As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

11/24/14  Polar Star Realty Trust Inc.      S-11/A                 2:8.3M                                   Merrill Corp/New/FA

Document/Exhibit                   Description                      Pages   Size 

 1: S-11/A      Pre-Effective Amendment to Registration Statement   HTML   3.24M 
                          for Securities of a Real Estate Company                
 2: EX-23.3     Consent of Experts or Counsel                       HTML      6K 

PROSPECTUS SUMMARY

        This summary highlights some of the information in this prospectus. It does not contain all of the information that you should consider before investing in shares of our common stock. You should read carefully the more detailed information set forth under "Risk Factors" and the other information included in this prospectus. Unless the context otherwise requires or indicates, (i) the terms "company," "we," "us" and "our" refer to Polar Star Realty Trust Inc., a Maryland corporation, together with its consolidated subsidiaries, including Polar Star Operating Partnership S.C.A., a corporate partnership limited by shares (société en commandite par actions) formed under the laws of the Grand Duchy of Luxembourg, which we refer to as our "operating partnership," and Polar Star GP Lux Co, a private limited liability company (société à responsabilité limitée) organized under the laws of the Grand Duchy of Luxembourg, which we refer to as our "GP subsidiary", and the senior management team of Polar Star Realty Trust Inc. and (ii) the terms "predecessor" and "EBH II" refer to Öffentliga Fastigheter i Sverige II AB, a Swedish corporation, which is our predecessor for accounting purposes and owns three of the 26 properties that will comprise our initial portfolio. Unless the context otherwise requires or indicates, the information set forth in this prospectus assumes that (i) the REIT formation transactions described in this prospectus under "The History, Structure and Formation of Our Company" have been completed, (ii) the underwriters' overallotment option is not exercised and (iii) the shares to be sold in this offering are sold at $11.50 per share, which is the mid-point of the initial public offering price range shown on the cover page of this prospectus. In addition, except for the historical financial information of our predecessor included in this prospectus and unless the context otherwise requires or indicates, the historical data, statistics and other information set forth in this prospectus relating to us and our real property portfolio relate to the 26 properties that will comprise our initial portfolio. "Annualized Base Rent", as used in this prospectus, means the contractual monthly base rent under our leases as of the date of measurement multiplied by 12.

Overview

        We are an internally managed Maryland corporation that acquires, owns, leases, manages and redevelops office and industrial properties located primarily in Norway, Sweden and Denmark, which we refer to as the Nordics or the Nordic Region. Our business is led by Bjarne Eggesbø, who serves as the Chairman of our board of directors, Chief Executive Officer and President, and other members of our highly experienced senior management team who together on average have more than 16 years of experience in the acquisition, management, financing and redevelopment of office and industrial properties in the Nordics. This team is supported by our full-time professional and administrative staff, including nine full-time property management and leasing professionals that will support our growth initiatives and the operating performance of our properties.

        Our growth strategy is focused throughout the Nordic region which is currently experiencing strong macroeconomic trends, including low unemployment, high gross domestic product, or GDP, and disposable income per capita, strong current account surpluses and improving growth outlooks, as well as limited sovereign debt risk. We believe that these and other factors support strong and improving real property fundamentals. The Nordics are three of only nine countries in the world to maintain a AAA rating from all three leading credit rating agencies (Standard & Poor's Financial Services LLC, or S&P, Moody's Investors Service, or Moody's, and Fitch Ratings Inc., or Fitch). Upon completion of this offering and the REIT formation transactions, we will wholly-own a high quality and strategically located portfolio of 26 properties, including 11 properties in Norway and 15 properties in Sweden, with an aggregate of approximately 7.2 million leasable square feet. As of September 30, 2014, our properties were approximately 94.6% leased with a weighted average remaining lease term of approximately 5.8 years. Our properties include 12 office properties comprising 3.2 million leasable square feet and 12 industrial properties comprising 3.9 million leasable square feet, as well as two commercial properties comprising approximately 115,105 leasable square feet. As of September 30, 2014, the majority (75% based on leasable square feet) of our properties were multi-tenant properties,

 

and 25% (based on leasable square feet) were single-tenant properties. Our industrial properties include a combination of warehouse and distribution facilities.

        Our strategy focuses on properties leased to Nordic state owned and controlled enterprises, AAA-rated sovereign tenants, departments and agencies of Nordic governments and state and municipal government entities in the Nordics. We believe that many of these tenants, which we refer to as government-related tenants, are exceptionally high quality lease counterparties. We also focus on properties leased to high credit quality corporate tenants, which are typically large public companies with investment grade ratings. Our growth strategy focuses on properties with at least five years remaining on their lease term, 100,000 square feet of leasable area and post-1980 construction.

        Sound fiscal management by Nordic governments supports stable credit markets and improving real property fundamentals. The Nordics benefit from low levels of public debt relative to GDP and sound fiscal and public finance policies including stable government spending and public debt-to-GDP ratios of 29.5%, 40.6% and 44.5% for Norway, Sweden and Denmark, respectively, in 2013, according to Eurostat. The same ratio in 2013 was 78.4% for Germany; 132.6% for Italy; 93.9% for Spain and 90.6% for the United Kingdom, with 92.6% for the entire Eurozone. The economic performance of the Nordics stands out among member nations of the Organization for Economic Co-operation and Development, or OECD. As of May 2014, the OECD projected 2014 GDP growth for Norway and Sweden to be 2.0% and 2.8%, respectively, compared to 1.2% for the Eurozone. In addition, the OECD projected 2015 GDP growth for Norway and Sweden to be 2.4% and 3.1% respectively, compared to 1.7% for the Eurozone.

        As of September 30, 2014, approximately 85.8% of the annualized base rent from our properties was derived from leases with Nordic government-related tenants, while 92.8% of the annualized base rent from our properties was derived from Nordic government-related tenants and investment-grade rated corporate tenants. Our in-place portfolio benefits from favorable lease structures and terms. Our leases with our tenants, including government-related tenants, are our standard commercial leases and do not contain any mechanism allowing tenants to terminate prior to their stated lease expiration date. This contrasts with some federal and state government leases in the United States, for example those administered by the U.S. General Services Administration, or GSA, under which government tenants may have rights to terminate early with little or no tenant liability, pursuant to early termination rights, or in the event the applicable U.S. government body does not appropriate rent amounts in its annual budget. Moreover, in Norway and Sweden municipal and government tenants cannot go bankrupt, and as such, they cannot discharge their financial obligations, including lease obligations, through bankruptcy proceedings. Finally, our tenants are typically contractually required to provide in excess of 12 months notice to us if they intend to vacate at lease expiration, which provides us with significant lead time to re-tenant upcoming vacancies.

