Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 11, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | NorthStar/RXR New York Metro Income, Inc. | |
Entity Central Index Key | 1,603,671 | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Share Outstanding | 22,223 | |
Amendment Flag | false | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Cash | $ 201,007 | $ 201,007 |
Total assets | 201,007 | 201,007 |
NorthStar/RXR New York Metro Income, Inc. Stockholders’ Equity | ||
Preferred stock, $0.01 par value, 50,000,000 shares authorized as of June 30, 2015 and no shares authorized as of December 31, 2014, no shares issued and outstanding as of June 30, 2015 and December 31, 2014 | 0 | 0 |
Common stock, $0.01 par value, 400,000,000 shares authorized as of June 30, 2015 and 200,000 shares authorized as of December 31, 2014, 22,223 shares issued and outstanding as of June 30, 2015 and December 31, 2014 | 222 | 222 |
Additional paid-in capital | 199,785 | 199,785 |
Total NorthStar/RXR New York Metro Income, Inc. stockholders’ equity | 200,007 | 200,007 |
Non-controlling interests | 1,000 | 1,000 |
Total equity | $ 201,007 | $ 201,007 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | |
Preferred stock, shares authorized (shares) | 50,000,000 | 0 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 400,000,000 | 200,000 |
Common stock, shares issued (shares) | 22,223 | 22,223 |
Common stock, shares outstanding (shares) | 22,223 | 22,223 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - Jun. 30, 2015 - USD ($) | Total |
Increase (Decrease) in Stockholder's Equity | |
Beginning Balance (in shares) | 22,223 |
Beginning Balance | $ 201,007 |
Ending Balance (in shares) | 22,223 |
Ending Balance | $ 201,007 |
Common Stock | |
Increase (Decrease) in Stockholder's Equity | |
Beginning Balance (in shares) | 22,223 |
Beginning Balance | $ 222 |
Ending Balance (in shares) | 22,223 |
Ending Balance | $ 222 |
Additional Paid-in Capital | |
Increase (Decrease) in Stockholder's Equity | |
Beginning Balance | 199,785 |
Ending Balance | 199,785 |
Total Company’s Stockholders’ Equity | |
Increase (Decrease) in Stockholder's Equity | |
Beginning Balance | 200,007 |
Ending Balance | 200,007 |
Non-controlling Interests | |
Increase (Decrease) in Stockholder's Equity | |
Beginning Balance | 1,000 |
Ending Balance | $ 1,000 |
Business and Organization
Business and Organization | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | Business and Organization NorthStar/RXR New York Metro Income, Inc. (the “Company”) was formed to acquire a high-quality commercial real estate (“CRE”) portfolio concentrated in the New York metropolitan area and, in particular New York City, with a focus on office, mixed-use properties and a lesser emphasis on multifamily properties. The Company intends to complement this strategy by originating and acquiring: (i) CRE debt including, subordinate loans and participations in such loans and preferred equity interests; and (ii) joint ventures and partnership interests in CRE related investments. The Company was formed on March 21, 2014 as a Maryland corporation and intends to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), beginning with the taxable year ended December 31 of the year in which the Company satisfies the minimum offering requirement. The Company is externally managed by NSAM J-NS/RXR Ltd (the “Advisor”), a subsidiary of the Company’s co-sponsor NorthStar Asset Management Group Inc. (NYSE: NSAM). NSAM provides asset management and other services to NorthStar Realty Finance Corp. (NYSE: NRF) (“NorthStar Realty”), NSAM’s sponsored non-traded companies, as well as any future sponsored companies, including funds, joint ventures and partnerships both in the United States and internationally. The Company is sub-advised by RXR NTR Sub-Advisor LLC (the “Sub-Advisor”), a Delaware limited liability company and a subsidiary of the Company’s co-sponsor, RXR Realty LLC (“RXR” or “RXR Realty”). RXR is a leading real estate owner, manager and developer in the New York metropolitan area. The Advisor and Sub-Advisor are collectively referred to as the Advisor Entities. The Company, the Advisor and the Sub-Advisor have entered into a sub-advisory agreement delegating certain investment responsibilities of the Advisor to the Sub-Advisor. NSAM and RXR are collectively referred to as the Co-Sponsors. The Company’s dealer manager for the offering, NorthStar Securities, LLC (the “Dealer Manager”) is an affiliate of the Advisor and a subsidiary of NSAM. Substantially all business of the Company will be conducted through NorthStar/RXR Operating Partnership, LP (the “Operating Partnership”). The Company is the sole general partner and a limited partner of the Operating Partnership. NorthStar/RXR NTR OP Holdings LLC (the “Special Unit Holder”) (a joint venture between the Co-Sponsors) has invested $1,000 in the Operating Partnership and has been issued a separate class of limited partnership units (the “Special Units”), which is recorded as non-controlling interests on the consolidated balance sheets. As the Company accepts subscriptions for shares, it will transfer substantially all of the net proceeds from the continuous, public offering to the Operating Partnership as a capital contribution. The Company’s charter authorizes the issuance of up to 400,000,000 shares of common stock with a par value of $0.01 per share and up to 50,000,000 shares of preferred stock with a par value of $0.01 per share. The board of directors of the Company is authorized to amend its charter, without the approval of the stockholders, to increase the aggregate number of authorized shares of capital stock or the number of shares of any class or series that the Company has authority to issue. On March 28, 2014, the Company issued 16,667 shares of common stock to NorthStar Realty and 5,556 shares of common stock to a subsidiary of RXR for $0.2 million . On February 9, 2015 , the Company’s registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) was declared effective to offer a minimum of 200,000 shares and a maximum of 201,052,632 shares of common stock in a continuous, public offering, of which up to 180,000,000 shares can be offered pursuant to its primary offering (the “Primary Offering”) and up to 21,052,632 shares can be offered pursuant to its distribution reinvestment plan (the “DRP”), which are herein collectively referred to as the Offering. At that time, the Company retained the Dealer Manager for the Primary Offering who will be responsible for marketing the shares being offered in the Primary Offering. The board of directors of the Company has the right to reallocate shares between the Primary Offering and the DRP. As of June 30, 2015 , the Company had not begun issuing shares in its Primary Offering and neither the Company nor the Operating Partnership had acquired or committed to make any investments. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Quarterly Presentation The accompanying unaudited consolidated financial statements and related notes of the Company have been prepared in accordance with accounting principles generally accepted in the United States ( “ U.S. GAAP ” ) for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally included in the consolidated financial statements prepared under U.S. GAAP have been condensed or omitted. The Company did not have operations for the six months ended June 30, 2015 and 2014 , and therefore does not present consolidated statements of operations or consolidated statements of cash flows for the applicable periods. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position have been included and are of a normal and recurring nature. Principles of Consolidation The consolidated financial statements include the accounts of the Company and the Operating Partnership, which is majority-owned and controlled by the Company. There were no intercompany balances as of June 30, 2015 and December 31, 2014 . Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that could affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates and assumptions. Cash The Company considers all highly-liquid investments with a remaining maturity date of three months or less to be cash. Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250,000 per institution. The Company mitigates credit risk by placing cash with major financial institutions. Operating Real Estate The Company will follow the purchase method for an acquisition of operating real estate, where the purchase price is allocated to tangible assets such as land, building, furniture and fixtures, improvements and other identified intangibles. Major replacements and betterments which improve or extend the life of the asset will be capitalized and depreciated over their useful life. Ordinary repairs and maintenance will be expensed as incurred. Operating real estate will be carried at historical cost less accumulated depreciation. Operating real estate will be depreciated using the straight-line method over the estimated useful life of the assets. Construction costs incurred in connection with the Company’s investments will be capitalized and included in operating real estate, net on the consolidated balance sheets. Construction or redevelopment in progress will not be depreciated until the development is substantially completed. Costs directly related to an acquisition deemed to be a business combination will be expensed and included in transaction costs in the consolidated statements of operations. The Company will evaluate whether a real estate acquisition constitutes a business and whether business combination accounting is appropriate. Real Estate Debt Investments CRE debt investments are generally intended to be held to maturity and, accordingly, will be carried at cost, net of unamortized loan fees, premium, discount and unfunded commitments. CRE debt investments that are deemed to be impaired will be carried at amortized cost less a loan loss reserve, if deemed appropriate, which approximates fair value. CRE debt investments where the Company does not have the intent to hold the loan for the foreseeable future or until its expected payoff will be classified as held for sale and recorded at the lower of cost or estimated value. Real Estate Securities The Company will classify its CRE securities investments as available for sale on the acquisition date, which will be carried at fair value. Unrealized gains (losses) will be recorded as a component of accumulated other comprehensive income ( “ OCI ” ) in the consolidated statements of equity. However, the Company may elect the fair value option for certain of its available for sale securities, and as a result, any unrealized gains (losses) on such securities will be recorded in unrealized gain (loss) on investments and other in the consolidated statements of operations. Revenue Recognition Operating Real Estate Rental and escalation income from operating real estate will be derived from the leasing of space to various types of tenants. The leases will be for fixed terms of varying length and will generally provide for annual rentals to be paid in monthly installments. Rental income from leases will be recognized on a straight-line basis over the term of the respective leases. Real Estate Debt Investments Interest income will be recognized on an accrual basis and any related premium, discount, origination costs and fees will be amortized over the life of the investment using the effective interest method. The amortization will be reflected as an adjustment to interest income in the consolidated statements of operations. The amortization of a premium or accretion of a discount will be discontinued if such loan is reclassified to held for sale. Real Estate Securities Interest income will be recognized using the effective interest method with any premium or discount amortized or accreted through earnings based on expected cash flow through the expected maturity date of the security. Changes to expected cash flow may result in a change to the yield which is then applied retrospectively for high-credit quality securities that cannot be prepaid or otherwise settled in such a way that the holder would not recover substantially all of the investment or prospectively for all other securities to recognize interest income. Credit Losses and Impairment on Investments Operating Real Estate The Company’s real estate portfolio will be reviewed on a quarterly basis, or more frequently as necessary, to assess whether there are any indicators that the value of its operating real estate may be impaired or that its carrying value may not be recoverable. A property’s value will be considered impaired if the Company’s estimate of the aggregate expected future undiscounted cash flow generated by the property is less than the carrying value. In conducting this review, the Company will consider U.S. macroeconomic factors, real estate sector, asset specific conditions and other factors. To the extent an impairment has occurred, the loss will be measured as the excess of the carrying value of the property over the estimated fair value and recorded