NorthStar Realty to sell $100 million 20-year exchangeable notes to yield 7%-7.5%, up 18%-22%

By Rebecca Melvin

New York, March 2 - NorthStar Realty Finance LP, the operating partnership of NorthStar Realty Finance Corp., plans to price $100 million of 20-year senior exchangeable notes after the market close Thursday that were talked to yield 7% to 7.5% with an initial conversion premium of 18% to 22%, according to a market source.

The Rule 144A offering has a $15 million greenshoe.

J.P. Morgan Securities LLC and Citigroup Capital Markets Inc. are the joint bookrunners. FBR Capital Markets is a co-manager.

The notes will be non-callable for five years with puts in years five, 10 and 15.

The notes will be senior unsecured obligations of the operating partnership, exchangeable for cash, shares of NorthStar's common stock, or a combination of cash and shares of NorthStar's common stock, at the operating partnership's option.

NorthStar and NRFC Sub-REIT Corp., a subsidiary of the operating partnership, have guaranteed payment of amounts due on the notes.

Proceeds are earmarked to purchase or repay debt and for general corporate purposes.

New York-based NorthStar is a real estate investment trust that originates and invests in commercial real estate debt, real estate securities and net lease properties.

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