10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-36301

NORTHSTAR ASSET MANAGEMENT GROUP INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization) 46-4591526 (IRS Employer Identification No.)

399 Park Avenue, 18th Floor, New York, NY 10022

(Address of Principal Executive Offices, Including Zip Code)

(212) 547-2600

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Class	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x    No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o   No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Annual Report on Form 10-K or any amendment to this Annual Report on Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer x Non-accelerated filer o  (Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No x

As of the market close on June 30, 2014, the registrant’s common stock was not held by any non-affiliates. As of February 26, 2015, the registrant had issued and outstanding 193,848,317 shares of common stock, $0.01 par value per share.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement for the registrant’s 2015 Annual Meeting of Stockholders to be filed within 120 days after the end of the registrant’s fiscal year ended December 31, 2014 are incorporated by reference into this Annual Report on Form 10-K in response to Part III, Items 10, 11, 12, 13 and 14.

NORTHSTAR ASSET MANAGEMENT GROUP INC.

FORM 10-K

TABLE OF CONTENTS

Index		Page
Part I.
Item 1.	Business	5
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	30
Item 2.	Properties	30
Item 3.	Legal Proceedings	30
Item 4.	Mine Safety Disclosures	30
Part II.
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	31
Item 6.	Selected Financial Data	32
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 8.	Financial Statements and Supplementary Data	46
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	73
Item 9A.	Controls and Procedures	73
Item 9B.	Other Information	74
Part III.
Item 10.	Directors, Executive Officers and Corporate Governance	74
Item 11.	Executive Compensation	74
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	74
Item 13.	Certain Relationships and Related Transactions, and Director Independence	74
Item 14.	Principal Accountant Fees and Services	74
Part IV.
Item 15.	Exhibits and Financial Statement Schedules	75
Signatures		78

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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “believe,” “could,” “project,” “predict,” “continue,” “future” or other similar words or expressions. Forward-looking statements are not guarantees of performance and are based on certain assumptions, discuss future expectations, describe plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Such statements include, but are not limited to, those relating to the effects of the spin-off described in this Annual Report on Form 10-K, our ability to effectively grow our business, our financing needs, the effects of our current asset management strategy, our management’s track record, our ability to manage credit risk and the assets of our Managed Companies (as defined below), our ability to source additional investment opportunities for our Managed Companies and our ability to obtain new Managed Companies and additional assets to manage. Our ability to predict results or the actual effect of plans or strategies is inherently uncertain, particularly given the economic environment. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements and you should not unduly rely on these statements. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results in future periods to differ materially from those forward-looking statements. These factors include, but are not limited to:

• risks inherent in a recently spun-off company, including those related to operating as an independent public company, the capital resources required to protect against business risks, legal risks and risks associated with the tax and accounting treatment of a spin-off transaction;

• our ability to realize the anticipated effective income tax rate following the spin-off;

• adverse domestic or international economic conditions and the impact of the commercial real estate industry on our Managed Companies;

• our ability to grow our business by raising capital for our existing Managed Companies and sponsoring new Managed Companies;

• our ability to effectively implement the business plans of, and the performance of, our Managed Companies;

• our ability to enter into, and grow our business through acquisitions, strategic investments and joint ventures;

• our ability to realize the anticipated benefits of our strategic investments and joint ventures;

• access to debt and equity capital and our liquidity;

• our use of leverage;

• changes in domestic or international laws or regulations governing various aspects of our business and our Managed Companies;

• the impact of any conflicts of interest arising from our asset management activities;

• our ability to manage our costs in line with our expectations and the impact on our cash available for distribution;

• competition for qualified personnel and our ability to retain key personnel;

• the competitive nature of the asset management industry;

• the effectiveness of our portfolio management techniques and strategies;

• our ability to expand and successfully manage our operations internationally;

• our ability to maintain our exclusion from the definition of an “investment company” under the Investment Company Act of 1940, as amended;

• our ability to maintain effective disclosure and internal controls;

• our historical financial information included in this Annual Report on Form 10-K for periods prior to the six months ended December 31, 2014 not providing an accurate indication of our performance in the future or reflecting what our financial position, results of operations or cash flows would have been had we operated as an independent public company during the periods presented; and

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• the effect of regulatory or tax actions, litigation and contractual claims against us, our affiliates or our Managed Companies, including the potential settlement and litigation of such claims.

The foregoing list of factors is not exhaustive. All forward-looking statements included in this Annual Report on Form 10-K are based on information available to us on the date hereof and we are under no duty to update any of the forward-looking statements after the date of this report to conform these statements to actual results.

Factors that could have a material adverse effect on our operations and future prospects are set forth in “Risk Factors” in this Annual Report on Form 10-K beginning on page 13. The risk factors set forth in our filings with the Securities and Exchange Commission could cause our actual results to differ significantly from those contained in any forward-looking statement contained in this report.

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PART I

Item 1. Business

References to “we,” “us” or “our” refer to NorthStar Asset Management Group Inc. and its subsidiaries unless the context specifically requires otherwise.

Overview

We are a global asset management firm focused on strategically managing real estate and other investment platforms in the United States and internationally. We commenced operations on July 1, 2014 upon the spin-off by NorthStar Realty Finance Corp., or NorthStar Realty, of its asset management business into a separate publicly-traded company, NorthStar Asset Management Group Inc. (NYSE: NSAM), a Delaware corporation. The spin-off was in the form of a tax-free distribution to NorthStar Realty’s common stockholders, where each NorthStar Realty common stockholder received shares of our common stock on a one-for-one basis. At the same time, NorthStar Realty became externally managed by our affiliate through a management contract with an initial term of 20 years. NorthStar Realty continues to operate its commercial real estate debt origination business. Most of NorthStar Realty’s employees at the time of the spin-off became our employees.

Certain of our affiliates also manage NorthStar Realty’s previously sponsored non-traded real estate investment trusts, or REITs, as well as our new non-traded companies and any future sponsored company, referred to as our Sponsored Companies and together with NorthStar Realty, referred to as our Managed Companies.

We are organized to provide asset management and other services to our Managed Companies or any other companies we may sponsor in the future, both in the United States and internationally. Our Managed Companies have historically invested in the commercial real estate, or CRE, industry. We seek to expand the scope of our asset management business beyond real estate into new asset classes and geographies by organically creating and managing additional investment vehicles or through acquisitions, strategic partnerships and joint ventures.

We earn asset management, incentive and other fees, directly or indirectly, pursuant to management and other contracts and investments in asset managers. In addition, we own NorthStar Realty Securities, LLC, or NorthStar Securities, a captive broker-dealer platform registered with the Securities and Exchange Commission, or SEC, which raises capital in the retail market for our Sponsored Companies.

As of December 31, 2014, we had $22 billion of assets under management, adjusted for commitments to acquire certain investments by our Managed Companies. In addition, we invested $92 million in asset management businesses that manage $8.5 billion across a variety of asset classes.

Significant Developments

Proposed Spin-off of European Real Estate Business

On February 26, 2015, NorthStar Realty announced that its board of directors unanimously approved a plan to spin-off its European real estate business, or the NRF Proposed European Spin, into a newly-formed publicly traded REIT, NorthStar Realty Europe Corp., or NRE, expected to be listed on the New York Stock Exchange, or NYSE, and potentially in Europe. Currently, NorthStar Realty has acquired or committed to acquire $2 billion of European real estate (excluding European healthcare assets) comprised of 50 properties spanning across some of Europe’s top markets that will be contributed to NRE upon the completion of the NRF Proposed European Spin. We will manage NRE pursuant to a long-term management agreement, on substantially similar terms as our management agreement with NorthStar Realty. The NRF Proposed European Spin is expected to be completed in the second half of 2015.

American Healthcare Investors LLC

In December 2014, we acquired an approximate 44% interest, or AHI Interest, in American Healthcare Investors LLC, or AHI, for $58 million, consisting of $38 million in cash and $20 million of our common stock, subject to certain lock-up and vesting restrictions ($10 million of our common stock vested immediately). AHI is a healthcare-focused real estate investment management firm that co-sponsored and advised Griffin-American Healthcare REIT II, Inc., or Griffin-American, until it was recently acquired by NorthStar Realty and NorthStar Healthcare and currently advises Griffin-American Healthcare REIT III, Inc., or GAHR III, which has raised over $1.8 billion in capital. AHI is entitled to receive 75% of all asset management and other fees of GAHR III and future healthcare focused non-traded REITs jointly sponsored by AHI and Griffin Capital Corporation. Refer to “Related Party Arrangements” below for further discussion.

Island Hospitality Management

In January 2015, we acquired an approximate 45% interest, or Island Interest, in Island Hospitality Management Inc., or Island, for $33 million in cash and $5 million of our common stock, subject to certain lock-up and vesting restrictions. Island is a

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leading, independent select service hotel management company and manages approximately 140 hotel properties representing $3.7 billion, of which 101 hotel properties are owned by NorthStar Realty.

Refer to “Our Investments” below for further discussion of our investments.

Our Business

Our primary business objective is to provide asset management and other services by managing NorthStar Realty and our Sponsored Companies, both in the United States and internationally. We earn asset management, incentive and other fees pursuant to management and other contracts. Our growth will depend upon the ability of NorthStar Realty and our Sponsored Companies to grow by raising capital, which in turn is driven by their investment activities and overall performance. In addition, growth in our assets under management for our Sponsored Companies is impacted by the ability to raise capital in the retail market through our captive broker-dealer platform. Our Managed Companies have historically invested in the CRE industry and have demonstrated the ability to invest and create value through multiple real estate cycles and changing market conditions. We seek to further expand the scope of our asset management business beyond real estate organically by creating and managing additional investment vehicles. For instance, we confidentially submitted a registration statement with the SEC to co-manage a business development company, or BDC, with OZ InstitutionalCredit Management LP, or OZ Credit Management, an affiliate of Och-Ziff Capital Management Group, LLC, or Och-Ziff, that will invest in senior and subordinate loans to middle-market companies.

As we grow our business, as well as to expand into new asset classes and geographies, we seek to enter into strategic partnerships and joint ventures with third parties with expertise in commercial real estate or other sectors and markets to augment our business operations while at the same time benefiting from fee streams generated by such strategic partnerships and joint ventures.

Our management team, located in the United States and internationally, has a proven track record in managing and growing our Managed Companies. We believe our in-place, long-duration fees, substantial growth prospects and scalable operating platform position us as an industry leading asset manager. We have the ability to maintain a competitive advantage through a combination of our deep industry relationships and access to market leading credit underwriting and capital markets expertise which enables us to manage credit risk as well as to structure and finance the assets of our Managed Companies efficiently. Our ability to identify opportunities across a broad spectrum of potential investments for our Managed Companies will continue to create complementary and overlapping sources of investment opportunities based on a common reliance on market fundamentals and application of similar underwriting and asset management skills as we seek to maximize stockholder value.

Assets of our Managed Companies grew significantly over the past several years driven by our ability to raise capital for NorthStar Realty and our Sponsored Companies and in turn effectively deploy such capital. The following table presents the assets of our Managed Companies as of December 31, 2014, 2013 and 2012 (dollars in thousands):

	December 31, 2014 (1)(2)				December 31, 2013				December 31, 2012
	Amount		Percentage		Amount		Percentage		Amount		Percentage
NorthStar Realty	$	17,871,175	82.30	%	$	8,660,375	81.50	%	$	6,547,116	88.46	%
Sponsored Companies:
NorthStar Income	2,183,570		10.10	%	1,831,104		17.20	%	854,516		11.54	%
NorthStar Healthcare	1,097,729		5.10	%	115,839		1.10	%	—		—
NorthStar Income II	533,063		2.50	%	25,326		0.20	%	—		—
Subtotal Sponsored Companies	3,814,362		17.70	%	1,972,269		18.50	%	854,516		11.54	%
Total	$	21,685,537	100.00	%	$	10,632,644	100.00	%	$	7,401,632	100.00	%

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(1) Adjusted for acquisitions and commitments to purchase through February 26, 2015.

(2) Based on investments reported by each Managed Company, except for NorthStar Realty which excludes NorthStar Healthcare’s proportionate interest in healthcare joint ventures.

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To date, we also invested in the following businesses that have an aggregate of $8.5 billion assets under management:

• AHI is a healthcare-focused real estate investment management firm;

• Island is a leading, independent select service hotel management company; and

• Distribution Finance Corporation, or Distribution Finance, is a crowd funding technology platform company.

In connection with these investments, we earn fees and may be entitled to certain incentive fees. In addition, AHI and Island provide certain asset management, property management and other services to us to assist in managing the current and future assets of our Managed Companies.

NorthStar Realty

NorthStar Realty is a diversified commercial real estate company with 82% of its total assets invested in real estate, of which 74% is invested in direct real estate investments including healthcare, hotel, manufactured housing communities, net lease, multifamily and multi-tenant office properties. In addition, NorthStar Realty originates, structures, acquires and manages senior and subordinate debt investments and invests in CRE securities. NorthStar Realty has grown its business by raising capital and deploying such capital effectively. In 2014, NorthStar Realty issued aggregate net capital of $2.6 billion, including $1.3 billion from the issuance of common equity (including the remaining shares issued under a forward sale agreement in February 2015 for net proceeds of $122 million), $1.1 billion as part of the consideration for the merger of Griffin-American and $242 million from the issuance of preferred equity. In 2013, NorthStar Realty issued aggregate net capital of $1.9 billion, including $1.4 billion from the issuance of common equity, $193 million from the issuance of preferred stock and $335 million from the issuance of exchangeable senior notes.

The management agreement with NorthStar Realty is for an initial term of 20 years and provides for a base management fee and incentive fee.

Base Management Fee

For the six months ended December 31, 2014, we earned $79 million related to the base management fee. The management contract with NorthStar Realty commenced on July 1, 2014, and as such, there were no management fees earned for the six months ended June 30, 2014. The base management fee from NorthStar Realty will increase subsequent to December 31, 2014, by an amount equal to 1.5% per annum of the sum of:

• cumulative net proceeds of all future common equity and preferred equity issued by NorthStar Realty;

• equity issued by NorthStar Realty in exchange or conversion of exchangeable senior notes based on the stock price at the date of issuance;

• any other issuances by NorthStar Realty of common equity, preferred equity or other forms of equity, including but not limited to limited partnership interests in an operating partnership, or LTIP units (excluding equity-based compensation, but including issuances related to an acquisition, investment, joint venture or partnership); and

• cumulative cash available for distribution, or CAD, of NorthStar Realty in excess of cumulative distributions paid on common stock, LTIP units or other equity awards beginning the first full calendar quarter after the spin-off.

Additionally, NorthStar Realty’s equity interest in RXR Realty LLC, or RXR Realty, and Aerium Group is structured so that we are entitled to the portion of distributable cash flow from each investment in excess of the $10 million minimum annual base amount.

Incentive Fee

For the six months ended December 31, 2014, we earned $3 million related to the incentive management fee. The incentive management fee is calculated and payable quarterly in arrears in cash, equal to:

• the product of: (a) 15% and (b) CAD of NorthStar Realty before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, when such amount is in excess of $0.39 per share but less than $0.45 per share; plus

• the product of: (a) 25% and (b) CAD of NorthStar Realty before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, when such amount is equal to or in excess of $0.45 per share;

• multiplied by the weighted average shares outstanding of NorthStar Realty for the calendar quarter.

In addition, we may also earn an incentive fee from NorthStar Realty’s healthcare investments in connection with our Healthcare Strategic Partnership (refer to Related Party Arrangements).

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Weighted average shares represents the number of shares of NorthStar Realty’s common stock, LTIP units or other equity-based awards (with some exclusions), outstanding on a daily weighted average basis. With respect to the base management fee, all equity issuances are allocated on a daily weighted average basis during the fiscal quarter of issuance.

Additional NorthStar Realty Management Agreement Terms

• 20-year initial term, which will be automatically renewed for additional 20-year terms each anniversary thereafter unless earlier terminated for “cause.”

• If NorthStar Realty were to spin-off any asset or business in the future, such as the recently announced NRF Proposed European Spin, such entity would be managed by us on terms substantially similar to those set forth in the management agreement between us and NorthStar Realty. The management agreement further provides that the aggregate base management fee in place immediately after any future spin-off will not be less than the aggregate base management fee in place at NorthStar Realty immediately prior to such spin-off.

Payment of Costs and Expenses and Expense Allocation

NorthStar Realty is responsible for all of its direct costs and expenses and will reimburse us for costs and expenses incurred by us on its behalf. In addition to NorthStar Realty’s costs and expenses, following the spin-off, NorthStar Realty is obligated to reimburse us for additional costs and expenses incurred by us for an amount not to exceed the following: (i) 20% of the combined total of: (a) NorthStar Realty’s general and administrative expenses as reported in its consolidated financial statements excluding: (1) equity-based compensation expense, (2) non-recurring items, (3) fees payable to us under the terms of the management agreement and (4) any allocation of expenses from NorthStar Realty, or NorthStar Realty G&A; and (b) our general and administrative expenses as reported in our combined consolidated financial statements, excluding equity-based compensation expense and adding back any costs or expenses allocated to any of our Managed Companies, less (ii) the NorthStar Realty G&A.

Sponsored Companies

We are raising capital for our Sponsored Companies through NorthStar Securities.

• NorthStar Real Estate Income Trust, Inc., or NorthStar Income - Our first Sponsored Company, NorthStar Income, successfully completed its public offering on July 1, 2013.

• NorthStar Healthcare Income, Inc., or NorthStar Healthcare - Our second Sponsored Company, NorthStar Healthcare, successfully completed its public offering on February 2, 2015 and began raising capital in a follow-on public offering at the end of February 2015.

• NorthStar Realty Estate Income II, Inc., or NorthStar Income II - Our third Sponsored Company, NorthStar Income II, is currently raising capital.

• NorthStar/RXR New York Metro Income, Inc., or NorthStar/RXR New York Metro - Our fourth Sponsored Company, NorthStar/RXR New York Metro, expects to begin raising capital in 2015.

• NorthStar Corporate Income, Inc., or NorthStar Corporate - Our fifth Sponsored Company, NorthStar Corporate, confidentially submitted its registration statement on Form N-2 to the SEC in December 2014. NorthStar Corporate seeks to raise up to $1 billion in a public offering of common stock.  NorthStar Corporate is structured as a non-diversified, closed-end management investment company that intends to elect to be regulated as a BDC under the Investment Company Act of 1940, as amended, or the Investment Company Act.  NorthStar Corporate intends to engage OZ Credit Management, an affiliate of Och-Ziff Capital Management, an alternative asset manager, to serve as the sub-advisor to manage NorthStar Corporate’s investments and oversee operations. Any asset management and other fees incurred by NorthStar Corporate will be shared between us and OZ Credit Management as co-sponsors. NorthStar Corporate intends to invest in senior and subordinate loans to middle-market companies.

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The following table presents a summary of the fee arrangements with our current Sponsored Companies:

	NorthStar	NorthStar	NorthStar	NorthStar/RXR
	Income	Healthcare	Income II	New York Metro(9)
Offering amount(1)	$1.1 billion	$1.8 billion(8)	$1.65 billion	$2.0 billion
Total raised through February 24, 2015 (2)	$1.2 billion	$1.1 billion	$385 million	(10)
Primary strategy	CRE Debt	Healthcare Equity and Debt	CRE Debt	New York City CRE Equity and Debt
Primary offering period	Completed July 2013	Ends February 2017(8)	Ends May 2015(11)	Ends February 2017(11)
Asset Management and Other Fees:
Asset management fees(3)	1.25% of assets	1.00% of assets	1.25% of assets	1.25% of assets
Acquisition fees(4)	1.00% of investment	2.25% for real estate properties 1.00% of other investments	1.00% of investment	2.25% for real estate properties 1.00% of other investments
Disposition fees(5)	1.00% of sales price	2.00% for real estate properties 1.00% of sales price for debt investments	1.00% of sales price	2.00% for real estate properties 1.00% of sales price for debt investments
Incentive payments(6)	15.00% of net cash flows after an 8.00% return	15.00% of net cash flows after a 6.75% return(7)	15.00% of net cash flows after a 7.00% return	15.00% of net cash flows after a 6.00% return

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(1) Represents amount of shares registered to offer pursuant to each Sponsored Company’s public offering and includes the follow-on public offering of up to $700 million for NorthStar Healthcare.

(2) Includes capital raised through the dividend reinvestment plan.

(3) Assets represent principal amount funded or allocated for debt investments originated or acquired and the cost of all other investments, including expenses and any financing attributable to such investments, less any principal received on debt and securities investments (or our proportionate share thereof in the case of an investment made in a joint venture).

(4) Calculated based on the amount funded or allocated by our Sponsored Companies to originate or acquire investments, including acquisition expenses and any financing attributable to such investments (or the proportionate share thereof in the case of an equity investment made through a joint venture).

(5) Calculated based on contractual sales price of each investment sold.

(6) We are entitled to receive distributions equal to 15% of net cash flow of the respective Sponsored Company, whether from continuing operations, repayment of loans, disposition of assets or otherwise, but only after stockholders have received, in the aggregate, cumulative distributions equal to their invested capital plus the respective cumulative, non-compounded annual pre-tax return (as noted in the table above) on such invested capital.

(7) The Healthcare Strategic Partnership (refer to Related Party Arrangements) is entitled to the incentive fees earned from managing NorthStar Healthcare, of which we earn our proportionate interest.

(8) NorthStar Healthcare successfully completed its public offering on February 2, 2015 by raising $1.1 billion in capital. We began raising capital for NorthStar Healthcare’s follow-on public offering at the end of February 2015.

(9) Any asset management and other fees incurred by NorthStar/RXR New York Metro will be shared between us and RXR Realty as co-sponsors.

(10) We expect to begin raising capital for NorthStar/RXR New York Metro in 2015.

(11) Offering period subject to extension as determined by the board of directors of each company.

Pursuant to each of the advisory agreements with our current Sponsored Companies, we may determine, in our sole discretion, to defer or waive, in whole or in part, certain asset management and other fees incurred. In considering whether to defer or waive any such fees, we evaluate the specific facts and circumstances surrounding the incurrence of a particular fee and make our decision on a case by case basis.

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The following table presents a summary of our current Sponsored Companies and their capital raising activity for the years endedDecember 31, 2014, 2013 and 2012 and from inception through February 24, 2015:

				Capital Raised (in thousands)(1)
				Years Ended December 31,						From inception through
	Primary Strategy	Offering Amount	Offering Period	2014		2013		2012		February 24,  2015
NorthStar Income	CRE Debt	$1.1 billion	Completed July 2013	$	42,661	$	545,423	$	443,353	$	1,196,382
NorthStar Healthcare	Healthcare Equity and Debt	$1.8 billion(2)	Ends February 2017(2)	867,245		109,243		—		1,101,586
NorthStar Income II	CRE Debt	$1.65 billion	Ends May 2015(3)	280,296		27,853		—		384,808
NorthStar/RXR New York Metro	New York City CRE Equity and Debt	$2.0 billion	Ends February 2017(3)	—		—		—		—
NorthStar Corporate	Senior and subordinate loans to middle-market companies	$1.0 billion	(4)	—		—		—		—

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(1) Includes capital raised through the dividend reinvestment plan.

(2) NorthStar Healthcare successfully completed its public offering on February 2, 2015 by raising $1.1 billion in capital. We began raising capital for NorthStar Healthcare’s follow-on public offering at the end of February 2015.

(3) Offering period subject to extension as determined by the board of directors of each company.

(4) Offering period will commence upon its registration statement being declared effective by the SEC.

Distribution Support

NorthStar Realty committed to invest up to $10 million in each of our Sponsored Companies that are in their offering stage. In addition, consistent with its past practices, NorthStar Realty will commit up to $10 million for distribution support in any future non-traded sponsored company that we sponsor, up to a total of five new companies per year.

The distribution support agreement related to NorthStar/RXR New York Metro is an obligation of both NorthStar Realty and RXR Realty, where each agreed to purchase up to an aggregate of $10 million in Class A common stock during the two-year period following commencement of the offering, with NorthStar Realty and RXR Realty agreeing to purchase 75% and 25% of any shares purchased, respectively.

Payment of Costs and Expenses and Expense Allocation

In addition, we are entitled to certain expense allocations for costs paid on behalf of our Sponsored Companies. The following table presents a summary of the expense arrangements with our current Sponsored Companies:

	NorthStar Income	NorthStar Healthcare	NorthStar Income II	NorthStar/RXR New York Metro
Organization and offering costs (1)	$11.0 million (2)	$22.5 million, or 1.5% of the proceeds expected to be raised from the offering  (4)	$24.8 million, or 1.5% of the proceeds expected to be raised from the offering	$30.0 million, or 1.5% of the proceeds expected to be raised from the offering
Operating costs (3)	Greater of 2.0% of its average invested assets or 25.0% of its net income	Greater of 2.0% of its average invested assets or 25.0% of its net income	Greater of 2.0% of its average invested assets or 25.0% of its net income	Greater of 2.0% of its average invested assets or 25.0% of its net income

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(1) Represents reimbursement for organization and offering costs paid on behalf of our Sponsored Companies in connection with their respective offerings. We are facilitating the payment of organization and offering costs on behalf of our Sponsored Companies.

(2) Represents the total expense allocation for organization and offering costs through the end of the offering period in July 2013.

(3) Calculated based on the four preceding fiscal quarters not to exceed the greater of: (i) 2.0% of each Sponsored Company’s average invested assets; or (ii) 25.0% of each Sponsored Company’s 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.

(4) Excludes shares being offered pursuant to the dividend reinvestment plan.

Financing Strategy

Our organizational documents do not limit our capacity to use leverage or the amount we may use. Our financing objective is to manage our capital structure effectively in order to provide sufficient capital to execute our business strategies and in turn create value for stockholders. We may seek to access a wide range of secured and unsecured debt and public and private equity capital sources to fund our investment activities and asset growth. We may borrow on a credit facility and from time to time use derivative instruments primarily to manage interest rate risk. We do not intend to use derivatives to speculate.

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Portfolio Management

Credit risk management is our ability to manage our investments and investments of our Managed Companies in a manner that preserves capital and income and minimizes losses that would decrease income. Upon commencement of operations, we perform portfolio management on behalf of our Managed Companies. We maintain a comprehensive portfolio management process generally includes day-to-day oversight by the portfolio management and servicing team, regular management meetings and an exhaustive quarterly credit review process. These processes are designed to enable management to evaluate and proactively identify asset-specific credit issues and trends on a portfolio-wide basis. Nevertheless, we cannot be certain that such review will identify all issues within the portfolios of our Managed Companies due to, among other things, adverse economic conditions or events adversely affecting specific assets; therefore, potential future losses at our Managed Companies may also stem from investments that are not identified during these credit reviews. We use many methods to actively manage the assets of our Managed Companies such as frequent re-underwriting and dialogue with borrowers/tenants/operators/partners and regular inspections of our Managed Companies’ collateral, modification to debt terms, taking title to collateral or selling assets when we can obtain a price that is attractive relative to its risk. In addition, we seek to utilize services of certain strategic partnerships and joint ventures with third parties with expertise in commercial real estate or other sectors and markets to assist our portfolio management of our Managed Companies.

Regulation

We and our Managed Companies, as applicable, are subject, in certain circumstances, to supervision and regulation by state, federal and international governmental authorities and are subject to various laws and judicial and administrative decisions imposing various requirements and restrictions, which, among other things:

• regulate our public disclosures, reporting obligations and capital raising activity;

• regulate the investment advisory, management and related services we or our affiliates may provide;

• regulate our broker-dealer;

• regulate our conduct as an investment advisor;

• require compliance with applicable REIT rules for our Managed Companies;

• establish loan servicing standards;

• regulate credit granting activities;

• require disclosures to clients;

• set collection, taking title to collateral, repossession and claims-handling procedures and other trade practices;

• regulate land use and zoning;

• regulate the foreign ownership or management of real property or mortgages;

• regulate the ability of foreign persons or corporations to remove profits earned from activities within the country to the person’s or corporation’s country of origin;

• regulate tax treatment and accounting standards; and

• regulate use of derivative instruments and our ability to hedge our risks related to fluctuations in interest rates and exchange rates.

We and our subsidiaries are subject to substantial regulation, including by the SEC, the Jersey Financial Services Commission, or JFSC, the NYSE, the Financial Industry Regulatory Authority, or FINRA, and other federal, state and local or international governmental bodies and agencies.

Certain of our affiliates are registered with the SEC as investment advisers under the Investment Advisers Act. In addition, certain of our subsidiaries are registered as fund services businesses with the JFSC. Such registration results in certain aspects of our asset management business being supervised by the SEC and the JFSC and requires our compliance with numerous obligations, including record-keeping requirements, operational procedures and disclosure obligations.

We believe that we are not, and intend to conduct our operations so as not to become, regulated as an investment company under the Investment Company Act. We have relied, and intend to continue to rely, on current interpretations of the staff of the SEC in an effort to continue to qualify for an exemption from registration under the Investment Company Act. For more information on the exemptions that we use refer to “Risk Factors - Risks Related to Regulatory Matters.”

In April 2010, NorthStar Securities became registered as a broker-dealer with the SEC and a member of FINRA. Much of the regulation of broker-dealers has been delegated to self-regulatory organizations, or SROs, principally FINRA, that adopt and

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amend rules, subject to approval by the SEC, which govern their members and conduct periodic examinations of member firms’ operations. The SEC, SROs and state securities commissions may conduct administrative proceedings that can result in censure, fine, suspension or expulsion of a broker-dealer, its officers or employees. Such administrative proceedings, whether or not resulting in adverse findings, can require substantial expenditures and can have an adverse impact on the reputation of a broker-dealer.

As a registered broker-dealer, NorthStar Securities is required by federal law to belong to the Securities Investor Protection Corporation, or SIPC. When the SIPC fund falls below a certain amount, members are required to pay annual assessments to replenish the reserves. Our broker-dealer subsidiary will be required to pay 0.25% of net operating revenues as a special assessment. Through December 31, 2014, NorthStar Securities have incurred an immaterial amount of special assessment charges. The SIPC fund provides protection for securities held in customer accounts up to $500,000 per customer, with a limitation of $100,000 on claims for cash balances, although NorthStar Securities does not hold any customer accounts.

In addition, as a registered broker-dealer and member of FINRA, NorthStar Securities is subject to the SEC’s Uniform Net Capital Rule, Exchange Act Rule 15c3-1, which is designed to measure the general financial integrity and liquidity of a broker-dealer and requires the maintenance of minimum net capital. Net capital is defined as the net worth of a broker-dealer subject to certain adjustments, including various adjustments to exclude assets not readily convertible into cash. Additionally, the regulations require that certain assets, such as a broker-dealer’s position in securities, be valued in a conservative manner so as to avoid over-inflation of the broker-dealer’s net capital. Given the scope of our broker-dealer’s operations, we believe the net capital requirement is immaterial.

There has also been increased regulatory scrutiny from the SEC, FINRA and state regulators regarding non-traded REITs. Amendments to FINRA rules regarding customer account statements have been approved by the SEC and will be effective on April 11, 2016, which may significantly affect the manner in which non-traded REITs, such as our Sponsored Companies, raise capital. Furthermore, as a result of this increased scrutiny, FINRA may impose additional restrictions on sales practices in the independent broker-dealer channel for non-traded REITs.

We are also subject to regulation with respect to certain of our loan servicing activities, such as Regulation AB, which requires certain disclosures regarding our servicing activities and compliance with servicing criteria and also requires that we deliver compliance statements.

We are also responsible for managing the regulatory aspects of our Managed Companies, including compliance with applicable REIT rules. Our current Managed Companies have each elected or expect to elect and are qualified and/or expect to qualify or continue to qualify to be taxed as REITs under Section 856 through 860 of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. As REITs, such companies must currently distribute, at a minimum, an amount equal to 90% of their taxable income. In addition, such companies must distribute 100% of taxable income to avoid paying corporate federal income taxes. REITs are also subject to a number of organizational and operational requirements in order to elect and maintain REIT status. These requirements include specific share ownership tests and assets and gross income composition tests. If our current Managed Companies fail to continue to qualify as REITs in any taxable year, they will be subject to federal income tax (including any applicable alternative minimum tax) on their taxable income at regular corporate tax rates. Even if such companies qualify for taxation as REITs, they may be subject to state and local income taxes and to federal income tax and excise tax on their undistributed income. In addition, our Managed Companies may acquire healthcare and hotel properties owned through structures permitted by the REIT Investment Diversification and Empowerment Act of 2007, or RIDEA, where they participate directly in the operational cash flow of a property.

In addition, one of our Managed Companies will be a BDC and intends to qualify as a regulated investment company, or RIC, under Regulation M of the Internal Revenue Code and we will be responsible for managing compliance with the applicable BDC and RIC rules.

Certain of our Managed Companies own and manage healthcare properties. As a result, such Managed Companies or the tenants/operators of such properties, as the case may be, are subject to numerous international, federal, state and local healthcare laws and regulations that are subject to frequent and substantial changes (sometimes applied retroactively) resulting from legislation, adoption of rules and regulations and administrative and judicial interpretations of existing laws.

Real estate properties owned by our Managed Companies and the operations of such properties are subject to various international, federal, state and local laws and regulations concerning the protection of the environment, including air and water quality, hazardous or toxic substances and health and safety. In addition, such properties are required to comply with the Americans with Disabilities Act of 1990, or ADA, the Fair Housing Act, applicable fire and safety regulations, building codes and other land use regulations.

Our Managed Companies are also subject to regulation governing mortgage lending. Although most states do not regulate commercial real estate finance, certain states impose limitations on interest rates and other charges and on certain collection practices and creditor remedies and require licensing of lenders and financiers and adequate disclosure of certain contract

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terms. Our Managed Companies are also required to comply with certain provisions of the Equal Credit Opportunity Act that are applicable to commercial real estate loans.

In the judgment of management, while we do incur significant expense complying with the various regulations to which we are subject, existing statutes and regulations have not had a material adverse effect on our business. However, it is not possible to forecast the nature of future legislation, regulations, judicial decisions, orders or interpretations, nor their impact upon our future business, financial condition, results of operations or prospects.

For additional information regarding regulations applicable to us, refer to Item 1A. “Risk Factors.”

Competition

The asset management industry is highly competitive. We compete on a regional, industry and niche basis based on a number of factors, including ability to raise capital, investment opportunities and performance, transaction execution skills, access to and retention of qualified personnel, reputation, range of products, innovation and fees for our services. Our current Managed Companies compete with many third parties engaged in real estate investment activities including publicly-traded REITs, non-traded REITs, insurance companies, commercial and investment banking firms, private equity funds and other investors. Some of these competitors, including other REITs and private real estate companies and funds, have substantially greater financial resources than our current Managed Companies. Such competitors may also enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies, as well as more experience operating internationally. Future competition from new market entrants may limit the number of suitable investment opportunities offered to our Managed Companies. It may also result in higher prices, lower yields and a narrower spread over the borrowing cost for our Managed Companies, making it more difficult for our Managed Companies to originate or acquire new investments on attractive terms. Certain competitors may also be subject to different regulatory regimes or rules that may provide them more flexibility or better access to pursue potential investments and raise capital for their managed companies. In addition, certain competitors may have higher risk tolerance, different risk assessment or a lower return threshold, which could allow them to consider a broader range of investments and to bid more aggressively for investment opportunities that we may want to pursue.

Employees

As of December 31, 2014, we had 202 employees, domestically and internationally. We believe that one of our major strengths is the quality and dedication of our people. Most of NorthStar Realty’s employees at the time of the spin-off became our employees except for executive officers, employees engaged in NorthStar Realty’s loan origination business at the time of the spin-off and certain other employees that became co-employees of both us and NorthStar Realty.

Corporate Governance and Internet Address

We emphasize the importance of professional business conduct and ethics through our corporate governance initiatives. Our board of directors consists of a majority of independent directors; the audit, nominating and corporate governance and compensation committees of our board of directors are composed exclusively of independent directors. We have adopted corporate governance guidelines and a code of business conduct and ethics, which delineate our standards for our officers, directors and employees.

Our internet address is www.nsamgroup.com. The information on our website is not incorporated by reference in this Annual Report on Form 10-K. We make available, free of charge through a link on our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports, if any, as filed or furnished with the SEC, as soon as reasonably practicable after such filing or furnishing. We also post corporate presentations on our website from time-to-time. Our website further contains our code of business conduct and ethics, code of ethics for senior financial officers, corporate governance guidelines and the charters of our audit committee, nominating and corporate governance committee and compensation committee of our board of directors. Within the time period required by the rules of the SEC and the NYSE, we will post on our website any amendment to our code of business conduct and ethics and our code of ethics for senior financial officers as defined in the code.

Item 1A. Risk Factors

The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us, that we currently deem immaterial or that generally apply to all businesses also may adversely impact our business. If any of the following risks occur, our business, financial condition, operating results, cash flow and liquidity could be materially adversely affected.

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Risks Related to Our Business

The asset management business is highly competitive.

The asset management business is highly competitive, driven by a variety of factors including asset performance, the quality of service provided to our Managed Companies, brand recognition and business reputation.A number of factors serve to increase our competitive risks:

• other asset managers may have greater financial, technical, marketing and other resources and more personnel than we do;

• other asset managers may offer more products and services than we do or be more adept at developing, marketing and managing new products and services than we are;

• our Managed Companies may not perform as well as the clients of other asset managers;

• several other asset managers and their clients have significant amounts of capital and many of them have similar management objectives to ours, which may create additional competition for management and acquisition opportunities;

• some of these other asset managers’ clients may also have a lower cost of capital and access to funding sources that are not available to our Managed Companies, which may create competitive disadvantages for us with respect to funding opportunities;

• some of these other asset managers’ clients may have higher risk tolerance, different risk assessment or a lower return threshold, which could allow them to facilitate the consideration, acquisition and management by their clients of a wider variety of assets and investments and to advise their clients to bid more aggressively for investment opportunities than we would advise our Managed Companies to bid;

• there are relatively few barriers to entry impeding new asset management firms and the successful efforts of new entrants into the asset management business is expected to continue to result in increased competition;

• some other asset managers may have better expertise or be regarded by potential clients as having better expertise with regard to specific assets;

• other asset managers may have more scalable platforms and may operate more efficiently than us;

• other asset managers may have better brand recognition than us and there is no assurance that we will maintain a positive brand in the future; and

• other industry participants may from time to time recruit members of our management team and other employees away from us.

In order to compete effectively, we may seek to enter into lines of business outside of commercial real estate and in which we have limited experience. For instance, NorthStar Corporate, which is our first sponsored BDC, is in the process of registration with the SEC.

We may lose opportunities in the future if we do not match fees, structures and terms offered by competitors. Alternatively, we may experience a decreased rate of return and increased risk of loss if we match fees, structures and terms offered by competitors. Moreover, if we are forced to compete with other asset managers on the basis of price, we may not be able to maintain our current fees. Fees in our industry may decline, without regard to the historical performance of an asset manager.  Fee reductions on existing or future funds, without corresponding decreases in our cost structure, would adversely affect our revenues and profitability.

Our inability to effectively compete in these and other areas may have an adverse effect on our business, results of operations and financial condition.

The commercial real estate industry has been and may continue to be adversely affected by economic conditions in the U.S. and global financial markets generally.

Our business and operations are currently dependent on the commercial real estate industry generally, which in turn is dependent upon broad economic conditions in the United States, Europe and elsewhere.Despite improvements in the U.S. economy, significant challenges still remain due to the uncertainty surrounding a low inflation rate in the United States, a stronger U.S. dollar, slow global growth and international market volatility. Global economic and political headwinds, along with global market instability and the risk of maturing commercial real estate debt that may have difficulties being refinanced, may continue to cause periodic volatility in the commercial real estate market for some time.Adverse conditions in the

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commercial real estate industry could harm our business and financial condition by, among other factors, limiting our and our Managed Companies’ access to debt and equity capital and otherwise negatively impacting our operations.

We conduct business internationally, which may subject us to numerous political, economic, market, reputational, operational, legal and other risks that could adversely impact our business and results of operations.

We conduct business internationally and continue to grow our international operations. In addition, our Managed Companies have international investments. Most of our expertise to date is in the United States and neither we nor our Managed Companies have extensive expertise in international markets. Our international operations may be affected by factors peculiar to the laws of the jurisdiction in which our and our Managed Companies business is located and these laws may expose us and our Managed Companies to risks that are different from and/or in addition to those commonly found in the United States. We may not be as familiar with the potential risks to our and our Managed Companies business outside of the United States and we may incur losses as a result. These risks include:

• governmental laws, rules and policies, including laws relating to the foreign ownership of real property or mortgages and laws relating to the ability of foreign persons or corporations to remove profits earned from activities within the country to the person's or corporation's country of origin;

• translation and transaction risks related to fluctuations in foreign currency exchange rates;

• adverse market conditions caused by inflation or other changes in national or local political and economic conditions;

• challenges of complying with a wide variety of foreign laws, including corporate governance, operations, taxes and litigation;

• changes in relative interest rates;

• the potential for significant U.S. tax liability upon repatriation of profits earned in foreign jurisdictions, which could result in us keeping such earnings in foreign jurisdictions, thereby limiting our liquidity;

• changes in the availability, cost and terms of borrowings resulting from varying national economic policies;

• changes in real estate and other tax rates, the tax treatment of transaction structures and other changes in operating expenses in a particular country where our Managed Companies may have investments;

• lack of uniform accounting standards (including availability of information in accordance with accounting principles generally accepted in the United States, or U.S. GAAP);

• changes in the social stability or other political, economic or diplomatic developments in or affecting a country where we or our Managed Companies do business;

• changes in applicable laws and regulations in the United States that affect foreign operations; and

• legal and logistical barriers to enforcing our contractual rights in other countries.

As a result, our operating infrastructure and expertise may not adequately support our or our Managed Companies international activities.

We currently have operations in five countries and substantially all of our revenue in 2014 following the spin-off was derived from our operations outside the United States. Fluctuations in foreign currencies, exchange controls and other restrictions on the repatriation of funds, may significantly affect our operating performance, liquidity and the value of any cash held outside the United States. in local currency. In particular, repatriation of earnings generated by our foreign subsidiaries to the United States may be inefficient from a tax perspective.

In addition, changes in policies or laws of U.S. or foreign governments resulting in, among other things, higher taxation, currency conversion limitations, restrictions on fund transfers, capital raising or the expropriation of private enterprises, could reduce the anticipated benefits of our international expansion. Any actions by countries in which we conduct business to reverse policies that encourage investment could adversely affect our business. If we fail to realize the anticipated growth of our future international operations, our business and operating results could suffer.

We are predominantly dependent on NorthStar Realty and the Sponsored Companies as our only Managed Companies, the loss of which, or their inability to pay for our services, could substantially reduce our revenue.

Our Managed Companies are the only companies for which we currently provide services for a fee.As of the date of this Annual Report, we provide services to NorthStar Realty and our four operating Sponsored Companies. One additional Sponsored Company confidentially submitted a registration statement with the SEC that has not yet been declared effective. The loss or failure of these Managed Companies, their failure to pay us or termination of their management agreements would adversely affect our revenue, results of operations and financial condition.Therefore, our business is subject to the risks of the

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businesses of our Managed Companies.Refer to “Risks Related to the Businesses of Our Managed Companies.” For example, if NorthStar Realty were to breach or were unable to satisfy its material obligations under our management agreement, including a failure to pay asset management, incentive and other fees under the management agreement, or if NorthStar Realty were to terminate the management agreement for cause, we could suffer significant losses. Such a failure could also lead to a decline or other adverse effects to our operating results and could harm our ability to execute our business plan.

Because the management agreements with our Sponsored Companies are subject to limitation or cancellation, any such termination could have a material adverse effect on our business, results of operations and financial condition.

The agreements under which we provide management and other services to our current Sponsored Companies, or any other non-traded company we may sponsor in the future, are renewable upon mutual consent of the parties for an unlimited number of successive one-year periods. These agreements may generally be terminated by each current Sponsored Company immediately for cause, or upon 60 days’ written notice, without cause or for good reason, and expire on an annual basis, unless otherwise renewed.We anticipate that our Sponsored Companies will pursue a liquidity transaction in the future and, if successful, any such liquidity transaction could result in termination or expiration of these agreements. There can be no assurance that these agreements will not expire or be terminated. Any such termination or expiration could have a material adverse effect on our business, results of operations, financial condition and prospects.

Our ability to raise capital and attract investors at our current, and any future, Managed Company is critical to their success and consequently our ability to grow our asset management business.

Our asset management, incentive and other fees are significantly driven by our ability to raise capital for our current and any future Managed Company. These risks are dependent on various factors beyond our control, including monetary and fiscal policies, domestic and international economic conditions, political considerations, regulatory issues and capital markets. The effect of such risks on our asset management, incentive and other fee agreements may vary based on the management agreement with the respective Managed Company. Refer to “Business” for further information regarding the management agreements with our current Managed Companies.

For instance, the management agreement that we entered into with NorthStar Realty consists of a base management fee that increases as equity is raised and an incentive fee based on the performance of NorthStar Realty using CAD as a performance metric. The base management fee currently represents the majority of the fee. The ability of NorthStar Realty to grow is dependent on access to the capital markets to raise equity and/or debt. To the extent that general capital markets activity slows down or comes to a halt (as was the case during the recession that began in 2008), NorthStar Realty may have difficulty growing. This risk is based on micro- and macro-economic market factors including but not limited to disruptions in the debt and equity capital markets, resulting in the lack of access to capital or prohibitively high costs of obtaining or replacing capital. Despite recent improvements, the markets could suffer another severe downturn and another liquidity crisis could emerge.

Our platform may not be as scalable as we anticipate and we could face difficulties growing our business without significant new investment in personnel and infrastructure.

While we believe our platform for operating our business is highly scalable and can support significant growth without substantial new investment in personnel and infrastructure on a relative basis, we may be wrong in that assessment.Our business and assets under management have grown substantially over the past year, which has placed additional demands on management and other personnel, as well as our support infrastructure.For instance, on July 1, 2014, our first day operating separately from NorthStar Realty, our assets under management were $16.7 billion. As of December 31, 2014, our assets under management were $21.7 billion. If our business continues to grow substantially, we will need to make significant new investment in personnel and infrastructure to support that growth.We may be unable to make significant investments on a timely basis or at reasonable costs, and our failure in this regard could disrupt our business and operations.

We may not realize the anticipated benefits of our strategic partnerships and joint ventures.

We have and may continue to enter into strategic partnerships and joint ventures to support the significant growth of our business. We may also make investments in partnerships or other co-ownership arrangements or participations with third parties. For instance, during 2014 and 2015, we entered into strategic partnerships and/or joint ventures with Mr. Flaherty, AHI and Island. We also may co-sponsor certain Managed Companies with third parties, such as NorthStar/RXR New York Metro and NorthStar Corporate. In connection with these investments, these partners provide, among other things, property management, investment advisory and other services to certain of our Managed Companies.

We may not realize any of the anticipated benefits of our strategic partnerships and joint ventures. Such investments and any future strategic partnerships and/or joint ventures subject us and our Managed Companies to risks and uncertainties not otherwise present with other methods of investment, including, for instance, the following risks:

• our joint venture partner in an investment could become insolvent or bankrupt;

• fraud or other misconduct by our joint venture partners;

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• we may share decision-making authority with our joint venture partner regarding certain major decisions affecting the ownership of the joint venture, which may prevent us from taking actions that are opposed by our joint venture partner;

• such joint venture partner may at any time have economic or business interests or goals that are or that become in conflict with our business interests or goals;

• such joint venture partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives; and

• the terms of our joint ventures could restrict our ability to sell or transfer our interest to a third party when we desire on advantageous terms, which could result in reduced liquidity.

In addition, to the extent our joint venture investment represents a minority interest in the joint venture, the controlling partner(s) may be able to take actions which are not in our or our Managed Companies’ best interests because of our lack of full control.  Furthermore, to the extent that our joint venture partner provides services to our Managed Companies, certain conflicts of interest will exist.

Any of the above might subject us to liabilities and thus reduce our returns on our investment with that joint venture partner. In addition, disagreements or disputes between us and our joint venture partner could result in litigation, which could increase our expenses and potentially limit the time and effort our officers and directors are able to devote to our business.

We may determine to grow our business through the acquisition of asset management contracts or companies, which entails substantial risk.

We may determine to grow our business through the acquisition of asset management contracts or companies.Such acquisitions entail substantial risk.During our due diligence of such acquisitions, we may not uncover all relevant liabilities and we may have limited, if any, recourse against the sellers.We may overpay to acquire asset management contracts or companies and these transactions may not be accretive or we could suffer significant losses. We also may not successfully integrate the asset management contracts or companies that we acquire into our business and operations, which could have a material adverse effect on our results of operation and financial condition. Additionally, to the extent such acquisitions result in us entering new lines of business, we may become subject to new laws and regulations with which we are not familiar, or from which we are currently exempt, potentially leading to increased litigation and regulatory risk.

The development of new products and services may expose NSAM to additional costs or operational risk.

NSAM’s financial performance depends, in part, on its ability to develop, market and manage new products and services. For instance, our Sponsored Company, NorthStar Corporate, which is our first sponsored BDC, is in the process of registration with the SEC. The development and introduction of new products and services may require significant time and resources, as well as ongoing support and investment. Substantial risk and uncertainties are associated with the introduction of new products and services, including the implementation of new and appropriate operational controls and procedures, shifting client and market preferences, the introduction of competing products or services and compliance with regulatory requirements. Failure to successfully manage these risks may cause NSAM’s revenues and costs to fluctuate and could have an adverse effect on its business and reputation.

Our ability to operate our business successfully would be harmed if key personnel terminate their employment with us.

Our future success depends, to a significant extent, upon the continued services of our key personnel, including our executive officers, which include our Chairman and Chief Executive Officer, David T. Hamamoto, our President, Albert Tylis, and Daniel R. Gilbert, the Chief Investment and Operating Officer of NorthStar Asset Management Group, Ltd, our wholly-owned subsidiary, in particular.For instance, the extent and nature of the experience of our executive officers and the nature of the relationships they have developed with real estate professionals and financial institutions are critical to the success of our business.We cannot assure stockholders of their continued employment with us.The loss of services of certain of our executive officers could harm our business and our prospects.

Our board of directors has adopted, and will likely in the future adopt, certain incentive plans to create incentives that will allow us to retain and attract the services of key employees.These incentive plans may be tied to the performance of our common stock and a decline in our stock price may result in us being unable to motivate and retain our management and these other employees.Our inability to motivate and retain these individuals could also harm our business and our prospects.Additionally, competition for experienced real estate professionals could require us to pay higher wages and provide additional benefits to attract qualified employees, which could result in higher compensation expenses to us.

If our portfolio management techniques and strategies are not effective, we may be exposed to material unanticipated losses.

We continue to refine our portfolio management techniques, strategies and assessment methods.However, our portfolio management techniques and strategies may not fully mitigate the risk exposure of our operations in all economic or market

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environments, or against all types of risk, including risks that we might fail to identify or anticipate.Any failures in our portfolio management techniques and strategies to accurately quantify such risk exposure could limit our ability to manage risks in our operations and could result in losses.

We are highly dependent on information systems and systems failures could significantly disrupt our business.

As an asset manager our business is highly dependent on information technology systems, including systems provided by third parties for which we have no control. Various measures have been implemented to manage our risks related to the information technology systems, but any failure or interruption of our systems could cause delays or other problems in our activities, which could have a material adverse effect on our financial performance. Potential sources for disruption, damage or failure of our information technology systems include, without limitation, computer viruses, security breaches, human error, cyber attacks, natural disasters and defects in design.

Failure to implement effective information and cyber security policies, procedures and capabilities could disrupt our business and harm our results of operations.

We are dependent on the effectiveness of our information and cyber security policies, procedures and capabilities to protect our computer and telecommunications systems and the data that resides on or is transmitted through them. An externally caused information security incident, such as a hacker attack, virus or worm, or an internally caused issue, such as failure to control access to sensitive systems, could materially interrupt business operations or cause disclosure or modification of sensitive or confidential information and could result in material financial loss, loss of competitive position, regulatory actions, breach of contracts, reputational harm or legal liability.

Significant legal proceedings may adversely affect our results of operations or financial condition.

We may in the future be involved in litigation matters arising in the ordinary course of business and may potentially be involved in other legal proceedings, including securities class actions and regulatory and governmental investigations. We are unable to predict with certainty the eventual outcome of any litigation we may be involved in. Developments adverse to us in legal proceedings to which we may be subject in the future could have a material adverse effect on our financial condition, results of operations or our reputation.

Misconduct by third-party selling broker-dealers or our broker-dealer sales force could have a material adverse effect on our business.

We rely on selling broker-dealers and our broker-dealer sales force to properly offer equity in our current and future Sponsored Companies to investors in compliance with our selling agreements and with applicable regulatory requirements. While these persons are responsible for their activities as registered broker-dealers, their actions may nonetheless result in complaints or legal or regulatory action against us. These actions could also directly or indirectly harm the industry generally or our reputation specifically, which could have a material adverse effect on our business. In addition, we may have indemnification obligations under certain selling agreements and dealer agreements for misconduct by such broker-dealers.

We act as special servicer with respect to certain securitization transactions and we may make decisions that subject us to loss and expose us to liability from third parties.

We act as special servicer with respect to certain securitization transactions.When acting in that capacity, we are responsible for servicing the subject assets in accordance with applicable industry standards, laws, regulations and contractual obligations.As special servicer, we are responsible for critical functions that can have a significant effect on the value of the underlying assets.If we fail to adhere to applicable industry standards, laws, regulations or contractual obligations, or if we make decisions that are not effective, we could suffer significant losses and expose ourselves to substantial liability from third parties who were relying on our servicing function.

We may incur costs in excess of our expectations as an independent public company.

We may incur costs and expenses greater than those we anticipated as a result of our separation from NorthStar Realty. These increased costs and expenses may arise from various factors, including financial reporting, costs associated with complying with federal securities laws (including compliance with the Sarbanes-Oxley Act and the Investment Advisers Act), tax administration, and legal and human resources related functions. There can be no assurance that we will be able to generate sufficient returns to pay our operating expenses and make satisfactory distributions to our stockholders or any distributions at all.

We may not be able to access financing sources on attractive terms, if at all, which could adversely affect our ability to grow our business.

While we do not currently significantly rely on financing, we may increasingly rely on outside capital to fund and grow our business in the future. If our financing and capital needs increase, our business may be adversely affected by disruptions in the debt and equity capital markets and institutional lending market, including the lack of access to capital or prohibitively high

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costs of obtaining or replacing capital, both domestically and abroad. Access to the capital markets and other sources of liquidity were severely disrupted during the recession that began in 2008. Despite recent improvements, the markets could suffer another severe downturn and another liquidity crisis could emerge. Based on the current conditions, we do not know whether any sources of capital will be available to us in the future on terms that are acceptable to us, if at all. If we cannot obtain sufficient debt and equity capital on acceptable terms, our business and our ability to operate could be severely impacted. For information about our available sources of funds, refer to Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” and the notes to our consolidated financial statements located in Part II, Item 8. “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

We may use leverage in connection with our business, which may increase the risk of loss associated with our business.

NorthStar Realty provided us with a $250 million revolving credit facility with a five-year term. We may also use additional financing arrangements in the future. High leverage may, particularly during difficult economic times, increase our risk of loss and harm our liquidity, thereby reducing cash available for distribution to stockholders, for our operations and for future business opportunities.

We may not be able to engage in desirable strategic or capital-raising transactions for a period of time following the spin-off. In addition, we could be liable for adverse tax consequences resulting from engaging in significant strategic or capital-raising transactions.

For a period of time following the spin-off, we may be prohibited, except in specific circumstances, from: (i) entering into any transaction pursuant to which all or a portion of our stock would be acquired, whether by merger or otherwise if, as a result of such a transaction and any related equity issuances or redemptions, 50% or more of our stock is acquired; or (ii) taking or failing to take action that prevents the spin-off and related transactions from being tax-free.

These restrictions may limit our ability for a period of time to pursue strategic arrangements or engage in new business or other transactions that may maximize the value of our business.

We are subject to federal and applicable state and local income tax and our future effective tax rates could be affected by the allocation of our income among different geographic regions, challenges to our international structure and tax law changes, which could affect our future operating results, financial condition and cash flows.

We are fully taxable as a corporation for federal income tax purposes. Our effective tax rate is directly affected by the relative proportions of revenue and income before taxes in the various domestic and international jurisdictions in which we operate. Our consolidated pre-tax income is subject to foreign tax at relatively lower tax rates when compared to the U.S. federal statutory tax rate and, as a consequence, our effective income tax rate is expected to be lower than the U.S. federal statutory rate. However, we are subject to changing tax laws, treaties, and regulations in multiple jurisdictions in which we operate. These tax laws, treaties and regulations are highly complex and subject to interpretation. In addition, it is possible that the valuation of our contractual arrangements between us and our wholly owned foreign subsidiaries could be challenged. Moreover, legislation has been proposed that, if enacted, would classify certain foreign corporations that are managed and controlled primarily in the United States as domestic corporations for United States tax purposes, which could adversely affect the relative mix of United States and international income. We cannot predict whether this or other similar legislative proposals will become law. Thus, our future effective income tax rates could be adversely affected if tax authorities challenge our international structure, the relative mix of United States and international income changes for any reason, or tax laws were to change in the future. Accordingly, there can be no assurance that our income tax rate will be less than the United States federal statutory rate in future periods.

We believe CAD, a non-GAAP measure, provides a meaningful indicator of our operating performance; however, CAD should not be considered as an alternative to net income (loss) determined in accordance with U.S. GAAP as an indicator of operating performance.

Management primarily uses CAD to evaluate our profitability and our board of directors will consider CAD in determining our quarterly cash distributions. CAD is a non-GAAP financial measure. In addition, the incentive fees to which we may be entitled pursuant to our management agreement with NorthStar Realty are determined using NorthStar Realty’s CAD as a performance metric. We believe that CAD is useful because it adjusts net income (loss) for a variety of non-cash, one-time and certain non-recurring items. We calculate CAD by subtracting from or adding to net income (loss): equity-based compensation, depreciation related items, foreign currency gains (losses), straight-line rent, adjustments for joint ventures, deferred tax (benefit) expense and transaction and other costs. In future periods, such adjustments may include amortization of deferred financing costs, impairment on goodwill and other intangibles and other one-time events pursuant to changes in U.S. GAAP and certain other non-recurring items. These items, if applicable, include any adjustments for unconsolidated ventures.

CAD should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance.In addition, our methodology for calculating CAD may differ from the methodologies used

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by other comparable companies when calculating the same or similar supplemental financial measures and may not be comparable with these companies.

Risks Relating to Our Relationships with our Managed Companies

The organization and management of our Managed Companies and any future companies we may manage may create conflicts of interest.

We are party to management and other agreements with our Managed Companies and owe certain duties to these companies under such agreements and applicable law, including the Investment Advisers Act.These Managed Companies, along with new future managed companies, funds or vehicles that we manage, advise or sub-advise, including companies, funds and vehicles that are subject to a strategic relationship between us and our strategic or joint venture partners will acquire assets consistent with their investment objectives and that are allocated in accordance with our investment allocation policy, which we adopted to ensure that investments are allocated fairly and appropriately among our Managed Companies, our strategic partnerships or our joint ventures over time.When determining the entity for which an investment opportunity would be the most suitable, the factors that our investment professionals may consider include, among other factors, the following:

• investment objectives, strategy and criteria;

• cash requirements;

• effect of the investment on the diversification of the portfolio, including by geography, size of investment, type of investment and risk of investment;

• leverage policy and the availability of financing for the investment by each entity;

• anticipated cash flow of the asset to be acquired;

• income tax effects of the purchase;

• the size of the investment;

• the amount of funds available;

• cost of capital;

• risk return profiles;

• targeted distribution rates;

• anticipated future pipeline of suitable investments;

• the expected holding period of the investment and the remaining term of our Managed Companies, if applicable;

• affiliate and/or related party considerations; and

• whether a strategic vehicle has received a special allocation (as defined in the investment allocation policy).

If, after consideration of the relevant factors, we determine that an investment is equally suitable for more than one of our current Managed Companies, strategic partnerships or joint ventures, the investment will be allocated among each of the applicable entities on a rotating basis. If, after an investment has been allocated to one Managed Company, our strategic partnerships or our joint ventures, a subsequent event or development, such as delays in structuring or closing on the investment, makes it, in the opinion of our investment professionals, more appropriate for another entity to fund the investment, we may determine to place the investment with the more appropriate entity while still giving credit to the original allocation.In certain situations, we may determine to allow more than one investment vehicle to co-invest in a particular investment.

There is no assurance that this policy will remain in place during the entire period we are seeking investment opportunities on behalf of our Managed Companies, our strategic partnerships or our joint ventures, increasing the risk of conflicts of interest.In addition, we may manage additional investment vehicles in the future and, in connection with the creation of such investment vehicles, may revise these allocation procedures.The result of a revision to the allocation procedures may, among other things, be to increase the number of parties who have the right to participate in investment opportunities sourced by us, increasing the risk of conflicts of interest.

In addition, under this policy, our investment professionals may consider the investment objectives and anticipated pipeline of future investments of the investment vehicles that we manage.We may choose, for a variety of reasons, to direct investment opportunities in the healthcare industry to NorthStar Healthcare rather than to NorthStar Realty or one of our other Sponsored Companies or vice versa.The decision of how any potential investment should be allocated among our Managed Companies, our strategic partnerships or our joint ventures for which such investment may be suitable may, in many cases, be a matter of subjective judgment which will be made by us.

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We may also have interests in third parties, such as management firms which manage certain of our Managed Companies’ properties for a fee, which may cause our interests to differ from those of our Managed Companies. If our interests and those of our Managed Companies are not aligned, we may face conflicts of interests that result in action or inaction that is detrimental to us, our Managed Companies, our strategic partnerships or our joint ventures.

Appropriately dealing with conflicts of interest is complex and difficult and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential or actual conflicts of interest.Regulatory scrutiny of, or litigation in connection with, conflicts of interest would have a material adverse effect on our reputation, which would materially adversely affect our business and our ability to attract investors for future vehicles.

Conflicts of interest may also arise in the allocation of fees and costs among our Managed Companies that we incur in connection with the management of their assets. This allocation sometimes requires us to exercise discretion and there is no guarantee that we will allocate these fees and costs appropriately.

In addition to the management fees we receive from our Managed Companies, we are reimbursed by our Managed Companies for costs and expenses we incur on their behalf, including indirect personnel and employment costs that we allocate to our Managed Companies and disputes could arise in connection with those allocations. 

We are paid substantial fees for the services we and our subsidiaries provide to our Managed Companies and we are also reimbursed by our Managed Companies for costs and expenses we incur and pay on their behalf.  Our Managed Companies reimburse us, subject to certain limitations and exceptions, for both direct expenses as well as indirect costs, including our personnel and employment costs.  The costs and expenses that we allocate to our Managed Companies can be substantial.   There are conflicts of interest that arise when we make allocation determinations.  For the year ended 2014, we allocated $30 million in costs to our Managed Companies.  Our Managed Companies could dispute the amount of costs we allocate to them and the methodologies we use to determine those amounts.  Any dispute regarding our allocation of costs and expenses could be distracting, expensive and harm our reputation as well as have other adverse effects on our company and future operating performance, including the potential that our Managed Companies could seek to terminate their relationship with us. 

Our board of directors has enacted resolutions that may result in the diversion of corporate opportunities to and other conflicts with our Managed Companies.

Our board of directors has enacted resolutions that recognize that our directors and executive officers may also be serving as directors, officers, employees, consultants or agents of our Managed Companies and their subsidiaries and that we may engage in material business transactions with such entities.We have renounced our rights to certain business opportunities and no director or officer of ours who is also serving as a director, officer, employee, consultant or agent of our Managed Companies or any of their subsidiaries will be liable to us or to our stockholders for breach of any fiduciary duty that would otherwise exist by reason of the fact that any such individual directs a corporate opportunity (other than certain limited types of opportunities set forth in resolutions enacted by our board of directors) to our Managed Companies or any of their subsidiaries instead of us, or does not refer or communicate information regarding such corporate opportunities to us.These resolutions also expressly validate certain contracts, agreements, assignments and transactions (and amendments, modifications or terminations thereof) between us and our Managed Companies and any of their subsidiaries and, to the fullest extent permitted by law, provide that the actions of the overlapping directors or officers in connection therewith are not breaches of fiduciary duties owed to us, any of our subsidiaries or our respective stockholders.

Our executive officers and professionals face competing demands relating to their time and conflicts of interests in performing services on behalf of our Managed Companies, which may cause our operations and stockholders’ investment to suffer.

Our executives and other real estate and finance professionals may face conflicts of interest in allocating their time among our Managed Companies. These conflicts of interest, as well as the loyalties of these individuals to other entities and investors, could result in action or inaction that is detrimental to our business, which could harm the implementation of our business strategy and our reputation.

Failure of our Managed Companies to effectively perform their obligations to us and to third parties could have an adverse effect on our business and performance.

In connection with the spin-off, we entered into various agreements with NorthStar Realty governing our relationship with NorthStar Realty subsequent to the spin-off. These agreements provide that all liabilities and obligations attributable to periods prior to the spin-off remain with NorthStar Realty, except for the liabilities for which NorthStar Realty agreed to contribute cash to us to enable us to pay such liabilities. We and NorthStar Realty also agreed to provide each other with indemnities with respect to liabilities arising out of the period after the spin-off. If NorthStar Realty were to fail to provide this indemnity and we were found liable, our financial condition and results of operation could be materially and adversely affected.

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In addition, NorthStar Realty has agreed to provide certain loan origination services to us. Our ability to fulfill our business strategy relies upon NorthStar Realty providing these services and any failure to do so could have an adverse effect on our business.

We also have entered into a third party selling agreement with one of our Sponsored Companies and a third party pursuant to which we agreed to indemnify such third party against certain breaches by our Sponsored Company. We may enter into similar arrangements in the future. If our Sponsored Companies fail to fulfill their obligations under these agreements, our potential liability as a result of our indemnification obligations could materially adversely affect our business and performance.

Risks Related to Regulatory Matters

We are subject to substantial regulation, numerous contractual obligations and extensive internal policies and failure to comply with these matters could have a material adverse effect on our business, financial condition and results of operations.

We and our subsidiaries are subject to substantial regulation, numerous contractual obligations and extensive internal policies.Given our organizational structure, we are subject to or expect to be subject to regulation by the SEC, the NYSE, FINRA and other federal, state and local or international governmental bodies and agencies. We are also responsible for managing the regulatory aspects of our Managed Companies, including compliance with applicable REIT rules. These regulations are extensive, complex and require substantial management time and attention.If we fail to comply with any of the regulations that apply to our business, we could be subjected to extensive investigations as well as substantial penalties, and our business and operations could be materially adversely affected.

Our lack of compliance with applicable law could result in, among other penalties, our inability to enforce contracts and our ineligibility to contract with and receive revenue from the federal government or other governmental authorities and agencies. We also have numerous contractual obligations that we must adhere to on a continuous basis to operate our business, the default of which could have a material adverse effect on our business and financial condition.We have also established internal policies designed to ensure that we manage our business in accordance with applicable law and regulation and in accordance with our contractual obligations.While we have designed policies to assist us with appropriately operating our business, these internal policies may not be effective and, further, if we fail to comply with our internal policies, we could be subjected to additional risk and liability.

Certain of our subsidiaries are registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended, or the Investment Advisers Act, and/or as a fund services business in the Bailiwick of Jersey, which could hinder our operating performance and negatively impact our stockholders’ return on investment.

Certain of our subsidiaries are registered with the SEC as investment advisers under the Investment Advisers Act and as a fund services business by the JFSC. Such registration results in certain aspects of our asset management business being supervised by the SEC and the JFSC. The Investment Advisers Act, in particular, requires registered investment advisers to comply with numerous obligations, includingcompliance, record-keeping, operating and marketing requirements, disclosure obligations and limitations on certain activities.Investment advisers also owe fiduciary duties to their clients.These regulatory and fiduciary obligations may result in increased costs or administrative burdens or otherwise adversely impact our business, including by preventing us from recommending investment opportunities that otherwise meet the respective investment criteria of our Managed Companies. We have only been registered as an investment adviser and/or fund manager since the spin-off and therefore have limited experience in complying with applicable investment adviser and/or fund manager regulations. If we do not comply with these requirements, we may not be able to provide management services to our Managed Companies to the extent they invest in securities.

The failure of our subsidiaries to comply with these regulations could cause the SEC or the JFSC to institute proceedings and impose sanctions, termination of our registration or prohibition from serving as an adviser and/or manager to certain funds and could lead to litigation by investors in our Managed Companies or harm to our reputation, any of which could cause our business and operations to be materially adversely affected.

If we are deemed an investment company under the Investment Company Act, our business would be subject to applicable restrictions there under, which could make it impracticable for us to continue our business as contemplated and would have a material adverse impact on the market price of our common stock.

We do not believe that we are an “investment company” under the Investment Company Act because the nature of our assets excludes us from the definition of an investment company under the Investment Company Act. In addition, we believe our company is not an investment company pursuant to Rule 3a-1 of the Investment Company Act because we have no more than 45% of our assets invested in and derive no more than 45% of our income from investment securities. We intend to conduct our operations so that we will not be deemed an investment company. If we were to be deemed an investment company, however, restrictions imposed by the Investment Company Act, including limitations on our capital structure and our ability to

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transact with affiliates, could make it impractical for us to continue our business as contemplated and would have a material adverse effect on our businesses and the price of our common stock.

We do business internationally, which may subject us to numerous regulatory and other risks that could adversely impact our business and results of operations.

Our business is subject to extensive regulation by governmental and other authorities in the jurisdictions in which we operate around the world. Similar to the United States, the current environment in jurisdictions outside the United States, in particular Europe, has become subject to further regulation. Governmental regulators and other authorities in Europe have proposed or implemented a number of initiatives and additional rules and regulations that could adversely affect our business.

We may also experience difficulty entering new international markets due to regulatory barriers, the necessity of adapting to new regulatory systems and problems related to entering new markets with different cultural bases and political systems. These difficulties may prevent, or significantly increase the cost of, our international expansion. We may also leverage partners or other third parties to provide local expertise or regulatory authority, which may create additional risks as we may be dependent upon, and subject to, liability or reputational damage relating to services or personnel outside of our control.

Government and self-regulatory organization intervention may limit our ability to continue to implement certain strategies or manage certain risks.

Government and self-regulatory organizations have significant influence over the regulatory framework under which our company operates. In the past, these organizations have also undertaken significant measures to influence market forces including quantitative easing, direct capital infusions into struggling industries or other programs and strategies.

Such intervention has also in certain cases been implemented on an “emergency” basis, suddenly and substantially eliminating market participants’ ability to continue to implement certain strategies or manage the risk of their outstanding positions. It is impossible to predict what, if any, additional interim or permanent governmental restrictions may be imposed on the markets and the effect of such restrictions on us and our results of operations. There is a high likelihood of significantly increased regulation of the financial markets that could have an impact on our operating results and financial condition.

Risks Related to the Businesses of Our Managed Companies

The risks associated with our Managed Companies’ businesses that could adversely affect their ability to grow their assets, generate revenue and pay our asset management fee are risks to our business.

We provide asset management and other services to our Managed Companies.In connection with these services, our Managed Companies pay us periodic asset management fees as well as certain other fees, as provided for under the governing agreements.These agreements also provide for the allocation of certain general corporate and administrative expenses, employee benefits, taxes and certain other liabilities and obligations. The risks associated with each of our Managed Companies’ businesses could adversely affect their ability to carry out their respective business plans.As a result, the risks to their businesses couldaffect their ability to pay us our asset management, incentive and other fees or reimburse us for expenses that are allocated to them, which would therefore adversely affect our ability to grow our business.

Our Managed Companies are currently public companies and their filings with the SEC detail the risks associated with the businesses of our Managed Companies.These risks include, but are not limited to, the following risks that could particularly impact their ability to raise capital if applicable, make new investments and pay us our asset management, incentive and other fees, thereby adversely affecting our business, results of operations and financial condition:

• our Managed Companies rely on outside sources of capital that have been challenged by U.S. and global economic and market conditions;

• challenging economic and financial market conditions could significantly reduce the amount of income our Managed Companies earn on their investments and reduce the value of their investments, harming their ability to raise funds, if applicable, and make new investments;

• changes in investor preferences or market conditions could limit our Managed Companies’ ability to raise funds, if applicable, or make new investments;

• changes in tax laws, regulation or accounting rules may make certain types of investments less attractive to potential sellers and lessees, which could negatively affect the ability of our Managed Companies to increase the amount of assets of those types under management;

• our Managed Companies face significant competition for attractive investment opportunities from other real estate investors, some of which have greater financial resources, including publicly-traded REITs, non-traded REITs, insurance companies, commercial and investment banking firms, private institutional funds, hedge funds, private

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equity funds and other investors and such competition may limit the amount of new investments that we are able to offer our Managed Companies;

• our Managed Companies’ CRE equity investments, CRE debt and mortgage loans underlying their CRE securities are subject to the risks typically associated with commercial real estate, which create risks to their businesses that may adversely affect their ability to profit from those investments and raise additional funds, if applicable;

• our Managed Companies have significant investments in certain asset classes, such as healthcare, hotels, manufactured housing communities and limited partnership interests in real estate private equity funds and the impact of adverse conditions on those specific asset classes could negatively impact their business and their ability to continue to raise capital, if applicable;

• certain of our Managed Companies’ investments may be concentrated in a geographic location and our Managed Companies have not and do not plan to establish any investment criteria to limit their exposure to risks of geographic concentration for future investments; additionally, we have limited expertise in managing investments outside the United States and we, and our Managed Companies, may incur losses as a result;

• economic conditions, both domestic and international, may impact the tenants/operators of the real property owned by our Managed Companies, as well as the borrowers of the commercial real estate debt originated and acquired by our Managed Companies and the commercial mortgage loans underlying the commercial mortgage backed securities, or CMBS, in which our Managed Companies have invested, impacting our Managed Companies’ business and their ability to grow their business;

• certain of our Managed Companies’ investments, particularly hotels and healthcare properties, are dependent upon third-party managers for their operation;

• our Managed Companies may be required to finance renovations and capital improvements, particularly in their hotel and healthcare properties, which could result in disruptions to operations, disputes and liquidity shortages;

• our Managed Companies are exposed to environmental, building and other laws, natural disasters and other factors beyond their control as a result of their ownership of real estate;

• our Managed Companies have in the past and expect to continue to make opportunistic investments that may involve asset classes and structures with which they have less familiarity, thereby increasing their risk of loss, potentially adversely impacting their businesses and ability to raise additional capital, if applicable;

• some of our Managed Companies have pursued and plan to continue to pursue expansion opportunities outside the United States and our lack of extensive expertise in international markets to-date could expose us and them to additional operating and regulatory risks;

• our Managed Companies may be unable to complete additional securitization transactions due to, among other things, a decrease in liquidity in the commercial real estate market;

• our Managed Companies may be unable to obtain financing required to originate or acquire investments as contemplated in their business plan, which could compel our Managed Companies to restructure or abandon a particular origination or acquisition and harm their ability to expand their businesses;

• certain of our Managed Companies have portfolios that are highly leveraged, which may adversely affect the return on their investments;

• maintenance of our Managed Companies’ Investment Company Act exemption imposes limits on our Managed Companies’ operations, which may adversely impact our Managed Companies’ ability to invest capital in their businesses;

• our Managed Companies’ failure to continue to qualify as REITs would subject them to federal income tax and reduce CAD to their stockholders, adversely impacting their ability to raise capital, if applicable, and operate their business; and

• complying with REIT or BDC requirements may cause our Managed Companies to forego otherwise attractive opportunities or liquidate otherwise attractive investments.

