TABLE OF CONTENTS
on-balance sheet financings of our real estate debt, securities, corporate loans and net lease investments increased from $1.8 billion from June 30, 2006 to $4.6 billion on June 30, 2007 and includes the partial impact of the June 2007 closing of our $172.5 million of our exchangeable notes and $265.0 million from the MC Facility. In addition, there was an increase in our average borrowing rate on our non-hedged variable rate debt due to increased LIBOR rates.
Real Estate Properties – Operating Expenses
Property operating expenses for the three months ended June 30, 2007 totaled $2.9 million, representing an increase of $0.9 million, or 45%, compared to $2.0 million for the three months ended June 30, 2006. The increase was attributable to net lease properties acquired subsequent to June 30, 2006.
General and Administrative
General and administrative expenses for the three months ended June 30, 2007 totaled $14.1 million and increased $5.5 million, or 64%, compared to $8.6 million for the three months ended June 30, 2006. The increase is comprised of the following:
Salaries and equity-based compensation for the three months ended June 30, 2007 totaled $8.9 million, including equity based compensation of $4.2 million, representing an increase of approximately $2.9 million, or 48%, compared to $6.0 million, including equity-based compensation of $2.7 million, for the three months ended June 30, 2006. The increase was primarily attributable to an increase in salaries of $1.5 million due to higher staffing levels to accommodate the expansion of our business throughout 2006 into 2007. Equity-based compensation expense for the three months ended June 30, 2007 increased by $1.4 million from the three months ended June 30, 2006. The increase in equity based compensation was attributable to approximately $1.6 million relating to the vesting of equity based awards issued under our 2004 Omnibus Stock Incentive Plan (which includes additional grants of 1.1 million LTIP units subsequent to June 2006), $0.1 million in additional compensation expense related to our Employee Outperformance Plan and $0.1 million of additional compensation to our board of directors. This increase was offset by the accelerated vesting in 2006 of $0.4 million grants to our former CFO in connection with his termination agreement.
Auditing and professional fees for the three months ended June 30, 2007 totaled $1.3 million, representing an increase of $0.7 million, or 117%, compared to $0.6 million for the three months ended June 30, 2006. The increase was primarily attributable to professional fees relating to legal fees for general corporate work, and investment activities, recruiting fees for new hires, and fees related to agreed upon procedures in connection with CDOs.
Other general and administrative expenses for the three months ended June 30, 2007 totaled $3.9 million, representing an increase of approximately $1.9 million, or 95%, compared to $2.0 million for the three months ended June 30, 2006. These costs include occupancy costs related to the new lease for the relocation of our corporate offices, the lease for our new LA office, printing expenses, public relations, cash management fees, software costs, and licensing fees.
Depreciation and Amortization
Depreciation and amortization expense for the three months ended June 30, 2007 totaled $7.8 million, representing an increase of $5.0 million, or 179%, compared to $2.8 million for the three months ended June 30, 2006. This increase was primarily attributable to $806.8 million of net lease acquisitions made subsequent to June 30, 2006.
Equity in Earnings of Unconsolidated Ventures
Equity in earnings for the three months ended June 30, 2007 totaled a loss of $0.6 million representing a decrease of $0.7 million compared to $0.1 million for the three months ended June 30, 2006. The decrease was attributable to the operations of Monroe Management which generated a loss of $0.7 million, which was partially offset by a net lease joint venture we entered into in February 2006 which had equity in earnings of $0.1 million.
Unrealized Gain (Loss) on Investments and Other
Unrealized gain (loss) on investments and other increased by approximately $0.4 million for the three months ended June 30, 2007 to a loss of $0.9 million from a loss of $0.5 million for the three months ended
TABLE OF CONTENTS
June 30, 2006. The unrealized loss on investments for the three months ended June 30, 2007 consisted of a $0.4 million mark-to-market loss on our CDO warehouse agreement as a result of a decline in the fair market value of collateral held in the warehouses, and a $1.0 million mark-to-market loss on the credit default swaps in our synthetic CDO. Both mark-to-market adjustments resulted from credit spread widening in the commercial real estate securities markets precipitated by credit issues in the residential sub-prime lending markets. We also had a $0.2 million unrealized loss related to the ineffective portion on the hedge of CDO VII. These negative adjustments were slightly offset by a $0.5 million unrealized gain on a US treasury note short sale and a $0.2 million unrealized gain related to the ineffective portion of one of our interest rate swaps in CDO IX. The unrealized loss on investment for the three months ended June 30, 2006 consists of a $0.4 million mark-to-market loss on the securities and $0.5 million gain that represents the net Carry on the accumulated securities held under the CDO VII warehouse agreement. This was offset by a net unrealized mark-to-market loss of $0.6 million related to the closing of CDO VII and the termination of the warehouse agreement.
Realized Gain on Investments and Other
Realized gain for the three months ended June 30, 2007 consisted of a realized loss on the settlement of US treasury note short sale entered into as a hedge offset by a gain on assets sold. The realized gain of $0.6 million for the three months ended June 30, 2006 related to gain on the net Carry in connection with the closing of CDO VII and termination of the warehouse agreement.
Income from Discontinued Operations, Net of Minority Interest
Income from discontinued operations represents the operations of properties sold or held for sale during the period. In April 2007, our Wakefield venture sold two assisted care living facilities. In the first quarter 2006, we sold our leasehold interest in 27 West 34th Street and terminated the leasehold interest in 1372 Broadway in January 2006. Accordingly, these leasehold interests operations were reclassified to income from discontinued operations.
Comparison of the Six Months Ended June 30, 2007 to Six Months Ended June 30, 2006
Revenues
Interest Income
Interest income for the six months ended June 30, 2007 totaled $138.2 million, representing an increase of $92.9 million, or 205%, compared to $45.3 million for the six months ended June 30, 2006. The increase was primarily attributable to increased investment activity and asset growth. We originated or acquired real estate debt, securities and net lease investments with a net book value of $2.9 billion subsequent to June 30, 2006. Income from new investment activities was slightly offset by approximately $806.8 million of real estate securities and debt repayments since June 30, 2006.
Interest Income – Related Parties
Interest income from related parties for the six months ended June 30, 2007 totaled $5.9 million, representing an increase of $0.1 million, or 2%, compared to $5.8 million for the six months ended June 30, 2006. Interest income from related parties is primarily attributable to our investment in the non-investment grade note classes of our unconsolidated CDOs. All of our securities CDOs completed since 2006 have been accounted for as on-balance sheet financings.
Rental and Escalation Income
Rental and escalation income for the six months ended June 30, 2007 totaled $41.2 million, representing a $26.8 million, or 186%, increase compared to $14.4 million for the six months ended June 30, 2006. The increase was attributable to the $806.8 million of real estate acquisitions made subsequent to June 30, 2006. These acquisitions collectively contributed additional rental income of $25.0 million. In addition, properties acquired during the first half 2006 contributed additional rental income of $1.7 million as a result of having two full quarters benefit of the properties income in 2007.
Advisory and Management Fee Income – Related Parties
Advisory fees from related parties for the six months ended June 30, 2007 totaled $2.8 million, representing a decrease of approximately $0.2 million, or 7%, compared to $3.0 million for the six months ended
28
TABLE OF CONTENTS
June 30, 2006. The decrease is the result of lower advisory fees on our unconsolidated CDOs as a result of lower collateral balances due to asset paydowns.
Other Revenue
Other revenue for the six months ended June 30, 2007 totaled $3.6 million, representing an increase of $1.2 million, or 50%, compared to $2.4 million for the six months ended June 30, 2006. Other revenue for the six months ended June 30, 2007 included $1.9 million of recurring income from premiums received on credit default swaps related to Abacus NS2, a consolidated synthetic CDO we acquired in August 2006, $0.3 million related to a one-time consent fee on the early repayment of one of our real estate securities investment, $1.3 million in prepayment penalties and loan assumption fees from loans in our real estate debt portfolio. Other revenue for the six months ended June 30, 2006 included the recognition of incentive income of $1.2 million in connection with sale of our interest in the NSF venture on February 1, 2006, $0.7 million of prepayment fees on the early repayment of four of our real estate debt investments and $0.3 million related to other reimbursement income from our net lease properties.