in impairment on operating real estate in the consolidated statements of operations. An allowance for a doubtful account for a tenant receivable will be established based on a periodic review of aged receivables resulting from estimated losses due to the inability of tenants to make required rent and other payments contractually due. Additionally, the Company will establish, on a current basis, an allowance for future tenant credit losses on unbilled rent receivable based on an evaluation of the collectability of such amounts. Real Estate Debt Investments Loans will be considered impaired when, based on current information and events, it is probable that the Company will not be able to collect principal and interest amounts due according to the contractual terms. The Company will assess the credit quality of the portfolio and adequacy of loan loss reserves on a quarterly basis, or more frequently as necessary. Significant judgment of the Company will be required in this analysis. The Company will consider the estimated net recoverable value of the loan as well as other factors, including but not limited to the fair value of any collateral, the amount and the status of any senior debt, the quality and financial condition of the borrower and the competitive situation of the area where the underlying collateral is located. Because this determination will be based on projections of future economic events, which are inherently subjective, the amount ultimately realized may differ materially from the carrying value as of the balance sheets date. If upon completion of the assessment, the estimated fair value of the underlying collateral is less than the net carrying value of the loan, a loan loss reserve will be recorded with a corresponding charge to provision for loan losses. The loan loss reserve for each loan will be maintained at a level that is determined to be adequate by management to absorb probable losses. Income recognition will be suspended for a loan at the earlier of the date at which payments become 90 -days past due or when, in the opinion of the Company, a full recovery of income and principal becomes doubtful. When the ultimate collectability of the principal of an impaired loan is in doubt, all payments will be applied to principal under the cost recovery method. When the ultimate collectability of the principal of an impaired loan is not in doubt, contractual interest will be recorded as interest income when received, under the cash basis method until an accrual is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. A loan will be written off when it is no longer realizable and/or legally discharged. Real Estate Securities CRE securities for which the fair value option is elected are not evaluated for other-than-temporary impairment (“OTTI”) as any change in fair value is recorded in the consolidated statements of operations. Realized losses on such securities are reclassified to realized gain (loss) on investments and other as losses occur. CRE securities for which the fair value option is not elected will be evaluated for OTTI quarterly. Impairment of a security is considered to be other-than-temporary when: (i) the holder has the intent to sell the impaired security; (ii) it is more likely than not the holder will be required to sell the security; or (iii) the holder does not expect to recover the entire amortized cost of the security. When a CRE security has been deemed to be other-than-temporarily impaired due to (i) or (ii), the security is written down to its fair value and an OTTI is recognized in the consolidated statements of operations. In the case of (iii), the security is written down to its fair value and the amount of OTTI is then bifurcated into: (a) the amount related to expected credit losses; and (b) the amount related to fair value adjustments in excess of expected credit losses. The portion of OTTI related to expected credit losses will be recognized in the consolidated statements of operations. The remaining OTTI related to the valuation adjustment will be recognized as a component of accumulated OCI in the consolidated statements of equity. The portion of OTTI recognized through earnings will be accreted back to the amortized cost basis of the security through interest income, while amounts recognized through OCI are amortized over the life of the security with no impact on earnings. CRE securities which are not high-credit quality will be considered to have an OTTI if the security has an unrealized loss and there has been an adverse change in expected cash flow. The amount of OTTI is then bifurcated as discussed above. Fair Value Measurement The fair value of financial instruments is categorized based on the priority of the inputs to the valuation technique and categorized into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Financial assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows: 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. U.S. GAAP requires disclosure of fair value about all financial instruments. As of June 30, 2015 and December 31, 2014 , the Company’s only financial instrument was cash and its fair value was estimated to approximate its carrying amount. Equity Based Compensation The Company adopted a long-term incentive plan (the “Plan”), which it may use to attract and retain qualified officers, directors, employees and consultants, as well as an independent directors compensation plan, which is a component of the Plan. The Company currently intends to issue awards only to its independent directors under the Plan. The Company will account for its equity-based compensation awards using the fair value method, which requires an estimate of fair value of the award at the time of grant. All fixed equity-based awards to directors, which have no vesting conditions other than time of service, will be amortized to compensation expense over the award’s vesting period on a straight-line basis. Equity-based compensation will be recorded in general and administrative expenses in the consolidated statements of operations. I ncome Taxes The Company intends to elect to be taxed as a REIT under the Internal Revenue Code and intends to operate as such, commencing with the taxable year in which the Company satisfies the minimum offering requirement. The Company expects to have little or no taxable income prior to electing REIT status. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to its stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with U.S. GAAP). As a REIT, the Company generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company intends to organize and operate in such a manner as to qualify for treatment as a REIT. |