Additional risks associated with the healthcare assets of NorthStar Realty and the business of NorthStar Healthcare include:

• the healthcare industry is highly competitive and we expect it to become more competitive and such competition may affect the ability of NorthStar Realty, NorthStar Healthcare or any other companies we may manage to make acquisitions or may increase the cost of these acquisitions which, in turn, could materially adversely affect their business, financial condition and results of operations;

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• the failure of the tenants/operators of healthcare facilities to comply with licensing and certification requirements, the requirements of governmental reimbursement programs, such as Medicare or Medicaid, fraud and abuse regulations or new legislative developments may materially adversely affect the business, financial condition and results of operations of NorthStar Realty, NorthStar Healthcare or any other companies we may manage;

• the healthcare industry is heavily regulated; new laws or regulations, such as the healthcare reform law and related regulations, changes to existing laws or regulations, loss of licensure or failure to obtain licensure could materially adversely affect the business, financial condition and results of operations of NorthStar Realty, NorthStar Healthcare or any other companies we may manage;

• government budget deficits could lead to a reduction in Medicare and Medicaid reimbursement as well as substantial delays in payments;

• adverse trends in healthcare provider operations may negatively affect lease revenue and the business of NorthStar Realty, NorthStar Healthcare or any other companies we may manage; and

• we may not realize the benefits we expect from the strategic arrangement with Mr. Flaherty.

Challenging economic and financial market conditions could significantly reduce the amount of income our Managed Companies earn on their investments and further reduce the value of their investments.

Challenging economic and financial market conditions may result in delinquencies, non-performing assets and taking title to collateral and a decrease in the value of the property or other collateral which secures our Managed Companies’ investments, all of which could adversely affect their results of operations.Our Managed Companies may incur substantial loan losses and need to establish significant provision for loan losses or impairment. Revenue from our Managed Companies’ properties could diminish significantly.

Our Managed Companies hold a diversified portfolio of equity and debt investments.As a result of the economic and market conditions, revenue generated by the properties and other assets underlying any investments they may make could decrease, making it more difficult for borrowers and tenants/operators to meet their payment obligations to our Managed Companies. In addition, the value of collateral securing any of their debt investments could decrease below the outstanding principal amount of such investment. Each of these factors would increase the likelihood of default and taking title to collateral or transferring title of collateral to a third-party lender, which would likely have a negative impact on the value of our Managed Companies’ portfolios.

More generally, the risks arising from the current financial market and economic conditions are applicable to all of the investments our Managed Companies may make, including their debt investments, whether mortgage, subordinate or other loans or direct senior housing and other healthcare real estate investments, the performance of which depends on the performance of the operator to which the property is leased, whose business may be adversely impacted by these conditions.

These conditions, or similar conditions that may exist in the future, may materially adversely affect our Managed Companies’ business, financial condition and results of operations, and their ability to make distributions to stockholders.Among other potential consequences, a prolonged economic slowdown or recession may materially adversely affect:

• our Managed Companies’ ability to borrow on terms and conditions that they find acceptable, or at all, which could reduce their ability to pursue origination and acquisition opportunities and refinance existing borrowings, reduce returns from their origination and acquisition activities and increase their future interest expense;

• the financial condition of their tenants/operators, which may result in defaults under leases due to bankruptcy, lack of liquidity, operational failures or for other reasons; and

• the value of our Managed Companies’ real estate and the ability of their tenants/operators to make their lease or mortgage payments, and in certain circumstances, their ability to dispose of these assets at attractive prices or to obtain financing collateralized by these assets.

If our Managed Companies perform poorly, we will have substantial difficulty growing our assets under management and attracting capital for new Managed Companies.

Non-traded companies have been the subject of increased scrutiny by regulators and media outlets resulting from inquires and investigations initiated by FINRA and the SEC and could also become the subject of scrutiny and face difficulties in raising capital should negative perceptions develop regarding non-traded REITs. As a result, our non-traded Sponsored Companies may be unable to raise substantial funds which will limit the number and type of investments they may make and their ability to diversify their assets.

In March 2009, the Enforcement Division of FINRA commenced a review of broker-dealer sale and promotion activities of non-traded companies and in connection with the review, requested information from broker-dealers with respect to sales

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practices. Subsequent to that review, FINRA has announced that it filed a complaint against a broker-dealer firm, charging it with soliciting investors to purchase shares in a non-traded companies without conducting a reasonable investigation to determine whether it was suitable for those investors, and with providing misleading information on its website regarding distributions to investors. The disciplinary proceedings were settled in October 2012. Although the broker-dealer firm neither admitted nor denied the charges, the terms of the settlement required the broker-dealer firm to, among other things, pay approximately $12 million in restitution to certain investors and, in consultation with an independent consultant, make changes to its supervisory systems and training programs relating to the marketing of non-traded companies. A principal of the broker-dealer firm was also fined and suspended from the securities industry for practices related to marketing non-traded companies.

In February 2014, Apple REIT Six, Inc., Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Nine, Inc., each of their external advisors and the chief executive officer and the chief financial officer of each of the REITs entered into a cease and desist order with the SEC and agreed to pay approximately $1.5 million in civil fines in the aggregate. Although the respondents did not admit or deny any wrongdoing, the cease and desist order stated that the REITs made material misrepresentations regarding the valuation of the securities sold through their dividend reinvestment plans, had failed to maintain sufficient disclosure controls and procedures to meaningfully evaluate whether the value of the securities had changed, failed to disclose numerous related party transactions and failed to disclose significant compensation paid by the advisors to the REITs and by the founder to the executive officers of the REITs.

The above-referenced proceedings and related matters have resulted in increased regulatory scrutiny from the SEC, FINRA and state regulators regarding non-traded companies. Furthermore, amendments to FINRA rules regarding customer account statements have been approved by the SEC and will be effective on April 11, 2016, which may significantly affect the manner in which non-traded companies raise capital. These amendments may cause a significant reduction in capital raised by non-traded companies. In addition, the Obama administration has also proposed additional rules imposing fiduciary and other standards on sales practices of broker-dealers and the impact of any such rules, if adopted, although uncertain, could adversely affect the distribution of securities by our Sponsored Companies.

As a result of this increased scrutiny and accompanying negative publicity and coverage by media outlets, FINRA may impose additional restrictions on sales practices in the independent broker-dealer channel for non-traded companies, and accordingly the non-traded companies we manage may face increased difficulties in raising capital in their offerings. Should these companies be unable to raise substantial funds in their offerings, the number and type of investments they may make will be curtailed, all of which could materially adversely affect the fee income generated from our broker-dealer that acts as the dealer manager of these offerings as well as the asset management and other fees we earn and the nature of the transactions undertaken by the non-traded companies we manage which would adversely affect our ability to grow our business. If we or the non-traded companies we manage become the subject of scrutiny, even if we have complied with all applicable laws and regulations, responding to such scrutiny could be expensive, harmful to our reputation and distracting to our management.

Because there are numerous companies seeking to raise capital through non-traded companies, it may be more difficult for us to do so.

We intend to expand our business by managing additional non-traded companies, including NorthStar/RXR New York Metro, whose registration statement was declared effective by the SEC on February 9, 2015. In addition, NorthStar Corporate confidentially submitted a registration statement to the SEC. The number of entrants in the non-traded space has grown significantly over the last couple of years.Based on publicly-available information, as of February 26, 2015, there were 42 active non-traded companies in the marketplace and 11 others have filed registration statements, which are not yet effective.As a result, we will be subject to significant competition from these and other companies seeking to raise capital in the non-traded space.There can be no assurance that we will be able to compete successfully against current and future competitors and raise capital through our non-traded companies. In addition, there can be no assurance that any non-traded companies we may sponsor or co-sponsor in the future will have their respective registration statement declared effective by the SEC or raise the maximum offering amounts as stated in the respective prospectus of such non-traded company.

Risks Related to the Business of NorthStar Securities

Our failure to maintain registration of NorthStar Securities as a broker-dealer member in the various jurisdictions in which we will do business, comply with applicable regulatory capital requirements and other interruptions could have a material adverse effect on our business, financial condition, liquidity and results of operations.

NorthStar Securities is a FINRA member wholesale broker-dealer that is registered in the various jurisdictions in which our Sponsored Companies do business. NorthStar Securities must comply with various regulatory guidelines to maintain its FINRA membership and continue to operate as a wholesale broker-dealer. There is no guarantee that FINRA, the SEC or the states or territories in which it is registered will not take action against NorthStar Securities to remove its membership and/or registrations. Even if NorthStar Securities has complied with applicable rules, it could still be subjected to investigation and scrutiny that could distract our management, force us to incur substantial cost and harm our brand. If NorthStar Securities has

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failed to comply with applicable rules, it could be subject to enforcement actions and other penalties that could disrupt our business. Accordingly, such events would delay or potentially hinder sales of our Sponsored Companies’ securities.

NorthStar Securities is subject to various regulatory and capital requirements administered by the federal banking regulators. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, NorthStar Securities must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Its capital amounts and classification are also subject to qualitative judgments by the regulators about components of its capital, risk weightings of assets, off-balance sheet transactions, and other factors. Failure to meet minimum capital requirements can trigger certain mandatory and possibly additional discretionary, actions by regulators that, if undertaken, could harm either our operations and our financial condition.

There is no assurance NorthStar Securities will be able to successfully raise capital for NorthStar Healthcare, NorthStar Income II, NorthStar RXR/New York Metro or any other new entities we may manage or that it will be able to enter into any additional third-party selling agreements.

NorthStar Securities may be unable to raise capital for NorthStar Healthcare, NorthStar Income II, NorthStar RXR/New York Metro or any other new entities that we may manage or co-manage, which would restrict our growth and harm our operations. We and NorthStar Securities have entered into, and will seek to enter into, additional third-party selling agreements in order to raise capital for our Sponsored Companies. There is no assurance, however, that we will be able to enter into additional third-party selling agreements on favorable terms, or at all, which would hinder or even cease our ability to raise capital for our Sponsored Companies. If our Sponsored Companies fail to fulfill their obligations under these agreements, our potential liability as a result of our indemnification obligations could materially adversely affect our business and performance. Additionally, significant declines in asset value and reductions in distributions in our Sponsored Companies could cause us to lose third-party selling agreements and limit our ability to sign future third-party selling agreements.

Risks Relating to Ownership of our Common Stock

The market price and trading volume of our common stock may be volatile.

The market price of our common stock could fluctuate significantly for many reasons, including in response to the risk factors listed in this Annual Report on Form 10-K or for reasons unrelated to our specific performance, such as investor perceptions, reports by industry analysts or negative developments with respect to us or our Managed Companies, as well as third parties. Our common stock could also be volatile as a result of speculation or general economic and industry conditions.

Our distribution policy is subject to change and we may not be able to make distributions in the future.

We intend to make distributions to holders of our common stock on a quarterly basis. Evaluation of our distribution policy and the decision to make a distribution will be made solely at the discretion of our board of directors and will be based on factors including, but not limited to, CAD, our ability to generate income, availability of existing cash balances, the performance of our business, capital requirements, applicable law, access to cash in the capital markets and other financing sources, general economic conditions and economic conditions that more specifically impact our business or prospects and other factors our board of directors deems relevant.

Future distribution levels are subject to adjustment based upon any one or more of the factors set forth above, the risk factors set forth in this Annual Report on Form 10-K or any other document we file with the SEC and other factors that our board of directors may, from time to time, deem relevant to consider when determining an appropriate common stock distribution. Our board of directors may also determine not to make any distribution.

Our ability to make distributions is limited by the requirements of Delaware law.

Our ability to make distributions on our common stock is limited by the laws of the State of Delaware, where we are incorporated.Under applicable Delaware law, a Delaware corporation may only declare and make a distribution out of its surplus or, in the event the corporation has no surplus, out of its net profits for the fiscal year in which the distribution is declared and/or the preceding fiscal year.Therefore, to the extent we do not have adequate surplus or net profits, we will be prohibited from making distributions.

Anti-takeover provisions in our constituent documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.

Our amended and restated certificate of incorporation and bylaws contain provisions that may make the acquisition of us more difficult without the approval of our board of directors. These provisions:

• authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval and which may include super voting, special approval, distribution or other rights or preferences superior to the rights of the holders of common stock;

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• prohibit stockholder action by written consent, without the express prior consent of our board of directors;

• provide that our board of directors is expressly authorized to make, alter or repeal our bylaws; and

• establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in our control, even if doing so would benefit our stockholders. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire. In addition, while we do not presently have a stockholder rights plan, we could adopt a stockholder rights plan in the future.

Furthermore, in the event of a change of our control, we may be obligated to pay NorthStar Realty a cash amount in connection with performance-based equity awards issued by us under the terms of the management agreement, which could increase the costs and discourage a change in control.

Stockholders may experience substantial dilution.

We may undertake substantial offerings of our common stock and securities that are convertible into our common stock and may issue additional common stock in connection with acquisitions or joint ventures. If we engage in such transactions, our existing stockholders may experience immediate and substantial dilution in their percentage ownership of our outstanding common stock. Furthermore, stockholders may experience dilution in the value of their shares depending on the terms and pricing of any new stock issuances and the value of our assets at such time.

Stockholders have limited control over changes in our policies and operations, which increases the uncertainty and risks they face as stockholders.

Our board of directors determines our major policies, including our policies regarding growth and distributions.Our board of directors may amend or revise these and other policies without a vote of our stockholders.We may change our investment or other policies without stockholder notice or consent, which could result in investments or activities that are different than, or in different proportion than, those described in this Annual Report.Under the Delaware General Corporation Law, or DGCL, and our amended and restated certificate of incorporation, stockholders have a right to vote only on limited matters.Our board of directors’ broad discretion in setting policies and stockholders’ inability to exert control over those policies increases the uncertainty and risks stockholders face.

Our organizational documents do not limit our ability to enter into new lines of businesses and we may expand into new investment strategies, geographic markets and businesses, each of which may result in additional risks and uncertainties in our businesses.

Our plan, to the extent that market conditions permit, is to grow our business and expand into new investment strategies, geographic markets and businesses. Our organizational documents do not limit us to the management of commercial real estate assets. Accordingly, we may pursue growth through acquisitions of asset management contracts or companies, acquisitions of critical business partners or other strategic initiatives. To the extent we make strategic investments or acquisitions, undertake other strategic initiatives or enter into a new line of business, we will face numerous risks and uncertainties, including risks associated with: (i) the required investment of capital and other resources; (ii) the possibility that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts of risk; (iii) combining or integrating operational and management systems and controls; and (iv) the broadening of our geographic footprint, including the risks associated with conducting operations in non-U.S. jurisdictions. Entry into certain lines of business may subject us to new laws and regulations with which we are not familiar, or from which we are currently exempt, and may lead to increased litigation and regulatory risk. If a new business generates insufficient revenues or if we are unable to efficiently manage our expanded operations, our results of operations will be adversely affected. Our strategic initiatives include joint ventures, which subject us to additional risks and uncertainties in that we are dependent upon, and subject to liability, losses or reputational damage relating to systems, controls and personnel that are not under our control. Any of these investments or initiatives could detract from management’s time and resources and create greater potential for conflicts of interests.

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Our organizational documents designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our organizational documents provide that, subject to limited exceptions, the Court of Chancery of the State of Delaware is the sole and exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders; (iii) any action asserting a claim against us arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws; or (iv) any other action asserting a claim against us that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our constituent documents described above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our constituent documents inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition and results of operations.

The reduced disclosure requirements applicable to us as an “emerging growth company” may make our common stock less attractive to investors.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we may avail ourselves of certain exemptions from various reporting requirements of public companies that are not “emerging growth companies,” including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirement of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may remain an emerging growth company for up to five full fiscal years following the spin-off. We would cease to be an emerging growth company, and, therefore, become ineligible to rely on the above exemptions, if we have more than $1 billion in annual revenue in a fiscal year, if we issue more than $1 billion of non-convertible debt over a three-year period or on the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act which would occur after: (i) we have filed at least one annual report; (ii) we have been an SEC-reporting company for at least 12 months; and (iii) the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.

If some investors find our common stock less attractive as a result of the exemptions available to us as an emerging growth company, there may be a less active trading market for our common stock and our value may be more volatile than that of an otherwise comparable company that does not avail itself of the same or similar exemptions.

If we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, or Sarbanes-Oxley Act, or our internal control over financial reporting is not effective, the reliability of our financial statements may be questioned and our stock price may suffer.

The Sarbanes-Oxley Act requires any company subject to the reporting requirements of the U.S. securities laws to do a comprehensive evaluation of its and its consolidated subsidiaries’ internal control over financial reporting. To comply with this statute, we are required to document and test our internal control procedures, our management is required to assess and issue a report concerning our internal control over financial reporting and our independent auditors are required to issue an opinion on their audit of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act. If our management cannot favorably assess the effectiveness of our internal control over financial reporting or our auditors identify material weaknesses in our internal controls, investor confidence in our financial results may weaken and our stock price may suffer. For instance, accounting irregularities recently discovered at various market participants have caused the SEC to launch an inquiry, stockholders initiate lawsuits, executives resign, the stock price to significantly decrease and the firm’s reputation to be questioned by stockholders and the press.

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Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our principal executive offices are located in leased office space at 399 Park Avenue, 18th Floor, New York, New York. As of December 31, 2014, we also lease our offices in the following locations (dollars in thousands):

Location	Lease Expiration	Current Annual Rent
New York, New York	Aug -2017	$	2,325
Denver, Colorado	Dec-2016	223
Dallas, Texas	Sept-2019	146
Bethesda, Maryland	Sept-2017	206
Los Angeles, California	Apr-2017	209
London, United Kingdom	Jun-2019	378
Senningerberg, Luxembourg	Jun-2019	220
Pembroke, Bermuda	Aug-2019	287
Total		$	3,994

We do not own any real property. We consider these leased office spaces to be suitable and adequate for the management and operations of our business.

Item 3. Legal Proceedings

We may be involved in various litigation matters arising in the ordinary course of our business. Although we are unable to predict with certainty the eventual outcome of any litigation, in the opinion of management, any legal proceedings are not expected to have a material adverse effect on our financial position or results of operations. Refer to Note 6. “Commitments and Contingencies” in Item 8. “Financial Statements and Supplementary Data” for further disclosure regarding legal proceedings.

Item 4. Mine Safety Disclosures

None.

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PART II.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is listed on the NYSE under the symbol “NSAM.” The following table presents the high, low and last sales prices for our common stock, as reported on the NYSE, and dividends per share with respect to the periods indicated:

Period	High		Low		Close		Dividends
2014
Fourth Quarter(1)	$	22.66	$	16.46	$	22.57	$	0.10
Third Quarter	$	20.00	$	17.72	$	18.42	$	0.10

_______________________________________________________

(1) On February 25, 2015, we declared a dividend of $0.10 per share of common stock. This dividend will be paid on March 13, 2015 to stockholders of record as of the close of business on March 9, 2015.

On October 30, 2014, we declared our first dividend of $0.10 on common stock, on a per share basis, for the three months ended September 30, 2014.

Refer to Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” for a discussion of our dividend policy. On February 25, 2015, the closing sales price for our common stock, as reported on the NYSE, was $23.35. As of February 24, 2015, there were 360 record holders of our common stock and 193,203,905 shares outstanding. This figure does not reflect the beneficial ownership of shares held in nominee name.

Refer to Part III, Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information regarding securities authorized for issuance under equity compensation plans.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

On January 9, 2015, in connection with the Island Interest, we issued an aggregate of 208,486 shares of our restricted common stock (which stock is subject to certain lock-up restrictions).  The issuance of such restricted common stock was exempt from registration as it does not involve a “public offering” within the meaning of Section 4(a)(2) of the Securities Act of 1933, as amended, or the Securities Act. 

On February 2, 2015, in connection with the completion of NorthStar Healthcare’s initial primary offering and the services Mr. Flaherty provides to our Healthcare Strategic Partnership (refer to Related Party Arrangements), we issued 20,305 restricted stock units, or RSUs, to Mr. Flaherty, or the Incremental RSU Grant.  The Incremental RSU Grant vests on the third anniversary of the grant, subject to certain exceptions.  The Incremental RSU Grant was exempt from registration as it does not involve a “public offering” within the meaning of Section 4(a)(2) of the Securities Act.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

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Item 6. Selected Financial Data

The information below should be read in conjunction with “Forward-Looking Statements,” Part I, Item 1A. “Risk Factors,” Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our combined consolidated financial statements and the related notes thereto included in Part II, Item 8. “Financial Statements and Supplementary Data,” included in this Annual Report on Form 10-K.

Certain amounts included herein differ from amounts reported in our preliminary unaudited consolidated balance sheet and statement of operations included in our earnings release dated February 27, 2015. The difference arose from a lesser excess tax deduction related to equity based compensation.  The impact to CAD for the year ended December 31, 2014 was a decrease of $1.4 million. Our net income (loss) was an incremental decrease of $2.1 million.  We believe that these revised amounts are not materially different from those reported in the earnings release.

The selected historical consolidated information presented for the five years ended December 31, 2014 relates to our operations and has been derived from our audited combined consolidated statements of operations included in this Annual Report on Form 10-K or our Registration Statement on Form 10, as amended. The consolidated financial statements for the year ended December 31, 2014 include: (i) our results of operations for the six months ended December 31, 2014 which represents our results of operations following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) results of operations for the six months ended June 30, 2014 which represents a carve-out of revenues and expenses attributable to us related to NorthStar Realty’s historical asset management business. Our historical financial information for the four years ended December 31, 2013 were prepared on the same basis as the six months ended June 30, 2014. As a result, results of operations for the year ended December 31, 2014 may not be comparative to our results of operations reported for the prior periods presented.

	Years Ended December 31,
	2014			2013			2012			2011			2010
Operating Data:	(Dollar in thousands, except per share data)												(Unaudited)
Asset management and other fees, related parties	$	147,738		$	26,633		$	8,112		$	993		$	126
Selling commission and dealer manager fees, related parties	110,563			62,572			42,385			12,024			2,476
Commission expense	104,428			57,325			38,506			10,764			2,130
Total general and administrative	106,572			32,873			29,287			27,814			15,450
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax (benefit) expense	21,761			(1,995		)	(17,322		)	(25,682		)	(15,004		)
Equity in earnings (losses) of unconsolidated ventures	(1,039		)	—			—			—			—
Income (loss) before income taxes	20,722			(1,995		)	(17,322		)	(25,682		)	(15,004		)
Current income tax (benefit) expense	4,953			—			—			—			—
Deferred income tax (benefit) expense	(3,331		)	—			—			—			—
Net income (loss)	19,100			(1,995		)	(17,322		)	(25,682		)	(15,004		)
Earnings per share:
Basic	$	0.10		$	(0.01	)	$	(0.09	)	$	(0.14	)	$	(0.08	)
Diluted	$	0.10		$	(0.01	)	$	(0.09	)	$	(0.14	)	$	(0.08	)
Dividends per share of common stock (1)	$	0.20		N/A			N/A			N/A			N/A

_________________

(1) On October 30, 2014, we declared our first dividend of $0.10 on common stock, on a per share basis, for the three months ended September 30, 2014. On February 25, 2015, we declared a dividend of $0.10 on common stock, on a per share basis, for the three months ended December 31, 2014.

	As of December 31,
	2014		2013		2012		2011		2010
Balance Sheet Data:	(Dollars in thousands)						(Unaudited)		(Unaudited)
Cash	$	109,199	$	7,537	$	6,643	$	2,047	$	1,267
Total assets	266,987		31,709		20,257		8,315		5,049
Total liabilities	65,239		3,341		2,382		1,501		939
Total equity	201,748		28,368		17,875		6,814		4,110

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	Years Ended December 31,
	2014			2013			2012			2011			2010
Other Data:	(Dollars in thousands)												(Unaudited)
Cash flow provided by (used in):
Operating activities	$	46,716		$	(6,363	)	$	(19,563	)	$	(22,847	)	$	(15,309	)
Investing activities	(43,582		)	—			—			—			—
Financing activities	98,933			7,257			24,159			23,627			15,338

We began usingCAD upon commencement of operations in third quarter 2014 as a non-GAAP measure of our operating performance. CAD for the six months ended December 31, 2014 was$87 million.Refer to Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measure” for details on the calculation of CAD including a reconciliation of CAD to net income (loss) calculated in accordance with U.S. GAAP.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our combined consolidated financial statements and notes thereto included in Item 8. “Financial Statements and Supplementary Data” and risk factors in Part I, Item 1A. “Risk Factors” of this report. References to “NSAM,” “we,” “us” or “our” refer to NorthStar Asset Management Group Inc. and its subsidiaries unless the context specifically requires otherwise.

Introduction

We are a global asset management firm focused on strategically managing real estate and other investment platforms in the United States and internationally. We commenced operations on July 1, 2014 upon the spin-off by NorthStar Realty of its asset management business into a separate publicly-traded company, NorthStar Asset Management Group Inc. (NYSE: NSAM), a Delaware corporation. The spin-off was in the form of a tax-free distribution to NorthStar Realty’s common stockholders where each NorthStar Realty common stockholder received shares of our common stock on a one-for-one basis. At the same time, NorthStar Realty became externally managed by our affiliate through a management contract with an initial term of 20 years. NorthStar Realty continues to operate its commercial real estate debt origination business. Most of NorthStar Realty’s employees at the time of the spin-off became our employees except for executive officers, employees engaged in NorthStar Realty’s loan origination business at the time of the spin-off and certain other employees that became co-employees of both us and NorthStar Realty.

Certain of our affiliates also manage our Sponsored Companies. We are organized to provide asset management and other services to our Managed Companies or any other companies we may sponsor in the future, both in the United States and internationally. Our Managed Companies have historically invested in the CRE industry. We seek to expand the scope of our asset management business beyond real estate into new asset classes and geographies by organically creating and managing additional investment vehicles or through acquisitions, strategic partnerships and joint ventures. We earn asset management, incentive and other fees, directly or indirectly, pursuant to management and other contracts and investments in asset managers. In addition, we own NorthStar Securities, a captive broker-dealer platform registered with the SEC which raises capital in the retail market for our Sponsored Companies.

As of December 31, 2014, we had $22 billion of assets under management, adjusted for commitments to acquire certain investments by our Managed Companies. In addition, we invested $92 million in asset management businesses that manage $8.5 billion across a variety of asset classes.

Summary of Business

Our primary business lines are as follows:

• NorthStar Realty - Provides asset management and other services on a fee basis by managing NorthStar Realty’s day-to-day operations. We began earning fees from NorthStar Realty on July 1, 2014.

• Sponsored Companies - Provides asset management and other services on a fee basis by managing each Sponsored Company’s respective day-to-day operations.

• Broker-dealer - Raises capital in the retail market through NorthStar Securities and earns dealer manager fees from our Sponsored Companies.

• Investments in Asset Managers - Invests in strategic partnerships and joint ventures with third-parties with expertise in commercial real estate or other sectors and markets, where we benefit from the fee stream and potential incentive fee or promote.

• Corporate/Other - Includes corporate level general and administrative expenses, as well special servicing on a fee basis in connection with certain securitization transactions.

Sources of Operating Revenues and Cash Flows

We primarily generate revenue from asset management, incentive and other fee income pursuant to contractual arrangements with our Managed Companies. We also generate revenue from commission income from selling equity in our Sponsored Companies. Effective July 1, 2014, we began generating revenue from asset management, incentive and other fee income from NorthStar Realty in addition to our Sponsored Companies. Additionally, we record equity in earnings from unconsolidated ventures.

Profitability and Performance Metrics

We calculate certain metrics to evaluate the profitability and performance of our business.

• CAD is a non-GAAP measure that provides investors and management with a meaningful indicator of operating performance (refer to “Non-GAAP Financial Measure” for a description of this metric); and

• Our ability to raise capital for our Managed Companies, which in turn grows the assets of our Managed Companies, is a driver of our ability to grow our fee income.

Outlook and Recent Trends

As an asset manager, we and the assets of our Managed Companies under management are impacted by general market and economic conditions. We have focused to date on strategically managing our real estate investments platform but we may determine to expand the breadth of our business. Historically, we have principally managed U.S. commercial real estate assets and have more recently expanded internationally. Consequently, we expect that global markets and economic conditions will have a greater impact on our business in the future.

Liquidity and capital started to become more available in early 2012 for the commercial real estate markets to stronger sponsors and both Wall Street and commercial banks began to more actively provide credit to real estate borrowers accelerating the pace of investment in real estate. In late 2012, in order to stimulate growth, several of the world’s largest central banks acted in a coordinated effort through massive injections of stimulus in the financial markets, which has facilitated keeping interest rates low since then.

A proxy for the liquidity in the commercial real estate market is non-agency CMBS issuance. Approximately $80 billion and $88 billion of non-agency CMBS was issued in 2013 and 2014, respectively, with industry experts currently predicting approximately $100 billion of non-agency CMBS issuance in 2015. We believe the U.S. economy is on a healthy growth path and that the U.S. Federal Reserve is on track to begin raising rates in 2015. However, there are concerns about low inflation in the United States, a stronger U.S. dollar, slow global growth and international market volatility. Many other global central banks are easing monetary conditions to combat their own problems with low inflation and slow growth.

Valuations in the commercial real estate markets have generally improved since bottoming out in 2009. Robust investor demand in 2014 for commercial real estate increased transaction activity and prices as rent and vacancy fundamentals improved across most property sectors and are forecasted to continue to improve in 2015. However, global economic and political headwinds remain. For instance, global market instability and the risk that maturing commercial real estate debt may have difficulties being refinanced, among other factors, may continue to cause periodic volatility in the market for some time.

As an asset manager in the non-traded company industry, we also monitor trends in that sector. After showing considerable resiliency during the economic downturn between 2007 and 2010, the non-traded company industry has grown with approximately $16 billion raised in 2014. The $20 billion of total capital raised in 2013 included increased activity due to an unusually high amount of liquidity events. We anticipate capital flows to remain strong in 2015 given the recent momentum in the market.

Due to generally positive market dynamics and our expertise and industry relationships, we continue to see a robust pipeline of investment opportunities that have credit qualities and yield profiles that are consistent with our underwriting standards and that we believe offer the opportunity to meet or exceed our Managed Companies targeted returns, thereby increasing our assets under management and fee income. We also believe the opportunity exists to accelerate our growth through accretive investments in third party asset managers. While we remain optimistic that we will continue to be able to generate and capitalize on an attractive pipeline of opportunities, there is no assurance that will be the case.

Critical Accounting Policies

Principles of Consolidation

Our consolidated financial statements include the accounts of NorthStar Asset Management Group Inc. and its consolidated subsidiaries.

Variable Interest Entities

A variable interest entity, or VIE, is an entity that lacks one or more of the characteristics of a voting interest entity. A VIE is defined as an entity in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The determination of whether an entity is a VIE includes both a qualitative and quantitative analysis. We base the qualitative analysis on our review of the design of the entity, its organizational structure including decision-making ability and relevant financial agreements and the quantitative analysis on the forecasted cash flow of the entity.

We reassess the initial evaluation of an entity as a VIE upon the occurrence of certain reconsideration events.

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A VIE must be consolidated only by its primary beneficiary, which is defined as the party who, along with its affiliates and agents has both the: (i) power to direct the activities that most significantly impact the VIE’s economic performance; and (ii) obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. We determine whether we are the primary beneficiary of a VIE by considering qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of its investment; the obligation or likelihood for us or other interests to provide financial support; consideration of the VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders and the similarity with and significance to our business activities and the other interests. We reassess the determination of whether we are the primary beneficiary of a VIE each reporting period. Significant judgments related to these determinations include estimates about the current and future fair value and performance of investments held by these VIEs and general market conditions.

We evaluate our Managed Companies, investments in unconsolidated ventures and securitization financing transactions to which we are the special servicer to determine whether they are a VIE.

Voting Interest Entities

A voting interest entity is an entity in which the total equity investment at risk is sufficient to enable it to finance its activities independently and the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If we have a majority voting interest in a voting interest entity, the entity will generally be consolidated. We do not consolidate a voting interest entity if there are substantive participating rights by other parties and/or kick-out rights by a single party.

We perform on-going reassessments of whether entities previously evaluated under the voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework.

Investments in Unconsolidated Ventures

Non-controlling, unconsolidated ownership interests in an entity may be accounted for using the equity method, at fair value or the cost method.

Under the equity method, the investment is adjusted each period for capital contributions and distributions and its share of the entity’s net income (loss). Capital contributions, distributions and net income (loss) of such entities are recorded in accordance with the terms of the governing documents. An allocation of net income (loss) may differ from the stated ownership percentage interest in such entity as a result of preferred returns and allocation formulas, if any, as described in such governing documents.

We may account for an investment in an unconsolidated entity at fair value by electing the fair value option. We record the change in fair value for our share of the projected future cash flow of such investments from one period to another in equity in earnings (losses) from unconsolidated ventures in the consolidated statements of operations. Any change in fair value attributed to market related assumptions is considered unrealized gain (loss).

We may account for an investment that does not qualify for equity method accounting or for which the fair value option was not elected using the cost method if we determine the investment in the unconsolidated entity is insignificant. Under the cost method, equity in earnings is recorded as dividends are received to the extent they are not considered a return of capital, which is recorded as a reduction of cost of the investment.

Estimates

The preparation of combined consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that could affect the amounts reported in the combined consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates and assumptions.

Revenue Recognition

Asset Management and Other Fees

Asset management and other fees include asset management, incentive and other fees, such as acquisition and disposition fees, earned from our Managed Companies. Base asset management and other fees are recognized based on contractual terms specified in the underlying governing documents in the periods during which the related services are performed and the amounts have been contractually earned. Incentive fees and payments are recognized subject to the achievement of return hurdles in accordance with the respective terms set forth in the governing documents of our Managed Companies.

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Selling Commission and Dealer Manager Fees and Commission Expense

Selling commission and dealer manager fees represent income earned by us for selling equity in our Sponsored Companies through NorthStar Securities. Selling commission and dealer manager fees and commission expense are accrued on a trade date basis.

Equity-Based Compensation

We account for equity-based compensation awards, including awards granted to co-employees, using the fair value method, which requires an estimate of fair value of the award. Awards may be based on a variety of measures such as time, performance, market or a combination thereof. For time-based awards, fair value is determined based on the stock price on the grant date. We recognize compensation expense over the vesting period on a straight-line basis. For performance-based awards, fair value is determined based on the stock price at the date of grant and an estimate of the probable achievement of such measure. We recognize compensation expense over the requisite service period, net of estimated forfeitures, using the accelerated attribution expense method. For market-based measures, fair value is determined using a Monte Carlo analysis under a risk-neutral premise using a risk-free interest rate. We recognize compensation expense over the requisite service period, net of estimated forfeitures, on a straight-line basis.

For awards with a combination of performance or market measures, we estimate the fair value as if it were two separate awards. First, we estimate the probability of achieving the performance measure. If it is not probable the performance condition will be met, we recognize the compensation expense based on the fair value of the market measure, as described above. This expense is recorded even if the market-based measure is never met. If the performance-based measure is subsequently estimated to be achieved, we record compensation expense based on the performance-based measure. We would then record a cumulative catch-up adjustment for any additional compensation expense.

Equity-based compensation issued to non-employees is accounted for using the fair value of the award at the earlier of the performance commitment date or performance completion date. The awards are remeasured every quarter based on the stock price as of the end of the reporting period until such awards vest, if any.

Income Taxes

Certain of our subsidiaries were subject to taxation by federal, state and foreign authorities for the periods presented. We and our U.S. subsidiaries will file a consolidated federal income tax return. Income taxes are accounted for by the asset/liability approach in accordance with U.S. GAAP. Deferred taxes, if any, represent the expected future tax consequences when the reported amounts of assets and liabilities are recovered or paid. Such amounts arise from differences between the financial reporting and tax bases of assets and liabilities and are adjusted for changes in tax laws and tax rates in the period which such changes are enacted. A provision for income tax represents the total of income taxes paid or payable for the current period, plus the change in deferred taxes.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board, or FASB, issued an accounting update requiring a company to recognize as revenue the amount of consideration it expects to be entitled to in connection with the transfer of promised goods or services to customers.  When it becomes effective on January 1, 2017, the accounting standard update will replace most of the existing revenue recognition guidance currently promulgated by U.S. GAAP.  We are in the process of evaluating the impact, if any, of the update on our consolidated financial statements and related disclosures.

In February 2015, the FASB issued updated guidance that changes the rules regarding consolidation. The pronouncement eliminates specialized guidance for limited partnerships and similar legal entities and removes the indefinite deferral for certain investment funds. The new guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, with early adoption permitted. We are currently assessing the impact of the guidance on our consolidated financial position, results of operations and financial statement disclosures.

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Results of Operations

Certain amounts included herein differ from amounts reported in our preliminary unaudited consolidated balance sheet and statement of operations included in our earnings release dated February 27, 2015. The difference arose from a lesser excess tax deduction related to equity based compensation.  The impact to CAD for the year ended December 31, 2014 was a decrease of $1.4 million. Our net income (loss) was an incremental decrease of $2.1 million.  We believe that these revised amounts are not materially different from those reported in the earnings release.

Comparison of the Year Ended December 31, 2014 to December 31, 2013 (Dollars in Thousands):

The combined consolidated financial statements for the year ended December 31, 2014 include: (i) our results of operations for the six months ended December 31, 2014 which represents our results of operations following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) our results of operations for the six months ended June 30, 2014 which represents a carve-out of revenues and expenses attributable to us related to NorthStar Realty’s historical asset management business. Our historical financial information for the year ended December 31, 2013 was prepared on the same basis as the six months ended June 30, 2014. As a result, results of operations for the year ended December 31, 2014 may not be comparative to our results of operations reported for the prior period presented. The following table represents our results of operations for the years ended December 31, 2014 and 2013 (dollars in thousands):

	Years Ended December 31,						Increase (Decrease)
	2014			2013			Amount			%
Revenues
Asset management and other fees, related parties	$	147,738		$	26,633		$	121,105		454.7	%
Selling commission and dealer manager fees, related parties	110,563			62,572			47,991			76.7	%
Other income	841			733			108			14.7	%
Total revenues	259,142			89,938			169,204			188.1	%
Expenses
Commission expense	104,428			57,325			47,103			82.2	%
Transaction costs	24,476			1,590			22,886			NM
Other expense	1,905			145			1,760			NM
General and administrative expenses
Salaries and related expense	37,205			21,344			15,861			74.3	%
Equity-based compensation expense	51,650			5,177			46,473			897.7	%
Other general and administrative expenses	17,717			6,352			11,365			178.9	%
Total general and administrative expenses	106,572			32,873			73,699			224.2	%
Total expenses	237,381			91,933			145,448			158.2	%
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax (benefit) expense	21,761			(1,995		)	23,756			(1,190.8	)%
Equity in earnings (losses) of unconsolidated ventures	(1,039		)	—			(1,039		)	N/A
Income (loss) before income tax (benefit) expense	20,722			(1,995		)	22,717			(1,138.7	)%
Income tax (benefit) expense	1,622			—			1,622			N/A
Net income (loss)	$	19,100		$	(1,995	)	$	24,339		(1,220.0	)%

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Asset Management and Other Fees

Asset management and other fees are comprised of fees from our Managed Companies summarized as follows (dollars in thousands):

	Years Ended December 31,
	2014		2013
NorthStar Realty:
Base fee	$	79,443	N/A
Incentive fee	3,316		N/A
Subtotal NorthStar Realty	82,759		N/A		(1)
Sponsored Companies:
Asset management fees	27,975		13,721		(2)
Acquisition fees	34,548		11,709		(3)
Disposition fees	2,456		1,203		(4)
Subtotal Sponsored Companies	64,979		26,633
Total	$	147,738	$	26,633

__________________

(1) We began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty.

(2) The increase was driven by the growth in assets of our Sponsored Companies. As of December 31, 2014 and 2013, our Sponsored Companies held aggregate assets of $3.8 billion and $2.0 billion, respectively.

(3) The increase was driven by increased investment activity of our Sponsored Companies, significantly driven by $21.1 million earned from NorthStar Healthcare’s real estate equity investments made in 2014.

(4) The increase was driven by increased repayments of debt investments from NorthStar Income in 2014.

Selling Commission and Dealer Manager Fees

We earn net commission income through NorthStar Securities for selling equity in our Sponsored Companies.

Selling commission and dealer manager fees represent fees earned for selling equity in our Sponsored Companies through NorthStar Securities. Pursuant to dealer manager agreements between NorthStar Securities and our Sponsored Companies, we generally receive selling commissions of up to 7% of gross offering proceeds raised, which we reallow to participating broker-dealers. In addition, we also generally receive a dealer manager fee of up to 3% of gross offering proceeds raised, a portion of which is typically also reallowed to participating broker-dealers and paid to certain employees of NorthStar Securities. Selling commission increased due to higher capital raising activity for the year endedDecember 31, 2014 as compared to the same period in 2013.

The following table presents equity raised by our Sponsored Companies for the periods presented (dollars in thousands):

	Years Ended December 31, (1)
	2014		2013
NorthStar Income	$	42,661	$	545,423	(2)
NorthStar Healthcare	867,245		109,243		(3)
NorthStar Income II	280,296		27,853		(3)
Total	$	1,190,202	$	682,519

_________________

(1) Includes capital raised through the dividend reinvestment plan.

(2) NorthStar Income successfully completed its primary offering on July 1, 2013.

(3) Capital raising pace at both NorthStar Healthcare and NorthStar Income II accelerated in 2014. Shortly after year end, NorthStar Healthcare completed its initial primary offering.

Other Income

Other income primarily represents special servicing fees related to certain securitization transactions at the corporate level. We are a rated special servicer by Standard & Poor’s and Fitch Ratings and we receive special servicing fees for services related to certain securitization transactions. The increase is primarily the result of more services performed in 2014.

Expenses

Commission Expense

Commission expense represents fees to participating broker-dealers with whom we have selling agreements to raise capital for our Sponsored Companies and commissions to employees of NorthStar Securities. Commission income and expense both increased due to higher capital raising activity for the year endedDecember 31, 2014 as compared to the same period in 2013.

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Transaction Costs

Transaction costs represent costs such as professional fees associated with the spin-off.

Other Expense

Other expense primarily represents depreciation expense and foreign exchange gain (loss) at the corporate level.

General and Administrative Expenses

General and administrative expenses are principally incurred at the corporate level except as it relates to direct compensation expense and other costs incurred at our broker-dealer, which is part of our broker-dealer segment.

General and administrative expenses increased$73.7 million primarily attributable to the following:

Salaries and related expense increased$15.9 million primarily due to most employees of NorthStar Realty becoming our employees upon the spin-off as well as hiring additional employees for increased activity, offset by an allocation to the Managed Companies.

Equity-based compensation expense increased$46.5 million primarily due to the prior period amount only represented an allocation of equity-based compensation expense related to NorthStar Realty’s historical asset management business. For the six months ended December 31, 2014, we recognized $37.9 million of equity-based compensation related to the NSAM Stock Plan (as defined below) and NorthStar Realty Equity Plans (as defined below). For the six months ended June 30, 2014, we were allocated $13.7 million of equity-based compensation expenses related to the NSAM Stock Plan and the NorthStar Realty Equity Plans. For the year ended December 31, 2013, we were allocated $5.2 million of equity-based compensation expense related to the NorthStar Realty Equity Plans.

Other general and administrative expenses increased$11.4 million primarily due to the spin-off as the prior period amount only represented an allocation of other general and administrative expense related to NorthStar Realty’s historical asset management business. For the six months ended December 31, 2014, we also incurred additional costs in connection with growing our business, offset by an allocation to the Managed Companies.

Equity in earnings (losses) on unconsolidated ventures

Equity in earnings (losses) on unconsolidated ventures represents interests in two investment management platforms that we acquired in 2014. From closing to December 31, 2014, operating income from AHI was $1.2 million, offset by $0.5 million of non-cash depreciation expense and equity-based compensation expense.

Income Tax (Benefit) Expense

Effective July 1, 2014, we are subject to both domestic and international income tax. We recognized a $5.0 million current income tax expense offset by a $3.3 million deferred income tax benefit for the six months ended December 31, 2014.

Comparison of the Year Ended December 31, 2013 to December 31, 2012 (Dollars in Thousands):

	Years Ended December 31,						Increase (Decrease)
	2013			2012			Amount			%
Revenues
Asset management and other fees, related parties	$	26,633		$	8,112		$	18,521		228.3	%
Selling commission and dealer manager fees, related parties	62,572			42,385			20,187			47.6	%
Other income	733			264			469			177.7	%
Total revenues	89,938			50,761			39,177			77.2	%
Expenses
Commission expense	57,325			38,506			18,819			48.9	%
Transaction costs	1,590			—			1,590			N/A
Other expense	145			290			(145		)	(50.0	)%
General and administrative expenses
Salaries and related expense	21,344			20,217			1,127			5.6	%
Equity-based compensation expense	5,177			4,224			953			22.6	%
Other general and administrative expenses	6,352			4,846			1,506			31.1	%
Total general and administrative expenses	32,873			29,287			3,586			12.2	%
Total expenses	91,933			68,083			23,850			35.0	%
Net income (loss)	$	(1,995	)	$	(17,322	)	$	15,327		(88.5	)%

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Asset Management and Other Fees

Asset management and other fees are comprised of fees from our Sponsored Companies summarized as follows (dollars in thousands):

	Years Ended December 31,
	2013		2012
Asset management fees	$	13,721	$	3,359
Acquisition fees	11,709		4,753
Disposition fees	1,203		—
Total	$	26,633	$	8,112	(1)

__________________

(1) The increase was driven by the growth of our first Sponsored Company, NorthStar Income and the commencement of capital raising and in turn investments for our second and third Sponsored Companies, NorthStar Healthcare and NorthStar Income II, respectively.

Selling Commission and Dealer Manager Fees

We earn net commission income through NorthStar Securities for selling equity in our Sponsored Companies.

Selling commission and dealer manager fees represent fees earned for selling equity in our Sponsored Companies through NorthStar Securities. Pursuant to dealer manager agreements between NorthStar Securities and our Sponsored Companies, we generally receive selling commissions of up to 7% of gross offering proceeds raised, which we reallow to participating broker-dealers. In addition, we also generally receive a dealer manager fee of up to 3% of gross offering proceeds raised, a portion of which is typically also reallowed to participating broker-dealers and paid to certain employees of NorthStar Securities. Selling commission increased due to higher capital raising activity for the year ended December 31, 2013 as compared to the same period in 2012.

The following table presents equity raised by our Sponsored Companies for the periods presented (dollars in thousands):

	Years Ended December 31,(1)
	2013		2012
NorthStar Income	$	545,423	$	443,353	(2)
NorthStar Healthcare	109,243		—		(3)
NorthStar Income II	27,853		—		(3)
Total	$	682,519	$	443,353

_________________

(1) Includes capital raised through the dividend reinvestment plan.

(2) NorthStar Income successfully completed its primary offering on July 1, 2013.

(3) Capital raising commenced at both NorthStar Healthcare and NorthStar Income II in 2013.

Other Income

Other income primarily represents special servicing fees related to certain securitization transactions at the corporate level. We are a rated special servicer by Standard & Poor’s and Fitch Ratings and we receive special servicing fees for services related to certain securitization transactions. The increase of $0.5 million is primarily the result of additional services performed in 2013.

Expenses

Commission Expense

Commission expense represents fees to participating broker-dealers with whom we have selling agreements to raise capital for our Sponsored Companies and commissions to employees of NorthStar Securities. Commission income and expense both increased due to stronger capital raising activity for the year ended December 31, 2013 as compared to the same period in 2012.

Transaction Costs

Transaction costs represent costs such as professional fees associated with the spin-off.

Other Expense

Other expense primarily represents depreciation expense, legal and other expenses associated with our broker-dealer and special servicing businesses.

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General and Administrative Expenses

General and administrative expenses are principally incurred at the corporate level except as it relates to direct compensation expense and other costs incurred at our broker-dealer, which is part of our broker-dealer segment.

General and administrative expenses increased $3.6 million primarily attributable to the following:

Salaries and related expense increased $1.1 million primarily due to higher staffing levels to accommodate the business activities of our Sponsored Companies.

Equity-based compensation expense increased $1.0 million primarily due to higher staffing levels to accommodate the business activities of our Sponsored Companies.

Other general and administrative expenses increased $1.5 million primarily due to increased legal and other expenses related to our broker-dealer business ($2.2 million), offset by a decrease in legal and other expenses related to our Sponsored Companies ($0.7 million).

Liquidity and Capital Resources

Our capital sources may include cash flow provided from operating activities, primarily from management and other fees income paid to us from our Managed Companies, as well as borrowings and the issuance of common stock. Our primary uses of liquidity include operating expenses, dividends and acquisitions of investment management platforms. On a quarterly basis, our board of directors determines an appropriate common stock dividend based upon numerous factors, including CAD, availability of existing cash balances, general economic conditions and economic conditions that more specifically impact our business or prospects. Future dividend levels are subject to adjustment based upon our evaluation of the factors described above, as well as other factors that our board of directors may, from time-to-time, deem relevant to consider when determining an appropriate common stock dividend.

We expect that our cash flow from operating activities and available financing will be sufficient to satisfy our liquidity needs. As of December 31, 2014, we had a receivable, related parties balance primarily from our Managed Companies of $76 million, of which we received $47 million subsequent to December 31, 2014.

We currently believe that our existing sources of funds should be adequate for the purposes of meeting our short-term liquidity needs. Unrestricted cash as of February 26, 2015, was approximately $68 million.

Cash Flows

The following presents a summary of our combined consolidated statements of cash flows for the years endedDecember 31, 2014, 2013 and 2012 (dollars in thousands):

	Years Ended December 31,
Cash flow provided by (used in):	2014			2013			2012
Operating activities	$	46,716		$	(6,363	)	$	(19,563	)
Investing activities	(43,582		)	—			—
Financing activities	98,933			7,257			24,159
Effect of foreign exchange rate changes on cash	(405		)	—			—
Net increase (decrease) in cash	$	101,662		$	894		$	4,596

Year Ended December 31, 2014 Compared to December 31, 2013

Net cash provided by operating activities was $47 million for the year ended December 31, 2014 compared to $6 million used in operating activities for the year ended December 31, 2013. The increase was primarily due to asset management and other fees from our Managed Companies and excludes $47 million of fees received subsequent to December 31, 2014, offset by an increase in operating expenses incurred to grow our business.

Net cash used in investing activities represents investments in asset managers, including the AHI Interest ($40 million) and Distribution Finance Interest ($4 million).

Net cash provided by financing activities was $99 million for the year ended December 31, 2014 compared to $7 million for the year ended December 31, 2013. The increase was primarily due to the initial capital contribution upon the spin-off of $116 million which became effective on June 30, 2014 and an excess tax benefit of $2 million, offset by $19 million for the payment of dividends.

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Year ended December 31, 2013 Compared to December 31, 2012

Net cash used in operating activities was $6 million for the year ended December 31, 2013 compared to $20 million for the year ended December 31, 2012. The decrease in net cash used was primarily due to increased asset management and other fees generated from our Sponsored Companies.

Net cash provided by financing activities was $7 million for the year ended December 31, 2013 compared to $24 million for the year ended December 31, 2012. The decrease was primarily due to transactions with NorthStar Realty including the operating activities between us and NorthStar Realty.

Contractual Obligations and Commitments

As of December 31, 2014, we had the following contractual commitments under operating leases for our offices in the United States: New York, New York; Denver, Colorado; Dallas, Texas; Bethesda, Maryland; and Los Angeles, California and internationally: London, United Kingdom; Senningerberg, Luxembourg; and Pembroke, Bermuda (dollars in thousands):

			2015		2016 - 2017		2018 - 2019		Thereafter
	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
Operating leases	$	12,892	$	3,994	$	7,104	$	1,794	$	—

Off-Balance Sheet Arrangements

We have certain arrangements which do not meet the definition of off-balance sheet arrangements, but do have some of the characteristics of off-balance sheet arrangements such as our investments in asset management businesses. Refer to Note 4. “Investments in Unconsolidated Ventures” in Item 8. “Financial Statements and Supplementary Data” for a discussion of such unconsolidated ventures in our consolidated financial statements. Our exposure to loss is limited to the carrying value of our investment.

Related Party Arrangements

NorthStar Realty

Investment Opportunities

Under the management agreement, NorthStar Realty agreed to make available to us for the benefit of our Managed Companies, including NorthStar Realty, all investment opportunities sourced by NorthStar Realty. We agreed to fairly allocate such opportunities among our Managed Companies, including NorthStar Realty, in accordance with our investment allocation policy. Pursuant to the management agreement, NorthStar Realty is entitled to fair and reasonable compensation for its services in connection with any loan origination opportunities sourced by it, which may include first mortgage loans, subordinate mortgage interests, mezzanine loans and preferred equity interests, in each case relating to commercial real estate.

We provide services with regard to such areas as payroll, human resources and employee benefits, financial systems management, treasury and cash management, accounts payable services, telecommunications services, information technology services, property management services, legal and accounting services and various other corporate services to NorthStar Realty as it relates to its loan origination business for commercial real estate debt.

Credit Agreement

In connection with the spin-off, we entered into a revolving credit agreement with NorthStar Realty pursuant to which NorthStar Realty makes available to us, on an “as available basis,” up to $250 million of financing for a five year term at LIBOR plus 3.50%. The revolving credit facility is unsecured. We expect to use the proceeds for general corporate purposes, including potential future acquisitions. In addition, we may use the proceeds to acquire assets on behalf of our Managed Companies that we intend to allocate to such Managed Company but for which such Managed Company may not then have immediately available funds. The terms of the revolving credit facility contain various representations, warranties, covenants and conditions, including the condition that NorthStar Realty’s obligation to advance proceeds to us is dependent upon NorthStar Realty and its affiliates having at least $100 million of either unrestricted cash and cash equivalents or amounts available under committed lines of credit, after taking into account the amount we seek to draw under the facility. As of December 31, 2014, we had no borrowings outstanding under the credit agreement.

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Healthcare Strategic Joint Venture

In January 2014, we entered into a long-term strategic partnership with James F. Flaherty III, former Chief Executive Officer of HCP, Inc., focused on expanding our healthcare business into a preeminent healthcare platform, or the Healthcare Strategic Partnership. In connection with the partnership, Mr. Flaherty oversees and seeks to grow both NorthStar Realty’s healthcare real estate portfolio and the portfolio of NorthStar Healthcare. In connection with entering into the partnership, NorthStar Realty granted Mr. Flaherty certain RSUs, which partially became our RSUs upon spin-off. The Healthcare Strategic Partnership is entitled to incentive fees ranging from 20% to 25% above certain hurdles for new and existing healthcare real estate investments held by NorthStar Realty and NorthStar Healthcare. The partnership will also be entitled to any incentive fees earned from NorthStar Healthcare or any future healthcare non-traded REITs sponsored by us, NorthStar Realty or any affiliates. For the year ended December 31, 2014, we did not earn any incentive fees related to the Healthcare Strategic Partnership. On February 2, 2015, in connection with the completion of NorthStar Healthcare’s initial primary offering, we issued 20,305 RSUs to Mr. Flaherty.

AHI Venture

In connection with the AHI Interest, AHI Newco, LLC, or AHI Ventures, a direct wholly-owned subsidiary of AHI, provides certain asset management, property management and other services to us to assist in managing the current and future healthcare assets (excluding any joint venture assets) of NorthStar Realty and other Sponsored Companies, including the assets formerly owned by Griffin-American and the assets by its former operating partnership, Griffin-American Healthcare REIT II Holdings, LP, or Griffin-America OP portfolio. AHI Ventures receives a base management fee of $0.6 million per year plus 0.50% of the equity invested by NorthStar Realty in future assets (excluding assets in the Griffin-American OP portfolio and other joint ventures) that AHI Ventures may manage. AHI Ventures would be entitled to additional base management fees should it manage assets on behalf of any other Managed Companies. AHI Ventures also intends to directly or indirectly sponsor, co-sponsor, form, register, market, advise, manage and/or operate investment vehicles that are intended to invest primarily in healthcare real estate assets. In addition, Mr. Flaherty acquired a 9% interest in AHI Ventures.

RXR Realty

In December 2013, NorthStar Realty entered into a strategic transaction with RXR Realty. The investment in RXR Realty includes an approximate 30% equity interest. NorthStar Realty’s equity interest in RXR Realty is structured so that we are entitled to certain fees in connection with RXR Realty’s investment management business. 

Recent Developments

Dividends

On February 25, 2015, we declared a dividend of $0.10 per share of common stock. The common stock dividend will be paid on March 13, 2015 to stockholders of record as of the close of business on March 9, 2015.

Island Interest

In January 2015, we acquired the Island Interest for $33 million in cash and $5 million of our common stock, subject to certain lock-up and vesting restrictions. Island is a leading, independent select service hotel management company and manages approximately 140 hotel properties representing $3.7 billion, of which 101 hotel properties are owned by NorthStar Realty.

Proposed Spin-off of European Real Estate Business

On February 26, 2015, NorthStar Realty announced that its board of directors unanimously approved the NRF Proposed European Spin. Currently, NorthStar Realty has acquired or committed to acquire $2 billion of European real estate (excluding European healthcare assets) comprised of 50 properties spanning across some of Europe’s top markets that will be contributed to NRE upon the completion of the NRF Proposed European Spin. We will manage NRE pursuant to a long-term management agreement, on substantially similar terms as our management agreement with NorthStar Realty. The NRF Proposed European Spin is expected to be completed in the second half of 2015.

Non-GAAP Financial Measure

We believe that CAD provides investors and management with a meaningful indicator of operating performance. Management also uses CAD, among other measures, to evaluate profitability. In addition, the incentive fees to which we are entitled pursuant to our management agreement with NorthStar Realty are determined using NorthStar Realty’s CAD as a performance metric. We believe that CAD is useful because it adjusts net income (loss) for a variety of non-cash, one-time and certain non-recurring items.

We calculate CAD by subtracting from or adding to net income (loss): equity-based compensation, depreciation related items, foreign currency gains (losses), straight-line rent, adjustments for joint ventures, deferred tax (benefit) expense and transaction

43

and other costs. In future periods, such adjustments may include amortization of deferred financing costs, impairment on goodwill and other intangible assets and other one-time events pursuant to changes in U.S. GAAP and certain other non-recurring items. These items, if applicable, include any adjustments for unconsolidated ventures. Management also believes that quarterly distributions are principally based on operating performance and our board of directors includes CAD as one of several metrics it reviews to determine quarterly distributions to stockholders.

CAD should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, our methodology for calculating CAD may differ from the methodologies used by other comparable companies when calculating the same or similar supplemental financial measures and may not be comparable with these companies.

The following table presents a reconciliation of CAD to net income (loss) for the three and six months ended December 31, 2014 (dollars in thousands):

	December 31, 2014
	Three Months Ended				Six Months Ended
Net income (loss)	$	30,908			$	49,652
Adjustments:
Equity-based compensation	21,364				37,905
Deferred tax (benefit) expense	(3,331		)		(3,331		)
Adjustment related to joint ventures (1)	1,040				1,040
Other	650			(2)	1,457			(3)
CAD	$	50,631			$	86,723

_______________

(1) Includes $0.3 million of equity-based compensation expense and $0.7 million of depreciation and amortization expense related to an unconsolidated venture.

(2) The three months ended December 31, 2014 includes $0.5 million of depreciation and amortization expense, $0.1 million of foreign currency related adjustments and $0.1 million of straight-line rental expense.

(3) The six months ended December 31, 2014 includes $0.9 million of depreciation and amortization expense, $0.4 million of foreign currency related adjustments and $0.2 million of straight-line rental income.

44

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk is primarily related to our role providing asset management and other services to our Managed Companies, both in the United States and internationally and its effect on the asset management, incentive and other fees we earn. Our exposure to market risk will increase as we expand into new asset classes and geographies, and as a result, we will seek to enter into strategic partnerships and joint ventures with third parties with expertise in commercial real estate or other sectors and markets to augment our business operations while at the same time benefiting from the fee streams generated by such strategic partnerships and joint ventures. Our asset management, incentive and other fees are primarily driven by the ability of our Managed Companies to grow by raising capital, which will in turn be driven by their investment activities, overall performance and various factors beyond our control, including but not limited to, monetary and fiscal policies, domestic and international economic conditions and political considerations. The effect of such risks on our asset management, incentive and other fee agreements vary based on the management contract with the respective Managed Company.

The NorthStar Realty management agreement consists of a base management fee which increases as equity is raised and an incentive fee which is based on the performance of NorthStar Realty using CAD as an operating metric. The base management fee currently represents the majority of the fee. The ability of NorthStar Realty to grow is dependent on access to the capital markets to raise equity and/or debt capital. To the extent that general capital markets activity slows down or comes to a halt (as was the case during the recession that began in 2008), NorthStar Realty may have difficulty growing. This risk is based on micro and macro-economic market factors including but not limited to disruptions in the equity and debt capital markets and institutional lending market, including the lack of access to capital or prohibitively high costs of obtaining or replacing capital. Despite recent improvements, the markets could suffer another severe downturn and another liquidity crisis could emerge.

Our Sponsored Companies’ ability to sell equity is highly dependent upon the market and the efforts of our broker-dealer, NorthStar Securities. The non-traded industry has experienced rapid growth, is highly competitive and has faced increased scrutiny in recent years. The number of entrants in the non-traded market space has grown significantly over the last several years and as a result, we are subject to significant competition from these and other companies seeking to raise capital in this market. Additionally, as a result of increased scrutiny and accompanying media attention, our non-traded companies may face increased difficulties in raising capital in their offerings due to market perception. This market perception may affect our ability to raise capital for our non-traded companies and make investments on their behalf, both of which could materially adversely affect our asset management, incentive and other fee income and the net commission income generated by our broker-dealer.

To a lesser extent, we are indirectly exposed to credit risk through the performance of our Managed Companies. Credit risk relates to the ability of the individual investments to perform, for instance the ability for the borrowers’ underlying debt or securities investments to make required interest and principal payments on scheduled due dates. We seek to manage credit risk through a comprehensive credit analysis prior to making an investment, actively monitoring our portfolio and the underlying credit quality, including subordination and diversification of our portfolio. Our analysis is based on a broad range of real estate, financial, economic and borrower-related factors which we believe are critical to the evaluation of credit risk inherent in a transaction.

Foreign Currency Exchange Rate Risk

We are subject to risks related to changes in foreign currency exchange rates as a result of our international operations. As a result, changes in exchange rates may either positively or negatively affect our consolidated revenues and expenses (as expressed in U.S. dollars). We may use several strategies to mitigate our exposure through a combination of foreign currency derivative instruments and use non-U.S. denominated borrowings, where appropriate.

Non-U.S. Operations

We conduct business internationally, with a current focus on Europe. We currently have foreign offices in the United Kingdom, Luxembourg and Bermuda. We are subject to social instability, changes in governmental policies or policies of central banks, expropriation, nationalization, unfavorable political and diplomatic developments and changes in legislation relating to non-U.S. ownership. As we continue to expand internationally, we will continue to focus on monitoring and managing these risk factors as they relate to specific international investments.

45

Item 8.   Financial Statements and Supplementary Data

The combined consolidated financial statements of NorthStar Asset Management Group Inc. and the notes related to the foregoing combined consolidated financial statements, together with the independent registered public accounting firm’s reports thereon are included in this Item 8.

Index to Consolidated Financial Statements

	Page
Reports of Independent Registered Public Accounting Firm	47
Combined Consolidated Balance Sheets as of December 31, 2014 and 2013	49
Combined Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012	50
Combined Consolidated Statements of Equity for the years ended December 31, 2014, 2013 and 2012	51
Combined Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012	52
Notes to Combined Consolidated Financial Statements	53

46

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders of NorthStar Asset Management Group Inc.

We have audited the accompanying combined consolidated balance sheets of NorthStar Asset Management Group Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2014 and 2013, and the related combined consolidated statements of operations, equity, and cash flows for each of the three years in the period ended December 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined consolidated financial statements referred to above present fairly, in all material respects, the financial position of NorthStar Asset Management Group Inc. and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2014, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 2, 2015 expressed an unqualified opinion.

/s/ GRANT THORNTON LLP

New York, New York

March 2, 2015

47

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders of NorthStar Asset Management Group Inc.

We have audited the internal control over financial reporting of NorthStar Asset Management Group Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2014, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in the 2013 Internal Control-Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the combined consolidated financial statements of the Company as of and for the year ended December 31, 2014, and our report dated March 2, 2015 expressed an unqualified opinion on those financial statements.

/s/ GRANT THORNTON LLP

New York, New York

March 2, 2015

48

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

COMBINED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

	December 31,
	2014			2013
Assets
Cash	$	109,199		$	7,537
Restricted cash	3,190			—
Receivables, related parties	77,626			23,187
Investments in unconsolidated ventures	54,480			—
Other assets	22,492			985
Total assets	$	266,987		$	31,709
Liabilities
Accounts payable and accrued expenses	$	53,075		$	1,373
Commission payable	12,164			1,968
Total liabilities	65,239			3,341
Commitments and contingencies
Equity
Performance common stock, $0.01 par value, 500,000,000 shares authorized; 3,738,314 shares and no shares issued and outstanding as of December 31, 2014 and 2013, respectively	37			—
Preferred stock, $0.01 par value, 100,000,000 shares authorized, no shares issued and outstanding as of December 31, 2014 and 2013	—			—
Common stock, $0.01 par value, 1,000,000,000 and 3,000 shares authorized, 192,947,856 and 1,000 shares issued and outstanding as of December 31, 2014 and 2013, respectively	1,930			—
Additional paid-in capital	276,874			105,498
Retained earnings (accumulated deficit)	(77,093		)	(77,130		)
Total equity	201,748			28,368
Total liabilities and equity	$	266,987		$	31,709

Refer to accompanying notes to combined consolidated financial statements.

49

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Share and Per Share Data)

	Years Ended December 31,
	2014(1)			2013			2012
Revenues
Asset management and other fees, related parties (2)	$	147,738		$	26,633		$	8,112
Selling commission and dealer manager fees, related parties	110,563			62,572			42,385
Other income	841			733			264
Total revenues	259,142			89,938			50,761
Expenses
Commission expense (refer to Note 3)	104,428			57,325			38,506
Transaction costs	24,476			1,590			—
Other expense	1,905			145			290
General and administrative expenses
Salaries and related expense	37,205			21,344			20,217
Equity-based compensation expense	51,650			5,177			4,224
Other general and administrative expenses	17,717			6,352			4,846
Total general and administrative expenses	106,572			32,873			29,287
Total expenses	237,381			91,933			68,083
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax (benefit) expense	21,761			(1,995		)	(17,322		)
Equity in earnings (losses) of unconsolidated ventures	(1,039		)	—			—
Income (loss) before income tax (benefit) expense	20,722			(1,995		)	(17,322		)
Current income tax (benefit) expense	4,953			—			—
Deferred income tax (benefit) expense	(3,331		)	—			—
Net income (loss)	$	19,100		$	(1,995	)	$	(17,322	)
Earnings (loss) per share:
Basic	$	0.10		$	(0.01	)	$	(0.09	)
Diluted	$	0.10		$	(0.01	)	$	(0.09	)
Weighted average number of shares:
Basic	187,852,497			187,815,614			187,815,614
Diluted	194,408,211			187,815,614			187,815,614

______________________

(1) The combined consolidated financial statements for the year ended December 31, 2014 include: (i) the Company’s results of operations for the six months ended December 31, 2014, which represents the Company’s results of operations following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) the Company’s results of operations for the six months ended June 30, 2014 which represents a carve-out of revenues and expenses attributable to the Company related to NorthStar Realty’s historical asset management business. The Company historical financial information for the years ended December 31, 2013 and 2012 was prepared on the same basis as the six months ended June 30, 2014. As a result, results of operations for the year ended December 31, 2014 may not be comparative to the Company’s results of operations reported for the prior periods presented.

(2) The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 1).

Refer to accompanying notes to combined consolidated financial statements.

50

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

COMBINED CONSOLIDATED STATEMENTS OF EQUITY

(Dollars and Shares in Thousands)

	Performance Stock			Common Stock					Additional Paid-in Capital			Retained Earnings (Accumulated  Deficit)			Total Equity
	Shares	Amount		Shares		Amount
Balance as of December 31, 2011	—	$	—	—		$	—		$	64,626		$	(57,813	)	$	6,813
NorthStar Realty contribution (refer to Note 1)	—	—		—		—			28,384			—			28,384
Net income (loss)	—	—		—		—			—			(17,322		)	(17,322		)
Balance as of December 31, 2012	—	—		—		—			93,010			(75,135		)	17,875
NorthStar Realty contribution (refer to Note 1)	—	—		—		—			12,488			—			12,488
Net income (loss)	—	—		—		—			—			(1,995		)	(1,995		)
Balance as of December 31, 2013	—	—		—		—			105,498			(77,130		)	28,368
Capital contribution of NorthStar Realty	—	—		188,597		1,886			119,323			—			121,209
Amortization of equity-based compensation	—	—		—		—			51,519			—			51,519
Issuance of common stock to directors	—	—		38		—			—			—			—
Issuance of common stock to transactions (refer to Note 4)	—	—		956		10			10,300			—			10,310
Issuance of common stock relating to equity-based compensation, net of forfeitures	—	—		827		8			(8		)	—			—
Settlement of RSUs to common stock (refer to Note 7)	—	—		3,030		31			(31		)	—			—
Settlement of RSUs to performance common stock (refer to Note 8)	3,738	37		—		—			(37		)	—			—
Dividends on common stock, Deferred LTIPs and RSUs	—	—		—		—			—			(19,063		)	(19,063		)
Tax withholding related to vesting of RSUs	—	—		(500	)	(5		)	(11,289		)	—			(11,294		)
Excess tax benefit from equity-based compensation	—	—		—		—			1,599			—			1,599
Net income (loss)	—	—		—		—			—			19,100			19,100
Balance as of December 31, 2014	3,738	$	37	192,948		$	1,930		$	276,874		$	(77,093	)	$	201,748

Refer to accompanying notes to combined consolidated financial statements.

51

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

	Years Ended December 31,
	2014			2013			2012
Cash flows from operating activities:
Net income (loss)	$	19,100		$	(1,995	)	$	(17,322	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in (earnings) losses of unconsolidated ventures	1,039			—			—
Accrued transaction costs	5,205			—			—
Depreciation expense	893			74			65
Amortization of equity-based compensation	51,519			5,177			4,224
Unrealized foreign currency (gain) loss	405			—			—
Straight line rent, net	154			—			—
Deferred income tax, net	3,095			—			—
Change in assets and liabilities:
Restricted cash	(3,190		)	—			—
Receivables, related parties	(54,439		)	(9,976		)	(7,402		)
Other assets	(17,602		)	(657		)	(8		)
Accounts payable and accrued expenses	30,341			(954		)	880
Commission payable	10,196			1,968			—
Net cash provided by (used in) operating activities	46,716			(6,363		)	(19,563		)
Cash flows from investing activities:
Investments in unconsolidated ventures	(43,582		)	—			—
Net cash provided by (used in) investing activities	(43,582		)	—			—
Cash flows from financing activities:
Contribution from NorthStar Realty (refer to Note 1)	116,397			7,257			24,159
Excess tax benefit from equity-based compensation	1,599			—			—
Dividends	(19,063		)	—			—
Net cash provided by (used in) financing activities	98,933			7,257			24,159
Effect of foreign exchange rate changes on cash	(405		)	—			—
Net increase (decrease) in cash	101,662			894			4,596
Cash - beginning of period	7,537			6,643			2,047
Cash - end of period	$	109,199		$	7,537		$	6,643
Supplemental disclosure of non-cash investing and financing activities:
Deemed capital contribution from NorthStar Realty (refer to Note 1)	$	4,811		$	—		$	—
Common stock related to transactions	10,310			—			—
Accrued transaction costs relating to investments in unconsolidated ventures	1,538			—			—
Tax effect related to the vesting of RSUs	11,294			—			—
Equity incentive plan	88			—			—
Supplemental disclosures of cash flow information:
Payment of income tax	$	6,700		$	—		$	—

Refer to accompanying notes to combined consolidated financial statements.

52

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

1. Business and Organization

NorthStar Asset Management Group Inc. (“NSAM” or the “Company”) is a global asset management firm focused on strategically managing real estate and other investment platforms in the United States and internationally. The Company commenced operations on July 1, 2014, upon the spin-off by NorthStar Realty Finance Corp. (“NorthStar Realty”) of its spin-off of its asset management business into a separate publicly-traded company, NSAM, a Delaware corporation. The spin-off was in the form of a tax-free distribution to NorthStar Realty’s common stockholders where each NorthStar Realty common stockholder received shares of the Company’s common stock on a one-for-one basis. At the same time, NorthStar Realty became externally managed by an affiliate of the Company through a management contract with an initial term of 20 years. NorthStar Realty continues to operate its commercial real estate debt origination business. Most of NorthStar Realty’s employees at the time of the spin-off became employees of the Company.

Certain of the Company’s affiliates of the Company also manage NorthStar Realty’s previously sponsored non-traded real estate investment trusts (“REITs”), as well as new non-traded companies and any future sponsored company (referred to as the “Sponsored Companies” and together with NorthStar Realty, referred to as the “Managed Companies”).

The Company is organized to provide asset management and other services to the Managed Companies or any other companies it may sponsor in the future, both in the United States and internationally. The Managed Companies have historically invested in the commercial real estate (“CRE”) industry. The Company seeks to expand the scope of its asset management business beyond real estate into new asset classes and geographies by organically creating and managing additional investment vehicles or through acquisitions, strategic partnerships and joint ventures. To date, the Company has acquired an approximate 44% interest in American Healthcare Investors LLC (the “AHI Interest”) (refer to Note 5), an approximate 45% interest in Island Hospitality Management Inc. (the “Island Interest”) (refer to Note 12) and an approximate 50% interest in Distribution Finance Corporation (the “Distribution Finance Interest”).

The Company earns asset management, incentive and other fees, directly or indirectly, pursuant to management and other contracts and investments in asset managers. In addition, the Company owns NorthStar Realty Securities, LLC (“NorthStar Securities”), a captive broker-dealer platform registered with the Securities and Exchange Commission (“SEC”) which raises capital in the retail market for the Sponsored Companies.

