segment Reporting
|
•
|
Commercial Real Estate Debt -
Focused on originating, acquiring and asset managing CRE debt investments including first mortgage loans, subordinate interests and mezzanine loans and participations in such loans, as well as preferred equity interests. The Company may also invest in CRE debt investments indirectly through joint ventures.
|
•
|
Select Commercial Real Estate Equity -
Focused on indirect interests in real estate through real estate private equity funds since the underlying collateral in the funds is primarily real estate, direct ownership in real estate or through a joint venture and select real estate assets that may or may not be structurally senior to a third-party partner’s equity.
|
•
|
Commercial Real Estate Securities -
Focused on investing in CMBS, unsecured REIT debt, CDO notes and other securities.
|
•
|
Corporate
-
The corporate segment includes corporate level asset management and other fees - related party and general and administrative expenses.
|
Three months ended September 30, 2014
|
|
Real Estate
Debt
|
|
Real Estate Equity
|
|
Real Estate
Securities
|
|
Corporate
|
|
Total
|
||||||||||
Net interest income
|
|
$
|
20,077
|
|
|
$
|
—
|
|
|
$
|
1,468
|
|
|
$
|
—
|
|
|
$
|
21,545
|
|
Rental and other income
|
|
—
|
|
|
6,834
|
|
|
—
|
|
|
—
|
|
|
6,834
|
|
|||||
Expenses
|
|
261
|
|
|
9,130
|
|
|
—
|
|
|
10,169
|
|
|
19,560
|
|
|||||
Income (loss) from operations
|
|
19,816
|
|
|
(2,296
|
)
|
|
1,468
|
|
|
(10,169
|
)
|
|
8,819
|
|
|||||
Equity in earnings (losses) of unconsolidated ventures
|
|
1,320
|
|
|
8,795
|
|
|
—
|
|
|
—
|
|
|
10,115
|
|
|||||
Net income (loss)
|
|
$
|
21,136
|
|
|
$
|
6,499
|
|
|
$
|
1,468
|
|
|
$
|
(10,169
|
)
|
|
$
|
18,934
|
|
Three months ended September 30, 2013
|
|
Real Estate
Debt
|
|
Real Estate Equity
|
|
Real Estate
Securities
|
|
Corporate
|
|
Total
|
||||||||||
Net interest income
|
|
$
|
18,834
|
|
|
$
|
—
|
|
|
$
|
1,433
|
|
|
$
|
—
|
|
|
$
|
20,267
|
|
Expenses
|
|
190
|
|
|
1,417
|
|
|
—
|
|
|
6,710
|
|
|
8,317
|
|
|||||
Income (loss) from operations
|
|
18,644
|
|
|
(1,417
|
)
|
|
1,433
|
|
|
(6,710
|
)
|
|
11,950
|
|
|||||
Equity in earnings (losses) of unconsolidated ventures
|
|
(280
|
)
|
|
9,601
|
|
|
—
|
|
|
—
|
|
|
9,321
|
|
|||||
Net income (loss)
|
|
$
|
18,364
|
|
|
$
|
8,184
|
|
|
$
|
1,433
|
|
|
$
|
(6,710
|
)
|
|
$
|
21,271
|
|
Nine months ended September 30, 2014
|
|
Real Estate
Debt |
|
Real Estate Equity
|
|
Real Estate
Securities |
|
Corporate
|
|
Total
|
||||||||||
Net interest income
|
|
$
|
56,901
|
|
|
$
|
—
|
|
|
$
|
4,352
|
|
|
$
|
—
|
|
|
$
|
61,253
|
|
Rental and other income
|
|
—
|
|
|
17,312
|
|
|
—
|
|
|
—
|
|
|
17,312
|
|
|||||
Expenses
|
|
723
|
|
|
20,552
|
|
|
—
|
|
|
26,440
|
|
|
47,715
|
|
|||||
Income (loss) from operations
|
|
56,178
|
|
|
(3,240
|
)
|
|
4,352
|
|
|
(26,440
|
)
|
|
30,850
|
|
|||||
Equity in earnings (losses) of unconsolidated ventures
|
|
2,157
|
|
|
26,056
|
|
|
—
|
|
|
—
|
|
|
28,213
|
|
|||||
Realized gain (loss) on investments and other
|
|
(175
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(175
|
)
|
|||||
Net income (loss)
|
|
$
|
58,160
|
|
|
$
|
22,816
|
|
|
$
|
4,352
|
|
|
$
|
(26,440
|
)
|
|
$
|
58,888
|
|
Nine months ended September 30, 2013
|
|
Real Estate
Debt |