Expenses
Interest Expense
Interest expense for the six months ended June 30, 2006 totaled $112.1 million, representing an increase of $77.9 million, or 228%, compared to $34.2 million for the six months ended June 30, 2006. This increase was primarily attributable to an increase in debt outstanding from the financing of our new investments. Our on-balance sheet financings of our real estate debt, securities, corporate loans and net lease investments increased from $1.8 billion as of June 30, 2006 to $4.6 billion in June 30, 2007 and included the partial period impact of the June closing of our $172.5 million of our exchangeable notes and the $265.0 million from our MC facility. In addition there was an increase in our average borrowing rate on our non-hedged variable rate debt due to increased LIBOR rates.
Real Estate Properties – Operating Expenses
Property operating expenses for the six months ended June 30, 2007 totaled $5.6 million, representing an increase of $2.1 million, compared to $3.5 million for the six months ended June 30, 2006. The increase was attributable to net lease properties acquired subsequent to June 30, 2006. These acquisitions collectively contributed $1.9 million of operating expenses. Properties acquired during first and second quarter 2006 contributed additional property operating expenses of $0.2 million as a result of having two full quarter’s expense in 2007.
General and Administrative
General and administrative expenses for the six months ended June 30, 2007 totaled $28.6 million and increased $12.9 million, or 82%, compared to $15.7 million for the three months ended June 30, 2006. The increase is comprised of the following:
Salaries and equity-based compensation for the six months ended June 30, 2007 totaled $17.7 million, including equity based compensation of $7.9 million, representing an increase of approximately $7.7 million, or 77%, compared to $10.0 million, including equity-based compensation of $4.5 million, for the six months ended June 30, 2006. The increase was primarily attributable to an increase in salaries of $4.3 million due to higher staffing levels to accommodate the expansion of our business throughout 2006 into 2007. Equity-based compensation expense for the six months ended June 30, 2007 increased by $3.4 million over the six months ended June 30, 2006. The increase in equity based compensation was attributable to approximately $2.7 million relating to the vesting of equity based awards issued under our 2004 Omnibus Stock Incentive Plan (which includes additional grants of 1.2 million LTIP units in the first half of 2007), $0.3 million in additional compensation expense relating to the 84,755 LTIP units granted under our Long Term Incentive Bonus Plan, $0.3 million in additional compensation expense related to our Employee Outperformance Plan and $0.1 million in additional compensation expense related to our board of directors annual grants.
Auditing and professional fees for the six months ended June 30, 2007 totaled $4.0 million, representing an increase of $1.7 million, or 74%, compared to $2.3 million for the six months ended June 30, 2006. The
29
TABLE OF CONTENTS
increase was primarily attributable to professional fees relating to legal fees for general corporate work, and investment activities, recruiting fees for new hires, and fees related to agreed upon procedures in connection with CDOs.
Other general and administrative expenses for the six months ended June 30, 2007 totaled $6.9 million, representing an increase of approximately $3.5 million, or 103%, compared to $3.4 million for the six months ended June 30, 2006. These costs include occupancy costs related to new lease for the relocation of our corporate offices, the lease for our new LA office, printing expenses, public relations, cash management fees, software costs, and licensing fees.
Depreciation and Amortization
Depreciation and amortization expense for the six months ended June 30, 2007 totaled $14.4 million, representing an increase of $9.1 million, or 172%, compared to $5.3 million for the six months ended June 30, 2006. This increase was primarily attributable to $806.8 million of net lease acquisitions made subsequent to June 30, 2006.
Equity in Earnings of Unconsolidated Ventures
Equity in earnings for the six months ended June 30, 2007 totaled a loss of $0.6 million representing a decrease of $0.8 million compared to $0.2 million for the six months ended June 30, 2006. The decrease was attributable to the operations of Monroe Management which generated a loss of $0.8 million which was partially offset by a net lease joint venture we entered into in February 2006 which generated equity in earnings of $0.2 million.
Unrealized Gain on Investments and Other
Unrealized gain (loss) on investments and other decreased by approximately $9.8 million for the six months ended June 30, 2007 to a loss of $8.2 million from a gain of $1.6 million for the six months ended June 30, 2006. The unrealized loss on investments for the six months ended June 30, 2007 consisted of a $4.2 million mark-to-market loss on our CDO warehouse agreement as a result of a decline in the fair market value of collateral held in the warehouses, and a $5.1 million mark-to-market loss on the credit default swaps in our synthetic CDO. Both mark-to-market adjustments resulted from credit spread widening in the commercial real estate securities markets precipitated by credit issues in the residential sub-prime lending markets. We also had a $0.2 million unrealized loss related to the ineffective portion of the hedge of CDO VII. These negative adjustments were slightly offset by a $0.5 million unrealized gain on securities sold, not yet purchased and a $0.8 million unrealized gain related to the ineffective portion of one of our interest rate swaps in CDO IX. The unrealized gain on investment for the six months ended June 30, 2006 consists of a $1.5 million mark-to-market gain on the securities of CDO VII warehouse prior to the closing of the CDO on June 22, 2006 and a $0.5 million gain which represents the net Carry on the accumulated securities held under the CDO VIII warehouse agreement offset by a $0.4 million mark-to-market loss on securities.
Realized Gain on Investments and Other
The realized gain of $2.5 million for the six months ended June 30, 2007 is primarily related to the increase in fair value related to the net Carry of securities during the warehouse period of $1.3 million, which was realized at the close of CDO IX and a gain of $1.5 million on the early redemption of REIT debt securities in CDO VII, partially offset by a realized loss of $0.3 million on the closing of short securities position. The realized gain of $0.8 million for the six months ended June 30, 2006 represented the net Carry on securities during the warehouse period on CDO VII and CDO III. This was offset for the six months ended June 30, 2006 by a $0.1 million loss related to the sale of our investments in AAA-rated, short term, floating rate securities.
Income from Discontinued Operations, Net of Minority Interest
Income from discontinued operations represents the operations of properties sold or held for sale during the period. In 2007, our Wakefield venture sold two assisted care living facilities, which closed April 2007. In the first quarter 2006, we sold our leasehold interest in 27 West 34th Street and terminated the leasehold interest in 1372 Broadway in January 2006. Accordingly, these leasehold interests operations were reclassified to income from discontinued operations.
30
TABLE OF CONTENTS
Gain on Sale from Discontinued Operations, Net of Minority Interest
We sold our leasehold interest in 27 West 34th Street and terminated the leasehold interest in 1372 Broadway in January 2006 and recognized a gain on sale, net of minority interest of $0.1 million for the six months ended June 30, 2006. We had no such gain for the six months ended June 30, 2007.
Gain on Sale of Joint Venture Interest, Net of Minority Interest
On February 1, 2006, we sold our interests in the NSF venture to the NSF venture investor and terminated the associated advisory agreements for total consideration of $2.9 million. We recognized a gain on sale, net of minority interest of $0.3 million for the six months ended June 30, 2006. We had no such gain for the six months ended June 30, 2007.
Liquidity and Capital Resources
We require significant capital to fund our investment activities and operating expenses. Currently, our capital sources include cash flow from operations, borrowings under revolving credit facilities, financings secured by our assets such as first mortgage and CDO financings, long-term senior and subordinate corporate capital such as senior notes, trust preferred securities and the perpetual preferred and common stock.
Our total available liquidity at June 30, 2007 was approximately $581.0 million, including, $41 million of unrestricted cash and cash equivalents, $281.0 million of cash in our CDOs, which is available for reinvestment within the CDO, and $259.0 million of available undrawn liquidity on our credit facilities.
As a REIT, we are required to distribute at least 90% of our annual REIT taxable income to our stockholders, and we intend to distribute all or substantially all of our REIT taxable income in order to comply with the REIT distribution requirements of the Internal Revenue Code and to avoid federal income tax and the non deductible excise tax.
