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Northstar Realty Finance Announces Sale of $100 Million Interest in Wakefield

Thursday, July 10, 2008 General News
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NEW YORK, July 10 NorthStar Realty Finance Corp.("NorthStar") (NYSE: NRF) today announced that its majority owned healthcarereal estate venture, Wakefield Capital, LLC ("Wakefield"), has sold a $100million convertible preferred equity interest to Inland American Real EstateTrust, Inc. ("Inland American"). NorthStar will receive approximately $90million of the net proceeds from the transaction.
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Prior to conversion, the convertible preferred investment will yield adividend of 10.5%. The convertible preferred equity may be converted orredeemed, at Inland American's option, upon the sale or recapitalization ofthe Wakefield venture. Wakefield may, at its option, redeem the convertiblepreferred interests at any time following the first anniversary of theclosing, subject to payment of a call premium that declines over time. Inaddition, at any time after the second anniversary of the closing, InlandAmerican may convert its preferred equity interests into common equity inWakefield. Based on the current investment amount and capital accounts of theWakefield members, the convertible preferred equity interests would represent,upon conversion, approximately a 42% common equity ownership interest inWakefield. Inland American will have the option of contributing additionalpreferred equity and participating in new Wakefield investment opportunitiesin proportion to its percentage ownership interest, assuming it were toconvert its interests to common equity.
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David T. Hamamoto, Chairman and Chief Executive Officer of NorthStar,commented, "We are pleased to continue our healthcare real estate investmentstrategy in partnership with Chain Bridge Capital LLC and with new sponsorshipfrom Inland American. This recapitalization provides us with the significantliquidity that we were seeking to achieve in a sale of Wakefield, as well asthe opportunity to continue to participate along with our partners in thevalue creation opportunity that we see in the healthcare real estate sector."Mr. Hamamoto continued, "The capital raised in this transaction, together withthe $80 million of convertible notes that we issued in May, further enhancesour liquidity and positions NorthStar to take advantage of some of the bestmarket opportunities that we have seen in years."

Safe Harbor Statement

Certain items in this press release may constitute forward-lookingstatements within the meaning of the Private Securities Litigation Reform Actof 1995. These statements are based on management's current expectations andbeliefs and are subject to a number of trends and uncertainties that couldcause actual results to differ materially from those described in theforward-looking statements; NorthStar can give no assurance that itsexpectations will be attained. Factors that could cause actual results todiffer materially from NorthStar's expectations include, but are not limitedto changes in economic conditions generally and the real estate and bondmarkets specifically, legislative or regulatory changes (including changes tolaws governing the taxation of REITs), availability of capital, interest ratesand interest rate spreads, policies and rules applicable to REITs, thecontinued service of key management personnel, the effect of competition inthe real estate finance industry, the costs associated with compliance andcorporate governance, including the Sarbanes-Oxley Act of 2002 and relatedregulations and requirements, and other risks detailed from time to time inNorthStar's SEC reports. Factors that could cause actual results to differmaterially from those in the forward-looking statements are specified in theCompany's Annual Report on Form 10-K for the year ended December 31, 2007.Such forward-looking statements speak only as of the date of this pressrelease. NorthStar expressly disclaims any obligation to release publicly anyupdates or revisions to any forward-looking statements contained
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