|
Real Estate Equity
|
|
Real Estate
Securities |
|
Corporate
|
|
Total
|
||||||||||
Net interest income
|
|
$
|
39,584
|
|
|
$
|
—
|
|
|
$
|
3,740
|
|
|
$
|
—
|
|
|
$
|
43,324
|
|
Expenses
|
|
340
|
|
|
3,696
|
|
|
14
|
|
|
15,487
|
|
|
19,537
|
|
|||||
Income (loss) from operations
|
|
39,244
|
|
|
(3,696
|
)
|
|
3,726
|
|
|
(15,487
|
)
|
|
23,787
|
|
|||||
Equity in earnings (losses) of unconsolidated ventures
|
|
(460
|
)
|
|
18,823
|
|
|
—
|
|
|
—
|
|
|
18,363
|
|
|||||
Net income (loss)
|
|
$
|
38,784
|
|
|
$
|
15,127
|
|
|
$
|
3,726
|
|
|
$
|
(15,487
|
)
|
|
$
|
42,150
|
|
Total Assets
|
|
Real Estate
Debt
|
|
Real Estate Equity
|
|
Real Estate
Securities
|
|
Corporate
(1)
|
|
Total
|
||||||||||
September 30, 2014
|
|
$
|
1,494,579
|
|
|
$
|
467,594
|
|
|
$
|
70,542
|
|
|
$
|
46,204
|
|
|
$
|
2,078,919
|
|
December 31, 2013
|
|
$
|
1,347,461
|
|
|
$
|
302,501
|
|
|
$
|
66,837
|
|
|
$
|
114,305
|
|
|
$
|
1,831,104
|
|
(1)
|
Includes cash, unallocated receivables and deferred costs and other assets, net.
|
14.
|
Subsequent Events
|
•
|
Commercial Real Estate Debt -
Our CRE debt investments may include first mortgage loans, subordinate interests and mezzanine loans and participations in such loans, as well as preferred equity interests. We may also invest in CRE debt investments indirectly through joint ventures.
|
•
|
Select Commercial Real Estate Equity -
Our CRE equity investments may include indirect interests in real estate through PE Investments since the underlying collateral in the funds is primarily real estate, direct ownership in real estate or through a joint venture and select real estate assets that may or may not be structurally senior to a third-party partner’s equity.
|
•
|
Commercial Real Estate Securities -
Our CRE securities investments may include CMBS, unsecured REIT debt, CDO notes and other securities.
|
Investment Type:
|
|
Number
|
|
Principal
Amount/ Cost
(1)
|
|
% of
Principal Amount
|
|||
CRE Debt
|
|
|
|
|
|
|
|||
First mortgage loans
(2)
|
|
24
|
|
$
|
1,072,526
|
|
|
52.9
|
%
|
Mezzanine loans
(2)
|
|
7
|
|
218,931
|
|
|
10.8
|
%
|
|
Subordinate interests
|
|
1
|
|
33,250
|
|
|
1.6
|
%
|
|
Preferred equity interests
|
|
1
|
|
69,054
|
|
|
3.4
|
%
|
|
Total CRE debt
|
|
33
|
|
1,393,761
|
|
|
68.7
|
%
|
|
PE Investments
|
|
|
|
|
|
|
|||
PE Investment I
|
|
1
|
|
85,473
|
|
|
4.2
|
%
|
|
PE Investment II
(2)
|
|
1
|
|
113,622
|
|
|
5.6
|
%
|
|
Total PE Investments
|
|
2
|
|
199,095
|
|
|
9.8
|
%
|
|
Real estate
|
|
|
|
|
|
|
|||
Office/retail
|
|
7
|
|
149,352
|
|
|
7.4
|
%
|
|
Multifamily
|
|
2
|
|
114,584
|
|
|
5.6
|
%
|
|
Student housing
|
|
3
|
|
67,644
|
|
|
3.3
|
%
|
|
Total real estate
|
|
12
|
|
331,580
|
|
|
16.3
|
%
|
|
CRE Securities
|
|
|
|
|
|
|
|||
CMBS
|
|
8
|
|
104,542
|
|
|
5.2
|
%
|
|
Total CRE securities
|
|
8
|
|
104,542
|
|
|
5.2
|
%
|
|
Total
|
|
55
|
|
$
|
2,028,978
|
|
|
100.0
|
%
|
(1)
|
Based on principal amount for real estate debt and securities investments, fair value for our PE Investments and cost for real estate equity, which includes net purchase price allocation related to net intangibles, deferred costs and other assets, if any.
|
(2)
|
Includes for CRE debt, future funding commitments and the deferred purchase price for PE Investment II (as defined below).
