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NorthStar Realty Finance Announces Second Quarter 2008 Results

Thursday, August 7, 2008 General News J E 4
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NEW YORK, Aug. 7 /PRNewswire-FirstCall/ - NorthStar Realty Finance Corp.(NYSE: NRF) today announced its results for the quarter ended June 30, 2008.

NorthStar reported adjusted funds from operations ("AFFO") for the quarterof $0.35 per share versus $0.39 per share for the second quarter 2007. AFFOfor the second quarter 2008 was $24.9 million, unchanged from the secondquarter 2007. Net income available to common stockholders for the secondquarter 2008 was a loss of ($18.5) million, or ($0.30) per share, compared to$11.0 million, or $0.18 per share for second quarter 2007. Second quarter netincome and AFFO include $4.9 million of placement fee expenses for issuing $80million of exchangeable notes. Excluding this charge, net income and AFFO onan aggregate and per share basis was ($13.6) million and ($0.22), and $29.9million and $0.43, respectively for second quarter 2008.

At June 30, 2008, diluted GAAP book value per common share was $12.23.For the quarter ended June 30, 2008, NorthStar generated an 18.4% return onaverage common book equity, excluding general and administrative expenses andthe one-time charge, and 11.5% inclusive of these corporate costs. For areconciliation of net income to AFFO and calculations of return on averagecommon book equity and diluted book value per common share, please refer tothe tables on the following pages.

David T. Hamamoto, chairman and chief executive officer commented,"NorthStar had a busy second quarter, further solidifying its balance sheetand liquidity position, delivering strong portfolio credit performance in achallenging market and finding investment opportunities which have thepotential to deliver strong future returns. Since the first quarter, weraised approximately $170 million of corporate capital from our lowerreturning net lease portfolios, further augmenting our dry powder to deployinto the unique and higher returning investment opportunities we are beginningto see in these disrupted markets."

Mr. Hamamoto continued, "We expect macroeconomic conditions to remainchallenging into 2009 and believe that NorthStar's past emphasis on firstmortgage direct originations, while staying away from the high profile andhighly leveraged syndicated financings in 2006 and 2007, has served us well.We believe that our solid asset base and our experienced portfolio managementteam have positioned NorthStar to outperform the market through thesedifficult times."

Investment Summary

NorthStar funded $89 million of new real estate loan investments duringthe quarter. The Company funded $63 million relating to prior period loancommitments and received $53 million in proceeds from loan repayments duringthe quarter. The Company invested in $38 million of securities and received$23 million of proceeds from securities payoffs and sales. In addition,NorthStar acquired $35 million face amount of its own CDO notes at an average40% discount to par with ratings ranging from AA to BBB and recognized a $7.1million gain compared to its carrying value. NorthStar also invested $16million into its securities fund and $6 million into its LandCap Partnersjoint venture with Whitehall Real Estate, a Goldman, Sachs and Co. affiliate.NorthStar did not invest in any healthcare or corporate net lease propertiesduring the quarter.

As of June 30, 2008, NorthStar had approximately $6.4 billion of assetsunder management.

Financing and Risk Management

At June 30, 2008, NorthStar had $505 million outstanding under its $946million of committed on-balance sheet secured term and revolving creditfacilities. Total available liquidity at June 30, 2008 was approximately $205million, including $137 million of unrestricted cash and cash equivalents, and$68 million of uninvested cash in its CDO secured term financings. Inclusiveof the net proceeds received from the July 9, 2008 sale of preferred equi
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