        As of September 30, 2014, leases representing 2.4%, 10.8% and 20.5% of the total annualized base rent of our properties will expire in 2014, 2015 and 2016, respectively, which we believe will afford our in-house leasing team the opportunity to increase our rental income over time. In cases where the rental rate charged to a vacating tenant is below the market rate, our in-house leasing team will seek to achieve higher market rates upon re-leasing to a new tenant. Further, many of our properties offer the potential for redevelopment, which may allow our team to increase rental rates by attracting a broader spectrum of tenants in search of higher quality spaces. In cases where tenants are renewing existing leases, our team actively seeks opportunities to provide modest tenant improvements to enhance the properties' value to our tenants while generating an appropriate return on invested capital.

        Many of our properties are integral to our tenants' operations, often containing tailored infrastructure that we believe cannot be easily replicated elsewhere, and many of our tenants have already invested significant amounts of their own capital to improve the properties. Moreover, many of our properties benefit from strategically important location attributes which we believe reduces the

 

likelihood that tenants will vacate. For these reasons, we believe that the prospects for lease renewals at our properties are high.

        Bolstered by strong real estate fundamentals and the extensive real estate experience and relationships of our senior management team, we intend to aggressively grow our portfolio through additional acquisitions in the office and industrial property sectors in the Nordics. According to CBRE, spreads between Nordic property yields and ten year Norwegian, Swedish and Danish government bonds remain near historical highs, suggesting the potential for near term price appreciation across the sector. As additional international capital flows into the region, we expect to see property values increase over time. We believe that the growing Nordic economies in conjunction with limited new supply will drive demand for office and industrial space in the region, thereby increasing occupancy, rents and property values.

        Our target acquisitions will be predominantly investments in the $40 million to $200 million range. We intend to focus on major cities in areas outside of central business districts, or CBDs, as well as in regional cities that exhibit significant public and private commercial and industrial activity due to their dense populations, strategic locations and strong levels of employment. Where appropriate potential returns present themselves, we also may acquire assets in city centers. In contrast, other institutional investors, primarily international buyers, tend to concentrate their efforts on larger deal sizes in Oslo and Stockholm. We believe that our market knowledge, in conjunction with limited competition from foreign capital, provides us with a competitive advantage within our target markets.

        We intend to elect, and to operate our business so as to qualify, to be taxed as a REIT for U.S. federal income tax purposes, commencing with our taxable year ending December 31, 2014. So long as we qualify as a REIT, we generally will not be subject to U.S. federal income tax on our taxable income to the extent that we annually distribute all of our taxable income to stockholders. Our wholly-owned GP subsidiary serves as the sole manager of, and we will operate our business through, our operating partnership subsidiary, Polar Star Operating Partnership S.C.A., a corporate partnership limited by shares (société en commandite par actions) organized under the laws of the Grand Duchy of Luxembourg, and its subsidiaries.

        We believe this offering will provide investors the unique opportunity to access a Nordic property portfolio through the NYSE-listed shares of a REIT formed in a so-called UpREIT structure. We believe there is no comparable investment opportunity currently available to U.S. investors today.

Our Senior Management Team and other Real Estate Professionals

        Led by our Chairman of our board of directors, Chief Executive Officer and President, Bjarne Eggesbø, our senior management team has extensive experience investing in and managing office and industrial properties in the Nordics, cross-border real estate transactions and global real estate finance. This team is currently responsible for the management and operation of our properties through their senior management roles with Obligo Investment Management AS, or Obligo, the investment advisor for the investment vehicles that own the properties we will acquire through the REIT formation transactions. Mr. Eggesbø, who has more than 17 years of experience in the real estate industry and has completed in excess of $33.0 billion in real estate acquisitions and financings, is supported by Espen Bjerke, our Chief Financial Officer, Robert Washington, our Chief Operating Officer, Rickard Olander, our Chief Investment Officer, Tor Pedersen, our Senior Vice President for Norway and Denmark, and Morten Wettergreen, our Senior Vice President for Sweden. Messrs. Eggesbø, Bjerke, Washington, Olander, Pedersen and Wettergreen have an average of approximately 16 years of real estate and capital markets experience. We believe their experience in providing full service real estate solutions for government and government-related tenants has enabled them to understand and anticipate tenant needs, leading to high occupancy rates, tenant retention and consistent property level cash flows. We

 

believe we will benefit from the long track record and broad experience of our senior management team as we pursue our business objectives and growth strategies.

        Our senior management team is supported by our full-time professional and administrative staff, including nine full-time property management and leasing professionals who will support our growth initiatives and the operating performance of our properties. Our full-time property management team handles and/or proactively monitors all aspects of property management for each of our properties. This in-house team is actively involved in our property management activities, including developing and approving property operating budgets, managing property leasing, including negotiations and interactions with tenants, leading and managing property redevelopment and property improvement activities, implementing property expansion programs and where appropriate engaging, approving and monitoring third-party property managers, contractors and service providers to support the in-house team. We plan to grow our internal property management function over time as we grow our portfolio through additional acquisitions.

Market Opportunity

        Upon completion of this offering and the REIT formation transactions, we will own, and will seek to acquire additional properties in Norway and Sweden, and we intend to target Denmark as part of our investment strategy.

        According to the World Bank, the 2013 GDP per capita in Norway, Denmark and Sweden of $100,818, $58,929 and $58,163, respectively, represented the second-, fourth- and fifth-highest in the Eurozone. According to CBRE, the Nordic Region benefits from stable or increasing employment levels, low levels of public-debt-to-GDP ratios, sound fiscal and public finance policies, including stable government spending. These countries benefit from sound government fiscal policies and stable public sectors with balanced views on private and public interests. The Norwegian and Swedish banking sectors remain stable after years of government induced proactive financial oversight measures.

        According to CBRE, driven by projected increases in economic growth and exports globally and among the Nordics' trading partners, the Nordic Region's GDP growth is expected to outperform that of the Eurozone over the next three years. Norway relies primarily on its oil-related revenues to support continued fiscal stimulus and stability. Norway's oil and gas reserves account for nearly one-third of total government revenues, while petroleum investments continue to support and stimulate the Norwegian economy. Sweden relies primarily on its diversified manufacturing and services industries. International demand for Sweden's goods and services is expected to be the primary catalyst for near term economic growth.

