NorthStar Realty Europe Corp. (Form: S-11/A, Received: 09/29/2015 06:11:18)

As filed with the Securities and Exchange Commission on September 29 , 2015

Registration No. 333-205440

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________

Amendment No. 2

FORM S-11

FOR REGISTRATION

UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES

____________________________________

NORTHSTAR REALTY EUROPE CORP.

(Exact Name of Registrant as Specified in Governing Instruments)



	399 Park Avenue, 18th Floor New York, New York 10022 (212) 547-2600

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant ’ s Principal Executive Offices)

____________________________________

c/o Trevor K. Ross , Esq.

General Counsel and Secretary

NorthStar Realty Europe Corp.

399 Park Avenue, 18th Floor

New York, New York 10022
(212) 547-2600

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

____________________________________

Copies to:



	Robert W. Downes Sullivan & Cromwell LLP 125 Broad Street New York, New York 10004 (212) 558-4000

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Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.

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.



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

CALCULATION OF REGISTRATION FEE



Title of Securities Being Registered	Proposed Maximum Aggregate Offering Price ⁽¹⁾⁽²⁾	Amount of Registration Fee ⁽³⁾
Common Stock, $0.01 par value per share	$960,685,096	$111,631.61


(1)	This Registration Statement relates to an indeterminate amount of shares of common stock, par value $0.01 per share, of NorthStar Realty Europe Corp., or NorthStar Europe, that will be distributed pursuant to a spin-off transaction to the holders of common stock, par value $0.01 per share, of NorthStar Realty Finance Corp.

(2)

Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(f)(2) of the Securities Act of 1933, based on the estimated book value of the common stock of NorthStar Europe at the latest practicable date prior to the filing of the Registration Statement, which has been computed based on estimated balances for the European Real Estate Business (as defined herein) to be contributed to NorthStar Europe, in each case as of June 30, 2015.

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(3)	$133,354 was previously paid with the initial filing of our Registration Statement on Form S-11 on July 2, 2015. Accordingly, no additional amount is being paid herewith upon filing of this Amendment.

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The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date or dates as the Commission, acting pursuant to said Section 8(a), may determine.

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Preliminary Prospectus Subject to Completion, Dated September 29 , 2015

The information set forth in this preliminary prospectus is not complete and may be changed. We may not distribute these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

NorthStar Realty Europe Corp.

Shares Common Stock

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This prospectus is being furnished in connection with the distribution by NorthStar Realty Finance Corp., a Maryland corporation, or NorthStar Realty, to holders of NorthStar Realty’s common stock, par value $0.01 per share, of all the outstanding shares of common stock, par value $0.01 per share, or our Common Stock, of NorthStar Realty Europe Corp., or NorthStar Europe, the Company or we. We will complete a series of transactions with NorthStar Realty pursuant to which we will own the European real estate business (excluding European healthcare properties) currently owned by NorthStar Realty, as described in this prospectus.

Shares of our Common Stock will be distributed to holders of shares of NorthStar Realty common stock of record as of the close of business, Eastern Time, on , 2015, which will be the record date. Each such holder will receive one share of our Common Stock for every share(s) of NorthStar Realty common stock held on the record date. No fractional shares of the Company will be issued in connection with the distribution. Holders of NorthStar Realty common stock that would otherwise be entitled to fractional shares of the Company as a result of the distribution will receive a check for the cash value thereof. The distribution will be effective at 11:59 p.m. Eastern Time on , 2015.

We intend to elect to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes beginning with the year ending December 31, 2015. Refer to “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution” for a discussion of the federal income tax consequences of the distribution. To assist us in qualifying as a REIT, among other purposes, stockholders are generally restricted from owning more than 9.8% in value or in number of shares, whichever is more restrictive, of the aggregate of our outstanding shares of our Common Stock, or more than 9.8% in the value of the aggregate of the outstanding shares of our stock. See “Description of Capital Stock — Restrictions on Transfer and Ownership of our Common Stock.”

No stockholder approval of the distribution is required or sought. We are not asking you for a proxy and you are requested not to send us a proxy. NorthStar Realty stockholders will not be required to pay for the shares of our Common Stock to be received by them in the distribution or to surrender or to exchange shares of NorthStar Realty common stock in order to receive our Common Stock or to take any other action in connection with the distribution. There is currently no trading market for our Common Stock. We expect to list our Common Stock on the New York Stock Exchange, or NYSE, under the symbol “NRE.”

IN REVIEWING THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED UNDER THE CAPTION “RISK FACTORS” BEGINNING ON PAGE 17 .

WE ARE AN EMERGING GROWTH COMPANY AS DEFINED IN THE JUMPSTART OUR BUSINESS STARTUPS ACT OF 2012. REFER TO “RISK FACTORS — RISKS RELATED TO THE SPIN-OFF— THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO US AS AN ‘EMERGING GROWTH COMPANY’ MAY MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS” AND “BUSINESS — EMERGING GROWTH COMPANY STATUS.”

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Stockholders of NorthStar Realty with inquiries related to the distribution should contact NorthStar Realty’s transfer agent, American Stock Transfer & Trust Company, LLC at 1-800-937-5449.

The date of this prospectus is , 2015.

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	Page
Introduction	ii
Forward-Looking Statements	1
Summary	3
Questions and Answers About the Distribution	13
Risk Factors	17
The Distribution	45
Business	52
Distribution Policy	67
Selected Financial Data	68
Unaudited Pro Forma Financial Information	70
Capitalization Table	76
Management’s Discussion and Analysis of Financial Condition and Results of Operations	77
Corporate Governance and Management	90
Executive Compensation	100
Certain Relationships and Related Party Transactions	103
Investment Policies and Policies with Respect to Certain Activities	106
Our Operating Partnership	109
Security Ownership of Certain Beneficial Owners and Management	112
Shares Eligible for Future Sale	113
Description of Capital Stock	114
Certain Provisions of Maryland Law and of Our Charter and Bylaws	117
Federal Income Tax Consequences of Our Status as a REIT	122
Use of Proceeds	141
Determination of Offering Price	141
Legal Matters	141
Experts	141
Additional Information	142
Financial Statements	F-1

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INTRODUCTION

This prospectus is being furnished solely to provide information to NorthStar Realty stockholders who will receive shares of our Common Stock in the distribution. It is not to be construed as an inducement or encouragement to buy or sell any securities of NorthStar Realty or NorthStar Europe. This prospectus describes, among other things, NorthStar Europe’s business, its relationship with NorthStar Realty and its manager, an affiliate of NorthStar Asset Management Group Inc., which together with its affiliates is referred to in this prospectus as NSAM, and how the spin-off affects NorthStar Realty and its stockholders and provides other information to assist you in evaluating the benefits and risks of holding or disposing of the shares of our Common Stock that you will receive in the spin-off.

Except as otherwise indicated or unless the context otherwise requires, “NorthStar Europe,” “NRE,” “we,” “us,” “our” and “the Company” refer to NorthStar Realty Europe Corp., a Maryland corporation, and its domestic and foreign subsidiaries, after giving effect to the spin-off of NorthStar Realty’s European real estate business (excluding European healthcare properties). All references to “NorthStar Realty” are, as the context may require, to NorthStar Realty excluding NRE after giving effect to the spin-off. Amounts are presented in U.S. dollars using an exchange rate as of June 30, 2015, unless otherwise noted.

We describe in this prospectus the European real estate business to be contributed to NorthStar Europe by NorthStar Realty as if the spin-off has already occurred, such business consisting of: (i) a $100 million multi-tenant leasehold office complex located in Woking , United Kingdom, or the U.K. Complex, purchased by NorthStar Realty in September 2014 (which, together with expected cash and any other related assets, liabilities or activities related to the launch of the European real estate business to be included as part of the proposed spin, we refer to as the NorthStar Europe Predecessor); (ii) a $1.3 billion portfolio primarily comprised of multi-tenant office properties located throughout Europe purchased by NorthStar Realty in April 2015, or the SEB Portfolio; (iii) 37 multi-tenant office properties located throughout Europe with an aggregate purchase price of $536 million acquired by NorthStar Realty in April 2015 across three portfolios comprised of the Internos Portfolio of $225 million, IVG Portfolio of $212 million and the Deka Portfolio of $99 million; and (iv) a $ 621 million office tower located in Frankfurt, Germany purchased by NorthStar Realty in July 2015, or the Trianon Tower. We collectively refer to the SEB Portfolio, Internos Portfolio, IVG Portfolio, Deka Portfolio and Trianon Tower as our New European Investments and together with the NorthStar Europe Predecessor, as our Current European Portfolio or our European Real Estate Business. The U.K. Complex, SEB Portfolio and Trianon Tower are currently owned through joint ventures (refer to “Summary — Unaudited Pro Forma Financial Information” for further detail). Our European Real Estate Business does not include any of NorthStar Realty’s European healthcare properties.

However, NorthStar Europe is a newly-formed entity that will not have conducted any separate operations prior to the spin-off. The financial results of the NorthStar Europe Predecessor or of our New European Investments operated as part of NorthStar Realty may not be indicative of NorthStar Europe’s financial results upon consummation of the spin-off or of the financial results of NorthStar Europe had it owned the U.K. Complex and our New European Investments as an independent public company for the periods presented.

This introduction may not contain all of the information that is important to you and should be read in conjunction with the combined financial statements of the NorthStar Europe Predecessor and the notes thereto included in “Financial Statements,” the unaudited pro forma financial information beginning on page 70 and the risk factors included in “Risk Factors” beginning on page 17 of this prospectus.

We refer in this prospectus to the transaction in which we will be spun-off from NorthStar Realty and become an independent public company as the “separation,” the “Distribution” or the “spin-off.”

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FORWARD-LOOKING STATEMENTS

This prospectus contains certain forward-looking statements. 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 prospectus, our ability to grow our business following the spin-off and entering into a long-term management contract with NSAM, the operating performance of our investments, our liquidity and financing needs, use of the proceeds from the sale of the Senior Notes (see “Recent Developments”), our management’s track record, the effects of our current strategies and investment activities, our pro forma combined financial statements and our ability to raise and effectively deploy capital. 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 significant 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 spin-off, including those related to the capital resources required to protect against business risks, legal risks and risks associated with the accounting treatment of a spin-off transaction;


•	risks associated with operating as an independent public company and loss of certain benefits associated with being owned as part of a larger company;


•	our rapid growth and relatively limited experience investing in Europe;


•	the ability of NSAM to scale its operations in Europe to effectively manage our growth;


•	our ability to realize the anticipated benefits of the spin-off;


•	our ability to qualify and remain qualified as a REIT;


•	access to debt and equity capital and our liquidity;


•	our use of leverage and our ability to comply with the terms of our borrowing arrangements;


•	our ability to obtain mortgage financing on our real estate portfolio on favorable terms or at all;


•	the effect of economic conditions, particularly in Europe, on the valuation of our investments and on the tenants of the real property that we own;


•	the unknown impact of the potential default and/or exit of one or more countries within the European Union;


•	our ability to acquire attractive investment opportunities and the impact of competition for attractive investment opportunities;

•

our performance pursuant to a long-term management contract with NSAM as our manager, including our reliance on NSAM and its affiliates and sub-advisors/joint venture partners in providing management services to us, the payment of substantial base and potential incentive fees to our manager, the allocation of investments by our manager among us and our manager’s and its affiliates’ other managed companies and strategic vehicles and various conflicts of interest in our relationship with NSAM;


•	the effectiveness of our portfolio management techniques and strategies, including our reliance on third parties and the potential loss and/or liability arising as a result of our relationships with such third parties;


•	the impact of adverse conditions affecting a specific property type in which we have investments, such as office properties;


•	tenant defaults or bankruptcy;


•	illiquidity of properties in our portfolio;


•	our ability to realize current and expected return over the life of our investments;


•	any failure in our due diligence to identify all relevant facts in our underwriting process or otherwise;

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•	the impact of credit rating downgrades;


•	our ability to manage our costs in line with our expectations and the impact on cash available for distribution, or CAD, and net operating income of our properties, or NOI;


•	environmental and regulatory requirements, compliance costs and liabilities related to owning and operating properties in our portfolio and to our business in general;


•	effect of regulatory actions, litigation and contractual claims against us and our affiliates, including the potential settlement and litigation of such claims;


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


•	future changes in local tax law that may have an adverse impact on the cash flow and value of our investments;


•	our ability to effectively structure our investments in a tax efficient manner, including for local tax purposes;


•	the impact that a rise in future interest rates may have on our floating rate financing;


•	potential devaluation of the Euro relative to the U.S. dollar due to quantitative easing and/or other factors which could cause the U.S. dollar value of our investments to decline;


•	general foreign exchange risk associated with properties located in European countries located outside of the Eurozone, including the United Kingdom and Sweden;


•	the loss of our exemption from the definition of an “investment company” under the Investment Company Act of 1940, as amended, or the Investment Company Act;


•	competition for qualified personnel and NSAM’s ability to retain key personnel to manage us effectively;


•	the impact of damage to our brand and reputation resulting from internal or external causes;


•	the lack of historical financial statements for properties we may acquire in compliance with U.S. Securities and Exchange Commission, or SEC, requirements and U.S. generally accepted accounting principles, or U.S. GAAP, as well as the lack of familiarity of our tenants and third party service providers with such requirements and principles;


•	failure to maintain effective internal controls and disclosure controls and procedures;


•	the historical combined financial information included in this prospectus 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


•	our status as an emerging growth company.

The foregoing list of factors is not exhaustive. All forward-looking statements included in this prospectus 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 this prospectus under the heading “Risk Factors.”

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SUMMARY

This summary highlights selected information contained elsewhere in this prospectus relating to the separation of NorthStar Europe from NorthStar Realty and the distribution of our Common Stock by NorthStar Realty to NorthStar Realty’s common stockholders.

We describe in this prospectus our European Real Estate Business, which includes the NorthStar Europe Predecessor and our New European Investments, to be contributed to NorthStar Europe by NorthStar Realty as if the spin-off has already occurred. However, NorthStar Europe is a newly-formed entity that will not have conducted any separate operations prior to the spin-off. The financial results of the NorthStar Europe Predecessor or of our New European Investments operated as part of NorthStar Realty may not be indicative of NorthStar Europe’s financial results upon consummation of the spin-off or of the financial results of NorthStar Europe had it owned the U.K. Complex and our New European Investments as an independent public company for the periods presented.

The following summary may not contain all of the information that is important to you and should be read in conjunction with the combined financial statements of the NorthStar Europe Predecessor and the notes thereto included in “Financial Statements,” the unaudited pro forma financial information beginning on page 70 and the risk factors beginning on page 17 of this prospectus.

Our Business

We are a newly-formed European commercial real estate company with approximately $2.6 billion, at cost, of investments located throughout nine countries in Europe. We have the ability to invest in a broad spectrum of European commercial real estate. We are currently predominantly focused on office properties and may expand by acquiring other types of commercial real estate located throughout Europe. We expect to make equity investments, directly or indirectly through joint ventures, in a diversified portfolio of European commercial real estate that offers the opportunity to generate attractive risk-adjusted returns. We seek to generate stable cash flow for distribution to our stockholders and in turn build long-term franchise value.

We will be externally managed and advised by an affiliate of NorthStar Asset Management Group Inc. (NYSE: NSAM), which together with its affiliates is referred to in this prospectus as NSAM. We are a Maryland corporation and intend to conduct our operations so as to qualify as a REIT for U.S. federal income tax purposes beginning with the year ending December 31, 2015. Our principal executive offices are located at 399 Park Avenue, 18th Floor, New York, New York 10022 and our telephone number is (212) 547-2600.

The Spin-Off

On February 26, 2015, NorthStar Realty announced that its board of directors, or the NorthStar Realty Board, unanimously approved a plan to spin-off its European real estate business (which excludes NorthStar Realty’s European healthcare properties) into an independent publicly-traded company. In connection with the spin-off, we will enter into a management agreement with an initial term of 20 years on terms substantially consistent with the terms of the existing management agreement between NSAM and NorthStar Realty.

Refer to “The Distribution” section in this prospectus for further discussion regarding the Distribution and to “Corporate Governance and Management — Our Manager — Management Agreement” for further discussion regarding the management agreement.

Reasons for the Spin-Off

The NorthStar Realty Board believes that investors and analysts will regard NorthStar Europe’s distinct focus on investing in European commercial real estate more favorably as a separate company than as part of the existing portfolio and strategy of NorthStar Realty and thus place a greater value on NorthStar Europe as a separate public company. In the event that the spin-off does not have this and other expected benefits, the costs associated with the transaction, including an expected increase in general and administrative expenses, could have a negative effect on the financial condition and ability to make distributions to the stockholders of each company.

The NorthStar Realty Board has determined that separation of our business from NorthStar Realty’s other businesses is in the best interests of NorthStar Realty. The potential benefits considered by the NorthStar Realty Board in making the determination to consummate the Distribution included the following:


•	attractive positioning as a European equity REIT with access to a lower cost of capital and capability to execute complex, cross border European transactions;

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•	European equity REIT with substantial growth prospects as financial and other institutions deleverage and wind-down their portfolios in Europe;


•	ability to benefit from opportunities in the European markets; and


•	opportunity to increase the aggregate value of NorthStar Europe and NorthStar Realty in order to allow each company to issue equity at a lower cost of capital in connection with acquisitions, joint ventures and partnerships on more favorable terms.

The NorthStar Realty Board believes that the aggregate value of NorthStar Realty and NorthStar Europe should increase relative to the value of NorthStar Realty prior to the announcement of the plan to spin-off its European real estate business because the Distribution will permit investors to invest separately in NorthStar Europe and in the remaining businesses of NorthStar Realty. This may make NorthStar Realty’s common stock and our Common Stock more attractive to investors as compared to NorthStar Realty’s common stock before the Distribution and therefore could improve access to the capital markets for both NorthStar Realty and NorthStar Europe. As a result of the Distribution, the common stock of each of NorthStar Realty and NorthStar Europe would become available to classes of investors who seek an investment that offers the growth, risk and sector exposure of either NorthStar Europe or NorthStar Realty, but not that of the combined company. There can be no assurance, however, as to the future market price of the common stock of NorthStar Realty or our Common Stock. Refer to “Risk Factors — Risks Related to the Spin-Off — The aggregate post-Distribution value of NorthStar Realty and NorthStar Europe shares may not equal or exceed the pre-spin-off value of NorthStar Realty shares.”

The NorthStar Realty Board considered several factors that might have a negative effect on NorthStar Realty as a result of the Distribution. For example, certain factors such as a lack of historical financial and performance data for our European Real Estate Business, including investments that were just recently acquired, or for NorthStar Europe as an independent public company may limit investors’ ability to appropriately value our Common Stock. Furthermore, because the Company will be separated from NorthStar Realty, the Distribution may also limit the ability of the Company to pursue cross-company business transactions and initiatives with other businesses of NorthStar Realty. Finally, following the Distribution, NorthStar Europe will be responsible for certain general and administrative costs previously incurred by NorthStar Realty. Refer to “The Distribution — Reasons for the Distribution” for a further discussion of the factors considered in consummating the Distribution.

Market Opportunity

We believe that the economic environment in Europe has stabilized and the foundations are in place for a gradual and sustained recovery. According to recent European Commission estimates, all of the countries in the European Union, with the exception of Cyprus, are expected to achieve Gross Domestic Product, or GDP, growth in 2015. We believe that the positive outlook for Europe is driven by a number of factors including the following:


•	historically low interest rates;


•	historically wide spreads between capitalization yields and interest rates;


•	the European Central Bank’s quantitative easing program;


•	depreciation of foreign currencies, primarily the Euro;


•	declining unemployment rates;


•	relatively low oil prices;


•	increased investor and consumer confidence in a sustained European recovery; and


•	the apparent stabilization of European sovereign debt and reversal of the recent upward trend in debt/GDP across the Eurozone.

There can be no assurance, however, that the European economy will continue to recover at the current rate or at all. For a discussion of risks relating to adverse conditions in the European and global economy, refer to “Risk Factors — Risks Related to Our Business.” For further discussion regarding our market opportunity, refer to “Business — Market Opportunity” in this prospectus.

Our Strategy

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real estate that offers the opportunity to generate attractive risk-adjusted returns. We seek to generate stable cash flow for distribution to our stockholders and in turn build long-term franchise value.

For further discussion regarding our investment strategy, refer to “Business — Our Strategy” in this prospectus.

Our Competitive Strengths

We believe that we operate with significant competitive strengths, including creating a new opportunity for investors as the only European real estate company listed in the United States, our anticipated access to lower cost of capital, our diversified investment strategy, our high-quality portfolio, our experienced management team and our real estate investment and asset management experience, which will allow us to continue to grow our investments, generate attractive risk-adjusted returns for our stockholders and be well-positioned to benefit from the ongoing recovery in the European commercial real estate market. For additional information regarding our competitive strengths, refer to “Business — NorthStar Europe Competitive Strengths.”

Our Properties

Our current portfolio of $2.6 billion, at cost, is comprised of 52 high-quality properties located in many key European markets, including Berlin, Frankfurt, Hamburg, London, Paris, Amsterdam, Milan, Brussels and Madrid. $2.0 billion of our portfolio was acquired or committed to be acquired in 2014, and given improved market conditions in Europe since such time, we believe has appreciated in value. Our current portfolio is primarily comprised of office properties, with 94% of our in-place rental income generated from office properties as of June 30, 2015, adjusted for an acquisition through September 28, 2015 . We hold prime office properties in Germany, the United Kingdom and France that account for approximately 71% of our in-place rental income as of June 30, 2015, adjusted for an acquisition through September 28, 2015 . As of June 30, 2015, adjusted for an acquisition through September 28, 2015 , our portfolio was 93% occupied, had a weighted average remaining lease term of 6.0 years and included high-quality tenants.

The following presents a summary, as of June 30, 2015, adjusted for an acquisition through September 28, 2015 , of our portfolio and diversity across geographic location based on cost:



			Portfolio by Geographic Location
Total portfolio, at cost	$2.6 billion
Number of properties	52
Number of countries	9
Total square meters	520,323
Weighted average occupancy	93	%
Weighted average remaining lease term	6.0 years
In-place rental income related to: ⁽¹⁾
Office properties	94	%
Other	6	%

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(1) In-place rental income represents gross rent adjusted for vacancies.

Risk Factors

Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors.” Some of these risks and uncertainties include:


•	the effect of adverse economic conditions in European, U.S. and global financial markets on the commercial real estate industry;


•	our dependence on NSAM as our manager, including our reliance on NSAM’s affiliates, sub-advisors, joint venture partners and third parties, to achieve our investment objectives, grow our business and make distributions to our stockholders ;


•	NSAM failing to effectively perform its obligations under various agreements with us, including our management agreement;


•	our agreements with NSAM and NorthStar Realty not reflecting terms that would have resulted from arm’s-length negotiations among unaffiliated third parties;

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•	the payment of substantial base and potential incentive fees to NSAM may cause NSAM to make decisions that are not in our best interests;


•	the allocation of investments by NSAM among us and NSAM’s other managed companies and strategic vehicles and certain other activities of NSAM may create various conflicts of interest in our relationship with NSAM;


•	the concentration of our investments in a specific property, property type or region;


•	the impact of adverse conditions effecting a specific property type in which we have investments, such as office properties;


•	political, economic, market, reputational, operational, legal, regulatory and other risks inherent in conducting business internationally;


•	the relative illiquidity of real estate investments;


•	the ability of our tenants to successfully operate their businesses;


•	regulatory compliance costs and liabilities related to owning and operating properties in our portfolio;


•	our access to financing sources on attractive terms, if at all;


•	our potential use of leverage;


•	the impact that a rise in future interest rates may have on our floating rate financing;


•	our use of short-term borrowings;


•	the effect of our hedging strategy against interest rate and currency exposure and our ability to align our hedging instruments and the investments being hedged;


•	the loss of key personnel if they terminate their employment with NSAM;


•	our dependence on information systems and failures of such systems and our ability to implement effective information and cyber security policies, procedures and capabilities;


•	unknown impact of the potential default and/or exit of one or more countries within the European Union;


•	costs associated with future growth through acquisitions of properties or other companies and our ability to integrate the properties or companies we acquire into our business and operations;


•	our ability to change our investment strategy and distribution policy;


•	our use of non-GAAP financial measures as indicators of our operating performance;


•	provisions of our organizational documents and Maryland law limiting certain business combinations or changes in control;


•	substantial European, U.S. and global regulation, numerous contractual obligations and extensive internal policies and our failure to comply with these matters;


•	our ability to qualify and remain qualified as a REIT for federal income tax purposes;


•	if NorthStar Realty fails to qualify as a REIT in its 2015 taxable year, we would be prevented from electing to qualify as a REIT and if so, would be required to pay income taxes at corporate rates and penalty taxes;


•	REIT distribution requirements could adversely affect our liquidity and may force us to borrow funds or sell properties during unfavorable market conditions;


•	the spin-off not having the benefits we anticipate or not enjoying all the benefits that we have prior to the spin-off;


•	the aggregate post-Distribution value of our Common Stock and NorthStar Realty’s common stock not equaling or exceeding the pre-Distribution value of NorthStar Realty’s common stock;


•	our ability to implement our business strategy;


•	the absence of a non-volatile, active trading market for our Common Stock;

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•	our ability to engage in desirable strategic or capital-raising transactions following the Distribution;


•	our ability to operate as an independent public company;


•	satisfaction of the requirements of the Sarbanes-Oxley Act and the effectiveness of our internal control over financial reporting;


•	the risk that we might fail to maintain our exclusion from the definition of an “investment company” under the Investment Company Act of 1940, as amended, or the Investment Company Act; and


•	our status as an emerging growth company.

Unaudited Pro Forma Financial Information

The following tables present unaudited pro forma combined financial statements of our European Real Estate Business consisting of pro forma combined results of operations for the six months ended June 30, 2015 and year ended December 31, 2014 and a pro forma combined balance sheet as of June 30, 2015, comprised of the following (dollars in millions):

Acquisition

Ownership

Date

Primary Location(s)

Primary Description

Cost

Properties

Interest

NorthStar Europe Predecessor ⁽¹⁾

U.K. Complex

Sept-14

Woking, U.K.

Multi-tenant office

100

93%

New European Investments

SEB Portfolio

April-15

U.K., France, Germany

Multi-tenant office

1,325

95%

⁽²⁾

Internos Portfolio

April-15

Germany, France, Portugal

Office/Hotel/Industrial/Retail

225

100%

IVG Portfolio

April-15

U.K., France, Germany

Multi-tenant office

212

100%

Deka Portfolio

April-15

Germany

Multi-tenant office

100%

Trianon Tower

July-15

Frankfurt, Germany

Multi-tenant office

621

95%

⁽²⁾

Total

2,582

__________________


(1)	The financial statements for NorthStar Predecessor include an allocation of certain costs and expenses from activities related to the launch of our European Real Estate Business.


(2)	We are entitled to 100% of net income (loss) based on the allocation formula, as set forth in the governing documents.

The unaudited pro forma combined statements of operations represent our European Real Estate Business for the six months ended June 30, 2015 and year ended December 31, 2014 and gives effect to the spin-off of our European Real Estate Business from NorthStar Realty as if it occurred on January 1, 2014. The pro forma combined balance sheet assumes the spin-off of our European Real Estate Business from NorthStar Realty occurred as of June 30, 2015.

The year ended December 31, 2014 is comprised of: (i) the period of our ownership of the U.K. Complex from September 16, 2014 to December 31, 2014, or the NorthStar Owner Period; and (ii) the period from January 1, 2014 to September 15, 2014 represents a period prior to our ownership, or the Prior Owner Period. Therefore, the amounts presented for the year ended December 31, 2014 may not be comparable to future periods.

The unaudited pro forma combined financial statements of our European Real Estate Business are not necessarily indicative of what our financial condition or results of operations would have been for the periods presented, nor are they representative of the future financial condition or results of operations of NorthStar Europe. The unaudited pro forma combined financial statements of our European Real Estate Business should be read in conjunction with the audited combined financial statements and the notes thereto of the NorthStar Europe Predecessor and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” both of which are included elsewhere in this prospectus.

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The following table presents the unaudited pro forma combined statements of operations of our European Real Estate Business for the six months ended June 30, 2015 and year ended December 31, 2014 (dollars in thousands, except share and per share data):



	Six Months Ended June 30, 2015
	NorthStar Europe Predecessor ⁽¹⁾			Pro Forma Adjustments ⁽²⁾			Other				Pro Forma ⁽³⁾
Revenues
Rental and escalation income	$	4,753		$	82,173		$	—			$	86,926
Other revenues	1			2,631			—				2,632
Total revenues	4,754			84,804			—				89,558
Expenses
Management fee, related party	—			—			7,000			⁽⁴⁾	7,000
Operating expenses	1,770			17,743			—				19,513
Interest expense	1,523			16,674			10,907			⁽⁵⁾	29,104
General and administrative expenses	1,358			—			—				1,358
Depreciation and amortization	1,814			35,747			—				37,561
Other expenses	—			2,132			—				2,132
Total expenses	6,465			72,296			17,907				96,668
Other income (loss)
Unrealized gain (loss) on investments and other	41			—			—				41
Realized gain (loss) on investments and other	(14		)	—			—				(14		)
Income (loss) before income tax benefit (expense)	(1,684		)	12,508			(17,907		)		(7,083		)
Income tax benefit (expense)	107			(668		)	—				(561		)
Net income (loss)	(1,577		)	11,840			(17,907		)		(7,644		)
Net (income) loss attributable to non-controlling interests	21			—			—				21
Net income (loss) attributable to NorthStar Europe	$	(1,556	)	$	11,840		$	(17,907	)		$	(7,623	)
Earnings (loss) per share:
Basic
Diluted
Weighted average number of shares: ⁽⁶⁾
Basic
Diluted

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	Year ended December 31, 2014
	NorthStar Europe Predecessor ⁽¹⁾			Pro Forma Adjustments ⁽²⁾			Other				Pro Forma ⁽³⁾
Revenues
Rental and escalation income	$	9,884		$	175,740		$	—			$	185,624
Other revenues	1,329			6,806			—				8,135
Total revenues	11,213			182,546			—				193,759
Expenses
Management fee, related party	—			—			14,000			⁽⁴⁾	14,000
Operating expenses	4,294			33,964			—				38,258
Transaction costs	4,198			—			(4,198		)	⁽⁷⁾	—
Interest expense	3,651			33,055			21,446			⁽⁵⁾	58,152
General and administrative expenses	5,883			—			—				5,883
Depreciation and amortization	3,382			79,115			394			⁽⁸⁾	82,891
Other expenses	—			4,264			—				4,264
Total expenses	21,408			150,398			31,642				203,448
Other income (loss)
Unrealized gain (loss) on investments and other	1,900			—			—				1,900
Income (loss) before income tax benefit (expense)	(8,295		)	32,148			(31,642		)		(7,789		)
Income tax benefit (expense)	—			(1,717		)	—				(1,717		)
Net income (loss)	(8,295		)	30,431			(31,642		)		(9,506		)
Net (income) loss attributable to non-controlling interests	276			—			205			⁽⁸⁾	481
Net income (loss) attributable to NorthStar Europe	$	(8,019	)	$	30,431		$	(31,437	)		$	(9,025	)
Earnings (loss) per share:
Basic
Diluted
Weighted average number of shares: ⁽⁶⁾
Basic
Diluted

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The following table presents our unaudited pro forma combined balance sheet of our European Real Estate Business as of June 30, 2015 (dollars in thousands):



	NorthStar Europe Predecessor		Pro Forma Adjustments ⁽⁹⁾		Other			Pro Forma ⁽³⁾
Assets
Cash	$	3,265	$	14,662	$	—		$	17,927
Restricted cash	6,106		—		—			6,106
Operating real estate, net	54,985		2,143,436		—			2,198,421
Receivables	1,031		—		330,986		⁽¹⁰⁾	332,017
Unbilled rent receivable, net	694		—		—			694
Derivative assets, at fair value	1,134		30,315		—			31,449
Deferred costs and intangible assets, net	35,232		219,679		9,014		⁽¹⁰⁾	263,925
Other assets	2,245		572		—			2,817
Total assets	$	104,692	$	2,408,664	$	340,000		$	2,853,356

Liabilities
Mortgage and other notes payable	$	78,585	$	1,439,869	$	—		$	1,518,454
Senior notes	—		—		340,000		⁽¹⁰⁾	340,000
Accounts payable and accrued expenses	824		—		—			824
Other liabilities	2,706		27,972		—			30,678
Total liabilities	82,115		1,467,841		340,000			1,889,956
Equity
NorthStar Europe equity	21,439		939,246		—			960,685
Non-controlling interests	1,138		1,577		—			2,715
Total equity	22,577		940,823		—			963,400
Total liabilities and equity	$	104,692	$	2,408,664	$	340,000		$	2,853,356

__________________


(1)	The year ended December 31, 2014 includes the Prior Owner Period from January 1, 2014 through September 15, 2014 and NorthStar Owner Period from September 16, 2014 through December 31, 2014. The six months ended June 30, 2015 represents the NorthStar Owner Period.


(2)	The following summarizes the pro forma adjustments related to our New European Investments for the six months ended June 30, 2015 and year ended December 31, 2014 (dollars in thousands):



	Six Months Ended June 30, 2015
	SEB Portfolio						Internos Portfolio							IVG Portfolio							Trianon Tower						Other Pro Forma Adjustments ^(viii)
	Historical ⁽ⁱ⁾		Pro Forma Adjustments				Historical ⁽ⁱ⁾			Pro Forma Adjustments				Historical ⁽ⁱ⁾			Pro Forma Adjustments				Historical ⁽ⁱ⁾		Pro Forma Adjustments				Other Pro Forma Adjustments ^(viii)			Total
Revenues
Rental and escalation income	$	39,906	$	756		⁽ⁱⁱ⁾	$	9,118		$	304		⁽ⁱⁱ⁾	$	4,970		$	(127	)	⁽ⁱⁱ⁾	$	18,486	$	2,544		⁽ⁱⁱ⁾	$	6,216		$	82,173
Other revenue	—		—				828			—				726							—		—				1,077			2,631
Total revenues	39,906		756				9,946			304				5,696			(127		)		18,486		2,544				7,293			84,804
Expenses
Operating expenses	5,564		719			^(iv)	1,811		^(iv)	—			^(iv)	2,127		^(iv)				^(iv)	5,173		—			^(iv)	2,349			17,743
Interest expense	—		9,506			⁽ⁱⁱⁱ⁾	—			1,752			⁽ⁱⁱⁱ⁾	—			1,728			⁽ⁱⁱⁱ⁾	—		2,826			⁽ⁱⁱⁱ⁾	862			16,674
Depreciation and amortization	—		18,990			^(v)	—			4,020.5			^(v)	—			2,698			^(v)	—		8,698			^(v)	1,341			35,747
Other expenses	—		2,132				—			—				—			—				—		—				—			2,132
Total expenses	5,564		31,347				1,811			5,773				2,127			4,426				5,173		11,524				4,552			72,296
Income (loss) before income tax benefit (expense)	34,342		(30,591		)		8,135			(5,469		)		3,569			(4,553		)		13,313		(8,980		)		2,741			12,508
Income tax benefit (expense)	—		(200		)	^(vi)	—			(142		)	^(vi)				53			^(vi)	—		(231		)	^(vi)	(146		)	(668		)
Net income (loss)	34,342		(30,791		)		8,135			(5,611		)		3,569			(4,500		)		13,313		(9,211		)		2,595			11,840
Net (income) loss attributable to non-controlling interests	—		—			^(vii)	—			—			^(vii)	—			—			^(vii)	—		—			^(vii)	—			—
Net income (loss) attributable to NorthStar Europe	$	34,342	$	(30,791	)		$	8,135		$	(5,611	)		$	3,569		$	(4,500	)		$	13,313	$	(9,211	)		$	2,595		$	11,840

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	Year Ended December 31, 2014
	SEB Portfolio						Internos Portfolio							IVG Portfolio							Trianon Tower							Other Pro Forma Adjustments ^(viii)
	Historical ⁽ⁱ⁾		Pro Forma Adjustments				Historical ⁽ⁱ⁾			Pro Forma Adjustments				Historical ⁽ⁱ⁾			Pro Forma Adjustments				Historical ⁽ⁱ⁾			Pro Forma Adjustments				Other Pro Forma Adjustments ^(viii)				Total
Revenues
Rental and escalation income	$	86,117	$	2,951		⁽ⁱⁱ⁾	$	21,894		$	607		⁽ⁱⁱ⁾	$	12,889		$	(254	)	⁽ⁱⁱ⁾	$	40,741		$	5,087		⁽ⁱⁱ⁾	$	5,708			$	175,740
Other revenue	—		—				3,065			—				2,685							—			—				1,056				6,806
Total revenues	86,117		2,951				24,959			607				15,574			(254		)		40,741			5,087				6,764				182,546
Expenses
Operating expenses	8,400		597			^(iv)	3,114		^(iv)	—			^(iv)	5,536		^(iv)	—			^(iv)	13,981		^(iv)	—			^(iv)	2,336				33,964
Interest expense	—		16,319			⁽ⁱⁱⁱ⁾	—			3,504			⁽ⁱⁱⁱ⁾				3,456			⁽ⁱⁱⁱ⁾	—			8,052			⁽ⁱⁱⁱ⁾	1,724			⁽ⁱⁱⁱ⁾	33,055
Depreciation and amortization	—		45,600			^(v)	—			8,041			^(v)	—			5,395			^(v)	—			17,397			^(v)	2,682			^(v)	79,115
Other expenses	—		4,264				—			—				—			—				—			—				—				4,264
Total expenses	8,400		66,780				3,114			11,545				5,536			8,851				13,981			25,449				6,742				150,398
Income (loss) before income tax benefit (expense)	77,717		(63,829		)		21,845			(10,938		)		10,038			(9,105		)		26,760			(20,362		)		22				32,148
Income tax benefit (expense)	—		(742		)	^(vi)	—			(582		)	^(vi)	—			(50		)	^(vi)	—			(342		)	^(vi)	(1		)	^(vi)	(1,717		)
Net income (loss)	77,717		(64,571		)		21,845			(11,520		)		10,038			(9,155		)		26,760			(20,704		)		21				30,431
Net (income) loss attributable to non-controlling interests	—		—			^(vii)	—			—			^(vii)	—			—			^(vii)	—			—			^(vii)	—				—
Net income (loss) attributable to NorthStar Europe	$	77,717	$	(64,571	)		$	21,845		$	(11,520	)		$	10,038		$	(9,155	)		$	26,760		$	(20,704	)		$	21			$	30,431

_____________________________


(i)	Represents audited financial statements of revenues and certain expenses for the year ended December 31, 2014 and unaudited financial statements of revenues and certain expenses for the six months ended June 30, 2015. The SEB Portfolio , the Internos Portfolio and the IVG Portfolio were acquired in April 2015 and the Trianon Tower was acquired in July 2015.


(ii)	Represents an adjustment to reflect amortization of above and below market leases .

(iii)

Represents interest expense for new borrowings at the contractual rate and includes amortization of deferred financing costs. The terms of such borrowings are described in “Business—Our Properties” of this prospectus. The estimated amortization period of deferred financing costs ranges from seven to 45 years. In addition, certain of the borrowings related to our Current European Portfolio are subject to interest rate caps. Refer to “Business - Our Properties” for further discussion of the borrowings associated with our Current European Portfolio.


(iv)	Represents an adjustment for third party property management and other fees for the SEB Portfolio. Third party management and other fees for the Internos Portfolio, the IVG Portfolio and the Trianon Tower are included in the historical period and therefore, no adjustment is necessary.


(v)	Represents depreciation and amortization expense based on a preliminary purchase price allocation for our New European Investments. The purchase price allocation is a preliminary estimate and may be adjusted within one year of the acquisition in accordance with U.S. GAAP. The depreciation and amortization periods range from one to 40 years.


(vi)	We estimate our effective tax rate to be approximately 5.3% on a blended basis based on projected earnings from our Current European Portfolio.


(vii)	We are entitled to 100% of net income (loss) based on the allocation formula, as set forth in the governing documents.


(viii)	Represents adjustments related to the Deka Portfolio acquired in April 2015.

(3)

The functional currency of NorthStar Europe is U.S. dollars and the functional currency of the properties comprising our European Real Estate Business is the local currency where the property is located, predominately the Euro. As such, the operations are translated to U.S. dollar using the average exchange rate during the respective period. Additionally, assets and liabilities of properties denominated in a foreign currency are translated to the U.S. dollar using the currency exchange rate at the end of the period presented. Our New European Investments presented in the unaudited pro forma combined balance sheet are translated using the currency exchange rate as of June 30, 2015. The pro forma adjustments do not include foreign currency forward contracts with a notional amount of $119.3 million and maturities ranging from August 2015 to May 2017 expected to be assumed as part of the Distribution.

(4)

Represents a pro forma adjustment to reflect asset management and other fees incurred in accordance with the management agreement with NSAM, the terms of which are described in “Corporate Governance and Management—Our Manager—Management Agreement” of this prospectus. The current base management fee of $14 million annually is based on our Current European Portfolio and does not include any adjustment related to the NSAM incentive fee.

(5)

Represents a pro forma adjustment to reflect interest expense (including amortization of related deferred financing costs) related to NorthStar Europe’s issuance of $340 million of 4.625% Senior Notes due December 2016, or the Senior Notes, in July 2015 of $7.9 million and $ 21.8 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively. The year ended December 31, 2014 also includes a pro forma adjustment to reflect interest expense (including amortization of related deferred financing costs) related to NorthStar Europe Predecessor of $ (0.4) million during the Prior Owner Period.


(6)	Weighted average shares used to compute basic and diluted earnings per share represents the number of weighted average shares of our Common Stock assumed to be outstanding based on a distribution ratio of one share of our Common Stock for every share of NorthStar Realty common stock. The actual number of our basic and diluted shares outstanding will not be known until the Distribution.


(7)	Transaction costs related to our Current European Portfolio include legal, accounting, tax and other professional services and are not included as part of the pro forma combined statements of operations.


(8)	Represents pro forma adjustments related to NorthStar Europe Predecessor during the Prior Owner Period.

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(9)	The following summarizes the pro forma adjustments related to our New European Investments for the unaudited pro forma combined balance sheet as of June 30, 2015 (dollars in thousands):



	As of June 30, 2015 ^(i)(ii)
	SEB Portfolio		Internos Portfolio		IVG Portfolio		Deka Portfolio			Trianon Tower		Total
Assets
Cash	$	3,831	$	—	$	10,831	$	—		$	—	$	14,662
Operating real estate, net	1,131,061		190,327		185,315		84,623		⁽ⁱⁱⁱ⁾	552,110		2,143,436
Derivative assets, at fair value	8,015		—		—		—			22,300		30,315
Deferred costs and intangible assets, net	135,522		18,534		13,371		7,246			45,006		219,679
Other assets	—		—		—		—			572		572
Total assets	$	1,278,429	$	208,861	$	209,517	$	91,869		$	619,988	$	2,408,664

Liabilities
Mortgage and other notes payable	$	826,459	$	101,315	$	94,066	$	51,914		$	366,115	$	1,439,869
Other liabilities	24,063		525		3,384		—			—		27,972
Total liabilities	850,522		101,840		97,450		51,914			366,115		1,467,841
Equity
NorthStar Europe equity	427,794		107,021		112,067		39,955			252,409		939,246
Non-controlling interests	113		—		—		—			1,464		1,577
Total equity	427,907		107,021		112,067		39,955			253,873		940,823
Total liabilities and equity	$	1,278,429	$	208,861	$	209,517	$	91,869		$	619,988	$	2,408,664

_____________________________

(i)

Represents the preliminary purchase price allocation for each of the properties that comprise our New European Investments. The purchase price allocation is a preliminary estimate and may be adjusted within one year of the acquisition in accordance with U.S. GAAP. The purchase price of each portfolio represents the fair value of the assets acquired and liabilities assumed. The pro forma balance sheet includes an adjustment for transaction costs.


(ii)	Our New European Investments are predominantly denominated in Euro and GBP. The initial purchase price allocation is translated based on the exchange rate to the U.S. dollar as of June 30, 2015.


(iii)	Includes one property of $4.3 million classified as held-for-sale as of June 30, 2015.

(10)

Represents a pro forma adjustment to reflect NorthStar Europe’s issuance of the Senior Notes, including related deferred financing costs. We loaned the net proceeds from the issuance of the Senior Notes to subsidiaries of NorthStar Realty, which used such amounts for general corporate purposes, including, among other things, the funding of acquisitions, including the Trianon Tower and the repayment of NorthStar Realty’s borrowings. The terms of the loan are materially the same as those of the Senior Notes and will be deemed repaid upon NorthStar Realty’s contribution to us of our European Real Estate Business. We may elect, upon satisfaction of certain conditions, to settle all or part of the principal amount of the Senior Notes in our Common Stock in lieu of cash. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments” for further discussion. Does not represent the final amount that may be contributed by NorthStar Realty to us upon Distribution.

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QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION

The following is a brief summary of the terms of the Distribution. Please refer to “The Distribution” for a more detailed description of the matters described below.


Q:	What is the Distribution?

The Distribution is the method by which NorthStar Realty will separate the business of the Company from NorthStar Realty’s other businesses, creating two separate publicly-traded companies. In the Distribution, NorthStar Realty will distribute to its common stockholders all of the shares of our Common Stock that it owns. Following the Distribution, we will be a separate company from NorthStar Realty and NorthStar Realty will not retain any ownership interest in us. The number of shares of NorthStar Realty common stock you own will not change as a result of the Distribution.


Q:	What is being distributed in the Distribution?

Approximately shares of our Common Stock will be distributed in the Distribution, based upon the shares of NorthStar Realty common stock expected to be outstanding on the record date. The shares of our Common Stock to be distributed by NorthStar Realty will constitute all of the issued and outstanding shares of our Common Stock immediately after the Distribution. The actual number of shares of our Common Stock to be issued in the Distribution will be determined as of the record date. For more information on the shares being distributed in the Distribution, refer to “Shares Eligible for Future Sale” and “Description of Capital Stock — Common Stock.”


Q:	What will I receive in the Distribution?

Holders of NorthStar Realty common stock will receive a distribution of one share of our Common Stock for every share(s) of NorthStar Realty common stock held by them on the record date. As a result of the Distribution, your proportionate interest in NorthStar Realty will not change and, on a fully diluted basis, you will own the same percentage of common stock and voting power in NorthStar Europe as you did in NorthStar Realty on the record date, except as a result of the receipt of cash in lieu of fractional shares. For a more detailed description, refer to “The Distribution.”


Q:	What is the record date for the Distribution?

Record ownership will be determined as of the close of business, Eastern Time, on , 2015, which we refer to as the record date. The person in whose name shares of NorthStar Realty common stock are registered at the close of business on the record date is the person to whom shares of our Common Stock will be issued in the Distribution. Refer to “The Distribution — Listing and Trading of Our Common Stock” for additional information.


Q:	When will the Distribution occur?


A:	We expect that shares of our Common Stock will be distributed by our transfer agent in its capacity as the distribution agent, on behalf of NorthStar Realty, effective at 11:59 p.m. Eastern Time on , 2015, which we refer to as the Distribution date.


Q:	What will the relationship between NorthStar Realty and us be following the Distribution?

Following the Distribution, we will be a separate public company and NorthStar Realty will have no continuing ownership interest in us. In connection with the Distribution, we and NorthStar Realty will enter into a separation agreement and will enter into several other agreements for the purpose of accomplishing the distribution of shares of our Common Stock to NorthStar Realty’s common stockholders. These agreements will govern our relationship with NorthStar Realty subsequent to the Distribution and will also provide that all liabilities and obligations attributable to periods prior to the Distribution will remain with NorthStar Realty except for the liabilities for which NorthStar Realty agrees to contribute cash to the Company to enable the Company to pay such liabilities. The separation agreement provides that we and NorthStar Realty agree to provide each other with appropriate indemnities with respect to liabilities arising out of the businesses being transferred to us by NorthStar Realty.

In connection with the Distribution, we will enter into a management agreement with NSAM pursuant to which NSAM will manage the Company for an initial term of 20 years. The management agreement provides for: (i) an annual base management fee equal to the sum of: (a) $14 million; and (b) an additional annual base management fee equal to 1.5% per annum of the sum of: (1) any equity we issue in exchange or conversion of exchangeable or stock-settleable notes; (2) any other issuances of common equity, preferred equity or other forms of equity, including but not limited to units, or LTIP Units, in NorthStar Realty Europe Limited Partnership, or our Operating Partnership (excluding units issued to us and equity-based compensation, but including issuances related to an acquisition, investment, joint venture or partnership); and (3) cumulative CAD, if any, in excess of cumulative distributions paid on common stock, LTIP Units

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or other equity awards beginning the first full calendar quarter after completion of the Distribution; and (ii) an incentive fee determined as described under “Corporate Governance and Management — Our Manager — Management Agreement” with each of the fees set forth in clauses (i) and (ii) being calculated and payable quarterly in arrears in cash. The current base management fee of $14 million is based on our Current European Portfolio.

Immediately following the Distribution, certain of the members of our board of directors will also be directors on the NorthStar Realty Board and/or on the NSAM board of directors. Refer to “Certain Relationships and Related Party Transactions — Relationship Between NorthStar Realty, NSAM and Us After the Distribution” for a discussion of the policy that will be in place for dealing with potential conflicts of interest that may arise from our ongoing relationships with NorthStar Realty and NSAM.


Q:	What do I have to do to participate in the Distribution?


A:	No action is required on your part. Stockholders of NorthStar Realty on the record date for the Distribution are not required to pay any cash or deliver any other consideration, including any shares of NorthStar Realty common stock, for the shares of our Common Stock distributable to them in the Distribution.


Q:	If I sell shares of NorthStar Realty common stock that I own after the date of this prospectus but before the Distribution, am I still entitled to receive shares of NorthStar Europe Common Stock distributable with respect to the shares of NorthStar Realty common stock I sold?

Beginning on or shortly before the record date and continuing up to and including the date of the Distribution, it is expected that there will be two markets in NorthStar Realty common stock: a “regular-way” market and an “ex-distribution” market. Shares of NorthStar Realty common stock that trade on the “regular-way” market will trade with an entitlement to our Common Stock distributed pursuant to the spin-off. Shares of NorthStar Realty common stock that trade on the “ex-distribution” market will trade without an entitlement to our Common Stock distributed pursuant to the spin-off. Therefore, if you sell shares of NorthStar Realty common stock in the “regular-way” market after the record date but before the Distribution, you will be selling your right to receive our Common Stock in the Distribution. If you sell shares of NorthStar Realty common stock in the “ex-distribution” market before the Distribution, you will receive the shares of our Common Stock that you are entitled to receive pursuant to your ownership as of the record date of NorthStar Realty common stock.


Q:	How will fractional shares be treated in the Distribution?


A:	If you would be entitled to receive a fractional share of our Common Stock in the Distribution, you will instead receive a cash payment. Refer to “The Distribution — General” for an explanation of how the cash payments will be determined.


Q:	How will NorthStar Realty distribute shares of NorthStar Europe Common Stock to me?


A:	Holders of shares of NorthStar Realty’s common stock on the record date will receive shares of our Common Stock in book-entry form. Refer to “The Distribution — General” for a more detailed explanation.


Q:	What is the reason for the Distribution?

The NorthStar Realty Board believes that investors and analysts will regard NorthStar Europe’s focused strategy of investing in European commercial real estate more favorably as a separate company than as part of the existing portfolio and strategy of NorthStar Realty and thus place a greater value on NorthStar Europe as a separate public company. In the event that the spin-off does not have this and other expected benefits, the costs associated with the transaction, including an expected increase in general and administrative expenses, could have a negative effect on the financial condition and ability to make distributions to the stockholders of each company.


Q:	Will I be taxed on the shares of NorthStar Europe Common Stock that I receive in the Distribution?

Yes. The Distribution will be in the form of a taxable special distribution to NorthStar Realty common stockholders. An amount equal to the fair market value of our Common Stock received by you will be treated as a taxable dividend to the extent of your ratable share of any current or accumulated earnings and profits of NorthStar Realty, with the excess treated as a nontaxable return of capital to the extent of your tax basis in shares of NorthStar Realty common stock and any remaining excess treated as capital gain. If this special distribution occurs in the structure and timeframe currently anticipated, the special distribution is expected to satisfy a portion of NorthStar Realty’s 2015 REIT taxable income distribution requirements. NorthStar Realty or other applicable withholding agents may be required to withhold on all or a portion of the Distribution payable to non-U.S. stockholders. For a more detailed discussion, see “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution” and “Federal Income Tax Consequences of Our Status as a REIT.”

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Q:	Does NorthStar Europe intend to pay cash distributions?

We intend to make distributions to holders of our Common Stock on a quarterly basis. Evaluation of our distribution policy will be solely at the discretion of our board of directors and will be based on factors including, but not limited to, CAD, NOI, new investments, capital requirements and other factors our board of directors deems relevant and in accordance with applicable law. For additional information, refer to “Distribution Policy.”


Q:	How will NorthStar Europe Common Stock trade?

There is not currently a public market for our Common Stock. We expect to list our Common Stock on the NYSE under the symbol “NRE.” Beginning shortly before, and continuing up to and including, the date of the Distribution, we expect that there will be a “when-issued” trading market in our Common Stock. The “when-issued” market will be a trading market for the shares of our Common Stock that will be distributed to holders of shares of NorthStar Realty common stock on the Distribution date. If you owned shares of NorthStar Realty common stock at the record date you will be entitled to shares of our Common Stock distributed pursuant to the Distribution. You may trade this entitlement to shares of our Common Stock, without the shares of NorthStar Realty common stock you own, on the “when-issued” market. On the first trading day following the Distribution date, “when-issued” trading with respect to our Common Stock will end and “regular-way” trading will begin.

Further, beginning shortly before the record date and continuing up to and including the date of the Distribution, we expect that there will be two markets in shares of NorthStar Realty common stock: a “regular-way” market and an “ex-distribution” market. Shares of NorthStar Realty common stock that trade on the “regular-way” market will trade with an entitlement to our Common Stock distributed pursuant to the spin-off. Shares of NorthStar Realty common stock that trade on the “ex-distribution” market will trade without an entitlement to our Common Stock distributed pursuant to the spin-off.

Refer to “The Distribution — Listing and Trading of Our Common Stock” for additional information.


Q:	Will the Distribution affect the trading price of my NorthStar Realty common stock?

Yes. After the distribution of our Common Stock, the trading price of NorthStar Realty common stock is expected to be lower than the trading price of the NorthStar Realty common stock immediately prior to the Distribution. Moreover, until the market has evaluated the operations of NorthStar Realty without the operations of NorthStar Europe, the trading price of NorthStar Realty common stock may fluctuate as a result of the Distribution. NorthStar Realty believes the separation of NorthStar Europe from NorthStar Realty offers its stockholders the greatest long-term value. However, the combined trading prices of NorthStar Realty common stock and our Common Stock after the Distribution may be lower than the trading price of NorthStar Realty common stock prior to the Distribution. Refer to “Risk Factors” beginning on page 17 .


Q:	Do I have appraisal rights?


A:	No. Holders of NorthStar Realty common stock are not entitled to appraisal rights in connection with the Distribution.


Q:	Is stockholder approval required for the Distribution?


A:	No. Stockholder approval is not required for the Distribution. Subsequent to final approval by the NorthStar Realty Board and regulatory approval, NorthStar Realty will distribute its ownership interest in NorthStar Europe to its existing stockholders as of the record date.


Q:	Can the NorthStar Realty Board decide to cancel the Distribution?

Yes. The occurrence of the Distribution will be subject to certain conditions, including the final approval of the NorthStar Realty Board. The NorthStar Realty Board may, in its sole and absolute discretion, determine to impose or waive conditions to the Distribution or abandon the Distribution. If the NorthStar Realty Board decides to cancel the Distribution or otherwise materially amend the terms of the Distribution, NorthStar Realty will notify stockholders of such decision by issuing a press release and/or filing a current report on Form 8-K.

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Q:	Who is the transfer agent for NorthStar Europe Common Stock?


A:	American Stock Transfer & Trust Company, LLC

6201 15th Avenue
Brooklyn, NY 11219
Telephone: 1-800-937-5449
Email: info@amstock.com
Website: www.amstock.com


Q:	Where can I get more information?


A:	If you have questions relating to the mechanics of the Distribution of shares of our Common Stock, you should contact the distribution agent:

American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
Telephone: 1-800-937-5449
Email: info@amstock.com
Website: www.amstock.com

Before the Distribution, if you have questions relating to the Distribution, you should contact:

NorthStar Realty Finance Corp.
Attn: General Counsel
399 Park Avenue, 18th Floor

New York, NY 10022

Telephone: (212) 547-2600

After the Distribution, if you have questions relating to NorthStar Europe, you should contact:

NorthStar Realty Europe Corp.
Attn: General Counsel
399 Park Avenue, 18th Floor

New York, NY 10022

Telephone: (212) 547-2600

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RISK FACTORS

The following risk factors and other information included in this prospectus should be carefully considered. If any of the following risks occur, our business, financial condition, operating results, cash flow and liquidity could be materially adversely affected.

Risks Related to Our Business

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

Our business and operations are dependent on the commercial real estate industry generally, which in turn is dependent upon global economic conditions. Despite improvements in the global economy, uncertainty remains as to the extent and timing of further recovery. Issues with the instability of credit and financial markets, actions by governments or central banks, weak consumer confidence in many markets and geopolitical or economic instability in certain countries continues to put pressure on the European economy. Instability or volatility of certain countries in the European Union may create risks for stronger countries within the European Union and globally. 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 economic conditions could harm our business and financial condition by, among other factors, reducing the value of our existing investments, limiting our access to debt and equity capital and otherwise negatively impacting our operations.

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

Challenging economic and financial market conditions may cause us to experience an increase in the number of investments that result in losses, including delinquencies, non-performing investments and a decrease in the value of our property, all of which could adversely affect our results of operations. We may incur substantial losses and need to establish significant provision for losses or impairment. Our revenue from our properties could diminish significantly.

Continuing concerns regarding European debt, market perceptions concerning the instability of the Euro and recent volatility and price movements in the rate of exchange between the U.S. dollar and the Euro could adversely affect our business, results of operations and financing.

Concerns persist regarding the debt burden of certain Eurozone countries and their potential inability to meet their future financial obligations, the overall stability of the Euro and the suitability of the Euro as a single currency, given the diverse economic and political circumstances in individual Eurozone countries and recent declines and volatility in the value of the Euro. These concerns could lead to the re-introduction of individual currencies in one or more Eurozone countries, or, in more extreme circumstances, the possible dissolution of the Euro currency entirely. Should the Euro dissolve entirely, the legal and contractual consequences for holders of Euro-denominated obligations would be uncertain. Such uncertainty would extend to, among other factors, whether obligations previously expressed to be owed and payable in Euros would be re-denominated in a new currency (with considerable uncertainty over the conversion rates), what laws would govern and which country’s courts would have jurisdiction. These potential developments, or market perceptions concerning these and related issues, could materially adversely affect the value of our Euro-denominated investments and obligations.

Furthermore, market concerns about economic growth in the Eurozone relative to the United States and speculation surrounding the potential impact on the Euro of a possible Greek or other country sovereign default and/or exit from the Eurozone may continue to exert downward pressure on the rate of exchange between the U.S. dollar and the Euro, which may adversely affect our results of operations.

Risks Related to Our Manager

Our ability to achieve our investment objectives and to pay distributions depends in substantial part upon the performance of our manager.

In connection with our spin-off from NorthStar Realty, we will enter into a management agreement with NSAM to manage our day-to-day operations and our investments. Our ability to achieve our investment objectives and grow our business will be dependent upon the performance of NSAM in the acquisition of investments, the determination of financing arrangements and the management of our investments and operation of our day-to-day activities under the supervision of, and subject to the policies and guidelines established by, our board of directors. If our manager performs poorly and as a result is unable to originate, acquire and manage our investments successfully, we may be unable to achieve our investment objectives or to pay distributions to stockholders at presently contemplated levels, if at all.

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Any adverse changes in NSAM’s financial health, the public perception of NSAM or our relationship with NSAM could hinder our operating performance and adversely affect our financial condition and results of operations.

Because NSAM is publicly-traded, any negative reaction by the stock market reflected in its stock price or deterioration in the public perception of NSAM could result in an adverse effect on our ability to acquire properties and obtain financing from third parties on favorable terms or at all. In addition, NSAM depends upon the management and other fees and reimbursement of costs that it receives from us and NSAM’s other managed companies in connection with the acquisition, management and sale of properties to conduct its operations. Any adverse changes in the financial condition of NSAM or our relationship with NSAM could hinder NSAM’s ability to successfully support our business and growth, which could have a material adverse effect on our financial condition and results of operations.

NSAM’s 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 by NSAM.

While we believe NSAM’s platform for operating our business is highly scalable and can support significant growth in our business without substantial new investment in personnel, expertise and infrastructure on a relative basis, we may be wrong in that assessment. We expect our business to grow substantially over the course of the next several years, which could place significant additional demands on management and other personnel, as well as our support infrastructure. It is possible that if our business grows substantially or that the business of the other companies managed by NSAM continues to grow, including NorthStar Realty, NSAM will need to make significant additional investments in personnel, expertise and infrastructure to support that growth. NSAM may be unable to make significant investments on a timely basis or at reasonable costs and its failure in this regard could disrupt our business and operations.

Failure of NSAM to effectively perform its obligations under the various agreements we will enter into with it, including the long-term management agreement, could have an adverse effect on our business and performance.

We will engage NSAM to provide asset management and other services to us pursuant to a long-term management agreement and other ancillary agreements. Our ability to achieve our investment objectives and to make distributions to stockholders will depend in substantial part upon the performance of NSAM and its ability to provide us with asset management and other services. We will also be dependent on other third party service providers to whom NSAM may delegate various responsibilities or engage on our behalf. If for any reason NSAM or any other service provider is unable to perform such services at the level we anticipate, alternate service providers may not be readily available on acceptable terms or at all, which could adversely affect our performance and materially harm our ability to execute our business plan.

In addition, the management agreement with NSAM will only be terminable by us for cause. We will be unable to terminate the management agreement for any other reason, including if NSAM performs poorly or is unable to acquire and manage our investments successfully. The term “cause” is limited to specific circumstances to be laid out in the management agreement, including NSAM’s breach of the management agreement or gross negligence that has a materially adverse effect on us. Termination for unsatisfactory financial performance does not constitute “cause” under the management agreement. In addition, we will be contractually committed to NSAM’s management for an initial term of approximately 20 years from the date of the Distribution, with automatic renewal terms thereafter. These provisions will increase our risk that NSAM may not perform well and our business could suffer. If NSAM’s performance as our manager does not meet our or our stockholders’ expectations, and we are unable to terminate the management agreement, the market price of our Common Stock could suffer.

Moreover, pursuant to the management agreement, we will agree to provide NSAM with all investment opportunities for the acquisition of commercial real estate investments that are presented to us or of which we become aware. NSAM will agree to use commercially reasonable efforts to fairly allocate such investment opportunities among us and its other managed companies, including NorthStar Realty, in accordance with an investment allocation policy; however, investment allocations will be determined by NSAM in its sole discretion and there can be no assurance that we will be allocated a fair share of investment opportunities. NSAM will also have the ability, without our consent, to revise the investment allocation policy in connection with obtaining additional managed companies. If NSAM fails to effectively allocate investments to us, we may be unable to achieve our investment objectives, which could have an adverse effect on our business and performance.

Certain fees payable to NSAM will be payable regardless of the performance of our portfolio and may fail to appropriately incentivize NSAM when managing our portfolio.

We will pay NSAM an annual base management fee regardless of the performance of our portfolio. Consequently, we may be required to pay NSAM significant base management fees in a particular quarter despite experiencing a net loss or a decline in the value of our portfolio during that quarter.

NSAM’s entitlement to compensation regardless of our performance might reduce its incentive to devote its time and effort to seeking investments that provide attractive risk-adjusted returns for our portfolio, particularly if other management

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agreements to which NSAM is a party have a performance-based fee structure. In addition, NSAM has the ability to earn incentive fees each quarter based on our CAD, which may create an incentive for NSAM to invest in investments with higher yield potential, which are generally riskier or more speculative, or sell an investment prematurely for a gain and pay down borrowings, in an effort to increase our short-term net income and thereby increase the incentive fees to which it is entitled. Furthermore, the compensation payable to NSAM will increase as a result of future issuances of our equity securities, even if the issuances are dilutive to existing stockholders. If our interests and those of NSAM are not aligned, the execution of our business plan and our results of operations could be adversely affected, which could materially and adversely affect our ability to make distributions to our stockholders and the market price of our Common Stock.

The fees we will pay to NSAM in connection with the acquisition and management of our investments pursuant to the management agreement will not be determined on an arm’s length basis; therefore, we will not have the benefit of arm’s length negotiations of the type normally conducted between unrelated parties.

The fees we will pay to NSAM for services it will provide to us pursuant to the management agreement will not be determined on an arm’s length basis. As a result, the fees will be determined without the benefit of arm’s length negotiations of the type normally conducted between unrelated parties and may be in excess of amounts that we would otherwise pay to third parties for such services; however, the final terms of the management agreement will be approved by our board of directors, including a majority of the independent members thereof.

In addition to the management fees we will pay to NSAM, we will reimburse NSAM for costs and expenses incurred on our behalf, including indirect personnel and employment costs of NSAM and these costs and expenses may be substantial.

We will pay NSAM substantial fees for the services it will provide to us and we also will have an obligation to reimburse NSAM for costs and expenses it may incur and pay on our behalf. Subject to certain limitations and exceptions, we will reimburse NSAM for both direct expenses as well as indirect costs, including a portion of NSAM’s personnel and employment costs. The costs and expenses NSAM expects to incur on our behalf, including the compensatory costs incurred by NSAM, may be substantial. There are conflicts of interest that could arise when NSAM makes allocation determinations. NSAM could allocate costs and expenses to us in excess of what we anticipate and such costs and expenses could have an adverse effect on our financial performance and ability to make cash distributions to our stockholders.

There will be conflicts of interest in our relationship with NSAM that could result in decisions that are not in the best interests of our stockholders.

We will be subject to conflicts of interest arising out of our relationship with NSAM, its affiliates, managed entities and strategic ventures. In particular, we expect to compete for investment opportunities directly with other companies and/or accounts that NSAM or its strategic or joint venture partners manage. Certain of NSAM’s managed companies, along with companies, funds and vehicles that are subject to a strategic relationship between NSAM and its strategic or joint venture partners (which we refer to collectively as strategic vehicles), may have investment mandates and objectives that target the same investments as us.

In addition, NSAM may have additional managed companies or strategic vehicles that will compete directly with us for investment opportunities in the future. We will adopt an investment allocation policy with NSAM that is intended to ensure that investments are allocated fairly and appropriately among us and the other NSAM managed companies or strategic vehicles over time, but there is no assurance that NSAM will be successful in eliminating the conflicts arising from the allocation of investment opportunities. When determining the entity for which an investment opportunity would be the most suitable, the factors that NSAM may consider include, among other factors, the following:


•	investment objectives, strategy and criteria;


•	cash requirements and amount of funds available;


•	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 investment to be acquired;


•	income tax effects of the purchase;


•	the size of the investment;


•	cost of capital;


•	risk return profiles;

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•	targeted distribution rates;


•	anticipated future pipeline of suitable investments;


•	the expected holding period of the investment and the remaining term of the NSAM managed company, 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, NSAM determines that an investment is equally suitable for us and one of its managed companies or strategic vehicles, the investment will be allocated among each of the applicable entities, including us, on a rotating basis. New NSAM clients, including us, will be initially added at the end of the rotation. If, after an investment has been allocated to us or any other entity, a subsequent event or development, such as delays in structuring or closing on the investment, makes it, in the opinion of NSAM, more appropriate for an alternative entity to fund the investment, NSAM may determine to place the investment with the more appropriate entity. If an investment opportunity is re-allocated to another managed company or strategic vehicle after being initially allocated to us because of a change in circumstances, for purposes of the rotation schedule, we would still be treated as having the investment opportunity allocated to us. This policy is the same for all of NSAM's managed companies and we anticipate receiving a fair and reasonable allocation of all of NSAM's investment opportunities. In certain situations, NSAM may determine to allow more than one investment vehicle, including us, to co-invest in a particular investment.

NSAM currently manages or sponsors five companies and intends to sponsor additional companies in the future. While none of the other managed companies, sponsored companies, joint ventures or strategic vehicles currently has the same strategic investment focus on European commercial real estate as the Company, there are no restrictions which would preclude the other managed companies and joint ventures from acquiring European commercial real estate properties in the future that could directly compete with the Company’s investments.

There is no assurance this policy will remain in place during the entire period we are seeking investment opportunities. In addition, NSAM may sponsor additional managed companies or strategic vehicles in the future and, in connection with the creation of such managed companies or strategic 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 NSAM or us, thereby reducing the number of investment opportunities available to us.

In addition, under this policy, NSAM investment professionals may consider the investment objectives and anticipated pipeline of future investments of its managed companies or strategic vehicles. The decision of how any potential investment should be allocated among us and one of NSAM’s managed companies or strategic vehicles for which such investment may be suitable may, in many cases, be a matter of subjective judgment which will be made by NSAM. Pursuant to the investment allocation policy, NSAM may choose to allocate favorable investments to its other managed companies instead of to us. Our investment allocation policy with NSAM could produce unfavorable results for us that could harm our business.

NSAM also has and may in the future acquire additional interests in third parties, such as management firms that manage certain of our properties, which may cause its interests to differ from ours. NSAM may also encourage our use of third party service providers, for which we pay a fee. If our interests and NSAM’s interests are not aligned, we may face conflicts of interest that result in action or inaction that is detrimental to us.

NSAM’s professionals who perform services for us will face competing demands relating to their time and conflicts of interests relating to performing services on our behalf, which may cause our operations and stockholders’ investment to suffer.

We will rely on NSAM’s professionals to perform services related to the operation of our business. NSAM professionals performing services for us also perform services for NSAM’s other managed companies. As a result of their interests in NSAM, other managed companies and the fact that they engage in other business activities on behalf of others, these individuals will face conflicts of interest in allocating their time among us, NSAM and other managed companies and other business activities in which they are involved. In addition, certain management personnel performing services on behalf of NSAM own equity interests in NSAM or other managed companies and NSAM may grant additional equity interests in NSAM or other managed companies to such persons in connection with their continued services. 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, our investment opportunities and the returns on our investments. If we do not successfully implement our business strategy, we may be unable to generate the cash needed to make distributions to stockholders and to maintain or increase the value of our investments.

Further, at times when there are turbulent conditions in the real estate markets or distress in the credit markets or other times when we will need focused support and assistance from NSAM, NSAM’s other managed companies may likewise require

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greater focus and attention, placing NSAM’s resources in high demand. In such situations, we may not receive the level of support and assistance that we may receive if we were internally managed or if NSAM did not act as a manager for other entities.

Our executive officers are employees of NSAM and face conflicts of interest related to their positions and interests in NSAM, which could hinder our ability to implement our business strategy.

Our executive officers are employees of NSAM and provide services to us solely in such capacity pursuant to NSAM’s obligations to us under the management agreement. We do not have employment agreements with any of our executive officers. If the management agreement with NSAM were to be terminated, we would lose the services of all our executive officers and other NSAM investment professionals acting on our behalf. Furthermore, if any of our executive officers ceased to be employed by NSAM, such individual would also no longer serve as one of our executive officers. NSAM is an independent contractor and controls the activities of its employees, including our executive officers. Our executive officers therefore owe duties to NSAM and its stockholders, which may from time-to-time conflict with the duties they owe to us and our stockholders. In addition, our executive officers may also own equity in NSAM or its other managed companies. As a result, 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 investment opportunities.

We may not realize the anticipated benefits of any of our manager’s strategic partnerships and joint ventures.

NSAM may enter into strategic partnerships and joint ventures to further its own interests or the interests of its managed companies, including us. NSAM may not be able to realize the anticipated benefits of these strategic partnerships and joint ventures. These strategic partnerships and/or joint ventures may also subject NSAM and its managed companies, including us, to additional risks and uncertainties, as NSAM and its managed companies, including us, may be dependent upon, and subject to, liability, losses or reputational damage relating to systems, control and personnel that are not under NSAM’s control. In addition, where NSAM does not have a controlling interest, it may not be able to take actions which are in our best interests due to a lack of full control. Furthermore, to the extent that NSAM’s partners provide services to us, certain conflicts of interests will exist. Moreover, disagreements or disputes between NSAM and its partners could result in litigation, which could potentially distract NSAM from our business.

NSAM will manage our portfolio pursuant to very broad investment guidelines and our board of directors is not required to approve each investment and financing decision made by NSAM unless so required by our investment guidelines.

NSAM will be authorized to follow very broad investment guidelines established by our board of directors. Our board of directors periodically will review our investment guidelines and our investment portfolio but will not, and will not be required to, review all of our proposed investments, except in limited circumstances as set forth in our investment guidelines. Our board of directors may also make modifications to our investment guidelines from time to time as it deems appropriate. In addition, in conducting periodic reviews or modifying our investment guidelines, our board of directors may rely primarily on information provided to them by NSAM. Furthermore, transactions entered into by NSAM on our behalf may be costly, difficult or impossible to unwind by the time they are reviewed by our board of directors. NSAM will have flexibility within the broad parameters of our investment guidelines in determining the types and amounts of investments in which to invest on our behalf, including making investments that may result in returns that are substantially below expectations or result in losses, which could materially and adversely affect our business and results of operations, or may otherwise not be in the best interests of our stockholders.

NSAM’s liability will be limited under the management agreement and we will agree to indemnify NSAM against all liabilities incurred in accordance with and pursuant to the management agreement.

In connection with the spin-off, we will enter into a management agreement with NSAM, which will govern our relationship with NSAM. Our manager maintains a fiduciary relationship with us. Under the terms of the management agreement, and subject to applicable law, NSAM, its directors, officers, employees, partners, managers, members, controlling persons, and any other person or entity affiliated with NSAM are not liable to us or our subsidiaries for acts taken or omitted to be taken in accordance with and pursuant to the management agreement, except those resulting from acts of willful misfeasance or bad faith in the performance of NSAM’s duties under the management agreement. In addition, subject to applicable law, we agreed to indemnify NSAM and each of its directors, officers, employees, partners, managers, members, controlling persons and any other person or entity affiliated with NSAM from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with NSAM’s performance of its duties or obligations under the management agreement or otherwise as our manager, except where attributable to acts of willful misfeasance or bad faith in the performance of NSAM’s duties under the management agreement.

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NSAM is subject to extensive regulation as an investment adviser in the United States and as a fund services business in the Bailiwick of Jersey, which could adversely affect its ability to manage our business.

Certain of NSAM’s affiliates, including our manager, are subject to regulation as investment advisers and/or fund managers by various regulatory authorities that are charged with protecting the interests of NSAM’s managed companies, including us. Instances of criminal activity and fraud by participants in the investment management industry and disclosures of trading and other abuses by participants in the financial services industry have led the U.S. government and regulators in foreign jurisdictions to consider increasing the rules and regulations governing, and oversight of, the financial system. This activity is expected to result in continued changes to the laws and regulations governing the investment management industry and more aggressive enforcement of the existing laws and regulations. NSAM could be subject to civil liability, criminal liability, or sanction, including revocation of its registration as an investment adviser in the United States, or its registration as a fund services business in the Bailiwick of Jersey, revocation of the licenses of its employees, censures, fines or temporary suspension or permanent bar from conducting business, if it is found to have violated any of these laws or regulations. Any such liability or sanction could adversely affect its ability to manage our business.

NSAM must continually address conflicts between its interests and those of its managed companies, including us. In addition, the SEC, the Jersey Financial Services Commission and other regulators have increased their scrutiny of potential conflicts of interest. However, appropriately dealing with conflicts of interest is complex and difficult and if NSAM fails, or appears to fail, to deal appropriately with conflicts of interest, it could face litigation or regulatory proceedings or penalties, any of which could adversely affect its ability to manage our business.

NSAM could undergo a change of control, which could result in a change of management at NSAM and cause a disruption to our business and operations.

NSAM could undergo a change of control, which could result in a change to the management at NSAM as well as a change to the board of directors at NSAM. Consequently, we could be managed by an entity and personnel that do not have the experience and track record that resides within NSAM and suitable alternatives may not be available. New management and personnel could change the manner in which they provide services to us and may not be effective. Any such fundamental change to NSAM could be disruptive to our business and operations and could have a material adverse effect on our performance.

Risks Related to Our Investments

A prolonged economic slowdown, a lengthy or severe recession or declining real estate values could harm our investments.

Our investments may be susceptible to economic slowdowns or recessions, which could lead to financial losses and a decrease in revenues, earnings and assets. We may continue to expand our commercial real estate portfolio by acquiring additional properties in Europe, which would increase our exposure to global economic slowdowns and recessions. An economic slowdown or recession, in addition to other non-economic factors such as an excess supply of properties, could have a material negative impact on the values of our investments. Declining real estate values will reduce the value of our properties, as well as our ability to refinance our properties and use the value of our existing properties to support the purchase or investment in additional properties. Slower than expected economic growth pressured by a strained labor market, along with overall financial uncertainty, could result in lower occupancy rates and lower lease rates across many property types and may create obstacles for us to achieve our business plans. We may also be less able to pay principal and interest on our borrowings, which could cause us to lose title to properties securing our borrowings. Any of the foregoing could significantly harm our revenues, results of operations, financial condition, business prospects and our ability to make distributions to stockholders.

We are subject to significant competition and we may not be able to compete successfully for investments.

We are subject to significant competition for attractive investment opportunities from other real estate investors, some of which have greater financial resources than us, including publicly-traded REITs, non-traded REITs, insurance companies, commercial and investment banking firms, private institutional funds, hedge funds, private equity funds, sovereign wealth funds and other investors. We may not be able to compete successfully for investments. In addition, the number of entities and the amount of funds competing for suitable investments may increase. If we pay higher prices for investments, our returns may be lower and the value of our investments may not increase or may decrease significantly below the amount we paid for such investments. If such events occur, we may experience lower returns on our investments.

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While we are focused on investing in European commercial real estate, we have no established investment criteria limiting the particular country or region , industry concentration or investment type of our investments. If our investments are concentrated in a particular country or region or property type that experiences adverse economic conditions, our investments may lose value and we may experience losses.

Properties that we may acquire may be concentrated in a particular country or region or in a particular property type. These current and future investments carry the risks associated with significant regional or industry concentration. We have not established and do not plan to establish any investment criteria to limit our exposure to these risks for future investments. As a result, properties underlying our investments may be overly concentrated in certain countries or regions or industries and we may experience losses as a result. A worsening of economic conditions, a natural disaster or civil disruptions in a particular country or region in which our investments may be concentrated, or economic upheaval with respect to a particular property type, could have an adverse effect on our business, including impairing the value of our properties.

Approximately 94% of our in-place rental income is generated from office properties, which increases the likelihood that risks related to owning office properties will become more material to our business and results of operations.

Approximately 94% of our in-place rental income is generated from office properties. Our exposure to the risks inherent in the office sector may make us more vulnerable to a downturn or slowdown in the office sector. A downturn in the office industry could negatively affect our lessees’ ability to make lease payments to us and our ability to pay distributions to our stockholders. These adverse effects may be more pronounced than if our investments were more diversified.

We are subject to additional risks due to the international nature of our investments, which could adversely impact our business and results of operations.

We recently acquired approximately $2.6 billion, at cost, of real estate in Europe, including properties located in Germany, the United Kingdom, France, the Netherlands, Italy, Belgium and Sweden. We expect to pursue additional expansion opportunities in Europe.

Most of our management’s expertise to date is in the United States and neither we nor NSAM has extensive expertise in international markets. Our investments may be affected by factors peculiar to the laws of the jurisdiction in which the borrower or the property is located and these laws may expose us to risks that are different from and/or in addition to those commonly found in the United States. We anticipate paying additional fees to third parties to help manage these portfolios, but there is no assurance this will reduce our risk. We and NSAM may not be as familiar with the potential risks to our investments 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, deflation 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;


•	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 we have an investment;


•	our REIT tax status not being respected under foreign laws, in which case any income or gains from foreign sources would likely be subject to foreign taxes, withholding taxes, transfer taxes and value added taxes;


•	lack of uniform accounting standards (including availability of information in accordance with U.S. GAAP);


•	changes in land use and zoning laws;


•	more stringent environmental laws or changes in such laws;

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•	changes in the social stability or other political, economic or diplomatic developments in or affecting a country where we have an investment;


•	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, including insolvency regimes, landlord/tenant rights and ability to take possession of collateral.

Each of these risks might adversely affect our performance and impair our ability to make distributions to our stockholders required to qualify and remain qualified as a REIT. In addition, there is generally less publicly available information about foreign companies and a lack of uniform financial accounting standards and practices (including the availability of information in accordance with U.S. GAAP) which could impair our ability to analyze transactions and receive timely and accurate financial information from tenants necessary to meet our reporting obligations to financial institutions or governmental or regulatory agencies.

Our business will also be subject to extensive regulation by various non-U.S. regulators, including governments, central banks and other regulatory bodies, in the jurisdictions in which the business operates. In many countries, the laws and regulations applicable to the financial services and securities industries are uncertain and evolving and it may be difficult for us to determine the exact requirements of local laws in every market or manage our relationships with multiple regulators in various jurisdictions. Our inability to remain in compliance with local laws in a particular market and manage our relationships with regulators could have a significant and adverse effect not only on our businesses in that market but also on our reputation generally.

Our joint venture partners could take actions that decrease the value of an investment to us and lower our overall return.

We currently are party to and may in the future enter into joint ventures with third parties to make investments. We may also make investments in partnerships or other co-ownership arrangements or participations. Such investments may involve risks not otherwise present with other methods of investment, including, for example, the following risks:


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


•	fraud or other misconduct by our joint venture partners;


•	we may share decision-making authority with our joint venture partner regarding certain major decisions affecting the ownership of the joint venture and the joint venture property, such as the sale of the property or the making of additional capital contributions for the benefit of the property, 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, including for example the operation of the properties owned by such joint venture;


•	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.

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.

Because real estate investments are relatively illiquid, we may not be able to vary our portfolio in response to changes in economic and other conditions, which may result in losses to us.

Many of our investments are illiquid. A variety of factors could make it difficult for us to dispose of any of our investments on acceptable terms even if a disposition is in the best interests of our stockholders. We cannot predict whether we will be able to sell any property for the price or on the terms set by us or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. Certain properties may also be subject to transfer restrictions that materially restrict us from selling that property for a period of time or impose other restrictions, such as a limitation on the amount of financing that can be placed or repaid on that property. We may be required to expend cash to correct defects or to make improvements before a property can be sold, and we cannot assure that we will have cash available to correct those defects or to make those improvements. The Internal Revenue Code of 1986, as amended, or the Code, also places limits on our ability to sell certain properties held for fewer than two years.

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We may also determine to give our tenants a right of first refusal or similar options. As a result, our ability to sell investments in response to changes in economic and other conditions could be limited. To the extent we are unable to sell any property for its book value or at all, we may be required to take a non-cash impairment charge or loss on the sale, either of which would reduce our earnings. Limitations on our ability to respond to adverse changes in the performance of our properties may have a material adverse effect on our business, financial condition and results of operations and our ability to make distributions to stockholders.

We are subject to risks, such as declining real estate values and operating performance, associated with future advance or capital expenditure obligations.

We may need to fund capital expenditures and other significant expenses for our real estate property investments in excess of those projected at the time of our underwriting because of, among other reasons, inaccurate or incomplete technical advice from our advisors at the time of underwriting that results in greater than expected expenditures. Future funding obligations subject us to significant risks such as that the property may have declined in value, projects to be completed with the additional funds may have cost overruns and the tenant may be unable to generate enough cash flow and execute its business plan, or sell or refinance the property, in order to repay our debt due. We could determine that we need to fund more money than we originally anticipated in order to maximize the value of our investment even though there is no assurance additional funding would be the best course of action. Further, future funding obligations require us to maintain higher liquidity than we might otherwise maintain and this could reduce the overall return on our investments. We could also find ourselves in a position with insufficient liquidity to fund future obligations and we could experience losses.

We may obtain only limited warranties when we purchase a property, which will increase the risk that we may lose some or all of our invested capital in the property or rental income from the property which, in turn, could materially adversely affect our business, financial condition and results from operations and our ability to make distributions to stockholders.

The seller of a property often sells such property in an “as is” condition on a “where is” basis and “with all faults,” without any warranties of merchantability or fitness for a particular use or purpose. In addition, the related real estate purchase and sale agreements may contain only limited warranties, representations and indemnifications that will only survive for a limited period after the closing. Despite our efforts, we may fail to uncover all material risks during our diligence process. The purchase of properties with limited warranties increases the risk that we may lose some or all of our invested capital in the property, as well as the loss of rental income from that property if an issue should arise that decreases the value of that property and is not covered by the limited warranties. If any of these results occur, it may have a material adverse effect on our business, financial condition and results of operations and our ability to make distributions to stockholders. In addition, where the seller of a property we purchase is a liquidating fund or funds, we may be further limited in our ability to enforce against breaches of certain representations and warranties granted in the purchase and sale agreement beyond a very limited period of time (as the entities may be dissolved).

The price we pay for acquisitions of real property will be based on our projections of market demand, occupancy and rental income, as well as on market factors, and our return on our investment may be lower than expected if any of our projections are inaccurate.

The price we pay for real property investments will be based on our projections of market demand, occupancy levels, rental income, the costs of any development, redevelopment or renovation of property and other factors. In addition, as the real estate market continues to strengthen with the recovery in the European economies that we expect to continue in 2015 to 2016, we will face increased competition, which may drive up prices for commercial real estate. If any of our projections are inaccurate or we overpay for investments and their value subsequently drops or fails to rise because of market factors, returns on our investment may be lower than expected and could experience losses.

Our lease transactions may not result in market rates over time.

We expect substantially all of our rental and escalation income to come from lease transactions, which may have longer terms than standard arrangements or renewal options that specify maximum rate increases. If we do not accurately judge the potential for increases in market rates, rental and escalation increases under the terms may fail to result in fair market rates over time. Further, we may have no ability to terminate our lease transactions or adjust the rent to then-prevailing market rates. As a result, our income and distributions to stockholders could be lower than they would otherwise be if we did not enter into such lease agreements.

Some of our leases may expire in the same year.

Some of the leases for our real estate investments may expire in the same year. We may also enter into leases that are short term in nature and therefore subject to heightened lease turnover risk. Additionally, for certain of our properties which are primarily leased to one tenant, such as certain of our Italian, French and Dutch properties in the SEB portfolio and the Trianon Tower, lease expirations may impact our ability to comply with financial covenants under our borrowings. As a result, we could

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be subject to a sudden and material change in value of our portfolio and available cash flow from such investments in the event that these leases are not renewed or in the event that we are not able to comply with or obtain relief from our financial covenants under the borrowings related to, or cross-collateralized with, the properties that are subject to these leases.

We may not be able to relet or renew leases at the properties held by us on favorable terms, or at all.

Certain of our real estate investments were negatively impacted by the more recent challenging economic conditions and all of our investments in real estate may be pressured if economic conditions and rental markets continue to be challenging. For example, upon expiration or earlier termination of leases for space located at our properties, the space may not be relet or, if relet, the terms of the renewal or reletting (including the cost of required renovations or concessions to tenants) may be less favorable than current lease terms. We may be receiving above market rental rates which will decrease upon renewal, which will adversely impact our income and could harm our ability to service our debt and operate successfully. Weak economic conditions would likely reduce tenants’ ability to make rent payments in accordance with the contractual terms of their leases and lead to early termination of leases. Furthermore, commercial space needs may contract, resulting in lower lease renewal rates and longer releasing periods when leases are not renewed. Any of these situations may result in extended periods where there is a significant decline in revenues or no revenues generated by a property. Additionally, to the extent that market rental rates are reduced, property-level cash flow would likely be negatively affected as existing leases renew at lower rates. If we are unable to relet or renew leases for all or substantially all of the space at these properties, if the rental rates upon such renewal or reletting are significantly lower than expected or if our reserves for these purposes prove inadequate, we will experience a reduction in net income and may be required to reduce or eliminate cash distributions to stockholders.

Additionally, the open market lease review process in certain jurisdictions can be a lengthy one and often results in resolution though arbitration. While the agreed rent level generally applies retroactively to the lease review date, this can be a lengthy and costly process.

Many of our investments are dependent upon tenants successfully operating their businesses and their failure to do so could have a material adverse effect on our business, financial condition and results of operations and our ability to make distributions to stockholders.

We depend on our tenants to manage the day-to-day operations of our real estate properties in a manner that generates revenues sufficient to allow them to meet their obligations to us, including their obligations to pay rent, maintain certain insurance coverage, pay real estate taxes and maintain the properties under their operational control in a manner that does not jeopardize their operating licenses or regulatory status. We may not be able to find suitable tenants to lease our properties, and the ability of our tenants to fulfill their obligations to us may depend, in part, upon the overall profitability of their operations, including any other facilities, properties or businesses they may acquire or operate. The cash flow generated by the operation of our properties may not be sufficient for a tenant to meet its obligations to us. Tenants who are having trouble with their cash flow are more likely to expose us to unknown liens and other risks to our investments. In addition, we may have trouble recovering from tenants who are insolvent. Our financial position could be weakened and our ability to fulfill our obligations under our real estate borrowings could be limited if our tenants are unable to meet their obligations to us or we fail to renew or extend our contractual relationship with any of our tenants. Any of these results could have a material adverse effect on our business, financial condition and results of operations and our ability to make distributions to stockholders.

We may become responsible for capital improvements. To the extent such capital improvements are not undertaken, the ability of our tenants to manage our properties effectively and on favorable terms may be affected, which in turn could materially adversely affect our business, financial conditions and results of operations and our ability to make distributions to stockholders.

We may be responsible under local law of certain jurisdictions in which we own property for capital improvements. In France, the legal distribution of charges between us and the tenant may be contractually set out. However, certain French law makes it mandatory for us, as owners of the real properties, for leases entered into or renewed on or after November 3, 2014, to incur expenditures for major repairs, in particular those related to the obsolescence of the properties and those required to meet changing legal regulation. They may also force us to pay certain taxes. These expenditures, which cannot be contractually transferred to the tenant, could have a material adverse effect on our business if they exceed our expectations.

In addition, under German law, maintenance and modernization measures may be required to meet changing legal, environmental or market requirements ( e.g. , with regard to health and safety requirements and fire protection). The costs associated with keeping properties up to market demand are borne primarily by the property owner. Lease agreements for commercial properties may also transfer responsibility for the maintenance and repair of leased properties to tenants. However, the costs of maintenance and repairs to the roof and structures and of areas located in the leased property used by several tenants may not be fully transferred to tenants by use of general terms and conditions and requires contractual limitation on the amount apportioned.

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Furthermore, although tenants are generally responsible for capital improvement expenditures under typical net lease structures applicable in the United Kingdom, it is possible that a tenant may not be able to fulfill its obligations to keep the facility in good operating condition. To the extent capital improvements are not undertaken or are deferred, occupancy rates and the amount of rental and reimbursement income generated by the facility may decline, which would negatively impact the overall value of the affected property. We may be forced to incur unexpected significant expense to maintain our properties, even those that are subject to net leases. Any of these results could have a material adverse effect on our business, financial condition and results of operations and our ability to make distributions to stockholders.

We could incur additional costs if the actual costs of maintaining or modernizing our properties exceed our estimates, if we are not permitted to raise rents in connection with maintenance and modernization measures, if hidden defects not covered by insurance or contractual warranties are discovered during the maintenance or modernization process or if additional spending is required. Any failure to undertake appropriate maintenance and modernization measures could adversely affect out rental income and entitle tenants to withhold or reduce rental payments or even to terminate existing lease agreements. If we incur substantial unplanned maintenance, repair and modernization costs or fail to undertake appropriate maintenance measures, this could have a material adverse effect on our business, net assets, financial condition, cash flows or results of operations.

We are party to commercial leases which are heavily regulated to protect the tenant and any future amendments to such regulation could increase our expenditures.

Commercial leases are heavily regulated in some countries in which we operate. In France, the contractual conditions applying to commercial leases duration, renewal, rent and rent indexation are considered matters of public policy, and as such are heavily regulated to protect the tenant. The minimum duration of a commercial lease is nine years. The tenant has the right to terminate the lease at the end of every three-year period, unless contractually agreed otherwise; he also has a right of renewal of the lease upon termination of the lease’s initial period.

In addition, the tenant has a right of revision of the rent every three years. The rent variation, however, is capped. Except where the rental value considerably changes (increase by more than 10% in case of a revision upon a three-year period), the variation of the rent, in case of a revision upon a three-year period or in the case of a renewal, cannot exceed the variation of the indice trimestriel des loyers commerciaux , or the Commercial Rents Index, or the indice trimestriel des loyers des activités tertiaires , or the Retail Rental Index. However, this provision does not apply in case of a renewal of a lease, the initial duration of which exceeded nine years or the effective duration of which exceeded twelve years. In addition, even in the case of a renewed or revised lease where the rental value has considerably changed, the rent increase cannot exceed 10% of the rent paid during the previous year. Consequently, we cannot freely raise rents of ongoing leases in France .

Furthermore, changes in the content, interpretation or enforcement of these regulations could compromise some of the practices adopted by us in managing our property holdings and increase our costs for operating, maintaining and renovating our property holding and adversely affect the valuation of our property holding. In particular, recent changes to French law amended many provisions applicable to commercial leases in France, and more specifically:


•	cancelled any reference in the French commercial code, with respect to the variation of the rent of a renewed or revised lease, to the indice national trimestriel mesurant le coût de la construction , or the Construction Cost Index, and replaced it with the Commercial Rents Index and the Retail Rental Index;


•	removed the possibility to contractually remove the right of the tenant to terminate the lease at the end of every three-year period, with the exception of leases for premises to be used exclusively as office space; and


•	made it mandatory for the property owner to incur certain charges.

Lease defaults, terminations or landlord-tenant disputes may reduce our income from our real estate investments.

The creditworthiness of our tenants in our real estate investments have been, or could become, negatively impacted as a result of challenging economic conditions or otherwise, which could result in their inability to meet the terms of their leases. Lease defaults or terminations by one or more tenants may reduce our revenues unless a default is cured or a suitable replacement tenant is found promptly. In addition, disputes may arise between the landlord and tenant that result in the tenant withholding rent payments, possibly for an extended period. These disputes may lead to litigation or other legal procedures to secure payment of the rent withheld or to evict the tenant. Upon a lease default, we may have limited remedies, be unable to accelerate lease payments or evict a defaulting tenant and have limited or no recourse against a guarantor. In addition, the legal process for evicting defaulting tenants may be lengthy and costly. Tenants as well as guarantors may have limited or no ability to satisfy any judgments we may obtain. We may also have duties to mitigate our losses and we may not be successful in that regard. Any of these situations may result in extended periods during which there is a significant decline in revenues or no revenues generated by a property. If this occurred, it could adversely affect our results of operations.

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The bankruptcy, insolvency or financial deterioration of any of our tenants could significantly delay our ability to collect unpaid rents or require us to find new tenants.

Our financial position and our ability to make distributions to stockholders may be adversely affected by financial difficulties experienced by any of our major tenants, including bankruptcy, insolvency or a general downturn in business, or in the event any of our major tenants do not renew or extend their relationship with us as their lease terms expire.

We are exposed to the risk that our tenants may not be able to meet their obligations to us or other third parties, which may result in their bankruptcy or insolvency. Although some of our leases and loans permit us to evict a tenant, demand immediate repayment and pursue other remedies, bankruptcy laws afford certain rights to a party that has filed for bankruptcy or reorganization. A tenant in bankruptcy may be able to restrict our ability to collect unpaid rents or interest during the bankruptcy proceeding. Furthermore, dealing with a tenant bankruptcy or other default may divert management’s attention and cause us to incur substantial legal and other costs.

Bankruptcy laws vary across the different jurisdictions in Europe. In certain jurisdictions, a debtor has the option to assume or reject an unexpired lease. A debtor cannot choose to keep the beneficial provisions of a contract while rejecting the burdensome ones; the contract must be assumed or rejected as a whole. In France, if the debtor chooses to continue an unexpired commercial lease, but still fails to pay the rent in connection with the occupancy after the bankruptcy procedure commencement order, we cannot legally request the termination of the lease before the end of a three-month period from the date of issue of the order relating to the bankruptcy procedure commencement.

Our tenants’ forms of entities may cause special risks or hinder our recovery.

Most of our tenants in the real estate that we own are legal entities rather than individuals. The obligations these entities owe us are typically non-recourse so we can only look to our collateral, and at times, the assets of the entity may not be sufficient to recover our investment. As a result, our risk of loss may be greater than for leases with individuals. Unlike individuals involved in bankruptcies, these legal entities will generally not have personal assets and creditworthiness at stake. As a result, the default or bankruptcy of one of our tenants, or a general partner or managing member of that tenant, may impair our ability to enforce our rights and remedies under the terms of the lease agreement.

Compliance fire and safety and other regulations may require us or our tenants to make unanticipated expenditures which could adversely affect our business, financial condition and results of operations and our ability to make distributions to stockholders.

Our properties are required to comply with jurisdiction-specific fire and safety regulations, building codes and other land regulations and licensing or certification requirements as they may be adopted by governmental agencies and bodies from time-to-time. We may be required to incur substantial costs to comply with those requirements. Changes in labor and other laws could also negatively impact us and our tenants. For example, changes to labor-related statutes or regulations could significantly impact the cost of labor in the workforce, which would increase the costs faced by our tenants and increase their likelihood of default.

Environmental compliance costs and liabilities associated with our properties may materially impair the value of our investments and expose us to liability.

Under various international and local environmental laws, ordinances and regulations, a current or previous owner of real property, such as us and our tenants, may be liable in certain circumstances for the costs of investigation, removal or remediation of, or related releases of, certain hazardous or toxic substances, including materials containing asbestos, at, under or disposed of in connection with such property, as well as certain other potential costs relating to hazardous or toxic substances, including government fines and damages for injuries to persons and adjacent property. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and the costs it incurs in connection with the contamination. These laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence or disposal of such substances and liability may be imposed on the owner in connection with the activities of a tenant at the property. The presence of contamination or the failure to remediate contamination may adversely affect our or our tenants’ ability to sell or lease real estate, or to borrow using the real estate as collateral, which, in turn, could reduce our revenues. We, or our tenants, as owner of a site, may be liable under common law or otherwise to third parties for damages and injuries resulting from environmental contamination emanating from the site. The cost of any required investigation, remediation, removal, fines or personal or property damages and our or our tenants’ liability could significantly exceed the value of the property without any limits.

The scope of the indemnification our tenants have agreed to provide us may be limited. For instance, some of our agreements with our tenants do not require them to indemnify us for environmental liabilities arising before the tenant took possession of the premises. Further, we cannot assure stockholders that any such tenant would be able to fulfill its indemnification obligations. If we were deemed liable for any such environmental liabilities and were unable to seek recovery against our tenant, our business, financial condition and results of operations could be materially and adversely affected.

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We may make investments that involve property types and structures with which we have less familiarity, thereby increasing our risk of loss.

We may determine to invest in residential real estate and multifamily housing and other certain property types with which we have limited or no prior experience. When investing in property types with which we have limited or no prior experience, we may not be successful in our diligence and underwriting efforts. We may also be unsuccessful in preserving value if conditions deteriorate and we may expose ourselves to unknown substantial risks. Furthermore, these investments could require additional management time and attention relative to investments with which we are more familiar. All of these factors increase our risk of loss.

Risks Related to Our Financing Strategy

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

We require outside capital to fund and grow our business. 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 costs of obtaining or replacing capital, both domestically and abroad. A primary source of liquidity for us will be the debt and equity capital markets, including issuances, directly or indirectly, of common equity, preferred equity and exchangeable senior notes. Despite recent improvements since the global financial crisis in 2008, 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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Sources of Operating Revenues and Cash Flows” and the notes to the NorthStar Europe Predecessor’s combined financial statements beginning on page F-1 .

We may be unable to obtain financing required to acquire investments as contemplated in our business plan, which could compel us to restructure or abandon a particular acquisition and harm our ability to make distributions to stockholders.

We expect to fund a portion of our investments with financing. We cannot assure stockholders that financing will be available on acceptable terms, if at all, which could reduce the number, or alter the type, of investments that we would make otherwise. To the extent that financing proves to be unavailable when needed, we may be compelled to modify our investment strategy to optimize the performance of our portfolio. This may reduce our income. Any failure to obtain financing could have a material adverse effect on the continued development or growth of our business and harm our ability to make distributions to stockholders.

We may use leverage in connection with our business, which could adversely affect our return on our investments and reduce cash available for distribution to stockholders.

We may leverage our portfolio generally through the use of credit facilities and other borrowings. The type and percentage of financing will vary depending on our ability to obtain credit and the lender’s estimate of the stability of the portfolio’s cash flow. However, we do not expect to restrict the amount of borrowings that we may incur. High leverage can, particularly during difficult economic times, increase our risk of loss and harm our liquidity. Moreover, we may have to incur more recourse borrowings, including recourse borrowings that are subject to mark-to-market risk, in order to obtain financing for our business. As of June 30, 2015, adjusted for an acquisition through September 28, 2015 , we had approximately $1.8 billion of borrowings outstanding.

Substantial borrowings, among other things, could:


•	require us to dedicate a large portion of our cash flow to pay principal and interest on our borrowings, which would reduce the availability of cash flow to fund working capital, capital expenditures and other business activities;


•	require us to maintain minimum unrestricted cash;


•	increase our vulnerability to general adverse economic and industry conditions;


•	require us to post additional reserves and other additional collateral to support our financing arrangements, which could reduce our liquidity and limit our ability to leverage our investments;


•	subject us to maintaining various debt, operating income, net worth, cash flow and other covenants and financial ratios;


•	limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

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•	restrict our operating policies and ability to make strategic acquisitions, dispositions or pursue business opportunities;


•	require us to maintain a borrowing base of assets;


•	place us at a competitive disadvantage compared to our competitors that have fewer borrowings;


•	put us in a position that necessitates raising equity capital at a time that is unfavorable to us and dilutive to our stockholders;


•	limit our ability to borrow additional funds (even when necessary to maintain adequate liquidity), dispose of investments or make distributions to stockholders; and


•	increase our cost of capital.

Our ability to effectively execute our financing strategy depends on various conditions in the financing markets that are beyond our control, including liquidity and credit spreads. We may be unable to obtain financing on favorable terms, if we are able to obtain additional financing at all. If our strategy is not viable, we will have to find alternative forms of long-term financing for our investments, as secured revolving credit facilities and repurchase agreements may not accommodate long-term financing. This could subject us to more restrictive recourse borrowings and the risk that debt service on less efficient forms of financing would require a larger portion of our cash flow, thereby reducing cash available for distribution to stockholders, for our operations and for future business opportunities. If alternative financing is not available on favorable terms, or at all, we may have to liquidate investments at unfavorable prices to pay off such financing. Our return on our investments and cash available for distribution to stockholders may be reduced to the extent that changes in market conditions cause the cost of our financing to increase relative to the earnings that we can derive from the investments we acquire.