References to the historical asset management business of NorthStar Realty including assets, liabilities and results of operations relate to managing the Sponsored Companies, owning NorthStar Securities and operating its special servicing business and are generally referred to as those of the Company.

In connection with the Distribution, NorthStar Realty contributed 100% of the limited liability company interests in certain of NorthStar Realty’s subsidiaries and $100.0 million in cash for the initial capitalization, plus approximately $17.9 million in cash for any expenses that the Company incurred in connection with the spin-off. Any additional expenses incurred in connection with the spin-off will be paid by NorthStar Realty.

Proposed Spin-off of European Real Estate Business

On February 26, 2015, NorthStar Realty announced that its board of directors unanimously approved a plan to spin-off its European real estate business (the “NRF Proposed European Spin”) into a newly-formed publicly-traded REIT, NorthStar Realty Europe Corp. (“NRE”) expected to be listed on the New York Stock Exchange (“NYSE”) and potentially in Europe. Currently, NorthStar Realty has acquired or committed to acquire $2 billion of European real estate (excluding European healthcare assets) comprised of 50 properties spanning across some of Europe’s top markets that will be contributed to NRE upon the completion of the NRF Proposed European Spin. The Company will manage NRE pursuant to a long-term management agreement, on substantially similar terms as the Company’s management agreement with NorthStar Realty. The NRF Proposed European Spin is expected to be completed in the second half of 2015.

2. Summary of Significant Accounting Policies

Basis of Accounting

The accompanying combined consolidated financial statements and related notes of the Company are presented on a carve-out basis for the period prior to June 30, 2014 and have been prepared from the historical consolidated balance sheets, statements of operations and cash flow attributed to the historical asset management business of NorthStar Realty and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

The combined consolidated financial statements for the six months ended December 31, 2014 represent the Company subsequent to the spin-off of NorthStar Realty’s historical asset management business of managing the Sponsored Companies,

owning NorthStar Securities and operating its special servicing business. In connection with the spin-off, most of NorthStar Realty’s employees at the time of the spin-off became employees of the Company except for executive officers, employees engaged in NorthStar Realty’s loan origination business at the time of the spin-off and certain other employees that became co-employees of both the Company and NorthStar Realty. Therefore, subsequent to June 30, 2014, the Company generally incurs substantially all employee-related cash costs.

Periods prior to June 30, 2014 present a carve-out of NorthStar Realty’s historical financial information, including revenues and expenses allocated to the Company, related to NorthStar Realty’s historical asset management business. Expenses also included an allocation of indirect expenses from NorthStar Realty, including salaries, equity-based compensation and other general and administrative expenses (primarily occupancy and other cost) based on an estimate had NorthStar Realty’s historical asset management business been run as an independent entity. This allocation method was principally based on relative headcount and management’s knowledge of NorthStar Realty’s operations. Additionally, periods prior to June 30, 2014 did not reflect the management agreement the Company entered into with NorthStar Realty effective July 1, 2014.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries.

Variable Interest Entities

A variable interest entity (“VIE”) is an entity that lacks one or more of the characteristics of a voting interest entity. A VIE is defined as an entity in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The determination of whether an entity is a VIE includes both a qualitative and quantitative analysis. The Company bases its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and relevant financial agreements and the quantitative analysis on the forecasted cash flow of the entity.

The Company reassesses its initial evaluation of an entity as a VIE upon the occurrence of certain reconsideration events.

A VIE must be consolidated only by its primary beneficiary, which is defined as the party who, along with its affiliates and agents has both the: (i) power to direct the activities that most significantly impact the VIE’s economic performance; and (ii) obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. The Company determines whether it is the primary beneficiary of a VIE by considering qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of its investment; the obligation or likelihood for the Company or other interests to provide financial support; consideration of the VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders and the similarity with and significance to the business activities of the Company and the other interests. The Company reassesses its determination of whether it is the primary beneficiary of a VIE each reporting period. Significant judgments related to these determinations include estimates about the current and future fair value and performance of investments held by these VIEs and general market conditions.

The Company evaluates the Managed Companies, investments in unconsolidated ventures and securitization financing transactions to which the Company is the special servicer to determine whether they are a VIE.

Voting Interest Entities

A voting interest entity is an entity in which the total equity investment at risk is sufficient to enable it to finance its activities independently and the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the Company has a majority voting interest in a voting interest entity, the entity will generally be consolidated. The Company does not consolidate a voting interest entity if there are substantive participating rights by other parties and/or kick-out rights by a single party.

The Company performs on-going reassessments of whether entities previously evaluated under the voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework.

Investments in Unconsolidated Ventures

Non-controlling, unconsolidated ownership interests in an entity may be accounted for using the equity method, at fair value or the cost method.

53

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under the equity method, the investment is adjusted each period for capital contributions and distributions and its share of the entity’s net income (loss). Capital contributions, distributions and net income (loss) of such entities are recorded in accordance with the terms of the governing documents. An allocation of net income (loss) may differ from the stated ownership percentage interest in such entity as a result of preferred returns and allocation formulas, if any, as described in such governing documents.

The Company may account for an investment in an unconsolidated entity at fair value by electing the fair value option. The Company records the change in fair value for its share of the projected future cash flow of such investments from one period to another in equity in earnings (losses) from unconsolidated ventures in the consolidated statements of operations. Any change in fair value attributed to market related assumptions is considered unrealized gain (loss).

The Company may account for an investment that does not qualify for equity method accounting or for which the fair value option was not elected using the cost method if the Company determines the investment in the unconsolidated entity is insignificant. Under the cost method, equity in earnings is recorded as dividends are received to the extent they are not considered a return of capital, which is recorded as a reduction of cost of the investment.

Non-controlling Interests

A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to the Company. A non-controlling interest is required to be presented as a separate component of equity on the consolidated balance sheets and presented separately as net income (loss) and other comprehensive income (loss) (“OCI”) attributable to controlling and non-controlling interests. An allocation to a non-controlling interest may differ from the stated ownership percentage interest in such entities as a result of preferred returns and allocation formulas, if any, as described in such governing documents.

Furniture, fixtures and equipment

Furniture, fixtures and equipment is carried at historical cost less accumulated depreciation. Ordinary repairs and maintenance are expensed as incurred. Major replacements and betterments which improve or extend the life of assets are capitalized and depreciated over their useful life. Furniture, fixtures and equipment is depreciated using the straight-line method over the estimated useful lives of assets.

Estimates

The preparation of combined consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that could affect the amounts reported in the combined consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates and assumptions.

Reclassifications

Certain prior period amounts have been reclassified in the combined consolidated financial statements to conform to current period presentation.

Cash

Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250,000 per institution. The Company mitigates credit risk by placing cash with major financial institutions. To date, the Company has not experienced any losses on cash.

Restricted Cash

Restricted cash represents cash held by the Company’s foreign subsidiaries due to certain regulatory capital requirements.

54

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other Assets and Accounts Payable and Accrued Expenses

The following table presents a summary of other assets and accounts payable and accrued expenses as of December 31, 2014 and 2013 (dollars in thousands):

	December 31,
	2014(1)		2013
Other assets:
Prepaid income taxes	$	6,656	$	—
Furniture, fixtures and equipment, net (2)	4,629		295
Deferred tax asset	3,155		—
Prepaid expenses	2,279		547
Security deposits	2,232		34
Due from participating broker-dealers	1,965		—
Pending deal costs	1,045		—
Other	531		109
Total	$	22,492	$	985

__________________

(1) Includes fixed assets, tenant improvements and deposits related to leased offices that were transferred to the Company at the time of the spin-off on June 30, 2014.

(2) The Company recorded depreciation expense of $0.9 million and $0.1 million for the years ended December 31, 2014 and 2013, respectively.

	December 31,
	2014		2013
Accounts payable and accrued expenses:
Accrued bonus	$	25,911	$	678
Accrued tax withholding (1)	11,938		—
Accrued transaction expense	5,205		—
Income tax payable	3,118		—
Accrued payroll	1,400		39
Accrued professional fees	740		54
Deferred tax liability	60		—
Other	4,703		602
Total	$	53,075	$	1,373

__________________

(1) Represents withholding tax related to vesting and net settlement of restricted stock units.

Revenue Recognition

Asset Management and Other Fees

Asset management and other fees include asset management, incentive and other fees, such as acquisition and disposition fees, earned from the Managed Companies. Base asset management and other fees are recognized based on contractual terms specified in the underlying governing documents in the periods during which the related services are performed and the amounts have been contractually earned. Incentive fees and payments are recognized subject to the achievement of return hurdles in accordance with the respective terms set forth in the governing documents of the Managed Companies.

Selling Commission and Dealer Manager Fees and Commission Expense

Selling commission and dealer manager fees represent income earned by the Company for selling equity in the Sponsored Companies through NorthStar Securities. Selling commission and dealer manager fees and commission expense are accrued on a trade date basis. As of December 31, 2014, commission payable of $12.2 million includes $3.7 million due to NorthStar Securities employees.

Allowance for Doubtful Accounts

An allowance for a doubtful account is established when, in the opinion of the Company, a full recovery of a receivable becomes doubtful. A receivable is written off when it is no longer collectible and/or legally discharged. As of December 31, 2014 and 2013, there was no allowance for doubtful accounts.

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NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Equity-Based Compensation

The Company accounts for equity-based compensation awards, including awards granted to co-employees, using the fair value method, which requires an estimate of fair value of the award. Awards may be based on a variety of measures such as time, performance, market or a combination thereof. For time-based awards, fair value is determined based on the stock price on the grant date. The Company recognizes compensation expense over the vesting period on a straight-line basis. For performance-based awards, fair value is determined based on the stock price at the date of grant and an estimate of the probable achievement of such measure. The Company recognizes compensation expense over the requisite service period, net of estimated forfeitures, using the accelerated attribution expense method. For market-based measures, fair value is determined using a Monte Carlo analysis under a risk-neutral premise using a risk-free interest rate. The Company recognizes compensation expense over the requisite service period, net of estimated forfeitures, on a straight-line basis.

For awards with a combination of performance or market measures, the Company estimates the fair value as if it were two separate awards. First, the Company estimates the probability of achieving the performance measure. If it is not probable the performance condition will be met, the Company records the compensation expense based on the fair value of the market measure, as described above. This expense is recorded even if the market-based measure is never met. If the performance-based measure is subsequently estimated to be achieved, the Company records compensation expense based on the performance-based measure. The Company would then record a cumulative catch-up adjustment for any additional compensation expense.

Equity-based compensation issued to non-employees is accounted for using the fair value of the award at the earlier of the performance commitment date or performance completion date. The awards are remeasured every quarter based on the stock price as of the end of the reporting period until such awards vest, if any.

Foreign Currency

Assets and liabilities denominated in non-U.S. dollar currencies are remeasured at the exchange rate prevailing on the reporting date and revenues and expenses are remeasured at the average exchange rate for the period. The Company’s functional currency of its non-U.S. denominated assets and liabilities is the U.S. dollar. Therefore, any gains or losses from the remeasurement of foreign currency to U.S. dollars are recognized in earnings.

Comprehensive Income (Loss)

The Company had no items of other comprehensive income (loss), so its comprehensive (loss) is the same as the net (loss) for all periods presented.

Earnings Per Share

The Company’s basic earnings per share (“EPS”) is calculated using the two-class method for each class of common stock and participating security as if all earnings for the years ended had been distributed by dividing net income (loss) attributed to common stockholders by the weighted average number of common stock outstanding. Under the two-class method, the net income is first reduced for distributions declared on all classes of securities to arrive at undistributed earnings. Under the two-class method, the net loss is reduced for distributions declared on participating securities only if the security has the right to participate in the earnings of the entity and an objectively determinable contractual obligation to share in net losses of the entity. Diluted EPS includes restricted stock and the potential dilution that could occur if outstanding restricted stock units (“RSUs”) or other contracts to issue common stock, assuming performance hurdles have been met, were converted to common stock, including Deferred LTIP Units (refer to Note 7), where such exercise or conversion would result in a lower EPS. The dilutive effect of such RSUs and Deferred LTIP Units is calculated assuming all units are converted to common stock.

Income Taxes

Certain subsidiaries of the Company are subject to taxation by federal, state and foreign authorities for the periods presented. The Company and its U.S. subsidiaries will file a consolidated federal income tax return. Income taxes are accounted for by the asset/liability approach in accordance with U.S. GAAP. Deferred taxes, if any, represent the expected future tax consequences when the reported amounts of assets and liabilities are recovered or paid. Such amounts arise from differences between the financial reporting and tax bases of assets and liabilities and are adjusted for changes in tax laws and tax rates in the period which such changes are enacted. A provision for income tax represents the total of income taxes paid or payable for the current period, plus the change in deferred taxes.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an accounting update requiring a company to recognize as revenue the amount of consideration it expects to be entitled to in connection with the transfer of promised goods

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NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

or services to customers.  When it becomes effective on January 1, 2017, the accounting standard update will replace most of the existing revenue recognition guidance currently promulgated by U.S. GAAP.  The Company is in the process of evaluating the impact, if any, of the update on its consolidated financial statements and related disclosures.

In February 2015, the FASB issued updated guidance that changes the rules regarding consolidation. The pronouncement eliminates specialized guidance for limited partnerships and similar legal entities and removes the indefinite deferral for certain investment funds. The new guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, with early adoption permitted. The Company is currently assessing the impact of the guidance on the Company’s consolidated financial position, results of operations and financial statement disclosures.

3. Management Agreements and Managed Companies

NorthStar Realty

Management Agreement

Upon completion of the Distribution, the Company entered into a management agreement with NorthStar Realty for an initial term of 20 years, which will be automatically renewed for additional 20-year terms each anniversary thereafter unless earlier terminated. As asset manager, the Company is responsible for NorthStar Realty’s day-to-day operations, subject to the supervision of the NorthStar Realty board of directors. Through its global network of subsidiaries and branch offices, the Company performs services and activities relating to, among other things, investments and financing, portfolio management and other administrative services, such as accounting and investor relations, to NorthStar Realty and its subsidiaries other than NorthStar Realty’s commercial real estate loan origination business. The management agreement with NorthStar Realty provides for a base management and incentive fee.

For the six months ended December 31, 2014, the Company earned $79.4 million related to the base management fee, $41.4 million of which is recorded in receivable, related parties on the combined consolidated balance sheets. The management contract with NorthStar Realty commenced on July 1, 2014, and as such, there were no management fees earned for the six months ended June 30, 2014. The base management fee from NorthStar Realty will increase subsequent to December 31, 2014, by an amount equal to 1.5% per annum of the sum of:

• cumulative net proceeds of all future common equity and preferred equity issued by NorthStar Realty;

• equity issued by NorthStar Realty in exchange or conversion of exchangeable senior notes based on the stock price at the date of issuance;

• any other issuances by NorthStar Realty of common equity, preferred equity or other forms of equity, including but not limited to limited partnership interests in an operating partnership (“LTIP”) units (excluding equity-based compensation, but including issuances related to an acquisition, investment, joint venture or partnership); and

• cumulative cash available for distribution (“CAD”) of NorthStar Realty in excess of cumulative distributions paid on common stock, LTIP units or other equity awards beginning the first full calendar quarter after the spin-off.

Additionally, NorthStar Realty’s equity interest in RXR Realty LLC (“RXR Realty”) and Aerium Group is structured so that the Company is entitled to the portion of distributable cash flow from each investment in excess of the $10.0 million minimum annual base amount.

For the six months ended December 31, 2014, the Company earned $3.3 million related to the incentive management fee, $2.0 million of which is recorded in receivable, related parties on the combined consolidated balance sheets. The incentive management fee is calculated and payable quarterly in arrears in cash, equal to:

• the product of: (a) 15.0% and (b) CAD of NorthStar Realty before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, when such amount is in excess of $0.39 per share but less than $0.45 per share; plus

• the product of: (a) 25.0% and (b) CAD of NorthStar Realty before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, when such amount is equal to or in excess of $0.45 per share;

• multiplied by the weighted average shares outstanding of NorthStar Realty for the calendar quarter.

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In addition, the Company may also earn an incentive fee from NorthStar Realty’s healthcare investments in connection with the Company’s Healthcare Strategic Partnership (refer to Note 5).

Weighted average shares represents the number of shares of NorthStar Realty’s common stock, LTIP units or other equity-based awards (with some exclusions), outstanding on a daily weighted average basis. With respect to the base management fee, all equity issuances are allocated on a daily weighted average basis during the fiscal quarter of issuances.

Furthermore, if NorthStar Realty were to spin-off any asset or business in the future, such as the recently announced NRF Proposed European Spin, such entity would be managed by the Company on terms substantially similar to those set forth in the management agreement between the Company and NorthStar Realty. The management agreement further provides that the aggregate base management fee in place immediately after any future spin-off will not be less than the aggregate base management fee in place at NorthStar Realty immediately prior to such spin-off.

Payment of Costs and Expenses and Expense Allocation

NorthStar Realty is responsible for all of its direct costs and expenses and will reimburse the Company for costs and expenses incurred by the Company on its behalf. In addition to NorthStar Realty’s costs and expenses, following the spin-off, NorthStar Realty is obligated to reimburse the Company for additional costs and expenses incurred by the Company for an amount not to exceed the following: (i) 20.0% of the combined total of: (a) NorthStar Realty’s general and administrative expenses as reported in its consolidated financial statements excluding: (1) equity-based compensation expense, (2) non-recurring items, (3) fees payable to the Company under the terms of the management agreement and (4) any allocation of expenses from NorthStar Realty (“NorthStar Realty G&A”); and (b) the Company’s general and administrative expenses as reported in its combined consolidated financial statements, excluding equity-based compensation expense and adding back any costs or expenses allocated to any of the Managed Companies, less (ii) the NorthStar Realty G&A. For the six months ended December 31, 2014, the Company allocated $5.2 million to NorthStar Realty, of which $4.0 million is recorded in receivables, related parties in the combined consolidated balance sheets.

Sponsored Companies

The following table presents a summary of the fee arrangements with the current Sponsored Companies:

	NorthStar	NorthStar	NorthStar	NorthStar/RXR
	Income	Healthcare	Income II	New York Metro(9)
Offering amount(1)	$1.1 billion	$1.8 billion(8)	$1.65 billion	$2.0 billion
Total raised through February 24, 2015 (2)	$1.2 billion	$1.1 billion	$385 million	(10)
Primary strategy	CRE Debt	Healthcare Equity and Debt	CRE Debt	New York City CRE Equity and Debt
Primary offering period	Completed July 2013	Ends February 2017(8)	Ends May 2015(11)	Ends February 2017(11)
Asset Management and Other Fees:
Asset management fees (3)	1.25% of assets	1.00% of assets	1.25% of assets	1.25% of assets
Acquisition fees (4)	1.00% of investment	2.25% for real estate properties 1.00% of other investments	1.00% of investment	2.25% for real estate properties 1.00% of other investments
Disposition fees (5)	1.00% of sales price	2.00% for real estate properties 1.00% of sales price for debt investments	1.00% of sales price	2.00% for real estate properties 1.00% of sales price for debt investments
Incentive payments (6)	15.00% of net cash flows after an 8.00% return	15.00% of net cash flows after a 6.75% return(7)	15.00% of net cash flows after a 7.00% return	15.00% of net cash flows after a 6.00% return

__________________

(1) Represents amount of shares registered to offer pursuant to each Sponsored Company’s public offering and includes the follow-on public offering of up to $700 million for NorthStar Healthcare.

(2) Includes capital raised through the dividend reinvestment plan.

(3) Assets represent principal amount funded or allocated for debt investments originated or acquired and the cost of all other investments, including expenses and any financing attributable to such investments, less any principal received on debt and securities investments (or the Company’s proportionate share thereof in the case of an investment made in a joint venture).

(4) Calculated based on the amount funded or allocated by the Sponsored Companies to originate or acquire investments, including acquisition expenses and any financing attributable to such investments (or the proportionate share thereof in the case of an equity investment made through a joint venture).

(5) Calculated based on contractual sales price of each investment sold.

(6) The Company is entitled to receive distributions equal to 15% of net cash flow of the respective Sponsored Company, whether from continuing operations, repayment of loans, disposition of assets or otherwise, but only after stockholders have received, in the aggregate, cumulative distributions

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

equal to their invested capital plus the respective cumulative, non-compounded annual pre-tax return (as noted in the table above) on such invested capital.

(7) The Healthcare Strategic Partnership is entitled to the incentive fees earned from managing NorthStar Healthcare, of which the Company earn its proportionate interest (refer to Note 5).

(8) NorthStar Healthcare successfully completed its public offering on February 2, 2015 by raising $1.1 billion in capital. The Company began raising capital for NorthStar Healthcare’s follow-on public offering at the end of February 2015.

(9) Any asset management and other fees incurred by NorthStar/RXR New York Metro will be shared between the Company and RXR Realty as co-sponsors.

(10) The Company expects to begin raising capital for NorthStar/RXR New York Metro in 2015.

(11) Offering period subject to extension as determined by the board of directors of each company.

For the years endedDecember 31, 2014, 2013 and 2012, the Company earned $65.0 million, $26.6 million and $8.1 million, respectively, of asset management and other fees from the Sponsored Companies.

In addition to the Sponsored Companies above, NorthStar Corporate confidentially submitted its registration statement on Form N-2 to the SEC in December 2014. NorthStar Corporate seeks to raise up to $1.0 billion in a public offering of common stock.  NorthStar Corporate is structured as a non-diversified, closed-end management investment company that intends to elect to be regulated as a BDC under the Investment Company Act of 1940, as amended.  NorthStar Corporate intends to engage OZ Institutional Credit Management LP (“OZ Credit Management”) an affiliate of Och-Ziff Capital Management Group, LLC (“Och-Ziff”), an alternative asset manager, to serve as the sub-advisor to manage NorthStar Corporate’s investments and oversee operations. Any asset management and other fees incurred by NorthStar Corporate will be shared between the Company and OZ Credit Management as co-sponsors. NorthStar Corporate intends to invest in senior and subordinate loans to middle-market companies.

Pursuant to each of the advisory agreements with the Company’s current Sponsored Companies, the Company may determine, in its sole discretion, to defer or waive, in whole or in part, certain asset management and other fees incurred. In considering whether to defer or waive any such fees, the Company evaluates the specific facts and circumstances surrounding the incurrence of a particular fee and makes its decision on a case by case basis.

Distribution Support

NorthStar Realty committed to invest up to $10.0 million in each of the Sponsored Companies that are in their offering stage. In addition, consistent with its past practices, NorthStar Realty will commit up to $10.0 million for distribution support in any future non-traded sponsored company that the Company sponsors, up to a total of five new companies per year.

The distribution support agreement related to NorthStar/RXR New York Metro is an obligation of both NorthStar Realty and RXR Realty, where each agreed to purchase up to an aggregate of $10.0 million in Class A common stock during the two-year period following commencement of the offering, with NorthStar Realty and RXR Realty agreeing to purchase 75% and 25% of any shares purchased, respectively.

Payment of Costs and Expenses and Expense Allocation

In addition, the Company is entitled to certain expense allocations for costs paid on behalf of its Sponsored Companies which include: (i) reimbursement for organization and offering costs such as professional fees and other costs associated with the formation and offering of the Sponsored Company; and (ii) reimbursement for direct and indirect operating costs such as certain salaries, equity-based compensation and professional and other costs associated with managing the operations of the Sponsored Company. The following table presents a summary of the expense arrangements with the current Sponsored Companies:

	NorthStar Income	NorthStar Healthcare	NorthStar Income II	NorthStar/RXR New York Metro
Organization and offering costs (1)	$11.0 million (2)	$22.5 million, or 1.5% of the proceeds expected to be raised from the offering  (4)	$24.8 million, or 1.5% of the proceeds expected to be raised from the offering	$30.0 million, or 1.5% of the proceeds expected to be raised from the offering
Operating costs (3)	Greater of 2.0% of its average invested assets or 25.0% of its net income	Greater of 2.0% of its average invested assets or 25.0% of its net income	Greater of 2.0% of its average invested assets or 25.0% of its net income	Greater of 2.0% of its average invested assets or 25.0% of its net income

__________________

(1) Represents reimbursement for organization and offering costs paid on behalf of the Sponsored Companies in connection with their respective offerings. The Company is facilitating the payment of organization and offering costs on behalf of the Sponsored Companies. The Company records these costs as Receivables, related parties on its consolidated balance sheets until repaid. The Sponsored Companies record these costs as either advisory fees-related parties on their consolidated statements of operations or as a cost of capital in their consolidated statements of equity.

(2) Represents the total expense allocation for organization and offering costs through the end of the offering period in July 2013.

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(3) Calculated based on the four preceding fiscal quarters not to exceed the greater of: (i) 2.0% of each Sponsored Company’s average invested assets; or (ii) 25.0% of each Sponsored Company’s 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.

(4) Excludes shares being offered pursuant to the dividend reinvestment plan.

The following table presents receivables, related parties on the consolidated balance sheets as of December 31, 2014 and 2013 (dollars in thousands):

	December 31,
	2014			2013
NorthStar Realty:(1)
Base management fee	$	41,395		N/A
Incentive fee	2,000			N/A
Other	4,019			N/A
Subtotal NorthStar Realty	47,414			N/A
Sponsored Companies:
Fees	245			2,252
Other receivables	29,319			20,894
Subtotal Sponsored Companies	29,564			23,146
Other	648			41
Total	$	77,626	(2)	$	23,187

________________________

(1) The management contract with NorthStar Realty commenced on July 1, 2014, and as such, there were no management fees earned for the six months ended June 30, 2014 and year ended December 31, 2013.

(2) As of December 31, 2014 and 2013, the Company had unreimbursed costs from the Sponsored Companies of $29.3 million and $20.9 million respectively, recorded as receivables, related parties on the combined consolidated balance sheets. Subsequent to December 31, 2014, the Company received $47.4 million from NorthStar Realty.

Selling Commission and Dealer Manager Fees and Commission Expense

Selling commissions and dealer manager fees represents income earned by selling equity in Sponsored Companies through NorthStar Securities. Pursuant to dealer manager agreements between NorthStar Securities and the Sponsored Companies, the Company generally receives selling commissions of up to 7.0% of gross offering proceeds raised. The Company reallows all selling commissions earned to participating broker-dealers. In addition, the Company also generally receives a dealer manager fee of up to 3.0% of gross offering proceeds raised, a portion of which may be reallowed to participating broker-dealers. The Company earns net commission income through NorthStar Securities for selling equity in the Sponsored Companies, which is expected to cover the costs of the broker-dealer business. Commission expense represents fees to participating broker-dealers with whom the Company has selling agreements and commissions to employees of NorthStar Securities. For the years ended December 31, 2014, 2013 and 2012, the Company reallowed $13.8 million, $7.8 million and $5.4 million commission expense to NorthStar Securities employees, respectively.

The following table summarizes selling commission and dealer manager fees, commission expense and net commission income for the years ended December 31, 2014, 2013 and 2012 (dollar in thousands):

	Years Ended
	2014		2013		2012
Selling commission and dealer manager fees	$	110,563	$	62,572	$	42,385
Commission expense	104,428		57,325		38,506
Net commission income(1)	$	6,135	$	5,247	$	3,879

________________________

(1)    Excludes direct expenses of NorthStar Securities.

Other

A subsidiary of the Company is a rated special servicer by Standard & Poor’s and Fitch Ratings and receives special servicing fees for services related to certain securitization transactions.

4. Investments in Unconsolidated Ventures

The following is a description of the Company’s investments in unconsolidated ventures, all of which are accounted for under the equity method.

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Distribution Finance Interest

In June 2014, the Company acquired the Distribution Finance Interest in Distribution Finance Corporation (“Distribution Finance”), a crowd funding technology platform company, for $4.0 million. In addition to earning a proportionate share of net income, the Company will also earn a net 0.50% fee on any syndicated investments, a minimum base management fee of 1.0% and an incentive fee of 15.0% on contractually defined excess cash flows. As of December 31, 2014, the carrying value of the investment was $3.7 million. From closing to December 31, 2014, the Company recognized equity in losses of $0.3 million related to legal fees incurred by Distribution Finance.

AHI Interest

In December 2014, the Company acquired the AHI Interest in AHI Newco, LLC (“AHI Ventures”), a direct wholly-owned subsidiary of American Healthcare Investors LLC (“AHI”) for $57.5 million, consisting of $37.5 million in cash and $20.0 million of the Company’s common stock, subject to certain lock-up and vesting restrictions ($10.0 million of the Company's common stock vested immediately). The Company’s investment in AHI Ventures is structured as a joint venture between the Company, the principals of AHI and James F. Flaherty III. The members of AHI are entitled to receive certain distributions of operating cash flow and certain promote fees in accordance with the allocations set forth in the joint venture agreement. As of December 31, 2014, the carrying value of the investment was $50.8 million. From closing to December 31, 2014, the Company recognized equity in losses of $0.7 million, which includes operating income of $1.2 million, offset by $0.5 million of non-cash depreciation expense and equity-based compensation expense.

5. Related Party Arrangements

NorthStar Realty

Investment Opportunities

Under the management agreement, NorthStar Realty agreed to make available to the Company for the benefit of the Managed Companies, including NorthStar Realty, all investment opportunities sourced by NorthStar Realty. The Company agreed to fairly allocate such opportunities among the Managed Companies, including NorthStar Realty, in accordance with an investment allocation policy. Pursuant to the management agreement, NorthStar Realty is entitled to fair and reasonable compensation for its services in connection with any loan origination opportunities sourced by it, which may include first mortgage loans, subordinate mortgage interests, mezzanine loans and preferred equity interests, in each case relating to commercial real estate.

The Company provides services with regard to such areas as payroll, human resources and employee benefits, financial systems management, treasury and cash management, accounts payable services, telecommunications services, information technology services, property management services, legal and accounting services and various other corporate services to NorthStar Realty as it relates to its loan origination business for commercial real estate debt.

Credit Agreement

In connection with the spin-off, the Company entered into a revolving credit agreement with NorthStar Realty pursuant to which NorthStar Realty makes available to the Company, on an “as available basis,” up to $250.0 million of financing for a five year term at LIBOR plus 3.50%. The revolving credit facility is unsecured. The Company expects to use the proceeds for general corporate purposes, including potential future acquisitions. In addition, the Company may use the proceeds to acquire assets on behalf of the Managed Companies that the Company intends to allocate to such Managed Company but for which such Managed Company may not then have immediately available funds. The terms of the revolving credit facility contain various representations, warranties, covenants and conditions, including the condition that NorthStar Realty’s obligation to advance proceeds to the Company is dependent upon NorthStar Realty and its affiliates having at least $100.0 million of either unrestricted cash and cash equivalents or amounts available under committed lines of credit, after taking into account the amount the Company seeks to draw under the facility. As of December 31, 2014, the Company had no borrowings outstanding under the credit agreement.

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Healthcare Strategic Joint Venture

In January 2014, the Company entered into a long-term strategic partnership with James F. Flaherty III, former Chief Executive Officer of HCP, Inc., focused on expanding the Company’s healthcare business into a preeminent healthcare platform (“Healthcare Strategic Partnership”). In connection with the partnership, Mr. Flaherty oversees and seeks to grow both NorthStar Realty’s healthcare real estate portfolio and the portfolio of NorthStar Healthcare. In connection with entering into the partnership, NorthStar Realty granted Mr. Flaherty certain RSUs, which partially became the Company’s RSUs upon spin-off (refer to Note 7). The Healthcare Strategic Partnership is entitled to incentive fees ranging from 20% to 25% above certain hurdles for new and existing healthcare real estate investments held by NorthStar Realty and NorthStar Healthcare. The partnership will also be entitled to any incentive fees earned from NorthStar Healthcare or any future healthcare non-traded REITs sponsored by the Company, NorthStar Realty or any affiliates. For the year ended December 31, 2014, the Company did not earn any incentive fees related to the Healthcare Strategic Partnership. On February 2, 2015, in connection with the completion of NorthStar Healthcare’s initial primary offering, the Company issued 20,305 RSUs to Mr. Flaherty.

AHI Venture

In connection with the AHI Interest, AHI Ventures provides certain asset management, property management and other services to the Company to assist in managing the current and future healthcare assets (excluding any joint venture assets) of NorthStar Realty and other Sponsored Companies, including the assets formerly owned by Griffin-American Healthcare REIT II, Inc. (“Griffin-American”) and the assets by its former operating partnership, Griffin-American Healthcare REIT II Holdings, LP (“Griffin-America OP portfolio”). AHI Ventures receives a base management fee of $0.6 million per year plus 0.50% of the equity invested by NorthStar Realty in future assets (excluding assets in the Griffin-American OP portfolio and other joint ventures) that AHI Ventures may manage. AHI Ventures would be entitled to additional base management fees should it manage assets on behalf of any other Managed Companies. AHI Ventures also intends to directly or indirectly sponsor, co-sponsor, form, register, market, advise, manage and/or operate investment vehicles that are intended to invest primarily in healthcare real estate assets. In addition, Mr. Flaherty acquired a 9.3% interest in AHI Ventures.

RXR Realty

In December 2013, NorthStar Realty entered into a strategic transaction with RXR Realty. The investment in RXR Realty includes an approximate 30% equity interest. NorthStar Realty’s equity interest in RXR Realty is structured so that the Company is entitled to certain fees in connection with RXR Realty’s investment management business. 

6. Commitments and Contingencies

Obligations Under Lease Agreements

The Company is the lessee of eight offices located in New York, New York, Denver, Colorado, Dallas, Texas, Bethesda, Maryland, Los Angeles, California, London, United Kingdom, Senningerberg, Luxembourg and Pembroke, Bermuda.

The following table presents minimum future rental payments under these contractual lease obligations as of December 31, 2014 (dollars in thousands):

Years Ending December 31:
2015	$	3,994
2016	4,148
2017	2,956
2018	1,138
2019	656
Thereafter	—
Total minimum lease payments	$	12,892

The Company recognized $2.1 million in rental expense for the year ended December 31, 2014.

Litigation

The Company may be involved in various litigation matters arising in the ordinary course of its business. Although the Company is unable to predict with certainty the eventual outcome of any litigation, in the opinion of management, the legal proceedings are not expected to have a material adverse effect on the Company’s financial position or results of operations.

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Other

Effective July 1, 2014, in connection with the spin-off, the Company adopted the NSAM 401(k) Retirement Plan (the “401(k) Plan”) for its employees.  Eligible employees under the 401(k) Plan may begin participation on the first day of the month after they have completed 30 days of employment.  The Company’s matching contribution is calculated as 100% of the first 3% and 50% of the next 2% of participant’s eligible earnings contributed (utilizing earnings that are not in excess of the amount established by the Internal Revenue Service).  The Company’s aggregate matching contribution for the year ended December 31, 2014 was $0.2 million.

7. Equity-Based Compensation

Impact of the Spin-off

NorthStar Realty issued equity-based awards to directors, officers, employees, consultants and advisors pursuant to the NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan, as amended and restated (the “NorthStar Realty Stock Plan”), and the NorthStar Realty Executive Incentive Bonus Plan, as amended (the “NorthStar Realty Plan” and collectively the “NorthStar Realty Equity Plans”). In addition, the Company issued equity-based awards to directors, officers, employees, consultants and advisors pursuant to the NorthStar Asset Management Group Inc. 2014 Omnibus Stock Incentive Plan (the “NSAM Stock Plan”).

All of the vested and unvested equity-based awards granted by NorthStar Realty prior to the spin-off remain outstanding following the spin-off, net of any forfeitures. Holders of shares of NorthStar Realty’s common stock subject to outstanding equity awards, including LTIP units converted to common shares in connection with NorthStar Realty’s internal corporate reorganization, received an equal number of shares of the Company’s common stock in connection with the spin-off, all of which generally remain subject to the same vesting and other terms that applied prior to the spin-off. Shares of the Company’s common stock that remain subject to vesting after the effect of the spin-off are herein referred to as restricted stock. Deferred LTIP Units are equity awards representing the right to receive either LTIP units in NorthStar Realty’s successor operating partnership or, if such LTIP units are not available upon settlement of the award, shares of NorthStar Realty common stock. Other equity and equity-based awards relating to NorthStar Realty’s common stock, such as RSUs and Deferred LTIP Units, were adjusted to also relate to an equal number of shares of the Company’s common stock, but otherwise generally remain subject to the same vesting and other terms that applied prior to the spin-off. Vesting conditions for outstanding awards have been adjusted to reflect the impact of the spin-off and related transactions in terms of employment for service-based awards and total stockholder return for performance-based awards.

Following the spin-off, NorthStar Realty and the compensation committee of its board of directors (the “NorthStar Realty Compensation Committee”) continues to administer all awards issued under the NorthStar Realty Equity Plans but the Company is obligated to issue shares of the Company’s common stock or other equity awards of its subsidiaries or make cash payments in lieu thereof or with respect to dividend or distribution equivalent obligations to the extent required by such awards previously issued under the NorthStar Realty Equity Plans. These awards will continue to be governed by the NorthStar Realty Equity Plans, as applicable, and shares of the Company’s common stock issued pursuant to these awards will not be issued pursuant to, or reduce availability under the NorthStar Realty Equity Plans.

In connection with the spin-off, most of NorthStar Realty’s employees at the time of the spin-off became employees of the Company except for executive officers, employees engaged in NorthStar Realty’s loan origination business at the time of the spin-off and certain other employees that became co-employees of both the Company and NorthStar Realty.

The following summarizes the equity-based compensation plans and related expenses.

NorthStar Asset Management Equity Plans

Omnibus Stock Incentive Plan

In March 2014, the NorthStar Realty Compensation Committee approved the NSAM Stock Plan, which was subsequently adopted by the Company’s board of directors and approved by its sole stockholder at the time. The NSAM Stock Plan was administered by the NorthStar Realty Compensation Committee prior to the spin-off and is administered by the Company’s compensation committee following the spin-off. The NSAM Stock Plan provides flexibility to use various equity-based and cash incentive awards as compensation tools to motivate the Company’s workforce.

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In anticipation of the spin-off, on April 3, 2014, the Company granted an aggregate of 6,230,529 RSUs to its executive officers pursuant to the NSAM Stock Plan. The RSUs vest over four years and are subject to the achievement of performance-based vesting conditions and continued employment. 40% of these RSUs are performance-based awards and were subject to the achievement of performance-based hurdles relating to CAD and capital raising of the Sponsored Companies, as well as continued employment through December 31, 2017 (“Performance RSUs”). 30% of these RSUs are market-based awards and are subject to the achievement of performance-based hurdles relating to the Company’s absolute total stockholder return and continued employment over a four-year period ended April 2, 2018 (“Absolute RSUs”). The remaining 30% of these RSUs are market-based awards and are subject to the achievement of performance-based hurdles based on the Company’s total stockholder return relative to the Russell 2000 Index and continued employment over a four-year period ended April 2, 2018 (“Relative RSUs”). With respect to these grants, the grant date fair value for the Performance RSUs, Absolute RSUs and Relative RSUs was $17.01, $10.22 and $16.21, respectively. The grant date fair value was determined using a risk-free interest rate of 1.48%. In May 2014, the Company also granted an aggregate of 1,334,891 RSUs (net of forfeitures) with substantially similar terms to certain employees pursuant to the NSAM Stock Plan. In December, 2014, the Company determined that the performance hurdle relating to the Performance RSUs was met.  With respect to these grants, the grant date fair value for the Performance RSUs, Absolute RSUs and Relative RSUs was $16.80, $9.95 and $16.29, respectively. The grant date fair value was determined using a risk-free interest rate of 1.29%. On December 31, 2014, the Performance RSUs were settled in shares of the Company’s common stock, of which 25% were vested and the remainder (in the form of restricted stock) will vest in equal installments on December 31, 2015, 2016, and 2017, subject to continued employment.  The Company retired 392,157 of the vested shares of common stock to satisfy the minimum statutory tax withholding requirements. The common stock retired to satisfy the withholding amounts was recorded as a reduction to additional paid-in capital with an offsetting payable recorded in accounts payable and accrued expenses.  On December 31, 2014, the Absolute RSUs and Relative RSUs related to the executives were settled in shares of performance common stock.  Upon vesting pursuant to the terms of the Absolute RSUs and Relative RSUs, shares of performance common stock will automatically convert into shares of common stock and the executive will be entitled to receive the distributions that would have been paid with respect to a share of common stock (for each share of performance common stock that vests) on or after the date the shares of performance common stock were initially issued.

Incentive Compensation Plan

In March 2014, the NorthStar Realty Compensation Committee approved the NorthStar Asset Management Group Inc. Executive Incentive Bonus Plan (the “NSAM Bonus Plan” and collectively, with the NSAM Stock Plan, the “NSAM Plans”), which was subsequently adopted by the Company’s board of directors and approved by its sole stockholder. The NSAM Bonus Plan establishes the general parameters of the Company’s incentive bonus program for its executive officers. Pursuant to the NSAM Bonus Plan, for each plan year, the administrator will establish two bonus pools (an annual cash bonus pool and a long-term bonus pool), award a bonus pool percentage(s) to each participant with respect to such bonus pools and establish performance goals, vesting requirements and other terms and conditions applicable to such bonuses. The NSAM Bonus Plan was administered by the NorthStar Realty Compensation Committee prior to the spin-off and is administered by the Company’s compensation committee following the spin-off.

For the 2014 NSAM Bonus Plan, the administrator established an incentive bonus program. Pursuant to an employee matters agreement entered into in connection with the spin-off, NorthStar Realty agreed to make the cash portion of any incentive payment to the Company employees for services performed in 2014 through the date of the spin-off and as a result NorthStar Realty is responsible for paying approximately 50% of the 2014 annual cash and long-term bonuses earned under the NSAM Bonus Plan. Long-term bonuses will be paid in both Company and NorthStar Realty equity-based awards, subject to performance-based and time-based vesting conditions over the four-year performance period from January 1, 2014 through December 31, 2017. Approximately 31.65% of the long-term bonuses were subject to the achievement of performance-based hurdles relating to CAD and capital raising of the Sponsored Companies in 2014 to be paid in shares of the Company’s common stock that vest 25% on each of December 31, 2014, 2015, 2016 and 2017, subject to continued employment. 18.35% of the long-term bonuses are performance-based awards to be paid in shares of performance common stock that are subject to vesting based on the achievement of performance-based hurdles relating to the Company’s absolute total stockholder return and continued employment over a four-year period. The remaining approximately 50% of long-term bonuses are being paid by NorthStar Realty. 

In connection with the 2014 NSAM Bonus Plan, the Company determined that the performance hurdle for the approximately 31.65% of the long-term bonuses to be paid in shares of the Company’s common stock was met.  On December 31, 2014, the Company paid this portion of the long-term bonus by issuing 795,107 shares of common stock, of which 25% were vested and the remainder (in the form of restricted stock) will vest in equal installments on December 31, 2015, 2016 and 2017, subject to continued employment. The Company retired 108,198 of the vested shares of common stock to satisfy the minimum statutory withholding requirements. Except for shares of common stock to be retired to satisfy tax withholding obligations, none of the

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shares of common stock issued with respect to this portion of the long-term bonus are permitted to be sold prior to December 31, 2017. In connection with the remainder of the long-term bonus to be paid by the Company, in February 2015, the Company issued an aggregate of 474,842 shares of performance common stock to executives, which are subject to vesting based on the Company’s absolute total stockholder return and continued employment over the four-year period ending December 31, 2017.  Upon vesting, these shares of performance common stock will automatically convert into shares of common stock and the executive will be entitled to receive the distributions that would have been paid with respect to a share of common stock (for each share of performance common stock that vests) on or after January 1, 2015.  In February 2015, the Company also granted 643,511 restricted shares to certain non-executive employees, with substantially similar terms to the executive awards subject to time based vesting conditions over three years.

NorthStar Realty Equity Plans

In connection with the spin-off, the Company issued the following related to the NorthStar Realty Equity Plans that remain outstanding as of December 31, 2014: 686,262 shares of restricted common stock which remained subject to vesting; 1,134,723 Deferred LTIP Units (net of forfeitures), of which 934,347 remained subject to vesting; and 1,968,108 RSUs, of which 1,205,213 remained subject to vesting based on performance and continued employment. The hurdle was met for the remaining 762,898 awards originally issued pursuant to NorthStar Realty’s bonus plan for 2011 and resulted in all of these RSUs vesting. To settle these RSUs, on January 1, 2015 the Company issued 49,149 shares of common stock, net of the minimum statutory tax withholding requirements, and the Company will issue 665,747 LTIP Units in a newly-formed operating partnership later in 2015.

Other Issuances

Healthcare Strategic Joint Venture

In connection with entering into the Healthcare Strategic Partnership, NorthStar Realty granted Mr. Flaherty 500,000 RSUs on January 22, 2014, adjusted to reflect NorthStar Realty’s reverse stock split, which vest on January 22, 2019, unless certain conditions are met. In connection with the spin-off, the RSUs granted to Mr. Flaherty were adjusted to also relate to an equal number of shares of the Company’s common stock. The RSUs are entitled to dividend equivalents prior to vesting and may be settled either in shares of common stock of the Company or in cash at the option of the Company. Mr. Flaherty is also entitled to incremental grants of the Company’s common stock subject to certain conditions being met pursuant to a separate contractual arrangement entered into in connection with the Healthcare Strategic Partnership. On February 2, 2015, in connection with the completion of NorthStar Healthcare’s initial public offering and the services Mr. Flaherty provides to the Healthcare Strategic Partnership, the Company issued 20,305 incremental RSU grants to Mr. Flaherty.

AHI

On December 8, 2014, the Company acquired an interest in AHI for $37.5 million in cash and $20.0 million of common stock, representing 956,462 shares. In connection with this acquisition, the Company required the seller to subject one-half of these shares to forfeiture conditions that lapse based on the continued service to AHI of its three principals, with forfeiture conditions with respect 50% of these shares lapsing two years after the closing date of the Company’s acquisition and the remaining 50% lapsing five years after the closing date. As a result of this re-vesting arrangement, $10.0 million of common stock (or 478,231 shares) subject to this arrangement is treated as a contingent consideration arrangement tied to continued employment of the AHI principals as an incentive to remain as employees of AHI.  As such, this contingent consideration arrangement is accounted for separately as a compensatory arrangement with amortization of such equity award being recorded by the Company through equity in earnings.  The AHI principals are also entitled to incremental grants of the Company’s common stock subject to certain conditions being met pursuant to a separate contractual arrangement entered into in connection with the Company’s AHI investment. For the year ended December 31, 2014, no incremental awards were issued. The Company will contribute $2.0 million in shares related to equity incentives for AHI’s employees for 2015 and 2016.

Summary

As of December 31, 2014, an aggregate of 22,500,000 shares of the Company’s common stock were reserved for the issuance of awards under the 2014 NSAM Plan, subject to equitable adjustment upon the occurrence of certain corporate events, provided that this number automatically increases each January 1 beginning on January 1, 2015 by 2% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31. Therefore, on January 1, 2015, the number of shares reserved under the plan increased by 3,858,957.

Equity-based compensation expense for the year ended December 31, 2014 includes: (i) the Company’s expense for the six months ended December 31, 2014 following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) an expense based on a carve-out attributed to the Company related to NorthStar Realty’s historical asset

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management business for the six months ended June 30, 2014. The allocation is based on an estimate had the Company’s asset management business has been run as an independent entity and was determined principally based on relative head count and management’s knowledge of NorthStar Realty’s operations. Equity-based compensation expense for the years ended December 31, 2013 and 2012 was prepared on the same basis as the six months ended June 30, 2014.

For the six months ended December 31, 2014, the Company recorded equity-based compensation of $37.9 million of which $21.6 million is deductible for income tax purposes. For the six months ended June 30, 2014, the Company was allocated $13.7 million of equity-based compensation expense related to the NorthStar Realty Equity Plans and the NSAM Stock Plan. For the years ended December 31, 2013 and 2012, the Company was allocated $5.2 million and $4.2 million, respectively, of equity-based compensation expense related to the NSAM Stock Plan and the NorthStar Realty Equity Plans.

The following table presents a summary of Deferred LTIP Units, whether vested or not, and unvested restricted stock from the time of the spin-off to December 31, 2014 (grants in thousands):

	Grants		Weighted Average Grant Price(2)
As of June 30, 2014, time of the spin-off	1,917		$	22.91
New grants	4,855		18.67
Vesting of restricted stock post-spin	(1,028	)	9.24
Withheld/retired shares	(500	)	18.17
Forfeited or canceled grants	(5	)	16.56
Ending Balance/Weighted Average(1)	5,239		$	22.12

__________

(1) Includes 4.1 million shares of restricted stock and 1.1 million vested and unvested Deferred LTIP Units as of December 31, 2014.

(2) Amounts have been retrospectively adjusted to reflect NorthStar Realty’s reverse stock split, which occurred prior to the spin-off on June 30, 2014.

As of December 31, 2014, equity-based compensation expense to be recognized over the remaining vesting period through April 2018 is $110.1 million, provided there are no forfeitures and excluding any mark-to-market adjustment.

8. Stockholders’ Equity

Spin-off

In connection with the spin-off, NorthStar Realty distributed to its common stockholders all of the common stock of the Company in a pro rata distribution of one share of the Company common stock for each share of NorthStar Realty common stock.

Common Stock

In December 2014, in connection with the AHI Interest, the Company issued 956,462 shares of common stock, of which 478,231 is restricted common stock, resulting in an increase to additional paid-in capital in 2014 of $10.1 million, subject to certain lock-up and vesting restrictions.

Director Shares

In July 2014, the Company issued 37,500 shares of restricted common stock with a fair value at the date of grant of $0.7 million to its board of directors as part of their annual grants. The stock will generally vest over three years.

Performance Common Stock

The Company is currently authorized to issue 1.6 billion shares of capital stock, of which 500 million is designated as performance common stock, par value $.01 per share. In December 2014, upon successfully completing the spin-off prior to December 31, 2015, the Company settled 1,869,157 and 1,869,157 of Absolute RSUs and Relative RSUs, respectively, into performance common stock.

Earnings Per Share

Basic and diluted earnings per share and the average number of common shares outstanding were calculated using the number of common stock outstanding immediately following the spin-off on June 30, 2014. The Company presents common shares issued in connection with the spin-off as if it had been outstanding for all periods presented, similar to a stock split. The following table presents EPS for the years ended December 31, 2014, 2013 and 2012 (dollars and shares in thousands, except per share data):

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Years Ended December 31,
	2014			2013			2012
Numerator:
Net income (loss)	$	19,100		$	(1,995	)	$	(17,322	)
Earnings (loss) allocated to unvested participating securities	(247		)	—			—
Numerator for basic income per share	$	18,853		$	(1,995	)	$	(17,322	)
Denominator:
Weighted average number of shares of common stock	187,852			187,816			187,816
Dilutive effect of restricted common stock	849			—			—
Dilutive effect of RSUs (1)	4,883			—			—
Dilutive effect of the Deferred LTIP Units	572			—			—
Dilutive effect of the Healthcare Strategic Partnership RSUs	252			—			—
Weighted average number of diluted shares(2)	194,408			187,816			187,816
Earnings (loss) per share:
Basic	$	0.10		$	(0.01	)	$	(0.09	)
Diluted	$	0.10		$	(0.01	)	$	(0.09	)

_______________________

(1) Represents shares related to the NorthStar Realty Stock Plan.

(2) Diluted EPS excludes the effect of equity-based awards issued that were not dilutive for the periods presented. These instruments could potentially impact diluted EPS in future periods, depending on changes in the Company’s stock price and other factors.

Dividends

The Company declared its first dividend on its common stock on October 30, 2014 of $0.10 per share, which was paid on November 14, 2014 to stockholders of record as of the close of business on November 10, 2014.

9.     Income Taxes

Subsequent to the spin-off, the Company became subject to both domestic and international income tax. The following table presents the income taxes (benefit) expense for the six months ended as of December 31, 2014 (dollars in thousands):

Current:
U.S. federal	$	2,516
U.S. state and local	503
Non-U.S.	1,934
Subtotal current	4,953
Deferred:
U.S. federal	(2,293		)
U.S. state and local	(458		)
Non-U.S.	(580		)
Subtotal deferred	(3,331		)
Income tax (benefit) expense	$	1,622

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NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred income taxes reflect the net tax effects of temporary differences that may exist between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes using enacted tax rates in effect for the year in which the differences are expected to reverse. The following table presents the tax effects of the temporary differences as of December 31, 2014:

Deferred tax asset
Equity-based compensation	$	3,006
Investments in unconsolidated ventures	149
Total deferred tax asset	$	3,155
Deferred tax liability
Intangible assets	$	60
Total deferred tax liability	$	60

The Company and its U.S. subsidiaries will file a consolidated federal income tax return. As a result, the Company concluded there is sufficient evidence to support the use of its subsidiaries net operating loss carryforward in the current year and reversed the full deferred tax valuation allowance of $10.9 million.

The Company operates internationally and domestically through multiple operating subsidiaries.  Each of the jurisdictions in which the Company operates has its own tax law and tax rate, where the tax rate outside the United States may be lower than the U.S. federal statutory income tax rate. The following table presents the reconciliation of the provision for income taxes expense (benefit) to the U.S. federal statutory income tax rate for the six months ended December 31, 2014:

U.S. federal statutory income tax rate	35.0	%
U.S. state and local income taxes	2.9
Change in valuation allowance	(21.3	)
Equity-based compensation	(2.3	)
Permanent items	4.4
Effect of foreign operations taxed at various rates	(17.9	)
Other	2.4
Effective income tax rate	3.2	%

The Company considers the operating earnings of certain non-U.S. subsidiaries to be indefinitely reinvested outside the United States based on the Company’s current needs for those earnings to be reinvested offshore as well as estimates that future domestic cash generated from operations and/or borrowings will be sufficient to meet future domestic cash needs for the foreseeable future. No provision has been made for U.S. federal, state or local taxes that may result from future remittances of the undistributed earnings of these foreign subsidiaries. For the six months ended December 31, 2014, the unrecognized tax liability was $19.2 million.

Excess tax benefits are recognized upon actual realization of the related tax benefit. The Company recognized a windfall tax benefit of $1.6 million relating to equity-based compensation expense, which is a reduction to income tax payable and recorded in additional paid-in capital on the combined consolidated balance sheets.

In the normal course of business, the Company is subject to examination by federal, state, local and foreign tax regulators. The normal statute of limitations will start and the examination period will open with the initial filings of the 2014 federal, state, local and foreign tax returns.

The guidance for accounting for uncertainty in income taxes prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company does not believe that it has any tax positions for which it is more likely than not that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months. Furthermore, the Company does not have any material uncertain tax positions at December 31, 2014.

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As of December 31, 2014, the Company had no unrecognized tax benefits. The Company would record penalties and interest related to uncertain tax positions as a component of income tax expense, where applicable.

10. Quarterly Financial Information (Unaudited)

The following presents selected quarterly information for the years ended December 31, 2014 and 2013 (dollars in thousands):

	Three Months Ended
	December 31,			September 30,			June 30,			March 31,
	2014			2014			2014(2)			2014(2)
Asset management and other fees, related parties	$	69,438		$	56,521		$	13,110		$	8,669
Selling commission and dealer manager fees, related parties	49,553			27,149			19,313			14,548
Commission expense	47,039			25,691			18,138			13,560
Transaction costs	—			—			21,926			2,550
Total general and administrative	43,500			32,719			14,850			15,503
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax (benefit) expense	27,408			24,905			(22,247		)	(8,305		)
Equity in earnings (losses) of unconsolidated ventures	(965		)	(74		)	—			—
Income (loss) before income taxes	26,443			24,831			(22,247		)	(8,305		)
Income tax (expense) benefit	4,465			(6,087		)	—			—
Net income (loss)	30,908			18,744			(22,247		)	(8,305		)
Earnings (loss) per share:(1)
Basic	$	0.16		$	0.10		$	(0.12	)	$	(0.04	)
Diluted	$	0.16		$	0.10		$	(0.12	)	$	(0.04	)

__________________

(1) The total for the year may differ from the sum of the quarters as a result of weighting.

(2) Represents a carve-out of revenues and expenses attributed to the Company related to NorthStar Realty’s historical asset management business.

	Three Months Ended(2)
	December 31,		September 30,		June 30,			March 31,
	2013		2013		2013			2013
Asset management and other fees, related parties	$	9,556	$	6,782	$	5,787		$	4,508
Selling commission and dealer manager fees, related parties	11,358		1,639		32,635			16,940
Commission expense	10,821		1,629		29,506			15,369
Total general and administrative	7,600		5,579		11,397			8,297
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax (benefit) expense	864		1,618		(2,348		)	(2,129		)
Income (loss) before income taxes	864		1,618		(2,348		)	(2,129		)
Income tax (expense) benefit	—		—		—			—
Net income (loss)	$	864	$	1,618	$	(2,348	)	$	(2,129	)
Earnings (loss) per share:(1)
Basic	$	0.01	$	0.01	$	(0.01	)	$	(0.01	)
Diluted	$	0.01	$	0.01	$	(0.01	)	$	(0.01	)

_________________

(1) The total for the year may differ from the sum of the quarters as a result of weighting.

(2) Represents a carve-out of revenues and expenses attributed to the Company related to NorthStar Realty’s historical asset management business.

11. Segment Reporting

The Company conducts its asset management business through the following five segments, which are based on how management reviews and manages its business:

• NorthStar Realty - Provides asset management and other services on a fee basis by managing NorthStar Realty’s day-to-day operations. The Company began earning fees from NorthStar Realty on July 1, 2014.

• Sponsored Companies - Provides asset management and other services on a fee basis by managing each Sponsored Company’s respective day-to-day operations.

• Broker-dealer - Raises capital in the retail market through NorthStar Securities and earns dealer manager fees from the Sponsored Companies.

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• Investments in Asset Managers - Invests in strategic partnerships and joint ventures with third-parties with expertise in commercial real estate or other sectors and markets, where the Company benefits from the fee stream and potential incentive fee or promote.

• Corporate/Other - Includes corporate level general and administrative expenses, as well special servicing on a fee basis in connection with certain securitization transactions.

The consolidated financial statements for the six months ended December 31, 2014 represent the Company subsequent to the spin-off of NorthStar Realty’s historical asset management business of managing the Sponsored Companies, owning NorthStar Securities and operating its special servicing business. Periods prior to June 30, 2014 present a carve-out of NorthStar Realty’s historical financial information including revenues and expenses allocated to the Company, related to NorthStar Realty’s historical asset management business. Expenses also included an allocation of indirect expenses from NorthStar Realty, including salaries, equity-based compensation and other general and administrative expenses (primarily occupancy and other costs) based on an estimate had NorthStar Realty’s historical asset management business been run as an independent entity. 

Periods prior to June 30, 2014 present a carve-out of NorthStar Realty’s historical financial information, including revenues and expenses allocated to us related to NorthStar Realty’s historical asset management business. Expenses also included an allocation of indirect expenses from NorthStar Realty, including salaries, equity-based compensation and other general and administrative expenses (primarily occupancy and other cost) based on an estimate had NorthStar Realty’s historical asset management business been run as an independent entity. This allocation method was principally based on relative headcount and management’s knowledge of NorthStar Realty’s operations. Additionally, periods prior to June 30, 2014 did not reflect the management agreement the Company entered into with NorthStar Realty effective July 1, 2014.

The following tables present segment reporting for the years ended December 31, 2014, 2013 and 2012 (dollars in thousands):

Statement of Operations:
Year ended December 31, 2014	NorthStar Realty (1)			Sponsored Companies			Broker Dealer (2)			Investment in Asset Managers				Corporate/Other			Total
Asset management and other fees, related parties	$	82,759		$	64,979		$	—		$	—			$	—		$	147,738
Selling commission and dealer manager fees, related parties	—			—			110,563			—				—			110,563
Commission expense	—			—			104,428			—				—			104,428
Salaries and related expense	—			—			6,831			—				30,374			37,205
Equity-based compensation expense	—			—			—			—				51,650			51,650
Other general and administrative expenses	—			—			8,126			—				9,591			17,717
Equity in earnings (losses) of unconsolidated ventures	—			—			—			(1,039		)		—			(1,039		)
Income tax (benefit) expense	—			—			—			—				1,622			1,622
Net income (loss)	82,759			64,979			(8,916		)	(1,039		)		(118,683		)	19,100
Balance Sheet:
December 31, 2014
Total assets	$	60,909	(3)	$	27,147	(3)	$	17,868		$	54,480		(4)	$	106,583		$	266,987

_______________    

(1) The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 3).

(2) Direct general and administrative expenses incurred by the broker dealer.

(3) Primarily represents receivables, related parties and cash. Subsequent to December 31, 2014, the Company received $47.4 million of reimbursements from the Managed Companies.

(4) Represents investments in unconsolidated ventures.

70

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Statement of Operations:
Year ended December 31, 2013	NorthStar Realty (1)		Sponsored Companies			Broker Dealer (2)			Corporate/Other			Total
Asset management and other fees, related parties	$	—	$	26,633		$	—		$	—		$	26,633
Selling commission and dealer manager fees, related parties	—		—			62,572			—			62,572
Commission expense	—		—			57,325			—			57,325
Salaries and related expense	—		—			5,731			15,613			21,344
Equity-based compensation expense	—		—			—			5,177			5,177
Other general and administrative expenses	—		—			5,977			375			6,352
Net income (loss)	—		26,617			(6,535		)	(22,077		)	(1,995		)
Balance Sheet:
December 31, 2013:
Total assets	$	—	$	23,149	(3)	$	8,377		$	183		$	31,709

_______________

(1) The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 3).

(2) Direct general and administrative expenses incurred by the broker dealer.

(3) Primarily represents receivables, related parties.

Statement of Operations:
Year ended December 31, 2012	NorthStar Realty (1)		Sponsored Companies			Broker Dealer (2)			Corporate/Other			Total
Asset management and other fees, related parties	$	—	$	8,112		$	—		$	—		$	8,112
Selling commission and dealer manager fees, related parties	—		—			42,385			—			42,385
Commission expense	—		—			38,506			—			38,506
Salaries and related expense	—		—			4,825			15,392			20,217
Equity-based compensation expense	—		—			—			4,224			4,224
Other general and administrative expenses	—		—			3,731			1,115			4,846
Net income (loss)	—		8,112			(4,742		)	(20,692		)	(17,322		)
Balance Sheet:
December 31, 2012:
Total assets	$	—	$	11,425	(3)	$	8,610		$	222		$	20,257

_______________

(1) The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 3).

(2) Direct general and administrative expenses incurred by the broker dealer.

(3) Primarily represents receivables, related parties.

12. Subsequent Events

Dividends

On February 25, 2015, the Company declared a dividend of $0.10 per share of common stock. The common stock dividend will be paid on March 13, 2015 to stockholders of record as of the close of business on March 9, 2015.

Island Interest

In January 2015, the Company acquired the Island Interest for $33.2 million in cash and $4.6 million of the Company’s common stock, subject to certain lock-up and vesting restrictions. Island is a leading, independent select service hotel management company and manages approximately 140 hotel properties representing $3.7 billion, of which 101 hotel properties are owned by NorthStar Realty.

Proposed Spin-off of European Real Estate Business

71

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On February 26, 2015, NorthStar Realty announced that its board of directors unanimously approved the NRF Proposed European Spin. Currently, NorthStar Realty has acquired or committed to acquire $2 billion of European real estate (excluding European healthcare assets) comprised of 50 properties spanning across some of Europe’s top markets that will be contributed to NRE upon the completion of the NRF Proposed European Spin. The Company will manage NRE pursuant to a long-term management agreement, on substantially similar terms as the Company’s management agreement with NorthStar Realty. The NRF Proposed European Spin is expected to be completed in the second half of 2015.

72

NORTHSTAR ASSET MANAGEMENT GROUP INC. AND SUBSIDIARIES

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.   Controls and Procedures

Attached as exhibits to this Annual Report on Form 10-K are certifications of the Company’s Chief Executive Officer and Chief Financial Officer, which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This “Controls and Procedures” section includes information concerning the controls and procedures evaluation referred to in the certifications. Item 8. of this Annual Report on Form 10-K sets forth the report of Grant Thornton LLP, the Company’s independent registered public accounting firm, regarding its audit of the Company’s internal control over financial reporting set forth below in this section. This section should be read in conjunction with the certifications and the Grant Thornton LLP report for a more complete understanding of the topics presented.

Disclosure Controls and Procedures

The management of the Company established and maintains disclosure controls and procedures that are designed to ensure that material information relating to the Company and its subsidiaries required to be disclosed in the reports that are filed or submitted under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

As of the end of the period covered by this report, management conducted an evaluation as required under Rules 13a-15(b) and 15d-15(b) under the Exchange Act under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s 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 the Company’s periodic reports.

Internal Control over Financial Reporting

(a) Management’s annual report on internal control over financial reporting.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company carried out an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2014 based on the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 framework). Based upon this evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2014.

(b) Attestation report of the registered public accounting firm.

The Company’s independent registered public accounting firm, Grant Thornton LLP, independently assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2014. Grant Thornton LLP has issued an attestation report, which is included in Item 8. “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

73

(c) Changes in internal control over financial reporting.

There have not been any changes in the Company’s 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 materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Item 9B. Other Information

The Company’s 2015 Annual Meeting of Stockholders will be held on May 27, 2015, at a place and time to be specified in the Company’s definitive proxy statement.  Stockholder proposals to be considered for inclusion in the Company’s proxy materials for the Company’s 2015 annual meeting in accordance with Rule 14a-8 under the Exchange Act must be received by the Company by March 12, 2015 and must comply with the applicable rules and regulations of the SEC. In order for a stockholder to present any other proposal or director nomination at the 2015 annual meeting, a stockholder’s notice complying with the requirements set forth in the Company’s current bylaws must be delivered to the Company not later than March 12, 2015.  All stockholder proposals or notices should be directed to the attention of the Company’s Corporate Secretary at the Company’s principal executive offices.

PART III

Item 10. Directors, Executive Officers and Corporate Governance*

Certain information relating to the Company’s code of business conduct and ethics and code of ethics for senior financial officers (as defined in the code) is included in Part I, Item 1. “Business” of this Annual Report on Form 10-K.

Item 11. Executive Compensation*

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters*

Item 13. Certain Relationships and Related Transactions and Director Independence*

Item 14. Principal Accountant Fees and Services*

__________________________

* The information that is required by Items 10, 11, 12, 13 and 14 (other than the information included in this Annual Report on Form 10-K) is incorporated herein by reference from the definitive proxy statement relating to the 2015 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, no later than 120 days after the end of the Company’s fiscal year ended December 31, 2014.

74

PART IV

Item 15.   Exhibits and Financial Statements

(a) 1. Combined Consolidated Financial Statements included in Part II, Item 8. “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K:

Reports of Independent Registered Public Accounting Firm

Combined Consolidated Balance Sheets as of December 31, 2014 and 2013

Combined Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012

Combined Consolidated Statements of Equity for the years ended December 31, 2014, 2013 and 2012

Combined Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012

Notes to the Consolidated Financial Statements

75

(a) 3. Exhibit Index:

Exhibit Number	Description of Exhibit
3.1	Amended and Restated Certificate of Incorporation of NorthStar Asset Management Group Inc. (incorporated by reference to Exhibit 4.1 to NorthStar Asset Management Group Inc.’s Registration Statement on Form S-8 (File No. 333-197104))
3.2	Amended and Restated Bylaws of NorthStar Asset Management Group Inc. (incorporated by reference to Exhibit 4.2 to NorthStar Asset Management Group Inc.’s Registration Statement on Form S-8 (File No. 333-197104))
10.1	Asset Management Agreement, dated as of June 30, 2014, between NSAM J-NRF Ltd and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.1 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.2	Separation Agreement, dated as of June 30, 2014, between NorthStar Asset Management Group Inc. and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.2 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.3	Contribution Agreement, dated as of June 30, 2014, between NorthStar Asset Management Group Inc. and NRFC Sub-REIT Corp. (incorporated by reference to Exhibit 10.3 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.4	Loan Origination Services Agreement, dated as of June 30, 2014, between NSAM US LLC and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.4 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.5	Tax Disaffiliation Agreement, dated as of June 30, 2014, between NorthStar Asset Management Group Inc. and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.5 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.6	Employee Matters Agreement, dated as of June 30, 2014, between NorthStar Asset Management Group Inc. and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.6 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.7	Advisory Agreement, dated as of June 30, 2014, by and among NSAM J-NSI Ltd, NorthStar Real Estate Income Trust, Inc., NorthStar Real Estate Income Trust Operating Partnership, LP and NorthStar Asset Management Group Inc. (incorporated by reference to Exhibit 10.7 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.8	Advisory Agreement, dated as of June 30, 2014, by and among NSAM J-NSHC Ltd, NorthStar Healthcare Income, Inc., NorthStar Healthcare Income Operating Partnership, LP and NorthStar Asset Management Group Inc. (incorporated by reference to Exhibit 10.8 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.9	Advisory Agreement, dated as of June 30, 2014, by and among NSAM J- NSII Ltd, NorthStar Real Estate Income II, Inc., NorthStar Real Estate Income Operating Partnership II, LP and NorthStar Asset Management Group Inc. (incorporated by reference to Exhibit 10.9 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.10	Credit Agreement, dated as of June 30, 2014, by and between NorthStar Asset Management Group Inc. and NorthStar Realty Finance Corp. (incorporated by reference to Exhibit 10.10 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.11†	Executive Employment Agreement, dated as of June 30, 2014, by and between NorthStar Asset Management Group Inc. and David T. Hamamoto (incorporated by reference to Exhibit 10.11 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.12†	Executive Employment Agreement and Agreement with Foreign Executive Officer, dated as of June 30, 2014, by and between NorthStar Asset Management Group, Ltd and Daniel R. Gilbert (incorporated by reference to Exhibit 10.12 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.13†	Executive Employment Agreement, dated as of June 30, 2014, by and between NorthStar Asset Management Group Inc. and Albert Tylis (incorporated by reference to Exhibit 10.13 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.14†	Executive Employment Agreement, dated as of June 30, 2014, by and between NorthStar Asset Management Group Inc. and Debra A. Hess (incorporated by reference to Exhibit 10.14 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.15†	Executive Employment Agreement, dated as of June 30, 2014, by and between NorthStar Asset Management Group Inc. and Ronald J. Lieberman (incorporated by reference to Exhibit 10.15 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed July 1, 2014)
10.16†	NorthStar Asset Management Group Inc. 2014 Omnibus Stock Incentive Plan. (incorporated by reference to Exhibit 10.12 to Amendment No. 1 to NorthStar Asset Management Group Inc.’s Registration Statement on Form 10 (File No. 001-36301))
10.17†	NorthStar Asset Management Group Inc. Executive Incentive Bonus Plan. (incorporated by reference to Exhibit 10.13 to Amendment No. 1 to NorthStar Asset Management Group Inc.’s Registration Statement on Form 10 (File No. 001-36301))
10.18†	Form of Indemnification Agreement between NorthStar Asset Management Group Inc. and its directors and officers (incorporated by reference to Exhibit 10.20 to Amendment No. 3 to NorthStar Asset Management Group Inc.’s Registration Statement on Form 10 (File No. 001-36301))
10.19	Unit Purchase Agreement, dated as of November 5, 2014, by and among American Healthcare Investors LLC, HC AHI Holding Company, LLC, AHI Newco, LLC, Platform HealthCare Investor T-II, LLC, NorthStar Asset Management Group Inc. and Jeffrey T. Hanson, Danny Prosky and Mathieu B. Streiff (incorporated by reference to Exhibit 10.19 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2014)
10.20**	Amended and Restated Limited Liability Company Agreement of AHI Newco, LLC, dated as of December 8, 2014, by and among Platform Healthcare Investor T-II, LLC, American Healthcare Investors LLC, Flaherty Trust, NorthStar Asset Management Group Inc. and Jeffrey T. Hanson, Danny Prosky and Mathieu B. Streiff
10.21	Unit Purchase Agreement, dated as of January 9, 2015, by and between Platform Hospitality Investor T-II, LLC and Island JV Member Inc. (incorporated by reference to Exhibit 10.1 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed January 15, 2015)
10.22	Limited Liability Company Agreement of Island Hospitality Joint Venture, LLC, dated as of January 9, 2015, by and between Platform Hospitality Investor T-II, LLC and Island JV Member Inc. (incorporated by reference to Exhibit 10.1 to NorthStar Asset Management Group Inc.’s Current Report on Form 8-K filed January 15, 2015)
21.1**	Significant Subsidiaries of the Registrant

76

Exhibit Number	Description of Exhibit
23.1**	Consent of Grant Thornton LLP
24.1**	Power of Attorney (see the Power of Attorney in the signature page hereto)
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
101**	The following materials from the NorthStar Asset Management Group Inc. Annual Report on Form 10-K for the year ended December 31, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Combined Consolidated Balance Sheets as of December 31, 2014 and 2013; (ii) Combined Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012; (iii) Combined Consolidated Statements of Equity for the years ended December 31, 2014, 2013 and 2012; (iv) Combined Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012; and (v) Notes to Consolidated Financial Statements

† Denotes a management contract or compensatory plan or arrangement.

** Filed herewith.

77

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 Asset Management Group Inc.
Date:	March 2, 2015	By:	/s/ DAVID T. HAMAMOTO
			Name: David T. Hamamoto
			Title: Chairman and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Debra A. Hess and Ronald Lieberman and each of them severally, her or his true and lawful attorney-in-fact with power of substitution and re-substitution to sign in her or his name, place and stead, in any and all capacities, to do any and all things and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of 1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with this Annual Report on Form 10-K and any and all amendments hereto, as fully for all intents and purposes as she or he might or could do in person, and hereby ratifies and confirms all said attorneys-in-fact and agents, each acting alone, and her or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below on behalf of the Registrant in the capacities and on the dates indicated.

Signature	Title	Date
/s/ DAVID T. HAMAMOTO	Chairman and Chief Executive Officer	March 2, 2015
David T. Hamamoto	(Principal Executive Officer)
/s/ DEBRA A. HESS	Chief Financial Officer	March 2, 2015
Debra A. Hess	(Principal Financial Officer and Principal Accounting Officer)
/s/ OSCAR JUNQUERA	Director	March 2, 2015
Oscar Junquera
/s/ WESLEY D. MINAMI	Director	March 2, 2015
Wesley D. Minami
/s/ LOUIS J. PAGLIA	Director	March 2, 2015
Louis J. Paglia
/s/ JUDITH A. HANNAWAY	Director	March 2, 2015
Judith A. Hannaway
/s/ STEPHEN E. CUMMINGS	Director	March 2, 2015
Stephen E. Cummings
/s/ JUSTIN METZ	Director	March 2, 2015
Justin Metz

78

EX-10.20

EXHIBIT 10.20

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

AHI NEWCO, LLC

a Delaware Limited Liability Company

Dated as of December 8, 2014

THE LIMITED LIABILITY COMPANY INTERESTS REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME, EXCEPT IN COMPLIANCE WITH (i) THE REQUIREMENTS OF THE SECURITIES ACT AND ANY OTHER APPLICABLE LAWS, RULES AND REGULATIONS AND (ii) THE OTHER TRANSFER RESTRICTIONS SET FORTH HEREIN.

