NorthStar reported adjusted funds from operations ("AFFO") for the second quarter 2009 of $0.26 per share compared to $0.42 per share for the second quarter 2008. AFFO for the second quarter 2009 was $19.5 million, compared to $29.2 million for the second quarter 2008. Net loss to common stockholders for the second quarter 2009 was ($4.3) million, or ($0.06) per share, compared to a loss of ($25.1) million, or ($0.40) per share for second quarter 2008. Second quarter 2009 net loss includes ($1.9) million of unrealized losses relating to mark-to-market adjustments, compared to ($42.1) million of unrealized losses in the second quarter 2008. The non-cash mark-to-market income is excluded from AFFO.

At June 30, 2009, diluted GAAP book value per common share was $17.74. For the quarter ended June 30, 2009, NorthStar generated a 9.1% return on average common book equity, excluding general and administrative expenses, and 5.8% inclusive of these corporate costs. For a reconciliation of net income to AFFO and calculations of return on average common book equity and diluted book value per common share, please refer to the tables on the following pages.

David T. Hamamoto, chairman and chief executive officer, commented, "NorthStar continues to navigate these very difficult market conditions by focusing intensively on liquidity and credit risk management. This quarter we made significant progress on reducing our non-discretionary future funding obligations, which should result in approximately $80 million of unrestricted cash savings for NorthStar over the next 12 to 18 months. Credit conditions are getting more challenging across the sector, but we believe our focus on strong investment structures, disciplined underwriting and diversification, combined with our experienced risk management team should enable NorthStar to continue to outperform other market participants."

Mr. Hamamoto continued, "Looking forward, we still believe there will be exceptional investment opportunities arising from this economic and financial crisis. Our strategy, announced last quarter, is to raise and manage fresh equity capital in the non-listed REIT market. We are committed to penetrating this market as the leading investor in commercial real estate debt and fixed income securities."

Investment Summary

During the second quarter 2009, NorthStar repurchased $22 million face amount of its 7.25% exchangeable notes for approximately $9 million cash at a 56% average discount to par. NorthStar also sold to an unaffiliated party, at par, three loans totaling $39 million. Concurrent with the sale of the loans, NorthStar provided to the buyer a new loan collateralized by the sold loans and a $5 million guarantee on an unrelated property. During the second quarter 2009, NorthStar received $40 million of loan repayments, of which $16 million represented partial repayments and $24 million related to a discounted repayment on a $28 million first mortgage loan well in advance of its final maturity date. NorthStar also invested in $50 million of securities, and received $49 million of proceeds from securities sales. No net lease properties were acquired during the second quarter 2009.

NorthStar had approximately $6.6 billion of assets under management at June 30, 2009.

Financing

Total available liquidity at June 30, 2009 was approximately $263 million, including $106 million of unrestricted cash and cash equivalents, and $157 million of uninvested and available cash in NorthStar's secured term financings. At June 30, 2009, NorthStar had $415 million outstanding under its secured term and revolving credit facilities and the average cost of NorthStar's on-balance sheet debt was 3.34%. NorthStar intends to fully repay the approximately $12 million outstanding balance on its credit facility with JP Morgan on its August 8, 2009 maturity date. As of July 31, 2009, NorthStar has repurchased a total of $104 million face of its 7.25% exchangeable notes for approximately $45 million cash, and $18 million face of its 11.50% exchangeable notes for approximately $10 million cash. During the second quarter, NorthStar reduced future funding commitments on real estate loans by $116 million.

Risk Management

As of June 30, 2009, NorthStar had four non-performing loans ("NPLs"), as previously announced, with aggregate outstanding principal balances totaling $73 million. NorthStar designates a loan as non-performing at such time as the loan becomes 90 days delinquent on contractual debt service payments or the loan has a maturity default. NorthStar recorded $17 million of credit loss provisions relating to eight loans during the second quarter 2009, increasing total credit loss reserves to $50 million on 13 loans at June 30, 2009. During the second quarter, NorthStar had a $4 million charge-off related to the discounted payoff on the $28 million first mortgage bearing a LIBOR + 4.5% interest rate and having a February 2012 final maturity date. NorthStar agreed to take the discounted payoff nearly 32 months in advance of the loan's final maturity date.