        According to Eurostat, population growth in Norway and Sweden has been strong, and the region as a whole benefits from a large and growing regional population with significant spending power. Furthermore, both countries benefit from a highly educated workforce, high levels of labor force participation and unemployment rates well below that of the broader set of Eurozone countries. Norway and Sweden rank high in terms of quality of life considerations and ease of doing business relative to the same broader set. Economic stability and growth prospects in both countries continue to attract businesses seeking to expand their geographic footprint. In addition, strong population growth coupled with stable employment levels are expected to result in increasing demand for additional leasable space from both public and private sector tenants. The overall trend is evident in the strong tenant demand for higher quality premises, which has translated into rising rental rates and property values.

        Commercial property values throughout Europe declined during the recent financial crisis. The Nordic countries, however, and in particular Norway and Sweden, were relatively less affected by the economic downturn compared to the broader set of Eurozone countries. According to CBRE, property

 

values are rising in Norway and Sweden, and the property market is expected to continue performing going forward.

        Property market indicators in the Nordics suggest that demand for office and industrial space is increasing in locations outside of CBDs while supply and new development in these areas remain limited, which is expected to translate into increased rental rates and property values. To take advantage of these trends, we expect to be an active buyer of office and industrial properties in the Nordics.

Our Competitive Strengths

        We believe that several factors distinguish us from other owners of office and industrial properties in the Nordics, including the following:

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Strategically Located Portfolio.  Our 26 properties are geographically diversified across Norway and Sweden and include 12 office properties, 12 industrial properties and two commercial properties comprising an aggregate of approximately 7.2 million leasable square feet. Many of our properties are mission-critical to our tenants' businesses or operations. Our properties are generally located in major cities in areas outside of CBDs as well as in regional cities in attractive locations for properties of their type. Our properties are strategically located in close proximity to major transportation hubs, employment centers and areas that are of significant strategic importance to existing or contemplated tenants.



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Ten of our 12 industrial properties are located in what we view as Sweden's prime logistics region, either along the key logistics transportation and trucking corridors linking Sweden's three largest cities or within those cities themselves, an area we refer to as Sweden's "Logistics Triangle." This southernmost region is also Sweden's most densely populated region, home to approximately 80% of the country's population. Four of our logistics properties feature direct rail links with Sweden's national rail system and have many potential alternative tenants and uses.



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Our office properties are all located in what we believe are "strategic" office locations within Norway and Sweden, typically outside of the CBDs. We believe these strategic, non-CBD locations generally offer a more compelling risk-adjusted return potential than properties within the CBDs themselves. The Norwegian government follows a long-standing policy of promoting decentralization. Government programs, including tax incentives, grants, and low-cost student loans, are used to promote a more even distribution of the population living, working and studying across the country's land mass and to drive commercial activity in areas outside the major cities and their CBDs. A significant implication of this policy is that the Norwegian government has consciously chosen to locate many of its key departments and agencies outside of the capital and has thereby promoted the development of regional government, business and commercial hubs. As a result, only 12.4% of Norway's population currently resides within the municipality of Oslo. A further result is a heightened demand for office real estate in such non-CBD strategic locations. In Sweden, the allocation of responsibilities between governmental and regional entities has shifted. The regional entities' responsibilities have grown and are continuously growing, and regional entities will accordingly require larger premises. As such, relocation from the city center may be required.



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Further, certain of our office properties are configured as multi-tenant campuses, in which two or more tenants have chosen to co-locate due to the interdependent nature of their operations. We believe it would be difficult for such clusters of interrelated tenants to vacate, due to the lack of suitable alternative campus properties and the organizational complexity and cost of relocation.

 

        In sum, we believe many of our existing properties exhibit favorable real property fundamentals and are also benefitting from favorable trends such as increasing demand for, but a limited supply and new development of, office and industrial space.

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Primary Investment Focus on Nordic Government and High Credit Quality Corporate Tenants.  We acquire, own, lease and manage properties that are primarily leased to Nordic government-related tenants and Nordic sovereigns. Our current government tenants include state owned or controlled enterprises and agencies and departments of the national governments of Norway and Sweden and state and municipal governmental entities. As of September 30, 2014, approximately 85.8% of our annualized base rent was derived from such tenants. We believe that many of these tenants represent exceptionally high quality lease counterparties, due to their financial strength and stability. In Norway, Denmark and Sweden, municipal and government tenants cannot go bankrupt, and as such, they cannot discharge their obligations, including lease obligations, through a bankruptcy proceeding in the absence of a bankruptcy of the national government. Accordingly, we believe that government and government-related tenants support a recurring and dependable revenue base from our properties and will support our objective of delivering attractive risk adjusted returns to our stockholders. Such tenants also tend to have long-term lengths of tenancy. This in turn contributes to our outstanding tenant retention history. Our largest tenant, PostNord AB, or PostNord, is wholly owned by the Swedish and Danish governments. PostNord is currently rated 'BBB+' with a stable outlook by Nordic capital market participants Danske Bank, Svenska Handelsbanken AB, or Handelsbanken, and Skandinaviska Enskilda Banken AB, or SEB. The parent of our next largest tenant, Kongsberg Gruppen ASA, is listed on the Oslo Stock Exchange and approximately 50% owned by the Government of Norway. Kongsberg Gruppen ASA is rated 'A-' with a stable outlook by SEB. The parent of our third largest and only material private sector tenant, FMC Technologies Inc., is listed on the NYSE and carries investment grade ratings of Baa2/BBB ratings from Moody's and S&P, respectively. Over time, we may expand our tenant base to include additional creditworthy private sector tenants. As of September 30, 2014, approximately 92.8% of the annualized base rent from our properties was derived from either government-related tenants or investment-grade rated corporate tenants.



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Strong and Stable Target Markets.  Our primary target markets are in the Nordics, which are three of only nine countries in the world to currently have a AAA rating from S&P, Moody's and Fitch. According to the World Bank, the 2013 GDP per capita in Norway, Denmark and Sweden of $100,818, $58,929 and $58,163, respectively, represented the second-, fourth- and fifth-highest in the Eurozone. We believe that the Nordics currently exhibit strong macroeconomic fundamental trends with low sovereign debt-to-GDP borrowing ratios, strong population growth and high and stable employment levels. Each of Norway, Sweden and Denmark maintains a separate sovereign currency from the euro and has full control over monetary policy, which we believe affords each greater control over government spending and fiscal policy compared to nations in the Eurozone.



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Favorable Lease Renewal and Re-tenanting Experience.  We believe that many of our properties are integral to our tenants' operations. In many cases, our tenants have made, or we believe plan to make, substantial capital investments in the property and/or site-specific equipment. Due to the tenant specific investments made in many of our properties by us or our tenants, we believe that there is a high likelihood that these properties will be re-leased to existing tenants upon expiration of the current lease term. Of the 190,167 and 1,464,169 square footage of leases that expired in 2012 and 2013, respectively, 89.8% and 91.6%, respectively, were renewed. Of the approximately 1,080,758 square feet of leases expiring through December 31, 2015, we are already in advanced negotiations for renewals on 24.7% of such square footage. In addition to our strong record in lease renewals, we have also been able to achieve higher rental income

 

from certain of our properties through a range of capital improvement projects at our properties and by re-tenanting at higher lease rates.