These distribution requirements limit our ability to retain earnings and thereby replenish or increase capital committed to its operations; however, we believe that our access to capital resources and financing will enable us to meet current and anticipated capital requirements. We believe that our existing sources of funds will be adequate for purposes of meeting our short-term liquidity needs. Our ability to meet a long-term (beyond one year) liquidity requirement is subject to obtaining additional debt and equity financing. Any decision by our lenders and investors to provide us with financing will depend upon a number of factors, such as our compliance with the terms of its existing credit arrangements, our financial performance, industry or market trends, the general availability of and rates applicable to financing transactions, such lenders’ and investors’ resources and policies concerning the terms under which they make capital commitments and the relative attractiveness of alternative investment or lending opportunities. On June 30, 2006, we filed a shelf registration statement with the Securities and Exchange Commission on Form S-3 which was amended on April 11, 2006 and declared effective by the Securities and Exchange Commission on April 26, 2006. We completed five offerings since the shelf was declared effective.
Unsecured Exchangeable Senior Notes
In June 2007, we issued $172.5 million of 7.25% exchangeable senior notes (the “Notes”) which are due in 2027. The Notes were offered in accordance with Rule 144A under the Securities Act of 1933, as amended. The Notes will pay interest semi-annually on June 15 and December 15, at a rate of 7.25% per annum, and mature on June 15, 2027. The Notes have an initial exchange rate representing an exchange price of $16.89 per share of our common stock. The initial exchange rate is subject to adjustment under certain circumstances. The Notes are senior unsecured obligations of our operating partnership and may be exchangeable upon the occurrence of specified events, and at any time on or after March 15, 2027, and prior to the close of business on the second business day immediately preceding the maturity date, into cash or a combination of cash and shares of our common stock, if any, at our option. The Notes are Redeemable, at our option on, and after June 15, 2014. We may be required to repurchase the Notes on June 15, 2012, 2014, 2017 and 2022 and upon the occurrence of certain designated events. The net proceeds from the offering were approximately $167.5 million, after deducting estimated fees and expenses. The proceeds of the offering were used to repay certain of our existing indebtedness, to make additional investments and for general corporate purposes.
As of June 30, 2007, we had outstanding approximately $172.5 million of senior unsecured Notes.
31
TABLE OF CONTENTS
In March 2007, a wholly owned subsidiary of ours, NorthStar Realty Finance Trust VII, completed a private placement of $37.5 million of trust preferred securities. The sole assets of the trust consist of a like amount of junior subordinate notes issued by us, which mature on April 30, 2037. The trust preferred securities and the notes have a 30-year term, ending April 30, 2037, and bear interest at a floating rate of three-month LIBOR plus 2.50%. We have entered into an interest rate swap agreement, which fixed the interest rate for ten years at 7.60%.
In June 2007, a wholly owned subsidiary of ours, NorthStar Realty Finance Trust VIII, completed a private placement of $35.0 million of trust preferred securities. The sole assets of the trust consist of a like amount of junior subordinate notes issued by us, which mature on July 30, 2027. The trust preferred securities and the notes have a 30-year term, ending July 30, 2027, and bear interest at a floating rate of three-month LIBOR plus 2.70%. We have entered into an interest rate swap agreement, which fixed the interest rate for ten years at 8.29%.
Dividend Reinvestment and Stock Purchase Plan
Effective as of April 27, 2007, we implemented a Dividend Reinvestment and Stock Purchase Plan, or the Plan, pursuant to which we registered and reserved for issuance 15,000,000 shares of our common stock. Under the terms of the Plan, stockholders who participate in the Plan may purchase shares of our common stock directly from us, in cash investments up to $10,000. At our sole discretion, we may accept optional cash investments in excess of $10,000 per month, which may qualify for a discount from the market price of 0% to 5%. Plan participants may also automatically reinvest all or a portion of their dividends for additional shares of our stock. We expect to use the proceeds from any dividend reinvestments or stock purchases for general corporate purposes.
During the second quarter 2007, we issued a total of approximately 204,000 common shares for a gross sales price of approximately $2.7 million.
Cash Flows
The net cash flow provided by operating activities of $51.8 million, increased $2.8 million for the six months ended June 30, 2007 from $49.0 million of cash provided by operations for the six months ended June 30, 2006. This was primarily due to the operating cash flows generated from a greater asset base resulting from net origination/acquisition volumes generated by our three business lines.
The net cash flow used in investing activities increased by $1.3 billion for the six months ended June 30, 2007 from $1.1 billion for the six months ended June 30, 2006. Net cash used in investing activities in 2007 consisted primarily of the purchase of operating real estate, funds used to acquire real estate securities and originate or acquire real estate debt investments, corporate loan investments, as well as funding of new warehouse deposits for our CDOs.
The net cash flow provided by financing activities increased by $1.3 billion for the six months ended June 30, 2007 to $2.3 billion from $1.0 billion for the six months ended June 30, 2006. The primary source of cash flow provided by financing activities was the perpetual preferred equity offering, the issuance of exchangable debt, the issuance of CDO bonds, borrowings under credit facilities, operating real estate, acquisition financing and issuing trust preferred securities.
32
TABLE OF CONTENTS
Contractual Obligations and Commitments
As of June 30, 2007, we had the following contractual commitments and commercial obligations (in thousands):
 | | | | | | | | | | |
| | Payments Due by Period |
| Contractual Obligations | | Total | | Less than
1 Year | | 1–3
Years | | 3–5
Years | | After 5
Years |
| Mortgage notes net lease | | $ | 829,835 | | | $ | 1,322 | | | $ | 12,167 | | | $ | 80,236 | | | $ | 736,110 | |
| Mezzanine loan payable | | | 14,664 | | | | 765 | | | | 3,324 | | | | 3,845 | | | | 6,730 | |
| Repurchase agreements | | | 59,622 | | | | 59,622 | | | | — | | | | — | | | | — | |
| CDO bonds payable | | | 2,411,845 | | | | — | | | | — | | | | — | | | | 2,411,845 | |
| Exchangeable senior notes | | | 172,500 | | | | — | | | | — | | | | — | | | | 172,500 | |
| Liability to subsidiary trusts issuing preferred securities | | | 286,258 | | | | — | | | | — | | | | — | | | | 286,258 | |
| Credit facilities | | | 692,007 | | | | — | | | | 265,003 | | | | 427,004 | | | | — | |
| Secured term loan | | | 101,513 | | | | — | | | | — | | | | 101,513 | | | | — | |
| Capital leases(1) | | | 17,249 | | | | 184 | | | | 934 | | | | 974 | | | | 15,157 | |
| Operating leases | | | 84,799 | | | | 2,851 | | | | 11,142 | | | | 11,211 | | | | 59,595 | |
| Unfunded commitments(2) | | | 792,837 | | | | — | | | | 140,956 | | | | 485,747 | | | | 166,134 | |
| Total contractual obligations | | $ | 5,463,129 | | | $ | 64,744 | | | $ | 433,526 | | | $ | 1,110,530 | | | $ | 3,854,329 | |
| (1) | Includes interest on the capital leases. |
| (2) | This represents unfunded loan commitments on our real estate debt and corporate loan investments. The funding of the commitment is recorded in the period the commitment expires due to the uncertainty of the funding. In accordance with certain loan agreements, we have unfunded commitments of $792.8 million as of June 30, 2007, that we are obligated to fund as borrowers meet certain requirements. |
Our debt obligations contain covenants that are both financial and non-financial in nature. Significant financial covenants include a requirement that we maintain a minimum tangible net worth, a minimum level of liquidity and a minimum fixed charge coverage ratio. As of June 30, 2007, we are in compliance with all financial and non-financial covenants in our debt obligations.
Off-Balance Sheet Arrangements
CDO Issuances
We have interests in four unconsolidated CDO issuances, whose CDO notes are primarily collateralized by investment grade real estate securities. We generally purchase the preferred equity or the income notes of each CDO, which are the equity securities of the CDO issuances, and, with the exception of CDO I, all of the below investment grade CDO Notes of each CDO issuance. In addition, we earn a fee of 0.35% of the outstanding principal balance of the assets backing each of these CDO issuances as an annual collateral management fee. Our interests in CDO I, CDO II, CDO III and CDO V are each accounted for as a single debt security available for sale pursuant to EITF 99-20.
