Investments in and Advances to Unconsolidated Ventures	6 Months Ended
Jun. 30, 2013
Investments in and Advances to Unconsolidated Ventures
Investments in and Advances to Unconsolidated Ventures	4. Investments in and Advances to Unconsolidated Ventures Investments in Private Equity Funds PE Investments are considered voting interest entities. They are not consolidated by the Company due to the substantive participating rights of the partners in the joint venture that owns the interests in the real estate private equity funds. The Company elected the fair value option for PE Investments. As a result, the Company records equity in earnings (losses) based on the change in fair value for its share of the projected future cash flow from one period to another. PE Investment I In February 2013, the Company completed the initial closing ("Initial Closing") of its investment in joint ventures ("PE Investment I"), which through a preferred investment, owns a portfolio of limited partnership interests in real estate private equity funds managed by institutional-quality sponsors. Pursuant to the terms of the agreement, at the Initial Closing, the full purchase price was funded, excluding future capital commitments. Accordingly, the Company funded $118.0 million and the Sponsor (together with the Company, the "NorthStar Entities") funded $282.1 million. The NorthStar Entities have an aggregate ownership interest in PE Investment I of 51.0%, of which the Company owns 29.5% and the Sponsor owns 70.5%. Teachers Insurance and Annuity Association of America (the "Class B Partner") contributed its interests in 47 funds subject to the transaction in exchange for all of the Class B partnership interests in PE Investment I. PE Investment I provides for all cash distributions on a priority basis to the NorthStar Entities as follows: (i) first, 85.0% to the NorthStar Entities and 15.0% to the Class B Partner until the NorthStar Entities receive a 1.5x multiple on all of their invested capital, including amounts funded in connection with future capital commitments; (ii) second, 15.0% to the NorthStar Entities and 85.0% to the Class B Partner until the Class B Partner receives a return of its then remaining June 30, 2012 capital; and (iii) third, 51.0% to the NorthStar Entities and 49.0% to the Class B Partner. All amounts paid to and received by the NorthStar Entities will be based on each partner's proportionate interest. Since the Company was contractually entitled to its proportional share of all distributions derived from the fund interests since June 30, 2012 regardless of the date fund interests were transferred to PE Investment I, at the Initial Closing the Company recorded its proportional share of all distributions received since June 30, 2012. As of June 30, 2013, the carrying value of the investment in PE Investment I was $111.1 million. For the three and six months ended June 30, 2013, the Company recognized $6.0 million and $9.2 million, respectively, of equity in earnings. For the six months ended June 30, 2013, the Company received $23.7 million of net distributions and made $7.5 million of contributions related to PE Investment I. As of June 30, 2013, the Company's estimated future capital commitments to the fund interests in PE Investment I would be approximately $11.1 million. PE Investment II In June 2013, the Company, the Sponsor and funds managed by Goldman Sachs Asset Management ("Vintage Funds") (each a "Partner") formed joint ventures ("PE Investment II") and entered into an agreement with Common Pension Fund E, a common trust fund created under New Jersey law (the "Seller"), to acquire a portfolio of limited partnership interests in up to 25 real estate private equity funds managed by institutional-quality sponsors with an aggregate reported net asset value ("NAV") of approximately $925.4 million as of September 30, 2012. The Company, the Sponsor and the Vintage Funds each have an ownership interest in PE Investment II of 15.0%, 70.0% and 15.0%, respectively. All amounts paid and received will be based on each Partner's proportionate interest. PE Investment II will pay $509.9 million to the Seller for all of the fund interests, or 55.0% of the September 30, 2012 NAV (the "Initial Amount"), and will pay the remaining $415.5 million, or 45.0% of the September 30, 2012 NAV (the "Deferred Amount"), by the fourth year after the first day of the fiscal quarter following the closing date of each fund interest. The Company's share of the Initial Amount and the Deferred Amount represents $76.5 million and $62.3 million, respectively. The Company funded all of its proportionate share of the Initial Amount at the initial closing on July 3, 2013. Refer to Note 13—"Subsequent Events" for further disclosure. The Deferred Amount is a liability of PE Investment II. Each Partner, directly or indirectly, guaranteed its proportionate interest of the Deferred Amount. PE Investment II is entitled to receive all cash distributions from September 30, 2012 through the closing of each fund interest and is obligated to fund all capital contributions from September 30, 2012. At each closing, there will be a "true up" for any distributions received and any contributions made by the Seller from the contributed funds since September 30, 2012. As of June 30, 2013, the Company's estimated future capital commitments to the fund interests in PE Investment II would be approximately $8.8 million. Beginning on the first day of the fiscal quarter following the closing date of each fund interest and for a period of three years thereafter, distributions will be made to PE Investment II on a priority basis as follows: 85.0% to PE Investment II and 15.0% to the Seller, provided that at the end of each such fiscal year, PE Investment II will pay amounts, if any, necessary to reduce the Deferred Amount by 15.0% of the then outstanding Deferred Amount (the "Amortization Amount") to the extent distributions to the Seller during each such year were less than the Amortization Amount for such year. In the fourth year following the applicable closing date, distributions will be split equally between PE Investment II and the Seller. At the conclusion of that four-year period, PE Investment II will be required to pay to the Seller the Deferred Amount less: (i) any distributions received by the Seller during such four-year period; and (ii) any Amortization Amounts received by the Seller during such four-year period. PE Investment II will receive 100% of all distributions following the payment of the Deferred Amount. PE Investment II deposited an aggregate of $50.0 million in connection with the transaction. The deposit is generally non-refundable unless the transaction contemplated by the agreement is not consummated as a result of a material breach by the Seller. The Company anticipates closing the fund interests by the end of 2013, subject to customary closing conditions, including third-party consents. As of June 30, 2013, the carrying value of the investment in PE Investment II was $7.5 million. Other In connection with the Milford loan, the Company and the Sponsor have an aggregate 35.0% interest in the Milford hotel and retail component at the hotel. As of June 30, 2013, the carrying value of the investment was $0.5 million, which is included in deferred costs and other assets, net on the consolidated balance sheets. For the three and six months ended June 30, 2013, the Company recognized $0.2 million of equity in losses.