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Experienced Senior Management Team with Broad Capabilities; Strong Relationships with Government Agencies.  Members of our senior management team collectively possess a combination of skills that we believe is unusual among Nordic real estate market participants. In addition to local property market expertise, our senior management team has substantial experience in global finance and capital markets, cross-border transactions and structuring. We believe combining local real estate knowledge with a global perspective and sophisticated finance and capital markets expertise gives us a competitive advantage. Our platform includes capabilities in acquisitions, development and redevelopment, construction and project management, capital markets and structuring, portfolio and asset management, and leasing and tenant relations. Members of our senior management team have an average of 16 years of experience acquiring, owning, leasing and managing real estate in the Nordics with certain members of this team being responsible for managing our existing portfolio since 2007. Our senior management team maintains deep relationships with our target tenants and specific knowledge of these tenants' real estate needs, requirements and processes. We believe that our senior management team's experience in providing full service real estate solutions for government and government-related tenants will enable us to understand and anticipate tenant needs, leading to high occupancy rates, tenant retention and consistent property-level cash flow. In addition, our full-time professional and administrative staff, including nine full-time property management and leasing professionals, will support our growth initiatives and the operating performance of our properties.



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Broad Industry Contacts to Drive Acquisition Opportunities.  We expect to grow our business by being an active buyer of office and industrial properties in the Nordics and by continuing to invest in our existing properties. Our senior management team has established and maintains a broad, in-place network of property owners, tenants and brokers in our target markets from which they expect to continue to identify and evaluate acquisition and leasing opportunities. In addition, we believe that our senior management team's government property expertise will provide us with attractive acquisition opportunities from state-owned property companies and other sellers, and will make us an attractive buyer. We believe that substantial immediate and long-term opportunities exist in the Nordic property market, particularly in non-CBD locations in close proximity to major Nordic cities, as well as certain key areas of regional Norway and Sweden. Many of the properties in our portfolio are located in these areas, and we intend to leverage our local market knowledge and relationships to be an active participant in both off-market and marketed opportunities. In addition, we will seek to take advantage of strategic acquisition opportunities through partnerships with local and regional property developers and operators in the Nordics to further expand and diversify our portfolio and improve our overall financial performance.



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Scalability of Platform.  We believe that our senior management team has the ability and processes in-place to handle a growing number of properties and accommodate further growth. Upon completion of this offering and the REIT formation transactions, we expect to explore property acquisitions in both existing and new markets in the Nordics to build our portfolio. In particular, we intend to target Denmark as a new market as part of our overall growth strategy. We believe that the collective experiences of our in-place senior management team will allow us to successfully acquire, integrate and operate properties in existing and new markets quickly and efficiently without incurring significant additional general and administrative expenses.

 

Our Business Objectives and Growth Strategies

        Our primary business objectives are to increase cash flow from operations, achieve sustainable long-term growth and provide attractive risk-adjusted returns to our stockholders through stable distributions and capital appreciation. Our business strategy consists of the following principal elements:

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Capitalize on Acquisition Opportunities in the Nordic Market.  We intend to take advantage of what we believe is an attractive market opportunity to invest in the public and private sector of commercial real estate in the Nordics. Government policy and spending is a significant and stable driver of economic activity in the Nordics. The combined total government spending in the Nordics in 2013 was $460 billion, according to the respective countries' national budgets. We believe there is a substantial investment opportunity to continue to acquire strategically located properties leased primarily to governments, government sponsored or controlled enterprises, government agencies within the Nordics and other investment grade tenants. We believe, and property market indicators suggest, that demand for office and industrial space in the Nordics is increasing while supply and new development remains limited. As a result, we expect that rental rates and property values in these areas will increase over the near to medium term. To take advantage of these trends, we expect to be an active buyer of office and industrial properties in the Nordics. We believe the most attractive risk-adjusted economics are available in, and therefore intend to focus our acquisition activity on, prime logistics markets and strategic office locations, including in major cities in areas outside of CBDs as well as in regional cities that exhibit significant public and private commercial and industrial activity due to their population density, strategic location, levels of employment and government policy. We intend to utilize our strong balance sheet and liquidity position, as well as our senior management team's in-depth market knowledge and expertise, to actively pursue such opportunities.



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Realize Internal Growth through Active Asset Management.  As our leases expire, we expect to realize rent growth as we re-lease or re-tenant our properties at higher rental rates over time. In addition, we expect to grow our rental rates and extend lease terms through targeted tenant improvements at our properties, while generating an appropriate return on invested capital. We will also seek to increase our cash flows by maintaining high tenant retention rates, efficiently leasing vacant space, managing operating expenses and maintaining and monitoring our properties. Our in-house property management team proactively manages our properties and rent rolls to stagger lease expiration profiles in order to reduce the risk of vacancies and synchronize expirations in the case of redevelopment. This team also carefully manages common area expenses to make our properties as competitive and cost-efficient as possible for new and existing tenants. We also have made and will make energy efficiency retrofitting and sustainability a portfolio-wide initiative driven by economic returns, which we believe increases our properties' overall value and desirability. In addition, our senior management team will continue to actively monitor and seek to maintain the high credit quality of our tenant mix on an ongoing basis. Finally, certain of our existing lease agreements include upward-only rent escalation provisions designed to provide us with a baseline of annual rental growth linked to a country specific consumer price index, or CPI.



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Maintain Relationships with High Quality Tenants.  Our tenants include government sponsored or controlled enterprises, governments and agencies and other creditworthy tenants which support a recurring and dependable revenue base from our properties. Our asset management team is focused on serving these tenants and our senior management team has instituted numerous activities and processes that we believe support strong tenant relationships. For example, our senior management team has regular meetings and continuous dialogue with our major tenants so that we can be responsive to their needs and provide a level of service that we believe is superior to other landlords in our markets. Our senior management team works to identify lease extension and capital improvement opportunities, both at lease expiration dates and during the

 

term of the lease in response to changing tenant requirements. We believe that this regular communication also allows us to gain valuable market insights. Our senior management team regularly undertakes targeted capital programs to improve our properties. For example, during the period from January 1, 2009 to September 30, 2014, 31.5% of the aggregate leasable square feet of our properties have benefitted from significant capital programs aimed at securing tenant retention. We believe our commitment to provide high quality premises and focus on tenant relationships will help us retain existing tenants and attract new tenants.