Stockholders may experience substantial dilution, including if we settle the Senior Notes with our Common Stock, which can affect the trading price of our Common Stock, earnings per share and CAD per share.

We have in the past and may continue to undertake substantial offerings of securities that are settleable, exchangeable or convertible into our Common Stock. For example, if we meet all of the conditions under the indenture governing our Senior Notes to settle the Senior Notes in our Common Stock and elect to settle the Senior Notes in our Common Stock, then depending on the trading price of our Common Stock during the applicable measurement, existing stockholders may experience more than % dilution due to the settlement in our Common Stock . In addition, we may issue shares of our Common Stock upon exercise or settlement of any share-based payment awards under our equity and incentive plans. If we continue to engage in such offerings, whether through the public markets or in private placements, our existing stockholders may experience immediate and substantial dilution in their percentage ownership of our Common Stock outstanding and such offerings can result in substantial decreases to our stock price. Furthermore, any such dilutions due to the issuance of additional shares of our Common Stock could adversely impact our earnings per share and CAD per share.

If we elect to settle our Senior Notes through share settlement, we expect to deliver shares of our Common Stock through the facilities of the Depository Trust Company, or DTC, as the depositary for the Senior Notes but there can be no assurances that DTC will deliver shares promptly following each share settlement date or that DTC will apply its policies and procedures to deliver those shares to the record holders we indicate or at all. As a result, holders of the Senior Notes may not receive shares of our Common Stock promptly following each share settlement date which could cause such holders to short our Common Stock or enter into other hedging strategies which could adversely impact the trading price of our Common Stock.

The Senior Notes will be represented by one or more global securities deposited with, or on behalf of, DTC, as the depositary for the Senior Notes and be registered in the name of a nominee of DTC. Administrative actions in respect of the Senior Notes, including any delivery of our Common Stock in settlement of the principal amount of the Senior Notes, will be executed through DTC and must comply with the rules and procedures of that system. We have no control over DTC. If we make a share settlement election, we will deliver to DTC the settlement amounts for the Senior Notes in five installments corresponding to each five trading-day period included in the 25 trading-day share settlement measurement period and deliverable on each share settlement date. DTC will deliver shares of our Common Stock through its facilities in accordance with its policies and procedures for notice, processing and delivery. There can be no assurances that DTC will deliver shares to the beneficial holders of the Senior Notes promptly following each share settlement date or that DTC will apply its policies and procedures to deliver those shares to the record holders we indicate or at all. As a result, holders of the Senior Notes may not receive shares of our Common Stock promptly following each share settlement date, which may cause such holders to enter into alternative or additional hedging strategies such as shorting our Common Stock which could increase the volatility and adversely impact the trading price of our Common Stock. For more information regarding the Senior Notes, refer to “Recent Developments.”

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A portion of our borrowings is floating rate and fluctuations in interest rates may cause losses.

Substantially all of our existing borrowings bear, and future borrowing may bear, interest at variable rates. If market interest rates increase, the interest rate on our variable rate borrowings will increase and will create higher debt service requirements, which would adversely affect our cash flow and could adversely impact our results of operations. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political conditions and other factors beyond our control. While we may enter into agreements limiting our exposure to higher debt service requirements, any such agreements may not offer complete protection from this risk.

Our interest rate risk sensitive assets, liabilities and related derivatives are generally held for non-trading purposes. Based on our Current European Portfolio, a hypothetical 1% , 2% and 3% increase in the applicable benchmark (EURIBOR and GBP LIBOR) applied to our floating-rate liabilities and related derivatives would result in an increase in net interest expense of approximately $10.1 million, $14.3 million and $14.5 million, respectively, annually.

In a period of rising interest rates, our interest expense could increase while the income we earn on our investments would not change, which would adversely affect our profitability.

Our operating results depend in large part on differences between the income from our investments less our operating costs, reduced by any credit losses and financing costs. Income from our investments may respond more slowly to interest rate fluctuations than the cost of our borrowings. Consequently, changes in interest rates, particularly short-term interest rates, may influence our net income. Increases in these rates may decrease our net income. Interest rate fluctuations resulting in our interest expense exceeding the income from our investments could result in losses for us and may limit our ability to make distributions to stockholders. In addition, if we need to repay existing borrowings during periods of rising interest rates, we could be required to liquidate one or more of our investments at times that may not permit realization of the maximum return on those investments, which would adversely affect our profitability.

We may not successfully align the maturities of our liabilities with the maturities on our investments, which could harm our operating results and financial condition.

Our general financing strategy is focused on the use of “match-funded” structures. This means that we seek to align the maturities of our liabilities with the maturities on our investments in order to manage the risks of being forced to refinance our liabilities prior to the maturities of our investments. We may fail to appropriately employ match-funded structures on favorable terms, or at all. We may also determine not to pursue a fully match-funded strategy with respect to a portion of our financings for a variety of reasons. If we fail to appropriately employ match-funded strategies or determine not to pursue such a strategy, our exposure to interest rate volatility and exposure to matching liabilities prior to the maturity of the corresponding investment may increase substantially, which could harm our operating results, liquidity and financial condition.

We may use short-term borrowings to finance our investments and we may need to use such borrowings for extended periods of time to the extent we are unable to access long-term financing. This may expose us to increased risks associated with decreases in the fair value of the underlying collateral, which could cause an adverse impact on our results of operations.

We may be dependent on short-term financing arrangements that are not matched in duration to our financial assets. Short-term borrowing through repurchase arrangements, credit facilities and other types of borrowings may put our investments and financial condition at risk. Any such short-term financing may also be recourse to us, which will increase the risk of our investments. We may obtain additional facilities and increase our lines of credit on existing facilities in the future. Our financing structures may economically resemble short-term, floating-rate financing and usually require the maintenance of specific loan-to-collateral value ratios and other covenants. In addition, the value of assets underlying any such short-term financing may be marked-to-market periodically by the lender, including on a daily basis. If the fair value of the investments subject to such financing arrangements decline, we may be required to provide additional collateral or make cash payments to maintain the loan-to-collateral value ratio. If we are unable to provide such collateral or cash repayments, we may lose our economic interest in the underlying investments. Further, such borrowings may require us to maintain a certain amount of cash reserves or to set aside unleveraged assets sufficient to maintain a specified liquidity position that would allow us to satisfy our collateral obligations. These facilities may be restricted to financing certain types of investments, which could impact our investment allocation. In addition, such short-term borrowing facilities may limit the length of time that any given asset may be used as eligible collateral. As a result, we may not be able to leverage our investments as fully as we would choose, which could reduce our income generated on such investments. In the event that we are unable to meet the collateral obligations for our short-term financing arrangements, our financial condition could deteriorate rapidly.

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We are subject to risks associated with obtaining mortgage financing on our real estate, which could materially adversely affect our business, financial condition and results of operations and our ability to make distributions to stockholders.

As of June 30, 2015, adjusted for an acquisition through September 28, 2015 , our real estate portfolio had $1.5 billion of total mortgage financing. Financing for new real estate investments and our maturing borrowings may be provided by credit facilities, private or public debt offerings, assumption of secured borrowings, mortgage financing on a portion of our owned portfolio or through joint ventures. We are subject to risks normally associated with financing, including the risks that our cash flow is insufficient to make timely payments of interest or principal, that we may be unable to refinance existing borrowings or support collateral obligations and that the terms of refinancing may not be as favorable as the terms of existing borrowing. If we are unable to refinance or extend principal payments due at maturity or pay them with proceeds from other capital transactions or the sale of the underlying property, our cash flow may not be sufficient in all years to make distributions to stockholders and to repay all maturing borrowings. This may entitle secured creditors to exercise their rights under their credit documentation which may include an acceleration of their claims and a foreclosure of security. The rights of creditors on foreclosure will be jurisdiction specific, but in the United Kingdom, for example, this may include the appointment of a receiver pursuant to the Law of Property Act 1925 who will be entitled to take possession and control of the relevant secured properties subject to the mortgage and to exercise a power of sale of a property in order discharge the secured indebtedness. This creates a risk that the proceeds will be insufficient to provide us with any equity in those properties. Alternatively, the secured creditors may have the right to appoint an administrator with respect to the property investments situated in the United Kingdom. An administrator is an officer of the court who will take possession, custody and control of the relevant company’s assets and undertaking and to exercise legislative powers that include a power of sale. The appointment of an administrator may similarly create a risk that the proceeds of realization of our assets in an administration will be insufficient to provide us with any equity in those properties or surplus proceeds.

Furthermore, if prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing, the interest expense relating to that refinanced borrowing would increase, which could reduce our profitability and the amount of distributions we are able to pay to stockholders. Moreover, additional financing increases the amount of our leverage, which could negatively affect our ability to obtain additional financing in the future or make us more vulnerable in a downturn in our results of operations or the economy generally.

Hedging against interest rate and currency exposure may adversely affect our earnings, limit our gains or result in losses, which could adversely affect cash available for distribution to stockholders.

We have and may in the future enter into interest rate swap, cap or floor agreements or pursue other interest rate or currency hedging strategies. Our hedging activity will vary in scope based on interest rate levels, the type of investments held and other changing market conditions. Interest rate and/or currency hedging may fail to protect or could adversely affect us because, among other things:


•	interest rate and/or currency hedging can be expensive, particularly during periods of rising and volatile interest rates;


•	available interest rate and/or currency hedging may not correspond directly with the risk for which protection is sought;


•	the duration of the hedge may not match the duration of the related liability or investment;


•	our hedging opportunities may be limited by the treatment of income from hedging transactions under the rules determining REIT qualification;


•	the credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction;


•	the counterparties with which we trade may cease making markets and quoting prices in such instruments, which may render us unable to enter into an offsetting transaction with respect to an open position;


•	the party owing money in the hedging transaction may default on its obligation to pay; and


•	we may purchase a hedge that turns out not to be necessary, i.e. , a hedge that is out of the money.

Any hedging activity we engage in may adversely affect our earnings, which could adversely affect cash available for distribution to stockholders. Therefore, while we may enter into such transactions to seek to reduce interest rate and/or currency risks, unanticipated changes in interest rates or exchange rates may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged or liabilities being hedged may vary materially. Moreover, for a variety of reasons, we may not be able to establish a perfect correlation between hedging instruments

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and the investments being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. We may also be exposed to liquidity issues as a result of margin calls or settlement of derivative hedges.

Hedging instruments often are not traded on regulated exchanges, guaranteed by an exchange or its clearinghouse or regulated by any foreign or U.S. governmental authorities and involve risks and costs.

The cost of using hedging instruments increases as the period covered by the instrument lengthens and during periods of rising and volatile interest rates and change in foreign currency exchange rates. We may increase our hedging activity and thus increase our hedging costs during periods when interest rates are volatile or rising or foreign currency exchange rates are unfavorable and hedging costs have increased. In addition, hedging instruments involve risk since they often are not traded on regulated exchanges, guaranteed by an exchange or its clearing house, or regulated by any foreign or U.S. governmental authorities. Consequently, there are no regulatory or statutory requirements with respect to recordkeeping, financial responsibility or segregation of customer funds and positions. Furthermore, the enforceability of agreements underlying derivative transactions may depend on compliance with applicable statutory, commodity and other regulatory requirements and, depending on the identity of the counterparty, applicable international requirements. The business failure of a hedging counterparty with whom we may enter into a hedging transaction will most likely result in a default. Default by a party with whom we may enter into a hedging transaction may result in the loss of unrealized profits and force us to cover our resale commitments, if any, at the then current market price. It may not always be possible to dispose of or close out a hedging position without the consent of the hedging counterparty and we may not be able to enter into an offsetting contract in order to cover our risk. We cannot assure stockholders that a liquid secondary market will exist for hedging instruments purchased or sold, and we may be required to maintain a position until exercise or expiration, which could result in losses.

Refer to the below risk factor “— Risks Related to Regulatory Matters and Our REIT Tax Status — The direct or indirect effects of the Dodd-Frank Act, enacted in July 2010 for the purpose of stabilizing or reforming the financial markets, may have an adverse effect on our interest rate hedging activities” for a discussion of how the Dodd-Frank Wall Street Reform Act, or the Dodd-Frank Act, may affect the use of hedging instruments.

Risks Related to Our Company

Our ability to operate our business successfully would be harmed if our executive officers or NSAM ’ s key personnel terminate their employment with NSAM.

Our future success depends, to a significant extent, upon the continued services of our executive officers and NSAM’s key personnel. For instance, the extent and nature of the experience of our executive officers and NSAM’s key personnel 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 NSAM. The loss of services of certain of our executive officers or NSAM’s key personnel could harm our business and our prospects.

Our board of directors will adopt certain incentive plans to permit NSAM to create incentives that will allow NSAM to retain and attract the services of its key employees and align its employee’s interests with our stockholders. These incentive plans may be tied to the performance of our Common Stock and a decline in the price of our Common Stock may result in NSAM being unable to motivate and retain our executive officers and NSAM’s key employees. NSAM’s inability to motivate and retain these individuals could also harm our business and our prospects. Additionally, competition for experienced real estate professionals could require NSAM to pay higher wages and provide additional benefits to attract qualified employees, which could result in higher expenses allocated to us by NSAM.

Failure of NorthStar Realty to effectively perform its obligations to us could have an adverse effect on our business and performance.

In connection with the spin-off, we will enter into a separation agreement and various other agreements with NorthStar Realty. These agreements will govern our relationship with NorthStar Realty subsequent to the Distribution and will provide that all liabilities and obligations attributable to periods prior to the Distribution will remain with NorthStar Realty except for the liabilities for which NorthStar Realty agrees to contribute cash to the Company to enable the Company to pay such liabilities. We and NorthStar Realty will also agree to provide each other with indemnities with respect to liabilities arising out of the period after the spin-off. We and NorthStar Realty will rely on each other to perform its obligations under these agreements. 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.

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If our ability to issue equity awards is limited, we may be in breach of our management agreement with NSAM and it could impact NSAM’s ability to retain key employees.

We will be required to issue equity awards to NSAM employees at NSAM’s request under the terms of our management agreement. We may at times have limited availability under our incentive plans to issue equity awards to these employees. We may seek stockholder approval for additional equity awards and there is no assurance stockholders would grant such approval. To the extent we do not have sufficient equity awards available, we may have to compensate these employees using cash. Because CAD excludes equity-based compensation expense, payment of higher levels of cash relative to equity awards will have a negative impact on CAD and reduce our liquidity position.

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

As a European commercial real estate company, our business is highly dependent on information technology systems, including systems provided by NSAM and third parties over 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.

We will continue to grow our business through acquisitions, which entails substantial risk.

We will continue growing our business through acquisitions. 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 also incur significant transaction and integration costs in connection with such acquisitions. Further, we may not successfully integrate the investments that we acquire into our business and operations, which could have a material adverse effect on our financial results and condition.

We may change our investment strategy without stockholder consent and make riskier investments.

We may change our investment strategy at any time without the consent of stockholders, which could result in our making investments that are different from and possibly riskier than the investments described in this prospectus. A change in our investment strategy may increase our exposure to interest rate and commercial real estate market fluctuations.

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

Management will use CAD and NOI, each a non-GAAP measure, to evaluate our profitability and our board of directors will consider CAD and NOI in determining our quarterly cash distributions.

We believe that CAD is useful because it adjusts net income (loss) for a variety of non-cash items. We calculate CAD by subtracting from or adding to net income (loss) attributable to common stockholders, non-controlling interests, if any, and the following items: depreciation and amortization items, including depreciation and amortization ( excluding amortization of second generation tenant improvements and leasing commissions ) , straight-line rental income or expense (excluding amortization of rent free periods), amortization of above/below market leases, amortization of deferred financing costs, amortization of discount on financing and amortization of equity-based compensation ; maintenance capital expenditures; unrealized gain (loss) from the change in fair value; realized gain (loss) on investments and other; impairment on depreciable property; bad debt expense; deferred tax benefit (expense); acquisition gains or losses (excluding accelerated amortization related to the sale of investments); provision for loan losses, net; distributions and adjustments related to joint venture partners; transaction costs; foreign currency gains (losses); impairment on goodwill and other intangible assets; gains (losses) on sales; and 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. The

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definition of CAD may be adjusted from time to time for our reporting purposes in our discretion, acting through our audit committee or otherwise.

We believe NOI is a useful metric of the operating performance of our real estate portfolio in the aggregate. NOI is equal to total property revenue less property operating expenses which includes real estate taxes and third-party property management fees. However, the usefulness of NOI is limited because it excludes general and administrative costs, interest expense, transaction costs, depreciation and amortization expense, realized gains (losses) from the sale of properties and other items under U.S. GAAP and capital expenditures and leasing costs necessary to maintain the operating performance of properties, all of which may be significant economic costs. NOI may fail to capture significant trends in these components of U.S. GAAP net income (loss) which further limits its usefulness.

CAD and NOI should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as indicators of operating performance. In addition, our methodology for calculating CAD and NOI may differ from the methodologies used by other comparable companies, including other REITs, when calculating the same or similar supplemental financial measures and may not be comparable with these companies. For example, our calculation of CAD per share will not take into account any potential dilution from any Senior Notes or restricted stock units subject to performance metrics not yet achieved.

The use of estimates and valuations may be different from actual results, which could have a material effect on our consolidated financial statements.

We make various estimates that affect reported amounts and disclosures. Broadly, those estimates are used in measuring the fair value of certain financial instruments, establishing provision for loan losses and potential litigation liability. Market volatility may make it difficult to determine the fair value for certain of our assets and liabilities. Subsequent valuations, in light of factors then prevailing, may result in significant changes in the values of these financial instruments in future periods. In addition, at the time of any sales and settlements of these assets and liabilities, the price we ultimately realize will depend on the demand and liquidity in the market at that time for that particular type of asset and may be materially lower than our estimate of their current fair value. Estimates are based on available information and judgment. In addition, the value of the assets in our portfolio may differ from our estimates. Therefore, actual values and results could differ from our estimates and that difference could have a material adverse effect on our combined financial statements.

Our distribution policy is subject to change.

Our board of directors will determine an appropriate distribution on our Common Stock based upon numerous factors, including REIT qualification requirements, the amount of cash flow generated from operations, availability of existing cash balances, borrowing capacity under existing credit agreements, access to cash in the capital markets and other financing sources, our view of our ability to realize gains in the future through appreciation in the value of our investments, general economic conditions and economic conditions that more specifically impact our business or prospects. Our board of directors expects to review changes to our distribution on a quarterly basis and distribution levels are subject to adjustment based upon any one or more of the risk factors set forth in this prospectus, as well as other factors that our board of directors may, from time-to-time, deem relevant to consider when determining an appropriate distribution on our Common Stock .

We may not be able to make distributions in the future.

Our ability to generate income and to make distributions may be adversely affected by the risks described in this prospectus and any document we file with the SEC. All distributions will be made at the discretion of our board of directors, subject to applicable law, and depend on our earnings, our financial condition, maintenance of our REIT qualification and such other factors as our board of directors may deem relevant from time-to-time. We may not be able to make distributions in the future.

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

Our ability to make distributions on our Common Stock is limited by the laws of Maryland. Under applicable Maryland law, a Maryland corporation generally may not make a distribution if, after giving effect to the distribution, the corporation would not be able to pay its liabilities as the liabilities become due in the usual course of business, or generally if the corporation’s total assets would be less than the sum of its total liabilities plus, unless the corporation’s charter provides otherwise, the amount that would be needed if the corporation were dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of the stockholders whose preferential rights are superior to those receiving the distribution. We may not make a distribution on our Common Stock unless permitted by Maryland law.

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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 will determine our major policies, including our policies regarding growth, REIT qualification and distributions. Our board of directors may amend or revise these and other policies without a vote of the stockholders. We may change our investment policies without stockholder notice or consent, which could result in investments that are different than, or in different proportion than, those described in this prospectus. Under the Maryland General Corporation Law, or MGCL, and our charter, stockholders have a right to vote only on limited matters. Our board of directors’ broad discretion in setting policies and our stockholders’ inability to exert control over those policies increases the uncertainty and risks stockholders face.

Certain provisions of Maryland law may limit the ability of a third-party to acquire control of us. This could depress our stock price.

Certain provisions of the MGCL may have the effect of inhibiting a third-party from acquiring us or of impeding a change of control under circumstances that otherwise could provide our stockholders with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

•

“business combination” provisions that, subject to limitations, prohibit certain business combinations between an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding shares of voting stock or an affiliate or associate of the corporation who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding stock of the corporation) or an affiliate of any interested stockholder and us for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes two super-majority stockholder voting requirements on these combinations; and

•

“control share” provisions that provide that holders of “control shares” of our company (defined as voting shares of stock that, if aggregated with all other shares of stock owned or controlled by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of issued and outstanding “control shares,” subject to certain exceptions) have no voting rights except to the extent approved by stockholders by the affirmative vote of at least two-thirds of all of the votes entitled to be cast on the matter, excluding all interested shares.

Pursuant to the Maryland Business Combination Act, our board of directors will exempt any business combinations: (i) between us and NSAM, any of its affiliates or any of their sponsored or other managed companies; and (ii) between us and any person, provided that any such business combination is first approved by our board of directors (including a majority of our directors who are not affiliates or associates of such person). Consequently, the five-year prohibition and the super-majority vote requirements do not apply to business combinations between us and any of them. As a result, such parties may be able to enter into business combinations with us that may not be in the best interest of stockholders, without compliance with the supermajority vote requirements and the other provisions in the statute. Our bylaws contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions by any person of shares of our stock. There can be no assurance that these resolutions or exemptions will not be amended or eliminated at any time in the future.

Our authorized but unissued common and preferred stock and other provisions of our charter and bylaws may prevent a change in our control.

Our charter will authorize us to issue additional authorized but unissued shares of our Common Stock or preferred stock and will authorize a majority of our entire board of directors, without stockholder approval, to amend our charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have the authority to issue. In addition, our board of directors may classify or reclassify any unissued shares of our Common Stock or preferred stock and may set the preferences, conversions or other rights, voting powers and other terms of the classified or reclassified shares. Our board of directors could establish a series of common stock or preferred stock that could delay or prevent a transaction or a change in control that might involve a premium price for the common stock or otherwise be in the best interest of stockholders.

Our charter and bylaws will contain other provisions that may delay or prevent a transaction or a change in control that might involve a premium price for shares of our Common Stock or otherwise be in the best interest of stockholders.

Maryland law also allows a corporation with a class of equity securities registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in its charter or bylaws, to a classified board, unless its charter prohibits such an election. Our charter will contain a provision prohibiting such an election to classify our board of directors under this provision of Maryland law. This may make us more vulnerable to a change in control. If

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stockholders voted to amend this charter provision and to classify our board of directors, the staggered terms of our directors could reduce the possibility of a tender offer or an attempt at a change in control even though a tender offer or change in control might be in the best interests of stockholders.

Risks Related to Regulatory Matters and Our REIT Tax Status

We will be 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 will be subject to substantial regulation, numerous contractual obligations and extensive internal policies. Given our organizational structure, we will be subject to regulation by the SEC, NYSE, Internal Revenue Service, or IRS, and other international, federal, state and local governmental bodies and agencies. 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 ineligibility to contract with and receive revenue from the federal government or other governmental authorities and agencies. We also expect to 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 will establish 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 will design policies to appropriately operate our business, these internal policies may not be effective in all regards and, further, if we fail to comply with our internal policies, we could be subjected to additional risk and liability.

The direct or indirect effects of the Dodd-Frank Act, enacted in July 2010 for the purpose of stabilizing or reforming the financial markets, may have an adverse effect on our interest rate hedging activities.

In July 2010, the Dodd-Frank Act became law in the United States. Title VII of the Dodd-Frank Act provides for significantly increased regulation of and restrictions on derivatives markets and transactions that could affect our interest rate hedging or other risk management activities, including: (i) regulatory reporting for swaps; (ii) mandated clearing through central counterparties and execution through regulated exchanges or electronic facilities for certain swaps; and (iii) margin and collateral requirements. Although the U.S. Commodity Futures Trading Commission has not yet finalized certain requirements, many other requirements have taken effect, such as swap reporting, the mandatory clearing of certain interest rate swaps and credit default swaps and the mandatory trading of certain swaps on swap execution facilities or exchanges. While the full impact of the Dodd-Frank Act on our interest rate hedging activities cannot be assessed until implementing rules and regulations are adopted and market practice develops, the requirements of Title VII may affect our ability to enter into hedging or other risk management transactions, may increase our costs in entering into such transactions and may result in us entering into such transactions on less favorable terms than prior to effectiveness of the Dodd-Frank Act and the rules promulgated thereunder. The occurrence of any of the foregoing events may have an adverse effect on our business.

If we are deemed an investment company under the Investment Company Act, our business would be subject to applicable restrictions under the Investment Company Act, 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 we are not, and we do not hold ourselves out, as being engaged primarily in the business of investing, reinvesting or trading in securities, and thus we do not fall within the definition of investment company provided in Section 3(a)(1)(A) of the Investment Company Act. Instead, we are in the business of commercial real estate. In addition, we satisfy the 40% test provided in Section 3(a)(1)(C) of the Investment Company Act. This test , described in more detail under “Business—Regulation—Policies Related to the Investment Company Act” below, provides that issuers that own or propose to acquire investment securities having a value exceeding 40% of the value of the issuer’s total assets are investment companies. Because of the nature of our assets, we do not expect to own investment securities. Instead, we will own commercial real estate through our wholly-owned and majority-owned subsidiaries. Thus, we intend to conduct our operations so that we will not be deemed an investment company under the Investment Company Act. If we were to be deemed an investment company, however, either because of SEC interpretational changes or otherwise, we could, among other things, be required either: (i) to substantially change the manner in which we conduct our operations to avoid being required to register as an investment company; or (ii) to register as an investment company, either of which could have an adverse effect on us and the market price of our Common Stock. If we are required to register as an investment company under the Investment Company Act, we would become subject to substantial regulation with respect to our capital structure (including our ability to use leverage), management, operations, transactions with affiliated persons (as defined in the Investment Company Act), portfolio composition, including restrictions with respect to diversification and industry concentration and other matters.

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Failure to qualify as a REIT, or failure to remain qualified as a REIT, would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our stockholders.

We believe that our organization and proposed method of operation will enable us to meet the requirements for qualification and taxation as a REIT beginning with our taxable year ending December 31, 2015. However, we cannot assure you that we will qualify and remain qualified as a REIT. In connection with our separation from NorthStar Realty, we will receive an opinion from Hunton & Williams LLP that, beginning with our taxable year ending December 31, 2015, we will be organized in conformity with the requirements for qualification and taxation as a REIT under the U.S. federal income tax laws and our intended method of operation will enable us to qualify as a REIT under the U.S. federal income tax laws for our taxable year ending December 31, 2015 and thereafter. You should be aware that Hunton & Williams LLP’s opinion will be based upon customary assumptions, representations and undertakings made by us, NorthStar Realty and certain private REITs in which NorthStar Realty owns an interest, or the Private REITs, as to factual matters, including regarding the nature of our, NorthStar Realty and the Private REITs’ assets and the conduct of our, NorthStar Realty’s and the Private REITs’ business, is not binding upon the IRS, or any court and speaks as of the date issued. In addition, Hunton & Williams LLP’s opinion will be based on existing U.S. federal income tax law governing qualification as a REIT, which is subject to change either prospectively or retroactively. Moreover, our qualification and taxation as a REIT will depend upon our ability to meet on a continuing basis, through actual annual operating results, certain qualification tests set forth in the U.S. federal tax laws. Hunton & Williams LLP will not review our compliance with those tests on a continuing basis. Accordingly, no assurance can be given that our actual results of operations for any particular taxable year will satisfy such requirements.

If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will substantially reduce the funds available for distributions to our stockholders because:


•	we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates;


•	we could be subject to the U.S. federal alternative minimum tax and possibly increased state and local taxes; and


•	unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.

In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions. As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our Common Stock. See “Federal Income Tax Consequences of Our Status as a REIT” for a discussion of material U.S. federal income tax consequences relating to us and our Common Stock.

If NorthStar Realty fails to qualify as a REIT in its 2015 taxable year, we would be prevented from electing to qualify as a REIT.

We believe that from the time of our formation until the date of the Distribution, we will be treated as a “qualified REIT subsidiary” of NorthStar Realty. Under applicable Treasury regulations, if NorthStar Realty fails to qualify as a REIT in its 2015 taxable year, unless NorthStar Realty’s failure was subject to relief under U.S. federal income tax laws, we would be prevented from electing to qualify as a REIT prior to the fifth calendar year following the year in which NorthStar Realty failed to qualify.

Complying with REIT requirements may force us to borrow funds to make distributions to stockholders or otherwise depend on external sources of capital to fund such distributions.

To qualify as a REIT, we are required to distribute annually at least 90% of our taxable income, subject to certain adjustments, to stockholders. To the extent that we satisfy the distribution requirement, but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed taxable income. In addition, we may elect to retain and pay income tax on our net long-term capital gain. In that case, a stockholder would be taxed on its proportionate share of our undistributed long-term gain and would receive a credit or refund for its proportionate share of the tax we paid. A stockholder, including a tax-exempt or foreign stockholder, would have to file a federal income tax return to claim that credit or refund. Furthermore, we will be subject to a 4% nondeductible excise tax if the actual amount that we distribute to stockholders in a calendar year is less than a minimum amount specified under federal tax laws. We anticipate that distributions generally will be taxable as ordinary income, although a portion of such distributions may be designated by us as long-term capital gain to the extent attributable to capital gain income recognized by us, or may constitute a return of capital to the extent that such distribution exceeds our earnings and profits as determined for tax purposes.

From time-to-time, we may generate taxable income greater than our net income (loss) for U.S. GAAP, due to among other things, amortization of capitalized purchase premiums, fair value adjustments and reserves. In addition, our taxable income may be greater than our cash flow available for distribution to stockholders as a result of, among other things, repurchases of our

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outstanding debt at a discount and investments in assets that generate taxable income in advance of the corresponding cash flow from the assets (for example, if a borrower defers the payment of interest in cash pursuant to a contractual right or otherwise).

If we do not have other funds available in the situations described in the preceding paragraph, we could be required to borrow funds on unfavorable terms, sell investments at disadvantageous prices or find another alternative source of funds to make distributions sufficient to enable us to distribute enough of our taxable income to satisfy the REIT distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our equity.

Because of the distribution requirement, it is unlikely that we will be able to fund all future capital needs, including capital needs in connection with investments, from cash retained from operations. As a result, to fund future capital needs, we likely will have to rely on third-party sources of capital, including both debt and equity financing, which may or may not be available on favorable terms or at all. Our access to third‑party sources of capital will depend upon a number of factors, including the market’s perception of our growth potential and our current and potential future earnings and cash distributions and the market price of our stock.

We could fail to qualify as a REIT and/or pay additional taxes if the IRS recharacterizes the structure of certain of our European investments.

We have funded our equity in certain of our European investments through the use of instruments that we believe will be treated as equity for U.S. federal income tax purposes. If the IRS disagreed with such characterization and was successful in recharacterizing the nature of our investments in European jurisdictions, we could fail to satisfy one or more of the asset and gross income tests applicable to REITs. Additionally, if the IRS recharacterized the nature of our investments and we were to take action to prevent such REIT test failures, the actions we would take could expose us to increased taxes both internationally and in the United States.

We could be subject to increased taxes if the tax authorities in various European jurisdictions were to modify tax rules and regulations on which we have relied in structuring our European investments.

We currently receive favorable tax treatment in various European jurisdictions through tax rules, regulations, tax authority rulings, and international tax treaties. Should changes occur to these rules, regulations, rulings or treaties, we may no longer receive such benefits, and consequently, the amount of taxes we pay with respect to our European investments may increase.

Even if we qualify as a REIT, we may be subject to tax (including foreign taxes for which we will not be permitted to pass-through any foreign tax credit to our stockholders), which would reduce the amount of cash available for distribution to our stockholders.

Even if we qualify as a REIT, we may be subject to foreign, U.S. federal, state and local taxes, including alternative minimum taxes and foreign, state or local income, franchise, property and transfer taxes. For example, we intend to make investments solely in real properties located outside the United States through foreign entities. Such entities may be subject to local income and property taxes in the jurisdiction in which they are organized or where their assets are located. In addition, in certain circumstances, we may be subject to non-U.S. withholding tax on repatriation of earnings from such non-U.S. entities. To the extent we are required to pay any such taxes we will not be able to pass through to our stockholders any tax credit with respect to our payment of any such taxes.

To the extent we distribute less than 100% of our taxable income, we will be subject to U.S. federal corporate income tax on our undistributed income and will incur a 4% non-deductible excise tax on the amount, if any, by which our distributions in any calendar year are less than a minimum amount specified under the Code. In addition, we could in certain circumstances be required to pay an excise or penalty tax, which could be significant in amount, in order to utilize one or more relief provisions under the Code to maintain qualification for taxation as a REIT. Furthermore, we may hold some of our assets through taxable REIT subsidiaries, or TRSs. Any TRS or other taxable corporation in which we own an interest could be subject to U.S. federal, state and local income taxes at regular corporate rates if such entities are formed as domestic entities or generate income from U.S. sources or activities connected with the United States, and also will be subject to any applicable foreign taxes. Any of these taxes would decrease the amount available for distribution to our stockholders.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.

To qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to stockholders and the ownership of our stock. As discussed above, we may be required to make distributions to stockholders at disadvantageous times

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or when we do not have funds readily available for distribution. Additionally, we may be unable to pursue investments that would be otherwise attractive to us in order to satisfy the source of income requirements for qualifying as a REIT.

We must also ensure that, at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified real estate assets, including certain mortgage loans and mortgage-backed securities. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets can consist of the securities of any one issuer (other than government securities and qualified real estate assets) and no more than 25% of the value of our total securities can be represented by securities of one or more TRSs.

If we fail to comply with these requirements at the end of any calendar quarter, we must correct such failure within 30 days after the end of the calendar quarter to avoid losing our REIT status and suffering adverse tax consequences, unless certain relief provisions apply. As a result, compliance with the REIT requirements may hinder our ability to operate solely on the basis of profit maximization and may require us to liquidate investments from our portfolio, or refrain from making, otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to stockholders.

Complying with REIT requirements may limit our ability to hedge effectively.

The REIT provisions of the Code may limit our ability to hedge the risks inherent to our operations. Under current law: (i) any transaction entered into in the normal course of our trade or business primarily to manage the risk of interest rate or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets; and (ii) any transaction entered into primarily to manage the risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% gross income test (or any property which generates such income or gain) will not constitute gross income for purposes of the 75% and 95% income requirements applicable to REITs. We are required to clearly identify any such hedging transaction before the close of the day on which it was acquired, originated or entered into and to satisfy other identification requirements in order to be treated as a qualified hedging transaction. In addition, any income from certain other qualified hedging transactions would generally not constitute gross income for purposes of both the 75% and 95% income tests. However, we may be required to limit the use of hedging techniques that might otherwise be advantageous, which could result in greater risks associated with interest rate or other changes than we would otherwise incur. We intend to structure any hedging transactions in a manner that does not jeopardize our qualification as a REIT.

Currency fluctuations could adversely impact our ability to satisfy the REIT requirements.

We expect that substantially all of our operating income and expense will be denominated in currencies where our assets are located and our Operating Partnership will pay distributions in foreign currencies or U.S. dollars. Accordingly, our Operating Partnership will hold various foreign currencies at any given time and may enter into foreign currency hedging transactions. The U.S. federal income tax rules regarding foreign currency transactions could adversely impact our compliance with the REIT requirements. For example, changes in the U.S. dollar value of the currencies of our operations will impact the determination of our gross income from such operations for U.S. federal income tax purposes. Variations in such currency values could therefore adversely affect our ability to satisfy the REIT gross income tests. In addition, foreign currency held by our Operating Partnership could adversely affect our ability to satisfy the REIT asset tests to the extent our Operating Partnership holds foreign currency on its balance sheet other than its functional currency or otherwise holds any foreign currency that is not held in the normal course of the activities of our Operating Partnership which give rise to qualifying income under the 95% or 75% gross income tests or are directly related to acquiring or holding qualifying assets under the 75% asset test.

If any of our activities do not comply with the applicable REIT requirements, the U.S. federal income tax rules applicable to foreign currencies could magnify the adverse impact of such activities on our REIT compliance. For example, if we receive a distribution from our Operating Partnership that is attributable to operations within a particular foreign jurisdiction, we could recognize foreign currency gain or loss based on the fluctuation in the U.S. dollar value of the local currency of such jurisdiction between the time that the underlying income was recognized and the time of such distribution. Provided that the segment of our Operating Partnership’s business to which such distribution is attributable satisfies certain of the REIT income and asset tests on a standalone basis, any foreign currency gain resulting from such distribution will be excluded for purposes of the REIT gross income tests. However, if such segment did not satisfy the applicable REIT income and asset tests on a standalone basis, any currency gain resulting from such distribution may be non-qualifying income for purposes of the REIT gross income tests, which would adversely affect our ability to satisfy such tests. As another example, foreign currency gain attributable to our holding of certain obligations, including currency hedges of such obligations, will be excluded for purposes of the 95% gross income test, but not the 75% gross income test. However, if such gains are attributable to cash awaiting distribution or reinvestment, such gains may be non-qualifying income under the 75% and 95% gross income tests. See “Federal Income Tax Consequences of Our Status as a REIT — Requirements for Qualification — Gross Income Tests.” Furthermore, the impact of currency fluctuations on our compliance with the REIT requirements could be difficult to predict.

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The U.S. federal income tax rules regarding foreign currency transactions are complex, in certain respects uncertain, and limited authority is available regarding the application of such rules. As a result, there can be no assurance that the IRS will not challenge the manner in which we apply such rules to our operations. Any successful challenge could increase the amount which we are required to distribute to our shareholders in order to qualify as a REIT or otherwise adversely impact our compliance with the REIT requirements.

Liquidation of assets may jeopardize our REIT qualification.

To qualify as a REIT, we must comply with requirements regarding our assets and our sources of income. If we are compelled to liquidate our investments to satisfy our obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% prohibited transaction tax on any resulting gain if we sell assets that are treated as dealer property or inventory.

Legislative or regulatory tax changes could adversely affect us or stockholders.

At any time, the federal income tax laws can change. Laws and rules governing REITs or the administrative interpretations of those laws may be amended. Any of those new laws or interpretations may take effect retroactively and could adversely affect us or stockholders.

The prohibited transactions tax may limit our ability to engage in transactions, including disposition of assets, which would be treated as sales for federal income tax purposes.

A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property, other than property that we took title to as a result of a default on a debt investment or lease and for which we make a foreclosure property election, but including loans, held primarily for sale to customers in the ordinary course of business. Although a safe-harbor exception to prohibited transaction treatment is available, we cannot assure stockholders that we can comply with such safe harbor or that we will avoid owning property that may be characterized as held primarily for sale to customers in the ordinary course of our trade or business. Consequently, we may choose not to engage in certain sales of real property or may conduct such sales or other activities through a TRS.

We may distribute our Common Stock in a taxable distribution, in which case stockholders may sell shares of our Common Stock to pay tax on such distributions, placing downward pressure on the market price of our Common Stock.

We may make taxable distributions that are payable in cash and our Common Stock. The IRS has issued private letter rulings to other REITs treating certain distributions that are paid partly in cash and partly in stock as taxable distributions that would satisfy the REIT annual distribution requirement and qualify for the dividends paid deduction for federal income tax purposes. Those rulings may be relied upon only by taxpayers to whom they were issued, but we could request a similar ruling from the IRS. In addition, the IRS issued a revenue procedure creating a temporary safe harbor that authorized publicly traded REITs to make elective cash/stock distributions, but that temporary safe harbor has expired. Accordingly, it is unclear whether and to what extent we will be able to make taxable distributions payable in cash and our Common Stock. If we made a taxable distribution payable in cash and our Common Stock, taxable stockholders receiving such distributions will be required to include the full amount of the distribution, which is treated as ordinary income to the extent of our current and accumulated earnings and profits, as determined for federal income tax purposes. As a result, stockholders may be required to pay income tax with respect to such distributions in excess of the cash distributions received. If a U.S. stockholder sells our Common Stock that it receives as a distribution in order to pay this tax, the sales proceeds may be less than the amount recorded in earnings with respect to the distribution, depending on the market price of our Common Stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. federal income tax with respect to such distributions, including in respect of all or a portion of such distribution that is payable in our Common Stock. If we made a taxable distribution payable in cash and our Common Stock and a significant number of stockholders determine to sell shares of our Common Stock in order to pay taxes owed on distributions, it may put downward pressure on the trading price of our Common Stock.

The stock ownership restrictions of the Code for REITs and the 9.8% stock ownership limit in our charter may inhibit market activity in our stock and restrict our business combination opportunities.

To qualify as a REIT, five or fewer individuals, as defined in the Code, may not own, actually or constructively, more than 50% in value of our issued and outstanding stock at any time during the last half of a taxable year. Attribution rules in the Code determine if any individual or entity actually or constructively owns our stock under this requirement. Additionally, at least 100 persons must beneficially own our stock during at least 335 days of a taxable year. To help insure that we meet these tests, our charter restricts the acquisition and ownership of shares of our stock.

Our charter, with certain exceptions, will authorize our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. Unless exempted by our board of directors, no person, including entities, may own more

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than 9.8% in value of the aggregate of the outstanding shares of our stock or more than 9.8% in value or number (whichever is more restrictive) of the aggregate of the outstanding shares of our Common Stock. The board may not grant an exemption from these restrictions to any proposed transferee whose ownership in excess of 9.8% of the value of our Common Stock outstanding would result in the termination of our status as a REIT. Despite these restrictions, it is possible that there will be five or fewer individuals who own more than 50% in value of our outstanding shares, which could cause us to fail to continue to qualify as a REIT. These restrictions on transferability and ownership will not apply, however, if our board of directors determines that it is no longer in our best interest to continue to qualify as a REIT.

These ownership limits could delay or prevent a transaction or a change in control that might involve a premium price for our Common Stock or otherwise be in the best interest of the stockholders.

REIT distribution requirements could adversely affect our ability to execute our business plan.

We generally must distribute annually at least 90% of our REIT taxable income (which is determined without regard to the dividends paid deduction or net capital gain for this purpose) in order to continue to qualify as a REIT. We intend to make distributions to stockholders to comply with the REIT requirements of the Code and to avoid corporate income tax and the 4% excise tax. We may be required to make distributions to stockholders at times when it would be more advantageous to reinvest cash in our business or when we do not have funds readily available for distribution. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

Distributions paid by REITs do not qualify for the reduced tax rates that apply to other corporate distributions.

The maximum tax rate for “qualified dividends” paid by corporations to individuals is 20%. Distributions paid by REITs, however, generally continue to be taxed at the normal ordinary income rate applicable to the individual recipient (subject to a maximum rate of 39.6%), rather than the preferential rate applicable to qualified dividends. The more favorable rates applicable to regular corporate distributions could cause potential investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay qualified distributions, which could adversely affect the value of the stock of REITs, including our Common Stock.

Non-U.S. stockholders will generally be subject to withholding tax with respect to our dividends.

Non-U.S. stockholders (as defined in “Material U.S. Federal Income Tax Considerations of the Distribution”) will generally be subject to U.S. federal withholding tax on dividends received from us at a 30% rate, subject to reduction under an applicable treaty or a statutory exemption under the Code. Although such withholding taxes may be creditable in such non-U.S. stockholder’s resident jurisdiction, for many such non-U.S. stockholders, investment in a REIT that invests principally in non-U.S. real property may not be the most tax-efficient way to invest in such assets compared to a direct investment in such assets which would generally not subject such non-U.S. stockholders to U.S. withholding taxes.

Unexpected tax costs could arise through changes to tax law or tax rates in various jurisdictions in which we operate.

There is a risk of unexpected tax costs through lack of tax planning or execution in tax-paying jurisdictions. These matters could have a material adverse effect our business, results of operations, financial condition or prospects.

Changes to our corporate structure may result in an additional tax burden.

We may undergo changes to our corporate structure involving, among other things, the direct or indirect transfer of legal or beneficial title to real estate. These transactions may results in unforeseen adverse tax consequences that may have detrimental effects on our business, net assets, financial condition, cash flow and results of operations.

Risks Related to the Spin-off

The spin-off may not have the benefits we anticipate.

The spin-off may not have the full or any strategic and financial benefits that we expect or such benefits may be delayed or may not materialize at all. The anticipated benefits of the spin-off are based on a number of assumptions, which may prove incorrect. For example, we believe that investors and analysts will regard NorthStar Europe’s focused European Real Estate Business more favorably as a separate company than as part of NorthStar Realty’s existing portfolio and strategy and thus place a greater value on NorthStar Europe as a separate public company than as a business that is a part of NorthStar Realty. In the event that the spin-off does not have this and other expected benefits, the costs associated with the transaction, including an expected increase in general and administrative expenses, could have a negative effect on our financial condition and ability to make distributions to our stockholders. Stockholder approval will not be required or sought in connection with the spin-off.

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The aggregate post-Distribution value of NorthStar Realty and our Common Stock may not equal or exceed the pre-spin-off value of NorthStar Realty shares.

After the spin-off, NorthStar Realty common stock will continue to be listed and traded on the NYSE. We expect to list our Common Stock on the NYSE under the symbol “NRE.” We cannot assure you that the combined value of NorthStar Realty and our Common Stock after the spin-off, as adjusted for any changes in the combined capitalization of these companies, will be equal to or greater than the value of NorthStar Realty prior to the spin-off. Until the market has fully evaluated the business of NorthStar Realty without the business of NorthStar Europe, the value of NorthStar Realty may fluctuate significantly. Similarly, until the market has fully evaluated the business of NorthStar Europe, the value of NorthStar Europe may fluctuate significantly.

We may not be able to successfully implement our business strategy.

Assuming the spin-off is completed, 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, once we commence operations as an independent company. Our financial condition, results of operations and cash flow will be affected by the expenses we will incur as an independent public company, including fees paid to NSAM as well as legal, accounting, compliance and other costs associated with being a public company with equity securities traded on the NYSE. In addition, our results of operations and our ability to make or sustain distributions to our stockholders depend on, among other factors, the availability of opportunities to acquire attractive investments in Europe, the level and volatility of interest rates, the availability of adequate short- and long-term financing, conditions in the real estate market and the financial markets and economic conditions, particularly in Europe. Furthermore, most of our expertise to date is in the United States and neither we nor NorthStar Realty or NSAM has owned or managed substantial investments over the long term in international markets. Our ability to achieve our investment objectives and to make distributions to stockholders will depend in substantial part upon the performance of NSAM and its ability to provide us with asset management and other services. After the spin-off, NorthStar Realty will not be required, and does not intend, to provide us with funds to finance our working capital or other cash requirements, so we will need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, through strategic relationships or other arrangements. There can be no assurance that we will be able to enter into any necessary additional financing on favorable terms or at all.

The Distribution will not qualify for tax-deferred treatment and may be taxable to NorthStar Realty common stockholders as a dividend; however, the tax impact will not be calculated until after the end of the 2015 calendar year.

The Distribution will not qualify for tax-deferred treatment. An amount equal to the fair market value of the shares of our Common Stock received by you on the Distribution date (assuming you are a stockholder of NorthStar Realty as of the applicable record date), including any fractional shares deemed to be received on the Distribution date, will be treated as a taxable dividend to the extent of your share of any of NorthStar Realty’s current or accumulated earnings and profits for the year of the distribution. Any fair market value in the excess of NorthStar Realty’s current or accumulated earnings and profits will be treated first as a non-taxable return of capital to the extent of your tax adjusted basis in NorthStar Realty’s common stock and then as capital gain. The Distribution will not include a distribution of cash, except for certain cash in lieu of fractional shares of our Common Stock, and thus, you will have to obtain cash from other sources to pay the income tax on this income. In addition, NorthStar Realty or other applicable withholding agents may be required or permitted to withhold at the applicable rate on all or a portion of the Distribution payable to non-U.S. stockholders, and any such withholding would be satisfied by NorthStar Realty or such agent withholding by selling a portion of our Common Stock otherwise distributable to non-U.S. stockholders. Such non-U.S. stockholders may bear brokerage fees or other costs from this withholding procedure. Your adjusted tax basis in NorthStar Realty common stock held at the time of the Distribution will be reduced (but not below zero) to the extent the fair market value of the shares of our Common Stock distributed by NorthStar Realty to you in the Distribution exceeds your share of NorthStar Realty’s current and accumulated earnings and profits. Your holding period for your shares of NorthStar Realty’s common stock will not be affected by the Distribution. Neither we nor NorthStar Realty will be able to advise you of the amount of NorthStar Realty’s earnings and profits until after the end of the 2015 calendar year.

Although NorthStar Realty will be ascribing a value to our shares of Common Stock in the Distribution for tax purposes, and will report that value to stockholders and the IRS, this valuation is not binding on the IRS or any other taxing authority. These taxing authorities could ascribe a higher valuation to such shares, particularly if our Common Stock trades at prices significantly above the value ascribed to such shares by NorthStar Realty in the period following the Distribution. Such a higher valuation may cause a larger reduction in the tax basis of your shares of us or may cause you to recognize additional dividend or capital gain income. You are urged to consult your tax advisor as to the particular tax consequences of the Distribution to you.

The NorthStar Europe Predecessor combined financial results and our unaudited pro forma combined financial statements may not be representative of our results as an independent company.

The combined financial information of the NorthStar Europe Predecessor included in this prospectus has been prepared from the accounting records of the NorthStar Europe Predecessor and does not necessarily reflect what its financial position, results

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of operations or cash flows would have been had it operated as part of NorthStar Europe during the periods presented. The historical information also does not necessarily indicate what NorthStar Europe’s results of operations, financial position, cash flows or costs and expenses will be in the future. Our pro forma combined financial information set forth under “Unaudited Pro Forma Financial Information” reflects changes that may occur in our funding and operations as a result of the spin-off. However, there can be no assurances that this unaudited pro forma combined financial information will reflect our costs as an independent company.

If, following the spin-off, we are unable to satisfy the requirements of Section 404 of the 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.

Section 404 of 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 controls over financial reporting. To comply with this statute, we will eventually be required to document and test our internal controls procedures, our management will be required to assess and issue a report concerning our internal controls over financial reporting and our independent auditors will be 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 controls 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 controls 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.

Because there has not been any public market for our Common Stock, the market price and trading volume of our Common Stock may be volatile.

Prior to the spin-off, there will have been no trading market for our Common Stock. We cannot predict the extent to which investors’ interest will lead to a liquid trading market or whether the market price of our Common Stock will 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 prospectus or for reasons unrelated to our specific performance, such as investor perceptions, reports by industry analysts or negative developments with respect to our affiliates, as well as third parties. Our Common Stock could also be volatile as a result of speculation or general economic and industry conditions.

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, an exemption from complying with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, and, like smaller reporting companies, 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 Distribution. 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 (assuming a market ever develops) 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.

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THE DISTRIBUTION

General

The general terms and conditions relating to the Distribution will be set forth in the separation agreement between us and NorthStar Realty, further discussed below under the heading “Certain Relationships and Related Party Transactions — Relationship Between NorthStar Realty, NSAM and Us After the Distribution — Separation Agreement.” Under the separation agreement, the Distribution will be effective at 11:59 p.m., Eastern Time, on , 2015 and NorthStar Realty will distribute all outstanding shares of our Common Stock to the holders of NorthStar Realty common stock. For NorthStar Realty stockholders who own NorthStar Realty common stock in registered form on the record date, which is the close of business, Eastern Time , 2015, our transfer agent will credit their shares of our Common Stock to book entry accounts established to hold these shares. Our distribution agent will send these stockholders a statement reflecting their ownership of our Common Stock. Book entry refers to a method of recording stock ownership in our records in which no physical certificates are used. For stockholders who own NorthStar Realty common stock through a broker or other nominee, their shares of our Common Stock will be credited to these stockholders’ accounts by the broker or other nominee. As further discussed below, fractional shares will not be distributed in the Distribution. Following the Distribution, stockholders whose shares are held in book entry form may request that their shares of our Common Stock be transferred to a brokerage or other account at any time without charge.

NORTHSTAR REALTY STOCKHOLDERS WILL NOT BE REQUIRED TO PAY FOR SHARES OF OUR COMMON STOCK RECEIVED IN THE DISTRIBUTION OR TO SURRENDER OR EXCHANGE SHARES OF NORTHSTAR REALTY COMMON STOCK IN ORDER TO RECEIVE OUR COMMON STOCK OR TO TAKE ANY OTHER ACTION IN CONNECTION WITH THE DISTRIBUTION. NO VOTE OF NORTHSTAR REALTY STOCKHOLDERS IS REQUIRED OR SOUGHT IN CONNECTION WITH THE DISTRIBUTION, AND NORTHSTAR REALTY STOCKHOLDERS HAVE NO APPRAISAL RIGHTS IN CONNECTION WITH THE DISTRIBUTION.

Fractional shares of our Common Stock will not be issued to NorthStar Realty stockholders as part of the Distribution or credited to book entry accounts. In lieu of receiving fractional shares, each holder of NorthStar Realty common stock who would otherwise be entitled to receive a fractional share of our Common Stock will receive cash for the fractional interest. An explanation of the tax consequences of the Distribution can be found below in the subsection captioned “— Material U.S. Federal Income Tax Consequences of the Distribution.” The distribution agent will, as soon as practicable after the Distribution, aggregate fractional shares of our Common Stock into whole shares and sell them in the open market at the prevailing market prices and distribute the aggregate proceeds, net of brokerage fees, ratably to NorthStar Realty stockholders who would otherwise be entitled to receive a fractional share of our Common Stock. The amount of such proceeds will depend on the prices at which the aggregated fractional shares are sold by the distribution agent in the open market shortly after the Distribution date. We do not anticipate a significant number of shares being aggregated to satisfy this requirement.

In order to be entitled to receive shares of our Common Stock in the Distribution, NorthStar Realty stockholders must be stockholders of record of NorthStar Realty common stock at the close of business, Eastern Time, , 2015, which is the record date for the Distribution.

Reasons for the Spin-Off


•	attractive positioning as a European equity REIT with access to a lower cost of capital and capability to execute complex, cross border European transactions;


•	European equity REIT with substantial growth prospects as financial and other institutions deleverage and wind-down their portfolios in Europe;


•	ability to benefit from opportunities in the European markets; and

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•	opportunity to increase the aggregate value of NorthStar Europe and NorthStar Realty in order to allow each company to issue equity at a lower cost of capital in connection with acquisitions, joint ventures and partnerships on more favorable terms.

Results of the Spin-off

After the Distribution, we will be an independent, publicly traded company. Immediately after the Distribution date, we expect that approximately million shares of our Common Stock will be issued and outstanding, based on the anticipated number of shares of NorthStar Realty common stock outstanding as of the record date. The actual number of shares of our Common Stock to be distributed will be determined based on the number of shares of NorthStar Realty common stock outstanding as of the record date.

In connection with the Distribution, we will enter into a management agreement with NSAM pursuant to which NSAM will manage the Company for an initial term of 20 years. The management agreement provides for: (i) an annual base management fee equal to the sum of: (a) $14 million; and (b) an additional annual base management fee equal to 1.5% per annum of the sum of: (1) any equity we issue in exchange or conversion of exchangeable or stock-settleable notes; (2) any other issuances of common equity, preferred equity or other forms of equity, including but not limited to LTIP Units in our Operating Partnership (excluding units issued to us and equity-based compensation, but including issuances related to an acquisition, investment, joint venture or partnership); and (3) cumulative CAD, if any, in excess of cumulative distributions paid on common stock, LTIP Units or other equity awards beginning the first full calendar quarter after completion of the Distribution; and (ii) an incentive fee determined as described under “Corporate Governance and Management — Our Manager — Management Agreement” with each of the fees set forth in clauses (i) and (ii) being calculated and payable quarterly in arrears in cash. The current base management fee of $14 million is based on our Current European Portfolio.

In addition, in conjunction with the Distribution, we will enter into the following agreements with NorthStar Realty or its affiliates: (i) a separation agreement, which will set forth, among other things, our agreements with NorthStar Realty regarding the principal transactions necessary to separate us from NorthStar Realty and distribute our Common Stock; and (ii) a contribution agreement and related agreements pursuant to which NorthStar Realty will contribute the European Real Estate Business and cash to us. For a detailed description of the foregoing agreements that we will enter into in conjunction with the Distribution, refer to “Certain Relationships and Related Party Transactions.”

The Distribution will not affect the number of outstanding shares of NorthStar Realty common stock or any rights of NorthStar Realty stockholders.

Material U.S. Federal Income Tax Consequences of the Distribution

The following is a summary of the material U.S. federal income tax consequences of the Distribution, and in particular the distribution by NorthStar Realty of shares of our Common Stock to common stockholders of NorthStar Realty.

This summary is based upon the Code, the regulations promulgated by the U.S. Treasury Department, rulings and other administrative pronouncements issued by the IRS, and judicial decisions, all as currently in effect, and all of which are subject to differing interpretations or to change, possibly with retroactive effect. No assurance can be given that the IRS would not assert,

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or that a court would not sustain, a position contrary to any of the tax consequences described below. We have not sought and do not intend to seek an advance ruling from the IRS regarding any matter discussed herein. The summary is also based upon the assumption that NorthStar Realty, we, and our respective subsidiaries and affiliated entities will operate in accordance with their applicable organizational documents or partnership agreements and the agreements and other documents applicable to the Distribution. This summary is for general information only and is not tax advice. The Code provisions governing the U.S. federal income tax treatment of REITs (such as NorthStar Realty and us) and their stockholders are highly technical and complex, and this summary is qualified in its entirety by the express language of applicable Code provisions, Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof. This summary does not address all possible tax considerations that may be material to a stockholder and does not constitute legal or tax advice. Moreover, this summary does not purport to discuss all aspects of U.S. federal income taxation that may be important to a particular stockholder in light of its investment or tax circumstances, or to stockholders subject to special tax rules, such as:


•	financial institutions;


•	insurance companies;


•	broker-dealers;


•	regulated investment companies;


•	foreign sovereigns and their controlled entities;


•	partnerships and trusts;


•	persons who will hold NorthStar Realty common stock on behalf of other persons as nominees;


•	persons who received NorthStar Realty common stock through the exercise of employee stock options or otherwise as compensation;


•	persons who will hold NorthStar Realty common stock as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or other integrated investment; and


•	except to the extent discussed below, tax-exempt organizations and foreign investors.

This summary assumes that stockholders will hold their NorthStar Realty common stock as a capital asset for U.S. federal income tax purposes, which generally means as property held for investment.

For purposes of this discussion under the heading “Material U.S. Federal Income Tax Consequences of the Distribution,” a “U.S. stockholder” is a beneficial owner of NorthStar Realty common stock that is, for U.S. federal income tax purposes:


•	a citizen or resident of the United States;


•	a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any of its states, or the District of Columbia;


•	an estate whose income is subject to U.S. federal income taxation regardless of its source; or


•	a trust if: (i) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust; or (ii) it has a valid election in place to be treated as a U.S. person.

A “non-U.S. stockholder” is a beneficial owner of NorthStar Realty common stock that is neither a U.S. stockholder nor a partnership (or other entity treated as a partnership) for U.S. federal income tax purposes. If a partnership, including for this purpose any entity that is treated as a partnership for U.S. federal income tax purposes, holds NorthStar Realty common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A stockholder that is a partnership and the partners in such partnership should consult their tax advisors about the U.S. federal income tax consequences of the Distribution.

THE U.S. FEDERAL INCOME TAX TREATMENT OF THE DISTRIBUTION TO STOCKHOLDERS OF NORTHSTAR REALTY DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT AND INTERPRETATIONS OF COMPLEX PROVISIONS OF U.S. FEDERAL INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY MAY BE AVAILABLE. IN ADDITION, THE TAX CONSEQUENCES OF THE DISTRIBUTION TO ANY PARTICULAR STOCKHOLDER OF NORTHSTAR REALTY WILL DEPEND ON THE STOCKHOLDER’S PARTICULAR TAX CIRCUMSTANCES. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE FOREIGN, U.S.

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FEDERAL, STATE, AND LOCAL INCOME AND OTHER TAX CONSEQUENCES TO YOU OF THE DISTRIBUTION IN LIGHT OF YOUR PARTICULAR INVESTMENT OR TAX CIRCUMSTANCES.

Tax Classification of the Distribution in General

For U.S. federal income tax purposes, the Distribution will not be eligible for treatment as a tax-deferred distribution by NorthStar Realty with respect to its common stock. Accordingly, the Distribution will be treated as if NorthStar Realty had distributed to each NorthStar Realty common stockholder an amount equal to the fair market value of our Common Stock received by such stockholder, determined as of the date of the Distribution. We refer to such amount as the “distribution amount.” The tax consequences of the Distribution to NorthStar Realty’s stockholders are thus generally the same as the tax consequences of NorthStar Realty’s cash distributions. The discussion below describes the U.S. federal income tax consequences to a U.S. stockholder, a non-U.S. stockholder, and a tax-exempt stockholder of NorthStar Realty common stock upon the receipt of our Common Stock in the Distribution.

Although NorthStar Realty will ascribe a value to our Common Stock distributed in the Distribution, this valuation is not binding on the IRS or any other tax authority. These taxing authorities could ascribe a higher valuation to the distributed Common Stock, particularly if, following the Distribution, those shares of Common Stock trade at prices significantly above the value ascribed to those shares by NorthStar Realty. Such a higher valuation may affect the distribution amount and thus the tax consequences of the distribution to NorthStar Realty’s stockholders. Any cash received by a NorthStar Realty stockholder in lieu of a fractional share of our Common Stock should be treated as if such fractional share had been: (i) received by the stockholder as part of the Distribution and then (ii) sold by such stockholder, via the distribution agent, for the amount of cash received. As described below, the basis of the fractional share deemed received by a NorthStar Realty stockholder will equal the fair market value of such share on the date of the Distribution.

Tax Basis and Holding Period of Our Common Stock Received by Holders of NorthStar Realty Common Stock

A NorthStar Realty stockholder’s tax basis in shares of our Common Stock received in the Distribution generally will equal the fair market value of such shares on the date of the Distribution and the holding period for such shares will begin the day after the date of the Distribution.

Tax Treatment of the Distribution to U.S. Stockholders

The following discussion describes the U.S. federal income tax consequences to a U.S. stockholder upon the receipt of shares of our Common Stock in the Distribution.

Ordinary Dividend Distributions

The portion of the distribution amount received by a U.S. stockholder that is payable out of NorthStar Realty’s current or accumulated earnings and profits and that is not designated by NorthStar Realty as a capital gain dividend will generally be taken into account by such U.S. stockholder as ordinary income and will not be eligible for the dividends received deduction for corporations. With limited exceptions, dividends paid by NorthStar Realty are not eligible for taxation at the preferential income tax rates for qualified dividend income received by U.S. stockholders taxed at individual rates from taxable C corporations. Such U.S. stockholders, however, are taxed at the preferential rates on dividends designated by and received from a REIT, such as NorthStar Realty, to the extent that the dividends are attributable to dividends received by the REIT from TRSs or other taxable C corporations.

Capital Gain Dividend Distributions

A distribution that NorthStar Realty designates as a capital gain dividend will generally be taxed to U.S. stockholders as long-term capital gain, to the extent that such distribution does not exceed NorthStar Realty’s actual net capital gain for the taxable year, without regard to the period for which the holder that receives such distribution has held its NorthStar Realty common stock. Corporate U.S. stockholders may be required to treat up to 20% of some capital gain dividends as ordinary income. Long-term capital gains are generally taxable at reduced maximum federal rates in the case of U.S. stockholders that are taxed at individual rates and ordinary income rates in the case of stockholders that are corporations.

Non-Dividend Distributions

A distribution to U.S. stockholders in excess of NorthStar Realty’s current and accumulated earnings and profits will generally represent a return of capital and will not be taxable to a U.S. stockholder to the extent that the amount of such distribution does not exceed the adjusted basis of the holder’s NorthStar Realty common stock in respect of which the distribution was made. Rather, the distribution will reduce the U.S. stockholder’s adjusted tax basis in its NorthStar Realty common stock. To the extent that such distribution exceeds a U.S. stockholder’s adjusted tax basis in its NorthStar Realty common stock, the holder generally

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must include such distribution in income as long-term capital gain, or short-term capital gain if the holder’s NorthStar Realty common stock has been held for one year or less.

Tax Treatment of the Distribution to Non-U.S. Stockholders

The following discussion describes the U.S. federal income tax consequences to a non-U.S. stockholder upon the receipt of shares of our Common Stock in the Distribution.

Ordinary Dividend Distributions

The portion of the distribution amount received by a non-U.S. stockholder that is: (i) payable out of NorthStar Realty’s earnings and profits; (ii) not attributable to NorthStar Realty’s capital gains; and (iii) not effectively connected with a U.S. trade or business of the non-U.S. stockholder, will be treated as a dividend that is subject to U.S. withholding tax at the rate of 30%, unless reduced or eliminated by treaty.

In general, non-U.S. stockholders will not be considered to be engaged in a U.S. trade or business solely as a result of their ownership of NorthStar Realty common stock. In cases where the dividend income from a non-U.S. stockholder’s investment in NorthStar Realty common stock is, or is treated as, effectively connected with the non-U.S. stockholder’s conduct of a U.S. trade or business, the non-U.S. stockholder generally will be subject to U.S. federal income tax at graduated rates, in the same manner as U.S. stockholders are taxed with respect to such dividends. Such income must generally be reported on a U.S. income tax return filed by or on behalf of the non-U.S. stockholder. The income may also be subject to the 30% branch profits tax in the case of a non-U.S. stockholder that is a corporation.

Capital Gain Distributions

Under the Foreign Investment in Real Property Tax Act of 1980, or FIRPTA, distributions that are attributable to gain from NorthStar Realty’s sales or exchanges of United States real property interests, or USRPIs, will be taxed to a non-U.S. stockholder as if such gain were effectively connected with a U.S. trade or business, and non-U.S. stockholders will be subject to U.S. federal income tax on the distributions at the rates applicable to U.S. individuals or corporations. NorthStar Realty will be required to withhold a 35% tax on such distributions. Distributions subject to FIRPTA may also be subject to a 30% branch profits tax in the hands of a corporate non-U.S. stockholder.

Distributions received by a non-U.S. stockholder that are attributable to dispositions of NorthStar Realty’s assets other than USRPIs are not subject to U.S. federal income tax, unless: (i) the gain is effectively connected with the non-U.S. stockholder’s U.S. trade or business, in which case the non-U.S. stockholder would be subject to the same treatment as U.S. stockholders with respect to such gain; or (ii) the non-U.S. stockholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States, in which case the non-U.S. stockholder will incur a 30% tax on his capital gains.

Non-Dividend Distributions

Unless NorthStar Realty’s common stock constitutes a USRPI, the distribution amount, to the extent not made out of NorthStar Realty’s earnings and profits, and not attributable to gain from the disposition of USRPIs (including gain realized in the Distribution), will not be subject to U.S. federal income tax. If NorthStar Realty cannot determine at the time of the Distribution whether the distribution amount will exceed its current and accumulated earnings and profits, the Distribution will be subject to withholding at the rate applicable to ordinary dividends, as described above.

If NorthStar Realty’s stock constitutes a USRPI (see discussion below), distributions in excess of the sum of: (i) the non-U.S. stockholder’s proportionate share of NorthStar Realty’s earnings and profits; plus (ii) the non-U.S. stockholder’s basis in its NorthStar Realty common stock, will be taxed under FIRPTA in the same manner as if the NorthStar Realty stock had been sold. In such situations, NorthStar Realty would be required to withhold 10% of such excess, the non-U.S. stockholder would be required to file a U.S. federal income tax return, and the non-U.S. stockholder would be subject to the same treatment and same tax rates as a U.S. stockholder with respect to such excess, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of non-resident alien individuals.

NorthStar Realty’s common stock will not be treated as a USRPI if less than 50% of NorthStar Realty’s assets throughout a prescribed testing period consist of interests in real property located within the United States, excluding, for this purpose, interests in real property solely in a capacity as a creditor. More than 50% of the value of NorthStar Realty’s assets consist of USRPI during the relevant period.

NorthStar Realty’s common stock nonetheless will not constitute a USRPI if NorthStar Realty is a “domestically controlled qualified investment entity.” A domestically controlled qualified investment entity includes a REIT, less than 50% of value of which is held directly or indirectly by non-U.S. stockholders at all times during a specified testing period. It is anticipated that

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NorthStar Realty will be a domestically controlled qualified investment entity at the time of the Distribution, and that a distribution with respect to NorthStar Realty’s stock in excess of NorthStar Realty earnings and profits will not be subject to withholding taxation under FIRPTA. No complete assurance can be given that NorthStar Realty will qualify as a domestically controlled qualified investment entity at the time of the Distribution.

Gain in respect of a non-dividend distribution that would not otherwise be subject to FIRPTA will nonetheless be taxable in the United States to a non-U.S. stockholder in two cases: (i) if the non-U.S. stockholder’s investment in NorthStar Realty common stock is effectively connected with a U.S. trade or business conducted by such non-U.S. stockholder, the non-U.S. stockholder will be subject to the same treatment as a U.S. stockholder with respect to such gain; or (ii) if the non-U.S. stockholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States, the nonresident alien individual will be subject to a 30% tax on the individual’s capital gain.

Withholding of Amounts Distributable to Non-U.S. Stockholders in the Distribution

If NorthStar Realty is required to withhold any amounts otherwise distributable to a non-U.S. stockholder in the Distribution, NorthStar Realty or other applicable withholding agents will collect the amount required to be withheld by reducing to cash for remittance to the IRS a sufficient portion of shares of our Common Stock that such non-U.S. stockholder would otherwise receive, and such holder may bear brokerage or other costs for this withholding procedure. A non-U.S. stockholder may seek a refund from the IRS of any amounts withheld if it is subsequently determined that the amounts withheld exceeded the non-U.S. stockholder’s U.S. tax liability for the year in which the Distribution occurred.

Time for Determination of the Tax Impact of the Distribution

The tax consequences of the Distribution will be affected by a number of facts that are yet to be determined, including NorthStar Realty’s final earnings and profits for 2015 (including as a result of the income and gain NorthStar Realty recognizes in connection with the Distribution), the fair market value of shares of our Common Stock on the date of the Distribution and the extent to which NorthStar Realty recognizes gain on the sales of USRPIs or other capital assets. Thus, a definitive calculation of the U.S. federal income tax consequences of the Distribution will not be possible until after the end of the 2015 calendar year. NorthStar Realty will provide its stockholders with tax information on an IRS Form 1099-DIV, informing them of the character of distributions made during the taxable year, including the Distribution.

Listing and Trading of Our Common Stock

There is not currently a public market for our Common Stock. We expect to list our Common Stock on the NYSE under the symbol “NRE.” Beginning on or shortly before, and continuing up to and including the date of the Distribution, we expect that there will be a “when-issued” market in our Common Stock. “When-issued” trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. The “when-issued” market will be a trading market for our Common Stock that will be distributed to holders of shares of NorthStar Realty common stock on the Distribution date. If you owned shares of NorthStar Realty common stock at the record date, which is the close of business, Eastern Time, on , 2015, you will be entitled to shares of our Common Stock distributed pursuant to the Distribution. You may trade this entitlement to shares of our Common Stock, without the shares of NorthStar Realty common stock you own, on the “when-issued” market. On the first trading day following the Distribution date, “when-issued” trading with respect to our Common Stock will end and “regular-way” trading will begin.

Furthermore, beginning on or shortly before the record date and continuing up to and including the date of the Distribution, we expect that there will be two markets in shares of NorthStar Realty common stock: a “regular-way” market and an “ex-distribution” market. Shares of NorthStar Realty common stock that trade on the “regular-way” market will trade with an entitlement to our Common Stock distributed pursuant to the spin-off. Shares of NorthStar Realty common stock that trade on the “ex-distribution” market will trade without an entitlement to our Common Stock distributed pursuant to the spin-off. Therefore, if you sell shares of NorthStar Realty common stock in the “regular-way” market before the Distribution, you will be selling your right to receive our Common Stock in the Distribution. If you sell shares of NorthStar Realty common stock in the “ex-distribution” market before the Distribution, you will receive the shares of our Common Stock that you are entitled to receive pursuant to your ownership as of the record date of NorthStar Realty common stock.

We cannot assure you as to the price at which our Common Stock will trade before, on or after the Distribution date. Until our Common Stock is fully distributed and an orderly market develops in our Common Stock, if ever, the price at which such stock trades may fluctuate significantly. In addition, the combined trading prices of our Common Stock and NorthStar Realty common stock held by stockholders after the Distribution may be less than, equal to or greater than the trading price of the NorthStar Realty common stock prior to the Distribution.

The shares of our Common Stock distributed to NorthStar Realty stockholders will be freely transferable, subject to the limitations on transfer and ownership set forth in our charter, and except for shares received by people who may have a special

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relationship or affiliation with us or shares subject to contractual restrictions. For a more detailed discussion of restrictions on transfer and ownership of our Common Stock, refer to “Description of Capital Stock — Restrictions on Transfer and Ownership of our Common Stock.” People who may be considered our affiliates after the Distribution generally include individuals or entities that control, are controlled by, or are under common control with us. This may include certain of our directors, officers and significant stockholders. Persons who are our affiliates will be permitted to sell their shares only pursuant to an effective registration statement under the Securities Act of 1933, as amended, or the Securities Act, or an exemption from the registration requirements of the Securities Act, or in compliance with Rule 144 under the Securities Act.

Conditions to the Distribution

The separation agreement will provide that the Distribution is subject to the satisfaction of certain material conditions, including the following:


•	the SEC declaring effective our registration statement and no stop order suspending the effectiveness of the registration statement in effect and no proceedings for such purpose pending before or threatened by the SEC;


•	the transaction agreements relating to the Distribution having been duly executed and delivered by the parties;


•	no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution or any of the related transactions in effect;

•

the receipt by us of an opinion from Hunton & Williams LLP to the effect that, beginning with our taxable year ending December 31, 2015, we will be organized in conformity with the requirements for qualification as a REIT under the Code and our proposed method of operation will enable us to satisfy the requirements for qualification and taxation as a REIT under the U.S. federal income tax laws for the year ending December 31, 2015 and subsequent taxable years; and


•	no event or development having occurred or existing that, in the judgment of the NorthStar Realty Board, in its sole discretion, makes it inadvisable to effect the Distribution and other related transactions.

Reason for Furnishing this Prospectus

This prospectus is being furnished by NorthStar Realty solely to provide information to current stockholders of NorthStar Realty who will receive shares of our Common Stock in the Distribution. It is not, and is not to be construed as, an inducement or encouragement to buy or sell any of our securities. We will not update the information in this prospectus except in the normal course of our respective public disclosure obligations and practices.

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BUSINESS

The following discussion may not contain all of the information that is important to you and should be read in conjunction with the combined financial statements of the NorthStar Europe Predecessor and the notes thereto included in “Financial Statements,” the unaudited pro forma financial information beginning on page 70 and the risk factors included in “Risk Factors” beginning on page 17 of this prospectus.

Our Company

We will be externally managed and advised by NSAM. We were formed as a Maryland corporation on June 18, 2015 and intend to conduct our operations so as to qualify as a REIT for U.S. federal income tax purposes beginning with the year ending December 31, 2015. Our principal executive offices are located at 399 Park Avenue, 18th Floor, New York, New York 10022 and our telephone number is (212) 547-2600.

Market Opportunity

We believe that the economic environment in Europe has stabilized and the foundations are in place for a gradual and sustained recovery. According to recent European Commission estimates, all of the countries in the European Union, with the exception of Cyprus, are expected to achieve GDP growth in 2015. In addition, the European Commission forecasts expected overall 2015 GDP growth in the European Union of 1.8% and in the Eurozone of 1.5%. We believe that the positive outlook for Europe is driven by a number of factors including the following:


•	historically low interest rates, with three-month Euribor falling below zero in April 2015 ((0.2)% in August 2015 compared to 5.1% in October 2008);


•	historically wide spreads between capitalization yields and interest rates;


•	the European Central Bank’s quantitative easing program, with a commitment to purchase €1.1 trillion in assets over a period of nineteen months beginning in the first quarter of 2015;


•	depreciation of foreign currencies, primarily the Euro ;


•	declining unemployment rates;


•	relatively low oil prices;


•	increased investor and consumer confidence in a sustained European recovery; and

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•	the apparent stabilization of European sovereign debt and reversal of the recent upward trend in debt/GDP across the Eurozone.

Despite the overall positive outlook, regional disparities continue to exist as European economies recover at different speeds. As a result, attractive investment opportunities opportunities exist in Europe for investors who are able to take a long-term view on the European recovery. Major economies, such as the United Kingdom and Germany, appear to be experiencing healthy growth with expected 2015 GDP growth of 2.4% and 1.6%, respectively, as forecasted by the International Monetary Fund. In addition, some of the more troubled economies, such as Spain, Ireland and the Netherlands, appear to have demonstrated a rapid turnaround. As of July 2015, the International Monetary Fund expects unemployment in the United Kingdom and Germany to decline to 5.4% and 4.9% in 2015, respectively.

We believe property values, particularly as compared to the United States, remain below their historical peaks in many markets within the European Union. For example, U.K. capital values remain well below the last peak across all property types including office, retail and industrial assets with the current cycle witnessing a 44% spread between the bottom and peak of the cycle and, despite the recovery in property values, there remains a considerable opportunity for capital value appreciation.



Property Capital Values - 1990’s Cycle vs. Current		U.K. Property Capital Values

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Source: Investment Property Databank Ltd. (IPD)

Investors may also benefit from historically wide spreads between capitalization yields and interest rates. The spread between the weighted average prime yield in the major European real estate markets (across all asset classes) and Euribor stood at approximately 0.08% in the third quarter of 2008. This compares to approximately 4.41% as of June 30, 2015. With interest rates expected to remain at low levels for the foreseeable future, we expect property to increasingly become an attractive source of income return for investors.

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The following graph shows yield spreads above long-term averages:

Yield Spreads Above Long-Term Average Rates ⁽¹⁾

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(1)	As of September 28 , 2015. Source: Jones Lang LaSalle IP, Inc, European property yield data © 2015.

The European office market is steadily improving. Improving economic conditions are positively impacting tenant demand as evidenced by an improvement in take-up, rental growth and declining vacancy in a number of markets. Overall limited new supply has created undersupplied pockets of good quality office space across Europe. This is supporting capital value appreciation. Furthermore, the weaker Euro is likely to help the domestic lodging sector by driving greater in-bound travel to Europe as well as capturing a larger share of domestic leisure travel.

Consistent with the improved economic outlook and market fundamentals for Europe, the investment market has also continued to improve with investment volumes approaching pre-financial crisis levels. According to Colliers International, total European investment volume in the first half of 2015 reached €129 billion, representing approximately a 30% year-on-year increase. Full year volumes for 2015 are currently expected to reach €250 billion, compared to €257 billion in 2007. The office sector continues to drive investment activity across Europe. According to BNP Paribas Real Estate, investment in office properties located in the European Union increased by 20% in 2014 compared to 2013. In the first half of 2015, the office sector represented 35% of total investment volume, but its share of investment activity is slowly declining due to growth in retail and mixed use investments.

Deleveraging by financial institutions and asset management agencies is beginning to gain momentum with approximately €24 billion of commercial real estate loan and real estate owned transactions completed in the first half of 2015 with a further €99 billion estimated to be in the pipeline for the second half of 2015 (compared to approximately €81 billion in 2014 and €30 billion in 2013). A number of open-ended funds are also in the process of being liquidated. It is estimated that German open-ended funds have together sold approximately €18 billion of properties since 2011. Together they own a total of approximately €81 billion of real estate globally as of March 2015, of which approximately €12 billion is estimated to be European properties designated for sale by 2017. A number of companies and asset managers are also beginning to liquidate their portfolios, presenting potential buying opportunities. There is no assurance, however, that we will be able to take advantage of these opportunities.

We intend to focus on the major investment markets in Europe in the near future while remaining open to additional opportunities. While Germany, the United Kingdom and France continue to be the largest European markets, with over 70% of the volume in the second quarter of 2015 according to DTZ, office investment outside of those top three markets has grown by 110% since 2009. Some of the periphery markets including Greece, Spain, Ireland and the Netherlands benefited from a sharp resurgence in investment volumes, which we believe were underpinned by the disposal of properties by the public asset management agencies such as the National Asset Management Agency in Ireland or SAREB in Spain.

In terms of sales activity among cities, according to BNP Paribas, London had the most sales, followed by Paris and Stockholm, with €29 billion, €18 billion and €6 billion invested in 2014, respectively for all property sectors.

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Due to tight supply and strong pressure on yields, particularly in the core markets, investors are increasingly targeting regional markets in the United Kingdom and Germany. For example, the share of German investments outside the six largest markets accounted for 55% of the investment volume in 2014.

Our Strategy

We have the ability to invest in a broad spectrum of European commercial real estate. We are currently predominantly focused on office properties and may expand by acquiring other types of commercial real estate located throughout Europe. We expect to make equity investments, directly or indirectly through joint ventures, in a diversified portfolio of European commercial real estate that offers the opportunity to generate attractive risk-adjusted returns. We seek to generate stable cash flow for distribution to our stockholders and in turn build long-term franchise value.

Our Competitive Strengths

We believe that we operate with significant competitive strengths that will allow us to continue to grow our investments, generate attractive risk-adjusted returns for our stockholders and be well-positioned to benefit from the ongoing recovery in the European commercial real estate market.


•	New Opportunity for Investors – We will be the only diversified European real estate company listed in the United States. We therefore believe we are creating a new opportunity for investors to gain pan-European real estate exposure through one vehicle, with the advantage of the accessibility and liquidity associated with the U.S. capital markets.

•

Access to Lower Cost of Capital – As a separate public company, we expect to have lower cost of capital. NSAM has a proven track record of accessing the capital markets on behalf of NorthStar Realty and its other managed companies and we believe that our experience should enable us to structure and finance investments efficiently. We believe NSAM’s experience, together with its affiliates, will provide us access to a wide range of secured and unsecured debt and public and private equity capital sources to grow and fund our business.

•

Diversified Investment Strategy – We have a diversified investment strategy, with flexibility to invest in a variety of property types and jurisdictions. This strategy gives our investors the opportunity to gain European exposure through a single investment. In addition, our strategy allows us to take advantage of portfolio sales that appear undervalued that competitors, most of whom are restricted to specific regions or property types in Europe, are unable to pursue.


•	High-Quality Portfolio in Key Markets – We have already begun to execute our strategy through our initial acquisitions of high-quality office buildings in many of the major cities across Europe, tapping a large and liquid market that we believe has significant potential for long-term growth.

•

Experienced Management Team – Our management team and experienced investment professionals are on the ground in Europe and have the ability to execute on complex, cross-border transactions. We believe our business will continue to benefit from the knowledge and industry contacts that these seasoned executives have gained through their accomplished careers while investing in numerous real estate cycles. We believe the accumulated experience of our senior management team, together with other resources at NSAM, will allow us to identify opportunities and deploy capital across a broad spectrum of potential investments fluidly in response to changes in the investment environment.

•

Real Estate Investment and Asset Management Experience – Our asset manager, NSAM, has developed a reputation as a leading, diversified commercial real estate investment and asset management team because of its strong performance record in managing approximately $25 billion in commercial real estate investments as of June 30, 2015, adjusted for acquisitions and commitments to purchase real estate through August 5, 2015. Prior to its spin-off from NorthStar Realty, NSAM historically focused in the United States and more recently NSAM has started managing assets in Europe, and as a result of its third party arrangements, we also benefit from the strength of our local partners in Europe. We believe that we can leverage that extensive real estate experience and the depth and thoroughness of the associated asset management skills to structure and manage our investments prudently and efficiently.

•

Public Company Reporting and REIT Experience – NorthStar Realty has operated as a REIT and its common stock has traded on the NYSE under the symbol “NRF” since October 2004. NSAM has also operated as a public company traded on the NYSE under the symbol “NSAM” since July 2014. Our management team is skilled in public company reporting and compliance with the requirements of the Sarbanes-Oxley Act, including internal control certifications, stock exchange regulations and investor relations and is experienced in complying with the requirements under the Code to obtain REIT status and to maintain the ability to be taxed as a REIT for U.S. federal income tax purposes.

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Financing Strategy

We plan to pursue a variety of financing arrangements such as mortgage notes and bank loans available from the commercial mortgage backed securities, or CMBS, market, finance companies and banks. In addition, we may use corporate-level financing such as credit facilities and other borrowings. We generally seek to limit our reliance on recourse borrowings. Borrowing levels for our investments may be dependent upon the nature of the investments and the related financing that is available.

In July 2015, we issued $340 million aggregate principal amount of Senior Notes. We received aggregate net proceeds of $331 million, after deducting the underwriters’ discount and other expenses. We loaned the net proceeds from the issuance of the Senior Notes to subsidiaries of NorthStar Realty, which used such amounts for general corporate purposes, including, among other things, the funding of acquisitions, including the Trianon Tower, and the repayment of NorthStar Realty’s borrowings. The loan does not incur interest and will be deemed repaid upon NorthStar Realty’s contribution to us of our European Real Estate Business. We expect to enter into an agreement with NorthStar Realty at the time of the Distribution providing that we will reimburse NorthStar Realty if any principal or interest payments on the Senior Notes are made by NorthStar Realty after the Distribution.

The current availability of attractive long-term, non-recourse, non-mark-to-market financing through the European bank markets has bolstered opportunities to acquire real estate. For longer duration, relatively stable cash flow investments, such as those derived from net lease investments, we may use fixed rate financing. For investment cash flow with greater growth potential, we expect to use floating rate financing, which provides prepayment flexibility and may provide a better match between underlying cash flow projections and potential increases in interest rates. Where we use floating rate financing, we expect to generally attempt to mitigate the risk of interest rates rising through hedging arrangements including interest rate swaps and caps. We may vary the mix of fixed and floating rate debt and use a combination of the two when we deem it appropriate. We also may utilize corporate-level financing in the future.

We intend to take advantage of differences in the monetary performance of the various European jurisdictions, which we expect to provide us lower cost to capital and to enable us to fund investments located in economies that are at a more advanced stage of recovery at artificially low financing costs.

Portfolio Management

NSAM will perform portfolio management on our behalf. In addition, we will rely on the services of local third party property managers. The 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 investment-specific credit issues and trends on a portfolio-wide basis. Nevertheless, we cannot be certain that such review will identify all issues within our portfolio due to, among other things, adverse economic conditions or events adversely affecting specific investments; therefore, potential future losses may also stem from investments that are not identified during these credit reviews.

The portfolio management team, under the direction of NSAM’s investment committee, will use many methods to actively manage our investment base to preserve our income and capital. Credit risk management is the ability to manage our investments and our tenants/partners in a manner that preserves principal/cost and income and minimizes credit losses that could decrease income and portfolio value. Frequent re-underwriting and dialogue with tenants/partners and regular inspections of our properties have proven to be an effective process for identifying issues early. Monitoring tenant creditworthiness is a key component of our portfolio management process, which may include, to the extent available, a review of financial statements and operating statistics, delinquencies, third party ratings and market data. During the quarterly credit review, or more frequently as necessary, investments may be put on highly-monitored status and identified for possible asset impairment based upon several factors, including missed or late contractual payments, significant declines in performance and other data which may indicate a potential issue in our ability to recover our invested capital from an investment.

Our Properties

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prime office properties in Germany, the United Kingdom and France that account for approximately 71% of our in-place rental income as of June 30, 2015, adjusted for an acquisition through September 28, 2015 . As of June 30, 2015, adjusted for an acquisition through September 28, 2015 , our portfolio was 93% occupied, had a weighted average remaining lease term of 6.0 years and included high-quality tenants. Management believes that each of the properties that comprise our Current European Portfolio is adequately covered by insurance and each property is suitable and adequate for its intended use.

The following presents a summary, as of June 30, 2015, adjusted for an acquisition through September 28, 2015 , of our portfolio and diversity across geographic location based on cost:



			Portfolio by Geographic Location
Total portfolio, at cost	$2.6 billion
Number of properties	52
Number of countries	9
Total square meters	520,323
Weighted average occupancy	93	%
Weighted average remaining lease term	6.0 years
In-place rental income related to: ⁽¹⁾
Office properties	94	%
Other	6	%

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(1) In-place rental income represents gross rent adjusted for vacancies.

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The following table presents our equity investments in properties that we own as of June 30, 2015, adjusted for an acquisition through September 28, 2015 (dollars in thousands except per square meter data):



Location Country, City	Number of Buildings	Estimated Amount ⁽¹⁾⁽²⁾			Type ⁽⁶⁾	Square Meters ^(9)(10)	Occupancy	Average Annual In-Place Rental Income per Square Meter ^(2)(10)		Borrowings ⁽²⁾⁽³⁾
Belgium
Brussels	4	$	67,796		Office	23,602	77%	$	210	$	5,172
U.K.
London - Portman Square ^(7)(12)	1	279,461			Office	10,447	100%	1,155		191,550		⁽⁴⁾
London (Other) ⁽⁷⁾	2	202,503			Office	13,378	100%	806		162,058
Scotland	2	20,485			Office	6,086	100%	366		10,785
Woking (U.K. Complex) ⁽⁷⁾⁽⁸⁾	1	97,452			Office	20,743	100%	343		78,585
Other (England)	3	31,603			Office	7,267	92%	368		19,429
Subtotal UK	9	631,504				57,921	99%	604		462,407
France
Paris	6	389,815			Office/Industrial	95,424	93%	230		243,484
Germany
Baden-Württemberg	1	6,581			Office	2,070	100%	179		2,851
Bavaria	1	6,216			Office	12,166	75%	119		3,328
Berlin	3	90,310			Hotel/Office	30,539	100%	185		51,497
Bremen	1	2,072			Office/Residential	2,192	97%	107		853
Frankfurt - Trianon Tower ⁽¹²⁾	3	621,293			Office/Residential	68,657	98%	490		366,115
Hesse (Frankfurt Other)	1	22,425			Office/Residential	6,832	73%	231		11,569
Hamburg	2	118,610			Office	34,253	86%	203		88,838
North-Rhine Westphalia	9	85,069			Office/Retail	45,753	88%	149		47,498
Schleswig-Holstein	2	6,947		⁽¹¹⁾	Office/Retail	7,558	51%	147		2,456
Subtotal Germany	23	959,523				210,020	90%	287		575,005
Italy
Milan	2	165,313			Office	30,924	95%	398		68,468
Netherlands
Amsterdam	1	103,710			Office	22,983	100%	309		41,404
Rotterdam	1	168,319			Office	37,816	98%	310		95,767
Other	2	10,238			Office	12,448	92%	235		5,944
Subtotal Netherlands	4	282,267				73,247	98%	298		143,115
Portugal
Albufeira	1	16,819			Retail	11,150	93%	157		—
Lisbon	1	13,650			Office	4,325	86%	245		—
Subtotal Portugal	2	30,469				15,475	91%	181		—
Spain
Madrid	1	8,775			Office	4,025	100%	177		—
Sweden
Gothenburg	1	44,998			Office	9,685	94%	241		20,803
Grand Total	52	$	2,580,460	⁽⁵⁾		520,323	93%	$	315	$	1,518,454

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(1)	Allocation to individual properties is based on a preliminary estimate of purchase price allocation and subject to change and includes transaction costs, deferred financing costs, derivatives and other assets assumed.


(2)	Amounts are translated using the exchange rate as of June 30, 2015 for all properties.


(3)	The following table presents borrowings for our Current European Portfolio as of June 30, 2015, adjusted for an acquisition through September 28 , 2015 (dollars in thousands):

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	Final	Contractual	Principal
	Maturity	Interest Rate	Amount
Mortgage and other notes payable ⁽ⁱ⁾
U.K. Complex	Dec-19	⁽ⁱⁱ⁾	$	78,585
Internos Portfolio ⁽ⁱⁱⁱ⁾	Apr-20	⁽ⁱⁱⁱ⁾	101,315		^(v)
IVG Portfolio ⁽ⁱⁱⁱ⁾	Apr-20	⁽ⁱⁱⁱ⁾	94,066		^(v)
Deka Portfolio ⁽ⁱⁱⁱ⁾	Apr-20	⁽ⁱⁱⁱ⁾	51,914		^(v)
SEB Portfolio	Apr-22	^(iv)	708,858		^(v)(vi)
SEB Portfolio - Preferred	Apr-60	3.00% ^(vii)	117,601		^(vi)(viii)
Trianon Tower	Jul-23	^(ix)	366,115
Total mortgage and other notes payable			$	1,518,454

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(i)	All borrowings are non-recourse to NorthStar Europe and are interest-only through maturity, subject to compliance with covenants of the respective borrowing.


(ii)	Comprised of $63.8 million principal amount of floating rate borrowings at GBP LIBOR plus 2.0%, with a related $63.8 million notional value interest rate cap at 2.0% and $14.7 million fixed rate borrowings at 8.0%.

(iii)

Represents a cross-collateralized borrowing between the Internos Portfolio, IVG Portfolio and Deka Portfolio. Comprised of $206.3 million principal amount of floating rate borrowings at EURIBOR plus 2.7%, with a related $206.3 million notional value interest rate cap at 2.0% and $41.0 million floating rate borrowing at GBP LIBOR plus 2.7%, with a related $41.0 million notional value interest rate cap at 2.0%.


(iv)	Comprised of $393.2 million principal amount of floating rate borrowing at EURIBOR plus 1.8%, with a related $393.2 million notional value interest rate cap at 0.5%, $298.3 million of floating rate borrowing at GBP LIBOR plus 1.8%, with a related $298.3 million notional value interest rate cap at 2.0% and $17.4 million floating rate borrowing at STIBOR plus 1.8%.


(v)	Prepayment provisions include a fee based on principal amount ranging from .75% to 1.5% through April 2018 for the Internos Portfolio, IVG Portfolio and Deka Portfolio borrowing and .5% to 2.0% through April 2019 for the SEB Portfolio borrowing.


(vi)	Includes financing related to Portman Square (refer to footnote 4).


(vii)	Contractual interest rate is 3% per annum through May 2019, increases to EURIBOR plus 12% through May 2022 and then increases to EURIBOR plus 15% through final maturity.


(viii)	The Company has the ability to prepay the principal amount in part or in full through May 2019. Any prepayment prior to such date is subject to the payment of the unpaid coupon on outstanding principal amount through May 2019.


(ix)	Comprised of $366.1 million principal amount of floating rate borrowing at EURIBOR plus 1.45%, with a related $366.1 million notional value interest rate cap at 0.5%.


(4)	The borrowing for Portman Square is part of the borrowing for the SEB Portfolio and is comprised of a $166.7 million mortgage note and a $24.9 million allocation of the preferred note. Refer to footnote 3 for the key terms of such borrowings.


(5)	The estimated fair value of the portfolio is $2.6 billion translated to U.S. dollars using the exchange rate at June 30, 2015.


(6)	Classification based on predominant property type but may include other types of properties.


(7)	Certain properties are subject to ground leases.


(8)	Represents the property owned by NorthStar Predecessor.


(9)	Excludes parking spaces.


(10)	The tenant, DekaBank Deutsche Girozentrale in the Trianon Tower, is material to our Current European Portfolio as it contributes 13% of annual in-place rental income. No tenant in our Current European Portfolio occupies greater than 10% of total square meters.


(11)	Includes one property held-for-sale with an estimated amount of $4.3 million as of June 30, 2015.


(12)	The following tables present information regarding significant properties in our Current European Portfolio (dollars in thousands):



Significant tenants:	Industry	Square Meters	Percentage of Square Meters	In-Place Rental Income		Percentage of In-Place Rental Income	Lease Maturity Date ^(iv)
Portman Square ^(i)(iii)
Cushman & Wakefield LLP	Insurance and real estate	5,150	49%	$	5,265	44%	June-25
Invesco UK Limited	Finance and law	2,043	20%	3,205		27%	May-23
Quintain Estates & Development PLC	Insurance and real estate	1,280	12%	1,733		14%	Feb-24
Regus (London Portman Square) Limited	Consulting and other professional services	1,056	10%	958		8%	Sept-20
Total		9,529	91%	$	11,161	93%
Trianon Tower ^(ii)(iii)
DekaBank Deutsche Girozentrale	Finance and law	35,036	51%	$	20,217	61%	Jun-24
Deutsche Bundesbank	Public institutions and non-governmental organizations (NGOs)	10,659	16%	4,544		14%	March-25
Linklaters LLP	Finance and law	10,082	15%	4,491		14%	Dec-15
Total		55,777	82%	$	29,252	89%

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(i)

The terms of the leases of the office and retail premises at Portman Square House range from eight to 20 years. Tenants are generally responsible for the maintenance and repair of their premises, as well as the cost of structural works and repair to common areas performed by the landlord. Tenants are responsible for the cost of insurance, as well as operating expenses and taxes with respect to their premises.

(ii)

The terms of the leases of the office and restaurant premises at Trianon Tower range from four to 18 years, while the terms of the residential leases are 25 years (subject to certain exceptions). Although the specific terms vary by lease, the tenants are generally responsible for the maintenance and repair of their premises and the landlord is responsible for carrying out any structural works. Costs of repair to the common areas of the building are borne by the tenants, though typically subject to a cap. Under the residential leases, the landlord is generally responsible for repair of the premises, structure and common areas,

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other than ordinary wear and tear of the tenant’s premises subject to a cap. Subject to variations under specific leases, tenants bear the costs of insurance, as well as the regular operation costs and taxes in respect of their premises.

(iii)

We expect to renovate and improve the properties in the ordinary course of business, including a planned approximately €15 million for the Trianon Tower, of which €6 million will be contributed by a tenant and the remainder will be funded through a capital expenditure escrow reserve. With respect to Portman Square, approximately £0.8 million of capital improvements are planned, which we expect to fund with cash on hand.


(iv)	Lease maturity date reflects the expiration date per the leases and does not assume renewal, extension or termination options. Both DekaBank Deutsche Girozentrale and Deutsche Bundesbank have one five-year extension option. No other tenants have extension options.



Historical occupancy and average effective rent per square meter:

	Portman Square			Trianon Tower
Period	Historical Occupancy	Average Annual Effective Rent per Square Meter ⁽¹⁾		Historical Occupancy	Average Annual Effective Rent per Square Meter ⁽¹⁾
As of June 30, 2015	100%	$	1,155	98%	$	490
2014	100%	1,119		84%	512
2013	92%	1,115		80%	600
2012	100%	1,118		84%	562
2011	100%	1,006		83%	553
2010	100%	1,091		79%	589

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(1) Effective rent represents gross in-place rental income.



Lease expirations:
	Portman Square						Trianon Tower
Year	Square Meters	In-Place Rental Income		Percentage of In-Place Rental Income		Number of Tenants	Square Meters	In-Place Rental Income		Percentage of In-Place Rental Income		Number of Tenants
2015	—	$	—	—		—	10,141	$	4,528	13.7	%	3
2016	27	7		0.1	%	1	4,065	1,916		5.8	%	1
2017	—	—		—		—	—	—		—		—
2018	288	261		2.2	%	1	2,947	578		1.7	%	3
2019	—	—		—		—	—	—		—		—
2020	1,056	958		7.9	%	1	65	19		0.1	%	1
2021	—	—		—		—	—	—		—		—
2022	—	—		—		—	—	—		—		—
2023	2,429	3,588		29.7	%	2	78	12		0.0	%	1
2024	1,496	1,988		16.5	%	2	37,772	21,422		64.7	%	2
2025	5,150	5,265		43.6	%	1	10,659	4,544		13.7	%	1
Thereafter	—	—		—		—	—	—		—		—
Other ⁽¹⁾	1	—		—		1	1,617	109		0.3	%	15
Total	10,447	$	12,067	100.0	%	9	67,344	$	33,128	100.0	%	27

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(1) Represents leases with private persons’ for parking and small residential tenants with an indefinite lease term.

Our Leases

The terms of our leases vary significantly by lease and jurisdiction, ranging from three months to 27.5 years. For example, our leases in the United Kingdom, Germany and Belgium have terms ranging from one year to 27.5 years, while our leases in France and the Netherlands have terms ranging from nine to 15 years and our leases in Spain and Italy have terms of six or seven years. Contractual and/or statutory tenant break options or extension rights also vary significantly across our portfolio. The weighted average remaining lease term of our portfolio is 6.0 years as of June 30, 2015, adjusted for an acquisition through September 28, 2015 .

Although the specific terms vary by lease and jurisdiction, our leases generally provide that keeping and maintaining the leased premises in good repair is the responsibility of the tenant. Responsibility for the costs associated with the maintenance and repair of common areas within multi-tenant buildings varies more significantly, but generally falls upon the tenant. By contrast, costs associated with structural works or extraordinary repairs of the building are typically the responsibility of the landlord, except

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in the United Kingdom where the tenant bears these costs. Responsibility for taxes and costs of insurance premiums also varies across leases and jurisdictions, but most frequently falls upon the tenant.

The following table presents lease expirations and associated in-place rental income for our Current European Portfolio (dollars in thousands):



Year	Occupied Square Meters	In-Place Rental Income		Percentage of In-Place Rental Income	Number of Tenants
2015	51,108	$	8,633	6%	26
2016	31,030	9,690		6%	31
2017	24,637	5,362		4%	32
2018	20,307	4,313		3%	27
2019	95,673	31,462		21%	27
2020	41,280	16,962		11%	17
2021	79,279	18,738		12%	31
2022	5,162	983		1%	7
2023	8,450	5,453		4%	15
2024	58,960	31,245		21%	17
Thereafter	57,245	17,446		10%	23
Other ⁽¹⁾	8,535	1,163		1%	147
Total	481,666	$	151,450	100%	400

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(1) Represents leases with private persons’ for parking and small residential tenants with an indefinite lease term.

The following table presents the tenant concentration by industry for our Current European Portfolio (dollars in thousands):



Industry	In-Place Rental Income		Percentage of In-Place Rental Income	Number of Tenants
Finance and law	$	70,565	47%	67
Technology and IT services	21,013		14%	46
Insurance and real estate	18,859		12%	20
Public institutions and non-profit government organizations	12,618		8%	23
Consulting and other professional services	3,343		2%	14
Hotel and restaurant	5,351		4%	19
Construction/logistics	5,997		4%	7
Fashion and consumer goods	3,666		2%	33
Media and public relations	2,202		1%	15
Private person	883		1%	115
Medical and pharmaceuticals	185		0%	4
Other	6,768		5%	37
Total	$	151,450	100%	400

Competition

We expect to be subject to increasing competition in seeking investments. We compete with many third parties engaged in real estate investment activities including publicly-traded REITs, public real estate companies, pension funds, insurance companies, private equity funds, sovereign wealth funds and other investors. Some of these competitors have substantially greater financial resources than we do. Such competitors may also enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies.

Future competition from new market entrants may limit the number of suitable investment opportunities offered to us. It may also result in higher prices, lower yields and a narrower spread over our borrowing costs, making it more difficult for us to originate or acquire new investments on attractive terms.

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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 such litigation, in the opinion of management, no such legal proceedings are expected to have a material adverse effect on our financial position or results of operations.