33
TABLE OF CONTENTS
The following tables describe certain terms of the collateral for and the notes issued by CDO I, CDO II, CDO III and CDO V as of June 30, 2007 and December 31, 2006 (in thousands):
| | | | | | | | | | | | | | |
| | CDO Collateral – June 30, 2007 | | CDO Notes – June 30, 2007 |
| Issuance | | Date
Closed | | Par
Value of CDO
Collateral | | Weighted
Average
Interest
Rate | | Weighted
Average
Expected
Life
(Years) | | Outstanding
CDO Notes(1) | | Weighted
Average
Interest
Rate | | Stated
Maturity |
| CDO I(2) | | | 8/21/03 | | | $ | 328,920 | | | | 6.62 % | | | | 4.98 | | | $ | 309,742 | | | | 6.24 % | | | | 8/1/2038 | |
| CDO II | | | 7/1/04 | | | | 351,180 | | | | 6.29 | | | | 5.79 | | | | 314,828 | | | | 5.80 | | | | 6/1/2039 | |
| CDO III | | | 3/10/05 | | | | 400,992 | | | | 6.37 | | | | 5.39 | | | | 359,118 | | | | 5.88 | | | | 6/1/2040 | |
| CDO V | | | 9/22/05 | | | | 495,937 | | | | 5.95 | | | | 7.61 | | | | 456,319 | | | | 5.15 | | | | 9/5/2045 | |
| Total | | | | | | $ | 1,577,029 | | | | 6.27 % | | | | 6.09 | | | $ | 1,440,007 | | | | 5.71 % | | | | | |
| (1) | Includes only notes held by third parties. |
| (2) | We have an 83.3% interest. |
Monroe CLO Equity Notes
We own a residual equity interests in a CLO originated by Monroe Capital, LLC, a specialty finance company. The CLO includes collateral of approximately $400 million backed primarily by first lien senior secured loans. Based on the projected future cash flows the equity is yielding an internal rate of return of approximately 18%. The CLO was determined to be a variable interest entity under Fin 46(R)-6 and we were determined not to be the primary beneficiary therefore the financial statements are not consolidated into our condensed financial statements. Our residual equity interests are accounted for as debt securities available for sale pursuant to EITF 99-20. The fair market value was $17.0 million at June 30, 2007.
Synthetic CMBS CDO
We own all of the notes issued in a synthetic CMBS CDO referred to as SEAWALL 2006-4a. The notes of this CDO bear interest backed by a combination of AAA floating rate securities and a fixed spread earned by the CDO for having sold credit protection on a portfolio of investment grade-rated reference securities. The notes yield a blended spread above LIBOR of approximately 4.41%. Any losses on the reference securities will require the CDO to liquidate a portion of the AAA collateral in order to make payments to credit protection buyer under the credit default swaps. SEAWALL 2006-4a is determined to be a Qualified Special Purpose Entity (“QSPE”) and accordingly is not consolidated. The notes acquired are accounted for as debt securities available for sale and are carried at their fair value with net unrealized gains or loss reported as a component of other comprehensive income. The fair value of the notes was $27.0 million at June 30, 2007.
Our potential loss in our off balance sheet investments was limited to the carrying value of its investment of $122.4 million at June 30, 2007.
Recent Developments
Dividends
Common Dividends
On July 24, 2007, we declared a cash dividend of $0.36 per share of common stock. The dividend is payable on August 15, 2007 to the shareholders on record as of the close of business on August 7, 2007.
Preferred Dividend
On July 24, 2007 we declared a cash dividend of $0.54688 per share of Series A preferred stock and $0.51563 per share of Series B preferred stock, payable on August 15, 2007 to shareholders of record on August 7, 2007.
Secured Credit Facilities
In August, we entered into a new $350 million Master Repurchase Agreement with a major financial institution (the “JP Facility”). Advance rates under the JP Facility range from 65% to 97% of the value of the
34
TABLE OF CONTENTS
collateral for which the advance is to be made. Amounts borrowed under the JP Facility bear interest at spreads of 0.05% to 1.75% over one-month LIBOR, depending on the type of collateral for which the amount is borrowed. The JP Facility has a maximum term of three years.
In July 2007, Monroe Capital, entered into a Master Repurchase (“MC VFCC”) arrangement with a major financial institution whereby it can acquire loans and finance up to an aggregate amount of $400 million to accumulate collateral for a potential collateralized loan obligation (“CLO”) securitization transaction. Advance rates range from 40% to 100% of the value of the collateral for which the advance is to be made. Amounts borrowed under the MC VFCC facility bear interest at the respective commercial paper rate plus 0.75%. The MC VFCC facility has a maximum term of three years.
NorthStar Real Estate Securities Opportunity Fund
In July 2007, we closed on $109.0 million of capital for our NorthStar Real Estate Securities Opportunity Fund, an investment vehicle in which we intend to prospectively conduct our real estate securities investment business.
We are the manager and general partner of the fund. We will typically receive base management fees ranging from 1.0% to 2.0% per annum on third party capital, and we are entitled to annual incentive management fees ranging from 20% of the increase in the fund's net asset value to 25% of the increase in net asset value in excess of an 8.0% return. Base and incentive fees vary depending on the investor capital lockup periods.
As part of the initial closing, we sold to the fund our interests in two synthetic commercial real estate CDOs, our equity interest in its most recent real estate securities CDO – CDO IX, the deposits relating to our off-balance sheet warehouse facility, and an equity interest in a third-party securitization. We received approximately $35.6 million of cash proceeds from the initial closing and retained a 25.7% interest in the fund.
Tax Treatment of Distributions for the Calendar Year 2006
Dividend income for federal income tax purposes, distributions declared and paid in 2006 of our common stock totaled $1.21 per share, of which $0.17 distributions is considered a return of capital. All distributions are fully (100%) taxable as dividend income at ordinary rates to stockholders and no portion of the dividends are eligible for the 15% dividend rate or the corporate dividends received deduction.
Excess Inclusion
Stockholders will be required to treat 9.57% of our 2006 distributions to the IRS as “excess inclusion income.”
| • | Tax-exempt stockholders will be required to treat excess inclusion income as unrelated business taxable income (commonly referred to as “UBTI”); |
| • | Non-U.S. stockholders will be subject to the 30 percent U.S. federal withholding tax in this excess inclusion income without reduction under any otherwise applicable income tax treaty; and |
| • | U.S. stockholders, including taxpaying entities, must report taxable income that in no event will be less than the amount of excess inclusion income. |
We recommend that stockholders discuss the tax consequences of their investment, including the proper tax treatment of any excess inclusion income with their tax advisor.
Inflation
Our leases for tenants of our net lease properties are generallytriple net or equivalent leases where the tenants are responsible for all real estate taxes, insurance and operating expenses or the leases provide for additional expense reimbursements based on changes in the Consumer Price Index (CPI) or actual increases in expenses.
We believe that inflationary increases in expenses will generally be offset by the expense reimbursements and contractual rent increases described above to the extent of occupancy.
35
TABLE OF CONTENTS
We believe that the risk associated with an increase in market interest rates on the floating rate debt used to finance our investments in our CDOs, certain of our debt securities available for sale, and our direct investments in real estate debt, is largely offset by our strategy of matching the terms of our assets with the terms of our liabilities and through our use of hedging instruments.
Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)
Management believes that funds from operations, or FFO, and adjusted funds from operations, or AFFO, each of which are non-GAAP measures, are additional appropriate measures of the operating performance of a REIT and NorthStar in particular. We computes FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (NAREIT), as net income or loss (computed in accordance with GAAP), excluding gains or losses from sales of depreciable properties, the cumulative effect of changes in accounting principles, real estate-related depreciation and amortization, and after adjustments for unconsolidated/uncombined partnerships and joint ventures. AFFO is a computation often made by REIT industry analysts and investors to measure a real estate company’s cash flow generated from operations. Management believes that FFO and AFFO are additional appropriate measures of our operating performance, and also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash expenses, such as real estate depreciation, which assumes that the value of real estate assets diminishes predictably over time. Since FFO and AFFO are generally recognized as industry standards for measuring the operating performance of a REIT, we also believe that FFO and AFFO provide us and our investors with an additional useful measure to compare our financial performance to other REITs.