TABLE OF CONTENTS

	Page
ARTICLE I ORGANIZATION	3
1.1Formation of Company	3
1.2Name	3
1.3Purpose	3
1.4Documents	3
1.5Principal Office	3
1.6Registered Office	3
1.7Term	4
ARTICLE II MEMBERS	4
2.1Members	4
2.2Limitation on Liability	4
2.3U.S. Person Status	4
ARTICLE III CAPITAL; CAPITAL ACCOUNTS	4
3.1Membership Interests	4
3.2Units Held	5
3.3Additional Membership Interests	5
3.4Preemptive Rights	5
3.5Class B Incentive Units	7
3.6Class J Incentive Units	7
3.7Notice 2005-43 Safe Harbor	8
3.8Capital Accounts	9
3.9Allocations	10
3.10Other Tax Matters	13
3.11Treatment of Capital Contributions	14
3.12 Benefits of Agreement	14
3.13 Member Loans	14
ARTICLE IV DISTRIBUTIONS	15
4.1Distributions	15
4.2Tax Distributions	17
4.3Amounts Withheld	18
4.4Limitations on Distributions	18
4.5Deemed Company Sale	18
ARTICLE V MANAGEMENT	19
5.1Executive Committee	19
5.2Officers	21
5.3Major Matters	21
5.4Approved Business Plan	26
5.5Investment Vehicles	26
5.6Other Activities	27

i

5.7Conflicting Interests; Enforcement of Remedies	28
5.8Healthcare Activities by AHI	29
5.9Group Members	30
5.10 Public Offerings	30
ARTICLE VI COVENANTS	30
6.1Books and Records	31
6.2Bank Accounts	31
6.3Reports to Class A Members	31
6.4Access to the Company	32
6.5Designation of Tax Matters Member	33
6.6The Flaherty JV	33
6.7Allocation Principles	34
6.8NSAM Member’s Equity Contributions	35
6.9AHI Member’s Equity Contributions	35
6.10Use of NorthStar Name	36
ARTICLE VII TRANSFER OF UNITS; ADDITIONAL MEMBERS	36
7.1Restrictions on Transfer or Assignment	36
7.2ROFO Right	38
7.3Conditions Applicable to All Transfers	42
7.4Tag-Along Rights	43
7.5Company Sale	45
ARTICLE VIII EXCULPATION AND INDEMNIFICATION	48
8.1Exculpation and Indemnification; Duties of Covered Persons	48
8.2Indemnification; Exculpation of Executive Committee Members, Officers, Employees and Agents	51
8.3Company as Indemnitor	54
ARTICLE IX DURATION AND TERMINATION OF THE COMPANY	55
9.1Dissolution and Termination of the Company	55
9.2Effect of Retirement, Withdrawal, Bankruptcy, Dissolution, Death, Etc. of a Member	56
ARTICLE X REPRESENTATIONS AND WARRANTIES OF THE MEMBERS	56
10.1Mutual Representations and Warranties	56
10.2Indemnification	58
ARTICLE XI MISCELLANEOUS	59
11.1Entire Agreement	59
11.2Amendments	59
11.3Choice of Law	59
11.4Jurisdiction; Waiver of Jury Trial	60
11.5Successors and Assigns	60
11.6Interpretation	60
11.7Captions	61

ii

11.8Severability	61
11.9Counterparts	61
11.10Additional Documents	61
11.11Non-Waiver	61
11.12Notices	61
11.13Time Periods	63
11.14Confidentiality	63
11.15Press Releases; Publicity	64
11.16Remedies; Specific Performance	64

iii

EXHIBITS

Exhibit A    Definitions

Exhibit B    Member Registry

Exhibit C    Officers

Exhibit D    Allocation Principles
Exhibit E    Communication Guidelines

Exhibit F    AHI Member Retained Acquisition Fees

Exhibit G    Flaherty JV Agreement

Exhibit H    Flaherty JV Amendment

iv

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

AHI NEWCO, LLC

THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT dated as of this 8th day of December, 2014 (the “Effective Date”), of AHI NEWCO, LLC, a Delaware limited liability company (the “Company”),is entered into by (i) PLATFORM HEALTHCARE INVESTOR T-II, LLC,a Delaware limited liability company (“NSAM Member”), having an office at 399 Park Avenue, 18th Floor, New York, New York 10022, (ii) AMERICAN HEALTHCARE INVESTORS LLC,a Delaware limited liability company (“AHI Member”), (iii) FLAHERTY TRUST, dated September 25, 1997, as amended(“Flaherty Member”, and collectively with NSAM Member and AHI Member, the “Initial Members”), having an office at 18191 Von Karman Ave, Suite 300, Irvine, CA 92612, and any members admitted to the Company after the date hereof (the “Additional Members,”and with the Initial Members, collectively, the “Members”), (iv) solely with respect to Sections 5.7, 5.8, 6.7, 7.1(d), 7.4(e), and 7.5(c), Jeffrey T. Hanson, Danny Prosky and Mathieu B. Streiff and (v) solely with respect to Sections 5.9(a), 5.10, 6.6, 6.7 and 6.8, NorthStar Asset Management Group Inc., a Delaware corporation (“NSAM Parent”).Capitalized terms used in this Agreement are defined on Exhibit A; references to an “Exhibit” are, unless otherwise specified, to an Exhibit attached to this Agreement; and references to a “Section” or a “Subsection” are, unless otherwise specified, to a Section or a Subsection of this Agreement.

R E C I T A L S:

A.     AHI Member formed the Company under the name “AHI NEWCO, LLC” on October 24, 2014, as a limited liability company under the Delaware Limited Liability Company Act, Del. Code Ann. Tit. 6. §§18-101 to 18-1109, as amended from time to time (the “Act”), and entered into a Limited Liability Company Agreement of the Company dated as of October 24, 2014 (the “Initial LLC Agreement”), by and between AHI Member and HC AHI Holding Company, LLC, a Delaware limited liability company (the “Second Member”).

B.    AHI Member and the Company entered into a Contribution Agreement, dated as of December 8, 2014 (the “Contribution Agreement”), pursuant to which AHI Member contributed the Contributed Assets (as defined in the Contribution Agreement) to the Company and the Company assumed the Assumed Liabilities (as defined in the Contribution Agreement) from AHI Member.

C.     In consideration for the Contribution, the Company issued 9,997 Common Units to the AHI Member.

D.     Immediately prior to the execution and delivery of this Agreement, (i) the Company issued 454.6 Common Units to Flaherty Member and (ii) the Company and Flaherty Member entered into that certain Warrant Agreement, dated as of December 8, 2014 (the “Warrant Agreement”), pursuant to which Flaherty Member shall be entitled to purchase for an additional $5

million a specified amount of Class A Common Units and Future HC NTR Units at a fixed value, in exchange for a $5 million capital contribution by Flaherty Member to the Company pursuant to that certain Subscription Agreement dated as of the date hereof (the “Flaherty Subscription”).

E.     Immediately prior to the execution and delivery of this Agreement but following the Flaherty Subscription, the Company redeemed 4.546% of the issued and outstanding Common Units held by AHI Member for a redemption price equal to $5 million (the “Redemption”).

F.     Immediately prior to the execution and delivery of this Agreement, NSAM Member acquired from AHI Member and Second Member 4672.7 Common Units pursuant to that certain Unit Purchase Agreement, dated as of November 5, 2014 (the “Purchase Agreement”), in exchange for Aggregate Closing Date Consideration (as defined therein) (the “NSAM Purchase”).

G.     Immediately prior to the execution and delivery of this Agreement but after giving effect to the Contribution, the Flaherty Subscription, the Redemption and the NSAM Purchase (i) AHI Member held 4872.7 Common Units and had a capital account balance in the Company of $60,146,515, (ii) NSAM Member held 4672.7 Common Units and had a capital account balance in the Company of $57,500,000, and (iii) Flaherty Member held 454.6 Common Units and had a capital account balance in the Company of $5,000,000.

H.     On the date hereof, upon the execution and delivery of this Agreement, the Initial Members have agreed to exchange their Common Units into GAHR III Units, Future HC NTR Units, PE Fund Units, NRF Units, Class A Common Units and Class J Incentive Units, to be held by the Initial Members in the amounts set forth opposite each Initial Member’s name on the Member Registry, effective on the Effective Date.

I.    The Initial Members desire to enter into this Agreement, as the same may be amended from time to time in accordance herewith, for the purpose of amending and restating the Initial LLC Agreement in its entirety and establishing the affairs of, and the conduct of the business of the Company, from and after the Effective Date, and to set forth the Members’ respective obligations vis-à-vis the Company.

W I T N E S S E T H:

In consideration of the mutual covenants set forth herein and for other good and valuable consideration, the adequacy, receipt and sufficiency of which are hereby acknowledged, the Members hereby agree as follows:

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ARTICLE I

ORGANIZATION

1.1Formation of Company. The Certificate of Formation of the Company (as the same may be amended, supplemented or modified from time to time, the “Certificate”) was filed by an “authorized person”, as such term is used in the Act, on October 24, 2014. The rights and liabilities of the Members of the Company shall be as provided in the Act, except as otherwise expressly provided herein or in the Certificate. In the event of any inconsistency between any terms and conditions contained in this Agreement and any non-mandatory provisions of the Act, the terms and conditions contained in this Agreement shall govern.

1.2Name. The name of the Company shall be AHI NEWCO, LLC or such other name or names as may be selected by the Executive Committee from time to time, and the Company’s business shall be carried out in such name with such variations and changes therein as the Executive Committee deems necessary to comply with the requirements of the jurisdictions in which the Company’s operations are conducted.

1.3Purpose. The purpose of the Company is to (a) directly or indirectly sponsor, co-sponsor, form, register, market, advise, manage, and/or operate Investment Vehicles that are intended to invest primarily in Healthcare real estate assets, (b) provide Healthcare real estate-related sub-advisory services to NSAM Luxembourg S.à r.l., a Luxembourg société à responsabilité limitée (“NSAM Luxembourg”) in accordance with the NSAM Sub-Advisory Agreement ((a) and (b) together, the “Primary Purpose”) and (c) engage in any other lawful act or activity for which a limited liability company may be organized under the Act.

1.4Documents. The Executive Committee is hereby authorized to approve and designate one or more persons to execute any necessary amendments and/or restatements of the Certificate in accordance with the Act (subject to approval of the NSAM Designees, to the extent required, in accordance with Section 5.3(a)), and cause the same to be filed in the office of the Secretary of State of the State of Delaware. The Company shall promptly execute and duly file with the proper offices in each state or jurisdiction in which the Company may conduct its activities, one or more certificates as required by the laws of each such state in order that the Company may lawfully conduct its activities in each such state and take any other action or measures necessary in such state or states for the Company to conduct such activities.

1.5Principal Office. The principal place of business and office of the Company shall be 18191 Von Karman Ave, Suite 300, Irvine, CA 92612, or at such other place or places as may be designated by the Executive Committee. The Company shall maintain at the Company’s principal place of business those books and records required by the Act to be maintained there.

1.6Registered Office. The registered office and registered agent of the Company in the State of Delaware shall be the initial registered office and initial registered agent as designated in the Certificate, or such other office and agent as the Executive Committee may designate from time to time.

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1.7Term. The term of the Company began on the date the Certificate was filed, and shall continue until terminated pursuant to this Agreement.

ARTICLE II

MEMBERS

2.1Members. The Company shall consist of the Initial Members and such Additional Members as may be admitted to the Company pursuant to Articles III and VII.

2.2Limitation on Liability. Except as otherwise expressly provided in the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and none of the direct or indirect equity holders, Officers, Executive Committee Members or Affiliates of the Company shall be obligated personally for any such debt, obligation or liability of the Company.

2.3U.S. Person Status. Each Member represents and warrants that it is a “United States person” as defined in Section 7701(a)(30) of the Code and is not a “foreign person” for purposes of Section 1445 of the Code and the Treasury Regulations thereunder.

ARTICLE III

CAPITAL; CAPITAL ACCOUNTS

3.1Membership Interests. The capital of the Company shall consist of Membership Interests that shall constitute limited liability company interests under the Act. The Membership Interests will initially consist of Class A Common Units, Class B Incentive Units, Class J Incentive Units, GAHR III Units, Future HC NTR Units, PE Fund Units and NRF Units. Additional classes or series of Units may be authorized from time to time by the Executive Committee, subject to approval of the NSAM Designees (to the extent required) in accordance with Section 5.3(d). A Member may own one or more classes of Units. Except as otherwise specifically provided herein, the ownership of one class of Units shall not affect the rights or obligations of a Member with respect to Units of other classes. Any reference to the holder of a class of Units shall be deemed to refer to such holder only to the extent of the Units of the relevant class held by such Member unless the context clearly and unequivocally provides otherwise. The relative rights, powers, preferences and obligations of the Units shall be as set forth herein and, with respect to the Class B Incentive Units, as also set forth in the Incentive Unit Plan and the Award Agreements pursuant to which such Class B Incentive Units have been issued and, with respect to any class or series of Units hereafter authorized and issued in accordance with this Agreement, in the Supplemental Terms adopted in accordance with this Agreement at the time of issuance of such Units. The Members shall not be required to make any additional capital contributions to the Company (other than in connection with the issuance to such Members of Additional Interests to the extent expressly required herein or in the applicable Supplemental Terms).

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3.2Units Held.

(a)Common Units. As of the Effective Date, each of the Initial Members holds the number of Class A Common Units set forth opposite such Initial Member’s name on Exhibit B hereto (the “Member Registry”).

(b)Promote Units. As of the Effective Date, each of the Initial Members holds the number and class of Promote Units set forth opposite such Initial Member’s name on the Member Registry.

(c)Class B Incentive Units. As of the Effective Date, no Class B Incentive Units have been issued.

(d)Class J Incentive Units. As of the Effective Date, Flaherty Member holds the number of Class J Incentive Units set forth opposite such Member’s name on the Member Registry.

3.3Additional Membership Interests.

(a)Except as provided in Sections 3.3(b), 3.4 and 3.5, the Company may not issue any Units (other than as contemplated under the Warrant Agreement) without the consent of the Executive Committee, subject to approval of the NSAM Designees (to the extent required) in accordance with Section 5.3(d). All Common Units shall be issued on a pari passu basis with the same distribution and voting rights, except as otherwise determined by the Executive Committee, subject to approval of the NSAM Designees so long as the NSAM Designation Threshold is met.

(b)Subject to Section 3.4, after the expiration of the Initial Lockout Period, the Executive Committee may issue additional Common Units for cash to a Bona Fide Third Party at a price per Common Unit equal to the Fair Market Value of such Common Unit; provided, that the aggregate number of Common Units issued pursuant to this Section 3.3(b) shall not exceed 25% of the total Class A Common Units outstanding as of the Effective Date (subject to adjustment for any subdivision, split, combination, or other reclassification). Notwithstanding the foregoing, the Company shall not be permitted to issue Common Units to any Person pursuant to this Section 3.3(b) without also issuing a proportionate amount of each class of Promote Units to such Person at a price per Promote Unit equal to the Fair Market Value of such Promote Unit, except as otherwise determined by the Executive Committee, subject to approval of the NSAM Designees so long as the NSAM Designation Threshold is met.

3.4Preemptive Rights.

(a)The Company hereby grants to each Class A Member the right, but not the obligation (the “Preemptive Right”) to purchase up to its Class A Pro Rata Share of any Additional Interests (including with respect to each class of Promote Units) to be issued by the Company and to fund its Class A Pro Rata Share of any Member Loan (each, a “Proposed Financing”), in each case, on the terms set forth in this Section 3.4. The Company shall give each Class A Member at least thirty (30) days’ priorwritten notice of such Proposed Financing (such 30-

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day period, the “Preemptive Rights Period”) describing in reasonable detail the aggregate amount of capital to be raised by such Proposed Financing, the contemplated date of such Proposed Financing, the purpose of such Proposed Financing, the issue price of the Additional Interests or the principal amount of the Member Loan, and the other material terms and conditions of such Proposed Financing (“Preemptive Rights Notice”).

(b)Each Class A Member shall be entitled to purchase up to its Class A Pro Rata Share of such Additional Interests or to fund its Class A Pro Rata Share of any Member Loan, as the case may be, by delivering a written subscription notice (a “Subscription Notice”) to the Company and the other Class A Members on or prior to the date that the Preemptive Rights Period expires. In the event that any Class A Member elects not to purchase its full Class A Pro Rata Share of Additional Interests or to fund its Class A Pro Rata Share of any Member Loan, then the other Class A Members that subscribed for their full Class A Pro Rata Share (the “Fully Participating Members”) may purchase or fund any or all of the remaining portion of such Additional Interests or Member Loan (the “Excess Financing”) on the same terms and conditions. The Company shall deliver written notice to such Fully Participating Members indicating the amount of Excess Financing available, and the Fully Participating Members shall have five (5) Business Days to participate in such Excess Financing by delivering a Subscription Notice to the Company prior to the expiration of such five (5) Business Day period. The Fully Participating Members shall be entitled to purchase or fund their Class A Pro Rata Share of such Excess Financing, as well as any Excess Financing not subscribed for by the other Fully Participating Members (which will also be allocated on a pro rata basis).

(c)If any Excess Financing remains unsubscribed after giving effect to the Class A Members’ subscriptions pursuant to Section 3.4(b), the Company shall have 120 days from the date of delivery by the Company of the Preemptive Rights Notice to complete such Excess Financing, upon terms no less favorable to the Company than the terms specified in the Preemptive Rights Notice. If the Company has not completed such Excess Financing within such 120 day period, the Company shall not thereafter issue or sell any Additional Interests or accept a Member Loan without first offering the Class A Members the right to acquire such Additional Interests or fund such Member Loan in accordance with this Section 3.4.

(d)If a Class A Member elects not to exercise its Preemptive Right with respect to any Additional Interests or Member Loan, such election shall not constitute a waiver of such Member’s right to participate in any subsequent Additional Issuance or Member Loan.

(e)There shall be no liability on the part of the Company, the Executive Committee or any Member if the issuance of Additional Interests or any Member Loan is not consummated for any reason. For the avoidance of doubt, the determination of whether to issue Additional Interests or accept any Member Loan shall be in the sole and absolute discretion of the Executive Committee, subject to approval of the NSAM Designees (to the extent required) in accordance with Section 5.3.

(f)Notwithstanding anything to the contrary in this Section 3.4, the Preemptive Rights of the Class A Members under this Section 3.4 shall not apply to (i) the issuance of Class B Incentive Units pursuant to and in accordance with Section 3.5 (ii) the issuance of Class

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J Incentive Units pursuant to and in accordance with Section 3.6 or (iii) any Equity Interests offered in connection with a Qualified Initial Public Offering, subject to approval of the NSAM Designees (to the extent required) in accordance with Section 5.3(w).

(g)Consideration payable in respect of Additional Interests issued pursuant to this Section 3.4 will be made in United States Dollars when due by wire transfer of immediately available funds to the account or accounts designated by the Company.

3.5    Class B Incentive Units.The Company is authorized to grant awards (each, a “Company Incentive Award”) that consist of an aggregate number of Class B Incentive Units representing 5% of the total outstanding Capital Proceeds Equity Interests of the Company as of the Effective Date (the “Pre-Approved Class B Issuance”) or such greater amount of Class B Incentive Units, if any, as may be determined by the Executive Committee, subject to approval of the NSAM Designees (to the extent required) in accordance with Section 5.3(h), directly or indirectly, to employees and other service providers of the Company or any of its Subsidiaries (other than the Principals unless approved in accordance with Section 5.3(h), to the extent such approval is required), which Class B Incentive Units will have the rights and obligations set forth herein and will be subject to the terms of the Incentive Unit Plan and the Award Agreements contemplated thereby; provided, that such Award Agreements comply with the provisions of this Agreement. During any Fiscal Year, the Executive Committee shall be permitted to distribute up to 20% of the Pre-Approved Class B Issuance to employees and other service providers of the Company or its Subsidiaries, subject to minimum vesting requirements of at least two years (the “Annual Permitted Class B Issuance”), or such greater amount of Class B Incentive Units, if any, as may be approved by the Executive Committee, subject to approval of the NSAM Designees (to the extent required) in accordance with Section 5.3(h); provided, that if all or any portion of the Annual Permitted Class B Issuance is not distributed in any Fiscal Year, such undistributed amount shall be available for distributions in subsequent Fiscal Years, and the Annual Permitted Class B Issuance shall be increased to reflect such undistributed amount; provided, further, that in no event may any employee or other service provider of the Company or its Subsidiaries receive Class B Incentive Units representing more than 2.5% of the total outstanding Capital Proceeds Equity Interests of the Company without the consent of the Executive Committee subject to the approval of the NSAM Designees (to the extent required) in accordance with Section 5.3(d). Any Company Incentive Award may be granted in consideration for services provided or to be provided by the recipient of such award and such consideration need not reflect the Fair Market Value of the additional Units that are the subject of such award. The Class B Incentive Units will carry no consent, approval, veto or other voting rights under this Agreement, and for the avoidance of doubt, shall not be deemed to be Common Units under any circumstance. Upon the issuance of additional Units in respect of a Company Incentive Award, the Executive Committee shall modify Exhibit B and the books and records of the Company to accurately reflect the capital contributions, Capital Accounts and number of Units of all Members, determined as of the time of such issuance of additional Units, and to reflect the admission of the additional Members as Members.

3.6Class J Incentive Units. On the Effective Date, the Company has granted 526.3 Class J Incentive Units to Flaherty Member, which represent 100% of the issued and outstanding Class J Incentive Units as of the date hereof. 100% of the Class J Incentive Units shall

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vest on the date which is the fifth (5th) anniversary of the Effective Date; provided, that in connection with an AHI Vesting Change of Control, 100% of the Class J Incentive Units shall vest on the date of, and immediately prior to, such AHI Vesting Change of Control. Notwithstanding the foregoing, if an AHI Reversion Event For Cause occurs prior to the fifth (5^th) anniversary of the Effective Date, and an AHI Vesting Change of Control has not occurred prior to such time, then the Class J Incentive Units shall be forfeited in their entirety.

3.7Notice 2005-43 Safe Harbor. By executing this Agreement, each Member authorizes and directs the Company to elect to have the “Safe Harbor” described in the proposed Revenue Procedure set forth in Internal Revenue Service Notice 2005-43 (the “Notice”) apply to any interest in the Company transferred to a service provider by the Company on or after the effective date of such Revenue Procedure in connection with services provided to or for the benefit of the Company. For purposes of making such Safe Harbor election, AHI Member is hereby designated as the “partner who has responsibility for U.S. federal income tax reporting” by the Company and, accordingly, execution of such Safe Harbor election by AHI Member constitutes execution of a “Safe Harbor Election” in accordance with Section 3.03(1) of the Notice. The Company and each Member hereby agree (i) to use commercially reasonable efforts to comply with all requirements of the Safe Harbor described in the Notice, and (ii) that each Member shall prepare and file all U.S. federal income tax returns reporting the income tax effects of each Unit issued by the Company that is subject to the Safe Harbor in a manner consistent with the requirements of the Notice. The officers of the Company shall file, or cause the Company to file, all returns, reports and other documentation as may be required to perfect and maintain the Safe Harbor Election with respect to grants of Profits Interests covered by such Safe Harbor Election. The Executive Committee is hereby authorized and empowered, without further vote or action of the Members, to amend this Agreement solely to the extent necessary to comply with any proposed Treasury Regulations, in order to provide for a Safe Harbor Election and the ability to maintain or revoke the same, and shall have the authority to execute any such amendment by and on behalf of each Member. Any undertakings by the Members necessary to enable or preserve a Safe Harbor Election may be reflected in such amendments and to the extent so reflected shall be binding on each Member. Each Member agrees to cooperate with the Company and the Executive Committee to perfect and maintain any Safe Harbor Election, and to timely execute and deliver any documentation with respect thereto reasonably requested by the Company or the Executive Committee. It shall be a condition subsequent to the issuance of any unvested Profits Interests of any Member, that such Member makes a timely and proper election under Section 83(b) of the Code with respect to such unvested Profits Interests. Any issuance of any unvested Profits Interests (whether issued on or after the date hereof) for which a Member fails to make a timely and proper 83(b) election shall be void ab initio unless otherwise determined by the Executive Committee. EACH MEMBER ACKNOWLEDGES THAT IT IS THE MEMBER’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S OR THE EXECUTIVE COMMITTEE’S (OR ANY OF THEIR RESPECTIVE AFFILIATES’ OR ADVISOR’S OR REPRESENTATIVES’) TO FILE TIMELY THE ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF THE MEMBER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON SUCH MEMBER’S BEHALF.

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3.8Capital Accounts.

(a)Maintenance.

(i)A single Capital Account will be maintained for each Member in accordance with this Section 3.8. Each Member’s initial Capital Account shall be set forth on Exhibit B.

(ii)Each Member’s Capital Account will from time to time be increased by:

A.    the amount of money contributed by such Member to the Company (including the amount of any Company liabilities which the Member assumes (within the meaning of Treas. Reg. § 1.704-1(b)(2)(iv)(c)), but excluding liabilities assumed in connection with the distribution of Company property and excluding increases in such Member’s share of Company liabilities pursuant to Section 752 of the Code);

B.    the Book Value of property contributed by such Member to the Company (net of any liabilities secured by such property that the Company is considered to assume or take subject to); and

C.    allocations to such Member of Company Book income and gain (or items thereof), including upon the revaluation of any Company property pursuant to Section 3.8(b)(i), the Book gain (if any) that would have been allocated to such Member if such Company property had been sold at its Adjusted Fair Market Value as of the date of such revaluation.

(iii)Each Member’s Capital Account will from time to time be reduced by:

A.    the amount of money distributed to such Member by the Company (including the amount of such Member’s individual liabilities for which the Company becomes personally and primarily liable but excluding liabilities assumed in connection with the contribution of property to the Company and excluding decreases in such Member’s share of Company liabilities pursuant to Section 752 of the Code);

B.    the Book Value of property distributed to such Member by the Company (net of any liabilities secured by such property that such Member is considered to assume or take subject to); and

C.    allocations to such Member of Company Book loss and deduction (or items thereof), including upon the revaluation of any Company property pursuant to Section 3.8(b)(i), the Company Book loss (if any) that would

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have been allocated to such Member if such Company property had been sold at its Adjusted Fair Market Value as of the date of such revaluation.

(iv)Each Member’s Capital Account shall be adjusted in accordance with Treas. Reg. § 1.704-1(b)(2)(iv)(m) to take into account any adjustment to the adjusted Tax Basis of any Company asset pursuant to Section 734(b) or Section 743(b) of the Code.

(v)As of the Effective Date, each Member is deemed to have a Capital Account in the amount set forth opposite such Member’s name on Exhibit B.

(vi)The Company will make such other adjustments to the Capital Accounts of the Members as are necessary to comply with the provisions of Treas. Reg. § 1.704-1(b)(2)(iv).

(b)Revaluation of Company Property.

(i)Upon the occurrence of a Revaluation Event, the Executive Committee will revalue all Company property (whether tangible or intangible) for Book purposes to reflect the Adjusted Fair Market Value of Company property on the date of the Revaluation Event. Any upward and downward revaluations of Company property will be taken into account in determining Net Book Income or Net Book Loss.

(ii)Upon the distribution of Company property to a Member, if Company property is not revalued pursuant to Section 3.8(b)(i), the property to be distributed will be revalued by the Executive Committee for Book purposes to reflect the Adjusted Fair Market Value of such property immediately prior to such distribution, and the Capital Accounts of all Members will be adjusted in accordance with Treas. Reg. § 1.704-1(b)(2)(iv)(e).

(c)Transfers of Units.

(i)Upon the Transfer of a Member’s entire interest in the Company, the Capital Account of such Member will carry over to the transferee in its entirety.

(ii)Upon the Transfer of a portion of a Member’s Units, the portion of such Member’s Capital Account attributable to the transferred portion will carry over to the transferee. If the document effecting such Transfer specifies the portion of such Member’s Capital Account to be Transferred, such portion will be deemed to be the portion attributable to the Transferred portion of such Member’s Units for purposes of this Section 3.8(c)(ii).

3.9Allocations.

(a)Book Income and Loss.

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(i)After the application of Section 3.9(b) through Section 3.9(d), Net Book Income and Net Book Loss (or gross items thereof, if necessary to reduce the following differences) for any Tax Year, or portion thereof, shall be allocated among the Members so as to reduce proportionately the differences between (i) the Members’ respective Adjusted Capital Accounts calculated immediately prior to such allocation and (ii) the Members’ respective Target Capital Accounts as of the end of such period;provided, that the Executive Committee may make adjustments to the allocations provided in this Section 3.9(a) if necessary to comply with applicable provisions of the Code and Treasury Regulations or if necessary to give effect to the economic arrangement of the parties as evidenced in Article IV, Article IX and the other economic provisions of this Agreement; provided, that any such adjustments shall comply with applicable provisions of the Code and Treasury Regulations.

(ii)Net Book Income or Net Book Loss of the Company for purposes of determining allocations to the Capital Accounts of the Members will be determined in the same manner as the determination of the Company’s taxable income, except that (i) items that are required by Section 703(a)(1) of the Code to be separately stated will be included, (ii) items of income that are exempt from inclusion in gross income for U.S. federal income tax purposes will be treated as Book income, and related deductions that are disallowed under Section 265 of the Code will be treated as Book deductions, (iii) Section 705(a)(2)(B) Expenditures will be treated as deductions, (iv) items of gain, loss, depreciation, amortization, or depletion that would be computed for U.S. federal income tax purposes by reference to the Tax Basis of an item of Company property will be determined by reference to the Book Value of such item of property, and (v) the effects of upward and downward revaluations of Company property pursuant to Section 3.8(b) will be treated as gain or loss respectively from the sale of such property.

(iii)Unless otherwise required by Section 6.10(b) of the Purchase Agreement, if the Book Value of any item of Company property differs from its Tax Basis, the amount of Book depreciation, depletion or amortization for a period with respect to such property will be computed so as to bear the same relationship to the Book Value of such property as the depreciation, depletion or amortization computed for tax purposes with respect to such property for such period bears to the Tax Basis of such property, unless another method is selected by the Executive Committee that is in compliance with Section 704 of the Code and the Treasury Regulations thereunder, and Section 6.10(b) of the Purchase Agreement, if applicable. If the Tax Basis of such property is zero, the Book depreciation, depletion or amortization with respect to such property will be computed by using a reasonable method.

(b)Allocation of Nonrecourse Deductions. Nonrecourse Deductions will be allocated among the Members in proportion to their respective Percentage Interests.

(c)Allocation of Member Nonrecourse Deductions. Any item of Member Nonrecourse Deduction with respect to a Member Nonrecourse Debt will be allocated to

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the Member or Members who bear the economic risk of loss for such Member Nonrecourse Debt in accordance with Treas. Reg. § 1.704-2(i).

(d)Chargebacks of Income and Gain.

(i)Company Minimum Gain. If there is a net decrease in Company Minimum Gain for a Tax Year of the Company, then before any other allocations are made for such Tax Year, each Member will be allocated items of Book income and gain for such year (and, if necessary, for subsequent years) to the extent required by Treas. Reg. § 1.704-2(f).

(ii)Member Nonrecourse Debt Minimum Gain. If there is a net decrease in Member Nonrecourse Debt Minimum Gain for a Tax Year of the Company, then after taking into account allocations pursuant to paragraph (i) immediately preceding, but before any other allocations are made for such Tax Year, each Member with a share of Member Nonrecourse Debt Minimum Gain at the beginning of such year will be allocated items of Book income and gain for such year (and, if necessary, for subsequent years) to the extent required by Treas. Reg. § 1.704-2(i)(4).

(iii)Qualified Income Offset. If any Member unexpectedly receives any Account Reduction Item that results in an Excess Deficit Balance at the end of any Tax Year after taking into account all other allocations and adjustments under this Agreement other than allocations under this Section 3.9(d)(iii), then items of Book income and gain for such year (and, if necessary, for subsequent years) will be reallocated to each such Member in the amount and in the proportions needed to eliminate such Excess Deficit Balance as quickly as possible.

(iv)Gross Income Allocation. If, at the end of any Tax Year, the Capital Accounts of any Members have Excess Deficit Balances after taking into account all other allocations and adjustments under this Agreement, then items of Book income and gain for such year will be reallocated to such Members in the amount and in the proportions needed to eliminate such Excess Deficit Balances as quickly as possible.

(e)Other Allocations.

(i)If during any Tax Year of the Company there is a change in any Member’s Units, allocations of Book income or loss for such Tax Year will take into account the varying interests of the Members in the Company in a manner consistent with the requirements of Section 706 of the Code, using the interim closing of the books method or such other method as shall be reasonably approved by the Executive Committee.

(ii)Forfeiture Allocations. The Executive Committee may cause the Company to make forfeiture allocations (within the meaning of Proposed Regulations § 1.704-1(b)(4)(xii)(c)) to the applicable Member with respect to the forfeiture of any Class B Incentive Unit by such Member.

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(iii)Performance-Based NSAM Shares. Any items of compensation deductions derived by the Company that arises from the vesting of Performance-Based NSAM Shares or the transfer of such shares by the Company to AHI Member or its members or employees shall be specially allocated solely to NSAM Member.

(iv)Compensation Deductions Related to Incentive Plans. All compensation deductions that arise in respect of the deemed contribution of shares of NSAM Common Stock by NSAM Member and the transfer of such shares pursuant to Section 6.8 or Section 6.9 shall be specially allocated to NSAM Member. All compensation deductions that arise in respect of contributions or deemed contributions of cash or Time-Based NSAM Shares by AHI Member and the deemed transfer of such shares pursuant to Section 6.9 shall be specially allocated to AHI Member.

(f)Allocation of Tax Items.

(i)In General. Except as otherwise provided in this Section 3.9(f), all items of income, gain, loss and deduction will be allocated among the Members for U.S. federal income tax purposes in the same manner as the corresponding allocation for Book purposes.

(ii)Section 704(c) Allocations. If the Book Value of an item of Company property differs from its Tax Basis, allocations of depreciation, depletion, amortization, gain and loss with respect to such property will be made for U.S. federal income tax purposes in a manner that takes account of the variation between the Tax Basis and Book Value of such property in accordance with Section 704(c)(1)(A) of the Code and Treas. Reg. § l.704-1(b)(4)(i). The Executive Committee may select any reasonable method or methods for making such allocations, unless otherwise required by Section 6.10(b) of the Purchase Agreement.

(iii)Tax Credits. Tax credits will be allocated among the Members in accordance with Treas. Reg. § l.704-1(b)(4)(ii).

3.10Other Tax Matters.

(b)Excess Nonrecourse Liabilities. For the purpose of determining the Members’ shares of the Company’s Excess Nonrecourse Liabilities pursuant to Treas. Reg. §§ 1.752-3(a)(3) and 1.707-5(a)(2)(ii), and solely for such purpose, any Excess Nonrecourse Liabilities shall be allocated (i) first, to each Member up to the amount of built-in gain that is allocable to such Member with respect to any asset of the Company the Book Value of which differs from its adjusted tax basis, and (ii) second, any remaining Excess Nonrecourse Liabilities shall be allocated among the Members pro rata in proportion to their respective Percentage Interests.

(c)Company Indebtedness. No Member shall enter into (or permit any Person related to such Member to enter into) any arrangement with respect to any liability of the Company or any Subsidiary of the Company that would result in such Member (or a Person related to such Member under Treasury Regulations § 1.752-4(b)) bearing the economic risk of loss (within

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the meaning of Treasury Regulations § 1.752-2) with respect to such liability unless such arrangement has been consented to and approved by the Executive Committee. This Section 3.10(c) shall not prohibit (i) any Member or Person related to a Member from making a loan authorized by the Executive Committee or (ii) the Company from becoming indebted to a Member or Person related to a Member for services rendered to the Company or for expenditures incurred on behalf of the Company in the ordinary course of business.

(d)Treatment of Certain Distributions.

(i)If (A) the Company makes a distribution that would (but for this Section 3.10(d)(i)) be treated as a Nonrecourse Distribution and (B) such distribution does not cause or increase a deficit balance in the Capital Account of the Member receiving such distribution as of the end of the Company’s Tax Year in which such distribution occurs, then the Company may treat such distribution as not constituting a Nonrecourse Distribution to the extent permitted by Treas. Reg. § 1.704-2(h)(3).

(ii)If (A) the Company makes a distribution that would (but for this Section 3.10(d)(ii)) be treated as a Member Nonrecourse Distribution and (B) such distribution does not cause or increase a deficit balance in the Capital Account of the Member receiving such distribution as of the end of the Company’s Tax Year in which such distribution occurs, then the Company may treat such distribution as not constituting a Member Nonrecourse Distribution to the extent permitted by Treas. Reg. § 1.704-2(i)(6).

(e)Tax Treatment. The parties to this Agreement intend that the Company be classified as a partnership for U.S. federal income tax purposes pursuant to Section 7701(a)(2) of the Code and the regulations thereunder. The provisions of this Agreement are intended to comply with the requirements of Treas. Reg. §1.704‑1(b)(2)(iv) and Treas. Reg. §1.704-2 with respect to maintenance of capital accounts and allocations, and will be interpreted and applied accordingly.

3.11Treatment of Capital Contributions. No Member shall be entitled to interest on such Member’s capital contributions nor shall any Member be entitled to demand the return of all or any part of such capital contributions.

3.12Benefits of Agreement. Nothing in this Agreement (except for those provisions herein that are expressly for the benefit of the Indemnitees and the Company Indemnitees), and, without limiting the generality of the foregoing, in this Article III, expressed or implied, is intended or shall be construed to give to any creditor of the Company or to any creditor of any Member or any other Person, other than the Members and the Company, any legal or equitable right, remedy or claim under or in respect of this Agreement or any covenant, condition or provisions herein contained, and such provisions are and shall be held to be for the sole and exclusive benefit of the Members and the Company.

3.13Member Loans. No Member shall be required to make any loans or otherwise lend any funds to the Company. Subject to approval of the NSAM Designees (to the extent required) in accordance with Section 5.3(p), loans may be made, however, by any Member to the Company

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(each, a “Member Loan”) and will not be considered capital contributions. If the Executive Committee determines (subject to approval of the NSAM Designees, to the extent required in accordance with Section 5.3(p)), to raise additional capital through a Member Loan, the opportunity to fund such Member Loan shall be offered to all Class A Members in accordance with Section 3.4. The amount of any Member Loan will be a debt due from the Company to the lending Member(s).

ARTICLE IV

DISTRIBUTIONS

4.1Distributions. Subject to Sections 4.2, 4.3 and 4.4, on each Quarterly Payment Date, the Company shall make distributions (if available) to the Members in the following manner:

(a)Priority Distribution to AHI Member. Prior to making any other distributions to the Members pursuant to Sections 4.1(f) or 4.1(g), 100% of all such distributions shall first be distributed to AHI Member until the cumulative amount received by AHI Member under this Section 4.1(a) equals $750,000.

(b)GAHR III Carried Interest Proceeds. GAHR III Carried Interest Proceeds shall be paid and distributed as follows:  (i) the Flaherty GAHR III Proceeds shall be paid to the Flaherty Partnership pursuant to and in accordance with the Flaherty Promote Agreement for payment to Flaherty Member (to the extent he is entitled to receive the same pursuant to the terms and conditions of the Amended Flaherty JV Agreement) and (ii) all remaining GAHR III Carried Interest Proceeds shall be distributed to the Members holding GAHR III Units at the time of such distribution, pro rata, in accordance with the number of GAHR III Units held by each.  In the event that any Flaherty GAHR III Proceeds are returned to the Company in accordance with the Flaherty Promote Agreement, such returned Flaherty GAHR III Proceeds shall be promptly distributed to the Members holding GAHR III Units in accordance with Section 4.1(b)(ii).  In the event that the Flaherty Promote Agreement is terminated or any Flaherty GAHR III Proceeds are forfeited, then upon such termination or forfeiture all GAHR III Carried Interest Proceeds shall be distributed to the Members holding GAHR III Units in accordance with Section 4.1(b)(ii).  Any amount paid to the Company by the Flaherty Partnership pursuant to the Flaherty Promote Agreement shall not be considered a Capital Contribution.

(c)Future Healthcare NTR Carried Interest Proceeds. Future Healthcare NTR Carried Interest Proceeds shall be paid and distributed as follows:  (i) the Flaherty Future Healthcare NTR Proceeds shall be paid to the Flaherty Partnership pursuant to and in accordance with the Flaherty Promote Agreement for payment to Flaherty Member (to the extent he is entitled to receive the same pursuant to the terms and conditions of the Amended Flaherty JV Agreement) and (ii) all remaining Future Healthcare NTR Carried Interest Proceeds shall be distributed to the Members holding Future HC NTR Units at the time of such distribution, pro rata, in accordance with the number of Future HC NTR Units held by each.  In the event that any Flaherty Future Healthcare NTR Proceeds are returned to the Company in accordance with the Flaherty Promote Agreement, such returned Flaherty Future Healthcare NTR Proceeds shall be promptly distributed to the Members holding Future HC NTR Units in accordance with Section 4.1(c)(ii).  In the event

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that the Flaherty Promote Agreement is terminated or any Flaherty Future Healthcare NTR Proceeds are forfeited, then upon such termination or forfeiture all Future Healthcare NTR Carried Interest Proceeds shall be distributed to the Members holdings Future HC NTR Units in accordance with Section 4.1(c)(ii).  Any amount paid to the Company pursuant to the Flaherty Promote Agreement shall not be considered a Capital Contribution.

(d)AHI PE Fund Carried Interest Proceeds. AHI PE Fund Carried Interest Proceeds shall be paid and distributed as follows:  (i) the Flaherty AHI PE Fund Promote Proceeds shall be paid to the Flaherty Partnership pursuant to and in accordance with the Flaherty Promote Agreement for payment to Flaherty Member (to the extent he is entitled to receive the same pursuant to the terms and conditions of the Amended Flaherty JV Agreement) and (ii) all remaining AHI PE Fund Carried Interest Proceeds shall be distributed to the Members holding PE Fund Units at the time of such distribution, pro rata, in accordance with the number of PE Fund Units held by each.  In the event that any Flaherty AHI PE Fund Promote Proceeds are returned to the Company in accordance with the Flaherty Promote Agreement, such returned Flaherty AHI PE Fund Promote Proceeds shall be promptly distributed to the Members holding PE Fund Units in accordance with Section 4.1(d)(ii).  In the event that the Flaherty Promote Agreement is terminated or any Flaherty AHI PE Fund Promote Proceeds are forfeited, then upon such termination or forfeiture all AHI PE Fund Carried Interest Proceeds shall be distributed to the Members holdings PE Fund Units in accordance with Section 4.1(d)(ii).  Any amount paid to the Company pursuant to the Flaherty Promote Agreement shall not be considered a Capital Contribution.

(e)Company Allotted NRF Carried Interest Proceeds. The Company Allotted NRF Carried Interest Proceeds shall be distributed to the Members holding NRF Units at the time of such distribution, pro rata, in accordance with the number of NRF Units held by each.

(f)Operating Cash Flow. Operating Cash Flow shall be distributed to the Members holding Class A Common Units and Class J Incentive Units (whether or not vested) at the time of such distribution, pro rata, in accordance with their respective Operating Cash Flow Pro Rata Share.

(g)Capital Proceeds. Capital Proceeds shall be distributed to the Members in the following priority:

(i)First, to the Members holding Class A Common Units, pro rata, in accordance with each Class A Member’s Unreturned Capital Amount, until the Unreturned Capital Amount of each Class A Member is equal to zero; and

(ii)Second, to the Members holding Class A Common Units, fully vested Class B Incentive Units and Class J Incentive Units (whether or not vested), pro rata, in accordance with their respective Capital Proceeds Pro Rata Share.

Notwithstanding the foregoing, a Class B Member and a Class J Member shall not be entitled to receive amounts otherwise distributable to it under this Section 4.1(g) with respect to a Class B Incentive Unit or a Class J Incentive Unit, as applicable, until the aggregate amounts distributed to all other Members pursuant to this Section 4.1(g) equals the Distribution

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Hurdle applicable to such Class B Incentive Unit or Class J Incentive Unit, as applicable. Any distributions not made to a Class B Member or Class J Member as a result of the preceding sentence shall instead be distributed, in the order of priority set forth in Section 4.1(g), to the other Members whose Distribution Hurdle has been satisfied or whose Units are not subject to a Distribution Hurdle.

(h)GAHR II Merger Promote and AHI Member Retained Fees.  GAHR II Merger Promote and AHI Member Retained Fees shall be distributed to AHI Member.

4.2Tax Distributions.

(a)Subject to sufficient cash of the Company being available (as determined by the Executive Committee), the Company shall distribute to each Member (for the avoidance of doubt, including the owners of Class B Incentive Units and the Class J Incentive Units), from and to the extent of (and only to the extent of) the Company’s cash, an amount equal to the excess, if any, of the following (any such distribution, a “Tax Distribution”): (i) the taxable income allocated by the Company to such Member, for U.S. federal income tax purposes (including by reason of restructuring transactions implemented by the Company in connection with a Public Offering or sale of the Company) for such Tax Year (reduced by any taxable losses allocated by the Company to such Member for U.S. federal income tax purposes in prior years that would have been available to such Member in such Tax Year had its sole source of income been from the Company and all such taxable losses been carried forward (i.e., not carried back)), multiplied by the Tax Rate for such Tax Year; minus (ii) the aggregate distributions made by the Company to such Member pursuant to Section 4.1 during such Tax Year;provided that the Executive Committee in its reasonable discretion may determine that any distributions made during the first quarter of any year should be treated as if distributed in the immediately preceding year if the distributions, if any, made in such prior year were not sufficient to cover the taxes of the Members due for such year. Such distributions shall be paid with respect to a Tax Year of the Company within 90 days after the end of such Tax Year, or, in the Executive Committee’s discretion, at such earlier times as may be determined by the Executive Committee so as to enable the Members to pay their quarterly estimated tax payments for such Tax Year.

(b)If, on the date the Company makes any distribution pursuant to this Section 4.2, the Company does not have an amount of cash sufficient to enable the Company to distribute to all the Members the aggregate amount to which they are entitled pursuant to thisSection 4.2, then the Company shall distribute to each Member an amount equal to: (i) the amount to which such Member is entitled pursuant to this Section 4.2, multiplied by (ii) a fraction, the numerator of which is the amount of the Company’s cash available to make the distributions required under this Section 4.2 and the denominator of which is the aggregate amount to which all the Members are entitled pursuant to this Section 4.2; provided that at such time as the Company may thereafter have sufficient cash to enable the Company to make additional distributions to the Members pursuant to this Section 4.2, as determined by the Executive Committee, the Company shall make one or more additional distributions to each Member in accordance with this Section 4.2(b).

(c)Distributions to a Member under this Section 4.2 shall reduce, dollar-for-dollar, any amounts otherwise distributable to such Member under Section 4.1, Section 9.1 or

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in connection with a Company Sale structured as a direct or indirect Transfer of Units representing 100% of the total outstanding Equity Interests of the Company.

(d)For the avoidance of doubt, the Company shall not be required to borrow funds, and no Member shall be required to make any capital contributions to the Company, in order to enable the Company to make any distributions pursuant to this Section 4.2.

4.3Amounts Withheld. The Company shall at all times be entitled to make payments with respect to each Member in amounts required to discharge any obligation of the Company to withhold or make payments to any U.S. federal, state, local or foreign taxing authority (“Taxing Authority”) with respect to any issuance of Class B Incentive Units or distribution or allocation of income or gain to such Member and to withhold (or deduct) the same from distributions to such Member. Any funds withheld from a distribution to a Member by the Company by reason of this Section 4.3 and all taxes incurred directly or indirectly by the Company in respect of a Member shall nonetheless be deemed distributed to such Member for all purposes under this Agreement. If the Company makes any payment to a Taxing Authority or incurs directly or indirectly any tax in respect of a Member hereunder that is not withheld from actual distributions to such Member, then such Member shall (on demand from the Company) reimburse the Company for the amount of such payment (and any such reimbursement shall not constitute a capital contribution hereunder). If the amount of such payment is not reimbursed by the applicable Member within ten (10) Business Days of demand for such reimbursement, such Member shall pay to the Company interest, compounded annually, on such amount from the date of such payment until such amount is repaid to the Company at the Prime Rate (and such payment of interest shall not constitute a capital contribution hereunder). The amount of a Member’s reimbursement obligation under this Section 4.3, to the extent not paid, shall be deducted from the amount of any distributions otherwise payable to such Member by the Company, and any amounts so deducted shall constitute a repayment (to the extent of such deducted amount) of such Member’s obligation hereunder. Each Member’s reimbursement obligation under this Section 4.3 shall continue after such Member transfers its interest in the Company, after a withdrawal by such Member or after dissolution of the Company. Each Member agrees to furnish the Company with any representations and forms as shall reasonably be requested by the Company to assist it in determining the extent of, and in fulfilling, any withholding obligations it may have. Each Member shall, to the fullest extent permitted by applicable law, indemnify and hold harmless the Company against all claims, liabilities and expenses of whatever nature relating to the Company’s obligation to withhold and to pay over, or otherwise pay, any withholding or other taxes payable by the Company as a result of such Member’s participation in the Company.

4.4Limitations on Distributions. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to make a distribution to any Member on account of its interest in the Company if such distribution would violate Section 18-607 or Section 18-804 of the Act or any other applicable law. It is the intention of the parties to this Agreement that distributions to any holder of a Class B Incentive Unit or any holder of a Class J Incentive Unit shall be limited to the extent necessary so that each Class B Incentive Unit and each Class J Incentive Unit, as applicable, constitutes a Profits Interest. In furtherance of the foregoing, and notwithstanding anything to the contrary in this Agreement, the Executive Committee shall, if

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necessary, limit distributions to any Member in respect of a Class B Incentive Unit or Class J Incentive Unit, as applicable, so that such distributions do not exceed the available profits in respect of such Member’s related Class B Incentive Unit or Class J Incentive Unit.

4.5Deemed Company Sale. In the event the Members sell all (but not less than all) of their Common Units to a Bona Fide Third Party or Third Party Purchaser (whether in a single transaction or series of related transactions), the proceeds of such transaction(s) shall be allocated amongst the Members as if such proceeds were Capital Proceeds distributed in accordance with Section 4.1(g).

ARTICLE V

MANAGEMENT

5.1Executive Committee.

(a)The Initial Members hereby form an executive committee of the Company (the “Executive Committee”). The Executive Committee will consist of five (5) members (each, an “Executive Committee Member”), (i) three (3) of whom will be designated by AHI Member (the “AHI Designees”), for so long as (A) AHI Member and its Group Members continue to own at least 25% of the total Class A Common Units and (B) two or more of the Principals retain voting control of AHI Member (clauses (A) and (B) together, the “AHI Designation Threshold”), and (ii) two (2) of whom will be designated by NSAM Member (the “NSAM Designees”) for so long as NSAM Member and its Group Members continue to own at least 24% of the total Class A Common Units (the “NSAM Designation Threshold”); provided, that if any issuance (or series of related issuances) of Class A Common Units would result in the NSAM Designation Threshold no longer being satisfied, then, unless such issuance (or series of related issuances) was approved by the NSAM Designees, such issuance (or series of related issuances) shall be disregarded for purposes of determining whether the NSAM Designation Threshold is satisfied. Except as otherwise provided herein, (x) AHI Member, in the case of the AHI Designees and (y) NSAM Member, in the case of the NSAM Designees, shall have the sole right to remove their respective Executive Committee Members (at any time, for any reason or no reason). In the event that AHI Member at any time no longer has the right to appoint the AHI Designees or NSAM Member at any time no longer has the right to appoint the NSAM Designees, a majority of the remaining Executive Committee Members may remove the AHI Designees or the NSAM Designees, as applicable, and appoint their replacements. Except as expressly provided otherwise pursuant to the preceding sentence, in the event that a vacancy is created on the Executive Committee as a result of the death, disability, retirement, resignation or removal of any Executive Committee Member, then the Person or Persons that designated such Executive Committee Member shall have the right to designate a Person to fill such vacancy; provided, that with respect to an AHI Designee, the AHI Designation Threshold is met, and with respect to an NSAM Designee, the NSAM Designation Threshold is met. The Executive Committee shall have complete and exclusive authority to manage, control, administer, and operate the business and affairs of the Company, and shall make all decisions affecting such business and affairs in accordance with the Approved Business Plan, subject to the rights of the NSAM Designees to approve Major Matters pursuant to Section 5.3. Each Executive Committee

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Member shall have one vote on all matters before the Executive Committee; provided, that Major Matters shall require the approval of both of the NSAM Designees for so long as the NSAM Designation Threshold is met. Each Executive Committee Member shall be deemed a “manager” (within the meaning of Section 18-101 of the Act) of the Company.

(b)The Executive Committee shall meet at the request of any NSAM Designee or AHI Designee upon not less than two (2) Business Days prior written notice to the Executive Committee Members; provided, that if a meeting of the Executive Committee is being called by an AHI Designee to decide upon a Major Matter, the notice of such meeting delivered to the NSAM Designees shall describe in reasonable detail the Major Matter to be decided upon at such meeting. The attendance of an Executive Committee Member at a meeting of the Executive Committee either in person or telephonically (other than for the purposes of protesting the absence of notice of the meeting) shall constitute a waiver of notice of such meeting. The meetings of the Executive Committee may be held (i) at the principal place of business of the Company, (ii) by telephone conference, or (iii) by other means determined by the Executive Committee Members. The Executive Committee Member unable to attend a meeting of the Executive Committee in person for any reason shall be entitled to participate in such meeting by telephone conference, and such participation shall constitute presence in person at such meeting. The presence of a majority of the Executive Committee Members then holding office, which majority must include at least two (2) AHI Designees for so long as the AHI Designation Threshold is met, shall constitute a quorum for the transaction of business; provided, that so long as the NSAM Designation Threshold is met, the presence of both NSAM Designees shall also be required to constitute a quorum at any meeting called to decide upon a Major Matter. If none of the NSAM Designees are able to attend a meeting of the Executive Committee, a representative of NSAM Member shall be permitted (but will not be required) to attend such meeting in person or by telephone conference solely as a non-voting observer (which non-voting observer shall not be included for purposes of establishing a quorum), and shall have the right to receive all materials distributed to the Executive Committee Members in connection with such meeting. If at any meeting of the Executive Committee there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum shall have been obtained. Telephonic participation in any meeting by any Executive Committee Member shall constitute such Executive Committee Member’s presence at such meeting for all purposes of this Agreement. Any decision made by an absolute majority of the total number of Executive Committee Members (e.g. at least three (3) Executive Committee Members when the Executive Committee is comprised of four (4) or five (5) Executive Committee Members) shall constitute the act of and approval by the Executive Committee; provided, that so long as the NSAM Designation Threshold is met, the approval of both NSAM Designees shall be required to approve any Major Matter. Any decision or other action required or permitted to be taken at any meeting of the Executive Committee may be taken without a meeting by written resolution if a copy of such resolution is delivered by the Executive Committee to each Executive Committee Member and shall be effective upon the date on which such resolution is approved in writing by the requisite Executive Committee Members; provided, that so long as the NSAM Designation Threshold is met, the approval of both NSAM Designees shall be required to approve any Major Matter. Minutes of each meeting and a record of each decision shall be kept by a designee of the Executive Committee and shall be available to each Class A Member and, to the extent required by any non-waivable provision of the Act, each other Member.

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(c)As of the Effective Date, (i) AHI Member hereby appoints each of the Principals as the initial AHI Designees and (ii) NSAM Member hereby appoints Flaherty Member and Ronald J. Lieberman as the initial NSAM Designees.

(d)Each of AHI Member and NSAM Member hereby acknowledges that its rights to appoint designees to the Executive Committee are personal, non-transferable and intended to be exercised only by AHI Member and NSAM Member, as applicable, and each hereby agrees not to enter into any Contract (other than this Agreement) with any Person intended to delegate, assign or otherwise transfer all or any portion of such rights to any other Person.

5.2Officers.

(a)Generally. The Executive Committee may from time to time appoint officers of the Company (each, an “Officer”) who shall exercise such powers and perform such duties as shall be delegated from time to time by the Executive Committee. Any number of offices may be held by the same person. The initial Officers of the Company designated by the Executive Committee are listed on Exhibit C attached hereto. Any Officer may be removed at any time, with or without cause, by the Executive Committee.

(b)Officers as Agents. The Officers, to the extent of the powers delegated to them by the Executive Committee, are agents of the Company for the purpose of the Company’s business and the actions of the Officers taken in accordance with such powers shall bind the Company. Notwithstanding anything to the contrary in this Agreement, so long as the NSAM Designation Threshold is met, no Officer shall be authorized to take any action that constitutes a Major Matter without the consent of the NSAM Designees pursuant to the terms of this Article V.

5.3Major Matters. Except as otherwise expressly set forth in this Agreement including Sections 5.5 and 5.7, none of the Executive Committee, the Executive Committee Members (in the Executive Committee Members’ capacity as “managers” under the Act) or the Officers shall do, or cause or permit the Company or, any Subsidiary of the Company to do, any of the following actions (the “Major Matters”), without the approval of both of the NSAM Designees (for so long as the NSAM Designation Threshold is met); provided, that if any such action has been specifically set forth in reasonable detail in the Approved Business Plan then in effect, then such action shall not be a Major Matter requiring approval of the NSAM Designees:

(a)amending, terminating, restating or otherwise modifying this Agreement, the Certificate or any other Organizational Documents of the Company or any Subsidiary of the Company;

(b)(i) appointing or terminating the appointment of any auditors of the Company or any of its Subsidiaries or (ii) changing any methods of accounting, except as required by changes in applicable law or GAAP;

(c)(i) approving each Business Plan and any material revision to the Approved Business Plan then in effect, (ii) except as set forth in Section 5.4(a), during any Fiscal Year, incurring unbudgeted corporate operating and overhead expenses in excess of 110% of the

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aggregate amount budgeted in the Approved Business Plan for such corporate operating and overhead expenses (each, a “Permitted Variance”) or (iii) incurring during any Fiscal Year less than 95% of the aggregate amount budgeted in the Approved Business Plan for such corporate operating and overhead expenses;

(d)(i) issuing any Equity Interests of the Company (other than Class B Incentive Units) or of any Subsidiary of the Company, (ii) authorizing any subdivision, split, combination, or other reclassification of any Equity Interests of the Company or of any Subsidiary of the Company or (iii) redeeming, repurchasing or otherwise acquiring any Equity Interests of the Company or of any Subsidiary of the Company (other than in accordance with the redemption contemplated in the Purchase Agreement); provided, that the foregoing restrictions shall not apply to (A) the issuance of Additional Interests pursuant to and in accordance with Section 3.3(b) or Section 3.5, and (B) the issuance of Equity Interests in connection with a Public Offering approved (to the extent required) in accordance with Section 5.3(w);

(e)amending or otherwise modifying any term of any Equity Interests of the Company or any of its Subsidiaries;

(f)(i) amending, terminating, restating, waiving any material term of, replacing, entering into or modifying any Advisory Agreement other than (A) the NSAM Sub-Advisory Agreement; provided, that any termination without Cause (as defined in the NSAM Sub-Advisory Agreement) shall be governed by clause (ii) below, and (B) any other Advisory Agreement in the ordinary course of business and on commercially reasonable terms, to the extent the Executive Committee deems necessary or advisable to manage, advise or sub-advise any Future Healthcare NTR; provided, that the Company continues to maintain at least a 75% economic interest in the advisor or sub-advisor, as applicable; or (ii) terminating the NSAM Sub-Advisory Agreement without Cause;

(g)(i) amending, terminating, restating, replacing or otherwise modifying the terms of any Principal’s employment agreement; or (ii) granting, increasing or modifying the terms of any bonus (including any severance, retention, change of control or similar payments) payable to any Principal, in each case, other than as set forth in such Principal’s employment agreement;

(h)(i) allocating to the Principals (or any of their respective Family Members) all or any portion of Class B Incentive Units; (ii) authorizing the Company or any of its Subsidiaries to grant Class B Incentive Units pursuant to the Incentive Unit Plan in excess of the Pre-Approved Class B Issuance; (iii) authorizing the Executive Committee to distribute Class B Incentive Units in excess of the Annual Permitted Class B Issuance; (iv) authorizing the Company or any of its Subsidiaries to grant any additional Class J Incentive Units; (v) amending, terminating, replacing or otherwise modifying the Incentive Unit Plan; or (vi) except as expressly contemplated in the applicable Approved Business Plan, establishing any equity compensation plans for employees of the Company or any Subsidiary of the Company other than the Incentive Unit Plan and the Phantom Stock Plan;

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(i)selling, transferring or otherwise disposing of all or substantially all of the Company’s assets or any of its Subsidiaries’ assets, in each case, whether by sale or transfer of assets, sale of equity, merger, consolidation, recapitalization or a transaction of similar nature, to any party; provided, that (i) a Company Sale pursuant to Section 7.5, (ii) any issuance of Equity Securities pursuant to Section 3.3(b) and (iii) any Transfer of Equity Securities in the Company that complies with the applicable provisions of Article VII, shall in no event constitute a Major Matter;

(j)declaring, setting aside, or paying any dividend or other distribution on account of any Membership Interests or redeeming any Membership Interests except, in each case, as set forth in Article IV or Section 9.1(d), or as otherwise expressly provided in the Approved Business Plan;

(k)(i) amending or modifying the Primary Purpose, (ii) engaging, or permitting any Subsidiary of the Company to engage, in any action that would materially and adversely affect the Company’s ability to fulfill its Primary Purpose, or (iii) entering into any new line of business not contemplated under this Agreement;

(l)(i) other than in the ordinary course of business consistent with past practice, entering into, amending, or otherwise modifying any Contract which is intended to limit or restrict in any material respect the ability of the Company and its Subsidiaries, taken as a whole, to enter into or engage in any market or line of business that is expressly contemplated under this Agreement or (ii) other than customary non-disclosure agreements entered into in the ordinary course of business and which purport to restrict the use of confidential information by Affiliates, entering into, amending or otherwise modifying any Contract which purports to limit or restrict the ability of NSAM Member or any of its Affiliates (other than the Company and its Subsidiaries) to enter into or engage in any market or line of business in any manner; provided, however, that any Contracts entered into for the sole purpose of consummating a Company Sale in accordance with the requirements of Section 7.5 shall not require any approval under this Section 5.3;

(m)entering into, amending or otherwise modifying any Contract pursuant to which the Company or any of its Subsidiaries is required to make payments in excess of $1,000,000 in the aggregate in any calendar year;

(n)entering into, amending, terminating, restating, replacing or otherwise modifying the terms of any joint venture, partnership, strategic alliance, fund management or similar Contract (each, a “JV Contract”) with any Person other than (i) any such Contract with a NSAM Entity (other than the Company and its Subsidiaries), but excluding a termination without Cause of the NSAM Sub-Advisory Agreement or (ii) as expressly contemplated by the Griffin JV Agreement or any JV Contract previously approved by the Executive Committee (with the consent of the NSAM Designees for so long as the NSAM Designation Threshold is met) (an “Approved JV Contract”);

(o)entering into any Affiliate Transaction; provided, that (i) the issuance of Additional Interests in accordance with the preemptive rights set forth in Section 3.4, (ii) any Company Sale pursuant to Section 7.5 and (iii) any Transfer of Equity Securities in the Company

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that complies with the applicable provisions of Article VII, shall in no event constitute a Major Matter;

(p)creating, incurring, assuming or suffering to exist any Indebtedness of the Company or any of its Subsidiaries (including pursuant to a Member Loan), other than any Indebtedness permitted to be incurred pursuant to the Approved Business Plan, subject, in each case, to the Permitted Variances;

(q)entering into, causing or permitting the Company or any Subsidiary of the Company to enter into any guaranties;

(r)causing the Company or any Subsidiary of the Company to acquire, directly or indirectly, any assets, make any loan, fund any capital or make any investment in any asset that, in any case, results in a net investment by the Company or any of its Subsidiaries of more than $1,000,000 in the aggregate (whether in an individual transaction or in a series of related transactions); provided, that, (x) the Company may fund startup costs in connection with forming and sponsoring each Future Healthcare NTR (which startup costs may not exceed $2,000,000 for so long as the NSAM Designation Threshold is met) and (y) neither the Company nor any of its Subsidiaries shall seek to register more than one Future Healthcare NTR in any twelve-month period.

(s)selling, assigning, conveying, transferring or otherwise disposing of, or causing or permitting any Subsidiary of the Company to sell, assign, convey, transfer or otherwise dispose of, directly or indirectly, all or any part of any assets owned by the Company or any Subsidiary (in an individual transaction or a series of related transactions) with an aggregate estimated value in excess of $1,000,000 (as determined by the Executive Committee), other than pursuant to (i) a Company Sale in accordance with Section 7.5, (ii) the issuance of Additional Interests pursuant to and in accordance with Sections 3.3(b) and 3.5 or (iii) any Transfer of Equity Securities in the Company that complies with the applicable provisions of Article VII;

(t)forming, establishing, operating, managing, sponsoring, funding, financing or registering, directly or indirectly through any Subsidiary of the Company, any Investment Vehicle, except (i) GAHR III, (ii) pursuant to the NSAM Sub-Advisory Agreement or (iii) as contemplated under Sections 5.5 or the Exclusivity Letter;

(u)making or causing the Company or any Subsidiary of the Company to make any material tax election, or causing the Company or any Subsidiary of the Company to adopt any material tax practice or procedure (except as required by applicable law) or settling or causing the Company or any Subsidiary of the Company to settle any material tax matter;

(v)except with respect to a NSAM Dispute (i) settling, or causing or permitting any Subsidiary of the Company to settle, any lawsuit, claim, counterclaim or other legal proceeding against the Company or any Subsidiary of the Company if such settlement requires payment in excess of $1,000,000; provided, that such settlement does not impose an injunction or other equitable relief against the Company or any Subsidiary of the Company, or (ii) initiating, joining, or otherwise voluntarily participating in any legal proceeding involving a matter in dispute with respect to the Company or any Subsidiary of the Company or causing or permitting any

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Subsidiary of the Company to initiate, join, or otherwise voluntarily participate in any legal proceeding involving a matter in dispute with respect to the Company or any Subsidiary of the Company, in each case, if such legal proceeding seeks damages in excess of $1,000,000;

(w)(i) effecting any Public Offering prior to the seventh anniversary of the Effective Date or (ii) effecting the first direct or indirect (through a parent entity or otherwise) Public Offering (other than a Qualified Initial Public Offering) after the seventh anniversary of the Effective Date;

(x)effecting a liquidation, restructuring, consolidation, reorganization, conversion, dissolution, winding up or cessation of business of the Company or any Subsidiary of the Company other than (i) pursuant to Section 9.1(a)(ii) or (ii) a Company Sale pursuant to Section 7.5;

(y)assigning, or causing or permitting any Subsidiary of the Company to assign, for the benefit of creditors or filing or causing any Subsidiary of the Company to file a voluntary petition in bankruptcy or any petition seeking any reorganization, composition, liquidation, dissolution or similar relief under the present or future applicable Federal or state laws relative to bankruptcy, insolvency or other relief for debtors (collectively, the “Bankruptcy Laws”);

(z)consenting to or acquiescing in the entry of, or causing or permitting any Subsidiary of the Company to consent or acquiesce in the entry of an Order approving a petition filed against the Company or any of its Subsidiaries seeking any reorganization, composition, liquidation, dissolution or other relief under the Bankruptcy Laws, or seeking or consenting to or acquiescing in the appointment of any trustee, receiver, conservator or liquidator of the Company or any of its Subsidiaries;

(aa)forming new Subsidiaries of the Company, other than (i) wholly-owned Subsidiaries of the Company, (ii) Subsidiaries formed in accordance with the Griffin JV Agreement or any Approved JV Contract and (iii) Subsidiaries formed to manage or advise any New American Product; provided, that the Company owns (directly or indirectly) at least 75% of the Subsidiaries described in clauses (ii) and (iii);

(bb)selling, assigning, transferring, pledging or otherwise encumbering, or causing or permitting any Subsidiary of the Company to directly or indirectly, sell, assign, transfer, pledge or otherwise encumber any of its rights to receive, earn or participate in, directly or indirectly, any management fees, promotes, incentive fees or other payment or remuneration or any other income stream or profit participation, in each case, other than AHI Member Retained Fees;

(cc)(i) entering into, amending, terminating, restating, replacing, waiving any material rights under or otherwise modifying (x) the terms of the Griffin JV Agreement; provided, that authorizing Griffin to increase the total number of products distributed by Griffin and its Affiliates from four to five shall not be deemed a Major Matter, or (y) the terms of any other Contract with Griffin other than to the extent contemplated by and consistent with the terms of the Griffin JV Agreement and on commercially reasonable terms or (ii) delivering or otherwise providing a Griffin Competitive Release (as such term is defined in the Griffin JV Agreement);

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(dd)(i) using the “NorthStar” name (or any variation or acronym thereof), whether in connection with the branding, marketing or sponsoring of any Permitted Investment Vehicles or otherwise; (ii) branding any Future Healthcare NTRs with any name other than “Griffin,” “American” or “NorthStar” (so long as the Company is permitted to use the “NorthStar” name in accordance with the terms of this Agreement); or (iii) entering into any Contract with respect to the co-sponsoring of any Future Healthcare NTRs other than to the extent contemplated under the Griffin JV Agreement or an Approved JV Contract, in each case on commercially reasonable terms; and

(ee)expect as otherwise required by Section 6.7, amending, terminating, restating, replacing or otherwise modifying the Allocation Principles.

5.4Approved Business Plan.    The Executive Committee shall cooperate in good faith to approve a Business Plan for each Fiscal Year, subject to approval of the NSAM Designees (to the extent required) in accordance with Section 5.3(c). An initial draft of the Business Plan with respect to any Fiscal Year (other than 2015) shall be delivered to NSAM Member no later than November 1 of the immediately preceding Fiscal Year. If a Business Plan with respect to any Fiscal Year is not approved by December 31 of the immediately preceding Fiscal Year, then the most recent Approved Business Plan shall continue to be in effect, except as follows, without duplication: (a) to the extent specific line items of the Business Plan have been approved in accordance with the applicable provisions of this Section 5.4, the budget for such specific line items shall be as so approved; and (b) until approved as provided in the foregoing clause (a) or the adoption of a new Approved Business Plan, the total budget for such Fiscal Year shall be increased by five percent (5%) over the aggregate budgeted amount set forth in the Approved Business Plan for the prior Fiscal Year, which the parties hereto agree may be allocated among the various expenses set forth in such Approved Business Plan in the reasonable discretion of the Executive Committee; provided, that Necessary Expenses may be reasonably incurred without any limitation or approval so long as NSAM Member and AHI Member are immediately notified of such expenses. Any proposed revision to an Approved Business Plan shall be submitted to the Executive Committee for its approval, subject to obtaining any approval of the NSAM Designees required under Section 5.3(c), and upon approval of such revision to the extent required by this Agreement, the Approved Business Plan, as so revised, shall thereafter constitute the Approved Business Plan for the period covered thereby.

5.5Investment Vehicles.

(a)    Except as provided for in Section 4.1, no promotes, incentive payments, fees or other funds payable by any Permitted Investment Vehicle shall be paid to any Principals (or any of their Affiliates (other than the Company or any of its Subsidiaries) or Family Members) or any employees of the Company.

(b)The Members agree that, other than with respect to GAHR III, and except as otherwise agreed by AHI Member and NSAM Member, the investment or advisory committee of any Permitted Investment Vehicle (each, an “Investment Committee”) shall include (i) the AHI Designees so long as the AHI Designation Threshold is met, (ii) the NSAM Designees so long as the NSAM Designation Threshold is met and (iii) a representative designated by Griffin

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so long as Griffin is co-sponsoring such Investment Vehicle pursuant to the Griffin JV Agreement. Any decision made by an absolute majority of the members of the Investment Committee (including any recommendations to any Permitted Investment Vehicle) shall constitute the act of and approval by the Investment Committee of the matter in question; provided, that other than with respect to GAHR III, the approval of both of the NSAM Designees shall be required with respect to any Investment Committee Major Matters so long as the NSAM Designation Threshold is met; provided, further, that if a specific matter that would otherwise constitute an Investment Committee Major Matter also constitutes a Major Matter and such specific matter was previously approved by the NSAM Designees pursuant to Section 5.3, then such specific matter shall be deemed to have been approved by the NSAM Designees for purposes of the Investment Committee, and separate approval of the NSAM Designees shall not be required pursuant to this Section 5.5(b).

(c)If AHI Member proposes to NSAM Member and the Executive Committee that the Company or any of its Subsidiaries manage, sponsor, advise, finance or fund any new business line, investment fund or investment vehicle (other than a Future Healthcare NTR) intended to invest primarily in Healthcare real estate assets (a “New American Product”), then NSAM Member and the NSAM Designees shall in good faith consider AHI Member’s proposal without taking into account any considerations related to the business activities of any NSAM Entity that may compete with such New American Product. For a period of thirty (30) days from the date AHI Member proposes a New American Product, AHI Member and NSAM Member shall cooperate in good faith to determine whether pursuing such New American Product is in the best interests of the Company. If, during such thirty (30)-day period, AHI Member and NSAM Member are unable to agree on pursuing such New American Product through the Company, then the Company shall not be permitted to pursue such New American Product.

5.6Other Activities. Except as otherwise expressly required by this Agreement, including the Allocation Principles (to the extent applicable), or the Exclusivity Letter:

(a) NSAM Member (or any Affiliate thereof) may own, purchase, sell, or otherwise deal in any manner with any investments that directly compete with, may otherwise conflict with, or involve a business opportunity that may be beneficial to, the interests and business of the Company and the Company’s Subsidiaries without notice to and without participation of the Company, the Company’s Subsidiaries or any other Member, and without liability of any kind or nature whatsoever. NSAM Member shall not be deemed to have violated a duty or obligation to the Company or the Company’s Subsidiaries merely because the conduct of NSAM Member (or any of its Affiliates) furthers the interests of NSAM Member (or any of its Affiliates). No transaction with the Company or any Subsidiary of the Company shall be void or voidable solely because NSAM Member (or any of its Affiliates) has a direct or indirect interest in the transaction. The Company, its Subsidiaries and each other Member expressly acknowledges that NSAM Member will not be obligated to inform or present to the Company, any Subsidiary of the Company or any other Member any such competitive transaction or business opportunity and none of the Company, any Subsidiary or any other Member will be entitled to acquire, on account of the transaction by NSAM Member an interest or participation in any such other competitive transaction or business opportunity.