Employees

We will be externally managed by NSAM and will not have our own employees.

Regulation

We 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;

• require compliance with applicable REIT rules;

• regulate credit granting activities;

• require disclosures to customers;

• govern secured transactions;

• 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 intend to elect and qualify to be taxed as a REIT under Section 856 through 860 of the Code beginning with the year ending December 31, 2015. As a REIT, we must currently distribute, at a minimum, an amount equal to 90% of our taxable income. In addition, we must distribute 100% of our 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 we fail to continue to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates. Even if we qualify for taxation as a REIT, we may be subject to state and local income taxes and to U.S. federal income tax and excise tax on our undistributed income.

Real estate properties owned by us and the operations of such properties are subject to various international 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 applicable fire and safety regulations, building codes, legal or regulatory provisions regarding access to our properties for persons with disabilities and other land use regulations. For further information regarding environmental matters, refer to “ — Environmental Matters” below.

In addition, we may own hotels, which are subject to various covenants, laws, ordinances and regulations, including regulations relating to common areas. We believe each of our hotels will have the necessary permits and approvals to operate its business.

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.

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Policies Relating to the Investment Company Act

We intend to conduct our operations so that neither we nor our subsidiaries are required to register as investment companies under the Investment Company Act. We are structured as holding company, holding virtually no assets, other than cash, directly. Our real properties are held through subsidiaries.

Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. Section 3(a)(1)(C) of the Investment Company Act defines an investment company as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis, which we refer to as the “40% Test.” Excluded from the term “investment securities,” among other things, are U.S. government securities and securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act. Accordingly, under Section 3(a)(1) of the Investment Company Act, in relevant part, a company is not deemed to be an ‘‘investment company’’ if (i) it neither is, nor holds itself out as being, engaged primarily, nor proposes to engage primarily, in the business of investing, reinvesting or trading in securities; and (ii) it neither is engaged nor proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and does not own or propose to acquire ‘‘investment securities’’ having a value exceeding 40% of the value of its total assets on an unconsolidated basis.

We believe that neither we nor our subsidiaries will fall within either definition of investment company. We are not engaged in the business of investing, reinvesting or trading in securities, but instead are engaged in the business of our subsidiaries, which is the commercial real estate business.

We expect most of our subsidiaries will be wholly-owned subsidiaries, but we may also make investments through joint ventures, which will own real estate. We treat these joint ventures as majority-owned subsidiaries. The determination of whether an entity is a majority-owned subsidiary of our company is made by us. The Investment Company Act defines a majority-owned subsidiary of a person as a company 50% or more of the outstanding voting securities of which are owned by such person, or by another company which is a majority-owned subsidiary of such person. The Investment Company Act further defines voting securities as any security presently entitling the owner or holder thereof to vote for the election of directors of a company. With respect to the joint ventures that are governed by a board of managers, we have the right to vote on at least 50% of the board seats. In some instances, the joint ventures are managed by their members, rather than by a board of managers. Thus, the membership interests do not fall squarely within the definition of voting securities, but we nevertheless consider these joint ventures to be majority-owned subsidiaries. The SEC staff has taken the position that limited partnership interests may be voting securities if one or more limited partners has the right to take part in the conduct or control of the partnership’s business or if the limited partners’ economic interests effectively gives them the power to exercise a controlling influence over the partnership. We believe the same analysis applies to limited liability company interests. Where there is no board of managers for a joint venture, we have 50% of the voting rights with respect to “major decisions” to be made, including any major decisions with respect to the assets of the companies. Thus, because we have 50% or more of the voting rights in these joint ventures, we consider them to be our majority-owned subsidiaries. We have not asked the SEC staff for concurrence of our analysis, our treatment of such securities as voting securities, or whether these joint ventures may be treated in the manner in which we intend, and it is possible that the SEC staff could disagree with any of our determinations. If the SEC staff were to disagree with our treatment of one or more companies as majority-owned subsidiaries, we would need to adjust our strategy and our assets. Any such adjustment in our strategy could have a material adverse effect on us. For more information on certain exemptions that we rely on refer to “Risk Factors — Risks Related to Regulatory Matters and Our REIT Status — If we are deemed an investment company under the Investment Company Act our business would be subject to applicable restrictions under the Investment Company Act, 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.”

To maintain compliance with the Investment Company Act exceptions, we or our subsidiaries may be unable to sell assets we would otherwise want to sell and may need to sell assets we would otherwise wish to retain. In addition, we or our subsidiaries may have to acquire additional income- or loss-generating assets that we might not otherwise have acquired or may have to forego opportunities to acquire interests in companies that we would otherwise want to acquire and that may be important to our investment strategy. If our subsidiaries fail to satisfy the requirements of any exemption or exclusion under the Investment Company Act, we could be characterized as an investment company. Our manager will continually review our investment activity to attempt to ensure that we will not be required to register as an investment company. Among other things, our manager will attempt to monitor the proportion of our portfolio that is placed in investments in securities.

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Environmental Matters

A wide variety of environmental and occupational health and safety laws and regulations affect our properties. These complex laws, and their enforcement, involve myriad regulations, many of which involve strict liability on the part of the potential offender. Some of these laws may directly impact us. Under various local environmental laws, ordinances and regulations, an owner of real property, such as us, may be liable for the costs of removal or remediation of hazardous or toxic substances at, under or disposed of in connection with such property, as well as other potential costs relating to hazardous or toxic substances (including government fines and damages for injuries to persons and adjacent property). The cost of any required remediation, removal, fines or personal or property damages and the owner’s liability therefore could exceed or impair the value of the property, and/or the assets of the owner. In addition, the presence of such substances, or the failure to properly dispose of or remediate such substances, may adversely affect the owner’s ability to sell or rent such property or to borrow using such property as collateral which, in turn, could reduce our revenues.

Selected Regulations Regarding our Operations in Germany, the United Kingdom and France

Our commercial real estate investments are subject to a variety of laws and regulations in Europe. If we fail to comply with any of these laws and regulations, we may be subject to civil liability, administrative orders, fines or even criminal sanctions. The following provides a brief overview of selected regulations that are applicable to our business operations in Germany, the United Kingdom and France, where a majority of our properties in terms of contribution to rental income are located.

Germany

Land-use Regulations, Building Regulations and Tenancy Law for Commercial Properties

Land-use Regulations. There are several regulations regarding the use of land including German planning law and urban restructuring planning by communities.

Urban Restructuring Planning . Communities may designate certain areas as restructuring areas and undertake comprehensive modernization efforts regarding the infrastructure in such areas. While this may improve the value of properties located in restructuring areas, being located in a restructuring area also imposes certain limitations on the affected properties ( e.g. , the sale, encumbrance and leasing of such properties, as well as reconstruction and refurbishment measures, are generally subject to special consent by municipal authorities).

Building Regulations. German building laws and regulations are quite comprehensive and address a number of issues, including, but not limited to, permissible types of buildings, building materials, proper workmanship, heating, fire safety, means of warning and escape in case of emergency, access and facilities for the fire department, hazardous and offensive substances, noise protection, ventilation and access and facilities for disabled people. Owners of erected buildings may be required to conduct alterations or improvements of the property if safety or health risks with respect to users of the building or the general public occur, including fire risks, traffic risks, risks of collapse and health risks from injurious building materials such as asbestos. To our knowledge, there are currently no official orders demanding any alterations to existing buildings owned by us.

Tenancy Law for Commercial Properties. German tenancy laws for commercial properties generally provide landlords and tenants with far-reaching discretion in how they structure lease agreements and use general terms and conditions. Certain legal restrictions apply with regard to the strict written form requirements regarding the lease agreement, transfer of operating costs and maintenance costs, cosmetic repairs and final decorative repairs. Lease agreements with a term of more than one year must be executed in writing or are deemed to have been concluded for an indefinite period with the consequence that they can be terminated at the end of one year after turning over the leased property. Operating costs of commercial tenancies may be apportioned to the tenants if the lease agreement stipulates explicitly and specifically which operating costs shall be borne by the tenant. Responsibility for maintenance and repair costs may be transferred to tenants, except for the full cost transfer of maintenance and repair costs for roof, structures and areas used by several tenants in general terms and conditions. Expenses for cosmetic repairs ( Schönheitsreparaturen ) may, in principle, be allocated to tenants, provided that the obligation to carry out ongoing cosmetic repairs is not combined with an undertaking to perform initial and/or final decorative repairs.

Regulation Relating to Environmental Damage and Contamination

The portion of our commercial real estate portfolio located in Germany is subject to various rules and regulations relating to the remediation of environmental damage and contamination.

Soil Contamination. Pursuant to the German Federal Soil Protection Act, the responsibility for residual pollution and harmful changes to soil, or Contamination, lies with, among others, the perpetrator of the Contamination, such perpetrator’s universal successor, the current owner of the property, the party in actual control of the property and, if the title was transferred after March 1999, the previous owner of the property if such owner knew or should have known about the Contamination, or the Liable Persons. The Liable Person that carried out the remediation work may claim indemnification on a pro rata basis from the

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other Liable Persons. Independently, from the aforementioned liability, civil law liability for Contaminations can arise from contractual warranty provisions or statutory law.

United Kingdom

For a discussion of the impact of regulations in the United Kingdom, refer to “Risk Factors — Risks Related to our Financing Strategy — We are subject to risks associated with obtaining mortgage financing on our real estate, which could materially adversely affect our business, financial condition and results of operations and our ability to make distributions to stockholders.”

France

Commercial Lease Regulation

The contractual conditions applying to commercial leases periods, renewal, rent and rent indexation are heavily regulated. The minimum duration of commercial leases is nine years. We cannot terminate the lease before such period except in very specific cases (such as reconstructing or elevating an existing building). The tenant, on the other hand, has the power to terminate the lease at the end of each three-year period. However, in leases of premises to be used exclusively as office spaces, such power of the tenant can be contractually removed.

The tenant has also a right of renewal of the lease at the end of its initial period and a right to a revision of the rent every three years. The rent variation is capped. Except in the case where the rental value considerably changes (increase by more than 10% in case of a revision upon a three-year period), the variation of the rent, in case of a revision upon a three-year period or in case of a renewal, cannot exceed the variation of the Commercial Rents Index ( indice trimestriel des loyers commerciaux ) or the Retail Rental Index ( indice trimestriel des loyers des activités tertiaires ). However, this provision does not apply in case of a renewal of a lease, the initial duration of which exceeded nine years or the effective duration of which exceeded twelve years. In addition, even in the case of a renewed or revised lease where the rental value has considerably changed, the rent increase cannot exceed 10% of the rent paid during the previous year.

Moreover, the tenant has a right of first refusal if the leased premises are offered for sale. However, this right can be contractually removed.

The legal distribution of charges between us and the tenant can be contractually set out. However, articles L. 145-40-2 and R. 145-35 of the French commercial code, which result from French law no. 2014-626 of June 18, 2014, make it mandatory for the property owner in leases entered into on or after November 3, 2014 to incur expenditures for major repairs, in particular those related to the obsolescence of the properties and those required to meet changing legal regulation. It also forces the property owner to incur certain taxes.

Bankruptcy Law

In France, a safeguarding ( sauvegarde ), judicial restructuring ( redressement judiciaire ) or judicial liquidation ( liquidation ) procedure commencement order against an insolvent tenant does not lead to the automatic termination of the lease. In such cases, we will not be able to get paid directly by the tenant any rent due before the commencement order. Furthermore, the tenant, via the insolvency court appointed receiver, will have the choice to continue or reject any unexpired lease. If the tenant chooses to continue an unexpired lease, but still fails to pay the rent in connection with the occupancy after the issue of the commencement order, we cannot legally request the termination of the lease before the end of a three-month period from the date of issue of the commencement order.

Environmental Law

In France, our investments are subject to regulations regarding the accessibility of buildings to persons with disabilities, public health and the environment, covering a number of areas, including the ownership and use of classified facilities, the use, storage, and handling of hazardous materials in building construction; inspections for asbestos, lead, and termites; inspection of gas and electricity facilities; assessments of energy efficiency; and assessments of technological and natural risks.

Emerging Growth Company Status

We are an “emerging growth company,” as defined in the JOBS Act and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

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Although we are still evaluating the JOBS Act, we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us as long as we qualify as an emerging growth company, except that we have irrevocably elected not to take advantage of the extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act.

We will, in general, remain as an emerging growth company for up to five full fiscal years following the Distribution. 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;


•	issue more than $1 billion of non-convertible debt during the preceding three-year period; or

•

become a “large accelerated filer” as defined in Exchange Act Rule 12b-2, which would occur after: (i) we have filed at least one annual report pursuant to the Exchange Act; (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.

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DISTRIBUTION POLICY

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, NOI, 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, distribution requirements necessary to maintain our qualification as a REIT, 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 matters discussed under “Risk Factors” in this prospectus or any other document we file with the SEC under the Exchange Act 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.

For more information about our ability to make distributions on the classes and series of stock we are authorized to issue, please refer to the sections entitled “Risk Factors — Risks Related to Our Company” and “Description of Capital Stock” of this prospectus. For more information about distribution requirements in connection with qualifying as and maintaining qualified as a REIT, refer to “Federal Income Tax Consequences of our Status as a REIT— Requirements for Qualification — Distribution Requirements.”

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SELECTED FINANCIAL DATA

The combined financial information of the NorthStar Europe Predecessor includes:


•	Prior Owner Period - The U.K. Complex and an allocation of certain costs and expenses related to the launch of our European Real Estate Business for periods prior to September 16, 2014, which is the date NorthStar Realty acquired the U.K. Complex; and


•	NorthStar Owner Period - The U.K. Complex and business activities related to our European Real Estate Business for periods from and subsequent to September 16, 2014.

Collectively, the Prior Owner Period and the NorthStar Owner Period represent the NorthStar Europe Predecessor. We have not presented historical information for NorthStar Europe because we have not engaged in any corporate activity since our formation other than the issuance of shares in connection with our initial capitalization and the issuance of the Senior Notes. The combined financial information of the NorthStar Europe Predecessor does not include our New European Investments.

This selected financial information should be read in conjunction with “Unaudited Pro Forma Financial Information” and corresponding notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the audited combined financial statements and the notes thereto and the unaudited interim combined financial statements and the notes thereto included elsewhere in this prospectus. Amounts reported in the combined statements of operations are translated to the U.S. dollar using the average exchange rate for the periods presented. Amounts reported on the combined balance sheets are translated to the U.S. dollar at an exchange rate as of the respective reporting date.

The selected combined balance sheet as of December 31, 2014 and combined statement of operations for the period from September 16, 2014 through December 31, 2014 represent the NorthStar Owner Period. The selected combined balance sheet as of December 31, 2013 and combined statements of operations for the period from January 1, 2014 through September 15, 2014 and the year ended December 31, 2013 represent the Prior Owner Period. This selected financial information is derived from the audited combined financial statements of the NorthStar Europe Predecessor included elsewhere in this prospectus.

The selected combined balance sheet information as of June 30, 2015 and the combined selected combined statements of operations for the six months ended June 30, 2015 and 2014 have been derived from the unaudited interim combined financial statements of the NorthStar Europe Predecessor included elsewhere in this prospectus. Such unaudited interim combined financial statements include all adjustments considered necessary for a fair presentation of the NorthStar Europe Predecessor’s financial position and results of operations and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year.

The historical results of the NorthStar Europe Predecessor are not necessarily indicative of the historical results of our European Real Estate Business, NorthStar Europe or the future results of NorthStar Europe. The audited combined financial statements of the NorthStar Europe Predecessor do not include all assets and liabilities to be contributed to NorthStar Europe. For instance, the audited combined financial statements of the NorthStar Europe Predecessor do not include our New European Investments. Additionally, the combined statements of operations of the NorthStar Europe Predecessor include an allocation of certain costs and expenses incurred by NorthStar Realty on behalf of the NorthStar Europe Predecessor, which although based on certain assumptions and estimates believed to be reasonable may differ from actual results.

The following tables present selected financial information for NorthStar Europe Predecessor (dollars in thousands):



	NorthStar Owner Period			Prior Owner Period			NorthStar Owner Period			Prior Owner Period
	Six Months Ended June 30,						Period from September 16 to December 31			Period from January 1 to September 15			Year Ended
	2015			2014			2014			2014			2013
Operating Data:
Rental and escalation income	$	4,753		$	5,181		$	2,722		$	7,162		$	9,869
Total expenses	6,465			10,180			7,839			13,569			12,163
Net income (loss)	(1,577		)	(2,663		)	(5,288		)	(3,007		)	1,633
Net income (loss) attributable to NorthStar Europe Predecessor	(1,556		)	(2,663		)	(5,012		)	(3,007		)	1,633

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	NorthStar Owner Period				Prior Owner Period
	June 30,		December 31,		December 31,
	2015		2014		2013
Balance Sheet Data:
Cash	$	3,265	$	1,552	$	1,350
Mortgage notes payable	78,585		77,660		47,895
Total assets	104,692		102,826		90,951
Total liabilities	82,115		81,947		67,367
Total equity	22,577		20,879		23,584

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UNAUDITED PRO FORMA FINANCIAL INFORMATION

Acquisition

Ownership

Date

Primary Location(s)

Primary Description

Cost

Properties

Interest

NorthStar Europe Predecessor ⁽¹⁾

U.K. Complex

Sept-14

Woking, U.K.

Multi-tenant office

100

93%

New European Investments

SEB Portfolio

April-15

U.K., France, Germany

Multi-tenant office

1,325

95%

⁽²⁾

Internos Portfolio

April-15

Germany, France, Portugal

Office/Hotel/Industrial/Retail

225

100%

IVG Portfolio

April-15

U.K., France, Germany

Multi-tenant office

212

100%

Deka Portfolio

April-15

Germany

Multi-tenant office

100%

Trianon Tower

July-15

Frankfurt, Germany

Multi-tenant office

621

95%

⁽²⁾

Total

2,582

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(1)	The financial statements for NorthStar Predecessor include an allocation of certain costs and expenses from activities related to the launch of our European Real Estate Business.


(2)	We are entitled to 100% of net income (loss) based on the allocation formula as set forth in the governing documents.

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	Six Months Ended June 30, 2015
	NorthStar Europe Predecessor ⁽¹⁾			Pro Forma Adjustments ⁽²⁾			Other				Pro Forma ⁽³⁾
Revenues
Rental and escalation income	$	4,753		$	82,173		$	—			$	86,926
Other revenues	1			2,631			—				2,632
Total revenues	4,754			84,804			—				89,558
Expenses
Management fee, related party	—			—			7,000			⁽⁴⁾	7,000
Operating expenses	1,770			17,743			—				19,513
Interest expense	1,523			16,674			10,907			⁽⁵⁾	29,104
General and administrative expenses	1,358			—			—				1,358
Depreciation and amortization	1,814			35,747			—				37,561
Other expenses	—			2,132			—				2,132
Total expenses	6,465			72,296			17,907				96,668
Other income (loss)
Unrealized gain (loss) on investments and other	41			—			—				41
Realized gain (loss) on investments and other	(14		)	—			—				(14		)
Income (loss) before income tax benefit (expense)	(1,684		)	12,508			(17,907		)		(7,083		)
Income tax benefit (expense)	107			(668		)	—				(561		)
Net income (loss)	(1,577		)	11,840			(17,907		)		(7,644		)
Net (income) loss attributable to non-controlling interests	21			—			—				21
Net income (loss) attributable to NorthStar Europe	$	(1,556	)	$	11,840		$	(17,907	)		$	(7,623	)
Earnings (loss) per share:
Basic
Diluted
Weighted average number of shares: ⁽⁶⁾
Basic
Diluted

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	Year ended December 31, 2014
	NorthStar Europe Predecessor ⁽¹⁾			Pro Forma Adjustments ⁽²⁾			Other				Pro Forma ⁽³⁾
Revenues
Rental and escalation income	$	9,884		$	175,740		$	—			$	185,624
Other revenues	1,329			6,806			—				8,135
Total revenues	11,213			182,546			—				193,759
Expenses
Management fee, related party	—			—			14,000			⁽⁴⁾	14,000
Operating expenses	4,294			33,964			—				38,258
Transaction costs	4,198			—			(4,198		)	⁽⁷⁾	—
Interest expense	3,651			33,055			21,446			⁽⁵⁾	58,152
General and administrative expenses	5,883			—			—				5,883
Depreciation and amortization	3,382			79,115			394			⁽⁸⁾	82,891
Other expenses	—			4,264			—				4,264
Total expenses	21,408			150,398			31,642				203,448
Other income (loss)
Unrealized gain (loss) on investments and other	1,900			—			—				1,900
Income (loss) before income tax benefit (expense)	(8,295		)	32,148			(31,642		)		(7,789		)
Income tax benefit (expense)	—			(1,717		)	—				(1,717		)
Net income (loss)	(8,295		)	30,431			(31,642		)		(9,506		)
Net (income) loss attributable to non-controlling interests	276			—			205			⁽⁸⁾	481
Net income (loss) attributable to NorthStar Europe	$	(8,019	)	$	30,431		$	(31,437	)		$	(9,025	)
Earnings (loss) per share:
Basic
Diluted
Weighted average number of shares: ⁽⁶⁾
Basic
Diluted

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The following table presents our unaudited pro forma combined balance sheet of our European Real Estate Business as of June 30, 2015 (dollars in thousands):



	NorthStar Europe Predecessor		Pro Forma Adjustments ⁽⁹⁾		Other			Pro Forma ⁽³⁾
Assets
Cash	$	3,265	$	14,662	$	—		$	17,927
Restricted cash	6,106		—		—			6,106
Operating real estate, net	54,985		2,143,436		—			2,198,421
Receivables	1,031		—		330,986		⁽¹⁰⁾	332,017
Unbilled rent receivable, net	694		—		—			694
Derivative assets, at fair value	1,134		30,315		—			31,449
Deferred costs and intangible assets, net	35,232		219,679		9,014		⁽¹⁰⁾	263,925
Other assets	2,245		572		—			2,817
Total assets	$	104,692	$	2,408,664	$	340,000		$	2,853,356

Liabilities
Mortgage and other notes payable	$	78,585	$	1,439,869	$	—		$	1,518,454
Senior notes	—		—		340,000		⁽¹⁰⁾	340,000
Accounts payable and accrued expenses	824		—		—			824
Other liabilities	2,706		27,972		—			30,678
Total liabilities	82,115		1,467,841		340,000			1,889,956
Equity
NorthStar Europe equity	21,439		939,246		—			960,685
Non-controlling interests	1,138		1,577		—			2,715
Total equity	22,577		940,823		—			963,400
Total liabilities and equity	$	104,692	$	2,408,664	$	340,000		$	2,853,356

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(1)	The year ended December 31, 2014 includes the Prior Owner Period from January 1, 2014 through September 15, 2014 and NorthStar Owner Period from September 16, 2014 through December 31, 2014. The six months ended June 30, 2015 represents the NorthStar Owner Period.


(2)	The following summarizes the pro forma adjustments related to our New European Investments for the six months ended June 30, 2015 and year ended December 31, 2014 (dollars in thousands):



	Six Months Ended June 30, 2015
	SEB Portfolio						Internos Portfolio							IVG Portfolio							Trianon Tower						Other Pro Forma Adjustments ^(viii)
	Historical ⁽ⁱ⁾		Pro Forma Adjustments				Historical ⁽ⁱ⁾			Pro Forma Adjustments				Historical ⁽ⁱ⁾			Pro Forma Adjustments				Historical ⁽ⁱ⁾		Pro Forma Adjustments				Other Pro Forma Adjustments ^(viii)			Total
Revenues
Rental and escalation income	$	39,906	$	756		⁽ⁱⁱ⁾	$	9,118		$	304		⁽ⁱⁱ⁾	$	4,970		$	(127	)	⁽ⁱⁱ⁾	$	18,486	$	2,544		⁽ⁱⁱ⁾	$	6,216		$	82,173
Other revenue	—		—				828			—				726							—		—				1,077			2,631
Total revenues	39,906		756				9,946			304				5,696			(127		)		18,486		2,544				7,293			84,804
Expenses
Operating expenses	5,564		719			^(iv)	1,811		^(iv)	—			^(iv)	2,127		^(iv)				^(iv)	5,173		—			^(iv)	2,349			17,743
Interest expense	—		9,506			⁽ⁱⁱⁱ⁾	—			1,752			⁽ⁱⁱⁱ⁾	—			1,728			⁽ⁱⁱⁱ⁾	—		2,826			⁽ⁱⁱⁱ⁾	862			16,674
Depreciation and amortization	—		18,990			^(v)	—			4,020.5			^(v)	—			2,698			^(v)	—		8,698			^(v)	1,341			35,747
Other expenses	—		2,132				—			—				—			—				—		—				—			2,132
Total expenses	5,564		31,347				1,811			5,773				2,127			4,426				5,173		11,524				4,552			72,297
Income (loss) before income tax benefit (expense)	34,342		(30,591		)		8,135			(5,469		)		3,569			(4,553		)		13,313		(8,980		)		2,741			12,507
Income tax benefit (expense)	—		(200		)	^(vi)	—			(142		)	^(vi)				53			^(vi)	—		(231		)	^(vi)	(146		)	(668		)
Net income (loss)	34,342		(30,791		)		8,135			(5,611		)		3,569			(4,500		)		13,313		(9,211		)		2,595			11,839
Net (income) loss attributable to non-controlling interests	—		—			^(vii)	—			—			^(vii)	—			—			^(vii)	—		—			^(vii)	—			—
Net income (loss) attributable to NorthStar Europe	$	34,342	$	(30,791	)		$	8,135		$	(5,611	)		$	3,569		$	(4,500	)		$	13,313	$	(9,211	)		$	2,595		$	11,839

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	Year Ended December 31, 2014
	SEB Portfolio						Internos Portfolio							IVG Portfolio							Trianon Tower							Other Pro Forma Adjustments ^(viii)
	Historical ⁽ⁱ⁾		Pro Forma Adjustments				Historical ⁽ⁱ⁾			Pro Forma Adjustments				Historical ⁽ⁱ⁾			Pro Forma Adjustments				Historical ⁽ⁱ⁾			Pro Forma Adjustments				Other Pro Forma Adjustments ^(viii)				Total
Revenues
Rental and escalation income	$	86,117	$	2,951		⁽ⁱⁱ⁾	$	21,894		$	607		⁽ⁱⁱ⁾	$	12,889		$	(254	)	⁽ⁱⁱ⁾	$	40,741		$	5,087		⁽ⁱⁱ⁾	$	5,708			$	175,740
Other revenue	—		—				3,065			—				2,685							—			—				1,056				6,806
Total revenues	86,117		2,951				24,959			607				15,574			(254		)		40,741			5,087				6,764				182,546
Expenses
Operating expenses	8,400		597			^(iv)	3,114		^(iv)	—			^(iv)	5,536		^(iv)	—			^(iv)	13,981		^(iv)	—			^(iv)	2,336				33,964
Interest expense	—		16,319			⁽ⁱⁱⁱ⁾	—			3,504			⁽ⁱⁱⁱ⁾				3,456			⁽ⁱⁱⁱ⁾	—			8,052			⁽ⁱⁱⁱ⁾	1,724			⁽ⁱⁱⁱ⁾	33,055
Depreciation and amortization	—		45,600			^(v)	—			8,041			^(v)	—			5,395			^(v)	—			17,397			^(v)	2,682			^(v)	79,115
Other expenses	—		4,264				—			—				—			—				—			—				—				4,264
Total expenses	8,400		66,780				3,114			11,545				5,536			8,851				13,981			25,449				6,742				150,398
Income (loss) before income tax benefit (expense)	77,717		(63,829		)		21,845			(10,938		)		10,038			(9,105		)		26,760			(20,362		)		22				32,148
Income tax benefit (expense)	—		(742		)	^(vi)	—			(582		)	^(vi)				(50		)	^(vi)	—			(342		)	^(vi)	(1		)	^(vi)	(1,717		)
Net income (loss)	77,717		(64,571		)		21,845			(11,520		)		10,038			(9,155		)		26,760			(20,704		)		21				30,431
Net (income) loss attributable to non-controlling interests	—		—			^(vii)	—			—			^(vii)	—			—			^(vii)	—			—			^(vii)	—				—
Net income (loss) attributable to NorthStar Europe	$	77,717	$	(64,571	)		$	21,845		$	(11,520	)		$	10,038		$	(9,155	)		$	26,760		$	(20,704	)		$	21			$	30,431

_____________________________


(i)	Represents audited financial statements of revenues and certain expenses for the year ended December 31, 2014 and unaudited financial statements of revenues and certain expenses for the six months ended June 30, 2015. The SEB Portfolio , the Internos Portfolio and the IVG Portfolio were acquired in April 2015 and the Trianon Tower was acquired in July 2015.


(ii)	Represents an adjustment to reflect amortization of above and below market leases .

(iii)


(iv)	Represents an adjustment for third party property management and other fees for the SEB Portfolio. Third party management and other fees for the Internos Portfolio, the IVG Portfolio and the Trianon Tower are included in the historical period and therefore, no adjustment is necessary.


(v)	Represents depreciation and amortization expense based on a preliminary purchase price allocation for our New European Investments. The purchase price allocation is a preliminary estimate and may be adjusted within one year of the acquisition in accordance with U.S. GAAP. The depreciation and amortization periods range from one to 40 years.


(vi)	We estimate our effective tax rate to be approximately 5.3% on a blended basis based on projected earnings from our Current European Portfolio.


(vii)	We are entitled to 100% of net income (loss) based on the allocation formula, as set forth in the governing documents.


(viii)	Represents adjustments related to the Deka Portfolio acquired in April 2015.

(3)

(4)

(5)

Represents a pro forma adjustment to reflect interest expense (including amortization of related deferred financing costs) related to NorthStar Europe’s issuance of $340 million of 4.625% Senior Notes due December 2016, or the Senior Notes, in July 2015 of $7.9 million and $21.8 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively. The year ended December 31, 2014 also includes a pro forma adjustment to reflect interest expense (including amortization of related deferred financing costs) related to NorthStar Europe Predecessor of $(0.4) million during the Prior Owner Period.


(6)	Weighted average shares used to compute basic and diluted earnings per share represents the number of weighted average shares of our Common Stock assumed to be outstanding based on a distribution ratio of one share of our Common Stock for every share of NorthStar Realty common stock. The actual number of our basic and diluted shares outstanding will not be known until the Distribution.


(7)	Transaction costs related to our Current European Portfolio include legal, accounting, tax and other professional services and are not included as part of the pro forma combined statements of operations.


(8)	Represents pro forma adjustments related to NorthStar Europe Predecessor during the Prior Owner Period.

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(9)	The following summarizes the pro forma adjustments related to our New European Investments for the unaudited pro forma combined balance sheet as of June 30, 2015 (dollars in thousands):



	As of June 30, 2015 ^(i)(ii)
	SEB Portfolio		Internos Portfolio		IVG Portfolio		Deka Portfolio			Trianon Tower		Total
Assets
Cash	$	3,831	$	—	$	10,831	$	—		$	—	$	14,662
Operating real estate, net	1,131,061		190,327		185,315		84,623		⁽ⁱⁱⁱ⁾	552,110		2,143,436
Derivative assets, at fair value	8,015		—		—		—			22,300		30,315
Deferred costs and intangible assets, net	135,522		18,534		13,371		7,246			45,006		219,679
Other assets	—		—		—		—			572		572
Total assets	$	1,278,429	$	208,861	$	209,517	$	91,869		$	619,988	$	2,408,664

Liabilities
Mortgage and other notes payable	$	826,459	$	101,315	$	94,066	$	51,914		$	366,115	$	1,439,869
Other liabilities	24,063		525		3,384		—			—		27,972
Total liabilities	850,522		101,840		97,450		51,914			366,115		1,467,841
Equity
NorthStar Europe equity	427,794		107,021		112,067		39,955			252,409		939,246
Non-controlling interests	113		—		—		—			1,464		1,577
Total equity	427,907		107,021		112,067		39,955			253,873		940,823
Total liabilities and equity	$	1,278,429	$	208,861	$	209,517	$	91,869		$	619,988	$	2,408,664

_____________________________

(i)


(ii)	Our New European Investments are predominantly denominated in Euro and GBP. The initial purchase price allocation is translated based on the exchange rate to the U.S. dollar as of June 30, 2015.


(iii)	Includes one property of $4.3 million classified as held-for-sale as of June 30, 2015.

(10)

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CAPITALIZATION TABLE

The following table sets forth our capitalization as of June 30, 2015: (i) on a historical basis of NorthStar Europe Predecessor; and (ii) on an as adjusted basis to give effect to the pro forma adjustments included in our unaudited pro forma combined financial information included elsewhere in this prospectus. The information below is not necessarily indicative of what our capitalization would have been had the Distribution been completed as of June 30, 2015. In addition, this information is not indicative of our future capitalization.

The following table should be read in conjunction with the sections entitled “Selected Financial Data,” “Unaudited Pro Forma Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus (dollars in thousands):



	NorthStar Europe Predecessor		Pro Forma Prior to the Distribution		As Adjusted
Liabilities	$	82,115	$	1,807,841	$	1,889,956
Equity
NorthStar Europe equity	21,439		939,246		960,685
Non-controlling interests	1,138		1,577		2,715
Total equity	22,577		940,823		963,400
Total liabilities and equity	$	104,692	$	2,748,664	$	2,853,356

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion may not contain all of the information that is important to you and should be read in conjunction with the combined financial statements of the NorthStar Europe Predecessor and the notes thereto included in “Financial Statements,” the unaudited pro forma financial information included in “Unaudited Pro Forma Financial Information” beginning on page 70 and the risk factors included in “Risk Factors” beginning on page 17 of this prospectus.

Overview

We will be externally managed and advised by NSAM. We are a Maryland corporation and intend to conduct our operations so as to qualify as a REIT for U.S. federal income tax purposes beginning with the year ending December 31, 2015.

We seek to access a wide range of secured and unsecured debt and public and private equity capital sources to grow and fund our investment activities. We expect to predominantly use investment-level financing as part of our strategy to prudently leverage our investments and seek to deliver attractive risk-adjusted returns to our stockholders. We expect to target overall leverage of 40% to 50%, although there is no assurance that this will be the case. We plan to pursue a variety of financing arrangements such as mortgage notes and bank loans available from the commercial mortgage-backed securities, or CMBS, market, finance companies and banks. In addition, we may use corporate-level financing such as credit facilities and other borrowings. We generally seek to limit our reliance on recourse borrowings. Borrowing levels for our investments may be dependent upon the nature of the investments and the related financing that is available.

We believe that we maintain a competitive advantage through a combination of deep industry relationships and access to market leading commercial real estate credit underwriting and capital markets expertise which enables us to manage credit risk across our business lines as well as to structure and finance our investments efficiently. Our ability to invest across the spectrum of investments allows us to take advantage of complementary and overlapping sources of investment opportunities based on a common reliance on commercial real estate fundamentals and application of similar underwriting and asset management skills as we seek to maximize stockholder value and to protect our capital.

Sources of Operating Revenues and Cash Flows

We primarily generate revenue from rental and other operating income from our real estate properties. Our income is primarily derived through the difference between revenue and the cost at which we are able to finance our investments. We may also acquire investments which generate attractive returns without any leverage.

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Profitability and Performance Metrics

We calculate several metrics to evaluate the profitability and performance of our business but our principal performance metrics are CAD and NOI (refer to “Non-GAAP Financial Measures” for a description of theses metrics).

Outlook and Recent Trends

The global economic and financial crisis of 2008 and 2009 had a dramatic negative impact on the proper functioning of the global capital markets and liquidity across all asset classes and markets. While conditions began to improve in the United States in 2012, recovery in Europe remained slow and uncertain, in particular due to the threat of a widespread sovereign debt crisis. However, the European economy has been steadily recovering. We believe that the economic environment in Europe has stabilized and the foundations are in place for a gradual and sustained recovery. Despite the overall positive outlook, regional disparities continue to exist as European economies recover at different speeds. As a result, attractive investment opportunities exist in Europe for investors who are able to take a long-term view on the European recovery. Historically wide spreads between capitalization yields and interest rates, coupled with property values, particularly as compared to the United States, remaining below their historical peaks in many markets within the European Union create a compelling long-term investment environment in Europe. At the same time, the investment market has also continued to improve as investment volumes approach pre-financial crisis levels, with the office sector continuing to drive investment activity. As financial institutions and asset management agencies continue to deleverage, we anticipate that there will be further opportunities to acquire portfolios and investments at an attractive long term basis.

Virtually all commercial real estate property types were adversely impacted by the global economic and financial crisis. Despite improvements in the global economy, uncertainty remains as to the extent and timing of further recovery. Issues with the instability of credit and financial markets, actions by governments or central banks, weak consumer confidence in many markets and geopolitical or economic instability in certain countries continues to put pressure on the European economy. Instability or volatility of certain countries in the European Union may create risks for stronger countries within the European Union and globally. A return to weak economic conditions in the future, or a lack of continued recovery in Europe, could reduce a tenant’s ability to make payments in accordance with the contractual terms and for companies to lease or occupy new space. To the extent that market rental and occupancy rates are reduced, property-level cash flow could be negatively affected.

Critical Accounting Policies

Basis of Accounting

The combined financial statements and related notes are presented on a carve-out basis and have been prepared from the historical combined balance sheets, statements of operations, comprehensive income (loss) and cash flows attributed to the NorthStar Europe Predecessor in accordance with U.S. GAAP. Historically, financial statements of the NorthStar Europe Predecessor have not been prepared as it has not operated separately from NorthStar Realty. These combined financial statements reflect the revenues and direct expenses of the NorthStar Europe Predecessor and include material assets and liabilities of NorthStar Realty that are specifically identifiable to us. Additionally, the combined financial statements include an allocation of costs and expenses by NorthStar Realty related to the NorthStar Europe Predecessor (primarily compensation and other general and administrative expense) based on an estimate of expenses had the NorthStar Europe Predecessor been run as an independent entity. This allocation method is principally based on relative head count and management’s knowledge of our operations. The amounts allocated in the accompanying combined financial statements are not necessarily indicative of the actual amount of such indirect expenses that would have been recorded had we been a separate independent entity. We believe the assumptions underlying its allocation of indirect expenses are reasonable.

NorthStar Europe Predecessor was determined to be the predecessor for accounting purposes and accordingly, followed S-X Rules 3-01 through 3-04 and Rule 12-28. Because the U.K. Complex was acquired from an unrelated third party on September 16, 2014, a “blackline” presentation for the change in basis giving effect to purchase accounting pursuant to U.S. GAAP is presented.

Principles of Consolidation

Our consolidated financial statements will include the accounts of NorthStar Realty Europe Corp. and its consolidated subsidiaries. We will consolidate variable interest entities, or VIEs, where we are the primary beneficiary and voting interest entities which are generally majority owned or otherwise controlled by us. All significant intercompany balances will be eliminated in consolidation.

Variable Interest Entities

A 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

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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 will 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 will reassess the 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. We will 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 will 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 will evaluate our investments in unconsolidated ventures to determine whether they are a VIE. We will analyze new investments and financings, as well as reconsideration events for existing investments and financings, which vary depending on type of investment or financing.

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 will 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 will 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

A non-controlling, unconsolidated ownership interest 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 a preferred return 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 where we would record the change in fair value in the combined statements of operations.

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.

Non-controlling Interests

A non-controlling interest is defined as the portion of the equity (net assets) not attributable, directly or indirectly, to us. A non-controlling interest will be required to be presented as a separate component of equity on the combined balance sheets and presented separately as net income (loss) and 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 entity as a result of a preferred return and allocation formula, if any, as described in such governing documents.

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Operating Real Estate

Operating real estate 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 the asset are capitalized and depreciated over their useful life. Operating real estate is depreciated using the straight-line method over the estimated useful lives of the assets. We follow the purchase method for an acquisition of operating real estate, where the purchase price is allocated to tangible assets such as land, building, tenant and land improvements and other identified intangibles, such as goodwill. Ordinary repairs and maintenance will be expensed as incurred. Major replacements and betterments which improve or extend the life of the asset will be capitalized and depreciated over their useful life. Operating real estate will be depreciated using the straight-line method over the estimated useful lives of the assets. Costs directly related to an acquisition deemed to be a business combination are expensed and included in transaction costs in our combined statements of operations. Any excess upon taking title to collateral between the carrying value of a loan over the estimated fair value of the property will be charged to provision for loan losses.

Operating real estate which has met the criteria to be classified as held for sale, will be separately presented on the combined balance sheets. Such operating real estate is recorded at the lower of its carrying value or its estimated fair value less the cost to sell. Once a property is determined to be held for sale, depreciation is no longer recorded.

Fair Value Measurement

The fair value of financial instruments is categorized based on the priority of the inputs to the valuation technique and categorized into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded at fair value on our combined balance sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1. Quoted prices for identical assets or liabilities in an active market.

Level 2. Financial assets and liabilities whose values are based on the following:


(a)	Quoted prices for similar assets or liabilities in active markets.


(b)	Quoted prices for identical or similar assets or liabilities in non-active markets.


(c)	Pricing models whose inputs are observable for substantially the full term of the asset or liability.


(d)	Pricing models whose inputs are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability.

Level 3. Prices or valuation techniques based on inputs that are both unobservable and significant to the overall fair value measurement.

Revenue Recognition

Operating Real Estate

Rental and escalation income from operating real estate will be derived from leasing of space to various types of tenants. The leases will be for fixed terms of varying length and generally provide for annual rentals and expense reimbursements to be paid in monthly installments. Rental income from leases will be recognized on a straight-line basis over the term of the respective leases. The excess of rents recognized over amounts contractually due pursuant to the underlying leases will be included in unbilled rent receivable on our combined balance sheets. Escalation income represents revenue from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes paid by us on behalf of the respective property. This revenue will be accrued in the same period as the expenses are incurred.

Impairment on Investments

Operating Real Estate

Our real estate portfolio is reviewed on a quarterly basis, or more frequently as necessary, to assess whether there are any indicators that the value of our operating real estate may be impaired or that its carrying value may not be recoverable. A property’s value is considered impaired if management’s estimate of the aggregate expected future undiscounted cash flow generated by the property is less than the carrying value of the property. In conducting this review, we consider factors including global

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macroeconomic factors, real estate sector conditions, together with investment specific and other factors. To the extent an impairment has occurred, the loss will be measured as the excess of the carrying value of the property over the estimated fair value of the property and recorded in impairment on operating real estate in our combined statements of operations.

An allowance for a doubtful account for a tenant receivable will be established based on a periodic review of aged receivables resulting from estimated losses due to the inability of a tenant to make required rent and other payments contractually due.

Investments in Unconsolidated Ventures

We will review our investments in unconsolidated ventures for which we did not elect the fair value option on a quarterly basis, or more frequently as necessary, to assess whether there are any indicators that the value may be impaired or that its carrying value may not be recoverable. An investment will be considered impaired if the projected net recoverable amount over the expected holding period is less than the carrying value. In conducting this review, we consider factors including global macroeconomic factors, real estate sector conditions, together with investment specific and other factors. To the extent an impairment has occurred and is considered to be other than temporary, the loss will be measured as the excess of the carrying value of the investment over the estimated fair value and recorded in provision for loss on equity investment in our combined statements of operations.

Derivatives

Derivatives are used to manage exposure to interest rate risk and foreign currency exchange rate risk. For derivatives that qualify as a cash flow hedge, the effective portion of the change in fair value of derivatives designated as a hedge will be recorded in accumulated OCI and is subsequently reclassified into income in the period that the hedged item affects income. Amounts reported in OCI that relate to the hedge of our floating-rate borrowings will be reclassified to interest expense as interest payments will be made on associated borrowings.

The change in fair value for derivatives that do not qualify as a hedge for U.S. GAAP will be recorded in earnings. If we elect the fair value option for certain of our borrowings, any derivatives designated as a qualifying hedge at the time no longer qualified for hedge accounting given that the underlying borrowing will be remeasured with changes in the fair value recorded in earnings. For such derivatives, the unrealized gain (loss) at that time will remain in accumulated OCI and will be reclassified into earnings over the life of the associated borrowing.

Foreign Currency

Assets and liabilities denominated in a foreign currency for which the functional currency is a foreign currency are translated using the currency exchange rate in effect at the end of the period presented and the results of operations for such entities are translated into U.S. dollars using the average currency exchange rate in effect during the period. The resulting foreign currency translation adjustment is recorded as a component of accumulated OCI.

Assets and liabilities denominated in a foreign currency for which the functional currency is the U.S. dollar are remeasured using the currency exchange rate in effect at the end of the period presented and the results of operations for such entities are remeasured into U.S. dollars using the average currency exchange rate in effect during the period. The resulting foreign currency remeasurement adjustment is recorded in unrealized gain (loss) on investments and other in the combined statements of operations.

Results of Operations

We have not presented historical information for NorthStar Europe because we have not engaged in any corporate activity since our formation other than the issuance of shares in connection with our initial capitalization and the issuance of the Senior Notes. We have presented financial information for our predecessor, NorthStar Europe Predecessor, in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which includes:


•	Prior Owner Period - The U.K. Complex and an allocation of certain costs and expenses related to the launch of our European Real Estate Business for periods prior to September 16, 2014, which is the date NorthStar Realty acquired the U.K. Complex; and


•	NorthStar Owner Period - The U.K. Complex and business activities related to our European Real Estate Business for periods subsequent to September 16, 2014.

Collectively, the Prior Owner Period and the NorthStar Owner Period represent the NorthStar Europe Predecessor.

The acquisition of the U.K. Complex by NorthStar Realty was accounted for as a business combination. As a result, the financial results presented in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” have

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been presented separately for the Prior Owner Period and the NorthStar Owner Period for the year ended December 31, 2014. Refer to Note 1 to the audited combined financial statements of the NorthStar Europe Predecessor for more detail.

The combined financial information included in this prospectus does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as a separate, publicly-traded company during the periods presented or those that we will achieve in the future primarily as a result of the following factors:


•	the combined financial information of the NorthStar Europe Predecessor does not include our New European Investments; and


•	the combined statements of operations of the NorthStar Europe Predecessor includes an allocation of certain costs and expenses incurred by NorthStar Realty on behalf of the NorthStar Europe Predecessor, which although based on certain assumptions and estimates believed to be reasonable may differ from actual results.

Comparison of the Six Months Ended June 30, 2015 to June 30, 2014 (Dollars in Thousands):



	NorthStar Owner Period			Prior Owner Period
	Six Months Ended June 30,						Increase (Decrease)
	2015			2014			Amount			%
Revenues
Rental and escalation income	$	4,753		$	5,181		$	(428	)	(8.26	)%
Other revenues	1			925			(924		)	(99.89	)%
Total revenues	4,754			6,106			(1,352		)	(22.14	)%
Expenses
Operating expenses	1,770			2,212			(442		)	(19.98	)%
Interest expense	1,523			2,453			(930		)	(37.91	)%
General and administrative expenses	1,358			3,922			(2,564		)	(65.37	)%
Depreciation and amortization	1,814			1,593			221			13.87	%
Total expenses	6,465			10,180			(3,715		)	(36.49	)%
Other income (loss)
Unrealized gain (loss)	41			1,414			(1,373		)	(97.10	)%
Realized gain (loss)	(14		)	—			(14		)	—	%
Income (loss) before income tax benefit (expense)	(1,684		)	(2,660		)	976			(36.69	)%
Income tax benefit (expense)	$	107		$	(3	)	110			(3,666.67	)%
Net income (loss)	$	(1,577	)	$	(2,663	)	$	1,086		(40.78	)%

Revenues

Rental and Escalation Income

Rental and escalation income consists of rental revenue and tenant recoveries. Rental and escalation income decreased $0.4 million primarily due to a reduction in recoverable service charges during the NorthStar Owner Period.

Other Revenue

Other revenue for the six months ended June 30, 2014 is related to the Prior Owner Period and was attributable to sundry income.

Expenses

Operating Expenses

Operating expenses decrease of $0.4 million was primarily attributable to lower nonrecoverable operating expesnes and other professional fees incurred in the Prior Owner Period.

Interest Expense

Interest expense decrease of $0.9 million was primarily attributable to a new mortgage notes payable associated with NorthStar Realty’s acquisition of the U.K. Complex in September 2014.

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General and Administrative Expenses

General and administrative expenses are principally incurred at the corporate level. General and administrative expenses represents an allocation of certain costs and expenses related to activities for the launch of our European Real Estate Business. The six months ended June 30, 2015 also includes $0.2 million related to an allocation of general and administrative expenses, primarily salaries and other professional fees, had NorthStar Europe Predecessor been a stand alone company. Decrease of $2.6 million was primarily attributable to a lower allocation of certain costs and expenses due to higher costs to launch European Real Estate Business for the six months ended June 30, 2014.

Depreciation and Amortization

Depreciation and amortization expense increased $0.2 million primarily due to a preliminary purchase price allocation of the U.K. Complex acquired by NorthStar Realty in September 2014.

Other Income (Loss)

Unrealized Gain (Loss)

Unrealized gain (loss) was related to foreign currency remeasurement on assets and liabilities denominated in foreign currencies during the Prior Owner Period. Translation adjustments for the NorthStar Owner Period are recorded to OCI.

Income Tax Benefit (Expense)

The income tax benefit for the six months ended June 30, 2015 related to a deferred tax benefit for the NorthStar Owner Period related to the U.K. Complex.

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



	NorthStar Owner Period			Prior Owner Period					Increase (Decrease)
	Period from September 16, 2014 to December 31, 2014			Period from January 1, 2014 to September 15, 2014			Year Ended 2013		Amount			%
Revenues
Rental and escalation income	$	2,722		$	7,162		$	9,869	$	15		0.15	%
Other revenues	39			1,290			1,129		200			17.71	%
Total revenues	2,761			8,452			10,998		215			1.95	%
Expenses
Operating expenses	1,181			3,113			4,002		292			7.30	%
Transaction costs	4,198			—			—		4,198			—	%
Interest expense	165			3,486			4,666		(1,015		)	(21.75	)%
General and administrative expenses	1,207			4,676			340		5,543			1,630.29	%
Depreciation and amortization	1,088			2,294			3,155		227			7.19	%
Total expenses	7,839			13,569			12,163		9,245			76.01	%
Other income (loss)
Unrealized gain (loss)	(210		)	2,110			2,798		(898		)	(32.09	)%
Net income (loss)	$	(5,288	)	$	(3,007	)	$	1,633	$	(9,928	)	(607.96	)%

Revenues

Rental and Escalation Income

Rental and escalation income consists of rental revenue and tenant recoveries.

Other Revenue

Other revenue is principally related to the Prior Owner Period and was attributable to sundry income.

Expenses

Operating Expenses

Property operating expenses increased $0.3 million due to a slight increase in consumption related costs.

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Transaction Costs

Transaction costs primarily represented expenses such as professional fees related to NorthStar Realty’s acquisition of the U.K. Complex in September 2014.

Interest Expense

Interest expense decrease of $1.0 million was primarily attributable to new mortgage notes payable associated with NorthStar Realty’s acquisition of the U.K. Complex in September 2014.

General and Administrative Expenses

Depreciation and Amortization

Depreciation and amortization expense increased $0.2 million primarily due to a preliminary purchase price allocation of the U.K. Complex acquired by NorthStar Realty in September 2014.

Other Income (Loss)

Unrealized Gain (Loss)

Liquidity and Capital Resources

We require capital to fund our investment activities and operating expenses. Our capital sources may include cash flow from operations, financings secured by our assets such as mortgage notes, borrowings under credit facilities, long-term senior and subordinate corporate capital such as revolving credit facilities, senior term loans, senior notes, senior exchangeable notes and perpetual preferred and common stock.

We seek to meet our long-term liquidity requirements, including the repayment of borrowings and our investment funding needs, through existing cash resources, issuance of debt or equity capital, return of capital from investments and the liquidation or refinancing of assets. Nonetheless, our ability to meet a long-term (beyond one year) liquidity requirement may be subject to obtaining additional debt and equity financing. Any decision by our lenders and investors to provide us with financing will depend upon a number of factors, such as our compliance with the terms of our existing credit arrangements, our financial performance, industry or market trends, the general availability of and rates applicable to financing transactions, such lenders’ and investors’ resources and policies concerning the terms under which they make capital commitments and the relative attractiveness of alternative investment or lending opportunities.

As a REIT, we will be required to distribute at least 90% of our annual REIT taxable income to our stockholders, including taxable income where we do not receive corresponding cash, and we intend to distribute all or substantially all of our REIT taxable income in order to comply with the REIT distribution requirements of the Code and to avoid federal income tax and the non-deductible excise tax. On a quarterly basis, our board of directors will determine an appropriate common stock dividend based upon numerous factors, including CAD, NOI, REIT qualification requirements, availability of existing cash balances, borrowing capacity under existing credit agreements, access to cash in the capital markets and other financing sources, our view of our ability to realize gains in the future through appreciation in the value of our assets, 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 currently believe that our existing sources of funds should be adequate for purposes of meeting our short-term liquidity needs. We expect our initial capitalization plus contractual rental income expected in our first year of operations is sufficient to meet our expected capital expenditures, interest, property operating and general and administrative expenses and common dividends that may be declared by the Company. We may seek to raise additional capital in order to finance new acquisitions.

In July 2015, we issued $340 million principal amount of Senior Notes. We received aggregate net proceeds of $331 million, after deducting the underwriters’ discount and other expenses. We may elect to settle all or part of the principal amount

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of the Senior Notes in our Common Stock in lieu of cash. Refer to “Recent Developments” for further discussion of the Senior Notes.

Cash Flows

The following presents a summary of our combined statements of cash flows for the six months ended June 30, 2015 (NorthStar Owner Period) and 2014 (Prior Owner Period) and for the years ended December 31, 2014 and 2013 (dollars in thousands). The combined statement of cash flows for the period from September 16, 2014 through December 31, 2014 represent the NorthStar Owner Period and the combined statements of cash flows for the period from January 1, 2014 through September 15, 2014 and the year ended December 31, 2013 represent the Prior Owner Period.



	NorthStar Owner Period			Prior Owner Period			NorthStar Owner Period			Prior Owner Period
							Period From			Period From
							September 16,			January 1,
	Six Months						2014 to			2014 to			Year Ended
	Ended June 30,						December 31,			September 15,			December 31,
Cash flow provided by (used in):	2015			2014			2014			2014			2013
Operating activities	$	1,265		$	2,554		$	(6,728	)	$	(2,681	)	$	7,245
Investing activities	(338		)	(2,020		)	(89,645		)	(2,307		)	(7,263		)
Financing activities	746			(348		)	100,608			(46		)	(656		)
Effect of foreign currency translation on cash	40			(10		)	(2,683		)	3,722			545
Net increase (decrease) in cash	$	1,713		$	176		$	1,552		$	(1,312	)	$	(129	)

Six Months Ended June 30, 2015 Compared to June 30, 2014

Net cash provided by operating activities was $1.3 million for the six months ended June 30, 2015 compared to $2.6 million for the six months ended June 30, 2014. The net cash flow provided by operating activities for the six months ended June 30, 2015 was higher than the six months ended June 30, 2014 due to lower operating costs and lower costs and expenses from activities related to the launch of our European Real Estate Business in 2014.

Net cash used in investing activities was immaterial for the six months ended June 30, 2015. Net cash used in investing activities for the six months ended June 30, 2014 related to improvements of operating real estate.

Net cash provided by financing activities was $0.7 million for the six months ended June 30, 2015 due to the financing by NorthStar Realty for the acquisition of the U.K. Complex in September 2014. There was immaterial cash activity in financing activities for the six months ended June 30, 2014.

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

Net cash used in operating activities was $9.4 million for the year ended December 31, 2014 compared to cash provided by operating activities of $7.2 million for the year ended December 31, 2013. The increase in net cash flow used in operating activities was primarily related to a decrease in net cash flow from operating activities, offset by costs and expenses from activities related to the launch of our European Real Estate Business in 2014.

Net cash used in investing activities was $92.0 million for the year ended December 31, 2014 compared to $7.3 million for the year ended December 31, 2013. The increase in net cash used in investing activities related to NorthStar Realty’s acquisition of the U.K. Complex in September 2014.

Net cash provided by financing activities was $100.6 million for the year ended December 31, 2014 compared to net cash used in financing activities of $0.7 million for the year ended December 31, 2013. The net cash provided by financing activities in 2014 relates to the financing by NorthStar Realty for the acquisition of the U.K. Complex in September 2014.

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Contractual Obligations and Commitments

The following table presents contractual obligations and commitments as of December 31, 2014 (dollars in thousands):



	Payments Due by Period
	Total ⁽¹⁾		Less than 1 year		1-3 years		3-5 years		More than 5 years
NorthStar Europe Predecessor ⁽²⁾
Mortgage and other note payable	$	77,660	$	—	$	—	$	77,660	$	—
Estimated interest payments ⁽³⁾	13,664		2,763		5,526		5,375		—
Subtotal	91,324		2,763		5,526		83,035		—

Pro Forma Contractual Obligations ⁽⁴⁾
Mortgage and other notes payable	1,439,869		—		—		—		1,439,869
Senior Notes	340,000		—		340,000		—		—
Estimated interest payments ⁽³⁾	345,372		29,898		59,796		59,796		195,882
Subtotal	2,125,241		29,898		399,796		59,796		1,635,751
Total	$	2,216,565	$	32,661	$	405,322	$	142,831	$	1,635,751

_____________________


(1)	Amounts denominated in foreign currencies are translated to the U.S. dollar using the currency exchange rate at the end of the period presented for the U.K. Complex and the exchange rate as of the respective acquisition or commitment date for our New European Investments included in the Pro Forma Contractual Obligations.


(2)	Excludes immaterial amounts related to an operating ground lease.


(3)	Applicable LIBOR benchmark plus the respective spread and foreign currency exchange rate as of June 30, 2015 was used to estimate payments for our floating-rate liabilities.


(4)	Represents pro forma contractual obligations related to our New European Investments and the Senior Notes. Refer to “Unaudited Pro Forma Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments” for further discussion of our pro forma borrowings.

The table above does not include the amounts payable to NSAM under the management agreement. The annualized fee payable to NSAM is approximately $14 million based on our Current European Portfolio. Refer to “Corporate Governance and Management—Our Manager—Management Agreement” of this prospectus for a discussion of the management agreement with NSAM, the terms of which are described therein. In addition, the table above does not include foreign currency forward contracts with a notional amount of $119.3 million and maturities ranging from August 2015 to May 2017.

Off-Balance Sheet Arrangements

We currently do not have any off-balance sheet arrangements.

Related Party Arrangements

For purposes of governing the ongoing relationships between NorthStar Realty and us after the Distribution and to provide for an orderly transition, prior to the Distribution, we and NorthStar Realty will enter into a separation agreement and a contribution agreement, each of which is or will be included as an exhibit to the registration statement of which this prospectus forms a part. These agreements will govern our relationship with NorthStar Realty subsequent to the Distribution and will also provide that all liabilities and obligations attributable to periods prior to the Distribution will remain with NorthStar Realty except for the liabilities for which NorthStar Realty agrees to contribute cash to the Company to enable the Company to pay such liabilities. For a description of the other agreements governing our ongoing relationship with NorthStar Realty, refer to “Certain Relationships and Related Party Transactions.”

In connection with the Distribution, we will enter into a management agreement with NSAM pursuant to which NSAM will manage the Company for an initial term of 20 years. The management agreement provides for: (i) an annual base management fee equal to the sum of: (a) $14 million; and (b) an additional annual base management fee equal to 1.5% per annum of the sum of: (1) any equity we issue in exchange or conversion of exchangeable or stock-settleable notes; (2) any other issuances of common equity, preferred equity or other forms of equity, including but not limited to LTIP Units in our Operating Partnership (excluding units issued to us and equity-based compensation, but including issuances related to an acquisition, investment, joint venture or partnership); and (3) cumulative CAD, if any, in excess of cumulative distributions paid on common stock, LTIP Units or other equity awards beginning the first full calendar quarter after completion of the Distribution; and (ii) an incentive fee determined as described under “Corporate Governance and Management — Our Manager — Management Agreement” with each of the fees set forth in clauses (i) and (ii) being calculated and payable quarterly in arrears in cash. The current base management fee of $14 million is based on our Current European Portfolio.

Recent Developments

Trianon Tower

In July 2015, we acquired the Trianon Tower, a Class A office tower located in Frankfurt, Germany for an approximate €560 million ($621 million). The Trianon Tower is approximately 68,700 square meters, 98.5% occupied and has a weighted average lease term of approximately seven years with two tenants rated “AAA” and “A” comprising over 70% of gross rent. We financed the Trianon Tower with an approximate €330 million ($366 million) senior mortgage note.

Senior Notes

In July 2015, NRE, a current wholly-owned subsidiary of NorthStar Realty, issued $340 million principal amount of 4.625% Senior Notes due December 2016 . We received aggregate net proceeds of $331 million, after deducting the underwriters’ discount and other expenses. We loaned the net proceeds from the issuance of the Senior Notes to subsidiaries of NorthStar Realty, which used such amounts for general corporate purposes, including, among other things, the funding of acquisitions, including the Trianon Tower and the repayment of NorthStar Realty’s borrowings. The terms of the loan are materially the same as those of the Senior Notes and will be deemed repaid upon NorthStar Realty’s contribution to us of our European Real Estate Business. We expect to enter into an agreement with NorthStar Realty at the time of the Distribution providing that we will reimburse NorthStar Realty if any principal or interest payments on the Senior Notes are made by NorthStar Realty after the Distribution. The sale of the Senior Notes to the underwriters was effected in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act because the issuance of such securities did not involve a public offering as contemplated by Section 4(a)(2) under the Securities Act. In addition, the underwriters agreed not to offer or sell the Senior Notes in any manner involving a public offering within the meaning of Section 4(a)(2) under the Securities Act. The Senior Notes are senior unsubordinated and unsecured obligations of NorthStar Europe and NorthStar Realty and NorthStar Realty Finance Limited Partnership will guarantee payments on the Senior Notes. Subject to specified conditions being met, including completion of the Distribution, the listing of our Common Stock and public notice at least 60 days prior to maturity, NorthStar Europe may elect to settle all or part of the principal amount of the Senior Notes in our Common Stock in lieu of cash, in which case the number of shares delivered per note will be based on our Common Stock prices during a measurement period immediately preceding the maturity date.

Non-GAAP Financial Measures

Management will use CAD and NOI, each a non-GAAP measure, to evaluate our profitability and our board of directors will consider CAD and NOI in determining our quarterly cash distributions.

We believe that CAD is useful because it adjusts net income (loss) for a variety of non-cash items. We calculate CAD by subtracting from or adding to net income (loss) attributable to common stockholders, non-controlling interests, if any, and the following items: depreciation and amortization items, including depreciation and amortization ( excluding amortization of second generation tenant improvements and leasing commissions ) , straight-line rental income or expense (excluding amortization of rent free periods), amortization of above/below market leases, amortization of deferred financing costs, amortization of discount on financing and amortization of equity-based compensation ; maintenance capital expenditures ; unrealized gain (loss) from the change in fair value; realized gain (loss) on investments and other; impairment on depreciable property; bad debt expense; deferred tax benefit (expense); acquisition gains or losses (excluding accelerated amortization related to the sale of investments); provision for loan losses, net; distributions and adjustments related to joint venture partners; transaction costs; foreign currency gains (losses); impairment on goodwill and other intangible assets; gains (losses) on sales; and 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. The definition of CAD may be adjusted from time to time for our reporting purposes in our discretion, acting through our audit committee or otherwise.

We believe NOI is a useful metric of the operating performance of our real estate portfolio in the aggregate. NOI is equal to total property revenue less property operating expenses which includes real estate taxes and third-party property management fees. However, the usefulness of NOI is limited because it excludes general and administrative costs, interest expense, transaction costs, depreciation and amortization expense , realized gains (losses) from the sale of properties and other items under U.S. GAAP and capital expenditures and leasing costs necessary to maintain the operating performance of properties, all of which may be significant economic costs. NOI may fail to capture significant trends in these components of U.S. GAAP net income (loss) which further limits its usefulness.

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take into account any potential dilution from any Senior Notes or restricted stock units subject to performance metrics not yet achieved.

Quantitative and Qualitative Disclosures about Market Risk

We are primarily subject to interest rate risk, foreign currency exchange rate risk and credit risk. These risks are dependent on various factors beyond our control, including monetary and fiscal policies, domestic and international economic conditions and political considerations. Our market risk sensitive assets, liabilities and related derivative positions will be held for investment and not for trading purposes.

Interest Rate Risk

Changes in interest rates affect our net income, which is the difference between the income earned on our investments and the interest expense incurred in connection with our borrowings and derivatives. Our operating results depend in large part on differences between the income from our investments less our operating costs, reduced by any credit losses and financing costs. Income from our investments may respond more slowly to interest rate fluctuations than the cost of our borrowings. Consequently, changes in interest rates, particularly short-term interest rates, may influence our net income. Increases in these rates may decrease our net income. Interest rate fluctuations resulting in our interest expense exceeding the income from our investments could result in losses for us and may limit our ability to make distributions to stockholders. In addition, if we need to repay existing borrowings during periods of rising interest rates, we could be required to liquidate one or more of our investments at times that may not permit realization of the maximum return on those investments, which would adversely affect our profitability.

For longer duration, relatively stable investment real estate cash flows such as those derived from net lease assets, we may use fixed rate financing. For real estate cash flows with greater growth potential, we may use floating rate financing, which provides prepayment flexibility and may provide a better match between underlying cash flow projections and potential increases in interest rates. We may vary the mix of fixed and floating rate debt and use a combination of the two when we deem it appropriate. Based on our Current European Portfolio a hypothetical 1% , 2% and 3% increase in the applicable index (EURIBOR and GBP LIBOR) applied to our floating-rate liabilities and related derivatives would result in an increase in net interest expense of approximately $10.1 million, $14.3 million and $14.5 million, respectively, annually. However, this does not reflect the potential increase in rental cash flow associated with economic growth that may be typical in a rising interest rate environment.

A change in interest rates affects the value of our real estate investments. For example, increasing interest rates could result in a higher required yield on investments, which could decrease the value on existing fixed-rate investments in order to adjust their yields to current market levels. In addition, the value of our real estate properties may be influenced by changes in interest rates and credit spreads (as discussed below) because value is typically derived by discounting expected future cash flow generated by the property using interest rates plus a risk premium based on the property type and creditworthiness of the tenants. A lower risk-free rate generally results in a lower discount rate and, therefore, a higher valuation, and vice versa; however, an increase in the risk-free rate would not impact our net income.

We use derivative instruments to manage interest rate exposure. These derivatives are typically in the form of interest rate swap agreements or interest rate cap agreements and the primary objective is to minimize interest rate risks associated with our investments and financing activities. The counterparties to these arrangements are major financial institutions with which we may also have other financial relationships.

As of June 30, 2015, none of our interest rate derivative instruments qualify for hedge accounting treatment. In addition, we may in the future be subject to additional expense based on the notional amount of the derivative and a specified spread over the applicable LIBOR. Because the fair value of these instruments can vary significantly between periods, we may experience significant fluctuations in the amount of our unrealized gain (loss) in any given period.

Foreign Currency Exchange Rate Risk

We are subject to risks related to change in foreign currency exchange rates as a result of our ownership of properties throughout Europe, predominantly the U.S. dollar/Euro exchange rate and U.S. dollar/U.K. Pounds Sterling exchange rate. All of the rent payments under our leases are denominated in Euro or U.K. Pounds Sterling and we expect that substantially all of our future leases will be denominated in the local currency of the nation in which the underlying property is located. A significant portion of our operating expenses and borrowings are also transacted in local currency. We report our results of operations and consolidated financial information in U.S. dollars. As a result, our results of operations as reported in U.S. dollars is impacted by fluctuations in the value of the local currencies in which we conduct our business.

In an effort to mitigate the risk of fluctuations in foreign currency exchange rates, we, our Operating Partnership and its subsidiaries, actively manage our revenues and expenses so that we incur a significant portion of our expenses, including our

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operating costs and borrowings, in the same local currencies in which we receive our revenues. In addition, subject to satisfying the requirements for qualification as a REIT, we engage in various hedging strategies, which may include currency futures, swaps, forwards and options. We expect that these strategies and instruments may allow us to reduce, but not eliminate, the risk of fluctuations in foreign currency exchange rates. The counterparties to these arrangements are major financial institutions with which we may also have other financial relationships.

Based on our Current European Portfolio, a hypothetical 10% increase in applicable exchange rate to the U.S dollar applied to our assets and liabilities and related derivatives would result in an increase of net equity of approximately $107.7 million. Such amount would be recorded in OCI. In addition, we enter into derivative instruments to manage foreign currency exposure of our operating income. Based on our Current European Portfolio, a hypothetical 10% increase in in applicable exchange rate to the U.S dollar applied to projected CAD would increase net income by $1.7 million.

Credit Spread Risk

We expect the value of our fixed and floating-rate investments to change with market credit spreads. This means that when market-demanded risk premium, or credit spread, increases, the value of our fixed- and floating-rate assets will decrease and vice versa. Fixed-rate assets are valued based on a market credit spread over the rate payable on the applicable fixed rate instrument of like maturity. This means that their value is dependent on the yield demanded on such assets by the market, based on their credit relative to certain instruments. Demand for a higher yield on investments results in higher or “wider” spread over the benchmark rate to value these assets. Under these conditions, the value of our portfolio should decrease. Conversely, if the spread used to value these assets were to decrease or “tighten,” the value of these assets should increase.

Credit Risk

We are subject to the credit risk of the tenant of our properties. We seek to undertake a rigorous credit evaluation of each tenant prior to acquiring properties. This analysis includes an extensive due diligence investigation of the tenant’s business as well as an assessment of the strategic importance of the underlying real estate to the tenant’s core business operations. Where appropriate, we may seek to augment the tenant’s commitment to the facility by structuring various credit enhancement mechanisms into the underlying leases. These mechanisms could include security deposit requirements or guarantees from entities we deem creditworthy. Additionally, we perform ongoing monitoring of creditworthiness of our tenants which is a key component of our portfolio management process. Such monitoring may include, to the extent available, a review of financial statements and operating statistics, delinquencies, third party ratings and market data.

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CORPORATE GOVERNANCE AND MANAGEMENT

General

We expect to list our Common Stock on the NYSE under the symbol “NRE.” As a result, we expect that we will be subject to NYSE corporate governance listing standards.

Corporate Governance Guidelines

Our board of directors will adopt our Corporate Governance Guidelines to assist in the exercise of its responsibilities. These guidelines will set forth our practices and policies with respect to among other things, board composition, board member qualifications, responsibilities and education, management succession and self-evaluation. The full text of our Corporate Governance Guidelines will be available on our website at on or prior to the date of Distribution. A copy will also be able to be obtained by writing to NorthStar Realty Europe Corp., Attn: General Counsel , 399 Park Avenue, 18th Floor, New York, New York 10022.

Board Leadership Structure; Meetings of Independent Directors

Our board of directors believes it is important to select its chairman and the Company’s chief executive officer in the manner it considers in the best interests of the Company at any given point in time. The members of our board of directors possess considerable business experience and in-depth knowledge of the issues the Company faces and are therefore in the best position to evaluate the needs of the Company and how best to organize the Company’s leadership structure to meet those needs. Accordingly, the chairman and chief executive officer positions may be filled by one individual or by two different individuals.

To promote the independence of our board of directors and appropriate supervision of management, the independent directors will select a Lead Non-Management Director to facilitate free and open discussion and communication among the independent directors of our board of directors and management. The Lead Non-Management Director will preside at all executive sessions at which only non-management directors are present. These meetings will be held in conjunction with the regularly scheduled quarterly meetings of our board of directors, but may be called at any time by our Lead Non-Management Director or any of our other independent directors. Our Lead Non-Management Director will set the agenda for these meetings held in executive session and will discuss issues that arise during those meetings with our chairman. Our Lead Non-Management Director will have discussions with our chairman and secretary regarding board of directors meeting agendas and may request inclusion of additional agenda items for meetings of our board of directors. It is expected that the individual who serves as the Lead Non-Management Director will rotate every two years.

Communicating with Our Directors

Our board of directors will adopt a process to receive communications from interested parties, including stockholders. Interested parties may contact the Lead Non-Management Director, any member or all members of our board of directors by mail. To communicate with our board of directors, any individual director, any group of directors or committee, correspondence should be addressed to our board of directors or any such individual director, group of directors or committee by either name or title. All such correspondence should be sent to NorthStar Realty Europe Corp., Attn: General Counsel , 399 Park Avenue, 18th Floor, New York, New York 10022.

All communications received as set forth in the preceding paragraph will be opened by the office of our General Counsel for the sole purpose of determining whether the contents represent a message to our directors. Any contents that are not in the nature of advertising, promotions of a product or service or patently offensive material will be forwarded promptly to the addressee. In the case of communications to our board of directors or any group of directors or committee, the office of the General Counsel will make sufficient copies of the contents to send to each director who is a member of the group or committee to which the envelope is addressed.

Code of Business Conduct and Ethics

We will adopt a code of business conduct and ethics relating to the conduct of our business by our directors and officers. We intend to maintain high standards of ethical business practices and compliance with all laws and regulations applicable to our business, in Europe and elsewhere. Specifically, among other things, our code of business conduct and ethics will prohibit employees from providing gifts, meals or anything of value to government officials or employees or members of their families without prior written approval from the Company’s general counsel. The code will be available on our website at on or prior to the date of the Distribution and will also be available without charge to stockholders upon written request to NorthStar Realty Europe Corp., Attn: General Counsel , 399 Park Avenue, 18th Floor, New York, New York 10022.

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Our Directors

Our sole director is currently David T. Hamamoto. For information regarding Mr. Hamamoto, refer to “— Our Manager — Officers of Our Manager” below. We intend to elect additional directors to our board of directors prior to the Distribution to serve as directors of the Company commencing on or prior to the Distribution date.

Director Compensation

We intend to approve and implement a competitive compensation program for our non-employee directors that may consist of one or more of the following: annual retainer fees, equity awards and attendance fees (by remote communication or in person), as well as other forms of compensation. We will also reimburse each of our directors for his or her travel expenses incurred in connection with his or her attendance at full board of directors and committee meetings. We have not made any payments to any of our non-employee directors or director nominees to date.

Board Committees

Our board of directors will appoint an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee and each of these standing committees will adopt a written charter. Each of these committees will be composed exclusively of independent directors, as defined by the listing standards of the stock exchange on which our Common Stock will be listed, which we expect to be the NYSE. Moreover, the Compensation Committee will be composed exclusively of individuals referred to as “non-employee directors” in Rule 16b-3 of the Exchange Act and as “outside directors” in Section 162(m) of the Code.

Audit Committee

At the time of the Distribution, our Audit Committee will consist of at least three members, each of whom will be independent and financially literate under the rules of the stock exchange on which our Common Stock will be listed, which we expect to be the NYSE, and at least one of whom will be an “audit committee financial expert,” as that term is defined by the SEC. The Audit Committee will be responsible for, among other things, engaging an independent registered public accounting firm, reviewing with the independent registered public accounting firm the plans and results of the audit engagement, approving professional services provided by the independent registered public accounting firm, reviewing the independence of the independent registered public accounting firm, considering the range of audit and non-audit fees and assisting our board of directors in its oversight of our internal controls over financial reporting. For more information, refer to “Certain Relationships and Related Party Transactions — Policy for Review of Related Party Transactions.”

On or prior to the date of Distribution, a copy of the Audit Committee charter will be available on our website at under the heading “Investor Relations — Corporate Governance” and will also be available without charge to stockholders upon written request to NorthStar Realty Europe Corp., Attn: General Counsel’s office, 399 Park Avenue, 18th Floor, New York, New York 10022.

Compensation Committee

At the time of the Distribution, our Compensation Committee will consist of members that are independent under the rules of the stock exchange on which our Common Stock will be listed, which we expect to be the NYSE. The Compensation Committee will be responsible for, among other things, determining compensation for our executive officers, administering and monitoring our equity compensation plans, evaluating the performance of our executive officers and producing an annual report on executive compensation for inclusion in the proxy statement for our annual meeting of stockholders. The Compensation Committee may delegate some or all of its duties to a subcommittee comprising one or more members of the Compensation Committee.

On or prior to the date of the Distribution, a copy of the Compensation Committee charter will be available on our website at under the heading “Investor Relations — Corporate Governance” and will also be available without charge to stockholders upon written request to NorthStar Realty Europe Corp., Attn: General Counsel’s office, 399 Park Avenue, 18th Floor, New York, New York 10022.

Nominating and Corporate Governance Committee

At the time of the Distribution, our Nominating and Corporate Governance Committee will be independent under the rules of the stock exchange on which our Common Stock will be listed, which we expect to be the NYSE. The Nominating and Corporate Governance Committee will be responsible for, among other things, seeking, considering and recommending to our board of directors qualified candidates for election as directors and recommending a slate of nominees for election as directors at the annual meeting. It will also periodically prepare and submit to our board of directors for adoption the Nominating and Corporate Governance Committee’s selection criteria for director nominees. It will review and make recommendations on matters involving

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the general operation of our board of directors, including director compensation plans and practices and our corporate governance and annually recommend to our board of directors nominees for each committee of our board of directors. In addition, the Nominating and Corporate Governance Committee will annually facilitate the assessment of our board of directors’ performance as a whole and of the individual directors and report thereon to our board of directors.

On or prior to the date of the Distribution, a copy of the Nominating and Corporate Governance Committee charter will be available on our website at under the heading “Investor Relations — Corporate Governance” and will also be available without charge to stockholders upon written request to NorthStar Realty Europe Corp., Attn: General Counsel , 399 Park Avenue, 18th Floor, New York, New York 10022.

Our Executive Officers

Set forth below is information regarding the individuals who serve as our executive officers.



Name	Age	Position
Mahbod Nia	39	Chief Executive Officer
Debra A. Hess	51	Interim Chief Financial Officer
Trevor K. Ross	37	General Counsel and Secretary

Set forth below is biographical information regarding each of our current executive officers.

Mahbod Nia . Mr. Nia has served as our Chief Executive Officer and President since June 2015. Mr. Nia also serves as Managing Director and Head of European Investments at NSAM, a position he has held since July 2014. Prior to joining NSAM, Mr. Nia worked for PanCap Investment Partners, a European real estate investment and advisory firm with clients including the Goldman Sachs Whitehall funds/Archon, Tishman Speyer and Münchener Hypothekenbank. From 2007 to 2009, Mr. Nia was a Senior Executive Director in the Real Estate Banking Group at Goldman Sachs. Prior to 2007, Mr. Nia served in various positions at Citigroup Inc. (formerly Salomon Brothers, where Mr. Nia began his career). Mr. Nia holds a Masters in Economics and Finance from the University of Warwick and a First Class Honors degree in Economics for Business.

Debra A. Hess . Ms. Hess has served as our interim Chief Financial Officer since June 2015. Ms. Hess also serves as Chief Financial Officer of NorthStar Realty, a position she has held since July 2011, and as Chief Financial Officer of NSAM, a position she has held since January 2014. Ms. Hess served as Chief Financial Officer and Treasurer of NorthStar Real Estate Income Trust, Inc., or NorthStar Income, a public non-traded REIT sponsored by NSAM, a position she held from October 2011 to August 2015. Ms. Hess served as Chief Financial Officer and Treasurer of NorthStar Healthcare Income, Inc., or NorthStar Healthcare, a second public non-traded REIT sponsored by NSAM, a position she held from March 2012 to August 2015. Ms. Hess also served as Chief Financial Officer and Treasurer of NorthStar Real Estate Income II, Inc., or NorthStar Income II, a third public non-traded REIT sponsored by NSAM, a position she held from December 2012 to August 2015. Ms. Hess further served as Chief Financial Officer and Treasurer of NorthStar/RXR New York Metro Income, Inc., or NorthStar/RXR New York Metro, a public non-traded REIT co-sponsored by NSAM, a position she held from March 2014 to August 2015. Ms. Hess has significant financial, accounting and compliance experience at public companies. Prior to joining NorthStar Realty, Ms. Hess served as Chief Financial Officer and Compliance Officer of H/2 Capital Partners, where she was employed from August 2008 to June 2011. From March 2003 to July 2008, Ms. Hess was a managing director at Fortress Investment Group, where she also served as Chief Financial Officer of Newcastle Investment Corp., a Fortress portfolio company and a NYSE-listed alternative investment manager. From 1993 to 2003, Ms. Hess served in various positions at Goldman, Sachs & Co., including as Vice President in Goldman Sachs’s Principal Finance Group and as a Manager of Financial Reporting in Goldman Sachs’ Finance Division. Prior to 1993, Ms. Hess was employed by Chemical Banking Corporation in the corporate credit policy group and by Arthur Andersen & Company as a supervisory senior auditor. Ms. Hess holds a Bachelor of Science in Accounting from the University of Connecticut in Storrs, Connecticut and a Master of Business Administration in Finance from New York University in New York, New York.

Trevor K. Ross . Mr. Ross is our General Counsel and Secretary, a position he has held since September 2015. Prior to joining us, Mr. Ross was a partner in the Real Estate Capital Markets practice at the law firm of Hunton & Williams LLP. Mr. Ross practiced at Hunton & Williams from September 2002 until August 2015 where he advised numerous REITs and other specialty finance companies and specialized in capital markets transactions, mergers and acquisitions, securities law compliance and corporate governance matters. Mr. Ross holds a Bachelor of Business Administration and Juris Doctor, each from Mercer University.

Limitation of Liability and Indemnification

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judgment and is material to the cause of action. Our charter will contain such a provision which eliminates directors’ and officers’ liability to the maximum extent permitted by Maryland law.

Our charter will authorize and our bylaws will obligate us, to the maximum extent permitted by Maryland law, to indemnify any present or former director or officer or any individual who, while a director or officer of the Company and at our request, serves or has served another corporation, real estate investment trust , limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, member, manager, partner or trustee, from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her status as a present or former director or officer of the Company and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding. Our charter and bylaws also will permit us to indemnify and advance expenses to any person who served a predecessor of the Company in any of the capacities described above and any employee or agent of the Company or a predecessor of the Company.

Maryland law requires a corporation (unless its charter provides otherwise, which our charter will not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made, or threatened to be made, a party to, or witness in, by reason of their service in those or other capacities unless it is established that: (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. A Maryland corporation may not indemnify a director or officer with respect to a proceeding by or in the right of the corporation in which the director or officer was adjudged liable to the corporation or a proceeding charging improper personal benefit to the director or officer in which the director or officer was adjudged liable on the basis that personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment in a suit by or in the right of the corporation, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of: (i) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation; and (ii) a written undertaking by him or on his behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.

We intend to enter into indemnification agreements with each of our directors and executive officers which will require that we indemnify such directors and officers to the maximum extent permitted by Maryland law and that we pay such persons’ expenses in defending any civil or criminal proceeding in advance of final disposition of such proceeding.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Further, the separation agreement between us and NorthStar Realty provides for indemnification by us of NorthStar Realty and its directors, officers and employees and by NorthStar Realty of us and our directors, officers and employees for some liabilities, including liabilities under the Exchange Act. The amount of these indemnity obligations is unlimited.

Our Manager

General

Upon completion of our separation from NorthStar Realty, we will enter into a management agreement with NSAM for an initial term of 20 years, which will be automatically renewed for additional 20-year terms each anniversary thereafter unless earlier terminated. The management agreement may not be terminated during its initial term, during any renewal term or at the end of any term, unless we have cause to terminate, as described under “— Management Agreement — Termination” below. Pursuant to the management agreement, NSAM will be the exclusive provider of the services set forth in the management agreement and will be responsible for managing, operating, directing and supervising the operations and administration of the Company, our subsidiaries and our real estate investments. A form of the management agreement will be filed as an exhibit to the registration statement of which this prospectus forms a part and the following description of the management agreement is qualified in its entirety by reference to the management agreement as so filed.

The services for which NSAM will receive fees and reimbursements include, but are not limited to, the following:

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Acquisition Services


•	serving as our investment and financial advisor and obtain certain market research and economic and statistical data in connection with our investments and investment objectives and policies;


•	subject to the investment objectives and limitations set forth in our charter and the investment guidelines approved by our board of directors: (i) locating, analyzing and selecting potential investments; (ii) structuring and negotiating the terms and conditions of approved investments; and (iii) acquiring approved investments on our behalf;


•	overseeing the due diligence process related to prospective investments;


•	conducting a thorough due diligence process for prospective investments;


•	preparing reports regarding prospective investments which include recommendations and supporting documentation necessary for our board of directors to evaluate the proposed investments;


•	obtaining reports (which may be prepared by NSAM or its affiliates), where appropriate, concerning the value of proposed investments; and


•	negotiating and executing approved investments and other transactions.

Asset Management Services

•

investigating, selecting and, on our behalf, engaging and conducting business with such persons as NSAM deems necessary to the proper performance of its obligations under our management agreement, including but not limited to consultants, accountants, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, developers, construction companies and any and all persons acting in any other capacity deemed by NSAM necessary or desirable for the performance of any of the services under our management agreement;


•	monitoring applicable markets and obtaining reports (which may be prepared by NSAM or its affiliates) where appropriate, concerning the value of our investments;


•	monitoring and evaluating the performance of our investments, providing daily management services to us and performing and supervising the various management and operational functions related to our investments;


•	formulating and overseeing the implementation of strategies for the administration, promotion, management, operation, maintenance, improvement, financing and refinancing, marketing, leasing and disposition of investments on an overall portfolio basis;


•	coordinating and managing relationships between any joint venture partners and us; and


•	providing financial and operational planning services and investment portfolio management functions.

Accounting and Other Administrative Services


•	managing and performing the various administrative functions necessary for our day-to-day operations;


•	from time-to-time, or at any time reasonably requested by our board of directors, reporting to our directors on NSAM’s performance of services to us under the management agreement;


•	coordinating with our independent accountants and auditors to prepare and deliver to the company’s audit committee an annual report covering NSAM’s compliance with certain aspects of the management agreement;


•	providing or arranging for administrative services, legal services, office space, office furnishings, personnel and other overhead items necessary and incidental to our business and operations;


•	providing financial and operational planning services and portfolio management functions;


•	maintaining accounting data and any other information concerning our activities as shall be required to prepare and to file all periodic financial reports and returns required to be filed with the SEC and any other regulatory agency, including annual financial statements;


•	maintaining all of our appropriate books and records;

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•	overseeing tax and compliance services and risk management services and coordinating with appropriate third parties, including independent accountants and other consultants, on related tax matters;


•	supervising the performance of such ministerial and administrative functions as may be necessary in connection with our daily operations;


•	providing us with all necessary cash management services;


•	managing and coordinating with the transfer agent the process of making distributions and payments to stockholders;


•	consulting with our officers and board of directors and assisting in evaluating and obtaining adequate insurance coverage based upon risk management determinations;


•	providing our officers and board of directors with timely updates related to the overall regulatory environment affecting the company, as well as managing compliance with regulatory matters;


•	consulting with our officers and board of directors relating to the corporate governance structure and appropriate policies and procedures related thereto; and


•	overseeing all reporting, recordkeeping, internal controls and similar matters in a manner to allow us to comply with applicable law.

Stockholder Services


•	managing communications with our stockholders, including answering phone calls, preparing and sending written and electronic reports and other communications; and


•	establishing technology infrastructure to assist in providing stockholder support and services.

Financing Services


•	identifying and evaluating potential financing and refinancing sources, engaging a third party broker if necessary;


•	negotiating terms of, arrange and execute financing agreements;


•	managing relationships between the company and its lenders; and


•	monitoring and overseeing the service of our debt facilities and other financings.

Disposition Services


•	consulting with our board of directors and providing assistance with the evaluation and approval of potential asset disposition, sales or liquidity transactions; and


•	structuring and negotiating the terms and conditions of transactions pursuant to which our investments may be sold.

Officers of NSAM

Our manager is managed by the following individuals:



Name	Age	Position
David T. Hamamoto	55	Executive Chairman
Albert Tylis	41	Chief Executive Officer and President
Daniel R. Gilbert	45	Chief Investment and Operating Officer of NorthStar Asset Management Group, Ltd, NSAM’s wholly owned subsidiary
Debra A. Hess	51	Chief Financial Officer
Ronald J. Lieberman	45	Executive Vice President, General Counsel and Secretary

Set forth below is biographical information regarding each of NSAM’s executive officers, other than Ms. Hess, whose biographical information is provided under “ — Our Executive Officers.”

David T. Hamamoto . Mr. Hamamoto has served as Executive Chairman of NSAM since August 2015 and served as Chief Executive Officer of NSAM from January 2014 to August 2015. He serves as the sole director of NorthStar Europe, a position he has held since June 2015. Mr. Hamamoto has been Chairman of NorthStar Realty since October 2007 and has served as one of its directors since October 2003. Mr. Hamamoto served as Chief Executive Officer of NorthStar Realty from October

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2004 to August 2015 and was its President from October 2004 to April 2011. Mr. Hamamoto also served as Chairman of NorthStar Income from February 2009 until August 2015, and served as its Chief Executive Officer from February 2009 until January 2013. Mr. Hamamoto also served as Chairman of NorthStar Healthcare from January 2013 until January 2014. Mr. Hamamoto also served as Chairman of NorthStar Income II from December 2012 until August 2015. Mr. Hamamoto further served as Co-Chairman of NorthStar/RXR New York Metro from March 2014 until August 2015. Additionally, Mr. Hamamoto serves as a member of the advisory committee of RXR Realty, LLC, or RXR Realty, a leading real estate operating and investment management company focused on high-quality real estate investments in the New York Tri-State area and the co-sponsor of NorthStar/RXR New York Metro, a position he has held since December 2013. Mr. Hamamoto also serves as a member of the executive committee of Island Hospitality Management Inc., a position he has held since January 2015. Mr. Hamamoto served as Executive Chairman from March 2011 until November 2012, and as Chairman, from February 2006 until March 2011, of the board of directors of Morgans Hotel Group Co. (NASDAQ: MHGC). In July 1997, Mr. Hamamoto co-founded NorthStar Capital Investment Corp., the predecessor to NorthStar Realty, for which he served as Co-Chief Executive Officer until October 2004. From 1983 to 1997, Mr. Hamamoto worked for Goldman, Sachs & Co. where he was co-head of the Real Estate Principal Investment Area and general partner of the firm between 1994 and 1997. During Mr. Hamamoto’s tenure at Goldman, Sachs & Co., he initiated the firm’s effort to build a real estate principal investment business under the auspices of the Whitehall Funds. Mr. Hamamoto holds a Bachelor of Science from Stanford University in Palo Alto, California and a Master of Business Administration from the Wharton School of Business at the University of Pennsylvania in Philadelphia, Pennsylvania.

Albert Tylis . Mr. Tylis has served as Chief Executive Officer of NSAM since August 2015 and as its President since January 2014 and has served as one of its directors since August 2015. Mr. Tylis served as President of NorthStar Realty from January 2013 to August 2015 and has served as one of its directors since August 2015. Prior to his current position at NorthStar Realty, Mr. Tylis served as its Co-President from April 2011 until January 2013, its Chief Operating Officer from January 2010 until January 2013, its Secretary from April 2006 until January 2013, an Executive Vice President from April 2006 until April 2011 and its General Counsel from April 2006 to April 2011. Mr. Tylis served as Chief Operating Officer of NorthStar Income from October 2010 until January 2013 and as General Counsel and Secretary of NorthStar Income from October 2010 until April 2011. He also served as Chairman of NorthStar Healthcare from April 2011 until January 2013 and as General Counsel and Secretary of NorthStar Healthcare from October 2010 until April 2011. Mr. Tylis also serves as a member of the advisory committee of RXR Realty, a position he has held since December 2013. Prior to joining NorthStar Realty in August 2005, Mr. Tylis was the Director of Corporate Finance and General Counsel of ASA Institute. From September 1999 through February 2005, Mr. Tylis was a senior attorney at the law firm of Bryan Cave LLP, where he was a member of the Corporate Finance and Securities Group, the Transactions Group, the Banking, Business and Public Finance Group and supported the firm’s Real Estate Group. Mr. Tylis holds a Bachelor of Science from the University of Massachusetts at Amherst and a Juris Doctor from Suffolk University Law School.

Daniel R. Gilbert . Mr. Gilbert has served as Chief Investment and Operating Officer of NorthStar Asset Management Group, Ltd, a wholly-owned subsidiary of NSAM, since June 2014. Mr. Gilbert has served as NorthStar Realty’s Chief Investment and Operating Officer since January 2013. Prior to his current position at NorthStar Realty, Mr. Gilbert served as Co-President of NorthStar Realty from April 2011 until January 2013 and in various other senior management positions since its initial public offering in October 2004. Mr. Gilbert serves as the Chairman, a position he has held since August 2015, and Chief Executive Officer and President of NorthStar Income, a position he has held since January 2013, and served as its President since March 2011 and its Chief Investment Officer from January 2009 through January 2013. Mr. Gilbert serves as the Executive Chairman of NorthStar Healthcare, a position he has held since January 2014, and served as its Chief Executive Officer from August 2012 to January 2014 and Chief Investment Officer from October 2010 through February 2012. Mr. Gilbert also serves as the Chairman, a position he has held since August 2015, and Chief Executive Officer and President of NorthStar Income II, a position he has held since October 2010. Mr. Gilbert further serves as the Co-Chairman, a position he has held since August 2015, and Chief Executive Officer and President of NorthStar/RXR New York Metro, a position he has held since March 2014. Mr. Gilbert served as an Executive Vice President and Managing Director of Mezzanine Lending of NorthStar Capital Investment Corp., the predecessor of NorthStar Realty. Prior to that role, Mr. Gilbert was with Merrill Lynch & Co. in its Global Principal Investments and Commercial Real Estate Department and prior to joining Merrill Lynch, held accounting and legal-related positions at Prudential Securities Incorporated. Mr. Gilbert holds a Bachelor of Arts degree from Union College in Schenectady, New York.

Ronald J. Lieberman . Mr. Lieberman has served as Executive Vice President, General Counsel and Secretary of NSAM since January 2014. Mr. Lieberman has served as Executive Vice President, General Counsel and Secretary of NorthStar Realty since January 2013. Prior to his current position at NorthStar Realty, Mr. Lieberman served as its General Counsel since April 2011, an Executive Vice President since April 2012 and as Assistant Secretary from April 2011 until January 2013. Mr. Lieberman served as NorthStar Income’s Executive Vice President (a position he held from January 2013 to August 2015), General Counsel and Secretary (positions he held from October 2011 to August 2015). Mr. Lieberman serves as NorthStar Healthcare’s Executive Vice President (a position he has held since January 2013), General Counsel and Secretary (positions he held since April 2011). Mr. Lieberman also served as NorthStar Income II’s Executive Vice President (a position he held since March 2013), General

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Counsel and Secretary (positions he held since December 2012) until August 2015. Mr. Lieberman further serves as Executive Vice President, General Counsel and Secretary for NorthStar/RXR New York Metro, positions he has held since March 2014. Mr. Lieberman also currently serves on the Executive Committee of American Healthcare Investors, LLC. Prior to joining NorthStar Realty, Mr. Lieberman was a partner in the Real Estate Capital Markets practice at the law firm of Hunton & Williams LLP. Mr. Lieberman practiced at Hunton & Williams from September 2000 until March 2011 where he advised numerous REITs, including mortgage REITs and specialized in capital markets transactions, mergers and acquisitions, securities law compliance, corporate governance and other board advisory matters. Prior to joining Hunton & Williams, Mr. Lieberman was the associate general counsel at Entrade, Inc., during which time Entrade was a public company listed on the NYSE. Mr. Lieberman began his legal career at Skadden, Arps, Slate, Meagher and Flom LLP. Mr. Lieberman holds a Bachelor of Arts, Master of Business Administration and Juris Doctor, each from the University of Michigan in Ann Arbor, Michigan.

Management Agreement

Duties of Asset Manager

As asset manager, NSAM will be responsible for our day-to-day operations, subject to the supervision of our board of directors. Through its global network of subsidiaries and branch offices, NSAM will perform (or will cause to be performed) services and activities relating to, among other things, investments and financing, portfolio management and other administrative services, such as accounting and investor relations, to us and our subsidiaries. NSAM will not be obligated to dedicate any of its executives or other personnel exclusively to us, nor to dedicate any specific amounts of time to fulfilling its obligations and NSAM may contract with and provide services to an unlimited number of additional managed companies.

Compensation Under the Management Agreement


(i)	an annual base management fee equal to the sum of:


(a)	$14 million; and


(b)	an additional annual base management fee equal to 1.5% per annum of the sum of:


(1)	any equity we issue in exchange or conversion of exchangeable or stock-settleable notes;


(2)	any other issuances of common equity, preferred equity or other forms of equity, including but not limited to LTIP Units in our Operating Partnership (excluding units issued to us and equity-based compensation, but including issuances related to an acquisition, investment, joint venture or partnership); and


(3)	cumulative CAD, if any, in excess of cumulative distributions paid on common stock, LTIP Units or other equity awards beginning the first full calendar quarter after completion of the Distribution; and


(ii)	an incentive fee equal to:


(a)	the product of: (a) 15% and (b) CAD before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, of any amount in excess of $ per share and up to $ per share; plus


(b)	the product of: (a) 25% and (b) CAD before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, of any amount in excess of $ per share;


(c)	multiplied by the weighted average shares outstanding for the calendar quarter,

Each of the fees set forth in clauses (i) and (ii) are calculated and payable quarterly in arrears in cash.

Weighted average shares represents the number of shares of our 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 issuances shall be allocated on a daily weighted average basis during the fiscal quarter of issuances. With respect to the incentive fee, such amounts will be appropriately adjusted from time to time to take into account the effect of any stock split, reverse stock split, stock dividend, reclassification, recapitalization or other similar transaction.

The current base management fee of $14 million is based on our Current European Portfolio.

Furthermore, if we were to spin-off any investment or business in the future, such entity would be managed by NSAM on terms substantially similar to those set forth in the management agreement between NSAM and us. The management agreement

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further provides that the aggregate base management fee in place immediately after such future spin-off will not be less than the aggregate base management fee in place at the Company immediately prior to such spin-off.

Payment of Costs and Expenses and Expense Allocation

We are responsible for all of our direct costs and expenses and will reimburse NSAM for costs and expenses incurred by NSAM on our behalf. NSAM allocates, in good faith, indirect costs to us related to employees , including our named executive officers, occupancy and other general and administrative costs and expenses in accordance with the terms of, and subject to the limitations contained in, our management agreement with our manager. The indirect costs include our allocable share of our manager’s compensation and benefit costs associated with dedicated or partially dedicated personnel who spend all or a portion of their time managing our affairs, based upon the percentage of time devoted by such personnel to our affairs. The indirect costs also include rental and occupancy, technology, office supplies and other general and administrative costs and expenses. NSAM allocates these costs to us relative to its other managed companies in good faith. Pursuant to the terms of our management agreement with our manager, we are obligated to reimburse NSAM, in NSAM's discretion, for costs and expenses incurred by NSAM for an amount not to exceed the following: (i) 20% of the combined total of (a) the general and administrative expenses as reported in the consolidated financial statements of each of NorthStar Europe, NorthStar Realty and any new entity spun-off from NorthStar Realty or NorthStar Europe after making certain adjustments described below, or the Managed Company G&A and (b) NSAM’s general and administrative expenses as reported in its consolidated financial statements, excluding equity-based compensation expense and adding back any costs or expenses allocated to any other managed company of NSAM; less (ii) the Managed Company G&A, or the Maximum Allocable G&A; provided, however, that NorthStar Europe will not be required to reimburse NSAM for any portion of the Maximum Allocable G&A for which NSAM receives reimbursement from NorthStar Realty or any company spun-off from NorthStar Realty or NorthStar Europe. Subject to the foregoing limitation and the limitations contained in the applicable management agreements between NSAM and NorthStar Realty or any company spun-off from NorthStar Realty or NorthStar Europe, the amount of the Maximum Allocable G&A paid by NorthStar Europe, NorthStar Realty and any company spun-off from NorthStar Realty or NorthStar Europe will be determined by NSAM in its discretion. In determining the reimbursement described above, the reported general and administrative expenses of each of NorthStar Europe, NorthStar Realty and any company spun-off from NorthStar Realty or NorthStar Europe will be adjusted to exclude (1) equity-based compensation expenses, (2) non-recurring expenses, (3) fees payable to NSAM under the terms of the applicable management agreement entered into by such entity with NSAM and (4) any allocation of expenses from NSAM.

In addition, we, together with NorthStar Realty and any company spun-off from NorthStar Realty or NorthStar Europe, will pay directly or reimburse NSAM for up to 50% of any long-term bonus or other compensation that its compensation committee determines shall be paid and/or settled in the form of equity and/or equity-based compensation to executives (including our named executive officers) , employees, service providers and staff of NSAM during any year. Subject to the foregoing limitation and the limitations contained in any applicable management agreement between NSAM and NorthStar Realty or any company spun-off from NorthStar Realty or NorthStar Europe, the amount paid by NorthStar Europe, NorthStar Realty and any company spun-off from NorthStar Realty or NorthStar Europe will be determined by NSAM in its discretion. At the discretion of NSAM’s compensation committee, the foregoing compensation may be granted in shares of NorthStar Europe restricted stock, restricted stock units, long-term incentive plan units or other forms of equity compensation or stock-based awards. The NorthStar Europe equity compensation for each year may be allocated on an individual-by-individual and award-by-award basis at the discretion of the NSAM compensation committee and, as long as the aggregate amount of the equity compensation for such year does not exceed the limits set forth in the management agreement, the proportion of any particular individual’s equity compensation may be greater or less than 50%. We will also pay directly or reimburse NSAM for an allocable portion of any severance paid pursuant to any employment, consulting or similar service agreements in effect between NSAM and any of its executives, employees or other service providers.

Termination

We may terminate the management agreement for cause at any time, including during the initial term, without the payment of any termination fee, with at least 60 days prior written notice to NSAM, upon the occurrence of any of the following:


•	NSAM engages in any material act of fraud, misappropriation of funds or embezzlement against us or any of our subsidiaries;


•	NSAM’s breach, in bad faith, of any provision of the management agreement or gross negligence that has a “material adverse effect” on us, in each case, if the effects of such breach in bad faith or gross negligence cannot be reversed, or such effects are not reversed within a period of 60 days (or 90 days if NSAM takes steps to reverse such effects within 30 days of the written notice);

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•	there is a commencement of any proceeding relating to NSAM’s bankruptcy or insolvency, including an order for relief in an involuntary bankruptcy case or NSAM authorizing or filing a voluntary bankruptcy petition that is not dismissed in 60 days;

•

there is a determination by a court of competent jurisdiction in a non-appealable binding order, or by the IRS in a closing agreement made under Section 7121 of the Code, that a provision of the management agreement caused or will cause us to fail to satisfy a requirement for qualification as a REIT and, within 60 days of such determination, NSAM has not agreed to amend or modify the management agreement in a manner that would allow us to qualify as a REIT, unless our board of directors determines that qualification as a REIT is no longer necessary or desirable; or


•	NSAM’s dissolution.

