NorthStar Capital Investment Corp., a real estate investor, is preparing to issue its first collateralized debt obligation. The New York manager is marketing a CDO via Citigroup that seeks to raise $400 million to invest in a mix of underlying commercial mortgage-backed securities and real estate investment trusts, according to officials familiar with the deal. It is being marketed as the NorthStar Capital Real Estate CDO. Mitch Wasterlain, managing director and head of the CDO business at NorthStar, declined to comment, and syndicate officials from Citigroup did not return a call.
The move comes as real estate CDOs enjoy perhaps their best year ever (BW, 4/7), as deals backed by real estate-related assets have fared better than those backed by corporate credits and avoided a similar rash of downgrades. One official outside the deal says NorthStar's expertise as a real estate investor makes it a logical choice as a collateral manager, though he notes CMBS spreads have tightened of late and speculates this may erode some of the deal's arbitrage.