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(b)Without limiting the generality of the foregoing, the Company, on behalf of itself and each of its Subsidiaries, and each Member expressly acknowledge and agree that (a) NSAM Member and its Affiliates may from time to time acquire or possess knowledge of a competitive transaction or business opportunity in which the Company or any Subsidiary of the Company could have an interest (each an “Opportunity”) and may exploit any such Opportunity or otherwise engage in or possess an interest in any business venture that is competitive with the activities of the Company or any Subsidiary of the Company, (b) neither the Company nor any Subsidiary of the Company shall have an interest in such Opportunity or expectation that such Opportunity be offered to it, any such interest or expectation being hereby renounced so that NSAM Member and its Affiliates (i) shall have no duty to communicate or present any such Opportunity to the Company, any Subsidiary of the Company or any other Member, (ii) shall have the right to hold any such Opportunity for their own account, or recommend, assign or otherwise transfer such Opportunity to Persons other than the Company, any Subsidiary of the Company or any other Member and (iii) shall not be liable to the Company, any Subsidiary of the Company or any other Member for pursuing or acquiring such Opportunity for themselves, for recommending, assigning or otherwise transferring such Opportunity to another Person, for not informing or presenting such Opportunity to the Company, any Subsidiary of the Company or any other Member, or for engaging in or possessing an interest in any business venture that is competitive with the activities of the Company or any Subsidiary of the Company.

5.7Conflicting Interests; Enforcement of Remedies. Notwithstanding anything to the contrary contained in this Agreement:

(a)    If the Company or any of its Subsidiaries has any legal claim or action against (i) AHI Member, any Principal, or any of their respective Affiliates (other than the Company and its Subsidiaries) (an “AHI Dispute”), or (ii) any NSAM Entity (a “NSAM Dispute”), then NSAM Member (in the case of an AHI Dispute and so long as the NSAM Designation Threshold is met) or any Principal designated by AHI Member (in the case of a NSAM Dispute and so long as the AHI Designation Threshold is met), shall have sole power and authority to act on behalf of the Company and its Subsidiaries with respect to the pursuit and enforcement of such AHI Dispute or NSAM Dispute, as applicable, including with respect to waiving any claims or rights or granting any releases, and shall be permitted to pursue any and all remedies it deems appropriate (in its sole discretion), whether arising under contract or statute, by operation of law or otherwise. If in a final determination rendered by a court of competent jurisdiction that is not subject to appeal, it is determined that a Principal (in the case of an AHI Dispute) or any NSAM Entity, including any director, officer, or employee of any NSAM Entity (in the case of a NSAM Dispute) has committed fraud, willful misconduct or gross negligence in the conduct of its duties to the Company or any of its Subsidiaries, then NSAM Member shall have sole power and authority to remove such Principal (in the case of such AHI Dispute) and AHI Member shall have sole power and authority to remove both NSAM Designees (in the case of such NSAM Dispute) from the Executive Committee, the Investment Committee of each Permitted Investment Vehicle and from the offices then held by such Persons at the Company and any of its Subsidiaries, and, in such case, such Principal or NSAM Designees, as applicable, shall immediately tender their resignations from the board of directors or similar governing body of each Future Healthcare NTR and Healthcare Fund (as defined in the Exclusivity Letter) to which they are members. AHI Member shall have the sole right to appoint

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any replacements for any Principal removed pursuant to this Section 5.7(a) for so long as the AHI Designation Threshold is met, and NSAM Member shall have the sole right to appoint any replacements for the NSAM Designees removed pursuant to this Section 5.7(a) for so long as the NSAM Designation Threshold is met; provided, that any such replacements appointed by AHI Member shall be subject to NSAM Member’s approval (for so long as the NSAM Designation Threshold is met) and any such replacements appointed by NSAM Member shall be subject to AHI Member’s approval (for so long as the AHI Designation Threshold is met), such approvals not to be unreasonably withheld, delayed or conditioned.

(b)If the Company or any of its Subsidiaries has entered into a Contract with (i) AHI Member, any Principal or any of their respective Affiliates (other than the Company and its Subsidiaries) (an “AHI Contract”), or (ii) any NSAM Entity (a “NSAM Contract”), then NSAM Member (in the case of an AHI Contract and so long as the NSAM Designation Threshold is met) or one or more Principals designated by AHI Member (in the case of a NSAM Contract and so long as the AHI Designation Threshold is met), shall have sole power and authority to exercise and enforce, on behalf of the Company and its Subsidiaries, all rights, benefits, privileges and remedies of the Company and its Subsidiaries, whether at law or in equity, under such AHI Contract or NSAM Contract, as applicable; provided, however, that notwithstanding this Section 5.7, in no event shall any Person be permitted to terminate the NSAM Sub-Advisory Agreement without Cause, without the prior approval of the NSAM Designees (for so long as the NSAM Designation Threshold is met).

(c)Any action taken by NSAM Member or any Principal pursuant to this Section 5.7 shall be given the same force and effect vis-à-vis the Company and its Subsidiaries as an action taken by the Executive Committee on a non-Major Matter; provided, however, when exercising its rights under this Section 5.7, neither NSAM Member nor any Principal shall be required to comply with any of the meeting, quorum, notice, voting or other requirements applicable to the Executive Committee under this Agreement. For the avoidance of doubt, any action taken by AHI Member or any Principal pursuant to this Section 5.7 shall not constitute a Major Matter.

5.8Healthcare Activities by AHI. AHI Member and each Principal shall present to the Company all Healthcare investment opportunities sourced by AHI Member or such Principal (for so long as such Principal (i) is employed by the Company or (ii) (x) is an AHI Designee, (y) is an officer of the Company, any Affiliate of the Company or any Future Healthcare NTR, or (z) is a director of the Company or any Affiliate of the Company (other than any Future Healthcare NTR) (each of clauses (i) and (ii), a “Company-Principal Relationship”)). To the extent (a) a Healthcare investment opportunity is sourced by AHI Member or any Principal, (b) the Company elects not to pursue such Healthcare investment opportunity and (c) all other Persons entitled to pursue such opportunity in accordance with the Allocation Principles (to the extent applicable) elect to pass on such opportunity, then, in such case, AHI Member, any Principal or their respective Affiliates (other than the Company and its Subsidiaries) shall be permitted to invest their personal funds in such opportunity on a passive basis (without taking on any active management role on behalf of others or fundraising responsibilities except with respect to friends and family) without further obligation to the Company, any Member or other Person. Notwithstanding the foregoing, for the initial sixty (60) day period immediately following such time as a Principal is no longer in any Company-

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Principal Relationship, such Principal shall be restricted from investing his personal funds in any Healthcare investment opportunities except to the extent he would have otherwise been permitted to make such investment under the preceding sentence.

5.9    Group Members

(a)All Group Members that have approval or consent rights or are otherwise required to take any action with respect to a matter shall be obligated to approve, consent or otherwise take such other action permitted or required to be taken by the Group Members under this Agreement as one Member constituting the aggregate Class A Common Units of all Group Members with respect to all matters under this Agreement. AHI Member shall be jointly and severally liable for the actions of its Group Members under this Agreement (and all other Group Members in AHI Member’s group shall be severally liable for their own actions under this Agreement). NSAM Member and NSAM Parent shall be jointly and severally liable for the actions of their Group Members under this Agreement (and all other Group Members in NSAM Member’s group shall be severally liable for their own actions under this Agreement); and

(b)The Group Members shall designate one Group Member (the “Group Agent”) to act as agent for the Group Members as the primary Group Member to give or receive notices hereunder. The Group Members may replace their Group Agent from time to time upon written notice to the other Members. For so long as there is only one AHI Member or NSAM Member, such party shall be designated the Group Agent for AHI Member and NSAM Member, as applicable. Notices given or received by the Group Agent shall be deemed given or received by all Group Members and shall be binding on all Group Members as if given or received by each of them.

5.10Public Offerings. Notwithstanding anything to the contrary contained in this Agreement, if NSAM Parent determines in its good faith judgment that it would be detrimental to NSAM Parent or any of its Affiliates for the Company to file a registration statement in connection with a Public Offering because such action would (a) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction of NSAM Parent or its Affiliates; (b) require premature disclosure of material information that NSAM Parent or any of its Affiliates has a bona fide business purpose for preserving as confidential; or (c) render NSAM Parent or any of its Affiliates unable to comply with requirements under the Securities Act or Exchange Act, then NSAM Parent shall have the right, exercisable not more than once every twelve (12) calendar months, to cause the Company to defer taking action with respect to such filing for a period of up to ninety (90) days, and the Company shall not register any securities for its own account or that of any other stockholder during such ninety (90) day period unless such filing or registration is expressly required by law.

ARTICLE VI

COVENANTS

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6.1Books and Records. The Company shall maintain at its principal office the books and records of the Company (which at all times shall remain the property of the Company), in the name of the Company and separate and apart from the books and records of the Members and their Affiliates, showing all receipts and expenditures, assets and liabilities, profits and losses, and all other information required by the Act. Such books and records of the Company, which shall be denominated in U.S. Dollars, shall be maintained in accordance with GAAP or any other generally accepted accounting principles required to be used in the United States at the applicable time.

6.2    Bank Accounts    (a) Funds of the Company shall be deposited in a separate Company account or accounts in the bank or banks selected by the Executive Committee and (b) withdrawals from bank accounts shall only be made by the Officers or such other parties as may be approved by the Executive Committee.

6.3    Reports to Class A Members

(a)The Company, at the Company’s expense, shall cause to be prepared and furnished to each Class A Member with respect to each Fiscal Year of the Company the following:

(i)within ninety (90) days after the close of each such Fiscal Year, an audited report prepared in accordance with GAAP, which includes for the Fiscal Year a balance sheet, an income statement, and a statement of cash flows of the Company on a consolidated basis, and a statement of such Member’s Capital Account; and

(ii)within ninety (90) days after the close of each such Fiscal Year, such other information as the Executive Committee or NSAM Member deems reasonably necessary or such Class A Member reasonably requests.

(b)The Company, at the Company’s expense, shall cause to be prepared and furnished to each Class A Member with respect to the first, second and third fiscal quarters of each Fiscal Year within forty-five (45) days after the close of each such fiscal quarter:

(i)an unaudited report prepared in accordance with GAAP, which includes for the quarter and year to date (x) a balance sheet and an income statement on a consolidated basis and a statement of such Member’s Capital Account, and (y) a comparison of the foregoing figures against the same figures from the preceding quarter and year to date; and

(ii)such Member’s Capital Account transactions report which shows the details of all transactions of the Company which flow through such Member’s Capital Account and have occurred since the end of the preceding quarter and preceding Fiscal Year, including all capital calls, cash flows and/or capital distributions.

(c)The Company, at the Company’s expense, shall cause to be prepared and furnished to each Class A Member with respect to the following fiscal quarters during each Fiscal Year the following: (i) within ten (10) days after the close of each of the first, second, third and fourth fiscal quarters, an estimate of the Distributable Cash Flow as of the end of such fiscal

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quarter, (ii) within forty-five (45) days after the close of each of the first, second and third fiscal quarters, a reasonably detailed calculation of the Distributable Cash Flow as of the end of such fiscal quarter and (iii) within ninety (90) days of the end of the fiscal year, a year end statement calculating Distributable Cash Flow for the prior fiscal year.

(d)In addition, the Company shall cause to be prepared and furnished to each Class A Member within fifteen (15) Business Days after the close of each fiscal quarter the following:

(i)a computation of all fees recognized on an accrual basis during such quarter;

(ii)a computation of all distributions made to the Members; and

(iii)a draft balance sheet, income statement and statement of cash flows of the Company on a consolidated basis for the applicable fiscal quarter and year to date and a draft statement of such Member’s Capital Account.

(e)The Company shall, at the Company’s expense, provide each Class A Member with such other information relating to the Company or its Subsidiaries as such Class A Member shall reasonably request.

(f)The Company shall provide to NSAM Member: (1) at least five (5) Business Days prior to each quarterly estimated tax payment date for calendar year corporations, an estimate of NSAM Member’s share of the Company’s taxable income or loss with respect to such calendar quarter and (2) within twenty-five (25) days after the end of each Tax Year, estimated information necessary for such Member to prepare any required 1099-DIV forms. The Executive Committee shall use commercially reasonable efforts to provide each Class A Member with a draft of all material U.S. federal income tax returns (including any reports, statements, attachments or information returns) at least fifteen (15) days prior to the due date (including extensions) for filing such returns, and shall consider in good faith any comments or corrections proposed by a Class A Member. Notwithstanding the above, the Executive Committee will provide each Member with (i) estimates of its IRS Schedule K-1 items with respect to any Tax Year within twenty (20) days after the end of such Tax Year, (ii) a draft IRS Schedule K-1 with respect to the Tax Year no later than May 31 following such Tax Year, and (iii) a final IRS Schedule K-1 with respect to the Tax Year no later than September 1 following such Tax Year. The Executive Committee shall also provide to any Member such other information as may be reasonably requested by such Member relating to the Company’s tax matters. Each Member acknowledges that any estimated tax information will be on an estimated basis only and may be substantially different than actual results.

6.4Access to the Company. The Company shall permit each Class A Member and its directors, officers, partners, employees, agents or representatives including attorneys, accountants, partners, experts and consultants (collectively, “Representatives”) (i) to visit the office, properties and other facilities of the Company and its Subsidiaries, (ii) to examine and review the financial records and books of account of the Company and its Subsidiaries, and (iii) to meet with key employees of the Company and its Subsidiaries, each during normal or extended business hours

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and upon reasonable advance notice (provided that 24 hours should be deemed reasonable advance notice), for a purpose reasonably related to its interest as a Member; provided, that each Class A Member’s Representatives must be obligated to keep all Confidential Information strictly confidential in accordance with Section 11.14.

6.5    Designation of Tax Matters Member

(a)Subject to approval of the NSAM Designees (to the extent required) in accordance with Section 5.3(u), the Executive Committee shall have the sole and exclusive authority to make (or not to make) any tax elections on behalf of the Company and its Subsidiaries permitted to be made (or not made) pursuant to U.S. federal, state and local and non-U.S. tax law and to determine the tax treatment of any transaction or other item in the Company’s and its Subsidiaries’ U.S. federal, state and local and non-U.S. tax returns. The Members shall each take reporting positions on their respective U.S. federal, state and local income tax returns consistent with the positions determined for the Company by the Executive Committee in accordance with, and subject to, the provisions of this Agreement.

(b)AHI Member shall be designated as the “tax matters partner” under Section 6231(a)(7) of the Code (the “Tax Matters Member”),to manage administrative tax proceedings conducted at the Company level by the Internal Revenue Service with respect to Company matters. The Tax Matters Member is specifically directed and authorized to take whatever steps it deems necessary or desirable to perfect such designation, including filing any forms or documents with the Internal Revenue Service and taking such other action as may from time to time be required under Treasury Regulations. The Company shall indemnify and reimburse the Tax Matters Member for all expenses, including legal and accounting fees, claims, liabilities, losses and damages incurred in connection with any administrative or judicial proceeding with respect to the tax liability of the Members or, if applicable, in connection with any audit of the Company’s income tax returns. The taking of any action and the incurring of any expense by the Tax Matters Member in connection with any such proceeding, except to the extent required by law, is a matter in the reasonable discretion of the Tax Matters Member; provided, that, to the extent that the Tax Matters Member knows that, based on a Member’s tax situation, such action or decision would have a material adverse impact on such Member disproportionately relative to the impact on the other Members, the Tax Matters Member shall consult with such Member prior to taking such action or making such decision and shall consider in good faith any proposal made by such Member regarding such action or decision.

6.6The Flaherty JV.

(a)NSAM Parent, NSAM Member and Flaherty Member represent and warrant to AHI Member as follows:

(i)a true, correct and complete copy of (A) the Flaherty JV Agreement is attached hereto as Exhibit G and (B) the Flaherty JV Amendment is attached hereto as Exhibit H.

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(ii)NSAM Parent, its Affiliates and Flaherty Member shall not amend, modify or supplement the Amended Flaherty JV Agreement in a manner that increases or decreases Flaherty Member’s right to receive GAHR III Carried Interest Proceeds, Future Healthcare NTR Carried Interest Proceeds or AHI PE Fund Carried Interest Proceeds without the prior consent of AHI Member.

(iii)It will notify AHI Member promptly after it becomes aware that (A) any event, circumstance, or action occurs, exists or is taken that has resulted in a reduction, waiver, forfeiture or other loss of Flaherty Member’s right to receive any GAHR III Carried Interest Proceeds, Future Healthcare NTR Carried Interest Proceeds or AHI PE Fund Carried Interest Proceeds, (B) a NAM Management Reversion Event has occurred, (C) a NAM Management Reversion Notice has been delivered and if such notice was delivered in connection with Cause (as defined in the Flaherty JV Agreement), (D) a Flaherty Resignation Notice has been delivered and if such notice was delivered without Good Reason (as defined in the Flaherty JV Agreement)or (E) the Amended Flaherty JV Agreement has been amended, modified or supplemented in any manner.

(b)NSAM Parent and NSAM Member represent and warrant to AHI Member that NSAM Member shall cause Flaherty Member to remain an NSAM Designee for so long as (x) NSAM Member or one of its Affiliates has the right to cause him to serve in such capacity under the terms and conditions of the Flaherty JV Agreement, as amended by the Flaherty JV Amendment (the “Amended Flaherty JV Agreement”) and (y) a NAM Management Reversion Event has not occurred.

6.7Allocation Principles.

(a)The Company hereby adopts, and agrees to act in accordance with, the Allocation Principles until such time as AHI Member, the Principals and their respective Affiliates are no longer required to act in accordance with the Allocation Principles pursuant to this Section 6.7.

(b)Each of AHI Member and the Principals shall, and shall cause each of their respective Affiliates (other than the Company or any of its Subsidiaries) to, act in accordance with the Allocation Principles until such time as (i) NSAM Parent, NSAM Member or any of their respective Affiliates (other than the Company or any of its Subsidiaries) engages in an Exclusive NTR Activity (as defined in the Exclusivity Letter) or Exclusive Fund Activity (as defined in the Exclusivity Letter) outside of the Company or (ii) AHI Member, the Principals and their respective Affiliates are no longer required to act in accordance with the Allocation Principles pursuant to Section 6.7(c).

(c)Each of NSAM Member and NSAM Parent shall, and shall cause each of their respective Affiliates (other than the Company or any of its Subsidiaries) to, act in accordance with the Allocation Principles; provided, that, if the NSAM Designation Threshold is not met and a NAM Management Reversion Event occurs, then (i) NSAM Member may affirmatively elect, on behalf of itself, NSAM Parent and their respective Affiliates, to no longer act in accordance with the Allocation Principles by notifying AHI Member in writing of such election

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and (ii) upon any such election by NSAM Member, AHI Member, the Principals and their respective Affiliates shall no longer be required to act in accordance with the Allocation Principles; provided, further, that if (x) NSAM Parent, NSAM Member or any of their respective Affiliates (other than the Company or any of its Subsidiaries) engages in an Exclusive NTR Activity (as defined in the Exclusivity Letter) or Exclusive Fund Activity (as defined in the Exclusivity Letter) outside of the Company and other than in violation of the Exclusivity Letter and (y) a NAM Management Reversion Event occurs, then, in such case, NSAM Parent, NSAM Member, AHI Member, the Principals and their respective Affiliates shall no longer be required to act in accordance with the Allocation Principles.

6.8    NSAM Member’s Equity Contributions

(a)NSAM Parent hereby agrees, on behalf of NSAM Member, to grant directly to certain employees of the Company or its Subsidiaries (other than the Principals), as determined by the Executive Committee in its reasonable discretion and in accordance with the Company’s compensation practices and procedures, a number of freely tradable shares of NSAM Common Stock (without volume limitations) equal to the quotient determined by dividing $1,000,000 by the Average NSAM Closing Price and rounding the result to the nearest share, for each of the following time periods: (a) on or before March 1, 2016, in respect of the Company’s 2015 Fiscal Year, and (b) on or before March 1, 2017, in respect of the Company’s 2016 Fiscal Year. Future annual contributions to be revisited by NSAM Parent and AHI Member in good faith based upon the amount of time being devoted by employees of the Company and its Subsidiaries to NRF investments.

(b)If any shares of NSAM Common Stock contributed pursuant to Section 6.8(a) are subject to vesting and are forfeited prior to vesting, then such forfeited shares shall revert to NSAM Parent and be available for future grants prior to December 31, 2019, at the direction of the Executive Committee in accordance with Section 6.8(a).

(c)For U.S. federal income tax purposes, any shares of NSAM Common Stock granted pursuant to this Section 6.8 shall be deemed contributed by NSAM Member to the Company and shall be deemed transferred immediately thereafter to employees of the Company (other than the Principals).

6.9AHI Member’s Equity Contributions. AHI Member hereby agrees that it shall contribute to the Company, as the sole funding for the Phantom Stock Plan, a number of fully vested Time-Based NSAM Shares (or their cash equivalent) equal to the quotient determined by dividing $500,000 by the Average NSAM Closing Price and rounding the result to the nearest share, by each of the following dates: (a) on or before ten days following the second anniversary of the Closing, provided that at least an equivalent number of Time-Based NSAM Shares issued to AHI Member under the Purchase Agreement shall have vested as of the second anniversary of the Effective Date, and (b) on or before ten days following the fifth anniversary of the Closing, provided that at least an equivalent number of Time-Based NSAM Shares issued to AHI Member under the Purchase Agreement shall have vested as of the fifth anniversary of the Effective Date.

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6.10Use of NorthStar Name. For so long as the NSAM Designation Threshold is met and provided that approval of the NSAM Designees is obtained in accordance with Section 5.3(dd), the Company, its Affiliates (including the Principals), AHI Member and each Future Healthcare NTR shall have the right to use the “NorthStar” name (to the extent NSAM Parent has the right to use the same) (i) in connection with the branding, marketing and sponsoring of Future Healthcare NTRs and (ii) for such other uses as approved in advance by NSAM Member.  If NSAM Member no longer satisfies the NSAM Designation Threshold, upon NSAM Member’s written request, the Company shall, and shall cause its Affiliates (including the Principals), AHI Member and Future Healthcare NTRs to, remove “NorthStar” (and variations and acronyms thereof) from the name of all applicable Future Healthcare NTRs as promptly as practicable, and otherwise cease using the “NorthStar” name (and variations and acronyms thereof) in all respects; provided, that with respect to any Future Healthcare NTRs in existence at the time of such written request, the Company shall be permitted a six-month transition period to discontinue the use of the “NorthStar” name in connection therewith.

ARTICLE VII

TRANSFER OF UNITS; ADDITIONAL MEMBERS

7.1Restrictions on Transfer or Assignment.

(a)    No Member may (i) sell, transfer, assign, or otherwise dispose of its right, title or interest in the Company, or any portion thereof or any interest therein (including its rights to receive distributions of any amounts hereunder other than AHI Member Retained Fees and GAHR II Promote), to any other Person, or (ii) permit such Member’s right, title or interest in the Company (including its rights to receive distributions of any amounts hereunder) to be encumbered, hypothecated or pledged as collateral security for any obligation in favor of any other Person (any of the foregoing under clause (i) or clause (ii), a “Transfer”), in each case, without the express prior written approval of the Executive Committee, including the NSAM Designees (so long as the NSAM Designation Threshold is met). The restrictions of this Section 7.1 shall not apply and no consent of the Executive Committee shall ever be required for (x) any issuance or transfer of ownership interests in NSAM Parent, (y) any issuance or transfer of ownership interests by an Affiliate of NSAM Member to a wholly-owned Affiliate of NSAM Parent or (z) any direct or indirect transfer or sale of all or substantially all of the assets of NSAM Parent or any NSAM Parent merger, spinoff, consolidation, reorganization or similar transaction.

(b)Notwithstanding the provisions of Section 7.1(a), the following Transfers shall be permitted without the approval of the Executive Committee or NSAM Designees otherwise required under Section 7.1(a) above:

(i)at any time, AHI Member may Transfer, in the aggregate, up to twenty percent (20%) of the Class A Common Units and Promote Units issued to it on the Effective Date by the Company (i.e. up to10.20% of the total Class A Common Units outstanding on the Effective Date) to any employees of the Company or any of its

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Subsidiaries; provided, that any such Transfer pursuant to this Section 7.1(b)(i) must be without payment of any kind;

(ii)after the expiration of the Initial Lockout Period, any Transfer of Common Units and Promote Units by AHI Member, NSAM Member or Flaherty Member; provided, that, (A) in the case of a Transfer by AHI Member, (x) it may Transfer any of its Common Units and Promote Units at any time following the date the NSAM Designation Threshold is not met, without restriction other than the requirements set forth in Sections 7.3 and 7.4, (y) if the NSAM Designation Threshold is met, NSAM Member shall be entitled to a ROFO Right pursuant to Section 7.2 or a Tag-Along Right (to the extent applicable) pursuant to Section 7.4 with respect to any such Transfer, and (z) Flaherty Member shall be entitled to a Tag-Along Right (to the extent applicable) pursuant to Section 7.4; (B) in the case of a Transfer by NSAM Member, (x) it may Transfer any of its Common Units and Promote Units at any time following the date the AHI Designation Threshold is not met, without restriction other than the requirements set forth in Sections 7.3 and 7.4, (y) if the AHI Designation Threshold is met, AHI Member shall be entitled to a ROFO Right pursuant to Section 7.2 or a Tag-Along Right (to the extent applicable) pursuant to Section 7.4 with respect to any such Transfer, and (z) Flaherty Member shall be entitled to a Tag-Along Right (to the extent applicable) pursuant to Section 7.4; and (C) in the case of a Transfer by Flaherty Member, AHI Member and NSAM Member shall each be entitled to a ROFO Right pursuant to Section 7.2;

(iii)any Transfer pursuant to a Company Sale in accordance with Section 7.5; provided, that NSAM Member (if the NSAM Designation Threshold is met) and AHI Member (if the AHI Designation Threshold is met) shall be entitled to a ROFO Right and a Right of First Refusal pursuant to Section 7.5(e) with respect to any such Transfer;

(iv)at any time, any Transfer of Common Units and Promote Units by NSAM Member, AHI Member or Flaherty Member to their respective wholly-owned Affiliates; provided, that (A) such wholly-owned Affiliate remains a wholly-owned Affiliate of NSAM Member or AHI Member, as applicable, for so long as such wholly-owned Affiliate continues to own any Common Units and such transferring Member remains, jointly and severally with the wholly-owned Affiliate transferee, responsible for any and all obligations and liabilities of such wholly-owned Affiliate transferee under this Agreement with respect to the Common Units that were Transferred and (B) such transferring Member and such wholly-owned Affiliate transferees shall indemnify the Company and each other Member against any taxes (including interest and penalties imposed by a taxing authority) incurred by such indemnitee as a result of such Transfer (it being understood that, subject to the further provisions of this Article VII, upon consummation of such Transfer, such transferee shall be deemed to be a Group Member with NSAM Member or AHI Member, as applicable);

(v)at any time, AHI Member, NSAM Member and Flaherty Member may Transfer their Common Units and Promote Units to NSAM Member, AHI Member and Flaherty Member, respectively; and

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(vi)at any time, Flaherty Member may Transfer his Common Units and Promote Units to any of his Family Members for estate planning purposes.

(c)Notwithstanding anything to the contrary contained in this Agreement, if any Member elects to Transfer all or any portion of any class of Units to any other Person in accordance with this Section 7.1, such Member shall be required to also Transfer a proportionate amount of all other classes of Units (other than Class B Incentive Units and Class J Incentive Units) held by such Member to such proposed transferee. For example, if a Member desires to Transfer 10% of its Class A Common Units to any Person, such Member shall be required to also Transfer 10% of its ownership interest in each class of Promote Units held by such Member to the same transferee.

(d)Notwithstanding anything contained in this Agreement to the contrary, in no event shall any of the Principals be permitted to directly or indirectly sell, transfer, assign, or otherwise dispose of any or all of their Equity Interests in AHI Member without the consent of NSAM Member (for so long as the NSAM Designation Threshold is met) except (i) in the event of the death or adjudication of insanity or incompetency of any Principal, such Principal shall be permitted to Transfer its Equity Interests in AHI Member to his Family Members; (ii) any Principal shall be permitted to transfer his Equity Interests in AHI Member to any of his wholly-owned Affiliates; provided, that such Affiliate remains a wholly-owned Affiliate of such Principal for so long as such wholly-owned Affiliate continues to own any Equity Interests in AHI Member and such transferring Principal remains, jointly and severally with the wholly-owned Affiliate transferee, responsible for any and all obligations and liabilities of such wholly-owned Affiliate transferee under this Agreement with respect to the Equity Interests in AHI Member that were Transferred; and (iii) any Principal may transfer his Equity Interests in AHI Member to any of his Family Members for estate planning purposes.

(e)If AHI Member or NSAM Member proposes to Transfer any of its Common Units and Promote Units in a manner that gives rise to the other Member’s Tag-Along Rights and ROFO Right, then NSAM Member (in the case of a Transfer by AHI Member) and AHI Member (in the case of a Transfer by NSAM Member) may elect to exercise either its Tag-Along Rights pursuant to Section 7.4 or its ROFO Right pursuant to Section 7.2, but never both in connection with the same Transfer.

7.2ROFO Right. Prior to (x) AHI Member, NSAM Member or Flaherty Member consummating a Transfer pursuant to Section 7.1(b)(ii) or (y) the Initiating Seller initiating a Company Sale pursuant to Section 7.5 (the transferring Member in clause (x) or (y), the “ROFO Transferring Party”), the ROFO Transferring Party shall comply with the following procedures (the “ROFO Procedures”):

(a)The ROFO Transferring Party shall first offer the Common Units and Promote Units it intends to Transfer (the “ROFO Units”) to AHI Member (if NSAM Member is the ROFO Transferring Party), NSAM Member (if AHI Member is the ROFO Transferring Party) or NSAM Member and AHI Member (if Flaherty Member is the ROFO Transferring Party), as applicable (the “ROFO Member(s)”), by providing a written notice to the ROFO Member(s) of the ROFO Transferring Party’s desire to Transfer such Common Units and Promote Units indicating

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the offering price (the “ROFO Offer Price”), which must be in cash in United States dollars, and the other material terms and conditions on which the ROFO Units are being offered to the ROFO Member(s) for Transfer (such notice, a “ROFO Notice”). A ROFO Notice shall also constitute a Tag-Along Notice for purposes of Section 7.4(c) (to the extent the ROFO Member(s) have Tag-Along Rights).

(b)If AHI Member or NSAM Member is the ROFO Transferring Party, the ROFO Member shall have the right (the “ROFO Right”), for a period of sixty (60) days (when NSAM Member is the ROFO Member) or one hundred twenty (120) days (when AHI Member is the ROFO Member) after receiving the ROFO Notice, to deliver written notice (the “ROFO Purchase Notice”) to the ROFO Transferring Party of such ROFO Member’s election to purchase all, but not less than all of the ROFO Units (at the ROFO Offer Price, and on the other terms and conditions set forth in the ROFO Notice).

(c)If Flaherty Member is the ROFO Transferring Party, each ROFO Member shall have the right, for a period of one hundred twenty (120) days after receiving the ROFO Notice, to deliver a ROFO Purchase Notice to the ROFO Transferring Party of such ROFO Member’s election to purchase all, but not less than all of such ROFO Member’s Class A Pro Rata Share of the ROFO Units; provided, that if any ROFO Member elects not to purchase its Class A Pro Rata Share of ROFO Units, then the other ROFO Member that elected to purchase its full Class A Pro Rata Share of the ROFO Units (the “Fully Participating ROFO Member”) may purchase all of the ROFO Units. The ROFO Transferring Party shall deliver written notice to such Fully Participating ROFO Member indicating the availability of additional ROFO Units, and the Fully Participating ROFO Member shall have five (5) Business Days to deliver a written notice to the ROFO Transferring Party indicating its election to purchase all of the ROFO Units.

(d)Delivery of a ROFO Purchase Notice by a ROFO Member pursuant to Section 7.2(b) or 7.2(c), as applicable, shall cause such ROFO Member to automatically forfeit its Tag-Along Rights with respect to such Transfer. Failure by a ROFO Member to timely deliver a ROFO Purchase Notice shall be deemed an election by such ROFO Member not to exercise its ROFO Right. If any portion of the ROFO Units are not purchased by the ROFO Member(s), the ROFO Transferring Party may Transfer the remaining portion of the ROFO Units to a Bona Fide Third Party or in a MBO (either at the ROFO Offer Price or at a higher price, which, subject to Sections 7.2(f), (g) and (h), may be paid in cash or non-cash assets (the “Non-Cash Assets”), or a combination of the two, on terms and conditions no more favorable to such Bona Fide Third Party or in a MBO than those offered to the ROFO Member); provided, that if Flaherty Member is the ROFO Transferring Party, Flaherty Member shall not be entitled to transfer its ROFO Units for consideration consisting of Non-Cash Assets. If a ROFO Member delivers a ROFO Purchase Notice in a timely manner (in accordance with Section 7.2(b) or 7.2(c), as applicable), then (i) on or before the 60th day after receipt of the ROFO Purchase Notice (the “ROFO Closing Date”), such ROFO Member (or its designated Affiliate) shall purchase from the ROFO Transferring Party, and the ROFO Transferring Party shall sell to the ROFO Member (or a designated Affiliate thereof), the number of ROFO Units available for purchase by such ROFO Member (at the ROFO Offer Price or its applicable portion of the ROFO Offer Price, payable in cash, and on the other terms and conditions set forth in the ROFO Notice) and (ii) on the ROFO Closing Date, such ROFO Member

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(or a designated Affiliate thereof) shall pay or cause to be paid to the ROFO Transferring Party the ROFO Offer Price (or its applicable portion of the ROFO Offer Price) in immediately available funds.

(e)The following additional provisions shall apply solely with respect to a Transfer of ROFO Units to ROFO Member(s) pursuant to this Section 7.2:

(i)The ROFO Transferring Party and each ROFO Member (or a designated Affiliate thereof) shall each deliver to the other a duly executed and acknowledged instrument pursuant to which the ROFO Units are conveyed to the ROFO Member(s) (or designated Affiliates thereof), free and clear of all liens and encumbrances (other than those created by this Agreement or under applicable securities laws), which instrument shall contain customary representations concerning (among others), due organization and authority of the ROFO Transferring Party and each ROFO Member (or a designated Affiliate thereof), ownership of the ROFO Units by the ROFO Transferring Party and the absence of liens and encumbrances on the ROFO Units (other than those created by this Agreement and under applicable securities laws), and shall contain a provision indemnifying and holding each ROFO Member (or a designated Affiliate thereof) harmless from any loss, liability, cost or expense (including reasonable attorneys’ fees) it may incur by reason of any breach of such representation (which indemnification shall be given or guaranteed by a creditworthy party reasonably satisfactory to each ROFO Member (or a designated Affiliate thereof), it being acknowledged that AHI Member and NSAM Member shall each be a creditworthy party); and

(ii)each of the ROFO Transferring Party and each ROFO Member (or designated Affiliates thereof) shall have obtained (at its sole cost and expense) any third party consents required by such party to consummate the sale of the ROFO Units pursuant to this Section 7.2.

(f)Notwithstanding the foregoing, if a ROFO Member does not elect to purchase its applicable portion of the ROFO Units pursuant to Section 7.2(b) and the ROFO Transferring Party desires to Transfer the ROFO Units to a Bona Fide Third Party or in a MBO in exchange for consideration that includes Non-Cash Assets, then the ROFO Transferring Party shall notify the ROFO Member in writing (the “ROFO Non-Cash Notice”), which notice shall include a description (in reasonable detail) of the total consideration to be paid for such ROFO Units and the value ascribed by the ROFO Transferring Party to the portion of such consideration comprised of Non-Cash Assets, including backup documentation supporting such ascribed value (the “ROFO Transferring Party’s Valuation”). The ROFO Member shall have forty-five (45) days following receipt of the ROFO Non-Cash Notice to deliver to the ROFO Transferring Party a written statement objecting to the ROFO Transferring Party’s Valuation (the “ROFO Objections Statement”), which ROFO Objections Statement shall include the value ascribed to such Non-Cash Assets by the ROFO Member (the “ROFO Member Valuation”). During such forty-five (45)-day period, the ROFO Transferring Party shall provide, as promptly as practicable, all documentation reasonably requested by the ROFO Member or its representatives in connection with preparing the ROFO Member Valuation. If the ROFO Member fails to deliver a ROFO Objections Statement that includes a

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ROFO Member Valuation within such forty-five (45)-day period, then the ROFO Transferring Party shall be permitted to Transfer such ROFO Units to the Bona Fide Third Party or in a MBO, upon the terms and conditions no less favorable to the ROFO Transferring Party than those set forth in the ROFO Non-Cash Notice.

(g)If the ROFO Member delivers a ROFO Objections Statement that includes a ROFO Member Valuation within such forty-five (45)-day period, then the ROFO Transferring Party shall engage a Qualified Appraiser to determine the final value of such Non-Cash Assets. The Qualified Appraiser shall determine the final value of such Non-Cash Assets solely by reviewing the ROFO Transferring Party’s Valuation and the ROFO Member Valuation, and any reasonable backup documentation supporting such valuations, provided by each of the ROFO Transferring Party and the ROFO Member and, thereafter, choosing one of the two valuations as the final value of such Non-Cash Assets. AHI Member and NSAM Member acknowledge and agree that in connection with determining the final value of such Non-Cash Assets, the Qualified Appraiser shall in no event be permitted to (1) review any materials other than the reasonable backup documentation provided by the ROFO Transferring Party and the ROFO Member, as applicable, or (2) determine the final value of such Non-Cash Assets to be any value other than the ROFO Transferring Party’s Valuation or the ROFO Member Valuation. The determination by the Qualified Appraiser of the final value of such Non-Cash Assets (the “Final Non-Cash Value”) shall be binding on the ROFO Transferring Party and the ROFO Member. The expenses of the Qualified Appraiser shall be borne one hundred percent (100%) by the ROFO Transferring Party if the Qualified Appraiser selects the ROFO Member Valuation as the Final Non-Cash Value or one hundred percent (100%) by the ROFO Member if the Qualified Appraiser selects the ROFO Transferring Party’s Valuation as the Final Non-Cash Value.

(h)If the Final Non-Cash Value is the ROFO Transferring Party’s Valuation, the ROFO Transferring Party may Transfer the ROFO Units to the Bona Fide Third Party or in a MBO, upon the terms and conditions set forth in the ROFO Non-Cash Notice. If the Final Non-Cash Value is the ROFO Member Valuation, the ROFO Transferring Party may Transfer the ROFO Units to the Bona Fide Third Party or in a MBO (upon the terms and conditions set forth in the ROFO Non-Cash Notice) but only if the sum of the Final Non-Cash Value and the total amount of cash consideration (if any) to be paid for such ROFO Units (such sum, the “Total Value”) equals or exceeds the ROFO Offer Price first offered by the ROFO Transferring Party pursuant to Section 7.2(a).

(i)If a Transfer to a Bona Fide Third Party or a MBO is not consummated within two hundred seventy (270) days following delivery of the ROFO Notice, then the ROFO Transferring Party shall not Transfer the ROFO Units without again complying with all of the provisions of this Section 7.2; provided, however, that such two hundred seventy-day period shall be tolled from the date the ROFO Member delivers the ROFO Objections Statement to the ROFO Transferring Party until the date a Qualified Appraiser selected by the ROFO Transferring Party determines the Final Non-Cash Value. If the ROFO Transferring Party defaults in its obligation to transfer the ROFO Units to the ROFO Member(s) (or designated Affiliates thereof) in accordance with this Section 7.2 or otherwise fails to comply with its obligations under this Section 7.2, the ROFO Member(s) (or designated Affiliates thereof) shall have all rights and remedies available

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pursuant to law and in equity, including the right to specifically enforce the terms of this Section 7.2 and to bring an action for damages against the ROFO Transferring Party.

7.3Conditions Applicable to All Transfers.

(a)Notwithstanding anything contained in this Article VII to the contrary, no Transfer by a Member otherwise contemplated or permitted by this Article VII shall be permitted (i) except in connection with a Company Sale, if any state or local transfer taxes payable by the Company shall arise as a result of, or shall be caused directly or indirectly by, such Transfer unless the transferor in connection with any Transfer pursuant to Article VII shall have previously submitted to the Company in advance its calculation of any such taxes and copies of any necessary tax filings and shall have agreed in a separate writing acceptable to the other Members in their reasonable discretion to pay such taxes and to indemnify and hold the Company and the other Members harmless from and against any such taxes, (ii) if the Executive Committee reasonably determines that prohibiting such Transfer is necessary or advisable in order to prevent the Company from being treated as a publicly traded partnership for U.S. federal income tax purposes or otherwise failing to qualify for the safe harbor from being a publicly traded partnership under Treasury Regulation § 1.7704-1(h), (iii) if such Transfer would result in the Company or any Member having to register under the Securities Act, the Investment Company Act, or any other federal, state or local securities laws, (iv) if such Transfer would violate the registration provisions of the Securities Act or of any other federal, state or local securities laws, (v) if such Transfer would violate any other applicable laws, including Executive Order 13224 (September 23, 2001), the rules and regulations of the Office of Foreign Assets Control, Department of Treasury, and any enabling legislation or other Executive Orders in respect thereof, (vi) if such Transfer would cause a Material Default to occur, or (viii) such transfer would constitute a nonexempt prohibited transaction under Section 406(a) or Section 407 of ERISA or Section 4975 of the Code.

(b)Any purported Transfer of Units in violation of this Article VII shall be void abinitio, and shall not bind the Company, and any purported Transfer by a Member or of direct or indirect ownership interests in a Member in violation of this Article VII shall be deemed a default by such Member hereunder (the “Defaulting Member”) and the Defaulting Member shall indemnify and hold the Company and the other Members harmless from and against any and all loss, damage or expense, including any U.S. federal, state or local income taxes, or transfer taxes, including transfer gain taxes, arising as a result of, or caused directly or indirectly by, such purported Transfer. The giving of any consent to a Transfer in any one or more instances shall not limit or waive the need for such consent in any other or subsequent instances. Notwithstanding the foregoing, unless a transferee is admitted as an Additional Member to the Company in accordance with the provisions of Section 7.3(c), the transferor shall not be relieved of any liability hereunder, and the transferee shall not be entitled to any of the rights granted to a Member hereunder, other than the right to receive all or part of the share of the income, gain, losses or cash distributions to which its transferor would otherwise be entitled.

(c)No transferee of any Units shall be admitted to the Company as an Additional Member unless and until (i) except in connection with a Company Sale, the transferee has executed a counterpart of this Agreement and such other instruments as the Executive Committee

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deems reasonably necessary or appropriate to confirm the undertaking of the transferee to be bound by all the terms and provisions of this Agreement, (ii) except in connection with a Company Sale, the transferee has paid any reasonable out-of-pocket expenses incurred by the Company in connection with such Transfer and (iii) the transferee executes and delivers a statement that it is acquiring the Units for its own account for investment and not with a view to the resale or distribution thereof and that it will only Transfer the acquired Units (subject to the terms of this Article VII) to a Person that similarly so represents and warrants; provided, that, in connection with a Company Sale, each transferee shall be deemed to be admitted as an Additional Member so long as such transferee complies with the immediately preceding clause (iii) only. Unless and until such transferee becomes an Additional Member, such transferee shall not be entitled to exercise any vote, consent or any other right or entitlement with respect to such Units and the only effect of such Transfer shall be to entitle the transferee to receive, to the extent assigned, the distributions and allocations of income, gain, losses or cash distributions to which the transferor would be entitled.

7.4Tag-Along Rights.

(b)In the event that AHI Member or NSAM Member (the “Proposed Seller”) shall Transfer any Common Units and Promote Units to a Bona Fide Third Party or in a MBO (a “Proposed Purchaser”) in accordance with Section 7.1(b)(ii) (a “Tag-Along Sale”), and such Transfer would cause either the NSAM Designation Threshold or the AHI Designation Threshold, as applicable, to no longer be satisfied, then NSAM Member and Flaherty Member, in the event AHI Member is the Proposed Seller, and AHI Member and Flaherty Member, in the event NSAM Member is the Proposed Seller (the “Tag-Along Members”) shall have the right and option (“Tag-Along Rights”), but not the obligation, to sell up to their Requisite Percentage (as defined below) of Units in such Tag-Along Sale, on the terms and conditions set forth in Section 7.1(e) and this Section 7.4.

(c)The Proposed Seller shall notify the Company in writing of any proposed Tag-Along Sale at least sixty (60) days prior to the effective date of such proposed Tag-Along Sale (a “Company Notice”), setting forth the number and classes of Units the Proposed Seller is selling in connection with such Tag-Along Sale and the proposed amount of consideration to be delivered by the Proposed Purchaser to the Proposed Seller in connection with such Tag-Along Sale (the “Tag-Along Consideration”). Following receipt of such Company Notice, the Executive Committee shall have thirty (30) days to prepare and deliver to the Proposed Seller, an allocation schedule, allocating the Tag-Along Consideration amongst the different classes of Units proposed to be transferred in the Tag-Along Sale (the “Tag-Along Allocation Schedule”). The Tag-Along Allocation Schedule shall be prepared in the Executive Committee’s good faith judgment, based upon the advice of, and valuation by, a reputable and independent, nationally recognized financial advisor. The Tag-Along Allocation Schedule shall be final and binding on all Members absent manifest error.

(d)The Proposed Seller shall notify the Tag-Along Members in writing of any proposed Tag-Along Sale at least thirty (30) days prior to the effective date of such proposed Tag-Along Sale (a “Tag-Along Notice”). A Tag-Along Notice shall also constitute a ROFO Notice for purposes of Section 7.2(a) (to the extent the Tag-Along Members have ROFO rights). Any such

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Tag-Along Notice delivered to the Tag-Along Members in connection with a proposed Tag-Along Sale shall set forth:  (i) the number and classes of Units the Proposed Seller is selling in connection with such Tag-Along Sale (the “Offered Tag-Along Sale Units”), (ii) the name and address of the Proposed Purchaser in such Tag-Along Sale, (iii) the Tag-Along Consideration, (iv) the Tag-Along Allocation Schedule, (v) the material terms and conditions of such proposed Tag-Along Sale and (vi) the proposed effective date of the proposed Tag-Along Sale.

(e)Each Tag-Along Member shall have the right to sell to the Proposed Purchaser, upon the terms set forth in the Tag-Along Notice, up to that number of each class of Units included in the Tag-Along Notice equal to a percentage of the total number of such class of Units proposed to be sold by the Proposed Seller determined by dividing (A) the total number of such class of Units then owned by such Tag-Along Member by (B) the sum of (x) the total number of such class of Units then owned by all Tag-Along Members and (y) the total number of such class of Units then owned by the Proposed Seller (the “Requisite Percentage”). Each Tag-Along Member may exercise its Tag-Along Rights in connection with a Tag-Along Sale described in a Tag-Along Notice by delivery of a written notice to the Proposed Seller within thirty (30) days following receipt of a Tag-Along Notice from such Proposed Seller. Delivery of any such notice by a Tag-Along Member shall cause such Tag-Along Member to automatically forfeit its ROFO Right (if applicable) with respect to such Transfer. In the event that one or more Tag-Along Members shall elect to exercise their respective Tag-Along Rights in connection with a proposed Tag-Along Sale, the number of Offered Tag-Along Sale Units to be Transferred by the Proposed Seller to the Proposed Purchaser will be reduced by the applicable number of Units to be included in the Transfer by such Tag-Along Members, and the Transfer to the Proposed Purchaser will otherwise proceed in accordance with the terms of this Section 7.4 and the Tag-Along Notice.

(f)In the event that any Tag-Along Members shall elect to exercise Tag-Along Rights in connection with a proposed Tag-Along Sale, the Proposed Seller and such Tag-Along Members shall take, or cause to be taken, all action, and do, or cause to be done, all things necessary or advisable to consummate and make effective such Tag-Along Sale, including (i) together with the Proposed Purchaser, execute any purchase agreement or other certificates, instruments and other agreement required to consummate the proposed Transfer to the Proposed Purchaser; provided, that any indemnification provided by the Tag-Along Member to the Proposed Purchaser shall be made on a several (and not joint) basis, pro rata in proportion to, and limited to, the sale proceeds paid to each seller in connection with the Tag-Along Sale (except in the case of indemnifications arising as a result of a breach of a representation or warranty relating specifically to a particular seller, which shall be borne solely by such seller), and (ii) use commercially reasonable efforts to obtain all necessary consents from third parties and take such other actions as may be necessary to effectuate the intent of the foregoing.  In connection with any Tag-Along Sale in which NSAM Member exercises its Tag-Along Rights, NSAM Member agrees to (x) enter into a customary two-year non-solicitation agreement and (y) extend the term of exclusivity covenants set forth in the Exclusivity Letter for the period provided in paragraph 1(b) thereof, in each case, for the benefit of the Proposed Purchaser; and to the extent the AHI Member exercises its Tag-Along Rights, each Principal agrees to extend the term of the non-solicit and non-compete covenants set forth in its Non-Compete Agreement for the benefit of the Proposed Purchaser for a period not to exceed two years from the closing date of such Tag-Along Sale if, at any time during the six (6) month period

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immediately preceding such Principal’s receipt of the Tag-Along Notice, such Principal held a direct or indirect ownership interest in the Company, or served as an employee or consultant to the Company or any of its Subsidiaries. At the closing of any such proposed Tag-Along Sale, the Proposed Seller and the Tag-Along Members shall deliver to the Proposed Purchaser (A) such instruments of transfer as shall be requested by the Proposed Purchaser with respect to the Units to be Transferred, against receipt of the purchase price therefor and (B) such Members’ Units to be Transferred, free and clear of any liens or encumbrances (other than those created by this Agreement or under applicable securities laws) and such Members shall so represent and warrant. At the closing of any proposed Tag-Along Sale, the Proposed Purchaser shall deliver payment (subject to any holdbacks, escrows or adjustments in purchase price) for the Units purchased by such Proposed Purchaser, which shall be distributed to the Tag-Along Members in accordance with the Tag-Along Allocation Schedule. In the event that the closing of any Tag-Along Sale shall not occur within one hundred eighty (180) days after the date of the Tag-Along Notice with respect thereto, the Tag-Along Members shall be entitled to revoke the Tag-Along Notice, in which event any subsequent Transfer of Units by such Proposed Seller shall once again become subject to the provisions of this Section 7.4.

(g)There shall be no liability on the part of the Executive Committee, the Proposed Seller or the Company to the Tag-Along Member or any of its Affiliates if any Tag-Along Sale is not consummated for any reason. For the avoidance of doubt, the determination of whether to effect a Tag-Along Sale shall be in the sole and absolute discretion of the Proposed Seller.

7.5Company Sale.

(a)If at any time following the seventh (7^th) anniversary of the Effective Date, AHI Member or NSAM Member (the “Initiating Seller”) desires to cause a Company Sale to an unrelated and unaffiliated third party purchaser (each, a “Third Party Purchaser”) or in connection with a MBO, then the Initiating Seller shall notify the other Members of its desire to effect a Company Sale at least thirty (30) days prior to marketing or otherwise engaging in any discussions, solicitations or negotiations with any potential Third Party Purchaser or in connection with a MBO; provided, however, AHI Member may initiate a Company Sale at any time when the NSAM Designation Threshold is not met and NSAM Member may initiate a Company Sale at any time when the AHI Designation Threshold is not met. Following such thirty (30) day period, the Initiating Seller shall be permitted to engage in discussions and negotiations with prospective Third Party Purchasers or in connection with a MBO, and in furtherance thereof shall (in the case of AHI Member, so long as the AHI Designation Threshold is met, and in the case of NSAM Member, so long as the NSAM Designation Threshold is met) have the right to require the other Members (the “Dragged Members”) to, and the Dragged Members shall, (i) if such Transfer is structured as a sale of Units, Transfer, or cause to be Transferred, to the Third Party Purchaser or in connection with a MBO all of the Units held by the Dragged Members, or (ii) if such Transfer is structured as a merger, consolidation or sale of all or substantially all of the assets of the Company, waive dissenters’ rights, appraisal rights or similar rights, if any, which the Dragged Members may have in connection therewith.  The rights of the Initiating Seller under this Section 7.5 shall be exercisable by written notice (a “Drag Along Notice”) delivered by the Initiating Seller to the Dragged Members and the Company no later than

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ten (10) Business Days prior to the execution of a definitive agreement with regard to such Company Sale, which shall state (A) that the Initiating Seller proposes to effect a Company Sale, (B) the proposed purchase price to be paid by the Third Party Purchaser or in connection with a MBO pursuant to such Company Sale (the “Company Sale Consideration”), and (C) the other principal terms of such Company Sale.

(b)Prior to or in connection with the closing of any such proposed Company Sale, each Dragged Member shall execute any purchase agreement or other certificates, instruments and other agreements required to consummate the proposed Company Sale, including making individual representations and warranties, which shall be borne solely by such Dragged Member, and requisite indemnifications to the Third Party Purchaser or in connection with a MBO; provided, however, that (i) any such purchase agreement or other certificates, instruments and other agreements shall be on terms no less favorable to the Dragged Members than those executed by the Initiating Seller in connection with such Company Sale except as a result of different rights of the Units pursuant to Section 4.1 and any customary employment-related compensation, (ii) the Dragged Members shall not be required to make any representations or warranties regarding the Company and (iii) any indemnification obligations and liabilities owed to the Third Party Purchaser or in connection with a MBO by the Initiating Seller and by the Dragged Members (including any escrows, holdbacks or adjustments in purchase price) shall be made on a several (but not joint) basis, pro rata in accordance with the portion of the aggregate consideration payable in connection with such Company Sale to the Initiating Seller and the Dragged Members and shall be limited, with respect to each Dragged Member, to the aggregate consideration payable in connection with such Company Sale to such Dragged Member; provided, that, (A) in the case of indemnifications obligations and liabilities arising as a result of a breach of a representation or warranty relating specifically to a particular seller, such indemnification shall be borne solely by such seller and (B) except as set forth in Section 7.5(c), NSAM Member shall not be required to enter into any non-competition, non-solicitation or other similar restrictive covenants in connection with the Company Sale.  At the closing of any such proposed Company Sale, the Dragged Members shall deliver to the Third Party Purchaser or in connection with a MBO (x) such instruments of transfer as shall be reasonably requested by the Third Party Purchaser or in connection with a MBO with respect to the Units to be Transferred, against payment of the purchase price therefor in such Company Sale (subject to any holdbacks, escrows or adjustments in purchase price) and (y) the Dragged Members’ Units in the Company, free and clear of any liens or encumbrances (other than those created by this Agreement or under applicable securities laws).  The Executive Committee shall consent to any Company Sale effected in accordance with this Section 7.5, and the Initiating Seller and Dragged Members shall each use their reasonable best efforts to obtain all other necessary consents from third parties and take such other actions as may be reasonably necessary or reasonably requested by the Initiating Seller to consummate any Company Sale. Prior to consummation of a Company Sale, the Executive Committee shall prepare and deliver to the Members an allocation schedule, allocating the Company Sale Consideration amongst the different classes of Units of the Company (the “Company Sale Allocation Schedule”). The Company Sale Allocation Schedule shall be prepared in the Executive Committee’s good faith judgment, based upon the advice of, and valuation by, a reputable and independent, nationally recognized financial advisor. If and when received, the Company Sale Consideration shall be allocated to the Members in accordance with the Company Sale Allocation

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Schedule. The Company Sale Allocation Schedule shall be final and binding on all Members absent manifest error.

(c)In connection with a Company Sale in which (i) AHI Member is the Initiating Seller, NSAM Member agrees to (x) enter into a customary two-year non-solicitation agreement and (y) extend the term of its exclusivity covenants set forth in the Exclusivity Letter for the period provided in paragraph 1(b) thereof, in each case, for the benefit of the Third Party Purchaser (or in connection with a MBO) or (ii) NSAM Member is the Initiating Seller, each Principal agrees to extend the term of the non-solicit and non-compete covenants set forth in its Non-Compete Agreement for the benefit of the Third Party Purchaser (or in connection with a MBO) for a period not to exceed two years from the closing date of such Company Sale if, at any time during the six (6) month period immediately preceding such Principal’s receipt of the Drag Along Notice, such Principal held a direct or indirect ownership interest in the Company, or served as an employee or consultant to the Company or any of its Subsidiaries.

(d)In the event that a Company Sale is effectuated through a business combination (whether by way of merger, recapitalization or otherwise) or asset sale, the Company and the Members shall take, or cause to be taken, all action, and do, or cause to be done, all things reasonably necessary, advisable or reasonably requested by the Initiating Seller to consummate and make effective the business combination.

(e)Notwithstanding anything to the contrary contained in this Agreement (including in the preceding clauses of this Section 7.5), prior to the Initiating Seller initiating a Company Sale pursuant to this Section 7.5, NSAM Member (when AHI Member is the Initiating Seller) or AHI Member (when NSAM Member is the Initiating Seller) shall be entitled to purchase all of the Initiating Seller’s Common Units pursuant to a ROFO Right in accordance with Section 7.2. If NSAM Member or AHI Member, as the case may be, elects not to exercise its ROFO Right in accordance with the ROFO Procedures, then the Initiating Seller shall be permitted to initiate a Company Sale; provided, that prior to consummating such Company Sale, NSAM Member (when AHI Member is the Initiating Seller) or AHI Member (when NSAM Member is the Initiating Seller) shall have the right (the “ROFR Right”), for a period of ten (10) days following receipt of a bona fide written offer from the Third Party Purchaser or in connection with a MBO intending to consummate such Company Sale, to purchase all, but not less than all, of the applicable Initiating Seller’s Units on the same terms and conditions as the Third Party Purchaser or in connection with a MBO; provided, that the price for such Units shall be an amount equal to (x) the aggregate cash value of the consideration to be received by the Initiating Seller in connection with such Company Sale (as set forth in a ROFO Notice delivered by the Initiating Seller), multiplied by (y) 1.02. Failure by NSAM Member or AHI Member, as applicable, to deliver notice to the Initiating Seller within such ten (10) -day period shall be deemed an election by NSAM Member or AHI Member, as applicable, not to exercise its ROFR Right. If NSAM Member or AHI Member, as applicable, does not elect to purchase the Initiating Seller’s Common Units, the Initiating Seller may consummate the Company Sale on the terms and conditions set forth in the Drag Along Notice. If such Company Sale is not consummated within two hundred seventy (270) days following delivery of the Drag-Along Notice by the Initiating Seller to NSAM Member or AHI Member, as applicable,

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then the Initiating Seller may not consummate the Company Sale without again complying with all of the provisions of this Section 7.5(e).

(f)There shall be no liability on the part of the Initiating Seller, the Executive Committee or the Company to the Dragged Members or any of their respective Affiliates if any Company Sale is not consummated for any reason.  For the avoidance of doubt, the determination of whether to effect a Company Sale in accordance with Section 7.5 shall be in the sole and absolute discretion of the Initiating Seller.

ARTICLE VIII

EXCULPATION AND INDEMNIFICATION

8.1Exculpation and Indemnification; Duties of Covered Persons.

(a)Subject to Section 8.1(c), Section 8.2(a) and Section 8.2(b), but notwithstanding any other terms of this Agreement, whether express or implied, or any obligation or duty at law or in equity, each Covered Person shall have no liability to the Company, its Subsidiaries or any Member and shall be exculpated by the Company and the Members, to the fullest extent permitted under applicable law, for any Covered Conduct and for any Losses related to any Covered Conduct by (i) the Company or any Covered Person or (ii) any Person selected in good faith by any Covered Person to perform services for the Company.

(b)Subject to Section 8.1(c), Section 8.2(a) and Section 8.2(b), but notwithstanding any other terms of this Agreement, whether express or implied, or any obligation or duty at law or in equity, each Covered Person (regardless of whether another Covered Person is entitled to indemnification) who is or was involved in any manner (including as a party or a witness) or is threatened to be made so involved in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including any action, suit or proceeding by or in the right of the Company to procure a judgment in its favor) (a “Proceeding”) shall be indemnified and held harmless by the Company, to the fullest extent permitted under applicable law, out of the Company’s assets, and not out of any other Person’s assets, from and against any and all Losses incurred or suffered by any such Covered Person for any Covered Conduct.

(c)A Covered Person shall not be entitled to exculpation from liability as set forth in Section 8.1(a) or to indemnification as set forth in Section 8.1(b), in each case with respect to (i) any Covered Conduct or related Losses that, in a final determination rendered by a court of competent jurisdiction that is not subject to appeal, are determined to have constituted (or, in the case of any related Losses, been caused by) such Covered Person’s gross negligence, willful misconduct, or fraud or (ii) Losses or Proceedings among a Member and its Affiliates (other than the Company and its Subsidiaries).

(d)If a claim for indemnification or advancement of expenses hereunder is not paid in full by the Company within sixty (60) days after a written claim has been received by the Company, a Covered Person may at any time thereafter bring suit against the Company to recover

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the unpaid amount of the claim, and if successful in whole or in part, the Covered Person shall also be entitled to be paid the reasonable expenses of prosecuting such claim. Neither the failure of the Company (including the Executive Committee) to have made its determination, prior to the commencement of such action, that indemnification of, or advancement of costs of defense to, the Covered Person is permissible in the circumstances nor an actual determination by the Company (including the Executive Committee) that such indemnification or advancement is not permissible will be (in itself) a defense to the action or create a presumption that such indemnification or advancement is not permissible; provided, that, for the avoidance of doubt, the facts underlying any such determination may be introduced as evidence of whether indemnification or advancement is permissible. The indemnification provided hereunder will be a contract right and will include the right to receive payment of reasonable out-of-pocket expenses as they are incurred by a Covered Person in connection with such Proceeding, consistent with the provisions of applicable law as then in effect. The right of indemnification provided in this Section 8.1 shall not be exclusive of any other rights to which any such Person seeking indemnification may otherwise be entitled under any other instrument or by reason of any action or otherwise.

(e)Promptly after receipt by a Covered Person of notice of the commencement of any Proceeding or the incurrence of any Loss, such Covered Person shall, if a claim for indemnification in respect thereof is to be made against the Company, give written notice to the Company of such event, provided that the failure of any Covered Person to give such notice as provided herein shall not relieve the Company of its obligations under this Section 8.1 except to the extent that the Company is actually prejudiced by such failure to give such notice. If any Proceeding is brought against a Covered Person, the Company will be entitled to participate in and to assume the defense thereof to the extent that the Company may wish, with counsel reasonably satisfactory to such Covered Person; provided, that in the case of retention of any counsel selected by the Company (a) the Covered Person shall have the right to retain separate counsel in any such Proceeding at the Covered Person’s sole expense; and (b) if (i) the retention of counsel by the Covered Person has been previously authorized by the Company, (ii) the counsel shall have reasonably concluded that there may be a conflict of interest between either (1) the Company and the Covered Person or (2) the Covered Person and another Covered Person also represented by such counsel in the conduct of any such defense, or (iii) the Company shall not, in fact, have retained counsel to prosecute the defense of such Proceeding within thirty days, then the reasonable expenses of counsel retained by the Covered Person shall be at the expense of the Company. Subject to clause (b) of the immediately preceding sentence, after notice from the Company to such Covered Person of the Company’s election to assume the defense of such Proceeding, the Company will not be liable for expenses subsequently incurred by such Covered Person in connection with the defense thereof. The Company shall not consent to entry of any judgment or enter into any settlement of such Proceeding that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Covered Person of a release from all liabilities in respect to such Proceeding and the related Losses.

(f)Any Covered Person shall be fully protected in relying in good faith upon the provisions of this Agreement and any other Transaction Agreement; upon the advice of counsel, accountants, and/or other professionals that is provided to the Company or such Covered Person; and upon any resolution, certificate, statement, instrument, opinion, report, notice, request,

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consent, order, bond, debenture, document, signature, or writing reasonably believed by it to be genuine, and may rely on a certificate signed by an officer, agent, or representative of any Person in order to ascertain any fact with respect to such Person or within such Person’s knowledge, and, to the fullest extent permitted under applicable law, such Covered Person shall not be liable to the Company, any Member, or to any other Person for such Covered Person’s reliance in good faith on this Agreement or any other Transaction Agreement, such advice, or such other items.

(g)The provisions of this Section 8.1 are for the benefit of the Covered Persons and will not be deemed to create any rights for the benefit of any other Person. To the fullest extent permitted by applicable law, the obligations of the Company to the Members and to Covered Persons set forth in this Agreement or any other Transaction Agreement, and/or arising under law, are solely the obligations of the Company, and no liability whatsoever shall attach to, or be incurred by, any Covered Person for such obligations. Any claims against and/or recourse to any Covered Person for or in connection with the foregoing obligations, whether arising in law or equity or created by rule of law, statute, constitution, contract, or otherwise, are expressly released and waived under this Agreement and the Transaction Agreements to the fullest extent permitted by applicable law as a condition of, and as part of the consideration for, the execution of such documents and the incurring by the Company of the obligations set forth in such documents.

(h)Notwithstanding anything in this Agreement or any other Transaction Agreement to the contrary, to the fullest extent permitted by applicable law, no Covered Person shall be liable to the Company, any Member, or to any other Person making claims on behalf of the foregoing, for consequential, exemplary, punitive, incidental, indirect, or special damages.

(i)NO MEMBER (IN ITS CAPACITY AS SUCH) SHALL HAVE ANY DIRECT OR INDIRECT DUTIES OR LIABILITIES TO ANY OTHER MEMBERS, THE COMPANY OR ANY OF ITS SUBSIDIARIES (INCLUDING ANY FIDUCIARY DUTIES), AND NO MEMBER (IN ITS CAPACITY AS SUCH) SHALL HAVE ANY DIRECT OR INDIRECT RIGHTS AGAINST ANY OTHER MEMBER OR THE COMPANY, BEYOND ANY DIRECT DUTIES, LIABILITIES AND RIGHTS EXPRESSLY SET FORTH IN, AND SUBJECT TO, THE EXPRESS TERMS OF THIS AGREEMENT, IT BEING AGREED THAT ALL OTHER DUTIES OR IMPLIED DUTIES, LIABILITIES AND RIGHTS RELATING TO THE COMPANY OR ANY MEMBER (IN ITS CAPACITY AS SUCH), WHETHER BY OPERATION OF LAW OR IN EQUITY, ARE HEREBY IRREVOCABLY WAIVED AND RELEASED BY THE MEMBERS TO FULLEST EXTENT PERMITTED BY APPLICABLE LAW.

(j)No Member, acting in accordance with this Agreement, shall be liable to the Company, any Member or any such other Person for its good faith reliance on the terms of this Agreement or any other Transaction Agreement. The provisions of this Agreement, to the extent that they restrict or eliminate the duties of a Member otherwise existing under applicable law or in equity, are agreed by all parties hereto to replace such other duties to the greatest extent permitted under applicable law.

(k)Whenever a Member is required or permitted to make a decision, take or approve an action, or omit to do any of the foregoing: (a) in its discretion, under a similar grant of authority or latitude, or without an express standard of behavior (including standards such as

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“reasonable” or “good faith”), then such Member shall be entitled to consider only such interests and factors, including its own, as it desires, and shall have no duty or obligation to consider any other interests or factors whatsoever, or (b) with an express standard of behavior (including standards such as “reasonable” or “good faith”), then such Member shall comply with such express standard but shall not be subject to any other, different, or additional standard imposed by applicable law.

(l)The provisions of this Section 8.1 shall survive any termination of this Agreement.

8.2Indemnification; Exculpation of Executive Committee Members, Officers, Employees and Agents.

(a)Executive Committee Members and Investment Committee Members.

(i)Actions Other Than by or in the Right of the Company. The Company shall, to the fullest extent permitted under applicable law, indemnify and advance expenses to any Person who was or is a party or is threatened to be made a party to any Proceeding (other than a Proceeding by or in the right of the Company) by reason of the fact that such Person is or was an Executive Committee Member (each a “Covered EC Member”), or is or was serving at the request of the Company as a director, board observer, manager, or member or other direct or indirect controlling Person (in such capacity) of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against Losses incurred or sustained by such Person in connection with such Proceeding so long as such Person acted in good faith and, with respect to any criminal action or proceedings, had no reasonable cause to believe his, her or its conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Person did not act in good faith, or, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

(ii)Actions by or in the Right of the Company. The Company shall, to the fullest extent permitted under applicable law, indemnify and advance expenses to any Person who was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of the fact that such Person is or was a Covered EC Member, or is or was serving at the request of the Company as a director, board observer, manager, or member or other direct or indirect controlling Person (in such capacity) of another corporation, limited liability company, partnership, joint venture, trust or other enterprise against Losses (other than judgments, fines and amounts paid in settlement) incurred or sustained by such Person in connection with the defense or settlement of such Proceeding so long as such Person acted in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue or matter as to which such Person shall have been adjudged to be liable to the Company, unless and only to the extent that the court (or other adjudicatory forum) in which such Proceeding was brought shall determine upon application that, despite the adjudication

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of liability, and in view of all the circumstances of the case, such Person is fairly and reasonably entitled to indemnity for such expenses which such court (or adjudicator) shall deem proper.

(iii)Intent of Section. To the extent that Section 18-108 of the Act or any successor section thereto may be amended or supplemented from time to time, this Section 8.2(a) shall be deemed amended automatically and construed so as to permit indemnification and advancement of expenses to the fullest extent consistent herewith and from time to time permitted by law. Any amendment, modification, supplement or repeal of Section 18-108 of the Act or any successor section thereto or of this Section 8.2(a) shall not adversely affect any right or protection of, or apply to or have any effect on the liability or alleged liability of, any Covered EC Member or any other Person entitled to indemnification under this Section 8.2(a) for or with respect to acts or omissions of such Covered EC Member or Person occurring prior to such amendment, modification, supplement or repeal. For the avoidance of doubt, a Covered EC Member (in his or her capacity as such) shall have rights of indemnification and advancement under this Section 8.2(a) and not under Section 8.1(b). With respect to the Covered EC Members, the intent of this Section 8.2(a) is to provide for indemnification only in their capacity as an Executive Committee Member, and not with respect to (A) the performance of their covenants and other obligations under this Agreement as a Covered Person, employee, officer or agent of the Company, or otherwise or (B) the performance of their covenants and other obligations to the Company or any Member under any other Transaction Agreement.

(b)Officers, Employees and Agents.

(i)Actions Other Than by or in the Right of the Company. The Company shall, to the fullest extent permitted under applicable Law, indemnify and advance expenses to any Person who was or is a party or is threatened to be made a party to any Proceeding (other than a Proceeding by or in the right of the Company) by reason of the fact that he is or was an Officer, employee, or agent (in such capacity) of the Company, or is or was serving at the request of the Company as an officer, employee or agent (in such capacity) of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against Losses incurred or sustained by him in connection with such Proceeding so long as he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceedings, had no reasonable cause to believe his conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

(ii)Actions by or in the Right of the Company. The Company shall, to the fullest extent permitted under applicable law, indemnify and advance expenses to any Person who was or is a party or is threatened to be made a party to any Proceeding

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by or in the right of the Company to procure a judgment in its favor by reason of the fact that he is or was an Officer, employee, or agent (in such capacity) of the Company, or is or was serving at the request of the Company as an officer, employee, or agent (in such capacity) of another corporation, limited liability company, partnership, joint venture, trust or other enterprise against Losses (other than judgments, fines and amounts paid in settlement) incurred or sustained by him in connection with the defense or settlement of such Proceeding so long as he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and except that no indemnification shall be made in respect of any claim, issue or matter as to which such Person shall have been adjudged to be liable to the Company, unless and only to the extent that the court (or other adjudicatory forum) in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability, and in view of all the circumstances of the case, such Person is fairly and reasonably entitled to indemnity for such expenses which such court (or other adjudicator) shall deem proper.

(iii)Intent of Section. To the extent that Section 18-108 of the Act or any successor section thereto may be amended or supplemented from time to time, this Section 8.2(a) shall be deemed amended automatically and construed so as to permit indemnification and advancement of expenses to the fullest extent consistent herewith and from time to time permitted by law. Any amendment, modification, supplement or repeal of Section 18-108 of the Act or any successor section thereto or of this Section 8.2 shall not adversely affect any right or protection of, or apply to or have any effect on the liability or alleged liability of, any officer, employee, or agent (in such capacity) of the Company for or with respect to acts or omissions of such Person occurring prior to such amendment, modification, supplement or repeal. For the avoidance of doubt, an Officer (in his or her capacity as such) shall have rights of indemnification and advancement under this Section 8.2(b) and not under Section 8.1(b). With respect to Members or their Affiliates acting as Officers or agents of the Company, the intent of this Section 8.2(b) is to provide for indemnification only in their capacity as Officers or agents of the Company, and not with respect to (A) the performance of their covenants and other obligations under this Agreement as a Covered EC Member, Covered Person or otherwise or (B) the performance of their covenants and other obligations to the Company or any Member under any other Transaction Agreement.

(c)Advance Payment; Indemnification Subject to Termination Based on Final Determination; Success on the Merits. With respect to any Proceeding for which any Person referred to in Section 8.2(a) or Section 8.2(b) may be entitled to be indemnified under such subsections, subject to (unless such Person is a Member) receipt of an undertaking by or on behalf of such Person to comply with clause (ii) of the proviso in this sentence, the Company shall indemnify, and advance expenses (including reasonable attorney’s fees) to, such Person in connection with such Proceeding from the time such Proceeding is threatened; provided that in the event that it shall be ultimately determined by a court of competent jurisdiction that such Person was not entitled to indemnification by the Company under such subsection in connection with such Proceeding because it did not meet the applicable standard of conduct required by such subsection, (i) the Company shall terminate such indemnification and advancement of expenses with immediate

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effect, and (ii) such Person shall promptly repay to the Company the amount of any advanced expenses or other amounts previously paid or reimbursed to or on behalf of it under this Section 8.2. To the extent that any Person referred to in Section 8.2(a) or Section 8.2(b) has been successful on the merits or otherwise in defense of any Proceeding referred to in such subsections, such Person shall be deemed automatically to have met, with respect to such Proceeding , the applicable standard of conduct required by such subsection.

(d)Insurance. The Company shall purchase and maintain insurance on behalf of any Person who is or was a Covered EC Member or Officer, or is or was serving at the request of the Company as a director, manager, officer, or member or other controlling Person of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, subject to compliance of any such insurance with applicable provisions of the Act.

(e)Not Exclusive. The indemnification provided for in this Section 8.2 shall not be deemed exclusive of any other rights to which those indemnified under this Section 8.2 may be entitled under any bylaw, agreement, vote of securityholders or disinterested directors or managers or otherwise, in each case with the approval of the NSAM Designees (to the extent required under Section 5.3), both as to action in their official capacity and as to action in another capacity while holding such office, and shall continue as to a Person who has ceased to be a director, manager, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a Person.

(f)Indemnification Agreements. The Company may enter into indemnification agreements with its Covered EC Members providing for the indemnification described in Section 8.2(a) so long as all Covered EC Members are entitled to identical benefits under such agreements.

(g)Survival. The provisions of this Section 8.2 shall survive any termination of this Agreement.

