NorthStar Realty unit to price up to $75 million five-year exchangeables to yield 11%-11.5%, up 20%

By Rebecca Melvin

New York, May 21 - NorthStar Realty Finance Corp. subsidiary NRFC NNN Holdings LLC plans to price up to $75 million of five-year exchangeable notes on Thursday, before the market open, according to a market source.

The exchangeables were talked to yield 11% to 11.5% with an initial conversion premium of 20%.

Wachovia is the bookrunner of the Rule 144A offering.

The notes, which are non-callable for five years, will be an unsecured obligation of Triple Net Holdings, except that Triple Net Holdings' obligations under the notes will be secured by an amount equal to one semiannual interest payment, which will be held in a lockbox for the benefit of the investors.

The notes will be exchangeable for cash, shares of NorthStar common stock, or a combination of cash and shares of NorthStar's common stock, at Triple Net's option.

Proceeds from the notes will be used to make investments relating to Triple Net's businesses and for general corporate purposes, as well as to fund the lockbox with an initial amount equal to one semiannual interest payment on the notes.

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

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