We calculate AFFO by subtracting from (or adding) to FFO:
| • | normalized recurring expenditures that are capitalized by us and then amortized, but which are necessary to maintain our properties and revenue stream, e.g., leasing commissions and tenant improvement allowances; |
| • | an adjustment to reverse the effects of straight-lining of rents and fair value lease revenue under SFAS 141; |
| • | the amortization or accrual of various deferred costs including intangible assets and equity based compensation; and |
| • | an adjustment to reverse the effects of unrealized gains/(losses) relating to: (i) change in the value of our off-balance sheet warehouse facilities caused by changes in interest rates; and (ii) changes in the value of the credit default swaps in our consolidated synthetic CDO equity interests (which would otherwise be recorded as an adjustment to shareholder’s equity if such interests had been unconsolidated.) |
Our calculation of AFFO differs from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs.
Neither FFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with U.S. GAAP. Furthermore, FFO and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.
36
TABLE OF CONTENTS
Set forth below is a reconciliation of FFO and AFFO to net income from continuing operations before minority interest for the three and six months ended June 30, 2007 and 2006 (in thousands):
| | | | | | | | |
| | Three Months Ended June 30, 2007 | | Three Months Ended June 30, 2006 | | Six Months Ended June 30, 2007 | | Six Months Ended
June 30, 2006 |
Funds from Operations:
| | | | | | | | | | | | | | | | |
| Income from continuing operations before minority interest | | $ | 16,646 | | | $ | 6,011 | | | $ | 24,733 | | | $ | 14,832 | |
| Minority interest in joint ventures | | | (136 | ) | | | — | | | | (136 | ) | | | — | |
| Income from continuing operations before minority interest in operating partnership | | | 16,510 | | | | 6,011 | | | | 24,597 | | | | 14,832 | |
Adjustments:
| | | | | | | | | | | | | | | | |
| Preferred dividend | | | (4,758 | ) | | | — | | | | (6,071 | ) | | | — | |
| Depreciation and amortization | | | 7,841 | | | | 2,843 | | | | 14,431 | | | | 5,338 | |
| Funds from discontinued operations | | | (5 | ) | | | 84 | | | | 17 | | | | 121 | |
Real estate depreciation and
amortization – unconsolidated
ventures | | | 247 | | | | 214 | | | | 496 | | | | 332 | |
| Funds from Operations | | $ | 19,835 | | | $ | 9,152 | | | $ | 33,470 | | | $ | 20,623 | |
Adjusted Funds from Operations:
| | | | | | | | | | | | | | | | |
| Funds from Operations | | $ | 19,835 | | | $ | 9,152 | | | $ | 33,470 | | | $ | 20,623 | |
| Straight-line rental income, net | | | (663 | ) | | | (368 | ) | | | (987 | ) | | | (673 | ) |
| Straight-line rental income, discontinued operations | | | — | | | | — | | | | 10 | | | | — | |
| Straight-line rental income, unconsolidated ventures | | | (53 | ) | | | (24 | ) | | | (113 | ) | | | (32 | ) |
Amortization of equity-based
compensation | | | 4,158 | | | | 2,743 | | | | 7,889 | | | | 4,456 | |
Fair value lease revenue (SFAS 141
adjustment) | | | (164 | ) | | | (88 | ) | | | (340 | ) | | | (115 | ) |
| Unrealized (gains)/losses from mark-to-market adjustments | | | 1,828 | | | | 1,000 | | | | 9,838 | | | | (1,074 | ) |
| Adjusted Funds from Operations | | $ | 24,941 | | | $ | 12,415 | | | $ | 49,767 | | | $ | 23,185 | |
Return on Average Common Book Equity
We calculate return on average common book equity (“ROE”) on a consolidated basis and for each of our major business lines. We believe that ROE provides investors and management with a good indication of the performance of the Company and our business lines because it provides the best approximation of cash returns on common equity invested. Management also uses ROE, among other factors, to evaluate profitability and efficiency of equity capital employed, and as a guide in determining where to allocate capital within its business. ROEs may fluctuate from quarter to quarter based upon a variety of factors, including the timing and amount of investment fundings, repayments and asset sales, capital raised and leverage used, and the yield on investments funded.
37
TABLE OF CONTENTS
Return on Average Common Book Equity (Pre-G&A and Unrealized Mark-to-Market Gain)
($ in thousands)
| | | | | | |
| | Northstar Realty Finance Corp. |
| | | Three Months Ended June 30, 2007 | | Annualized
June 30, 2007(2) | | Year Ended
December 31, 2006 |
| Adjusted Funds from Operations (AFFO) | | | 24,941 | | | | 99,764 (A) | | | | 59,409 | |
| Plus: General & Administrative Expenses | | | 14,057 | | | | | | | | | |
| Plus: General & Administrative Expenses from Unconsolidated Ventures | | | 1,470 | | | | | | | | | |
| Less: Equity-Based Compensation and Straight-Line Rent included in G&A | | | 4,161 | | | | | | | | | |
| AFFO, excluding G&A | | | 36,307 | | | | 145,228 (B) | | | | 85,739 | |
| Average Common Book Equity & Operating Partnership Minority Interest(1) | | $ | 586,965 | (C) | | | | | | | 378,628 | |
| Return on Average Common Book Equity (including G&A) | | | 17.0%(A)/(C) | | | | | | | | 15.7 % | |
| Return on Average Common Book Equity (excluding G&A) | | | 24.7%(B)/(C) | | | | | | | | 22.6 % | |
| (1) | Average Common Book Equity and Operating Partnership Minority Interest computed using beginning and ending of period balances. |
| (2) | Annualized numbers are calculated by taking the current quarter amounts and multiplying by 4. |
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market risk is the exposure to loss resulting from changes in interest rates and asset prices. We are subject to credit risk and interest rate risk with respect to our investments in real estate debt, real estate securities and net leased real estate. The primary market risk that we are exposed to is interest rate risk. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control. Our interest rate risk sensitive assets, liabilities and related derivative positions are generally held for non-trading purposes. At June 30, 2007, a hypothetical 100 basis point increase in interest rates applied to our variable rate assets would increase our annual interest income by approximately $25.6 million, offset by an increase in our interest expense of approximately $20.4 million on our variable rate liabilities.
Real Estate Debt
We invest in real estate debt which are generally instruments secured by commercial and multifamily properties, including first lien mortgage loans, junior participations in first lien mortgage loans, which we also refer to as senior mortgage loans, second lien mortgage loans, mezzanine loans, and preferred equity interests in borrowers who own such properties. We generally hold these instruments for investment rather than trading purposes. These investments are either floating or fixed rate. The interest rates on our floating rate investments typically float at a fixed spread over an index such as LIBOR. These instruments typically reprice every 30 days based upon LIBOR in effect at that time. Given the frequent and periodic repricing of our floating rate investments, changes in interest rates are unlikely to materially affect the value of our floating rate portfolio. Changes in short-term rates will, however, affect earnings from our investments. Increases in LIBOR will increase the interest income received by us on our investments and therefore increase our earnings. Decreases in LIBOR have the opposite effect.
We also invest in fixed rate investments. The value of these investments may be affected by changes in long-term interest rates. To the extent that long-term interest rates increase, the value of long-term fixed rate assets is diminished. Any fixed rate real estate debt investments which we hold would be similarly impacted. We do not generally seek to hedge this type of risk unless the asset is leveraged as the costs of such a hedging transaction over the term of such an investment would generally outweigh the benefits. If fixed rate real estate debt is funded with floating rate liabilities, we typically convert the floating rate to fixed through the
38
TABLE OF CONTENTS
use of interest rate swaps, caps or other hedges. Because the interest rates on our fixed rate investments are generally fixed through maturity of the investment, changes in interest rates do not affect the income we earn from our fixed rate investments.