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Seek Opportunities Based on Industry Relationships Deal Flow.  Our senior management team has deep industry relationships and a broad network of contacts, which we believe will provide us with access to an extensive pipeline of acquisition opportunities. We believe that this access to real estate investment opportunities, as well as the breadth of these relationships, will generate attractive investment opportunities through which we can grow our business and increase value for our stockholders. We believe that these relationships and local market knowledge will provide us with a competitive advantage over other investors, particularly foreign capital attempting to invest in similar assets. In addition, we believe that our senior management team's government property expertise provides us access to acquisition opportunities from state-owned property companies and other sellers. Unlike commercial landlords, government sellers of properties have a long-term interest in ensuring that the new owner is sensitive to the ongoing needs of government tenants. We believe our senior management team's experience and reputation with this property type make us an attractive buyer. Finally, within the Nordic market, we will be unique by virtue of our typical corporate governance profile as a U.S.-listed REIT. We believe that this, combined with our access to U.S. and other capital markets and liquidity and a stable balance sheet, will make us an attractive counterparty for transacting with sellers, lenders and tenants.



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Capitalize on Opportunities to Generate Additional Cash Flow from our Properties.  We expect to increase cash flow from our properties by redeveloping certain existing properties and undertaking new construction on surplus land. We believe trends in the Nordics, and our senior management team's own experience with our tenants, indicate public and private sector tenants will require additional leasable space to conduct their operations. Accordingly, we believe we will have opportunities to grow our rental revenue by expanding or redeveloping properties to satisfy tenant needs. Some of our properties include surplus land plots in attractive areas, which are suitable for future development. This includes potential development of up to approximately 320,000 square feet in Stockholm, Sweden; up to 160,000 square feet in Linköping, Sweden; and up to 65,000 square feet in Kongsberg, Norway. In addition, certain of our expiring leases present redevelopment opportunities. These may include converting older industrial spaces to higher-rent office space. Our senior management team has successfully executed both ground-up developments as well as warehouse-to-office conversions and believes such projects present the potential for attractive returns on invested capital. Finally, we may convert former single-tenant properties into multitenant space in order to realize a higher rental rate per square foot and access a larger universe of potential users. We may pursue these redevelopment opportunities by leveraging our expertise in managing fee-for-service construction partners, as we have in the past, or via joint ventures.

Our Initial Portfolio

        Upon completion of the REIT formation transactions and this offering, our initial portfolio will consist of 26 properties, including 11 in Norway and 15 in Sweden, with approximately 7.2 million leasable square feet. As of September 30, 2014, our properties were approximately 94.6% leased, with a weighted average remaining lease term of approximately 5.8 years. As of September 30, 2014, approximately 80.5% of the aggregate leasable square feet of our properties was leased to, and approximately 85.8% of our annualized base rent was derived from, government sponsored or controlled enterprises, government tenants or government or municipal agencies in Norway and Sweden.

 

        The tables below set forth certain information with respect to our properties, as of September 30, 2014:

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Principal Tenant

        Our largest tenant as of September 30, 2014 was PostNord. As of September 30, 2014, PostNord accounted for approximately 34.5% of the annualized base rents attributable to our properties. PostNord is currently rated `BBB+' with a stable outlook by Nordic credit market participants Danske Bank, Handelsbanken and SEB.

        PostNord is a leading supplier of business communications in the Nordics, one of the largest operators in the Nordic advertising market and a leading provider of logistics services to, from and within the Nordics. The company was formed through the merger of Posten AB and Post Danmark A/S in 2009 and is 60% owned by the Swedish government and 40% owned by the Danish government. PostNord reported that, during the nine months ended September 30, 2014, PostNord had net sales of approximately $4.07 billion. Based on our discussions with PostNord, it is our belief that PostNord has committed to an equipment upgrade program of approximately $150 million to be implemented by the end of 2016. We believe that approximately $100 million of the total capital commitment will be allocated to five specific properties that will be part of our initial portfolio, including Kläppen 4, Magasinet 8, Gullbergsvass, Vasslan 3 and Skönsmon 2:2. New machine equipment has been installed at Magasinet 8 and Kläppen 4 and upgrades at the other locations will follow. For more detailed financial information regarding PostNord, please refer to PostNord's financial reports which are publicly available at www.postnord.com. The information on PostNord's website is not intended to form a part of or be incorporated by reference into this prospectus.

        We believe that PostNord benefits from the following market positioning and governance attributes:

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Markets—Regulated postal service market with attractive cash flow profile. Logistics market offers compelling growth opportunities. Strong e-commerce growth drives demand for parcel services.



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Position—Positioned as a dominant Nordic market player. Significant barriers to entry exist due to need for an asset-intense network.



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Financial Strength—Stable financial position. Proven ability to deliver attractive profit margins and cash flows amidst a changing market landscape.



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Ownership—Mission-critical service for domestic and regional economies.

        Over time, we intend to further diversify our tenant base through acquisitions, which should also reduce our exposure to PostNord as a percentage of our total portfolio.

Our Financing Strategy

        We intend to finance our future growth with the most advantageous sources of capital available to us at the time of the financing, which may include a combination of public and private offerings of our equity and debt securities, secured and unsecured corporate-level debt, property-level debt and mortgage financing or borrowings. We may issue ordinary shares of our operating partnership, or OP shares, or shares of our common stock, as means to finance our business or as currency in large portfolio acquisitions. We currently intend to limit our borrowings so that our enterprise-wide loan-to-value ratio does not exceed 50% (measured at time of incurrence). However, our charter does not contain a specific limitation on the amount of debt we may incur, and our board of directors may implement or change our target debt levels at any time without the approval of our stockholders.

        We have executed commitment letters relating to the following four borrowings, which we expect to arrange concurrently with the completion of this offering. We refer to these four borrowings collectively as our new credit facilities in this prospectus.

 

        Swedish Term Loan.    We have executed a commitment letter with Deutsche Pfandbriefbank AG and Swedbank AB, dated November 5, 2014, which is expected to provide us with a medium term secured credit facility with total available borrowings of up to approximately $384.0 million, or the Swedish term loan. We expect that the Swedish term loan will become effective concurrently with the completion of this offering. Borrowings under the Swedish term loan are expected to bear interest at an annual rate equal to 3-month Stockholm Interbank Offered Rate (STIBOR) plus 1.95%, payable on a quarterly basis. The maturity date of the Swedish term loan is expected to be December 11, 2019.