8.3Company as Indemnitor. The Company hereby acknowledges that certain Persons entitled to indemnification under Section 8.1 or Section 8.2 (each, an “Indemnitee”) may have certain rights to indemnification, advancement of expenses and/or insurance provided by Persons other than the Company (any such Persons, a “Primary Indemnitor”). The Members hereby further acknowledge and agree that the Company is the indemnitor of last resort (i.e., its obligations to the Indemnitee are secondary and any obligation of any Primary Indemnitor to advance expenses or to provide indemnification for the same expenses or liabilities incurred by an Indemnitee is primary). No advancement or payment by the Company on behalf of an Indemnitee with respect to any claim for which the Indemnitee has sought indemnification from a Primary Indemnitor shall affect the foregoing and the Company shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of the Indemnitee against the Primary Indemnitor.

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ARTICLE IX

DURATION AND TERMINATION OF THE COMPANY

9.1Dissolution and Termination of the Company.

(a)The Company shall be dissolved and its business wound up upon the occurrence of any of the following events:

(i)subject to obtaining any approval required under Section 5.3(x), the decision by the Executive Committee to dissolve the Company; or

(ii)by judicial decree in accordance with Section 18-802 of the Act.

(b)In the event of the dissolution of the Company, there shall be an orderly liquidation of the Company Assets, unless the Executive Committee determines, subject to approval of the NSAM Designees (so long as the NSAM Designation Threshold is met), that an immediate sale of all or part of the Company Assets would cause undue loss to the Members, in which event (i) the liquidation may be deferred for a reasonable time except as to those assets necessary to satisfy the Company debts and the Members shall be deemed to have elected to reconstitute the Company for such period, or (ii) all or part of the Company Assets may be distributed in kind, subject to the provisions of and in the same manner as cash under the applicable provisions of this Section 9.1. If Company Assets are distributed in kind, the Capital Accounts of the Members shall be adjusted to reflect the Book gain or loss (if any) that would have been recognized by the Company if those assets had been sold for an amount equal to their Fair Market Value at the time of distribution.

(c)Upon any dissolution of the Company, the Accountant shall prepare a statement setting forth the assets and liabilities of the Company as of the date of dissolution, and such statement shall be furnished to all Members.

(d)In the event of liquidation of the Company Assets, and subject to the first sentence of Section 9.1(b) above, the Company Assets shall be liquidated as promptly as possible and the Executive Committee shall appoint a Member to supervise such liquidation, subject to approval of the NSAM Designees (so long as the NSAM Designation Threshold is met) (the “Liquidating Member”), which shall be conducted in an orderly and business-like manner. The proceeds thereof shall be applied and distributed in the following order of priority:

(i)for the payment of the debts and liabilities of the Company (including any debts and liabilities owed to the Members and their Affiliates) and the expenses of liquidation;

(ii)to the setting up of any reserves which the Executive Committee reasonably may deem necessary for any contingent or unforeseen liabilities or obligations of the Company arising out of or in connection with the Company, subject to approval of the NSAM Designees (so long as the NSAM Designation Threshold is met).

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Said reserves may be paid over to an escrow agent to be held by it for the purpose of disbursing such reserves in payment of any of the aforementioned contingencies and, at the expiration of such period as the Executive Committee shall deem advisable, subject to approval of the NSAM Designees (so long as the NSAM Designation Threshold is met), to distribute the balance of such reserves to the Members as provided below; and

(iii)thereafter, in accordance with Section 4.1.

(e)No dissolution of the Company shall release or relieve the Members of their obligations under this Agreement.

9.2Effect of Retirement, Withdrawal, Bankruptcy, Dissolution, Death, Etc. of a Member. The retirement, withdrawal, bankruptcy, dissolution, death, incapacity or adjudication of incompetency of a Member shall not dissolve the Company unless the remaining Members agree to dissolve the Company.

ARTICLE X

REPRESENTATIONS AND WARRANTIES OF THE MEMBERS

10.1Mutual Representations and Warranties. Each Member hereby represents and warrants, in each case solely as to itself, to the Company and to each other Member as of the Effective Date as follows:

(a)    Authorization. If the Member is a corporation, limited liability company, partnership, trust, estate or other entity: (i) it is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization; and (ii) the execution, delivery and performance by it of this Agreement and the other Transaction Agreements to which it is a party are within its powers, have been duly authorized by all necessary action on its behalf, require no action by or in respect of, or filing with, any governmental body, agency or official and do not and will not contravene, or constitute a default under, any provision of applicable law or regulation or of its certificate of incorporation or other comparable organizational documents or any agreement, judgment, injunction, order, decree or other instrument binding upon it. If the Member is an individual, it has all legal capacity and power to execute, deliver and perform its obligations under this Agreement and the other Transaction Agreements to which it is a party, and no other action by or in respect of, or filing with, any governmental body, agency or official is required in connection therewith, and the execution, delivery and performance by such Member of this Agreement and the other Transaction Agreement do not and will not contravene, or constitute a default under, any provision of applicable law or regulation or any agreement, judgment, injunction, order, decree or other instrument binding upon such Member. This Agreement and each other Transaction Agreement to which such Member is a party has been duly executed and delivered by such Member and constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency,

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reorganization, moratorium, or other laws affecting the enforcement of creditors’ rights generally and the application of general principles of equity.

(b)Conflicts. No material consent, authorization, approval, order, license, certificate or permit of or from, or declaration or filing with, any federal, state, local or other governmental authority or any court or other tribunal or any other Person, is required for the execution, delivery and performance by such Member of this Agreement or any other Transaction Agreement to which it is a party. Neither the execution, delivery and performance by such Member of this Agreement and any other Transaction Agreement to which it is a party (with or without the giving of notice, the lapse of time, or both) nor the consummation of the transactions contemplated hereby or thereby: (i) conflicts with any provision of the organizational documents of such Member (if applicable) or any of its Subsidiaries: (ii) conflicts with, results in a material breach of, or constitutes a material default under any law applicable to such Member or any of its Subsidiaries; or (iii) results in a material breach of or constitutes a material default under or permits any party to terminate, modify, accelerate the performance of or cancel the terms of, any material Contract or other obligation to which such Member or any of its Subsidiaries is a party or is subject.

(c)Legal Proceedings. There are no claims, counter-claims, suits, arbitrations, governmental investigations or other legal, administrative or tax proceedings, nor any orders, decrees or judgments, in progress or pending or, to such Member’s knowledge, threatened that could reasonably be expected to impair such Member’s ability to perform under this Agreement.

(d)Investment Intention. Except as contemplated under the Purchase Agreement, such Member holds or is acquiring its Membership Interests solely for such Member’s own account for investment and not with a view to, or for resale in connection with, any distribution thereof, and such Member has no present intention of selling, granting any participation in, or otherwise distributing the same, and such Member is not making and will not make a market in Membership Interests. Except for the Purchase Agreement, such Member does not have any Contract with any Person to Transfer any of its Membership Interests or grant participation in any of its Membership Interests to such Person or to any other Person. Such Member either (i) is not a grantor trust, partnership or S corporation for U.S. federal income tax purposes or (ii) was not formed with, and will not be used for, a principal purpose of permitting the Company to satisfy the one hundred (100) partner limitation contained in Treas. Reg. § 1.7704-1(h)(1)(ii).

(e)Suitability. Such Member has been advised to engage, and either has engaged or determined after careful consideration not to engage, independent counsel of its choice (whether in-house or external) and any other advisors, including tax advisors, it deems necessary and appropriate. By reason of its business or financial experience, or by reason of the business or financial experience of its own attorneys, accountants and financial advisors (which advisors, attorneys and accountants are not Affiliates of the Company or any other Member), it is capable of evaluating the risks and merits of an investment in the Membership Interest and of protecting its own interests in connection with this investment. Nothing in this Agreement should or may be construed to allow any Member to rely upon the advice of counsel acting for another Member or to create an attorney-client relationship between a Member and counsel for another Member.

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(f)Accredited Investor. Such Member is familiar with the definition of “accredited investor” in Rule 501(a) of Regulation D of the Securities Act, and it is an “accredited investor” within the meaning of that Rule.

(g)Investment Company Act. Such Member is either (i) a “qualified purchaser” within the meaning of Section 2(a)(51) of the Investment Company Act of 1940 (the “Investment Company Act”), (ii) a “knowledgeable employee” as defined in Rule 3c-5 promulgated under the Investment Company Act or (iii) a Person owned exclusively by such qualified purchasers or knowledgeable employees.

(h)Not Formed for the Specific Purpose. Such Member either (i) was not formed for the specific purpose of acquiring a Membership Interest or (ii) all of its beneficial owners are (A) “accredited investors” as defined in Rule 501(a) of Regulation D of the Securities Act and (B) either “qualified purchasers within the meaning of Section 2(a)(51) of the Investment Company Act or “knowledgeable employees” as defined in Rule 3c-5 promulgated under the Investment Company Act.

(i)ERISA. Such Member is neither a “benefit plan investor” within the meaning of the Employee Retirement Income Security Act of 1974, as amended, nor is it a plan subject to Section 4975 of the Code.

(j)(i) Each Person owning a ten percent (10%) or greater interest in such Member (A) is not currently identified on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury (or any other similar list maintained by the Office of Foreign Assets Control pursuant to any authorizing statute, executive order or regulation) and (B) is not a Person with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of U.S. law, regulation, or executive order of the President of the United States, and (ii) such Member has implemented procedures, and will consistently apply those procedures, to ensure the foregoing representations and warranties remain true and correct at all times. This Section 10.1(j) shall not apply to any Person to the extent that such Person’s interest in such Member is through either (x) a Person (other than an individual) whose securities are listed on a national securities exchange, or quoted on an automated quotation system, in the United States, or a wholly-owned Subsidiary of such a Person or (y) an “employee pension benefit plan” or “pension plan” as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended.

10.2Indemnification.

(a)Subject to the terms and conditions hereof, each Member (a “Member Indemnifying Party”) agrees to indemnify and hold harmless the Company, its Subsidiaries, the other Members and their respective directors, managers, officers, and employees (collectively, the “Company Indemnitees”) from and against, and to promptly pay to a Company Indemnitee or reimburse a Company Indemnitee for, any and all Losses sustained or incurred by such Company Indemnitee resulting from or arising out of the material breach by such Member Indemnifying Party of any representation or warranty of such Member Indemnifying Party contained in this Article X.

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(b)Promptly after receipt by a Company Indemnitee of notice of any Loss for which such Company Indemnitee is entitled to indemnification under Section 10.2(a), such Company Indemnitee shall, if a claim for indemnification in respect thereof is to be made hereunder, give written notice to the Company and to the applicable Member Indemnifying Party of the Loss; provided, that the failure of any Company Indemnitee to give notice as provided herein shall not relieve such Member Indemnifying Party of its obligations under this Section 10.2, except to the extent that the responsible party is actually prejudiced by such failure to give notice. In case any Proceeding is brought against a Company Indemnitee, the applicable Member Indemnifying Party will be entitled to participate in and to assume the defense thereof with counsel satisfactory to such Company Indemnitee. A Member Indemnifying Party will not consent to entry of any judgment or enter into any settlement without the consent of the Company Indemnitee, which consent shall not unreasonably be withheld. The right of any Company Indemnitee to the indemnification provided herein shall be cumulative with, and in addition to, any and all rights to which such Indemnified Party may otherwise be entitled by contract or as a matter of law or equity and shall extend to such Company Indemnitee’s successors, assigns and legal representatives.

ARTICLE XI

MISCELLANEOUS

11.1Entire Agreement.    This Agreement constitutes the entire agreement among the parties with respect to the subject matter herein and supersedes any prior agreement or understanding among the parties hereto.

11.2    Amendments.    This Agreement may only be amended, supplemented or modified by the Executive Committee, subject to obtaining any approval required under Section 5.3(a); provided, that:

(a)any such amendment, supplement, modification or waiver which adversely and disproportionately affects any Member relative to any other Member holding the same class of Units, or affects any class of Members relative to any other class of Members, shall not be made or given without the prior written consent of such Member or such class of Members so affected; and

(b)Sections 5.7, 5.8, 6.7, 7.1(d), 7.4(e), 7.5(c) or Article VIII may not be amended, supplemented or otherwise modified in a manner that limits a Principal’s rights or increases a Principal’s obligations thereunder, without such Principal’s prior written consent.

11.3    Choice of Law.    THIS AGREEMENT AND THE RIGHTS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ANY CONFLICT OF LAW OR CHOICE OF LAW PRINCIPLES OF SUCH STATE TO THE EXTENT SUCH PRINCIPLES WOULD APPLY THE LAW OF ANOTHER JURISDICTION.

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11.4    Jurisdiction; Waiver of Jury Trial.    The Members agree that jurisdiction and venue for any action arising from or relating to this Agreement or the relationship between the parties, including but not limited to matters concerning validity, construction, performance, or enforcement, shall be exclusively brought in a state or a federal court sitting in New York, New York (provided, that a final judgment in any such action shall be conclusive and enforced in other jurisdictions) and further agree that service of process may be made in any matter permitted by law. The Members stipulate and agree that they are subject to personal jurisdiction in New York. This paragraph is intended to fix the location of potential litigation between the parties and does not create any causes of action or waive any defenses or immunities to suit.  EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHTS TO A TRIAL BY JURY WITH RESPECT TO ANY DISPUTE AMONG THE MEMBERS OR THEIR AFFILIATES OR AMONG A MEMBER (OR ITS AFFILIATES) AND THE COMPANY CONCERNING THIS AGREEMENT, THE COMPANY OR ITS ASSETS.

11.5    Successors and Assigns.    Except as otherwise specifically provided herein, this Agreement shall be binding upon and inure to the benefit of the parties and their heirs, administrators, executors, successors and permitted assigns.

11.6    Interpretation.        Unless otherwise expressly provided, for the purposes of this Agreement, the following rules of interpretation shall apply: (a) unless the context clearly requires otherwise, the words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (b) all pronouns and all variations thereof shall be deemed to refer to the masculine, female or neuter, singular or plural, as the identity of the Person may require; (c) references herein to a specific Article, Section, Subsection or Exhibit shall refer, respectively, to Articles, Sections, Subsections or Exhibits of this Agreement, unless the express context otherwise requires; (d) wherever the word “include,” “includes,” or “including” is used in this Agreement, it shall be deemed to be followed by the words “but not limited to” or “without limitation” unless clearly indicated otherwise; (e) the word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.”; (f) a reference to “$,” “U.S. dollars” or “dollars” means the legal tender of the United States of America; (g) with respect to the determination of any period of time, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”; (h) all terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein; (i) references to a Member in a particular capacity, shall refer to such Member in such capacity and not in any other capacity; and (j) any law referred to herein or in any agreement or instrument that is referred to herein means such law as from time to time amended, modified or supplemented, including by succession of comparable successor law and references to all attachments thereto and instruments incorporated therein.

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11.7    Captions.    Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend or otherwise affect the scope or intent of this Agreement or any provision hereof.

11.8    Severability.    If any provision of this Agreement, or the application of such provision to any Person or circumstance, shall be held invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions of this Agreement, or the application of such provision in jurisdictions or to Persons or circumstances other than those to which it is held invalid, illegal or unenforceable shall not be affected thereby.

11.9    Counterparts.    This Agreement may be executed in several counterparts and via facsimile or other electronic means, each of which shall be deemed an original but all of which shall constitute one and the same instrument. It shall not be necessary for all Members to execute the same counterpart hereof.

11.10    Additional Documents. Subject to the provisions of this Agreement, each party hereto agrees to execute, with acknowledgment or affidavit, if required, any and all documents and writings which the Executive Committee determines may be reasonably necessary or expedient in connection with the creation of the Company and the achievement of its purposes, specifically including (a) any amendments to this Agreement and such certificates and other documents as the Members deem necessary or appropriate to form, qualify or continue the Company as a limited liability company in all jurisdictions in which the Company conducts or plans to conduct business and (b) all such agreements, certificates, tax statements, tax returns and other documents as may be reasonably required of the Company or its Members by the laws of the United States of America or any jurisdiction in which the Company conducts or plans to conduct business, or any political subdivision or agency thereof.

11.11    Non-Waiver. No provision of this Agreement shall be deemed to have been waived unless such waiver is contained in a written notice given to the party claiming such waiver has occurred, provided that no such waiver shall be deemed to be a waiver of any other or further obligation or liability of the party or parties in whose favor the waiver was given.

11.12    Notices. To be effective, unless otherwise specified in this Agreement, all notices and demands, consents and other communications under this Agreement must be in writing and must be given (a) by depositing the same in the United States mail, postage prepaid, certified or registered, return receipt requested, (b) by delivering the same in person and receiving a signed receipt therefor, (c) by sending the same by a nationally recognized overnight delivery service or (d) by electronic mail with acknowledgment of receipt. For

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purposes of notices, demands, consents and other communications under this Agreement, the addresses of the Members shall be as set forth below. Notices, demands, consents and other communications mailed in accordance with the foregoing clause (a) shall be deemed to have been given and made three (3) Business Days following the date so mailed. Notices, demands, consents and other communications given in accordance with the foregoing clauses (b) and (c) shall be deemed to have been given when delivered. Notices, demands, consents and other communications given in accordance with the foregoing clause (d) shall be deemed to have been given on the date transmitted, if such date is a Business Day (and same is transmitted prior to 5 PM Eastern Standard Time), or, if such date is not a Business Day (or is transmitted after 5 PM Eastern Standard Time on a Business Day), on the first Business Day thereafter. Notices directed to a Member shall be delivered to the parties at the address as set forth below, or at such other address as may be supplied by written notice given in conformity with the terms of this Section 11.12:

If to AHI Member:

American Healthcare Investors, LLC

18191 Von Karman Ave, Suite 300

Irvine, CA 92612

Attention: Mathieu Streiff

Email: mstreiff@ahinvestors.com

with a copy (which shall not constitute notice) to:

O’Melveny & Myers LLP

Two Embarcadero Center, 28th Floor

San Francisco, California 94111

Attention: C. Brophy Christensen, Esq.

Email: bchristensen@omm.com

If to NSAM Member or NSAM Parent:

NorthStar Asset Management Group Inc.

399 Park Avenue, 18^th Floor
New York, New York 10022
Attention: Ronald J. Lieberman
Executive Vice-President and General CounselEmail: rlieberman@nsamgroup.com

with a copy (which shall not constitute notice) to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019

Attention: Bruce Gutenplan, Esq.

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Email: bgutenplan@paulweiss.com

If to Flaherty Member:

Flaherty Trust

c/o James F. Flaherty, III211 S. Bristol AvenueLos Angeles, CA 90049
Email: jflaherty@nsamgroup.com

If to any Class B Member, as provided in the Incentive Unit Plan or pursuant to the terms of the Award Agreements contemplated thereby.

Any counsel designated above or any replacement counsel that may be designated respectively by any Member or such counsel by written notice to the other parties is hereby authorized to give notices hereunder on behalf of its respective client.

11.13Time Periods. In applying any provision of this Agreement that requires an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days will be used unless otherwise specified and the day of the doing of the act will be excluded and the day of the event will be included; provided, that if a period of days provided for herein ends on a day that is not a Business Day, such period of days instead shall end on the first Business Day following such non-Business Day.

11.14Confidentiality.

(a)Each Member recognizes that Confidential Information may have been and may be disclosed to such Member by the Company and its Representatives. By executing this Agreement, each Member expressly agrees that, at all times during the term of the Company and thereafter and whether or not at that time it is a Member of the Company, such Member shall maintain in strict confidence, shall not disclose to any Person other than the Company or another Member, and shall not give, sell or use (other than in connection with Company purposes), any Confidential Information, except (y) to its Representatives (solely to the extent such disclosure reasonably relates to such Member’s monitoring, analyzing and managing its investment in the Company) and (z) as deemed necessary or appropriate to comply with any law, rule or regulation, including, but not limited to, applicable securities laws and the rules of any national securities exchange. As used herein, “Confidential Information” means (i) information that is known or reasonably should have been known by the recipient to be confidential or proprietary, (ii) trade secrets belonging or related to the Company, its Subsidiaries, any Member, any Principal or their respective Affiliates in each case, including information concerning this Agreement, (iii) business plans, (iv) financial statements and other information provided pursuant hereto, (v) operating practices and methods, (vi) expansion plans, (vii) strategic plans, (viii) marketing plans, (ix) contracts and (x) customer lists or other business documents which the Company and its Subsidiaries treat as confidential or proprietary. Nothing in this Section 11.14 shall prohibit any Member or any

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of its Affiliates from disclosing the terms of this Agreement to its counsel or any court or other Governmental Authority in connection with the enforcement by such Member of this Agreement.

(b)The foregoing agreements shall not apply to any Confidential Information that (i) is or becomes publicly available through no fault of such Member, or any Person with whom such Member shared Confidential Information, (ii) is received from a third party and not, to the knowledge of such Member, through violation of any confidentiality agreement, (iii) is independently obtained by such Member without use of or reference to the Confidential Information, (iv) such Member is legally required or requested by any Governmental Authority having jurisdiction over such Member to be disclosed; provided, however, that if such Member is requested or required to disclose any such information pursuant to Order or any other applicable legal procedure, it shall provide the Company with prompt written notice thereof to the extent not prohibited from doing so by applicable law so that the Company may seek an appropriate protective Order at the sole cost and expense of the Company or (v) relates to the Company, any of its Subsidiaries or their business and is disclosed by AHI Member, NSAM Member or their respective Representatives as necessary or advisable to form, register, market, finance, sponsor or promote any Permitted Investment Vehicle.

(c)Each Member shall indemnify each other Member and the Company for any loss, damage, liability, claims and expenses incurred, suffered or sustained by any of them as a result of any breach of this Section 11.14 by such Member or its Affiliate.

11.15Press Releases; Publicity. Unless otherwise required by law or the rules of any stock exchange or Governmental Authority, and except as set forth in Section 6.7 of the Purchase Agreement, no party hereto may issue any press release or otherwise make any public announcement about this Agreement or any other Transaction Agreements without the prior written consent of the Initial Members, other than in accordance with the Communication Guidelines attached hereto as Exhibit E.

11.16    Remedies; Specific Performance

(a)Except as otherwise provided herein, no remedy herein conferred or reserved is intended to be exclusive of any other available remedy or remedies, and each and every remedy shall be cumulative and shall be in addition to every remedy under this Agreement or now or hereafter existing at law or in equity.

(b)Without limiting the generality of the foregoing, each Member acknowledges and agrees that its respective remedies at law for a breach or threatened breach of any of the provisions of this Agreement would be inadequate and, in recognition of that fact, agrees that, in the event of a breach or threatened breach by any Member of the provisions of this Agreement, in addition to any remedies at law, the Company, any of its Subsidiaries or any other Member shall, without posting any bond or proof of damages, be entitled to seek equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available.

[The remainder of this page has been intentionally left blank.]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

AHI NEWCO, LLC
By:	American Healthcare Investors LLC, its manager
By:
Name:	Mathieu B. Streiff
Title:	Principal

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AMERICAN HEALTHCARE INVESTORS LLC
By:
Name:	Mathieu B. Streiff
Title:	Principal

66

PLATFORM HEALTHCARE INVESTOR T-II, LLC
By:
Name:	Ronald J. Lieberman
Title:	Executive Vice President and General Counsel

67

FLAHERTY TRUST, dated September 25, 1997, as amended
By:
	James F. Flaherty, III
	Trustee

68

ACKNOWLEDGED AND AGREED AS TO SECTIONS 5.7, 5.8, 6.7, 7.1(d), 7.4(e) and 7.5(c) ONLY:

Jeffrey T. Hanson

69

ACKNOWLEDGED AND AGREED AS TO SECTIONS 5.7, 5.8, 6.7, 7.1(d), 7.4(e) and 7.5(c) ONLY:

Danny Prosky

70

ACKNOWLEDGED AND AGREED AS TO SECTIONS 5.7, 5.8, 6.7, 7.1(d), 7.4(e) and 7.5(c) ONLY:

Mathieu B. Streiff

71

ACKNOWLEDGED AND AGREED AS TO SECTIONS 5.9(a), 5.10, 6.6, 6.7 and 6.8 ONLY:
NORTHSTAR ASSET MANAGEMENT GROUP INC.
By:
Name:	Ronald J. Lieberman
Title:	Executive Vice President and General Counsel

72

[FORM OF]

COUNTERPART SIGNATURE PAGE

ADDITIONAL MEMBER admitted to the Company pursuant to Article VII.

Name:

Date:

73

Exhibit A

Definitions

As used in this Agreement the following terms shall have the following respective meanings:

Account Reduction Item: means (i) any adjustment described in Treas. Reg. §1.704-1(b)(2)(ii)(d)(4), (ii) any allocation described in Treas. Reg. §1.704-1(b)(2)(ii)(d)(5), other than a Nonrecourse Deduction or a Member Nonrecourse Deduction, or (iii) any distribution described in Treas. Reg. §1.704-1(b)(2)(ii)(d)(6), other than a Nonrecourse Distribution or a Member Nonrecourse Distribution.

Accountant: means a nationally recognized firm of independent certified public accountants selected by the Executive Committee, subject to obtaining any approval required under Section 5.3(b).

Act: has the meaning set forth in the Recitals.

Additional Interests: means (i) any Membership Interests or other equity securities in the Company issued after the Effective Date, (ii) any rights, options or warrants issued by the Company to purchase any such Membership Interests or other equity securities, or to purchase securities that may become convertible into, exercisable for or exchangeable for such Membership Interests or other equity securities and (iii) any securities issued by the Company convertible into, exercisable for or exchangeable for such Membership Interests or other equity securities; provided, however, that Additional Interests shall not include (A) securities issued as or in connection with a distribution on, subdivision of, reclassification of, split of or other distribution pro rata in respect of all Membership Interests, (B) securities issued upon conversion, exercise or exchange of any previously issued Additional Interests, so long as such securities are issued pursuant to the terms of such previously issued Additional Interests as in effect at the time of such issuance, (C) securities issued upon exercise of the Warrant Agreement, (D) securities issued in connection with the Company’s acquisition of another business, (E) securities issued in connection with a Company Sale, (F) securities issued in connection with any Public Offering or (G) securities granted to employees pursuant to an employment agreement or the Incentive Unit Plan.

Additional Issuance: means any issuance of Additional Interests in the Company.

Additional Members: has the meaning set forth in the introductory paragraph to this Agreement.

Adjusted Capital Account: means, as of the end of any Tax Year, a Member’s Capital Account balance as of the end of such Tax Year (taking into account all contributions made by such Member and distributions made to such Member during such Tax Year and any special allocations required by Sections 3.9(b) through 3.9(d), without duplication (but before giving effect to any allocations of Net Book Income or Net Book Loss for such Tax Year pursuant to Section 3.9(a)), increased by the sum of (i) such Member’s share of Company Minimum Gain and (ii) such Member’s

share of Member Nonrecourse Debt Minimum Gain, both determined after taking into account any such special allocations.

Adjusted Fair Market Value: means, with respect to an item of Company property, the greater of (i) the Fair Market Value of such property as reasonably determined by the Executive Committee or (ii) the amount of any nonrecourse indebtedness to which such property is subject within the meaning of Section 7701(g) of the Code.

Advisory Agreements: means any advisory agreement, sub-advisory agreement or other Contract relating to the provision of asset management, operating, supervisory, administrative or similar services to an Investment Vehicle.

Affiliate: means, with reference to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such Person.

Affiliate Transaction: means any transaction between (i) AHI Member, any Principal, any Family Member of any Principal or any of their respective Affiliates, on the one hand, and (ii) the Company, any Subsidiaries of the Company or any Permitted Investment Vehicles, on the other hand; provided, however, that any Affiliate or director indemnification agreements provided by any Investment Vehicle in the ordinary course to AHI Member, any Principal or any of their respective Affiliates shall not be considered an Affiliate Transaction for purposes of this Agreement.

Agreement: means this Amended and Restated Limited Liability Company Agreement of the Company, as the same may be amended hereafter from time to time as provided herein.

AHI/NRF Promote Agreement: means that certain AHI/NRF Promote Participation Agreement, dated as of the date hereof, by and among the Company, the Flaherty Partnership, NSAM P-Holdings, LLC and NSAM Parent.

AHI Contract: has the meaning set forth in Section 5.7(b).

AHI Designation Threshold: has the meaning set forth in Section 5.1(a).

AHI Designees: has the meaning set forth in Section 5.1(a).

AHI Dispute: has the meaning set forth in Section 5.7(a).

AHI Fund Investments: means a limited partnership or other investment vehicle formed to invest in Healthcare assets and pursuant to which (a) third party capital is raised through subscriptions and (b) the general partner or fund manager is the Company or an Affiliate thereof.

AHI Member: has the meaning set forth in the introductory paragraph to this Agreement.

AHI Member Retained Fees: means the AHI Member Retained Acquisition Fees and the AHI Member Retained Management Fees.

AHI Member Retained Management Fees: means the asset management fees and property management fees payable to Griffin-American Healthcare REIT Sub-Advisor, LLC and AHI Management Services, Inc., respectively, for services rendered to GAHR II on or prior to the GAHR II Merger Date.

AHI Member Retained Acquisition Fees: means all acquisition and similar fees received by the Company that were generated by the transaction identified on Exhibit F attached hereto.

AHI PE Fund Carried Interest Proceeds: means all carried interest, profits interest, promotes, incentive fees and similar forms of compensation directly or indirectly received by the Company from any AHI Fund Investments, which is available for distributions to any holder of PE Fund Units, less any reserves pertaining to liabilities and contingent obligations of the Company or any of its direct or indirect Subsidiaries (whether at the Company level or any such Subsidiary level) with respect to such AHI Fund Investments, established by the Executive Committee, in each case, in accordance with the Approved Business Plan.

AHI Reversion Event For Cause: means, at any time following a NAM Management Reversion Event, the Flaherty Member (i) is convicted of, or enters a plea of nolo contendere for, the commission of a felony, (ii) does not use his commercially reasonable efforts to source Healthcare real estate investment opportunities for the benefit of the Company and its Affiliates, acting on an exclusive basis, and the Flaherty Member fails to reasonably cure any such breach or failure to perform within the 30 day period following written notice that specifically identifies such breach or failure to perform given to him by the Company, or (iii) engages in willful misconduct that is demonstrably and materially injurious to the Company or any of its Affiliates.

AHI Vesting Change of Control: means (i) prior to the occurrence of a NAM Management Reversion Event, if both the NSAM Designation Threshold and the AHI Designation Threshold are no longer satisfied, or (ii) following the occurrence of a NAM Management Reversion Event, if the AHI Designation Threshold is no longer satisfied.

Allocation Principles: means the principles for allocating Healthcare real estate investments between Permitted Investment Vehicles, on the one hand, and Investment Vehicles managed by NSAM Parent or its Affiliates, on the other hand, as such principles may be amended, modified or supplemented from time to time. The Allocation Principles in effect as of the date hereof are forth on Exhibit D attached hereto.

Amended Flaherty JV Agreement: has the meaning set forth in Section 6.6(b).

Annual Permitted Class B Issuance: has the meaning set forth in Section 3.5(a).

Approved Business Plan: means for each Fiscal Year of the Company, the Business Plan that has been approved by the Executive Committee in accordance with Section 5.3(c) (to the extent required).

Approved JV Contract: has the meaning set forth in Section 5.3(n).

Average NSAM Closing Price: means the volume weighted average price of shares of NSAM Common Stock for a ten (10) trading day period ending on the closing of the second to last trading day prior to (a) the applicable date such shares are granted by NSAM Parent, in the case of NSAM Common Stock granted pursuant to Section 6.8(a) or (b) the Effective Date, in the case of Time-Based NSAM Shares contributed by AHI Member pursuant to Section 6.9, in each case, as reported by Bloomberg.

Award Agreement: means an award agreement between the Company, on the one hand, and a director, officer or employee of the Company, on the other hand, relating to the issuance by the Company of Class B Incentive Units.

Bankruptcy Laws: has the meaning set forth in Section 5.3(y).

Book: means the method of accounting prescribed for compliance with the capital account maintenance rules set forth in Treas. Reg. § 1.704-1(b)(2)(iv) as reflected in Section 3.8and Section 3.9, as distinguished from any accounting method which the Company may adopt for other purposes such as financial reporting.

Book Value: means, with respect to any item of Company property, the Book value of such property within the meaning of Treas. Reg. § 1.704-1(b)(2)(iv), as adjusted to reflect revaluations as determined in accordance with Section 3.8(b); provided, that if the Company adopts the remedial allocation method described in Treas. Reg. § 1.704-3(d) with respect to any item of Company property, the Book Value of such property will be its Book basis determined in accordance with Treas. Reg. § 1.704-3(d)(2).

Bona Fide Third Party: means any Person other than NSAM Member, AHI Member, any Principal, any Executive Committee Member, any Affiliate of the Company or any of its Subsidiaries or any of their respective Affiliates, directors, officers, employees, shareholders, members and Family Members; provided, that such Person does not directly or indirectly (i) carry on business activities that compete with those of the Company, its Subsidiaries or any Permitted Investment Vehicles or (ii) own more than 10% of the Equity Interests of a Person that carries on business activities that compete with those of the Company, any of its Subsidiaries or any Permitted Investment Vehicle (clauses (i) and (ii), each a “Competing Activity”).  Notwithstanding the foregoing, each member of the Management Group that is not engaged in a Competing Activity is deemed to be a Bona Fide Third Party.    

Business Day: means any day other than a Saturday, a Sunday or a holiday on which commercial banks in the State of New York or California are authorized or required to be closed.

Business Plan: means for each Fiscal Year of the Company, an annual business plan and operating budget for the Company.

Capital Account: means the capital account of a Member maintained as required by Section 3.8.

Capital Event: mean an extraordinary transaction (or series of related transactions) involving the Company or any of its Subsidiaries, whether occurring directly or indirectly, under circumstances designed to monetize the Members’ Membership Interests, which may include (a) a sale of Membership Interests to a Third Party Purchaser that results in a Change of Control, (b) a public offering of securities of the Company or any of its Subsidiaries or successors in which the Members sell all or a portion of their Membership Interests or other interest in any Subsidiaries of the Company, (c) a refinancing or recapitalization of the Company or any of its Subsidiaries to the extent any proceeds therefrom are made available for distribution to the Members, (d) a sale of all or substantially all of the Company Assets in contemplation of a complete liquidation and winding up of the Company or (e) any other event or transaction (or series of related transactions) that the Executive Committee determines to characterize as a Capital Event, subject to approval of the NSAM Designees for so long as the NSAM Designation Threshold is met.

Capital Proceeds: means the net cash proceeds realized by the Company or its Subsidiaries in connection with a Capital Event, following payment of all outstanding third party debts, liabilities and taxes of the Company or its Subsidiary to the extent that such debts, liabilities and taxes are then due, and that are not reserved, reinvested or otherwise retained by the Company or its Subsidiary for the continuation of its business as determined by the Executive Committee (in accordance with the Approved Business Plan, if applicable).

Capital Proceeds Equity Interests: means Equity Interests of the Company that are entitled to participate in distributions of Capital Proceeds in accordance with Section 4.1(g).

Capital Proceeds Pro Rata Share: means, with respect to any Class A Member, Class B Member or Class J Member at any time, the quotient (expressed as a percentage) of (a) the number of Class A Common Units, fully vested Class B Incentive Units and Class J Incentive Units (whether or not vested) held by such Member at the time of determination, divided by (b) the total number of issued and outstanding Class A Common Units, fully vested Class B Incentive Units and Class J Incentive Units (whether or not vested), at such time of determination; provided, that a fully vested Class B Incentive Unit and a Class J Incentive Unit shall not be included in the calculations of Capital Proceeds Pro Rata Share (in either the numerator or the denominator) until the Distribution Hurdle for such fully vested Class B Incentive Unit or Class J Incentive Unit, as applicable, has been satisfied.

Certificate: has the meaning set forth in Section 1.1.

Change of Control: means any transaction (or series of related transactions) that results in the sale of all of the Units issued to the Initial Members.

Class A Common Units: means the Units designated as Class A Common Units under this Agreement.

Class A Member: means a Member holding Class A Common Units, in its capacity as such.

Class A Pro Rata Share: means, with respect to any Class A Member at any time, the quotient (expressed as a percentage) of (a) the Class A Common Units held by such Class A Member at the time of determination, divided by (b) the aggregate number of outstanding Class A Common Units held by all Class A Members at such time.

Class B Incentive Units: means the Units designated as Class B Incentive Units under this Agreement.

Class B Member: means a Member holding Class B Incentive Units, in its capacity as such.

Class J Incentive Units: means the Units designated as Class J Incentive Units under this Agreement.

Class J Member: means a Member holding Class J Incentive Units, in its capacity as such.

Code: means the Internal Revenue Code of 1986.

Common Unit: means a Class A Common Unit and any other Unit designated a Common Unit at the time of its issuance in accordance with the terms of this Agreement; provided, that the Class B Incentive Units, the Promote Units and the Class J Incentive Units shall in no event be deemed to be Common Units.

Company: has the meaning set forth in the introductory paragraph to this Agreement.

Company Allotted NRF Carried Interest Proceeds: has the meaning set forth in the AHI/NRF Promote Agreement.

Company Assets: means all assets, whether tangible or intangible and whether real, personal or mixed, at any time owned by the Company.

Company Incentive Award: has the meaning set forth in Section 3.5(a).

Company Indemnitees: has the meaning set forth in Section 10.2(a).

Company Minimum Gain: means partnership minimum gain determined pursuant to Treas. Reg. § 1.704-2(d) and Section 3.9(d).

Company Notice: has the meaning set forth in Section 7.4(b).

Company Sale: means (i) a sale of all or substantially all of the assets of the Company in one transaction or a series of related transactions, or (ii) a direct or indirect sale of Units representing 100% of the outstanding economic or voting interest in the Company (whether by merger, consolidation, sale or Transfer of the Units) in one transaction or a series of related transactions, in each case to a Third Party Purchaser or in connection with a MBO.

Company Sale Allocation Schedule: has the meaning set forth in Section 7.5(a).

Company Sale Consideration: has the meaning set forth in Section 7.5(a).

Company Principal Relationship: has the meaning set forth in Section 5.8

Confidential Information: has the meaning set forth in Section 11.14(a).

Contract: means any contract, agreement, indenture, note, bond, loan, lease, sublease, conditional sales contract, mortgage, license, sublicense, franchise agreement, obligation, promise, undertaking, commitment or other binding arrangement.

Contribution: has the meaning set forth in the Recitals.

Contribution Agreement: has the meaning set forth in the Recitals.

Control: (including the terms “Controlling”, “Controlled by” and “under common Control with”) of a Person includes the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting interests, by contract or otherwise.

Covered Conduct: means any action, omission, or determination (including any trading, programming, or other error) in connection with a Person’s duties, rights or actions in the capacity of a Covered Person, in each case, related to the Company or any of its Subsidiaries; provided, for the avoidance of doubt, that Covered Conduct shall expressly exclude any breach of a representation, warranty, covenant or agreement contained in this Agreement for which a Covered Person is obligated to indemnify any Person pursuant to Section 10.2.

Covered Person: means each Member and their respective Affiliates (other than the Company or any of its Subsidiaries), each of the current and former shareholders, partners, members, managers, consultants, agents, liquidators and other representatives of any of the foregoing and any other Person designated by the Executive Committee as a Covered Person, including the consent of the NSAM Designees (for so long as the NSAM Designation Threshold is satisfied).

Deemed Liquidation: means a liquidation of the Company that is deemed to occur pursuant to Treas. Reg. § 1.708-1(b)(4) in the event of a termination of the Company pursuant to Section 708(b)(1)(B) of the Code.

Defaulting Member: has the meaning set forth in Section 7.3(b).

Distributable Cash Flow: means Future Healthcare NTR Carried Interest Proceeds, GAHR III Carried Interest Proceeds, AHI PE Fund Carried Interest Proceeds, Operating Cash Flow and/or Capital Proceeds, as the context requires. For the avoidance of doubt, Distributable Cash Flow shall not include any Company Allotted NRF Carried Interest Proceeds or AHI Member Retained Fees.

Distribution Hurdle: means, with respect to a Class B Incentive Unit, the “Distribution Hurdle” designated in the applicable Award Agreement.

Drag Along Notice: has the meaning set forth in Section 7.4(a).

Dragged Members: has the meaning set forth in Section 7.4(a).

Effective Date: has the meaning set forth in the introductory paragraph to this Agreement.

Equity Interests: means, with respect to any Person, equity interests of (including membership interests, shares of capital stock or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of equity interests of (including membership interests, shares of capital stock or other ownership or profit interests in) such Person, securities convertible into or exchangeable for equity interests of (including membership interests, shares of capital stock or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such equity interests (including membership interests, shares of capital stock or other ownership or profit interests) in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.

Excess Deficit Balance: means the amount, if any, by which the balance in a Member’s Capital Account as of the end of the relevant Tax Year is more negative than the amount, if any, of such negative balance that such Member is treated as obligated to restore to the Company pursuant to Treas. Reg. § l.704-1(b)(2)(ii)(c), Treas. Reg. § 1.704-1(b)(2)(ii)(h), Treas. Reg. § 1.704-2(g)(1), or Treas. Reg. § 1.704-2(i)(5). Solely for purposes of computing a Member’s Excess Deficit Balance, such Member’s Capital Account will be reduced by the amount of any Account Reduction Items that are reasonably expected as of the end of such Tax Year.

Excess Nonrecourse Liabilities: means excess nonrecourse liabilities within the meaning of Treas. Reg. § 1.752-3(a)(3).

Excess Financing: has the meaning set forth in Section 3.4(b).

Executive Committee: has the meaning set forth in Section 5.1(a).

Executive Committee Member: has the meaning set forth in Section 5.1(a).

Exclusivity Letter: means that certain letter agreement RE: Future Healthcare NTRs and Healthcare Funds, dated as of the Effective Date by and among the Company, AHI Member, NSAM Member and NSAM Parent.

Fair Market Value: means, with respect to any asset (including any Unit), the fair market value of such asset based upon an arm’s length sale between a willing buyer and a willing seller, as determined by the Executive Committee in good faith, and based upon the advice of and valuation by a reputable and nationally recognized financial advisor.

Family Member: means, with respect to any natural Person, each of (a) the spouse, lineal ancestors or descendants, nieces, nephews or cousins of such natural Person including the spouse of any of the foregoing, and regardless of whether such relationship exists by birth, adoption or marriage, (b) any executors or administrators for, or the estate of, such natural Person or any of the foregoing, (c) any charitable trust, charitable organization or private foundation formed by any of the foregoing for estate planning purposes and (d) any trusts, partnerships, limited liability companies or other legal entities formed for the benefit of such natural Person or any of the foregoing individuals.

Final Non-Cash Value: has the meaning set forth in Section 7.2(f).

Fiscal Year: means the fiscal year of the Company, which shall be the calendar year.

Flaherty AHI PE Fund Promote Proceeds: means an amount equal to 33.33% of the AHI PE Fund Carried Interest Proceeds.

Flaherty Future Healthcare NTR Proceeds: means an amount equal to 33.33% of the Future Healthcare NTR Carried Interest Proceeds.

Flaherty GAHR III Proceeds: means an amount equal to 25% of the GAHR III Carried Interest Proceeds.

Flaherty JV Agreement: means that certain Limited Partnership Agreement of the Flaherty Partnership, dated as of January 22, 2014, by and among Healthcare JV GP, LLC, a Delaware limited liability company (the “NAM General Partner”), as general partner, NSAM P-Holdings, LLC, a Delaware limited liability company, as limited partner, and Flaherty Member, as limited partner, as such Limited Partnership Agreement is in effect on the Effective Date without giving effect to any amendments, supplements, modification or waivers of or under such Limited Partnership Agreement on or after the Effective Date.

Flaherty JV Amendment: means that certain Amendment to the Flaherty JV Agreement, dated as of November 5, 2014.

Flaherty Partnership: means Healthcare Opportunity JV, LP, a Delaware limited partnership.

Flaherty Promote Agreement: means that certain Flaherty Promote Participation Agreement, dated as of the date hereof, by and between the Flaherty Partnership and the Company.

Flaherty Resignation Notice: has the meaning set forth in the Flaherty JV Agreement.

Flaherty Subscription: has the meaning set forth in the Recitals.

Fully Participating Members: has the meaning set forth in Section 3.4(b).

Fully Participating ROFO Member: has the meaning set forth in Section 7.2(c).

Future HC NTR Units: means the Units designated as Future HC NTR Units under this Agreement.

Future Healthcare NTR: means any public, non-listed real estate investment trust that intends to invest primarily in Healthcare real estate assets. For the avoidance of doubt, GAHR III shall not be considered a Future Healthcare NTR.

Future Healthcare NTR Carried Interest Proceeds: means all carried interest, profits interest, promotes, incentive fees and similar forms of compensation directly or indirectly received by the Company from any Future Healthcare NTR or any of its Subsidiaries, which is available for distributions to any holder of Future HC NTR Units, less any reserves pertaining to liabilities and contingent obligations of the Company or any of its direct or indirect Subsidiaries (whether at the Company level or any such Subsidiary level) with respect to such Future Healthcare NTR, established by the Executive Committee, in each case, in accordance with the Approved Business Plan.

GAAP: means generally accepted accounting principles applicable in the United States, consistently applied.

GAHR II: means Griffin-American Healthcare REIT II, Inc., a Maryland corporation, as it may from time to time be constituted.

GAHR II Merger Date: means the effective date of the closing of the merger between GAHR II and NRF.

GAHR II Merger Promote: means the “Merger Termination Amount” as defined in that certain Amended and Restated Agreement of Limited Partnership of Griffin-American Healthcare REIT II Holdings, LP, dated as of April 26, 2014.

GAHR III: means Griffin-American Healthcare REIT III, Inc., a Maryland corporation, as it may from time to time be constituted.

GAHR III Advisory Agreement: means that certain Advisory Agreement, dated as of February 26, 2014, by and among GAHR III, Griffin-American Healthcare REIT III Advisor, LLC and Griffin-American Healthcare REIT III Holdings, LP, as it may be amended from time to time.

GAHR III Carried Interest Proceeds: means all carried interest, profits interest, promotes, incentive fees and similar forms of compensation directly or indirectly received by the Company from GAHR III or any of its Subsidiaries, which is available for distributions to any holder of GAHR III Units, less any reserves pertaining to liabilities and contingent obligations of the Company or any of its direct or indirect Subsidiaries (whether at the Company level or any such Subsidiary level) with respect to GAHR III, established by the Executive Committee, in each case, in accordance with the Approved Business Plan.

GAHR III Operating Agreement: means that certain Amended and Restated Limited Liability Company Agreement of Griffin-American Healthcare REIT III Advisor, LLC, dated effective as of February 16, 2014.

GAHR III Units: means the Units designated as GAHR III Units under this Agreement.

Governmental Authority: means (a) any United States federal, state or local or foreign government (or political subdivision thereof), (b) any agency or instrumentality of any such government (or political subdivision thereof), (c) any non-governmental regulatory or administrative authority, body or other organization (to the extent that the rules, regulations, standards, requirements, procedures and Orders of such authority, body or other organization have the force of law), and (d) any United States federal, state or local or foreign court, tribunal, arbitrator or arbitration panel.

Griffin: means Griffin Capital Corporation, a California corporation, as it may from time to time be constituted.

Griffin JV Agreement: means that certain Amended and Restated Joint Venture Agreement, dated as of November 5, 2014 between Griffin and the Company, as amended, supplemented or otherwise modified from time to time.

Group Agent: has the meaning set forth in Section 5.9(b).

Group Members: means, as the context requires, either (a) AHI Member, the Principals and their respective wholly-owned Affiliates, as a group, in their capacities as Class A Members or (b) NSAM Member, NSAM Parent and their respective wholly-owned Affiliates, as a group, in their capacities as Class A Members.

Healthcare: means the industry related to the provision of goods or services that treat individuals with curative, preventive, rehabilitative, and palliative care (including real estate related to the healthcare industry such as medical office buildings, adult or senior housing, assisting living facilities and nursing homes, and life science centers).

Incentive Unit Plan: means the AHI NEWCO, LLCIncentive Unit Plan entered into as of the Effective Date, as the same may be modified from time to time in accordance with the terms thereof and this Agreement.

Indebtedness: means, with respect to any Person, at any date, without duplication, (i) all obligations of such Person for borrowed money, including all principal, interest, premiums, fees, expenses, overdrafts and penalties with respect thereto, and all obligations relating to any swap, hedge, cap, collar or other interest rate protection agreement entered into in connection therewith, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit or similar instrument, and (iv) all Indebtedness of any other

Person of the type referred to in clauses (i) to (iii) above directly or indirectly guaranteed by such Person or secured by any assets of such Person.

Indemnitee: has the meaning set forth in Section 8.3.

Initial LLC Agreement: has the meaning set forth in the Recitals to this Agreement.

Initial Lockout Period: means the period beginning on the Effective Date and ending on the fifth anniversary of the Effective Date.

Initial Members: has the meaning set forth in the introductory paragraph to this Agreement.

Initial Public Offering: means the first direct or indirect (through a parent entity or otherwise) Public Offering of equity securities of the Company that results in the listing of such equity securities for trading on an internationally recognized securities exchange.

Initiating Seller: has the meaning set forth in Section 7.5(a).

Investment Committee: has the meaning set forth in Section 5.5.

Investment Committee Major Matters: means, with respect to any Permitted Investment Vehicle (other than GAHR III), recommendations with respect to (i) the liquidation, dissolution, winding up, restructuring, consolidation or reorganization of such Permitted Investment Vehicle, (ii) acquisitions (including the financing thereof at the time of acquisition) and dispositions of any asset held, directly or indirectly, by such Permitted Investment Vehicle, (iii) the aggregate amount and duration of any equity offerings of such Permitted Investment Vehicle or any transactions that could require capital contributions from the Company, (iv) the appointment of valuation firms engaged to appraise all or substantially all of the assets held, directly or indirectly, by such Permitted Investment Vehicle, (v) material amendments or modifications to the Organizational Documents of such Permitted Investment Vehicle, (vi) establishing dividend rates or other distribution rates by such Permitted Investment Vehicle, (vii) the amendment, termination, replacement or modification of any agreement between such Permitted Investment Vehicle (or any of its Subsidiaries), on the one hand, and Griffin (or any of its Subsidiaries), on the other hand, (viii) amendments, terminations, restatements, waivers or modifications to the investment guidelines, corporate governance guidelines, codes of ethics and similar corporate policies of such Permitted Investment Vehicle, in each case to the extent material, (ix) changing the investment purpose or strategy of such Permitted Investment Vehicle, including with respect to the asset class or geographic area of the investments made by such Permitted Investment Vehicle, (x) making any material change to the plan of distribution of such Permitted Investment Vehicle in a manner not contemplated under the Exclusivity Letter, (xi) material amendments, terminations, restatements, waivers or modifications to any Advisory Agreement (other than the NSAM Sub-Advisory Agreement), and (xii) any transaction that would: (A) require a guarantee or indemnification from the Company or any of its Affiliates; or (B) grant a counterparty recourse against the Company or any of its Affiliates for Indebtedness; provided, that if any such action has been specifically set forth in reasonable detail

in the Approved Business Plan then in effect, then such action shall not be an Investment Committee Major Matter.

Investment Vehicle: means an investment fund or investment vehicle, directly or indirectly managed, sponsored, advised, financed, funded or controlled by the Company or a Subsidiary of the Company, and which was formed for a purpose that is consistent with the Primary Purpose.

JV Contract: has the meaning set forth in Section 5.3(n).

Losses: means any losses, liabilities, taxes, damages, penalties, judgments, fines, amounts paid or to be paid in settlement or otherwise, and expenses (including any reasonable costs of investigation and preparation and reasonable fees, expenses, and disbursements of attorneys).

Major Matters: has the meaning set forth in Section 5.3.

Management Group: means the officers, managers, directors and/or employees of the Company or any of its Subsidiaries, other than the Principals, the AHI Designees and Affiliates and Family Members of the Principals and the AHI Designees.

Material Default: means any material violation, breach, default or event of default of or under or that would otherwise result in a modification of the terms of any outstanding Indebtedness of the Company or any of its Subsidiaries or any other material agreement to which the Company or any of its Subsidiaries is a party.

MBO: means a Transfer of all of AHI Member’s Units to a group of unaffiliated purchasers that includes the Management Group, as a result of which, the Management Group will acquire at least 25% of the total Equity Interests of the Company.

Member Indemnifying Party: has the meaning set forth in Section 10.2(a).

Member Loan: has the meaning set forth in Section 3.13.

Member Nonrecourse Debt: means any liability of the Company that is a partner nonrecourse debt within the meaning of Treas. Reg. § 1.704-2(b)(4).

Member Nonrecourse Debt Minimum Gain: means minimum gain attributable to Member Nonrecourse Debt pursuant to Treas. Reg. § 1.704-2(i)(3).

Member Nonrecourse Deduction: means any item of Book loss or deduction that is a partner nonrecourse deduction within the meaning of Treas. Reg. § 1.704-2(i)(1) and (2).

Member Nonrecourse Distribution: means a distribution to a Member that is allocable to a net increase in such Member’s share of Member Nonrecourse Debt Minimum Gain pursuant to Treas. Reg. § 1.704-2(i)(6).

Member Registry: has the meaning set forth in Section 3.2(a).

Members: has the meaning set forth in the introductory paragraph to this Agreement.

Membership Interest: means, with respect to a Member at any time, the limited liability company interest of such Member in the Company at such time, including the right of such Member to any and all of the benefits to which such Member may be entitled (in its capacity as a Member) as provided in this Agreement, together with the obligations of such Member (in such capacity) to comply with the terms and provisions of this Agreement.

NAM General Partner: has the meaning set forth in the definition of Flaherty JV Agreement.

NAM Management Reversion Event: has the meaning set forth in the Flaherty JV Agreement.

NAM Management Reversion Notice: has the meaning set forth in the Flaherty JV Agreement.

Necessary Expenses: means any non-discretionary expenses of the Company or any of its Subsidiaries as and when they become due (i) to fulfill tax obligations, (ii) to maintain appropriate insurance, (iii) to protect against imminent injury to Persons or imminent material commercial loss, including in respect of security and life safety or (iv) to maintain the status of the Company as a limited liability company under the Act and under the laws of any jurisdiction in which the Company conducts business.

Net Book Income: means, for any period, the excess, if any, of the Company’s items of income and gain for such period over the Company’s items of loss and deduction for such period, as computed for Book purposes; provided that, notwithstanding any other provisions of this Agreement, any items which are specially allocated pursuant to Sections 3.9(b), (c) and (d)shall not be taken into account in computing the Net Book Income.

Net Book Loss: means, for any period, the excess, if any, of the Company’s items of loss and deduction for such period over the Company’s items of income and gain for such period, as computed for Book purposes; provided that, notwithstanding any other provisions of this Agreement, any items which are specially allocated pursuant to Sections 3.9(b), (c) and (d)shall not be taken into account in computing the Net Book Loss.

New American Product: has the meaning set forth in Section 5.5(c).

NHI: NorthStar Healthcare Income Inc., a Maryland corporation, as it may from time to time be constituted.

Non-Cash Assets: has the meaning set forth in Section 7.2(b).

Non-Compete Agreements: has the meaning set forth in the Purchase Agreement.

Nonrecourse Deduction: means, subject to Section 3.9(b), a nonrecourse deduction determined pursuant to Treas. Reg. § 1.704-2(b)(1) and Treas. Reg. §1.704-2(c).

Nonrecourse Distribution: means a distribution to a Member that is allocable to a net increase in Company Minimum Gain pursuant to Treas. Reg. § 1.704-2(h)(1).

Notice: has the meaning set forth in Section 3.7.

NRF: NorthStar Realty Finance Corp., a Maryland corporation, as it may from time to time be constituted.

NRF Units: means the Units designated as NRF Units under this Agreement.

NSAM Common Stock: means the shares of common stock, par value $0.01 per share, of NSAM Parent.

NSAM Contract: has the meaning set forth in Section 5.7(b).

NSAM Designation Threshold: has the meaning set forth in Section 5.1(a).

NSAM Designees: has the meaning set forth in Section 5.1(a).

NSAM Dispute: has the meaning set forth in Section 5.7(a).

NSAM Entity: means (a) NSAM Parent, (b) each of its direct and indirect Subsidiaries and Affiliates, and their respective directors, officers and managers and (c) each investment fund or investment vehicle, directly or indirectly sponsored, advised, financed, funded or controlled by any of the Persons described in the immediately preceding clauses (a) and (b).

NSAM Luxembourg: has the meaning set forth in Section 1.3.

NSAM Member: has the meaning set forth in the introductory paragraph to this Agreement.

NSAM Parent: has the meaning set forth in the introductory paragraph to this Agreement.

NSAM Purchase: has the meaning set forth in the Recitals.

NSAM Sub-Advisory Agreement: means that certain Sub-Advisory Agreement, effective as of the Effective Date, between NSAM Luxembourg and the Company.

Offered Tag-Along Sale Units: has the meaning set forth in Section 7.4(b).

Officer: has the meaning set forth in Section 5.2(a).

Operating Cash Flow: means all available cash of the Company which is available for distributions to any Member, excluding Future Healthcare NTR Carried Interest Proceeds, GAHR III Carried Interest Proceeds, Company Allotted NRF Carried Interest Proceeds, AHI Member Retained Management Fees and Capital Proceeds, less any reserves pertaining to liabilities and contingent obligations of the Company or any of its direct or indirect Subsidiaries (whether at

the Company level or any such Subsidiary level) and the reasonably anticipated needs of the business of the Company and its Subsidiaries, established by the Executive Committee, in each case, in accordance with the Approved Business Plan.

Operating Cash Flow Pro Rata Share: means, with respect to any Class A Member or Class J Member at any time, the quotient (expressed as a percentage) of (a) the number of Class A Common Units and Class J Incentive Units (whether or not vested) held by such Member at the time of determination, divided by (b) the total number of issued and outstanding Class A Common Units and Class J Incentive Units (whether or not vested), at such time of determination.

Opportunity: has the meaning set forth in Section 5.6(b).

Order: means any order, decision, judgment, writ, injunction, decree, award or other determination of any Governmental Authority.

Organizational Documents: means (i) in the case of a corporation, its charter and by-laws; (ii) in the case of a limited or general partnership, its partnership certificate, certificate of formation or similar organizational document and its partnership agreement; (iii) in the case of a limited liability company, its articles of organization, certificate of formation or similar organizational documents and its operating agreement, limited liability company agreement, membership agreement or other similar agreement; (iv) in the case of a trust, its certificate of trust, certificate of formation or similar organizational document and its trust agreement or other similar agreement; and (v) in the case of any other entity, the organizational and governing documents of such entity.

PE Fund Units: means the Units designated as PE Fund Units under this Agreement.

Percentage Interest: means, as of any given time, as to any Member, a fraction, expressed as a percentage, equal to the number of Class A Common Units, Class B Incentive Units and Class J Incentive Units held by such Member, divided by the total number of issued and outstanding Class A Common Units, Class B Incentive Units and Class J Incentive Units.

Performance-Based NSAM Shares: means a number of additional shares of NSAM Common Stock to be granted to AHI Member or any Principal if certain performance criteria are achieved, upon the terms and subject to the conditions set forth in Section 1.2(b) of the Purchase Agreement.

Permitted Investment Vehicle: means (i) GAHR III and its Subsidiaries, (ii) each Future Healthcare NTR, (iii) any other Investment Vehicle approved by the Executive Committee, subject to approval of the NSAM Designees (to the extent required) in accordance with Section 5.3(t), and (iv) any Subsidiaries of Permitted Investment Vehicles described in the immediately preceding clauses (ii) and (iii).

Permitted Variance: has the meaning set forth in Section 5.3(c).

Person: means any individual, corporation, company, partnership, firm, joint venture, association, limited liability company, limited liability partnership, joint-stock company, trust, unincorporated organization, Governmental Authority, or other legal entity.

Phantom Stock Plan: means the contemplated equity incentive plan of the Company, to be funded by AHI Member with a number of fully vested Time-Based NSAM Shares (or their cash equivalent), as set forth in Section 6.9.

Pre-Approved Class B Issuance: has the meaning set forth in Section 3.5(a).

Preemptive Right: has the meaning set forth in Section 3.4(a).

Preemptive Rights Notice: has the meaning set forth in Section 3.4(a).

Preemptive Rights Period: has the meaning set forth in Section 3.4(a).

Primary Indemnitor: has the meaning set forth in Section 8.3.

Primary Purpose: has the meaning set forth in Section 1.3.

Prime Rate: means the average, at the time in question, of the rates announced as their respective prime commercial lending rates by Citibank, N.A. and JPMorgan Chase & Co. or their respective successors, and if such prime rates shall cease to be so announced by either or both of such banks, then the term “Prime Rate” shall mean the prime commercial lending rate for large commercial banks reported in The Wall Street Journal. Any interest payable with reference to the Prime Rate shall be adjusted on a daily basis, based upon the Prime Rate in effect at the time in question, and shall be calculated with respect to the actual number of days elapsed on the basis of a 365-day year. If (i) such prime commercial lending rates shall cease to be so announced by either or both of such banks, and (ii) The Wall Street Journal does not report the prime commercial lending rate for large commercial banks, then, the term “Prime Rate” shall mean a rate, reasonably determined by the Executive Committee, from time to time, to be comparable to the rate that had formerly constituted the “Prime Rate” hereunder.

Principals: means Jeffrey T. Hanson, Danny Prosky and Mathieu B. Streiff.

Proceeding: has the meaning set forth in Section 8.1(b).

Profits Interest: shall mean an interest in the future profits of the Company satisfying the requirements for a partnership profits interest transferred in connection with the performance of services, as set forth in IRS Revenue Procedures 93-27 and 2001-43, or any future IRS guidance or other authority that supplements or supersedes the foregoing Revenue Procedures.

Promote Agreements: means the Flaherty Promote Agreement and the AHI/NRF Promote Agreement.

Promote Units: means, collectively, the GAHR III Units, Future HC NTR Units, PE Fund Units and NRF Units.

Proposed Financing: has the meaning set forth in Section 3.4(a).

Proposed Purchaser: has the meaning set forth in Section 7.4(a).

Proposed Seller: has the meaning set forth in Section 7.4(a).

Public Offering: means any bona fide public offering of equity securities (or securities exchangeable for or convertible into equity securities) of the Company or any of its Subsidiaries pursuant to an effective registration statement under the Securities Act, or any other applicable law, or any other offering which results in such securities being listed for trading on any internationally recognized securities exchange.

Purchase Agreement: has the meaning set forth in the Recitals.

Qualified Appraiser: means each Person designated as a “Qualified Appraiser” in any Approved Business Plan.

Qualified Initial Public Offering: means an Initial Public Offering, underwritten on a firm commitment basis by a nationally recognized investment banking firm in which (i) at least 25% of the total equity securities of the Company are sold to the public and (ii) the gross proceeds to the Company (prior to deduction of underwriting discounts, commissions and fees) are at least $140 million.

Quarterly Payment Date: means, each January 10, April 10, July 10 and October 10 after the date hereof; provided, however, that if any Quarterly Payment Date falls on any day other than a Business Day, the payment due on such Quarterly Payment Date shall be paid on the first Business Day immediately following such Quarterly Payment Date.

Redemption: has the meaning set forth in the Recitals.

REIT: means a real estate investment trust qualifying under Section 856 of the Code.

Representatives: has the meaning set forth in Section 6.4.

Requisite Percentage: has the meaning set forth in Section 7.4(b).

Revaluation Event: means (i) a liquidation of the Company (within the meaning of Treas. Reg. § 1.704-1(b)(2)(ii)(g) but not including a Deemed Liquidation), (ii) a contribution of more than a de minimis amount of money or other property to the Company by a new or existing Member or a distribution of more than a de minimis amount of money or other property to a retiring or continuing Member in exchange for Units, (iii) the grant of any Units in connection with the provision of services to or for the benefit of the Company, including the issuance of Class B Incentive Units or (iv) immediately after the acquisition of an interest in the Company through the exercise of a noncompensatory option (as defined in Treasury Regulation Section 1.721-2(d)), including for the avoidance of doubt an exercise of the warrant contemplated by the Warrant Agreement; provided, that in the case of the events described in clause (ii) and (iii), such events shall not be classified as “Revaluation Events” if the Executive Committee determines in good faith that such adjustments

are not necessary or appropriate to reflect the relative economic interest of the Members in the Company.

ROFO Closing Date: has the meaning set forth in Section 7.2(c).

ROFO Member: has the meaning set forth in Section 7.2(a).

ROFO Member Valuation: has the meaning set forth in Section 7.2(e).

ROFO Non-Cash Notice: has the meaning set forth in Section 7.2(e).

ROFO Notice: has the meaning set forth in Section 7.2(a).

ROFO Objections Statement: has the meaning set forth in Section 7.2(e).

ROFO Offer Price: has the meaning set forth in Section 7.2(a).

ROFO Procedures: has the meaning set forth in Section 7.2.

ROFO Purchase Notice: has the meaning set forth in Section 7.2(b).

ROFO Right: has the meaning set forth in Section 7.2(b).

ROFO Transferring Party: has the meaning set forth in Section 7.2.

ROFO Transferring Party’s Valuation: has the meaning set forth in Section 7.2(e).

ROFO Units: has the meaning set forth in Section 7.2(a).

ROFR Right: has the meaning set forth in Section 7.5(e).

Safe Harbor Election: has the meaning set forth in Section 3.7.

Second Member: has the meaning set forth in the Recitals.

Section 705(a)(2)(B) Expenditures: means non-deductible expenditures of the Company that are described in Section 705(a)(2)(B) of the Code, and organization and syndication expenditures and disallowed losses to the extent that such expenditures or losses are treated as expenditures described in Section 705(a)(2)(B) of the Code pursuant to Treas. Reg. § 1.704-1(b)(2)(iv)(i).

Securities Act: means the Securities Act of 1933.

Subscription Agreement: has the meaning set forth in the Recitals.

Subscription Notice: has the meaning set forth in Section 3.4(b).

Subsidiary: means, with respect to any specified Person, any entity of which the specified Person (either alone or through or together with any other Subsidiary of such specified Person) directly or indirectly (a) owns more than fifty percent (50%) of the Equity Interests or other interests, the holders of which are generally entitled to vote for the election of the board of directors or other applicable governing body of such entity or (b) controls the management.

Supplemental Terms: means with respect to a specified class and series of Units, the supplemental terms applicable to such class or series of Units, as determined by the Executive Committee (subject to approval of the NSAM Designees for so long as the NSAM Designation Threshold is met), in connection with the issuance of such class or series of Units.

Tag-Along Allocation Schedule: has the meaning set forth in Section 7.4(b).

Tag-Along Consideration: has the meaning set forth in Section 7.4(b).

Tag-Along Member: has the meaning set forth in Section 7.4(a).

Tag-Along Notice: has the meaning set forth in Section 7.4(b).

Tag-Along Sale: has the meaning set forth in Section 7.4(a).

Tag-Along Rights: has the meaning set forth in Section 7.4(a).

Target Capital Account: means, with respect to any Member, an amount (which may be either positive or negative) equal to the hypothetical distribution such Member would receive if (a) all Company assets were sold for cash equal to their Book Value (after reduction for depreciation of such assets), (b) all liabilities of the Company were satisfied for cash according to their terms (limited, with respect to each nonrecourse liability, to the Book Value of the Company Asset securing such liability), and (c) the net proceeds of such hypothetical transactions and all other available cash (taking into account any contributions to be made on such liquidation) were distributed in full pursuant to the provisions of Article IV).

Tax Basis: means, with respect to any item of Company property, the adjusted basis of such property as determined in accordance with the Code.

Tax Distribution: has the meaning set forth in Section 4.2(a).

Tax Matters Member: has the meaning set forth in Section 6.5(b).

Tax Rate: means, with respect to each Tax Year, the highest marginal combined effective U.S. federal, state, and local income tax rate for such Tax Year applicable to an individual resident of, or U.S. corporation doing business in, (i) the borough of Manhattan, in New York City, New York or (ii) the state of California, whichever rate is higher, and taking into account the deductibility of state and/or local income taxes for U.S. federal and/or state income tax purposes.

Tax Year: means, except as otherwise required by the Code, the Fiscal Year.

Taxing Authority: has the meaning set forth in Section 4.3.

Third Party Purchaser: has the meaning set forth in Section 7.5(a).

Time-Based NSAM Shares: has the meaning set forth in the Purchase Agreement.

Transaction Agreements: means this Agreement, the Purchase Agreement, the Contribution Agreement, the Subscription Agreement, the Warrant Agreement, the NSAM Sub-Advisory Agreement, the Promote Agreements and the Exclusivity Letter.

Transfer: has the meaning set forth in Section 7.1(a).

Treasury Regulations or Treas. Reg.: means the income tax regulations, including temporary regulations, promulgated under the Code, as such regulations are amended from time to time.

Units: means, as the context requires, the Class A Common Units, GAHR III Units, Future HC NTR Units, PE Fund Units, NRF Units, Class B Incentive Units, Class J Incentive Units or any other unit representing Membership Interests issued in accordance with the terms of this Agreement.

Unreturned Capital Amount: means, with respect to any Member, (i) the sum of (x) the amount of all cash or cash equivalents contributed by such Member (as of the date of contribution), plus (y) the Book Value of all property contributed by such Member (as of the date of contribution), including, for the avoidance of doubt, the Book Value of any shares of NSAM Common Stock contributed or deemed contributed to the Company pursuant to Sections 6.8 and 6.9, less (ii) the sum of (x) all distributions made to such Member in respect of its Units pursuant to Sections 4.1 and 4.1 (g) and (y) the Book Value of any shares of NSAM Common Stock that revert to NSAM Parent pursuant to Section 6.8, that revert to AHI Member pursuant to Section 6.9 or that do not vest in the hands of the recipient (in each case, determined as of the date of the contribution or deemed contribution of NSAM Common Stock). As of the date hereof, the Unreturned Capital Amounts of the Members are as follows: (i) NSAM Member is $57,500,000, (ii) Flaherty Member is $5,000,000 and (iii) AHI Member is $60,146,515.

Warrant Agreement: has the meaning set forth in the Recitals.

Exhibit B

Member Registry

Member	Class A Common Units	GAHR III Units	Future HC NTR Units	PE Fund Units	NRF Units	Class J Incentive Units	Capital Accounts
AHI Member	4872.7	5,100	4772.7	5,000	5,100	—	60,146,515
NSAM Member	4672.7	4,900	4772.7	5,000	4,900	—	57,500,000
Flaherty Member	454.6	—	454.6	—	—	526.3	5,000,000

Exhibit C

Officers

Name	Title
Jeffrey T. Hanson	Managing Director
Danny Prosky	Managing Director
Mathieu B. Streiff	Managing Director and General Counsel
Shannon Johnson	Chief Financial Officer and Treasurer
Stefan Oh	Senior Vice President, Acquisitions
Cora Lo	Senior Vice President, Securities Counsel
Damon Elder	Senior Vice President, Marketing & Communications
Chris Rooney	Senior Vice President, Asset Management

Exhibit D

Allocation Principles

See attached

Exhibit E

Communication Guidelines

AHI/Healthcare NTR Key Communication Points

November 5, 2014

I. Timing

a. NorthStar Asset Management Group Inc. (“NSAM”)

i. November 6, 2015 at 10:00am in conjunction with Q3 2014 earnings release/call.

b. American Healthcare Investors LLC (“AHI”)

i. Contemporaneous with NSAM

c. Griffin Capital Corporation

i. Contemporaneous with NSAM

II. Discussion of Key Deal Points / Messaging

a. Internal and third party constituents

i. NSAM is purchasing 46.727% of AHI as a strategic investment to enhance existing high quality fee streams and to ensure the continued value enhancement of the GAHR II assets, given AHI’s familiarity of that portfolio and its quality management team. Significant portions of the purchase price will be in NSAM common stock to align the interests of AHI principals with the success of NSAM and, consequently, its managed companies.

ii. GAHR III and NHI will continue status quo in all regards as separately managed companies, including investment, portfolio management and capital raising.

iii. AHI management of other non-NHI NRF healthcare assets allows existing NSAM healthcare team, including James F. Flaherty, III, to provide even more focus on NHI investment and portfolio management.

iv. Best interest of both companies to continue to enhance the franchise value of each respective organization’s assets and NTR products.

v. AHI team to focus on GAHR II assets and other NRF assets not managed by third parties (e.g., Eclipse deal), while continuing to build out GAHR III.

vi. AHI investment by NSAM will be managed by current NSAM healthcare management team (James F. Flaherty, III, David Hamamoto, Dan Gilbert and Albert Tylis) but not have oversight on GAHR III, including having no involvement with investment committee or major GAHR III decisions.

vii. NSAM will continue aggressive build out of NorthStar Realty Securities, LLC and NSAM diversified product offerings and look to open up new channels of distribution and support its partners.

Exhibit F

AHI Member Retained Acquisition Fees

All acquisition fees payable in connection with the following acquisitions:

Riverstone

Winn III

Exhibit G

Flaherty JV Agreement

See attached

Exhibit H

Flaherty JV Amendment

See attached

EX-21.1

Exhibit 21.1

NorthStar Asset Management Group Inc.

List of Significant Subsidiaries

Entity Name	Formation Jurisdiction
NSAM LLC	Delaware
NSAM US LLC	Delaware
Platform Healthcare Investor T-II, LLC	Delaware
NorthStar Realty Securities LLC	Delaware
NorthStar Asset Management Group, Ltd	Jersey
NSAM J-NRF Ltd	Jersey
NSAM J-NSII Ltd	Jersey
NSAM J-NSHC Ltd	Jersey
NSAM J-NSI Ltd	Jersey
NorthStar Healthcare Income Advisor, LLC	Delaware
NS Real Estate Income Advisor LLC	Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our reports dated March 2, 2015, with respect to the consolidated financial statements, schedules, and internal control over financial reporting included in the Annual Report of NorthStar Asset Management Group Inc. on Form 10-K for the year ended December 31, 2014. We hereby consent to the incorporation by reference of said reports in the Registration Statement on Form S-8 (File No. 333-197104), pertaining to the NorthStar Asset Management Group Inc. 2014 Omnibus Stock Incentive Plan, and to the use of our name as it appears under the caption “Experts.”