Related Party Arrangements
Related Party Arrangements | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Arrangements | Related Party Arrangements NSAM J-NS/RXR Ltd. and RXR NTR Sub-Advisor LLC Subject to certain restrictions and limitations, the Advisor Entities are responsible for managing the Company’s affairs on a day-to-day basis and for identifying, acquiring, originating and asset managing investments on behalf of the Company. The Advisor Entities may delegate certain of their obligations to affiliated entities, which may be organized under the laws of the United States or foreign jurisdictions. For such services, to the extent permitted by law and regulations, the Advisor Entities will receive fees and reimbursements from the Company, of which the Sub-Advisor generally will receive 50% of all fees and up to 25% of all reimbursements. The Company will pay the Sub-Advisor, or its affiliates, development, leasing, property management and construction related service fees that are usual and customary for owners and operators in the geographic area of the property. Fees to Advisor Entities Asset Management Fee The Advisor Entities, or their affiliates, will receive a monthly asset management fee equal to one-twelfth of 1.25% of the sum of the amount funded or allocated for CRE investments, including expenses and any financing attributable to such investments, less any principal received on debt and securities investments (or the proportionate share thereof in the case of an investment made through a joint venture). Acquisition Fee The Advisor Entities, or their affiliates, will also receive an acquisition fee equal to 2.25% of each real estate property acquired by the Company, including acquisition costs and any financing attributable to an equity investment (or the proportionate share thereof in the case of an equity investment made through a joint venture) and 1.0% of the amount funded or allocated by the Company to acquire or originate CRE debt investments, including acquisition costs and any financing attributable to such investments (or the proportionate share thereof in the case of an investment made through a joint venture). An acquisition fee incurred related to an equity investment will generally be expensed as incurred. An acquisition fee paid to the Advisor Entities related to the acquisition of an equity or CRE debt investment in an unconsolidated joint venture is included in investments in unconsolidated ventures on the consolidated balance sheets. An acquisition fee paid to the Advisor Entities related to the origination or acquisition of CRE debt investments will be included in debt investments, net on the consolidated balance sheets and will be amortized to interest income over the life of the investment using the effective interest method. The Company records as an expense certain acquisition costs and fees associated with transactions deemed to be business combinations in which it consolidates the asset and capitalizes the costs for transactions deemed to be acquisitions of an asset, including an equity investment. Disposition Fee For substantial assistance in connection with the sale of investments and based on the services provided, the Advisor Entities, or their affiliates, will receive a disposition fee equal to 2.0% of the contract sales price of each property sold and 1.0% of the contract sales price of each CRE debt investment sold or syndicated. The Company will not pay a disposition fee upon the maturity, prepayment, workout, modification or extension of a CRE debt investment unless there is a corresponding fee paid by the borrower, in which case the disposition fee is the lesser of: (i) 1.0% of the principal amount of the CRE debt investment prior to such transaction; or (ii) the amount of the fee paid by the borrower in connection with such transaction. If the Company takes ownership of a property as a result of a workout or foreclosure of a CRE debt investment, the Company will pay a disposition fee upon the sale of such property. A disposition fee from the sale of an investment is generally expensed and will be included in asset management and other fees - related party in the Company’s consolidated statements of operations. A disposition fee for a CRE debt investment incurred in a transaction other than a sale will be included in CRE debt investments, net on the consolidated balance sheets and will be amortized to interest income over the life of the investment using the effective interest method. Reimbursements to Advisor Entities Operating Costs The Advisor Entities, or their affiliates, are entitled to receive reimbursement for direct and indirect operating costs incurred by the Advisor Entities in connection with administrative services provided to the Company. The Advisor Entities allocate, in good faith, indirect costs to the Company related to the Advisor Entities and their affiliates’ employees, occupancy and other general and administrative costs and expenses in accordance with the terms of, and subject to the limitations contained in, the advisory agreement with the Advisor Entities. The indirect costs include the Company’s allocable share of the Advisor Entities compensation and benefit costs associated with dedicated or partially dedicated personnel who spend all or a portion of their time managing the Company’s affairs, based upon the percentage of time devoted by such personnel to the Company’s affairs. The indirect costs also include rental and occupancy, technology, office supplies and other general and administrative costs and expenses. However, there will be no reimbursement for personnel costs related to executive officers and other personnel involved in activities for which the Advisor Entities receive an acquisition fee or a disposition fee. The Advisor Entities allocate these costs to the Company relative to its and its affiliates’ other managed companies in good faith and has reviewed the allocation with the Company’s board of directors, including its independent directors. The Advisor Entities will update the board of directors on a quarterly basis of any material changes to the expense allocation and will provide a detailed review to the board of directors, at least annually, and as otherwise requested by the board of directors. The Company will reimburse the Advisor Entities quarterly for operating costs (including the asset management fee) based on a calculation for the four preceding fiscal quarters not to exceed