In our real estate debt business we are also exposed to credit risk, which is the risk that the borrower under our loan agreements cannot repay its obligations to us in a timely manner. While we have not experienced a payment default as of the date of this Quarterly Report on Form 10-Q, our position in the capital structure may expose us to losses as a result of such default in the future. In the event that the borrower cannot repay our loan, we may exercise our remedies under the loan documents, which may include a foreclosure against the collateral if we have a foreclosure right as a real estate debt holder under the loan agreement. The real estate debt that we intend to invest in will often allow us to demand foreclosure as a real estate debt holder if our loan is in default. To the extent the value of our collateral exceeds the amount of our loan (including all debt senior to us) and the expenses we incur in collecting on our loan, we would collect 100% of our loan amount. To the extent that the amount of our loan plus all debt senior to our position exceeds the realizable value of our collateral, then we would incur a loss. We also incur credit risk in our periodically scheduled interest payments which may be interrupted as a result of the operating performance of the underlying collateral.
We seek to manage credit risk through a thorough financial analysis of a transaction before we make such an investment. Our analysis is based upon a broad range of real estate, financial, economic and borrower-related factors which we believe are critical to evaluating the credit risk inherent in a transaction.
We expect our investments to be denominated in U.S. dollars or, if they are denominated in another currency, to be converted back to U.S. dollars through the use of currency swaps. It may not be possible to eliminate all of the currency risk as the payment characteristics of the currency swap may not exactly match the payment characteristics of the investments.
Real Estate Securities
In our real estate securities business, we mitigate credit risk through credit analysis, subordination and diversification. The CMBS we invest in are generally junior in right of payment of interest and principal to one or more senior classes, but benefit from the support of one or more subordinate classes of securities or other form of credit support within a securitization transaction. The senior unsecured REIT debt securities we invest in reflect comparable credit risk. Credit risk refers to each individual borrower’s ability to make required interest and principal payments on the scheduled due dates. We believe that these securities offer attractive risk-adjusted returns with reasonable long-term principal protection under a variety of default and loss scenarios. While the expected yield on these securities is sensitive to the performance of the underlying assets, the more subordinated securities and certain other features of a securitization, in the case of mortgage backed securities, and the issuer’s underlying equity and subordinated debt, in the case of REIT securities, are designed to bear the first risk of default and loss. The real estate securities portfolios of our investment grade CDOs are diversified by asset type, industry, location and issuer. We further minimize credit risk by monitoring the real estate securities portfolios of our investment grade CDOs and the underlying credit quality of their holdings.
The real estate securities underlying our investment grade CDOs are also subject to spread risk. The majority of these securities are fixed rate securities, which are valued based on a market credit spread over the rate payable on fixed rate U.S. Treasuries of like maturity. In other words, their value is dependent on the yield demanded on such securities by the market, as based on their credit relative to U.S. Treasuries. An excessive supply of these securities combined with reduced demand will generally cause the market to require a higher yield on these securities, resulting in the use of a higher or “wider” spread over the benchmark rate (usually the applicable U.S. Treasury security yield) to value these securities. Under these conditions, the value of our real estate securities portfolio would tend to decrease. Conversely, if the spread used to value these securities were to decrease or “tighten,” the value of our real estate securities would tend to increase. Such changes in the market value of our real estate securities portfolio may affect our net equity or cash flow either directly through their impact on unrealized gains or losses on available-for-sale securities by diminishing our ability to realize gains on such securities, or indirectly through their impact on our ability to borrow and access capital.
39
TABLE OF CONTENTS
Returns on our real estate securities are sensitive to interest rate volatility. If interest rates increase, the funding cost on liabilities that finance the securities portfolio will increase if these liabilities are at a floating rate or have maturities shorter than the assets.
Our general financing strategy focuses on the use of “match-funded” structures. This means that we seek to align the maturities of our debt obligations with the maturities of our investments in order to minimize the risk of being forced to refinance our liabilities prior to the maturities of our assets, as well as to reduce the impact of fluctuating interest rates on earnings. In addition, we generally match interest rates on our assets with like-kind debt, so that fixed rate assets are financed with fixed rate debt and floating rate assets are financed with floating rate debt, directly or through the use of interest rate swaps, caps or other financial instruments or through a combination of these strategies. Our investment grade CDOs utilize interest rate swaps to minimize the mismatch between their fixed rate assets and floating rate liabilities. We expect to hedge the interest rate risk in future investment grade CDOs in a similar manner.
Our financing strategy is dependent on our ability to place the match-funded debt we use to finance our real estate securities at spreads that provide a positive arbitrage. If spreads on the bonds issued by CDOs widen or if demand for these liabilities ceases to exist, then our ability to execute future CDO financings will be severely restricted.
Interest rate changes may also impact our net book value as our investments in debt securities are marked-to-market each quarter with changes in fair value reflected in other comprehensive income (a separate component of owners’ equity). Generally, as interest rates increase, the value of fixed rate securities within the CDO, such as CMBS, decreases and as interest rates decrease, the value of these securities will increase. These swings in value have a corresponding impact on the value of our investment in the CDO. Within the CDO, we seek to hedge against changes in cash flows attributable to changes in interest rates by entering into interest rate swaps/caps and other derivative instruments as allowed by our predecessor’s risk management policy. Such derivatives are designated as cash flow hedge relationships according to SFAS No. 133.
Net Lease Properties
Our ability to manage the interest rate risk and credit risk associated with the assets we acquire is integral to the success of our net lease properties investment strategy. Although we may, in special situations, finance our purchase of net lease assets with floating rate debt, our general policy will be to mitigate our exposure to rising interest rates by financing our purchases with fixed rate mortgages. We seek to match the term of fixed rate mortgages to our expected holding period for the underlying asset. Factors we consider to assess the expected holding period include, among others, the primary term of the lease as well as any extension options that may exist.
In order to ensure that we have as complete an understanding as possible of a tenant’s ability to satisfy its obligations under its lease, we undertake a rigorous credit evaluation of each tenant prior to executing sale/leaseback or net lease asset acquisitions. This analysis includes an extensive due diligence investigation of the tenant’s business as well as an assessment of the strategic importance of the underlying real estate to the tenant’s core business operations. Where appropriate, we may seek to augment the tenant’s commitment to the facility by structuring various credit enhancement mechanisms into the underlying leases. These mechanisms could include security deposit requirements or affiliate guarantees from entities we deem to be creditworthy.
Derivatives and Hedging Activities
We use derivatives primarily to manage interest rate risk exposure. These derivatives are typically in the form of interest rate swap agreements and the primary objective is to minimize interest rate risks associated with the our investment and financing activities. The counterparties of these arrangements are major financial institutions with which we may also have other financial relationships. We are exposed to credit risk in the event of non-performance by these counterparties; however, we do not anticipate that any of the counterparties will fail to meet their obligations because of their high credit ratings. The objective in using interest rate derivatives is to add stability to interest expense and to manage exposure to interest rate movements.
We have acquired all the notes of a synthetic CMBS CDO that entered into a credit default swap agreement with a major financial institution to sell credit protections on a pool of CMBS securities. As of June 30, 2007, we recorded an unrealized loss of $5.1 million in the consolidated statement of operations in
40
TABLE OF CONTENTS
connection with the mark-to-market adjustment on the credit default swap. Our maximum exposure to loss on the credit default swap is limited to its $54.2 million initial investment.
The following tables summarize our derivative financial instruments as of June 30, 2007 (in thousands).
| | | | | | | | |
| | Notional Amount | | Fair Value | | Range of Fixed Libor | | Range of Maturity |
| Interest rate swaps and basis swaps | | $ | 1,239,680 | | | $ | 13,796 | | | | 4.18% – 7.27 % | | | | February 2008 – January 2019 | |
Item 4. Controls and Procedures
As of the end of the period covered by this report, our management conducted an evaluation (as required under Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act), under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures to disclose material information otherwise required to be set forth in our periodic reports.