/s/ GRANT THORNTON LLP

New York, New York March 2, 2015

EX-31.1

EXHIBIT 31.1

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO

17 CFR 240.13a-14(a)/15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David T. Hamamoto, certify that:

1. I have reviewed this Annual Report on Form 10-K of NorthStar Asset Management Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	March 2, 2015	By:	/s/ DAVID T. HAMAMOTO
			David T. Hamamoto
			Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO

17 CFR 240.13a-14(a)/15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Debra A. Hess, certify that:

1. I have reviewed this Annual Report on Form 10-K of NorthStar Asset Management Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	March 2, 2015	By:	/s/ DEBRA A. HESS
			Debra A. Hess
			Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report on Form 10-K of NorthStar Asset Management Group Inc. (the "Company") for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), David T. Hamamoto, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March 2, 2015	By:	/s/ DAVID T. HAMAMOTO
			David T. Hamamoto
			Chief Executive Officer

        This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

      A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report on Form 10-K of NorthStar Asset Management Group Inc. (the "Company") for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Debra A. Hess, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of her knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March 2, 2015	By:	/s/ DEBRA A. HESS
			Debra A. Hess
			Chief Financial Officer

        This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

      A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Investments in Unconsolidated Ventures - Distribution Finance Corporation (Narrative) (Details) (USD $)	3 Months Ended						12 Months Ended				0 Months Ended	6 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2014		Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2014	Dec. 31, 2014
Investments in and Advances to Affiliates [Line Items]
Equity in (earnings) losses of unconsolidated ventures	$ 965,000	$ 74,000	$ 0	[1]	$ 0	[1]	$ 1,039,000	[2]	$ 0	$ 0
Distribution Finance Corporation
Investments in and Advances to Affiliates [Line Items]
Contribution to equity method investments											4,000,000
Fee on syndicated investments											0.50%
Incentive fee			15.00%								15.00%
Equity method investments	3,700,000						3,700,000					3,700,000
Equity in (earnings) losses of unconsolidated ventures												$ 300,000
Distribution Finance Corporation | Minimum
Investments in and Advances to Affiliates [Line Items]
Annual asset management fees (percent of assets)											1.00%

[1] Represents a carve-out of revenues and expenses attributed to the Company related to NorthStar Realty’s historical asset management business.

[2] The combined consolidated financial statements for the year ended December 31, 2014 include: (i) the Company’s results of operations for the six months ended December 31, 2014, which represents the Company’s results of operations following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) the Company’s results of operations for the six months ended June 30, 2014 which represents a carve-out of revenues and expenses attributable to the Company related to NorthStar Realty’s historical asset management business. The Company historical financial information for the years ended December 31, 2013 and 2012 was prepared on the same basis as the six months ended June 30, 2014. As a result, results of operations for the year ended December 31, 2014 may not be comparative to the Company’s results of operations reported for the prior periods presented.

XML

Income Taxes - Summary of Tax Effects of Temporary Differences (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Deferred tax asset
Equity-based compensation	$ 3,006
Investments in unconsolidated ventures	149
Total deferred tax asset	3,155	[1]	0
Deferred tax liability
Intangible assets	60
Total deferred tax liability	$ 60

[1] Includes fixed assets, tenant improvements and deposits related to leased offices that were transferred to the Company at the time of the spin-off on June 30, 2014.

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Equity-Based Compensation - Other Issuances (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended	12 Months Ended	0 Months Ended
	Dec. 08, 2014	Dec. 31, 2014	Jan. 22, 2014	Feb. 02, 2015
American Healthcare Investors, LLC
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cash paid to acquire business	$ 37.5
Percentage of shares subject to forfeiture conditions	50.00%
Cash and stock consideration	20.0
Number of shares	956,462
Number of principals for continued service	3
Lapsing period for first 50% of shares	2 years
Lapsing period for remaining 50% of shares	5 years
Contribution of equity incentives		2.0
American Healthcare Investors, LLC | Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cash and stock consideration	$ 10.0
Number of shares	478,231
Restricted Stock Units (RSUs) | Healthcare Strategic Joint Venture | Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted in period			500,000
Subsequent Event | Restricted Stock Units (RSUs) | Healthcare Strategic Joint Venture | Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted in period				20,305

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Income Taxes - Reconciliation of Income Tax Expense (Benefit) (Details)	12 Months Ended
	Dec. 31, 2014
Income Tax Disclosure [Abstract]
U.S. federal statutory income tax rate	35.00%
U.S. state and local income taxes	2.90%
Change in valuation allowance	(21.30%)
Equity-based compensation	(2.30%)
Permanent items	4.40%
Change in Foreign Tax Rate	(17.90%)
Other	2.40%
Effective income tax rate	3.20%

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Equity-Based Compensation - NorthStar Asset Management Equity Plans (Narrative) (Details) (USD $)	12 Months Ended	0 Months Ended	1 Months Ended		0 Months Ended	1 Months Ended
	Dec. 31, 2014	Apr. 03, 2014	Dec. 31, 2014	May 31, 2014	Dec. 31, 2014	Feb. 28, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Percent of RSUs subject to performance based hurdles	31.65%
Incentive Compensation Plan | NorthStar Realty Finance Corporation
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum long-term bonus and other compensation covered by NorthStar	50.00%
Restricted Stock Units (RSUs) | Omnibus Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted in period		6,230,529		1,334,891
Award vesting period		4 years
Percent of RSUs subject to performance based hurdles		40.00%
Percent of RSUs, subject to performance-based hurdles, total shareholder return		30.00%
Percent of RSUs subject to performance based hurdles, total shareholder return, Russell 2000 Index		30.00%
Risk free rate		1.48%	1.29%
Percent of vested RSUs	25.00%
Number of retired shares	392,157
Performance RSUs | Omnibus Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
New grants, Weighted Average Grant Price		17.01	16.80
Absolute TSR RSUs | Omnibus Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
New grants, Weighted Average Grant Price		10.22	9.95
Relative TSR RSUs | Omnibus Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
New grants, Weighted Average Grant Price		16.21	16.29
Common Stock | Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percent of RSUs subject to performance based hurdles	31.65%
Percent of vested performance shares	25.00%
Number of common shares issued					795,107
Number of retired shares					108,198
Performance Stock | Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percent of RSUs subject to performance based hurdles	18.35%
Employment period	4 years
Subsequent Event | Common Stock | Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period						3 years
Number of common shares issued						643,511
Executive Officer | Restricted Stock Units (RSUs) | Omnibus Stock Incentive Plan | NorthStar Realty Finance Corporation
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted in period	1,968,108
Executive Officer | Subsequent Event | Common Stock | Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common shares issued						474,842

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Management Agreements and Managed Companies - Summary of Fee Arrangements (Details) (USD $)	12 Months Ended		0 Months Ended	1 Months Ended		0 Months Ended
	Dec. 31, 2014		Jan. 01, 2015	Feb. 28, 2015		Feb. 02, 2015	Dec. 04, 2014
Related Party Transaction [Line Items]
Incentive payments (percent of net cash flows)	15.00%
Projected proceeds from public offering							$ 1,000,000,000.0
NorthStar Income
Related Party Transaction [Line Items]
Public offering	1,100,000,000	[1]
Annual asset management fees (percent of assets)	1.25%	[2]
Acquisition fees (percent of investment)	1.00%	[3]
Disposition fees (percent of sales price)	1.00%	[4]
Incentive payments (percent of net cash flows)	15.00%	[5]
Return on investment	8.00%	[5]
NorthStar Healthcare
Related Party Transaction [Line Items]
Public offering	1,800,000,000	[1],[6]
Follow-on public offering	700,000,000
Annual asset management fees (percent of assets)	1.00%	[2]
Acquisition fees (percent of investment)	1.00%	[3]
Acquisition fees (percent of real estate properties)	2.25%	[2]
Disposition fees (percent of sales price)	1.00%	[4]
Disposition fees (percent of real estate properties sales price)	2.00%	[4]
Incentive payments (percent of net cash flows)	15.00%	[5],[7]
Return on investment	6.75%	[5],[7]
NorthStar Income II
Related Party Transaction [Line Items]
Public offering	1,650,000,000	[1]
Annual asset management fees (percent of assets)	1.25%	[2]
Acquisition fees (percent of investment)	1.00%	[3]
Disposition fees (percent of sales price)	1.00%	[4]
Incentive payments (percent of net cash flows)	15.00%	[5]
Return on investment	7.00%	[5]
NorthStar/RXR New York Metro
Related Party Transaction [Line Items]
Public offering	2,000,000,000	[1],[8]
Annual asset management fees (percent of assets)	1.25%	[2],[8]
Acquisition fees (percent of investment)	1.00%	[3],[8]
Acquisition fees (percent of real estate properties)	2.25%	[2],[8]
Disposition fees (percent of sales price)	1.00%	[4],[8]
Disposition fees (percent of real estate properties sales price)	2.00%	[4],[8]
Incentive payments (percent of net cash flows)	15.00%	[5],[8]
Return on investment	6.00%	[5],[8]
Subsequent Event
Related Party Transaction [Line Items]
Annual asset management fees (percent of assets)			1.50%
Subsequent Event | NorthStar Income
Related Party Transaction [Line Items]
Follow-on public offering				1,200,000,000	[9]
Subsequent Event | NorthStar Healthcare
Related Party Transaction [Line Items]
Public offering						1,100,000,000
Follow-on public offering				1,100,000,000	[9]
Subsequent Event | NorthStar Income II
Related Party Transaction [Line Items]
Follow-on public offering				$ 385,000,000	[9]

[1] Represents amount of shares registered to offer pursuant to each Sponsored Company’s public offering and includes the follow-on public offering of up to $700 million for NorthStar Healthcare.

[2] Assets represent principal amount funded or allocated for debt investments originated or acquired and the cost of all other investments, including expenses and any financing attributable to such investments, less any principal received on debt and securities investments (or the Company’s proportionate share thereof in the case of an investment made in a joint venture).

[3] Calculated based on the amount funded or allocated by the Sponsored Companies to originate or acquire investments, including acquisition expenses and any financing attributable to such investments (or the proportionate share thereof in the case of an equity investment made through a joint venture).

[4] Calculated based on contractual sales price of each investment sold.

[5] The Company is entitled to receive distributions equal to 15% of net cash flow of the respective Sponsored Company, whether from continuing operations, repayment of loans, disposition of assets or otherwise, but only after stockholders have received, in the aggregate, cumulative distributions equal to their invested capital plus the respective cumulative, non-compounded annual pre-tax return (as noted in the table above) on such invested capital.

[6] NorthStar Healthcare successfully completed its public offering on February 2, 2015 by raising $1.1 billion in capital. The Company began raising capital for NorthStar Healthcare’s follow-on public offering at the end of February 2015

[7] The Healthcare Strategic Partnership is entitled to the incentive fees earned from managing NorthStar Healthcare, of which the Company earn its proportionate interest (refer to Note 5).

[8] Any asset management and other fees incurred by NorthStar/RXR New York Metro will be shared between the Company and RXR Realty as co-sponsors.

[9] Includes capital raised through the dividend reinvestment plan.

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Quarterly Financial Information (Unaudited) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended																12 Months Ended
	Dec. 31, 2014		Sep. 30, 2014		Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Quarterly Financial Information Disclosure [Abstract]
Asset management and other fees, related parties	$ 69,438		$ 56,521		$ 13,110	[1]	$ 8,669	[1]	$ 9,556	[1]	$ 6,782	[1]	$ 5,787	[1]	$ 4,508	[1]	$ 147,738	[2],[3]	$ 26,633	[2]	$ 8,112	[2]
Selling commission and dealer manager fees, related parties	49,553		27,149		19,313	[1]	14,548	[1]	11,358	[1]	1,639	[1]	32,635	[1]	16,940	[1]	110,563	[3]	62,572		42,385
Commission expense	47,039		25,691		18,138	[1]	13,560	[1]	10,821	[1]	1,629	[1]	29,506	[1]	15,369	[1]	104,428	[3]	57,325		38,506
Transaction costs	0		0		21,926	[1]	2,550	[1]									24,476	[3]	1,590		0
Total general and administrative	43,500		32,719		14,850	[1]	15,503	[1]	7,600	[1]	5,579	[1]	11,397	[1]	8,297	[1]	106,572	[3]	32,873		29,287
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax (benefit) expense	27,408		24,905		(22,247)	[1]	(8,305)	[1]	864	[1]	1,618	[1]	(2,348)	[1]	(2,129)	[1]	21,761	[3]	(1,995)		(17,322)
Equity in earnings (losses) of unconsolidated ventures	(965)		(74)		0	[1]	0	[1]									(1,039)	[3]	0		0
Income (loss) before income taxes	26,443		24,831		(22,247)	[1]	(8,305)	[1]	864	[1]	1,618	[1]	(2,348)	[1]	(2,129)	[1]	20,722	[3]	(1,995)		(17,322)
Income tax (expense) benefit	4,465		(6,087)		0	[1]	0	[1]	0	[1]	0	[1]	0	[1]	0	[1]	(1,622)
Net income (loss)	$ 30,908		$ 18,744		$ (22,247)	[1]	$ (8,305)	[1]	$ 864	[1]	$ 1,618	[1]	$ (2,348)	[1]	$ (2,129)	[1]	$ 19,100	[3]	$ (1,995)		$ (17,322)
Earnings (loss) per share:
Basic (usd per share)	$ 0.16	[4]	$ 0.10	[4]	$ (0.12)	[1],[4]	$ (0.04)	[1],[4]	$ 0.01	[1],[4]	$ 0.01	[1],[4]	$ (0.01)	[1],[4]	$ (0.01)	[1],[4]	$ 0.10	[3]	$ (0.01)		$ (0.09)
Diluted (usd per share)	$ 0.16	[4]	$ 0.10	[4]	$ (0.12)	[1],[4]	$ (0.04)	[1],[4]	$ 0.01	[1],[4]	$ 0.01	[1],[4]	$ (0.01)	[1],[4]	$ (0.01)	[1],[4]	$ 0.10	[3]	$ (0.01)		$ (0.09)

[1] Represents a carve-out of revenues and expenses attributed to the Company related to NorthStar Realty’s historical asset management business.

[2] The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 1).

[3] The combined consolidated financial statements for the year ended December 31, 2014 include: (i) the Company’s results of operations for the six months ended December 31, 2014, which represents the Company’s results of operations following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) the Company’s results of operations for the six months ended June 30, 2014 which represents a carve-out of revenues and expenses attributable to the Company related to NorthStar Realty’s historical asset management business. The Company historical financial information for the years ended December 31, 2013 and 2012 was prepared on the same basis as the six months ended June 30, 2014. As a result, results of operations for the year ended December 31, 2014 may not be comparative to the Company’s results of operations reported for the prior periods presented.

[4] The total for the year may differ from the sum of the quarters as a result of weighting.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

The following table presents the income taxes (benefit) expense for the six months ended as of December 31, 2014 (dollars in thousands):

Current:
U.S. federal	$	2,516
U.S. state and local	503
Non-U.S.	1,934
Subtotal current	4,953
Deferred:
U.S. federal	(2,293		)
U.S. state and local	(458		)
Non-U.S.	(580		)
Subtotal deferred	(3,331		)
Income tax (benefit) expense	$	1,622

Schedule of Deferred Tax Assets and Liabilities

The following table presents the tax effects of the temporary differences as of December 31, 2014:

Deferred tax asset
Equity-based compensation	$	3,006
Investments in unconsolidated ventures	149
Total deferred tax asset	$	3,155
Deferred tax liability
Intangible assets	$	60
Total deferred tax liability	$	60

Schedule of Effective Income Tax Rate Reconciliation

The following table presents the reconciliation of the provision for income taxes expense (benefit) to the U.S. federal statutory income tax rate for the six months ended December 31, 2014:

U.S. federal statutory income tax rate	35.0	%
U.S. state and local income taxes	2.9
Change in valuation allowance	(21.3	)
Equity-based compensation	(2.3	)
Permanent items	4.4
Effect of foreign operations taxed at various rates	(17.9	)
Other	2.4
Effective income tax rate	3.2	%

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Equity-Based Compensation - Summary of Deferred LTIP Units and Restricted Stock (Details) (USD $)	6 Months Ended
	Dec. 31, 2014
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Number of restricted shares and vested and unvested Deferred LTIP Units	4,100,000
LTIP
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Beginning Balance, time of spin-off, Grants	1,917,000
New grants, Grants	4,855,000
Vesting of restricted stock post-spin, Grants	(1,028,000)
Withheld/retired shares	(500,000)
Forfeited or canceled grants, Grants	(5,000)
Ending Balance, Grants	5,239,000	[1]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Beginning Balance, time of spin-off, Weighted Average Grant Price	$ 22.91	[2]
New grants, Weighted Average Grant Price	$ 18.67	[2]
Vesting of restricted stock post-spin, Weighted Average Grant Price	$ 9.24	[2]
Withheld/retired shares, Weighted Average Grant Price	$ 18.17	[2]
Forfeited or canceled grants, Weighted Average Grant Price	$ 16.56	[2]
Ending Balance, Weighted Average Grant Price	$ 22.12	[1],[2]
Number of restricted shares and vested and unvested Deferred LTIP Units	1,100,000

[1] Includes 4.1 million shares of restricted stock and 1.1 million vested and unvested Deferred LTIP Units as of December 31, 2014.

[2] Amounts have been retrospectively adjusted to reflect NorthStar Realty’s reverse stock split, which occurred prior to the spin-off on June 30, 2014.

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Related Party Arrangements - Healthcare Strategic Joint Venture (Narrative) (Details)	0 Months Ended
	Feb. 02, 2015	Dec. 31, 2014
Minimum | Healthcare Strategic Partnership
Related Party Transaction [Line Items]
Incentive fee		20.00%
Maximum | Healthcare Strategic Partnership
Related Party Transaction [Line Items]
Incentive fee		25.00%
Subsequent Event | Restricted Stock Units (RSUs) | Mr. Flaherty
Related Party Transaction [Line Items]
Number of common shares issued	20,305

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Management Agreements and Managed Companies - Selling Commission and Dealer Manager Fees and Commission Expense (Narrative) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Related Party Transaction [Line Items]
Selling commission as percentage of gross primary offering proceeds	7.00%
Dealer manager fee rate, percent of gross proceeds	3.00%
NorthStar Securities
Related Party Transaction [Line Items]
Reallowed commission expense	$ 13.8	$ 7.8	$ 5.4

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Stockholders' Equity (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended																12 Months Ended
	Dec. 31, 2014		Sep. 30, 2014		Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Numerator:
Net income (loss)	$ 30,908		$ 18,744		$ (22,247)	[1]	$ (8,305)	[1]	$ 864	[1]	$ 1,618	[1]	$ (2,348)	[1]	$ (2,129)	[1]	$ 19,100	[2]	$ (1,995)		$ (17,322)
Earnings (loss) allocated to unvested participating securities																	(247)		0		0
Numerator for basic income per share																	$ 18,853		$ (1,995)		$ (17,322)
Denominator:
Weighted average number of shares of common stock																	187,852,497	[2]	187,815,614		187,815,614
Weighted average number of diluted shares																	194,408,211	[2],[3]	187,815,614	[3]	187,815,614	[3]
Earnings (loss) per share:
Basic (usd per share)	$ 0.16	[4]	$ 0.10	[4]	$ (0.12)	[1],[4]	$ (0.04)	[1],[4]	$ 0.01	[1],[4]	$ 0.01	[1],[4]	$ (0.01)	[1],[4]	$ (0.01)	[1],[4]	$ 0.10	[2]	$ (0.01)		$ (0.09)
Diluted (usd per share)	$ 0.16	[4]	$ 0.10	[4]	$ (0.12)	[1],[4]	$ (0.04)	[1],[4]	$ 0.01	[1],[4]	$ 0.01	[1],[4]	$ (0.01)	[1],[4]	$ (0.01)	[1],[4]	$ 0.10	[2]	$ (0.01)		$ (0.09)
Restricted common stock
Denominator:
Dilutive effect (shares)																	848,902		0		0
Restricted Stock Units (RSUs) | Omnibus Stock Incentive Plan
Denominator:
Dilutive effect (shares)																	4,882,524	[5]	0	[5]	0	[5]
Restricted Stock Units (RSUs) | Healthcare Strategic Joint Venture
Denominator:
Dilutive effect (shares)																	252,055		0		0
LTIP | Deferred LTIP
Denominator:
Dilutive effect (shares)																	572,233		0		0

[1] Represents a carve-out of revenues and expenses attributed to the Company related to NorthStar Realty’s historical asset management business.

[2] The combined consolidated financial statements for the year ended December 31, 2014 include: (i) the Company’s results of operations for the six months ended December 31, 2014, which represents the Company’s results of operations following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) the Company’s results of operations for the six months ended June 30, 2014 which represents a carve-out of revenues and expenses attributable to the Company related to NorthStar Realty’s historical asset management business. The Company historical financial information for the years ended December 31, 2013 and 2012 was prepared on the same basis as the six months ended June 30, 2014. As a result, results of operations for the year ended December 31, 2014 may not be comparative to the Company’s results of operations reported for the prior periods presented.

[3] Diluted EPS excludes the effect of equity-based awards issued that were not dilutive for the periods presented. These instruments could potentially impact diluted EPS in future periods, depending on changes in the Company’s stock price and other factors.

[4] The total for the year may differ from the sum of the quarters as a result of weighting.

[5] Represents shares related to the NorthStar Realty Stock Plan.

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Equity-Based Compensation - NorthStar Realty Equity Plans (Narrative) (Details)	0 Months Ended	1 Months Ended	12 Months Ended	0 Months Ended	12 Months Ended
	Apr. 03, 2014	May 31, 2014	Dec. 31, 2014	Jan. 01, 2015	Dec. 31, 2015
Omnibus Stock Incentive Plan | Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted in period	6,230,529	1,334,891
Omnibus Stock Incentive Plan | NorthStar Realty Finance Corporation | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common shares issued			686,262
Omnibus Stock Incentive Plan | NorthStar Realty Finance Corporation | Restricted Stock | Subsequent Event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common shares issued				49,149
Omnibus Stock Incentive Plan | NorthStar Realty Finance Corporation | Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares that met the performance hurdle			762,898
Omnibus Stock Incentive Plan | NorthStar Realty Finance Corporation | Restricted Stock Units (RSUs) | Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of units subject to vesting			1,205,213
Number of shares granted in period			1,968,108
Incentive Compensation Plan | NorthStar Realty Finance Corporation | LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
LTIP units issued			1,134,723
Number of units subject to vesting			934,347
Scenario, Forecast | Omnibus Stock Incentive Plan | NorthStar Realty Finance Corporation | LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of LTIP shares that will be issued					665,747

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Management Agreements and Managed Companies

12 Months Ended

Dec. 31, 2014

Management Agreements [Abstract]

Management Agreements and Sponsored Companies

Management Agreements and Managed Companies

NorthStar Realty

Management Agreement

Upon completion of the Distribution, the Company entered into a management agreement with NorthStar Realty for an initial term of 20 years, which will be automatically renewed for additional 20-year terms each anniversary thereafter unless earlier terminated. As asset manager, the Company is responsible for NorthStar Realty’s day-to-day operations, subject to the supervision of the NorthStar Realty board of directors. Through its global network of subsidiaries and branch offices, the Company performs services and activities relating to, among other things, investments and financing, portfolio management and other administrative services, such as accounting and investor relations, to NorthStar Realty and its subsidiaries other than NorthStar Realty’s commercial real estate loan origination business. The management agreement with NorthStar Realty provides for a base management and incentive fee.

For the six months ended December 31, 2014, the Company earned $79.4 million related to the base management fee, $41.4 million of which is recorded in receivable, related parties on the combined consolidated balance sheets. The management contract with NorthStar Realty commenced on July 1, 2014, and as such, there were no management fees earned for the six months ended June 30, 2014. The base management fee from NorthStar Realty will increase subsequent to December 31, 2014, by an amount equal to 1.5% per annum of the sum of:

• cumulative net proceeds of all future common equity and preferred equity issued by NorthStar Realty;

• equity issued by NorthStar Realty in exchange or conversion of exchangeable senior notes based on the stock price at the date of issuance;

• any other issuances by NorthStar Realty of common equity, preferred equity or other forms of equity, including but not limited to limited partnership interests in an operating partnership (“LTIP”) units (excluding equity-based compensation, but including issuances related to an acquisition, investment, joint venture or partnership); and

• cumulative cash available for distribution (“CAD”) of NorthStar Realty in excess of cumulative distributions paid on common stock, LTIP units or other equity awards beginning the first full calendar quarter after the spin-off.

Additionally, NorthStar Realty’s equity interest in RXR Realty LLC (“RXR Realty”) and Aerium Group is structured so that the Company is entitled to the portion of distributable cash flow from each investment in excess of the $10.0 million minimum annual base amount.

For the six months ended December 31, 2014, the Company earned $3.3 million related to the incentive management fee, $2.0 million of which is recorded in receivable, related parties on the combined consolidated balance sheets. The incentive management fee is calculated and payable quarterly in arrears in cash, equal to:

• the product of: (a) 15.0% and (b) CAD of NorthStar Realty before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, when such amount is in excess of $0.39 per share but less than $0.45 per share; plus

• the product of: (a) 25.0% and (b) CAD of NorthStar Realty before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, when such amount is equal to or in excess of $0.45 per share;

• multiplied by the weighted average shares outstanding of NorthStar Realty for the calendar quarter.

In addition, the Company may also earn an incentive fee from NorthStar Realty’s healthcare investments in connection with the Company’s Healthcare Strategic Partnership (refer to Note 5).

Weighted average shares represents the number of shares of NorthStar Realty’s common stock, LTIP units or other equity-based awards (with some exclusions), outstanding on a daily weighted average basis. With respect to the base management fee, all equity issuances are allocated on a daily weighted average basis during the fiscal quarter of issuances.

Furthermore, if NorthStar Realty were to spin-off any asset or business in the future, such as the recently announced NRF Proposed European Spin, such entity would be managed by the Company on terms substantially similar to those set forth in the management agreement between the Company and NorthStar Realty. The management agreement further provides that the aggregate base management fee in place immediately after any future spin-off will not be less than the aggregate base management fee in place at NorthStar Realty immediately prior to such spin-off.

Payment of Costs and Expenses and Expense Allocation

NorthStar Realty is responsible for all of its direct costs and expenses and will reimburse the Company for costs and expenses incurred by the Company on its behalf. In addition to NorthStar Realty’s costs and expenses, following the spin-off, NorthStar Realty is obligated to reimburse the Company for additional costs and expenses incurred by the Company for an amount not to exceed the following: (i) 20.0% of the combined total of: (a) NorthStar Realty’s general and administrative expenses as reported in its consolidated financial statements excluding: (1) equity-based compensation expense, (2) non-recurring items, (3) fees payable to the Company under the terms of the management agreement and (4) any allocation of expenses from NorthStar Realty (“NorthStar Realty G&A”); and (b) the Company’s general and administrative expenses as reported in its combined consolidated financial statements, excluding equity-based compensation expense and adding back any costs or expenses allocated to any of the Managed Companies, less (ii) the NorthStar Realty G&A. For the six months ended December 31, 2014, the Company allocated $5.2 million to NorthStar Realty, of which $4.0 million is recorded in receivables, related parties in the combined consolidated balance sheets.

Sponsored Companies

The following table presents a summary of the fee arrangements with the current Sponsored Companies:

	NorthStar	NorthStar	NorthStar	NorthStar/RXR
	Income	Healthcare	Income II	New York Metro(9)
Offering amount(1)	$1.1 billion	$1.8 billion(8)	$1.65 billion	$2.0 billion
Total raised through February 24, 2015 (2)	$1.2 billion	$1.1 billion	$385 million	(10)
Primary strategy	CRE Debt	Healthcare Equity and Debt	CRE Debt	New York City CRE Equity and Debt
Primary offering period	Completed July 2013	Ends February 2017(8)	Ends May 2015(11)	Ends February 2017(11)
Asset Management and Other Fees:
Asset management fees (3)	1.25% of assets	1.00% of assets	1.25% of assets	1.25% of assets
Acquisition fees (4)	1.00% of investment	2.25% for real estate properties 1.00% of other investments	1.00% of investment	2.25% for real estate properties 1.00% of other investments
Disposition fees (5)	1.00% of sales price	2.00% for real estate properties 1.00% of sales price for debt investments	1.00% of sales price	2.00% for real estate properties 1.00% of sales price for debt investments
Incentive payments (6)	15.00% of net cash flows after an 8.00% return	15.00% of net cash flows after a 6.75% return(7)	15.00% of net cash flows after a 7.00% return	15.00% of net cash flows after a 6.00% return

__________________

(1) Represents amount of shares registered to offer pursuant to each Sponsored Company’s public offering and includes the follow-on public offering of up to $700 million for NorthStar Healthcare.

(2) Includes capital raised through the dividend reinvestment plan.

(3) Assets represent principal amount funded or allocated for debt investments originated or acquired and the cost of all other investments, including expenses and any financing attributable to such investments, less any principal received on debt and securities investments (or the Company’s proportionate share thereof in the case of an investment made in a joint venture).

(4) Calculated based on the amount funded or allocated by the Sponsored Companies to originate or acquire investments, including acquisition expenses and any financing attributable to such investments (or the proportionate share thereof in the case of an equity investment made through a joint venture).

(5) Calculated based on contractual sales price of each investment sold.

(6) The Company is entitled to receive distributions equal to 15% of net cash flow of the respective Sponsored Company, whether from continuing operations, repayment of loans, disposition of assets or otherwise, but only after stockholders have received, in the aggregate, cumulative distributions equal to their invested capital plus the respective cumulative, non-compounded annual pre-tax return (as noted in the table above) on such invested capital.

(7) The Healthcare Strategic Partnership is entitled to the incentive fees earned from managing NorthStar Healthcare, of which the Company earn its proportionate interest (refer to Note 5).

(8) NorthStar Healthcare successfully completed its public offering on February 2, 2015 by raising $1.1 billion in capital. The Company began raising capital for NorthStar Healthcare’s follow-on public offering at the end of February 2015.

(9) Any asset management and other fees incurred by NorthStar/RXR New York Metro will be shared between the Company and RXR Realty as co-sponsors.

(10) The Company expects to begin raising capital for NorthStar/RXR New York Metro in 2015.

(11) Offering period subject to extension as determined by the board of directors of each company.

For the years endedDecember 31, 2014, 2013 and 2012, the Company earned $65.0 million, $26.6 million and $8.1 million, respectively, of asset management and other fees from the Sponsored Companies.

In addition to the Sponsored Companies above, NorthStar Corporate confidentially submitted its registration statement on Form N-2 to the SEC in December 2014. NorthStar Corporate seeks to raise up to $1.0 billion in a public offering of common stock.  NorthStar Corporate is structured as a non-diversified, closed-end management investment company that intends to elect to be regulated as a BDC under the Investment Company Act of 1940, as amended.  NorthStar Corporate intends to engage OZ Institutional Credit Management LP (“OZ Credit Management”) an affiliate of Och-Ziff Capital Management Group, LLC (“Och-Ziff”), an alternative asset manager, to serve as the sub-advisor to manage NorthStar Corporate’s investments and oversee operations. Any asset management and other fees incurred by NorthStar Corporate will be shared between the Company and OZ Credit Management as co-sponsors. NorthStar Corporate intends to invest in senior and subordinate loans to middle-market companies.

Pursuant to each of the advisory agreements with the Company’s current Sponsored Companies, the Company may determine, in its sole discretion, to defer or waive, in whole or in part, certain asset management and other fees incurred. In considering whether to defer or waive any such fees, the Company evaluates the specific facts and circumstances surrounding the incurrence of a particular fee and makes its decision on a case by case basis.

Distribution Support

NorthStar Realty committed to invest up to $10.0 million in each of the Sponsored Companies that are in their offering stage. In addition, consistent with its past practices, NorthStar Realty will commit up to $10.0 million for distribution support in any future non-traded sponsored company that the Company sponsors, up to a total of five new companies per year.

The distribution support agreement related to NorthStar/RXR New York Metro is an obligation of both NorthStar Realty and RXR Realty, where each agreed to purchase up to an aggregate of $10.0 million in Class A common stock during the two-year period following commencement of the offering, with NorthStar Realty and RXR Realty agreeing to purchase 75% and 25% of any shares purchased, respectively.

Payment of Costs and Expenses and Expense Allocation

In addition, the Company is entitled to certain expense allocations for costs paid on behalf of its Sponsored Companies which include: (i) reimbursement for organization and offering costs such as professional fees and other costs associated with the formation and offering of the Sponsored Company; and (ii) reimbursement for direct and indirect operating costs such as certain salaries, equity-based compensation and professional and other costs associated with managing the operations of the Sponsored Company. The following table presents a summary of the expense arrangements with the current Sponsored Companies:

	NorthStar Income	NorthStar Healthcare	NorthStar Income II	NorthStar/RXR New York Metro
Organization and offering costs (1)	$11.0 million (2)	$22.5 million, or 1.5% of the proceeds expected to be raised from the offering  (4)	$24.8 million, or 1.5% of the proceeds expected to be raised from the offering	$30.0 million, or 1.5% of the proceeds expected to be raised from the offering
Operating costs (3)	Greater of 2.0% of its average invested assets or 25.0% of its net income	Greater of 2.0% of its average invested assets or 25.0% of its net income	Greater of 2.0% of its average invested assets or 25.0% of its net income	Greater of 2.0% of its average invested assets or 25.0% of its net income

__________________

(1) Represents reimbursement for organization and offering costs paid on behalf of the Sponsored Companies in connection with their respective offerings. The Company is facilitating the payment of organization and offering costs on behalf of the Sponsored Companies. The Company records these costs as Receivables, related parties on its consolidated balance sheets until repaid. The Sponsored Companies record these costs as either advisory fees-related parties on their consolidated statements of operations or as a cost of capital in their consolidated statements of equity.

(2) Represents the total expense allocation for organization and offering costs through the end of the offering period in July 2013.

(3) Calculated based on the four preceding fiscal quarters not to exceed the greater of: (i) 2.0% of each Sponsored Company’s average invested assets; or (ii) 25.0% of each Sponsored Company’s 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.

(4) Excludes shares being offered pursuant to the dividend reinvestment plan.

The following table presents receivables, related parties on the consolidated balance sheets as of December 31, 2014 and 2013 (dollars in thousands):

	December 31,
	2014			2013
NorthStar Realty:(1)
Base management fee	$	41,395		N/A
Incentive fee	2,000			N/A
Other	4,019			N/A
Subtotal NorthStar Realty	47,414			N/A
Sponsored Companies:
Fees	245			2,252
Other receivables	29,319			20,894
Subtotal Sponsored Companies	29,564			23,146
Other	648			41
Total	$	77,626	(2)	$	23,187

________________________

(1) The management contract with NorthStar Realty commenced on July 1, 2014, and as such, there were no management fees earned for the six months ended June 30, 2014 and year ended December 31, 2013.

(2) As of December 31, 2014 and 2013, the Company had unreimbursed costs from the Sponsored Companies of $29.3 million and $20.9 million respectively, recorded as receivables, related parties on the combined consolidated balance sheets. Subsequent to December 31, 2014, the Company received $47.4 million from NorthStar Realty.

Selling Commission and Dealer Manager Fees and Commission Expense

Selling commissions and dealer manager fees represents income earned by selling equity in Sponsored Companies through NorthStar Securities. Pursuant to dealer manager agreements between NorthStar Securities and the Sponsored Companies, the Company generally receives selling commissions of up to 7.0% of gross offering proceeds raised. The Company reallows all selling commissions earned to participating broker-dealers. In addition, the Company also generally receives a dealer manager fee of up to 3.0% of gross offering proceeds raised, a portion of which may be reallowed to participating broker-dealers. The Company earns net commission income through NorthStar Securities for selling equity in the Sponsored Companies, which is expected to cover the costs of the broker-dealer business. Commission expense represents fees to participating broker-dealers with whom the Company has selling agreements and commissions to employees of NorthStar Securities. For the years ended December 31, 2014, 2013 and 2012, the Company reallowed $13.8 million, $7.8 million and $5.4 million commission expense to NorthStar Securities employees, respectively.

The following table summarizes selling commission and dealer manager fees, commission expense and net commission income for the years ended December 31, 2014, 2013 and 2012 (dollar in thousands):

	Years Ended
	2014		2013		2012
Selling commission and dealer manager fees	$	110,563	$	62,572	$	42,385
Commission expense	104,428		57,325		38,506
Net commission income(1)	$	6,135	$	5,247	$	3,879

________________________

(1)    Excludes direct expenses of NorthStar Securities.

Other

A subsidiary of the Company is a rated special servicer by Standard & Poor’s and Fitch Ratings and receives special servicing fees for services related to certain securitization transactions.

XML

Related Party Arrangements - AHI Venture (Narrative) (Details) (USD $)	6 Months Ended		12 Months Ended
	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013	Dec. 31, 2014
Related Party Transaction [Line Items]
Base management fees	$ 79,400,000	$ 0	$ 0
AHI Ventures | AHI Ventures
Related Party Transaction [Line Items]
Base management fees				$ 600,000
Ownership percentage	0.50%			0.50%
Mr. Flaherty | AHI Ventures
Related Party Transaction [Line Items]
Ownership percentage	9.30%			9.30%

XML

Summary of Significant Accounting Policies - Other assets and liabilities (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Other Assets [Abstract]
Prepaid income taxes	$ 6,656	[1]	$ 0
Furniture, fixtures and equipment, net	4,629	[1],[2]	295	[2]
Deferred tax asset	3,155	[1]	0
Prepaid expenses	2,279	[1]	547
Security deposits	2,232	[1]	34
Due from participating broker-dealers	1,965	[1]	0
Pending deal costs	1,045	[1]	0
Other	531	[1]	109
Total	22,492	[1]	985
Depreciation expense	$ 893		$ 74		$ 65

[1] Includes fixed assets, tenant improvements and deposits related to leased offices that were transferred to the Company at the time of the spin-off on June 30, 2014.

[2] The Company recorded depreciation expense of $0.9 million and $0.1 million for the years ended December 31, 2014 and 2013, respectively.

XML

Business and Organization (Details) (USD $)	0 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2014	Feb. 26, 2015 property
Variable Interest Entity [Line Items]
Conversion rate of common stock	1
Length of management contract term	20 years	20 years
NorthStar Realty Finance Corporation
Variable Interest Entity [Line Items]
Limited liability company interests contributed	100.00%
Cash contributed	100,000,000
Cash Contributions for expenses related to the spin-off	17,900,000
Subsequent Event
Variable Interest Entity [Line Items]
Value of European real estate portfolio acquired or committed to acquired			$ 2,000,000,000
Number of properties in European real estate portfolio acquired or committed to acquire			50
American Healthcare Investors, LLC
Variable Interest Entity [Line Items]
Ownership percentage		44.00%
Island Hospitality [Member]
Variable Interest Entity [Line Items]
Ownership percentage		45.00%
Distribution Finance Corporation
Variable Interest Entity [Line Items]
Ownership percentage		50.00%

XML

Income Taxes Income Taxes - Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Change in deferred tax valuation allowance	$ 10.9
Unrecognized tax liability	19.2
Recognized tax benefit	$ 1.6

XML

Related Party Arrangements - RXR Realty (Narrative) (Details) (RXR Realty, NorthStar Realty Finance Corporation)	Dec. 31, 2013
RXR Realty | NorthStar Realty Finance Corporation
Related Party Transaction [Line Items]
Ownership percentage	30.00%

XML

Summary of Significant Accounting Policies - Accounts Payable and Accrued Expenses (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Accounting Policies [Abstract]
Accrued bonus	$ 25,911		$ 678
Accrued tax withholding	11,938	[1]	0	[1]
Accrued transaction expense	5,205		0
Income tax payable	3,118		0
Accrued payroll	1,400		39
Accrued professional fees	740		54
Deferred tax liability	60		0
Other	4,703		602
Total	$ 53,075		$ 1,373

[1] Represents withholding tax related to vesting and net settlement of restricted stock units.

XML

Summary of Significant Accounting Policies - Narrative (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
Commission payable	$ 12,164	$ 1,968
North Star Realty Securities LLC [Member]
Related Party Transaction [Line Items]
Commission payable	$ 3,700

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Accounting

The accompanying combined consolidated financial statements and related notes of the Company are presented on a carve-out basis for the period prior to June 30, 2014 and have been prepared from the historical consolidated balance sheets, statements of operations and cash flow attributed to the historical asset management business of NorthStar Realty and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

The combined consolidated financial statements for the six months ended December 31, 2014 represent the Company subsequent to the spin-off of NorthStar Realty’s historical asset management business of managing the Sponsored Companies, owning NorthStar Securities and operating its special servicing business. In connection with the spin-off, most of NorthStar Realty’s employees at the time of the spin-off became employees of the Company except for executive officers, employees engaged in NorthStar Realty’s loan origination business at the time of the spin-off and certain other employees that became co-employees of both the Company and NorthStar Realty. Therefore, subsequent to June 30, 2014, the Company generally incurs substantially all employee-related cash costs.

Periods prior to June 30, 2014 present a carve-out of NorthStar Realty’s historical financial information, including revenues and expenses allocated to the Company, related to NorthStar Realty’s historical asset management business. Expenses also included an allocation of indirect expenses from NorthStar Realty, including salaries, equity-based compensation and other general and administrative expenses (primarily occupancy and other cost) based on an estimate had NorthStar Realty’s historical asset management business been run as an independent entity. This allocation method was principally based on relative headcount and management’s knowledge of NorthStar Realty’s operations. Additionally, periods prior to June 30, 2014 did not reflect the management agreement the Company entered into with NorthStar Realty effective July 1, 2014.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries.

Variable Interest Entities

A variable interest entity (“VIE”) is an entity that lacks one or more of the characteristics of a voting interest entity. A VIE is defined as an entity in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The determination of whether an entity is a VIE includes both a qualitative and quantitative analysis. The Company bases its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and relevant financial agreements and the quantitative analysis on the forecasted cash flow of the entity.

The Company reassesses its initial evaluation of an entity as a VIE upon the occurrence of certain reconsideration events.

A VIE must be consolidated only by its primary beneficiary, which is defined as the party who, along with its affiliates and agents has both the: (i) power to direct the activities that most significantly impact the VIE’s economic performance; and (ii) obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. The Company determines whether it is the primary beneficiary of a VIE by considering qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of its investment; the obligation or likelihood for the Company or other interests to provide financial support; consideration of the VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders and the similarity with and significance to the business activities of the Company and the other interests. The Company reassesses its determination of whether it is the primary beneficiary of a VIE each reporting period. Significant judgments related to these determinations include estimates about the current and future fair value and performance of investments held by these VIEs and general market conditions.

The Company evaluates the Managed Companies, investments in unconsolidated ventures and securitization financing transactions to which the Company is the special servicer to determine whether they are a VIE.

Voting Interest Entities

A voting interest entity is an entity in which the total equity investment at risk is sufficient to enable it to finance its activities independently and the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the Company has a majority voting interest in a voting interest entity, the entity will generally be consolidated. The Company does not consolidate a voting interest entity if there are substantive participating rights by other parties and/or kick-out rights by a single party.

The Company performs on-going reassessments of whether entities previously evaluated under the voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework.

Investments in Unconsolidated Ventures

Non-controlling, unconsolidated ownership interests in an entity may be accounted for using the equity method, at fair value or the cost method.

Under the equity method, the investment is adjusted each period for capital contributions and distributions and its share of the entity’s net income (loss). Capital contributions, distributions and net income (loss) of such entities are recorded in accordance with the terms of the governing documents. An allocation of net income (loss) may differ from the stated ownership percentage interest in such entity as a result of preferred returns and allocation formulas, if any, as described in such governing documents.

The Company may account for an investment in an unconsolidated entity at fair value by electing the fair value option. The Company records the change in fair value for its share of the projected future cash flow of such investments from one period to another in equity in earnings (losses) from unconsolidated ventures in the consolidated statements of operations. Any change in fair value attributed to market related assumptions is considered unrealized gain (loss).

The Company may account for an investment that does not qualify for equity method accounting or for which the fair value option was not elected using the cost method if the Company determines the investment in the unconsolidated entity is insignificant. Under the cost method, equity in earnings is recorded as dividends are received to the extent they are not considered a return of capital, which is recorded as a reduction of cost of the investment.

Non-controlling Interests

A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to the Company. A non-controlling interest is required to be presented as a separate component of equity on the consolidated balance sheets and presented separately as net income (loss) and other comprehensive income (loss) (“OCI”) attributable to controlling and non-controlling interests. An allocation to a non-controlling interest may differ from the stated ownership percentage interest in such entities as a result of preferred returns and allocation formulas, if any, as described in such governing documents.

Furniture, fixtures and equipment

Furniture, fixtures and equipment is carried at historical cost less accumulated depreciation. Ordinary repairs and maintenance are expensed as incurred. Major replacements and betterments which improve or extend the life of assets are capitalized and depreciated over their useful life. Furniture, fixtures and equipment is depreciated using the straight-line method over the estimated useful lives of assets.

Estimates

The preparation of combined consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that could affect the amounts reported in the combined consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates and assumptions.

Reclassifications

Certain prior period amounts have been reclassified in the combined consolidated financial statements to conform to current period presentation.

Cash

Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250,000 per institution. The Company mitigates credit risk by placing cash with major financial institutions. To date, the Company has not experienced any losses on cash.

Restricted Cash

Restricted cash represents cash held by the Company’s foreign subsidiaries due to certain regulatory capital requirements.

Other Assets and Accounts Payable and Accrued Expenses

The following table presents a summary of other assets and accounts payable and accrued expenses as of December 31, 2014 and 2013 (dollars in thousands):

	December 31,
	2014(1)		2013
Other assets:
Prepaid income taxes	$	6,656	$	—
Furniture, fixtures and equipment, net (2)	4,629		295
Deferred tax asset	3,155		—
Prepaid expenses	2,279		547
Security deposits	2,232		34
Due from participating broker-dealers	1,965		—
Pending deal costs	1,045		—
Other	531		109
Total	$	22,492	$	985

__________________

(1) Includes fixed assets, tenant improvements and deposits related to leased offices that were transferred to the Company at the time of the spin-off on June 30, 2014.

(2) The Company recorded depreciation expense of $0.9 million and $0.1 million for the years ended December 31, 2014 and 2013, respectively.

	December 31,
	2014		2013
Accounts payable and accrued expenses:
Accrued bonus	$	25,911	$	678
Accrued tax withholding (1)	11,938		—
Accrued transaction expense	5,205		—
Income tax payable	3,118		—
Accrued payroll	1,400		39
Accrued professional fees	740		54
Deferred tax liability	60		—
Other	4,703		602
Total	$	53,075	$	1,373

__________________

(1) Represents withholding tax related to vesting and net settlement of restricted stock units.

Revenue Recognition

Asset Management and Other Fees

Asset management and other fees include asset management, incentive and other fees, such as acquisition and disposition fees, earned from the Managed Companies. Base asset management and other fees are recognized based on contractual terms specified in the underlying governing documents in the periods during which the related services are performed and the amounts have been contractually earned. Incentive fees and payments are recognized subject to the achievement of return hurdles in accordance with the respective terms set forth in the governing documents of the Managed Companies.

Selling Commission and Dealer Manager Fees and Commission Expense

Selling commission and dealer manager fees represent income earned by the Company for selling equity in the Sponsored Companies through NorthStar Securities. Selling commission and dealer manager fees and commission expense are accrued on a trade date basis. As of December 31, 2014, commission payable of $12.2 million includes $3.7 million due to NorthStar Securities employees.

Allowance for Doubtful Accounts

An allowance for a doubtful account is established when, in the opinion of the Company, a full recovery of a receivable becomes doubtful. A receivable is written off when it is no longer collectible and/or legally discharged. As of December 31, 2014 and 2013, there was no allowance for doubtful accounts.

Equity-Based Compensation

The Company accounts for equity-based compensation awards, including awards granted to co-employees, using the fair value method, which requires an estimate of fair value of the award. Awards may be based on a variety of measures such as time, performance, market or a combination thereof. For time-based awards, fair value is determined based on the stock price on the grant date. The Company recognizes compensation expense over the vesting period on a straight-line basis. For performance-based awards, fair value is determined based on the stock price at the date of grant and an estimate of the probable achievement of such measure. The Company recognizes compensation expense over the requisite service period, net of estimated forfeitures, using the accelerated attribution expense method. For market-based measures, fair value is determined using a Monte Carlo analysis under a risk-neutral premise using a risk-free interest rate. The Company recognizes compensation expense over the requisite service period, net of estimated forfeitures, on a straight-line basis.

For awards with a combination of performance or market measures, the Company estimates the fair value as if it were two separate awards. First, the Company estimates the probability of achieving the performance measure. If it is not probable the performance condition will be met, the Company records the compensation expense based on the fair value of the market measure, as described above. This expense is recorded even if the market-based measure is never met. If the performance-based measure is subsequently estimated to be achieved, the Company records compensation expense based on the performance-based measure. The Company would then record a cumulative catch-up adjustment for any additional compensation expense.

Equity-based compensation issued to non-employees is accounted for using the fair value of the award at the earlier of the performance commitment date or performance completion date. The awards are remeasured every quarter based on the stock price as of the end of the reporting period until such awards vest, if any.

Foreign Currency

Assets and liabilities denominated in non-U.S. dollar currencies are remeasured at the exchange rate prevailing on the reporting date and revenues and expenses are remeasured at the average exchange rate for the period. The Company’s functional currency of its non-U.S. denominated assets and liabilities is the U.S. dollar. Therefore, any gains or losses from the remeasurement of foreign currency to U.S. dollars are recognized in earnings.

Comprehensive Income (Loss)

The Company had no items of other comprehensive income (loss), so its comprehensive (loss) is the same as the net (loss) for all periods presented.

Earnings Per Share

The Company’s basic earnings per share (“EPS”) is calculated using the two-class method for each class of common stock and participating security as if all earnings for the years ended had been distributed by dividing net income (loss) attributed to common stockholders by the weighted average number of common stock outstanding. Under the two-class method, the net income is first reduced for distributions declared on all classes of securities to arrive at undistributed earnings. Under the two-class method, the net loss is reduced for distributions declared on participating securities only if the security has the right to participate in the earnings of the entity and an objectively determinable contractual obligation to share in net losses of the entity. Diluted EPS includes restricted stock and the potential dilution that could occur if outstanding restricted stock units (“RSUs”) or other contracts to issue common stock, assuming performance hurdles have been met, were converted to common stock, including Deferred LTIP Units (refer to Note 7), where such exercise or conversion would result in a lower EPS. The dilutive effect of such RSUs and Deferred LTIP Units is calculated assuming all units are converted to common stock.

Income Taxes

Certain subsidiaries of the Company are subject to taxation by federal, state and foreign authorities for the periods presented. The Company and its U.S. subsidiaries will file a consolidated federal income tax return. Income taxes are accounted for by the asset/liability approach in accordance with U.S. GAAP. Deferred taxes, if any, represent the expected future tax consequences when the reported amounts of assets and liabilities are recovered or paid. Such amounts arise from differences between the financial reporting and tax bases of assets and liabilities and are adjusted for changes in tax laws and tax rates in the period which such changes are enacted. A provision for income tax represents the total of income taxes paid or payable for the current period, plus the change in deferred taxes.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an accounting update requiring a company to recognize as revenue the amount of consideration it expects to be entitled to in connection with the transfer of promised goods or services to customers.  When it becomes effective on January 1, 2017, the accounting standard update will replace most of the existing revenue recognition guidance currently promulgated by U.S. GAAP.  The Company is in the process of evaluating the impact, if any, of the update on its consolidated financial statements and related disclosures.

In February 2015, the FASB issued updated guidance that changes the rules regarding consolidation. The pronouncement eliminates specialized guidance for limited partnerships and similar legal entities and removes the indefinite deferral for certain investment funds. The new guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, with early adoption permitted. The Company is currently assessing the impact of the guidance on the Company’s consolidated financial position, results of operations and financial statement disclosures.

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Management Agreements and Managed Companies - NorthStar Realty (Narrative) (Details) (USD $)	0 Months Ended	6 Months Ended		12 Months Ended		0 Months Ended
	Jun. 30, 2014	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2014	Dec. 31, 2013	Jan. 01, 2015
Related Party Transaction [Line Items]
Length of management contract term	20 years			20 years
Length of additional option on management contract				20 years
Base management fees		$ 79,400,000	$ 0		$ 0
Additional annual base management fee				10,000,000
Incentive management fee		3,300,000
Expenses covered by NorthStar Realty				20.00%
Additional expenses covered by NorthStar Realty		5,200,000
Range 1
Related Party Transaction [Line Items]
Incentive fee		15.00%		15.00%
Range 2
Related Party Transaction [Line Items]
Incentive fee		25.00%		25.00%
Incentive fee (usd per share)		$ 0.45		$ 0.45
Minimum | Range 1
Related Party Transaction [Line Items]
Incentive fee (usd per share)		$ 0.39		$ 0.39
Maximum | Range 1
Related Party Transaction [Line Items]
Incentive fee (usd per share)		$ 0.45		$ 0.45
Subsequent Event
Related Party Transaction [Line Items]
Annual asset management fees (percent of assets)						1.50%
Affiliated Entity [Member] | Base Management Fee
Related Party Transaction [Line Items]
Related Party Transaction, Amounts of Transaction		41,400,000
Affiliated Entity [Member] | Incentive Management Fee, Receivable [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Amounts of Transaction		2,000,000
Affiliated Entity [Member] | Additional Expenses [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Amounts of Transaction		$ 4,000,000

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Investments in Unconsolidated Ventures - American Healthcare Investors LLC (Narrative) (Details) (USD $)	3 Months Ended						12 Months Ended				1 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2014		Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2014
Investments in and Advances to Affiliates [Line Items]
Equity in (earnings) losses of unconsolidated ventures	$ 965,000	$ 74,000	$ 0	[1]	$ 0	[1]	$ 1,039,000	[2]	$ 0	$ 0
American Healthcare Investors, LLC
Investments in and Advances to Affiliates [Line Items]
Cash and stock consideration											57,500,000
Cash paid to acquire business											37,500,000
Common stock consideration	20,000,000						20,000,000				20,000,000
Common stock consideration that vested immediately	10,000,000						10,000,000				10,000,000
Equity method investments	50,800,000						50,800,000				50,800,000
Equity in (earnings) losses of unconsolidated ventures											700,000
Operating income											1,200,000
Non-cash depreciation expense and equity-based compensation expense											$ 500,000

[1] Represents a carve-out of revenues and expenses attributed to the Company related to NorthStar Realty’s historical asset management business.

[2] The combined consolidated financial statements for the year ended December 31, 2014 include: (i) the Company’s results of operations for the six months ended December 31, 2014, which represents the Company’s results of operations following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) the Company’s results of operations for the six months ended June 30, 2014 which represents a carve-out of revenues and expenses attributable to the Company related to NorthStar Realty’s historical asset management business. The Company historical financial information for the years ended December 31, 2013 and 2012 was prepared on the same basis as the six months ended June 30, 2014. As a result, results of operations for the year ended December 31, 2014 may not be comparative to the Company’s results of operations reported for the prior periods presented.

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Income Taxes - Provision for Income Tax Expense (Benefit) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended														12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2014		Dec. 31, 2013	Dec. 31, 2012
Current:
U.S. federal															$ 2,516
U.S. state and local															503
Non-U.S.															1,934
Subtotal current															4,953	[1]	0	0
Deferred:
U.S. federal															(2,293)
U.S. state and local															(458)
Non-U.S.															(580)
Subtotal deferred															(3,331)	[1]	0	0
Provision for income tax expense (benefit)	$ (4,465)	$ 6,087	$ 0	[2]	$ 0	[2]	$ 0	[2]	$ 0	[2]	$ 0	[2]	$ 0	[2]	$ 1,622

[1] The combined consolidated financial statements for the year ended December 31, 2014 include: (i) the Company’s results of operations for the six months ended December 31, 2014, which represents the Company’s results of operations following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) the Company’s results of operations for the six months ended June 30, 2014 which represents a carve-out of revenues and expenses attributable to the Company related to NorthStar Realty’s historical asset management business. The Company historical financial information for the years ended December 31, 2013 and 2012 was prepared on the same basis as the six months ended June 30, 2014. As a result, results of operations for the year ended December 31, 2014 may not be comparative to the Company’s results of operations reported for the prior periods presented.

[2] Represents a carve-out of revenues and expenses attributed to the Company related to NorthStar Realty’s historical asset management business.

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Combined Consolidated Balance Sheet (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Assets
Cash	$ 109,199		$ 7,537
Restricted cash	3,190		0
Receivables, related parties	77,626	[1]	23,187
Investments in unconsolidated ventures	54,480		0
Other assets	22,492	[2]	985
Total assets	266,987		31,709
Liabilities
Accounts payable and accrued expenses	53,075		1,373
Commission payable	12,164		1,968
Total liabilities	65,239		3,341
Commitments and contingencies
Equity
Performance common stock, $0.01 par value, 500,000,000 shares authorized; 3,738,314 shares and no shares issued and outstanding as of December 31, 2014 and 2013, respectively	37		0
Preferred stock, $0.01 par value, 100,000,000 shares authorized, no shares issued and outstanding as of December 31, 2014 and 2013	0		0
Common stock, $0.01 par value, 1,000,000,000 and 3,000 shares authorized, 192,947,856 and 1,000 shares issued and outstanding as of December 31, 2014 and 2013, respectively	1,930		0
Additional paid-in capital	276,874		105,498
Retained earnings (accumulated deficit)	(77,093)		(77,130)
Total equity	201,748		28,368
Total liabilities and equity	$ 266,987		$ 31,709

[1] As of December 31, 2014 and 2013, the Company had unreimbursed costs from the Sponsored Companies of $29.3 million and $20.9 million respectively, recorded as receivables, related parties on the combined consolidated balance sheets. Subsequent to December 31, 2014, the Company received $47.4 million from NorthStar Realty.

[2] Includes fixed assets, tenant improvements and deposits related to leased offices that were transferred to the Company at the time of the spin-off on June 30, 2014.

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Commitments and Contingencies (Details) (USD $)	0 Months Ended	12 Months Ended
	Jul. 01, 2014	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
2015		$ 3,994,000
2016		4,148,000
2017		2,956,000
2018		1,138,000
2019		656,000
2019		0
Total minimum lease payments		12,892,000
Rent expense		2,100,000
Number of days of employment to qualify for 401(k) plan	30 days
Employee matching contribution for the first level of earnings	100.00%
Employer match level one	3.00%
Employee matching contribution for the second level of earnings	50.00%
Employer match level two	2.00%
Aggregate matching contribution		$ 200,000

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Combined Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities:
Net income (loss)	$ 19,100	[1]	$ (1,995)	$ (17,322)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in (earnings) losses of unconsolidated ventures	1,039	[1]	0	0
Accrued transaction costs	5,205		0	0
Depreciation expense	893		74	65
Amortization of equity-based compensation	51,519		5,177	4,224
Unrealized foreign currency (gain) loss	405		0	0
Straight line rent, net	154		0	0
Deferred income tax, net	3,095		0	0
Change in assets and liabilities:
Restricted cash	(3,190)		0	0
Receivables, related parties	(54,439)		(9,976)	(7,402)
Other assets	(17,602)		(657)	(8)
Accounts payable and accrued expenses	30,341		(954)	880
Commission payable	10,196		1,968	0
Net cash provided by (used in) operating activities	46,716		(6,363)	(19,563)
Cash flows from investing activities:
Investments in unconsolidated ventures	(43,582)		0	0
Net cash provided by (used in) investing activities	(43,582)		0	0
Cash flows from financing activities:
Contribution from NorthStar Realty (refer to Note 1)	116,397		7,257	24,159
Excess tax benefit from equity-based compensation	1,599		0	0
Dividends	(19,063)		0	0
Net cash provided by (used in) financing activities	98,933		7,257	24,159
Effect of foreign exchange rate changes on cash	(405)		0	0
Net increase (decrease) in cash	101,662		894	4,596
Cash - beginning of period	7,537		6,643	2,047
Cash - end of period	109,199		7,537	6,643
Supplemental disclosure of non-cash investing and financing activities:
Deemed capital contribution from NorthStar Realty (refer to Note 1)	4,811		0	0
Common stock related to transactions	10,310		0	0
Accrued transaction costs relating to investments in unconsolidated ventures	1,538		0	0
Tax effect related to the vesting of RSUs	11,294		0	0
Equity incentive plan	88		0	0
Supplemental disclosures of cash flow information:
Payment of income tax	$ 6,700		$ 0	$ 0

[1] The combined consolidated financial statements for the year ended December 31, 2014 include: (i) the Company’s results of operations for the six months ended December 31, 2014, which represents the Company’s results of operations following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) the Company’s results of operations for the six months ended June 30, 2014 which represents a carve-out of revenues and expenses attributable to the Company related to NorthStar Realty’s historical asset management business. The Company historical financial information for the years ended December 31, 2013 and 2012 was prepared on the same basis as the six months ended June 30, 2014. As a result, results of operations for the year ended December 31, 2014 may not be comparative to the Company’s results of operations reported for the prior periods presented.

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Subsequent Events (Details) (USD $)	0 Months Ended		1 Months Ended
	Oct. 30, 2014	Feb. 25, 2015	Jan. 31, 2015 property	Feb. 26, 2015 property
Subsequent Event [Line Items]
Dividends per share of common stock	$ 0.10
Subsequent Event
Subsequent Event [Line Items]
Dividends per share of common stock		$ 0.10
Value of European real estate portfolio acquired or committed to acquired				$ 2,000,000,000
Number of properties in European real estate portfolio acquired or committed to acquire				50
Subsequent Event | Island Hospitality [Member]
Subsequent Event [Line Items]
Cash paid to acquire business			33,200,000
Common stock consideration			4,600,000
Number of hotel properties			140
Value of business acquired			$ 3,700,000,000
Subsequent Event | NorthStar Realty Finance Corporation | Island Hospitality [Member]
Subsequent Event [Line Items]
Number of hotel properties			101

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Management Agreements and Managed Companies - Summary of Expense Arrangements (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Related Party Transaction [Line Items]
Operating Costs (percent of average invested assets)	2.00%
Operating Costs (percent of net income)	25.00%
NorthStar Income
Related Party Transaction [Line Items]
Organization and offering costs	11.0	[1],[2]
Operating Costs (percent of average invested assets)	2.00%	[3]
Operating Costs (percent of net income)	25.00%	[3]
NorthStar Healthcare
Related Party Transaction [Line Items]
Organization and offering costs	22.5	[1],[4]
Organization and offering costs (percent of proceeds expected to be raised)	1.50%	[1],[4]
Operating Costs (percent of average invested assets)	2.00%	[3]
Operating Costs (percent of net income)	25.00%	[3]
NorthStar Income II
Related Party Transaction [Line Items]
Organization and offering costs	24.8	[1]
Organization and offering costs (percent of proceeds expected to be raised)	1.50%	[1]
Operating Costs (percent of average invested assets)	2.00%	[3]
Operating Costs (percent of net income)	25.00%	[3]
NorthStar/RXR New York Metro
Related Party Transaction [Line Items]
Organization and offering costs	30.0	[1]
Organization and offering costs (percent of proceeds expected to be raised)	1.50%	[1]
Operating Costs (percent of average invested assets)	2.00%	[3]
Operating Costs (percent of net income)	25.00%	[3]

[1] Represents reimbursement for organization and offering costs paid on behalf of the Sponsored Companies in connection with their respective offerings. The Company is facilitating the payment of organization and offering costs on behalf of the Sponsored Companies. The Company records these costs as Receivables, related parties on its consolidated balance sheets until repaid. The Sponsored Companies record these costs as either advisory fees-related parties on their consolidated statements of operations or as a cost of capital in their consolidated statements of equity.

[2] Represents the total expense allocation for organization and offering costs through the end of the offering period in July 2013.

[3] Calculated based on the four preceding fiscal quarters not to exceed the greater of: (i) 2.0% of each Sponsored Company’s average invested assets; or (ii) 25.0% of each Sponsored Company’s 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.

[4] Excludes shares being offered pursuant to the dividend reinvestment plan.

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Commitments and Contingencies Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments for Capital Leases

The following table presents minimum future rental payments under these contractual lease obligations as of December 31, 2014 (dollars in thousands):

Years Ending December 31:
2015	$	3,994
2016	4,148
2017	2,956
2018	1,138
2019	656
Thereafter	—
Total minimum lease payments	$	12,892

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Management Agreements and Managed Companies - Related Party Receivables (Details) (USD $)	6 Months Ended			12 Months Ended	2 Months Ended
	Dec. 31, 2014		Jun. 30, 2014	Dec. 31, 2013	Feb. 26, 2015
Related Party Transaction [Line Items]
Receivables, related parties	$ 77,626,000	[1]		$ 23,187,000
Base management fees	79,400,000		0	0
Unreimbursed costs receivable	29,300,000			20,900,000
Subsequent Event
Related Party Transaction [Line Items]
Reimbursement revenue					47,400,000
NorthStar Realty Finance Corporation
Related Party Transaction [Line Items]
Base management fee	41,395,000	[2]
Incentive fee	2,000,000	[2]
Other	4,019,000	[2]
Receivables, related parties	47,414,000	[2]
Sponsored Companies
Related Party Transaction [Line Items]
Receivables, related parties	29,564,000			23,146,000
Fees	245,000			2,252,000
Other receivables	29,319,000			20,894,000
Other Affiliates
Related Party Transaction [Line Items]
Other receivables	$ 648,000			$ 41,000

[1] As of December 31, 2014 and 2013, the Company had unreimbursed costs from the Sponsored Companies of $29.3 million and $20.9 million respectively, recorded as receivables, related parties on the combined consolidated balance sheets. Subsequent to December 31, 2014, the Company received $47.4 million from NorthStar Realty.

[2] The management contract with NorthStar Realty commenced on July 1, 2014, and as such, there were no management fees earned for the six months ended June 30, 2014 and year ended December 31, 2013.

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Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2014

Stockholders' Equity Note Disclosure and Earnings Per Share Disclosure [Abstract]

Schedule of Earnings Per Share

The following table presents EPS for the years ended December 31, 2014, 2013 and 2012 (dollars and shares in thousands, except per share data):

	Years Ended December 31,
	2014			2013			2012
Numerator:
Net income (loss)	$	19,100		$	(1,995	)	$	(17,322	)
Earnings (loss) allocated to unvested participating securities	(247		)	—			—
Numerator for basic income per share	$	18,853		$	(1,995	)	$	(17,322	)
Denominator:
Weighted average number of shares of common stock	187,852			187,816			187,816
Dilutive effect of restricted common stock	849			—			—
Dilutive effect of RSUs (1)	4,883			—			—
Dilutive effect of the Deferred LTIP Units	572			—			—
Dilutive effect of the Healthcare Strategic Partnership RSUs	252			—			—
Weighted average number of diluted shares(2)	194,408			187,816			187,816
Earnings (loss) per share:
Basic	$	0.10		$	(0.01	)	$	(0.09	)
Diluted	$	0.10		$	(0.01	)	$	(0.09	)

_______________________

(1) Represents shares related to the NorthStar Realty Stock Plan.

(2) Diluted EPS excludes the effect of equity-based awards issued that were not dilutive for the periods presented. These instruments could potentially impact diluted EPS in future periods, depending on changes in the Company’s stock price and other factors.

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Business and Organization

12 Months Ended

Dec. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business and Organization

Business and Organization

NorthStar Asset Management Group Inc. (“NSAM” or the “Company”) is a global asset management firm focused on strategically managing real estate and other investment platforms in the United States and internationally. The Company commenced operations on July 1, 2014, upon the spin-off by NorthStar Realty Finance Corp. (“NorthStar Realty”) of its spin-off of its asset management business into a separate publicly-traded company, NSAM, a Delaware corporation. The spin-off was in the form of a tax-free distribution to NorthStar Realty’s common stockholders where each NorthStar Realty common stockholder received shares of the Company’s common stock on a one-for-one basis. At the same time, NorthStar Realty became externally managed by an affiliate of the Company through a management contract with an initial term of 20 years. NorthStar Realty continues to operate its commercial real estate debt origination business. Most of NorthStar Realty’s employees at the time of the spin-off became employees of the Company.

Certain of the Company’s affiliates of the Company also manage NorthStar Realty’s previously sponsored non-traded real estate investment trusts (“REITs”), as well as new non-traded companies and any future sponsored company (referred to as the “Sponsored Companies” and together with NorthStar Realty, referred to as the “Managed Companies”).

The Company is organized to provide asset management and other services to the Managed Companies or any other companies it may sponsor in the future, both in the United States and internationally. The Managed Companies have historically invested in the commercial real estate (“CRE”) industry. The Company seeks to expand the scope of its asset management business beyond real estate into new asset classes and geographies by organically creating and managing additional investment vehicles or through acquisitions, strategic partnerships and joint ventures. To date, the Company has acquired an approximate 44% interest in American Healthcare Investors LLC (the “AHI Interest”) (refer to Note 5), an approximate 45% interest in Island Hospitality Management Inc. (the “Island Interest”) (refer to Note 12) and an approximate 50% interest in Distribution Finance Corporation (the “Distribution Finance Interest”).

The Company earns asset management, incentive and other fees, directly or indirectly, pursuant to management and other contracts and investments in asset managers. In addition, the Company owns NorthStar Realty Securities, LLC (“NorthStar Securities”), a captive broker-dealer platform registered with the Securities and Exchange Commission (“SEC”) which raises capital in the retail market for the Sponsored Companies.

References to the historical asset management business of NorthStar Realty including assets, liabilities and results of operations relate to managing the Sponsored Companies, owning NorthStar Securities and operating its special servicing business and are generally referred to as those of the Company.

In connection with the Distribution, NorthStar Realty contributed 100% of the limited liability company interests in certain of NorthStar Realty’s subsidiaries and $100.0 million in cash for the initial capitalization, plus approximately $17.9 million in cash for any expenses that the Company incurred in connection with the spin-off. Any additional expenses incurred in connection with the spin-off will be paid by NorthStar Realty.

Proposed Spin-off of European Real Estate Business

On February 26, 2015, NorthStar Realty announced that its board of directors unanimously approved a plan to spin-off its European real estate business (the “NRF Proposed European Spin”) into a newly-formed publicly-traded REIT, NorthStar Realty Europe Corp. (“NRE”) expected to be listed on the New York Stock Exchange (“NYSE”) and potentially in Europe. Currently, NorthStar Realty has acquired or committed to acquire $2 billion of European real estate (excluding European healthcare assets) comprised of 50 properties spanning across some of Europe’s top markets that will be contributed to NRE upon the completion of the NRF Proposed European Spin. The Company will manage NRE pursuant to a long-term management agreement, on substantially similar terms as the Company’s management agreement with NorthStar Realty. The NRF Proposed European Spin is expected to be completed in the second half of 2015.

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Combined Consolidated Balance Sheet Combined Balance Sheet (Parenthetical) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,000,000,000	3,000
Common stock, shares issued	192,947,856	1,000
Common stock, shares outstanding	192,947,856	1,000
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Performance Stock, Par or Stated Value Per Share	$ 10.00	$ 10.00
Performance Stock, Shares Authorized	500,000,000,000	500,000,000,000
Performance Stock, Shares, Issued	3,738,314,000	0
Performance Stock, Shares, Outstanding	3,738,314,000	0

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Segment Reporting

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

The Company conducts its asset management business through the following five segments, which are based on how management reviews and manages its business:

• NorthStar Realty - Provides asset management and other services on a fee basis by managing NorthStar Realty’s day-to-day operations. The Company began earning fees from NorthStar Realty on July 1, 2014.

• Sponsored Companies - Provides asset management and other services on a fee basis by managing each Sponsored Company’s respective day-to-day operations.

• Broker-dealer - Raises capital in the retail market through NorthStar Securities and earns dealer manager fees from the Sponsored Companies.

• Investments in Asset Managers - Invests in strategic partnerships and joint ventures with third-parties with expertise in commercial real estate or other sectors and markets, where the Company benefits from the fee stream and potential incentive fee or promote.

• Corporate/Other - Includes corporate level general and administrative expenses, as well special servicing on a fee basis in connection with certain securitization transactions.

The consolidated financial statements for the six months ended December 31, 2014 represent the Company subsequent to the spin-off of NorthStar Realty’s historical asset management business of managing the Sponsored Companies, owning NorthStar Securities and operating its special servicing business. Periods prior to June 30, 2014 present a carve-out of NorthStar Realty’s historical financial information including revenues and expenses allocated to the Company, related to NorthStar Realty’s historical asset management business. Expenses also included an allocation of indirect expenses from NorthStar Realty, including salaries, equity-based compensation and other general and administrative expenses (primarily occupancy and other costs) based on an estimate had NorthStar Realty’s historical asset management business been run as an independent entity. 

Periods prior to June 30, 2014 present a carve-out of NorthStar Realty’s historical financial information, including revenues and expenses allocated to us related to NorthStar Realty’s historical asset management business. Expenses also included an allocation of indirect expenses from NorthStar Realty, including salaries, equity-based compensation and other general and administrative expenses (primarily occupancy and other cost) based on an estimate had NorthStar Realty’s historical asset management business been run as an independent entity. This allocation method was principally based on relative headcount and management’s knowledge of NorthStar Realty’s operations. Additionally, periods prior to June 30, 2014 did not reflect the management agreement the Company entered into with NorthStar Realty effective July 1, 2014.

The following tables present segment reporting for the years ended December 31, 2014, 2013 and 2012 (dollars in thousands):

Statement of Operations:
Year ended December 31, 2014	NorthStar Realty (1)			Sponsored Companies			Broker Dealer (2)			Investment in Asset Managers				Corporate/Other			Total
Asset management and other fees, related parties	$	82,759		$	64,979		$	—		$	—			$	—		$	147,738
Selling commission and dealer manager fees, related parties	—			—			110,563			—				—			110,563
Commission expense	—			—			104,428			—				—			104,428
Salaries and related expense	—			—			6,831			—				30,374			37,205
Equity-based compensation expense	—			—			—			—				51,650			51,650
Other general and administrative expenses	—			—			8,126			—				9,591			17,717
Equity in earnings (losses) of unconsolidated ventures	—			—			—			(1,039		)		—			(1,039		)
Income tax (benefit) expense	—			—			—			—				1,622			1,622
Net income (loss)	82,759			64,979			(8,916		)	(1,039		)		(118,683		)	19,100
Balance Sheet:
December 31, 2014
Total assets	$	60,909	(3)	$	27,147	(3)	$	17,868		$	54,480		(4)	$	106,583		$	266,987

_______________    

(1) The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 3).

(2) Direct general and administrative expenses incurred by the broker dealer.

(3) Primarily represents receivables, related parties and cash. Subsequent to December 31, 2014, the Company received $47.4 million of reimbursements from the Managed Companies.

(4) Represents investments in unconsolidated ventures.

Statement of Operations:
Year ended December 31, 2013	NorthStar Realty (1)		Sponsored Companies			Broker Dealer (2)			Corporate/Other			Total
Asset management and other fees, related parties	$	—	$	26,633		$	—		$	—		$	26,633
Selling commission and dealer manager fees, related parties	—		—			62,572			—			62,572
Commission expense	—		—			57,325			—			57,325
Salaries and related expense	—		—			5,731			15,613			21,344
Equity-based compensation expense	—		—			—			5,177			5,177
Other general and administrative expenses	—		—			5,977			375			6,352
Net income (loss)	—		26,617			(6,535		)	(22,077		)	(1,995		)
Balance Sheet:
December 31, 2013:
Total assets	$	—	$	23,149	(3)	$	8,377		$	183		$	31,709

_______________

(1) The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 3).

(2) Direct general and administrative expenses incurred by the broker dealer.

(3) Primarily represents receivables, related parties.