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
Floating Rate
as % of
Principal
Amount
|
|||||||||||||
Investment Type:
|
|
Number
|
|
Principal
Amount
(1)
|
|
Carrying
Value
|
|
Allocation by
Investment
Type
(2)
|
|
Fixed
Rate
|
|
Spread
over
LIBOR
|
|
Total Unleveraged
Current
Yield
|
|
||||||||||
First mortgage loans
|
|
24
|
|
$
|
1,072,526
|
|
|
$
|
1,048,358
|
|
|
76.9
|
%
|
|
12.00
|
%
|
|
6.25
|
%
|
|
6.37
|
%
|
|
98.9
|
%
|
Mezzanine loans
(3)
|
|
7
|
|
218,931
|
|
|
176,688
|
|
|
15.7
|
%
|
|
10.02
|
%
|
|
13.95
|
%
|
|
12.54
|
%
|
|
62.9
|
%
|
||
Subordinate interests
|
|
1
|
|
33,250
|
|
|
33,250
|
|
|
2.4
|
%
|
|
13.11
|
%
|
|
—
|
%
|
|
13.24
|
%
|
|
—
|
%
|
||
Preferred equity interests
(4)
|
|
1
|
|
69,054
|
|
|
70,012
|
|
|
5.0
|
%
|
|
10.00
|
%
|
|
—
|
%
|
|
10.00
|
%
|
|
—
|
%
|
||
Total/Weighted average
|
|
33
|
|
$
|
1,393,761
|
|
|
$
|
1,328,308
|
|
|
100.0
|
%
|
|
10.71
|
%
|
|
6.99
|
%
|
|
7.55
|
%
|
|
86.0
|
%
|
(1)
|
Includes future funding commitments of
$68.4 million
.
|
(2)
|
Based on principal amount.
|
(3)
|
Includes our proportionate interest in a mezzanine loan owned through a joint venture of
$69.2 million
, including future funding commitments.
|
(4)
|
Excludes a
$7.7 million
proportionate interest in a preferred equity investment owned by a joint venture partner.
|
Debt Investments by Property Type
|
|
Debt Investments by Geographic Location
|
|
|
|
|
Portfolios
|
|
Amount
(1)
|
|
%
|
|||
PE Investment I
|
1
|
|
$
|
85,473
|
|
|
42.9
|
%
|
PE Investment II
|
1
|
|
113,622
|
|
|
57.1
|
%
|
|
Total
|
2
|
|
$
|
199,095
|
|
|
100.0
|
%
|
(1)
|
Represents fair value and includes the deferred purchase price for PE Investment II.
|
PE Investment
(1)
|
|
Number of Funds
|
|
Number of General Partners
|
|
Initial NAV
|
|
Closing NAV as a Percentage of Cost
(2)
|
|
Reported NAV Growth
(3)
|
|
Underlying Assets, at Cost
|
|
Implied Leverage
(4)
|
|
Expected Future Contributions
(5)
|
||||||
PE Investment I
|
|
49
|
|
26
|
|
$
|
802.4
|
|
|
66.2%
|
|
22.5%
|
|
$
|
22,500
|
|
|
50.4%
|
|
$
|
4
|
|
PE Investment II
|
|
24
|
|
15
|
|
$
|
910.0
|
|
|
73.5%
|
|
15.0%
|
|
$
|
24,229
|
|
|
32.5%
|
|
$
|
1
|
|
(1)
|
Based on financial data reported by the underlying funds as of June 30, 2014, except as otherwise noted.
|
(2)
|
Net cost represents total funded capital less distributions received. For PE Investment I, excludes any distributions in excess of contributions for funds, which represented
4%
of reported NAV.
|
(3)
|
The reported NAV growth for PE Investment I and II is measured from the agreed upon reported NAV at date of acquisition, or Initial NAV.
|
(4)
|
Represents implied leverage for funds with investment-level financing, calculated as the underlying borrowing divided by assets at fair value.
|
(5)
|
Represents the estimated amount of expected future contributions to funds as of
September 30, 2014
.
|
|
|
Our Proportionate Share of PE Investments
|
||||||||||||||||||
|
|
Income
|
|
Return of Capital
|
|
Total Distributions
(2)
|
|
Contributions
|
|
Net
|
||||||||||
PE Investment I
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Quarter ended September 30, 2014
|
|
$
|
5.8
|
|
|
$
|
1.7
|
|
|
$
|
7.5
|
|
|
$
|
0.4
|
|
|
$
|
7.1
|
|
February 15, 2013 to September 30, 2014
(1)
|
|
$
|
39.9
|
|
|
$
|
41.7
|
|
|
$
|
81.6
|
|
|
$
|
9.1
|
|
|
$
|
72.5
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
PE Investment II
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Quarter ended September 30, 2014
|
|
$
|
3.0
|
|
|
$
|
5.7
|
|
|
$
|
8.7
|
|
|
$
|
—
|
|
|
$
|
8.7
|
|
July 3, 2013 to September 30, 2014
(1)
|
|
$
|
14.8
|
|
|
$
|
27.0
|
|
|
$
|
41.8
|
|
|
$
|
3.5
|
|
|
$
|
38.3
|
|
(1)
|
Represents activity from the respective initial closing date through
September 30, 2014
.