the greater of: (i) 2.0% of its average invested assets; or (ii) 25.0% of its net income determined without reduction for any additions to reserves for depreciation, loan losses or other similar non-cash reserves and excluding any gain from the sale of assets for that period. Notwithstanding the above, the Company may reimburse the Advisor Entities for expenses in excess of this limitation if a majority of the Company’s independent directors determines that such excess expenses are justified based on unusual and non-recurring factors. The Company will calculate the expense reimbursement quarterly based upon the trailing twelve -month period. Organization and Offering Costs The Advisor Entities, or their affiliates, will be entitled to receive reimbursement for organization and offering costs paid on behalf of the Company in connection with the Offering. The Company will be obligated to reimburse the Advisor Entities, or their affiliates, as applicable, for organization and offering costs to the extent the aggregate of selling commissions, dealer manager fees and other organization and offering costs do not exceed 15% of gross proceeds from the Offering. The Advisor Entities do not expect reimbursable organization and offering costs, excluding selling commissions and dealer manager fees, to exceed $30.0 million, or 1.5% of the total proceeds available to be raised from the Offering. The Company shall not reimburse the Advisor Entities for any organization and offering costs that the Company’s independent directors determine are not fair and commercially reasonable to the Company. The Company will record organization and offering costs each period based on an allocation of expected total organization and offering costs to be reimbursed. Organization costs will be recorded in general and administrative expenses in the consolidated statements of operations and offering costs will be recorded as a reduction to equity. NorthStar Securities, LLC Selling Commissions and Dealer Manager Fees Pursuant to a dealer manager agreement, the Company will pay the Dealer Manager, an affiliate of the Sponsor, selling commissions of up to 7.0% of gross proceeds from the Primary Offering, all of which will be reallowed to participating broker-dealers. In addition, the Company will pay the Dealer Manager a dealer manager fee of up to 3.0% of gross proceeds from the Primary Offering, a portion of which is typically reallowed to participating broker-dealers and paid to certain employees of the Dealer Manager. No selling commissions or dealer manager fees will be paid for sales pursuant to the DRP. Distribution Support Agreement Pursuant to a distribution support agreement, NorthStar Realty and RXR agreed to purchase 75% and 25% , respectively, of any shares, up to an aggregate of $10 million in shares of the Company’s common stock (which will include any shares NorthStar Realty and RXR may purchase in order to satisfy the minimum offering requirement) in certain circumstances in order to provide additional funds to support distributions to stockholders, if necessary. NorthStar Realty and RXR In December 2013, NorthStar Realty entered into a strategic transaction with RXR. The investment in RXR Realty includes an approximate 27% equity interest. NorthStar Realty’s equity interest in RXR Realty is structured so that NSAM may be entitled to certain fees in connection with RXR’s investment management business. |
Equity-Based Compensation
Equity-Based Compensation | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity-Based Compensation | Equity-Based Compensation The Company adopted the Plan, which it may use to attract and retain qualified officers, directors, employees and consultants, as well as an independent directors compensation plan, which is a component of the Plan. The Company currently intends to issue awards only to its independent directors under the Plan. The Company will account for its equity-based compensation awards using the fair value method, which requires an estimate of fair value of the award at the time of grant. All fixed equity-based awards to directors, which have no vesting conditions other than time of service, will be amortized to compensation expense over the award’s vesting period on a straight-line basis. Equity-based compensation will be recorded in general and administrative expenses in the consolidated statements of operations. Each of the Company’s three independent directors will be granted 5,000 shares of restricted stock upon the Company raising the minimum amount of $2.0 million in gross offering proceeds. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common Stock As of June 30, 2015 and December 31, 2014 , the Company had 22,223 shares outstanding. Distribution Reinvestment Plan The Company adopted a DRP through which common stockholders may elect to reinvest an amount equal to the distributions declared on their shares in additional shares of the Company’s common stock in lieu of receiving cash distributions. The initial purchase price per share pursuant to the DRP is $9.50 . Once the Company establishes an estimated value per share, shares issued pursuant to the DRP will be priced at 95.0% of the estimated value per share of the Company’s common stock, as determined by the Advisor Entities or another firm chosen for that purpose. Pursuant to amended FINRA Rule 2310 which is expected to be effective in 2016, the Company expects to establish an estimated value per share from and after 150 days following the second anniversary of breaking escrow in the offering and annually thereafter. No selling commissions or dealer manager fees are paid on shares issued pursuant to the DRP. The board of directors of the Company may amend, suspend or terminate the DRP for any reason upon ten -days’ notice to participants, except that the Company may not amend the DRP to eliminate a participant’s ability to withdraw from the DRP. Share Repurchase Program The Company adopted a share repurchase program that may enable stockholders to sell their shares to the Company in limited circumstances (the “Share Repurchase Program”). The Company may not repurchase shares unless a stockholder has held shares for one year. However, the Company may repurchase shares held less than one year in connection with a stockholder’s death or disability (as disability is defined in the Internal Revenue Code) and after receiving written notice from the stockholder or the stockholder’s estate. The Company is not obligated to repurchase shares under the Share Repurchase Program. The Company may amend, suspend or terminate the Share Repurchase Program at its discretion at any time, subject to certain notice requirements. |