        Norwegian Term Loan.    We have executed a commitment letter with Bolig- og Næringskreditt AS, dated May 6, 2014, which is expected to provide us with a secured term loan with total available borrowings of up to approximately $85.6 million, or the Norwegian term loan. We expect that the Norwegian term loan will become effective concurrently with the completion of this offering. Borrowings under the Norwegian term loan are expected to bear interest at an annual rate equal to the three month Norwegian Interbank Offered Rate (NIBOR) plus 1.80%, payable on a quarterly basis. This facility does not require principal amortization during the first five years of its term, and amortization thereafter will be based on a designated principal payment schedule. The maturity date of the Norwegian term loan is expected to be July 15, 2021.

        Swedish Revolving Credit Facility.    We have executed a commitment letter with Deutsche Pfandbriefbank AG and Swedbank AB, dated November 5, 2014, which is expected to provide us with a revolving secured credit facility with total available borrowings of up to approximately $58.2 million, or the Swedish revolving credit facility. We expect that the Swedish revolving credit facility will become effective concurrently with the completion of this offering. Borrowings under the Swedish revolving credit facility are expected to bear interest at an annual rate equal to 3-month STIBOR plus 2.25%, payable on a quarterly basis. The maturity date of the Swedish revolving credit facility is expected to be December 11, 2019.

        Norwegian Revolving Credit Facility.    We have executed a commitment letter with Bolig- og Næringskreditt AS, dated May 6, 2014, which is expected to provide us with a revolving secured credit facility with total available borrowings of up to approximately $38.9 million, or the Norwegian revolving credit facility. We refer to the Swedish term loan, the Norwegian term loan, the Swedish revolving credit facility and the Norwegian revolving credit facility in this prospectus collectively as our new credit facilities. We expect that the Norwegian revolving credit facility will become effective concurrently with the completion of this offering. Borrowings under the Norwegian revolving credit facility are expected to bear interest at an annual rate equal to the three month NIBOR plus 2.65%, payable on a quarterly basis. The maturity date of the Norwegian revolving credit facility is expected to be 12 months from the closing of this offering (and may be extended at our option on a rolling 12 month basis, subject to our satisfaction of certain conditions).

        In addition, upon completion of this offering, approximately $155.8 million of existing mortgage debt secured by two of our initial properties will remain outstanding. For a further description of the mortgage loans, see Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Contractual Obligations."

Our Hedging Strategy

        All of our leases are denominated in Swedish Krona and Norwegian Krone, and we expect that substantially all of our future leases will be denominated in the local currency of the nation in which the underlying property is located. In addition, we expect that a significant portion of our operating expenses will be transacted in local currencies. We plan to report our results of operations and consolidated financial information in U.S. dollars. In addition, our operating partnership will pay distributions in local currencies or U.S. dollars, and we will pay distributions to our stockholders in U.S. dollars. Accordingly, our operating partnership will hold various foreign currencies at any given

 

time and may enter into foreign currency hedging transactions. As a result, our results of operations as reported in U.S. dollars and our distributions to our stockholders will be impacted by fluctuations in the values of the local currencies in which we conduct our real property business or that are held or acquired for distribution to holders of OP shares against the U.S. dollar.

        In order to mitigate the risk of fluctuations in foreign currency exchange rates, we, our operating partnership and its subsidiaries will actively manage our revenues and expenses so that we incur a significant portion of our expenses, including our operating costs and borrowings, in the same local currencies in which we receive our revenues. In addition, subject to satisfying the requirements for qualification as a REIT, we may engage in various hedging strategies, which may include currency futures, swaps, forwards and options. We expect that these strategies and instruments, if implemented, may allow us to reduce, but not eliminate, the risk of fluctuations in foreign currency exchange rates.

        We also plan, subject to satisfying the requirements for qualification as a REIT, to manage interest rate risk related to our borrowings through the use of interest rate swaps, interest rate caps or other financial instruments. An interest rate swap is a contractual agreement entered into by two counterparties under which each agrees to make periodic payments to the other for an agreed period of time based on a notional amount of principal. We expect that we will primarily utilize interest rate swaps. We expect that our interest rate swaps will typically be floating-to-fixed interest rate swaps, under which we will agree to pay a series of fixed interest rate payments on a notional amount of principal in exchange for a series of floating or variable rate payments, effectively fixing our interest rate on that amount of principal of our variable rate debt. The market values of floating-to-fixed interest rate swaps will depend heavily on the current market fixed rate, the corresponding term structures of variable rates and the expectation of changes in future variable rates. As expectations of future variable rates increase, the market values of the swaps increase. We expect our hedging strategies and instruments may allow us to reduce, but not eliminate, interest rate risk.

Summary Risk Factors

        An investment in our common stock involves a high degree of risk. You should carefully read and consider the risks discussed below and under the caption "Risk Factors" beginning on page 23 of this prospectus before investing in our common stock.

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Our growth will depend to a significant extent upon future acquisitions of real estate assets, and we may be unable to consummate acquisitions on advantageous terms or acquisitions may not perform as we expect.



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Our properties are geographically concentrated in Norway and Sweden, and we will be subject to social, political and economic risks of doing business in these countries and any other country in which we may own property.



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Compliance or failure to comply with certain rules on accessibility for disabled persons under the Norwegian Planning and Building Act, the Swedish Planning and Building Act and under the Danish Buildings Act and other similar regulations could result in substantial costs.



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We depend on certain individual tenants for a substantial amount of our revenues. Any failure by such tenants to perform their obligations or renew their leases upon expiration may harm our business, financial condition, liquidity and results of operations.



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We are exposed to risks associated with leasing properties to government tenants, including certain regulations applicable to government tenants that could adversely impact our ability to enter into leases with government tenants and the timing and cost of our leasing activities.



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Because certain of our principal tenants are governmental entities, our properties may have a higher risk of terrorist attack than similar properties leased to non-governmental tenants.

 

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We may be unable to renew leases or re-lease space as leases expire, which could harm our operating results and ability to make distributions to our stockholders.



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Our real estate investments are concentrated in office and industrial buildings, making us more vulnerable economically than if our investments were more diversified.



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Investors will not have an ability to evaluate our future investments and our past performance is not an indication of our future success.



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Fluctuations in the values of the Norwegian Krone, Swedish Krona and the Danish Krone against the U.S. dollar may have a material and adverse effect on our financial performance.



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We have no experience operating our business as a REIT, U.S. company, Luxembourg corporate partnership or public company and have limited experience reporting in U.S. GAAP.



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Even if we qualify as a REIT, we may be subject to tax (including foreign taxes for which we will not be permitted to pass-through any foreign tax credit to our stockholders), which would reduce the amount of cash available for distributions to our stockholders.



