7. Related Party Arrangements

NS Real Estate Income Trust Advisor, LLC

Subject to certain restrictions and limitations, the Advisor is responsible for managing the Company's affairs on a day-to-day basis and for identifying, originating, acquiring and asset managing investments on behalf of the Company. For such services, to the extent permitted by law and regulations, the Advisor receives fees and reimbursements from the Company. Below is a description and table of the fees and reimbursements incurred to the Advisor.

Organization and Offering Costs

The Advisor, or its affiliates, is entitled to receive reimbursement for organization and offering costs paid on behalf of the Company in connection with the Offering. The Company is obligated to reimburse the Advisor, or its affiliates, as applicable, for organization and offering costs to the extent the aggregate of selling commissions, dealer manager fees and other organization and offering costs do not exceed 15.0% of gross proceeds from the Total Primary Offering. The Advisor initially expected cumulative organization and offering costs, excluding selling commissions and dealer manager fees, would not exceed $15.0 million, or 1.5% of the proceeds expected to be raised from the Total Primary Offering. Based on gross proceeds raised of $1,072.9 million from the Total Primary Offering, the Company estimates reimbursable organization and offering costs, excluding selling commissions and dealer manager fees, of $10.5 million, or 1.0%, which is less than the 1.5% threshold. The Company expects to continue to incur organization and offering costs in connection with the DRP beyond the Total Primary Offering. The Company shall not reimburse the Advisor for any organization and offering costs that the Company's independent directors determine are not fair and commercially reasonable to the Company. The Company records organization and offering costs each period based on an allocation of expected total organization and offering costs to be reimbursed. Organization costs are recorded in general and administrative expenses in the consolidated statements of operations and offering costs are recorded as a reduction to equity. In addition, total underwriting compensation through the completion of the Total Primary Offering, including selling commissions, the dealer manager fee and amounts reimbursed to participating broker dealers and investment advisors, did not exceed the 10.0% of gross Total Primary Offering proceeds limitation prescribed by the Financial Industry Regulatory Authority.

Operating Costs

The Advisor, or its affiliates, is entitled to receive reimbursement for direct and indirect operating costs incurred by the Advisor in connection with administrative services provided to the Company. Indirect operating costs include the Company's allocable share of costs incurred by the Advisor for personnel and other overhead such as rent, technology and utilities. However, there is no reimbursement for personnel costs related to executive officers and other personnel involved in activities for which the Advisor receives an acquisition fee or disposition fee. The Company reimburses the Advisor quarterly for operating costs (including the asset management fee) based on a calculation for the four preceding fiscal quarters not to exceed the greater of: (i) 2.0% of its average invested assets; or (ii) 25.0% of its net income determined without reduction for any additions to reserves for depreciation, loan losses or other similar non-cash reserves and excluding any gain from the sale of assets for that period (the "2%/25% Guidelines"). Notwithstanding the above, the Company may reimburse the Advisor for expenses in excess of this limitation if a majority of the Company's independent directors determines that such excess expenses are justified based on unusual and non-recurring factors. The Company calculates the expense reimbursement quarterly based upon the trailing twelve-month period.

Advisory Fees

Asset Management Fee

The Advisor, or its affiliates, receives a monthly asset management fee equal to one-twelfth of 1.25% of the sum of the amount funded or allocated for CRE investments including expenses and any financing attributable to such investments, less any principal received on debt and securities investments (or the proportionate share thereof in the case of an investment made through a joint venture).

Acquisition Fee

The Advisor, or its affiliates, also receives an acquisition fee equal to 1.0% of the amount funded or allocated by the Company to originate or acquire investments, including acquisition expenses and any financing attributable to such investments. Acquisition fees paid to the Advisor related to the origination or acquisition of CRE debt investments are included in CRE debt investments, net on the consolidated balance sheets and are amortized to interest income over the life of the investment using the effective interest method.

Disposition Fee

For substantial assistance in connection with the sale of investments and based on the services provided, the Advisor, or its affiliates, receives disposition fees equal to 1.0% of the contract sales price of each CRE investment sold. The Company does not pay a disposition fee upon the maturity, prepayment, workout modification or extension of a CRE debt investment unless there is a corresponding fee paid by the borrower, in which case the disposition fee is the lesser of: (i) 1.0% of the principal amount of the CRE debt investment prior to such transaction; or (ii) the amount of the fee paid by the borrower in connection with such transaction. If the Company takes ownership of a property as a result of a workout or foreclosure of a CRE debt investment, the Company will pay a disposition fee upon the sale of such property. Disposition fees incurred to the Advisor on CRE debt investments are included in CRE debt investments, net on the consolidated balance sheets and are amortized to interest income over the life of the investment using the effective interest method.

NorthStar Realty Securities, LLC

Selling Commissions and Dealer Manager Fees

Pursuant to a dealer manager agreement, the Company paid the Dealer Manager selling commissions of up to 7.0% of gross proceeds from the Total Primary Offering, all of which were reallowed to participating broker-dealers. In addition, the Company paid the Dealer Manager a dealer manager fee of up to 3.0% of gross proceeds from the Total Primary Offering, a portion of which was reallowed to participating broker-dealers. No selling commissions or dealer manager fees are paid for sales pursuant to the DRP.

