NEW YORK CITY-NorthStar Realty Finance Corp. said Wednesday it had originated a $255-million loan secured by a leasehold mortgage in the Milford Plaza hotel in Midtown. A partnership of David Werner and Deutsche Asset & Wealth Management acquired the ground lease of the 1,331-key lodging property in March, but the partnership owning the property has been marketing the asset itself.
NorthStar originated $166 million of the loan, while one of its sponsored non-traded REITs, NorthStar Real Estate Income Trust Inc., originated the remaining $89 million. The loan was financed with $130 million from credit facilities with Deutsche Bank AG, pro-rata between NorthStar and NorthStar Income.
As part of the loan, NorthStar and NorthStar Income, on a pro-rata basis, will take a 35% ownership interest in the hotel and its retail component. The current sponsors, a joint venture between Highgate Hotels and private equity firm Rockpoint Group, retained the remaining 65% ownership interest in the hotel and retail. NorthStar intends to ultimately securitize an interest in the senior portion of the $255-million loan.
“This loan provides the sponsors a creative financing solution, while also providing us an attractive current return that could be further enhanced in a securitization and potential upside through an ownership interest in a historic hotel located in one of the best hotel submarkets in the world,” David Hamamoto, chairman and CEO of Northstar, says in a release. The property is within walking distance of Times Square.
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