Under the management agreement, a material adverse effect means a material adverse effect on the business, results of operations, financial condition and assets of the Company and our subsidiaries, taken as a whole. The following, either alone or in combination, shall be excluded from consideration when evaluating the existence of a material adverse effect: (i) changes or effects in general economic conditions; (ii) changes or effects in general market conditions, including the securities, credit , currency, interest rate or financial markets; (iii) fluctuations in the market value of our Common Stock (or other debt or equity securities) on the NYSE, any other market or otherwise; (iv) changes in U.S. GAAP; (v) changes or effects, including legal, tax or regulatory changes, that generally affect the industry in which the Company operates; (vi) any failure by us to meet internal projections, plans or forecasts for any period; (vii) changes or effects that directly arise out of or are directly attributable to the negotiation, execution, public announcement or performance of the management agreement or the compliance with provisions thereof; (viii) changes or effects that arise out of or are attributable to the commencement, occurrence, continuation or intensification of any war, sabotage, armed hostilities or acts of terrorism; and (ix) the effects of earthquakes, hurricanes or other natural disasters. Notice of termination of the management agreement must be provided within 90 days from the date we first became aware of the act of gross negligence, breach or other event that gave rise to the termination event.

Indemnification

We will agree to indemnify, defend and protect NSAM as asset manager and its directors, officers, employees, partners, managers, members, controlling persons and any other person or entity affiliated with NSAM as asset manager and hold NSAM harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Company, our stockholders or our subsidiaries) arising out of or otherwise based upon the performance of any of NSAM’s duties or obligations under the management agreement or otherwise as an asset manager of the Company or any of our subsidiaries.

Additional Covenants

In consideration of the services that NSAM will provide under the management agreement, we will grant NSAM a right to appoint one individual to serve as a non-voting observer of our board of directors and any committee thereof. This individual will be entitled to receive copies of all notices, correspondence and materials directed to the members of our board of directors, except in limited circumstances.

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EXECUTIVE COMPENSATION

Executive Officers

Our named executive officers are expected to be:



Name		Position
Mahbod Nia		Chief Executive Officer
Debra A. Hess		Interim Chief Financial Officer
Trevor K. Ross		General Counsel and Secretary

For all periods prior to December 31, 2014 and prior to the spin-off, we did not conduct business and our named executive officers have been employees of NorthStar Realty and/or NSAM and we did not pay compensation to any of our named executive officers. Accordingly, we did not have compensation policies or objectives governing our named executive officer compensation and we have not adopted compensation policies with respect to, among other things, setting base salaries, awarding bonuses or making future grants of equity awards to our executive officers. Following the spin-off, pursuant to the management agreement, NSAM will assume principal responsibility for managing our affairs and our officers, in their capacity as such, will not receive compensation directly from us other than as may be provided under the equity incentive plan described below pursuant to the terms of the management agreement or otherwise.

Equity Incentive Plan

Summary of Equity Incentive Plan

Our board of directors intends to adopt our 2015 Omnibus Stock Incentive Plan, or the 2015 Plan, which our sole stockholder also intends to approve. Our 2015 Plan provides flexibility to use various equity-based and cash incentive awards as compensation tools to motivate our workforce.

Initially, shares of our Common Stock have been reserved for the issuance of awards under the 2015 Plan. The number of shares of our Common Stock reserved under the 2015 Plan was based on the aggregate number of outstanding shares of common stock of NorthStar Realty on the date the 2015 Plan was adopted. The number of shares reserved under the 2015 Plan is subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization.

The shares we issue under the 2015 Plan will be authorized but unissued shares or shares that we reacquire. The shares of our Common Stock underlying any awards that are forfeited, canceled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without any issuance of stock, expire or are otherwise terminated (other than by exercise) under the 2015 Plan will be added back to the shares of our Common Stock available for issuance under the 2015 Plan.

Stock options and stock appreciation rights with respect to no more than shares of stock may be granted to any one individual in any one calendar year and the maximum “performance-based award” payable to any one individual under the 2015 Plan is shares of stock or $ in the case of awards payable in cash. The maximum aggregate number of shares that may be issued in the form of incentive stock options shall not exceed shares of our Common Stock.

The 2015 Plan provides that the value of all awards granted under the 2015 Plan and all other cash compensation paid by us to any non-employee director in any calendar year shall not exceed $ .

The 2015 Plan is currently administered by the compensation committee of the board of directors of NorthStar Realty. Following the completion of the spin-off, the 2015 Plan will be administered by our compensation committee. The administrator has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted and to determine the specific terms and conditions of each award, subject to the provisions of the 2015 Plan. Persons eligible to participate in the 2015 Plan are those executive officers, employees, co-employees, directors (including non-employee directors), consultants and advisors of the Company or any parent or subsidiary of the Company who provides services to the Company as selected from time to time by the administrator in its discretion.

The 2015 Plan permits the granting of both options to purchase our Common Stock intended to qualify as incentive stock options under Section 422 of the Code and options that do not so qualify. The exercise price of each stock option will be determined by the administrator but may not be less than 100% of the fair market value of our Common Stock on the date of grant or, in the case of an incentive stock option granted to a 10% owner, less than 110% of the fair market value of our Common Stock on the date of grant. The term of each stock option will be fixed by the administrator and may not exceed ten years from the date of grant (or five years in the case of an incentive stock option granted to a 10% owner). The administrator will determine at what time or times each option may be exercised.

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The administrator may award stock appreciation rights subject to such conditions and restrictions as it may determine. Stock appreciation rights entitle the recipient to shares of our Common Stock, or cash, equal to the value of the appreciation in our stock price over the exercise price. Stock appreciation rights may be granted either alone or in conjunction with all or part of any stock option granted under the 2015 Plan. The exercise price of each stock appreciation right may not be less than 100% of the fair market value of our Common Stock on the date of grant and the term of each stock appreciation right may not exceed ten years from the date of grant.

The administrator may award restricted shares of our Common Stock and restricted stock units to participants subject to such conditions and restrictions as it may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with us through a specified vesting period.

The administrator may grant dividend equivalent rights to participants either as a freestanding award or as a component of another award. Dividend equivalent rights entitle the recipient to receive credits for dividends that would be paid if the recipient held a specified number of shares of our Common Stock.

The administrator may grant other awards that are valued in whole or in part by reference to, or are otherwise calculated by reference to or based on, shares of our Common Stock including, without limitation: (i) operating partnership units and other membership interests in our Operating Partnership; (ii) other convertible, exchangeable or redeemable securities or equity interests; (iii) membership interests in a subsidiary or operating partnership; and (iv) awards valued by reference to book value, fair value or performance parameters relative to the Company or any subsidiary or group of subsidiaries. The terms of any other awards will be determined by the administrator. The administrator may also grant cash-based awards to participants subject to such conditions and restrictions as it may determine.

The administrator may grant awards of restricted stock, restricted stock units, other awards or cash-based awards under the 2015 Plan that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code. These awards will only vest or become payable upon the attainment of performance goals that are established by the administrator and related to one or more performance criteria. The performance criteria that could be used with respect to any such awards include: total stockholder return; cash available for distribution; earnings before interest, taxes, depreciation and amortization; net income (loss) (either before or after interest, taxes, depreciation and/or amortization or any other adjustment); changes in the market price of our Common Stock or stock of our manager; economic value-added; funds from operations or similar measure, including adjusted funds from operations and equity adjusted funds from operations; sales or revenue; acquisitions or strategic transactions; operating income (loss); cash flow (including, but not limited to, operating cash flow and free cash flow); return on capital, assets, equity, or investment; return on sales; liquidity; balance sheet liquidity; discounted payoff; gross or net profit levels; productivity; expense; margins; operating efficiency; working capital; earnings (loss) per share of our Common Stock or stock of our manager; sales or market share and assets under management, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group. The maximum award that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code that may be made to any one employee during any one calendar year period is shares of our Common Stock with respect to a stock-based award and $ with respect to an award payable in cash.

The 2015 Plan provides that in the case of, and subject to, the consummation of: (i) a merger, share exchange, reorganization or consolidation; or (ii) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person, all outstanding awards may be assumed, substituted or otherwise continued by the successor entity. To the extent that the successor entity does not assume, substitute or otherwise continue such awards: (i) except as otherwise provided in the applicable award agreement, all stock options and stock appreciation rights that are not exercisable immediately prior to the effective time of such transaction will become fully exercisable as of the effective time, the restrictions and conditions on all other awards with time-based vesting, conditions or restrictions will become fully vested and nonforfeitable as of the effective time and awards with conditions and restrictions relating to the attainment of performance goals may become vested and non-forfeitable in connection with such transaction in the administrator’s discretion; and (ii) upon the effectiveness of such transaction, the 2015 Plan and all outstanding awards thereunder will terminate. In the event of such termination, we may make or provide for a cash payment to participants holding options and stock appreciation rights, in exchange for the cancellation thereof, equal to the difference between the per share cash consideration in the transaction and the exercise price of the options or stock appreciation rights or each participant shall be permitted, within a specified period of time prior to the consummation of the sale event, as determined by the administrator, to exercise all outstanding options and stock appreciation rights held by such participant. In addition, in connection with such a transaction in which our Common Stock is exchanged for or converted into the right to receive cash, the parties to such transaction may provide that some or all outstanding awards that would otherwise not be fully vested and exercisable after giving effect to the transaction will be converted into the right to receive the per share cash consideration in the transaction multiplied by the number of shares subject to such awards (net of the applicable exercise price), subject to any remaining vesting provisions relating to such awards and other terms and conditions of such transaction to the extent provided by the parties thereto.

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Our board of directors may at any time amend or discontinue the 2015 Plan and the administrator may at any time amend or cancel any outstanding award for the purpose of satisfying changes in the law or for any other lawful purpose. However, no such action may adversely affect any rights under any outstanding award without the holder’s consent. Our board of directors, in its discretion, may determine to make any amendments subject to approval by our stockholders for purposes of complying with applicable stock exchange requirements, ensuring the qualified status of incentive options or ensuring that compensation earned under the 2015 Plan qualifies as performance-based compensation under Section 162(m) of the Code. In no event may the administrator reduce the exercise price of outstanding stock options or stock appreciation rights or effect the repricing of stock options or stock appreciation rights through cancellation and re-grants or cancellation in exchange for cash, other awards or stock options or stock appreciation rights with a lower exercise price without stockholder approval.

No awards may be granted under the 2015 Plan after the date that is ten years from the date of stockholder approval.

Compensation Committee Interlocks and Insider Participation

Upon completion of the spin-off, we do not anticipate that any of our executive officers will serve as a member of a compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our compensation committee.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Relationship Between NorthStar Realty, NSAM and Us After the Distribution

Following the Distribution, we will be an independent public company and NorthStar Realty will have no continuing ownership interest in us.

For purposes of governing the ongoing relationships between NorthStar Realty, NSAM and us after the Distribution and to provide for an orderly transition, NorthStar Realty, NSAM and we have entered or will enter into the agreements described in this section prior to the Distribution. In addition, we will be party to a management agreement with NSAM, which is further described above in “Corporate Governance and Management — Our Manager — Management Agreement.”

Certain of the agreements summarized in this section are or will be included as exhibits to the registration statement of which this prospectus forms a part and the following summaries of those agreements are qualified in their entirety by reference to the agreements as so filed.

Separation Agreement

We will enter into a separation agreement with NorthStar Realty which will set forth, among other things, our agreements with NorthStar Realty regarding the principal transactions necessary for NorthStar Realty to distribute our Common Stock. Under the separation agreement, NorthStar Realty will distribute our Common Stock to its common stockholders and our management and certain NorthStar Realty employees as a result of their ownership of certain equity awards of NorthStar Realty entitling them to the same benefits as holders of NorthStar Realty common stock.

The separation agreement will also set forth the other agreements that govern certain aspects of our relationship with NorthStar Realty after the Distribution date. These other agreements are described in additional detail below. A form of the separation agreement will be filed as an exhibit to the registration statement of which this prospectus forms a part and the following description of the separation agreement is qualified in its entirety by reference to the separation agreement as so filed.

Conditions to the Distribution

The separation agreement will provide that the Distribution is subject to the satisfaction of certain material conditions, including the following:


•	the SEC declaring effective our registration statement and no stop order suspending the effectiveness of the registration statement in effect and no proceedings for such purpose pending before or threatened by the SEC;


•	the transaction agreements relating to the Distribution having been duly executed and delivered by the parties;


•	no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution or any of the related transactions in effect;

•

the receipt by us of an opinion from Hunton & Williams LLP to the effect that, beginning with our taxable year ending December 31, 2015, we will be organized in conformity with the requirements for qualification as a REIT under the Code and our proposed method of operation will enable us to satisfy the requirements for qualification and taxation as a REIT under the U.S. federal income tax laws for our taxable year ending December 31, 2015 and subsequent taxable years; and


•	no event or development having occurred or existing that, in the judgment of the NorthStar Realty Board, in its sole discretion, makes it inadvisable to effect the Distribution and other related transactions.

Transfer of Assets and Assumption of Liabilities

The separation agreement will identify assets to be transferred, liabilities to be assumed and contracts to be performed by each of us and NorthStar Realty as part of the Distribution and it will provide for when and how these transfers, assumptions and assignments will occur.

Legal Matters

In general, NorthStar Realty will assume liability for all pending, threatened and unasserted legal claims relating to actions or omissions occurring prior to the Distribution and we will be responsible for all claims relating to actions or omissions occurring after the Distribution that relate to our business. To the extent a claim relates to a series of actions relating to our business occurring both before and after the Distribution, we will allocate liability for such claims between us and NorthStar Realty on a pro rata basis. In the event of any third-party claims that name both companies as defendants but that do not primarily relate to either our

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business or NorthStar Realty’s business, each party will cooperate with the other party to defend against such claims. Each party will cooperate in defending any claims against the other for events that are related to the Distribution, but may have taken place prior to, on or after such date.

Insurance

The separation agreement will provide for all pre-Distribution claims to be made under NorthStar Realty’s existing insurance policies and post-Distribution claims to be made under our insurance policies. In addition, the separation agreement will allocate between the parties the right to proceeds and the obligation to incur certain deductibles under certain insurance policies. On or prior to the Distribution date, we will be required to have in place all insurance programs to comply with our contractual obligations and as reasonably necessary for our business. NorthStar Realty will be required, subject to the terms of the agreement, to obtain certain director and officer insurance policies to apply against pre-Distribution claims.

Tax Matters

We have agreed to use our reasonable best efforts to qualify for taxation as a REIT for our taxable year ending December 31, 2015. NorthStar Realty has agreed to use its reasonable best efforts to maintain its REIT status for its taxable year ending December 31, 2015, unless NorthStar Realty obtains an opinion from a nationally recognized tax counsel or a private letter ruling from the IRS, on which we can rely, substantially to the effect that NorthStar Realty’s failure to maintain its REIT status will not prevent us from making a valid REIT election for any taxable year, or otherwise cause us to fail to qualify for taxation as a REIT for any taxable year, pursuant to Section 856(g)(3) of the Code. We have also agreed to use commercially reasonable efforts to cooperate with NorthStar Realty as necessary to enable NorthStar Realty to qualify for taxation as a REIT and receive customary legal opinions concerning our qualification and taxation as a REIT, including by providing information and representations to NorthStar Realty and its tax counsel with respect to the composition of our income and assets, the composition of the holders of our stock and our organization, operation and qualification as a REIT for our taxable year ending December 31, 2015.

We have also agreed to indemnify NorthStar Realty against all taxes attributable to the Distribution (other than taxes incurred by NorthStar Realty under Code section 311(b)). Additionally, we have agreed to indemnify NorthStar Realty against all taxes due with respect to NorthStar Realty, its subsidiaries, business or assets that are attributable to our failure to qualify as a REIT for our taxable year ending December 31, 2015, unless such failure was wholly or primarily attributable to NorthStar Realty, its subsidiaries, its business or its assets. NorthStar Realty has agreed to indemnify us against all taxes due with respect to us, our subsidiaries, our business and our assets relating to periods prior to the Distribution and for any taxes due with respect to us, our subsidiaries, our business and our assets that are attributable to NorthStar Realty’s failure to qualify as a REIT for its taxable year ending December 31, 2015 unless such failure was wholly or primarily attributable to us, our subsidiaries, our business or our assets.

Other Matters

Other matters governed by the separation agreement will include, but are not limited to, access to financial and other records and information, intellectual property, legal privilege, confidentiality, access to and provision of records and treatment of outstanding guarantees.

The separation agreement will also provide that NorthStar Realty will have the sole and absolute discretion to determine whether to proceed with the Distribution, including the form, structure and terms of any transactions to effect the Distribution and the timing of and satisfaction of conditions to the consummation of the Distribution.

Contribution Agreement

As part of the series of transactions described above under “ — Separation Agreement,” we will enter into a contribution agreement and related agreements with NorthStar Realty pursuant to which NorthStar Realty will contribute to our Operating Partnership, on or prior to the effective date of the contribution agreement, as the case may be, our European Real Estate Business , as set forth in the contribution agreement and $ in cash. Any additional expenses incurred in connection with the spin-off will be paid by NorthStar Realty. A form of the contribution agreement will be filed as an exhibit to the registration statement of which this prospectus forms a part and the preceding description of the contribution agreement is qualified in its entirety by reference to the contribution agreement as so filed.

Conflicts of Interest

As a result of the spin-off, our directors and executive officers may also be serving as directors, officers, employees, consultants or agents of NorthStar Realty, NSAM or any of its other managed companies and we may engage in material business transactions with such entities. Members of our board of directors and our executive officers may have conflicts of interest, or the appearance of conflicts of interest, with respect to matters, including business opportunities or legal proceedings, involving or

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affecting more than one of the companies to which they serve. Refer to “— Policy for Review of Related Party Transactions” below for a discussion of the policy that will be in place for dealing with potential conflicts of interest that may arise from our ongoing relationship with NorthStar Realty, NSAM and any of its other managed companies.

We will renounce our rights to certain business opportunities and our board of directors will enact resolutions that will provide that no director or officer of ours who is also serving as a director, officer, employee, consultant or agent of NorthStar Realty, NSAM or any of its other managed companies and their subsidiaries will be liable to us or our stockholders for breach of any 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 to be set forth in our charter or by resolution) to NorthStar Realty, NSAM or any of its other sponsored or managed companies and any of their subsidiaries instead of us, or does not refer or communicate information regarding such corporate opportunities to us. These resolutions will also expressly validate certain contracts, agreements, assignments and transactions (and amendments, modifications or terminations thereof) between us and NorthStar Realty, NSAM and its other sponsored or 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 duties owed to us, any of our subsidiaries or our respective stockholders. There can be no assurance that the terms of any such transactions will be as favorable to NorthStar Europe as would be the case where there is no overlapping director or executive officer. Refer to “Risk Factors — Risks Related to Our Manager — There will be conflicts of interest in our relationship with NSAM that could result in decisions that are not in the best interests of our stockholders” and “Certain Provisions of Maryland Law and of Our Charter and Bylaws — Certain Corporate Opportunities and Conflicts.”

Policy for Review of Related Party Transactions

Our current policy for the review of related party transactions is that all “disinterested” directors of our audit committee shall evaluate and consider for approval arrangements and relationships that may occur or exist between us, on the one hand, and our directors, our officers and certain persons or entities associated with such persons, on the other hand. Under the written policy, any transaction between us and any such related party (other than de minimis transactions), including, without limitation, any transaction that is required to be disclosed by us in any of our filed periodic reports or proxy statements, will be deemed to be a related party transaction. When reviewing and evaluating a related party transaction, each “disinterested” director of our audit committee may consider, among other things, any effect a transaction may have upon a director’s independence, whether the transaction involves terms and conditions that are no less favorable to us than those that could be obtained in a transaction between us and an unrelated third party and the nature of any director or officer’s involvement in the transaction. Our general counsel will notify the members of our audit committee promptly of new potential related party transactions and any material changes to previously approved or conditionally approved related party transactions.

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INVESTMENT POLICIES AND POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

Our Investment, Credit and Monitoring Process

Our investment process will combine intensive underwriting with a disciplined decision-making process. We intend to apply fundamental real estate analysis to credit decisions in each of our business lines. Our real estate analysis will be supplemented by financial modeling and stress testing to assess the performance of each specific investment under adverse conditions.

All investment opportunities will be evaluated based on the impact on aggregate portfolio composition and aggregate exposure, real estate market and economic conditions affecting the underlying properties, stability of the underlying property, cash flow and ability to cover debt service and/or expenses, attractiveness compared to alternative investment opportunities and ability to finance the investment with term funding and to minimize interest rate risk. If the investment is deemed to be appropriate, the specialists for the relevant business line will proceed with asset-level analysis, documentation review and financial modeling. They will be encouraged to seek input with respect to market information and pricing from their counterparts in other business lines.

The results of our analysis will be summarized in a memorandum and provided to an investment committee. All members of the investment committee will review prospective investments and may provide input into the investment decision. The specific approval level that is required will depend upon the size and type of the investment being made. After an investment is made, it will be monitored through our surveillance process. Our objective is to anticipate credit changes so that steps can be taken to protect our position or to liquidate investments prior to significant credit deterioration. Asset-level performance information will be updated regularly on our portfolio management system, which will incorporate both proprietary and third-party databases. Overall portfolio composition will be monitored to manage exposure to particular markets, sectors or credits. Each business line will produce a quarterly surveillance report that will be reviewed by the investment committee. If necessary, the committee may meet more frequently to discuss emerging issues within the portfolio and authorize specific actions.

Investment Policies

Investment Objectives

Our investment objective is to make real estate investments that produce attractive risk-adjusted returns and predictable cash flow for distribution to our stockholders. We expect to pursue our investment objectives primarily through the ownership by our Operating Partnership of interests in real estate investments. We intend to pursue diverse real estate investments that have the potential to generate favorable risk-adjusted returns, consistent with the maintenance of our status as a REIT for federal income tax purposes.

Investment Guidelines

Our board of directors will adopt general guidelines for our investments and borrowings to the effect that:


•	no investment shall be made which would cause us to fail to qualify as a REIT; and


•	no investment shall be made which would cause us to be regulated as an investment company.

These investment guidelines may be changed by our board of directors without the approval of our stockholders.

Investment in Real Estate

We may also participate with third parties in property ownership, through joint ventures or other forms of co-ownership. These investments may permit us to own interests in larger investments without unduly restricting diversification and, therefore, add flexibility in structuring our portfolio. We will not, however, enter into a joint venture or partnership to make an investment that would not otherwise meet our investment policies. Equity investments may be subject to existing mortgage financing and other indebtedness or other financing or indebtedness as may be incurred in connection with acquiring or refinancing these investments. Debt service on such financing or indebtedness will have a priority over any distributions with respect to our Common Stock. Investments are also subject to our policy not to be treated as an investment company under the Investment Company Act.

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Financing Policies

Our investment guidelines will not restrict the amount of borrowings that we may incur. We intend to use leverage in order to enhance our overall investment returns, while maintaining appropriate levels of leverage relative to our investments and the cost and structure of available financing. We intend to seek, where possible, to match the terms and interest rates of a substantial part of our assets and liabilities to minimize the differential between overall asset and liability maturities.

We plan to pursue a variety of financing arrangements such as mortgage notes and bank loans available from the CMBS market, finance companies and banks. In addition, we may use corporate-level financing such as credit facilities and other borrowings. We generally seek to limit our reliance on recourse borrowings. Borrowing levels for our investments may be dependent upon the nature of the investments and the related financing that is available.

For longer duration, relatively stable cash flow investments, such as those derived from net lease investments, we may use fixed rate financing. For investment cash flow with greater growth potential, we expect to use floating rate financing, which provides prepayment flexibility and may provide a better match between underlying cash flow projections and potential increases in interest rates. Where we use floating rate financing, we expect to generally attempt to mitigate the risk of interest rates rising through hedging arrangements including interest rate swaps and caps. We may vary the mix of fixed and floating rate debt and use a combination of the two when we deem it appropriate. We also may utilize corporate-level financing in the future.

We anticipate that the process of raising, investing and deploying equity capital will give rise to short-term fluctuations in the levels of leverage within each of our business lines and on an overall basis. Our objectives in utilizing leverage are to improve risk-adjusted returns and, where possible, to lock in, on a long-term non-recourse basis, a spread between the yield on our investments and the cost of their financing. For further information regarding our financing, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Sources of Operating Revenues and Cash Flows.”

Our financing policies may be changed by our board of directors and executive officers without the approval of our stockholders.

Hedging Policies

We may use derivative instruments primarily to manage the risk of interest rate and foreign currency fluctuations. We may use forward or option foreign currency purchase contracts, interest rate swaps, interest rate caps, short sales of securities, options or other hedging instruments in order to implement our hedging strategy. The counterparties to these arrangements are major financial institutions with which we may also have other financial relationships.

Creating an effective strategy for dealing with interest rate and foreign currency movements is complex and no strategy can completely insulate us from risks associated with such fluctuations. There can be no assurance that our hedging activities will have the intended impact on our results. A more detailed discussion of our hedging policy is provided in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations — Quantitative and Qualitative Disclosures About Market Risk.”

Policies with Respect to Other Activities

We will have the authority to offer our Common Stock, preferred stock or options to purchase stock in exchange for property and to repurchase or otherwise acquire our Common Stock or other securities in the open market or otherwise, and we may engage in such activities in the future. We expect, but are not obligated, to issue shares of our Common Stock to holders of operating partnership units in our Operating Partnership upon exercise of their redemption rights. We may issue preferred stock from time to time, in one or more series, as authorized by our board of directors without the need for stockholder approval. We have not engaged in trading, underwriting or agency distribution or sale of securities of other issuers other than our Operating Partnership and do not intend to do so. We have not in the past, but we may in the future, invest in the securities of other issuers for the purpose of exercising control over such issuers. At all times, we intend to make investments in such a manner as to qualify as a REIT, unless because of circumstances or changes in the Code or the regulations of the U.S. Department of the Treasury, our board of directors determines that it is no longer in our best interest to qualify as a REIT. Except as described in this prospectus , we have not made any loans to third parties, although we may in the future make loans to third parties, including, without limitation,

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to joint ventures in which we participate. We intend to make investments in such a way that we will not be treated as an investment company under the Investment Company Act. We also intend to furnish our stockholders with annual reports containing consolidated financial statements audited by our independent certified public accountants and with quarterly reports containing unaudited consolidated financial statements for each of the first three quarters of each fiscal year. Our policies with respect to such activities may be reviewed and modified or amended from time to time by our board of directors without a vote of our stockholders.

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OUR OPERATING PARTNERSHIP

NorthStar Realty Europe Limited Partnership has been organized as a Delaware limited partnership. We are the general partner. The purpose of our Operating Partnership includes the conduct of any business that may be lawfully conducted by a limited partnership formed under the Delaware Revised Uniform Limited Partnership Act, or the DRULPA, except that the partnership agreement of our Operating Partnership requires the business of our Operating Partnership to be conducted in such a manner that will permit us to qualify as a REIT under federal tax laws. The following summary of material provisions of our Operating Partnership agreement is subject to, and is qualified in its entirety by reference to, all the provisions of our operating partnership agreement and applicable provisions of the DRULPA. We have incorporated by reference the partnership agreement as an exhibit to the registration statement of which this prospectus is a part.

General

Pursuant to the operating partnership agreement, the general partner, as the sole general partner of our Operating Partnership, has full, exclusive and complete responsibility and discretion in the management and control of our Operating Partnership. The limited partners of our Operating Partnership have no authority in their capacity as limited partners to transact business for, or participate in the management activities or decisions of, our Operating Partnership except as required by applicable law. Consequently, we, by virtue of our position as the general partner, control the assets and business of our Operating Partnership. However, any amendment to the operating partnership agreement that would: (i) affect the redemption rights; (ii) adversely affect the limited partners’ rights to receive cash distributions; (iii) convert a limited partner interest into a general partner interest; or (iv) modify the limited liability of a limited partner, will require the consent of each partner adversely affected thereby or else shall be effective against only those partners who shall have consented thereto.

Operations

The operating partnership agreement requires that our Operating Partnership be operated in a manner that will enable us to satisfy the requirements for being classified as a REIT for federal tax purposes, to avoid any federal income or excise tax liability imposed by the Code, and to ensure that our Operating Partnership will not be classified as a “publicly traded partnership” for purposes of section 7704 of the Code.

In addition to the administrative and operating costs and expenses incurred by our Operating Partnership, it is anticipated that our Operating Partnership will pay all of our administrative costs and expenses and our expenses will be treated as expenses of our Operating Partnership. Our expenses generally will include: (i) expenses relating to the ownership of interests in and management and operation of, or for the benefit of, our Operating Partnership; (ii) compensation of our officers; (iii) fees and expenses of our directors; and (iv) all costs and expenses of us being a public company, including costs of filings with the SEC reports and other distributions to our stockholders.

Distributions

The operating partnership agreement provides that our Operating Partnership shall distribute cash from operations (including net sale or refinancing proceeds, but excluding net proceeds from the sale of our Operating Partnership’s property in connection with the liquidation of our Operating Partnership) on a quarterly (or, at the election of the general partner, more frequent) basis, in amounts determined by the general partner in its sole discretion, to the partners in accordance with their respective percentage interests in our Operating Partnership. Upon liquidation of our Operating Partnership, after payment of, or adequate provision for, debts and obligations of our Operating Partnership, including any partner loans, it is anticipated that any remaining assets of our Operating Partnership will be distributed to all partners with positive capital accounts in accordance with their respective positive capital account balances. If the general partner has a negative balance in its capital account following a liquidation of our Operating Partnership, it will be obligated to contribute cash to our Operating Partnership equal to the negative balance in its capital account.

Allocations

It is anticipated that income, gain and loss of our Operating Partnership for each fiscal year generally will be allocated among the partners in accordance with their respective interests in our Operating Partnership, subject to compliance with the provisions of sections 704(b) and 704(c) of the Code and Treasury regulations promulgated thereunder.

Capital Contributions and Borrowings

The partnership agreement provides that if the partnership requires additional funds at any time in excess of funds available to the partnership from borrowing or capital contributions, we may borrow such funds from a financial institution or other lender and lend such funds to the partnership. Under the partnership agreement, we are obligated to contribute the proceeds of any offering of shares of our Common Stock as additional capital to our Operating Partnership.

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Issuance of Additional Limited Partnership Interests

We are authorized, without the consent of the limited partners, to cause our Operating Partnership to issue additional units to us, to the limited partners or to other persons for such consideration and on such terms and conditions as we deem appropriate. If additional units are issued to us, then we must: (i) issue additional shares of common stock and must contribute to our Operating Partnership the entire proceeds received by us from such issuance; or (ii) issue additional units to all partners in proportion to their respective interests in our Operating Partnership. In addition, we may cause our Operating Partnership to issue to us additional partnership interests in different series or classes, which may be senior to the units, in conjunction with an offering of our securities having substantially similar rights, in which the proceeds thereof are contributed to our Operating Partnership. Consideration for additional partnership interests may be cash or other property or assets. No person, including any partner or assignee, has preemptive, preferential or similar rights with respect to additional capital contributions to our Operating Partnership or the issuance or sale of any partnership interests therein.

The operating partnership may issue units of limited partnership interest that are common units or LTIP Units. The operating partnership also has the authority to issue additional units of limited partnership interest that are preferred as to distributions and upon liquidation to the Operating Partnership units which we refer to as preferred operating partnership units.

LTIP Units

Our operating partnership is also authorized to issue LTIP Units. In general, an LTIP Unit will receive the same quarterly per unit distributions as a common unit. Initially, each LTIP Unit will have a capital account balance of zero and, therefore, will not have full parity with common units with respect to liquidating distributions. However, the partnership agreement provides that “book gain,” or economic appreciation, in our assets realized by our Operating Partnership as a result of the actual sale of all or substantially all of our Operating Partnership’s assets or the revaluation of our Operating Partnership’s assets as provided by applicable Treasury regulations, will be allocated first to the LTIP Unit holders until the capital account per LTIP Unit is equal to the average capital account per-unit of our common units in our Operating Partnership. The partnership agreement provides that our Operating Partnership’s assets will be revalued upon the occurrence of certain events, specifically additional capital contributions by us or other partners, the redemption of a partnership interest, a liquidation (as defined in the Treasury regulations) of our Operating Partnership or the issuance of a partnership interest (including LTIP Units) to a new or existing partner as consideration for the provision of services to, or for the benefit of, our Operating Partnership.

Upon equalization of the capital accounts of the LTIP Units with the average per-unit capital account or our common units, the LTIP Units will achieve full parity with the common units for all purposes, including with respect to liquidating distributions. If such parity is reached and the LTIP Units have vested under the terms of the agreement granting the LTIP Units, then the LTIP Units, subject to the terms and conditions of the partnership agreement, may be converted into an equal number of common units at any time, and thereafter enjoy all the rights of common units. If a sale or revaluation of assets occurs at a time when our Operating Partnership’s assets have appreciated sufficiently since the last revaluation, the LTIP Units would achieve full parity with the common units upon such sale or revaluation. In the absence of sufficient appreciation in the value of our Operating Partnership’s assets at the time of a sale or revaluation, full parity would not be reached.

Consequently, an LTIP Unit may never become convertible because the value of our Operating Partnership’s assets has not appreciated sufficiently between revaluation dates to equalize capital accounts. Until and unless parity is reached, the value for a given number of vested LTIP Units will be less than the value of an equal number of shares of our Common Stock.

Redemption Rights

Pursuant to our operating partnership agreement, the limited partners have the right to cause our Operating Partnership to redeem their common units for cash or, at the election of the general partner, shares of our Common Stock on a one-for-one basis beginning one year after the issuance of such common units. We expect, but are not obligated, to issue shares of our Common Stock to holders of common units in our Operating Partnership upon exercise of their redemption rights. The redemption price will be paid in cash in our discretion or in the event that the issuance of shares of our Common Stock to the redeeming limited partner would: (i) result in any person owning, directly or indirectly, shares of our Common Stock in excess of 9.8% in value or number of shares, whichever is more restrictive, of the aggregate of the outstanding shares of our Common Stock, or more than 9.8% in value of the aggregate of the outstanding shares of our stock; (ii) result in shares of our securities being owned by fewer than 100 persons (determined without reference to any rules of attribution); (iii) result in our being “closely held” within the meaning of section 856(h) of the Code; (iv) cause us to own, actually or constructively, 9.9% or more of the ownership interests in a tenant of our or our Operating Partnership’s real property, within the meaning of section 856(d)(2)(B) of the Code; or (v) cause the acquisition of shares of our Common Stock by such redeeming limited partner to be “integrated” with any other distribution of shares of our Common Stock for purposes of complying with the Securities Act. Specifically, the partnership agreement prohibits all limited partners from redeeming their common units for a period of one year from the date of issuance.

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No Removal of the General Partner

We may not be removed as general partner by the partners with or without cause, except with the consent of the general partner.

Withdrawal of General Partner; Transfer of General Partner’s Interests

The general partner may not withdraw from our Operating Partnership or transfer or assign its interest in our Operating Partnership unless: (i) the interests are transferred to a qualified REIT subsidiary; (ii) the limited partners holding a majority of the outstanding partnership interests held by all limited partners consent; or (iii) the general partner merges with another entity and, immediately after such merger, the surviving entity contributes substantially all of its assets, other than the general partner’s interests in our Operating Partnership, to our Operating Partnership in exchange for operating partnership units.

Restrictions on Transfer of Operating Partnership Units by Limited Partners

The operating partnership agreement imposes certain restrictions on the transfer of units. The operating partnership agreement provides that no limited partner shall transfer all or any portion of its partnership interest to any transferee prior to the one-year anniversary following the consummation of the IPO without the consent of the general partner, which consent may be withheld in its sole and absolute discretion; provided, however, that any limited partner may, at any time without the consent of the general partner: (i) transfer all or part of its partnership interest to any family member, any controlled entity or any affiliate, provided that the transferee is, in any such case, a qualified transferee; or (ii) pledge all or any portion of its partnership interest to a lending institution, that is not an affiliate of such limited partner, as collateral or security for a bona fide loan or other extension of credit, and transfer such partnership interest to such lending institution in connection with the exercise of remedies under such loan or extension or credit. After the one-year anniversary of the consummation of the IPO, each limited partner, and each transferee of partnership interests or assignee pursuant to a permitted transfer, shall have the right to transfer all or any portion of its partnership interest to any person, subject to the provisions of our operating partnership agreement.

No limited partner shall have the right to substitute a transferee as a limited partner in its place. A transferee of the interest of a limited partner may be admitted as a substituted limited partner only with the consent of the general partner which consent may be given or withheld by the general partner in its sole and absolute discretion.

Term

We intend to form our operating partnership prior to the Distribution and expect it to continue until terminated as provided in our operating partnership agreement or by operation of law.

Tax Matters

Pursuant to our operating partnership agreement, the general partner is the tax matters partner of our Operating Partnership and, as such, has authority to handle tax audits and to make tax elections under the Code on behalf of our Operating Partnership.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Beneficial Ownership of Stock

The following table shows the number and percentage of shares of our Common Stock that will be owned of record and beneficially immediately following the time of the Distribution with respect to:


•	each director and director nominee;


•	each of our named executive officers;


•	each person or group of affiliated persons that is the beneficial owner of 5% or more of our Common Stock; and


•	all of our directors, director nominees and executive officers as a group.

All information in the table is based upon information available to us as of , 2015 as to the ownership of our Common Stock and is presented as if the Distribution has occurred prior to the dates of ownership information used in the table.



	Amount and Nature of Beneficial Ownership ⁽¹⁾
Name and Address of Beneficial Owner	Number	Percentage
Principal Stockholders:
The Vanguard Group
Directors and Executive Officers:
David T. Hamamoto
Mahbod Nia
Debra A. Hess
Trevor K. Ross
All directors and executive officers as a group

____________

*Less than one percent.

(1)

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. In accordance with SEC rules, each listed person’s beneficial ownership includes all shares the investor actually owns beneficially or of record; all shares over which the investor has or shares direct or indirect voting or dispositive control (such as in the capacity as a general partner of an investment fund); and all shares over which the investor has the right to acquire direct or indirect voting or dispositive control within 60 days (such as restricted shares of our Common Stock that are currently vested or which are scheduled to vest within 60 days). Unless otherwise described in a footnote below, number reflects shares of our Common Stock.

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SHARES ELIGIBLE FOR FUTURE SALE

Sales or the availability for sale of substantial amounts of our Common Stock in the public market could adversely affect the prevailing market price for such stock. As of , 2015, there were approximately record holders of NorthStar Realty common stock. Upon completion of the Distribution, we will have outstanding an aggregate of approximately million shares of our Common Stock based upon the approximately million shares of NorthStar Realty common stock outstanding on , 2015. All of the shares of our Common Stock will be freely tradable without restriction, subject to the limitations on ownership set forth in our charter, and without further registration under the Securities Act unless the shares are owned by our “affiliates” as that term is defined in the rules under the Securities Act. For a more detailed discussion of restrictions on transfer of our Common Stock, refer to “Description of Capital Stock — Restrictions on Transfer and Ownership of our Common Stock.” Shares of our Common Stock held by “affiliates” may be sold in the public market only if registered or if they qualify for an exemption from registration or in compliance with Rule 144 under the Securities Act, which is summarized below.

Rule 144

In general, under Rule 144 of the Securities Act as currently in effect, an affiliate would be entitled to sell within any three-month period a number of shares of our Common Stock that does not exceed the greater of:


•	one percent of the number of shares of our Common Stock then outstanding; or


•	the average weekly trading volume of our Common Stock on the stock exchange on which our Common Stock will be listed, which we expect to be the NYSE, during the four calendar weeks preceding the filing of a notice of Form 144 with respect to such sale.

Sales under Rule 144 are also subject to certain holding period requirements, manner of sale provisions and notice requirements and to the availability of current public information about us.

Stock Awards

We expect to establish an equity incentive plan, pursuant to which we may grant an aggregate of restricted shares of our Common Stock to our non-employee directors. Refer to “Executive Compensation — Equity Incentive Plan” for additional information.

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DESCRIPTION OF CAPITAL STOCK

Our charter will be amended and restated prior to the spin-off, which we refer to, as amended and restated, as our charter. The following is a summary of the material terms of our capital stock that will be contained in our charter and bylaws. The summaries and descriptions below do not purport to be complete statements of the relevant provisions of our charter or our bylaws to be in effect at the time of the spin-off and are qualified in their entirety by reference to these documents, which you should read (along with the applicable provisions of Maryland law) for complete information on our capital stock as of the time of the spin-off. Our charter and bylaws to be in effect at the time of the spin-off will be included as exhibits to our registration statement of which this prospectus forms a part and this summary is qualified in its entirety by such exhibits.

General

We are currently authorized to issue up to 1,000,000,000 shares of our Common Stock. Prior to the Distribution, we will amend and restate our charter to provide authorization for us to issue up to 200,000,000 shares of shares of preferred stock, par value $0.01 per share, or our Preferred Stock, in addition to the 1,000,000,000 shares of our Common Stock authorized. In addition, our charter will authorize a majority of our entire board of directors, without stockholder approval, to amend our charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that NorthStar Europe is authorized to issue.

On June 18, 2015, the Company issued 100 shares of our Common Stock to NorthStar Realty for $1,000, which are the only shares of our Common Stock currently issued and outstanding.

Common Stock

All shares of our Common Stock currently outstanding are duly authorized, validly issued, fully paid and non-assessable, not subject to redemption and without preemptive or other rights to subscribe for or purchase any proportionate part of any new or additional issues of stock of any class or of securities convertible into stock of any class. Holders of our Common Stock will be entitled to receive dividends when authorized by our board of directors and declared by us out of assets legally available for the payment of dividends. They are also entitled to share ratably in our assets legally available for distribution to our stockholders in the event of our liquidation, dissolution or winding up, after payment of or adequate provision for all of our known debts and liabilities, including the liquidation preferences of any shares of Preferred Stock. These rights will be subject to the preferential rights of any other class or series of our stock and to the provisions of our charter regarding restrictions on transfer and ownership of our stock.

Subject to our contemplated charter restrictions on transfer and ownership of our stock, each outstanding share of our Common Stock will entitle the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors. Except as expressly provided with respect to any other class or series of our stock, the holders of our Common Stock will possess the exclusive voting power on all matters submitted to a vote of stockholders. There will not be cumulative voting in the election of directors, which means that the holders of a majority of the outstanding shares of our Common Stock will be able to elect all of the directors then standing for election and the holders of the remaining shares will not be able to elect any directors.

Holders of our Common Stock will have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and will have no preemptive rights to subscribe for any of our securities. Subject to our contemplated charter restrictions on transfer and ownership of stock, all shares of our Common Stock will have equal dividend, liquidation and other rights.

Under Maryland law, a Maryland corporation generally cannot dissolve, amend its charter, merge or consolidate with or convert into another entity, sell all or substantially all of its assets or engage in a statutory share exchange unless approved by the affirmative vote of stockholders holding at least two-thirds of all the votes entitled to be cast on the matter. However, a Maryland corporation may provide in its charter for approval of these matters by a lesser percentage, but not less than a majority of all of the votes entitled to be cast on the matter. Our charter will provide that these matters (other than certain amendments to the provisions of our charter relating to the removal of directors and charter amendments) may be approved by a majority of all of the votes entitled to be cast on the matter. Also, because many of our assets may be held by subsidiaries, these subsidiaries may be able to merge or sell all or substantially all of their assets without the approval of our stockholders.

Transfer Agent and Registrar

The transfer agent and registrar for our Common Stock is American Stock Transfer & Trust Company, LLC.

Preferred Stock

Our charter authorizes our board of directors to classify any unissued shares of Preferred Stock and to reclassify any previously classified but unissued shares of any class or series of stock, as authorized by our board of directors. Prior to issuance

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of shares of each class or series, our board of directors is required by the MGCL and will be required by our charter to set, subject to the contemplated provisions of our charter regarding the restrictions on transfer and ownership of stock, the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each such class or series. Thus, our board of directors could authorize the issuance of shares of Preferred Stock with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control of NorthStar Europe that might involve a premium price for holders of our Common Stock or otherwise be in their best interest. As of the date hereof, no shares of Preferred Stock are outstanding and we have no present plans to issue any Preferred Stock.

Restrictions on Transfer and Ownership of our Common Stock

For us to qualify as a REIT under the Code, our stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of twelve months or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of our outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year.

Our charter contains restrictions on the number of shares of our stock that a person may own. No person, including entities, may acquire or hold, directly or indirectly, in excess of 9.8% in value of the aggregate of the outstanding shares of our stock. In addition, no person, including entities, may acquire or hold, directly or indirectly, our Common Stock in excess of 9.8% (in value or number, whichever is more restrictive) of the aggregate of the outstanding shares of our Common Stock.

Our charter further prohibits: (i) any person from beneficially or constructively owning shares of our stock that would result in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of the taxable year) or otherwise cause us to fail to qualify as a REIT (including, but not limited to, beneficial or constructive ownership that would result in our owning (directly or indirectly) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by us from such tenant would cause us to fail to satisfy any of the gross income requirements of Section 856(c) of the Code); and (ii) any person from transferring shares of our stock if the transfer would result, if effective, in our stock being owned by fewer than 100 persons. Any person who acquires or who attempts or intends to acquire shares of our stock that may violate any of these restrictions or who is the intended transferee of shares of our stock which are transferred to the trust is required to give us immediate written notice, or in the case of a proposed or attempted transaction, give at least 15 days prior written notice, and provide us with such information as we may request in order to determine the effect, if any, of the transfer on our qualification as a REIT.

The above restrictions will not apply if our board of directors determines that it is no longer in our best interests to continue to qualify as a REIT (or that compliance is no longer required for REIT qualification). Our board of directors, in its sole discretion, may exempt (prospectively or retroactively) a person from these limits, subject to such terms, conditions, representations and undertakings as it may determine and as are contained in our charter.

Any attempted transfer of shares of our stock that would result in shares of our stock being owned by fewer than 100 persons will be null and void, and the intended transferee shall acquire no rights in such shares. Any attempted transfer of our stock which, if effective, would result in any other violation of the above limitations, will cause the number of shares causing the violation (rounded to the nearest whole share) to be automatically transferred to a trust for the exclusive benefit of one or more charitable beneficiaries and the proposed transferee will not acquire any rights in the shares. If the automatic transfer to the trust would not be effective for any reason to prevent the violation of the above limitations, then the transfer of that number of shares of stock that otherwise would cause the violation will be null and void, and the proposed transferee will not acquire any rights in the shares. The automatic transfer will be deemed to be effective as of the close of business on the business day (as defined in our charter) prior to the date of the purported transfer. Shares of our stock held in the trust will be issued and outstanding shares. The proposed transferee will not benefit economically from ownership of any shares of stock held in the trust, will have no rights to dividends or other distributions and no rights to vote or other rights attributable to the shares of stock held in the trust. The trustee of the trust will have all voting rights and rights to dividends or other distributions with respect to shares held in the trust. These rights will be exercised for the exclusive benefit of the charitable beneficiary. Any dividend or other distribution paid prior to our discovery that shares of stock have been transferred to the trust must be paid by the recipient to the trustee upon demand. Any dividend or other distribution authorized but unpaid will be paid when due to the trustee. Any dividend or distribution paid to the trustee will be held in trust for the charitable beneficiary. Subject to Maryland law, effective as of the date that the shares of stock are transferred to the trust, the trustee will have the authority, at the trustee’s discretion, to: (i) rescind as void any vote cast by the proposed transferee prior to our discovery that the shares have been transferred to the trust; and (ii) recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary. However, if we have already taken irreversible corporate action, then the trustee will not have the authority to rescind and recast the vote. If necessary to protect our qualification as a REIT, we may establish additional trusts with distinct trustees and charitable beneficiaries to which shares may be transferred.

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Furthermore, our charter grants our board of directors the authority to take other actions, including the redemption of shares of stock, that it deems advisable to prevent a violation of the transfer and ownership restrictions described above.

Within 20 days of receiving notice from us that shares of our stock have been transferred to the trust, the trustee will sell the shares to a person designated by the trustee, whose ownership of the shares will not violate the above ownership limitations. Upon the sale, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the proposed transferee and to the charitable beneficiary as follows. The proposed transferee will receive the lesser of: (i) the price paid by the proposed transferee for the shares or, if the proposed transferee did not give value for the shares in connection with the event causing the shares to be held in the trust ( e.g. , a gift, devise or other similar transaction), the market price (as defined in our charter) of the shares on the day of the event causing the shares to be held in the trust and (ii) the price received by the trustee, net of any commission and other expenses of sale, from the sale or other disposition of the shares held in trust. Any net sale proceeds in excess of the amount payable to the proposed transferee will be paid immediately to the charitable beneficiary. If, prior to our discovery that shares of our stock have been transferred to the trust, the shares are sold by the proposed transferee, then: (i) the shares shall be deemed to have been sold on behalf of the trust; and (ii) to the extent that the proposed transferee received an amount for the shares that exceeds the amount he was entitled to receive, the excess shall be paid to the trustee upon demand.

In addition, shares of our stock held in the trust will be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser of: (i) the price per share in the transaction that resulted in the transfer to the trust (or, in the case of a devise or gift, the market price at the time of the devise or gift); and (ii) the market price on the date we, or our designee, accept the offer. We will have the right to accept the offer until the trustee has sold the shares. Upon a sale to us, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the proposed transferee.

All certificates representing shares of our stock will bear a legend referring to the restrictions described above.

Every owner of 5% or more (or such lower percentage as required by the Code or the regulations promulgated thereunder) of our outstanding stock is required, within 30 days after the end of each taxable year, to give us written notice stating his name and address, the number of shares of each class and series of our stock which he beneficially owns and a description of the manner in which the shares are held. Each such owner shall provide us with such additional information as we may request in order to determine the effect, if any, of his beneficial ownership on our qualification as a REIT and to ensure compliance with the ownership limits. In addition, each stockholder shall upon demand be required to provide us with such information as we may request in good faith in order to determine our qualification as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance.

These restrictions on ownership and transfer could delay, defer or prevent a transaction or a change in control that might involve a premium price for our Common Stock or otherwise be in the best interest of the stockholders.

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CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS

The following description of the terms of certain provisions of Maryland law and our charter and bylaws is only a summary. The summaries and descriptions below do not purport to be complete statements of the relevant provisions of our charter or our bylaws to be in effect at the time of the spin-off and are qualified in their entirety by reference to these documents, which you should read (along with the applicable provisions of Maryland law). Our charter and bylaws to be in effect at the time of the spin-off will be included as exhibits to our registration statement of which this prospectus forms a part and this summary is qualified in its entirety by such exhibits.

Our Board of Directors

Our charter and bylaws will provide that, subject to the rights of holders of one or more classes or series of preferred stock, the number of our directors may be established by our board of directors but may not be fewer than the minimum required by the MGCL (which is currently one) nor more than 15. Any vacancy will be filled, at any regular meeting or at any special meeting called for that purpose, by a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum.

Removal of Directors

Our charter will provide that, subject to the rights of holders of one or more classes or series of preferred stock, a director may be removed only by the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of directors. This provision, when coupled with the provisions that will be included in our charter and bylaws authorizing our board of directors to fill vacant directorships, will preclude stockholders from removing incumbent directors (except by a substantial affirmative vote) and filling the vacancies created by the removal with their own nominees.

Business Combinations

Under Maryland law, “business combinations” between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as:


•	any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s outstanding voting stock; or


•	an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then outstanding voting stock of the corporation.

A person is not an interested stockholder under the statute if our board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. In approving a transaction, our board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by our board of directors of the corporation and approved by the affirmative vote of at least:


•	80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and


•	two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.

These super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

The statute provides various exemptions from its provisions, including for business combinations that are exempted by the board of directors before the time that the interested stockholder becomes an interested stockholder. Pursuant to the statute, our board of directors has, by resolution, exempted any business combinations: (i) between us and NSAM, any of its affiliates or any of their sponsored or other managed companies; and (ii) between us and any person, provided that any such business combination is first approved by our board of directors (including a majority of our directors who are not affiliates or associates of such person).

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Consequently, the five-year prohibition and the supermajority vote requirements will not apply to business combinations between NorthStar and any of them. As a result, such parties may be able to enter into business combinations with NorthStar that may not be in the best interest of our stockholders, without compliance with the super-majority vote requirements and the other provisions of the statute. The board of directors may revise, repeal or amend these resolutions at any time.

The business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.

Control Share Acquisitions

Maryland law provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by the affirmative vote of holders entitled to cast two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquiror, by officers or by directors who are employees of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power:


•	one-tenth or more but less than one-third;


•	one-third or more but less than a majority; or


•	a majority or more of all voting power.

Control shares do not include shares that the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval or shares acquired directly from the corporation. A control share acquisition means the acquisition of issued and outstanding control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the corporation to redeem control shares is subject to certain conditions and limitations. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or, if a meeting of stockholders is held at which the voting rights of the shares are considered and not approved, as of the date of the meeting. If voting rights for control shares are approved at a stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition.

The control share acquisition statute does not apply: (i) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction; or (ii) to acquisitions approved or exempted by the charter or bylaws of the corporation.

Our bylaws will contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of our stock. This provision may be amended or eliminated at any time in the future.

Amendment to Our Charter

Our charter will provide that, except for provisions relating to removal of directors and certain charter amendments related thereto, it may be amended only if such amendment is declared advisable by our board of directors and, to the extent stockholder approval is required, approved by the affirmative vote of the holders of not less than a majority of all of the votes entitled to be cast on the matter.

Dissolution

Our charter will provide that our dissolution must be declared advisable by our board of directors and approved by the affirmative vote of the holders of not less than a majority of all of the votes entitled to be cast on the matter.

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Subtitle 8

Subtitle 8 of Title 3 of the MGCL, or Subtitle 8, permits a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in our charter or bylaws, to any or all of five provisions:


•	a classified board;


•	a two-thirds vote requirement for removing a director;


•	a requirement that the number of directors be fixed only by vote of the directors;


•	a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the class of directors in which the vacancy occurred; and


•	a majority requirement for the calling of a stockholder-requested special meeting of stockholders.

Our charter makes the election to be subject to the provisions of Subtitle 8 relating to the filling of vacancies on our board of directors. Through provisions in our charter and bylaws unrelated to Subtitle 8, we will: (i) require a two-thirds vote for the removal of any director from our board of directors; (ii) vest in our board of directors the exclusive power to fix the number of directorships and fill vacancies on our board of directors; and (iii) require, unless called by our chairman of the board, president, chief executive officer or our board of directors, the request of holders of a majority of outstanding shares to call a special meeting. Our charter will prohibit us from classifying our board of directors through an election under Subtitle 8 of Title 3 of the MGCL. In the future, our board of directors may elect, without stockholder approval, to be subject to the other provisions of Subtitle 8.

Advance Notice of Director Nominations and New Business

Our bylaws will provide that with respect to an annual meeting of stockholders, nominations of persons for election to our board of directors and the proposal of business to be considered by stockholders may be made only: (i) pursuant to our notice of the meeting; (ii) by or at the discretion of our board of directors; or (iii) by a stockholder of record, both at the time of giving notice and at the time of the annual meeting, who is entitled to vote at the meeting in the election of directors and who has complied with the advance notice procedures of our bylaws. With respect to special meetings of stockholders, only the business specified in our notice of the meeting may be brought before the meeting. Nominations of persons for election to our board of directors at a special meeting may be made only: (i) by our board of directors; or (ii) provided that the special meeting has been called in accordance with our bylaws for the purposes of electing directors, by a stockholder of record, both at the time of giving notice and at the time of the special meeting, who is entitled to vote at the meeting in the election of directors and who has complied with the advance notice provisions of our bylaws.

Anti-Takeover Effect of Certain Provisions of Maryland Law and of Our Charter and Bylaws

The business combination provisions and, if the applicable provision that will be included in our bylaws is rescinded, the control share acquisition provisions of Maryland law, the provisions that will be included in our charter relating to removal of directors and filling vacancies on our board, the restrictions on ownership and transfer of our shares and the advance notice provisions that will be included in our bylaws could delay, defer or prevent a transaction or a change in the control of us that might involve a premium price for holders of our Common Stock or otherwise be in their best interest.

Exclusive Forum

Our bylaws will provide will that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, shall be the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of NorthStar Europe; (ii) any action asserting a claim of breach of any duty owed by any director or officer or other employee of NorthStar Europe to NorthStar Europe or to the stockholders of NorthStar Europe; (iii) any action asserting a claim against NorthStar Europe or any director or officer or other employee of NorthStar Europe arising pursuant to any provision of the MGCL or the charter or bylaws of NorthStar Europe; or (iv) any action asserting a claim against NorthStar Europe or any director or officer or other employee of NorthStar Europe that is governed by the internal affairs doctrine.

Certain Corporate Opportunities and Conflicts

Certain of our executive officers are also executive officers of NorthStar Realty, NSAM and certain of NSAM’s other managed companies. Certain of our directors are also directors of NorthStar Realty, NSAM and certain of NSAM’s other managed companies. Our board of directors will enact resolutions that will recognize that certain directors and officers of the Company, or

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the Overlap Persons, may serve as directors, officers, employees, consultants and agents of NorthStar Realty and its subsidiaries and successors, NSAM and/or NSAM’s other managed companies and their subsidiaries and successors, each of the foregoing referred to as an Other Entity, and will provide that if a director or officer of the Company who is an Overlap Person is presented or offered, or otherwise acquires knowledge of, a potential transaction or matter that may constitute or present a business opportunity for the Company or any of our subsidiaries, in which the Company or any of our subsidiaries could have an interest or expectancy (any such transaction or matter, and any such actual or potential business opportunity, referred to as a Potential Business Opportunity): (i) such director or officer will, to the fullest extent permitted by law, have no duty or obligation to refrain from referring such Potential Business Opportunity to any Other Entity and, if such director or officer refers such Potential Business Opportunity to an Other Entity, such director or officer shall have no duty or obligation to refer such Potential Business Opportunity to the Company or to any of our subsidiaries or to give any notice to the Company or to any of our subsidiaries regarding such Potential Business Opportunity (or any matter related thereto); (ii) if such director or officer refers a Potential Business Opportunity to an Other Entity, such director or officer will not be liable to the Company or to any of our subsidiaries, as a director, officer, stockholder or otherwise, for any failure to refer such Potential Business Opportunity to the Company, or for referring such Potential Business Opportunity to any Other Entity, or for any failure to give any notice to the Company regarding such Potential Business Opportunity or any matter relating thereto; (iii) any Other Entity may participate, engage or invest in any such Potential Business Opportunity notwithstanding that such Potential Business Opportunity may have been referred to such Other Entity by an Overlap Person; and (iv) if a director or officer who is an Overlap Person refers a Potential Business Opportunity to an Other Entity, then, as between the Company and/or our subsidiaries on the one hand, and such Other Entity, on the other hand, the Company and our subsidiaries shall be deemed to have renounced any interest, expectancy or right in or to such Potential Business Opportunity or to receive any income or proceeds derived therefrom solely as a result of such director or officer having been presented or offered, or otherwise acquiring knowledge of such Potential Business Opportunity unless in each case referred to in clause (i), (ii), (iii) or (iv), the director or officer believed that the Company possessed substantially better resources to benefit from such Potential Business Opportunity than an Other Entity to which the Potential Business Opportunity was referred (an opportunity meeting all of such conditions, a Restricted Potential Business Opportunity) and was given to such person exclusively in its capacity as an officer or director of the Company. The resolution of our board of directors will also confirm that the taking by an Overlap Person for himself or herself, or the offering or other transfer to an Other Entity, of any Potential Business Opportunity, other than a Restricted Potential Business Opportunity, shall not constitute or be construed or interpreted as: (i) an act or omission of such Overlap Person committed in bad faith or as the result of active or deliberate dishonesty; or (ii) receipt by such Overlap Person of an improper benefit, or an improper personal benefit, in money, property, services or otherwise. In the resolutions of our board of directors, on behalf of the Company, our board of directors will renounce to the fullest extent permitted by law, any interest or expectancy in any Potential Business Opportunity that is not a Restricted Potential Business Opportunity. In the event that our board of directors declines to pursue a Potential Business Opportunity, the Overlap Persons are free to refer such Potential Business Opportunity to an Other Entity.

Our board of directors will also enact resolutions that will provide that no contract, agreement, arrangement or transaction (or any amendment, modification or termination thereof) entered into between the Company and/or any of our subsidiaries, on the one hand, and an Other Entity, on the other hand, before the Company ceased to be an indirect, wholly-owned subsidiary of NorthStar Realty shall be void or voidable or be considered unfair to the Company or any of our subsidiaries because an Other Entity is a party thereto, or because any directors, officers or employees of an Other Entity was present at or participated in any meeting of our board of directors, or a committee thereof, of the Company or of any subsidiary of the Company, that authorized the contract, agreement, arrangement or transaction (or any amendment, modification or termination thereof), or because his, her or their votes were counted for such purpose. The Company may from time to time enter into and perform, and cause or permit any of our subsidiaries to enter into and perform, one or more contracts, agreements, arrangements or transactions (or amendments, modifications or supplements thereto) with an Other Entity. To the fullest extent permitted by law, no such contract, agreement, arrangement or transaction (nor any such amendments, modifications or supplements), nor the performance thereof by the Company or any subsidiary of the Company or an Other Entity, shall be considered contrary to any duty owed to the Company (or to any subsidiary of the Company, or to any stockholder of the Company or any of our subsidiaries) by any director or officer of the Company (or by any director or officer of any subsidiary of the Company) who is an Overlap Person. To the fullest extent permitted by law, no director or officer of the Company or any subsidiary of the Company who is an Overlap Person thereof shall have or be under any duty to the Company (or to any subsidiary of the Company, or to any stockholder of the Company or any of our subsidiaries) to refrain from acting on behalf of the Company or an Other Entity, or any of their respective subsidiaries, in respect of any such contract, agreement, arrangement or transaction or performing any such contract, agreement, arrangement or transaction in accordance with its terms and any action by any director or officer of the Company who is an Overlap Person for an Other Entity, or any of its respective subsidiaries in respect of any such contract, agreement, arrangement or transactions (or amendments, modifications or supplements thereto), or in performance thereof in accordance with its terms, shall not constitute or be construed or interpreted as: (i) an act or omission of such Overlap Person committed in bad faith or as the result of active or deliberate dishonesty; or (ii) receipt by such Overlap Person of an improper benefit, or an improper personal benefit, in money, property, services or otherwise.

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No amendment, repeal or adoption of any resolution inconsistent with the foregoing provisions will have any effect upon: (i) any agreement between the Company or a subsidiary thereof and any Other Entity, that was entered into before the time of such amendment or repeal or adoption of any such inconsistent resolution, or the Amendment Time, or any transaction entered into in connection with the performance of any such agreement, whether such transaction is entered into before or after the Amendment Time; (ii) any transaction entered into between the Company or a subsidiary thereof and any Other Entity, before the Amendment Time; (iii) the allocation of any business opportunity between the Company or any subsidiary thereof and any Other Entity before the Amendment Time; or (iv) any duty or obligation owed by any director or officer of the Company or any subsidiary of the Company (or the absence of any such duty or obligation) with respect to any Potential Business Opportunity which such director or officer was offered or of which such director or officer otherwise became aware before the Amendment Time (regardless of whether any proceeding relating to any of the above is commenced before or after the Amendment Time).

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FEDERAL INCOME TAX CONSEQUENCES OF OUR STATUS AS A REIT

This section summarizes the material federal income tax considerations that you, as a stockholder, may consider relevant. Hunton & Williams LLP has acted as our special tax counsel, has reviewed this summary and is of the opinion that the discussion contained herein is accurate in all material respects. Because this section is a summary, it does not address all aspects of taxation that may be relevant to particular stockholders in light of their personal investment or tax circumstances, or to certain types of stockholders that are subject to special treatment under the federal income tax laws, such as:


•	insurance companies;


•	tax-exempt organizations (except to the extent discussed in “— Taxation of Tax-Exempt Stockholders” below);


•	financial institutions or broker-dealers;


•	non-U.S. individuals and foreign corporations (except to the extent discussed in “— Taxation of Non-U.S. Stockholders” below);


•	U.S. expatriates;


•	persons who mark-to-market our securities;


•	subchapter S corporations;


•	U.S. stockholders (as defined below) whose functional currency is not the U.S. dollar;


•	regulated investment companies or REITs;


•	trusts and estates;


•	holders who receive our Common Stock through the exercise of employee stock options or otherwise as compensation;


•	persons holding our Common Stock as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or other integrated investment;


•	persons subject to the alternative minimum tax provisions of the Code;


•	persons holding our securities through a partnership or similar pass-through entity; and


•	persons holding a 10% or more (by vote or value) beneficial interest in our stock.

This summary assumes that stockholders hold our Common Stock as capital assets for federal income tax purposes, which generally means property held for investment.

The statements in this section are based on the current federal income tax laws, are for general information purposes only and are not tax advice. We cannot assure you that new laws, interpretations of law, or court decisions, any of which may take effect retroactively, will not cause any statement in this section to be inaccurate.

WE URGE YOU TO CONSULT YOUR TAX ADVISER REGARDING THE SPECIFIC TAX CONSEQUENCES TO YOU OF THE OWNERSHIP AND SALE OF OUR COMMON STOCK AND OF OUR ELECTION TO BE TAXED AS A REIT. SPECIFICALLY, YOU SHOULD CONSULT YOUR TAX ADVISER REGARDING THE FOREIGN, FEDERAL, STATE AND LOCAL AND OTHER TAX CONSEQUENCES OF SUCH OWNERSHIP, SALE AND ELECTION, AND REGARDING POTENTIAL CHANGES IN APPLICABLE TAX LAWS.

Taxation of Our Company

From the time of our formation until the date of the Distribution, we will be treated as a “qualified REIT subsidiary” of NorthStar Realty. As described below, a corporation that is a “qualified REIT subsidiary” is not treated as a corporation separate from its parent REIT. We intend to elect to be taxed as a REIT for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2015. We believe that, commencing with such year, we have been organized and have operated in such a manner as to qualify for taxation as a REIT under the U.S. federal income tax laws, and we intend to continue to operate in such a manner, but no assurances can be given that we will operate in a manner so as to qualify or remain qualified as a REIT. This section discusses the laws governing the U.S. federal income tax treatment of a REIT and its stockholders. These laws are highly technical and complex.

In connection with the Distribution, we will receive an opinion from Hunton & Williams LLP to the effect that, beginning with our taxable year ending December 31, 2015, we will be organized in conformity with the requirements for qualification and

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taxation as a REIT under the U.S. federal income tax laws, and our intended method of operation will enable us to qualify as a REIT under the U.S. federal income tax laws for our taxable year ending December 31, 2015 and thereafter. You should be aware that Hunton & Williams LLP’s opinion will be based upon customary assumptions, representations and undertakings made by us, NorthStar Realty and the Private REITs as to factual matters, including representations regarding the nature of our, NorthStar Realty’s and the Private REITs’ assets and the conduct of our, NorthStar Realty’s and the Private REITs’ business. Hunton & Williams LLP’s opinion is not binding upon the IRS, or any court, and speaks as of the date issued. In addition, Hunton & Williams LLP’s opinion will be based on existing U.S. federal income tax law governing qualification as a REIT, which is subject to change either prospectively or retroactively. Moreover, our qualification and taxation as a REIT will depend upon our ability to meet on a continuing basis, through actual annual operating results, certain qualification tests set forth in the federal tax laws. Those qualification tests involve the percentage of income that we earn from specified sources, the percentage of our assets that fall within specified categories, the diversity of our stock ownership, and the percentage of our earnings that we distribute. Hunton & Williams LLP will not review our compliance with those tests on a continuing basis. In addition, the fact that we will be a U.S. REIT making all of our investments through non-U.S. subsidiary entities and in currencies other than the U.S. dollar may subject us to novel issues and interpretations of the various REIT requirements. Accordingly, no assurance can be given that our actual results of operations for any particular taxable year will satisfy such requirements. Hunton & Williams LLP’s opinion does not foreclose the possibility that we may have to use one or more of the REIT savings provisions described below, which would require us to pay an excise or penalty tax (which could be material) in order for us to satisfy the requirements for REIT qualification. For a discussion of the tax consequences of our failure to qualify as a REIT, see “— Requirements for Qualification — Failure to Qualify.”

If we qualify as a REIT, we generally will not be subject to U.S. federal income tax on the taxable income that we distribute to our stockholders. The benefit of that tax treatment is that it avoids the “double taxation,” or taxation at both the corporate and stockholder levels, that generally results from owning stock in a corporation. However, we will be subject to federal tax in the following circumstances:


•	We will pay U.S. federal income tax on any taxable income, including undistributed net capital gain, that we do not distribute to stockholders during, or within a specified time period after, the calendar year in which the income is earned.


•	We may be subject to the “alternative minimum tax” on any items of tax preference, including any deductions of net operating losses.


•	We will pay income tax at the highest corporate rate on:


•	net income from the sale or other disposition of property acquired through foreclosure or after a default on a lease of the property, or foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, and


•	other non-qualifying income from foreclosure property.


•	We will pay a 100% tax on net income from sales or other dispositions of property, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business.

•

If we fail to satisfy one or both of the 75% gross income test or the 95% gross income test, as described below under “— Requirements for Qualification — Gross Income Tests,” and nonetheless continue to qualify as a REIT because we meet other requirements, we will pay a 100% tax on the gross income attributable to the greater of the amount by which we fail the 75% gross income test or the 95% gross income test, in either case, multiplied by a fraction intended to reflect our profitability.


•	If we fail to distribute during a calendar year at least the sum of: (i) 85% of our REIT ordinary income for the year; (ii) 95% of our REIT capital gain net income for the year; and (iii) any undistributed taxable income required to be distributed from earlier periods, we will pay a 4% nondeductible excise tax on the excess of the required distribution over the amount we actually distributed.


•	We may elect to retain and pay income tax on our net long-term capital gain. In that case, a U.S. stockholder would be taxed on its proportionate share of our undistributed long-term capital gain (to the extent that we made a timely designation of such gain to the stockholders) and would receive a credit or refund for its proportionate share of the tax we paid.


•	We will be subject to a 100% excise tax on transactions with a TRS that are not conducted on an arm’s-length basis.

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•

In the event of a failure of any of the asset tests, other than a de minimis failure of the 5% asset test or the 10% vote or value test, as described below under “— Requirements for Qualification — Asset Tests,” as long as the failure was due to reasonable cause and not to willful neglect, we file a description of each asset that caused such failure with the IRS, and we dispose of such assets or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify such failure, we will pay a tax equal to the greater of $50,000 or the highest U.S. federal income tax rate then applicable to U.S. corporations (currently 35%) on the net income from the nonqualifying assets during the period in which we failed to satisfy the asset tests.


•	In the event we fail to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests, and such failure is due to reasonable cause and not to willful neglect, we will be required to pay a penalty of $50,000 for each such failure.

•

If we acquire any asset from a C corporation, or a corporation that generally is subject to full corporate-level tax, in a merger or other transaction in which we acquire a basis in the asset that is determined by reference either to the C corporation’s basis in the asset or to another asset, we will pay tax at the highest regular corporate rate applicable if we recognize gain on the sale or disposition of the asset during the ten-year period after we acquire the asset provided no election is made for the transaction to be taxable on a current basis. The amount of gain on which we will pay tax is the lesser of:


•	the amount of gain that we recognize at the time of the sale or disposition, and


•	the amount of gain that we would have recognized if we had sold the asset at the time we acquired it.


•	We may be required to pay monetary penalties to the IRS in certain circumstances, including if we fail to meet record-keeping requirements intended to monitor our compliance with rules relating to the composition of a REIT’s stockholders, as described below in “— Requirements for Qualification — Recordkeeping Requirements.”


•	The earnings of our lower-tier entities that are subchapter C corporations, including TRSs, will be subject to federal corporate income tax.

In addition, we and our subsidiaries may be subject to a variety of taxes other than U.S. federal income tax, including foreign, state and local income, transfer, franchise, property and other taxes. For example, we intend to make investments solely in real properties located outside of the United States through foreign entities. Such foreign entities may be subject to local income and property taxes in the jurisdiction in which they are organized or where their assets are located. In addition, in certain circumstances, we may be subject to non-U.S. withholding tax on repatriation of earnings from such non-U.S. entities. To the extent we are required to pay any such taxes, we will not be able to pass through to our stockholders any tax credit with respect to our payment of any such taxes. See “— Foreign, State and Local Taxes.” We could also be subject to tax in situations and with respect to transactions not presently contemplated.

Requirements for Qualification

A REIT is a corporation, trust or association that meets each of the following requirements:


1.	It is managed by one or more directors or trustees.


2.	Its beneficial ownership is evidenced by transferable shares, or by transferable certificates of beneficial interest.


3.	It would be taxable as a domestic corporation, but for the REIT provisions of the U.S. federal income tax laws.


4.	It is neither a financial institution nor an insurance company subject to special provisions of the U.S. federal income tax laws.


5.	At least 100 persons are beneficial owners of its shares or ownership certificates.


6.	Not more than 50% in value of its outstanding shares or ownership certificates is owned, directly or indirectly, by five or fewer individuals, which the Code defines to include certain entities, during the last half of any taxable year.


7.	It elects to be a REIT, or has made such election for a previous taxable year, and satisfies all relevant filing and other administrative requirements established by the IRS that must be met to elect and maintain REIT status.


8.	It meets certain other qualification tests, described below, regarding the nature of its income and assets and the amount of its distributions to stockholders.

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9.	It uses a calendar year for U.S. federal income tax purposes and complies with the recordkeeping requirements of the U.S. federal income tax laws.

We must meet requirements 1 through 4, 7, 8 and 9 during our entire taxable year and must meet requirement 5 during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. Requirements 5 and 6 will apply to us beginning with our 2016 taxable year. If we comply with all the requirements for ascertaining the ownership of our outstanding stock in a taxable year and have no reason to know that we violated requirement 6, we will be deemed to have satisfied requirement 6 for that taxable year. For purposes of determining share ownership under requirement 6, an “individual” generally

We intend to enter into a long-term management agreement with NSAM pursuant to which we will delegate certain management responsibilities. We have been advised by counsel that entering into that management agreement should not cause us to cease to satisfy requirement 1 above, which requires that a REIT be managed by one or more trustees or directors. If the IRS successfully asserted that our management agreement caused us to fail to satisfy requirement 1, we may be required to pay a $50,000 penalty tax or may fail to qualify as a REIT. See “— Failure to Qualify.”

As noted above, from the time of our formation until the date of the Distribution, we will be treated as a “qualified REIT subsidiary” of NorthStar Realty. Under applicable Treasury regulations, if NorthStar Realty fails to qualify as a REIT in its 2015 taxable year, unless NorthStar Realty’s failure to qualify as a REIT was subject to relief under as described below under “— Failure to Qualify,” we would be prevented from electing to qualify as a REIT prior to the fifth calendar year following the year in which NorthStar Realty failed to qualify.

Qualified REIT Subsidiaries. A corporation that is a “qualified REIT subsidiary” is not treated as a corporation separate from its parent REIT. All assets, liabilities and items of income, deduction and credit of a “qualified REIT subsidiary” are treated as assets, liabilities and items of income, deduction and credit of the REIT. A “qualified REIT subsidiary” is a corporation, other than a TRS, all the stock of which is owned by the REIT. Thus, in applying the requirements described herein, any “qualified REIT subsidiary” that we own will be ignored, and all assets, liabilities and items of income, deduction and credit of such subsidiary will be treated as our assets, liabilities and items of income, deduction and credit.

Other Disregarded Entities and Partnerships. An unincorporated domestic entity, such as a partnership or limited liability company, that has a single owner, generally is not treated as an entity separate from its owner for federal income tax purposes. An unincorporated domestic entity with two or more owners is generally treated as a partnership for federal income tax purposes. In the case of a REIT that is a partner in a partnership that has other partners, the REIT is treated as owning its proportionate share of the assets of the partnership and as earning its allocable share of the gross income of the partnership for purposes of the applicable REIT qualification tests. Thus, our proportionate share of the assets, liabilities and items of income of any partnership, and any other partnership, joint venture or limited liability company that is treated as a partnership for federal income tax purposes in which we have acquired or will acquire an interest, directly or indirectly, or a subsidiary partnership, will be treated as our assets and gross income for purposes of applying the various REIT qualification requirements. For purposes of the 10% value test (described under “— Asset Tests”), our proportionate share is based on our proportionate interest in the equity interests and certain debt securities issued by the partnership. For all of the other asset and income tests, our proportionate share is based on our proportionate interest in the capital of the partnership. We intend to cause each non-U.S. disregarded subsidiary to file an entity classification election under Section 301.7701-3 of the Treasury Regulations to be treated as a disregarded entity for U.S. federal income tax purposes.

Entity Classification of Foreign Subsidiaries . We intend to conduct substantially all of our business through our Operating Partnership and certain foreign property-owning entities and intermediate entities. With respect to such foreign property-owning entities and intermediate entities, we intend to use entities that are not per se corporations under Section 301.7701-2(b) of the Treasury Regulations and intend to file entity classification elections under Section 301.7701-3 of the Treasury Regulations to treat such property-owning entities and intermediate entities as pass-through entities ( i.e. , either as partnerships or disregarded entities) for U.S. federal income tax purposes. If any such pass-through entities were treated associations for U.S. federal income tax purposes, they would be taxable as corporations and, therefore, generally would be subject to an entity-level tax on its income to the extent they generate income from U.S. sources or activities connected to the United States. In such a situation, the character of our assets and items of our gross income would change and could preclude us from satisfying the REIT asset tests (particularly the tests generally preventing a REIT from owning more than 10% of the voting securities, or more than 10% of the value of the securities, of a corporation) or the gross income tests as discussed in “— Asset Tests” and “— Gross Income Tests” above, and in turn would prevent us from qualifying as a REIT. See “— Failure to Qualify,” below, for a discussion of the effect of our failure to meet these tests for a taxable year.

Taxable REIT Subsidiaries. A REIT may own up to 100% of the stock of one or more TRSs. A TRS is a fully taxable corporation that may earn income that would not be qualifying income if earned directly by the parent REIT. The subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than

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35% of the voting power or value of the stock will automatically be treated as a TRS. However, an entity will not qualify as a TRS if it directly or indirectly operates or manages a lodging or health care facility or, generally, provides rights to any brand name under which any lodging or health care facility is operated, unless such rights are provided to an “eligible independent contractor” to operate or manage a lodging facility or a health care facility if such rights are held by the TRS as a franchisee, licensee or in a similar capacity and such lodging facility or health care facility is either owned by the TRS or leased to the TRS by its

The TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. Further, the rules impose a 100% excise tax on transactions between a TRS and its parent REIT or the REIT’s tenants that are not conducted on an arm’s-length basis.

Non-U.S. corporations and non-U.S. entities treated as corporations for U.S. federal income tax purposes are not generally subject to U.S. federal corporate income tax except to the extent that they recognize income from U.S. sources or certain activities connected with the United States. However, under certain circumstances, certain U.S. stockholders of a non-U.S. corporation are required to include in their income currently their proportionate share of certain categories of income of the non-U.S. corporation, which includes passive investment income as well as certain other categories. As a result, if we hold an interest in a foreign TRS, such TRS may not be subject to significant U.S. federal corporate income tax, but we may be required to include in our income, on a current basis, certain categories of income recognized by such foreign TRS. These inclusions could affect our ability to comply with the REIT income tests and distribution requirement. See “— Gross Income Tests” and “— Distribution Requirements.” In addition, certain foreign TRSs that we may form may generate income, such as income from providing services, that is not subject to this pass-through regime. We generally would not be required to include the earnings of such a TRS attributable to such activities in our income until we receive a distribution from such TRS.

A REIT is not treated as holding the assets of a taxable subsidiary corporation or as receiving any income that the subsidiary earns. Rather, the stock issued by the subsidiary is an asset in the hands of the parent REIT and the REIT recognizes as income the dividends, if any, that it receives from the subsidiary. This treatment can affect the income and asset test calculations that apply to the REIT. Because a parent REIT does not include the assets and income of such subsidiary corporations in determining the parent’s compliance with the REIT requirements, such entities may be used by the parent REIT to undertake indirectly activities that the REIT rules might otherwise preclude it from doing directly or through pass-through subsidiaries (for example, activities that give rise to certain categories of income such as management fees).

Gross Income Tests

We must satisfy two gross income tests annually to qualify as a REIT. First, at least 75% of our gross income for each taxable year must consist of defined types of income that we derive, directly or indirectly, from investments relating to real property or mortgages on real property or qualified temporary investment income. Qualifying income for purposes of the 75% gross income test generally includes:


•	rents from real property;


•	interest on debt secured by mortgages on real property or on interests in real property;


•	dividends or other distributions on, and gain from the sale of, shares in other REITs;


•	gain from the sale of real estate assets;


•	income derived from a REMIC in proportion to the real estate assets held by the REMIC, unless at least 95% of the REMIC’s assets are real estate assets, in which case all of the income derived from the REMIC; and


•	income derived from the temporary investment in stock and debt investments purchased with the proceeds from the issuance of our stock or a public offering of our debt with a maturity date of at least five years and that we receive during the one-year period beginning on the date on which we received such new capital.

Second, in general, at least 95% of our gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test (except for income derived from the temporary investment of new capital), other types of interest and dividends, gain from the sale or disposition of stock or securities or any combination of these. Gross income from our sale of property that we hold primarily for sale to customers in the ordinary course of business is excluded from both the numerator and the denominator in both gross income tests. In addition, income and gain from “hedging transactions” that we enter into to hedge borrowings incurred or to be incurred to acquire or carry real estate assets and that are clearly and timely identified as such will be excluded from both the numerator and the denominator for purposes of the 75% and 95% gross income tests. In addition, certain foreign currency gains will be excluded from gross income for purposes of one or both of the gross income tests. See “— Foreign Currency Gain” below. The following paragraphs discuss the specific application of the gross income tests to us.

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Rents from Real Property. Rent that we receive from our real property will qualify as “rents from real property” which is qualifying income for purposes of the 75% and 95% gross income tests, only if the following conditions are met:


•	First, the rent must not be based, in whole or in part, on the income or profits of any person. However, an amount received or accrued generally will not be excluded from rents from real property solely by reason of being based on fixed percentages of receipts or sales.

•

Second, rents we receive from a “related party tenant” will not qualify as rents from real property in satisfying the gross income tests unless the tenant is a TRS, and either: (i) at least 90% of the property is leased to unrelated tenants and the rent paid by the TRS is substantially comparable to the rent paid by the unrelated tenants for comparable space; or (ii) the TRS leases a qualified lodging facility or qualified health care property and engages an eligible independent contractor (as defined above in “— Taxable REIT Subsidiaries”) to operate such facility or property on its behalf. A tenant is a related party tenant if the REIT, or an actual or constructive owner of 10% or more of the REIT, actually or constructively owns 10% or more of the tenant.


•	Third, if rent attributable to personal property leased in connection with a lease of real property is 15% or less of the total rent received under the lease, then the rent attributable to personal property will qualify as rents from real property. However, if the 15% threshold is exceeded, the rent attributable to personal property will not qualify as rents from real property.

•

Fourth, we generally must not operate or manage our real property or furnish or render services to our tenants, other than through an “independent contractor” who is adequately compensated and from whom we do not derive revenue. However, we may provide services directly to tenants if the services are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not considered to be provided for the tenants’ convenience. In addition, we may provide a minimal amount of “noncustomary” services to the tenants of a property, other than through an independent contractor, as long as our income from the services (valued at not less than 150% of our direct cost of performing such services) does not exceed 1% of our income from the related property. Furthermore, we may own up to 100% of the stock of a TRS which may provide customary and noncustomary services to our tenants without tainting our rental income for the related properties. See “— Taxable REIT Subsidiaries.”

Interest. The term “interest,” as defined for purposes of both gross income tests, generally excludes any amount that is based, in whole or in part, on the income or profits of any person. However, interest generally includes the following:


•	an amount that is based on a fixed percentage or percentages of receipts or sales; and


•	an amount that is based on the income or profits of a debtor, as long as the debtor derives substantially all of its income from the real property securing the debt from leasing substantially all of its interest in the property and only to the extent that the amounts received by the debtor would be qualifying “rents from real property” if received directly by a REIT.

If a loan contains a provision that entitles a REIT to a percentage of the borrower’s gain upon the sale of the real property securing the loan or a percentage of the appreciation in the property’s value as of a specific date, income attributable to that loan provision will be treated as gain from the sale of the property securing the loan, which generally is qualifying income for purposes of both gross income tests, provided that the property is not inventory or dealer property in the hands of the borrower or the REIT.

Interest on debt secured by mortgages on real property or on interests in real property, including, for this purpose, prepayment penalties, loan assumption fees and late payment charges that are not compensation for services, generally is qualifying income for purposes of the 75% gross income test. In general, under applicable Treasury Regulations, if a loan is secured by real property and other property and the highest principal amount of the loan outstanding during a taxable year exceeds the fair market value of the real property securing the loan determined as of: (i) the date we agreed to acquire or originate the loan; or (ii) as discussed further below, in the event of a “significant modification,” the date we modified the loan, then a portion of the interest income from such loan will not be qualifying income for purposes of the 75% gross income test, but will be qualifying income for purposes of the 95% gross income test. Although the law is not entirely clear, a portion of the loan will likely be a non-qualifying asset for purposes of the 75% asset test. The non-qualifying portion of such a loan would be subject to, among other requirements, the 10% value test. See “— Asset Tests” below.

Dividends. Our share of any dividends received from any corporation (including any TRS, but excluding any REIT) in which we own an equity interest will qualify for purposes of the 95% gross income test but not for purposes of the 75% gross income test. Our share of any dividends received from any other REIT in which we own an equity interest will be qualifying income for purposes of both gross income tests.

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To the extent that we make equity investments in foreign TRSs, we intend to treat certain income inclusions received with respect to those investments as qualifying income for purposes of the 95% gross income test but not the 75% gross income test. The IRS has issued several private letter rulings to other taxpayers concluding that similar income inclusions will be treated as qualifying income for purposes of the 95% gross income test. Those private letter rulings can only be relied upon by the taxpayers to whom they were issued. No assurance can be provided that the IRS will not successfully challenge our treatment of such income inclusions.

Hedging Transactions. We may enter into hedging transactions with respect to one or more of our assets or liabilities, including hedging transactions designed to minimize our risk with respect to: (i) changes in interest rates on floating rate debt used to acquire or carry our properties; and (ii) fluctuations in local currencies in the jurisdictions in which we invest. Hedging transactions could take a variety of forms, including interest rate swap agreements, interest rate cap agreements, options, futures contracts, forward rate agreements or similar financial instruments. Except to the extent provided by Treasury Regulations, any income from a hedging transaction we enter into: (i) in the normal course of our business primarily to manage risk of interest rate or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets, which we clearly identify as specified in Treasury Regulations before the close of the day on which it was acquired, originated, or entered into, including gain from the sale or disposition of such a transaction; or (ii) primarily to manage risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% gross income tests which is clearly identified as such before the close of the day on which it was acquired, originated, or entered into, will not constitute gross income for purposes of the 75% or 95% gross income test. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of both of the 75% and 95% gross income tests. We intend to structure our hedging transactions in a manner that will not jeopardize our qualification as a REIT, although no assurance can be given that we will at all times be successful in this regard .

Foreign Currency Gain. We expect that we will make all of our investments outside the United States and substantially all of our operating income, expenses and certain distributions from our Operating Partnership will be denominated in currencies other than the U.S. dollar. As a result, we will be subject to foreign currency gains and losses. “Real estate foreign exchange gain” is excluded from the calculation of the 75% gross income test and “passive foreign exchange gain” is excluded from the calculation of the 95% gross income test. “Real estate foreign exchange gain” means: (i) foreign currency gain attributable (without duplication) to (a) an item of income or gain to which the 75% gross income test applies, (b) the acquisition or ownership of obligations secured by mortgages on real property or on interests in real property, or (c) becoming or being the obligor under obligations secured by mortgages on real property. or interests in real property; or (ii) foreign currency gain attributable to a “qualified business unit” or “QBU” under Section 987 of the Code, provided the QBU itself satisfies both the 75% gross income test and the 75% asset test described below under “— Asset Tests.” Passive foreign exchange gain is (without duplication) real estate foreign exchange gain, foreign currency gain attributable to an item of income or gain to which the 95% gross income test applies, foreign currency gain attributable to the acquisition or ownership of obligations, or foreign currency gain attributable to becoming or being the obligor under obligations. These exclusions for real estate foreign exchange gain and passive foreign exchange gain do not apply to any foreign currency gain derived from dealing, or engaging in substantial and regular trading, in securities. Such gain is treated as non-qualifying income for purposes of both the 75% and 95% gross income tests. In addition, the U.S. federal income tax law provides rules for determining the amount of gross income and deductions that we are treated as recognizing from activities of a QBU conducted in a foreign currency. As a result of these rules, changes in the U.S. dollar value of the currencies of our operations could impact our compliance with the REIT gross income tests, and the impact of these changes on our compliance with the REIT gross income requirements could be difficult to predict.

We intend to invest primarily in real estate assets located outside of the United States, and accordingly we expect that most foreign currency gains recognized by us would generally be excluded from the REIT 75% and 95% gross income tests. However, foreign currency gain attributable to our holding of certain obligations, including currency hedges of such obligations, will be excluded for purposes of the 95% gross income test, but not the 75% gross income test. In addition, if such gains are attributable to cash awaiting distribution or reinvestment, such gains may be non-qualifying income under the 75% and 95% gross income tests. If we were to recognize significant foreign currency gains not excluded from the REIT gross income tests, we could fail to qualify as a REIT.

Prohibited Transactions. A REIT will incur a 100% tax on the net income derived from any sale or other disposition of property, other than foreclosure property, that the REIT holds primarily for sale to customers in the ordinary course of a trade or business. We believe that none of our assets are held primarily for sale to customers and that a sale of any of our assets will not be in the ordinary course of our business. Whether a REIT holds an asset “primarily for sale to customers in the ordinary course of a trade or business” depends, however, on the facts and circumstances in effect from time-to-time, including those related to a particular asset. A safe harbor to the characterization of the sale of property by a REIT as a prohibited transaction and the 100% prohibited transaction tax is available if the following requirements are met:


•	the REIT has held the property for not less than two years;

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•

the aggregate expenditures made by the REIT, or any partner of the REIT, during the two-year period preceding the date of the sale that are includable in the basis of the property do not exceed 30% of the selling price of the property; either: (i) during the year in question, the REIT did not make more than seven sales of property other than foreclosure property or sales to which Section 1033 of the Code applies; (ii) the aggregate adjusted bases of all such properties sold by the REIT during the year did not exceed 10% of the aggregate bases of all of the assets of the REIT at the beginning of the year; or (iii) the aggregate fair market value of all such properties sold by the REIT during the year did not exceed 10% of the aggregate fair market value of all of the assets of the REIT at the beginning of the year;


•	in the case of property not acquired through foreclosure or lease termination, the REIT has held the property for at least two years for the production of rental income; and


•	if the REIT has made more than seven sales of non-foreclosure property during the taxable year, substantially all of the marketing and development expenditures with respect to the property were made through an independent contractor from whom the REIT derives no income.

We will attempt to comply with the terms of that safe harbor when disposing of assets. We cannot assure you, however, that we can comply with that safe harbor or that we will avoid owning property that may be characterized as property that we hold “primarily for sale to customers in the ordinary course of a trade or business.” The 100% tax will not apply to gains from the sale of property that is held through a TRS or other taxable corporation.

Foreclosure Property. We will be subject to tax at the maximum corporate rate on any income from foreclosure property, which includes certain foreign currency gains and related deductions recognized, other than income that otherwise would be qualifying income for purposes of the 75% gross income test, less expenses directly connected with the production of that income. However, gross income from foreclosure property will qualify under the 75% and 95% gross income tests. Foreclosure property is any real property, including interests in real property, and any personal property incident to such real property:


•	that is acquired by a REIT as the result of the REIT having bid on such property at foreclosure or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was a default or default was imminent on a lease of such property or on indebtedness that such property secured;


•	for which the related loan was acquired by the REIT at a time when the default was not imminent or anticipated; and


•	for which the REIT makes a proper election to treat the property as foreclosure property.

A REIT will not be considered to have foreclosed on a property where the REIT takes control of the property as a mortgagee-in-possession and cannot receive any profit or sustain any loss except as a creditor of the mortgagor. Property generally ceases to be foreclosure property at the end of the third taxable year following the taxable year in which the REIT acquired the property or longer if an extension is granted by the Secretary of the Treasury. However, this grace period terminates and foreclosure property ceases to be foreclosure property on the first day:


•	on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test, or any amount is received or accrued, directly or indirectly, pursuant to a lease entered into on or after such day that will give rise to income that does not qualify for purposes of the 75% gross income test;


•	on which any construction takes place on the property, other than completion of a building or any other improvement, where more than 10% of the construction was completed before default became imminent; or


•	which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income.

Taxable Income in Excess of Economic Gain. Due to our investments in real property located outside of the United States, we may enter into hedging transactions to manage our risk with respect to local currency fluctuations. If we were to recognize ordinary income with respect to such hedging transaction and a capital loss on the sale of such real property, we would be required to make a distribution although we may have not realized an overall economic gain. Similarly, the rules regarding foreign currency fluctuations may cause us to have taxable income in excess of our overall economic gain. As a result, a stockholder may recognize dividend income in excess of such stockholder’s true economic gain with respect to our stock. In addition, we may generate less cash flow than taxable income in a particular year and we may incur U.S. federal income tax and the 4% non-deductible excise tax on that income if we do not distribute such income to stockholders in that year. In that event, we may be required to use cash reserves, incur debt or liquidate assets at rates or times that we regard as unfavorable or, to the extent possible, make a taxable

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distribution of our stock in order to satisfy the REIT 90% distribution requirement and to avoid U.S. federal income tax and the 4% nondeductible excise tax in that year.

Failure to Satisfy the Gross Income Tests. If we fail to satisfy one or both of the gross income tests for any taxable year, we nevertheless may qualify as a REIT for that year if we qualify for relief under certain provisions of the federal income tax laws. Those relief provisions are available if:


•	our failure to meet those tests is due to reasonable cause and not to willful neglect; and


•	following such failure for any taxable year, we file a schedule of the sources of our income with the IRS.

We cannot predict, however, whether in all circumstances we would qualify for the relief provisions. In addition, as discussed above in “— Taxation of Our Company,” even if the relief provisions apply, we would incur a 100% tax on the gross income attributable to the greater of the amount by which we fail the 75% or 95% gross income test, in each case, multiplied by a fraction intended to reflect our profitability.

Asset Tests

To qualify as a REIT, we also must satisfy the following asset tests at the end of each quarter of each taxable year. First, at least 75% of the value of our total assets must consist of:


•	cash or cash items, including certain receivables and money market funds;


•	government securities;


•	interests in real property, including leaseholds and options to acquire real property and leaseholds;


•	interests in mortgage loans secured by real property;


•	stock in other REITs;


•	investments in stock or debt instruments during the one-year period following our receipt of new capital that we raise through equity offerings or public offerings of debt with at least a five-year term; and


•	regular or residual interests in a REMIC. However, if less than 95% of the assets of a REMIC consists of assets that are qualifying real estate-related assets under the federal income tax laws, determined as if we held such assets, we will be treated as holding directly our proportionate share of the assets of such REMIC.

Cash includes the functional currency of a REIT or its QBU if such foreign currency: (i) is held for use in the normal course of the activities of the REIT or QBU which give rise to qualifying income under the 95% or 75% gross income tests or are directly related to acquiring or holding qualifying assets under the 75% asset test; and (ii) is not held in connection with dealing or engaging in substantial and regular trading in securities. Assets that do not qualify for purposes of the 75% asset test are subject to the additional asset tests described below. We intend to cause our subsidiaries to manage their holdings of foreign currency and related assets in a manner that permits us to qualify under the 75% asset test.

Second, of our investments not included in the 75% asset class, the value of our interest in any one issuer’s securities may not exceed 5% of the value of our total assets, or the 5% asset test.

Third, of our investments not included in the 75% asset class, we may not own more than 10% of the voting power or value of any one issuer’s outstanding securities, or the 10% vote or value test.

Fourth, no more than 25% of the value of our total assets may consist of the securities of one or more TRSs.

Fifth, no more than 25% of the value of our total assets may consist of the securities of TRSs and other non-TRS taxable subsidiaries and other assets that are not qualifying assets for purposes of the 75% asset test, or the 25% securities test.

For purposes of the 5% asset test, the 10% vote or value test and the 25% securities test, the term “securities” does not include stock in another REIT, equity or debt securities of a qualified REIT subsidiary or, in the case of the 5% asset test and 10% vote or value test, TRS debt or equity, mortgage loans or mortgage-backed securities that constitute real estate assets, or equity interests in a partnership. For purposes of the 10% value test, the term “securities” does not include:

•

“Straight debt” securities, which is defined as a written unconditional promise to pay on demand or on a specified date a sum certain in money if: (i) the debt is not convertible, directly or indirectly, into equity; and (ii) the interest rate and interest payment dates are not contingent on profits, the borrower’s discretion, or similar factors. “Straight debt” securities do not include any securities issued by a partnership or a corporation in which we or any TRS in

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which we own more than 50% of the voting power or value of the shares hold non-“straight debt” securities that have an aggregate value of more than 1% of the issuer’s outstanding securities. However, “straight debt” securities include debt subject to the following contingencies:

•

a contingency relating to the time of payment of interest or principal, as long as either: (i) there is no change to the effective yield of the debt obligation, other than a change to the annual yield that does not exceed the greater of 0.25% or 5% of the annual yield; or (ii) neither the aggregate issue price nor the aggregate face amount of the issuer’s debt obligations held by us exceeds $1 million and no more than 12 months of unaccrued interest on the debt obligations can be required to be prepaid; and


•	a contingency relating to the time or amount of payment upon a default or prepayment of a debt obligation, as long as the contingency is consistent with customary commercial practice;


•	Any loan to an individual or an estate;


•	Any “section 467 rental agreement” other than an agreement with a related party tenant;


•	Any obligation to pay “rents from real property”;


•	Certain securities issued by governmental entities;


•	Any security issued by a REIT;


•	Any debt instrument issued by an entity treated as a partnership for federal income tax purposes in which we are a partner to the extent of our proportionate interest in the equity and debt securities of the partnership; and


•	Any debt instrument issued by an entity treated as a partnership for federal income tax purposes not described in the preceding bullet points if at least 75% of the partnership’s gross income, excluding income from prohibited transactions, is qualifying income for purposes of the 75% gross income test described above in “— Gross Income Tests.”

For purposes of the 10% value test, our proportionate share of the assets of a partnership is our proportionate interest in any securities issued by the partnership, without regard to the securities described in the last two bullet points above.

We have funded our equity investments in certain of our holdings through the use of instruments that we believe will be treated as equity for U.S. federal income tax purposes. If the IRS disagreed with such characterization and was successful in recharacterizing the nature of those instruments, we could fail to satisfy one or more of the asset and gross income tests applicable to REITs. Additionally, if the IRS recharacterized the nature of those investments and we were to take action to prevent such REIT test failures, the actions we would take could expose us to increased taxes both internationally and in the United States.

We believe our holdings of real property and other assets and securities relating to such real property will comply with the foregoing REIT asset requirements, and we intend to monitor compliance with such tests on an ongoing basis. There can be no assurance, however, that we will be successful in this effort. Moreover, the values of some of our assets, including the securities of our TRSs or other non-publicly traded investments, may not be susceptible to a precise determination and are subject to change in the future. Furthermore, the proper classification of an instrument as debt or equity for U.S. federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT asset tests. Accordingly, there can be no assurance that the IRS will not contend that our assets do not meet the requirements of the REIT asset tests.

We intend to monitor the status of our assets for purposes of the various asset tests. If we fail to satisfy the asset tests at the end of a calendar quarter, we will not lose our REIT qualification if:


•	we satisfied the asset tests at the end of the preceding calendar quarter; and


•	the discrepancy between the value of our assets and the asset test requirements arose from changes in the market values of our assets and was not wholly or partly caused by the acquisition of one or more non-qualifying assets.

If we did not satisfy the condition described in the second item, above, we still could avoid disqualification by eliminating any discrepancy within 30 days after the close of the calendar quarter in which it arose.

If at the end of any calendar quarter we violate the 5% asset test or the 10% vote or value test described above, we will not lose our REIT qualification if: (i) the failure is de minimis (up to the lesser of 1% of our assets or $10 million); and (ii) we dispose of assets or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify such failure. In the event of a failure of any of the asset tests (other than de minimis failures described in the preceding sentence), as long as the failure was due to reasonable cause and not to willful neglect, we will not lose our qualification as a REIT if we:

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(i) dispose of assets or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify the failure; (ii) we file a description of each asset causing the failure with the IRS; and (iii) pay a tax equal to the greater of $50,000 or 35% of the net income from the nonqualifying assets during the period in which we failed to satisfy the asset tests.

Distribution Requirements

Each taxable year, we must distribute dividends, other than capital gain dividends and deemed distributions of retained capital gain, to our stockholders in an aggregate amount at least equal to the sum of:


•	90% of our “REIT taxable income,” computed without regard to the dividends paid deduction and our net capital gain or loss and


•	90% of our after-tax net income, if any, from foreclosure property; minus


•	the sum of certain items of non-cash income.

Generally, we must pay such distributions in the taxable year to which they relate, or in the following taxable year if: (i) we declare the distribution before we timely file our federal income tax return for the year and pay the distribution on or before the first regular dividend payment date after such declaration; or (ii) we declare the distribution in October, November or December of the taxable year, payable to stockholders of record on a specified day in any such month, and we actually pay the dividend before the end of January of the following year. The distributions under clause (i) are taxable to the stockholders in the year in which paid and the distributions in clause (ii) are treated as paid on December 31 of the prior taxable year. In both instances, these distributions relate to our prior taxable year for purposes of the 90% distribution requirement.

We will pay federal income tax on taxable income, including net capital gain, that we do not distribute to stockholders. Furthermore, if we fail to distribute during a calendar year, or by the end of January following the calendar year in the case of distributions with declaration and record dates falling in the last three months of the calendar year, at least the sum of:


•	85% of our REIT ordinary income for such year;


•	95% of our REIT capital gain income for such year; and


•	any undistributed taxable income from prior periods,

we will incur a 4% nondeductible excise tax on the excess of such required distribution over the amounts we actually distribute.

We may elect to retain and pay income tax on the net long-term capital gain we receive in a taxable year. If we so elect, we will be treated as having distributed any such retained amount for purposes of the 4% nondeductible excise tax described above. We have made, and we intend to continue to make, timely distributions sufficient to satisfy the annual distribution requirements and to avoid corporate income tax and the 4% nondeductible excise tax.

It is possible that, from time-to-time, we may experience timing differences between the actual receipt of income and actual payment of deductible expenses and the inclusion of that income and deduction of such expenses in arriving at our REIT taxable income. In the event that such timing differences occur, it might be necessary to arrange borrowings or other means of raising capital to meet the distribution requirements. Additionally, we may, if possible, pay taxable dividends of our stock or debt to meet the distribution requirements.

Under certain circumstances, we may be able to correct a failure to meet the distribution requirement for a year by paying “deficiency dividends” to our stockholders in a later year. We may include such deficiency dividends in our deduction for dividends paid for the earlier year. Although we may be able to avoid income tax on amounts distributed as deficiency dividends, we will be required to pay interest to the IRS based upon the amount of any deduction we take for deficiency dividends.