|
(2)
|
Net of
$5.1 million
reserve for taxes in the aggregate for the PE Investments.
|
PE Investments by Underlying Investment Type
(1)
|
|
PE Investments by Underlying Geographic Location
(1)
|
|
|
|
(1)
|
Based on individual fund financial statements.
|
Property Type
|
|
Number of Properties
|
|
Units
|
|
Cost
(1)
|
||
Office/retail
|
|
7
|
|
884,308 sq ft
|
|
$
|
149,352
|
|
Multifamily
|
|
2
|
|
1,418 units
|
|
114,584
|
|
|
Student Housing
|
|
3
|
|
2,166 beds
|
|
67,644
|
|
|
Total
|
|
12
|
|
|
|
$
|
331,580
|
|
(1)
|
Based on cost which includes net purchase price allocation related to net intangibles, deferred costs and other assets, if any.
|
|
|
Year to Date Through
|
|
From Inception Through
|
||||||||
|
|
November 12, 2014
|
|
November 12, 2014
|
||||||||
Investment Type:
|
|
Number
|
|
Principal Amount/Cost
(1)
|
|
Number
|
|
Principal Amount/Cost
(1)
|
||||
CRE debt
|
|
8
|
|
$
|
475,442
|
|
|
47
|
|
$
|
1,736,000
|
|
PE Investments
(2)
|
|
—
|
|
—
|
|
|
2
|
|
255,460
|
|
||
Real estate equity
|
|
9
|
|
194,056
|
|
|
12
|
|
331,580
|
|
||
CRE securities
|
|
—
|
|
—
|
|
|
10
|
|
133,398
|
|
||
Total
|
|
17
|
|
$
|
669,498
|
|
|
71
|
|
$
|
2,456,438
|
|
(1)
|
Represents principal amount for real estate debt and securities and cost for real estate equity investments, which includes net purchase price allocation related to net intangibles, deferred costs and other assets, if any.
|
(2)
|
Excludes contributions related to future funding commitments.
|
Level 1.
|
Quoted prices for identical assets or liabilities in an active market.
|
Level 2.
|
Financial assets and liabilities whose values are based on the following:
|
a)
|
Quoted prices for similar assets or liabilities in active markets.
|
b)
|
Quoted prices for identical or similar assets or liabilities in non-active markets.
|
c)
|
Pricing models whose inputs are observable for substantially the full term of the asset or liability.
|
d)
|
Pricing models whose inputs are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability.
|
Level 3.
|
Prices or valuation techniques based on inputs that are both unobservable and significant to the overall fair value measurement.
|
|
Three Months Ended September 30,
|
|
Increase (Decrease)
|
|||||||||||
|
2014
|
|
2013
|
|
Amount
|
|
%
|
|||||||
Net interest income
|
|
|
|
|
|
|
|
|
||||||
Interest income
|
$
|
25,392
|
|
|
$
|
24,403
|
|
|
$
|
989
|
|
|
4.1
|
%
|
Interest expense
|
3,847
|
|
|
4,136
|
|
|
(289
|
)
|
|
(7.0
|
)%
|
|||
Net interest income
|
21,545
|
|
|
20,267
|
|
|
1,278
|
|
|
6.3
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Other revenues
|
|
|
|
|
|
|
|
|||||||
Rental and other income
|
6,834
|
|
|
—
|
|
|
6,834
|
|
|
100.0
|
%
|
|||
Total other revenues
|
6,834
|
|
|
—
|
|
|
6,834
|
|
|
100.0
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Expenses
|
|
|
|
|
|
|
|
|||||||
Asset management and other fees - related party
|
6,959
|
|
|
5,556
|
|
|
1,403
|
|
|
25.3
|
%
|
|||
Other interest expense
|
1,812
|
|
|
—
|
|
|
1,812
|
|
|
100.0
|
%
|
|||
Transaction costs
|
1,638
|
|
|
—
|
|
|
1,638
|
|
|
100.0
|
%
|
|||
Property operating expenses
|
4,020
|
|
|
—
|
|
|
4,020
|
|
|
100.0
|
%
|
|||
General and administrative expenses
|
3,471
|
|
|
2,761
|
|
|
710
|
|
|
25.7
|
%
|
|||
