NEW YORK—NorthStar Realty Finance has reached an agreement to acquire a $1.34 billion (€1.1B) European office portfolio in cooperation with Cale Street Partners.  The portfolio is comprised of 11 class A office properties located across gateway cities in seven of Europe's top markets: London, UK; Paris, France; Hamburg, Germany; Milan, Italy; Brussels, Belgium; Amsterdam and Rotterdam, Netherlands; and Gothenburg, Sweden. The group totals 186,299 square meters (about 2 million square feet) with a well-diversified mix of market leading tenants.

"We are extremely pleased to announce this differentiated and rare portfolio acquisition,” said NorthStar's chairman and CEO, David Hamamoto. “The size and execution complexity of this transaction, spanning seven countries and three currencies, demonstrates the strength of our investment platform. While our base case assumption is that we retain these high quality assets as we expect rents to grow and cap rates to compress in the coming years, we believe the optionality of this portfolio is very valuable, both from an asset level standpoint and from a corporate standpoint given the quality and scale of the portfolio."

Cale Street Partners, a real estate finance and investment firm backed by flexible sovereign wealth capital, will provide certain financing for the acquisition of the portfolio and assisted in sourcing the transaction. NorthStar is a New-York based investment firm organized as a REIT.

 Portfolio Highlights:

 

  • The Portfolio includes trophy office buildings such as Condor House and Portman Square House in London, Issy-les-Moulineaux in Paris and Maastoren in Rotterdam.

  • The Portfolio has an average age of only eight years and is currently 93% leased with a weighted average remaining lease term of 6 years and with periodic rent reviews.

  • Credit tenants and "Big Four" professional service firms such as BNP Paribas, Cushman & Wakefield, Chartis Europe, AIG, Barclays, Invesco UK, Ernst & Young and Deloitte represent approximately 66% of in-place rents.

  • Approximately 50% of the Portfolio by rent is derived from properties located in London and Paris.

  • NorthStar Realty expects to earn an initial leveraged yield of approximately 13%, based on estimated year-one NOI.

 

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