Recordkeeping Requirements

We must maintain certain records in order to qualify as a REIT. In addition, to avoid a monetary penalty, we must request on an annual basis information from our stockholders designed to disclose the actual ownership of our outstanding shares of beneficial interest. We have complied, and we intend to continue to comply, with these requirements.

Failure to Qualify

If we fail to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests, we could avoid disqualification if our failure is due to reasonable cause and not to willful neglect and we pay a penalty of $50,000 for each such failure. In addition, there are relief provisions for a failure of the gross income tests and asset tests, as described in “— Gross Income Tests” and “— Asset Tests.”

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If we fail to qualify as a REIT in any taxable year, and no relief provision applies, we would be subject to federal income tax and any applicable alternative minimum tax on our taxable income at regular corporate rates. In calculating our taxable income in a year in which we fail to qualify as a REIT, we would not be able to deduct amounts paid out to stockholders. In fact, we would not be required to distribute any amounts to stockholders in that year. In such event, to the extent of our current and accumulated earnings and profits, distributions to most stockholders taxed at individual rates would generally be taxable at capital gains tax rates. Subject to certain limitations of the federal income tax laws, corporate stockholders might be eligible for the dividends received deduction. Unless we qualified for relief under specific statutory provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. We cannot predict whether in all circumstances we would qualify for such statutory relief.

Taxation of Taxable U.S. Stockholders

For the purposes of this discussion under the heading “Material U.S. Federal Income Tax Consequences,” the term “U.S. stockholder” means a beneficial owner of shares of our Common Stock that for U.S. federal income tax purposes is:


•	a citizen or resident of the United States;


•	a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any of its states or the District of Columbia;


•	an estate whose income is subject to U.S. federal income taxation regardless of its source; or


•	any trust if: (i) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust; or (ii) it has a valid election in place to be treated as a U.S. person.

If a partnership, entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares of our Common Stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. If you are a partner in a partnership that will hold shares of our Common Stock, you are urged to consult your tax advisor regarding the consequences of the ownership and disposition of our Common Stock by the partnership.

As long as we qualify as a REIT, a taxable U.S. stockholder must generally take into account as ordinary income distributions made out of our current or accumulated earnings and profits that we do not designate as capital gain dividends or retained long-term capital gain. A U.S. stockholder will not qualify for the dividends received deduction generally available to corporations. In addition, dividends paid to a U.S. stockholder generally will not qualify for the 20% tax rate for “qualified dividend income.” The maximum tax rate for qualified dividend income received by U.S. stockholders taxed at individual rates is 20%. The maximum tax rate on qualified dividend income is lower than the maximum tax rate on ordinary income, which is 39.6%. Qualified dividend income generally includes dividends paid to U.S. stockholders taxed at individual rates by domestic C corporations and certain qualified foreign corporations. Because we are not generally subject to U.S. federal income tax on the portion of our REIT taxable income distributed to our stockholders, our dividends generally will not be eligible for the 20% rate on qualified dividend income. See “— Taxation of Our Company” above. As a result, our ordinary REIT dividends will be taxed at the higher tax rate applicable to ordinary income. However, the 20% tax rate for qualified dividend income will apply to our ordinary REIT dividends: (i) attributable to dividends received by us from non-REIT corporations, such as our TRS; and (ii) to the extent attributable to income upon which we have paid corporate income tax (e.g., to the extent that we distribute less than 100% of our taxable income). In general, to qualify for the reduced tax rate on qualified dividend income, a U.S. stockholder must hold our Common Stock for more than 60 days during the 121-day period beginning on the date that is 60 days before the date on which our Common Stock becomes ex-dividend. In addition, individuals, trusts and estates whose income exceeds certain thresholds are also subject to a 3.8% Medicare tax on dividends received from us.

A U.S. stockholder generally will take into account as long-term capital gain any distributions that we designate as capital gain dividends without regard to the period for which the U.S. stockholder has held our Common Stock. We generally will designate our capital gain dividends as either 20% or 25% rate distributions. See “— Capital Gains and Losses.” A corporate U.S. stockholder, however, may be required to treat up to 20% of certain capital gain dividends as ordinary income.

We may elect to retain and pay income tax on the net long-term capital gain that we receive in a taxable year. In that case, to the extent that we designate such amount in a timely notice to such stockholder, a U.S. stockholder would be taxed on its proportionate share of our undistributed long-term capital gain. The U.S. stockholder would receive a credit for its proportionate share of the tax we paid. The U.S. stockholder would increase the basis in its Common Stock by the amount of its proportionate share of our undistributed long-term capital gain, minus its share of the tax we paid.

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A U.S. stockholder will not incur tax on a distribution in excess of our current and accumulated earnings and profits if the distribution does not exceed the adjusted basis of the U.S. stockholder’s common stock. Instead, the distribution will reduce the adjusted basis of such shares of our Common Stock. A U.S. stockholder will recognize a distribution in excess of both our current and accumulated earnings and profits and the U.S. stockholder’s adjusted basis in his or her common stock as long-term capital gain, or short-term capital gain if our Common Stock has been held for one year or less, assuming our Common Stock is a capital asset in the hands of the U.S. stockholder. In addition, if we declare a distribution in October, November, or December of any year that is payable to a U.S. stockholder of record on a specified date in any such month, such distribution shall be treated as both paid by us and received by the U.S. stockholder on December 31 of such year, provided that we actually pay the distribution during January of the following calendar year.

Stockholders may not include in their individual income tax returns any of our net operating losses or capital losses. Instead, these losses are generally carried over by us for potential offset against our future income. Taxable distributions from us and gain from the disposition of our Common Stock will not be treated as passive activity income and, therefore, stockholders generally will not be able to apply any “passive activity losses,” such as losses from certain types of limited partnerships in which the stockholder is a limited partner, against such income. In addition, taxable distributions from us and gain from the disposition of our Common Stock generally will be treated as investment income for purposes of the investment interest limitations. We will notify stockholders after the close of our taxable year as to the portions of the distributions attributable to that year that constitute ordinary income, return of capital and capital gain.

Taxation of U.S. Stockholders on the Disposition of our Common Stock

A U.S. stockholder who is not a dealer in securities must generally treat any gain or loss realized upon a taxable disposition of our Common Stock as long-term capital gain or loss if the U.S. stockholder has held our Common Stock for more than one year and otherwise as short-term capital gain or loss. In general, a U.S. stockholder will realize gain or loss in an amount equal to the difference between the sum of the fair market value of any property and the amount of cash received in such disposition and the U.S. stockholder’s adjusted tax basis. A stockholder’s adjusted tax basis generally will equal the fair market value of its shares of our Common Stock on the date of the Distribution increased by the excess of net capital gains deemed distributed to the U.S. stockholder (discussed above) less tax deemed paid on such gains and reduced by any returns of capital. See “Material U.S. Federal Income Tax Consequences of the Distribution — Tax Basis & Holding Period of Our Common Stock Received by Holders of NorthStar Realty Stock.” However, a U.S. stockholder must treat any loss upon a sale or exchange of our Common Stock held by such stockholder for six months or less as a long-term capital loss to the extent of capital gain dividends and any other actual or deemed distributions from us that such U.S. stockholder treats as long-term capital gain. All or a portion of any loss that a U.S. stockholder realizes upon a taxable disposition of our Common Stock may be disallowed if the U.S. stockholder purchases other Common Stock within 30 days before or after the disposition.

Capital Gains and Losses

A taxpayer generally must hold a capital asset for more than one year for gain or loss derived from its sale or exchange to be treated as long-term capital gain or loss. The highest marginal individual income tax rate currently is 39.6%. The maximum tax rate on long-term capital gain applicable to taxpayers taxed at individual rates is 20% for sales and exchanges of assets held for more than one year. The maximum tax rate on long-term capital gain from the sale or exchange of “Section 1250 property,” or depreciable real property, is 25%, which applies to the lesser of the total amount of the gain or the accumulated depreciation on the Section 1250 property. In addition, individuals, estates or trusts whose income exceeds certain thresholds will be required to pay a 3.8% Medicare tax on gains from the sale of our Common Stock.

With respect to distributions that we designate as capital gain dividends and any retained capital gain that we are deemed to distribute, we generally may designate whether such a distribution is taxable to our stockholders taxed at individual rates at a 20% or 25% rate. Thus, the tax rate differential between capital gain and ordinary income for those taxpayers may be significant. In addition, the characterization of income as capital gain or ordinary income may affect the deductibility of capital losses. A non-corporate taxpayer may deduct capital losses not offset by capital gains against its ordinary income only up to a maximum annual amount of $3,000. A non-corporate taxpayer may carry forward unused capital losses indefinitely. A corporate taxpayer must pay tax on its net capital gain at ordinary corporate rates. A corporate taxpayer may deduct capital losses only to the extent of capital gains, with unused losses being carried back three years and forward five years.

Taxation of Tax-Exempt Stockholders

Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts, generally are exempt from U.S. federal income taxation. However, they are subject to taxation on their unrelated business taxable income, or UBTI. Although many investments in real estate generate UBTI, the IRS has issued a ruling that dividend distributions from a REIT to an exempt employee pension trust do not constitute UBTI. Based on that ruling, amounts that we distribute to tax-exempt stockholders generally should not constitute UBTI. However, if a tax-exempt stockholder were to finance its acquisition

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of our Common Stock with debt, a portion of the income that it receives from us would constitute UBTI pursuant to the “debt-financed property” rules. Moreover, social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal services plans that are exempt from taxation under special provisions of the U.S. federal income tax laws are subject to different UBTI rules, which generally will require them to characterize distributions that they receive from us as UBTI. Finally, in certain circumstances, a qualified employee pension or profit sharing trust that owns more than 10% of our stock must treat a percentage of the dividends that it receives from us as UBTI. Such percentage is equal to the gross income we derive from an unrelated trade or business, determined as if we were a pension trust, divided by our total gross income for the year in which we pay the dividends. That rule applies to a pension trust holding more than 10% of our stock only if:


•	the percentage of our dividends that the tax-exempt trust must treat as UBTI is at least 5%;


•	we qualify as a REIT by reason of the modification of the rule requiring that no more than 50% of our stock be owned by five or fewer individuals that allows the beneficiaries of the pension trust to be treated as holding our stock in proportion to their actuarial interests in the pension trust; and


•	one pension trust owns more than 25% of the value of our stock; or


•	a group of pension trusts individually holding more than 10% of the value of our stock collectively owns more than 50% of the value of our stock.

Taxation of Non-U.S. Stockholders

For purposes of this discussion under the heading “Federal Income Tax Consequences of Our Status as a REIT,” the term “non-U.S. stockholder” means a beneficial owner of our Common Stock that is neither a U.S. stockholder nor a partnership (or entity treated as a partnership for U.S. federal income tax purposes). The rules governing U.S. federal income taxation of nonresident alien individuals, foreign corporations, foreign partnerships, and other foreign stockholders are complex. This section is only a summary of such rules. We urge non-U.S. stockholders to consult their tax advisors to determine the impact of federal, state, and local income tax laws on the ownership and disposition of our Common Stock, including any reporting requirements.

The following is a summary of material U.S. federal income tax consequences of the acquisition, ownership and disposition of our Common Stock applicable to non-U.S. stockholders. The discussion is based on current law and is for general information only. It addresses only selective and not all aspects of U.S. federal income taxation.

Non-U.S. stockholders will generally be subject to U.S. federal withholding tax on dividends received from us at a 30% rate, subject to reduction under an applicable treaty or a statutory exemption under the Code. Although such withholding taxes may be creditable in such non-U.S. stockholder’s resident jurisdiction, for many such non-U.S. stockholders, investment in a REIT that invests principally in non-U.S. real property may not be the most tax-efficient way to invest in such assets compared to a direct investment in such assets, which would generally not subject such non-U.S. stockholders to U.S. federal withholding taxes. The remainder of this section generally assumes that we will not hold USRPIs, and therefore will not be treated as a U.S. real property holding company and our Common Stock will not be treated as a USRPI for purposes of FIRPTA.

Ordinary Dividends. The portion of dividends received by non-U.S. stockholders payable out of our earnings and profits that are not attributable to gains from sales or exchanges of U.S. real property interests and which are not effectively connected with a U.S. trade or business of the non-U.S. stockholder generally will be treated as ordinary income dividends and will be subject to U.S. federal withholding tax at the rate of 30%, unless reduced or eliminated by an applicable income tax treaty. Under some treaties, however, lower rates generally applicable to dividends do not apply to dividends from REITs.

In general, non-U.S. stockholders should not be considered to be engaged in a U.S. trade or business solely as a result of their ownership of our stock because distributions received by the non-U.S. stockholders will be non-U.S. source.

Non-Dividend Distributions. Unless: (i) our Common Stock constitutes a USRPI; or (ii) either (a) the non-U.S. stockholder’s investment in our Common Stock is effectively connected with a U.S. trade or business conducted by such non-U.S. stockholder (in which case the non-U.S. stockholder will be subject to the same treatment as U.S. stockholders with respect to such gain) or (b) the non-U.S. stockholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States (in which case the non-U.S. stockholder will be subject to a 30% tax on the individual’s net capital gain for the year), distributions by us which are not treated as dividends for U.S. federal income tax purposes ( i.e. , not treated as being paid out of our current and accumulated earnings and profits) will not be subject to U.S. federal income tax. If it cannot be determined at the time at which a distribution is made whether the distribution will constitute a dividend for U.S. federal income tax purposes, the distribution will be subject to withholding at the rate applicable to dividends. However, the non-U.S. stockholder may seek a refund from the IRS of any amounts withheld if it is subsequently determined that

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the distribution was, in fact, in excess of our current and accumulated earnings and profits and, therefore, did not constitute a dividend for U.S. federal income tax purposes.

Because it will not generally be possible for us to determine the extent to which a distribution will be from our current or accumulated earnings and profits at the time the distribution is made, we intend to withhold and remit to the IRS 30% of distributions to non-U.S. stockholders unless: (i) a lower treaty rate applies and the non-U.S. stockholder files an IRS Form W-8BEN or W-8BEN-E evidencing eligibility for that reduced treaty rate with us; or (ii) the non-U.S. stockholder files an IRS Form W-8ECI with us claiming that the distribution is income effectively connected with the non-U.S. stockholder’s trade or business.

Capital Gain Dividends. Capital gain dividends received by a non-U.S. stockholder from a REIT that are not attributable to USRPI capital gains are generally not subject to U.S. federal income or withholding tax, unless either: (i) the non-U.S. stockholder’s investment in our Common Stock is effectively connected with a U.S. trade or business conducted by such non-U.S. stockholder (in which case the non-U.S. stockholder will be subject to the same treatment as U.S. stockholders with respect to such gain); or (ii) the non-U.S. stockholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States (in which case the non-U.S. stockholder will be subject to a 30% tax on the individual’s net capital gain for the year). Capital gain dividends withheld are creditable against the non-U.S. stockholder’s U.S. federal income tax liability or refundable when the non-U.S. stockholder properly and timely files a tax return with the IRS.

Dispositions of Our Common Stock. Gain from the sale of our Common Stock would be taxable in the United States to a non-U.S. stockholder in two cases: (i) if the non-U.S. stockholder’s investment in our Common Stock is effectively connected with a U.S. trade or business conducted by such non-U.S. stockholder, the non-U.S. stockholder will be subject to the same treatment as a U.S. stockholder with respect to such gain; or (ii) if the non-U.S. stockholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States. In such cases, the nonresident alien individual will be subject to a 30% tax on the individual’s capital gain.

FATCA . A U.S. withholding tax at a 30% rate will be imposed on dividends paid on our Common Stock received by certain non-U.S. stockholders if certain disclosure requirements related to U.S. accounts or ownership are not satisfied. In addition, if those disclosure requirements are not satisfied, a U.S. withholding tax at a 30% rate will be imposed, for payments after December 31, 2018 , on proceeds from the sale of our Common Stock received by certain non-U.S. stockholders. If payment of withholding taxes is required, non-U.S. stockholders that are otherwise eligible for an exemption from, or a reduction of, U.S. withholding taxes with respect of such dividends and proceeds will be required to seek a refund from the IRS to obtain the benefit of such exemption or reduction. We will not pay any additional amounts in respect of any amounts withheld.

Information Reporting Requirements and Withholding

We will report to our stockholders and to the IRS the amount of distributions we pay during each calendar year, and the amount of tax we withhold, if any. Under the backup withholding rules, a stockholder may be subject to backup withholding at a rate of 28% with respect to distributions unless the holder:


•	is a corporation or qualifies for certain other exempt categories and, when required, demonstrates this fact; or


•	provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules.

A stockholder who does not provide us with its correct taxpayer identification number also may be subject to penalties imposed by the IRS. Any amount paid as backup withholding will be creditable against the stockholder’s income tax liability. In addition, we may be required to withhold a portion of capital gain distributions to any stockholders who fail to certify their non-foreign status to us.

Backup withholding will generally not apply to payments of dividends made by us or our paying agents, in their capacities as such, to a non-U.S. stockholder provided that the non-U.S. stockholder furnishes to us or our paying agent the required certification as to its non-U.S. status, such as providing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, or certain other requirements are met. Notwithstanding the foregoing, backup withholding may apply if either we or our paying agent has actual knowledge, or reason to know, that the holder is a U.S. person that is not an exempt recipient. Payments of the net proceeds from a disposition or a redemption effected outside the United States by a non-U.S. stockholder made by or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, information reporting (but not backup withholding) generally will apply to such a payment if the broker has certain connections with the U.S. unless the broker has documentary evidence in its records that the beneficial owner is a non-U.S. stockholder and specified conditions are met or an exemption is otherwise established. Payment of the net proceeds from a disposition by a non-U.S. stockholder of our Common Stock made by or through the U.S. office of a broker is generally subject to information reporting and backup withholding unless

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the non-U.S. stockholder certifies under penalties of perjury that it is not a U.S. person and satisfies certain other requirements, or otherwise establishes an exemption from information reporting and backup withholding.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the stockholder’s U.S. federal income tax liability if certain required information is furnished to the IRS. Stockholders are urged consult their tax advisors regarding application of backup withholding to them and the availability of, and procedure for obtaining an exemption from, backup withholding.

A U.S. withholding tax at a 30% rate will be imposed on dividends paid on our Common Stock received by U.S. stockholders who own their shares through foreign accounts or foreign intermediaries if certain disclosure requirements related to U.S. accounts or ownership are not satisfied. In addition, if those disclosure requirements are not satisfied, a U.S. withholding tax at a 30% rate will be imposed, for payments after December 31, 2018 , on proceeds from the sale of our Common Stock received by U.S. stockholders who own their shares through foreign accounts or foreign intermediaries. We will not pay any additional amounts in respect of any amounts withheld.

Other Tax Consequences

Tax Aspects of Our Investments in Our Operating Partnership and Subsidiary Partnerships

Substantially all of our investments are owned indirectly through our Operating Partnership, which will own our assets through certain subsidiaries. Our operating partnership is currently disregarded as a separate entity for U.S. federal income tax purposes because we own, directly and indirectly through disregarded entities, 100% of the interests in it. If our Operating Partnership admits other limited partners, it will be eligible to be taxed as a partnership for U.S. federal income tax purposes. The following discussion summarizes certain U.S. federal income tax considerations applicable to our direct or indirect investments in our Operating Partnership (assuming our Operating Partnership is not a disregarded entity) and any subsidiary partnerships or limited liability companies that we form or acquire (each individually a Partnership and collectively, the Partnerships). The discussion does not cover state or local tax laws or any U.S. tax laws other than U.S. federal income tax laws.

Classification as Partnerships. We will be entitled to include in our income our distributive share of each Partnership’s income and to deduct our distributive share of each Partnership’s losses only if such Partnership is classified for U.S. federal income tax purposes as a partnership (or an entity that is disregarded for U.S. federal income tax purposes if the entity has only one owner or member) rather than as a corporation or an association taxable as a corporation. An unincorporated entity with at least two owners or members will be classified as a partnership, rather than as a corporation, for U.S. federal income tax purposes if it:


•	is treated as a partnership under the Treasury regulations relating to entity classification, or the check-the-box regulations; and


•	is not a “publicly traded” partnership.

Under the check-the-box regulations, an unincorporated entity with at least two owners or members may elect to be classified either as an association taxable as a corporation or as a partnership. If such an entity fails to make an election, it generally will be treated as a partnership (or an entity that is disregarded for U.S. federal income tax purposes if the entity has only one owner or member) for U.S. federal income tax purposes. Each Partnership intends to be classified as a partnership for U.S. federal income tax purposes, and no Partnership will elect to be treated as an association taxable as a corporation under the check-the-box regulations.

A publicly traded partnership is a partnership whose interests are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof. A publicly traded partnership will not, however, be treated as a corporation for any taxable year if, for each taxable year beginning after December 31, 1987 in which it was classified as a publicly traded partnership, 90% or more of the partnership’s gross income for such year consists of certain passive-type income, including real property rents, gains from the sale or other disposition of real property, interest, and dividends, or the “90% passive income exception.” Treasury regulations, or the “PTP regulations,” provide limited safe harbors from the definition of a publicly traded partnership. Pursuant to one of those safe harbors, or the private placement exclusion, interests in a partnership will not be treated as readily tradable on a secondary market or the substantial equivalent thereof if: (i) all interests in the partnership were issued in a transaction or transactions that were not required to be registered under the Securities Act; and (ii) the partnership does not have more than 100 partners at any time during the partnership’s taxable year. In determining the number of partners in a partnership, a person owning an interest in a partnership, grantor trust, or S corporation that owns an interest in the partnership is treated as a partner in such partnership only if: (i) substantially all of the value of the owner’s interest in the entity is attributable to the entity’s direct or indirect interest in the partnership; and (ii) a principal purpose of the use of the entity is to permit the partnership to satisfy the 100-partner limitation. Each Partnership is expected to qualify for the private placement exclusion in the foreseeable future. Additionally, if our Operating Partnership were a publicly traded partnership, we believe that our Operating

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Partnership would have sufficient qualifying income to satisfy the 90% passive income exception and thus would continue to be taxed as a partnership for U.S. federal income tax purposes.

If our Operating Partnership admits other limited partners, we do not intend to request a ruling from the IRS that our Operating Partnership will be classified as a partnership for U.S. federal income tax purposes. If for any reason our Operating Partnership were taxable as a corporation, rather than as a disregarded entity or a partnership, for U.S. federal income tax purposes, most, if not all, of the tax consequences described herein would be inapplicable. In particular, we would not qualify as a REIT unless we qualified for certain relief provisions, because the value of our ownership interest in our Operating Partnership would exceed 5% of our assets and we would be considered to hold more than 10% of the voting securities (and more than 10% of the value of the outstanding securities) of another corporation. See “— Requirements for Qualification — Gross Income Tests” and “— Requirements for Qualification — Asset Tests.” In addition, any change in our Operating Partnership’s status for tax purposes might be treated as a taxable event, in which case we might incur tax liability without any related cash distribution. See “— Requirements for Qualification — Distribution Requirements.” Further, items of income and deduction of our Operating Partnership would not pass through to its partners, and its partners would be treated as stockholders for tax purposes. Consequently, our Operating Partnership would be required to pay income tax at corporate rates on its net income, and distributions to its partners would constitute dividends that would not be deductible in computing our Operating Partnership’s taxable income.

Income Taxation of Partnerships and their Partners

Partners, Not the Partnerships, Subject to Tax. A partnership is not a taxable entity for U.S. federal income tax purposes. Rather, we are required to take into account our allocable share of each Partnership’s income, gains, losses, deductions, and credits for any taxable year of such Partnership ending within or with our taxable year, without regard to whether we have received or will receive any distribution from such Partnership.

Partnership Allocations. Although a partnership agreement generally will determine the allocation of income and losses among partners, such allocations will be disregarded for tax purposes if they do not comply with the provisions of the U.S. federal income tax laws governing partnership allocations. If an allocation is not recognized for U.S. federal income tax purposes, the item subject to the allocation will be reallocated in accordance with the partners’ interests in the partnership, which will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the partners with respect to such item. Each Partnership’s allocations of taxable income, gain, and loss are intended to comply with the requirements of the U.S. federal income tax laws governing partnership allocations.

Tax Allocations With Respect to Our Properties. Income, gain, loss and deduction attributable to appreciated or depreciated property that is contributed to a partnership in exchange for an interest in the partnership must be allocated in a manner such that the contributing partner is charged with, or benefits from, respectively, the unrealized gain or unrealized loss associated with the property at the time of the contribution. The amount of such unrealized gain or unrealized loss, referred to as built-in gain or “built-in loss, is generally equal to the difference between the fair market value of the contributed property at the time of contribution and the adjusted tax basis of such property at the time of contribution, or a book-tax difference. Any property purchased by our Operating Partnership for cash initially will have an adjusted tax basis equal to its fair market value, resulting in no book-tax difference. In the future, however, our Operating Partnership may admit partners in exchange for a contribution of appreciated or depreciated property, resulting in book-tax differences. Such allocations are solely for U.S. federal income tax purposes and do not affect the book capital accounts or other economic or legal arrangements among the partners. The U.S. Treasury Department has issued regulations requiring partnerships to use a “reasonable method” for allocating items with respect to which there is a book-tax difference and outlining several reasonable allocation methods. Under certain available methods, the carryover basis of contributed properties in the hands of our Operating Partnership: (i) would cause us to be allocated lower amounts of depreciation deductions for tax purposes than would be allocated to us if all contributed properties were to have a tax basis equal to their fair market value at the time of the contribution; and (ii) in the event of a sale of such properties, could cause us to be allocated taxable gain in excess of the economic or book gain allocated to us as a result of such sale, with a corresponding benefit to the contributing partners. An allocation described in (ii) above might cause us to recognize taxable income in excess of cash proceeds in the event of a sale or other disposition of property, which might adversely affect our ability to comply with the REIT distribution requirements and may result in a greater portion of our distributions being taxed as dividends.

Basis in Partnership Interest. Our adjusted tax basis in our partnership interest in a Partnership generally is equal to:


•	the amount of cash and the basis of any other property contributed by us to the Partnership;


•	increased by our allocable share of the Partnership’s income and our allocable share of indebtedness of the Partnership; and

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•	reduced, but not below zero, by our allocable share of the Partnership’s loss and the amount of cash distributed to us, and by constructive distributions resulting from a reduction in our share of indebtedness of our Operating Partnership.

If the allocation of our distributive share of a Partnership’s loss would reduce the adjusted tax basis of our partnership interest below zero, the recognition of such loss will be deferred until such time as the recognition of such loss would not reduce our adjusted tax basis below zero. To the extent that a Partnership’s distributions, or any decrease in our share of the indebtedness of the Partnership, which is considered a constructive cash distribution to the partners, reduce our adjusted tax basis below zero, such distributions will constitute taxable income to us. Such distributions and constructive distributions normally will be characterized as long-term capital gain.

Sale of a Partnership’s Property

Generally, any gain realized by a Partnership on the sale of property held by the Partnership for more than one year will be long-term capital gain, except for any portion of such gain that is treated as depreciation or cost recovery recapture. Any gain or loss recognized by a Partnership on the disposition of contributed properties will be allocated first to the partners of the Partnership who contributed such properties to the extent of their built-in gain or loss on those properties for U.S. federal income tax purposes. The partners’ built-in gain or loss on such contributed properties will equal the difference between the partners’ proportionate share of the book value of those properties and the partners’ tax basis allocable to those properties at the time of the contribution, subject to certain adjustments. Any remaining gain or loss recognized by the Partnership on the disposition of the contributed properties, and any gain or loss recognized by the Partnership on the disposition of the other properties, will be allocated among the partners in accordance with their respective percentage interests in the Partnership.

Our share of any gain realized by a Partnership on the sale of any property held by the Partnership as inventory or other property held primarily for sale to customers in the ordinary course of the Partnership’s trade or business will be treated as income from a prohibited transaction that is subject to a 100% penalty tax. Such prohibited transaction income also may have an adverse effect upon our ability to satisfy the income tests for REIT status. See “— Gross Income Tests.” We do not presently intend to acquire or hold or to allow any Partnership to acquire or hold any property that represents inventory or other property held primarily for sale to customers in the ordinary course of our or such Partnership’s trade or business.

Legislative or Other Actions Affecting REITs

The present U.S. federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time. The REIT rules are constantly under review by persons involved in the legislative process and the IRS and the U.S. Treasury Department which may result in statutory changes as well as revisions to regulations and interpretations. Additionally, several of the tax considerations described herein are currently under review and are subject to change. Prospective stockholders are urged to consult with their tax advisors regarding the effect of potential changes to the U.S. federal tax laws on an investment in our Common Stock.

Foreign, State and Local Taxes

We and our subsidiaries and stockholders may be subject to foreign, state and local taxation in various jurisdictions, including those in which they or we transact business, own property or reside. We will likely own interests in properties located in a number of foreign jurisdictions, and we may be required to file tax returns and pay taxes in certain of those jurisdictions. The foreign, state or local tax treatment of our company and our stockholders may not conform to the U.S. federal income tax treatment discussed above. Prospective investors should consult their tax advisors regarding the application and effect of foreign, state or local income and other tax laws on an investment in our Common Stock.

The Code generally gives taxpayers the option of either deducting foreign taxes paid from taxable income or crediting such taxes against the taxpayer’s U.S. federal income tax liability. If we elected to receive the foreign tax credit, we could be able to use part of this credit to offset our liability for U.S. federal income tax, for example by distributing less than 100% (but more than 90%) of our net income, thus incurring a REIT-level U.S. federal income tax liability that could be offset with foreign tax credits. However, we may not be able to fully utilize our foreign tax credits depending upon the source of our foreign income and the timing of our payment of foreign and U.S. federal taxes. In addition, we will not be able to use our foreign tax credits to the extent that we do not otherwise have a U.S. federal income tax liability. In such cases, we could elect to deduct foreign taxes paid, which would reduce the amount that we are required to distribute annually to our stockholders regardless of whether we have any U.S. federal income tax liability. In either event, any foreign taxes incurred by us will not pass through to stockholders as a credit against their U.S. federal income tax liability.

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FOREIGN TAX CONSIDERATIONS

The following contains a general description of certain local country tax considerations that may be relevant regarding an investment in our Common Stock. It does not purport to be a comprehensive description of all relevant local country tax considerations. This summary is based upon tax laws, regulations and treaties in force and effect at the time of preparation of this prospectus. It is important to note that the relevant laws may change, possibly with retroactive effect. The following is intended only as a general and non-comprehensive summary and is not intended to be, nor should it be considered to be, legal or tax advice with respect to any country’s tax law. In case of doubt, potential investors should consult their professional tax advisers.

We will conduct our operations through property companies and holding companies established in multiple European jurisdictions. Each of these property and holding companies are subject to tax in one or more of the local country jurisdictions in which they are resident or conduct business. Accordingly, we may be subject to tax in several jurisdictions at rates ranging upwards of 39% on ordinary income and capital gains, with additional withholding of upwards of 35%. Additionally, we will generally be subject to real estate-related taxes (for example, property taxes and real estate transfer taxes) in the countries where the properties are located. Further, we may be subject to increased local country taxes in the event that changes are made to the current tax law, regulations, tax authority rulings, tax treaties or tax rates in the various European jurisdictions in which we operate.

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USE OF PROCEEDS

We will not receive any proceeds from the Distribution.

DETERMINATION OF OFFERING PRICE

No consideration will be paid for the shares of our Common Stock distributed in the Distribution.

LEGAL MATTERS

The validity of our Common Stock issued and distributed pursuant to this prospectus will be passed upon for us by Venable LLP, Baltimore, Maryland, our Maryland counsel. Certain federal income tax matters will be passed upon for us by Hunton & Williams LLP.

EXPERTS

On April 21, 2015, we appointed PricewaterhouseCoopers, Société coopérative, or PwC, as our initial independent registered public accounting firm.

The NorthStar Europe Predecessor’s combined financial statements as of December 31, 2014 and 2013 and the related combined statements of operations, comprehensive income (loss) and cash flows for the periods from January 1, 2014 through September 15, 2014 and September 16, 2014 through December 31, 2014, and the year ended December 31, 2013 appearing in this prospectus have been audited by Marcum LLP, or Marcum, an independent registered public accounting firm as stated in their report appearing elsewhere herein and are included in reliance upon such report and upon the authority of such firm as experts in accounting and auditing.

Such report did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. Moreover, during such periods: (i) there were no disagreements between us and Marcum on any matters of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Marcum, would have caused Marcum to make reference to the subject matter of the disagreement in its report on the NorthStar Europe Predecessor’s combined financial statements; and (ii) there were no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K .

The combined statement of revenues and certain expenses (Historical Summary) of the Trianon Tower for the year ended December 31, 2014, and the related notes thereto, appearing in this prospectus and registration statement have been audited by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, independent auditors, as set forth in their report thereon appearing elsewhere herein, and is included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The combined statements of revenues and certain expenses of the SEB Portfolio, IVG Portfolio and Internos Portfolio for the year ended December 31, 2014 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers, Société coopérative, independent accountants, given on the authority of said firm as experts in auditing and accounting.

Prior to their engagement, neither we nor anyone acting on our behalf, consulted PwC regarding any of the matters or events set forth in Item 304(a)(2) of Regulation S-K.

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ADDITIONAL INFORMATION

Before the date of this prospectus, we were not required to file reports with the SEC. We have filed with the SEC a registration statement under the Securities Act on Form S-11 with respect to the shares of our Common Stock being distributed to NorthStar Realty common stockholders in the Distribution. This prospectus, which is a part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits related thereto filed with the SEC, reference to which is made hereby. Statements in this prospectus as to the contents of any contract, agreement or other document are qualified in all respects by reference to such contract, agreement or document. If we have filed any of those contracts, agreements or other documents as an exhibit to the registration statement, you should read the full text of such contract, agreement or document for a more complete understanding of the document or matter involved. For further information with respect to us and our Common Stock, we refer you to the registration statement, including the exhibits and the schedules filed as a part of it.

We intend to furnish the holders of our Common Stock with annual reports and proxy statements containing financial statements audited by an independent registered public accounting firm and to file with the SEC quarterly reports for the first three quarters of each fiscal year containing interim unaudited financial information. We also intend to furnish other reports as we may determine or as required by law.

The registration statement of which this prospectus forms a part and its exhibits and schedules, and other documents that we will file with the SEC, can be inspected without charge and copied at, and copies can be obtained from, the SEC’s public reference room. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. In addition, our SEC filings are available to the public at the SEC’s website at www.sec.gov. We expect to list our Common Stock on the NYSE. If and when our stock is listed on the NYSE, you can also obtain reports, proxy statements and other information about us at the NYSE’s website at www.nyse.com.

Information that we file with the SEC after the date of this prospectus may supersede the information in this prospectus. You may read these reports, proxy statements and other information and obtain copies of such documents and information as described above.

No person is authorized to give any information or to make any representations other than those contained in this prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized. Neither the delivery of this prospectus nor any distribution of securities made hereunder shall imply that there has been no change in the information set forth or in our affairs since the date hereof.

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Index to Financial Statements



NorthStar Europe Predecessor Audited Combined Financial Statements
Report of Independent Registered Public Accounting Firm		F-2
Combined Balance Sheets as of December 31, 2014 and 2013		F-3
Combined Statements of Operations for the years ended December 31, 2014 and 2013		F-4
Combined Statements of Comprehensive Income (Loss) for the years ended December 31, 2014 and 2013		F-5
Combined Statements of Cash Flows for the years ended December 31, 2014 and 2013		F-6
Notes to Combined Financial Statements		F-7
NorthStar Europe Predecessor Unaudited Combined Interim Financial Statements
Combined Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014		F-16
Combined Statements of Operations for the six months ended June 30, 2015 and 2014 (unaudited)		F-17
Combined Statements of Comprehensive Income (Loss) for the six months ended June 30, 2015 and 2014 (unaudited)		F-18
Combined Statements of Cash Flows for the six months ended June 30, 2015 and 2014 (unaudited)		F-19
Notes to Combined Financial Statements (unaudited)		F-20
SEB Portfolio
Report of Independent Auditors		F-27
Combined Statements of Revenues and Certain Expenses for the six months ended June 30, 2015 (unaudited) and for the year ended December 31, 2014		F-28
Notes to Combined Statements of Revenues and Certain Expenses for the six months ended June 30, 2015 (unaudited) and for the year ended December 31, 2014		F-29
Trianon Tower
Report of Independent Auditors		F-31
Combined Statements of Revenues and Certain Expenses for the six months ended June 30, 2015 (unaudited) and for the year ended December 31, 2014		F-32
Notes to Combined Statements of Revenues and Certain Expenses for the six months ended June 30, 2015 (unaudited) and for the year ended December 31, 2014		F-33
IVG Financials
Report of Independent Auditors		F-35
Combined Statements of Revenues and Certain Expenses for the six months ended June 30, 2015 (unaudited) and for the year ended December 31, 2014		F-36
Notes to Combined Statements of Revenues and Certain Expenses for the six months ended June 30, 2015 (unaudited) and for the year ended December 31, 2014		F-37
Internos Financials
Report of Independent Auditors		F-39
Combined Statements of Revenues and Certain Expenses for the six months ended June 30, 2015 (unaudited) and for the year ended December 31, 2014		F-40
Notes to Combined Statements of Revenues and Certain Expenses for the six months ended June 30, 2015 (unaudited) and for the year ended December 31, 2014		F-41

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Audit Committee of the

Board of Directors and Shareholders

of NorthStar Realty Finance Corp.

We have audited the accompanying combined balance sheets of NorthStar Europe Predecessor (the “Company”) as of December 31, 2014 and 2013, and the related combined statements of operations, comprehensive income (loss) and cash flows for the periods from January 1, 2014 through September 15, 2014 and September 16, 2014 through December 31, 2014, and the year ended December 31, 2013. 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 financial statements referred to above present fairly, in all material respects, the financial position of NorthStar Europe Predecessor as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the for the periods from January 1, 2014 through September 15, 2014 and September 16, 2014 through December 31, 2014, and the year ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America.

/s/ Marcum LLP

Marcum LLP

Bala Cynwyd, PA

July 2, 2015

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NORTHSTAR EUROPE PREDECESSOR

COMBINED BALANCE SHEETS

(Dollars in Thousands)



	NorthStar Owner Period		Prior Owner Period
	December 31, 2014		December 31, 2013
Assets
Cash	$	1,552	$	1,350
Restricted cash	5,277		1,591
Operating real estate, net	54,896		59,201
Receivables	740		335
Unbilled rent receivable	264		560
Derivative assets, at fair value	1,080		—
Deferred costs and intangible assets, net	36,006		27,914
Other assets	3,011		—
Total assets	$	102,826	$	90,951

Liabilities and Equity
Mortgage notes payable	$	77,660	$	47,895
Accounts payable and accrued expenses	1,698		12,651
Derivative liabilities, at fair value	—		4,187
Other liabilities	2,589		2,634
Total liabilities	81,947		67,367
NorthStar Europe Predecessor equity	19,821		23,584
Non-controlling interest	1,058		—
Total equity	20,879		23,584
Total liabilities and equity	$	102,826	$	90,951

Refer to accompanying notes to the combined financial statements.

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NORTHSTAR EUROPE PREDECESSOR

COMBINED STATEMENTS OF OPERATIONS

(Dollars in Thousands)



	NorthStar Owner Period			Prior Owner Period
	Period from September 16, 2014 to December 31, 2014			Period from January 1 to September 15, 2014			Year Ended December 31, 2013
Revenues
Rental and escalation income	$	2,722		$	7,162		$	9,869
Other revenues	39			1,290			1,129
Total revenues	2,761			8,452			10,998
Expenses
Operating expenses	1,181			3,113			4,002
Transaction costs	4,198			—			—
Interest expense	165			3,486			4,666
General and administrative expenses	1,207			4,676			340
Depreciation and amortization	1,088			2,294			3,155
Total expenses	7,839			13,569			12,163
Other income (loss)
Unrealized gain (loss) on investments and other	(210		)	2,110			2,798
Net income (loss)	(5,288		)	(3,007		)	1,633
Net (income) loss attributable to non-controlling interest	276			—			—
Net income (loss) attributable to the NorthStar Europe Predecessor	$	(5,012	)	$	(3,007	)	$	1,633

Refer to accompanying notes to the combined financial statements.

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NORTHSTAR EUROPE PREDECESSOR

COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands)



	NorthStar Owner Period			Prior Owner Period
	Period from September 16, 2014 to December 31, 2014			Period from January 1 to September 15, 2014			Year Ended December 31, 2013
Net income (loss)	$	(5,288	)	$	(3,007	)	$	1,633
Other comprehensive income (loss):
Foreign currency translation adjustment	(4,648		)	(57		)	(981		)
Total other comprehensive income (loss)	(9,936		)	(3,064		)	652
Comprehensive income (loss)
Comprehensive (income) loss attributable to non-controlling interest	588			—			—
Comprehensive income (loss) attributable to NorthStar Europe Predecessor	$	(9,348	)	$	(3,064	)	$	652

Refer to accompanying notes to the combined financial statements.

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NORTHSTAR EUROPE PREDECESSOR

COMBINED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)



	NorthStar Owner Period			Prior Owner Period
	Period from September 16, 2014 to December 31, 2014			Period from January 1 to September 15, 2014			Year Ended December 31, 2013
Cash flows from operating activities:
Net income (loss)	$	(5,288	)	$	(3,007	)	$	1,633
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization	1,088			2,294			3,155
Amortization of deferred financing costs	18			—			—
Amortization of discount on borrowing	—			846			1,120
Unrealized (gain) loss on investments and other	210			(2,110		)	(2,798		)
Amortization of capitalized above/below market leases	37			37			68
Straight line rental income	(270		)	(352		)	(958		)
Changes in operating assets and liabilities:
Restricted cash	(2,839		)	1,170			(116		)
Receivables	(57		)	189			42
Other assets	(1,726		)	—			—
Accounts payable and accrued expenses	549			(1,979		)	4,879
Other liabilities	1,550			231			220
Net cash provided by (used in) operating activities	(6,728		)	(2,681		)	7,245
Cash flows from investing activities:
Acquisitions of operating real estate, net	(89,484		)	—			—
Improvements of operating real estate	(161		)	(2,307		)	(7,263		)
Net cash (used in) investing activities	(89,645		)	(2,307		)	(7,263		)
Cash flows from financing activities:
Borrowings from mortgage notes	77,660			481			—
Repayment of mortgage notes	—			(527		)	(656		)
Payment of deferred financing costs	(643		)	—			—
Purchase of derivative instruments	(1,249		)	—			—
Change in restricted cash	(2,562		)	—			—
Net transactions with NorthStar Realty	27,400			—			—
Contributions from non-controlling interest	2			—			—
Net cash provided by (used in) financing activities	100,608			(46		)	(656		)
Effect of foreign currency translation on cash	(2,683		)	3,722			545
Net change in cash	1,552			(1,312		)	(129		)
Cash - beginning of period	—			1,350			1,479
Cash - end of period	$	1,552		$	38		$	1,350

Supplemental disclosure of cash flow information
Cash paid during the year for interest	$	2,355		$	2,286		$	3,516

Refer to accompanying notes to the combined financial statements.

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NORTHSTAR EUROPE PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS


1.	Business and Organization

NorthStar Realty Finance Corp. (“NorthStar Realty”) is a diversified commercial real estate company listed on the New York Stock Exchange (“NYSE”) that qualifies as a real estate investment trust (“REIT”). NorthStar Realty is externally managed and advised by an affiliate of NorthStar Asset Management Group Inc. (NYSE: NSAM), which together with its affiliates is referred to as NSAM.

On February 26, 2015 (the “Announcement Date”), NorthStar Realty announced that its board of directors unanimously approved a plan to spin-off its European real estate business (the “Proposed European Spin”) into a newly-formed publicly-traded REIT, NorthStar Realty Europe Corp. (“NRE”) expected to be listed on the NYSE. NSAM will manage NRE pursuant to a long-term management agreement, on substantially similar terms as NorthStar Realty’s management agreement with NSAM. The Proposed European Spin is expected to be completed in the second half of 2015.

On the Announcement Date, NorthStar Realty’s European properties consisted of a $100 million multi-tenant leasehold office complex located in the United Kingdom (the “U.K. Complex”) purchased on September 16, 2014 (“NorthStar Acquisition Date”) from an unrelated third party and $1.9 billion of commitments to purchase two portfolios of primarily multi-tenant office properties from unrelated third parties, that closed in April 2015 (“European Portfolios”). In addition, in June 2015, NorthStar Realty entered into a definitive agreement to purchase a $600 million office tower located in Frankfurt, Germany from an unrelated third party which is expected to close in the third quarter of 2015 (“Trianon Tower”), together with the European Portfolios, (the “New European Investments”). The U.K. Complex, together with the New European Investments, cash and any other related assets, liabilities or activities are expected to be contributed by NorthStar Realty to NRE as part of the Proposed European Spin.

The U.K. Complex and activities related to the launch of the European real estate business, which includes an allocation of certain costs and expenses, comprises the business of NRE (the “European Real Estate Business”). Previously, the U.K. Complex was acquired by IMV Immobilien SE (“IMW”) on July 13, 2012 (“IMW Acquisition Date”). IMW is referred to as the Prior Owner. The period from the NorthStar Acquisition Date to December 31, 2014 is referred to as the NorthStar Owner Period and the period from January 1, 2014 to September 15, 2014, including an allocation of certain costs and expenses related to the European Real Estate Business, and the year ended December 31, 2013 are referred to as the Prior Owner Period. The NorthStar Owner Period together with the Prior Owner Period is referred to as NorthStar Europe Predecessor or the Company.


2.	Summary of Significant Accounting Policies

Basis of Accounting

The accompanying combined financial statements and related notes of the Company are presented on a carve-out basis and have been prepared from the historical combined balance sheets, statements of operations and cash flows attributed to the NorthStar Europe Predecessor in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Historically, financial statements of the NorthStar Europe Predecessor have not been prepared as it has not operated separately from NorthStar Realty. These combined financial statements reflect the revenues and direct expenses of the NorthStar Europe Predecessor and include material assets and liabilities of NorthStar Realty that are specifically identifiable to the Company. Additionally, the combined financial statements include an allocation of costs and expenses by NorthStar Realty related to the NorthStar Europe Predecessor (primarily compensation and other general and administrative expense) based on an estimate of expenses had the NorthStar Europe Predecessor been run as an independent entity. This allocation method is principally based on relative head count and management’s knowledge of the operations of the Company. The amounts allocated in the accompanying combined financial statements are not necessarily indicative of the actual amount of such indirect expenses that would have been recorded had the Company been a separate independent entity. The Company believes the assumptions underlying its allocation of indirect expenses are reasonable. In addition, an estimate of management fees to NSAM of $0.1 million was recorded for the NorthStar Owner Period as if NRE was managed as an independent entity and is included in general and administrative expenses.

Such unaudited interim combined financial statements include all adjustments considered necessary for a fair presentation of the NorthStar Europe Predecessor’s financial position and results of operations and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year.

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NORTHSTAR EUROPE PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

The Company was determined to be the predecessor for accounting purposes and accordingly, followed S-X Rules 3-01 through 3-04 and Rule 12-28. Because the U.K. Complex was acquired from an unrelated third party on September 16, 2014, a “blackline” presentation for the change in basis giving effect to purchase accounting pursuant to U.S. GAAP is presented.

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 combined 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 entity as a result of a preferred return and allocation formula, if any, as described in such governing documents.

Estimates

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

Comprehensive Income (Loss)

The Company reports combined comprehensive income (loss) in separate statements following the combined statements of operations. Comprehensive income (loss) is defined as the change in equity resulting from net income (loss) and OCI. OCI includes foreign currency translation adjustment.

Restricted Cash

Restricted cash consists of amounts related to operating real estate such as escrows for taxes, insurance, capital expenditures, tenant security deposits, payments required under certain lease agreements.

Operating Real Estate

Operating real estate is carried at historical cost less accumulated depreciation. Costs directly related to an acquisition deemed to be a business combination are expensed and included in transaction costs in the combined statements of operations. Ordinary repairs and maintenance are expensed as incurred. Major replacements and betterments which improve or extend the life of the asset are capitalized and depreciated over their useful life.

Operating real estate is depreciated using the straight-line method over the estimated useful lives of the assets, summarized as follows:



Category:		Term:
Buildings		40 years
Building leasehold interests		Lesser of 40 years or remaining term of the lease
Land improvements		15 years
Tenant improvements		Lesser of the useful life or remaining term of the lease
Equipment		5 to 7 years

The Company follows the purchase method for an acquisition of operating real estate, where the purchase price is allocated to tangible assets such as land, building, tenant and land improvements and other identified intangible assets and liabilities.

The following is a schedule of future contractual minimum rental income under leases as of December 31, 2014 (dollars in thousands):



Years Ending December 31:
2015	$	5,183
2016	5,507
2017	5,907
2018	5,289
2019	4,915
Thereafter	4,889
Total	$	31,690

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NORTHSTAR EUROPE PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

Cash

Cash 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.

Deferred Costs

Deferred costs include deferred financing costs and deferred lease costs. Deferred financing costs represent commitment fees, legal and other third-party costs associated with obtaining financing. These costs are amortized to interest expense over the term of the financing using either the effective interest method or straight-line method depending on the type of financing. Unamortized deferred financing costs are expensed when the associated borrowing is repaid before maturity. Costs incurred in seeking financing transactions, which do not close, are expensed in the period such financing transaction was terminated. Deferred lease costs consist of fees incurred to initiate and renew operating leases, which are amortized on a straight-line basis over the remaining lease term and is recorded to depreciation and amortization in the combined statements of operations.

Identified Intangibles

The Company records acquired identified intangibles, which includes intangible assets (such as value of the above-market leases, in-place leases and other intangibles) and intangible liabilities (such as the value of below-market leases), based on estimated fair value. The value allocated to the above or below-market leases is amortized over the remaining lease term as a net adjustment to rental income. Other intangible assets are amortized into depreciation and amortization expense on a straight-line basis over the remaining lease term. The weighted average amortization period for above-market leases, below-market leases and in-place lease costs is 7.8 years, 5.7 years and 6.3 years for the NorthStar Owner Period, the period from January 1, 2014 to September 15, 2014 and the year ended December 31, 2013, respectively.

The Company recorded an immaterial amount of amortization of below-market leases for the NorthStar Owner Period, the period from January 1, 2014 to September 15, 2014 and the year ended December 31, 2013, respectively. Amortization of other intangible assets was $0.6 million, $0.7 million and $1.2 million for the NorthStar Owner Period, the period from January 1, 2014 to September 15, 2014 and the year ended December 31, 2013, respectively.

Identified intangible assets are recorded in deferred costs and intangible assets and identified intangible liabilities are recorded in other liabilities on the consolidated balance sheets.

The following table presents identified intangibles as of December 31, 2014 (dollars in thousands):



	Intangibles Assets						Intangible Liabilities
	Above-market Leases			Other ⁽¹⁾			Below-market Leases
Gross amount	$	1,657		$	33,231		$	(151	)
Accumulated amortization	(54		)	(578		)	18
Total	$	1,603		$	32,653		$	(133	)

_______________

(1) Primarily represents the value of in-place leases and below market ground lease.

The following table presents annual amortization of intangible assets and liabilities as of December 31, 2014 (dollars in thousands):



			Above and
Years Ending	Other		Below Market
December 31:	Intangibles ⁽¹⁾		Leases, Net ⁽¹⁾
2015	$	1,738	$	122
2016	1,344		119
2017	964		166
2018	838		160
2019	812		156
Thereafter	26,957		747
Total	$	32,653	$	1,470

_______________

(1) Identified intangibles will be amortized through periods ending December 2025.

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NORTHSTAR EUROPE PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

Revenue Recognition

Operating Real Estate

Rental and escalation income from operating real estate is derived from leasing of space to various types of tenants. The leases are for fixed terms of varying length and generally provide for annual rentals and expense reimbursements to be paid in quarterly installments. Rental income from leases is recognized on a straight-line basis over the term of the respective leases. The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in unbilled rent receivable on the combined balance sheets. Escalation income represents revenue from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes paid by the Company on behalf of the respective property. This revenue is accrued in the same period as the expenses are incurred.

Fair Value

Fair Value Measurement

The Company follows fair value guidance in accordance with U.S. GAAP to account for its financial instruments. The Company categorizes its financial instruments, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

Financial assets and liabilities recorded at fair value on our combined balance sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1. Quoted prices for identical assets or liabilities in an active market.

Level 2. Financial assets and liabilities whose values are based on the following:

(a) Quoted prices for similar assets or liabilities in active markets.

(b) Quoted prices for identical or similar assets or liabilities in non-active markets.


(c)	Pricing models whose inputs are observable for substantially the full term of the asset or liability.


(d)	Pricing models whose inputs are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability.

Level 3. Prices or valuation techniques based on inputs that are both unobservable and significant to the overall fair value measurement.

As of December 31, 2014 and 2013, the Company’s sole recurring financial measurements recorded at fair value were its derivative assets/liabilities. Such derivative instruments are valued using a third-party pricing service. These quotations are not adjusted and are generally based on valuation models with observable inputs such as interest rates and contractual cash flow, and as such, are classified as Level 2 of the fair value hierarchy.

Impairment

The Company’s real estate portfolio is reviewed on a quarterly basis, or more frequently as necessary, to assess whether there are any indicators that the value of its operating real estate may be impaired or that its carrying value may not be recoverable. A property’s value is considered impaired if the Company’s estimate of the aggregate expected future undiscounted cash flow to be generated by the property is less than the carrying value of the property. In conducting this review, the Company considers global macroeconomic factors, including real estate sector conditions, together with investment specific and other factors. To the extent an impairment has occurred, the loss is measured as the excess of the carrying value of the property over the estimated fair value of the property. The Company did not record impairment for the periods presented.

Derivatives

The Company uses derivative instruments as a strategy to manage interest rate risk and does not enter into derivative instruments for trading or speculative purposes. The Company’s derivative instruments are recorded on the balance sheet at fair value and do not qualify as hedges under U.S. GAAP. Therefore, the change in fair value of derivative instruments are recorded in earnings.

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NORTHSTAR EUROPE PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

Foreign Currency

Income Taxes

Income taxes are accounted for by the asset/liability approach in accordance with U.S. GAAP. Deferred taxes 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. The provision for income taxes represents the total of income taxes paid or payable for the current year, plus the change in deferred taxes during the year. Income tax for the periods presented was immaterial.

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. The accounting standard update will replace most of the existing revenue recognition guidance currently promulgated by U.S. GAAP. In April 2015, the FASB proposed a one-year deferral of the effective date of the new revenue standard to January 1, 2018. The Company is in the process of evaluating the impact, if any, of the update on its combined financial position, results of operations and financial statement disclosures.

In April 2015, the FASB issued an accounting update changing the presentation of financing costs in financial statements. Under the new guidance, an entity would present these costs in the balance sheet as a direct deduction from the related liability rather than as an asset. Amortization of the costs would be reported as interest expense. The new guidance is effective for annual periods and interim periods beginning after December 15, 2015, with early adoption permitted. The Company is currently assessing the impact of the guidance on the Company’s combined financial position, results of operations and financial statement disclosures.


3.	Operating Real Estate

The following table presents operating real estate, net as of December 31, 2014 and 2013 (dollars in thousands):



	NorthStar Owner			Prior Owner
	Period ⁽¹⁾			Period ⁽²⁾
	December 31,			December 31,
	2014			2013
Building, leasehold interests and improvements	$	51,646		$	57,483
Tenant improvements	3,767			4,650
Subtotal	55,413			62,133
Less: Accumulated depreciation	(517		)	(2,932		)
Operating real estate, net	$	54,896		$	59,201

_____________


(1)	NorthStar Realty has a 93.25% ownership interest in the U.K. Complex.


(2)	IMW acquired the shares in Firefly Limited, a Jersey subsidiary formed as the direct owner of the U.K. Complex for £16 million. The fair value of the U.K. Complex on the IMW Acquisition Date was $79 million.

Rental income and service charges to related party tenants was $1.6 million and $1.1 million for the year ended December 31, 2013 and the period from January 1, 2014 to September 15, 2014, respectively.

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NORTHSTAR EUROPE PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

The following table presents the final allocation of the purchase price of the assets acquired and liabilities of the IMW Acquisition Date, which is the basis used to record depreciation and amortization expense for the Prior Owner Period.



Assets:
Buildings, leasehold interests and improvements	$	48,820
Acquired intangibles	29,839
Total assets acquired	$	78,659

Liabilities:
Mortgage notes payable	$	44,345
Other liabilities assumed	10,235
Total liabilities	54,580
Total Company's equity	24,079
Total equity	24,079
Total liabilities and equity	$	78,659

The following table presents the preliminary allocation of the purchase price of the assets acquired on the NorthStar Acquisition Date, which is the basis used to record depreciation and amortization expense for the NorthStar Owner Period.



Assets:
Buildings, leasehold interests and improvements	$	57,434
Acquired intangibles	36,328
Total assets acquired	$	93,762

Total Company’s equity	$	92,116
Non-controlling interest	1,646
Total equity	93,762
Total liabilities and equity	$	93,762

Depreciation expense was $0.5 million, $1.6 million and $1.9 million for the NorthStar Owner Period, the period from January 1, 2014 to September 15, 2014 and the year ended December 31, 2013, respectively.


4.	Mortgage Notes Payable

The following table presents the Company’s borrowings as of December 31, 2014 and 2013 (dollars in thousands):



NorthStar Owner Period ⁽¹⁾	Principal Amount		Contractual Interest Rate	Maturity Date
As of December 31, 2014:
Mortgage notes payable	$	77,660	LIBOR plus 3.00%	December 2019

Prior Owner Period ⁽²⁾
As of December 31, 2013:
Mortgage note payable	$	47,895	LIBOR plus 0.95%	April 2015

_______________


(1)	Includes a non-recourse senior mortgage and mezzanine mortgage note entered into by NorthStar Realty in December 2014 (“New Borrowing”). The New Borrowing is interest only and the contractual interest rate represents a weighted average. The mezzanine note of $14.6 million with a fixed interest rate of 8%. Amount represents a weighted average.

(2)

Represents a non-recourse senior mortgage note assumed by IMW in connection with its acquisition (“Initial Borrowing”). The Initial Borrowing was secured by the U.K. Complex and a Jersey security interest over the shares in Firefly Limited. The Initial Borrowing had quarterly principal amortization of £105,000. The Initial Borrowing was repaid in connection with the acquisition of the U.K. Complex by NorthStar Realty.

The carrying value of mortgage notes payable approximates fair value as of December 31, 2014 and 2013, as such amounts bear floating rates of interest. These fair value measurements are based on observable inputs, and as such, are classified as Level 2 of the fair value hierarchy.

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NORTHSTAR EUROPE PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)


5.	Equity

The combined financial statements of the Company represent the operations of various subsidiaries of the NorthStar Europe Predecessor and include an allocation of costs and expenses of NorthStar Realty related to the NorthStar Europe Predecessor. The following table presents a rollforward of equity for the NorthStar Owner Period, the Prior Owner Period from January 1, 2014 to September 15, 2014 and the year ended December 31, 2013 (dollars in thousands):



Balance as of December 31, 2012	$	22,932
Net income (loss)	1,633
Other comprehensive income (loss)	(981		)
Balance as of December 31, 2013	23,584

Net income (loss)	(3,007		)
Other comprehensive income (loss)	(57		)
Balance as of September 15, 2014	20,520

Balance as of September 16, 2014	—
Net income (loss)	(5,288		)
Other comprehensive income (loss)	(4,060		)
Net transactions with NorthStar Realty	29,169
Non-controlling interest	1,058
Balance as of December 31, 2014	$	20,879

Net transactions with NorthStar Realty represent contributions or distributions related to the operating activities between the Company and NorthStar Realty, which includes certain non-cash activity. The Company had no past borrowing arrangements with NorthStar Realty. There are currently no borrowing arrangements with NorthStar Realty.

Non-controlling interest at December 31, 2014 represents a third party 6.75% equity interest in the U.K. Complex that is consolidated with the Company’s combined financial statements. Net income (loss) attributable to non-controlling interest for the period from September 16, 2014 to December 31, 2014 was a net loss of $0.3 million. There was no non-controlling interest for the period from January 1, 2014 to September 15, 2014 and the year ended December 31, 2013.


6.	Derivatives

The following table presents derivative instruments that were not designated as hedges under U.S. GAAP as of December 31, 2014 and 2013 (dollars in thousands):



NorthStar Owner Period	Number	Notional Amount		Fair Value Net Asset (Liability)			Fixed LIBOR / Forward Rate	Maturity
As of December 31, 2014:
Interest rate cap ⁽¹⁾	1	$	63,099	$	1,080		2.0%	January 2020

Prior Owner Period
As of December 31, 2013:
Interest rate swaps	4	$	49,513	$	(4,187	)	6.4%	April 2015

_______________


(1)	In connection with the New Borrowing, in December 2014, the Company entered into a multi-year interest rate cap agreement.

The Company recognized an unrealized loss on derivative instruments related to fair value adjustments of $0.2 million and an unrealized gain of $2.1 million and $2.8 million for the NorthStar Owner Period, the period from January 1, 2014 to September 15, 2014 and the year ended December 31, 2013, respectively.


7.	Credit Risk Concentrations

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NORTHSTAR EUROPE PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

has approximately 48.6% of rental revenue generated from two tenants during the NorthStar Owner Period. The Company believes it is well diversified and does not have any other concentrations of credit risks.


8.	Commitments and Contingencies

The Company is 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 result of operations.


9.	Subsequent Events

The Company has evaluated events and transactions that may have occurred since December 31, 2014 through July 2, 2015, the date the financial statements were available for issuance and noted no items requiring adjustments or additional disclosure to the combined financial statements.

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NorthStar Europe Predecessor

Unaudited Combined Interim Financial Statements

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NORTHSTAR EUROPE PREDECESSOR

COMBINED BALANCE SHEETS

(Dollars in Thousands)



	NorthStar Owner Period
	June 30, 2015 (Unaudited)		December 31, 2014
Assets
Cash	$	3,265	$	1,552
Restricted cash	6,106		5,277
Operating real estate, net	54,985		54,896
Receivables	1,031		740
Unbilled rent receivable	694		264
Derivative assets, at fair value	1,134		1,080
Deferred costs and intangible assets, net	35,232		36,006
Other assets	2,245		3,011
Total assets	$	104,692	$	102,826

Liabilities and Equity
Mortgage notes payable	$	78,585	$	77,660
Accounts payable and accrued expenses	824		1,698
Other liabilities	2,706		2,589
Total liabilities	82,115		81,947
NorthStar Europe Predecessor equity	21,439		19,821
Non-controlling interest	1,138		1,058
Total equity	22,577		20,879
Total liabilities and equity	$	104,692	$	102,826

Refer to accompanying notes to the combined financial statements.

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NORTHSTAR EUROPE PREDECESSOR

COMBINED STATEMENTS OF OPERATIONS

(Dollars in Thousands)

(Unaudited)



	NorthStar Owner Period			Prior Owner Period
	Six Months Ended June 30, 2015			Six Months Ended June 30, 2014
Revenues
Rental and escalation income	$	4,753		$	5,181
Other revenues	1			925
Total revenues	4,754			6,106
Expenses
Operating expenses	1,770			2,212
Interest expense	1,523			2,453
General and administrative expenses	1,358			3,922
Depreciation and amortization	1,814			1,593
Total expenses	6,465			10,180
Other income (loss)
Unrealized gain (loss) on investments and other	41			1,414
Realized gain (loss) on investments and other	(14		)	—
Income (loss) before income tax benefit (expense)	(1,684		)	(2,660		)
Income tax benefit (expense)	107			(3		)
Net income (loss)	(1,577		)	(2,663		)
Net (income) loss attributable to non-controlling interest	21			—
Net income (loss) attributable to the NorthStar Europe Predecessor	$	(1,556	)	$	(2,663	)

Refer to accompanying notes to the combined financial statements.

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NORTHSTAR EUROPE PREDECESSOR

COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands)

(Unaudited)



	NorthStar Owner Period			Prior Owner Period
	Six Months Ended June 30, 2015			Six Months Ended June 30, 2014
Net income (loss)	$	(1,577	)	$	(2,663	)
Other comprehensive income (loss):
Foreign currency translation adjustment	289			483
Total other comprehensive income (loss)	(1,288		)	(2,180		)
Comprehensive income (loss)
Comprehensive (income) loss attributable to non-controlling interest	—			—
Comprehensive income (loss) attributable to NorthStar Europe Predecessor	$	(1,288	)	$	(2,180	)

Refer to accompanying notes to the combined financial statements.

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NORTHSTAR EUROPE PREDECESSOR

COMBINED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)



	NorthStar Owner Period			Prior Owner Period
	Six Months Ended June 30, 2015			Six Months Ended June 30, 2014
Cash flows from operating activities:
Net income (loss)	$	(1,577	)	$	(2,663	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization	1,814			1,593
Amortization of deferred financing costs	172			—
Amortization of discount on borrowings	—			592
Unrealized (gain) loss on investments and other	(41		)	(1,414		)
Realized (gain) loss on investments and other	14			—
Amortization of capitalized above/below market leases	115			43
Straight line rental income, net	(414		)	(262		)
Allocation of costs and expenses by NorthStar Realty	1,273			—
Changes in operating assets and liabilities:
Restricted cash	(1,162		)	7
Receivables	(32		)	207
Other assets	752			—
Accounts payable and accrued expense	393			4,451
Other liabilities	(42		)	—
Net cash provided by operating activities	1,265			2,554
Cash flows from investing activities:
Acquisitions of operating real estate, net	(94		)	—
Improvements of operating real estate	(684		)	(1,814		)
Deferred costs and intangible assets	—			(206		)
Change in restricted cash	440			—
Net cash (used in) investing activities	(338		)	(2,020		)
Cash flows from financing activities:
Repayment of mortgage notes	—			(348		)
Payment of deferred financing costs	(847		)	—
Net transactions with NorthStar Realty	1,593			—
Net cash provided by (used in) financing activities	746			(348		)
Effect of foreign currency translation on cash	40			(10		)
Net change in cash	1,713			176
Cash - beginning of period	1,552			1,350
Cash - end of period	$	3,265		$	1,526

Refer to accompanying notes to the combined financial statements.

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NORTHSTAR EUROPE PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS

(Unaudited)


1.	Business and Organization

On the Announcement Date, NorthStar Realty’s European properties consisted of a $100 million multi-tenant leasehold office complex located in the United Kingdom (the “U.K. Complex”) purchased on September 16, 2014 (“NorthStar Acquisition Date”) from an unrelated third party and $1.9 billion of commitments to purchase two portfolios of primarily multi-tenant office properties from unrelated third parties, that closed in April 2015 (“European Portfolios”). In addition, in June 2015, NorthStar Realty entered into a definitive agreement to purchase $600 million office tower located in Frankfurt, Germany from an unrelated third party which closed in July 2015 (“Trianon Tower” together with the European Portfolios, the “New European Investments”). The U.K. Complex, together with the New European Investments, cash and any other related assets, liabilities or activities are expected to be contributed by NorthStar Realty to NRE as part of the Proposed European Spin.

The U.K. Complex including an allocation of certain costs and expenses related to the launch of the European real estate business comprises the business of NRE (the “European Real Estate Business”). Previously, the U.K. Complex was acquired by IMV Immobilien SE (“IMW”) on July 13, 2012 (“IMW Acquisition Date”). IMW is referred to as the Prior Owner. The period from the NorthStar Acquisition Date to December 31, 2014 is referred to as the NorthStar Owner Period and the period from January 1, 2014 to September 15, 2014, including an allocation of certain costs and expenses related to the European Real Estate Business, is referred to as the Prior Owner Period. The NorthStar Owner Period together with the Prior Owner Period is referred to as NorthStar Europe Predecessor or the Company.


2.	Summary of Significant Accounting Policies

Basis of Quarterly Presentation

The accompanying combined financial statements and related notes of the Company are presented on a carve-out basis and have been prepared from the historical combined balance sheets, statements of operations and cash flows attributed to the NorthStar Europe Predecessor in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Historically, financial statements of the NorthStar Europe Predecessor have not been prepared as it has not operated separately from NorthStar Realty. These combined financial statements reflect the revenues and direct expenses of the NorthStar Europe Predecessor and include material assets and liabilities of NorthStar Realty that are specifically identifiable to the Company. Additionally, the combined financial statements include an allocation of costs and expenses by NorthStar Realty related to the NorthStar Europe Predecessor (primarily compensation and other general and administrative expense) based on an estimate of expenses had the NorthStar Europe Predecessor been run as an independent entity. This allocation method is principally based on relative head count and management’s knowledge of the operations of the Company. The amounts allocated in the accompanying combined financial statements are not necessarily indicative of the actual amount of such indirect expenses that would have been recorded had the Company been a separate independent entity. The Company believes the assumptions underlying its allocation of indirect expenses are reasonable. In addition, an estimate of management fees to NSAM of $0.2 million was recorded for the NorthStar Owner Period as if NRE was managed as an independent entity and is included in general and administrative expenses.

These combined financial statements should be read in conjunction with NorthStar Europe Predecessor’s audited combined financial statements and notes thereto included in the Form S-11 for the years ended December 31, 2014 and 2013.

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NORTHSTAR EUROPE PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Non-controlling Interests

A non-controlling interest is defined as the portion of the equity (net assets) 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 combined 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 entity as a result of a preferred return and allocation formula, if any, as described in such governing documents.

Estimates

Comprehensive Income (Loss)

Restricted Cash

Operating Real Estate

Cash

Deferred Costs

Deferred costs include deferred financing costs and deferred lease costs. Deferred financing costs represent commitment fees, legal and other third-party costs associated with obtaining financing. These costs are amortized to interest expense over the term of the financing using the straight-line method. Unamortized deferred financing costs are expensed when the associated borrowing is repaid before maturity. Costs incurred in seeking financing transactions, which do not close, are expensed in the period such financing transaction was terminated. Deferred lease costs consist of fees incurred to initiate and renew operating leases, which are amortized on a straight-line basis over the remaining lease term and is recorded to depreciation and amortization in the combined statements of operations.

Identified Intangibles

The Company records acquired identified intangibles, which includes intangible assets (such as value of the above-market leases, in-place leases and other intangibles) and intangible liabilities (such as the value of below-market leases), based on estimated fair value. The value allocated to the above or below-market leases is amortized over the remaining lease term as a net adjustment to rental income. Other intangible assets are amortized into depreciation and amortization expense on a straight-line basis over the remaining lease term. As of June 30, 2015 and December 31, 2014, the weighted average amortization period for above-market leases, below-market leases and in-place lease costs is 7.3 years and 7.8 years, respectively.

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NORTHSTAR EUROPE PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Revenue Recognition

Operating Real Estate

Fair Value

Fair Value Measurement

Financial assets and liabilities recorded at fair value on our combined balance sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1. Quoted prices for identical assets or liabilities in an active market.

Level 2. Financial assets and liabilities whose values are based on the following:


(a)	Quoted prices for similar assets or liabilities in active markets.


(b)	Quoted prices for identical or similar assets or liabilities in non-active markets.


(c)	Pricing models whose inputs are observable for substantially the full term of the asset or liability.


(d)	Pricing models whose inputs are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability.

Level 3. Prices or valuation techniques based on inputs that are both unobservable and significant to the overall fair value measurement.

As of June 30, 2015 and December 31, 2014, the Company’s sole recurring financial measurement recorded at fair value was its derivative asset. Such derivative instrument is valued using a third-party pricing service. This quotation is not adjusted and is generally based on valuation models with observable inputs such as interest rates and contractual cash flow, and as such, is classified as Level 2 of the fair value hierarchy.

Impairment

The Company’s real estate portfolio is reviewed on a quarterly basis, or more frequently as necessary, to assess whether there are any indicators that the value of its operating real estate may be impaired or that its carrying value may not be recoverable. A property’s value is considered impaired if the Company’s estimate of the aggregate expected future undiscounted cash flow to be generated by the property is less than the carrying value of the property. In conducting this review, the Company considers global macroeconomic factors, including real estate sector conditions, together with investment specific and other factors. To the extent an impairment has occurred, the loss will be measured as the excess of the carrying value of the property over the estimated fair value of the property. The Company did not record impairment for the periods presented.

Derivatives

The Company uses derivative instruments as a strategy to manage interest rate risk and does not enter into derivative instruments for trading or speculative purposes. The Company’s derivative instruments are recorded on the combined balance sheet at fair value and do not qualify as hedges under U.S. GAAP. Therefore, the change in fair value of derivative instruments are recorded in earnings.

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NORTHSTAR EUROPE PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Foreign Currency

Income Taxes

Recent Accounting Pronouncements

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 combined financial position, results of operations and financial statement disclosures.


3.	Operating Real Estate

The following table presents operating real estate, net as of June 30, 2015 and December 31, 2014 (dollars in thousands):



	June 30, 2015			December 31, 2014
Building, leasehold interests and improvements	$	52,566		$	51,646
Tenant improvements	3,857			3,767
Subtotal	56,423			55,413
Less: Accumulated depreciation	(1,438		)	(517		)
Operating real estate, net ⁽¹⁾	$	54,985		$	54,896

_____________


(1)	NorthStar Realty has a 93.25% ownership interest in the U.K. Complex.

Rental income and service charges to related party tenants was $0.7 million for the six months ended June 30, 2014.


4.	Mortgage Notes Payable

The following table presents the Company’s borrowings as of June 30, 2015 and December 31, 2014 (dollars in thousands):



	Principal Amount ⁽¹⁾		Contractual Interest Rate	Maturity Date
As of June 30, 2015:
Mortgage notes payable	$	78,585	⁽¹⁾	December 2019

As of December 31, 2014:
Mortgage notes payable	$	77,660	⁽¹⁾	December 2019

_______________


(1)	Includes a non-recourse senior mortgage and mezzanine mortgage note entered into by NorthStar Realty in December 2014 (“New Borrowing”). The New Borrowing is interest only and is comprised of $63.8 million principal amount of floating rate borrowing at GBP LIBOR plus 2.0% with a related $63.8 million notional interest rate cap of 2.0% and $14.7 million fixed rate borrowing at 8.0%.

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NORTHSTAR EUROPE PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The carrying value of mortgage notes payable approximates fair value as of June 30, 2015 and December 31, 2014, as such amounts bear floating rates of interest. Such fair value measurements are based on observable inputs, and as such, are classified as Level 2 of the fair value hierarchy.


5.	Equity

The combined financial statements of the Company represent the operations of various subsidiaries of the NorthStar Europe Predecessor and include an allocation of costs and expenses of NorthStar Realty related to the NorthStar Europe Predecessor. The following table presents a rollforward of equity for the NorthStar Owner Period and the Prior Owner Period for the six months ended June 30, 2015 and the year ended December 31, 2014 (dollars in thousands):



Balance as of December 31, 2013	$	23,584
Net income (loss)	(3,007		)
Other comprehensive income (loss)	(57		)
Balance as of September 15, 2014	20,520

Balance as of September 16, 2014	—
Net income (loss)	(5,288		)
Other comprehensive income (loss)	(4,060		)
Net transactions with NorthStar Realty	29,169
Non-controlling interest	1,058
Balance as of December 31, 2014	20,879

Net income (loss)	(1,577		)
Other comprehensive income (loss)	289
Net transactions with NorthStar Realty	2,906
Non-controlling interest	80
Balance as of June 30, 2015	$	22,577

Net transactions with NorthStar Realty represent contributions or distributions related to the operating activities between the Company and NorthStar Realty. The Company had no past borrowing arrangements with NorthStar Realty and NSAM. There are currently no borrowing arrangements with NorthStar Realty.

Non-controlling interest as of June 30, 2015 and December 31, 2014 represents a third party 6.75% equity interest in the U.K. Complex. Net loss attributable to non-controlling interest for the six months ended June 30, 2015 was $0.02 million. Other comprehensive income attributable to non-controlling interest for the six months ended June 30, 2015 was $0.02 million. There was no non-controlling interest for the six months ended June 30, 2014.

6. Derivatives

The following table presents derivative instruments that were not designated as hedges under U.S. GAAP as of June 30, 2015 and December 31, 2014 (dollars in thousands):



	Number	Notional Amount ⁽¹⁾		Fair Value Net Asset (Liability)		Fixed LIBOR / Forward Rate	Maturity
As of June 30, 2015:
Interest rate cap	1	$	63,850	$	1,134	2.00%	January 2020

As of December 31, 2014:
Interest rate cap	1	$	63,099	$	1,080	2.00%	January 2020

_______________


(1)	In connection with the New Borrowing, in December 2014, the Company entered into a multi-year interest rate cap agreement.

The Company recognized an unrealized gain on the interest rate cap agreement related to fair value adjustments of $0.04 million and $1.4 million for the six months ended June 30, 2015 and 2014, respectively.

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7.	Credit Risk Concentrations

Concentrations of credit risk arise when a number of tenants related to the Company’s investments are engaged in similar business activities or located in the same geographic location to be similarly affected by changes in economic conditions. The Company has approximately 48% of rental revenue generated from two tenants for the six months ended June 30, 2015. The Company believes it is well diversified and does not contain any unusual concentrations of credit risks.


8.	Commitments and Contingencies


9.	Subsequent Events

The Company has evaluated events and transactions that may have occurred since June 30, 2015 through August 19, 2015, the date the financial statements were available for issuance.

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SEB Portfolio

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REPORT OF INDEPENDENT AUDITORS

To the Shareholders of

NorthStar Realty Europe Corp.

We have audited the accompanying combined statements of revenues and certain expenses (the “Statements”) of SEB Portfolio (the “Properties”) for the year ended 31 December 2014.

Management’s Responsibility for the Statements of Revenues and Certain Expenses

Management is responsible for the preparation and fair presentation of the Statements in accordance with accounting principles generally accepted in the United States of America (GAAP) described in Note 2, this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the Statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the Statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Properties’ preparation and fair presentation of the Statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Properties’ internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the Statements referred to above present fairly, in all material respects, the revenues and certain expenses of the Properties for the year ended 31 December 2014 in conformity with accounting principles generally accepted in the United States of America.

Emphasis of Matter

We draw attention to Note 1 of the Statements, which describes the basis of accounting. The Statements were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the registration statement on Form S-11 of NorthStar Realty Europe Corp.), as described in Note 1. The presentation is not intended to be a complete presentation of the Properties’ revenues and expenses. Our opinion is not modified with respect to this matter.

/s/ PricewaterhouseCoopers, Société coopérative

Luxembourg

June 30, 2015

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SEB PORTFOLIO

COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES

(Dollars in Thousands)



	Six Months Ended June 30, 2015		Year Ended December 31, 2014
	Six Months Ended June 30, 2015		Year Ended December 31, 2014
Revenues	(Unaudited)
Rental income	$	36,230	$	80,500
Escalation income	3,676		5,617
Total revenues	39,906		86,117

Certain expenses
Real estate properties - operating expenses	5,564		8,400
Total expenses	5,564		8,400

Revenues in excess of certain expenses	$	34,342	$	77,717

The accompanying notes are an integral part to the combined statements of revenues and certain expenses.

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SEB PORTFOLIO

NOTES TO THE COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES

SIX MONTHS ENDED JUNE 30, 2015 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2014

1. Basis of Presentation

The SEB Portfolio (the “Properties”) are multi-tenant office properties located across seven European countries. The accompanying combined statements of revenues and certain expenses (the “Statements”) relate to the operations of the Properties.

The Statements have been prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended, and accordingly, are not representative of the actual results of operations of the Properties. Material amounts excluded consist of interest expense, depreciation and amortization and corporate general and administrative expenses.

2. Summary of Significant Accounting Policies

Revenue Recognition

Rental and escalation income from operating real estate is derived from leasing of space to tenants. The leases are for fixed terms of varying length and generally provide for annual rentals and expense reimbursements to be paid in monthly or quarterly installments. Rental income from leases is recognized on a straight-line basis over the term of the respective leases. Escalation income represents revenue from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes paid by the Properties. This revenue is accrued for in the same period as the expenses are incurred.

Use of Estimates

The preparation of the Statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that could affect the amounts of reported revenues and certain operating expenses. Actual results could differ from those estimates.

Commitments and Contingencies

The Properties may be subject to legal claims and disputes in the ordinary course of business. Management believes any settlement of any existing potential claims and dispute would not have a material impact on the Properties’ revenues and certain expenses.

3. Minimum Future Lease Rentals

There are various lease agreements in place with tenants to lease space in the Properties. As of December 31, 2014, the minimum future cash rents receivable under noncancelable operating leases in each of the next five years and thereafter are as follows (dollars in thousands) (unaudited):



Years Ending:
2015	$	76,749
2016	76,613
2017	74,874
2018	74,611
2019	72,966
Thereafter	100,143
	$	475,956

4. Subsequent Events

Management has evaluated the events and transactions that have occurred through June 30, 2015, the date which the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.

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Trianon Tower

F-30

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Report of Independent Auditors

Board of Directors and Stockholders

NorthStar Realty Europe Corp.

We have audited the combined statement of revenues and certain expenses (Historical Summary) of the Trianon Tower for the year ended December 31, 2014, and the related notes to the financial statement.

Management´s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the Historical Summary in conformity with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the Historical Summary that is free of material misstatement, whether due to fraud or error.

Auditor´s Responsibility

Our responsibility is to express an opinion on the Historical Summary based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Summary. The procedures selected depend on the auditor´s judgment, including the assessment of the risks of material misstatement of the Historical Summary, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity´s preparation and fair presentation of the Historical Summary in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion in the effectiveness of the entity´s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Historical Summary.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the Historical Summary referred to above present fairly, in all material respects, the revenues and certain expenses described in Note 2 of Trianon Tower for the year ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.

Basis of Accounting

As described in Note 2 to the financial statements, the Historical Summary has been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the registration statement on Form S-11 of NorthStar Realty Europe Corp., and are not intended to be a complete presentation of the Trianon Tower revenue and expenses. Our opinion is not modified with respect to this matter.

June 30, 2015

Ernst & Young GmbH

Wirtschaftsprüfungsgesellschaft

Eschborn/Frankfurt am Main, Germany

/s/ Enzenhofer

Wirtschaftsprüfer

(German Public Auditor)

/s/ Teuber

Wirtschaftsprüferin

(German Public Auditor)

F-31

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TRIANON TOWER

COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES

(Dollars in Thousands)



	Six Months Ended June 30, 2015		Year Ended December 31, 2014
	Six Months Ended June 30, 2015		Year Ended December 31, 2014
Revenues	(Unaudited)
Rental and escalation income	$	18,486	$	40,741
Total revenues	18,486		40,741

Certain expenses
Real estate property - operating expenses	4,532		12,467
Asset management expenses	641		1,514
Total expenses	5,173		13,981

Revenues in excess of certain expenses	$	13,313	$	26,760

The accompanying notes are an integral part to the combined statements of revenues and certain expenses.

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TRIANON TOWER

NOTES TO THE COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES

SIX MONTHS ENDED JUNE 30, 2015 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2014

1. Basis of Presentation

The Trianon Tower and the associated buildings (the “Property”) is a multi-tenant office property located in Frankfurt, Germany. The accompanying combined statements of revenues and certain expenses (the “Statements”) relate to the operations of the Property. The acquisition of the Property occurred on July 15, 2015.

The Statements have been prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended, and accordingly, are not representative of the actual results of operations of the Property. Material amounts excluded consist of interest expense, depreciation and amortization and corporate general and administrative expenses.

2. Summary of Significant Accounting Policies

Revenue Recognition

Rental and escalation income from operating real estate is derived from leasing of space to tenants. The leases are for fixed terms of varying length and generally provide for annual rentals and expense reimbursements to be paid in monthly installments. Rental income from leases is recognized on a straight-line basis over the term of the respective leases. Escalation income represents revenue from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes paid by the Property on behalf of the respective property. This revenue is accrued for in the same period as the expenses are incurred.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that could affect the amounts of reported revenues and certain operating expenses. Actual results could differ from those estimates.

Commitments and Contingencies

The Property may be subject to legal claims and disputes in the ordinary course of business. Management believes any settlement of any existing potential claims and dispute would not have a material impact on the Property’s revenues and certain expenses.

3. Minimum Future Lease Rentals

There are various lease agreements in place with tenants to lease space in the Property. As of December 31, 2014, the minimum future cash rents receivable under noncancelable operating leases in each of the next five years and thereafter are as follows (dollars in thousands) (unaudited):



Years Ending:
2015	$	31,198
2016	29,791
2017	29,836
2018	29,609
2019	29,378
Thereafter	136,523
	$	286,335

The above future minimum lease payments exclude tenant reimbursements.

4. Concentration of Credit Risk

Three and four tenants comprised approximately 75% of rental and escalation income for the year ended December 31, 2014 and six months ended June 30, 2015, respectively.

5. Subsequent Events

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IVG Portfolio

F-34

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REPORT OF INDEPENDENT AUDITORS

To the Shareholders of

NorthStar Realty Europe Corp.

We have audited the accompanying combined statements of revenues and certain expenses (the “Statements”) of IVG Portfolio (the “Properties”) for the year ended 31 December 2014.

Management’s Responsibility for the Statements of Revenues and Certain Expenses

Auditor’s Responsibility

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

Emphasis of Matter

/s/ PricewaterhouseCoopers, Société coopérative

Luxembourg

28 September 2015

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IVG PORTFOLIO

COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES

(Dollars in Thousands)



	Six Months Ended June 30, 2015		Year Ended December 31, 2014
	Six Months Ended June 30, 2015		Year Ended December 31, 2014
Revenues	(Unaudited)
Rental income	$	4,970	$	12,889
Escalation income	726		2,685
Total revenues	5,696		15,574

Certain expenses
Real estate properties - operating expenses	2,127		5,536
Total expenses	2,127		5,536

Revenues in excess of certain expenses	$	3,569	$	10,038

The accompanying notes are an integral part to the combined statements of revenues and certain expenses.

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IVG PORTFOLIO

NOTES TO THE COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES

SIX MONTHS ENDED JUNE 30, 2015 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2014

1. Basis of Presentation

The IVG Portfolio (the “Properties”) are multi-tenant office properties located across six European countries. The accompanying combined statements of revenues and certain expenses (the “Statements”) relate to the operations of the Properties.

2. Summary of Significant Accounting Policies

Revenue Recognition

Use of Estimates

Commitments and Contingencies

3. Minimum Future Lease Rentals



Years Ending:
2015	$	11,920
2016	9,922
2017	8,815
2018	8,424
2019	7,445
Thereafter	17,329
	$	63,855

4. Subsequent Events

Management has evaluated the events and transactions that have occurred through September 28, 2015, the date which the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.

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Internos Portfolio

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REPORT OF INDEPENDENT AUDITORS

To the Shareholders of

NorthStar Realty Europe Corp.

We have audited the accompanying combined statements of revenues and certain expenses (the “Statements”) of Internos Portfolio (the “Properties”) for the year ended 31 December 2014.

Management’s Responsibility for the Statements of Revenues and Certain Expenses

Auditor’s Responsibility

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

Emphasis of Matter

/s/ PricewaterhouseCoopers, Société coopérative

Luxembourg

28 September 2015

F-39

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INTERNOS PORTFOLIO

COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES

(Dollars in Thousands)



	Six Months Ended June 30, 2015		Year Ended December 31, 2014
	Six Months Ended June 30, 2015		Year Ended December 31, 2014
Revenues	(Unaudited)
Rental income	$	9,118	$	21,894
Escalation income	828		3,065
Total revenues	9,946		24,959

Certain expenses
Real estate properties - operating expenses	1,811		3,114
Total expenses	1,811		3,114

Revenues in excess of certain expenses	$	8,135	$	21,845

The accompanying notes are an integral part to the combined statements of revenues and certain expenses.

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INTERNOS PORTFOLIO

NOTES TO THE COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES

SIX MONTHS ENDED JUNE 30, 2015 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2014

1. Basis of Presentation

The Internos Portfolio (the “Properties”) are multi-tenant office properties located across six European countries. The accompanying combined statements of revenues and certain expenses (the “Statements”) relate to the operations of the Properties.

2. Summary of Significant Accounting Policies

Revenue Recognition

Use of Estimates

Commitments and Contingencies

3. Minimum Future Lease Rentals



Years Ending:
2015	$	21,105
2016	16,231
2017	13,530
2018	12,285
2019	11,479
Thereafter	98,595
	$	173,225

4. Subsequent Events

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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

Item 31. Other Expenses of Issuance and Distribution.

The following table sets forth the costs and expenses payable by us in connection with the distribution of the securities being registered. All amounts are estimated.



Type of Fee	Amount
SEC filing fee	$	111,632
Accounting fees and expenses
Legal fees and expenses
Printing fees
Miscellaneous
Total

Item 32. Sales to Special Parties.

On June 18, 2015, we issued 100 shares of our Common Stock to NorthStar Realty Finance Corp. in connection with the initial capitalization of our company for an aggregate purchase price of $1,000. The issuance of such shares was effected in reliance upon an exemption from registration provided by Section 4(a)(2) under the Securities Act.

Item 33. Recent Sales of Unregistered Securities.

In July 2015, we issued $340 million aggregate principal amount of 4.625% Senior Stock-Settleable Notes due December 2016 to Deutsche Bank Securities Inc. as the representative of the several underwriters of the Senior Notes. The issuance of the Senior Notes to the underwriters was effected in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act because the issuance of such securities did not involve a “public offering” as contemplated by Section 4(a)(2) under the Securities Act. In addition, the underwriters agreed not to offer or sell the Senior Notes in any manner involving a public offering within the meaning of Section 4(a)(2) under the Securities Act.

Item 34. Indemnification of Directors and Officers.

Maryland law permits a Maryland corporation to include in its charter a provision eliminating the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from: (i) actual receipt of an improper benefit or profit in money, property or services; or (ii) active and deliberate dishonesty that is established by a final judgment and is material to the cause of action. Our charter will contain such a provision which eliminates directors’ and officers’ liability to the maximum extent permitted by Maryland law.

Our charter will authorize and our bylaws will obligate us, to the maximum extent permitted by Maryland law, to indemnify any present or former director or officer or any individual who, while a director or officer of the Company and at our request, serves or has served another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, member, manager, partner or trustee, from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her status as a present or former director or officer of the Company and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding. Our charter and bylaws also will permit us to indemnify and advance expenses to any person who served a predecessor of the Company in any of the capacities described above and any employee or agent of the Company or a predecessor of the Company.

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officer was adjudged liable to the corporation or a proceeding charging improper personal benefit to the director or officer in which the director or officer was adjudged liable on the basis that personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment in a suit by or in the right of the corporation, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of: (i) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation; and (ii) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.

Item 35. Treatment of Proceeds from Stock Being Registered.

We will not receive any proceeds from the distribution of our Common Stock in the Distribution.

Item 36. Financial Statements and Exhibits.

(a) Financial Statements . See page F-1 for an index to the financial statements and schedules included in this registration statement.

(b) Exhibits.

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Exhibit No.	Description
2.1*	Form of Separation Agreement between NorthStar Realty Europe Corp. and NorthStar Realty Finance Corp.
3.1*	Articles of Amendment and Restatement of NorthStar Realty Europe Corp.
3.2*	Form of Bylaws of NorthStar Realty Europe Corp.
4.1**	Indenture, dated as of July 1, 2015, by and among NorthStar Realty Europe Corp., NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership and Wilmington Trust, National Association.
5.1*	Opinion of Venable LLP
8.1*	Opinion of Hunton & Williams LLP
10.1*	Form of Amended and Restated Agreement of Limited Partnership of NorthStar Realty Europe Limited Partnership
10.2*	Form of Management Agreement between NorthStar Realty Europe Corp. and an affiliate of NorthStar Asset Management Group Inc.
10.3*	Form of Contribution Agreement between NorthStar Realty Europe Corp. or an affiliate and NorthStar Realty Finance Corp.
10.4**	Purchase Agreement, dated June 25, 2015, by and among NorthStar Realty Europe Corp., NorthStar Realty Finance Corp., NorthStar Realty Finance Limited Partnership and Deutsche Bank Securities Inc.
10.5	Agreement, dated as of September 16, 2014, by and between Dukes Court-T (UK), LLC, as buyer, and IMW Immobilien SE, as seller
10.6	Umbrella Agreement, dated December 22, 2014, by and among Prime Holdco C-T, S.à r.l., Prime GER Drehbahn - T S.à r.l., Prime GER Valentinskamp - T S.à r.l. and Trias Pool II A - T S.à r.l., collectively as the buyers, and SEB Investment GmbH (“SEB”), SEB Investment GmbH, Filiale di Milano, SEB Investment GmbH, French Branch SEB Investment GmbH, Altair Issy S.A.S. and Balni bvba (SPRL), collectively as the sellers
10.7	Umbrella Sale and Purchase Agreement, dated as of February 16, 2015, between SEB Investment GmbH, SEB Investment GmbH, Filiale di Milano, SEB Investment GmbH, French Branch SEB Investment GmbH, Altair Issy S.A.S. and Balni bvba (SPRL), collectively as the sellers, and certain subsidiaries of the Company listed therein, as the buyers
10.8*	Master Agreement, dated as of December 19, 2014, by and among IVG Institutional Funds GmbH, PMG - Property Management GmbH, Via Bensi S.r.l., Internos Spezialfondsgesellschaft mbH and WestInvest Gesellschaft für Investmentfonds mbH, collectively as the sellers, and the several purchasers identified therein, as amended on February 12, 2015, March 27, 2015, April 17, 2015 and June 1, 2015
10.9	Share Sale and Purchase Agreement, dated June 11 and 12, 2015, by and among Madison Trianon S.à r.l. and MSEOF Trianon S.à r.l., collectively as the sellers, and the several purchasers identified therein
21.1*	Subsidiaries of the Registrant
23.1*	Consent of Venable LLP (included in Exhibit 5.1)
23.2*	Consent of Hunton & Williams LLP (included in Exhibit 8.1)
23.3	Consent of Marcum LLP
23.4	Consent of PricewaterhouseCoopers, Société coopérative
23.5	Consent of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft
23.6	Consent of PricewaterhouseCoopers, Société coopérative
23.7	Consent of PricewaterhouseCoopers, Société coopérative
24.1**	Power of Attorney (included on signature page)
*	To be filed by amendment.
**	Previously filed.

Item 37. Undertakings.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-11 and has duly caused this Amendment No. 2 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of London, United Kingdom, on September 29, 2015 .



NORTHSTAR REALTY EUROPE CORP.

By:	/s/ Mahbod Nia
	Chief Executive Officer (Principal Executive Officer)

Table of Contents

Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 2 to the Registration Statement on Form S-11 has been signed by the following persons in the capacities and on the dates indicated.



Name	Title	Date
/s/ Mahbod Nia	Chief Executive Officer (Principal Executive Officer)	September 29, 2015
Mahbod Nia	Chief Executive Officer (Principal Executive Officer)	September 29, 2015

/s/ Debra A. Hess	Interim Chief Financial Officer (Principal Financial and Accounting Officer)	September 29, 2015
Debra A. Hess		September 29, 2015

*	Director	September 29, 2015
David T. Hamamoto	Director	September 29, 2015

By: /s/ Ronald J. Lieberman

Ronald J. Lieberman

* As Attorney-in-fact for the persons indicated.

Exhibit 10.5

DATED 16 September 2014 1616 SEPTEMBER 2014

DUKES COURT-T (UK), LLC

and

IMW IMMOBILIEN SE

______________________________________________________________

AGREEMENT

relating to the sale and purchase of the entire issued share capital in
FIREFLY LIMITED

_______________________________________________________________

CONTENTS



1.	INTERPRETATION	5
2.	SALE AND PURCHASE	14
3.	COMPLETION	14
4.	COMPLETION ACCOUNTS	15
5.	WARRANTIES, INDEMNITIES	16
6.	PROPERTY	17
7.	CRC	17
8.	TAX COVENANT	17
9.	CONFIDENTIALITY AND ANNOUNCEMENTS	18
10.	FURTHER ASSISTANCE	19
11.	ASSIGNMENT	19
12.	WHOLE AGREEMENT	20
13.	VARIATION AND WAIVER	20
14.	COSTS	21
15.	NOTICE	21
16.	SEVERANCE	22
17.	AGREEMENT SURVIVES COMPLETION	22
18.	THIRD PARTY RIGHTS	23
19.	SUCCESSORS	23
20.	COUNTERPARTS	23
21.	GOVERNING LAW AND JURISDICTION	23
SCHEDULE 1		25
PARTICULARS OF THE COMPANY		25
COMPLETION		26
PART 1 PRE-COMPLETION ACTIONS		26
PART 2 PURCHASE OF THE COMPANY BY THE BUYER		27
PART 3 REPAYMENT OF SENIOR LOAN AND TERMINATION OF INTEREST SWAPS		28
PART 4 REPAYMENT OF SELLER INTERCOMPANY LOAN		29
SCHEDULE 3		30
WARRANTIES		30
PART 1 GENERAL WARRANTIES		30
PART 2 TAX WARRANTIES		39
PART 3 SELLER’S LIMITATION OF LIABILITY		50
SCHEDULE 4		53
TAX COVENANT		53
SCHEDULE 5		62
THE PROPERTY		62
PART 1 LEASEHOLD		62
PART 2 PROPERTY SPECIFIC ISSUE		62
SCHEDULE 6		64
PROPERTY DOCUMENTS		64
SCHEDULE 7		65
TENANCY DOCUMENTS		65
SUBSTATION LEASE		65
SCHEDULE 8		86
CRC		86



SCHEDULE 9		87
RENT DEPOSIT DEEDS		87
SCHEDULE 10		88
INSURANCE POLICIES		88
SCHEDULE 11 INDEPENDENT ACCOUNTANT APPOINTMENT		89
SCHEDULE 12 ACCOUNTING INSTRUCTIONS		90
PART B – FORMAT OF BALANCE SHEET		93
SCHEDULE 13 SENIOR LOAN DOCUMENTS		94

Agreed Form Documents

Directors’ resignation letters.

Land Registry Forms DS1 The Royal Bank of Scotland International Limited releasing the charges dated 10 May 2005 and 29 December 2005 in favour of The Royal Bank of Scotland International Limited registered under title number SY668453 together with associated forms RX4.

Deed of Release made between (1) The Royal Bank of Scotland International Limited (2) the Company (3) Michellisa (4) Warwick Square Limited and (5) the Seller.

Release and Reassignment of Security Interest Agreement Over Monies made between (1) the Company and (2) The Royal Bank of Scotland International Limited.

Release and Reassignment of Security Interest Agreement over Shares in Michellisa made between (1) the Seller and (2) The Royal Bank of Scotland International Limited.

Release and Reassignment of Security Interest Agreement over shares in the Company made between (1) the Seller and (2) The Royal Bank of Scotland International Limited.

Interest Swap Termination Confirmation.

a Deed of Surrender between the Company and Michellisa pursuant to which Michellisa surrenders to the Company its interest in the lease registered at the Land Registry under title number SY798742.

Rent authority letters from the Seller's solicitors to Plan Limited in respect of the surrender of the lease between the Company and Michellisa.

Agreed form of undertaking from Senior Lender’s solicitors.

Agreed form of undertaking from Seller’s solicitors.

Bank consent to sale of Sale Shares, funding of Company and repayment of Senior Loan/termination of Interest Swaps.

Buyer Completion Loan.

Seller Loan Release Document.

Buyer’s Legal Opinion.

Seller’s Legal Opinion and jurisdiction agreement

Construction Retention Identification Letter

THIS AGREEMENT is made on 16 September 2014

BETWEEN


(1)	DUKES COURT-T (UK), LLC , a company incorporated and registered in the state of Delaware, USA, whose registered office is at Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, USA (the “ Buyer ”) whose registered agent is Corporation Service Company of such address; and


(2)	IMW IMMOBILIEN SE incorporated and registered in Germany with registered number HRB 135984B whose registered office is at Stresemannstrasse 78, 10963 Berlin, Germany (the “ Seller ”).

INTRODUCTION

The Seller has agreed to sell and the Buyer has agreed to buy the Sale Shares subject to the terms and conditions of this Agreement.