Depreciation
|
1,660
|
|
|
—
|
|
|
1,660
|
|
|
100.0
|
%
|
|||
Total expenses
|
19,560
|
|
|
8,317
|
|
|
11,243
|
|
|
135.2
|
%
|
|||
Income (loss) from operations
|
8,819
|
|
|
11,950
|
|
|
(3,131
|
)
|
|
(26.2
|
)%
|
|||
Equity in earnings (losses) of unconsolidated ventures
|
10,115
|
|
|
9,321
|
|
|
794
|
|
|
8.5
|
%
|
|||
Net income (loss)
|
$
|
18,934
|
|
|
$
|
21,271
|
|
|
$
|
(2,337
|
)
|
|
(11.0
|
)%
|
|
Three Months Ended September 30,
|
||||||||||||||||||||
|
2014
|
|
2013
|
||||||||||||||||||
|
Average
Carrying
Value
(1)
|
|
Interest
Income/
Expense
(2)
|
|
WA Yield/
Financing
Cost
(3)
|
|
Average
Carrying
Value
(1)
|
|
Interest
Income/
Expense
(2)
|
|
WA Yield/
Financing
Cost
(3)
|
||||||||||
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
CRE debt investments
|
$
|
1,271,108
|
|
|
$
|
23,882
|
|
|
7.52
|
%
|
|
$
|
1,009,945
|
|
|
$
|
22,928
|
|
|
9.08
|
%
|
CRE securities investments
|
54,173
|
|
|
1,510
|
|
|
11.15
|
%
|
|
52,979
|
|
|
1,475
|
|
|
11.14
|
%
|
||||
|
$
|
1,325,281
|
|
|
$
|
25,392
|
|
|
7.66
|
%
|
|
$
|
1,062,924
|
|
|
$
|
24,403
|
|
|
9.18
|
%
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit facilities
|
$
|
185,158
|
|
|
$
|
1,333
|
|
|
2.88
|
%
|
|
$
|
127,097
|
|
|
$
|
1,734
|
|
|
5.46
|
%
|
Securitization bonds payable
|
468,968
|
|
|
2,514
|
|
|
2.14
|
%
|
|
316,009
|
|
|
2,402
|
|
|
3.04
|
%
|
||||
|
$
|
654,126
|
|
|
$
|
3,847
|
|
|
2.35
|
%
|
|
$
|
443,106
|
|
|
$
|
4,136
|
|
|
3.73
|
%
|
Net interest income
|
|
|
|
$
|
21,545
|
|
|
|
|
|
|
|
|
$
|
20,267
|
|
|
|
|
(1)
|
Based on amortized cost for CRE debt and securities investments and principal amount for securitization bonds payable and credit facilities. All amounts are calculated based on quarterly averages.
|
(2)
|
Includes the effect of amortization of premium or accretion of discount and deferred fees.
|
(3)
|
Calculated based on annualized interest income or expense divided by average carrying value.
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||
|
2014
|
|
2013
|
||||||||||||||||||
|
Average
Carrying
Value
(1)
|
|
Interest
Income/
Expense
(2)
|
|
WA Yield/
Financing
Cost
(3)
|
|
Average
Carrying
Value
(1)
|
|
Interest
Income/
Expense
(2)
|
|
WA Yield/
Financing
Cost
(3)
|
||||||||||
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
CRE debt investments
|
$
|
1,180,281
|
|
|
$
|
71,914
|
|
|
8.12
|
%
|
|
$
|
789,581
|
|
|
$
|
49,390
|
|
|
8.34
|
%
|
CRE securities investments
|
53,863
|
|
|
4,480
|
|
|
11.09
|
%
|
|
46,920
|
|
|
3,871
|
|
|
11.00
|
%
|
||||
|
$
|
1,234,144
|
|
|
$
|
76,394
|
|
|
8.25
|
%
|
|
$
|
836,501
|
|
|
$
|
53,261
|
|
|
8.49
|
%
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit facilities
|
$
|
106,740
|
|
|
$
|
3,272
|
|
|
4.09
|
%
|
|
$
|
140,221
|
|
|
$
|
5,469
|
|
|
5.20
|
%
|
Securitization bonds payable
|
484,386
|
|
|
11,869
|
|
|
3.27
|
%
|
|
220,334
|
|
|
4,468
|
|
|
2.70
|
%
|
||||
|
$
|
591,126
|
|
|
$
|
15,141
|
|
|
3.42
|
%
|
|
$
|
360,555
|
|
|
$
|
9,937
|
|
|
3.67
|
%
|
Net interest income
|
|
|
|
$
|
61,253
|
|
|
|
|
|
|
|
|
$
|
43,324
|
|
|
|
|
(1)
|
Based on amortized cost for CRE debt and securities investments and principal amount for securitization bonds payable and credit facilities. All amounts are calculated based on quarterly averages.