Non-controlling Interests
Non-controlling Interests | 6 Months Ended |
Jun. 30, 2015 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interests | Non-controlling Interests Operating Partnership Non-controlling interests include the aggregate limited partnership interests in the Operating Partnership held by limited partners, other than the Company. Income (loss) attributable to the non-controlling interests will be based on the limited partners’ ownership percentage of the Operating Partnership. The Special Unit Holder has invested $1,000 in the Operating Partnership and has been issued Special Units, which is recorded as non-controlling interests on the consolidated balance sheets as of June 30, 2015 and December 31, 2014 . |
Summary of Significant Accoun11
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of Quarterly Presentation | The accompanying unaudited consolidated financial statements and related notes of the Company have been prepared in accordance with accounting principles generally accepted in the United States ( “ U.S. GAAP ” ) for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally included in the consolidated financial statements prepared under U.S. GAAP have been condensed or omitted. The Company did not have operations for the six months ended June 30, 2015 and 2014 , and therefore does not present consolidated statements of operations or consolidated statements of cash flows for the applicable periods. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position have been included and are of a normal and recurring nature. |
Principles of Consolidation | The consolidated financial statements include the accounts of the Company and the Operating Partnership, which is majority-owned and controlled by the Company. |
Estimates | The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that could affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates and assumptions. |
Cash | The Company considers all highly-liquid investments with a remaining maturity date of three months or less to be cash. Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250,000 per institution. The Company mitigates credit risk by placing cash with major financial institutions. |
Operating Real Estate | The Company will follow the purchase method for an acquisition of operating real estate, where the purchase price is allocated to tangible assets such as land, building, furniture and fixtures, improvements and other identified intangibles. Major replacements and betterments which improve or extend the life of the asset will be capitalized and depreciated over their useful life. Ordinary repairs and maintenance will be expensed as incurred. Operating real estate will be carried at historical cost less accumulated depreciation. Operating real estate will be depreciated using the straight-line method over the estimated useful life of the assets. Construction costs incurred in connection with the Company’s investments will be capitalized and included in operating real estate, net on the consolidated balance sheets. Construction or redevelopment in progress will not be depreciated until the development is substantially completed. Costs directly related to an acquisition deemed to be a business combination will be expensed and included in transaction costs in the consolidated statements of operations. The Company will evaluate whether a real estate acquisition constitutes a business and whether business combination accounting is appropriate. |
Real Estate Debt Investments | CRE debt investments are generally intended to be held to maturity and, accordingly, will be carried at cost, net of unamortized loan fees, premium, discount and unfunded commitments. CRE debt investments that are deemed to be impaired will be carried at amortized cost less a loan loss reserve, if deemed appropriate, which approximates fair value. CRE debt investments where the Company does not have the intent to hold the loan for the foreseeable future or until its expected payoff will be classified as held for sale and recorded at the lower of cost or estimated value. |
Real Estate Securities | The Company will classify its CRE securities investments as available for sale on the acquisition date, which will be carried at fair value. Unrealized gains (losses) will be recorded as a component of accumulated other comprehensive income ( “ OCI ” ) in the consolidated statements of equity. However, the Company may elect the fair value option for certain of its available for sale securities, and as a result, any unrealized gains (losses) on such securities will be recorded in unrealized gain (loss) on investments and other in the consolidated statements of operations. |
Revenue Recognition | Operating Real Estate Rental and escalation income from operating real estate will be derived from the leasing of space to various types of tenants. The leases will be for fixed terms of varying length and will generally provide for annual rentals to be paid in monthly installments. Rental income from leases will be recognized on a straight-line basis over the term of the respective leases. Real Estate Debt Investments Interest income will be recognized on an accrual basis and any related premium, discount, origination costs and fees will be amortized over the life of the investment using the effective interest method. The amortization will be reflected as an adjustment to interest income in the consolidated statements of operations. The amortization of a premium or accretion of a discount will be discontinued if such loan is reclassified to held for sale. Real Estate Securities Interest income will be recognized using the effective interest method with any premium or discount amortized or accreted through earnings based on expected cash flow through the expected maturity date of the security. Changes to expected cash flow may result in a change to the yield which is then applied retrospectively for high-credit quality securities that cannot be prepaid or otherwise settled in such a way that the holder would not recover substantially all of the investment or prospectively for all other securities to recognize interest income. |