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Our failure to qualify or remain qualified as a REIT would subject us to U.S. federal income tax, which would reduce the amount of cash available for distribution to our stockholders.

REIT Formation Transactions

        Upon completion of this offering, we will engage in a series of transactions, which we refer to as the REIT formation transactions, which will enable us to qualify as a REIT for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2014, facilitate this offering and enable continuing investors to obtain liquidity (after the expiration of applicable lock-up agreements) for their existing investments. Our strategy in electing to be taxed as a REIT and in undertaking this offering is to expand our access to capital in order to position us for significant growth in the size and scope of our real property portfolio, all while delivering attractive risk-adjusted returns to our stockholders.

        The properties that will comprise our initial portfolio are currently held by real estate investment vehicles managed by Obligo, including EBH II, which is our predecessor for financial accounting purposes, Etatbygg Holding I AS, or EBH I, a joint venture between two other investment vehicles, which we refer to as the TRES portfolio, and a joint venture between two other investment vehicles that own two properties located in Kongsberg, Norway, which we refer to as the Kongsberg portfolio. Prior to or concurrently with the completion of this offering, we will engage in the REIT formation transactions that will consolidate our initial real estate portfolio within our operating partnership and its subsidiaries. We will acquire a 100% interest in all of our properties. We will acquire these interests in exchange for an aggregate of 24,668,442 OP shares and approximately $95.0 million in cash.

        The REIT formation transactions include a series of consolidation transactions pursuant to which EBH II and EBH I will exchange their equity interests in subsidiaries that hold office and industrial properties in Norway and Sweden for interests in an intermediate holding company that holds an aggregate of 14,920,488 OP shares of our operating partnership and approximately $25.0 million in cash. In addition, we will acquire the ownership interests in the TRES portfolio, which holds the 12 properties comprising the TRES portfolio, for an aggregate of 7,929,532 OP shares and approximately $49.1 million in cash and the ownership interests in the Kongsberg portfolio for an aggregate of 1,818,422 OP shares and approximately $20.9 million in cash. The agreements relating to the consolidation transactions are subject to customary closing conditions, including the completion of this offering. The terms of the purchase and sale agreements were unanimously approved by the board of directors of each of EBH I and EBH II, including all of their respective independent directors. In addition, the terms of the purchase and sale agreements were unanimously approved by the board of

 

directors of the investment vehicles that hold interests in each of the TRES portfolio and the Kongsberg portfolio, including all of their respective independent directors. See "The History, Structure and Formation of Our Company—REIT Formation Transactions."

        In addition, the following will occur as part of the REIT formation transactions:

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We will internalize our management structure prior to the completion of this offering.



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As part of the internalization, we will issue 369,565 class B OP shares and 369,565 OP shares to Obligo prior to the completion of this offering. The class B OP shares will initially only entitle the holders thereof to participate in nominal distributions paid by our operating partnership, including from operations or upon liquidation of our operating partnership. However, these class B OP shares will, subject to the satisfaction of targeted performance achieved by us as described elsewhere in this prospectus, have the right to participate fully in future distributions paid by our operating partnership on the same basis as OP shares (as if the class B OP shares were converted into an aggregate of 0.5% of our shares of common stock and OP shares (not held by us) outstanding as of the date of completion of this offering).



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We will enter into an interim transition agreement with Obligo. For additional information regarding the interim transition agreement, see "Our Management—Interim Transition Agreement."



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Under the existing organizational documents of EBH II, Obligo and its affiliates are entitled to receive a percentage of the OP shares indirectly received by EBH II and an amount in cash in the consolidation transaction based on EBH II's performance and the value of the consideration to be received by holders of interests in EBH II upon completion of this offering.



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We will sell 43,478,261 shares of our common stock in this offering and up to an additional 6,521,739 shares if the underwriters exercise their overallotment option. We will contribute the net proceeds from this offering to our operating partnership in exchange for 43,478,261 OP shares (or up to 50,000,000 OP shares if the underwriters exercise their overallotment option).



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We will enter into the four new credit facilities and plan to borrow approximately $469.6 under these new credit facilities. We expect to have available an additional $97.1 in borrowing immediately following the completion of this offering under these new credit facilities.



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We will repay approximately $685.0 million of existing indebtedness and pay approximately $33.9 million in prepayment penalties, swap breakage costs and related costs to repay such indebtedness. We will keep outstanding approximately $155.8 million of existing mortgage debt secured by two of our properties. For a further description of the existing mortgage loans to remain outstanding, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Contractual Obligations."



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In connection with our operating partnership's formation, we have issued and sold a total of 745,981 OP shares to certain members of our senior management team. In addition, effective upon completion of this offering, we will issue and sell a total of 123,584 shares of restricted common stock or equity interests in our operating partnership (including LTIP units) to our directors and certain officers under our Equity Incentive Plan. These sales were and are designed to provide an incentive for the recipients and to ensure that their interests are aligned with those of our stockholders and holders of OP shares in connection with the future growth and operation of our business.

        For additional detail on the REIT formation transactions, see "The History, Structure and Formation of Our Company."

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Our Structure

        The following diagram sets forth our expected structure immediately following completion of this offering and the REIT formation transactions:

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Entity is organized under the laws of Norway.

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Entity is organized under the laws of the Grand Duchy of Luxembourg.

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Entity is incorporated under the laws of the State of Maryland.

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Polar Star LP Lux Co, which we refer to as the local holding company, will hold all of the OP shares issued in the REIT formation transactions (other than the GP shares held by us and the OP shares and class B OP shares held by Obligo). See "The History, Structure and Formation of Our Company." Our GP subsidiary is the sole manager (or its equivalent) of the local holding company.

⁽⁵⁾

Interests are held through existing feeder vehicles.

⁽⁶⁾

Includes our senior management team, our directors and Wunderlich Securities.

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Obligo Investment Management AS will hold OP shares and class B OP shares issued as part of the internalization. For additional detail on the class B OP shares, see "Polar Star Operating Partnership S.C.A. Articles of Incorporation—Class B OP Shares."

Equity Incentive Plan

        Prior to the completion of this offering, we will adopt the Polar Star Realty Trust Inc. 2014 Equity Incentive Plan, or the Equity Incentive Plan, which permits us to issue and sell equity-based compensation to our directors, officers, consultants and service providers in the form of stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units, phantom shares, performance-based awards, unrestricted stock, LTIP units and other awards. The maximum number of shares of common stock, OP shares, LTIP units or other awards that may be issued and sold under the Equity Incentive Plan, consisting of authorized but unissued shares, is equal to approximately 3.3% of the shares of our common stock issued and outstanding upon completion of this offering (2,262,580 shares) or approximately 3.4% of the shares of our common stock issued and outstanding upon completion of this offering if the underwriters' exercise their overallotment option in full (2,556,058 shares), in each case, on a fully diluted basis (assuming, if applicable, the exercise of all outstanding options and the conversion of all warrants and convertible securities, including OP shares and LTIP units, into shares of common stock).