4. Investments in and Advances to Unconsolidated Ventures

Investments in Private Equity Funds

PE Investments are considered voting interest entities. They are not consolidated by the Company due to the substantive participating rights of the partners in the joint venture that owns the interests in the real estate private equity funds. The Company elected the fair value option for PE Investments. As a result, the Company records equity in earnings (losses) based on the change in fair value for its share of the projected future cash flow from one period to another.

PE Investment I

In February 2013, the Company completed the initial closing ("Initial Closing") of its investment in joint ventures ("PE Investment I"), which through a preferred investment, owns a portfolio of limited partnership interests in real estate private equity funds managed by institutional-quality sponsors. Pursuant to the terms of the agreement, at the Initial Closing, the full purchase price was funded, excluding future capital commitments. Accordingly, the Company funded $118.0 million and the Sponsor (together with the Company, the "NorthStar Entities") funded $282.1 million. The NorthStar Entities have an aggregate ownership interest in PE Investment I of 51.0%, of which the Company owns 29.5% and the Sponsor owns 70.5%. Teachers Insurance and Annuity Association of America (the "Class B Partner") contributed its interests in 47 funds subject to the transaction in exchange for all of the Class B partnership interests in PE Investment I.

PE Investment I provides for all cash distributions on a priority basis to the NorthStar Entities as follows: (i) first, 85.0% to the NorthStar Entities and 15.0% to the Class B Partner until the NorthStar Entities receive a 1.5x multiple on all of their invested capital, including amounts funded in connection with future capital commitments; (ii) second, 15.0% to the NorthStar Entities and 85.0% to the Class B Partner until the Class B Partner receives a return of its then remaining June 30, 2012 capital; and (iii) third, 51.0% to the NorthStar Entities and 49.0% to the Class B Partner. All amounts paid to and received by the NorthStar Entities will be based on each partner's proportionate interest.