Credit Losses and Impairment on Investments | Operating Real Estate The Company’s real estate portfolio will be reviewed on a quarterly basis, or more frequently as necessary, to assess whether there are any indicators that the value of its operating real estate may be impaired or that its carrying value may not be recoverable. A property’s value will be considered impaired if the Company’s estimate of the aggregate expected future undiscounted cash flow generated by the property is less than the carrying value. In conducting this review, the Company will consider U.S. macroeconomic factors, real estate sector, asset specific conditions and other factors. To the extent an impairment has occurred, the loss will be measured as the excess of the carrying value of the property over the estimated fair value and recorded in impairment on operating real estate in the consolidated statements of operations. An allowance for a doubtful account for a tenant receivable will be established based on a periodic review of aged receivables resulting from estimated losses due to the inability of tenants to make required rent and other payments contractually due. Additionally, the Company will establish, on a current basis, an allowance for future tenant credit losses on unbilled rent receivable based on an evaluation of the collectability of such amounts. Real Estate Debt Investments Loans will be considered impaired when, based on current information and events, it is probable that the Company will not be able to collect principal and interest amounts due according to the contractual terms. The Company will assess the credit quality of the portfolio and adequacy of loan loss reserves on a quarterly basis, or more frequently as necessary. Significant judgment of the Company will be required in this analysis. The Company will consider the estimated net recoverable value of the loan as well as other factors, including but not limited to the fair value of any collateral, the amount and the status of any senior debt, the quality and financial condition of the borrower and the competitive situation of the area where the underlying collateral is located. Because this determination will be based on projections of future economic events, which are inherently subjective, the amount ultimately realized may differ materially from the carrying value as of the balance sheets date. If upon completion of the assessment, the estimated fair value of the underlying collateral is less than the net carrying value of the loan, a loan loss reserve will be recorded with a corresponding charge to provision for loan losses. The loan loss reserve for each loan will be maintained at a level that is determined to be adequate by management to absorb probable losses. Income recognition will be suspended for a loan at the earlier of the date at which payments become 90 -days past due or when, in the opinion of the Company, a full recovery of income and principal becomes doubtful. When the ultimate collectability of the principal of an impaired loan is in doubt, all payments will be applied to principal under the cost recovery method. When the ultimate collectability of the principal of an impaired loan is not in doubt, contractual interest will be recorded as interest income when received, under the cash basis method until an accrual is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. A loan will be written off when it is no longer realizable and/or legally discharged. Real Estate Securities CRE securities for which the fair value option is elected are not evaluated for other-than-temporary impairment (“OTTI”) as any change in fair value is recorded in the consolidated statements of operations. Realized losses on such securities are reclassified to realized gain (loss) on investments and other as losses occur. CRE securities for which the fair value option is not elected will be evaluated for OTTI quarterly. Impairment of a security is considered to be other-than-temporary when: (i) the holder has the intent to sell the impaired security; (ii) it is more likely than not the holder will be required to sell the security; or (iii) the holder does not expect to recover the entire amortized cost of the security. When a CRE security has been deemed to be other-than-temporarily impaired due to (i) or (ii), the security is written down to its fair value and an OTTI is recognized in the consolidated statements of operations. In the case of (iii), the security is written down to its fair value and the amount of OTTI is then bifurcated into: (a) the amount related to expected credit losses; and (b) the amount related to fair value adjustments in excess of expected credit losses. The portion of OTTI related to expected credit losses will be recognized in the consolidated statements of operations. The remaining OTTI related to the valuation adjustment will be recognized as a component of accumulated OCI in the consolidated statements of equity. The portion of OTTI recognized through earnings will be accreted back to the amortized cost basis of the security through interest income, while amounts recognized through OCI are amortized over the life of the security with no impact on earnings. CRE securities which are not high-credit quality will be considered to have an OTTI if the security has an unrealized loss and there has been an adverse change in expected cash flow. The amount of OTTI is then bifurcated as discussed above. |
Fair Value Measurement | The fair value of financial instruments is categorized based on the priority of the inputs to the valuation technique and categorized into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Financial assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows: 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. U.S. GAAP requires disclosure of fair value about all financial instruments. |
Equity Based Compensation | The Company adopted a long-term incentive plan (the “Plan”), which it may use to attract and retain qualified officers, directors, employees and consultants, as well as an independent directors compensation plan, which is a component of the Plan. The Company currently intends to issue awards only to its independent directors under the Plan. The Company will account for its equity-based compensation awards using the fair value method, which requires an estimate of fair value of the award at the time of grant. All fixed equity-based awards to directors, which have no vesting conditions other than time of service, will be amortized to compensation expense over the award’s vesting period on a straight-line basis. Equity-based compensation will be recorded in general and administrative expenses in the consolidated statements of operations. |