AGREED TERMS


1.	INTERPRETATION


1.1	The definitions and rules of interpretation in this clause apply in this Agreement.

“ 2002 Asbestos Report ” means the report prepared by Cazella Hazment for the Property dated January 2002;

“ Accounts ” means the Company’s financial statements as at and to the Accounts Date (a copy of which are attached to the Disclosure Letter);

“ Accounts Date ” means 31 March 2014;

“ Apportionment Date ” means the Completion Date;

“ Arrears ” means the total of all Rents or other sums due but not paid to the Company (as landlord) under the Tenancy Documents at Completion (including any sums that were due to Michellisa prior to the Michellisa Surrender);

“ Business Day ” means a day (other than a Saturday, Sunday or public holiday) when banks in Germany, Jersey and the City of London are open for business;

“ Buyer Completion Loan ” means the loan agreement in the agreed form to be entered into between the Buyer and Company at Completion, immediately after the completion of the transfer of the Sale Shares;

“ Buyer’s Legal Opinion ” means a legal opinion in the agreed form in relation to the Buyer from the Buyer’s Delaware, USA counsel, addressed to the Seller;

“ Buyer’s Solicitors ” means Clifford Chance LLP of 10 Upper Bank Street, London E14 5JJ (Ref: 70-405772901/911123);

“ Chertsey House Extension (2006) Permission ” means planning permission reference PLAN/2001/724 granted by Woking Borough Council permitting a two-storey extension to Chertsey House;

“ Claim ” means a Warranty Claim;

“ Company ” means Firefly Limited, a company incorporated and registered in Jersey, Channel Islands with company number 56518 whose registered office is at Elizabeth House, 9 Castle Street, St. Helier, Jersey JE2 3RT further details of which are set out in Schedule 1;

“ Completion ” means completion of the sale and purchase of the Sale Shares in accordance with clause 3 of this Agreement;

“ Completion Accounts ” means the document comprising a balance sheet in respect of the Company, in each case prepared in accordance with clause 4 and on the basis of the accounting instructions set out in SCHEDULE 12;

“ Completion Date ” means the date of this Agreement;

“ Completion Payment ” means the sum to be paid at Completion by the Buyer pursuant to clause 3 (on account of the Purchase Price), being equal to:


(a)	Gross Property Value; plus


(b )	the Estimated NAV;

“ Connected ” in relation to a person, has the meaning given in section 1122 of the Corporation Tax Act 2010;

“ Construction Documents ” means the construction documents relating to the Property as listed at the Schedule to the Disclosure Letter;

“ Construction Retentions ” means those construction retentions identified in the Construction Retention Identification Letter;

“ Construction Retention Identification Letter ” means the letter in the agreed form identifying certain retention amounts in relation to construction arrangements;

“ Control ” means in relation to a body corporate, the power of a person to secure that the affairs of the body corporate are conducted in accordance with the wishes of that person:


(a)	by means of the holding of shares, or the possession of voting power, in or in relation to that or any other body corporate; or


(b)	by virtue of any powers conferred by the constitutional or corporate documents, or any other document, regulating that or any other body corporate,

and a “ Change of Control ” occurs if a person who controls any body corporate ceases to do so or if another person acquires control of it;

“ Core Warranty Claim ” means a claim for breach of any of the Core Warranties;

“ Core Warranty ” means any of the Warranties set out in paragraphs 2.2, 2.3, 2.6, 10.1, 10.2, 15.1 of Part 1 of SCHEDULE 3;

“ CRC Administrator ” means an administrator under the CRC Scheme as defined in Article 9 of the CRC Order;

“ CRC Evidence Pack ” means the CRC evidence pack held by the Seller and/or the Seller’s Group for the purposes of Part 7 of the CRC Order and in accordance with the CRC Evidence Pack Guidance;

“ CRC Evidence Pack Guidance ” means the Guidance on the CRC Energy Efficiency Scheme Evidence Pack published by the Environment Agency;

“ CRC Scheme ” means the CRC Energy Efficiency Scheme made pursuant to the CRC Order;

“ CRC Supplies ” has the meaning given in the CRC Order;

“ CRC Order ” means the CRC Energy Efficiency Scheme Order 2010 (SI 2010/768) or the CRC Energy Efficiency Scheme Order 2013 (SI 2013/1119), as applicable;

“ CTA 2009 ” means Corporation Tax Act 2009;

“ CTA 2010 ” means Corporation Tax Act 2010;

“ Director ” means each person who is a director (or treated as a director in law) of the Company, the names of whom are set out in Schedule 1;

“ Disclosed ” means fairly disclosed (with sufficient details so as to reasonably identify the nature, scope and magnitude of the matter disclosed) in or under the Disclosure Letter;

“ Disclosure Letter ” means the letter from the Seller to the Buyer with the same date as this Agreement and described as the disclosure letter, including the bundle of documents attached to or referred to in it (“ Disclosure Bundle ”);

“ Election ” means a valid election to waive exemption from VAT in respect of the Property within the meaning of Paragraph 2, Schedule 10, VATA 1994;

“ Encumbrance ” means any interest or equity of any person (including any right to acquire, option or right of pre-emption) or any mortgage, charge, pledge, lien, assignment, hypothecation, security interest, title retention or any other security agreement or arrangement;

“ Environment ” means any of the following media namely air, water or land including without limitation those media within buildings or other natural or manmade structures above or below ground and any living organisms or ecosystems;

“ Environmental Authority ” means any court, government, agency or authority (in each case whether, international, national or local) or agency having judicial, regulatory or administrative authority under Environmental Laws;

“ Environmental Laws ” means any applicable law, including without limitation any common law, statute, statutory instrument, treaty, regulation, directive, decision, by-law, circular code, guidance plan, order, notice, demand, decree, injunction, resolution or judgment which relate to Environmental Matters and which are in force or effect at the Completion Date;

“ Environmental Matters ” means any of the following:


(a)	protection of the Environment;


(b)	pollution or contamination of the Environment;


(c)	the production, generation, manufacture, processing, handling, keeping, possession, presence, storage, distribution, use (including as a building material), treatment, supply receipt, sale, purchase, removal, transport, importation, exportation, disposal, release, spillage, deposit, escape, discharge, leak, emission, leaching or migration of Hazardous Substances or Waste;


(d)	exposure of any human or other living organism to Hazardous Substances or Waste;


(e)	the creation of any noise, vibration, radiation, common law or statutory nuisance, or other impact on the Environment;


(f)	any other matters in relation to the condition, protection, maintenance, restoration, or remediation or the Environmental or any part of it;


(g)	human health and safety; and/or


(h)	town and country planning including pursuant to Planning Acts;

“ Environmental Permits ” means all or any authorisations, certificates, approvals, permits, licences, registrations, notifications or consents (and all conditions attaching thereto) required under any Environmental Laws for the operations of the Company or the occupation or use of the Property;

“ Estimated NAV ” means the sum agreed by the Seller and the Buyer as being the estimated Net Asset Value of the Company as at Completion (taking into account the Senior Loan Redemption Amount and the Interest Swap Termination Payment as paid at Completion) and recorded by way of memorandum or email exchange between the Seller's Solicitors and the Buyer's Solicitors;

“ Event ” has the meaning given in the Tax Covenant;

“ Gross Property Value ” means £59,368,707.62;

“ Group ” means in relation to a company, that company, its subsidiary undertakings, any entity of which it is a subsidiary undertaking (its parent undertaking) and any other subsidiary undertakings of any such parent undertaking and each entity in a group is a member of the group and unless the context otherwise requires, the application of the definition of Group to any company at any time will apply to the company as it is at that time;

“ Hazardous Substances ” means any poisonous, noxious, dangerous, hazardous, radioactive, toxic, flammable, carcinogenic, corrosive, infectious, mutagenic, teratogenic, irritant or explosive materials (or substances) and/or any other materials or substances that are regulated under any Environmental Law;

“ Headlease ” means a head lease of the Property dated 3 November 1987 and made between (1) Woking Borough Council and (2) Westbourne Terrace Investment Company Limited and any deed or document supplemental thereto whether or not expressed to be so;

“ ICTA 1988 ” means the Income and Corporation Taxes Act 1988;

“ IFRS ” means International Financial Reporting Standards or International Accounting Standards issued or adopted by the International Accounting Standards Board (or a predecessor body) and interpretations issued by the IFRS Interpretations Committee (or a predecessor body) as and to the extent from time to time adopted by the European Commission under EC Regulation No. 1606/2002;

“ Indemnities ” means the indemnities set out in clause 5.6, SCHEDULE 4 and SCHEDULE 8;

“ Independent Accountant ” means an independent chartered accountant who is a partner of not less than ten (10) years’ standing in an independent firm of chartered accountants of international repute practising in the UK and who is appointed in accordance with SCHEDULE 11.

“ Information ” means any information in respect of (a) the preparation, review and audit of the accounts of the Company whether relating to the current or any previous accounting period; (b) the tax affairs of the Company, any Tax Claim or any discussions or negotiations with HMRC; (c) the current and prior management, administration and operation of the Company and its business and affairs or of the Property; (d) the operation of service charges (for current and previous service charge years); and (e) the acquisition of the Property and current or historic lettings, pre-lettings, insurance, rent collection, VAT, disputes, environmental matters, planning, claims, construction, design, defects or health and safety or otherwise.

“ Intellectual Property Rights ” means patents, utility models, rights to inventions, copyright and neighbouring and related rights, moral rights, trademarks and service marks, business names and domain names, rights in get-up and trade dress, goodwill and the right to sue for passing off or unfair competition, rights in designs, rights in computer software, database rights, rights to use, and protect the confidentiality of, confidential information (including know-how and trade secrets), and all other intellectual property rights, in each case whether registered or unregistered and including all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world;

“ Interest Swaps ” means the interest hedge agreements taken out by the Company pursuant to the Senior Loan Documents listed at documents 9, 10 and 11 of SCHEDULE 13;

“ Interest Swap Counterparty ” means The Royal Bank of Scotland plc;

“ Interest Swap Termination Confirmation ” means confirmations in the agreed form that the Interest Swaps has been terminated;

“ Interest Swap Termination Payment ” means the sums required to be paid by the Company to the Interest Swap Counterparty or by the Interest Swap Counterparty to the Company (as the case may be) to terminate the Interest Swaps on Completion;

“ ITJL 1961 ” means the Income Tax (Jersey) Law 1961 (as amended);

“ Jersey Income Tax Department ” means the office of the Comptroller of Taxes in Jersey;

“ Management Accounts ” means the unaudited balance sheet of the Company as at the Management Accounts Date and the unaudited profit and loss account of the Company (including any notes thereon) for the period from 1 April 2014 to the Management Accounts Date (a copy of which is attached to the Disclosure Letter);

“ Management Accounts Date ” means 30 June 2014;

“ Michellisa ” means Michellisa Properties Limited whose registered office is at Elizabeth House, 9 Castle Street, St Helier, Jersey JE4 2QP, Channel Islands;

“ Michellisa Lease ” means the lease dated 21 July 2009 between (1) the Company and (2) Michellisa;

“ Michellisa Surrender ” means surrenders by Michellisa to the Company of its interest under the Michellisa Lease;

“ Net Asset Value ” means the net asset value of the Company as set out in the Completion Accounts (which figure may be a positive number or a negative number);

“P arent Undertaking ” means a “parent undertaking” as defined in section 1162 of the Companies Act 2006;

“ Planning Acts ” means the Town and Country Planning Act 1990, the Planning and Compensation Act 1991, the Planning and Compulsory Purchase Act 2004 and, where applicable, the Planning (Listed Buildings and Conservation Areas) Act 1990 and the Planning (Hazardous Substances) Act 1990, Planning Act 2008 and any associated or similar legislation regulating the development or use of the Property;

“ Previously Owned Property ” means The Plaza, 120 Oxford Street, London, W1 which on 12 March 1997 comprised the land and buildings then registered under title number NGL343586 at the Land Registry;

“ Proceedings ” means any proceedings, suit or action arising out of or in connection with this Agreement;

“ Property ” means the two leasehold property interests vested in the Company and described in Part 1 Schedule 5 ( The Property );

“ Property Documents ” means the deeds and documents relating to the Property details of which are set out in Schedule 6 ( The Property Documents);

“ Property Manager ” means Property Initiatives Management Limited (registered number 06865283) whose registered office is at c/o Shelley Stock Hutter 1 ^st Floor 7-10 Chandos Street London W1G 9DQ and its business address is Fifth Floor, Queens House, 8-9 Queen Street, London, EC4N 1SP;

“ Property Management Agreement ” means the property management agreement relating to the Property dated 22 March 2012 between (1) the Company and (2) the Property Manager;

“ Purchase Price ” means the Completion Payment subject to:


(a)	reduction by the amount of any payment made to the Buyer:


(i)	in respect of a breach of any Warranty;


(ii)	under the Tax Covenant;


(iii)	under the Indemnities;


(b)	adjustment in respect of any sums payable under clause 4; and


(c)	adjustment in respect of any sums payable under Part 2 of SCHEDULE 5;

“ Records ” includes all books, records, accounts, files, papers, documents, spreadsheets, drawings, calculations, letters and other like material relating to the Company, its business, the Property and to any Information (whether in hard copy or electronic format).

“ Rent Deposit Deeds ” means the rent deposit deeds details of which are set out in Schedule 9 ( Rent Deposit Deeds);

“ Rents ” means the principal rent and any other sums payable periodically by the Tenants under the Tenancy Documents, but excluding the sums payable by way of service charge and excluding sums payable for

insurance or otherwise by way of reimbursement of costs incurred by the Company as landlord under the Tenancy Documents;

“ Replies to Enquiries ” means (1) the written replies listed in paragraph 2.7 of the Disclosure Letter, (2) the written replies to Commercial Property Standard Enquiries CPSE 1, 2 and 4 given on 10 June, 2014 by the Seller’s Solicitors to the Buyer’s Solicitors and (3) the summary of construction work prepared by the Seller’s Solicitors dated 6 June 2014. For the purposes of this definition reference to “written enquiries” or “written replies” shall include enquiries raised and replies given by email;

“ Sale Shares ” means the 2 issued fully paid shares of £1.00 each in the Company;

“ Seller Intercompany Loan ” means the loan owed by the Company to the Seller pursuant to the facility agreements made between them on 16 October 2012, 10 December 2012, 15 March 2013 and 12 August 2013 and any other agreement made between them pursuant to which the Seller provided finance to the Company;

“ Seller Intercompany Loan Amount ” means the sum required to repay all principal and accrued interest and other sums payable to the Seller in respect of the Seller Intercompany Loan;

“ Seller Loan Release Document ” means the documents, in the agreed form, under which the Seller will, conditional on payment of the Seller Intercompany Loan Amount to the Seller, release all liabilities of the Company in respect of, and release any Encumbrances given pursuant to the Seller Intercompany Loan;

“ Seller’s Legal Opinion ” means a legal opinion in the agreed form in relation to the Seller from the Seller’s German counsel, addressed to the Buyer;

“ Seller’s Solicitors ” means Rosenblatt Solicitors of 9-13 St. Andrew Street, London EC4A 3AF (Ref AGK/FIR13-80);

“ Seller’s Solicitors Account ” means the following bank account with Barclays Bank plc, Hatton Garden Business Centre, 99 Hatton Garden, London, EC1N 8DN: account number: 23566501; sort code 20-37-75; ref AGK/FIR/13/80;

“ Senior Lender ” means The Royal Bank of Scotland International Limited;

“ Senior Lender’s Solicitors ” means Berwin Leighton Paisner LLP of Adelaide House, London Bridge, London EC4R 9HA (Ref: Ms. K. Goodfellow);

“ Senior Lender’s Solicitors Account ” means the following bank account:

Barclays Bank Plc

50 Pall Mall

PO Box 15161

London SW1A 1QA

Sort Code: 20-65-82

Account number: 50089753

Reference: CWAT/KGDF/19817.00038;

“ Senior Loan ” means the outstanding principal now owed by the Company to the Senior Lender under the Senior Loan Documents;

“ Senior Loan Documents ” means the documents listed in SCHEDULE 13;

“ Senior Loan Redemption Amount ” means the sum required to repay all principal, all accrued or outstanding interest and all fees, penalties, costs and other sums required to settle all liabilities under the Senior Loan Documents and to secure the Senior Loan Release Documents.

“ Senior Loan Release Documents ” means the following documents, in the agreed form, required to release all Encumbrances given pursuant to the Senior Loan Documents:


(a)	Land Registry Form(s) DS1 executed by The Royal Bank of Scotland International Limited releasing the charges dated 29 December 2005 and 10 May 2005 registered in favour of that Bank against the Company’s title to the Underlease which is registered at the Land Registry under title number SY668453;


(b)	Deed of Release made between (1) The Royal Bank of Scotland International Limited (2) the Company (3) Michellisa (4) Warwick Square Limited and (5) the Seller;


(c)	Release and Reassignment of Security Interest Agreement Over Monies made between (1) the Company and (2) The Royal Bank of Scotland International Limited;


(d)	Release and Reassignment of Security Interest Agreement over Shares in Michellisa made between (1) the Seller and (2) The Royal Bank of Scotland International Limited; and


(e)	Release and Reassignment of Security Interest Agreement over shares in the Company made between (1) the Seller and (2) The Royal Bank of Scotland International Limited.

“ subsidiary ” means a “subsidiary” as defined in section 1159 of the Companies Act 2006 and a company shall be treated, for the purposes only of the membership requirement contained in subsections 1159(1)(b) and (c), as a member of another company even if its shares in that other company are registered in the name of (a) another person (or its nominee), by way of security or in connection with the taking of security, or (b) its nominee;

“ subsidiary undertaking ” means a “subsidiary undertaking” as defined in section 1162 of the Companies Act 2006 and shall include any person the shares or ownership interests in which are subject to security and where the legal title to the shares or ownership interests so secured are registered in the name of the secured party or its nominee pursuant to such security;

“ Tax ” or “ Taxation ” has the meaning given in the Tax Covenant;

“ Tax Covenant ” means the tax covenant as set out in paragraph 2 of Schedule 4;

“ Tax Covenant Claim ” means a claim under the Tax Covenant;

“ Tax Claim ” has the meaning given in the Tax Covenant;

“ Tax Warranties ” means the Warranties in Part 2 of Schedule 3;

“ Taxation Authority ” has the meaning given in the Tax Covenant;

“ Taxation Statute ” has the meaning given in the Tax Covenant;

“ TCGA 1992 ” means the Taxation of Chargeable Gains Act 1992;

“ Tenants ” means the tenants of the Property pursuant to the Tenancy Documents;

“ Tenancy Documents ” means the leases and other documents to which the Property is subject details of which are set out in Schedule 7 ( Tenancy Documents);

“ Third Party Debt Provider ” means a bona fide arm’s length provider of debt finance (not being a member of the Buyer’s Group) to:

(a) the Buyer,

(b) a member of the Buyer’s Group, and/or

“ Transaction ” means the transaction contemplated by this Agreement or any part of that transaction;

“ Title ” means an official copy of the register and title plan to the Property together with copies of any documents noted on the register;

“ Underlease ” means an underlease of the Property dated 24 March 1997 made between (1) Westbourne Terrace Investment Company Limited and (2) Sans Souci Properties Limited and any deed or document supplemental thereto whether or not expressed to be so;

“ VAT ” means value added tax as provided for in VATA 1994;

“ VATA 1994 ” means the Value Added Tax Act 1994;

“ Warranties ” means the warranties in clause 5 and Part 1 and Part 2 of Schedule 3;

“ Warranty Claim ” means a claim for breach of any of the Warranties.


1.2	Clause and Schedule headings do not affect the interpretation of this Agreement.


1.3	A person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality) and that person’s personal representatives, successors or permitted assigns.


1.4	Unless the context otherwise requires, words in the singular include the plural and in the plural include the singular.


1.5	Unless the context otherwise requires, a reference to one gender includes a reference to the other genders.


1.6	Subject to clause 12, a reference to any party shall include that party’s personal representatives, successors and permitted assigns.


1.7	A reference to a company shall include any company, corporation or other body corporate, wherever and however incorporated or established.

1.8

A reference to a particular statute, statutory provision or subordinate legislation is a reference to it as it is in force from time to time, taking account of any amendment or re-enactment and includes any statute, statutory provision or subordinate legislation which it amends or re-enacts and subordinate legislation for the time being in force made under it, provided that, as between the parties, no such amendment or re-enactment made after the date of this Agreement shall apply for the purposes of this Agreement to the extent that it would impose any new or extended obligation, liability or restriction on, or otherwise adversely affect the rights of, any party.


1.9	Writing or written includes faxes but not e-mail (unless otherwise expressly provided in this Agreement).


1.10	Documents in agreed form are documents in the form agreed by the parties or on their behalf and initialled by them or on their behalf for identification or otherwise agreed as being in agreed form between the Buyer's Solicitors and the Seller's Solicitors.


1.11	References to clauses and Schedules are to the clauses and Schedules of this Agreement and references to paragraphs are to paragraphs of the relevant Schedule.


1.12	Any reference to an English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of any jurisdiction other than England, be deemed to include a reference to what most nearly approximates to the English legal term in that jurisdiction.


1.13	References to this Agreement include this Agreement as amended or varied in accordance with its terms.


1.14	Any words following the terms including, include, in particular or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or term preceding those terms.


1.15	References to time are to the time of day in London, United Kingdom, unless the context expressly requires otherwise.


2.	SALE AND PURCHASE


2.1	On the terms of this Agreement, the Seller shall sell and the Buyer shall buy, with effect from Completion, the Sale Shares with full title guarantee, free from all Encumbrances and together with all rights that attach (or may in the future attach) to them including, in particular, the right to receive all dividends and distributions declared, made or paid on or after the date of this Agreement.


3.	COMPLETION


3.1	Completion shall take place on the Completion Date at the offices of the Buyer’s Jersey legal counsel or at any other place outside the United Kingdom as agreed in writing by the Seller and the Buyer.


3.2	To the extent not already done, the Seller and the Buyer shall comply with their respective obligations in Part 1 of SCHEDULE 2;


3.3	At Completion, each of the Seller and the Buyer shall comply with their respective obligations in Part 2 and Part 3 of SCHEDULE 2.


3.4	The Buyer and the Seller are not obliged to complete this Agreement unless:


(a)	in the case of the Buyer, the Seller, and in the case of the Seller, the Buyer, complies with all its obligations under this clause 3 and SCHEDULE 2; and


(b)	the purchase of all the Sale Shares is completed simultaneously.


3.5	The Buyer and the Seller are not obliged to complete this Agreement if the Completion Payment produces a negative number.


4.	COMPLETION ACCOUNTS


4.1	The Buyer will, within 60 calendar days, prepare and deliver to the Seller drafts of the Completion Accounts.

4.2

The Seller may serve a written notice on the Buyer stating that it objects or does not object to the draft Completion Accounts within a period of 30 calendar days following receipt of the draft Completion Accounts and if it serves a notice not objecting to the draft Completion Accounts then such drafts shall then be the agreed Completion Accounts for the purposes of this Agreement. Any notice objecting to the draft Completion Accounts shall include the items and amounts in dispute as well as reasons (in reasonable detail) and any relevant supporting documentation in relation to the dispute.


4.3	If the Seller does not notify the Buyer within 30 calendar days from receipt of the draft Completion Accounts that it objects to those draft Completion Accounts then it shall be deemed to have agreed with them and the draft Completion Accounts shall then be the agreed Completion Accounts for the purposes of this Agreement.


4.4	If the Buyer does not deliver to the Seller the draft Completion Accounts within 60 calendar days after Completion then the Seller may prepare such draft Completion Accounts and the provisions of this Clause shall thereafter apply with the roles of the Buyer and the Seller reversed.


4.5	If within 30 calendar days of receipt of the draft Completion Accounts the Seller notifies the Buyer that it objects to the draft Completion Accounts, then either the Seller or the Buyer may require by notice in writing that the objection is referred to the Independent Accountant for determination.


4.6	Each of the Seller and the Buyer will provide (and the Buyer shall procure that the Company shall provide) to each of the Buyer, the Seller, their respective accountants (if any) and the Independent Accountant:


(a)	access to all accounts, books, documents, records and papers relating to the Company as may be in their possession or under their control (but excluding such records which are subject to legal privilege or which relate to a party’s consideration of whether the Completion Accounts comply with the requirements of SCHEDULE 12);


(b)	access to such personnel (including in the case of the Seller, the auditors and other professional advisers engaged by the Company prior to Completion) and premises; and


(c)	acting in good faith, all such co-operation and assistance;

as may reasonably be required to produce the Completion Accounts and resolve any dispute in relation to the same.


4.7	If the Net Asset Value of the Company (as set out in the Completion Accounts) is less than the Estimated NAV, then the Seller will pay to the Buyer, as a reduction in the Purchase Price, £1 for every £1 of such difference, such amount to be paid within twenty (20) calendar days after the date of agreement or determination of the Completion Accounts.


4.8	If the Net Asset Value of the Company (as set out in the Completion Accounts) is more than the Estimated NAV, then the Buyer will pay to the Seller, as an increase in the Purchase Price, £1 for every £1 of such difference, such amount to be paid within twenty (20) calendar days after the date of agreement or determination of the Completion Accounts.


4.9	Where the difference between the Estimated NAV and the Net Asset Value of the Company is such that the increase or decrease in the Purchase Price pursuant to clauses 4.7 or 4.8 (as appropriate) would (but for

this clause 4.9) be an amount of £10,000 or less, then such difference shall be deemed to be zero and there shall be no adjustment to the Purchase Price pursuant to those clauses.


4.10	Where the actual amount of the Seller Intercompany Loan is higher than the amount of the Seller Intercompany Loan in the Estimated NAV:


(a)	the amount that the Seller owes to the Buyer due to the decrease in Net Asset Value of the Company shall be set off in the Completion Accounts against the additional amount that the Company owes to the Seller under the Seller Intercompany Loan; and


(b)	the Buyer shall pay to the Company as an additional advance under the Buyer Completion Loan the amount by which the actual amount of the Seller Intercompany Loan is higher than the amount of the Seller Intercompany Loan in the Estimated NAV.


4.11	Where the amount of the Seller Intercompany Loan in the Estimated NAV is higher than the actual amount of the Seller Intercompany Loan,


(a)	the amount that the Buyer owes to the Seller due to the increase in Net Asset Value of the Company shall be set off in the Completion Accounts against the additional amount that the Seller owes to the Company under the Seller Intercompany Loan; and


(b)	the Company shall be deemed to have repaid the amount by which the Seller Intercompany Loan in the Estimated NAV exceeds the actual amount of the Seller Intercompany Loan to the Buyer under the Buyer Completion Loan.


5.	WARRANTIES, INDEMNITIES


5.1	The Seller warrants to the Buyer that each Warranty is true, accurate and not misleading on the date of this agreement except as Disclosed.


5.2	Warranties and Replies to Enquiries qualified by the expression “so far as the Seller is aware” (or any similar expression) are deemed to be given to the best of the knowledge, information and belief of the Seller after it has made all reasonable enquiries of the Directors, the Property Manager and the Seller’s Solicitors.


5.3	The maximum aggregate liability of the Seller under the Warranties, the Tax Covenant and the Indemnities shall when taken together not exceed:


(a)	the Purchase Price; plus


(b)	the Seller Intercompany Loan Amount; plus


(c)	the Senior Loan Redemption Amount; and


(d)	where the Interest Swap Termination Payment is a payment due from the Company then plus the Interest Swap Termination Payment, or where the Interest Swap Termination Payment is a payment due to the Company then minus the Interest Swap Termination Payment.


5.4	Part 3 of Schedule 3 (Seller’s limitation of liability) shall apply in respect of Claims and Tax Covenant Claims under this Agreement in accordance with its terms (but not otherwise).


5.5	The Buyer shall notify the Seller as soon as reasonably practicable of any Claim or Tax Covenants, including where reasonably practicable to do so an estimate of the amount in question or a bona fide estimate of such amount.


5.6	The Seller indemnifies (and shall keep indemnified) the Buyer and the Company against all liabilities, costs, expenses, damages and losses (including all interest, penalties and reasonable and properly incurred legal costs) suffered or incurred by the Buyer or the Company:

(a)

to terminate and discharge all liabilities of the Company under the Seller Intercompany Loan, the Senior Loan, the Senior Loan Documents or the Interest Swaps (and including liabilities arising out or in connection with any guarantees or security given in respect of the same or in respect of the repayment of the same and/or any other guarantees or debt facilities including any swap or hedging arrangements that the Company is subject to on or prior to Completion) in excess of:


(i)	the amount, reflected in the Estimated NAV, paid by the Company to the Senior Lender at Completion;


(ii)	the amount, reflected in the Estimated NAV, paid by the Company to the Interest Swap Counterparty at Completion; and


(iii)	the amount, reflected in the Estimated NAV, paid by the Company to the Seller in respect of the Seller Intercompany Loan, and


(b)	to terminate and discharge all liabilities of the Company under any other arrangements under which a provider of debt finance has made a facility available to the Company in respect of the period before Completion,

provided that such indemnity shall not apply to the extent such loss or damage has been made good to the Buyer under the Completion Accounts so as to avoid double counting.


5.7	Nothing in this Agreement shall in any way restrict or limit the general obligation at law of the Buyer and the Company to mitigate any loss or damage which it or they may suffer in consequence of any matter which may give rise to a claim under the Indemnity at Clause 5.6.


5.8	The Buyer warrants to Seller that:


(a)	the Buyer has full corporate power, right and authority to execute and deliver this agreement and to consummate the Transaction. All corporate proceedings on the part of Buyer that are necessary to approve and authorise the execution and delivery of this agreement and the consummation of the Transaction have occurred; and


(b)	the Buyer is a corporation organised, existing and in good standing under the laws of the state of Delaware, USA with full corporate power and due authorisation to conduct its business as presently conducted by it.


6.	PROPERTY

The Seller and the Buyer will comply with their respective obligations in Part 2 of Schedule 5.


7.	CRC

The Seller and the Buyer will comply with their respective obligations in Schedule 8.


8.	TAX COVENANT

The provisions of the Tax Covenant shall have effect from the date of this Agreement.


9.	CONFIDENTIALITY AND ANNOUNCEMENTS


9.1	The Seller shall not at any time disclose to any person or use to the detriment of the Company this Agreement or any trade secret or other confidential information which it holds in relation to the Company and its affairs.


9.2	The Buyer undertakes to the Seller to keep confidential the terms of this Agreement and all information that it has acquired about the Seller, and the Seller undertakes to the Buyer to keep confidential and all information that it has acquired about the Buyer.


9.3	No party shall make any announcement relating to this Agreement or its subject matter without the prior written approval of the other party (such approval not to be unreasonably withheld or delayed) other than to the extent that the disclosure is required:


(a)	by law; or


(b)	by a regulatory body, Taxation Authority or securities exchange; or


(c)	to make any filing with, or obtain any authorisation from, a regulatory body, Taxation Authority or securities exchange; or


(d)	to protect the disclosing party’s interest in any legal proceedings;


(e)	in the case of the Buyer, to any of its direct and/or indirect owners (or potential investors in any member of the Buyer’s Group), or any member of the Buyer’s Group if the Buyer procures that the people to whom the information is disclosed keep it confidential as if they were that party;

but that party shall use reasonable efforts (to the extent permitted by applicable law or regulation) to consult the other parties and to take into account any reasonable requests they may have in relation to the announcement before making it.


9.4	Each party to this Agreement does not have to keep confidential or to restrict its use of:


(a)	information that is or becomes public knowledge other than as a direct or indirect result of a breach of this Agreement; or


(b)	information that it receives from a source not connected with the party to whom the duty of confidence is owed that it has acquired free from any obligation of confidence to any other person.


9.5	A party may disclose or make use of any information that it is otherwise required to keep confidential under this clause 9:


(a)	to such professional advisers, consultants and employees or officers of its Group as are reasonably necessary to advise on this Agreement, or to facilitate the Transaction, if the disclosing party procures that the people to whom the information is disclosed keep it confidential as if they were that party; or


(b)	in the case of the Buyer, to a capital provider (including a potential joint venture partner) or a potential purchaser of the Property and/or the Sale Shares, if the Buyer procures that the people to whom the information is disclosed keep it confidential as if they were that party;


(c)	in the case of the Buyer, to any of its direct and/or indirect owners (or potential investors in any member of the Buyer’s Group), or any member of the Buyer’s Group if the Buyer procures that the people to whom the information is disclosed keep it confidential as if they were that party;


(d)	with the written consent of the other party; or


(e)	to confirm that the sale has taken place and the date of the sale (but without otherwise revealing any other terms of sale or making any other announcement); or


(f)	to the extent that the disclosure is required:


(i)	by law; or


(ii)	by a regulatory body, Taxation Authority or securities exchange; or


(iii)	to make any filing with, or obtain any authorisation from, a regulatory body, Taxation Authority or securities exchange; or


(iv)	to protect the disclosing party’s interest in any legal proceedings;

but shall use reasonable efforts (to the extent permitted by applicable law or regulation) to consult the other parties and to take into account any reasonable requests they may have in relation to the disclosure before making it; or


(g)	for the purposes contemplated by this Agreement or to the extent necessary for the purpose of exercising or performing its rights and obligations under this Agreement.


10.	FURTHER ASSURANCE

The Seller and the Buyer shall (at their respective expense) promptly execute and deliver all such documents, and do all such things, as the other may from time to time reasonably require for the purpose of giving full effect to the provisions of this Agreement.


11.	ASSIGNMENT


11.1	Except as provided otherwise in this clause 11 no party may assign, or grant any Encumbrance or security interest over, any of its rights under this Agreement.


11.2	Each party that has rights under this Agreement is acting on its own behalf.

11.3

The Buyer may assign all (but not some only) of its rights and benefits under this Agreement but not its obligations to a member of its Group to whom it has transferred the Property and/or all of the Sale Shares, as relevant, if at the time of the assignment the Buyer executes, and procures that the assignee executes, and delivers to the Seller a deed in a form reasonably acceptable to the Seller under which:


(a)	the assignee:


(i)	agrees to be bound by the terms of this clause 11 as if it were the Buyer;


(ii)	agrees to assign to the Buyer, with effect from immediately before the assignee ceases to be a member of the Buyer’s Group, all rights under this Agreement assigned to it; and


(b)	the Buyer guarantees (as a continuing guarantee) all the obligations and liabilities of the assignee under this Agreement assumed under such deed.


11.4	The Buyer may assign its rights under this Agreement by way of security to any Third Party Debt Provider. The Buyer acknowledges and agrees that the rights conferred on any such assignee shall only be exercisable at the same time as such assignee exercises its security under the relevant associated security documents.


11.5	The Buyer agrees that if it makes an assignment pursuant to this clause, the assignment shall not increase the liabilities of the Seller.


11.6	If there is an assignment:


(a)	the Buyer shall give written notice of the assignment to the Seller containing details of the assignments including the name of the assignor and assignee


(b)	the Seller may discharge its obligations under this Agreement to the assignor until it receives notice of the assignment;


(c)	the assignee may enforce this Agreement as if it were a party to it, but the Buyer shall remain liable for any obligations under this Agreement; and


(d)	the Seller’s liability to the assignee shall not exceed the liability to the Buyer under this Agreement if such assignment had not taken place.


12.	WHOLE AGREEMENT


12.1	This Agreement constitutes the whole agreement between the parties with respect to the subject matter of this Agreement and supersedes and extinguishes all previous drafts, agreements, arrangements and understandings between them, whether written or oral, relating to its subject matter.


12.2	Each party:


(a)	acknowledges that, in entering into this Agreement, it does not rely on and shall have no remedy in respect of any statement, representation, assurance or warranty (whether of fact or at law and whether made innocently or negligently) of any person other than as expressly set out in this Agreement;


(b)	irrevocably and unconditionally waives any right it may have to claim damages or to rescind this Agreement by reason of any misrepresentation and/or warranty not set out in any such document;


(c)	acknowledges and agrees that it shall not have any claim for innocent or negligent misrepresentation based upon any statement in this Agreement; and


(d)	acknowledges and agrees for the purposes of the Misrepresentation Act 1967 and the Unfair Contract Terms Act 1977 that the provisions of this clause 12 are reasonable.


12.3	Nothing in this clause 12 operates to limit or exclude any liability for fraud or wilful misconduct.


13.	VARIATION AND WAIVER


13.1	Any variation of this Agreement shall be in writing and signed by or on behalf of the parties.


13.2	Any waiver of any right under this Agreement is only effective if it is in writing and it applies only to the party to whom the waiver is addressed and to the circumstances for which it is given and shall not prevent the party who has given the waiver from subsequently relying on the provision it has waived.


13.3	No failure to exercise or delay in exercising any right or remedy provided under this Agreement or by law constitutes a waiver of such right or remedy or shall prevent any future exercise in whole or in part thereof.


13.4	No single or partial exercise of any right or remedy under this Agreement shall preclude or restrict the further exercise of any such right or remedy.


13.5	Unless specifically provided otherwise, rights arising under this Agreement are cumulative and do not exclude rights provided by law.


14.	COSTS

All costs in connection with the negotiation, preparation, execution and performance of this Agreement, and any documents referred to in it, shall be borne by the party that incurred the costs.


15.	NOTICE


15.1	A notice given under this Agreement:


(a)	shall be in writing;


(b)	shall be sent for the attention of the person, and to the address or fax number, specified in this clause 15 (or such other address, fax number or person as each party may notify to the others in accordance with the provisions of this clause 15); and


(c)	shall be:


(i)	delivered personally; or


(ii)	sent by fax; or


(iii)	sent by pre-paid first-class post or recorded delivery; or


(iv)	(if the notice is to be served by post outside the country from which it is sent) sent by airmail.


15.2	The addresses for service of notice are:


(a)	the Seller:


(i)	address: c/o JTC (Jersey) Limited, Elizabeth House, 9 Castle Street, St. Helier, Jersey JE2 3RT


(ii)	for the attention of: Mrs Saffron Harrop


(iii)	fax number: (0)1534 700 007

and with a copy by email to:

mschaefer@imw-se.de


(b)	the Buyer:


(i)	address:

6 Route de Trèves 2633 Senningerberg Luxembourg, 6th Floor

with a copy to:

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

Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808

and with a copy by email to:

kauff@nsamgroup.eu

jfarkas@nrfc.com

mbernal@nsamgroup.eu

safshari@nsamgroup.eu


15.3	A notice is deemed to have been received:


(a)	if delivered personally, at the time of delivery; or


(b)	in the case of fax, at the time of transmission; or


(c)	in the case of pre-paid first class post, recorded delivery, 2 Business Days from the date of posting; or


(d)	in the case of registered airmail, 7 Business Days from the date of posting;

provided that if deemed receipt under the previous provisions of this clause 15.3 is not within business hours (meaning 9.00 am to 5.30 pm Monday to Friday in the place of receipt on a day that is not a public holiday in the place of receipt), when business next starts in the place of receipt and all references to time are to local time in the place of deemed receipt.


15.4	To prove service, it is sufficient to prove that the notice was transmitted by fax to the fax number of the party or, in the case of post, that the envelope containing the notice was properly addressed and posted.


16.	SEVERANCE


16.1	If any provision of this Agreement (or part of a provision) is found by any court or administrative body of competent jurisdiction to be invalid, unenforceable or illegal, the other provisions shall remain in force.


16.2	If any invalid, unenforceable or illegal provision would be valid, enforceable or legal if some part of it were deleted, the provision shall apply with whatever modification is necessary to give effect to the commercial intention of the parties.


17.	AGREEMENT SURVIVES COMPLETION

This Agreement (other than obligations that have already been fully performed) remains in full force after Completion.


18.	THIRD PARTY RIGHTS


18.1	Subject to clause 11 and clause 18.2, this Agreement and the documents referred to in it are made for the benefit of the parties and their successors and permitted assigns and are not intended to benefit, or be enforceable by, anyone else.


18.2	The Company may enforce the provisions of clause 5.5, and the Company and members of the Buyer’s Group can enforce the provisions of SCHEDULE 8.


18.3	The parties to this Agreement do not require the consent of the Company or any members of the Buyer’s Group (other than the Buyer) to vary this Agreement at any time or bring proceedings under this Agreement.


19.	SUCCESSORS

The rights and obligations of the Seller and the Buyer under this Agreement shall continue for the benefit of, and shall be binding on, their respective successors and assigns.


20.	COUNTERPARTS

This Agreement may be executed in any number of counterparts, each of which is an original and which together have the same effect as if each party had signed the same document.


21.	GOVERNING LAW AND JURISDICTION


21.1	This Agreement and any disputes or claims arising out of or in connection with its subject matter or formation (including non-contractual disputes and claims) are governed by and construed in accordance with the law of England.

21.2

The parties irrevocably agree that the courts of England have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this Agreement or its subject matter or formation (including non-contractual disputes and claims) and that any suit, action or proceedings (together in this clause 21 “ Proceedings ”) arising out of or in connection with this agreement shall be brought in such courts.

21.3

Each of the Seller and the Buyer irrevocably waives any objection which it may have now or hereafter to the laying of the venue of any Proceedings in such court as is referred to in this clause 21 and any claim that any such Proceedings have been brought in an inconvenient forum and further irrevocably agrees that a judgment in any Proceedings brought in the English courts shall be conclusive and binding upon each of the Seller and the Buyer and may be enforced in the courts of any other jurisdiction.

21.4

The Buyer irrevocably appoints Northstar Asset Management UK, Limited of 25-28 Old Burlington Street, London, W1S 3AN as its process agent to receive on its behalf service of process in any Proceedings in England, service upon whom shall be good service upon the Buyer whether or not forwarded to or received by the Buyer. Where, for any reason the process agent ceases to be able to act as process agent, or no longer has an address in England, the Buyer irrevocably agrees to appoint a substitute process agent with an address in England, and to deliver to the Seller a copy of the substitute process agent’s acceptance of that appointment within twenty (20) Business Days. If the Buyer fails to appoint a substitute process agent, it shall be effective service for the Seller to serve the process upon the last known address in England of the last known process agent for the Buyer notified to the Seller, notwithstanding that such process agent is no longer found at such address or has ceased to act.


21.5	The Seller irrevocably appoints Rosenblatt of 9-13 St. Andrew Street, London EC45A 3AF as its process agent to receive on its behalf service of process in any Proceedings in England, service upon whom shall

be good service upon the Seller whether or not forwarded to or received by the Seller. Where, for any reason the process agent ceases to be able to act as process agent, or no longer has an address in England, the Seller irrevocably agrees to appoint a substitute process agent with an address in England, and to deliver to the Buyer a copy of the substitute process agent’s acceptance of that appointment within twenty (20) Business Days. If the Seller fails to appoint a substitute process agent, it shall be effective service for the Buyer to serve the process upon the last known address in England of the last known process agent for the Seller notified to the Buyer, notwithstanding that such process agent is no longer found at such address or has ceased to act.

This Agreement has been entered into on the date first above written.

SCHEDULE 1

Particulars of the Company



Name:	Firefly Limited
Authorised share capital:	10,000 shares of £1.00 each
Issued share capital:	2 shares of £1.00 each
Directors:	Saffron Harrop, Donna McCrorie, Robert Monticelli, Maic Schafer
Secretary:	JTC (Jersey) Limited
Accounting reference date:	31 March
Accountant:	BDO Limited Windward House La Route de la Liberation St Helier Jersey JE1 1BG
Charges:	Prior to Completion: 1. Debenture dated on or around 10 May 2005 granted by Firefly Limited to The Royal Bank of Scotland International Limited as Original Lender containing (amongst other things) a floating charge over the whole of the Borrower’s undertaking and first fixed legal charges over the Property (as reconfirmed from time to time). 2. Jersey security interest agreement over the Rent Account from Firefly Limited (undated) (as reconfirmed from time to time). 3. Jersey Security Interest Agreement dated 10th May, 2005 between Firefly Limited and The Royal Bank of Scotland International Limited.

SCHEDULE 2

Completion

Part 1

Pre-Completion Actions


1.	Immediately before Completion:


1.1	the Seller shall deliver to the Buyer written consent in the agreed form from the agent under the Senior Loan Documents to:


(a)	the sale of the Sale Shares subject to the Senior Loan Documents; and


(b)	the funding of the Company pursuant to the Buyer Completion Loan and the subsequent repayment of the Senior Loan and the termination of the Interest Swaps and payment of the Seller Intercompany Loan Amount to the Seller.


1.2	the Seller will procure that the Seller’s Solicitors and the Senior Lender’s Solicitors deliver written undertakings in the agreed form undertaking to hold all sums received by them under paragraphs 1.3, 1.4 and 1.5 to the order of the Buyer or the Company (as the case may be) and in the case of conflict between the terms of those paragraphs and the undertakings, the undertakings prevail;


1.3	following receipt of the undertakings referred to above, the Buyer will procure the delivery by electronic transfer of an amount in aggregate equal to the Completion Payment to:


(a)	the Seller’s Solicitors Account; and


(b)	the Senior Lender's Solicitor's Account,


1.4	following receipt of the undertakings referred to above, the Buyer will procure the delivery by electronic transfer of an amount in aggregate equal to the Seller Intercompany Loan Amount to:


(a)	the Seller's Solicitors Account; and


(b)	the Senior Lender' Solicitors Account

divided into such amounts as the Seller shall have notified to the Buyer, with such amounts in each case being held by the Seller’s Solicitors and the Senior Lender's Solicitors (as the case may be) to the order of the Buyer pending completion of the Buyer Completion Loan (which shall occur immediately after the acquisition of the Sales Shares pursuant to Part 2) and following which such amounts shall be held to the order of the Company until released in accordance with the provisions of Part 4;


1.5	following receipt of the undertakings referred to above, the Buyer will procure the delivery to the Senior Lender’s Solicitor’s Account by electronic transfer of an amount equal:


(a)	to the Senior Loan Redemption Amount; and


(b)	where the Interest Swap Termination Payment is a payment due from the Company then plus the Interest Swap Termination Payment, or where the Interest Swap Termination Payment is a payment due to the Company then minus the Interest Swap Termination Payment,

such amounts to be held to the order of the Buyer pending completion of the Buyer Completion Loan (which shall occur immediately after the acquisition of the Sales Shares pursuant to Part 2) and following which such amounts shall be held to the order of the Company until released in accordance with the provisions of Part 3.


2.	Immediately before Completion (but subject to the transfers of the funds referred to in paragraphs 1.3, 1.4 and 1.5 above having occurred) the Seller shall procure that a board meeting of the Company is held at which the following matters shall take place (each subject to Completion occurring in accordance with this Schedule):


2.1	a resolution to register the transfer of the Sale Shares to the Buyer on presentation of executed transfers in favour of the Buyer shall be passed;

2.2

a resolution is passed with effect from registration of the transfer of the Sale Shares, to enter into the Buyer Completion Loan and to use the sums advanced under the Buyer Completion Loan to procure the repayment of the Senior Loan and the termination of the Interest Swaps and to procure the repayment of the Seller Intercompany Loan, as well as enter into any of the Senior Loan Release Documents, Interest Swap Termination Confirmation and/or Seller Loan Release Document, as applicable.


2.3	the Directors resign from their offices as directors of the Company with effect from the registration of the transfer of the Sale Shares;


2.4	Daniel Gilbert, Jon Farkas, Steven Kauff and Philip Hendy are appointed as directors of the Company with effect from the registration of the transfer of the Sale Shares; and


2.5	a resolution is passed with effect from the registration of the transfer of the Sale Shares revoking each existing mandate given by the Company for the operation of its bank accounts and giving authority to persons nominated by the Buyer.

Part 2

Purchase of the Company by the Buyer


3.	At Completion, the Seller shall deliver or cause to be delivered to or on behalf of the Buyer the following documents and evidence:


3.1	the Seller’s Legal Opinion duly signed by the Seller’s German counsel;


3.2	as evidence of the authority of each person executing a document referred to in this Schedule on the Seller’s behalf:

(a)

a copy of the minutes of a duly held meeting of the directors of the Seller (or a duly constituted committee thereof) authorising the execution by the Seller of the document, where such execution is authorised by a committee of the board of directors of the Seller, a copy of the minutes of a duly held meeting of the directors constituting such committee or, in each case, the relevant extract thereof; or


(b)	a copy of the power of attorney conferring the authority (and in the case of the documents required to be registered or produced to the Land Registry, in a form which is compliant with the Land Registry’s requirements in relation to such powers of attorney);

in each case certified to be a true copy by a director or the secretary of the Seller;


3.3	transfers of the Sale Shares executed by the registered holders in favour of the Buyer in such form as is necessary for the Buyer to establish legal ownership in accordance with Jersey law;


3.4	the share certificates for the Sale Shares in the names of the registered holders or an indemnity in the agreed form for any lost certificates;


3.5	resignation letters in the agreed form signed by the Directors;


3.6	a letter from the Seller’s Solicitors to the Buyer’s Solicitors confirming that the Seller’s Solicitors hold on behalf of the Company the Property Documents, Tenancy Documents and Rent Deposit Deeds;

3.7

a letter from JTC (Jersey) Limited to the Buyer and/or Mourant Ozannes, the Buyer’s Jersey lawyers confirming that JTC (Jersey) Limited holds on behalf of the Company each register, minute book, and other statutory book required by law to be kept by the Company, made up to the Completion Date along with the Certificate of Incorporation of the Company and all consents issued to the Company pursuant to the Control of Borrowing (Jersey) Order 1958;


3.8	a Deed of Surrender executed by and completed between the Company (1) and Michellisa Properties Limited (“ Michellisa ”) (2) in the agreed form pursuant to which Michellisa surrenders to the Company its interest under the Michellisa Lease;


3.9	two rent authority letters from the Seller's solicitors to Plan Limited informing the tenant of the surrender of the Michellisa Lease;


3.10	a copy of each new bank mandate of the Company authorised under paragraph 2.5 of this Schedule and copies of statements of each bank account of the Company made up to a date not earlier than two Business Days before Completion; and


3.11	a US tax election on Form 8832 in the agreed form electing to classify the Company as a transparent entity (in the case that it currently has more than one owner, a partnership) for US federal income tax purposes signed on behalf of the Company by the directors holding office immediately prior to registration of the Sale Shares and the Seller, with an effective date prior to Completion.


4.	At Completion, the Buyer shall deliver or cause to be delivered to or on behalf of the Seller the Legal Opinion duly signed by the Buyer's Delaware, USA counsel.

Simultaneously with the steps set out at paragraph 3 , the Completion Payment referred to in paragraph 1.3 of Part 1 shall be unconditionally and irrevocably released to the Seller’s Solicitors and the Senior Lender's Solicitors (as the case may be) by or on behalf of the Buyer and the Seller acknowledges that whatever proportion (if any) of the Completion Payment has been transferred to the Senior Lender's Solicitors being released to the Senior Lender's Solicitors shall constitute good receipt by the Seller of such amount.

Part 3

Repayment of Senior Loan and termination of Interest Swaps


6.	Immediately following the acquisition of the Sales Shares of the Company pursuant to Part 2 the Buyer shall (and shall procure that the Company shall) enter into the Buyer Completion Loan.


7.	Immediately following the entry into of the Buyer Completion Loan, the Buyer shall advance an amount equal to:


(a)	Senior Loan Redemption Amount;


(b)	plus (where the Interest Swap Termination Payment is a payment due from the Company) or minus (where the Interest Swap Termination Payment is a payment due to the Company) the Interest Swap Termination Amount

to the Company and shall procure that the Company immediately pays such amounts to the Senior Lender’s Solicitors in order to repay the Senior Loan and terminate the Interest Swaps (and the Seller and the Buyer acknowledge and agree that this obligation shall be satisfied by the sums referred to in paragraph 1.4 of Part 1 of SCHEDULE 2 immediately following Completion being unconditionally and irrevocably released in accordance with the terms of the Senior Lender’s Solicitors undertaking by the Buyer to the Company and by the Company to the Senior Lender’s Solicitors).


8.	Subject to the Buyer complying with its obligations pursuant to paragraphs 6 and 76 and the relevant amounts having been unconditionally and irrevocably released to the Senior Lender’s Solicitors, the Seller shall immediately deliver or cause to be delivered to the Buyer the Senior Loan Release Documents and the Interest Swap Termination Confirmation.

Part 4

Repayment of Seller Intercompany Loan

Immediately following the repayment of the Senior Loan and the termination of the Interest Swaps, the Buyer shall advance an amount equal to Seller Intercompany Loan Amount to the Company and shall procure that the Company pays such amounts to the Seller in order to repay the Seller Intercompany Loan (and the Seller and the Buyer acknowledge and agree that this obligation shall be satisfied by the sums referred to in paragraph 1.4 of Part 1 of this Schedule in respect of the Seller Intercompany Loan Amount immediately following Completion being unconditionally and irrevocably released in accordance with the terms of the Seller’s Solicitors undertaking and the Senior Lender's Solicitors undertaking (as the case may be) by the Buyer to the Company and by the Company to the Seller’s Solicitors and/or the Senior Lender's Solicitors (as the case may be), with the Seller further acknowledging that the release of the relevant amounts to the Seller’s Solicitors and/or the Senior Lender's Solicitors (as the case may be) shall constitute good receipt by the Seller of such amount).

10.

Subject to the Buyer complying with its obligations pursuant to this Part 4 and the Seller Intercompany Loan Amount having been unconditionally and irrevocably released to the Seller's Solicitors, the Seller shall immediately deliver or cause to be delivered to the Buyer the Seller Loan Release Document, duly executed by the Seller and with effect from release to the Seller's Solicitors of the amounts in respect of the Seller Intercompany Loan Amount held to the order of the Company by the Seller’s Solicitors, the Seller hereby immediately releases the Company from any and all obligations and liabilities (past, present or future) which have not already been discharged by the repayment of the Seller Intercompany Loan (but excluding to the extent of any underpayment by the Company to the Seller under the Seller Intercompany Loan which is taken into account in the Completion Accounts).

SCHEDULE 3

Warranties

Part 1

General warranties


1.	POWER TO SELL THE COMPANY


1.1	The Seller has taken all necessary action and has all requisite power and authority to enter into and perform this Agreement in accordance with its terms.


1.2	This Agreement constitutes (or shall constitute when executed) valid, legal and binding obligations on the Seller in the terms of the Agreement.


1.3	Compliance with the terms of this Agreement shall not breach or constitute a default under any of the following:


(a)	any agreement or instrument to which the Seller or the Company is a party or by which it is bound;


(b)	any order, judgment, decree or other restriction of any kind applicable to the Seller or the Company; or


(c)	any licences or consents issued to the Company, including but not limited to any consent issued under the Control of Borrowing (Jersey) Order 1958.


2.	SHARES IN THE COMPANY


2.1	The Company is a limited company incorporated under Jersey Law and has been in continuous existence since incorporation.


2.2	The Sale Shares constitute the whole of the allotted and issued share capital of the Company and are fully paid.


2.3	The Seller is the sole legal and beneficial owner of the Sale Shares.


2.4	The register of members of the Company contained in the Disclosure Letter contains all the information which it is required to do to comply with the Companies (Jersey) Law 1991.


2.5	The Company has no (and has never had any) subsidiary and holds no (and has never held any) legal or beneficial interest in the share capital of any other company. The Company has not agreed to acquire an interest in or merge or consolidate with any other person.


2.6	The Sale Shares are free from all Encumbrances and no commitment has been given to create an Encumbrance affecting the Sale Shares. So far as the Seller is aware, no person has claimed to be entitled to an Encumbrance in relation to any of the Shares.


2.7	No right has been granted to any person to require the Company to issue any share capital and no Encumbrance has been created and no commitment has been given to create an Encumbrance in favour of any person affecting any unissued shares or debentures or other unissued securities of the Company.


2.8	Other than this Agreement, there is no arrangement requiring the transfer, redemption or repayment of a share in the capital of the Company.


3.	GENERAL

3.1

The Company owns no assets other than its interest in the Property. The Company has no liabilities (actual or contingent) other than in relation to the Property or under the Senior Loan Documents, and it is not a party to any contract or other commitment other than, (i) those of the Property Documents to which it is a party or by which it is otherwise bound; (ii) those of the insurance policies referred to in Schedule 10 to which it is a party; (iii) the Property Management Agreement; (iv) those of the Tenancy Documents to which it is a party or by which it is otherwise bound; (v) those of the Construction Documents to which it is a party or by which it is otherwise bound; (vi) to the extent Disclosed, the maintenance, service, cleaning and security agreements which relate to the Property and to which it is a party or is otherwise bound; (vii) an engagement letter with BDO Limited dated 3 October 2013 under which the Company engages BDO Limited as its accountants; (viii) an engagement letter with Ernst & Young dated 22 November 2012 under which the Company engages Ernst & Young as tax advisors; and (ix) the Senior Loan Documents, the Senior Loan Release Documents and the Seller Loan Release Document (together the “ Existing Arrangements ”).


3.2	So far as the Seller is aware, no fact or circumstance exists which might invalidate or give rise to a ground for termination, avoidance or repudiation of any of the Existing Arrangements. No party with whom the Company has entered into any of the Existing Arrangements has given notice of its intention to terminate, or has sought to repudiate or disclaim, the same.


3.3	Neither the Company nor, so far as the Seller is aware is any party with whom the Company has entered into any of the Existing Arrangements is in material breach thereof.


3.4	The Title, copy Tenancy Documents, copy Property Documents, copy Construction Documents and Replies to Enquiries provided to the Buyer or the Buyer’s Solicitors are true, accurate and complete in all material respects and not misleading.


3.5	The particulars relating to the Company in Schedule 1 of this Agreement are true and accurate and not misleading.


4.	COMPLIANCE WITH LAWS

The Company has at all times during the four years before the date of this Agreement conducted its business in accordance with its constitutional documents and with all applicable laws and regulations.


5.	LICENCES AND CONSENTS


5.1	Save for consent issued under the Control of Borrowing (Jersey) Order 1958, the Company has and requires no licences, consents, permits or authorities of any kind.


5.2	In respect of any licences, consents, permits or authorities which are Disclosed the Company has complied with the terms and conditions of each such licence, consent, permit or authority, such licence, consent permit or authority is in force and unconditional or subject only to a condition that has been satisfied.


6.	INSURANCE


6.1	Particulars of all insurances maintained by or on behalf of the Company are set out in Schedule 10 (Insurance Policies).


6.2	The insurance policies maintained by or on behalf of the Company meet all the requirements of the Tenancy Documents.


6.3	There are no outstanding claims under, or in respect of the validity of, any of those policies and there are no circumstances likely to give rise to any claim under any of those policies.


6.4	All those insurance policies are in full force and effect, are not void or voidable, nothing has been done or not done by the Company or the Seller (or a member of the Seller’s Group) which could make any of them void or voidable and Completion will not terminate, or entitle any insurer to terminate, any such policy.


6.5	All insurance premiums payable pursuant to all insurance policies maintained by or on behalf of the Company have been paid in full.


6.6	All of the Tenants have paid all of their respective proportions of the insurance premiums applicable to the insurance policies maintained by or on behalf of the Company for the period ending on the Apportionment Date pursuant to the terms of their respective Tenancy Documents.


6.7	So far as the Seller is aware, no insurer has ever cancelled or refused to accept or continue any insurance taken out or applied for by or on behalf of the Company.


7.	POWER OF ATTORNEY

There are no powers of attorney in force given by the Company and, other than the Directors listed at SCHEDULE 1, no person, as agent or otherwise, is entitled or authorised to bind or commit the Company to any obligation.


8.	DISPUTES AND INVESTIGATIONS


8.1	Neither the Company nor any of the Directors (in their capacity as directors of the Company):


(a)	is engaged in any litigation, administrative, mediation or arbitration proceedings or other proceedings or hearings before any statutory or governmental body, department, board or agency; or


(b)	is the subject of any investigation, inquiry or enforcement proceedings by any governmental, administrative or regulatory body.


8.2	No such proceedings, investigation or inquiry as are mentioned in paragraph 8.1 have been threatened or are pending and, so far as the Seller is aware, there are no circumstances likely to give rise to any such proceedings.


9.	TRANSACTIONS WITH THE SELLER

There is no outstanding indebtedness or other liability (actual or contingent) and no outstanding contract, commitment or arrangement between the Company and any of the following:


(a)	the Seller or any member of the Seller’s Group or any person Connected with the Seller; or


(b)	any member of, or any director of any member of, the Seller’s Group or any person Connected with such a member or director other than in the ordinary course of business on arm’s length terms.


10.	FINANCE AND GUARANTEES


10.1	Except under the Senior Loan Documents or as set out in the Replies to Enquiries, no guarantee, mortgage, charge, pledge, lien, assignment or other security agreement or arrangement has been given by or entered into by the Company in respect of borrowings or other obligations of the Company or any other person or by any third party in respect of borrowings or other obligations of the Company.


10.2	The Company is not a party to and is not liable under a guarantee, indemnity or other agreement to secure or incur a financial or other obligation with respect to another person’s obligation.


10.3	The Company has no outstanding loan capital and has lent no money that has not been repaid and there are no debts owing to the Company other than debts that have arisen in the normal course of business or under the Tenancy Documents.


10.4	The Company has not factored any of its debts or discounted any of its debts or engaged in financing of a type which would not need to be shown or reflected in the Accounts.


10.5	Particulars of all money borrowed by the Company that remains outstanding for repayment (other than trade credit given to it in the ordinary course of its business), including particulars of the material terms on which such money has been borrowed, have been Disclosed.

10.6

No indebtedness of the Company is due and payable and no security over any of the assets of the Company is now enforceable. The Company has not received any written notice that has not been withdrawn or whose terms have not been fully complied with and/or carried out from any creditor requiring any payment to be made and/or threatening the enforcement of any security which it may hold over the assets of the Company.


10.7	No corporate action, legal proceedings or other procedure has been taken in relation to the enforcement of any security over any assets of the Company held by the Sellers or any member of the Sellers’ Group or, so far as the Sellers are aware, any other person.


11.	INSOLVENCY


11.1	The Company:


(a)	is not insolvent or unable to pay its debts within the meaning of the Insolvency Act 1986 or any other insolvency law applicable to the Company;


(b)	has not been declared bankrupt (within the definition of the Interpretation (Jersey) Law 1954, as amended) or had any judgment taken against it in any court or suffered or committed any act indicative of insolvency by the law of any jurisdiction; and


(c)	has not stopped paying its debts as they fall due, nor has the Company commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness.


11.2	No step has been taken by the Company or the Directors and no notice has been received by the Company of any steps taken by any third party in any applicable jurisdiction to initiate any process by or under which:


(a)	the ability of the creditors of the Company to take any action to enforce their debts is suspended, restricted or prevented; or


(b)	some or all of the creditors of the Company accept, by agreement or in pursuance of a court order, an amount less than the respective sums owing to them in satisfaction of those sums with a view to preventing the dissolution of the Company; or


(c)	a person is appointed to manage the affairs, business and assets of the Company on behalf of its creditors; or


(d)	the holder of a charge over all or any of the Company’s assets is appointed to control the business and/or all or any assets of the Company.


11.3	In relation to the Company:


(a)	no administrator has been appointed by the Company or, so far as the Company is aware, by any third party;


(b)	no documents have been filed with the court for the appointment of an administrator by the Company or, so far as the Company is aware, by any third party; and


(c)	no notice of intention to appoint an administrator has been given by the Company or, so far as the Company is aware, by any third party.

11.4

No notice has been received by the Company that any receiver (including an administrative receiver), liquidator, trustee, custodian or similar official (including the Jersey Viscount) has been appointed in any jurisdiction in respect of the whole or any part of the business or assets of the Company and so far as the Company is aware no step has been taken for or with a view to the appointment of such a person.


11.5	No transaction at an undervalue or preference (within the meaning of the Bankruptcy (Désastre)(Jersey) Law 1990 or the Companies (Jersey) Law 1991) relating to the Sale or to which the Company has been a party has been effected.


11.6	No process has been initiated which leads to the Company being dissolved and its assets being distributed among its creditors, shareholders or other contributors.


11.7	No distress, execution or other process has been levied on an asset of the Company.


12.	INTELLECTUAL PROPERTY


12.1	No Intellectual Property Rights are owned, used, or held for use by the Company.


12.2	Since the incorporation/registration of the Company it has not owned or used any IT hardware or software.


12.3	The activities of the Company have not infringed any Intellectual Property Rights of any third party.


13.	EMPLOYMENT


13.1	The Company has no employees, workers or persons who could be deemed or construed to be employees or workers. The Company has never had any employees, workers or persons who could be deemed or construed to be employees or workers.


13.2	The Company does not have and has not been involved in any scheme or arrangement or the provision of a pension or similar retirement benefit on death or sickness for any person.

13.3

The Company has no employees and has no office space in Jersey and does not require a business licence under the Control of Housing and Work (Jersey) Law 2012 (“ CHJW Law ”) or a licence pursuant to the Regulation of Undertakings and Development (Jersey) Law 1973 (“ RoU Law ”) and has complied at all times with the requirements of the relevant exemptions under the CHJW Law and the RoU Law.


14.	NON-PROPERTY ASSETS


14.1	Each asset (other than the Property) included in the Accounts or acquired by the Company since the Accounting Date is:


(a)	legally and beneficially owned solely by the Company free from any Encumbrance; and


(b)	where capable of possession, in the possession or under the control of the Company.


15.	THE PROPERTY


15.1	The Property is legally and beneficially owned solely by the Company.


15.2	The Company has in its possession or under its control all duly stamped deeds and documents which are necessary to prove title to the Property.


15.3	The Company does not own and has never owned any interest in any freehold or leasehold or commonhold property other than the Property and the Previously Owned Property.

15.4

The Company sold all of its rights title and interest in the Previously Owned Property on 12 March 1997 to Corston Holdings Limited (Jersey company number 53933) and on 26 March 1999 Corston Holdings Limited sold all of its rights title and interest in the Previously Owned Property to Sirosa Anstalt. The Company did not retain and has never re-acquired any right title or interest in the Previously Owned Property. The Company has no liabilities (actual or contingent) in relation to or arising out of any right title or interest that it had in the Previously Owned Property.


16.	ENVIRONMENTAL MATTERS


16.1	The Company complies and has complied with all applicable Environmental Law and the Company has not received any notification under Environmental Law and has obtained and complied with the terms and conditions all Environmental Permits.

16.2

Neither the Company nor, so far as the Seller is aware, any person for whose acts or defaults the Company may be vicariously liable is involved, or has been involved, in nor is there pending or threatened against the Company or any person for whom it is vicariously liable, any civil, criminal, arbitration, administrative proceeding or inquiry relating to the Environment. As far as the Seller is aware, no fact or circumstance exists which might give rise to any of the aforesaid.


16.3	There are no environmental or health and safety audit reports, assessments, studies or tests, insurance appraisals, or associated documentation and correspondence relating to the assets and business of the Company.


16.4	There are no reports identifying the presence of Asbestos on the Property other than the 2002 Asbestos Report and all recommended actions pursuant to the 2002 Asbestos Report have been completed.


16.5	The Company has not implemented the Chertsey House Extension (2006) permission.


17.	RENT DEPOSITS


17.1	No deductions withdrawals or repayments have been made from any of the money deposited pursuant to the terms of the Rent Deposit Deeds by the Company, the Seller or by any agent on their behalf.


17.2	To the extent that the Rent Deposit Deeds require that interest is to accrue on the money deposited pursuant to those deeds such interest has been credited to the accounts in which such money is held.


17.3	The money deposited pursuant to the terms of the Rent Deposit Deeds are lodged in the following accounts and managed by the Property Manager. The only signatories to these accounts are the directors of the Property Manager:



Tenant	Account details
Paradigm Geophysical (UK) Limited.	Property Initiatives Management Limited, re Firefly – Paradigm Geophysical UK Limited Client Rent Deposit Account, Barclays Bank, Sort Code 20-00-00, Account Number 03834484
Tractebel Engineering Limited (formerly CCSTLM Limited)	Property Initiatives Management Limited, re Firefly – CCSTLM Limited Client Rent Deposit Account, Barclays Bank, Sort Code 20-00-00, Account Number 03791874
Commerce Connections Limited	Property Initiatives Management Limited, re Firefly – Commerce Connections Client Rent Deposit Account, Barclays Bank, Sort Code 20-00-00, Account Number 23537315
E Trawler UK Limited	Property Initiatives Management Limited, re Firefly – E Trawler Client Rent Deposit Account, Barclays Bank, Sort Code 20-00-00, Account Number 53130924
Fuse Information Management Limited	Property Initiatives Management Limited, re Firefly – Fuse Information Management Client Rent Deposit Account, Barclays Bank, Sort Code 20-00-00, Account Number 93040976


18.	CRC SCHEME


18.1	The Company has at all times in all material respects complied with the requirements of the CRC Order and all law relating to the CRC Scheme and is continuing to carry out the monitoring required under the said scheme and, so far as the Seller is aware, there are no facts or circumstances which may lead to any breach of or liability under the CRC Order or such law.

18.2

There have been no audits, notices, claims, investigations, prosecutions or proceedings against or threatened against the Company or the Seller or the Seller’s Group to the extent that such are related to a liability or potential liability of the Company or any of the Company’s directors, officers or employees in respect of the CRC Scheme and there are no facts or circumstances which may lead to any such audits, notices, claims, investigations, prosecutions or other proceedings.


18.3	Copies of the registration and CRC Evidence Pack relating to the participation of the Company in the CRC Scheme as at Completion are complete, accurate, fully up to date and not misleading.


18.4	All records required to be maintained by the Company under the CRC Scheme are complete, accurate, and up to date in all material respects and not misleading in any material respect.


19.	ACCOUNTS


19.1	The Accounts have been prepared in accordance with IFRS and in accordance with all applicable law in force on the Accounts Date and give a true and fair view of the state of affairs of the Company as at the Accounts Date and of the profit or loss of the Company for the financial year ended on that date.


19.2	The Accounts have been prepared on a basis consistent with the accounts of the Company for the two prior accounting periods without any change in accounting policies used.


19.3	The Management Accounts have been prepared on a basis consistent with that employed in preparing the Accounts and fairly represent the assets and liabilities and profits and losses the Company as at and to the date for which they have been prepared.


20.	ACCOUNTING, FINANCIAL AND OTHER RECORDS


20.1	All accounting, financial and other records of the Company (including the statutory books of the Company):


(a)	have been properly prepared, filed and maintained and are up to date;


(b)	constitute an accurate record of all matters required by law to appear in them;


(c)	do not contain any material inaccuracies or discrepancies;


(d)	are in the possession or under the control of the Company; and


(e)	comply with all applicable laws.


21.	CHANGES SINCE ACCOUNTS DATE

Since the Accounts Date:


(a)	the Company has conducted its business in the normal course and as a going concern; and


(b)	there has been no adverse change in the financial position of the Company with a negative impact on the Company in excess of £10,000; and


(c)	has not acquired or disposed of, or agreed to acquire or dispose of an asset with a value in excess of £10,000 (other than as set out in the Tenancy Documents); and


(d)	no dividend or other distribution of profits or assets has been, or agreed to be, declared, made or paid by the Company; and


(e)	the Company has not made any capital expenditure or incurred any capital commitments; and


(f)	the Company’s business has not been materially and adversely affected by the loss of a Tenant; and


(g)	no shareholder resolutions of the Company have been passed.


22.	EFFECT OF SALE OF SALE SHARES

Neither the acquisition of the Sale Shares by the Buyer nor compliance with the terms of this Agreement will:


(a)	so far as the Seller is aware, cause the Company to lose the benefit of any right or privilege it presently enjoys; or


(b)	relieve any person of any legal obligation to the Company (whether contractual or otherwise), or enable any person to determine any such obligation or any right or benefit enjoyed by the Company, or to exercise any right in respect of the Company.

Part 2

Tax warranties


1.	GENERAL

1.1

All notices, returns (including any land transaction returns), reports, accounts, computations, statements, assessments and registrations and any other necessary information submitted by the Company to any Taxation Authority for the purposes of Taxation have been made on a proper basis, were submitted within applicable time limits, were accurate and complete when submitted and remain accurate and complete in all material respects. Without prejudice to the foregoing, all returns have been made to the Jersey Income Tax Department and any other Taxation Authority in Jersey. None of the above is, or is likely to be, the subject of any material dispute with any Taxation Authority.


1.2	All Taxation (whether of the UK or elsewhere), for which the Company has been liable to account, has been duly paid (insofar as such Taxation ought to have been paid).


1.3	The Company has, within applicable time limits, kept and maintained complete and accurate records, invoices and other information in relation to Taxation as it is required or is prudent to keep and maintain. Such records, invoices and information form part of tax accounting arrangements that enable the tax liabilities of the Company to be calculated accurately in all material respects.


1.4	The Company has complied within applicable time limits with all notices served on it and any other requirements lawfully made of it by any Taxation Authority.


1.5	The Company has not made any payments representing instalments of corporation tax pursuant to the Corporation Tax (Instalment Payments) Regulations 1998 in respect of any current or preceding accounting periods nor is under any obligation to do so.


1.6	The Company has not received from any Taxation Authority (and has not subsequently repaid to or settled with that Taxation Authority) any payment to which it was not entitled, or any notice in which its liability to Taxation was understated.


1.7	The Company has not paid, within the period of seven years ending on the date of this Agreement, or will become liable to pay any penalty, fine, surcharge or interest charged by virtue of the TMA 1970 or any other Taxation Statute.


1.8	All Taxation and national insurance contributions deductible and payable under any Taxation Statute has, so far as is required to be deducted, been deducted from all payments made (or treated as made) by the Company. All amounts due to be paid to the relevant Taxation Authority prior to the date of this Agreement have been so paid by the due date.


1.9	Proper records have been maintained in respect of all such deductions and payments, and all applicable regulations have been complied with.


1.10	The Company is not involved in any dispute with any Taxation Authority nor has it, within the past 2 years, been subject to any visit, audit, investigation, discovery or access order by any Taxation Authority. The Seller is not aware of any circumstances existing which make it likely that a visit, audit, investigation, discovery or access order will be made in the next 12 months.


1.11	The amount of Taxation chargeable on the Company during any accounting period ending on or within the six years before Completion has not, to any material extent, depended on any concession, agreement or other formal or informal arrangement with any Taxation Authority.

1.12

All transactions in respect of which any clearance or consent was required from any Taxation Authority have been entered into by the Company after such consent or clearance has been properly obtained. Any application for such clearance or consent has been made on the basis of full and accurate disclosure of all the relevant material facts and considerations, and all such transactions have been carried into effect only in accordance with the terms of the relevant clearance or consent.


1.13	The Company has duly submitted all claims, disclaimers and elections the making of which has been assumed for the purposes of the Accounts. No such claims, disclaimers or elections are likely to be disputed or withdrawn.


1.14	The Disclosure Letter contains full particulars of all matters relating to Taxation in respect of which the Company is, or at Completion, will be entitled to:


(a)	make any claim (including a supplementary claim), disclaimer or election for relief under any Taxation Statute or other provision; and/or


(b)	appeal against any assessment or determination relating to Taxation; and/or


(c)	apply for a postponement of Taxation.


1.15	The Company is not, nor will become liable, to make to any person (including any Taxation Authority) any payment in respect of any liability to Taxation which is primarily or directly chargeable against, or attributable to, any other person.

1.16

The Accounts make full provision or reserve within generally accepted accounting principles for any period ending on or before the date to which they were drawn up for all Taxation assessed or liable to be assessed on the Company, or for which the Company is accountable at that date, whether or not the Company has (or may have) the right of reimbursement against any other person. Proper provision has been made and shown in the Accounts for deferred taxation in accordance with generally accepted accounting principles.


1.17	The Company has sufficient records to determine the tax consequence which would arise on any disposal or realisation of any asset owned at the Accounts Date or acquired since that date, but prior to Completion.


1.18	The Company has not entered into a Managed Payment Plan within the provisions of sections 59F-G of the TMA 1970 nor into any arrangement with HM Revenue & Customs for the deferred payment of any liability to Taxation.


1.19	The Company is not a qualifying company within the meaning of Schedule 46 to the Finance Act 2009.


2.	CHARGEABLE GAINS

2.1

The book value shown in, or adopted for the purposes, of the Accounts as the value of each of the assets of the Company, on the disposal of which a chargeable gain or allowable loss could arise, does not exceed the amount which on a disposal of such asset at the date of this Agreement would be deductible, in each case, disregarding any statutory right to claim any allowance or relief other than amounts deductible under section 38 of TCGA 1992.


2.2	There has been no transaction to which any of the following provisions applies, or could apply, in respect of any asset held by the Company:


(a)	section 23 of TCGA 1992 (compensation and insurance monies);


(b)	section 135 and 136 of TCGA 1992 (reconstructions and amalgamations);


(c)	section 139 of TCGA 1992 (transfers of business on reconstructions and amalgamations);


(d)	section 152-154 (inclusive) of TCGA 1992 (replacement of business assets);


(e)	sections 140A and 140C of TCGA 1992 (transfer of a trade);


(f)	section 165 of TCGA 1992 (gifts of business assets);


(g)	section 171-171C and 173 of TCGA 1992 (intra-group transfers);


(h)	section 247-248 of TCGA 1992 (compulsory acquisitions); and


(i)	section 242(2) of TCGA 1992 (small part disposals of land).


2.3	The Company has not been a party to any scheme or arrangement whereby the value of an asset has been materially reduced as set out in sections 29-34 of TCGA 1992.


2.4	The Company has not made any election under section 35(5) of TCGA 1992 and the Accounts have not been prepared on the basis that such an election will be made.


2.5	The Company does not own, and has not owned, any asset on the disposal of which paragraph 2 of Schedule 3 to TCGA 1992 would apply.


2.6	The Company holds no asset on the disposal of which Schedule 4 to TCGA 1992 may apply.


2.7	The Company has not transferred a trade carried on by it outside the UK in circumstances such that a chargeable gain may be deemed to arise at a date after such transfer under section 140 of TCGA 1992.


2.8	The Company does not own any assets which are wasting assets within the meaning of section 44 of TCGA 1992 and which do not qualify in full for an allowance under the provisions of CAA 2001.


2.9	The Company has not disposed of or acquired any asset in circumstances falling within section 17 or 19 of TCGA 1992.


2.10	The Company is not owed a debt on a security, the disposal or satisfaction of which will give rise to a liability to corporation tax on chargeable gains by reason of section 251 of TCGA 1992.


2.11	The Company has not received any assets by way of gift as mentioned in section 282 of TCGA 1992 and the Company has not held, nor does it hold, shares in a company to which section 125 of TCGA 1992 could apply.


2.12	No claim or election affecting the Company has been made (or assumed to be made) under section 187 of TCGA 1992.


2.13	The Company has not made a part disposal of any assets for the purposes of section 42 of TCGA 1992.


2.14	The Company has not, since the Accounts Date, appropriated any of its assets to or from trading stock for the purposes of section 161 of TCGA 1992.


2.15	The Company is not, nor may it become, liable to tax under section 190 of TCGA 1992 in respect of a disposal occurring on or before Completion.


2.16	No assessment in respect of a capital gain on the disposal of any asset situated outside the UK or of unremittable overseas income has been postponed under section 279 of TCGA 1992 or section 1275 of CTA 2009 in relation to the Company.


2.17	The Company has not acquired shares on a reorganisation (within the meaning of section 126 of TCGA 1992) in circumstances such that part of the consideration given by the Company would be disallowed under section 128(2) of that Act.


3.	CAPITAL LOSSES


3.1	No capital loss has accrued to the Company that is a loss within the meaning of either section 8 or section 16A of TCGA 1992.


3.2	No allowable loss has accrued to the Company to which section 18(3) of TCGA 1992 would apply.


3.3	No loss which might accrue on the disposal by the Company of any asset is liable to be reduced or eliminated by the application of section 35(3) or (4) of TCGA 1992.


3.4	No allowable loss which might accrue on the disposal by the Company of any share in, or security of, any company is likely to be reduced by virtue of sections 176 and 177 of TCGA 1992.


3.5	The Company has no pre-entry loss, as defined in paragraph 1(2) of Schedule 7A to TCGA 1992, and there is no allowable loss accrued, or which might accrue, on the disposal of any asset of the Company which could be treated as a pre-entry loss as so defined following Completion.


3.6	The Disclosure Letter gives details of any loss accruing to the Company in respect of which notice needs to be, but has not been, given to an officer of HM Revenue & Customs in order to be an allowable loss for the purposes of TCGA 1992.


4.	CAPITAL ALLOWANCES

4.1

If any asset of the Company were disposed of at Completion for its book value as shown in, or adopted for the purpose of, the Accounts, or for the value of consideration actually given for it on its acquisition (if such asset were acquired since the Accounts Date), no balancing charge under CAA 2001 (or any other legislation relating to capital allowances) or similar clawback of relief in jurisdictions outside the UK would be made on the Company.

4.2

No event has occurred since the Accounts Date (otherwise than in the ordinary course of business) whereby any balancing charge may fall to be made against, or any disposal value may fall to be brought into account by, the Company under CAA 2001 (or any other legislation relating to any capital allowances) or similar legislation relating to relief for similar capital expenditure in jurisdictions outside of the UK.


4.3	All expenditure which the Company has incurred (or may incur) under any subsisting commitment for the provision of plant or machinery has qualified, or will qualify (if not deductible as a trading expense of the Company), for allowances at the applicable rate under CAA 2001. The Company has notified its Inspector of Taxes of all such expenditure.


4.4	The Company has not made any claim for capital allowances in respect of any asset which is leased to or from, or hired to or from, the Company. No election affecting the Company has been made, or agreed to be made, under sections 177 or 183 of CAA 2001 in respect of such assets.


4.5	The Company is not a lessee under a lease to which Chapter 17 of Part 2 of CAA 2001 apply or could apply.


4.6	The Company is not a party to any transactions to which paragraphs 2-5 and 7 of Schedule 3 to TIOPA 2010 apply or could apply.


4.7	The Company has made no election under section 83 of CAA 2001, nor is it taken to have made such an election under section 89(4) of CAA 2001.


4.8	The Company has not incurred any long-life asset expenditure within the meaning of section 90 of CAA 2001.


4.9	The Disclosure Letter gives full details of any disclaimers of allowances on plant and machinery.


4.10	The Company has not incurred any expenditure which qualifies for allowances under Part 3A of CAA 2001 (business premises renovation allowance).


4.11	The Disclosure Letter gives full details of all expenditure incurred on the provision of or replacement of integral features (within the meaning of section 33A of CAA 2001).


5.	DISTRIBUTIONS AND OTHER PAYMENTS


5.1	No distribution or deemed distribution, within the meaning of section 1000 or sections 1022-1027 of CTA 2010, has been made (or will be deemed to have been made) by the Company, except dividends shown in their audited accounts, and the Company is not bound to make any such distribution.


5.2	No securities within the meaning of section 1114 of CTA 2010 issued by the Company and remaining in issue at the date of this Agreement were issued in such circumstances that the interest payable under them falls to be treated as a distribution under section 1000 of CTA 2010, nor has the Company agreed to issue any such securities.


5.3	No rents, interest, annual payments or other sums of an income nature, paid or payable by the Company, or which the Company is under an existing obligation to pay in the future, are or may be wholly or partially disallowable as deductions, management expenses or charges in computing taxable profits for Taxation purposes.


5.4	The Company has not, within the period of seven years preceding Completion, been engaged in, nor been a party to, any of the transactions set out in Chapter 5 of Part 23 of CTA 2010, nor has it made or received a chargeable payment as defined in section 1086 of CTA 2010.


5.5	The Company has not received any capital distribution to which section 189 of TCGA 1992 could apply.


6.	LOAN RELATIONSHIPS


6.1	All interests, discounts and premiums payable by the Company in respect of its loan relationships (within the meaning of section 302 of CTA 2009) are eligible to be brought into account by the Company as a debit for the purposes of Part 5 of CTA 2009 at the time, and to the extent that such debits are recognised in the statutory accounts of the Company.


6.22	The Company is not, nor in the six years prior to Completion has it been, party to a debtor relationship (within the meaning of section 302(6) of CTA 2009), to which Chapter 8 of Part 5 of CTA 2009 applies or may apply.


6.3	The Company is not party to a loan relationship made other than on arm’s length terms. There are no circumstances in which section 445 or 447 of CTA 2009 could apply to require an adjustment of debits and/or credits brought into account by the Company.


6.4	The Disclosure Letter contains full particulars of any debtor relationship (within the meaning of section 302(6) of CTA 2009 of the Company which relates to any deeply discounted security (within the meaning of Chapter 8 of Part 4 of the Income Tax (Trading and Other Income Act) 2005) to which sections 406-412 of CTA 2009 apply.


6.5	The Company has not been a party to a loan relationship which had an unallowable purpose (within the meaning of section 442 of CTA 2009.


7.	CLOSE COMPANIES


7.1	The Company is not and has never been, a close investment-holding company as defined in section 34 of CTA 2010.


7.2	No distribution within section 1064 of CTA 2010 has been made by the Company during the last six years ending at the Accounts Date, nor have such distributions been made between the Accounts Date and Completion.


7.3	Any loans or advances made, or agreed to be made, by the Company within sections 455, 459 and 460 of CTA 2010 have been disclosed in the Disclosure Letter. The Company has not released or written off, or agreed to release or write off, the whole or any part of any such loans or advances.


8.	GROUP RELIEF


8.1	The Disclosure Letter contains true and accurate details of each claim and each consent to surrender by the Company for or of:


(a)	group relief under Part 5 of the CTA 2010 (group relief); and


(b)	the surrender of tax refund under section 963 of CTA 2010 (surrender of tax refund within group);

which has been made or given prior to the date of this Agreement and no such claim or consent will be altered or withdrawn by a member of the Seller Group, or, prior to Completion, the Company, once made. Each such claim or consent was validly made.


9.	GROUPS OF COMPANIES


9.1	The Company has not entered into, or agreed to enter into, an election pursuant to section 171A of TCGA 1992 or pursuant to paragraph 16 of Schedule 26 to the Finance Act 2008.


9.2	Neither the execution nor completion of this Agreement, nor any other event since the Accounts Date, will result in any chargeable asset being deemed to have been disposed of and re-acquired by the Company for Taxation purposes under:


(a)	section 179 of TCGA 1992;


(b)	sections 345 and 346 of CTA 2009;


(c)	sections 630-632 of CTA 2009;


(d)	section 780 or 785 of CTA 2009 (or under paragraph 58 or 60 of Schedule 29 to the Finance Act 2002); or


(e)	as a result of any other Event (as defined in the Tax Covenant) since the Accounts Date.


9.3	The Company has not made any election under section 179A of TCGA 1992 or section 792 of CTA 2009 (or under paragraph 66 of Schedule 29 to the Finance Act 2002).

9.4

No change of ownership of the Company has taken place in circumstances such that Part 14 of CTA 2010 or Regulation 13(6) of the Corporation Tax (Treatment of Unrelieved Surplus Advance Corporation Tax) Regulations 1999 have, or may, be applied to deny relief for a loss or losses incurred by the Company. Within the period of three years ending with the date of this Agreement, there has been no cessation of, or major change in the nature or conduct of, any trade or business (as defined for these purposes in section 673 of CTA 2010) carried on by the Company.


9.5	The Company has never been party to any arrangements pursuant to section 59F-G of TMA 1970 (group payment arrangements).


10.	INTANGIBLE ASSETS

For the purposes of this paragraph 10, references to “intangible fixed assets” mean intangible fixed assets and goodwill within the meaning of Part 8 of CTA 2009 and to which that legislation applies. References to an “intangible fixed asset” shall be construed accordingly.

10.1

The Disclosure Letter sets out the amount of expenditure on each of the intangible fixed assets of the Company and provides the basis on which any debit relating to that expenditure has been taken into account in the Accounts or, in relation to expenditure incurred since the Accounts Date, will be available to the Company. No circumstances have arisen since the Accounts Date by reason of which that basis might change.


10.2	No claims or elections have been made by the Company under Chapter 7 of Part 8 of CTA 2009 (Part 7 of Schedule 29 to the Finance Act 2002), or section 827 of CTA 2009 (paragraph 86 of Schedule 29 to the Finance Act 2002) in respect of any intangible fixed asset of the Company.


10.3	Since the Accounts Date:


(a)	the Company owns no asset which has ceased to be a chargeable intangible asset in the circumstances described in section 859 of CTA 2009;


(b)	the Company has not realised or acquired an intangible fixed asset for the purposes of Part 8 of CTA 2009; and


(c)	no circumstances have arisen which have required, or will require, a credit to be brought into account by the Company on a revaluation of an intangible fixed asset.


11.	COMPANY RESIDENCE, TREASURY CONSENTS AND OVERSEAS INTERESTS


11.1	The Company is and has since 8 June 2010 been resident for Tax purposes solely in Jersey and is subject to Income Tax in Jersey at a rate of zero per cent. The Company is not liable to pay and has not at any time incurred any liability to Tax chargeable under the laws of any jurisdiction other than the jurisdiction of its incorporation.


11.2	The Company has not had and does not have any profits or gains to which Schedule A of the ITJL 1961 applies.


11.3	No individual resident in Jersey has at any time owned (within the meaning of Article 82A of the Income Tax (Jersey) Law 1961) any of the share capital of the Company.


11.4	The Company is an international services entity for the purposes of the Goods and Services Tax (Jersey) Law 2007, as amended (the “ GST Law ”), being eligible to have and having its name on a list kept with the Comptroller of Taxes under Article 59(1) of the GST Law and accordingly the Company is, inter alia, not required to register under the GST Law.


11.5	Prior to 1 January 2009 and from incorporation the Company had exempt Company Tax status for the purposes of the Income Tax (Jersey) Law 1961.


11.6	Until 7 June 2010 the Company was resident in the UK only for corporation tax purposes and has not, at any time before that date, been treated as resident in any other jurisdiction for the purposes of any double taxation arrangements having effect under section 18 of CTA 2009 and section 2 of TIOPA 2010 or for any other tax purpose.


11.7	The Company has not caused, permitted or entered into any of the transactions specified in section 37 of and Schedule 17 to the Finance Act 2009 without having duly provided the required information to HM Revenue & Customs or, in relation to transactions occurring before 1 July 2009, as set out in section 765 of ICTA 1988 (migration of companies) without the prior written consent of HM Treasury.


11.8	The Company would not be a person to whom paragraph 54 Of Schedule 7 to TIOPA 2010 applies in relation to a migrating company.


11.9	The Company holds no shares in a company which is not resident in the UK and which would be a close company if it were resident in the UK in circumstances such that a chargeable gain accruing to the company not resident in the UK could be apportioned to the Company pursuant to section 13 of TCGA 1992.


11.10	The Company is not, nor may it become, liable to tax under Chapter 7 of Part 22 of CTA 2010 in respect of any amount of unpaid corporation tax of a non-UK resident company.


11.11	The Company is not holding, nor has it held in the past seven years, any interest in a controlled foreign company within section 747 of ICTA 1988. The Company has no material interest in an offshore fund as defined in Part 1 of Schedule 22 to the Finance Act 2009.


11.12	The Company has not received any foreign loan interest in respect of which double taxation relief will, or may, be restricted under section 50 of TIOPA 2010.


11.13	No claim has been made by the Company under sections 584 or 585 of ICTA 1988 or section 1275 of CTA 2009.


11.14	The Company has not been a party to any transaction or arrangement whereby it is, or may become, liable for Taxation by virtue of sections 835U, 971 and 972 of the Income Tax Act 2007 (ITA 2007) (or regulations made under them).


11.15	The Company is not an agent or permanent establishment of another company, person, business or enterprise for the purpose of assessing such company, person, business or enterprise to Taxation in the country of residence of the Company.


11.16	The Company is not, nor has it been within the past seven years, a dual resident company for the purposes of section 109 of CTA 2010.


12.	TRANSFER PRICING


12.1	All transactions or arrangements made by the Company have been made on fully arm’s length terms. There are no circumstances in which Part 4 of TIOPA 2010 or any other rule or provision could apply causing any Taxation Authority to make an adjustment to the terms on which such transaction or arrangement is treated as being made for Taxation purposes.


12.2	In relation to each transaction for the supply of goods or services or the lending or borrowing of money into which the Company has entered with a party with which it was connected, the Company has full contemporaneous documentary evidence of the process used to establish that arm’s length terms applied.


13.	ANTI-AVOIDANCE


13.1	The Company has not been a party to, nor has it been otherwise involved in, any transaction, scheme or arrangement designed wholly or mainly or containing steps or stages having no commercial purpose and designed wholly or mainly for the purpose of avoiding or deferring Taxation or reducing a liability to Taxation.

13.2

The Company has not, at any time, been a party to or otherwise involved in a transaction or series of transactions in relation to which advisers considered that there was a risk that the Company could be liable to Taxation as a result of the principles in W. T. Ramsey Limited v IRC (54 TC 101) or Furniss v Dawson (55 TC 324), as developed in subsequent cases, or as a result of the principles in Halifax (C-255/02) as developed in subsequent cases.


13.3	The Company has not entered into any notifiable arrangements for the purposes of Part 7 of the Finance Act 2004 any notifiable contribution arrangement for the purpose of the National Insurance Contribution (Application of Part 7 of the Finance Act 2004) Regulations 2007 (SI 2007/785) or any notifiable schemes for the purposes of Schedule 11A to the VATA 1994.


14.	INHERITANCE TAX


14.1	The Company has not:


(a)	made any transfer of value within sections 94 and 202 of IHTA 1984; or


(b)	received any value such that liability might arise under section 199 of IHTA 1984; or


(c)	been a party to associated operations in relation to a transfer of value as defined by section 268 of IHTA 1984.


14.2	There is no unsatisfied liability to inheritance tax attached to, or attributable to, the Sale Shares or any asset of the Company. None of them are subject to any Inland Revenue charge as mentioned in section 237 and 238 of IHTA 1984.


14.3	No asset owned by the Company, nor the Sale Shares, are liable to be subject to any sale, mortgage or charge by virtue of section 212(1) of IHTA 1984.


15.	VALUE ADDED TAX


15.1	The Company is a taxable persons and duly registered for the purposes of VAT.


15.2	The Company has complied with all statutory provisions, rules, regulations, orders and directions in respect of VAT, promptly submitted accurate returns, and maintained full and accurate VAT records, invoices and other requisite documents. The Company has not been:


(a)	subject to any interest, forfeiture, surcharge or penalty; or


(b)	given any notice under sections 59, 59A or 64 of VATA 1994; or


(c)	given a warning within section 76(2) of VATA 1994; or


(d)	required to give security under paragraph 4 of Schedule 11 to VATA 1994.


15.3	VAT has been duly paid by the Company, or provision has been made in the Accounts for all amounts of VAT for which the Company is liable.


15.4	All supplies made by the Company are taxable supplies. The Company has not been, nor will it be, denied full credit for all input tax under sections 25 and 26 of VATA 1994 (and regulations made under it) or for any other reasons. All VAT paid or payable by the Company is input tax as defined in section 24 of VATA 1994 and regulations made under it.

15.5

The Company is not, nor has it been, for VAT purposes, a member of any group of companies. No act or transaction has been effected in consequence of which the Company, is or may be held, liable for any VAT arising from supplies made by another company. No direction has been given, nor will be given, by HM Revenue & Customs under Schedule 9A to VATA 1994 as a result of which the Company would be treated as a member of another group for the purposes of VAT.


15.6	The Company has not been, or agreed to be, a party to any transaction or arrangement in relation to which a direction has been, or could be, made under paragraph 1 of Schedule 6 or paragraph 1 of Schedule 7 to VATA 1994.


15.7	The Company is not, nor has it agreed to become, liable for VAT under sections 47, 48 or 55 of VATA 1994. No direction has been given, or may be given, by HM Revenue & Customs under paragraph 2 of Schedule 6 to VATA 1994.


15.8	For the purposes of Schedule 10 to VATA 1994, the Company and any relevant associates (within the meaning of paragraph 3 of Schedule 10 to VATA 1994) have exercised an option to tax (pursuant to paragraph 2 of Schedule 10 to VATA 1994) only in respect of those Properties listed as having been the subject of such an option in the Disclosure Letter and:


(a)	the Company or relevant associate has no intention of exercising, or obligation to exercise, such an option in respect of any other of the Properties;


(b)	all things necessary for the option to have effect have been done and, in particular, any notification and information required by paragraph 20 of Schedule 10 to VATA 1994 has been given and any permission required by paragraph 28 of Schedule 10 to VATA 1994 has been properly obtained;


(c)	a copy of the notification, and of any permission obtained from HM Revenue & Customs in connection with the option, is included in the Disclosure Letter;


(d)	no option has or will be revoked or rendered ineffective under paragraph 12 of Schedule 10 to VATA 1994;


(e)	neither the Company or relevant associate (within the meaning of paragraph 3 of Schedule 10 to VATA 1994) has charged VAT, whether on rents or otherwise, which is not properly chargeable;


(f)	neither the Company or relevant associate has agreed to refrain from exercising an option in relation to any of the Properties; and


(g)	neither the Company nor any relevant associate has made a real estate election within the meaning of paragraph 21 of Schedule 10 VATA 1994 in relation to any property.


15.9	The Company does not own, nor has it at any time within the period of ten years preceding the date of this Agreement owned, any assets which are capital items that are subject to the capital goods scheme under Part XV of the VAT Regulations 1995.


15.10	The Company has not made any claim for bad debt relief under section 36 of VATA 1994. There are no existing circumstances by virtue of which any refund of VAT obtained or claimed may be required to be repaid.


15.11	The Company has not entered into any self-billing arrangement (in the circumstances provided in section 29 of VATA 1994) in respect of supplies made by any other person, nor has it at any time agreed to allow any such person to make out VAT invoices in respect of supplies made by the Company.


15.12	The Disclosure Letter contains full particulars of all claims which have been, or could be, made by the Company under sections 78 or 79 of VATA 1994. There are no circumstances under which an assessment under section 78A of VATA 1994 has been, or could be, made on the Company.


15.13	In relation to the cross-border VAT changes which took effect from 1 January 2010 under the provisions of section 76 to 78 of and Schedule 36 to the Finance Act 2009:


(a)	the Company has a record of the VAT registration number of all EU business customers and has provided its own VAT registration number to all its suppliers who are resident in an EU Member State;


(b)	the accounting system of the Company produces promptly and accurately the information required for completion of the EC sales lists;


(c)	the Company supplies or purchases no cross-border services the VAT treatment of which has been or will be affected by the changes in the place or time of supply rules;


(d)	no repayments of VAT have been claimed by the Company in the 12 months ending on Completion from the tax authorities of any EU Member State other than the UK, and as at Completion, the Company will not have any outstanding entitlement to make such a claim.


16.	PREMIUMS AND SALE AND LEASE BACK OF LAND

The Company has not entered into any transaction to which Chapter 4 of Part 4 of CTA 2009 or Part 19 of CTA 2010 have been, or could be, applied.


17.	EMPLOYEES AND PENSIONS

17.1

The Company nor any employee benefit trust or other third party has made, or agreed to make, any payment to, or provided or agreed to provide any benefit for, any director or former director, officer (or associate of any of the foregoing) of the Company or, whether as compensation for loss of office, or otherwise, which is not allowable as a deduction in calculating the profits of the Company for Taxation purposes, whether up to or after the Accounts Date.


18.	STAMP DUTY, STAMP DUTY LAND TAX AND STAMP DUTY RESERVE TAX


18.1	Any document that may be necessary or desirable in proving the title of the Company to any asset which is owned by the Company at Completion, and each document which the Company may wish to enforce or

produce in evidence, is duly stamped for stamp duty purposes. No such documents which are outside the UK would attract stamp duty if they were brought into the UK.


18.2	Neither entering into this Agreement nor Completion will result in the withdrawal of a stamp duty or stamp duty land tax relief granted on or before Completion which will affect the Company.


18.3	No circumstances exist under which paragraph 5 or paragraph 12 of Schedule 7 to the Finance Act 2003 (recovery of relief from another group company or controlling director) could apply to the Company.

18.4

The Disclosure Letter sets out full and accurate details of any chargeable interest (as defined under section 48 of the Finance Act 2003) acquired or held by the Company before Completion in respect of which the Seller is aware, or ought reasonably to be aware, that an additional land transaction return will be required to be filed with a Taxation Authority and/or a payment of stamp duty land tax made on or after Completion.


18.5	Since the Accounts Date, the Company has not incurred any liability to, or been accountable for, any stamp duty reserve tax. There has been no agreement within section 87(1) of the Finance Act 1986 which could lead to the Company incurring such a liability or becoming so accountable.


18.6	The Sale Shares are not chargeable securities for the purposes of section 99 of the Finance Act 1986.


18.7	The Company is not, nor has it been, a person falling within subsections (6), (7) or (8) of section 67 or section 70 of the Finance Act 1986. The Company has not given, nor is it obliged to give, any notification under section 68 or section 71 of the Finance Act 1986 or incurred any liability to stamp duty reserve tax under sections 93-97, of the Finance Act 1986.


19.	TAX SHARING

The Company is not bound by or party to any Taxation indemnity, Taxation sharing or any Taxation allocation agreement in respect of which claims against the Company would not be time barred.


20.	CONSTRUCTION INDUSTRY SUB-CONTRACTORS’ SCHEME

The Company is not required to register as a Contractor under the provisions of section 59 of the Finance Act 2004 and the expenditure incurred by each of the Company on construction, refurbishment and fitting-out works in each of the three years ending on the Accounting Date is less than £1 million.


21.	NON-RESIDENT LANDLORD SCHEME

The Company is and has at all times since 8 June 2010 been registered with HM Revenue and Customs as a non-resident landlord under the Non-Resident Landlord Scheme.

Part 3

Seller’s Limitation of Liability


1.	APPLICATION OF THIS PART OF THIS SCHEDULE


1.1	Clauses 5.3 and 5.4 and this Part of this Schedule limit the liability of the Seller in relation to any Claim and, where expressly set out, any Tax Covenant Claim, as set out in those provisions.


1.2	For the purpose of this Part of this Schedule, a Claim or Tax Covenant Claim is “connected” with another Claim or Tax Covenant Claim if they all arise out of the occurrence of the same or similar event or relate to the same or similar subject matter.


1.3	Nothing in this Part of this Schedule applies to a Claim that arises or is delayed as a result of dishonesty or fraud by the Seller.


2.	TIME LIMITS


2.1	The Seller is not liable for a Claim or a Tax Covenant Claim unless the Buyer has given the Seller notice in writing of the Claim or the Tax Covenant Claim, specifying in reasonable detail, the matter or thing giving rise to the Claim or Tax Covenant Claim (as far as known to the Buyer) and the amount claimed or a bona fide estimate of such amount before:


(a)	in the case of a claim made under the Tax Warranties or a Tax Covenant Claim, 5.00pm on the seventh anniversary of the Completion Date; and


(b)	in any other case, 5.00pm on the date that is 18 months after Completion Date.

2.2

Any Claim (other than a claim under the Tax Warranties) made by the Buyer shall be deemed to be withdrawn and be wholly barred and unenforceable (if it has not been previously satisfied, settled or withdrawn) unless legal proceedings in respect thereof have been started by being issued and validly served on the Seller within six months of the date of notification of such Claim to the Seller and no new Claim may be made on the same, or materially similar grounds as the withdrawn Claim.


3.	THRESHOLDS


3.1	The Seller shall not be liable for a Warranty Claim unless the amount of all such Warranty Claims when taken together, exceeds £300,000, in which case the whole amount (and not just the amount by which the limit in this paragraph is exceeded) is recoverable by the Buyer.


3.2	The limitation on liability in paragraph 3.1 shall not apply in respect of Core Warranty Claims.


4.	MATTERS DISCLOSED

The Seller is not liable for any Claim to the extent that the Claim relates to any matter:


(a)	for which provision, reserve or allowance has been made in the Completion Accounts; or


(b)	Disclosed.


5.	KNOWLEDGE


5.1	The Buyer shall not be entitled to make a Claim if and to the extent that the Buyer had actual knowledge of the liability, matter or thing giving rise to the Claim and such liability, matter or thing could reasonably be expected to result in a Claim.


5.2	No other knowledge of the Buyer (constructive or imputed) prevents or limits a Claim and the Seller shall not invoke the Buyer’s constructive or imputed knowledge of a liability, matter or thing as a defence to a Claim or to reduce any amount recoverable.


6.	NO DOUBLE RECOVERY


6.1	The Seller shall not be liable in respect of a Claim if but only to the extent that the loss caused as a result of the subject matter of the Claim has been recovered by way of a Tax Covenant Claim;


6.2	The Buyer shall not be entitled to reimbursement more than once in respect of the same subject matter and same facts of any Warranty Claim and/or Tax Covenant Claim.


7.	FURTHER LIMITATIONS


7.1	No Claim shall be admissible and the Seller shall not be liable in respect thereof to the extent that:


(a)	the liability arises wholly or partly as a result of or is otherwise attributable to any voluntary act, transaction, or omission of the Company or the Buyer or their respective directors, employees or agents on or after Completion, otherwise than:


(i)	pursuant to a legally binding obligation on the Company created before Completion;


(ii)	as required pursuant to applicable law or regulation in force before Completion;


(iii)	in the normal and proper course of business as business was carried on during the 12 months before Completion; or


(iv)	as a result of steps taken by such persons to mitigate that or any other Claim or liability; or


(b)	any Claim or the subject matter thereof has been or is made good or is otherwise fully compensated for (otherwise than by the Company, the Buyer or any member of the Buyer’s Group) after deducting all reasonable costs, charges and expenses properly incurred by the Buyer and/or the Company in connection with obtaining such compensation; or

(c)

the liability is contingent, unless and until such contingent liability becomes an actual liability or until it is adjudicated as such. This paragraph 7.1(c) shall not operate so as to avoid a Claim made in respect of a contingent liability within the time limits referred to in paragraph 2.1 of this Part of this Schedule if the requisite details of the Claim have been delivered to the Seller before the expiry of the relevant period (even if the contingent liability does not become an actual liability until after the expiry of the periods referred to in paragraph 2.1).


8.	RESCISSION

The Buyer agrees that rescission shall not be available to it as a remedy for any breach of this Agreement and agrees not to claim that remedy.


9.	NO SET-OFF

The Buyer shall not have any right of set-off (howsoever arising) in respect of any Claim and/or Tax Covenant Claim and all sums payable by the Buyer to the Seller under this Agreement shall be paid in full without set-off, counterclaim or other deduction.