The weighted average first and last dollar loan-to-value ratios of NorthStar's real estate loans were 26.7% and 81.0%, respectively, at June 30, 2009. NorthStar generally uses original loan-to-cost statistics in its reported loan-to-value ratios, except when there are asset-specific events which would indicate revaluation of the collateral is necessary, such as for loans where a credit loss reserve is deemed appropriate and for non-performing loans.

NorthStar's NPLs at June 30, 2009 consist of a first mortgage with an outstanding balance of $21 million secured by a condo/hotel development site in New York City, a first mortgage with an outstanding balance of $14 million secured by a seven-unit condominium/multi-family development site in New York City, a junior participation in a first mortgage with an outstanding balance of $29 million secured by a master planned community located in Orlando, Florida, and a mezzanine loan with an outstanding balance of $9 million secured by a multi-family development site located in Washington, DC. Three of the NPLs have maturity defaults and NorthStar has reserves totaling $15 million for these assets, the fourth is 90 days delinquent in debt service payments and has reserves fully covering its $9 million balance.

NorthStar's securities portfolio had 64 downgrades representing $345 million of securities during the second quarter 2009. NorthStar reports all current rating actions issued by each agency independently of actions issued during prior quarters. The average credit rating of NorthStar's real estate securities was BB+/Ba1, which was the same as the prior quarter. During the second quarter 2009, S&P downgraded several classes of notes issued by five NorthStar commercial real estate term financings primarily backed by commercial real estate securities, N-Star I, II, III, VII, and IX. During the second quarter, Moody's downgraded several classes of notes issued by N-Star IV, and Fitch downgraded several classes of notes issued by N-Star V, two NorthStar commercial real estate term financings. Rating agency actions associated with NorthStar's issued secured term debt notes have no impact on the payment terms of such debt.

NorthStar's net lease portfolio was 92% leased and net lease assets have an 8.3 year weighted average remaining lease term as of June 30, 2009. During the quarter, NorthStar completed two lease renewals totaling approximately 201,439 square feet of rentable space for Lockheed Martin, a sub-tenant in a joint venture property located in Colorado, and Cincom Systems, Inc. located in Ohio. For more information regarding the core net lease assets, please refer to the tables on the following pages.

Andrew C. Richardson, chief financial officer and treasurer, stated, "This quarter we continue to make significant progress in bolstering liquidity by reducing future funding obligations as well as seeking asset monetization opportunities through which we can generate liquidity and manage credit by accommodating discounted payoffs. We will be selective in taking discounts, and only when we believe there is an economic and/or credit benefit from doing so."

Mr. Richardson continued, "NorthStar remains in compliance with all of its overcollateralization and interest coverage tests in its CDO financings as of June 30, 2009, and we have seen compelling investment opportunities that are enabling us to aggressively manage our CDOs in anticipation of future downgrade actions, especially from Standard and Poor's, who has put most of its rated CMBS universe on watch for downgrade. Downgrade actions can negatively impact overcollateralization tests, even if the related security is performing according to its contractual terms."

Stockholder's Equity and Dividends

At June 30, 2009, NorthStar had 76,067,306 total shares and operating partnership units outstanding, and $107.9 million of minority interest relating to its operating partnership. During the second quarter 2009, NorthStar sold approximately 1.2 million common shares at a weighted average net price of $3.08 per share. Book value per diluted common share was $17.74 at June 30, 2009. Exclusive of all unrealized mark-to-market adjustments and accumulated depreciation, book value at June 30, 2009 would be $7.89 per diluted common share. For a calculation of book value per diluted common share, please refer to the table on the following pages.

On July 21, 2009, NorthStar announced that it's Board of Directors declared a dividend of $0.10 per share of common stock, payable with respect to the quarter ended June 30, 2009. The dividend is expected to be paid on August 14, 2009 to shareholders of record as of the close of business on August 4, 2009.