Income Tax | The Company intends to elect to be taxed as a REIT under the Internal Revenue Code and intends to operate as such, commencing with the taxable year in which the Company satisfies the minimum offering requirement. The Company expects to have little or no taxable income prior to electing REIT status. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to its stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with U.S. GAAP). As a REIT, the Company generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company intends to organize and operate in such a manner as to qualify for treatment as a REIT. |
Business and Organization (Deta
Business and Organization (Details) - USD ($) | Feb. 09, 2015 | Mar. 28, 2014 | Jun. 30, 2015 | Dec. 31, 2014 |
Business and Organization | ||||
Noncontrolling interests | $ 1,000 | |||
Common stock, shares authorized (shares) | 400,000,000 | 200,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||
Preferred stock, shares authorized (shares) | 50,000,000 | 0 | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | |||
Proceeds from issuance of common stock | $ 200,000 | |||
Common stock filed in a registration statement with SEC, for issuance pursuant to the primary offering (shares) | 180,000,000 | |||
Common stock filed in a registration statement with SEC, for issuance pursuant to DRP (shares) | 21,052,632 | |||
Minimum | ||||
Business and Organization | ||||
Common stock filed in a registration statement with SEC, for issuance pursuant to offering (shares) | 200,000 | |||
Maximum | ||||
Business and Organization | ||||
Common stock filed in a registration statement with SEC, for issuance pursuant to offering (shares) | 201,052,632 | |||
Sponsor of the Registrant | ||||
Business and Organization | ||||
Number of shares of common stock issued (shares) | 16,667 | |||
Co-Sponsor of the Registrant | ||||
Business and Organization | ||||
Number of shares of common stock issued (shares) | 5,556 | |||
NorthStar/RXR NTR OP Holdings LLC | ||||
Business and Organization | ||||
Noncontrolling interests | $ 1,000 |
Summary of Significant Accoun13
Summary of Significant Accounting Policies (Details) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Number of days past due for suspension of income recognition | 90 days |
Related Party Arrangements (Det
Related Party Arrangements (Details) | 6 Months Ended | |
Jun. 30, 2015USD ($)Quarter | Dec. 31, 2013 | |
Dealer Manager | ||
Selling Commissions and Dealer Manager Fees | ||
Dealer manager fee as a percentage of gross offering proceeds from the primary offering | 3.00% | |
Maximum | Dealer Manager | ||
Selling Commissions and Dealer Manager Fees | ||
Selling commissions as a percentage of gross offering proceeds from the primary offering | 7.00% | |
NorthStar Realty Finance Corporation | ||
Distribution Support Agreement [Abstract] | ||
Commitment to purchase common stock (percent) | 75.00% | |
RXR Realty | ||
Distribution Support Agreement [Abstract] | ||
Commitment to purchase common stock (percent) | 25.00% | |
RXR Realty | NorthStar Realty Finance Corporation | ||
NorthStar Realty and RXR [Abstract] | ||
Equity interest percentage | 27.00% | |
Sub-Advisor | ||
Sub-Advisor | ||
Sub-advisors percentage rights to fees | 50.00% | |
Sub-advisors percentage rights to reimbursements | 25.00% | |
Advisor | Asset Management Fee | ||
Asset Management Fee | ||
Annual asset management fee rate | 1.25% | |
Asset management fee monthly factor | 8.33% | |
Monthly asset management fee rate | 0.10417% | |
Advisor | Acquisition Fee | ||
Acquisition Fee | ||
Maximum acquisition fee | 2.25% | |
Acquisition fee as percentage of principal amount funded to originate debt or other real estate investments | 1.00% | |
Advisor | Disposition Fee | ||
Disposition Fee | ||
Disposition fee of contract sales price of each property | 2.00% | |
Maximum disposition fee as a percentage of contract sales price of CRE investment sold | 1.00% | |
Disposition fee as a percentage of the principal amount of the loan or CRE debt investment prior to the specified transaction | 1.00% | |
Advisor | Operating Costs | ||
Operating Costs | ||
Reimbursement of personnel costs related to officers and personnel involved in activities for which other fees is received | $ 0 | |
Number of fiscal quarters | Quarter | 4 | |
Reimbursement expense period | 12 months | |
Advisor | Maximum | Operating Costs | ||
Operating Costs | ||
Percentage of average invested assets reimbursable as operating costs | 2.00% | |
Percentage of net income, without reduction for any additions to reserves for depreciation, loan losses or other similar non-cash reserves and excluding any gain from the sale of the company's assets, considered for reimbursement of operating costs | 25.00% | |
Advisor | Maximum | Organization and Offering Costs | ||
Organization and Offering Costs | ||
Percentage of gross offering proceeds from primary offering, reimbursable as organization and offering costs | 15.00% | |
Expected reimbursable organization and offering costs, excluding selling commissions and dealer manager fee | $ 30,000,000 | |
Expected reimbursable organization and offering costs, excluding selling commissions and dealer manager fee, as a percentage of total proceeds available to be raised from the primary offering | 1.50% | |
Co-Sponsor of the Registrant | Maximum | ||
Distribution Support Agreement [Abstract] | ||
Commitment to purchase common stock | $ 10,000,000 |
Equity-Based Compensation (Deta
Equity-Based Compensation (Details) - Jun. 30, 2015 | USD ($)directorshares |
Equity-based compensation | |
Number of independent directors | director | 3 |
Target gross offering proceeds | $ | $ 2,000,000 |
Restricted stock | |
Equity-based compensation | |
Shares granted | 5,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Common Stock [Abstract] | ||
Number of common shares outstanding | 22,223 | 22,223 |
Share Repurchase Program | ||
Holding period of shares required for repurchase | 1 year | |
DRP | ||
Distribution Reinvestment Plan | ||
Initial purchase price per share under the DRP (in dollars per share) | $ 9.50 | |
Percentage of estimated value per share of common stock (percent) | 95.00% | |
Period within which the company expects to establish an estimated value per share | 150 days | |
Notice period served by board of directors to amend or terminate distribution reinvestment plan | 10 days |
Non-controlling Interest (Detai
Non-controlling Interest (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Noncontrolling Interest [Line Items] | ||
Noncontrolling interests | $ 1,000 | |
NorthStar/RXR NTR OP Holdings LLC | ||
Noncontrolling Interest [Line Items] | ||
Noncontrolling interests | $ 1,000 |