Summary of Fees and Reimbursements

The following table presents the fees and reimbursements incurred to the Advisor for the three and six months ended June 30, 2013 and 2012 and the due to related party as of June 30, 2013 and December 31, 2012 (dollars in thousands):

										Due to related party as of

		Three Months Ended June 30,				Six Months Ended June 30,				Due to related party as of
	Financial Statement Location	Three Months Ended June 30,				Six Months Ended June 30,				June 30, 2013		December 31, 2012
Type of Fee or Reimbursement	Financial Statement Location	2013		2012		2013		2012		June 30, 2013		December 31, 2012
Organization and offering costs
Organization	General and administrative expenses	$	9	$	118	$	62	$	270	$	—	$	113
Offering	Cost of capital(1)		1,502		768		2,505		1,755		1,124		2,151
Operating costs(2)	General and administrative expenses		2,218		763		3,754		1,098		2,148		523
Advisory fees
Asset management	Advisory fees—related party		2,761		511		4,903		818		981		559
Acquisition(3)	Real estate debt investments, net / Advisory fees—related party		2,981		2,321		5,323		2,577		1,404		—
Disposition(3)	Real estate debt investments, net		15		—		15		—		—		24
Selling commissions / Dealer manager fees	Cost of capital(1)		32,577		8,678		49,511		16,078		—		—

Total(4)										$	5,657	$	3,370

(1): Cost of capital is included in net proceeds from issuance of common stock in the consolidated statements of equity.
(2): As of June 30, 2013, the Advisor incurred unreimbursed operating costs on behalf of the Company and $5.2 million is still allocable.
(3): Acquisition/disposition fees incurred to the Advisor related to CRE debt investments are generally offset by origination/exit fees paid to the Company by borrowers if such fees are required from the borrower. Acquisition fees related to PE Investments are included in advisory fees—related party in the consolidated statements of operations. The Advisor may determine to defer fees or seek reimbursement, subject to compliance with applicable policies. From inception through June 30, 2013, the Advisor deferred $0.5 million of acquisition fees and $0.3 million of disposition fees related to CRE securities.
(4): Due to related party includes a $2.0 million receivable and $11.8 million payable as of June 30, 2013 and December 31, 2012, respectively, related to PE Investment I.

Sponsor Purchase of Common Stock

The Company was party to a Second Amended and Restated Distribution Support Agreement, as amended (the "Distribution Support Agreement"), with the Sponsor pursuant to which the Sponsor committed to purchase up to an aggregate of $10.0 million in shares of the Company's common stock at a price of $9.00 per share if cash distributions exceed modified funds from operations (as defined in accordance with the current practice guidelines issued by the Investment Program Association) to provide additional funds to support distributions to stockholders. In April 2012, the Distribution Support Agreement was extended until July 2013. For the three and six months ended June 30, 2013, the Sponsor was not required to purchase shares in connection with the Distribution Support Agreement. For the three and six months ended June 30, 2012, the Sponsor purchased 0.1 million and 0.2 million shares, respectively, of the Company's common stock for $0.9 million and $1.9 million, respectively. From inception through the expiration of the Distribution Support Agreement, the Sponsor purchased 0.5 million shares for $4.6 million (refer to Note 13).

Securitization 2012-1

The Company entered into an agreement with the Sponsor that provides that both the Company and the Sponsor receive the economic benefit and bear the economic risk associated with the investments we each contributed into Securitization 2012-1. In both cases, the respective retained equity interest of the Company and the Sponsor is subordinate to interests of the senior bondholders of Securitization 2012-1 and the senior bondholders have no recourse to the general credit of the Company or the Sponsor. In the event that either the Company or the Sponsor suffer a complete loss of the retained equity interests in Securitization 2012-1, any additional losses would be borne by the remaining retained equity interests held by the Company or the Sponsor, as the case may be, prior to the senior bondholders. An affiliate of the Sponsor was named special servicer for Securitization 2012-1.

PE Investments

In connection with PE Investments, the Company guaranteed all of its funding obligations that may be due and owed under the governing documents indirectly through an indemnification with the Sponsor, which in turn guaranteed the obligations directly to PE Investment JV entities. The Company and the Sponsor each agreed to indemnify the other proportionately for any losses that may arise in connection with the funding and other obligations as set forth in the governing documents in the case of a joint default by the Company and the Sponsor. The Company and the Sponsor further agreed to indemnify each other for all of the losses that may arise as a result of a default that was solely caused by the Company or the Sponsor, as the case may be.

PE Investment I

In connection with PE Investment I, the Company assumed the rights to subscribe to 29.5% of PE Investment I from the Sponsor. The Company and the Sponsor contributed cash of $400.1 million, of which the Company and the Sponsor contributed $118.0 million and $282.1 million, respectively.

In December 2012, the Sponsor deposited an aggregate of $40.0 million in connection with this transaction, which included $11.8 million on behalf of the Company, in the proportion of the respective capital contributions. This amount was settled by the Company in the first quarter 2013.

PE Investment II

In connection with the transaction, PE Investment II deposited an aggregate of $50.0 million, of which the Company deposited $7.5 million. 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.