 

        Concurrently with the completion of this offering, pursuant to the Equity Incentive Plan, we expect to issue and sell an aggregate of 123,584 shares of restricted common stock or equity interests in our operating partnership (including LTIP units) to our directors and certain officers. The issuances and sales to our directors and certain officers are designed to provide an incentive for the recipient and to align their interests with those of our stockholders and holders of OP shares in connection with the future growth and operation of our business.

Restrictions on Ownership of Our Stock

        In order to assist us in complying with the limitations on the concentration of ownership of REIT stock imposed by the Internal Revenue Code of 1986, as amended, or the Code, among other purposes, our charter generally prohibits any person (other than a person who has been granted an exception, or an excepted holder) from actually, beneficially or constructively owning more than 9.8% by value or number of shares, whichever is more restrictive, of the outstanding shares of common stock, of the outstanding shares of any class or series of our preferred stock and of the outstanding shares of our capital stock. Our charter permits exceptions to be made for stockholders provided, among other requirements, that our board of directors determines such exceptions will not jeopardize our qualification as a REIT. See "Description of Capital Stock—Restrictions on Ownership and Transfer."

Our U.S. Federal Income Tax Status

        We have been organized and we intend to operate in a manner that will enable us to qualify as a REIT for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2014. To qualify as a REIT, we must meet, on an ongoing basis, various tests regarding the nature and diversification of our assets and our income, the ownership of our outstanding stock and the amount of our distributions. Provided that we qualify as a REIT, we will generally not be subject to U.S. federal income tax on our net taxable income (including net capital gains) that we currently distribute to our stockholders. If we fail to qualify as a REIT in any taxable year and do not qualify for certain statutory relief provisions, we would be subject to U.S. federal income tax at regular corporate rates and may not be able to re-elect to be taxed as a REIT for the four taxable years following the year in which we lost our REIT qualification. Even if we qualify as a REIT, we may be subject to U.S. federal, state, local and foreign taxes on our income and property, including income, property, transfer and other taxes imposed by the foreign jurisdictions in which our assets are located and foreign withholding tax on earnings that are repatriated from such jurisdictions, and, in certain cases, a 100% penalty tax in the event we sell property as a dealer. Any taxable REIT subsidiaries, or TRSs, that we form could be subject to U.S. federal, state and local income taxes at regular corporate rates if such entities are formed as domestic entities or generate income from U.S. sources or activities connected to the United States, and also will be subject to any applicable foreign taxes. See "Material U.S. Federal Income Tax Considerations."

Distribution Policy

        We intend to make regular quarterly distributions to our stockholders and holders of OP shares. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay U.S. federal income tax at regular corporate rates to the extent that it annually distributes less than 100% of its taxable income. We intend to pay a pro rata initial distribution of $0.04 per share with respect to the period commencing on the completion of this offering and ending at the last day of the then-current fiscal quarter, based on a distribution of $0.17 per share for a full quarter. On an annualized basis, this would be $0.69 per share, or an annual distribution rate of approximately 6.0% based on the offering price of $11.50 per share. We estimate this initial annual distribution rate will represent approximately 85.3% of estimated cash available for distribution to our common stockholders

 

for the 12-months ending September 30, 2015 on a constant currency basis. We intend to maintain our initial distribution rate for the 12-month period following completion of this offering unless our actual results of operations, economic conditions or other factors differ materially from the assumptions used in our estimate. We do not intend this estimate to be a projection or forecast of our actual results of operations or our liquidity, and have estimated cash available for distribution for the sole purpose of determining the amount of our initial annual distribution rate. Our estimate of cash available for distribution assumes the completion of this offering, including the application of the net proceeds from this offering as described in "Use of Proceeds." We cannot assure you that our distribution policy will not change in the future. These distributions and any future distributions we make will be at the direction of our board of directors and will depend upon a number of factors, including our earnings and financial conditions. See "Distribution Policy" and for a detailed discussion of constant currency, see "Management's Discussion and Analysis of Financial condition and Results of Operations—Non-GAAP Financial Measures—Constant Currency."

Implications of Being an Emerging Growth Company

        We qualify as an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. While we are an emerging growth company, among other things:

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we are exempt from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act;



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we are permitted to provide less extensive disclosure about our executive compensation arrangements;



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we are not required to give to our stockholders non-binding advisory votes on executive compensation or golden parachute arrangements; and



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we have elected not to use an extended transition period for complying with new or revised accounting standards, and this election is irrevocable.

        We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1 billion in annual revenues, have more than $700 million in market value of shares of our common stock held by non-affiliates, or issue more than $1 billion of non-convertible debt securities over a three-year period.

Corporate Information

        Our principal U.S. executive offices are located at One World Financial Center, Suite 2200, New York, New York 10281. Our telephone number is (212) 402-2092. Our website is www.polar-star.com. The information on, or that can be accessed through, our website is not intended to form a part of or be incorporated by reference into this prospectus.

 

THE OFFERING

 

SUMMARY FINANCIAL DATA

        The following table shows summary pro forma financial data for our company and historical financial data for our predecessor for the periods indicated. You should read the following summary pro forma and historical financial data together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the pro forma and historical financial statements and related notes thereto included elsewhere in this prospectus.

        The following summary historical balance sheet data as of December 31, 2013 and 2012 and the historical statements of operations data and cash flows data for the two-year period ended December 31, 2013 have been derived from the audited historical financial statements of our predecessor.

        The summary historical balance sheet data as of September 30, 2014 and historical statements of operations and cash flows data for the nine-month periods ended September 30, 2014 and 2013 have been derived from the unaudited historical financial statements of our predecessor, which we believe include all adjustments (consisting of normal recurring adjustments) necessary to present the information set forth therein under U.S. GAAP.

        Our unaudited summary pro forma results of operations data for the nine months ended September 30, 2014 and for the year ended December 31, 2013 and balance sheet data as of September 30, 2014, give effect to the REIT formation transactions, this offering, the use of proceeds from this offering and certain related transactions, as if those transactions occured on January 1, 2013 for the operating data and on September 30, 2014 for the balance sheet data. Our pro forma financial information is not necessarily indicative of what our actual financial position and results of operations would have been as of the dates and for the periods indicated nor does it purport to represent our future financial position or results of operations.