Earnings Conference Call

NorthStar will hold a conference call to discuss second quarter 2009 financial results on Friday July 31, 2009, at 11:00 AM Eastern time. Hosting the call will be David Hamamoto, chairman, president and chief executive officer, and Andrew Richardson, chief financial officer and treasurer. The Company will post on its website, http://www.nrfc.com/, a June 30, 2009 update to its corporate presentation.

The call will be webcast live over the Internet from NorthStar's website, http://www.nrfc.com/, and will be archived on the Company's website. The call can also be accessed live over the phone by dialing 877-941-1469, or for international callers, by dialing 480-629-9676.

A replay of the call will be available one hour after the call through Friday August 7, 2009 by dialing 800-406-7325 or 303-590-3030 for international callers, using pass code 4117554.

About NorthStar Realty Finance Corp.

NorthStar Realty Finance Corp. is a finance REIT that primarily originates and invests in commercial real estate debt, real estate securities and net lease properties. For more information about NorthStar Realty Finance Corp., please visit http://www.nrfc.com/.

   NorthStar Realty Finance Corp.   Consolidated Statements of Operations   (Amounts in thousands)                              Three Months Ended         Six Months Ended                                   June 30,                  June 30,                              ------------------         ----------------                              2009         2008         2009         2008                              ----         ----         ----         ----                           (unaudited)  (unaudited)  (unaudited) (unaudited)   Revenues and other income:   Interest income           $35,749      $49,885      $72,533     $113,590   Interest income -    related parties            4,443        3,582        8,950        7,343   Rental and escalation    income                    24,401       29,020       51,649       57,977   Advisory and management    fee income -related    parties                    1,808        6,546        3,499        8,876   Other revenue                 178        3,983          346        4,959                                 ---        -----          ---        -----         Total revenues       66,579       93,016      136,977      192,745   Expenses:       Interest expense       31,921       46,522       66,033      101,980       Real estate        properties -        operating expenses     2,806        2,037        4,933        4,085       Asset management        fees -related        parties                  854          933        1,707        3,039       Provision for        loan losses           17,000        2,500       38,462        3,250   General and    administrative:       Salaries and        equity based        compensation (1)      11,235        9,925       22,845       21,655       Auditing and        professional fees      2,274        1,234        4,537        3,675       Other general and        administrative         3,464        3,532        7,046        7,415                               -----        -----        -----        -----         Total general and          administrative      16,973       14,691       34,428       32,745   Depreciation and    amortization              17,382        9,977       32,196       19,915                              ------        -----       ------       ------         Total expenses       86,936       76,660      177,759      165,014   Income (loss)    from operations          (20,357)      16,356      (40,782)      27,731   Equity in earnings/    (loss) of    unconsolidated    ventures                     159       (5,440)      (4,259)      (5,618)   Unrealized (loss)gain on    investments and other       (616)     (41,257)      90,045      169,688   Realized gain on    investments and other     23,283        7,074       60,196        7,084                              ------        -----       ------        -----   Consolidated net    income (loss)              2,469      (23,267)     105,200      198,885     Net income (loss)      attributable to the      non-controlling      interests               (1,490)       3,439      (14,355)     (19,677)   Preferred stock    dividends                 (5,231)      (5,231)     (10,463)     (10,462)                              ------       ------      -------      -------   Net income (loss)    attributable to    NorthStar Realty    Finance Corp. common    stockholders             ($4,252)    ($25,059)     $80,382     $168,746                             =======     ========      =======     ========   Net income (loss)    attributable    to NorthStar    Realty Finance    Corp. common    stockholders    (basic/diluted)           ($0.06)      ($0.40)       $1.22        $2.69                              ======       ======        =====        =====   Weighted average number    of shares of    common stock:       Basic              67,353,541   62,708,688   65,964,065   62,662,208       Diluted            75,049,690   70,192,538   73,660,271   69,799,329    (1) The three months ended June 30, 2009 and 2008 include $5,320 and       $5,966 of equity based compensation expense, respectively.  The six       months ended June 30, 2009 and 2008 include $10,465 and $12,957 of       equity based compensation expense, respectively.        NorthStar Realty Finance Corp.