10.	ASSIGNEES

Any third party which is entitled under the terms of this Agreement to claim against the Seller shall be subject to the provisions of this Part of this Schedule as if it were the Buyer.

SCHEDULE 4

Tax Covenant


1.	INTERPRETATION


1.1	The definitions and rules of interpretation in this paragraph apply in this Tax Covenant.

“Accounts Relief”


(a)	any Relief (including the right to a repayment of Tax) that has been shown as an asset in the Accounts or the Completion Accounts;


(b)	any Relief that has been taken into account in computing (and so reducing or eliminating) any provision for deferred Tax in the Accounts or the Completion Accounts;

“Buyer’s Relief”


(a)	any Accounts Relief;


(b)	any Relief which arises in connection with any Event occurring after Completion; and


(c)	any Relief whenever arising, of the Buyer or any member of the Buyer’s Tax Group other than the Company;

“Buyer’s Tax Group” means the Buyer and any other company or companies which are from time to time treated as members of the same group as, or otherwise connected or associated in any way with, the Buyer for any Tax purpose (other than, for the avoidance of doubt, any member of the Seller’s Group);

“Dispute” means any dispute, appeal, negotiations or other proceedings in connection with a Tax Claim;

“Event” means an event, act, transaction or omission, including, without limitation, a receipt or accrual of income or gains, distribution, acquisition, disposal, transfer, payment, loan or advance;

“Group Relief” means any or all of the following:


(a)	relief surrendered or claimed pursuant to Chapter IV Part X of ICTA 1988 (Part 5 of the Corporation Tax Act 2010);


(b)	advance corporation tax capable of being surrendered or claimed pursuant to Regulation 13 of the Corporation Tax (Treatment of Unrelieved Surplus Advance Corporation Tax) Regulations (SI 1999/358);


(c)	a Tax refund capable of being surrendered or claimed pursuant to section 102 of the Finance Act 1989 (section 963 of the Corporation Tax Act 2010);


(d)	the notional transfer of an asset or reallocation of a gain or loss pursuant to section 171A or section 179A of TCGA 1992 and the notional reallocation of a gain pursuant to section 792 of the Corporation Tax Act 2009 (paragraph 66, Schedule 29 of Finance Act 2002 for accounting periods ending before 1 April 2009);


(e)	eligible unrelieved foreign Tax surrendered or claimed pursuant to The Double Taxation Relief (Surrender of Relievable Tax Within a Group) Regulations 2001 (SI 2001/1163);


(f)	any other Relief available between members of a group for Tax purposes;

“Liability for Taxation” means


(a)	any liability of the Company to make an actual payment of or in respect of Tax whether or not the same is primarily payable by the Company and whether or not the Company has or may have any right of reimbursement against any other person, in which case the amount of the Liability for Taxation shall be the amount of the actual payment; or

(b)

the Loss of any Accounts Relief (including any Relief surrendered or to be surrendered by a member of the Seller’s Group), in which case the amount of the Liability for Taxation will be the amount of Tax which would (on the basis of Tax rates current at the date of such Loss) have been saved but for such Loss, assuming for this purpose that the Company had sufficient profits or was otherwise in a position to use the Relief; or where the Relief is the right to repayment of Tax or to a payment in respect of Tax, the amount of the repayment or payment; or

(c)

the use or setting off of any Buyer’s Relief in circumstances where, but for such set off or use, the Company would have had a liability to make a payment of or in respect of Tax for which the Buyer would have been able to make a claim against the Seller under this Tax Covenant, in which case, the amount of the Liability for Taxation shall be the amount of Tax in respect of which the Seller would have been so liable but for such set off or utilisation.

“Loss” means any reduction, modification, loss, nullification, disallowance or claw-back for whatever reason;

“Relief” includes any loss, relief, allowance, credit, exemption or set off in respect of Tax or any deduction in computing income, profits or gains for the purposes of Tax and any right to a repayment of Tax or to a payment in respect of Tax;

“Seller’s Group” means the Seller and any other company or companies (other than the Company) which either are or become after Completion, or have within the seven years ending at Completion been treated as, members of the same group, or otherwise connected or associated in any way with the Seller for Tax purposes;

“Seller’s VAT Group” means The VAT Group, within the meaning of sections 43A to 43C of the VATA 1994, of which a member of the Seller’s Group is the representative member;

“Tax or Taxation” means all forms of taxation and statutory, governmental, state, federal, provincial, local, government or municipal charges, duties, imposts, contributions, levies, withholdings or liabilities of whatever nature wherever chargeable and whether of the UK or any other jurisdiction (including, for the avoidance of doubt, any income tax, social security, GST returns or other taxation due to the Jersey Income Tax Department or other Jersey authority and also including national insurance contributions in the UK and corresponding obligations elsewhere) and any penalty, fine, surcharge, interest, charges or costs relating thereto (including interest and penalties arising from the Company’s failure to make adequate instalment payments under the Corporation Tax (Instalments Payments) Regulations in any period ending on or before Completion);

“Tax Claim” means any assessment, notice, demand, letter or other document issued or action taken by or on behalf of any Taxation Authority, self-assessment or other occurrence from which it appears that the Company or the Buyer is or may be subject to a Liability for Taxation or other liability in respect of which the Seller is or may be liable under this Tax Covenant;

“Taxation Authority” means any government, state or municipality or any local, state, federal or other fiscal, revenue, customs or excise authority, body or official competent to impose, administer, levy, assess or collect Tax in the United Kingdom or elsewhere including the States of Jersey (Comptroller of Taxes);

“Taxation Statute” means any directive, statute, enactment, law or regulation wherever enacted or issued, coming into force or entered into providing for or imposing any Tax and shall include orders, regulations, instruments, bye-laws or other subordinate legislation made under the relevant statute or statutory provision and any directive, statute, enactment, law, order, regulation or provision which amends, extends, consolidates or replaces the same or which has been amended, extended, consolidated or replaced by the same.


1.2	References to gross receipts, income, profits or gains earned, accrued or received shall include any gross receipts, income, profits or gains deemed pursuant to the relevant Taxation Statute to have been or treated or regarded as earned, accrued or received.


1.3	References to a repayment of Tax shall include any repayment supplement or interest in respect of it.


1.4	Any reference to something occurring in the ordinary course of business shall not include:


(a)	Any act of the Company which leads directly or indirectly to any liability of the Company to Tax that is the primary liability of, or properly attributable to, or due from another person (other than a member of the Buyer’s Tax Group); or


(b)	anything that relates to or involves the acquisition or disposal of an asset or the supply of services (including the lending of money, or the hiring or licensing of tangible or intangible property) in a transaction which is not entered into on arm’s length terms (but only to the extent of the difference from the arm’s length terms); or


(c)	anything that relates to any scheme, transaction or arrangement designed partly or wholly or containing steps or stages designed partly or wholly for the purpose of avoiding or reducing or deferring a Liability to Taxation; or

(d)

anything that relates to or involves the making of a distribution for Tax purposes, the creation, cancellation or reorganisation of share or loan capital, the creation, cancellation or repayment of any intra-group debt or the Company becoming or ceasing to be or being treated as ceasing to be a member of a group of companies or becoming or ceasing to be associated or connected with any other company for any Tax purposes; or


(e)	anything that involves, or leads directly or indirectly to, a change of residence of the Company for Tax purposes.


1.5	Unless the contrary intention appears, words and expressions defined in this Agreement have the same meaning in this Tax Covenant and any provisions in this Agreement concerning matters of construction or interpretation also apply in this Tax Covenant.

1.6

Any stamp duty which is charged on any document, or in the case of a document which is outside the United Kingdom, any stamp duty which would be charged on the document if it were brought into the United Kingdom, which is necessary to establish the title of the Company to any asset, and any interest fine or penalty relating to such stamp duty, shall be deemed to be a liability of the Company to make an actual payment of Taxation in consequence of an Event arising on the last day on which it would have been necessary to pay such stamp duty in order to avoid any liability to interest or penalties arising on it.


1.7	An Event on or before Completion includes an Event which is deemed for the purposes of any Tax to have occurred on or before Completion.


1.8	Events occurring in pursuance of Part 3 and/or Part 4 of Schedule 2 shall be treated for the purposes of this Schedule 4 as occurring on or before Completion.


2.	COVENANT


2.1	The Seller covenants with the Buyer that, subject to the provisions of this Tax Covenant, the Seller shall pay to the Buyer an amount equal to any:

(a)

Liability for Taxation resulting from or by reference to: (i) any Event occurring on or before Completion or in respect of any gross receipts, income, profits or gains earned, accrued or received by the Company on or before Completion, whether or not such liability has been discharged on or before Completion or (ii) without prejudice to (i) above, any default or omission before Completion in relation to the payment of amounts under the Senior Loan or the Seller Intercompany Loan without deduction for or on account of UK income tax;


(b)	Liability for Taxation, including liability for payments in respect of Taxation, which is primarily the liability of another person other than a member of the Buyer’s Tax Group (the “Primary Person”) for which the Company is liable as a consequence of being controlled or otherwise connected with the Primary Person for the purpose of any Tax, whensoever arising;


(c)	Liability for Taxation which arises as a result of any Event which occurs after Completion pursuant to a legally binding obligation (whether or not conditional) entered into by the Company on or before Completion otherwise than in the ordinary course of business;

(d)

Liability for Taxation which arises at any time (being a liability for the Company to account for income tax or national insurance contributions) in respect of the grant, exercise, surrender, exchange or other disposal of an option or other right to acquire securities or in respect of any acquisition, holding, variation or disposal of employment-related securities (as defined for the purposes of Part 7 of the Income Tax (Employment and Pensions) Act 2003) where the acquisition of the security or the grant of the option or other right to acquire the security occurred on or before Completion;

(e)

Liability for Taxation that arises at any time under Part 7A of ITEPA 2003 (introduced by Finance Act 2011 with effect from 6 April 2011) including any liability arising as a consequence of any payments or loans made to, any assets made available or transferred to, or any assets earmarked, however informally, for the benefit of, any employee or former employee of the Company or for the benefit of any relevant person, by an employee benefit trust or another third party where the arrangement giving rise to the charge was entered into at a time when the third party was acting on the instructions of, or for the benefit of, the Seller or an associate of the Seller;


(f)	Liability for Taxation being a liability for inheritance tax which:


(i)	is a liability of the Company and arises as a result of a transfer of value occurring or being deemed to occur on or before Completion (whether or not in conjunction with the death of a person whenever occurring);


(ii)	arose on or before Completion (whether or not a liability of the Company) and gives rise to a charge on any of the shares in or assets of the Company;


(iii)	arises after Completion and gives rise to a charge on any of the shares or assets of the Company as the result of the death of any person within seven years after a transfer of value which occurred before Completion; or


(iv)	costs and expenses, properly incurred by the Buyer, the Company or any member of the Buyer’s Tax Group in connection with any Liability for Taxation or other liability in respect of which the Seller is liable under this Schedule, any Tax Claim or taking or defending any action under this Schedule ; or


(g)	Liability for Taxation resulting from or by reference to the Company being determined or otherwise found to be resident for Tax purposes outside Jersey at any time at or before Completion and becoming resident for Tax purposes in Jersey after Completion.


3.	PAYMENT DATE AND INTEREST


3.1	Payment by the Seller in respect of any liability under this Schedule must be made in cleared and immediately available funds on the following days:


(a)	in the case of a Liability for Taxation that involves an actual payment of or in respect of Tax, the later of fourteen Business Days before the due date for payment and 14 Business Days after the date on which the Buyer serves notice on the Seller requesting payment; or


(b)	in the case of the loss of a right to repayment of Tax or a liability under paragraph 2.1(f)(iv), seven Business Days following the date on which the Buyer serves notice on the Seller requesting payment; or


(c)	in a case that involves the loss of a Relief (other than a right to repayment of Tax), the last date upon which the Tax is or would have been required to be paid to the relevant Taxation Authority in respect of the earlier of:


(i)	the period in which the Loss of the Relief gives rise to an actual liability to pay tax; or


(ii)	the period in which the Loss of the Relief occurs (assuming for this purpose that the Company had sufficient profits or was otherwise in a position to use the Relief);


(d)	in a case that falls within paragraph (c) of the definition of Liability for Taxation, the date upon which the Tax saved by the Company would have been required to be paid to the relevant Taxation Authority but for the use of the Buyer’s Relief.


3.2	If the Liability for Taxation is a liability to corporation tax payable by instalments in accordance with the Corporation Tax (Instalment Payments) Regulations 1998 (SI 1998/3175):


(a)	the notice served by the Buyer on the Seller under paragraph 3.1 shall specify the amount of the liability that is due for payment on each instalment date for the accounting period in which the Liability to Taxation arises; and


(b)	the due dates for payment of the tax in paragraph 3.1(a) to paragraph 3.1(d) shall be the due dates for payment of each of the instalments.


3.3	Any dispute as to the amount specified in any notice served on the Seller under paragraph 3.1(b) to paragraph 3.1(d) shall be determined by the tax advisers of the Company for the time being, acting as experts and not as arbitrators (the costs of that determination being shares equally by the Seller and the Buyer).

3.4

If any sums required to be paid by the Seller under this Tax Covenant are not paid on the date specified in paragraph 3.1, then, except to the extent that the Seller’s liability under paragraph 2 compensates the Buyer for the late payment by virtue of it extending to interest and penalties, such sums shall bear interest (which shall accrue from day to day after as well as before any judgment for the same) at the rate of 3% per annum over the base rate from time to time of HSBC Bank plc or (in the absence thereof) at such similar rate as the Buyer shall select from the day following the Due Date up to and including the day of actual payment of such sums, such interest to be compounded quarterly.


4.	EXCLUSIONS


4.1	The covenant contained in paragraph 2 above shall not cover any Liability for Taxation to the extent that:


(a)	it would not have arisen but for a change after Completion in the accounting bases upon which the Company values its assets (other than a change made in order to comply with IFRS or other applicable accounting standard); or


(b)	the Buyer is compensated for any such matter under any other provision of this Agreement; or


(c)	there is available to the Company a Relief which is not a Buyer’s Relief which can actually be used to mitigate the Liability to Tax in question; or

(d)

it would not have arisen but for a voluntary act, transaction or omission of the Company or the Buyer outside the ordinary course of business after Completion provided that in relation to any claim under paragraph 2(1)(a)(ii) no act, transaction or omission shall be regarded as voluntary to the extent that the Buyer or the Company reasonably considers it to be required for the purposes of complying with applicable law or regulation, and further provided that this paragraph 4.1(d) shall not have the effect of preventing a liability of the Seller arising in relation to any claim under paragraph 2.1(g) to the extent that such liability relates to a change in the tax residence of the Company; or


(e)	such Liability for Taxation arises or is increased as a result of any increase in the rates of Taxation, any change in law, published rule or regulation or any withdrawal of any published extra statutory concession, in each such case made by a Taxation Authority after the date of this Agreement.

4.2

For the purposes of paragraph 4.1(d) an act will not be regarded as voluntary if undertaken pursuant to a legally binding obligation entered into by the Company on or before Completion or imposed on the Company by any legislation whether coming into force before, on or after Completion or for the purpose of avoiding or mitigating a penalty imposable by such legislation, or if carried out at the written request of the Seller or pursuant to the terms of the Sale Agreement.


5.	RECOVERY FROM THIRD PARTIES

5.1

Where the Seller has paid an amount in full discharge of a liability under paragraph 2 in respect of any Liability for Taxation and the Buyer or the Company is or becomes entitled to recover from some other person not being the Buyer, the Company or any other company within the Buyer’s Tax Group, any amount in respect of such Liability for Taxation, the Buyer shall or shall procure that the Company shall:


(a)	notify the Seller of its entitlement as soon as reasonably practicable; and


(b)	if required by the Seller and, subject to the Buyer and the Company being secured and indemnified by the Seller against any Tax that may be suffered on receipt of that amount and any costs, expenses or other liabilities (to the Buyer’s reasonable satisfaction) incurred in recovering that amount, take

or procure that the Company takes all reasonable steps to enforce that recovery against the person in question (keeping the Seller fully informed of the progress of any action taken).


5.2	If the Buyer or the Company recovers any amount referred to in paragraph 5.1, the Buyer or the Company shall account to the Seller for the lesser of:


(a)	any amount recovered (including any related interest or related repayment supplement) less any Tax suffered in respect of that amount and any costs, expenses or other liabilities incurred in recovering that amount (save to the extent that that amount has already been made good by the Seller under paragraph 5.1(b)); and


(b)	the amount paid by the Seller under paragraph 2 in respect of the Liability for Taxation in question.


6.	SURRENDER OF GROUP RELIEF

6.1

Subject to and in accordance with the provisions of this paragraph 6, if any liability of the Seller under this Tax Covenant or in respect of any claim under the Tax Warranties can be reduced or eliminated by the surrender of Group Relief to the Company by the Seller or any company other than a member of the Buyer’s Tax Group or a company connected with the Buyer (including by way of electing that any gain on the disposal or notional disposal of an asset be treated as accruing not to the Company but to a member of the Seller’s Group), the Seller may make or procure the making of such surrender or election and the Buyer shall procure that the Company shall cooperate with the Seller in relation to such surrender or election and make all necessary returns, claims, consents and notifications required to be made in respect of such surrender or election. Nothing in this paragraph 6 shall require the Buyer or the Company to act or omit to act in a manner which it reasonably considers to be contrary to its commercial interests (including in relation to Tax matters).


6.2	The Company shall not be liable to give any consideration in respect of any surrender of or election in relation to Group Relief or any election for the early commencement of the provisions of Schedule 10 to the Finance Act 2011 pursuant to paragraph 6.1.


7.	CONDUCT OF TAX CLAIMS


7.1	Subject to paragraph 7.2, if the Buyer or the Company becomes aware of a Tax Claim, the Buyer shall give or procure that notice in writing is given to the Seller or to the Seller’s duly authorised agent as soon as reasonably practicable, provided that the giving of such notice shall not be a condition precedent to the Seller’s liability under this Tax Covenant.


7.2	If the Seller becomes aware of a Tax Claim, it shall notify the Buyer in writing as soon as reasonably practicable, and, on receipt of such notice, the Buyer shall be deemed to have given the Seller notice of the Tax Claim in accordance with the provisions of paragraph 7.1.

7.3

Subject to paragraph 7.4, if the Seller indemnifies and secures the Buyer and the Company to the Buyer’s reasonable satisfaction against all liabilities, costs, damages or expenses which may be incurred thereby, including any additional Liability for Taxation, the Buyer shall take and procure that the Company shall take such action as the Seller may reasonably request by notice in writing given to the Buyer to avoid, dispute, defend, resist, appeal, request an internal HMRC review or compromise any Tax Claim.


7.4	Neither the Buyer nor the Company shall be obliged to appeal or procure an appeal against any assessment to Tax if the Buyer, having given the Seller written notice of such assessment, does not receive written instructions from the Seller within ten Business Days to do so.


7.5	If:

(a)

the Seller does not request the Buyer to take any action under paragraph 7.3 or fails to indemnify and secure the Buyer or the Company to the Buyer’s reasonable satisfaction within a period of time (commencing with the date of the notice given to the Seller) that is reasonable having regard to the nature of the Tax Claim and the existence of any time limit in relation to avoiding, disputing, defending, resisting, appealing, seeking a review or compromising such Tax Claim, and which period will not in any event exceed a period of 14 days; or


(b)	the Seller (or the Company before Completion) has been involved in a case involving fraudulent conduct or deliberate default in respect of the Liability for Taxation; or


(c)	the Dispute involves an appeal against a determination by the Tax Chamber of the First-tier Tribunal or higher tribunal (or equivalent), unless the Seller has obtained the opinion of Tax counsel of at least 10 years’ standing that having regard to all the circumstances, it would be reasonable to proceed with the appeal,

the Buyer or the Company shall have the conduct of the Dispute absolutely (without prejudice to its rights under this Tax Covenant) and shall be free to pay or settle the Tax Claim on such terms as the Buyer or the Company may in its absolute discretion consider fit.


7.6	The Buyer shall provide and shall procure that the Company provides to the Seller and the Seller’s professional advisors reasonable access to premises and personnel and to any relevant assets, documents and records within their power, possession or control for the purpose of investigating the matter and enabling the Seller to take such action as is referred to in this paragraph 7.


7.7	Neither the Buyer nor the Company shall be subject to any claim by or liability to the Seller for non-compliance with any of the provisions of this paragraph 7 if the Buyer or the Company has acted in good faith in accordance with the instructions of the Seller.


7.8	The Seller does not have the right to conduct any action referred to in clause 7.3 but in taking any action under clause 7.3 the Buyer shall:


(a)	keep the Seller fully informed of all matters relating to the Tax Claim and deliver to the Seller copies of all correspondence relating to the Assessment;


(b)	obtain the Seller’s prior written approval (not to be unreasonably withheld or delayed) to:


(i)	the content and sending of each communication (written or otherwise) relating to the action to a Tax Authority; and


(ii)	the settlement or compromise of the Tax Claim,

and approval is deemed given if no comment is received from the Seller within ten Business Days starting on day of delivery of the communication to the Seller.


8.	GROSSING UP

8.1

All sums payable by the Seller to the Buyer (or where applicable, the Company) under this Agreement shall be paid free and clear of all deductions or withholdings whatsoever unless the deduction or withholding is required by law. If any deductions or withholdings are required by law to be made from any of the sums payable under this Agreement, the Seller shall pay to the Buyer (or where applicable, the Company) such

sum as will, after the deduction or withholding has been made, leave the Buyer (or where applicable, the Company) with the same amount as it would have been entitled to receive in the absence of any such requirement to make a deduction or withholding.

8.2

If the Buyer (or where applicable, the Company) incurs a taxation liability which results from, or is calculated by reference to, any sum paid under this Agreement, the amount so payable shall be increased by such amount as will ensure that, after payment of the taxation liability, the Buyer (or where applicable, the Company) is left with a net sum equal to the sum it would have received had no such taxation liability arisen.


8.3	If the Buyer (or where applicable, the Company) would, but for the availability of a Buyer’s Relief, incur a taxation liability falling within paragraph 8.2, it shall be deemed for the purposes of that paragraph to have incurred and paid that liability.


9.	GENERAL

All payments made by the Seller to the Buyer or by the Buyer to the Seller in accordance with this Tax Covenant will be treated, to the extent possible, as an adjustment to the Purchase Price for the Sale Shares.

SCHEDULE 5

The Property

Part 1

Leasehold



Legal Owner	Description	Title No. or Root of Title
The Company	(i) Land on the North side of Dukes Street, Woking (ii) Dukes Court, Dukes Street, Woking	(i) SY579769 (ii) SY668453

Part 2

Property Specific Issue


1.	Insurance


1.1	At Completion, the Seller shall or shall procure that the existing policies of insurance relating to the Property brief details of which are set out in Schedule 10 (Insurance Policies) (the “ Insurance Policies ”) are not cancelled.


1.2	If any claim under the Insurance Policies arises before Completion but the proceeds of any insurance claim are received by or on behalf of the Seller after Completion, the Seller shall pay or procure payment to the Company of the relevant proceeds as soon as practicable following receipt (and in any event within 5 Business Days).


2.	Arrears


2.1	If there are any Arrears:


(a)	the Arrears shall not be treated as income of the Company nor as a current asset of the Company and shall be disregarded for the purposes of the Completion Accounts;

(b)

the Buyer shall use or shall procure that the Company shall use all reasonable endeavours to recover the Arrears whether by way of the institution of legal proceedings or otherwise provided that the Buyer shall not, to secure payment of the Arrears, be required to forfeit the relevant occupational lease or seek to place the Tenant into insolvency and subject to the payment by the Seller of the proper and reasonable legal costs of the Buyer to the extent these are not recoverable from the relevant Tenants; and


(c)	the Buyer shall apply any receipts of rent, licence fee and other like sums (excluding VAT) to the rental period to which the receipt is expressed to relate or if it is not expressed to relate to any period pro rata (based on the overall amount) in reducing the Arrears and any equivalent arrears due in respect of the period following Completion; and


(d)	within 10 Business Days of receipt of any Arrears by or on behalf of the Company (including receipt by the Buyer), the Buyer shall pay or shall procure that the Company pays the same to the Seller.


(e)	Six (6) months after Completion, the provisions of this paragraph 2.1 (other than sub-paragraph (a)) shall cease to apply to any Arrears not by then recovered and such unrecovered Arrears shall then be written off


3.	Further information

As soon as reasonably practicable following any written request from the Buyer to the Seller, whether made after exchange of this Agreement or Completion, the Seller shall provide or procure that there be provided to the Buyer such Information and access to and copies of such Records as the Buyer may reasonably require and as may be in the possession of or under the control of the Seller.


4.	Manuals, plans, etc.


4.1	On or after Completion, the Seller shall deliver or procure the delivery to the Buyer (or to its managers, agents or contractors) of such of the following as may be in the possession or under the control of the Seller or the Property Manager and as may be reasonably requested by the Buyer:


(a)	any manual or other set of instructions relating to the operation or maintenance of any building on, or any plant, machinery or equipment on or serving the Property;

(b)

any contract, appointment, collateral warranty, direct agreement, guarantee, policy, warranty or other document relating to the design, durability, capacity, construction, performance specification, installation, alteration, repair or maintenance of any building on, or plant, machinery or equipment on or serving the Property, or anything benefiting the Property, including any structure, supporting or protecting, or access-way, or service or other installation serving the Property (whether or not with any other land); and


(c)	any plan, drawing or other illustration of the whole or any part of any building on, or supporting or protecting the Property, any plant, machinery or equipment on or serving the Property and any water, sewerage, gas, electricity, telecommunication or other service on, or serving or which may serve the Property.

SCHEDULE 6

Property Documents



No.	DATE	DOCUMENT	PARTIES
1.	FREEHOLD TITLE NUMBER SY438761
		Official Copies and Plan for Title Number SY438761
2.	HEAD LEASE TITLE NUMBER SY579769
2.1		Official Copies and Plan for Title Number SY579769
2.2	3/11/1987	Certified copy Lease	Woking Borough Council (“ WBC ”) (1) Westbourne Terrace Investment Co. Limited (“ Westbourne Terrace ”) (2)
2.3	10/2/2006	Vesting Order	Firefly Limited (“ Firefly ”) (1) WBC (2)
3.	UNDERLEASE TITLE NUMBER SY668453
3.1	Official Copies and Plan for Title Number SY668453
3.2	14/3/1997	Agreement for Underlease	Westbourne Terrace (1) The Oldham Estate Company PLC (“ Oldham ”) (2) Sans Souci Properties Limited (“ Sans Souci ”) (3)
3.3	24/3/1997	Underlease	Westbourne Terrace (1) Sans Souci (2)
3.4	14/3/1997	Copy Legal Contingency Insurance Policy Number 9780CQ00436	Issued by Norwich Union
3.5	13/3/1997	Copy Restrictive Covenant Indemnity Insurance Policy Number 9780CQ00432	Issued by Norwich Union

SCHEDULE 8

CRC


1.	ALLOWANCES UNDER THE CRC SCHEME


1.1	The Seller indemnifies (and shall keep indemnified) the Buyer, the Company and the Buyer's Group against the cost of all allowances that are required to be purchased by the Company, the Buyer or the Buyer's Group under the CRC Scheme in respect of the Company’s CRC Supplies made at any time in the period prior to, and including, 23:59:59 on the Apportionment Date.


2.	COMPLIANCE


2.1	The Seller shall (or shall procure that the relevant member of the Seller’s Group shall) at its/their own cost:

(a)

either on its/their own account or, where relevant, jointly with the Company or a member of the Buyer’s Group promptly make such applications and notifications to, and effect such registrations with, the relevant CRC Administrator within the relevant timescales as required by the CRC Scheme which are (insofar as any such action relates to the Company) in a form and in terms reasonably satisfactory to the Buyer and, as soon as possible after the date of this Agreement, take all necessary steps to correct all previous errors in registration, notification, reporting or purchasing of allowances under the CRC Scheme made by the Seller, the Company or the Seller’s Group;


(b)	ensure those applications and registrations are accompanied by all relevant information relating to the Seller’s Group or the Company; and


(c)	generally provide such access to information and to employees of the Seller or any other member of the Seller’s Group as the Buyer shall from time to time reasonably require to enable the Company to comply with its obligations under the CRC Order.

2.2

The Seller indemnifies (and shall keep indemnified) the Buyer, the Company and the Buyer's Group against all costs, losses, liabilities or penalties that any of the Buyer or the Company or any member of the Buyer’s Group may incur under the CRC Order or in respect of the CRC Scheme, in each case as result of the Seller failing to comply with its obligations under this Schedule or against any failure prior to, and including, 23:59:59 on the Apportionment Date by the Company or any member of the Seller’s Group or any other undertaking with which the Company is or was required to participate in the CRC Scheme, to comply with the CRC Order or the CRC Scheme (including, without limitation, in relation to registration, notification, reporting or purchasing of allowances).


3.	MITIGATION


3.1	Nothing in this Agreement shall in any way restrict or limit the general obligation at law of the Buyer, the Company and any other member of the Buyer’s Group to mitigate any loss or damage which it or they may suffer in consequence of any matter which may give rise to a claim under the indemnities in this Schedule.

SCHEDULE 11
INDEPENDENT ACCOUNTANT APPOINTMENT


1.	Appointment of Independent Accountant

The Independent Accountant shall be appointed by agreement between the Seller and the Buyer or in default of agreement within 10 Business Days of either requiring an objection to be referred to the Independent Accountant under clause 4.5, on the application of either of the Seller or the Buyer to the President or an officer appointed by him of the Institute of Chartered Accountants in England and Wales.


2.	Terms of appointment of Independent Accountant


2.1	The Independent Accountant shall:


(a)	act as an expert;

(b)

invite the Seller and the Buyer to submit to him or her, within such time limits (not being less than 15 Business Days) as he or she may consider appropriate, such representations with such supporting evidence as they may respectively wish and provide the Seller and the Buyer the opportunity to comment on the representations of the other party within such time limits (not being less than 15 Business Days) as he or she may consider appropriate;


(c)	within 60 Business Days of his or her appointment (or within such extended period as the Seller and the Buyer may agree) give his or her determination of objection in relation to the Completion Accounts to the Seller and the Buyer in accordance with the provisions of SCHEDULE 12 (but shall not otherwise determine any items not in dispute).

2.2

If the Independent Accountant fails to give notice of his or her determination within the allotted time, or if he or she dies, is unwilling to act, or becomes incapable of acting, or if, for any other reason, he or she is unable to act, either the Seller or the Buyer may discharge the person appointed as the Independent Accountant and appoint another in his or her place to act in the same capacity in accordance with this Schedule, which procedure may be repeated as many times as necessary.

2.3

The Independent Accountant will determine (using his or her own legal advice as appropriate) any question of the legal construction of this Agreement insofar as it is relevant to the determination of the dispute in relation the Completion Accounts. If the Independent Accountant obtains legal advice, a copy of the advice and any instructions on which it is based will be delivered to the Seller and to the Buyer.


2.4	The Independent Accountant will act as an expert (and not as an arbitrator) in making his or her determination which will (in the absence of fraud or manifest error) be final and binding on the parties.


3.	Fees and Expenses


3.1	The fees and expenses of the Independent Accountant including the fee payable for his or her nomination, shall be in the award of the Independent Accountant but, failing such award, they shall be payable by the Seller and the Buyer in equal shares who shall each bear their own costs, fees and expenses.

3.2

If either the Seller or the Buyer fails to pay its share of the fees and expenses of the Independent Accountant, including the fee payable for his or her nomination, within five Business Days after being required in writing to do so, the other party may pay such fees and expenses, and the share of the defaulting party shall become a debt payable to the other party on written demand with interest on such share at the rate of 3% per annum over the base rate from time to time of HSBC Bank plc or (in the absence thereof) at such similar rate as the non-defaulting party shall select .

SCHEDULE 12

ACCOUNTING INSTRUCTIONS

PART A - ACCOUNTING PRINCIPLES TO BE ADOPTED


1.	General Principles


1.1	The Completion Accounts will be prepared in accordance with the provisions set out in this Schedule and shall be substantially in the format set out in Part B of this SCHEDULE 12.


1.2	The Completion Accounts will be prepared:


(a)	in accordance with the specific accounting policies, practices, principles, rules, estimation techniques and procedures set out in paragraph 2 of this Schedule; and


(b)	subject to paragraph (a) above, in accordance with the same accounting policies, practices, principles, rules, estimation techniques and procedures and applied in good faith as were used in the preparation of the Accounts (including in relation to the exercise of accounting discretion and judgement); and


(c)	subject to paragraphs (a) or (b) above, in accordance with IFRS as at the Accounts Date.

For the avoidance of doubt, paragraph (a) shall take precedence over paragraphs (b) and (c), and paragraph (b) shall take precedence over paragraph (c).


2.	Specific Accounting Principles


2.1	The Completion Accounts shall be prepared by reference to the general ledger of the Company drawn up as at immediately prior to Completion on the day of Completion (the “ Effective Time ”) and in accordance with those specific procedures that would normally be adopted at a financial year-end.


2.2	In preparing the Completion Accounts, account shall be taken in respect of Adjusting Events (as defined by IAS10 “Events After the Reporting Period”) after the Effective Time up until the time the Buyer delivers the Completion Accounts to the Seller (the “ Cut-Off Time ”).


2.3	No item shall be included in the Completion Accounts more than once and no item shall be excluded from the Completion Accounts solely on the grounds of immateriality.


2.4	The Completion Accounts shall be stated in pounds sterling. Amounts in currencies other than pounds sterling shall be translated into pounds sterling at the closing mid-point rate on the Completion Date, as published in the London edition of the Financial Times following the Effective Time.


2.5	The Completion Accounts shall exclude all non-current assets and fixed assets, whether tangible or intangible, including the Property.

2.6

The Completion Accounts shall include cash at bank (only to the extent that such bank accounts are held in the name of the Company or the Company is the sole legal beneficiary) and cash in hand including accrued interest receivable, only to the extent freely available at the Effective Time or to the extent it will become freely available as a result of the repayment of the Senior Loan in accordance with this Agreement.


2.7	No amount shall be recognised as an asset or liability in relation to the deferral of rent free periods, cash incentives paid to tenants or any other expenditure related to tenant incentives.

2.8

No liability shall be included in the Completion Accounts for dilapidations or other remedial work to be undertaken after the Effective Time, in each case where such amounts relate to the value of the Property or for amounts included in the Construction Retentions. For the avoidance of doubt liability shall be included in the Completion Accounts for maintenance / repair costs in respect of work undertaken prior to the Effective Time but which remain unpaid at the Effective Time.


2.9	No asset or liability shall be included in the Completion Accounts in respect of any rent renewals or lease renewals not agreed or determined prior to the Effective Time.

2.10

Any debt or equity invested into the Company as a result of or pursuant to Completion (whether directly by the Buyer or on its behalf) shall not be taken into account in the Completion Accounts, nor shall any debt (or other amounts) discharged by, or on behalf of, the Company as a result of or pursuant to Completion (whether directly by the Buyer or on its behalf) be excluded from the Completion Accounts.

2.11

The Completion Accounts shall include full provision for all amounts required to repay or terminate the principal and interest and other sums, and secure the release of all associated Encumbrances, for all borrowings or amounts in the nature of borrowings and all financial derivatives, including the Senior Loan, Interest Swap and Seller Intercompany Loan. For the avoidance of doubt, if there is an amount received by the Company from the Interest Swap Counterparty upon termination of the Interest Swap in accordance with the Agreement, then an asset equal to such amount will be included in the Completion Accounts.


2.12	No asset or liability with respect to the Company’s CRC Scheme shall be included in the Completion Accounts.


2.13	No amount shall be included in the Completion Accounts in respect of unamortised debt issue costs.


2.14	No amount shall be included in the Completion Accounts as an asset in respect of deferred letting or agent costs.


2.15	No assets with respect to Arrears or any other amounts due from tenants or rental-related accrued income shall be included in the Completion Accounts.


2.16	No amount shall be included in the Completion Accounts as an asset in respect of any surrender premiums.


2.17	Subject to clauses 4.10 and 4.11, no amount shall be included as an asset in the Completion Accounts in respect of any amount owed to the Company by the Seller or its affiliates or related parties (including Michellisa Properties Limited).


2.18	Tax


(a)	No liability and no asset will be recorded for any amount in respect of deferred taxation.

(b)

The Completion Accounts shall include full provision for all Tax which will be calculated as if Completion were at the end of a tax reporting period, and on the basis that all income recognised prior to the Effective Time is to be recognised for tax purposes as if received prior to the Effective Time. For the purposes of determining the Tax provision there will be disregarded any action taken by the Buyer on or after Completion.


2.19	The Completion Accounts shall not include any asset in respect of tenant deposits or any liability in respect of amounts due to tenants for such deposits.


2.20	An asset shall be included in the Completion Accounts in respect of amounts paid or accrued by the Company at the Effective Time in relation to goods and services to be supplied to the Company after the Effective Time, only to the extent the benefit of which will be available to the Company following Completion.


2.21	The Completion Accounts shall include full provision for rates, service charges and other property costs payable by the Company in respect of voids prior to the Effective Time.


2.22	Notwithstanding accounting policy 2.15, any amounts received or receivable in advance in respect of rent or any other amounts from tenants which relates to periods after the Effective Time shall be included in the Completion Accounts in deferred income.

2.23

A full service charge reconciliation as of the Effective Time shall be undertaken prior to the Cut-Off Time. A liability shall be included in the Completion Accounts in respect of the Company’s share of service charge costs incurred as at the Effective Time (including amounts in respect of voids and amounts not rechargeable to tenants) in excess of the service charge amounts paid by the Company as at the Effective Time. An asset shall be included in the Completion Accounts with respect to service charge amounts paid by the Company as at the Effective Time in excess of the Company’s share of service charge costs incurred as at the

Effective Time (including amounts in respect of voids and amounts not rechargeable to tenants). No other asset or liability with respect to service charges shall be included in the Completion Accounts.

2.24

Full accrual shall be included in the Completion Accounts in accruals for the cost of all goods and services, accounting, audit, tax and consulting fees (including the pro rate element for FY14 up to the Effective Time); management fees; repair and maintenance expenses; capital and development expenditure (including refurbishment); utilities and insurance, received up to the Effective Time, to the extent unpaid at the Effective Time.


2.25	The Completion Accounts shall include full provision for any Transaction-related costs of the Seller (or its affiliates or related parties) and the Company, including advisor fees (including Tax), and Transaction-related bonuses (including any employer payroll-related Taxes), in each case to the extent payable by the Company after the Effective Time


2.26	The Completion Accounts shall include full provision in respect of any unpaid dividends or other distributions declared or approved prior to the Effective Time.

PART B – FORMAT OF BALANCE SHEET



	Completion Accounts
£000’s
Current assets
Trade and other receivables:
Tenant debtors (including Arrears)	-
Sundry debtors	X
Accrued income	X
Rent deposit held	-
Value added tax	X
Swap assets	X
Cash at bank	X

Liabilities
Trade and other creditors:
Bank loan	(X)
Amounts due to the Seller, including the Seller Intercompany Loan	(X)
Accrued interest	(X)
Swap liabilities	(X)
Deferred income	(X)
Rent deposit	-
Value added tax	(X)
Other Tax	(X)
Other liabilities	(X)

Net Asset Value	X/(X)

SCHEDULE 13

Senior Loan Documents

Facility Agreement between The Royal Bank of Scotland International Limited as Original Lender, Firefly Limited as Borrower and Warwick Square Limited as Guarantor originally dated 22 April 2005 (as amended and restated by an amendment and restatement agreement between the Original Lender, the Borrower and the Guarantor dated 14 May 2010 and as further amended and restated by an amendment and restatement agreement between the Original Lender, the Borrower and the Guarantor to be dated on or around the date of this share purchase agreement).


2.	Debenture dated on or around 10 May 2005 granted by Firefly Limited to The Royal Bank of Scotland International Limited as Original Lender containing (amongst other things) a floating charge over the whole of the Borrower’s undertaking and first fixed legal charges over the Property (as reconfirmed from time to time).


3.	Debenture dated on or around 10 May 2005 granted by Michellisa Properties Limited to The Royal Bank of Scotland International Limited as Original Lender containing (amongst other things) a floating charge over the whole of Michellisa Properties Limited’s undertaking and first fixed legal charges over the Property (as reconfirmed from time to time).


4.	Jersey Security Interest Agreement between The Royal Bank of Scotland International Limited as Original Lender and Warwick Square Limited dated 8 June 2010 in respect of Warwick’s shares in Firefly Limited (to be released on or prior to the date of this share purchase agreement).


5.	Jersey Security Interest Agreement between The Royal Bank of Scotland International Limited as Original Lender and Watermark Holdings Limited dated 8 June 2010 in respect of Watermark’s shares in Michellisa Properties Limited (to be released on or prior to the date of this share purchase agreement).


6.	Guarantee from Warwick Square Limited in favour of The Royal Bank of Scotland International Limited originally dated 14 May 2010 (as reconfirmed from time to time).


7.	Subordination agreement dated on or around 22 April 2005 subordinating the debts owed by Firefly Limited to Warwick Square Limited to the liabilities owed to The Royal Bank of Scotland International Limited (to be released on or prior to the date of this share purchase agreement).


8.	Jersey security interest agreement over the Rent Account from Firefly Limited (undated) (as reconfirmed from time to time).


9.	ISDA Master Agreement dated 10th May, 2005 between The Royal Bank of Scotland Plc and Firefly Limited.


10.	ISDA Novation Agreement dated 10th May, 2005 between SEB AG, Corston Holdings Limited and The Royal Bank of Scotland Plc.


11.	4 x terms and conditions of the GBP Amortising interest rate SWAPS between The Royal Bank of Scotland Plc and Firefly Limited dated 10th May, 2005.


12.	Deed of Subordination between Firefly Limited, Watermark Holdings Limited and The Royal Bank of Scotland International Limited (undated).


13.	Guarantee between Watermark Holdings Limited (as Guarantor) and The Royal Bank of Scotland International Limited dated 10th May, 2005.


14.	Jersey Security Interest Agreement dated 10th May, 2005 between Firefly Limited and The Royal Bank of Scotland International Limited.


15.	Jersey Security Interest Agreement dated 10th May, 2005 between Watermark Holdings Limited and The Royal Bank of Scotland International Limited.


16.	Form of utilisation request dated 25 April 2005 from Firefly Limited to The Royal Bank of Scotland International Limited.


17.	Correspondence from Nabarro Nathanson dated 28th April, 2005 re: letter from Aareal Bank confirming the intended discharge of the security interest over Dukes Court, Woking.


18.	Letter dated 10 May 2005 from Firefly Limited confirming entry into the SWAP transactions.


19.	Letter from Firefly Limited to the Royal Bank of Scotland International Limited confirming Landesbank Baden Wurttemberg consent to the issue of guarantee by Watermark Holdings Limited dated 10th May, 2005 re: original Facility CP4.5.


20.	Duty of Care Agreement between The Royal Bank of Scotland International Limited, Firefly Limited and Property Initiatives Limited dated 10th May, 2005.


21.	Certificate of Title - Nabarro Nathanson relating to Dukes Court, Woking (undated).


22.	Service of Process appointment letters from JTC Mayfair Limited dated 10th May, 2005.


23.	Directors certificates dated 10th May, 2005.


24.	Directors certificates dated 25th April, 2005.


25.	Transactional minutes from 25th April, 2005.


26.	Transactional minutes from 12th May, 2010.


27.	Directors certificates dated 8th June, 2010.


28.	Service of Process appointment letters dated 8th June, 2010.


29.	Letter from Michellisa to The Royal Bank of Scotland International Limited dated 8th June, 2010 referencing the Debenture.


30.	Instrument of Release, Discharge and re-Assignment relating to certain security interests over the entire issued shares in Firefly Limited and Michellisa Properties Limited.


31.	Subordination agreement subordinating all sums owed by Firefly Limited to the Buyer to the liabilities owed to The Royal Bank of Scotland International Limited (undated).



Signed by	)	/s/ Steven B. Kauff
for and on behalf of DUKES COURT-T (UK) LLC	) )	Executive Vice President



Signed by	)	/s/ R. Poehlmann	/s/ M. Schaefer
for and on behalf of IMW IMMOBILIEN SE	) )	Director	Director

Exhibit 10.6



	UMBRELLA AGREEMENT Project Prime

		DATED 22.12.2014
	SEB Investment GmbH SEB Investment GmbH, Filiale di Milano SEB Investment GmbH, French BranchAltair Issy S.A.S. Balni bvba (SPRL) - Sellers -
	Prime Holdco C –T S.à r.l. Prime GER Drehbahn – T S.à r.l. Prime GER Valentinskamp – T S.à r.l. Trias Pool II A – T S.à r.l. - Purchasers -

CONTENTS



1.	DOWN PAYMENT, GUARANTEE, ESCROW AGREEMENT	8
2.	AGREEMENTS	9
3.	COOPERATION	11
4.	TERMINATION, LONG STOP	11
5.	MERGER CONTROL CLEARANCE	12
6.	COSTS, TRANSFER TAX	14
7.	NOTIFICATIONS	14
8.	CONFIDENTIALITY, ANNOUNCEMENTS	17
9.	DISPUTE RESOLUTION	18
10.	MISCELLANEOUS	19
11.	REFERENCE DEED	22

This umbrella agreement (the “ Umbrella Agreement ”) is entered into on 22 December 2014 by and between

(1)

SEB Investment GmbH, a company duly organised and existing under the laws of Germany and registered in the commercial register of the local court of Frankfurt am Main under HRB 75345 with its registered office at Rotfelder-Ring 7 in 60327 Frankfurt am Main being registered with and supervised by the German Federal Financial Service Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, " BaFin ") as capital management company (Kapitalverwaltungsgesellschaft) within the meaning of the German Capital Investment Act (Kapitalanlagegesetzbuch) (hereinafter referred to as “ SEB-GER ”)

SEB-GER is the management company ( Kapitalverwaltungsgesellschaft ) of, inter alia , the German open-ended real estate investment funds SEB ImmoInvest, SEB ImmoPortfolio Target Return Fund and SEB Global Property Fund (together hereinafter referred to as “ Funds ”) and, therefore, acting on the account of the Funds.


(2)	SEB Investment GmbH, Filiale di Milano , a branch company of SEB-GER with its registered office in Milano, Via della Chiusa 2, 20123 Milano, Italy (hereinafter referred to as “ SEB-ITA ”)


(3)	SEB Investment GmbH, French Branch SEB Investment GmbH, a branch company of SEB-GER with its registered office in Succursale, 112, Av. Kleber, 75116 Paris, France (hereinafter referred to as “ SEB-FRA ”)

SEB-GER, SEB-ITA and SEB-FRA together hereinafter referred to as “ SEB ”; and


(4)	Altair Issy S.A.S., a company duly organised and existing under the laws of France and registered in the Paris Trade and Companies’ Register under number 428 095 095 (hereinafter referred to as “ Altair ”), with its registered office at 27, avenue de l’Opéra, 75001 Paris; and


(5)	Balni bvba (SPRL) , (bvba being the Dutch and SPRL the French abbreviation of the same legal entity) registered with the Crossroad Databank for Undertakings under number 0453.711.659 (hereinafter referred to as “ Balni ”), with its registered office at Boulevard Auguste Reyers 207-209, 1030 Brussels, Belgium;

- SEB-GER, SEB-ITA, SEB-FRA, Altair and Balni each a “ Seller ” and collectively referred to as “ Sellers ” –

and


(6)	Prime Holdco C –T S.à r.l. , Société à responsabilité limitée, Siège social: 6A route de Trèves, L-2633 Senningerberg (hereinafter referred to as “ HoldCo ” or " Investor "),


(7)	Prime GER Drehbahn – T S.à r.l. , Société à responsabilité limitée, Siège social: 6A route de Trèves, L-2633 Senningerberg (hereinafter referred to as “ Drehbahn Purchaser ”)


(8)	Prime GER Valentinskamp – T S.à r.l. , Société à responsabilité limitée, Siège social: 6A route de Trèves, L-2633 Senningerberg (hereinafter referred to as “ Valentinskamp Purchaser ”,and


(9)	Trias Pool II A – T S.à r.l. , Société à responsabilité limitée Siège social : 6A route de Trèves, L-2633 Senningerberg (hereinafter referred to as “ Dammtor Purchaser ”),

- HoldCo, Drehbahn Purchaser, Valentinskamp Purchaser and Dammtor Purchaser hereinafter collectively referred to as “ Purchasers ” –

PREAMBLE


(A)	The Sellers are directly or indirectly the legal owners and holders of title to the 12 properties described in Annex P1 of this UA.


(B)	The properties listed in Annex P1 under nos. 1 to 6, 8 and 9 are directly owned by SEB. SEB further is the bare owner of the soil and full owner of the underground of the property listed in Annex P1 under no 7 (together hereinafter called the “ Properties ”).

(C)

The building developed on the property listed in Annex P1 under no. 7 is indirectly owned by SEB and directly owned by Chrysalis. The shares in Chrysalis are held and owned by SEB, holding 870,083 of 870,084 shares and by Balni holding and owning 1 share, whereas 749 of 750 shares in Balni are held and owned by SEB and 1 share is held and owned by Chrysalis. The property listed in Annex P1 under no. 10 is indirectly owned by the SEB and SEB owns and holds title to all shares of the property company SEB ImmoInvest Lindholmen Science Park AB (“ Lindholmen AB ”) . The property listed in Annex P1 under no. 11 is directly owned by Altair. SEB holds the properties and the shares in Lindholmen AB and Altair and Chrysalis on account of the real estate funds set out in Annex P2 (the shares in Lindholmen AB and Chrysalis are together referred to as the “ Shares ”).

(D)

In this Umbrella Agreement, SEB is acting on account of said respective real estate investment funds as follows (i) SEB-GER acting on behalf of SEB ImmoPortfolio Target Return Fund with respect to the real estate described in Schedule 3.1 of the Umbrella SPA (ii) SEB-GER acting on behalf of SEB ImmoPortfolio Target Return Fund with respect to the real estate described in Schedule 3.2 of the Umbrella SPA (iii) SEB-FRA with respect to the real estate described in Schedule 3.3 of the Umbrella SPA (iv) SEB-GER acting on behalf of SEB ImmoInvest with respect to the real estate described in Schedule 3.4 of the Umbrella SPA (v) SEB-GER acting on behalf of SEB ImmoInvest with respect to the real estate described in Schedule 3.5 of the Umbrella SPA (vi) SEB-ITA acting on behalf of SEB ImmoInvest with respect to the real estate described in Schedule 3.6 of the Umbrella SPA (vii) SEB-GER acting on behalf of SEB ImmoInvest with respect to the real estate described in Schedule 3.7.1 of the Umbrella SPA (viii) SEB-GER acting on behalf of SEB ImmoInvest with respect to the real estate described in Schedule 3.8 (a) of the Umbrella SPA (ix) SEB-GER acting on behalf of SEB ImmoInvest with respect to the real estate described in Schedule 3.8 (b) of the Umbrella SPA (x) SEB-GER acting on behalf of SEB Global Property Fund with respect to the real estate described in Schedule 3.9 (xI) SEB-GER holds the Shares in Lindholmen AB on account of SEB ImmoInvest, which is the beneficial owner of such shares and SEB-GER holds its shares in Chrysalis on account of SEB ImmoInvest, which is the beneficial owner of such shares.


(E)	The Sellers desire to sell and transfer the Properties and the Shares (hereinafter also called the “ Portfolio ”) to the Purchasers. Purchasers desire to acquire the Properties and the Shares.


(F)	The Purchasers and/or, as the case may be certain affiliates of the Investor (for further reference cf. Section 2.1.1 - such affiliates also referred to as the “ Propcos ”) desire to instruct SEB-GER as the asset manager of the Portfolio and to enter into an asset management agreement with SEB-GER.

(G)

Therefore, the Sellers, the Purchasers and certain Propcos intend to enter into an umbrella sale and purchase agreement (“ USPA ”) providing for the provisions of the intended transactions together with twelve local sale and purchase agreements implementing the sale and transfer of the Properties and the Shares (each an “ Individual Transfer ”) as well as an asset management services agreement (“ AMA ”).


(H)	The terms and conditions of the USPA are set out in the draft umbrella sale and purchase agreement between the Sellers, the Investor and certain Propcos as attached hereto as Annex 2.1 . The terms and conditions of the Individual Transfers are set out in the Schedules 3.1 to 3.11 to the USPA.


(I)	The terms and conditions of the AMA are set out in the Draft Asset Management Services Agreement between the Sellers, the Investor and certain Propcos as attached hereto as Annex 2.2 .


(J)	It is the common intention of the Parties to execute the drafts of the USPA, the Individual Transfers and the AMA together with all annexes and schedules thereto by no later than 19 February 2015.

(K)

It is thus the mutual understanding of the Parties to herewith enter into this Umbrella Agreement and to create the binding obligation ( Vorvertrag ) to enter into the USPA with the Individual Transfers and the AMA, in each case including all annexes and schedules referenced in the agreements as required for the implementation of the envisaged transaction (“ Transaction ”) it being understood that the Dammtor Purchaser, the Drehbahn Purchaser and the Valentinskamp Purchaser with respect to the USPA shall only be obliged to enter into the USPA and the Individual Transfers to which they are a Party under the USPA.

Now, therefore Sellers and Investors (herein also referred to each as a “ Party ” and jointly as the “ Parties ”) agree as follows:

DEFINITIONS

Except as otherwise expressly provided in this Umbrella Agreement, capitalized terms used in this Umbrella Agreement, shall have the following meaning.

In the Annexes to this Umbrella Agreement, defined terms shall have the meanings as given therein, if not or otherwise defined in this Umbrella Agreement.

" Agreement " means this Umbrella Agreement;

“ AMA ” means the asset management services agreement as described in Section 2.2;

“ Business Day ” shall mean any day other than a Saturday, Sunday or a public holiday in Frankfurt am Main (Federal Republic of Germany), Luxembourg, London (U.K.) and New York (USA) on which banks are open for usual business during usual hours;

“ Chrysalis ” means Chrysalis Invest S.A (N.V) ((N.V being the Dutch and S.A. the French abbreviation of the same legal entity), a company duly organized and existing under the laws of Belgium and registered with the Crossroad Databank for Undertakings under number 0463.603.184 with its registered office at boulevard Auguste Reyers 207-209, 5 ^th floor, 1030 Brussels;

“Dispute Meeting” shall have the meaning as defined in Section 9.1.1;

“Dispute Notice” shall have the meaning as defined in Section 9.1.1;

“Dispute Representative” shall have the meaning as defined in Section 9.1.2;

“ Down Payment ” shall have the meaning as defined in Section 1.1;

“ Escrow Agreement ” means the agreement between the Investor and the German Notary and SEB attached hereto as Annex 1.1;

“ Funds ” shall have the meaning as defined in the Caption;

“ German Notary ” shall have the meaning as defined in Section 11 and shall include his official substitute or his successor in office;

“ Guarantee ” means the first demand payment guarantee in the amount of EUR 25,000,000 a copy of which is attached as Annex 1.2;

“ Investor ” shall have the meaning as defined in the caption;

" Notarization Date " shall mean the date of the notarization of this Umbrella Agreement.

“ Long Stop Date ” means 19 February 2015 including that day (24.00) or as the case may be the deferred date pursuant to Section 4.2.1;

“ Propcos ” shall have the meaning as defined in the Preamble (E)

“Schedules” means any attachments incorporated by reference into this Umbrella Agreement.

“ SEB ” shall mean SEB-GER, SEB-ITA and SEB-FRA collectively;

“ SEB-FRA ” shall have the meaning as defined in the caption;

“ SEB-GER ” shall have the meaning as defined in the caption;

“ SEB-ITA ” shall have the meaning as defined in the caption;

“ Transaction ” shall have the meaning as defined in the Preamble (J)

“ Umbrella Agreement ” means this Umbrella Agreement together with its schedules and annexes;

“ Umbrella Sale and Purchase Agreement ” or “ USPA ” means the agreement attached hereto as Annex 2.1 with all schedules and referenced therein;

INTERPRETATIONS

Throughout the Agreement, unless the context requires otherwise,


(a)	headings are for convenience only and shall not affect the interpretation of the Agreement;


(b)	references to any term in the singular shall also include the plural and vice versa;


(c)	references to one gender shall include all genders;


(d)	references to a Seller and/or a Investor shall mean a reference to the relevant Seller and the relevant Purchase in relation to one particular Purchase Object;


(e)	“including”, “in particular”, “e. g.” or “or” shall be read non-exclusive;


(f)	references to EUR or Euro are references to the lawful currency of the member states of the European Union;


(g)	where a German term has been inserted in quotation marks or italics, it alone (and not the English term to which it relates) shall be authoritative for the purpose of the interpretation of the relevant English term in the Agreement;


(h)	references to any German legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any other legal concept shall, in respect of any jurisdiction other than Germany, be interpreted to include the legal concept which most closely corresponds in that jurisdiction to the German legal term; and


(i)	references to any statute or statutory provision shall be construed as a reference to the same as it has been in force as of the date of the notarisation of the Agreement.


1.	DOWN PAYMENT, GUARANTEE, ESCROW AGREEMENT


1.1	Down Payment

An amount of EUR 25,000,000 (Euro: twenty five million) (“ Down Payment ”) has been paid by the Investor into the account at Commerzbank, IBAN DE22500800000402583006, SWIFT: DRESDEFFXXX held by the German Notary (“ Escrow Account ”) in accordance with the agreement attached hereto as Annex 1.1 (“ Escrow Agreement ”).


1.2	Corporate Guarantee

The Investor has furthermore provided the German Notary with the Corporate Guarantee in the amount of EUR 25,000,000 (Euro: twenty five million) issued by NorthStar Realty Finance Corporation (“ Guarantee ”) together with a legal opinion issued by Clifford Chance opining on the legality and the enforceability of the Guarantee.


1.3	Confirmation of the German Notary

The German Notary hereby confirms to the Parties that the Down Payment was fully paid into the Escrow Account, that he holds a copy of the Guarantee and that he will hold, from the date of this Agreement the Down Payment and the copy of the Guarantee in escrow according to the joint instructions of the Parties under this Agreement and, as the case may be, the USPA.

The Investor has handed over the signed original of the Guarantee to Mayer Brown LLP in New York. The Notary is hereby irrevocably instructed to take the necessary actions to have the Guarantee couriered to his attention and – after receipt - to take the original of the Guarantee in escrow. The Notary shall inform the Parties about receipt of the original of the Guarantee in writing.


1.4	Releases from the Escrow Account and Release of the Guarantee/Contractual Penalty


1.4.1	Prior to the notarisation of the USPA, the Sellers and the Purchasers herewith irrevocably instruct the German Notary to release the Guarantee and pay out the whole Down Payment from the Escrow Account


(a)	to the Investor if


(i)	Purchasers rescind in accordance with Section 4.2.1


(ii)	either Party rescinds in accordance with Section 4.2.3 or 4.2.4

and


(b)	to the Seller as a Contractual Penalty to which the Seller shall be entitled, if the Seller rescinds in accordance with Section 4.2.1.; the Seller shall also be entitled to demand immediate payment of an amount of EUR 25,000,000 under the Guarantee.

In all cases, Interest accrued on the Down Payment shall be paid out to the Investor. The Parties agree that Purchaser shall not be liable and not be obliged to pay the Contractual Penalty and the Sellers shall not be entitled to demand payment under the Guarantee in the event that merger control clearance is not granted for the Transaction.


1.4.2	Other payments out of the Escrow Account or return or release of the Guarantee shall exclusively be made upon a joint written instruction executed by or on behalf of the Sellers and the Investor and delivered to the German Notary (Fax sufficient).


1.4.3	As from the date of the notarisation of the USPA, the Sellers and the Investor herewith irrevocably instruct the German Notary to release and pay out any funds out of the Escrow Account and to release the Guarantee only in accordance with the provisions of the USPA.


2.	AGREEMENTS

The Parties herewith undertake to each other the following:


2.1	Umbrella Sale and Purchase Agreement

2.1.1

The HoldCo shall incorporate all relevant entities – namely the Propcos and their direct and indirect shareholders as may be required at Investor's sole discretion – in order to have the USPA, the Individual Transfers and the AMA executed by such entities. To the extent no further entities including the other Purchasers are incorporated, the Investor undertakes to enter into the USPA, the Individual Transfers and, as the case may be, the AMA itself.


2.1.2	The Parties herewith instruct the German Notary, and the German Notary undertakes to make available all relevant information to other notaries or authorities involved in the Individual Transfers as is required for the due and binding execution and timely implementation of the Individual Transfers.

2.1.3

The Sellers and the Purchasers (and/or, as the case may be any entities established and notified to the German Notary and the Sellers in accordance with Section 2.1.1) irrevocably undertake ( verpflichten sich ) to enter into the USPA together with the Individual Transfers in the form and substance as attached hereto as Annex 2.1 and are mutually obliged to agree on final execution versions of all documents within due course.


2.1.4	With respect to the Properties listed as nos. 8a and 8b in Annex P1 only the aggregate Purchase Price is agreed. The parties will agree on the allocation of the Purchase Price per Property prior to Signing as reasonably determined by the Investor.

2.1.5

The Sellers shall, at the written request of the Purchasers, and at the Purchasers' cost, take all necessary legal and factual steps to assist in procuring a full transfer of the contractual relationship under this Umbrella Agreement referable to a Purchase Object/Shares as defined in the USPA from the Purchasers to, or the assignment or novation of the corresponding benefits and obligations to, or the nomination of, an affiliated entity of the Purchasers (“ Internal Designee ”). Affiliated entity is determined according to Secs. 15 et seq. German Stock Corporation Act ( Aktiengesetz ) accordingly and it being understood that in interpreting this German law concept the specifics of other jurisdictions shall reasonably be taken into account. A transfer under this clause would lead to a complete exchange of the contractual position on the Purchaser’s side, i.e. only the Internal Designee would from then on be entitled and obliged under this Umbrella Agreement (or the relevant part as the case may be) and the relevant Individual Transfers corresponding to the Purchase Objects/Shares.


2.1.6	With respect to the Property listed in Schedule P1 under no. 7 the Parties agree that the relevant Purchaser and SEB shall agree the terms and conditions of a lease agreement to be entered into between Chrysalis and SEB based on the agreed commercial terms as set out in Part A of Annex 2.1.6 . The lease shall then replace Part A of Annex 15.7 of te USPA.


2.2	Asset Management Services Agreement

2.2.1

SEB-GER and the Purchasers (and/or, as the case may be any entities established and notified to the German Notary and the Sellers in accordance with Section 2.1.1) irrevocably undertake ( verpflichten sich ) to enter into the AMA in the form and substance as attached hereto as Annex 2.2 and are mutually obliged to agree on final execution versions of all documents as soon as reasonably practicable.

2.2.2

Sellers and Purchasers agree to start the discussions regarding the Operational Memorandum to be agreed as part of the AMA no later than mid January 2015. Such discussions and negotiations shall be conducted in good faith with the aim to finalize the Operational Memorandum as soon as reasonably possible, however, no later than on the Starting Date as defined in the AMA. The Parties agree that the finalizing of the Operational Memorandum shall not be a condition for the Signing of the USPA or the AMA.


2.2.3	The Investor shall procure that any affiliate nominated in accordance with Section 2.1.4 above shall enter into the AMA in respect of the relevant Property as defined in the USPA.


3.	COOPERATION

The Parties shall cooperate acting reasonably and properly in all respects with each other including timely exchange of execution copies of the documentation and execution logistics and formalities and shall use their best efforts to achieve a notarisation of the USPA and the relevant Individual Transfers as well as the AMA until the Long Stop Date.

The Parties shall at all times act in good faith and shall not hinder the timely execution and completion of any of the USPA and/or the Individual Transfers and/or the AMA.

If following the notarization of this Agreement a change to any agreement, clause, annex or other document which has already been attached as a draft to this Agreement is requested by any Party and such change cannot be agreed by and between the Parties, then the version of the relevant agreement, clause, annex or other document as attached hereto shall apply. In case of doubt, Section 10.6 ( Severability ) sentence 4 of this Agreement shall apply accordingly.


4.	TERMINATION, LONG STOP


4.1	Termination

This Umbrella Agreement cannot be terminated by either Party unless otherwise agreed below.


4.2	Long Stop Date/Rescission

4.2.1

If the Parties have not signed the USPA, the relevant Individual Transfers and the AMA (each in the form annexed and as required under applicable law) together with all annexes and schedules by the Long Stop Date either Party shall be entitled to rescind this Umbrella Agreement together with all transactions contemplated by this Umbrella Agreement but strictly subject to the limitations in Section 4.2.2.


4.2.2	A Party (the " Notifying Party ") shall not be entitled to rescind this Umbrella Agreement unless


(a)	it (the Notifying Party) has notified the other Party (the " Receiving Party ") that it (i.e. the Notifying Party) is ready, willing and able to sign the USPA , the relevant Individual Transfers and the AMA (in each case together with all annexes and schedules) and


(b)	the Receiving Party defaults in signing the USPA, the relevant Individual Transfers and the AMA until the Long Stop Date.

The right to rescind can only be exercised within a time period of two weeks following the Long Stop Date.

In the event of a rescission by the Purchaser the Purchaser shall be entitled to damages.

In the event of a rescission by the Seller, the Seller shall be entitled to the Contractual Penalty which shall be in full and final settlement of all claims that the Seller may have.


4.2.3	If on the Long Stop Date neither Party has served a notice pursuant to Section 4.2.1 then following a grace period of 5 Business Days either Party shall be entitled to rescind this Agreement and neither party shall have any claims against the other.


4.2.4	If Merger Control Clearance is denied by the Cartel Authorities without possibility to appeal ( bestandskräftig ), either Party shall be entitled to rescind this Agreement and neither party shall have any claims against the other.


4.2.5	Any rescission shall be made by way of a written declaration to the German Notary. The Sellers and the Purchasers herewith irrevocably entitle the German Notary to receive such declarations on their behalf.


5.	MERGER CONTROL CLEARANCE


5.1	Filings

The Purchasers (and SEB, to the extent any filing cannot be made by the Purchasers on behalf of SEB or on behalf of the other Sellers under applicable law) shall use reasonable endeavours to make any filings necessary in connection with the merger control clearance and any other filings with, or notifications to, any governmental authority required in connection with the Agreement as soon as possible after 5 January 2015.. Any filings made by the Purchasers shall require the prior written consent of SEB (and vice versa) which shall not be unreasonably withheld, conditioned or delayed. The Purchaser may withdraw ( zurücknehmen ) any filing or agree to the extension of any examination period only with the express prior written consent of SEB, which shall not unreasonably be withheld.


5.2	Cooperation

In order to obtain all requisite approvals for the transactions contemplated by this Umbrella SPA, the Parties shall (i) reasonably cooperate in all respects with each other in the preparation of any filing or notification and in connection with any submission, investigation or inquiry including timely exchange of drafts in order to give reasonable opportunity to comment on such drafts,

(ii) supply to any competent authority promptly ( unverzüglich ) any additional information requested pursuant to any applicable laws and take all other procedural actions required in order to obtain any necessary clearance or to cause any applicable waiting periods to commence or expire, (iii) promptly provide each other with copies of any written communication received or sent (or written summaries of any non-written communication) in connection with any proceeding and (iv) give each other and their respective advisers the opportunity to participate in all meetings and conferences with any competent authority.


5.3	Merger Control Clearance

The obligations pursuant to Sections 2.1.3 and 2.2.1 are subject to the condition precedent of merger control authority (“ Merger Control Clearance ”) The Parties assume that the Federal Cartel Office ( Bundeskartellamt ) (“ FCO ”) is competent.

Merger Control Clearance is deemed to have occurred, if (i) the FCO notifies the Parties in writing that the Transaction contemplated under this Agreement does not trigger merger control under the German Act Against Restrictions of Competition ( Gesetz gegen Wettbewerbsbeschränkungen ) (“ ARC ”) or (ii) in the case of statutory fiction of Merger Control Clearance. The Parties can mutually waive the condition precedent of Merger Control Clearance in writing.


5.4	Charges, Conditions

If a prohibition order of the Federal Cartel Office is to be anticipated or is actually issued, the Parties shall endeavour what can be reasonably be expected to remedy the circumstances preventing the clearance; any liability of the Purchaser in this context is excluded. The Purchaser is entitled to lodge an appeal against the prohibition order in co-operation with the Seller, and at its own expense.


6.	INTERIM PERIOD UNTIL TRANSFER OF POSSESSION


6.1	Sellers Undertakings


6.1.1	With respect to the time period between Signing of this UA and Merger Control Clearance, Sellers shall not do any actions or give any declarations that are outside the ordinary course of business without Purchasers' prior written consent.


6.1.2	With respect to the time period between Merger Control Clearance and the Signing of the USPA, Sections 14.1, 14.2 and 14.3 of the USPA shall apply in relation between the Sellers and the Purchasers mutatis mutandis .

6.1.3

To the extent any actions of Sellers require confirmation or consent of the Purchasers pursuant to these Seller's above undertakings, the Purchasers hereby agree that the persons listed under Sections 8.3.1(b)(ii) and 8.3.1(b)(iii) shall be the contact persons for the Sellers and that any confirmation or consent given by any of these contact persons shall be deemed a confirmation or consent of the Purchasers. Any confirmation or consent shall be deemed granted if Purchasers do not otherwise instruct within a 5 Business Day period commencing on the receipt of the written request.


6.2	Material Adverse Change

Purchasers shall be entitled to rescind from their obligations under this Umbrella Agreement to enter into the USPA and Individual Transfers to the extent that circumstances occur that would entitle the Purchasers under Section 14.4.3 and 14.4.4 of the USPA to rescind from any such Individual Transfer under the USPA. Sections 14.4.5 and 14.4.6 of the USPA shall apply mutatis mutandis . Section 4.2.4 applies to such rescission.


7.	COSTS, TRANSFER TAX

All costs and transfer taxes connected with this Umbrella Agreement, its Schedules and Annexes including the costs of the Escrow Account shall be borne by the Investors.

Each Party shall, however, bear the costs of its own legal and other advisors and agents.


8.	NOTIFICATIONS


8.1	Purchasers’ Agent


8.1.1	Each Purchaser by its execution of this Umbrella Agreement irrevocably appoints

Prime HoldCo C-T S.à r.l.,
6A Route De Treves - 6th Floor,
Senningerberg,
L 2633 Luxembourg

to act on its behalf as its agent (“ Purchaser’s Agent ”) in relation to this Umbrella Agreement and irrevocably authorizes on its behalf to give and receive all notices and instructions, to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Purchaser notwithstanding that they may affect the Purchaser without further reference to or the consent of that Purchaser; and in each

case the Purchaser shall be bound as though the Purchaser itself had given or received the notices and instructions or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.

8.1.2

Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made or received by the Purchasers’ Agent or given to the Purchasers’ Agent under this Agreement on behalf of another Purchaser or by a Seller or in connection with this Agreement shall be binding for all purposes on that Purchaser as if that Purchaser had expressly made, given, received or concurred with it. In the event of any conflict between any notices or other communications of the Purchasers’ Agent and any other Purchaser, those of the Purchasers’ Agent shall prevail.


8.1.3	Each Purchaser hereby – to the extent applicable and legally possible - exempts the Purchaser’s Agent from the restrictions provided for in Section 181 of the German Civil Code.


8.1.4	Purchaser’s Agent must not cease to be a Purchasers’ Agent unless a replacement Purchasers’ Agent has been appointed to the reasonable satisfaction of the Sellers.


8.2	Declarations or notifications to the Sellers


8.2.1	Declarations or notifications to the any of the Sellers shall be made in writing and be addressed to:

SEB Investment GmbH
Rotfeder-Ring 7
D – 60327 Frankfurt am Main
Attn.: Mr. Nils Hübener
Email: nils.huebener@sebam.de
Attn.: Mr. Peter Rocker
Email: peter.rocker@sebam.de

With a copy to:

Dr Jens Ortmanns,
McDermott Will & Emery
Stadttor 1
40219 Düsseldorf
Germany
Email: jens.ortmanns@mwe.com


8.3	Declarations or notifications to the Purchaser’s Agent


8.3.1	Declarations or notifications to the Purchaser’s Agent shall be made in writing and be addressed to:


(a)	Purchaser’s Agent and


(b)	For all Purchasers to:


(i)	c/o NorthStar Asset Management Group, attn. General Counsel, 6A Route de Trèves, 6th Floor, 2633 Luxembourg, Luxembourg, Email: legal@nsamgroup.com

and


(ii)	c/o NorthStar Asset Management Group, attn. Shawana McGee, 6A Route de Trèves, 6th Floor, 2633 Luxembourg, Luxembourg, Email: smcgee@nsamgroup.eu

and


(iii)	c/o NorthStar Realty Finance Corp., attn. Ronald J. Lieberman, Esq., 399 Park Avenue, 18th Floor, New York, NY 10022, USA, Fax: +1 (212) 547-2704; Email: Rlieberman@nsamgroup.com

With a copy to:


(iv)	Clifford Chance Deutschland LLP, attn. Thomas Reischauer, Mainzer Landstraße 46, 60325 Frankfurt am Main, Germany, Fax: +49 (0)69 7199 4000; Email: thomas.reischauer@cliffordchance.com


8.4	Purchasers’ Process Agent

The Purchasers will irrevocably appoint a Process Agent within a reasonable period of time after the date hereof. Such Process Agent shall be situated in Germany. Until such Process Agent is appointed, North Star Asset Management Group, 6A Route de Trèves, 6th Floor, 2633 Luxembourg, Grand Duchy of Luxembourg, attn. of the Persons listed under Sections 8.3.1(b)(i) to 8.3.1(b)(iii), shall serve as Purchasers' Process Agent.


8.5	Receipt of Notices


8.5.1	In the absence of evidence of earlier receipt, any notice shall take effect from the time that it is deemed to be received:


(a)	in the case of a notice left at the address of the addressee, upon delivery at that address; and


(b)	in the case of a posted letter, on the third day after posting.


8.5.2	A notice received or deemed to be received in accordance with Section 19.5.1 above on a day which is not a Business Day in the place of receipt or after 5 p.m. on any Business Day, according to local time in the place of receipt, shall be deemed to be received on the next following Business Day in the place of receipt.


8.5.3	Each Party undertakes to notify the other Parties by notice served in accordance with this Section 19.5 if the address specified herein is no longer an appropriate address for the service of notices.


9.	CONFIDENTIALITY, ANNOUNCEMENTS


9.1	No Disclosure of Confidential Information

Each Party agrees to maintain in confidence the economic terms contained in this Agreement, information and data furnished or made available by Sellers, its agents or representatives in connection with Purchaser's investigation of the Properties and Shares and the transactions contemplated by this Agreement (collectively, the " Confidential Matters "); provided however, that each Party, its agents and representatives may disclose such information and data (i) to such Party's direct and indirect accountants, attorneys, prospective lenders, investment bankers, underwriters, partners, members, investors (prospective and current), employees, affiliates, officers, directors, consultants and advisors (collectively, " Representatives "), in each case, solely to the extent that such Representatives reasonably need to know such information in connection with assisting Purchaser in connection with the Transaction, and Purchaser shall be liable to the Sellers for any action or omission prohibited under this Agreement by any of its Representatives; (ii) to the extent required by an applicable statute, law, regulation, governmental authority or securities exchange; (iii) to the extent required by Purchaser's reporting requirements under the rules and regulations of the Securities and Exchange Commission, including, without limitation, the necessity of filing Form 8-k disclosure with respect to the transaction contemplated hereby or as required by any securities exchange, (iv) if in the opinion of counsel to the disclosing Party, disclosure is required to comply with any mandatory provision of law, of any directive from a government recognized stock exchange, or of a binding decision from a court or another government body, (v) with respect to generic disclosures about business and pipeline of the Purchaser or any affiliate of the Purchaser made in the ordinary course of business that would not reasonably be expected to identify Seller with the specific transaction contemplated hereby; or (vi) if required by subpoena issued in connection with any litigation or proceeding.


9.2	Announcements

Each Party shall use reasonable efforts to notify the other of impending press-releases regarding the conclusion of this Agreement and the Individual Transfers; provided that the Sellers shall not release any press releases or otherwise publically announce in advance of the Purchaser without the Purchaser’s prior written consent; provided further that substantially similar press-releases shall not require additional notification. The Parties shall so far as reasonably practicable, coordinate with each other to achieve consistency in the factual content of any press-releases.


10.	DISPUTE RESOLUTION


10.1	Disputes

The Parties shall attempt in good faith to resolve any dispute by mutual agreement by the following procedure:

10.1.2

In the event of any dispute between the Parties arising out of or relating to this Umbrella Agreement, the responsible representatives of the Parties shall, within fifteen (15) Business Days of a written notice from one Party to the other Party (the " Dispute Notice "), hold a meeting (the " Dispute Meeting ") in an effort to resolve the dispute in fair dealing and good faith. In the absence of agreement to the contrary the Dispute Meeting shall be held at the registered office for the time being of SEB.

10.1.3

Each Party shall use all reasonable efforts to send a senior representative who has authority to settle the dispute to attend the Dispute Meeting (the " Dispute Representative "). Each Party shall give notice of the appointment of its Dispute Representative to the other Party. The Dispute Representatives shall use all reasonable efforts to resolve disputes arising out of this Umbrella Agreement or Individual Transfers by amicable settlement.


10.1.4	Any dispute which is not resolved within forty (40) Business Days after the service of a Disputes Notice/ the service of the first notice of the appointment of a Dispute Representative, whether or not a Dispute Meeting has been held, shall, at the request of either Party be referred to the dispute resolution procedure pursuant to Section 21.2.

10.1.5

Nothing in this Section 21.1 and the following Section 21.2 shall limit the right of the Parties to request conservatory or interim measures, such as preliminary injunctions, from the competent national courts, the pre-arbitral referee and/or the arbitral tribunal. If a claim in a dispute may become time barred due to a statute of limitation being applicable, the Parties shall agree in an appropriate way that the application of such statute of limitation shall be suspended by the time

period of the settlement efforts made by the Dispute Representatives and/or the dispute resolution procedure pursuant to Section 21.2. If the Parties cannot reach an appropriate agreement on such suspension sufficiently in advance of time bar of the claim becoming effective, the Party whose claim may become time barred may initiate the dispute resolution procedure pursuant to Section 21.2 irrespective of the prerequisites of this Section 21.1.


10.2	Litigation

In the event that a dispute cannot be settled pursuant to Section 21.1, the Parties agree that the Courts of Frankfurt am Main shall have exclusive jurisdiction over any and all disputes unless required otherwise by mandatory law.


11.	MISCELLANEOUS


11.1	Restrictions on Assignment

Claims of any of the Investors arising out of or in connection with the Agreement may only be assigned with the prior written consent of SEB-GER except assignments to intra-group companies of the Investors or to debt or equity providers.


11.2	Payments, Bank Accounts

Any payment under the Agreement must be made free of all taxes, bank charges and other deductions by wire transfer of immediately available funds. Any such payment shall be deemed to have been duly made only upon the irrevocable and unconditional crediting of the amount payable (without deduction of any costs or charges) to the relevant bank account on, and on a value date no later than, the relevant due date.


11.3	Liability of Sellers

No Seller shall be liable for any obligations of another Seller acting on behalf of a different real estate fund (several liability, Ausschluss der gesamtschuldnerischen Haftung ). Within the same real estate fund, Sellers shall be jointly and severally liable for any obligations hereunder ( gesamtschuldnerische Haftung ).


11.4	Joint and Several Liability of Investors

Any Investor shall be jointly liable together with all other Investors and assumes to fulfill all obligations by any other Investor and assignee under this Umbrella Agreement ( gesamtschuldnerische Haftung der Käufer ).


11.5	Amendments

Any amendments to the Agreement shall be in writing, signed by each of the Parties to be valid and require the explicit reference to the Agreement but need to be notarised if this is required by mandatory law. This is also applicable for an amendment of this Section 10.5.


11.6	Severability

Should a provision of the Agreement or a provision later on included in the Agreement be or become null and void as a whole or in part, or should a gap in the Agreement become evident, this does not affect the validity of the remaining provisions. The Parties are aware of the German Federal Supreme Court's ( Bundesgerichtshof ) decision according to which a severability Section merely reverses the burden of proof. However, it is the express intention of the Parties to maintain the validity of the remaining provisions at all events and thus to exclude the applicability of section 139 BGB as a whole. Instead of the null and void provision, or in order to fill the gap, such valid and practicable regulation is deemed to be agreed with effect ex tunc that in legal and economic terms comes closest to what the Parties intended or would have intended in accordance with the purpose of the Agreement if they had considered the point at the time of conclusion of the Agreement. If the nullity of a provision is due to a degree of performance or time (period or deadline) laid down in this provision, then the provision is deemed to be agreed with a legally permissible degree that comes closest to the original degree. If the nullity or gap relates to a provision requiring notarisation, the regulation pursuant to sentence 4 or the provision pursuant to sentence 5 must be agreed in notarised form. However, in derogation of sentences 1 to 5, the Agreement is null and void as a whole if it is null and void in relation to individual Parties or if the partial nullity concerns the contractual main performance obligations or a part of them.


11.7	Governing Law


11.7.1	The Umbrella Agreement shall be exclusively governed by and construed in accordance with the law of the Federal Republic of Germany applicable to parties residing within the Federal Republic of Germany without regard to the conflicts of law provisions of the law of the Federal Republic of Germany.


11.8	Entire Agreement


11.8.1	The Agreement including all Schedules to the Agreement and all Schedules and Annexes to such Schedules comprises the entire agreement between the Parties concerning the subject matter

hereof and supersedes and replaces all prior negotiations, agreements and undertakings of the Parties whether oral or written, with respect to the subject matter hereof.


11.9	Further Assurances

Each Party shall from time to time execute and deliver all such further documents and agreements and take all such further actions as the other Party may reasonably require and which are not inconsistent with any other provisions of the Agreement in order to effectively consummate the Agreement as provided herein.


11.10	No Contract for the Benefit of a Third Party

The Agreement shall not grant any rights to, and is not intended to operate for, the benefit of third parties unless otherwise explicitly provided for herein.

Exhibit 10.7



	UMBRELLA SALE AND PURCHASE AGREEMENT Project Prime

	DATED 16 February 2015
	SEB Investment GmbH SEB Investment GmbH, Filiale di Milano SEB Investment GmbH, French Branch Altair Issy S.A.S. Balni bvba (SPRL) - Sellers -
	Prime UK Portman – T S.à r.l. Prime UK Condor – T S.à r.l. SCI Prime FRA MacDonald-T Prime NLD Rotterdam – T B.V. Prime NLD Amsterdam – T B.V. Prime Pool III C – T S.à r.l. Prime Pool V – T S.à r.l.			Prime Pool V-T S.a r.l. acting as founder and incorporator of Prime BEL Brussels - T BVBA in process of incorporation Prime GER Drehbahn – T S.à r.l. Prime GER Dammtorwall – T S.à r.l. Prime GER Valentinskamp – T S.à r.l. SCI Prime FRA Issy-T Prime Pool IV B-T S.à r.l.
	- Purchasers -

CONTENTS



1.	ENGLISH LANGUAGE/REFERENCE DEED/LEGAL UNITY	11
2.	REAL ESTATE, SHARES, PURCHASE OBJECTS	11
3.	SALES AND PURCHASES, TRANSFER	13
4.	PURCHASE PRICE	21
5.	COLLATERAL, CONTRACTUAL PENALTY	23
6.	VAT	25
7.	CLOSING	25
8.	PROCUREMENT OF TITLE, ENCUMBRANCES, CHANGES TO THE LAND REGISTER	31
9.	INDEPENDENT SYSTEM OF GUARANTEES	32
10.	GUARANTEES	36
11.	TAX	46
12.	INDEMNIFICATION	46
13.	LIMITATIONS OF LIABILITY	48
14.	INTERIM PERIOD UNTIL TRANSFER OF POSSESSION	50
15.	TRANSFER OF POSSESSION, DOCUMENTATION, ETC.	55
16.	RIGHTS OF RESCISSION	61
17.	MERGER CONTROL CLEARANCE	63
18.	COSTS, REAL ESTATE TRANSFER TAX	63
19.	NOTIFICATIONS	63
20.	CONFIDENTIALITY, ANNOUNCEMENTS	66
21.	DISPUTE RESOLUTION	67
22.	SEC FILINGS AND REIT STATUS	68
23.	MISCELLANEOUS	69

- 3 -

This umbrella sale and purchase agreement (the “ Umbrella SPA ”) is made on 16 February 2015.

by and between

(1)

SEB Investment GmbH, a company duly organised and existing under the laws of Germany and registered in the commercial register of the local court of Frankfurt am Main under HRB 29859 with its registered office at Rotfeder-Ring 7 in 60327 Frankfurt am Main being registered with and supervised by the German Federal Financial Service Authority ( Bundesanstalt für Finanzdienstleistungsaufsicht , " BaFin ") as a capital management company ( Kapitalverwaltungsgesellschaft ) within the meaning of the German Capital Investment Act ( Kapitalanlagegesetzbuch ) (hereinafter referred to as “ SEB-GER ”).

SEB-GER is management company ( Kapitalverwaltungsgesellschaft ) of, inter alia , the German open-ended real estate investment funds SEB ImmoInvest, SEB ImmoPortfolio Target Return Fund and SEB Global Property Fund (together hereinafter referred to as “ Funds ” and individually as a “ Fund ”) and, therefore, acting on the account of the Funds.


(2)	SEB Investment GmbH, Filiale di Milano , a branch company of SEB-GER with its registered office in Milano, Via della Chiusa 2, 20123 Milano, Italy (hereinafter referred to as “ SEB-ITA ”).


(3)	SEB Investment GmbH, French Branch SEB Investment GmbH, a branch company of SEB-GER with its registered office in Succursale, 112, Av. Kleber, 75116 Paris, France (hereinafter referred to as “ SEB-FRA ”).

SEB-GER, SEB-ITA and SEB-FRA together hereinafter referred to as “ SEB ”; and


(4)	Altair Issy S.A.S., a company duly organised and existing under the laws of France and registered in the Paris Trade and Companies’ Register under number 428 095 095 (hereinafter referred to as “ Altair ”), with its registered office at 27, avenue de l’Opéra, 75001 Paris;


(5)	Balni bvba (SPRL) , a company duly organized and existing under the laws of Belgium and registered with the Crossroad Databank for Undertakings under number 0453.711.659 (hereinafter referred to as “ Balni ”), with its registered office in Boulevard Auguste Reyers 207-9; 1030 Brussels, Belgium;

and

- SEB-GER, SEB-ITA, SEB-FRA, Altair and Balni each a “ Seller ” and collectively referred to as “ Sellers ” -

- 4 -

and


(6)	Prime UK Portman – T S.à r.l. , a company duly organised and existing under the laws of Luxembourg and registered in the Registre de Commerce et des Sociétés under number B193076 (hereinafter referred to as “ London Portman Purchaser ”), with its registered office at 6A, route de Trèves, L-2633 Senningerberg, Luxembourg; and


(7)	Prime UK Condor – T S.à r.l. , a company duly organised and existing under the laws of Luxembourg and registered in the Registre de Commerce et des Sociétés under number B193151 (hereinafter referred to as “ London Condor Purchaser ”), with its registered office at 6A, route de Trèves, L-2633 Senningerberg, Luxembourg; and

(8)

SCI Prime FRA MacDonald-T , a real estate civil company ( société civile immobilière ) incorporated under the laws of France and registered at the Commercial and Companies Register of Nanterre and whose registration number is in the course of being delivered (hereinafter referred to as “ Paris McDonald Purchaser ”), with its registered office at 4, place de la Défense, La Défense 4, 92974 Paris La Défense Cedex, France; and


(9)	Prime NLD Rotterdam – T B.V. , a company duly organised and existing under the laws of the Netherlands and registered in the register of the Kamer van Koophandel under number 62583182 (hereinafter referred to as “ Rotterdam Purchaser ”), with its registered office at Zuidplein 156, 1077 XV Amsterdam, the Netherlands; and


(10)	Prime NLD Amsterdam – T B.V. , a company duly organised and existing under the laws of the Netherlands and registered in the register of the Kamer van Koophandel under number 62583115 (hereinafter referred to as “ Amsterdam Purchaser ”), with its registered office at Zuidplein 156, 1077 XV Amsterdam, the Netherlands; and

(11)

Prime Pool III C – T S.à r.l. , a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 6A, route de Trèves, L-2633 Senningerberg, Luxembourg and in the process of being registered with the Luxembourg Trade and Companies' Register (hereinafter referred to as “ Milan Purchaser ”); and

(12)

Prime Pool V – T S.à r.l. , a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 6A, route de Trèves, L-2633 Senningerberg, Luxembourg and in the process of being registered with the Luxembourg Trade and Companies' Register (hereinafter referred to as “ Brussels Shares Purchaser ”); and

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(13)

Prime Pool V – T S.à r.l., a company duly organised and existing under the laws of Luxembourg and in the process of being registered with the Luxembourg Trade Companies' Register and with its registered office at 6A, route de Trèves, L-2633 Senningerberg, Luxembourg, acting in accordance with article 60 of the Belgian Code of Companies as founder and incorporator of Prime BEL Brussels – T BVBA , a limited liability company ("besloten vennootschap met beperkte aansprakelijkheid" / “société privée à responsabilité limitée”) in the process of incorporation (hereinafter referred to as “ Brussels Land Purchaser ”).


(14)	Prime GER Drehbahn – T S.à r.l. , a company duly organised and existing under the laws of Luxembourg and registered in the Registre de Commerce et des Sociétés under number B192950 (hereinafter referred to as “ Hamburg Drehbahn Purchaser ”), with its registered office at 6A, route de Trèves, L-2633 Senningerberg, Luxembourg; and


(15)	Prime GER Dammtorwall – T S.à r.l. (formerly named Trias Pool II A – T S.à r.l.), a company duly organised and existing under the laws of Luxembourg and registered in the Registre de Commerce et des Sociétés under number B193493 (hereinafter referred to as “ Hamburg Dammtorwall Purchaser ”), with its registered office at 6A, route de Trèves, L-2633 Senningerberg, Luxembourg; and


(16)	Prime GER Valentinskamp – T S.à r.l. , a company duly organised and existing under the laws of Luxembourg and registered in the Registre de Commerce et des Sociétés under number B192951 (hereinafter referred to as “ Hamburg Valentinskamp Purchaser ”), with its registered office at 6A, route de Trèves, L-2633 Senningerberg, Luxembourg; and

(17)

SCI Prime FRA Issy-T a real estate civil company ( société civile immobilière ) incorporated under the laws of France and registered at the Commercial and Companies Register of Nanterre and whose registration number is in the course of being delivered (hereinafter referred to as “ Paris Issy Purchaser ”), with its registered office at 4, place de la Défense, La Défense 4, 92974 Paris La Défense Cedex, France; and

(18)

Prime Pool IV B-T S.à r.l. , a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 6A, route de Trèves, L-2633 Senningerberg, Luxembourg and in the process of being registered with the Luxembourg Trade and Companies' Register (hereinafter referred to as “ Gothenburg Purchaser ”);

- London Portman Purchaser, London Condor Purchaser, Paris McDonald Purchaser, Rotterdam Purchaser, Amsterdam Purchaser, Milan Purchaser, Brussels Shares Purchaser, Brussels Land

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Purchaser, Hamburg Dammtorwall Purchaser, Hamburg Drehbahn Purchaser, Hamburg Valentinskamp Purchaser, Paris Issy Purchaser and Gothenburg Purchaser hereinafter collectively referred to as “ Purchasers ” -.

PREAMBLE


(A)	The Sellers are either directly or indirectly the legal owners and holders of title to the 12 properties described in Annex P1 of this Umbrella SPA including its Schedules 3.1 through 3.11 and hereinafter also called the “ Portfolio ” or “ Prime Properties ”.


(B)	The properties listed in Annex P1 under nos. 1 to 6, 8a, 8b and 9 are directly owned by SEB, whereas SEB is the bare owner of the land and full owner of the underground of the Property listed in Annex P1 under no 7; the building developed on this Property is directly owned by Chrysalis;

(C)

The shares in Chrysalis are held by SEB, holding 870,083 of 870,084 shares and by Balni holding one share whereas Chrysalis itself currently also holds one share in Balni. Immediately after Closing , Chrysalis is to sell its share in Balni to SEB. Chrysalis holds a building right on the land at Property no. 7 and owns the above ground part of the building developed on this property until expiry of this building right (i.e. at 31 March 2050).


(D)	The Property listed in Annex P1 under no. 11 is indirectly owned by SEB and SEB owns and holds title to all shares of the property company SEB ImmoInvest Lindholmen Science Park AB (“ Lindholmen AB ”) which shares are more precisely described in Schedule 3.11 .


(E)	The Property listed in Annex P1 under no. 10 is directly owned by Altair.


(F)	SEB holds the Properties and the shares in Lindholmen AB and Altair and Chrysalis on account of the real estate funds mentioned in Annex P2 .

(G)

SEB, on behalf of the beneficial owners hereinafter described and Altair and Balni desire to sell and transfer by the present Umbrella SPA the Properties listed in Annex P1 under nos. 1 to 11 and the shares in Lindholmen AB and the shares in Chrysalis on account of the respective real estate funds to the Purchasers (each an “ Individual Transfer ” and together the “ Individual Transfers ”) , it being specified that with respect to the Properties described in Annex P1 under nos. 3 and 10 located in France, the Individual Transfers shall include the provisions of Sections 3.3 and 3.10 together with the drafts deed of sale ( projets d'acte de vente ) attached in Schedules 3.3 and Schedules 3.10.

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(H)	The Purchasers existing and established as set out in the Parties Section, desire to acquire by the present Agreement the entirety of these Properties and shares in Lindholmen AB and Chrysalis.

Now, therefore Sellers and Purchasers (herein also referred to each as a “ Party ” and jointly as the “ Parties ”) agree as follows:

DEFINITIONS

Capitalised terms and expressions used in the Agreement shall be interpreted as follows:

“ Agreement ” or “ Umbrella SPA ” shall mean this Umbrella Sale and Purchase Agreement;

“ Additional Information ” shall mean the documents listed in Annex 9.4.4a and contained on a DVD handed over to the notary;

“ Agreed Property Value ” means in respect of the Swedish Property the amount of : SEK 362,400,000 and in respect of the Belgium Building the amount of 18,050,000;

“ Altair ” shall have the meaning as defined in the caption;

“ Amsterdam Purchaser ” shall have the meaning as defined in the caption;

“ Approved Leases ” means the leases as described in Annex 14.1.9 approved by the Purchasers but not entered into until 1 January 2015;

“ Balni ” has the meaning as defined in the caption;

“ Balni Share ” means the share in Balni held by Chrysalis;

“ BGB ” shall mean the German Civil Code ( Bürgerliches Gesetzbuch );

“ Breach ” shall mean collectively a Guarantee Breach and/or a Covenant Breach;

“ Brussels Land Purchaser ” shall have the meaning as defined in the caption;

“ Brussels Property ” means the Building transferred pursuant to Schedule 3.7.2 ;

“ Brussels Share Purchaser ” shall have the meaning as defined in the caption;

“ Buildings ” shall have the meaning as defined in Section 10.3.1(f);

“ Business Day ” shall mean any day other than a Saturday, Sunday or a public holiday in Frankfurt am Main (Federal Republic of Germany), Luxembourg, Paris (France), New York (USA) and London (U.K.) on which banks are open for usual business during usual hours;

“ Chrysalis ” means Chrysalis Invest N.V., a company duly organised and existing under the laws of Belgium and registered with the Crossroad Databank for Undertakings under number 0463.603.184 with its registered office at boulevard August Reyers 207-209, 5th floor, 1030 Brussels;

“ Chrysalis Shares ” means the shares in Chrysalis set forth in Section 2.2.2;

“ Claim ” shall mean any claim under or for breach of this Agreement, including any claim for damages or indemnification due to a Guarantee being incorrect or a covenant being breached but excluding claims regarding Tax Matters;

“ Closing Actions ” shall mean the actions to be taken upon Closing as defined in Section 7.3.1;

“ Closing Conditions ” shall mean the closing conditions as defined in Section 7.1.1;

“ Closing Date ” shall mean 24:00 CET of the day on which all Closing Actions have been taken;

“ Closing Day ” shall mean the point in time as defined in Section 7.2.1;

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“ Closing ” shall mean the consummation of the Closing Actions;

“ Collateral ” shall have the meaning as described in Section 5.1;

“ Core Portfolio ” shall have the meaning as described in Section 7.2.1;

“ Core Portfolio Closing Condition ” shall have the meaning as described in Section 7.2.1;

“ Corporate Guarantee ” shall have the meaning as described in Section 5.1;

“ Covenant Breach ” has the meaning as defined in Section 12.1;

“ Custodian Bank ” means SEB Bank AG;

“Cut-Off Date” shall have the meaning as defined in Section 9.4.4;

“ Data Room ” shall have the meaning as defined in Section 9.4.4;

“Dispute Meeting” shall have the meaning as defined in Section 21.1.1

“Dispute Notice” shall have the meaning as defined in Section 21.1.1;

“Dispute Representative” shall have the meaning as defined in Section 21.1.2

“ Environmental Authority ” shall mean a governmental agency or other regulatory body, court of law or tribunal with jurisdiction under Environmental Laws.

“ Environmental Damage ” shall mean the presence of Hazardous Materials in the soil, leachate, soil-vapor, ground water, surface water, or building of / on a Prime Property.

“Environmental Laws” shall mean all applicable laws, ordinances, rules, directives and regulations relating to Environmental Damage and being applicable to a Property (including buildings) or a Party, as the case may be.

“ Environment-Related Matters ” shall have the meaning as defined in Section 9.5.1(c);

“ Escrow Account ” shall have the meaning as defined in Section 5.1;

“ Escrow Amount ” shall have the meaning as defined in Section 5.1;

“ GBP ” means Great British Pound, the currency used in the United Kingdom

“ German Notary ” shall have the meaning as defined in Section 1 and shall include his official substitute or his successor in office;

“ Gothenburg Purchaser ” shall have the meaning as defined in the caption;

“ GrEStG ” shall mean the German Real Estate Acquisition Tax Act ( Grunderwerbsteuergesetz );

“ GrStG ” shall mean the German Property Tax Act ( Grundsteuergesetz );

“ Guarantees ” shall mean the guarantees as defined in Section 9.3;

“ Guarantee Breach ” has the meaning as defined in Section 12.1;

“Hamburg Dammtorwall Purchaser ” shall have the meaning as defined in the caption;

“ Hamburg Drehbahn Purchaser ” shall have the meaning as defined in the caption;

“ Hamburg Valentinskamp Purchaser ” shall have the meaning as defined in the caption;

“ Hazardous Materials ” has the meaning as defined in Section 10.4.1(b);

“ HGB ” shall mean the German Commercial Code ( Handelsgesetzbuch );

“ Individual Purchase Price ” means that part of the Purchase Price allocated to the Purchase Object or Shares in question as set out in in Annex 4.1 ;

“Individual Transfer ” and “Individual Transfers ” shall have the meaning as defined in the Preamble (G);

“ Information ” shall have the meaning as defined in Section 9.4.4;

“Lease” shall have the meaning as defined in Section 10.3.2(a)

“ Lease Agreement ” means the lease agreements listed in Annex 10.3.2(a);

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“ Limitations on Liability ” shall mean the limitations on liability under the Guarantees as defined in Section 13;

“ Lindholmen AB ” means the company SEB ImmoInvest Lindholmen Science Park AB, Register No. 556589-8920 and with its registered seat at c/o Newsec AM AB, Lilla Bommen 5, SE – 404 29 Gothenburg;

“ Lindholmen Shares ” means the shares in Lindholmen AB set forth in Section 2.2.1;

“ London Condor Purchaser ” shall have the meaning as defined in the caption;

“ London Portman Purchaser ” shall have the meaning as defined in the caption;

“ Long Stop Date ” shall mean the date as defined in Section 7.2.2;

“ Milan Purchaser ” shall have the meaning as defined in the caption;

“ Milan Property ” shall mean the Property listed as no. 6 in Annex P1.

“ Mortgages ” shall have the meaning as defined in Section 4.2.1;

“ Notarial Trust Accounts ” means the accounts held by local notaries instructed on the notarization of Individual Transfers as set forth in Annex 4.1.6;

“ Notarisation Date ” shall mean 16 February 2015;

“ Paris Issy Purchaser ” shall have the meaning as defined in the caption;

“ Paris McDonald Purchaser ” shall have the meaning as defined in the caption;

“ Parties ” shall mean the Sellers and the Purchasers as defined in the caption;

“ Party ” shall have the meaning as defined in the Preamble;

“ Portfolio Leases ” means the lease agreements in place for the Prime Properties except for the property in Sweden, Gothenburg and Brussels, Belgium;

“ Portfolio ” shall have the meaning as defined in the Preamble (A);

“ Prime Properties ” shall have the meaning as defined in the Preamble (A);

“Property” means any individual Prime Property;

“ Purchase Object ” and “ Purchase Objects ” shall have the meaning as defined in Section 2.3.1;

“ Purchase Price ” shall have the meaning as defined in Section 4.1.1;

“ Purchaser’s Agent ” shall have the meaning as defined in Section 19.1.1;

“ Purchaser ” and “ Purchasers ” shall have the meaning as defined in the caption;

“ Real Estate Matters ” shall have the meaning as defined in Section 9.5.1(b);

“ Rotterdam Purchaser ” shall have the meaning as defined in the caption;

“ SEB ” shall mean SEB-GER, SEB-ITA and SEB-FRA collectively;

“ SEB-FRA ” shall have the meaning as defined in the caption;

“ SEB-GER ” shall have the meaning as defined in the caption;

“ SEB-ITA ” shall have the meaning as defined in the caption;

“ Seller ” and “ Sellers ” shall have the meaning as defined in the caption;

“ Shares ” means collectively the Lindholmen Shares and the Chrysalis Shares;

“ SEK ” means the Swedish Krona, the currency used in Sweden;

“ Tax Matters ” shall have the meaning as defined in Section 9.5.1(e);

“ Title Matters ” shall have the meaning as defined in Section 9.5.1(a);

“ Transfer ” shall have the meaning as defined in Section 3.12.1;

“ Transfer of Possession ” shall have the meaning as defined in Section 15.1.1

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" Umbrella Agreement " means the umbrella agreement notarized on 22 December 2014 and pursuant to which this Agreement has been executed and notarized;

“ UStG ” shall mean the German Value Added Tax Act ( Umsatzsteuergesetz );

“ VAT ” shall mean value added tax ( Umsatzsteuer );

INTERPRETATIONS

Throughout the Agreement, unless the context requires otherwise,


(a)	headings are for convenience only and shall not affect the interpretation of the Agreement;


(b)	references to any term in the singular shall also include the plural and vice versa;


(c)	references to one gender shall include all genders;


(d)	references to a Seller and/or a Purchaser shall mean a reference to the relevant Seller and the relevant Purchaser in relation to one particular Purchase Object or Shares;


(e)	“including”, “in particular”, “e. g.” or “or” shall be read non-exclusive;


(f)	references to EUR or Euro are references to the lawful currency of the member states of the European Union;


(g)	where a German term has been inserted in quotation marks or italics, it alone (and not the English term to which it relates) shall be authoritative for the purpose of the interpretation of the relevant English term in the Agreement;


(h)	where a French term has been inserted in quotation marks or italics, it alone (and not the English or German term to which it relates) shall be authoritative for the purpose of the interpretation of the relevant English or German term in the Agreement;

(i)

save for provisions concerning the bilateral deeds of sale ( Promesses Synallagmatiques de Vente ) under provisions of articles 3.3 and 3.10, references to any German legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any other legal concept shall, in respect of any jurisdiction other than Germany, be interpreted to include the legal concept which most closely corresponds in that jurisdiction to the German legal term; and


(j)	references to any statute or statutory provision shall be construed as a reference to the same as it has been in force as of the date of the notarisation of the Agreement (“ Notarisation Date ”).