|
(2)
|
Includes the effect of amortization of premium or accretion of discount and deferred fees.
|
(3)
|
Calculated based on annualized interest income or expense divided by average carrying value.
|
|
|
OC
|
|
IC
|
||||
Cushion at closing date of transaction
|
|
$
|
91,431
|
|
|
$
|
799
|
|
Cushion at remittance report dated closest to September 30, 2014
|
|
93,581
|
|
|
1,476
|
|
|
|
Nine Months Ended September 30,
|
||||||
Cash flow provided by (used in):
|
|
2014
|
|
2013
|
||||
Operating activities
|
|
$
|
78,279
|
|
|
$
|
46,757
|
|
Investing activities
|
|
(377,069
|
)
|
|
(791,197
|
)
|
||
Financing activities
|
|
236,622
|
|
|
662,569
|
|
||
Net increase (decrease) in cash
|
|
$
|
(62,168
|
)
|
|
$
|
(81,871
|
)
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
Due to Related Party as of
|
||||||||||||||||||
Type of Fee or Reimbursement
(1)
|
|
Financial Statement Location
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
September 30,
2014 |
|
December 31,
2013 |
||||||||||||
Fees to Advisor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset management
|
|
Asset management and other fees-related party
|
|
$
|
5,637
|
|
|
$
|
4,165
|
|
|
$
|
15,760
|
|
|
$
|
9,068
|
|
|
$
|
1,963
|
|
|
$
|
1,607
|
|
Acquisition
(2)
|
|
Real estate debt investments, net / Asset management and other fees- related party
|
|
3,200
|
|
|
2,334
|
|
|
6,689
|
|
|
7,657
|
|
|
2,450
|
|
|
—
|
|
||||||
Disposition
(2)
|
|
Real estate debt investments, net / Asset management and other fees- related party
|
|
1,367
|
|
|
162
|
|
|
2,174
|
|
|
177
|
|
|
291
|
|
|
10
|
|
||||||
Reimbursements to Advisor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating costs
|
|
General and administrative expenses
|
|
3,208
|
|
|
2,568
|
|
|
8,470
|
|
|
6,392
|
|
|
3,208
|
|
|
1,459
|
|
||||||
Organization
|
|
General and administrative expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62
|
|
|
—
|
|
|
—
|
|
||||||
Offering
|
|
Cost of capital
|
|
—
|
|
|
483
|
|
|
—
|
|
|
2,989
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,912
|
|
|
$
|
3,076
|
|
(1)
|
We incurred selling commissions / dealer manager fees of
$49.5 million
for the nine months ended
September 30, 2013
. These costs are recorded as cost of capital and are included in net proceeds from issuance of common stock in our consolidated statements of equity.
|
(2)
|
Acquisition/disposition fees incurred to our Advisor related to CRE debt investments are generally offset by origination/exit fees paid to us by borrowers if such fees are required from the borrower. Acquisition fees related to equity investments are included in asset management and other fees - related party in our consolidated statements of operations. Our Advisor may determine to defer fees or seek reimbursement. From inception through
September 30, 2014
, our Advisor deferred
$0.5 million
of acquisition fees and
$0.3 million
of disposition fees related to CRE securities.
