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Strategy

NorthStar Realty Finance Corp.’s primary objectives are to make real estate-related investments that increase our franchise value and produce attractive risk-adjusted returns, and to generate predictable cash flow for distribution to our stockholders. Our strategy is to target sectors that combine characteristics of real estate, corporate credit and fixed income investments. We believe that we derive a competitive advantage from the combination of our real estate, credit underwriting and capital markets expertise, which enables us to manage credit risk across all three business lines as well as to structure and finance our assets efficiently.

We believe that our complimentary core businesses provide us with the following synergies that enhance our competitive position:

• Sourcing Investments: Commercial mortgage-backed securities, or CMBS, purchased real estate debt and net leased properties are often sourced from the same originators. We can offer a single source of financing by purchasing or originating a rated senior interest for our real estate securities portfolio and an unrated junior interest for our real estate debt portfolio.

• Credit Analysis: Real estate debt interests are usually marketed to investors prior to the issuance of CMBS backed by rated senior interests secured by the same property. By participating in both sectors, we can utilize our underwriting resources more efficiently and enhance our ability to underwrite the securitized debt.

• CDO Financing: Our experience and reputation as a CDO manager gives us access to low cost, match funded financing for our real estate securities and real estate debt investments.

• Capital Allocation: Through our participation in these three businesses and the fixed income markets generally, we benefit from market information that enables us to make more informed decisions with regard to the relative valuation of financial assets and capital allocation.