Internal Control over Financial Reporting
Changes in internal control over financial reporting. There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
41
TABLE OF CONTENTS
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Our Annual Meeting of shareholders was held on May 24, 2007 (the “Meeting”). At the close of business on the record date for the Meeting (which was April 24, 2007), there were 61,344,601 shares of common stock outstanding and entitled to vote at the Meeting. Holders of 57,559,415 shares of common stock (representing a like number of votes) were present at the Meeting, either in person or by proxy.
At the Meeting, the following individuals were elected to our Board of Directors to hold office for a one-year term and until his or her successor is duly elected and qualified, by the following vote:
| | | | |
| Nominee | | In Favor | | Withheld |
| William V. Adamski | | 57,405,779 | | 153,636 |
| Preston Butcher | | 28,126,268 | | 29,433,147 |
| David T. Hamamoto | | 56,178,187 | | 1,381,228 |
| Judith A. Hannaway | | 57,406,039 | | 153,376 |
| Wesley D. Minami | | 57,371,757 | | 187,658 |
| Louis J. Paglia | | 57,408,079 | | 151,336 |
| W. Edward Scheetz | | 56,138,852 | | 1,420,563 |
| Frank V. Sica | | 28,149,586 | | 29,409,829 |
At the Meeting, our shareholders ratified the appointment of Grant Thornton LLP as our independent registered public accounting firm for fiscal year 2007, by the following vote:
| | | | |
| In Favor | | Against | | Abstained |
| 57,457,863 | | 45,364 | | 86,188 |
At the Meeting, our shareholders approved Amendment No. 2 to the NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan, by the following vote:
| | | | |
| In Favor | | Against | | Abstained |
| 35,346,707 | | 6,848,155 | | 347,804 |
Item 5. Other Information
Item 6. Exhibits
| | |
| Exhibit Number | | Description |
| 3.1 | | Articles of Amendment and Restatement of NorthStar Realty Finance Corp., as filed with the State Department of Assessments and Taxation of Maryland on October 20, 2004 (incorporated by reference to Exhibit 3.1 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-114675)) |
| 3.2 | | Bylaws of NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 3.2 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-114675)) |
| 3.3 | | Amendment No. 1 to the Bylaws of NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 3.3 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed on April 27, 2005) |
| 3.4 | | Articles Supplementary Classifying NorthStar Realty Finance Corp.’s 8.75 % Series A Preferred Stock, liquidation preference $25.00 per share (incorporated by reference to Exhibit 3.2 to NorthStar Realty Finance Corp.’s Registration Statement on Form 8-A, dated September 14, 2006) |
| 3.5 | | Articles Supplementary Classifying NorthStar Realty Finance Corp.’s 8.25 % Series B Preferred Stock, liquidation preference $25.00 per share (incorporated by reference to Exhibit 3.2 to NorthStar Realty Finance Corp.’s Registration Statement on Form 8-A, dated February 7, 2007) |
42
TABLE OF CONTENTS
| | |
| Exhibit Number | | Description |
| 3.6 | | Articles Supplementary Classifying and Designating Additional Shares of NorthStar Realty Finance Corp.’s 8.25 % Series B Preferred Stock, liquidation preference $25.00 per share |
| 10.1 | | Agreement of Limited Partnership of NorthStar Realty Finance Limited Partnership, dated as of October 19, 2004, by and among NorthStar Realty Finance Corp., as sole general partner and initial limited partner and the other limited partners a party thereto from time to time (incorporated by reference to Exhibit 10.1 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004) |
| 10.2 | | Non-Competition Agreement, dated as of October 29, 2004, by and among NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership, NorthStar Capital Investment Corp. and NorthStar Partnership, L.P. (incorporated by reference to Exhibit 10.2 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004) |
| 10.3 | | Executive Employment Agreement, dated as of October 22, 2004, between David T. Hamamoto and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.5 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004) |
| 10.4 | | Executive Employment Agreement, dated as of October 22, 2004, between Jean-Michel Wasterlain and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.7 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004) |
| 10.5 | | Executive Employment Agreement, dated as of October 22, 2004, between Daniel R. Gilbert and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.8 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004) |
| 10.6 | | NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 10.9 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004) |
| 10.7 | | Amendment No. 1 to NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 99.2 to the NorthStar Realty Finance Corp. Post-Effective Amendment No. 2 to Form S-8 filed on April 13, 2007) |
| 10.8 | | Amendment No. 2 to NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 99.3 to the NorthStar Realty Finance Corp. Post-Effective Amendment No. 3 to Form S-8 filed on June 6, 2007) |
| 10.9 | | LTIP Unit Vesting Agreement under the NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan among NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership and NRF Employee, LLC (incorporated by reference to Exhibit 10.10 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004) |
| 10.10 | | Form of Vesting Agreement for Units of NRF Employee, LLC, each dated as of October 29, 2004, between NRF Employee, LLC and certain employees and co-employees of NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.11 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004) |
| 10.11 | | Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.7(a) to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-114675)) |
| 10.12 | | NorthStar Realty Finance Corp. 2004 Long-Term Incentive Bonus Plan (incorporated by reference to Exhibit 10.13 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004) |
| 10.13 | | Form of Notification under NorthStar Realty Finance Corp. 2004 Long-Term Incentive Bonus Plan (incorporated by reference to Exhibit 10.14 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2004) |
| 10.14 | | Form of Indemnification Agreement for directors and officers of NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.15 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-114675)) |
43
TABLE OF CONTENTS
| | |
| Exhibit Number | | Description |
| 10.15 | | Amended and Restated Master Repurchase Agreement, dated as of March 21, 2005, between NRFC DB Holdings, LLC and Deutsche Bank AG, Cayman Islands Branch (incorporated by reference to Exhibit 10.16 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2004) |
| 10.16 | | Amended and Restated Junior Subordinated Indenture dated as of September 16, 2005, between NorthStar Realty Finance Limited Partnership and JPMorgan Chase Bank, National Association, as trustee (incorporated by reference to Exhibit 10.17 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962)) |
| 10.17 | | Second Amended and Restated Trust Agreement, dated as of September 16, 2005, among NorthStar Realty Finance Limited Partnership, as depositor, JPMorgan Chase Bank, National Association, as property trustee, Chase Bank USA, National Association, as Delaware trustee and Andrew Richardson, David Hamamoto and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.18 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962)) |
| 10.18 | | Master Repurchase Agreement, dated as of July 13, 2005, between NRFC WA Holdings, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.21 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended June 30, 2005) |
| 10.19 | | First Amendment to the Master Repurchase Agreement, dated as of August 24, 2005, between NRFC WA Holdings, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.22 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962)) |
| 10.20 | | Second Amendment to the Master Repurchase Agreement, dated as of September 20, 2005, between NRFC WA Holdings, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.23 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962)) |
| 10.21 | | Master Loan, Guarantee and Security Agreement, dated as of September 28, 2005, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp., NS Advisors LLC and Bank of America, N.A. (incorporated by reference to Exhibit 10.24 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962)) |
| 10.22 | | Third Amendment to the Master Repurchase Agreement, dated as of September 30, 2005, between NRFC WA Holdings, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.25 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962)) |
| 10.23 | | Omnibus Amendment to the Master Repurchase Agreement, dated as of October 21, 2005, between NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.26 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2005) |
| 10.24 | | Agreement of Purchase and Sale, dated as of October 25, 2005, between 1552 Lonsdale LLC and 1552 Bway Owner, LLC (incorporated by reference to Exhibit 10.27 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2005) |
| 10.25 | | Fourth Amendment to the Master Repurchase Agreement, dated October 28, 2005, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.28 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2005) |
| 10.26 | | Sublease, dated as of November 7, 2005, between NorthStar Realty Finance Limited Partnership and NorthStar Partnership, L.P. (incorporated by reference to Exhibit 10.29 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2005) |