|
•
|
acquisition fees and expenses;
|
•
|
non-cash amounts related to straight-line rent and the amortization of above or below market and in-place intangible lease assets and liabilities (which are adjusted in order to reflect such payments from an accrual basis of accounting under U.S. GAAP to a cash basis of accounting);
|
•
|
amortization of a premium and accretion of a discount on debt investments;
|
•
|
non-recurring impairment of real estate-related investments;
|
•
|
realized gains (losses) from the early extinguishment of debt;
|
•
|
realized gains (losses) on the extinguishment or sales of hedges, foreign exchange, securities and other derivative holdings except where the trading of such instruments is a fundamental attribute of our business;
|
•
|
unrealized gains (losses) from fair value adjustments on real estate securities, including CMBS and other securities, interest rate swaps and other derivatives not deemed hedges and foreign exchange holdings;
|
•
|
unrealized gains (losses) from the consolidation from, or deconsolidation to, equity accounting;
|
•
|
adjustments related to contingent purchase price obligations; and
|
•
|
adjustments for consolidated and unconsolidated partnerships and joint ventures calculated to reflect MFFO on the same basis as above.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Funds from operations:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to NorthStar Real Estate Income Trust, Inc. common stockholders
|
$
|
19,080
|
|
|
$
|
21,271
|
|
|
$
|
59,239
|
|
|
$
|
42,150
|
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation
|
1,660
|
|
|
331
|
|
|
4,263
|
|
|
550
|
|
||||
Depreciation related to non-controlling interests
|
(259
|
)
|
|
—
|
|
|
(656
|
)
|
|
—
|
|
||||
Funds from operations
|
$
|
20,481
|
|
|
$
|
21,602
|
|
|
$
|
62,846
|
|
|
$
|
42,700
|
|
Modified funds from operations:
|
|
|
|
|
|
|
|
||||||||
Funds from operations
|
$
|
20,481
|
|
|
$
|
21,602
|
|
|
$
|
62,846
|
|
|
$
|
42,700
|
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Amortization of premiums, discounts and fees on investments and borrowings, net
|
389
|
|
|
1,160
|
|
|
5,188
|
|
|
4,185
|
|
||||
Acquisition fees on investments
|
2,961
|
|
|
1,391
|
|
|
4,075
|
|
|
3,670
|
|
||||
Realized (gain) loss on investments and other
|
—
|
|
|
—
|
|
|
175
|
|
|
—
|
|
||||
Adjustments related to non-controlling interests
|
(94
|
)
|
|
—
|
|
|
(258
|
)
|
|
—
|
|
||||
Modified funds from operations
|
$
|
23,737
|
|
|
$
|
24,153
|
|
|
$
|
72,026
|
|
|
$
|
50,555
|
|
|
|
Nine Months Ended
|
|
Year Ended
|
|
Inception through
|
||||||||||||
|
|
September 30, 2014
|
|
December 31, 2013
|
|
September 30, 2014
(2)
|
||||||||||||
Distributions Declared
(1)
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash
|
|
$
|
37,535
|
|
|
|
|
$
|
43,744
|
|
|
|
|
$
|
102,864
|
|
|
|
DRP
|
|
31,873
|
|
|
|
|
34,478
|
|
|
|
|
79,914
|
|
|
|
|||
Total
|
|
$
|
69,408
|
|
|
|
|
$
|
78,222
|
|
|
|
|
$
|
182,778
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sources of Distributions
|
|
|
|
|
|
|
|
|
|
|||||||||
Funds from Operations
|
|
$
|
62,846
|
|
91
|
%
|
|
$
|
62,328
|
|
80
|
%
|
|
$
|
144,386
|
|
79
|
%
|
Distribution support proceeds
|
|
—
|
|
—
|
%
|
|
—
|
|
—
|
%
|
|
4,572
|
|
2
|
%
|
|||
Offering proceeds
|
|
6,562
|
|
9
|
%
|
|
15,894
|
|
20
|
%
|
|
33,820
|
|
19
|
%
|
|||
Total
|
|
$
|
69,408
|
|
100
|
%
|
|
$
|
78,222
|
|
100
|
%
|
|
$
|
182,778
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash Flow Provided by (Used in) Operations
|
|
$
|
78,279
|
|
|
|
$
|
66,600
|
|
|
|
$
|
159,212
|
|
|
(1)
|
Represents distributions declared for such period, even though such distributions are actually paid to stockholders the month following such period.
|
(2)
|
Includes the results of NorthStar Income Opportunity REIT I, Inc. prior to our Merger Transaction. From inception through
September 30, 2014
, the difference between total distributions paid (including cash distributions and shares issued in connection with our DRP) and cash flow provided by operations was
$15.9 million
, of which
$4.6 million
related to shares purchased by NorthStar Realty pursuant to our Distribution Support Agreement and the remainder related to shares issued pursuant to our DRP.
|
Period
|
Number of
Shares Purchased
|
|
Average Price
Paid Per Share
|
|
Maximum Approximate
Dollar Value of Shares
that May Yet Be Purchased
Under the Plan or Program
|
|||
July 1 to July 31
|
392,640
|
|
|
$
|
9.63
|
|
|
(1)
|
August 1 to August 31
|
—
|
|
|
—
|
|
|
(1)
|
|
September 1 to September 30
|
—
|
|
|
—
|
|
|
(1)
|
|
Total
|
392,640
|
|
|
$
|
9.63
|
|
|
|
(1)
|
We adopted our Share Repurchase Program effective July 19, 2010, which may enable stockholders to sell their shares to us in limited circumstances. We may not repurchase shares unless a stockholder has held shares for one year. However, we may repurchase shares held less than one year in connection with a stockholder’s death or disability, if the disability is deemed qualifying by our board of directors, in their sole discretion, and after receiving written notice from the stockholder or the stockholder’s estate. We are not obligated to repurchase shares under our Share Repurchase Program. We fund repurchase requests received during a quarter with proceeds set aside for that purpose which are not expected to exceed proceeds received from our DRP. However, to the extent that the aggregate DRP proceeds are not sufficient to fund repurchase requests, our board of directors may, in its sole discretion, choose to use other sources of funds. Subject to funds being available, we will limit the number of shares redeemed pursuant to our Share Repurchase Program to: (i) 5.0% of the weighted average number of shares of our common stock outstanding during the prior calendar year; and (ii) those that could be funded from the net DRP proceeds in the prior calendar year plus such additional funds as may be reserved for that purpose by our board of directors; provided, however, that the above volume limitations shall not apply to repurchases requested within two years after the death or qualifying disability of a stockholder. Our board of directors may, in its sole discretion, amend, suspend or terminate our Share Repurchase Program at any time upon ten days’ notice except that changes in the number of shares that can be repurchased during any calendar year will take effect only upon ten business days’ prior written notice. In addition, our Share Repurchase Program will terminate in the event a secondary market develops for our shares or until our shares are listed on a national exchange or included for quotation in a national securities market. As of
September 30, 2014
, we had
no
unfulfilled repurchase requests.