Statement of Operations:
Year ended December 31, 2012	NorthStar Realty (1)		Sponsored Companies			Broker Dealer (2)			Corporate/Other			Total
Asset management and other fees, related parties	$	—	$	8,112		$	—		$	—		$	8,112
Selling commission and dealer manager fees, related parties	—		—			42,385			—			42,385
Commission expense	—		—			38,506			—			38,506
Salaries and related expense	—		—			4,825			15,392			20,217
Equity-based compensation expense	—		—			—			4,224			4,224
Other general and administrative expenses	—		—			3,731			1,115			4,846
Net income (loss)	—		8,112			(4,742		)	(20,692		)	(17,322		)
Balance Sheet:
December 31, 2012:
Total assets	$	—	$	11,425	(3)	$	8,610		$	222		$	20,257

_______________

(1) The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 3).

(2) Direct general and administrative expenses incurred by the broker dealer.

(3) Primarily represents receivables, related parties.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Feb. 26, 2015	Jun. 30, 2014
Document and Entity Information
Entity Registrant Name	NORTHSTAR ASSET MANAGEMENT GROUP INC.
Entity Central Index Key	0001597503
Entity Current Reporting Status	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Share Outstanding		193,848,317
Amendment Flag	false
Document Type	10-K
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Public Float			$ 0

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Subsequent Events

12 Months Ended

Dec. 31, 2014

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Dividends

On February 25, 2015, the Company declared a dividend of $0.10 per share of common stock. The common stock dividend will be paid on March 13, 2015 to stockholders of record as of the close of business on March 9, 2015.

Island Interest

In January 2015, the Company acquired the Island Interest for $33.2 million in cash and $4.6 million of the Company’s common stock, subject to certain lock-up and vesting restrictions. Island is a leading, independent select service hotel management company and manages approximately 140 hotel properties representing $3.7 billion, of which 101 hotel properties are owned by NorthStar Realty.

Proposed Spin-off of European Real Estate Business

On February 26, 2015, NorthStar Realty announced that its board of directors unanimously approved the NRF Proposed European Spin. Currently, NorthStar Realty has acquired or committed to acquire $2 billion of European real estate (excluding European healthcare assets) comprised of 50 properties spanning across some of Europe’s top markets that will be contributed to NRE upon the completion of the NRF Proposed European Spin. The Company will manage NRE pursuant to a long-term management agreement, on substantially similar terms as the Company’s management agreement with NorthStar Realty. The NRF Proposed European Spin is expected to be completed in the second half of 2015.

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Combined Consolidated Statements of Operations (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Revenues
Asset management and other fees, related parties	$ 147,738	[1],[2]	$ 26,633	[1]	$ 8,112	[1]
Selling commission and dealer manager fees, related parties	110,563	[2]	62,572		42,385
Other income	841	[2]	733		264
Total revenues	259,142	[2]	89,938		50,761
Expenses
Commission expense (refer to Note 3)	104,428	[2]	57,325		38,506
Transaction costs	24,476	[2]	1,590		0
Other expense	1,905	[2]	145		290
General and administrative expenses
Salaries and related expense	37,205	[2]	21,344		20,217
Equity-based compensation expense	51,650	[2]	5,177		4,224
Other general and administrative expenses	17,717	[2]	6,352		4,846
Total general and administrative expenses	106,572	[2]	32,873		29,287
Total expenses	237,381	[2]	91,933		68,083
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax (benefit) expense	21,761	[2]	(1,995)		(17,322)
Equity in earnings (losses) of unconsolidated ventures	(1,039)	[2]	0		0
Income (loss) before income tax (benefit) expense	20,722	[2]	(1,995)		(17,322)
Current income tax (benefit) expense	4,953	[2]	0		0
Deferred income tax (benefit) expense	(3,331)	[2]	0		0
Net income (loss)	$ 19,100	[2]	$ (1,995)		$ (17,322)
Earnings (loss) per share:
Net income (loss) per Basic (usd per share)	$ 0.10	[2]	$ (0.01)		$ (0.09)
Net income (loss) per Dilutive (usd per share)	$ 0.10	[2]	$ (0.01)		$ (0.09)
Weighted average number of shares:
Basic (shares)	187,852,497	[2]	187,815,614		187,815,614
Dilutive (shares)	194,408,211	[2],[3]	187,815,614	[3]	187,815,614	[3]

[1] The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 1).

[2] The combined consolidated financial statements for the year ended December 31, 2014 include: (i) the Company’s results of operations for the six months ended December 31, 2014, which represents the Company’s results of operations following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) the Company’s results of operations for the six months ended June 30, 2014 which represents a carve-out of revenues and expenses attributable to the Company related to NorthStar Realty’s historical asset management business. The Company historical financial information for the years ended December 31, 2013 and 2012 was prepared on the same basis as the six months ended June 30, 2014. As a result, results of operations for the year ended December 31, 2014 may not be comparative to the Company’s results of operations reported for the prior periods presented.

[3] Diluted EPS excludes the effect of equity-based awards issued that were not dilutive for the periods presented. These instruments could potentially impact diluted EPS in future periods, depending on changes in the Company’s stock price and other factors.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Obligations Under Lease Agreements

The Company is the lessee of eight offices located in New York, New York, Denver, Colorado, Dallas, Texas, Bethesda, Maryland, Los Angeles, California, London, United Kingdom, Senningerberg, Luxembourg and Pembroke, Bermuda.

The following table presents minimum future rental payments under these contractual lease obligations as of December 31, 2014 (dollars in thousands):

Years Ending December 31:
2015	$	3,994
2016	4,148
2017	2,956
2018	1,138
2019	656
Thereafter	—
Total minimum lease payments	$	12,892

The Company recognized $2.1 million in rental expense for the year ended December 31, 2014.

Litigation

The Company may be involved in various litigation matters arising in the ordinary course of its business. Although the Company is unable to predict with certainty the eventual outcome of any litigation, in the opinion of management, the legal proceedings are not expected to have a material adverse effect on the Company’s financial position or results of operations.

Other

Effective July 1, 2014, in connection with the spin-off, the Company adopted the NSAM 401(k) Retirement Plan (the “401(k) Plan”) for its employees.  Eligible employees under the 401(k) Plan may begin participation on the first day of the month after they have completed 30 days of employment.  The Company’s matching contribution is calculated as 100% of the first 3% and 50% of the next 2% of participant’s eligible earnings contributed (utilizing earnings that are not in excess of the amount established by the Internal Revenue Service).  The Company’s aggregate matching contribution for the year ended December 31, 2014 was $0.2 million.

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Related Party Arrangements

12 Months Ended

Dec. 31, 2014

Related Party Transactions [Abstract]

Related Party Arrangements

Related Party Arrangements

NorthStar Realty

Investment Opportunities

Under the management agreement, NorthStar Realty agreed to make available to the Company for the benefit of the Managed Companies, including NorthStar Realty, all investment opportunities sourced by NorthStar Realty. The Company agreed to fairly allocate such opportunities among the Managed Companies, including NorthStar Realty, in accordance with an investment allocation policy. Pursuant to the management agreement, NorthStar Realty is entitled to fair and reasonable compensation for its services in connection with any loan origination opportunities sourced by it, which may include first mortgage loans, subordinate mortgage interests, mezzanine loans and preferred equity interests, in each case relating to commercial real estate.

The Company provides services with regard to such areas as payroll, human resources and employee benefits, financial systems management, treasury and cash management, accounts payable services, telecommunications services, information technology services, property management services, legal and accounting services and various other corporate services to NorthStar Realty as it relates to its loan origination business for commercial real estate debt.

Credit Agreement

In connection with the spin-off, the Company entered into a revolving credit agreement with NorthStar Realty pursuant to which NorthStar Realty makes available to the Company, on an “as available basis,” up to $250.0 million of financing for a five year term at LIBOR plus 3.50%. The revolving credit facility is unsecured. The Company expects to use the proceeds for general corporate purposes, including potential future acquisitions. In addition, the Company may use the proceeds to acquire assets on behalf of the Managed Companies that the Company intends to allocate to such Managed Company but for which such Managed Company may not then have immediately available funds. The terms of the revolving credit facility contain various representations, warranties, covenants and conditions, including the condition that NorthStar Realty’s obligation to advance proceeds to the Company is dependent upon NorthStar Realty and its affiliates having at least $100.0 million of either unrestricted cash and cash equivalents or amounts available under committed lines of credit, after taking into account the amount the Company seeks to draw under the facility. As of December 31, 2014, the Company had no borrowings outstanding under the credit agreement.

Healthcare Strategic Joint Venture

In January 2014, the Company entered into a long-term strategic partnership with James F. Flaherty III, former Chief Executive Officer of HCP, Inc., focused on expanding the Company’s healthcare business into a preeminent healthcare platform (“Healthcare Strategic Partnership”). In connection with the partnership, Mr. Flaherty oversees and seeks to grow both NorthStar Realty’s healthcare real estate portfolio and the portfolio of NorthStar Healthcare. In connection with entering into the partnership, NorthStar Realty granted Mr. Flaherty certain RSUs, which partially became the Company’s RSUs upon spin-off (refer to Note 7). The Healthcare Strategic Partnership is entitled to incentive fees ranging from 20% to 25% above certain hurdles for new and existing healthcare real estate investments held by NorthStar Realty and NorthStar Healthcare. The partnership will also be entitled to any incentive fees earned from NorthStar Healthcare or any future healthcare non-traded REITs sponsored by the Company, NorthStar Realty or any affiliates. For the year ended December 31, 2014, the Company did not earn any incentive fees related to the Healthcare Strategic Partnership. On February 2, 2015, in connection with the completion of NorthStar Healthcare’s initial primary offering, the Company issued 20,305 RSUs to Mr. Flaherty.

AHI Venture

In connection with the AHI Interest, AHI Ventures provides certain asset management, property management and other services to the Company to assist in managing the current and future healthcare assets (excluding any joint venture assets) of NorthStar Realty and other Sponsored Companies, including the assets formerly owned by Griffin-American Healthcare REIT II, Inc. (“Griffin-American”) and the assets by its former operating partnership, Griffin-American Healthcare REIT II Holdings, LP (“Griffin-America OP portfolio”). AHI Ventures receives a base management fee of $0.6 million per year plus 0.50% of the equity invested by NorthStar Realty in future assets (excluding assets in the Griffin-American OP portfolio and other joint ventures) that AHI Ventures may manage. AHI Ventures would be entitled to additional base management fees should it manage assets on behalf of any other Managed Companies. AHI Ventures also intends to directly or indirectly sponsor, co-sponsor, form, register, market, advise, manage and/or operate investment vehicles that are intended to invest primarily in healthcare real estate assets. In addition, Mr. Flaherty acquired a 9.3% interest in AHI Ventures.

RXR Realty

In December 2013, NorthStar Realty entered into a strategic transaction with RXR Realty. The investment in RXR Realty includes an approximate 30% equity interest. NorthStar Realty’s equity interest in RXR Realty is structured so that the Company is entitled to certain fees in connection with RXR Realty’s investment management business.

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Equity-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2014

Share-based Compensation [Abstract]

Summary of Deferred LTIP Units and Unvested Restricted Stock at Spinoff

The following table presents a summary of Deferred LTIP Units, whether vested or not, and unvested restricted stock from the time of the spin-off to December 31, 2014 (grants in thousands):

	Grants		Weighted Average Grant Price(2)
As of June 30, 2014, time of the spin-off	1,917		$	22.91
New grants	4,855		18.67
Vesting of restricted stock post-spin	(1,028	)	9.24
Withheld/retired shares	(500	)	18.17
Forfeited or canceled grants	(5	)	16.56
Ending Balance/Weighted Average(1)	5,239		$	22.12

__________

(1) Includes 4.1 million shares of restricted stock and 1.1 million vested and unvested Deferred LTIP Units as of December 31, 2014.

(2) Amounts have been retrospectively adjusted to reflect NorthStar Realty’s reverse stock split, which occurred prior to the spin-off on June 30, 2014.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Basis of Accounting

Basis of Accounting

The accompanying combined consolidated financial statements and related notes of the Company are presented on a carve-out basis for the period prior to June 30, 2014 and have been prepared from the historical consolidated balance sheets, statements of operations and cash flow attributed to the historical asset management business of NorthStar Realty and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

The combined consolidated financial statements for the six months ended December 31, 2014 represent the Company subsequent to the spin-off of NorthStar Realty’s historical asset management business of managing the Sponsored Companies, owning NorthStar Securities and operating its special servicing business. In connection with the spin-off, most of NorthStar Realty’s employees at the time of the spin-off became employees of the Company except for executive officers, employees engaged in NorthStar Realty’s loan origination business at the time of the spin-off and certain other employees that became co-employees of both the Company and NorthStar Realty. Therefore, subsequent to June 30, 2014, the Company generally incurs substantially all employee-related cash costs.

Periods prior to June 30, 2014 present a carve-out of NorthStar Realty’s historical financial information, including revenues and expenses allocated to the Company, related to NorthStar Realty’s historical asset management business. Expenses also included an allocation of indirect expenses from NorthStar Realty, including salaries, equity-based compensation and other general and administrative expenses (primarily occupancy and other cost) based on an estimate had NorthStar Realty’s historical asset management business been run as an independent entity. This allocation method was principally based on relative headcount and management’s knowledge of NorthStar Realty’s operations. Additionally, periods prior to June 30, 2014 did not reflect the management agreement the Company entered into with NorthStar Realty effective July 1, 2014.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries.

Variable Interest Entities

A variable interest entity (“VIE”) is an entity that lacks one or more of the characteristics of a voting interest entity. A VIE is defined as an entity in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The determination of whether an entity is a VIE includes both a qualitative and quantitative analysis. The Company bases its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and relevant financial agreements and the quantitative analysis on the forecasted cash flow of the entity.

The Company reassesses its initial evaluation of an entity as a VIE upon the occurrence of certain reconsideration events.

A VIE must be consolidated only by its primary beneficiary, which is defined as the party who, along with its affiliates and agents has both the: (i) power to direct the activities that most significantly impact the VIE’s economic performance; and (ii) obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. The Company determines whether it is the primary beneficiary of a VIE by considering qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of its investment; the obligation or likelihood for the Company or other interests to provide financial support; consideration of the VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders and the similarity with and significance to the business activities of the Company and the other interests. The Company reassesses its determination of whether it is the primary beneficiary of a VIE each reporting period. Significant judgments related to these determinations include estimates about the current and future fair value and performance of investments held by these VIEs and general market conditions.

The Company evaluates the Managed Companies, investments in unconsolidated ventures and securitization financing transactions to which the Company is the special servicer to determine whether they are a VIE.

Voting Interest Entities

A voting interest entity is an entity in which the total equity investment at risk is sufficient to enable it to finance its activities independently and the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the Company has a majority voting interest in a voting interest entity, the entity will generally be consolidated. The Company does not consolidate a voting interest entity if there are substantive participating rights by other parties and/or kick-out rights by a single party.

The Company performs on-going reassessments of whether entities previously evaluated under the voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework.

Investments in Unconsolidated Ventures

Non-controlling, unconsolidated ownership interests in an entity may be accounted for using the equity method, at fair value or the cost method.

Under the equity method, the investment is adjusted each period for capital contributions and distributions and its share of the entity’s net income (loss). Capital contributions, distributions and net income (loss) of such entities are recorded in accordance with the terms of the governing documents. An allocation of net income (loss) may differ from the stated ownership percentage interest in such entity as a result of preferred returns and allocation formulas, if any, as described in such governing documents.

The Company may account for an investment in an unconsolidated entity at fair value by electing the fair value option. The Company records the change in fair value for its share of the projected future cash flow of such investments from one period to another in equity in earnings (losses) from unconsolidated ventures in the consolidated statements of operations. Any change in fair value attributed to market related assumptions is considered unrealized gain (loss).

The Company may account for an investment that does not qualify for equity method accounting or for which the fair value option was not elected using the cost method if the Company determines the investment in the unconsolidated entity is insignificant. Under the cost method, equity in earnings is recorded as dividends are received to the extent they are not considered a return of capital, which is recorded as a reduction of cost of the investment.

Non-controlling Interests

Non-controlling Interests

A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to the Company. A non-controlling interest is required to be presented as a separate component of equity on the consolidated balance sheets and presented separately as net income (loss) and other comprehensive income (loss) (“OCI”) attributable to controlling and non-controlling interests. An allocation to a non-controlling interest may differ from the stated ownership percentage interest in such entities as a result of preferred returns and allocation formulas, if any, as described in such governing documents.

Furniture, fixtures and equipment

Furniture, fixtures and equipment

Furniture, fixtures and equipment is carried at historical cost less accumulated depreciation. Ordinary repairs and maintenance are expensed as incurred. Major replacements and betterments which improve or extend the life of assets are capitalized and depreciated over their useful life. Furniture, fixtures and equipment is depreciated using the straight-line method over the estimated useful lives of assets.

Estimates

Estimates

The preparation of combined consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that could affect the amounts reported in the combined consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates and assumptions.

Reclassifications

Reclassifications

Certain prior period amounts have been reclassified in the combined consolidated financial statements to conform to current period presentation.

Cash

Cash

Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250,000 per institution. The Company mitigates credit risk by placing cash with major financial institutions. To date, the Company has not experienced any losses on cash

Revenue Recognition

Revenue Recognition

Asset Management and Other Fees

Asset management and other fees include asset management, incentive and other fees, such as acquisition and disposition fees, earned from the Managed Companies. Base asset management and other fees are recognized based on contractual terms specified in the underlying governing documents in the periods during which the related services are performed and the amounts have been contractually earned. Incentive fees and payments are recognized subject to the achievement of return hurdles in accordance with the respective terms set forth in the governing documents of the Managed Companies.

Selling Commission and Dealer Manager Fees and Commission Expense

Selling commission and dealer manager fees represent income earned by the Company for selling equity in the Sponsored Companies through NorthStar Securities. Selling commission and dealer manager fees and commission expense are accrued on a trade date basis.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

An allowance for a doubtful account is established when, in the opinion of the Company, a full recovery of a receivable becomes doubtful. A receivable is written off when it is no longer collectible and/or legally discharged.

Equity-Based Compensation

Equity-Based Compensation

The Company accounts for equity-based compensation awards, including awards granted to co-employees, using the fair value method, which requires an estimate of fair value of the award. Awards may be based on a variety of measures such as time, performance, market or a combination thereof. For time-based awards, fair value is determined based on the stock price on the grant date. The Company recognizes compensation expense over the vesting period on a straight-line basis. For performance-based awards, fair value is determined based on the stock price at the date of grant and an estimate of the probable achievement of such measure. The Company recognizes compensation expense over the requisite service period, net of estimated forfeitures, using the accelerated attribution expense method. For market-based measures, fair value is determined using a Monte Carlo analysis under a risk-neutral premise using a risk-free interest rate. The Company recognizes compensation expense over the requisite service period, net of estimated forfeitures, on a straight-line basis.

For awards with a combination of performance or market measures, the Company estimates the fair value as if it were two separate awards. First, the Company estimates the probability of achieving the performance measure. If it is not probable the performance condition will be met, the Company records the compensation expense based on the fair value of the market measure, as described above. This expense is recorded even if the market-based measure is never met. If the performance-based measure is subsequently estimated to be achieved, the Company records compensation expense based on the performance-based measure. The Company would then record a cumulative catch-up adjustment for any additional compensation expense.

Equity-based compensation issued to non-employees is accounted for using the fair value of the award at the earlier of the performance commitment date or performance completion date. The awards are remeasured every quarter based on the stock price as of the end of the reporting period until such awards vest, if any.

Foreign Currency

Foreign Currency

Assets and liabilities denominated in non-U.S. dollar currencies are remeasured at the exchange rate prevailing on the reporting date and revenues and expenses are remeasured at the average exchange rate for the period. The Company’s functional currency of its non-U.S. denominated assets and liabilities is the U.S. dollar. Therefore, any gains or losses from the remeasurement of foreign currency to U.S. dollars are recognized in earnings.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

The Company had no items of other comprehensive income (loss), so its comprehensive (loss) is the same as the net (loss) for all periods presented.

Earnings Per Share

Earnings Per Share

The Company’s basic earnings per share (“EPS”) is calculated using the two-class method for each class of common stock and participating security as if all earnings for the years ended had been distributed by dividing net income (loss) attributed to common stockholders by the weighted average number of common stock outstanding. Under the two-class method, the net income is first reduced for distributions declared on all classes of securities to arrive at undistributed earnings. Under the two-class method, the net loss is reduced for distributions declared on participating securities only if the security has the right to participate in the earnings of the entity and an objectively determinable contractual obligation to share in net losses of the entity. Diluted EPS includes restricted stock and the potential dilution that could occur if outstanding restricted stock units (“RSUs”) or other contracts to issue common stock, assuming performance hurdles have been met, were converted to common stock, including Deferred LTIP Units (refer to Note 7), where such exercise or conversion would result in a lower EPS. The dilutive effect of such RSUs and Deferred LTIP Units is calculated assuming all units are converted to common stock.

Income Taxes

Income Taxes

Certain subsidiaries of the Company are subject to taxation by federal, state and foreign authorities for the periods presented. The Company and its U.S. subsidiaries will file a consolidated federal income tax return. Income taxes are accounted for by the asset/liability approach in accordance with U.S. GAAP. Deferred taxes, if any, represent the expected future tax consequences when the reported amounts of assets and liabilities are recovered or paid. Such amounts arise from differences between the financial reporting and tax bases of assets and liabilities and are adjusted for changes in tax laws and tax rates in the period which such changes are enacted. A provision for income tax represents the total of income taxes paid or payable for the current period, plus the change in deferred taxes.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an accounting update requiring a company to recognize as revenue the amount of consideration it expects to be entitled to in connection with the transfer of promised goods or services to customers.  When it becomes effective on January 1, 2017, the accounting standard update will replace most of the existing revenue recognition guidance currently promulgated by U.S. GAAP.  The Company is in the process of evaluating the impact, if any, of the update on its consolidated financial statements and related disclosures.

In February 2015, the FASB issued updated guidance that changes the rules regarding consolidation. The pronouncement eliminates specialized guidance for limited partnerships and similar legal entities and removes the indefinite deferral for certain investment funds. The new guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, with early adoption permitted. The Company is currently assessing the impact of the guidance on the Company’s consolidated financial position, results of operations and financial statement disclosures.

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Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Subsequent to the spin-off, the Company became subject to both domestic and international income tax. The following table presents the income taxes (benefit) expense for the six months ended as of December 31, 2014 (dollars in thousands):

Current:
U.S. federal	$	2,516
U.S. state and local	503
Non-U.S.	1,934
Subtotal current	4,953
Deferred:
U.S. federal	(2,293		)
U.S. state and local	(458		)
Non-U.S.	(580		)
Subtotal deferred	(3,331		)
Income tax (benefit) expense	$	1,622

Deferred income taxes reflect the net tax effects of temporary differences that may exist between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes using enacted tax rates in effect for the year in which the differences are expected to reverse. The following table presents the tax effects of the temporary differences as of December 31, 2014:

Deferred tax asset
Equity-based compensation	$	3,006
Investments in unconsolidated ventures	149
Total deferred tax asset	$	3,155
Deferred tax liability
Intangible assets	$	60
Total deferred tax liability	$	60

The Company and its U.S. subsidiaries will file a consolidated federal income tax return. As a result, the Company concluded there is sufficient evidence to support the use of its subsidiaries net operating loss carryforward in the current year and reversed the full deferred tax valuation allowance of $10.9 million.

The Company operates internationally and domestically through multiple operating subsidiaries.  Each of the jurisdictions in which the Company operates has its own tax law and tax rate, where the tax rate outside the United States may be lower than the U.S. federal statutory income tax rate. The following table presents the reconciliation of the provision for income taxes expense (benefit) to the U.S. federal statutory income tax rate for the six months ended December 31, 2014:

U.S. federal statutory income tax rate	35.0	%
U.S. state and local income taxes	2.9
Change in valuation allowance	(21.3	)
Equity-based compensation	(2.3	)
Permanent items	4.4
Effect of foreign operations taxed at various rates	(17.9	)
Other	2.4
Effective income tax rate	3.2	%

The Company considers the operating earnings of certain non-U.S. subsidiaries to be indefinitely reinvested outside the United States based on the Company’s current needs for those earnings to be reinvested offshore as well as estimates that future domestic cash generated from operations and/or borrowings will be sufficient to meet future domestic cash needs for the foreseeable future. No provision has been made for U.S. federal, state or local taxes that may result from future remittances of the undistributed earnings of these foreign subsidiaries. For the six months ended December 31, 2014, the unrecognized tax liability was $19.2 million.

Excess tax benefits are recognized upon actual realization of the related tax benefit. The Company recognized a windfall tax benefit of $1.6 million relating to equity-based compensation expense, which is a reduction to income tax payable and recorded in additional paid-in capital on the combined consolidated balance sheets.

In the normal course of business, the Company is subject to examination by federal, state, local and foreign tax regulators. The normal statute of limitations will start and the examination period will open with the initial filings of the 2014 federal, state, local and foreign tax returns.

The guidance for accounting for uncertainty in income taxes prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company does not believe that it has any tax positions for which it is more likely than not that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months. Furthermore, the Company does not have any material uncertain tax positions at December 31, 2014.

As of December 31, 2014, the Company had no unrecognized tax benefits. The Company would record penalties and interest related to uncertain tax positions as a component of income tax expense, where applicable.

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Equity-Based Compensation

12 Months Ended

Dec. 31, 2014

Share-based Compensation [Abstract]

Equity-Based Compensation

Equity-Based Compensation

Impact of the Spin-off

NorthStar Realty issued equity-based awards to directors, officers, employees, consultants and advisors pursuant to the NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive Plan, as amended and restated (the “NorthStar Realty Stock Plan”), and the NorthStar Realty Executive Incentive Bonus Plan, as amended (the “NorthStar Realty Plan” and collectively the “NorthStar Realty Equity Plans”). In addition, the Company issued equity-based awards to directors, officers, employees, consultants and advisors pursuant to the NorthStar Asset Management Group Inc. 2014 Omnibus Stock Incentive Plan (the “NSAM Stock Plan”).

All of the vested and unvested equity-based awards granted by NorthStar Realty prior to the spin-off remain outstanding following the spin-off, net of any forfeitures. Holders of shares of NorthStar Realty’s common stock subject to outstanding equity awards, including LTIP units converted to common shares in connection with NorthStar Realty’s internal corporate reorganization, received an equal number of shares of the Company’s common stock in connection with the spin-off, all of which generally remain subject to the same vesting and other terms that applied prior to the spin-off. Shares of the Company’s common stock that remain subject to vesting after the effect of the spin-off are herein referred to as restricted stock. Deferred LTIP Units are equity awards representing the right to receive either LTIP units in NorthStar Realty’s successor operating partnership or, if such LTIP units are not available upon settlement of the award, shares of NorthStar Realty common stock. Other equity and equity-based awards relating to NorthStar Realty’s common stock, such as RSUs and Deferred LTIP Units, were adjusted to also relate to an equal number of shares of the Company’s common stock, but otherwise generally remain subject to the same vesting and other terms that applied prior to the spin-off. Vesting conditions for outstanding awards have been adjusted to reflect the impact of the spin-off and related transactions in terms of employment for service-based awards and total stockholder return for performance-based awards.

Following the spin-off, NorthStar Realty and the compensation committee of its board of directors (the “NorthStar Realty Compensation Committee”) continues to administer all awards issued under the NorthStar Realty Equity Plans but the Company is obligated to issue shares of the Company’s common stock or other equity awards of its subsidiaries or make cash payments in lieu thereof or with respect to dividend or distribution equivalent obligations to the extent required by such awards previously issued under the NorthStar Realty Equity Plans. These awards will continue to be governed by the NorthStar Realty Equity Plans, as applicable, and shares of the Company’s common stock issued pursuant to these awards will not be issued pursuant to, or reduce availability under the NorthStar Realty Equity Plans.

In connection with the spin-off, most of NorthStar Realty’s employees at the time of the spin-off became employees of the Company except for executive officers, employees engaged in NorthStar Realty’s loan origination business at the time of the spin-off and certain other employees that became co-employees of both the Company and NorthStar Realty.

The following summarizes the equity-based compensation plans and related expenses.

NorthStar Asset Management Equity Plans

Omnibus Stock Incentive Plan

In March 2014, the NorthStar Realty Compensation Committee approved the NSAM Stock Plan, which was subsequently adopted by the Company’s board of directors and approved by its sole stockholder at the time. The NSAM Stock Plan was administered by the NorthStar Realty Compensation Committee prior to the spin-off and is administered by the Company’s compensation committee following the spin-off. The NSAM Stock Plan provides flexibility to use various equity-based and cash incentive awards as compensation tools to motivate the Company’s workforce.

In anticipation of the spin-off, on April 3, 2014, the Company granted an aggregate of 6,230,529 RSUs to its executive officers pursuant to the NSAM Stock Plan. The RSUs vest over four years and are subject to the achievement of performance-based vesting conditions and continued employment. 40% of these RSUs are performance-based awards and were subject to the achievement of performance-based hurdles relating to CAD and capital raising of the Sponsored Companies, as well as continued employment through December 31, 2017 (“Performance RSUs”). 30% of these RSUs are market-based awards and are subject to the achievement of performance-based hurdles relating to the Company’s absolute total stockholder return and continued employment over a four-year period ended April 2, 2018 (“Absolute RSUs”). The remaining 30% of these RSUs are market-based awards and are subject to the achievement of performance-based hurdles based on the Company’s total stockholder return relative to the Russell 2000 Index and continued employment over a four-year period ended April 2, 2018 (“Relative RSUs”). With respect to these grants, the grant date fair value for the Performance RSUs, Absolute RSUs and Relative RSUs was $17.01, $10.22 and $16.21, respectively. The grant date fair value was determined using a risk-free interest rate of 1.48%. In May 2014, the Company also granted an aggregate of 1,334,891 RSUs (net of forfeitures) with substantially similar terms to certain employees pursuant to the NSAM Stock Plan. In December, 2014, the Company determined that the performance hurdle relating to the Performance RSUs was met.  With respect to these grants, the grant date fair value for the Performance RSUs, Absolute RSUs and Relative RSUs was $16.80, $9.95 and $16.29, respectively. The grant date fair value was determined using a risk-free interest rate of 1.29%. On December 31, 2014, the Performance RSUs were settled in shares of the Company’s common stock, of which 25% were vested and the remainder (in the form of restricted stock) will vest in equal installments on December 31, 2015, 2016, and 2017, subject to continued employment.  The Company retired 392,157 of the vested shares of common stock to satisfy the minimum statutory tax withholding requirements. The common stock retired to satisfy the withholding amounts was recorded as a reduction to additional paid-in capital with an offsetting payable recorded in accounts payable and accrued expenses.  On December 31, 2014, the Absolute RSUs and Relative RSUs related to the executives were settled in shares of performance common stock.  Upon vesting pursuant to the terms of the Absolute RSUs and Relative RSUs, shares of performance common stock will automatically convert into shares of common stock and the executive will be entitled to receive the distributions that would have been paid with respect to a share of common stock (for each share of performance common stock that vests) on or after the date the shares of performance common stock were initially issued.

Incentive Compensation Plan

In March 2014, the NorthStar Realty Compensation Committee approved the NorthStar Asset Management Group Inc. Executive Incentive Bonus Plan (the “NSAM Bonus Plan” and collectively, with the NSAM Stock Plan, the “NSAM Plans”), which was subsequently adopted by the Company’s board of directors and approved by its sole stockholder. The NSAM Bonus Plan establishes the general parameters of the Company’s incentive bonus program for its executive officers. Pursuant to the NSAM Bonus Plan, for each plan year, the administrator will establish two bonus pools (an annual cash bonus pool and a long-term bonus pool), award a bonus pool percentage(s) to each participant with respect to such bonus pools and establish performance goals, vesting requirements and other terms and conditions applicable to such bonuses. The NSAM Bonus Plan was administered by the NorthStar Realty Compensation Committee prior to the spin-off and is administered by the Company’s compensation committee following the spin-off.

For the 2014 NSAM Bonus Plan, the administrator established an incentive bonus program. Pursuant to an employee matters agreement entered into in connection with the spin-off, NorthStar Realty agreed to make the cash portion of any incentive payment to the Company employees for services performed in 2014 through the date of the spin-off and as a result NorthStar Realty is responsible for paying approximately 50% of the 2014 annual cash and long-term bonuses earned under the NSAM Bonus Plan. Long-term bonuses will be paid in both Company and NorthStar Realty equity-based awards, subject to performance-based and time-based vesting conditions over the four-year performance period from January 1, 2014 through December 31, 2017. Approximately 31.65% of the long-term bonuses were subject to the achievement of performance-based hurdles relating to CAD and capital raising of the Sponsored Companies in 2014 to be paid in shares of the Company’s common stock that vest 25% on each of December 31, 2014, 2015, 2016 and 2017, subject to continued employment. 18.35% of the long-term bonuses are performance-based awards to be paid in shares of performance common stock that are subject to vesting based on the achievement of performance-based hurdles relating to the Company’s absolute total stockholder return and continued employment over a four-year period. The remaining approximately 50% of long-term bonuses are being paid by NorthStar Realty. 

In connection with the 2014 NSAM Bonus Plan, the Company determined that the performance hurdle for the approximately 31.65% of the long-term bonuses to be paid in shares of the Company’s common stock was met.  On December 31, 2014, the Company paid this portion of the long-term bonus by issuing 795,107 shares of common stock, of which 25% were vested and the remainder (in the form of restricted stock) will vest in equal installments on December 31, 2015, 2016 and 2017, subject to continued employment. The Company retired 108,198 of the vested shares of common stock to satisfy the minimum statutory withholding requirements. Except for shares of common stock to be retired to satisfy tax withholding obligations, none of the shares of common stock issued with respect to this portion of the long-term bonus are permitted to be sold prior to December 31, 2017. In connection with the remainder of the long-term bonus to be paid by the Company, in February 2015, the Company issued an aggregate of 474,842 shares of performance common stock to executives, which are subject to vesting based on the Company’s absolute total stockholder return and continued employment over the four-year period ending December 31, 2017.  Upon vesting, these shares of performance common stock will automatically convert into shares of common stock and the executive will be entitled to receive the distributions that would have been paid with respect to a share of common stock (for each share of performance common stock that vests) on or after January 1, 2015.  In February 2015, the Company also granted 643,511 restricted shares to certain non-executive employees, with substantially similar terms to the executive awards subject to time based vesting conditions over three years.

NorthStar Realty Equity Plans

In connection with the spin-off, the Company issued the following related to the NorthStar Realty Equity Plans that remain outstanding as of December 31, 2014: 686,262 shares of restricted common stock which remained subject to vesting; 1,134,723 Deferred LTIP Units (net of forfeitures), of which 934,347 remained subject to vesting; and 1,968,108 RSUs, of which 1,205,213 remained subject to vesting based on performance and continued employment. The hurdle was met for the remaining 762,898 awards originally issued pursuant to NorthStar Realty’s bonus plan for 2011 and resulted in all of these RSUs vesting. To settle these RSUs, on January 1, 2015 the Company issued 49,149 shares of common stock, net of the minimum statutory tax withholding requirements, and the Company will issue 665,747 LTIP Units in a newly-formed operating partnership later in 2015.

Other Issuances

Healthcare Strategic Joint Venture

In connection with entering into the Healthcare Strategic Partnership, NorthStar Realty granted Mr. Flaherty 500,000 RSUs on January 22, 2014, adjusted to reflect NorthStar Realty’s reverse stock split, which vest on January 22, 2019, unless certain conditions are met. In connection with the spin-off, the RSUs granted to Mr. Flaherty were adjusted to also relate to an equal number of shares of the Company’s common stock. The RSUs are entitled to dividend equivalents prior to vesting and may be settled either in shares of common stock of the Company or in cash at the option of the Company. Mr. Flaherty is also entitled to incremental grants of the Company’s common stock subject to certain conditions being met pursuant to a separate contractual arrangement entered into in connection with the Healthcare Strategic Partnership. On February 2, 2015, in connection with the completion of NorthStar Healthcare’s initial public offering and the services Mr. Flaherty provides to the Healthcare Strategic Partnership, the Company issued 20,305 incremental RSU grants to Mr. Flaherty.

AHI

On December 8, 2014, the Company acquired an interest in AHI for $37.5 million in cash and $20.0 million of common stock, representing 956,462 shares. In connection with this acquisition, the Company required the seller to subject one-half of these shares to forfeiture conditions that lapse based on the continued service to AHI of its three principals, with forfeiture conditions with respect 50% of these shares lapsing two years after the closing date of the Company’s acquisition and the remaining 50% lapsing five years after the closing date. As a result of this re-vesting arrangement, $10.0 million of common stock (or 478,231 shares) subject to this arrangement is treated as a contingent consideration arrangement tied to continued employment of the AHI principals as an incentive to remain as employees of AHI.  As such, this contingent consideration arrangement is accounted for separately as a compensatory arrangement with amortization of such equity award being recorded by the Company through equity in earnings.  The AHI principals are also entitled to incremental grants of the Company’s common stock subject to certain conditions being met pursuant to a separate contractual arrangement entered into in connection with the Company’s AHI investment. For the year ended December 31, 2014, no incremental awards were issued. The Company will contribute $2.0 million in shares related to equity incentives for AHI’s employees for 2015 and 2016.

Summary

As of December 31, 2014, an aggregate of 22,500,000 shares of the Company’s common stock were reserved for the issuance of awards under the 2014 NSAM Plan, subject to equitable adjustment upon the occurrence of certain corporate events, provided that this number automatically increases each January 1 beginning on January 1, 2015 by 2% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31. Therefore, on January 1, 2015, the number of shares reserved under the plan increased by 3,858,957.

Equity-based compensation expense for the year ended December 31, 2014 includes: (i) the Company’s expense for the six months ended December 31, 2014 following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) an expense based on a carve-out attributed to the Company related to NorthStar Realty’s historical asset management business for the six months ended June 30, 2014. The allocation is based on an estimate had the Company’s asset management business has been run as an independent entity and was determined principally based on relative head count and management’s knowledge of NorthStar Realty’s operations. Equity-based compensation expense for the years ended December 31, 2013 and 2012 was prepared on the same basis as the six months ended June 30, 2014.

For the six months ended December 31, 2014, the Company recorded equity-based compensation of $37.9 million of which $21.6 million is deductible for income tax purposes. For the six months ended June 30, 2014, the Company was allocated $13.7 million of equity-based compensation expense related to the NorthStar Realty Equity Plans and the NSAM Stock Plan. For the years ended December 31, 2013 and 2012, the Company was allocated $5.2 million and $4.2 million, respectively, of equity-based compensation expense related to the NSAM Stock Plan and the NorthStar Realty Equity Plans.

The following table presents a summary of Deferred LTIP Units, whether vested or not, and unvested restricted stock from the time of the spin-off to December 31, 2014 (grants in thousands):

	Grants		Weighted Average Grant Price(2)
As of June 30, 2014, time of the spin-off	1,917		$	22.91
New grants	4,855		18.67
Vesting of restricted stock post-spin	(1,028	)	9.24
Withheld/retired shares	(500	)	18.17
Forfeited or canceled grants	(5	)	16.56
Ending Balance/Weighted Average(1)	5,239		$	22.12

__________

(1) Includes 4.1 million shares of restricted stock and 1.1 million vested and unvested Deferred LTIP Units as of December 31, 2014.

(2) Amounts have been retrospectively adjusted to reflect NorthStar Realty’s reverse stock split, which occurred prior to the spin-off on June 30, 2014.

As of December 31, 2014, equity-based compensation expense to be recognized over the remaining vesting period through April 2018 is $110.1 million, provided there are no forfeitures and excluding any mark-to-market adjustment.

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Stockholders' Equity

12 Months Ended

Dec. 31, 2014

Stockholders' Equity Note Disclosure and Earnings Per Share Disclosure [Abstract]

Shareholders' Equity

Stockholders’ Equity

Spin-off

In connection with the spin-off, NorthStar Realty distributed to its common stockholders all of the common stock of the Company in a pro rata distribution of one share of the Company common stock for each share of NorthStar Realty common stock.

Common Stock

In December 2014, in connection with the AHI Interest, the Company issued 956,462 shares of common stock, of which 478,231 is restricted common stock, resulting in an increase to additional paid-in capital in 2014 of $10.1 million, subject to certain lock-up and vesting restrictions.

Director Shares

In July 2014, the Company issued 37,500 shares of restricted common stock with a fair value at the date of grant of $0.7 million to its board of directors as part of their annual grants. The stock will generally vest over three years.

Performance Common Stock

The Company is currently authorized to issue 1.6 billion shares of capital stock, of which 500 million is designated as performance common stock, par value $.01 per share. In December 2014, upon successfully completing the spin-off prior to December 31, 2015, the Company settled 1,869,157 and 1,869,157 of Absolute RSUs and Relative RSUs, respectively, into performance common stock.

Earnings Per Share

Basic and diluted earnings per share and the average number of common shares outstanding were calculated using the number of common stock outstanding immediately following the spin-off on June 30, 2014. The Company presents common shares issued in connection with the spin-off as if it had been outstanding for all periods presented, similar to a stock split. The following table presents EPS for the years ended December 31, 2014, 2013 and 2012 (dollars and shares in thousands, except per share data):

	Years Ended December 31,
	2014			2013			2012
Numerator:
Net income (loss)	$	19,100		$	(1,995	)	$	(17,322	)
Earnings (loss) allocated to unvested participating securities	(247		)	—			—
Numerator for basic income per share	$	18,853		$	(1,995	)	$	(17,322	)
Denominator:
Weighted average number of shares of common stock	187,852			187,816			187,816
Dilutive effect of restricted common stock	849			—			—
Dilutive effect of RSUs (1)	4,883			—			—
Dilutive effect of the Deferred LTIP Units	572			—			—
Dilutive effect of the Healthcare Strategic Partnership RSUs	252			—			—
Weighted average number of diluted shares(2)	194,408			187,816			187,816
Earnings (loss) per share:
Basic	$	0.10		$	(0.01	)	$	(0.09	)
Diluted	$	0.10		$	(0.01	)	$	(0.09	)

_______________________

(1) Represents shares related to the NorthStar Realty Stock Plan.

(2) Diluted EPS excludes the effect of equity-based awards issued that were not dilutive for the periods presented. These instruments could potentially impact diluted EPS in future periods, depending on changes in the Company’s stock price and other factors.

Dividends

The Company declared its first dividend on its common stock on October 30, 2014 of $0.10 per share, which was paid on November 14, 2014 to stockholders of record as of the close of business on November 10, 2014.

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Quarterly Financial Information (Unaudited)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information

Quarterly Financial Information (Unaudited)

The following presents selected quarterly information for the years ended December 31, 2014 and 2013 (dollars in thousands):

	Three Months Ended
	December 31,			September 30,			June 30,			March 31,
	2014			2014			2014(2)			2014(2)
Asset management and other fees, related parties	$	69,438		$	56,521		$	13,110		$	8,669
Selling commission and dealer manager fees, related parties	49,553			27,149			19,313			14,548
Commission expense	47,039			25,691			18,138			13,560
Transaction costs	—			—			21,926			2,550
Total general and administrative	43,500			32,719			14,850			15,503
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax (benefit) expense	27,408			24,905			(22,247		)	(8,305		)
Equity in earnings (losses) of unconsolidated ventures	(965		)	(74		)	—			—
Income (loss) before income taxes	26,443			24,831			(22,247		)	(8,305		)
Income tax (expense) benefit	4,465			(6,087		)	—			—
Net income (loss)	30,908			18,744			(22,247		)	(8,305		)
Earnings (loss) per share:(1)
Basic	$	0.16		$	0.10		$	(0.12	)	$	(0.04	)
Diluted	$	0.16		$	0.10		$	(0.12	)	$	(0.04	)

__________________

(1) The total for the year may differ from the sum of the quarters as a result of weighting.

(2) Represents a carve-out of revenues and expenses attributed to the Company related to NorthStar Realty’s historical asset management business.

	Three Months Ended(2)
	December 31,		September 30,		June 30,			March 31,
	2013		2013		2013			2013
Asset management and other fees, related parties	$	9,556	$	6,782	$	5,787		$	4,508
Selling commission and dealer manager fees, related parties	11,358		1,639		32,635			16,940
Commission expense	10,821		1,629		29,506			15,369
Total general and administrative	7,600		5,579		11,397			8,297
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax (benefit) expense	864		1,618		(2,348		)	(2,129		)
Income (loss) before income taxes	864		1,618		(2,348		)	(2,129		)
Income tax (expense) benefit	—		—		—			—
Net income (loss)	$	864	$	1,618	$	(2,348	)	$	(2,129	)
Earnings (loss) per share:(1)
Basic	$	0.01	$	0.01	$	(0.01	)	$	(0.01	)
Diluted	$	0.01	$	0.01	$	(0.01	)	$	(0.01	)

_________________

(1) The total for the year may differ from the sum of the quarters as a result of weighting.

(2) Represents a carve-out of revenues and expenses attributed to the Company related to NorthStar Realty’s historical asset management business.

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Management Agreements and Managed Companies - Sponsored Companies (Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 04, 2014
Related Party Transaction [Line Items]
Sponsor fees	$ 65,000,000	$ 26,600,000	$ 8,100,000
Projected proceeds from public offering				1,000,000,000.0
NorthStar Realty Finance Corporation
Related Party Transaction [Line Items]
Commitment to invest in initial public offering	10,000,000.0
Commitment to invest as distribution support	10,000,000.0
Number of new sponsored companies per year	5
Class A Common Stock | NorthStar/RXR New York Metro
Related Party Transaction [Line Items]
Commitment to purchase common stock	$ 10,000,000.0
Commitment to purchase common stock period	2 years
Class A Common Stock | NorthStar Realty Finance Corporation
Related Party Transaction [Line Items]
Commitment to purchase common stock (percent)	75.00%
Class A Common Stock | RXR Realty
Related Party Transaction [Line Items]
Commitment to purchase common stock (percent)	25.00%

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Stockholders' Equity (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended	12 Months Ended	1 Months Ended
	Oct. 30, 2014	Dec. 31, 2014	Jul. 31, 2014	Dec. 31, 2014	Dec. 31, 2013
Director Shares [Abstract]
Award vesting period		4 years
Performance Stock [Abstract]
Number of capital units authorized		1,600,000,000		1,600,000,000
Number of performance common shares authorized		1,000,000,000		1,000,000,000	3,000
Common stock, par value		$ 0.01		0.01	$ 0.01
Dividends [Abstract]
Dividends per share of common stock	$ 0.10
Restricted Stock
Director Shares [Abstract]
Number of restricted shares issued to directors			37,500
Fair value of restricted common shares at grant date			$ 0.7
Award vesting period			3 years
Performance Stock
Performance Stock [Abstract]
Number of performance common shares authorized		500,000,000		500,000,000
Common stock, par value		$ 0.01		0.01
Absolute TSR RSUs
Common Stock [Abstract]
Number of common shares issued				1,869,157
Relative TSR RSUs
Common Stock [Abstract]
Number of common shares issued				1,869,157
American Healthcare Investors, LLC | Common Stock
Common Stock [Abstract]
Number of common shares issued				956,462
American Healthcare Investors, LLC | Restricted Stock
Common Stock [Abstract]
Number of common shares issued				478,231
Additional Paid-in Capital | American Healthcare Investors, LLC | Restricted Stock
Common Stock [Abstract]
Increase to additional paid-in capital		$ 10.1

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Management Agreements and Managed Companies (Tables)

12 Months Ended

Dec. 31, 2014

Management Agreements [Abstract]

Schedule of Asset Management and Other Fees

The following table presents a summary of the fee arrangements with the current Sponsored Companies:

	NorthStar	NorthStar	NorthStar	NorthStar/RXR
	Income	Healthcare	Income II	New York Metro(9)
Offering amount(1)	$1.1 billion	$1.8 billion(8)	$1.65 billion	$2.0 billion
Total raised through February 24, 2015 (2)	$1.2 billion	$1.1 billion	$385 million	(10)
Primary strategy	CRE Debt	Healthcare Equity and Debt	CRE Debt	New York City CRE Equity and Debt
Primary offering period	Completed July 2013	Ends February 2017(8)	Ends May 2015(11)	Ends February 2017(11)
Asset Management and Other Fees:
Asset management fees (3)	1.25% of assets	1.00% of assets	1.25% of assets	1.25% of assets
Acquisition fees (4)	1.00% of investment	2.25% for real estate properties 1.00% of other investments	1.00% of investment	2.25% for real estate properties 1.00% of other investments
Disposition fees (5)	1.00% of sales price	2.00% for real estate properties 1.00% of sales price for debt investments	1.00% of sales price	2.00% for real estate properties 1.00% of sales price for debt investments
Incentive payments (6)	15.00% of net cash flows after an 8.00% return	15.00% of net cash flows after a 6.75% return(7)	15.00% of net cash flows after a 7.00% return	15.00% of net cash flows after a 6.00% return

__________________

(1) Represents amount of shares registered to offer pursuant to each Sponsored Company’s public offering and includes the follow-on public offering of up to $700 million for NorthStar Healthcare.

(2) Includes capital raised through the dividend reinvestment plan.

(3) Assets represent principal amount funded or allocated for debt investments originated or acquired and the cost of all other investments, including expenses and any financing attributable to such investments, less any principal received on debt and securities investments (or the Company’s proportionate share thereof in the case of an investment made in a joint venture).

(4) Calculated based on the amount funded or allocated by the Sponsored Companies to originate or acquire investments, including acquisition expenses and any financing attributable to such investments (or the proportionate share thereof in the case of an equity investment made through a joint venture).

(5) Calculated based on contractual sales price of each investment sold.

(6) The Company is entitled to receive distributions equal to 15% of net cash flow of the respective Sponsored Company, whether from continuing operations, repayment of loans, disposition of assets or otherwise, but only after stockholders have received, in the aggregate, cumulative distributions equal to their invested capital plus the respective cumulative, non-compounded annual pre-tax return (as noted in the table above) on such invested capital.

(7) The Healthcare Strategic Partnership is entitled to the incentive fees earned from managing NorthStar Healthcare, of which the Company earn its proportionate interest (refer to Note 5).

(8) NorthStar Healthcare successfully completed its public offering on February 2, 2015 by raising $1.1 billion in capital. The Company began raising capital for NorthStar Healthcare’s follow-on public offering at the end of February 2015.

(9) Any asset management and other fees incurred by NorthStar/RXR New York Metro will be shared between the Company and RXR Realty as co-sponsors.

(10) The Company expects to begin raising capital for NorthStar/RXR New York Metro in 2015.

(11) Offering period subject to extension as determined by the board of directors of each company.

Schedule of Expense Arrangements with Sponsored Companies

The following table presents a summary of the expense arrangements with the current Sponsored Companies:

	NorthStar Income	NorthStar Healthcare	NorthStar Income II	NorthStar/RXR New York Metro
Organization and offering costs (1)	$11.0 million (2)	$22.5 million, or 1.5% of the proceeds expected to be raised from the offering  (4)	$24.8 million, or 1.5% of the proceeds expected to be raised from the offering	$30.0 million, or 1.5% of the proceeds expected to be raised from the offering
Operating costs (3)	Greater of 2.0% of its average invested assets or 25.0% of its net income	Greater of 2.0% of its average invested assets or 25.0% of its net income	Greater of 2.0% of its average invested assets or 25.0% of its net income	Greater of 2.0% of its average invested assets or 25.0% of its net income

__________________

(1) Represents reimbursement for organization and offering costs paid on behalf of the Sponsored Companies in connection with their respective offerings. The Company is facilitating the payment of organization and offering costs on behalf of the Sponsored Companies. The Company records these costs as Receivables, related parties on its consolidated balance sheets until repaid. The Sponsored Companies record these costs as either advisory fees-related parties on their consolidated statements of operations or as a cost of capital in their consolidated statements of equity.

(2) Represents the total expense allocation for organization and offering costs through the end of the offering period in July 2013.

(3) Calculated based on the four preceding fiscal quarters not to exceed the greater of: (i) 2.0% of each Sponsored Company’s average invested assets; or (ii) 25.0% of each Sponsored Company’s 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.

(4) Excludes shares being offered pursuant to the dividend reinvestment plan.

Schedule of Related Party Receivables

The following table presents receivables, related parties on the consolidated balance sheets as of December 31, 2014 and 2013 (dollars in thousands):

	December 31,
	2014			2013
NorthStar Realty:(1)
Base management fee	$	41,395		N/A
Incentive fee	2,000			N/A
Other	4,019			N/A
Subtotal NorthStar Realty	47,414			N/A
Sponsored Companies:
Fees	245			2,252
Other receivables	29,319			20,894
Subtotal Sponsored Companies	29,564			23,146
Other	648			41
Total	$	77,626	(2)	$	23,187

________________________

(1) The management contract with NorthStar Realty commenced on July 1, 2014, and as such, there were no management fees earned for the six months ended June 30, 2014 and year ended December 31, 2013.

(2) As of December 31, 2014 and 2013, the Company had unreimbursed costs from the Sponsored Companies of $29.3 million and $20.9 million respectively, recorded as receivables, related parties on the combined consolidated balance sheets. Subsequent to December 31, 2014, the Company received $47.4 million from NorthStar Realty.

Schedule of Net Commission Revenue

The following table summarizes selling commission and dealer manager fees, commission expense and net commission income for the years ended December 31, 2014, 2013 and 2012 (dollar in thousands):

	Years Ended
	2014		2013		2012
Selling commission and dealer manager fees	$	110,563	$	62,572	$	42,385
Commission expense	104,428		57,325		38,506
Net commission income(1)	$	6,135	$	5,247	$	3,879

________________________

(1)    Excludes direct expenses of NorthStar Securities.

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Quarterly Financial Information (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information

The following presents selected quarterly information for the years ended December 31, 2014 and 2013 (dollars in thousands):

	Three Months Ended
	December 31,			September 30,			June 30,			March 31,
	2014			2014			2014(2)			2014(2)
Asset management and other fees, related parties	$	69,438		$	56,521		$	13,110		$	8,669
Selling commission and dealer manager fees, related parties	49,553			27,149			19,313			14,548
Commission expense	47,039			25,691			18,138			13,560
Transaction costs	—			—			21,926			2,550
Total general and administrative	43,500			32,719			14,850			15,503
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax (benefit) expense	27,408			24,905			(22,247		)	(8,305		)
Equity in earnings (losses) of unconsolidated ventures	(965		)	(74		)	—			—
Income (loss) before income taxes	26,443			24,831			(22,247		)	(8,305		)
Income tax (expense) benefit	4,465			(6,087		)	—			—
Net income (loss)	30,908			18,744			(22,247		)	(8,305		)
Earnings (loss) per share:(1)
Basic	$	0.16		$	0.10		$	(0.12	)	$	(0.04	)
Diluted	$	0.16		$	0.10		$	(0.12	)	$	(0.04	)

__________________

(1) The total for the year may differ from the sum of the quarters as a result of weighting.

(2) Represents a carve-out of revenues and expenses attributed to the Company related to NorthStar Realty’s historical asset management business.

	Three Months Ended(2)
	December 31,		September 30,		June 30,			March 31,
	2013		2013		2013			2013
Asset management and other fees, related parties	$	9,556	$	6,782	$	5,787		$	4,508
Selling commission and dealer manager fees, related parties	11,358		1,639		32,635			16,940
Commission expense	10,821		1,629		29,506			15,369
Total general and administrative	7,600		5,579		11,397			8,297
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax (benefit) expense	864		1,618		(2,348		)	(2,129		)
Income (loss) before income taxes	864		1,618		(2,348		)	(2,129		)
Income tax (expense) benefit	—		—		—			—
Net income (loss)	$	864	$	1,618	$	(2,348	)	$	(2,129	)
Earnings (loss) per share:(1)
Basic	$	0.01	$	0.01	$	(0.01	)	$	(0.01	)
Diluted	$	0.01	$	0.01	$	(0.01	)	$	(0.01	)

_________________

(1) The total for the year may differ from the sum of the quarters as a result of weighting.

(2) Represents a carve-out of revenues and expenses attributed to the Company related to NorthStar Realty’s historical asset management business.

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Equity-Based Compensation - Summary (Narrative) (Details) (USD $)	6 Months Ended	12 Months Ended				6 Months Ended	0 Months Ended
	Dec. 31, 2014	Dec. 31, 2014		Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2014	Jan. 01, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ 37,900,000	$ 51,650,000	[1]	$ 5,177,000	$ 4,224,000
Deductible compensation expense	21,600,000
Equity-based compensation expense not yet recognized	110,100,000	110,100,000
NorthStar Realty Finance Corporation | Omnibus Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense						$ 13,700,000
Common Stock | Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares reserved for future awards	22,500,000	22,500,000
Percent of increase in shares outstanding		2.00%
Subsequent Event | Common Stock | Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common Stock, Increase (Decrease) in Capital Shares Reserved For Future Issuance							3,858,957

[1] The combined consolidated financial statements for the year ended December 31, 2014 include: (i) the Company’s results of operations for the six months ended December 31, 2014, which represents the Company’s results of operations following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) the Company’s results of operations for the six months ended June 30, 2014 which represents a carve-out of revenues and expenses attributable to the Company related to NorthStar Realty’s historical asset management business. The Company historical financial information for the years ended December 31, 2013 and 2012 was prepared on the same basis as the six months ended June 30, 2014. As a result, results of operations for the year ended December 31, 2014 may not be comparative to the Company’s results of operations reported for the prior periods presented.

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Related Party Arrangements - NorthStar Realty (Narrative) (Details) (Revolving Credit Facility, NorthStar Realty Finance Corporation, USD $)	12 Months Ended
	Dec. 31, 2014
Related Party Transaction [Line Items]
Borrowing capacity	$ 250,000,000
Term of financing option	5 years
Financial covenant, unrestricted cash or cash equivalents amount	$ 100,000,000
LIBOR
Related Party Transaction [Line Items]
Basis spread on variable rate (percent)	3.50%

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Combined Consolidated Statements of Equity (USD $) In Thousands, except Share data, unless otherwise specified	Total	Performance Stock	Common Stock	Additional Paid-in Capital	Retained Earnings (Accumulated Deficit)
Beginning Balance at Dec. 31, 2011	$ 6,813	$ 0	$ 0	$ 64,626	$ (57,813)
Beginning Balance (shares) at Dec. 31, 2011		0	0
Increase (Decrease) in Stockholders' Equity
Capital contribution of NorthStar Realty	28,384			28,384
Net income (loss)	(17,322)				(17,322)
Ending Balance at Dec. 31, 2012	17,875	0	0	93,010	(75,135)
Ending Balance (shares) at Dec. 31, 2012		0	0
Increase (Decrease) in Stockholders' Equity
Capital contribution of NorthStar Realty	12,488			12,488
Net income (loss)	(1,995)				(1,995)
Ending Balance at Dec. 31, 2013	28,368	0	0	105,498	(77,130)
Beginning Balance (shares) at Dec. 31, 2013		0	0
Increase (Decrease) in Stockholders' Equity
Capital contribution of NorthStar Realty (shares)			188,597,000
Capital contribution of NorthStar Realty	121,209		1,886	119,323
Amortization of equity-based compensation	51,519			51,519
Issuance of common stock to directors (shares)			38,000
Issuance of common stock to transactions (refer to Note 4) (shares)			956,000
Issuance of common stock to transactions (refer to Note 4)	10,310		10	10,300
Issuance of common stock relating to equity-based compensation, net of forfeitures (shares)			827,000
Issuance of common stock relating to equity-based compensation, net of forfeitures			8	(8)
Settlement of RSUs to common stock (refer to Note 7) (shares)			3,030,000
Settlement of RSUs to common stock (refer to Note 7)			31	(31)
Settlement of RSUs to performance common stock (refer to Note 8) (shares)		3,738,000
Settlement of RSUs to performance common stock (refer to Note 8)		37		(37)
Dividends on common stock, Deferred LTIPs and RSUs	(19,063)				(19,063)
Tax withholding related to vesting of RSUs (shares)			(500,000)
Tax withholding related to vesting of RSUs	(11,294)		(5)	(11,289)
Excess tax benefit from equity-based compensation	1,599			1,599
Net income (loss)	19,100				19,100
Ending Balance at Dec. 31, 2014	$ 201,748	$ 37	$ 1,930	$ 276,874	$ (77,093)
Ending Balance (shares) at Dec. 31, 2014		3,738,000	192,948,000

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Investments in Unconsolidated Ventures

12 Months Ended

Dec. 31, 2014

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Ventures

Investments in Unconsolidated Ventures

The following is a description of the Company’s investments in unconsolidated ventures, all of which are accounted for under the equity method.

Distribution Finance Interest

In June 2014, the Company acquired the Distribution Finance Interest in Distribution Finance Corporation (“Distribution Finance”), a crowd funding technology platform company, for $4.0 million. In addition to earning a proportionate share of net income, the Company will also earn a net 0.50% fee on any syndicated investments, a minimum base management fee of 1.0% and an incentive fee of 15.0% on contractually defined excess cash flows. As of December 31, 2014, the carrying value of the investment was $3.7 million. From closing to December 31, 2014, the Company recognized equity in losses of $0.3 million related to legal fees incurred by Distribution Finance.

AHI Interest

In December 2014, the Company acquired the AHI Interest in AHI Newco, LLC (“AHI Ventures”), a direct wholly-owned subsidiary of American Healthcare Investors LLC (“AHI”) for $57.5 million, consisting of $37.5 million in cash and $20.0 million of the Company’s common stock, subject to certain lock-up and vesting restrictions ($10.0 million of the Company's common stock vested immediately). The Company’s investment in AHI Ventures is structured as a joint venture between the Company, the principals of AHI and James F. Flaherty III. The members of AHI are entitled to receive certain distributions of operating cash flow and certain promote fees in accordance with the allocations set forth in the joint venture agreement. As of December 31, 2014, the carrying value of the investment was $50.8 million. From closing to December 31, 2014, the Company recognized equity in losses of $0.7 million, which includes operating income of $1.2 million, offset by $0.5 million of non-cash depreciation expense and equity-based compensation expense.

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Segment Reporting (Details) (USD $)	3 Months Ended															6 Months Ended		12 Months Ended						2 Months Ended
	Dec. 31, 2014		Sep. 30, 2014	Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2014		Dec. 31, 2014 segment		Dec. 31, 2013		Dec. 31, 2012		Feb. 26, 2015
Segment Reporting Information [Line Items]
Number of Reportable Segments																		5
Asset management and other fees, related parties	$ 69,438,000		$ 56,521,000	$ 13,110,000	[1]	$ 8,669,000	[1]	$ 9,556,000	[1]	$ 6,782,000	[1]	$ 5,787,000	[1]	$ 4,508,000	[1]			$ 147,738,000	[2],[3]	$ 26,633,000	[2]	$ 8,112,000	[2]
Selling commission and dealer manager fees, related parties	49,553,000		27,149,000	19,313,000	[1]	14,548,000	[1]	11,358,000	[1]	1,639,000	[1]	32,635,000	[1]	16,940,000	[1]			110,563,000	[3]	62,572,000		42,385,000
Commission expense																		104,428,000		57,325,000		38,506,000
Salaries and related expense																		37,205,000	[3]	21,344,000		20,217,000
Equity-based compensation expense																37,900,000		51,650,000	[3]	5,177,000		4,224,000
Other general and administrative expenses																		17,717,000	[3]	6,352,000		4,846,000
Equity in earnings (losses) of unconsolidated ventures	(965,000)		(74,000)	0	[1]	0	[1]											(1,039,000)	[3]	0		0
Income tax (benefit) expense	(4,465,000)		6,087,000	0	[1]	0	[1]	0	[1]	0	[1]	0	[1]	0	[1]			1,622,000
Net income (loss)	30,908,000		18,744,000	(22,247,000)	[1]	(8,305,000)	[1]	864,000	[1]	1,618,000	[1]	(2,348,000)	[1]	(2,129,000)	[1]			19,100,000	[3]	(1,995,000)		(17,322,000)
Balance Sheet:
Total assets	266,987,000							31,709,000								266,987,000		266,987,000		31,709,000		20,257,000
NorthStar Realty Finance Corporation
Segment Reporting Information [Line Items]
Asset management and other fees, related parties																		82,759,000	[4]	0	[4]	0	[4]
Selling commission and dealer manager fees, related parties																		0	[4]	0	[4]	0	[4]
Commission expense																		0	[4]	0	[4]	0	[4]
Salaries and related expense																		0	[4]	0	[4]	0	[4]
Equity-based compensation expense																		0	[4]	0	[4]	0	[4]
Other general and administrative expenses																		0	[4]	0	[4]	0	[4]
Equity in earnings (losses) of unconsolidated ventures																		0	[4]
Income tax (benefit) expense																		0	[4]
Net income (loss)																		82,759,000	[4]	0	[4]	0	[4]
Balance Sheet:
Total assets	60,909,000	[4],[5]						0	[4]							60,909,000	[4],[5]	60,909,000	[4],[5]	0	[4]	0	[4]
Sponsored Companies
Segment Reporting Information [Line Items]
Asset management and other fees, related parties																		64,979,000		26,633,000		8,112,000
Selling commission and dealer manager fees, related parties																		0		0		0
Commission expense																		0		0		0
Salaries and related expense																		0		0		0
Equity-based compensation expense																		0		0		0
Other general and administrative expenses																		0		0		0
Equity in earnings (losses) of unconsolidated ventures																		0
Income tax (benefit) expense																		0
Net income (loss)																		64,979,000		26,617,000		8,112,000
Balance Sheet:
Total assets	27,147,000	[5]						23,149,000	[6]							27,147,000	[5]	27,147,000	[5]	23,149,000	[6]	11,425,000	[6]
Broker Dealer
Segment Reporting Information [Line Items]
Asset management and other fees, related parties																		0	[7]	0	[7]	0	[7]
Selling commission and dealer manager fees, related parties																		110,563,000	[7]	62,572,000	[7]	42,385,000	[7]
Commission expense																		104,428,000	[7]	57,325,000	[7]	38,506,000	[7]
Salaries and related expense																		6,831,000	[7]	5,731,000	[7]	4,825,000	[7]
Equity-based compensation expense																		0	[7]	0	[7]	0	[7]
Other general and administrative expenses																		8,126,000	[7]	5,977,000	[7]	3,731,000	[7]
Equity in earnings (losses) of unconsolidated ventures																		0	[7]
Income tax (benefit) expense																		0	[7]
Net income (loss)																		(8,916,000)	[7]	(6,535,000)	[7]	(4,742,000)	[7]
Balance Sheet:
Total assets	17,868,000	[7]						8,377,000	[7]							17,868,000	[7]	17,868,000	[7]	8,377,000	[7]	8,610,000	[7]
Investment in Asset Management Businesses
Segment Reporting Information [Line Items]
Asset management and other fees, related parties																		0
Selling commission and dealer manager fees, related parties																		0
Commission expense																		0
Salaries and related expense																		0
Equity-based compensation expense																		0
Other general and administrative expenses																		0
Equity in earnings (losses) of unconsolidated ventures																		(1,039,000)
Income tax (benefit) expense																		0
Net income (loss)																		(1,039,000)
Balance Sheet:
Total assets	54,480,000	[8]														54,480,000	[8]	54,480,000	[8]
Corporate/Other
Segment Reporting Information [Line Items]
Asset management and other fees, related parties																		0		0		0
Selling commission and dealer manager fees, related parties																		0		0		0
Commission expense																		0		0		0
Salaries and related expense																		30,374,000		15,613,000		15,392,000
Equity-based compensation expense																		51,650,000		5,177,000		4,224,000
Other general and administrative expenses																		9,591,000		375,000		1,115,000
Equity in earnings (losses) of unconsolidated ventures																		0
Income tax (benefit) expense																		1,622,000
Net income (loss)																		(118,683,000)		(22,077,000)		(20,692,000)
Balance Sheet:
Total assets	106,583,000							183,000								106,583,000		106,583,000		183,000		222,000
Subsequent Event
Balance Sheet:
Reimbursement revenue																								$ 47,400,000

[1] Represents a carve-out of revenues and expenses attributed to the Company related to NorthStar Realty’s historical asset management business.

[2] The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 1).

[3] The combined consolidated financial statements for the year ended December 31, 2014 include: (i) the Company’s results of operations for the six months ended December 31, 2014, which represents the Company’s results of operations following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) the Company’s results of operations for the six months ended June 30, 2014 which represents a carve-out of revenues and expenses attributable to the Company related to NorthStar Realty’s historical asset management business. The Company historical financial information for the years ended December 31, 2013 and 2012 was prepared on the same basis as the six months ended June 30, 2014. As a result, results of operations for the year ended December 31, 2014 may not be comparative to the Company’s results of operations reported for the prior periods presented.

[4] The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 3).

[5] Primarily represents receivables, related parties and cash. Subsequent to December 31, 2014, the Company received $47.4 million of reimbursements from the Managed Companies.

[6] Primarily represents receivables, related parties.

[7] Direct general and administrative expenses incurred by the broker dealer.

[8] Represents investments in unconsolidated ventures.

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Segment Reporting (Tables)

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Schedule of segment reporting information

The following tables present segment reporting for the years ended December 31, 2014, 2013 and 2012 (dollars in thousands):

Statement of Operations:
Year ended December 31, 2014	NorthStar Realty (1)			Sponsored Companies			Broker Dealer (2)			Investment in Asset Managers				Corporate/Other			Total
Asset management and other fees, related parties	$	82,759		$	64,979		$	—		$	—			$	—		$	147,738
Selling commission and dealer manager fees, related parties	—			—			110,563			—				—			110,563
Commission expense	—			—			104,428			—				—			104,428
Salaries and related expense	—			—			6,831			—				30,374			37,205
Equity-based compensation expense	—			—			—			—				51,650			51,650
Other general and administrative expenses	—			—			8,126			—				9,591			17,717
Equity in earnings (losses) of unconsolidated ventures	—			—			—			(1,039		)		—			(1,039		)
Income tax (benefit) expense	—			—			—			—				1,622			1,622
Net income (loss)	82,759			64,979			(8,916		)	(1,039		)		(118,683		)	19,100
Balance Sheet:
December 31, 2014
Total assets	$	60,909	(3)	$	27,147	(3)	$	17,868		$	54,480		(4)	$	106,583		$	266,987

_______________    

(1) The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 3).

(2) Direct general and administrative expenses incurred by the broker dealer.

(3) Primarily represents receivables, related parties and cash. Subsequent to December 31, 2014, the Company received $47.4 million of reimbursements from the Managed Companies.

(4) Represents investments in unconsolidated ventures.

Statement of Operations:
Year ended December 31, 2013	NorthStar Realty (1)		Sponsored Companies			Broker Dealer (2)			Corporate/Other			Total
Asset management and other fees, related parties	$	—	$	26,633		$	—		$	—		$	26,633
Selling commission and dealer manager fees, related parties	—		—			62,572			—			62,572
Commission expense	—		—			57,325			—			57,325
Salaries and related expense	—		—			5,731			15,613			21,344
Equity-based compensation expense	—		—			—			5,177			5,177
Other general and administrative expenses	—		—			5,977			375			6,352
Net income (loss)	—		26,617			(6,535		)	(22,077		)	(1,995		)
Balance Sheet:
December 31, 2013:
Total assets	$	—	$	23,149	(3)	$	8,377		$	183		$	31,709

_______________

(1) The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 3).

(2) Direct general and administrative expenses incurred by the broker dealer.

(3) Primarily represents receivables, related parties.

Statement of Operations:
Year ended December 31, 2012	NorthStar Realty (1)		Sponsored Companies			Broker Dealer (2)			Corporate/Other			Total
Asset management and other fees, related parties	$	—	$	8,112		$	—		$	—		$	8,112
Selling commission and dealer manager fees, related parties	—		—			42,385			—			42,385
Commission expense	—		—			38,506			—			38,506
Salaries and related expense	—		—			4,825			15,392			20,217
Equity-based compensation expense	—		—			—			4,224			4,224
Other general and administrative expenses	—		—			3,731			1,115			4,846
Net income (loss)	—		8,112			(4,742		)	(20,692		)	(17,322		)
Balance Sheet:
December 31, 2012:
Total assets	$	—	$	11,425	(3)	$	8,610		$	222		$	20,257

_______________

(1) The Company began earning fees on July 1, 2014, in connection with the management agreement with NorthStar Realty (refer to Note 3).

(2) Direct general and administrative expenses incurred by the broker dealer.

(3) Primarily represents receivables, related parties

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Management Agreements and Managed Companies - Summary of Net Commission Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended														12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Management Agreements [Abstract]
Selling commission and dealer manager fees, related parties	$ 49,553	$ 27,149	$ 19,313	[1]	$ 14,548	[1]	$ 11,358	[1]	$ 1,639	[1]	$ 32,635	[1]	$ 16,940	[1]	$ 110,563	[2]	$ 62,572		$ 42,385
Commission expense	47,039	25,691	18,138	[1]	13,560	[1]	10,821	[1]	1,629	[1]	29,506	[1]	15,369	[1]	104,428	[2]	57,325		38,506
Net commission income															$ 6,135	[3]	$ 5,247	[3]	$ 3,879	[3]

[1] Represents a carve-out of revenues and expenses attributed to the Company related to NorthStar Realty’s historical asset management business.

[2] The combined consolidated financial statements for the year ended December 31, 2014 include: (i) the Company’s results of operations for the six months ended December 31, 2014, which represents the Company’s results of operations following the spin-off of NorthStar Realty’s historical asset management business on June 30, 2014; and (ii) the Company’s results of operations for the six months ended June 30, 2014 which represents a carve-out of revenues and expenses attributable to the Company related to NorthStar Realty’s historical asset management business. The Company historical financial information for the years ended December 31, 2013 and 2012 was prepared on the same basis as the six months ended June 30, 2014. As a result, results of operations for the year ended December 31, 2014 may not be comparative to the Company’s results of operations reported for the prior periods presented.

[3] Excludes direct expenses of NorthStar Securities.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Schedule of Noncurrent Assets

The following table presents a summary of other assets and accounts payable and accrued expenses as of December 31, 2014 and 2013 (dollars in thousands):

	December 31,
	2014(1)		2013
Other assets:
Prepaid income taxes	$	6,656	$	—
Furniture, fixtures and equipment, net (2)	4,629		295
Deferred tax asset	3,155		—
Prepaid expenses	2,279		547
Security deposits	2,232		34
Due from participating broker-dealers	1,965		—
Pending deal costs	1,045		—
Other	531		109
Total	$	22,492	$	985

__________________

(1) Includes fixed assets, tenant improvements and deposits related to leased offices that were transferred to the Company at the time of the spin-off on June 30, 2014.

(2) The Company recorded depreciation expense of $0.9 million and $0.1 million for the years ended December 31, 2014 and 2013, respectively.

Schedule of Accounts Payable and Accrued Liabilities

	December 31,
	2014		2013
Accounts payable and accrued expenses:
Accrued bonus	$	25,911	$	678
Accrued tax withholding (1)	11,938		—
Accrued transaction expense	5,205		—
Income tax payable	3,118		—
Accrued payroll	1,400		39
Accrued professional fees	740		54
Deferred tax liability	60		—
Other	4,703		602
Total	$	53,075	$	1,373

__________________

(1) Represents withholding tax related to vesting and net settlement of restricted stock units.