| 10.27 | | Junior Subordinated Indenture, dated as of November 22, 2005, between NorthStar Realty Finance Limited Partnership and JPMorgan Chase Bank, National Association, as trustee (incorporated by reference to Exhibit 10.30 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962)) |
44
TABLE OF CONTENTS
| | |
| Exhibit Number | | Description |
| 10.28 | | Amended and Restated Trust Agreement, dated as of November 22, 2005, between NorthStar Realty Finance Limited Partnership, as depositor, JPMorgan Chase Bank, National Association, as property trustee, Chase Bank USA, National Association, as Delaware trustee and Andrew Richardson, David Hamamoto and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.31 to the NorthStar Realty Finance Corp. Registration Statement on Form S-11 (File No. 333-128962)) |
| 10.29 | | Fifth Amendment to the Master Repurchase Agreement, dated February 28, 2006, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.30 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005) |
| 10.30 | | Junior Subordinated Indenture, dated as of March 10, 2006, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 10.31 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005) |
| 10.31 | | Amended and Restated Trust Agreement, dated as of March 10, 2006, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and Andrew Richardson, David Hamamoto and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.32 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005) |
| 10.32 | | Form of NorthStar Realty Finance Corp. 2006 Outperformance Plan Award Agreement (incorporated by reference to Exhibit 99.3 to the NorthStar Realty Finance Corp. Post-Effective Amendment No. 2 to Form S-8 filed on April 13, 2007) |
| 10.33 | | Amendment No. 1 to Agreement of Limited Partnership of NorthStar Realty Finance Limited Partnership, dated as of March 14, 2006, by and among NorthStar Realty Finance Corp., as sole general partner and initial limited partner and the other limited partners a party thereto from time to time (incorporated by reference to Exhibit 10.34 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005) |
| 10.34 | | Executive Employment Agreement, dated as of March 14, 2006, between Richard J. McCready and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.35 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2005) |
| 10.35 | | Executive Employment Agreement, dated as of March 22, 2006, between Andrew C. Richardson and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 99.1 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed on March 28, 2006) |
| 10.36 | | Agreement, dated as of April 6, 2006 between Mark E. Chertok and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 99.1 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed on April 10, 2006) |
| 10.37 | | Second Omnibus Amendment to Repurchase Documents, dated as of June 6, 2006, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings III, LLC, NRFC WA Holdings IV, LLC, NRFC WA Holdings V, LLC, NRFC WA Holdings VI, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings VIII, LLC, and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.38 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006) |
| 10.38 | | Junior Subordinated Indenture, dated as of August 1, 2006, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 10.39 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006) |
45
TABLE OF CONTENTS
| | |
| Exhibit Number | | Description |
| 10.39 | | Amended and Restated Trust Agreement, dated as of August 1, 2006, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and David Hamamoto, Andrew Richardson and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.40 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006) |
| 10.40 | | Second Amendment to the Agreement of Limited Partnership of NorthStar Realty Finance Limited Partnership, dated as of September 14, 2006 (incorporated by reference to Exhibit 3.2 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed September 14, 2006) |
| 10.41 | | Junior Subordinated Indenture, dated as of October 6, 2006, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 10.42 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2006) |
| 10.42 | | Amended and Restated Trust Agreement, dated as of October 6, 2006, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and David Hamamoto, Andrew Richardson and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.43 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2006) |
| 10.43 | | Revolving Credit Agreement, dated as of November 3, 2006, between NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership, NRFC Sub-REIT Corp., NS Advisors, LLC, Keybanc Capital Markets and Bank of America, N.A. (incorporated by reference to Exhibit 10.44 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2006) |
| 10.44 | | Sixth Amendment to the Master Repurchase Agreement, dated as of November 6, 2006, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings III, LLC, NRFC WA Holdings IV, LLC, NRFC WA Holdings V, LLC, NRFC WA Holdings VI, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings VIII, LLC, and Wachovia Bank, National Association (incorporated by reference to Exhibit 10.45 to the NorthStar Realty Finance Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2006) |
| 10.45 | | Third Amendment to the Agreement of Limited Partnership of NorthStar Realty Finance Limited Partnership, dated as of February 7, 2007 (incorporated by reference to Exhibit 3.2 to the NorthStar Realty Finance Corp. Current Report on Form 8-K filed February 9, 2007) |
| 10.46 | | Purchase and Sale Agreement, dated as of February 23, 2007, by and among GIN Housing Partners I, L.L.C. and the persons and entities identified as sellers on the signature pages thereto, portions of which have been omitted pursuant to a request for confidential treatment (incorporated by reference to Exhibit 10.44 to NorthStar Realty Finance Corp.’s Annual Report on Form 10-K for the year ended December 31, 2006) |
| 10.47 | | Junior Subordinated Indenture, dated as of March 30, 2007, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 10.46 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007) |
| 10.48 | | Amended and Restated Trust Agreement, dated as of March 30, 2007, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and David Hamamoto, Andrew Richardson and Richard McCready, each as administrative trustees (incorporated by reference to Exhibit 10.47 to NorthStar Realty Finance Corp.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007) |
46
TABLE OF CONTENTS
| | |
| Exhibit Number | | Description |
| 10.49 | | Master Repurchase Agreement, dated as of May 14, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, Variable Funding Capital Company LLC, Wachovia Bank, National Association, Wachovia Capital Markets, LLC, NorthStar Realty Finance Corp., NorthStar Realty Finance L.P. and NRFC Sub-REIT Corp. |
| 10.50 | | First Amendment to Master Repurchase Agreement, dated as of May 24, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, Variable Funding Capital Company LLC, Wachovia Bank, National Association, Wachovia Capital Markets, LLC, NorthStar Realty Finance Corp., NorthStar Realty Finance L.P. and NRFC Sub-REIT Corp. |
| 10.51 | | Amended and Restated Master Repurchase Agreement, dated as of June 5, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, and Wachovia Bank, National Association, NorthStar Realty Finance Corp. and NorthStar Realty Finance Limited Partnership |
| 10.52 | | Junior Subordinated Indenture, dated as of June 7, 2007, between NorthStar Realty Finance Limited Partnership, NorthStar Realty Finance Corp. and Wilmington Trust Company, as trustee |
| 10.53 | | Amended and Restated Trust Agreement, dated as of June 7, 2007, between NorthStar Realty Finance Limited Partnership, as depositor, NorthStar Realty Finance Corp., a guarantor, Wilmington Trust Company, as property trustee and Delaware trustee and David Hamamoto, Andrew Richardson and Richard McCready, each as administrative trustees |
| 10.54 | | First Amendment to Amended and Restated Master Repurchase Agreement, dated as of June 22, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, and Wachovia Bank, National Association, NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership and Wells Fargo Bank, National Association |
| 10.55 | | Second Amendment to the Master Repurchase Agreement, dated as of June 22, 2007, by and among NRFC WA Holdings, LLC, NRFC WA Holdings II, LLC, NRFC WA Holdings VII, LLC, NRFC WA Holdings X, LLC, NRFC WA Holdings XI, LLC, NRFC WA Holdings XII, LLC, Variable Funding Capital Company LLC, Wachovia Bank, National Association, Wachovia Capital Markets, LLC, NorthStar Realty Finance Corp., NorthStar Realty Finance L.P., NRFC Sub-REIT Corp. and Wells Fargo Bank, National Association |
| 10.56 | | Master Repurchase Agreement, dated as of August 8, 2007, by and among NRFC JP Holdings, LLC and JPMorgan Chase Bank, N.A. |
| 31.1 | | Certification by the Chief Executive Officer pursuant to 17 CFR 240.13a-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2 | | Certification by the Chief Financial Officer pursuant to 17 CFR 240.13a-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | | Certification by the Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2 | | Certification by the Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
47
TABLE OF CONTENTS
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | |
| | NORTHSTAR REALTY FINANCE CORP. |
| Date: August 9, 2007 | | By: /s/ David T. Hamamoto
David T. Hamamoto
Chief Executive Officer |
| | | By: /s/ Andrew C. Richardson
Andrew C. Richardson
Chief Financial Officer |
48