|
Exhibit
Number
|
|
Description of Exhibit
|
|
3.1
|
|
|
Second Articles of Amendment and Restatement of NorthStar Real Estate Income Trust, Inc. (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on August 26, 2010 and incorporated herein by reference)
|
3.2
|
|
|
Amended and Restated Bylaws of NorthStar Real Estate Income Trust, Inc. (filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 and incorporated herein by reference)
|
10.1*
|
|
|
Third Amendment to Master Repurchase Agreement, dated as of June 30, 2014, by and among NSREIT CB LOAN, LLC, Citibank, N.A. and NorthStar Real Estate Income Trust, Inc.
|
10.2
|
|
|
Fourth Amendment to Master Repurchase Agreement, dated as of October 20, 2014, by and among NSREIT CB LOAN, LLC, Citibank, N.A. and NorthStar Real Estate Income Trust, Inc. (filed as exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 20, 2014 and incorporated herein by reference)
|
31.1*
|
|
|
Certification by the Chief Executive Officer pursuant to 17 CFR 240.13a-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2*
|
|
|
Certification by the Chief Financial Officer pursuant to 17 CFR 240.13a-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1*
|
|
|
Certification by the Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2*
|
|
|
Certification by the Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101*
|
|
|
The following materials from the NorthStar Real Estate Income Trust, Inc. Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, 2014 (unaudited) and December 31, 2013; (ii) Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2014 and 2013; (iii) Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2014 and 2013; (iv) Consolidated Statements of Equity for the nine months ended September 30, 2014 (unaudited) and year ended December 31, 2013; (v) Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2014 and 2013; and (vi) Notes to Consolidated Financial Statements (unaudited).
|
*
|
Filed herewith
|
|
|
NorthStar Real Estate Income Trust, Inc.
|
|||
|
|
|
|
||
Date:
|
November 14, 2014
|
|
By:
|
/s/ DANIEL R. GILBERT
|
|
|
|
|
|
Name:
|
Daniel R. Gilbert
|
|
|
|
|
Title:
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ DEBRA A. HESS
|
|
|
|
|
|
Name:
|
Debra A. Hess
|
|
|
|
|
Title:
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
BUYER
:
|
|
CITIBANK, N.A.
|
|
By:__
_/s/ Richard B. Schlenger_________
|
|
Name: Richard B. Schlenger
Title: Authorized Signatory
|
|
|
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/ Jenny B. Neslin_
____________
Name: Jenny B. Neslin Title: Associate General Counsel and Assistant Secretary |
|
|
|
ACKNOWLEDGED AND AGREED TO
AS OF JUNE 30, 2014:
GUARANTOR
:
|
|
NORTHSTAR REAL ESTATE INCOME TRUST, INC.
,
a Maryland corporation |
|
|
|
By:___________________________________
|
|
Name:
Title:
|
|
By:
|
|
/s/ DANIEL R. GILBERT
|
|
|
|
Daniel R. Gilbert
|
|
|
|
Chief Executive Officer
|
|
Date:
|
|
November 14, 2014
|
|
By:
|
|
/s/ DEBRA A. HESS
|
|
|
|
Debra A. Hess
|
|
|
|
Chief Financial Officer
|
|
Date:
|
|
November 14, 2014
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
By:
|
|
/s/ DANIEL R. GILBERT
|
|
|
|
Daniel R. Gilbert
|
|
|
|
Chief Executive Officer
|
|
Date:
|
|
November 14, 2014
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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By:
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/s/ DEBRA A. HESS
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Debra A. Hess
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Chief Financial Officer
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Date:
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November 14, 2014
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