Since the Company was contractually entitled to its proportional share of all distributions derived from the fund interests since June 30, 2012 regardless of the date fund interests were transferred to PE Investment I, at the Initial Closing the Company recorded its proportional share of all distributions received since June 30, 2012. As of June 30, 2013, the carrying value of the investment in PE Investment I was $111.1 million. For the three and six months ended June 30, 2013, the Company recognized $6.0 million and $9.2 million, respectively, of equity in earnings. For the six months ended June 30, 2013, the Company received $23.7 million of net distributions and made $7.5 million of contributions related to PE Investment I. As of June 30, 2013, the Company's estimated future capital commitments to the fund interests in PE Investment I would be approximately $11.1 million.

PE Investment II

In June 2013, the Company, the Sponsor and funds managed by Goldman Sachs Asset Management ("Vintage Funds") (each a "Partner") formed joint ventures ("PE Investment II") and entered into an agreement with Common Pension Fund E, a common trust fund created under New Jersey law (the "Seller"), to acquire a portfolio of limited partnership interests in up to 25 real estate private equity funds managed by institutional-quality sponsors with an aggregate reported net asset value ("NAV") of approximately $925.4 million as of September 30, 2012. The Company, the Sponsor and the Vintage Funds each have an ownership interest in PE Investment II of 15.0%, 70.0% and 15.0%, respectively. All amounts paid and received will be based on each Partner's proportionate interest.

PE Investment II will pay $509.9 million to the Seller for all of the fund interests, or 55.0% of the September 30, 2012 NAV (the "Initial Amount"), and will pay the remaining $415.5 million, or 45.0% of the September 30, 2012 NAV (the "Deferred Amount"), by the fourth year after the first day of the fiscal quarter following the closing date of each fund interest. The Company's share of the Initial Amount and the Deferred Amount represents $76.5 million and $62.3 million, respectively. The Company funded all of its proportionate share of the Initial Amount at the initial closing on July 3, 2013. Refer to Note 13—"Subsequent Events" for further disclosure. The Deferred Amount is a liability of PE Investment II. Each Partner, directly or indirectly, guaranteed its proportionate interest of the Deferred Amount.

PE Investment II is entitled to receive all cash distributions from September 30, 2012 through the closing of each fund interest and is obligated to fund all capital contributions from September 30, 2012. At each closing, there will be a "true up" for any distributions received and any contributions made by the Seller from the contributed funds since September 30, 2012. As of June 30, 2013, the Company's estimated future capital commitments to the fund interests in PE Investment II would be approximately $8.8 million.

Beginning on the first day of the fiscal quarter following the closing date of each fund interest and for a period of three years thereafter, distributions will be made to PE Investment II on a priority basis as follows: 85.0% to PE Investment II and 15.0% to the Seller, provided that at the end of each such fiscal year, PE Investment II will pay amounts, if any, necessary to reduce the Deferred Amount by 15.0% of the then outstanding Deferred Amount (the "Amortization Amount") to the extent distributions to the Seller during each such year were less than the Amortization Amount for such year.

In the fourth year following the applicable closing date, distributions will be split equally between PE Investment II and the Seller. At the conclusion of that four-year period, PE Investment II will be required to pay to the Seller the Deferred Amount less: (i) any distributions received by the Seller during such four-year period; and (ii) any Amortization Amounts received by the Seller during such four-year period. PE Investment II will receive 100% of all distributions following the payment of the Deferred Amount.

PE Investment II deposited an aggregate of $50.0 million in connection with the transaction. The deposit is generally non-refundable unless the transaction contemplated by the agreement is not consummated as a result of a material breach by the Seller. The Company anticipates closing the fund interests by the end of 2013, subject to customary closing conditions, including third-party consents. As of June 30, 2013, the carrying value of the investment in PE Investment II was $7.5 million.

Other

In connection with the Milford loan, the Company and the Sponsor have an aggregate 35.0% interest in the Milford hotel and retail component at the hotel. As of June 30, 2013, the carrying value of the investment was $0.5 million, which is included in deferred costs and other assets, net on the consolidated balance sheets. For the three and six months ended June 30, 2013, the Company recognized $0.2 million of equity in losses.