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1.	ENGLISH LANGUAGE/REFERENCE DEED/LEGAL UNITY


1.1	RECORDING IN THE ENGLISH LANGUAGE

The persons appearing requested that this Umbrella SPA be recorded in the English language and stated that they had sufficient command of the English language. The German Notary, who himself has sufficient command of the English language, verified that the persons appearing did, in fact, have such sufficient command of the English language. Advised by the German Notary of their rights to obtain the assistance of a sworn interpreter and to have a certified translation attached to this Agreement, the persons appearing waived such rights.


1.2	Legal Unity

The Parties hereby agree that this Umbrella SPA and the Individual Transfers shall only constitute a legal unity ( rechtliche Einheit ) for the purpose of entering into the aforementioned agreements on the date of this Umbrella SPA, and otherwise shall not constitute a legal unity ( rechtliche Einheit ). In consequence:


(a)	The Individual Transfers for one Purchase Object/Shares may subsequently suffer different fates than the Individual Transfers for other Purchase Objects/Shares, e.g. in case of invalidity, execution or consummation obstacles and rescissions.


(b)	The Individual Transfers and this Umbrella SPA do not require notarial form (nota-rielle Beurkundung) in respect of, but not limited to:


(i)	any amendment or variation to, or waiver of, this Umbrella SPA, the Individual Transfers; and


(ii)	the exercise of any rights under this Umbrella SPA or any Individual Transfer,

however, in each case only unless notarial form is required under applicable local law provisionsor specifically provided for in the Umbrella SPA or any of the Individual Transfers.


2.	REAL ESTATE, SHARES, PURCHASE OBJECTS


2.1	Real Estate


2.1.1	SEB is the sole legal owner of the real estate described in Schedules 3.1 through 3.6 and 3.8 and 3.9 , whereas it is the bare owner of the soil and full owner of the underground of the Property listed in Schedule 3.7.1 . SEB holds this real estate on account of the respective real estate

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investment fund mentioned in these Schedules, which is the respective beneficial owner of such real estate described therein.


2.1.2	Chrysalis is the holder of a building right on the property described in Schedule 3.7.2 and therefore, until expiry of this building right which will occur on 31 March 2050, is the sole legal owner of the building developed on the above ground part of the Property described in Schedule 3.7.1 .


2.1.3	Altair is the sole legal owner of the real estate described in Schedule 3.10 .


2.1.4	Lindholmen AB is the sole legal owner of the real estate described in Schedule 3.11 .


2.1.5	In this Umbrella SPA and the Individual Transfers, SEB is acting on account of said respective real estate investment funds as follows:


(a)	SEB-GER acting on behalf of SEB ImmoPortfolio Target Return Fund with respect to the real estate described in Schedule 3.1;


(b)	SEB-GER acting on behalf of SEB ImmoPortfolio Target Return Fund with respect to the real estate described in Schedule 3.2;


(c)	SEB-FRA acting on behalf of SEB ImmoInvest with respect to the real estate described in Schedule 3.3;


(d)	SEB-GER acting on behalf of SEB ImmoInvest with respect to the real estate described in Schedule 3.4;


(e)	SEB-GER acting on behalf of SEB ImmoInvest with respect to the real estate described in Schedule 3.5;


(f)	SEB-ITA acting on behalf of SEB ImmoInvest with respect to the real estate described in Schedule 3.6;


(g)	SEB-GER acting on behalf of SEB ImmoInvest with respect to the real estate described in Schedule 3.7.1;


(h)	SEB-GER acting on behalf of SEB ImmoInvest with respect to the real estate described in Schedule3.8(a);


(i)	SEB-GER acting on behalf of SEB ImmoInvest with respect to the real estate described in Schedule 3.8(b);

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(j)	SEB-GER acting on behalf of SEB Global Property Fund with respect to the real estate described in Schedule 3.9.


2.1.6	The Prime Properties are encumbered as described in Schedules 3.1 through 3.11 .


2.2	Shares


2.2.1	Lindholmen AB

SEB-GER is the sole legal owner of the shares in Lindholmen AB as described in Schedule 3.11 . SEB-GER holds these shares on account of SEB ImmoInvest, which is the beneficial owner of such shares.


2.2.2	Chrysalis

SEB-GER and Balni are the sole legal owners of the shares in Chrysalis as described in Schedule 3.7.2 . SEB-GER holds its shares on account of SEB ImmoInvest, which is the beneficial owner of such shares.


2.3	Purchase Object, Shares, Purchaser


2.3.1	The real estate set forth in Section 2.1 are individually referred to as “ Purchase Object ” and together as “ Purchase Objects ”.


2.3.2	The shares in Lindholmen AB set forth in Section 2.2.1 are referred to as “ Lindholmen Shares ”.


2.3.3	The shares in Chrysalis set forth in Section 2.2.2 are referred to as “ Chrysalis Shares ”.


2.3.4	Any reference to the relevant Individual Transfer shall mean, in respect of a Purchase Object or the Shares, such Individual Transfer which has as its subject matter the transfer of such Purchase Object or of the Lindholmen Shares or of the Chrysalis Shares.


2.3.5	Any reference to Purchaser in this Umbrella SPA shall mean the relevant Purchaser which, as described in the relevant Individual Transfer, is acquiring the relevant Purchase Object or the relevant Shares, as the context requires.


3.	SALES AND PURCHASES, TRANSFER


3.1	London Portman Square

SEB hereby agrees to sell to the London Portman Purchaser, and the London Portman Purchaser hereby agrees to purchase the relevant Property described in Schedule 1 of Schedule 3.1 , pursuant

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to the specific terms and conditions included in Schedule 3.1 and - for the remainder and to the extent they are not excluded by the specific terms and conditions included in Schedule 3.1 or mandatory English law - the terms and conditions of this Umbrella SPA.


3.2	London Condor House

SEB hereby agrees to sell to the London Condor Purchaser, and the London Condor Purchaser hereby agrees to purchase the relevant Property described in Schedule 1 of Schedule 3.2 , pursuant to the specific terms and conditions included in Schedule 3.2 and - for the remainder and to the extent they are not excluded by the specific terms and conditions included in Schedule 3.2 or mandatory English law - the terms and conditions of this Umbrella SPA.


3.3	Paris Boulevard McDonald

Subject to the satisfaction of or waiver by, as applicable, SEB and/or the Paris McDonald Purchaser, of the relevant Closing Conditions ( conditions suspensives ), SEB hereby irrevocably obliges itself to sell to the Paris McDonald Purchaser, and the Paris McDonald Purchaser hereby irrevocably obliges itself to purchase the real estate set forth in the draft of the deed of sale ( projet d'acte de vente ) attached in Schedule 3.3 , along with the buildings on it, its essential components and the statutory accessories, pursuant and subject to the specific terms and conditions included in Schedule 3.3 and for the remainder and to the extent they are not contrary to the specific terms and conditions included in Schedule 3.3 nor to mandatory French law - the terms and conditions of this Umbrella SPA. The parties to this Individual Transfer make the statements and provide the guarantees included in Schedule 3.3 .

It is expressly specified that, by way of exception to article 1179 of the French civil code, Closing Conditions mentioned in the paragraph above, will not retroact on the date of execution of the Agreement.

The parties to this Umbrella SPA also oblige themselves to enter into a final deed of sale ( acte authentique de vente de l'actif du boulevard Madonald à Paris ) concerning the sale of the real estate set forth in Schedule 3.3 by SEB to the Paris McDonald Purchaser, in the terms and conditions set forth in Schedule 3.3 , until or at the Closing Date.

This Section 3.3 constitutes a bilateral deed of sale ( promesse synallagmatique de vente ) within the meaning of and governed by Article 1589 of the French Civil Code, the parties having agreed in particular on the Individual Purchase Price and on the subject matter of the sale as set forth in Schedule 3.3 , which is expressly acknowledged by and agreed between the parties.

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For the full information of the Paris McDonald Purchaser, and in accordance with articles L.271-4 to L.271-6 of the French " Code de la construction et de l'habitation ", the following documents and surveys are appended to the Individual Transfer as referenced therein:


(a)	"Etat des risques miniers naturels et technologiques" provided for by article L.125-5 of the French "Code de l'environnement", dated of December 4th 2014 , and its appendixes as set forth in Schedule 3.3(b) ;


(b)	Termites survey provided for by article L.133-6 of the French "Code de la construction et l'habitation", dated October 29th, 2014 , and its appendices as set forth in Schedule 3.3(c) ;


(c)	"Diagnostic de performance énergétique" provided for by article L.134-1 of the French "Code de la construction et l'habitation", dated July 24th 2012, and its appendices as set forth in Schedule 3.3(d) .

Notwithstanding any contradictory provision in this Agreement, any rescission right granted to SEB or the Paris McDonald Purchaser in this Agreement shall only apply to the bilateral deed of sale ( promesse synallagmatique de vente ) contained in this clause 3.3. SEB and the Paris McDonald Purchaser expressly agree that as from the execution of the deed of sale (a draft of which is attached as Schedule 3.3 ) none of them will be entitled to rescind such deed of sale (except, as the case may be, as otherwise specifically provided under the deed of sale).

In addition, as from the execution date of the French deed of sale attached as Schedule 3.3 related to the Property described in Annex P1 under no.3, the sale of this Purchase Object will be governed by the terms and conditions of such deed of sale, without prejudice to the relevant parties to exercise any of their rights under Sections 10 to 14 of this Agreement.

It is expressly agreed between the parties that in case of contradiction between the Individual Transfer set forth in Schedule 3.3 and the Umbrella SPA, the Individual Transfer shall prevail in all cases.

This Section 3.3 will be governed and interpreted by French law and the courts of Paris will have jurisdiction.


3.4	Rotterdam Maastoren

SEB hereby sells to the Rotterdam Purchaser and the Rotterdam Purchaser hereby purchases the real estate set forth in Schedule 3.4 along with the buildings on it, its essential components and the statutory accessories, pursuant to the specific terms and conditions included in Schedule 3.4 and - for the remainder and to the extent they are not excluded by the specific terms and conditions

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included in Schedule 3.4 or mandatory Dutch law - the terms and conditions of this Umbrella SPA. The parties to this Individual Transfer make the statements included in Schedule 3.4 .

The parties to this Umbrella SPA also oblige themselves to enter into a final notarial deed of sale concerning the sale of the real estate set forth in Schedule 3.4 by SEB to the Rotterdam Purchaser, on the terms and conditions provided for in Schedule 3.4 , before or at the Closing Date.


3.5	Amsterdam Teleportboulevard

SEB hereby sells to the Amsterdam Purchaser, and the Amsterdam Purchaser hereby purchases the real estate set forth in Schedule 3.5 , along with the buildings on it, its essential components and the statutory accessories, pursuant to the specific terms and conditions included in Schedule 3.5 and - for the remainder and to the extent they are not excluded by the specific terms and conditions included in Schedule 3.5 or mandatory Dutch law - the terms and conditions of this Umbrella SPA. The parties to this Individual Transfer make the statements included in Schedule 3.5 .

The parties to this Umbrella SPA also oblige themselves to enter into a final notarial deed of sale concerning the sale of the real estate set forth in Schedule 3.5 by SEB to the Amsterdam Purchaser, on the terms and conditions provided for in Schedule 3.5 , before or at the Closing Date.


3.6	Milan Via de la Chiusa

The Parties to this Umbrella SPA oblige themselves to enter into the notarial deed of sale ( atto di compravendita ) concerning the sale of the real estate set forth in Schedule 3.6 along with the buildings on it, its essential components and the statutory accessories, by SEB to the Milan Purchaser, under the terms and conditions provided for in Schedule 3.6 , until or at the Closing Date.

The Milan Purchaser shall designate a third party being a VAT registered entity in Italy to purchase the Property in accordance with the provisions of Article 1401 of the Italian Civil Code. Should such designated third party not be a VAT registered entity in Italy, the Milan Purchaser shall hold the Sellers harmless and indemnify them for any possible charge (tax, penalties and interest) and damages which might arise in connection with or as consequence of the designated third party not being a VAT registered entity in Italy. Such designation will be sufficiently made if notified in writing to the Seller in accordance with Section 19, together with the written acceptance of the designee. Upon notification of any such designation, to be given no later than five (5) Business Days prior to the Closing Date, any reference in this Umbrella SPA to the Milan Purchaser will be construed and interpreted as a reference to such designee.

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No later than ten Business Days prior to the Closing Date, the Milan Purchaser will inform the Seller in writing as to whether it wishes to enter into a new property management agreement with First Atlantic Real Estate S.p.A. in relation to the Property. In such case, the Seller undertakes to use its best efforts to support the Milan Purchaser in order to have a new property management agreement entered into by the Milan Purchaser and First Atlantic Real Estate S.p.A. on the Closing Date on the same terms and conditions currently applied.


3.7	Brussels Rue de la Loi

3.7.1

SEB hereby sells to the Brussels Land Purchaser, and the Brussels Land Purchaser hereby purchases, its rights and interest in the land, the soil and underground of the real estate set forth in Schedule 3.7.1. , and - for the remainder and to the extent they are not excluded by the specific terms and conditions included in Schedule 3.7.1 or mandatory Belgium law - the terms and conditions of this Umbrella SPA. The parties to this Individual Transfer make the statements included in Schedule 3.7.1 .

The parties to this Umbrella SPA also oblige themselves to enter into a final notarial deed of sale concerning the sale of the real estate set forth in Schedule 3.7.1 by SEB to the Brussels Land Purchaser, substantially in the terms and conditions provided for in Schedule3.7.1 , at the latest within four months after the date hereof.

3.7.2

SEB and Balni hereby sell to the Brussels Shares Purchaser, and the Brussels Shares Purchaser hereby purchases, the shares in Chrysalis as set forth in Schedule 3.7.2 , pursuant to the specific terms and conditions included in Schedule 3.7.2 and - for the remainder and to the extent they are not excluded by the specific terms and conditions included in Schedule 3.7.2 or mandatory Belgium law - the terms and conditions of this Umbrella SPA. The parties to this Individual Transfer make the statements included in Schedule 3.7.2.


3.8	Hamburg Drehbahn / Dammtorwall

3.8.1

SEB hereby sells to the Hamburg Drehbahn Purchaser, and the Hamburg Drehbahn Purchaser hereby purchases, the real estate set forth in Schedule 3.8a , along with the buildings on it, its essential components and the statutory accessories, pursuant to the specific terms and conditions included in Schedule 3.8a and - for the remainder and to the extent they are not excluded by the specific terms and conditions included in Schedule 3.8a - the terms and conditions of this Umbrella SPA. The parties to this Individual Transfer make the statements included in Schedule 3.8a .


3.8.2	SEB hereby sells to the Hamburg Damtorwall Purchaser, and the Hamburg Dammtorwall Purchaser hereby purchases, the real estate set forth in Schedule 3.8b , along with the buildings

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on it, its essential components and the statutory accessories, pursuant to the specific terms and conditions included in Schedule 3.8b and - for the remainder and to the extent they are not excluded by the specific terms and conditions included in Schedule 3.8b - the terms and conditions of this Umbrella SPA. The parties to this Individual Transfer make the statements included in Schedule 3.8b .


3.9	Hamburg Valentinskamp

SEB hereby sells to the Hamburg Valentinskamp Purchaser, and the Hamburg Valentinskamp Purchaser hereby purchases, the real estate set forth in Schedule 3.9 , along with the buildings on it, its essential components and the statutory accessories, pursuant to the specific terms and conditions included in Schedule 3.9 and - for the remainder and to the extent they are not excluded by the specific terms and conditions included in Schedule 3.9 - the terms and conditions of this Umbrella SPA. The parties to this Individual Transfer make the statements included in Schedule 3.9 .


3.10	Paris Issy-les-Moulineaux

Subject to the satisfaction of waiver by, as applicable, SEB and/or the Paris Issy Purchaser, of the relevant Closing Conditions ( conditions suspensives ), Altair hereby irrevocably obliges itself to sell to the Paris Issy Purchaser, and the Paris Issy Purchaser hereby irrevocably obliges itself to purchase the real estate set forth in the draft of the deed of sale ( projet d'acte de vente ) attached as Schedule 3.10 , along with the buildings on it, its essential components and the statutory accessories, pursuant and subject to the specific terms and conditions included in Schedule 3.10 and for the remainder and to the extent they are not contrary to the specific terms and conditions included in Schedule 3.10 nor to mandatory French law - the terms and conditions of this Umbrella SPA. The parties to this Individual Transfer make the statements and provide the guarantees included in Schedule 3.10 .

The parties to this Umbrella SPA also oblige themselves to enter into a final deed of sale ( acte authentique de vente ) concerning the sale of the real estate set forth in Schedule 3.10 by Altair to the Paris Issy Purchaser, in the terms and conditions set forth in Schedule 3.10 , until or at the Closing Date.

This Section 3.10 constitutes a bilateral deed of sale ( promesse synallagmatique de vente de l’actif d’Issy-les-Moulinaux ) within the meaning of and governed by Article 1589 of the French

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Civil Code, the parties having agreed in particular on the Individual Purchase Price and on the subject matter of the sale as set forth in Schedule 3.10 , which is expressly acknowledged by and agreed between the parties.

For the full information of Paris Issy Purchaser , and in accordance with articles L.271-4 to L.271-6 of the French "Code de la construction et de l'habitation", the following documents and surveys are appended to the Individual Transfer as referenced therein:


(a)	"Etat des risques miniers naturels et technologiques" provided for by article L.125-5 of the French "Code de l'environnement", dated December 4th 2014 , and its appendixes as set forth in Schedule 3.10(b) ;


(b)	Termites survey provided for by article L.133-6 of the French "Code de la construction et l'habitation", dated November 7th 2014 , and its appendixes as set forth in Schedule 3.10(c) ;


(c)	"Diagnostic de performance énergétique" provided for by article L.134-1 of the French "Code de la construction et l'habitation", dated June 5th 2013, and its appendixes as set forth in Schedule 3.10(d) .

Notwithstanding any contradictory provision in the Agreement, any rescission right granted to SEB or the Paris Issy Purchaser in this Agreement shall only apply to the bilateral deed of sale ( promesse synallagmatique de vente ) contained in this Section 3.10. SEB and the Paris Issy Purchaser expressly agree that as from the execution of the deed of sale (a draft of which is attached as Schedule 3.10 ) none of them will be entitled to rescind such deed of sale (except, if the case may be, as otherwise specifically provided under the deed of sale).

It is expressly agreed between the parties that in case of contradiction between the Individual Transfer set forth in Schedule 3.10 and the Umbrella SPA, the Individual Transfer shall prevail in all cases.

In addition, as from the execution date of the French deed of sale attached in Schedule 3.10 related to the Property described in Annex P1 under no. 10, the sale of this Purchase Object will be governed by terms and conditions of such deed of sale, without prejudice for the relevant parties to exercise any of their rights under Sections 10 to 14 of this Agreement.

This Section 3.10 will be governed and interpreted by French law and the courts of Paris will have jurisdiction.


3.11	Gothenburg Lindholmspiren

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SEB hereby sells to the Gothenburg Purchaser, and the Gothenburg Purchaser hereby purchases, the shares set forth in Schedule 3.11 exclusively, pursuant to the specific terms and conditions included in Schedule 3.11 and – for the remainder and to the extent they are not excluded by the specific terms and conditions included in Schedule 3.11 or mandatory Swedish law – the clauses of this Umbrella SPA explicitly referring to the Shares or the Individual Transfer as set forth in Schedule 3.11 . The parties to this Individual Transfer make the statements included in Schedule 3.11 .


3.12	Transfer, Assignment

3.12.1

The Sellers and the Purchasers agree that the transfer of possession and of beneficial title in the Purchase Objects described in Schedules 3.1 through 3.10 (except Schedule 3.7.2 ) and the assignment of the Shares described in Schedules 3.7.2 and 3.11 (“ Transfer ”) shall take place on the Closing Date and as provided for in Section 15.1 and in the respective Individual Transfers in accordance with (and governed by) the law in the jurisdiction of such Purchase Object’s location or incorporation.


3.12.2	Each Party undertakes to use its reasonable endeavors to satisfy those conditions precedent set forth in Schedules 3.1 through 3.11 , if any, which are its responsibility as soon as possible.


3.12.3	To the extent transfer of full title to a Purchase Object does not occur on the Closing Date due to statutory requirements (e.g. registration), the completion of the transfer shall occur as of the Closing Date in accordance with the steps set forth in the relevant Individual Transfer.


4.	PURCHASE PRICE


4.1	Purchase Price, Payment of Purchase Price

4.1.1

The purchase price for the Purchase Objects and the Shares pursuant to Sections 3.3 to and including 3.10 in total amounts to EUR 686.400.000 (in words Euro six hundred eighty six million and four hundred thousand) and the purchase price for the Purchase Objects pursuant to Section 3.1 and 3.2 in total amounts to GBP 275.715.000 (in words GBP two hundred seventy five million and seven hundred and fifteen thousand) and the purchase price for the Shares in Lindholmen AB pursuant to Section 3.11 amounts to SEK 362.400.000 (in words SEK three hundred sixty two million and four hundred thousand) (the amount of all purchase prices totaling the “ Purchase Price ”) and is allocated to the individual Purchase Objects, Shares and the Purchasers as described in Annex 4.1 .

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4.1.2

The Individual Purchase Price payable for the shares in Chrysalis as listed in Annex 4.1 is a preliminary Individual Purchase price calculated on the basis of the plan accounts for Chrysalis and based on an agreed property value of the building right owned by Chrysalis as described in Schedule 3.7.2 . The plan account as well as the principles of calculating the preliminary Individual Purchase Price is described in Schedule 3.7.2 (" Chrysalis Plan Account "). The Sellers and the Brussels Shares Purchaser acknowledge that (i) the Chrysalis Plan Account is of a preliminary nature only and (ii) the Chrysalis Plan Account and the preliminary Individual Purchase Price for the shares in Chrysalis is subject to an adjustment on the basis of the final Chrysalis closing date account to be prepared in accordance with the principles and guidelines set out in Schedule 3.7.2 .

4.1.3

The Individual Purchase Price payable for the shares in Lindholmen AB as listed in Annex 4.1 is a preliminary Individual Purchase Price calculated on the basis of the plan accounts for Lindholmen AB and based on an agreed property value of the Property owned by Lindholmen AB as described in Schedule 3.11 . The plan account as well as the principles of calculating the preliminary Individual Purchase Price is described in Schedule 3.11 (" Lindholmen Plan Account "). The Sellers and the Purchaser acknowledge that (i) the Lindholmen Plan Account is of a preliminary nature only and (ii) the Lindholmen Plan Account and the preliminary Individual Purchase Price for the shares in Lindholmen AB is subject to an adjustment on the basis of the final Lindholmen closing date account to be prepared in accordance with the principles and guidelines set out in Schedule 3.11 .


4.1.4	Each Individual Purchase Price shall fall due and be paid by the Purchasers upon satisfaction, or as the case may be, waiver pursuant to the provisions of Section 7.1.3 of the relevant Closing Conditions and on the relevant Closing Day as further detailed in Section 7 unless Section 4.1.6 or Section 4.1.7 applies.


4.1.5	All Individual Purchases Prices are payable in Euro save for the Individual Purchase Price for the English Properties, which will be paid in GBP and the Individual Purchase Price for the Swedish Shares which will be paid in SEK.


4.1.6	As regards the Purchase Objects Rotterdam Maastoren and Amsterdam Teleportboulevard pursuant to Schedules 3.4 and 3.5 the amounts for these Purchase Objects must be paid into the third party accounts as set forth in Schedules 3.4 and 3.5 (“ Notarial Trust Accounts ”) until the relevant Closing Date pursuant to Schedules 3.4 and 3.5 ;


4.1.7	As regards the Purchase Objects Paris Boulevard McDonald and Paris Issy-les-Moulineaux, the Individual Purchase Prices for these Purchase Objects must be paid upon notarial execution of

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the relevant deed of sale (drafts of which are attached as Schedule 3.3 and Schedule 3.10 ) pursuant to the terms and conditions of such relevant deed of sale.


4.1.8	The Purchasers agree to transfer all payments from an account held in an EU member state. Payments may only be made to the Seller’s bank accounts or Notarial Trust Accounts, unless Section 4.2 or any Individual Transfer provides otherwise.


4.1.9	The Purchase Price is a net purchase price. For all tax treatment (incl. VAT), the provisions in the relevant Individual Transfer and in Section 6 shall apply.


4.1.10	The Sellers shall provide, no later than ten (10) Business Days prior to a Closing Date, the Purchasers with the payment details, amounts and instructions for the Individual Purchase Price to be paid on that Closing Date.

4.1.11

Any failure by either Party to make any payment when it is due shall result in such Party's immediate default without any reminder by the other Party being required. The amount of any payment which is overdue shall carry interest at a fixed interest rate of 4.5% per annum, in each case as from the date of default until the date when the overdue amount is paid (calculated daily on the basis of a year of 360 days).


4.2	Release of Securities, Payment

4.2.1

Regarding the land charges and/or mortgages (“ Mortgages ”) encumbering the Properties as listed in Annex 4.2 , the Sellers undertake to redeem all Mortgages (including as the case may be any ancillary costs and taxes relating thereto) in full on Closing using Purchase Price funds. The Parties thus agree that redemption amounts, as notified by the mortgagors under the Individual Transfers (each a " Redemption Amount " and together the " Redemption Amounts ") shall be payable on the Closing Date for the respective Individual Transfer. The Purchasers shall pay the Purchase Price forming such redemption payments to the mortgagees directly pursuant to the provisions of the Individual Transfers (or as otherwise stated therein). If and to the extent any Individual Purchase Price is insufficient to pay a Redemption Amount, the Sellers undertake to pay the balance directly to the mortgagees on Closing.

4.2.2

The Sellers shall be required to obtain any documentation necessary for the cancellation or – at the Purchasers' written request to the relevant Seller and only if such request is made as soon as reasonably practicable, but in any event no later than 10 March 2015 – for the assignment of the Mortgages or any other security. The Parties shall send to the German Notary a copy of any Purchaser's request for assignment of a Mortgage. It is understood that it is an obligation of the Seller to provide the release documentation but not to provide documentation for an assignment of Mortgages. In this respect, the Seller shall only be obliged to undertake its best efforts ( sich

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zu bemühen ) to obtain the assignment documentation from the creditor. Should a creditor refuse an assignment of a Mortgage, the Seller shall only be obliged to provide the release documents.


5.	COLLATERAL, CONTRACTUAL PENALTY


5.1	Escrow Amount, Corporate Guarantee

The Purchasers have paid an amount of EUR 25,000,000.00 (in words: Euro twenty five million) (“ Escrow Amount ”) into the notary escrow account of the German Notary (“ Escrow Account ”) and handed over to the German Notary a guarantee of North Star Realty Finance Corp. in the amount of further EUR 25,000,000.00 (in words: Euro twenty five million) (“ Corporate Guarantee ”; Escrow Amount and Corporate Guarantee together the “ Collateral ”). The Collateral serves as security for the Seller’s claims for non-payment of any Individual Purchase Price under this Agreement and the Individual Transfers.


5.2	Return/Release

With respect to the utilization of the Collateral the Parties agree the following and instruct the German Notary accordingly and irrevocably:


5.2.1	Return/Release of the Corporate Guarantee

The Corporate Guarantee shall automatically reduce by a sum representing 5% of an Individual Purchase Price allocated to any individual Purchase Object/Shares pursuant to the Individual Transfer which is rescinded by either party pursuant to Sections 12.2, 14.5.3, 14.5.4 or 16.2.2, such reduction to take effect upon effectiveness of the relevant rescission. The Sellers are thus obliged to partially release the Corporate Guarantee by written waivers of the released amount.

The German Notary shall return the Corporate Guarantee to the Purchasers on the date that the Closing pursuant to Section 7.3 has occurred of the Core Portfolio and the relevant portion of the Purchase Price has been paid.


5.2.2	Release of the Escrow Amount


(a)	The German Notary shall hold the Escrow Amount in the Escrow Account on trust and shall only release it in the following circumstances:


(i)	The Escrow Amount shall be released to the Seller on the Closing Date of the last outstanding Individual Transfer and shall be used as (partial) payment of the respective Individual Purchase Price due on that final Closing.

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(ii)

The Escrow Amount shall be released to the Seller in the amount of the agreed Contractual Penalty upon request of the Seller and subject to compliance with the procedure agreed in Section 5.4.2 if the Seller has rescinded this Agreement in accordance with Section 7.3.3 with respect to one or more Individual Transfers because the Purchaser has not fulfilled its obligation to pay the Individual Purchase Price(s) due on the Closing Date. In this case the payment is made in fulfillment of the Purchaser's obligation to pay the Contractual Penalty pursuant to Section 5.3.


(iii)	The Escrow Amount shall be released to the Purchaser if there is no further Individual Transfer to close under this Umbrella SPA and the Individual Transfers because either Party has rescinded the final Individual Transfer for reasons other than failure by the relevant Purchaser to pay the Purchase Price.


5.2.3	The instructions to the German Notary given in this Section 5.2 replace any former instructions given to the German Notary with immediate effect.


5.3	Contractual Penalty

In case the Individual Purchase Price for one or more of the Purchase Objects or the Shares is not paid on the relevant Closing Date and the relevant Seller rescinds the relevant Individual Transfer and/or this Agreement (and provided, for the avoidance of doubt, all conditions to Closing have been met and such Individual Purchase Price is due and payable), the Purchasers are obliged to pay a contractual penalty (“ Contractual Penalty ”) in the following amount:

If the Seller rescinds one or more of the relevant Individual Transfers after the Core Portfolio Closing Conditions are satisfied but one or more Individual Purchase Price is not paid, the whole Escrow Amount shall be released to the Seller as a Contractual Penalty. At the same time, the Seller shall be entitled to draw the Corporate Guarantee and demand payment under the Corporate Guarantee in the full amount as reduced pursuant to Section 5.2.1 unless the Corporate Guarantee has already been returned in accordance with Section 5.2.1 in which case no claims under the Corporate Guarantee can be made.

For the avoidance of doubt, this obligation to pay the Contractual Penalty shall apply to each and every individual Closing following the Closing of the Core Portfolio until the last Closing. In any event, the Contractual Penalty can only be claimed once.

The Parties agree that Sellers are not entitled to any further claims (specific performance, penalties, compensation etc.) in addition to the Contractual Penalty and the claims under the

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Corporate Guarantee and that the Contractual Penalty and the Corporate Guarantee shall be the sole remedy.


5.4	Common Provisions


5.4.1	The Sellers must confirm in writing to the German Notary the receipt of any Individual Purchase Price without undue delay.

5.4.2

In case of a rescission by a Seller pursuant to Section 7.3.3, the Seller shall submit to the German Notary a copy of the rescission notice to the relevant Purchaser and evidence of receipt. The German Notary has to inform the relevant Purchaser of Seller’s payment request for the Contractual Penalty in writing by registered mail together with a copy of the confirmation received from the Seller. Payment has to be made by the German Notary to the Seller immediately upon the expiration of a period of 15 Business Days from receipt by the relevant Purchaser of the copy payment request of Seller unless the relevant Purchaser obtains a court decision disallowing the payment.


5.4.3	The Purchasers shall be entitled to the interest accrued on the deposited amount, if any.


5.4.4	Unless instructed otherwise jointly by the Sellers and Purchaser’s Agent, the German Notary shall make any payment pursuant to this Section 5 only in Euro. If to a relevant Purchaser, to a bank account designated by the Purchaser’s Agent and, if to the Sellers, to the bank account designated by the Sellers.


6.	VAT

The VAT-treatment of the Purchase Price pursuant to the Individual Transfers is specified in the Individual Transfers.


7.	CLOSING


7.1	Closing Conditions


7.1.1	The obligations of the Parties to carry out the Closing for each Individual Transfer are conditional upon satisfaction or waiver of all of the following “ Closing Conditions ”:


a)	The Custodian Bank has approved the relevant sale of a Purchase Object or the relevant Shares as per the relevant Individual Transfer and the relevant provisions of this Umbrella SPA;

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(b)

Notification by the Parties to an Individual Transfer that all individual Closing Conditions, if any, under the relevant Individual Transfer are satisfied; the Parties are obliged to make such notification to the German Notary and to the other Parties immediately and without undue delay after such individual Closing Conditions have been satisfied pursuant to the terms of the Individual Transfer. With respect to the Individual Transfers pursuant to Schedules 3.8a, 3.8b and 3.9 (Hamburg, Drehbahn, Dammtorwall and Valentinskamp), satisfaction of the Closing Conditions will be monitored by the German Notary and no further Parties' confirmation is required.


(c)	The German Notary has confirmed to the Parties that he is

(i)

in possession of either the documents (including all required releases) required for the release of the Mortgages encumbering the relevant Property which are not being assumed by the relevant Purchaser or - in accordance with Section 4.2.2 - the documents required for the assignment of the registered Mortgage (e.g. deed of assignment, Mortgage Letter – if any - application for registration of assignment), provided that the trust instructions given by any of the creditors to the German Notary in this regard must be in compliance with this Agreement; or

(ii)

in possession of (x) the written confirmation from any other notary or (y) – to the extent no notary is involved under the respective Individual Transfer – a Purchaser confirmation or reasonable evidence provided by the Seller that the Purchaser or any other person as designated in any Individual Transfer is in possession of either (a) documents (including all required releases, and, as for the Purchase Objects pursuant to Schedule 3.3 and 3.10 , a mortgage registry certificate dated less than forty five (45) days before the relevant Closing Date (état hypothécaire de moins de quarante cinq (45) jours de date au jour de la signature de l'acte authentique de vente) confirming that there is no mortgage (inscription hypothécaire) for an amount exceeding the Individual Purchase Price of the relevant Purchase Object, unless the relevant Seller delivers to the relevant Purchaser a document evidencing the release of such mortgage by the relevant beneficiary)) required for the release of the Mortgages encumbering the relevant Property which are not being assumed by the relevant Purchaser or (b) the documents required for the assignment of the registered Mortgage (e.g. deed of assignment, Mortgage Letter – if any - application for registration of assignment), including a confirmation that the trust instructions given by any of the creditors

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to such notary or the respective Parties in this regard must be in compliance with this Agreement in accordance with Section 4.2.2 .

7.1.2

Unless otherwise mentioned below, the Seller shall be responsible ( hat zu vertreten ) to satisfy the Closing Conditions under Section 7.1.1(a) and 7.1.1(c), for the latter only to the extent satisfaction does not depend on a notification by the Purchaser and the Purchaser fails to notify the relevant notary that the Purchaser has the documents referred to in Section 7.1.1 in its possession. With respect to the Closing Condition 7.1.1(b) such Party shall be responsible that is agreed to be responsible under the relevant Individual Transfer or – in case of the absence of any agreed responsibility - who is in control over the satisfaction of the Closing Condition.

The Sellers hereby confirm that they have received Custodian Bank consent for the transactions contemplated under this Agreement and the Individual Transfers. The Sellers shall use best efforts to obtain the relevant release documentation from the Custodian Bank prior to each relevant Closing Date but shall not be held responsible, if the Custodian Bank does not provide it, subject to the Sellers not doing any act or omission, which shall cause the Custodian Bank not to provide the release or revoke the consent.

7.1.3

The Closing Conditions or any of them may only be waived, in whole or in part, by the written agreement of the relevant Seller and Purchaser, or if stated otherwise in the Individual Transfers pursuant to Schedules 3.1 to 3.11 , only by either the relevant Seller or the relevant Purchaser. The effect of a waiver shall be limited to eliminating the respective Closing Condition and shall not limit or prejudice any claims any Party may have with respect to any non-fulfillment of any other Closing Condition under this Umbrella SPA, the relevant Individual Transfer or under applicable law.


7.1.4	For the avoidance of doubt, should the Parties / a Party have validly exercised a rescission right under any of the Individual Transfers pursuant to the terms of this Umbrella SPA (e.g. pursuant to Sections 16.2 or 14.5), the relevant Individual Transfer and the Individual Purchase Price allocated to it pursuant to Annex 4.1 shall be disregarded for the purposes of this Umbrella SPA.


7.1.5	The Sellers and the Purchasers shall each notify the other in writing promptly upon becoming aware that any of the Closing Conditions have been satisfied or have become incapable of satisfaction ( unmöglich geworden ) and shall, upon request, provide the other Party with any documentation providing reasonable evidence of such fulfillment or incapability of satisfaction.


7.1.6	The Sellers shall use their best efforts to ensure that the Closing Conditions are satisfied, including best efforts to ensure that each Closing Condition is satisfied as soon as possible after the Notarisation Date. The Sellers shall without undue delay notify the Custodian Bank of the transactions contemplated under the terms of this Agreement and shall request the required

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consents hereto. The Sellers and the Purchasers shall not delay or prevent the satisfaction of the Closing Conditions and are obliged to immediately give any confirmation due or required for the satisfaction of a Closing Condition.


7.2	Time and Place of Closing


7.2.1	The Parties shall effect the Closing for any Individual Transfer on


(a)	the final Business Day of the month in which all Closing Conditions have been satisfied or waived, provided this occurs at least 10 Business Days prior to the final Business Day of that month, however, not before the later of 31 March 2015 and the day following 10 Business Days after the Core Portfolio Closing Condition is satisfied (in each case the “ Closing Day ”) or


(b)	on such other Business Day the Parties may have agreed upon and


(c)	only referring to the Closing of the Individual Transfer pursuant to Schedule 3.7.1 (soil and ground of the Brussels Property), the transfer of the Shares in Chrysalis from the relevant Seller to the Brussels Purchaser.

On the Closing Day, the Closing Actions shall be taken for the Individual Transfers for which the Closing Conditions are satisfied.

To the extent all Closing Conditions for any additional Individual Transfer are satisfied during the 10-Business-Day time period after the satisfaction of the Core Portfolio Closing Condition, both Parties may agree, acting reasonably, upon Closing such Individual Transfer together with the Core Portfolio irrespective of the time period.

The Individual Transfers, which cannot close with the Core Portfolio because the Closing Conditions are not satisfied, shall then close one after the other as soon as the Closing Conditions under an Individual Transfer are satisfied, in each case at least ten Business Days after this has occurred. The provisions of this Umbrella SPA shall in this case apply mutatis mutandis to the individual Closings.

The “ Core Portfolio Closing Condition ” is satisfied once the Closing Conditions of (i) at least 5 (five) Individual Transfers are satisfied and (ii) the Individual Purchase Prices and only in respect of the share transfers the relevant agreed property values, respectively sum up to at least (net) EUR 600,000,000 (the " Core Portfolio "). The Parties agree that the closing condition pursuant to Section 7.2.1(c) shall be disregarded for the purpose of determining, whether the Core Portfolio Closing Condition is satisfied.

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7.2.2	Long Stop Date, Rescission Rights

(a)

If the Core Portfolio Closing Condition has not been satisfied or waived on or before 31 May 2015 (“ Long Stop Date ”), the Parties may in their respective absolute discretion jointly agree to extend the Long Stop Date or - after a grace period of 15 Business Days after the Long Stop Date has lapsed - either the Sellers or the Purchasers may each elect to rescind this Agreement unless the relevant Party is responsible (hat zu vertreten) for the failure of one or more Closing Conditions to be satisfied. Such rescission right can only be exercised by the relevant Party within a further period of 30 Business Days after the lapse of the grace period or otherwise such right shall expire.

(b)

If after the Core Portfolio Closing Condition is satisfied and the Core Portfolio is closed but not all of the Closing Conditions under one or more remaining Individual Transfers have been satisfied or waived by the Long Stop Date, the Sellers and the Purchasers may in their respective absolute discretion jointly agree to extend the Long Stop Date for any or all of the remaining Individual Transfers or otherwise – after a grace period of 15 Business Days after the Long Stop Date has lapsed – either the Sellers or the Purchasers may each elect to rescind any one or more of the outstanding Individual Transfers (unless the relevant Party is responsible (hat zu vertreten) for the failure of one or more of the individual closing conditions to be satisfied). Such rescission right can only be exercised by the relevant Party within a further period of one month after the lapse of the grace period or otherwise such right shall expire.

(c)

In the event of a rescission pursuant to (a) or (b), neither Party shall have any claim under this Agreement or the relevant Individual Transfer of any nature whatsoever against the other Party except (i) in respect of any rights and liabilities which have accrued before rescission or (ii) the Sellers are responsible (haben zu vertreten) with at least gross negligence (grobe Fahrlässigkeit) for the failure of a Closing Condition to be satisfied in which case the Purchasers may claim damages in accordance with relevant provisions of the German Civil Code. It is agreed that for the purpose of this Section 7.2.2 damages shall in any case include transaction costs including legal and other advisors’ fees referable to the Individual Transfer that has been rescinded.


7.2.3	Each Closing shall take place at the office of McDermott Will & Emery, Feldbergstraße 35 in Frankfurt am Main, Germany or at such other place the Sellers and the Purchasers may have agreed upon in writing or if required under national law, at local notarial offices as provided for under the Individual Transfers.

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7.3	Closing


7.3.1	At each Closing, the Parties shall take the following actions (“ Closing Actions ”) in the following order:


(a)	Completion of the closing actions under the relevant Individual Transfers, if any, for which the individual Closing Conditions have been satisfied;


(b)	Where required under the terms of an Individual Transfer, execution of the relevant local deed of transfers relating to the transfer of the relevant Property, for which the individual Closing Conditions have be satisfied;


(c)	Payment of the Individual Purchase Price(s) for which the individual Closing Conditions are satisfied either by direct transfer or by instruction of the relevant notaries holding the payments on the Notarial Trust Accounts in accordance with Sections 4.1 and 4.2 or, if otherwise agreed therein, pursuant to the terms and conditions of the relevant Individual Transfer;


(d)	Delivery by the Sellers to the Purchasers of a receipt confirming the payment under Section 7.3.1(c) in compliance with this Agreement;


(e)	Confirmation of receipt of relevant Individual Purchase Price by the relevant Parties to any of the Individual Transfer pursuant to Schedules 3.4 and 3.5 to the notaries instructed under these Individual Transfers.

7.3.2

Purchasers may waive each of the Closing Actions set forth in Section 7.3.1 other than the Closing Actions in Sections 7.3.1(b) and 7.3.1(c) (payment of Purchase Price), which cannot be waived, by written notice to Seller. The effect of a waiver shall not limit or prejudice any claims any Party may have with respect to any circumstances relating to such Closing Action not being taken pursuant to this Umbrella SPA.

7.3.3

If any Party fails to perform or procure performance of their respective Closing Actions to be performed by it, the relevant Purchaser, in the case of non-compliance by the relevant Seller, or the relevant Seller, in the case of non-compliance by the relevant Purchaser, shall be entitled to (in addition to and without prejudice to all other rights or remedies available including the Sellers' rights under Section 7.3.2), by written notice to the other Party (i) fix a new date for Closing (not being more than 10 Business Days after the Closing Day) in which case the provisions of this Section 7.3 shall apply to Closing as so deferred and (ii) if Closing does not occur on the deferred date rescind the Individual Transfer for which the Closing Actions are not performed. Section 16.3 applies to such rescission right.

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7.3.4

Any purported withdrawal shall be deemed void and shall not have any effect if, at the time when the notice from the withdrawing Party is received by the other Party, all Closing Actions have been taken or waived. The withdrawal shall not limit or prejudice any claims of the withdrawing Party on the basis of any circumstances relating to the Closing Actions not being taken; Section 7.3.2 shall in particular remain unaffected.


8.	PROCUREMENT OF TITLE, ENCUMBRANCES, CHANGES TO THE LAND REGISTER


8.1	Title Matters

8.1.1

The Sellers are, in return for the payment of each Individual Purchase Price, obliged to transfer legal and beneficial ownership in the relevant Purchase Object (and in the case of the Purchase Objects which are the subject of Schedules 3.1 and 3.2 with full title guarantee) free from encumbrances and other rights of third parties, except for any encumbrances, burdens or other third party rights provided for in Section 8.2.1 and Schedules 3.1 to 3.10 . In respect of the Purchase Objects which are the subject of Schedules 3.1 to 3.10; this obligation to procure title shall be governed by the relevant Individual Transfer.

8.1.2

SEB is, in return for the payment of each Individual Purchase Price, obliged to transfer to the relevant Purchaser, pursuant to the provisions of Schedule 3.11 and Schedule 3.7.2 , the Shares, with full title guarantee, free from all encumbrances not assumed by the relevant Purchaser and together with all rights which are at the Closing Date attached to them, as set forth in the relevant Individual Transfers.


8.2	Encumbrances, changes to the land register

8.2.1

The relevant Purchaser will assume all encumbrances of the Properties listed in Annex 10.3.1(b) except (i) any rights in favor of the Custodian Bank as listed in Annex 8.2.1 and (ii) any financial charges unless agreed differently in the Individual Transfers and/or pursuant to Section 4.2.2, in each case without deduction from the Individual Purchase Price. The Sellers will thus procure the deletion of all restrictions which were granted or registered in favor of the Custodian Bank or any mortgagee as provided for under the Individual Transfers or any rights not listed in Annex 10.3.1(b).


8.2.2	Any further assumption of third party rights (such as easements or servitudes not registered in the land registers, public charges and restrictions arising from agreements with neighbors and the municipalities along with the underlying obligations, as well as restrictions of the Purchase

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Objects under public law), shall be governed by the Individual Transfers in Schedules 3.1 to 3.11 .


9.	INDEPENDENT SYSTEM OF GUARANTEES


9.1	Liability System Separate From Statutory Rules

The Purchasers and the Sellers have extensively discussed and negotiated to which extent and in which way the Sellers should be liable for defects of the Purchase Objects and Shares according to Section 3 or if it turns out that the Guarantees are untrue or incorrect. The Purchasers and the Sellers have decided to depart from the statutory system of liability and to provide instead for a separate system of liability as determined in the following.


9.2	State of Transfer


9.2.1	The Purchase Objects are sold in their current condition. The current state and condition resulting from the age and use of the building shall be agreed as the contractually owed factual status. All rights and claims of the Purchasers because of defects of the ground and the building on it shall be excluded, unless otherwise agreed in this Umbrella SPA or in the Individual Transfers.

9.2.2

Unless otherwise agreed in this Umbrella SPA or in the Individual Transfers the Sellers do not assume any liability, in particular not with respect to the size and quality of the Purchase Objects as well as the buildings on it, or the absence of identifiable or hidden defects of the Purchase Objects, as well as the absence of negative impacts from adjacent properties, unless otherwise agreed in this Umbrella SPA or in the Individual Transfers; the risk of the future use, the entitlement to erect buildings and use of the Purchase Objects remains solely with the Purchasers. For the avoidance of doubt, the restrictions of liability, respectively, above shall also apply in the case that lessees claim rent reductions or damages unless such liability arises under a Guarantee in which case only the Limitations on Liability (Section 13) shall apply.


9.3	Agreement on Independent Guarantees

The Sellers guarantee in the form of an independent guarantee according to section 311(1) BGB ( selbständiges Garantieversprechen ) that, subject to the qualifications set out in Section 9.5, the statements in Section 10 and – if any - in the Individual Transfers (“ Guarantees ”) are true and correct in relation to the Purchase Objects or the Shares (it being understood that in case a Guarantee is granted pursuant to an Individual Transfer it shall apply only in relation to such Purchase Object or Shares which are the subject of these Individual Transfers) as at the Notarisation Date or as at such date as expressly referred to in the Guarantees, provided, however,

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that any provisions and limitations contained in this Agreement relating to the consequences of a breach of the Guarantees, including the provisions and limitations set forth in Section 13 (“ Limitations on Liability ”) form an integral part of the Guarantees ( Inhalt des Schuldverhältnisses / Bestandteil der Garantieerklärung ), and the Guarantees are only given subject to such provisions and limitations and, provided further, that each of the Sellers gives the Guarantees only in relation to the relevant Purchase Object or Shares sold by it. To the extent a Guarantee refers to the Closing Date it shall mean the relevant Closing Date of the Individual Transfer the Guarantee refers to.


9.4	Purchaser’s Confirmation, Sellers' Representation, Sellers’ Knowledge, Data Room


9.4.1	The Purchasers confirm that when entering into this Agreement the Purchasers solely relied on (i) their inspection and investigation of the Portfolio conducted in the sole responsibility of the Purchasers, and (ii) the Information. The Purchasers had the opportunity to ask questions and seek further clarifications regarding the Information.

9.4.2

Sellers represent that they have disclosed to the Purchasers all information that an experienced real estate investor would reasonably expect in a similar transaction and have put forth best efforts to obtain from its service providers the relevant documents and information and that the Sellers have not put any information in the Data Room in a misleading manner, for example (without limitation) information which the Sellers in each case know is in material respects wrong or inaccurate or incorrectly placed in the Data Room, in each case if the information thereby is misleading.

9.4.3

To the extent this Umbrella SPA makes reference to the knowledge or best knowledge of a or the Sellers, only the actual knowledge or grossly negligent lack of knowledge ( grob fahrlässige Unkenntnis ), as at the date such declaration is made or at the date otherwise stipulated in this Umbrella SPA of the persons listed in Annex 9.4.3 shall be relevant, having made due and careful enquiry of the asset and property managers currently retained for the Properties (which for each Property are listed in Annex 9.4.3 ). Any knowledge of any other person shall not be attributed to the relevant Seller.

The persons listed in Annex 9.4.3 have confirmed with the Sellers’ employees specifically tasked with the asset and/or property management, and with the sale of the Properties under this Umbrella SPA that, except as disclosed in the Data Room and/or in the Umbrella SPA, the Individual Transfers and/or the Schedules and Annexes thereto, they are not aware of any incorrectness of the facts underlying the Guarantees given. The Sellers' employees specifically tasked with the asset and/or property management, and with the sale of the Properties under this Umbrella SPA have asked the asset and/or property managers and/or other external parties contracted in respect

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of the Prime Properties as appropriate (the “ Service Providers ”), whether they are aware of any incorrectness of the facts underlying the Guarantees given. The Sellers have informed the Purchasers of such instances where the answers to this query uncovered new issues and have made all due and careful enquiries within the given timeframe (apart from court proceedings) to extract satisfactory answers from the Service Providers.

Each Seller hereby assigns, except as provided differently under the Individual Transfers, to the relevant Purchaser with effect as of the Transfer of Possession any claims it has against its Service Providers based on inaccurate or incomplete reporting. The relevant Purchaser accepts such assignment. The Sellers, however, assume no liability for the existence, scope, enforceability and assignability of these assigned claims. Should the Sellers themselves be liable towards the Purchasers and the Claim which has been satisfied by the Sellers is based on an action or omission by a Service Provider, the relevant Purchaser is obliged to re-assign the claims to the Sellers to enable the Sellers to take recourse against the relevant Service Provider.

9.4.4

The documents handed over by the Sellers during the due diligence as well as the questions and answers in the Q&A process all as of 12 December 2014 (the " Cut-Off Date ") have been saved on three identical DVDs by the provider of the Data Room for each of the Purchase Objects/Shares (in each case together with a letter of the provider of the Data Room confirming that the DVDs contain an identical copy of the Information provided in the Data Room as at the Cut-Off Date) (“ Data Room ” or “ Information ”) which have been reviewed and signed off by the Parties prior to the Date of Notarization. Two sets of these DVDs will be kept in custody by the German Notary until ten years following the date hereof. The German Notary is instructed to provide to the Sellers and/or the Purchasers upon written request and at own cost one set of the DVDs. DVDs remaining with the German Notary after the date falling ten years after the date hereof may be destroyed unless there is a dispute or proceedings have commenced. The German Notary has not reviewed the DVDs and shall not assume any liability for the content and durability of the data. In case of loss or destruction of the DVDs, the German Notary shall be liable only in case of deliberate act or gross negligence. The index to the Data Room is appended hereto as Annex 9.4.4 .

Any information disclosed by the Sellers after the Cut-off Date shall not exclude Purchaser's claims, unless the relevant information is listed in the schedule of additional information that was provided to the Purchaser by the Seller after the Cut-Off Date (“ Additional Information ”). The schedule of Additional Information is appended hereto as Annex 9.4.4a .


9.4.5	The Purchasers have inspected and examined the Properties in the presence of a qualified expert and have carried out a suitable due diligence on them as is customary in acquisitions of this kind, inter alia on the basis of the documents contained in the Data Room. The Purchasers had sufficient

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opportunity to make their own enquiries on all issues relating to the Properties, to independently investigate all facts and circumstances relating to the development, use and management of the Portfolio, and to obtain all information and documentation that is of significance for the legal, technical and economic evaluation of the Properties and their suitability for the purposes of the Purchasers, judging by the standards that are generally applied to properties of this kind.


9.5	Compartmentalisation


9.5.1	The Purchasers acknowledge and agree that the only Guarantees given in relation to:


(a)	the title


(i)	to the Purchase Objects are those set out in Sections 10.3.1(a) to 10.3.1(d), 10.2.1(m) and 10.2.2(j) and


(ii)	to the Shares are those set out in Sections 10.2.1(a), 10.2.1(b),10.2.1(c), 10.2.2(a), 10.2.2(b) and 10.2.2(c),

together with Sellers' obligation to transfer legal and beneficial ownership pursuant to Section 8.1 (the “ Title Matters ”).


(b)	real estate, planning and zoning and leasehold matters or any related claims, liabilities or other matters (“ Real Estate Matters ”) are those set out in Section 10.3.1(e) to 10.3.1(l) of the Guarantees and no other Guarantee is given in relation to Real Estate Matters;


(c)	environment or any related claims, liabilities or other matters (“ Environment-Related Matters ”) are those set out in Section 10.4 of the Guarantees and no other Guarantee is given in relation to Environment-Related Matters;


(d)	corporate matters or any related claims, liabilities or other matters referring to the shares described in Schedules 3.7.2 and 3.11 (“ Corporate Matters ”) are those set out in Sections 10.2 of the Guarantees (except those Sections under Section 10.2 that qualify as Title Matters) and no other Guarantee is given in relation to Corporate Matters;

(and in each case (a) to (d) together with the relevant additional guarantees given in the Individual Transfers, if any)


(e)	tax or any related claims, liabilities or other matters (“ Tax Matters ”) are those set out in Section 11 of this Agreement in connection with the relevant Individual Transfers and no other Guarantee is given in relation to Tax Matters.


9.6	Fraud or Wilful Misconduct

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None of the limitations in this Section 9 (including the Limitations on Liability) shall apply to any Claim which arises as a consequence of fraud or wilful misconduct ( Vorsatz ).


9.7	No Claims Against Employees etc.

The Purchasers undertake to the Sellers that, except in the case of fraud or wilful misconduct, it waives and shall not make any personal claim against any employee, director, agent or officer of any of the Sellers or member of the Seller’s Group on whom it may have relied in relation to any information supplied or omitted to be supplied by any such person in connection with the Guarantees or the Agreement.


10.	GUARANTEES


10.1	Authorization and Legal Organization of Sellers

10.1.1

On the Notarisation Date and on the Closing Date, subject to the approvals pursuant to Sections 7.1.1(a), the execution and performance by the Sellers of this Agreement and the consummation of the transactions contemplated by this Agreement and the Individual Transfers are within the relevant Sellers' corporate powers, do not violate the articles of association of the Sellers and will be, prior to the Closing Date, duly authorized by all necessary regulatory and corporate action on the part of the Sellers.


10.1.2	On the Notarisation Date, there is no lawsuit, investigation or proceeding pending or, to the Sellers' best knowledge, threatened in writing against the Sellers before any court, arbitrator or governmental authority in relation to the Prime Properties or the Shares of Chrysalis or Lindholmen AB.


10.1.3	On the Notarisation Date and on the Closing Date, the Sellers have been duly established and the Sellers validly exist under the laws of their relevant jurisdiction.


10.1.4	On the Notarisation Date and on the Closing Date, no bankruptcy or insolvency proceedings are pending with respect to the Sellers.


10.2	Corporate Matters


10.2.1	Lindholmen AB


(a)	On the Notarisation Date and on the Closing Date SEB is the sole and unrestricted owner of the shares in Lindholmen AB. Purchasers are, however, aware that the original share certificate is not available and cannot be provided to the Purchaser. Sellers have already or shall immediately after the Notarisation Date apply for cancellation of the share

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certificate and assist the Purchaser after transfer of the Shares in Lindholmen AB in the cancellation process and the process of applying for a new share certificate. The costs of the cancellation procedure and the issue of the new share certificate shall be borne by the relevant Seller.


(b)	On the Notarisation Date and on the Closing Date, the shares in Lindholmen AB are free and clear of any liens, encumbrances or other rights of third parties, and there are no pre-emptive rights, rights of first refusal, options or other rights of any third party to purchase or acquire any of the shares in Lindholmen AB.


(c)	On the Notarisation Date and on the Closing Date, Lindholmen AB has been duly established under the laws of Sweden and exists under the laws of Sweden.


(d)	Lindholmen AB has not carried out any business other than to acquire, own, manage and develop the Property described in Schedule 3.11 and on the Notarisation Date and on the Closing Date, Lindholmen AB has all corporate powers to conduct its business as presently conducted.


(e)	Annex 10.2.1(e) contains true and correct copy of the articles of association of Lindholmen AB as presently in effect and as in effect on the Closing Date.


(f)	On the Notarisation Date and on the Closing Date no bankruptcy or insolvency proceedings are pending with respect to Lindholmen AB.


(g)	On the Notarisation Date and on the Closing Date, Lindholmen AB is not a party to any agreement which would permit any third party to control Lindholmen AB or obligate Lindholmen AB to transfer profits to any such third party.


(h)	On the Notarisation Date and on the Closing Date, Lindholmen AB holds no interest or share in any other company.


(i)	On the Notarisation Date no lawsuit or other proceeding is pending (rechtshängig) against Lindholmen AB before any court, arbitrator or governmental authority and, to SEB’s best knowledge, no such lawsuit or proceeding has been threatened in writing.


(j)	The audited annual accounts as of 31 December 2013 of Lindholmen AB have been prepared in accordance with Swedish generally accepted accounting principles and give a true and fair view of the business, the financial position and the result of operations of Lindholmen AB as of the date of such accounts.

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(k)

All accounts receivable of Lindholmen AB (except any arrears under any of the Lease Agreements in place for the Swedish Property contained in the Preliminary Closing Accounts) are and will be bona fide, good and collectible, without any set-off, counterclaim, restriction or encumbrance, and will be fully paid up within sixty Business Days from the Closing Date, with the exception of the amounts reflected in the reserves for doubtful accounts contained in the Preliminary Closing Accounts (as defined in Schedule 3.11 ).


(l)	On the Notarisation Date, Lindholmen AB is not bound by any material agreements other than the Lease Agreements set forth in Annex 10.3.2(a) in respect of the Swedish Property and the management agreement, the service agreements and the loan agreements as disclosed in the Data Room and the Additional Information.

(m)

On the Notarization Date and on the Closing Date Lindholmen AB is the owner of and has registered title (Sw. lagfart) to the Property described in Schedule 3.11 . All buildings and other objects on the Property that may constitute property, building or industrial appurtenances and fixtures (Sw. fastighets-, byggnads- eller industritillbehör) in accordance with Swedish Law constitute such property, building or industrial appurtenances and fixtures of the Property.


(n)	Lindholmen AB has no, and has never had, any employees and no person will be entitled to employment with Lindholmen AB or the Purchaser as a result of the Agreement


10.2.2	Chrysalis


(a)	On the Notarisation Date and on the Closing Date SEB and Balni are the sole and unrestricted owners of the shares in Chrysalis.


(b)	On the Notarisation Date and on the Closing Date, the shares in Chrysalis are free and clear of any liens, encumbrances or other rights of third parties, and there are no pre-emptive rights, rights of first refusal, options or other rights of any third party to purchase or acquire any of the shares in Chrysalis.


(c)	On the Notarisation Date and on the Closing Date, Chrysalis has been duly established under the laws of Belgium and exists under the laws of Belgium.


(d)	On the Notarisation Date and on the Closing Date, Chrysalis has all corporate powers to conduct its business as presently conducted.


(e)	Annex 10.2.1(e) contains true and correct copy of the articles of association of Chrysalis as presently in effect.

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(f)	On the Notarisation Date and on the Closing Date no bankruptcy or insolvency proceedings are pending with respect to Chrysalis.


(g)	On the Notarisation Date and on the Closing Date, Chrysalis is not a party to any agreement which would permit any third party to control Chrysalis or obligate Chrysalis to transfer profits to any such third party.


(h)	On the Notarisation Date and on the Closing Date, Chrysalis holds no interest or share in any other company except the Balni Share.


(i)	On the Notarisation Date no lawsuit or other proceeding are pending (rechtshängig) against Chrysalis before any court, arbitrator or governmental and, to the SEB’s best knowledge, no such lawsuit or proceeding has been threatened in writing.


(j)	On the Notarisation Date and on the Closing Date Chrysalis is the sole legal owner of the building right described in Schedule 3.7.2.


(k)	On the Notarization Date and on the Closing Date Chrysalis does not have any employees.


(l)	On the Notarization Date and on the Closing Date, Chrysalis has all necessary licenses, permits, authorisations and consents to carry out its business and all of which are valid and enforceable. There is no reason why any of these licenses, permits, authorisations and consents would be revoked, cancelled or suspended.


(m)	Accounts and Liabilities


(i)	The accounts have been prepared and audited in accordance with the law and applicable principles and practices generally accepted in Belgium and show a true and fair view of the financial position and the assets and liabilities of Chrysalis and of the profits or losses, financial condition and results of operations of Chrysalis for the period ended on the date of the relevant accounts.


(ii)	Save for what is disclosed in the Data Room, on the Closing Date, Chrysalis has no material obligation, undertaking, debt or liability, whether actual or contingent (including any off balance sheet liabilities).


(iii)	Since the date of the accounts and on the Closing Date, the business of Chrysalis has been carried on in the ordinary course so as to maintain it as a going concern and the business has been carried on in its ordinary course and, to the best of the Sellers' knowledge, there has been no material adverse change.


(iv)	Since the date of the accounts and on the Closing Date Chrysalis has not:

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(1)	declared or paid any dividends or " tantièmes ", or otherwise agreed to distribute or pay any funds to any of its directors, shareholders, other securities holders or related parties thereto;


(2)	acquired or disposed of (in any manner whatsoever) any material asset;


(3)	entered into, amended or terminated any material agreement or any agreement containing non arms’ length terms; or


(4)	taken any decision that was not accounted for or reserved against in the completion accounts and that has or could have an adverse effect on the assets or financial position of Chrysalis.


(v)	On the Notarization Date and on the Closing Date all books of accounts, ledgers, and all other accounting or financial Records and documents of Chrysalis that must be maintained by Law, are up-to-date, have been properly maintained and contain true and complete records of all matters required to be entered therein.


(vi)	On the Notarization Date and on the Closing Date Chrysalis has not:


(1)	given or agreed to give any guarantee (whether as "caution / borgtocht ", " aval " or otherwise) securing any liability of any third party; or


(2)	issued or agreed to issue any comfort letter (whether binding or not) in respect of any liability of any third party.


10.3	Real Estate and Lease Agreements


10.3.1	Real Estate, Buildings


(a)	Subject to the respective Individual Transfer, the Sellers are, and will be on the Closing Date, the full legal owner of each Purchase Object and have the authority to sell and transfer such Purchase Object.


(b)	On the Notarization Date and on the Closing Date the Prime Properties are not encumbered with any rights of third parties, except as listed in Annex 10.3.1(b) .

(c)

The Sellers have not allowed, consented to, requested or applied for any changes in relation to the title of the Prime Properties and their encumbrance with servitudes, easements, liens, mortgages, land charges and other charges (jointly the “ Encumbrances ”) compared to the current encumbrances as disclosed in Annex 10.3.1(b) and will not do so until the Closing Date unless expressly provided for or permitted

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in this Agreement or an Individual Transfer. The Sellers are not aware of any process to change the title or the Encumbrances of the Prime Properties initiated by a third party.


(d)	Where applicable (i.e. where a land register, mortgage register or equivalent system exists that lists encumbrances of a property), the Sellers are not aware of any Encumbrances not registered or not capable of registration in the land register (Grundbuch) or equivalent registers.

(e)

Unless disclosed in Annex 10.3.1(e) , the Sellers have not allowed, consented to, requested or applied for any changes in relation to public easements (Baulasten) or zoning plan or other edificial or comparable charges under public law compared to those disclosed in each Individual Transfer, and will not do so until the Closing Date unless expressly provided for or permitted in the Individual Transfers and the Sellers are not aware of any process to enter, amend or change such charges under public law initiated by a third party.


(f)	To the Sellers' best knowledge and except as set out in Annex 10.3.1(f) the buildings on the Prime Properties (“ Buildings ”) have the necessary building permits or other material permits required for the use and possession of the Buildings. The same is true on the Closing Date.


(g)	To the Sellers best knowledge and except as set out in Annex 10.3.1(g) , all Prime Properties materially comply with the relevant regulatory requirements, including fire safety standards, health and safety.


(h)	On the Notarization Date there are no unsatisfied instructions or requirements imposed by any public authority that provide for material structural changes or the demolition of any part of the Buildings. Until the Closing Date Sellers have complied at all times with requirements imposed by public authorities including under monument protection regulation unless disclosed in Annex 10.3.1(h) .


(i)	To the Sellers' best knowledge no permit relating to the construction or use of the Buildings has been cancelled, revoked or challenged.


(j)	To the Sellers' best knowledge there are no unpermitted encroachments from the Prime Properties onto neighbouring properties or from neighbouring properties onto the Prime Properties, however not from one Prime Property onto another Prime Property.


(k)	None of the Prime Properties will, after payment of the Purchase Price and upon the transfer (including for the avoidance of doubt the transfer of the Shares), be encumbered

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with any security of any kind (including, without limitation, mortgages, rent assignments, assignment of insurance claims) for any kind of loan or financing (including shareholder loans and financing), unless specifically agreed otherwise in the Individual Transfers.


(l)	To the Sellers' best knowledge, the status of no Property breaches any copyright rights and/or name rights of third parties.


10.3.2	Lease Agreements

(a)

On the Notarisation Date and on the Closing Date Annex 10.3.2(a) contains a true and complete list as at 1 January 2015 of existing real property lease agreements, occupational leases, agreements on use and comparable agreements under Local Law, however, excluding any lease or similar usage agreements on parking lots, antennas and kiosks regarding the Prime Properties or parts thereof (jointly the “ Lease Agreements ” and each a " Lease ") including information as to lessee, term, annual rent payments and ancillary charge payments. Any lease or similar usage agreement in respect of parking lots, antennae and kiosks are listed with respect to each Property in Annex 10.3.2(a) as one collective line item per usage together with the respective total passing annual net rent per usage;


(b)	On the Notarization Date and on the Closing Date, there are no other material contractual agreements or side agreements etc. with the tenants in addition to those specified in Annex 10.3.2(b) and


(c)	the Sellers are not aware of any material information relating to the Lease Agreements which are not provided in the Data Room or in the Additional Information or which are Approved Leases -

it being understood that in both, (b) and (c) such information is " material " which relates to the Lease Agreement’s duration, the amount of rent or ancillary costs receivable, the expenses to be borne by the landlord, rent free periods, rent reviews, break rights or outstanding payments to tenants agreed to under the current Lease Agreements, having any effect after the relevant Closing Date.


(d)	Except as disclosed in Annex 10.3.2(d) on the Closing Date, (i) no advance dispositions have been made affecting any claim for payment of rent under the Lease Agreements and (ii) as at 10 February 2015 there are no arrears of any payments of rent or ancillary charges or any other payments of tenants under the Lease Agreements;

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(e)	Except as disclosed in Annex 10.3.2(e) none of the lessees under the Lease Agreements is asserting or threatening to assert any claim for reduction in rent, and no rent under the Lease Agreements is being paid subject to a right to claim back such rent.


(f)	Except as disclosed in Annex 10.3.2(f) none of the lessees has given notice of termination and no notice of termination has been given by the relevant lessors with respect to any of the Lease Agreements.


(g)	Except as disclosed in Annex 10.3.2(g) no lawsuit is pending with any of the lessees and no advance warning has been given that such a lawsuit may be instituted with respect to any of the Lease Agreements.


(h)	All incentives promised to tenants under the Lease Agreements or ancillary documentation have been disclosed in the Data Room (except those that have already been discharged in full). On the Closing Date any such incentives which are due and payable prior to the relevant Closing Date are discharged in full.


(i)	The list of security, surety, deposit or other collateral under the Lease Agreements (the “ Rent Security ”) attached as Annex 10.3.2(i) as per the date given in such list and the Closing Date, is complete and accurately reflects the rent security the Sellers hold.


10.4	Environmental Matters


10.4.1	Definitions used in this Section on Environmental Matters


(a)	“ Environmental Damage ” shall mean the presence of Hazardous Materials in the soil, leachate, soil-vapor, ground water, surface water, or building of / on a Prime Property.


(b)	“ Hazardous Materials ” shall mean any pollutants, contaminants or hazardous substances according to the Environmental Laws including, without limitation, oil, petroleum, asbestos, hazardous wastes or toxic, explosive or radioactive substances.


(c)	“ Environmental Authority ” shall mean a governmental agency or other regulatory body, court of law or tribunal with jurisdiction under Environmental Laws.


(d)	“ Environmental Laws ” shall mean all applicable laws, ordinances, rules, directives and regulations relating to Environmental Damages and being applicable to a Property (including buildings) or a Party, as the case may be.


10.4.2	To the best of the Sellers' knowledge no Environmental Damage exists on any site of the Portfolio except as disclosed in Annex 10.4.4 .

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10.4.3	The Sellers declare that they have no knowledge of Environmental Damage that has not been fairly disclosed to the Purchasers in the Data Room or is otherwise known to the Purchaser. The Sellers declare that they have not caused, or allowed to be caused, any Environmental Damage on any of the Prime Properties up to the Closing Date.

10.4.4

Except as disclosed in Annex 10.4.4 , to the Sellers' best knowledge, in the last twelve months (i) neither the Sellers nor Lindolmen AB nor Chrysalis have received any written order from any Environmental Authority lawfully requiring the remediation of any Environmental Damage on any of the Prime Properties, and (ii) no administrative or governmental action, suit, investigation or proceeding has been asserted in writing which would result in such an order and is still pending.


10.4.5	Beyond a liability for a breach of the foregoing Environmental provisions, the Sellers shall not be liable to the Purchasers for any of the Prime Properties being free from Environmental Damages.


10.4.6	Exclusively regarding the Purchase Objects referred to in Schedules 3.8a , 3.8b and 3.9 the Seller and the Purchaser agree as follows:

(a)

The Purchaser shall fully indemnify the Seller with respect to any obligations or liabilities of any kind that may arise under Environmental Laws as a consequence of any claims, rights or acts of Environmental Authorities or any other third party that has a bona fide claim in connection with the existence of any Environmental Damage in respect of the relevant Purchase Objects; this shall include, without limitation, any costs incurred for investigating, monitoring, securing, cleaning-up or removing any Environmental Damage (including, without limitation, reasonable and proper fees and expenses of environmental consultants and, legal and other advisors).

(b)

Where any action needs to be taken by the Seller, this obligation to indemnify shall include , without limitation, that at the Purchaser´s option the Purchaser shall either take any such action at its own cost, exercising due care and diligence in this regard, or, alternatively, if such action is taken by the Seller, that the Purchaser shall reimburse the Seller for all reasonably and properly incurred costs, which shall be done by the Purchaser by making timely payment either to the Seller or, if so instructed by the Seller, to any appropriate third-party to be specified by the Seller in writing. This obligation to indemnify shall also cover any legal defense against such measures in consultation with the Seller.


(c)	The obligation to indemnify also applies to any employees of the Seller or any affiliate of the Seller obliged by law to assume liability for the obligations of a Seller,

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(d)

If a Party becomes aware of any circumstances giving a reasonably clear indication of any Environmental Damage which could result in a claim under this indemnity, the Party shall give the respective other Parties written notice as soon as reasonably practicable and in any event within thirty (30) days thereof. The notice shall state the nature and amount (if and to the extent that such amount can with reasonable efforts be determined at the time the notice is given) of the Environmental Damage, and the details of the claim being made by the Environmental Authority.

(e)

All measures taken by a Party with respect to any Environmental Damage which could give rise to a claim under this indemnity shall be conducted after prior consultation with the other Party only, unless immediate action is required in which case the other Party shall be informed immediately thereafter of the action taken and the reasons. Parties shall keep each other promptly informed in reasonable detail of the status of any proceeding with regard to Environmental Damage which could give rise to a claim under this indemnity.


10.4.7	The aforementioned obligations to indemnify on the part of the Purchaser shall be


(a)	without prejudice to the environmental guarantee given by the Sellers under this Section 10.4.1 up to 10.4.5; and


(b)	subject to the Seller up until 30 November 2016 contributing fifty percent of the costs, liabilities, expenses and losses resulting from the claim up to a maximum of 5% (five percent) of the Individual Purchase Price of the Purchase Object in question.


10.4.8	Both Parties shall seek to take such reasonable and proper steps as are available to them to mitigate damage, losses, expenses, costs or liabilities arising from any claim which could result in a claim under the indemnity in this clause.


10.5	[blank]


10.6	Employees

There are no employment or pension liabilities which would, as a result of the consummation of this Agreement or the Individual Transfers, transfer to the Purchasers or, with respect to the Individual Transfers as set out in Schedules 3.7.2 and 3.11 , to Chrysalis, or Lindholmen AB unless otherwise set out in the Individual Transfers pursuant to 3.1 and 3.2, which provisions shall prevail.


10.7	No Other Guarantee

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Aside from the Guarantees, the Sellers do not give any further express or implied guarantees.


10.8	Information of the Purchasers

As of the Notarisation Date, the Sellers undertake to inform the Purchasers of any occurrence that might result in a Guarantee being untrue as at the date it is given. Sellers shall keep the Purchasers informed and coordinate with the Purchasers in good faith in respect of any action to be taken to avoid a Guarantee becoming untrue.


11.	TAX

Tax Matters shall be exclusively governed by the relevant provisions of the Individual Transfers.


12.	INDEMNIFICATION


12.1	Damages

In case of a Claim resulting from a Guarantee being untrue or incorrect (“ Guarantee Breach ”) or a covenant or an undertaking under this Umbrella SPA or the Individual Transfers being breached (“ Covenant Breach ”, together with the Guarantee Breach a " Breach ") the relevant Seller or Sellers shall put the relevant Purchaser into the position the Purchaser would have been in without the Breach or the breach of a covenant ( Naturalrestitution ). If the relevant Seller is unable to achieve this position within a reasonable period of time of not more than six weeks after having been notified by the relevant Purchaser of the Breach, the Purchaser may claim monetary damages ( Schadenersatz in Geld ) from the relevant Seller, provided, however, that such damages shall not cover (i) loss of profit ( entgangener Gewinn ), (ii) damages and losses to goodwill, or (iii) reputational damages, and (vii) the Purchaser is not entitled to claim damages based on any argument that an Individual Purchase Price has been calculated upon incorrect assumptions. In any event, damages shall include loss of rent. The right of the Purchaser to rescind the Agreement is expressly excluded unless explicitly agreed in this Agreement.


12.2	Right to Rescind in case of Breach

The Purchasers are entitled to rescind the relevant Individual Transfers in relation to a Purchase Object or the Shares in case of a material breach of any of the Title Matters and the Guarantee pursuant to Section 10.1.4.


12.3	Purchaser's Assistance

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Without prejudice to its duty to mitigate any loss, the Purchasers shall, at the cost of the Relevant Seller provide all reasonable assistance to the Relevant Seller to remedy any Breach.


12.4	Limitation to Remedies Under Agreement

The Parties agree that the rights and remedies which the relevant Seller on the one hand and the relevant Purchaser on the other hand may have in case of a Breach are, save for specific performance, limited to the rights and remedies expressly contained in this Agreement and Individual Transfers.


12.5	Exclusion of Pre-Contractual Rights

To the extent legally permissible, any pre-contractual claims and rights of any Party of any legal nature whatsoever (contractual, quasi-contractual, tort or otherwise) extending beyond the claims expressly provided for in this Agreement and the Individual Transfers are hereby excluded and waived by the Purchasers and the Sellers.


12.6	Caveat

The provisions of this Section 12 shall not apply to (i) rights and remedies which the Parties may have under applicable mandatory law or as a result of the Purchasers' failure to pay the Purchase Price or any portion thereof in accordance with this Agreement and the Individual Transfers, and (ii) any rights and remedies of any Party for fraud or wilful misconduct.


12.7	Sellers’ Claims Against Third Parties

The Sellers herewith transfer and assign to the relevant Purchasers any and all claims for material defects that the relevant Seller is entitled to against architects, engineers and construction companies, craftspersons and suppliers with respect to the Purchase Objects including the security granted in this respect subject to the condition precedent of Transfer of Possession. The Purchasers hereby accept such assignment.


12.8	Copyrights and Name Rights

The Purchasers are aware that copyright rights and/or name rights may be existing in connection with the Purchase Objects which may cause limitations for structural changes to a building. Any liability of the Sellers due to a potential violation of copyright rights and/or name rights shall be excluded. To the extent that the Sellers are entitled to any copyright-related utilization and exploitation rights with respect to a Purchase Object and/or any claims in connection with construction and renovation works against its contractors, the Sellers hereby assign such rights to the Purchasers with effect as of the Transfer of Possession. The Purchasers hereby accept such

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assignments. The Sellers shall, however, not be liable for the assignability, existence or enforceability of the assigned rights.


13.	LIMITATIONS OF LIABILITY


13.1	Time Limitation

13.1.1

The Sellers shall not be liable for any claim under or for a Breach of this Agreement, including any claim for damages or indemnification due to a Guarantee being incorrect or an undertaking or a covenant being breached (except for claims regarding Tax Matters, which are solely governed by the Individual Transfers) under the Umbrella SPA and/or the Individual Transfers (“ Claim ”) unless it receives from the party invoking the Claim written notice:


(a)	prior to the day following 18 months after the relevant Closing Date in the case of a Guarantee Breach; or


(b)	prior to the first Business Day following the fifth anniversary of the relevant Closing Date in the case of a Breach of the Title Matters; or


(c)	prior to 31 December 2016 with respect to any other Claim.


13.1.2	After the expiry of the relevant limitation periods set out under 13.1.1(a), 13.1.1(b) and 13.1.1(c) respectively, the relevant Claims shall be time-barred ( verjährt ).


13.2	Thresholds

Except in relation to Title Matters a Seller shall only be liable for a Claim resulting from a Guarantee Breach if


13.2.1	the amount of the liability pursuant to a single Claim for a Guarantee Breach exceeds a threshold of EUR 75,000 (in which case the Purchaser shall be able to claim for the entire amount and not merely the excess); and


13.2.2	the aggregate amount of the liability of the Sellers for all Guarantee Breaches under one of the Individual Transfers for which the individual liability exceeds the threshold pursuant to Section 13.2.1 exceeds the threshold of EUR 300,000 ( Freigrenze ), it being understood that if this threshold is exceeded, the Purchaser shall be able to claim for the entire amount and not merely the excess.


13.3	Maximum Limit for Claims Resulting From a Guarantee Breach

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The aggregate amount ( Gesamtsumme ) of the liability of the Sellers for Claims resulting from Guarantee Breaches but except for Breaches of the Title Matters (to which the maximum liability according to Section 13.7 shall apply) shall be limited to 5% (five percent) of (i) the aggregate Individual Purchase Prices for the Purchase Objects and/or (ii) – relating to Shares – the Agreed Property Value sold by each Fund ( cap applies to each of the Funds individually on a funds by funds basis ).


13.4	Purchasers' Knowledge

The Sellers shall not be liable for a Guarantee being untrue or incorrect, if the underlying facts of such untrue or incorrect Guarantee have been disclosed in writing to the Purchaser or the representatives or advisers of the Purchaser prior to the Cut-Off Date or if the relevant information is included in the Additional Information, in particular by providing the Information in the Data Room (which is deemed be known by all Purchasers), or if at the Notarisation Date the Purchasers or the representatives or advisers of the Purchasers otherwise know, or fail to know in a grossly negligent way ( grob fahrlässige Unkenntnis ), unless such facts were provided or presented by the Sellers in a misleading way (concept of true and fair disclosure);


13.5	Insured Claims

No Seller shall be liable for a Breach if and to the extent the loss caused by the damage incurred by the Purchaser is recovered under insurance policies.


13.6	Changes in Legislation

No Seller shall be liable to a Purchaser for any Claim to the extent that the damage incurred results from or is increased by the passing of, or any change in, after the Notarisation Date, any law, rule, regulation or administrative practice of any government, governmental authority, agency or regulatory body unless such Claim occurs as a result of Sellers' non-compliance with such law, rule, regulation or administrative practice prior to the Closing Date.


13.7	Applicability and Maximum Liability of Sellers

The provisions of these Limitations on Liability shall not apply to the liability of any Seller arising from a breach of the Title Matters, provided, however, that such liability of the Sellers shall be limited, together with any other liability of the Sellers under this Agreement, to an amount equal to the relevant Individual Purchase Price of the relevant Purchase Object or Shares. For the purpose of the Sellers' maximum liability and with respect to the Individual Transfers as set out in Schedules 3.7.2 and 3.11 , the respective Individual Purchase Price allocated to the Shares shall be the Agreed Property Value.

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13.8	Exceptions from the Limitations of Liability

Any exemption from or limitation of liability agreed herein shall not apply to any liability for damage or loss arising from loss of life, physical injury or damage to health any Seller or any legal representative or agent of any Seller is responsible for, nor shall any such exemption from liability apply to any obligation to provide compensation for any damage caused through a wilful or grossly negligent breach of duty by any Seller or any of its legal representatives or agents.


14.	INTERIM PERIOD UNTIL TRANSFER OF POSSESSION


14.1	Conduct of Business until Closing

Following the notarization of this Umbrella SPA, the Sellers may not do the following– unless authorized to do so under this Umbrella SPA, other than with the written consent of the Purchasers (also by email or fax):


14.1.1	conclude, terminate, accept a surrender or otherwise change or vary any lease, license, usufruct lease and similar documents or agreements, collateral or supplemental to such leases or licenses or similar documents or agreements, with respect to the Prime Properties;


14.1.2	take any steps in relation to rental claims with effect after the Transfer of Possession, claims for payment of service charge, rent security/deposits or other claims or dispose of future rental claims;


14.1.3	accept advance rental payments, waive the terms of any lease, license, usufruct or similar, or collateral or supplemental agreements;


14.1.4	grant or formally withhold any consents under any lease (other than those where the relevant Seller is expressly required under such lease to grant consent);


14.1.5	agree the terms of any rent review;


14.1.6	take any steps that might reasonably constitute a violation of the terms of any Lease Agreement;


14.1.7	grant third parties rights in the Prime Properties or Shares or change or terminate such rights which are attached to the Prime Properties or Shares or which exist for their benefit (such as easements) or allow their termination or change;


14.1.8	submit filing requests, withdraw such filing requests or alter them, unless for the purpose of closing this Umbrella SPA;


14.1.9	save for the Approved Leases, conclude, terminate or vary any agreements or take factual actions with respect to Prime Properties beyond the ordinary course of business; the Sellers will inform

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the Purchasers of any material change to any of the Prime Properties or of new contamination occurring without undue delay and, unless in the case of imminent danger, take appropriate countermeasures only with the written consent of the relevant Purchaser (also by email or fax); in the event of imminent danger the relevant Purchaser shall be notified without undue delay of the measures taken; consequential measures require the written consent of it (also by email or fax);


14.1.10	initiate, compromise or settle any litigation, arbitration, action, demand, dispute or appeals with respect to the Prime Properties or Shares other than those which only directly affect the Seller;


14.1.11	cancel or vary or consent to any cancellation or amendment to the terms of any insurance policies with respect to the Prime Properties or take any action which may invalidate any such insurance policies other than a termination effective as of Transfer of Possession.


14.2	Sellers’ Undertakings

The Sellers undertake towards the Purchasers to


14.2.1	maintain and manage the Prime Properties in the normal course of business, including continuing to perform the obligations as lessor as applicable under any Lease, and in close communication with the Purchasers duly and diligently;


14.2.2	prepare due rent reviews, unless specified otherwise in the Individual Transfers, and claim pre-agreed or index based rent adjustments when due;


14.2.3	maintain on existing terms all existing insurance policies relating to the Prime Properties until the Transfer of Possession;


14.2.4	inform the Purchasers without undue delay (in any case within five business days after discovery) and in writing of any deterioration of any Property, and allow the Purchaser access to the relevant Property to make his own assessment of the deterioration; and


14.2.5	inform the Purchasers without undue delay and in writing about any material event (e.g. insolvency, termination of lease) with a tenant.


14.2.6	permit the Purchasers and their agents at their own costs, upon 7 Business Days prior notice, reasonable access during normal business hours to each of the Prime Properties;


14.2.7	effect at their own cost any required routine maintenance;


14.2.8	carry out all inspections required by mandatory law, public order or insurance requirements;

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14.2.9	pay to the relevant utility providers, service providers and other third parties all due ancillary costs and other costs that cannot be charged to tenants; Sellers shall be entitled to refuse payment in case of permitted retention rights under the respective utility-/service agreement.


14.2.10	pay all due taxes, duties and other public charges;


14.2.11	make all due payments to financing banks and other creditors (e.g. contractors) in order to avoid recourse against or enforcement of charges secured on the Prime Properties;


14.2.12	ensure material compliance with all applicable laws for any measures of construction, maintenance or repair performed as of the Notarisation Date;


14.3	Sellers’ undertakings regarding Chrysalis

The Sellers undertake towards the Purchasers


14.3.1	To cause Chrysalis to act in its ordinary course of business.


14.3.2	Not to approve any of the following resolutions at any shareholders’ meeting of Chrysalis, without limitation, without the Purchaser’s prior written consent:


(a)	declaring any dividends or “tantièmes”;


(b)	increasing or decreasing Chrysalis’ capital, or making any other amendment to the Chrysalis’ Articles of Association;


(c)	approving the contribution or the sale by Chrysalis of its business as a whole (“universalité / algemeenheid”); or


(d)	winding up, merging or splitting up Chrysalis.


14.3.3	To cause Chrysalis (acting through its Board of Directors or, as the case may be, the person in charge of daily management or any attorney-in-fact) not to do any of the following, without limitation, without the Purchasers’ prior written consent:


(a)	relocate its registered office;


(b)	open, relocate or close down any place of business in Belgium or any branch office, representative office or permanent establishment abroad;


(c)	increase its capital through the authorised capital procedure (“capital autorisé/toegestaan kapitaal”);

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(d)	enter into, amend or terminate any joint venture, partnership, profit sharing or any similar agreement or arrangement;


(e)	acquire (in any manner whatsoever) any shares or other securities in any corporation, company or partnership;


(f)	make any change to its valuation rules or accounting policies or practices;


(g)	incur any indebtedness (of any nature whatsoever) otherwise than within the scope of their daily management;


(h)	give any guarantee (whether as “caution / borgtocht” or otherwise) to secure any liability of any third party;


(i)	incur any liabilities in respect of any loans, overdrafts or other financial facilities otherwise than within the scope of their daily management;


(j)	declare any interim dividend;


(k)	acquire or dispose of (in any manner whatsoever) any division (“branche d’activité / bedrijfstak”);


(l)	acquire or dispose of (in any manner whatsoever) any asset (other than assets composing a division), except within the scope of their daily management;


(m)	create any overall pledge on their assets ( “gage sur fonds de commerce / pand op de handelszaak”);


(n)	create any other security interest on any of its assets, except within the scope of their daily management;


(o)	grant any loan or advance any monies to any third party, or enter into any similar transaction, except within the scope of their daily management;


(p)	enter into, amend or terminate any lease agreement in respect of any real property owned by them;


(q)	enter into, amend or terminate any material agreement;


(r)	enter into, amend or terminate any agreement, outside the scope of their daily management;


(s)	institute any legal proceedings, or settle any litigation in which they are involved as a plaintiff or a defendant; or

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(t)	enter into any agreement or commitment to do any of the above.


14.4	Seller’s Undertaking regarding the Milan Property

The Sellers shall, on or before the Closing Date of the Milan Property, provide evidence reasonably satisfactory to the Purchaser of payment of the Italian registration taxes relating to the two lease agreements with the tenant Xchanging Italy Spa and the lease agreement with the tenant Global Shared Services Srl . If and to the extent such evidence is not provided on or before the Closing Date of the Milan Property, the relevant Seller shall indemnify the relevant Purchaser for any loss, cost, expense or liability arising in any way in respect thereto.


14.5	Material Adverse Changes

14.5.1

The Sellers shall be liable for any deterioration in the condition of any of the Prime Properties that may occur between the date of notarisation of the Umbrella Agreement and the Closing Date unless such deterioration falls within the limits of normal wear and tear, it being understood that any wear and tear resulting from actions, or the lack of actions, not in compliance with Section 14 shall in no case be deemed to be ordinary wear and tear. In such case, the Sellers shall be obliged to remedy the defect and (if the deterioration is discovered after the Closing Date) compensate for any costs of such remediation including any loss of rent. Remediation has to be undertaken in any case in a good and workmanlike manner with good quality materials and by a reputable firm and without undue delay after the deterioration is discovered.


14.5.2	If any deterioration in the condition of a Property is covered by insurance, the relevant Purchaser shall be informed of this immediately and shall be entitled to demand any insurance benefits payable in this respect. The Purchaser may claim such insurance benefits only in lieu of its claim for the damage being repaired by the Seller pursuant to Section 14.5.1.

14.5.3

In the event of any deterioration in the condition of a Property going beyond normal wear and tear, the reinstatement costs exceeding 20% of the Individual Purchase Price of the relevant Purchase Object or in the case of Shares the Agreed Property Value as described in Annex 4.1 plus value-added tax and/or which requires a time period to reinstate of more than six months , the Purchaser shall be entitled to rescind the relevant Individual Transfer in respect of the affected Property.

14.5.4

The Purchaser is entitled to rescind the relevant Individual Transfer in relation to a Purchase Object/Share in case there is a rent shortfall pertaining to the respective Property due to a tenant falling into insolvency or an extraordinary termination of a Lease, as set forth in the list of Lease Agreements specified in Section 10.3.2(a), which exceeds 15% of the relevant Property's total net rent (as set forth in the list of Lease Agreements specified in Section 10.3.2(a)). Should more

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than one Lease be extraordinarily terminated or more than one tenant fall into insolvency for a given Property, the loss of rent of all terminated Leases / Leases with an insolvent tenant shall be aggregated to determine whether or not the threshold for the rescission right is exceeded.


14.5.5	The rescission right pursuant to Sections 14.5.3 and 14.5.4 must be exercised within one month of the date the Party exercising the right becoming aware of the deterioration and the anticipated costs of reinstatement or of the rent shortfall. In case of rescission the statutory provisions relating to consequences of rescission apply. Section 16.3 applies to such rescission rights.

14.5.6

In case the Parties cannot agree on the anticipated costs for reinstatement, the anticipated reinstatement time or the rent shortfall, these circumstances shall be determined for them by a jointly selected and appointed expert arbitrator ( Schiedsgutachter ). If the Parties cannot agree on an expert arbitrator such expert arbitrator will at the request of either Party be bindingly designated by the president of the Chamber of Commerce (or equivalent under local law, as designated in the Individual Transfers) competent of the location of the relevant Property. The costs of the expert arbitrator are split according to secs. 91 seq. ZPO. The expert arbitrator is asked to also decide on the costs in his determination.

If expert arbitrator proceedings are pending in relation to a Purchase Object or the Shares, the maturity of the Individual Purchase Price for such Purchase Object or the Shares according to Section 4.1.4 shall be suspended until ten Business Days after the determination of the expert arbitrator is rendered.


14.6	Purchaser’s Undertakings


14.6.1	The Milan Purchaser shall, on or immediately after the Closing Date enter into a temporary lease agreement with SEB-GER Milan Branch materially in the form of the draft attached as Annex 14.6.1 to lease certain spaces located at the first underground floor of the Milan Property.

14.6.2

The Rotterdam Purchaser undertakes towards the Seller to enter into a lease transfer agreement materially in the form as attached in Annex 14.6.2 regarding the transfer of the Ontwikkelingsbedrijf Rotterdam's position as a lessee under the existing lease agreement with Regionale Directie Domeinen West (attached in Annex 14.6.2 for the purpose of reference) if so requested by the Ontwikkelingsbedrijf Rotterdam before the Closing Date.


15.	TRANSFER OF POSSESSION, DOCUMENTATION, ETC.


15.1	Transfer of Possession

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15.1.1

Save as provided in Section 15.1.3 and 15.1.4 below, possession, benefits and burdens to the individual Property in relation to which closing has occurred, shall pass on to the relevant Purchaser on 24:00 hrs. on the relevant Closing Date (“ Transfer of Possession ”), provided that, for the purpose of calculations re apportionments, accounts, tax, and completion accounts, the Closing Day shall be considered a day of Seller’s ownership.

15.1.2

Save as provided in Section 15.1.3 below, upon Transfer of Possession of a Property, the risk of accidental loss or deterioration, the benefits and charges and all duties to safeguard traffic relating to the Property shall pass from the Seller to the Purchaser. As of Transfer of Possession, the Purchaser shall assume the rights and obligations arising from the ownership of the Property, thereby releasing the Seller, and shall indemnify and hold the Seller harmless from any claims arising from the ownership of the relevant Property as of the Transfer of Possession.

15.1.3

In respect of the Purchase Objects which are the subjects of Schedules 3.1 and 3.2 , completion of the transfer of that Purchase Object shall occur on the relevant Closing Date in accordance with the provisions of Schedules 3.1 and 3.2 (with the time of such closing being the " Transfer of Possession " for the purposes of this Purchase Object) and provided that for the purposes of apportionments, the Closing Day shall be considered a day of the Seller's ownership. Upon such Transfer of Possession, the risk of accidental, loss, damage and deterioration shall pass from the Seller to the relevant Purchaser. The indemnity contained in Section 15.1.2 shall not apply in respect of the Purchase Objects which are the subject of Schedules 3.1 and 3.2 as such matters shall be covered in the relevant transfer documents that give effect to the transfer as provided for in Schedules 3.1 and 3.2 .

15.1.4

In respect of the Purchase Objects which are subject of Schedules 3.3 and 3.10 Transfer of Possession shall occur upon execution of the relevant deed of sale (drafts of which are attached in Schedules 3.3 and 3.10 ) and be governed only by the respective Individual Transfers and this Section 15.1 shall not apply. For these Purchase Objects, Transfer of Possession shall be the transfer of possession as set forth in the Individual Transfer.


15.1.5	In respect of the Shares which are subject of Schedules 3.7.2 and 3.11 the transfer shall be governed only by the respective Individual Transfers and this Section 15.1 shall not apply.

15.1.6

The Sellers shall indemnify the Purchasers for real estate or residential tax and related ancillary payments (included payments due under applicable public law for public development measures, etc.) to the extent they relate to periods up to the date of the Transfer of Possession or, as the case may be, i.e., the real estate or residential tax for the year of Transfer of Possession shall be allocated pro rata temporis between the relevant Purchaser and the relevant Seller. The Parties shall indemnify and hold harmless each other in their internal relationship against all claims and

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demands contradictory to the above allocation. This Section 15.1.6 shall not apply to the transfer of the Shares, which instead shall be governed by the Individual Transfers pursuant to Schedules 3.7.2 and 3.11 .

15.1.7

For the avoidance of doubt, legal title and beneficial ownership shall transfer to the relevant Purchaser on the Closing Date; provided that, where it is not possible under the law of the jurisdiction of the Purchase Object or Shares to transfer legal title on the Closing Date, possession and beneficial ownership shall nevertheless transfer on the Closing Date and final transfer of title shall occur under the provisions of the relevant Individual Transfer.

15.1.8

The Sellers hereby authorize the relevant Purchaser to exercise all rights relating to the relevant Property like an owner with effect as of the Closing Date, provided that the Purchasers shall indemnify and keep the Sellers harmless from any claims, costs, damages or other burdens incurred by a Seller in connection with such authorization of a Purchaser. The relevant Seller will, at the relevant Purchaser’s request, confirm such authorization in writing. The Sellers are obliged to reasonably cooperate in the exercise of such rights to the extent necessary.


15.2	Documentation, Transfer of Property Related Agreements

15.2.1

The Sellers shall deliver to the Purchasers on the Closing Date the completion deliverables set out in each of the Individual Transfers, if any. All other documents relating to the Purchase Objects or Shares and necessary for their ownership and operation – to the extent they are present with or under the control of the Sellers (or its service providers, in particular the Property Manager) – shall be delivered to the Purchasers as soon as practicable and in any event no later than within four weeks upon Transfer of Possession of the relevant Purchase Object or transfer of the Shares in the original, otherwise as copies.


15.2.2	The Sellers shall be entitled to retain copies for themselves. Excluded from the obligation to hand over to the Purchasers shall be in particular documents with confidential information like internal notes and calculations, brokerage engagements, conceptions or marketing studies and all comparable documents.

15.2.3

Except where provided otherwise under the Individual Transfers, the Purchasers shall – unless notified otherwise by the Purchasers prior to the relevant Closing Date- continue all contractual arrangement with third parties pertaining to the Purchase Objects as set forth in Annex 15.2.3 for the relevant Properties. Each Purchaser assumes – irrespective of a potential termination right – contingently upon and with effect of Transfer of Possession, all rights and obligations arising from such agreements for periods after the Transfer of Possession. In the event that the assumption of any of the aforementioned contractual agreements is subject to the prior consent of the other party and this party refuses to approve the assumption of any of the aforementioned contracts,

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the respective Seller shall be obliged to maintain the contract(s) in question at the relevant Purchaser's request and for the Purchaser's account and at its expense until the next available termination date and afterwards be entitled to terminate the relevant contractual agreement. To the extent the services under the agreements as set forth in Annex 15.2.3 cannot be demarcated as belonging prior or subsequent to Transfer of Possession, the Sellers and Purchasers shall settle any claims for remuneration or consideration of the relevant parties that relate to such services on a pro rata temporis basis (i.e. insofar as they are payable for services for periods of time prior to or subsequent to Transfer of Possession).

15.2.4

The Sellers assign on the Closing Date to the Purchasers the claims for defects or malperformance out of the agreements mentioned in Section 15.2.3 or any other agreements relating to any Property upon Transfer of Possession. The Purchasers hereby accept such assignments. The Sellers shall, however, not be liable for the effectiveness, the existence, the amount, the absence of objections or the enforceability of such claims save as otherwise set out in this Umbrella SPA. The Sellers shall, if so requested by any Purchaser, repeat or re-declare the above assignment in sufficiently clear form, if necessary. The Sellers shall assign to the Purchasers on the Closing Date any collateral security provided in this respect with effect from the Transfer of Possession. Any amount withheld from the contractual remuneration due to any service provider shall be paid to the respective Purchaser. Collateral security provided under the underlying contracts for work shall be held and drawn on or released as stipulated therein.


15.3	Insurances

Any insurance regarding the Purchase Objects will expire upon the Transfer of Possession. Accordingly, the Purchasers will not assume the insurance agreements and not become the insured party or the beneficiary. The Purchasers undertake towards the Sellers to keep the individual Purchase Object upon the Transfer of Possession insured at a sufficient amount and in accordance with statutory requirements until the date on which legal title is transferred.


15.4	Purchasers’ Entitlement


15.4.1	The Sellers authorize the Purchasers with effect upon the Transfer of Possession to make use of and exercise all ownership rights (including towards authorities) as if the legal ownership (as opposed to only beneficial ownership) had already passed on to the Purchasers upon the Transfer of Possession.


15.4.2	To the extent legally possible under the relevant jurisdiction of a Purchase Object, the Purchasers herewith indemnify the Sellers from all damages, expenses and disadvantages arising from the exercise of this power of attorney. Upon request of a Purchaser, the Sellers shall reiterate this power of attorney in a separate deed at the Purchaser’s costs.

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15.5	Transfer of Lease Agreements Following Closing

15.5.1

Upon Transfer of Possession, the Purchasers will assume the lease agreements in place for the Purchase Objects (“ Portfolio Leases ”) from the relevant Seller. Therefore, upon Transfer of Possession, all rights and obligations under the Portfolio Leases relating to periods after the Transfer of Possession shall pass on to the relevant Purchaser. Accordingly, the relevant Seller shall indemnify the respective Purchaser from claims of the lessees pertaining to periods prior to Transfer of Possession.


15.5.2	The relevant Sellers herewith assign their claims as of the Transfer of Possession under the Portfolio Leases contingent upon and with effect of Transfer of Possession to the relevant Purchaser who accepts such assignment. The relevant Purchaser in turn indemnifies the respective Seller from all rights and claims of lessees which come into existence or become due after the Transfer of Possession.


15.5.3	The Sellers shall remain entitled to pursue any claims for arrears of rent (also by taking legal actions, however excluding the right to draw guarantees) against the lessees to the extent such claim arose and became due prior to the Transfer of Possession and including any disputes with lessees regarding statements of operating costs that have not been settled as per the Closing Date.

(a)

In respect of the Purchase Objects, the following is agreed: The Sellers shall however, not do so before (i) the relevant Purchaser is informed of the action to be taken and the Sellers, if requested by the Purchaser, shall cooperate with the Purchaser to recover such arrears without taking legal action and (ii) a grace period of at least 20 banking days has expired without the claim being satisfied either by the relevant tenant or the relevant Purchaser. In any event, the Seller shall not be entitled to take any actions against a tenant, if (i) the claim has already been due for more than four months or (ii) is below EUR 40,000 (net) or the equivalent (“ Collection Limits ”). Subject to compliance with the aforementioned right, the Seller’s right to sell and assign a claim to a third party debt collector shall remain unaffected, subject to that the relevant Purchaser being granted a right of first refusal.

(b)

In respect of the Shares, the following is agreed: Irrespective of contrary undertakings in this Agreement, the Seller shall be entitled to cause Chrysalis and Lindholmen AB, respectively, to pursue any claims for arrears of rent from the date hereof to the date of Closing in the same manner as agreed in Section 15.5.3(a) above. However, the right to sell and assign a claim is excluded and the Collection Limits do not apply. These rights shall expire on the Closing Date.

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15.5.4	The Seller and the Purchaser will inform the lessees immediately after the Transfer of Possession in a joint letter in a form appropriate to the respective jurisdiction, of the change of the lessor and upon request of the Purchaser, the Seller shall provide such letter on the Closing Date.

15.5.5

To the extent the aforementioned rights and claims against the lessees cannot be assigned under the applicable local law provisions, the Sellers herewith authorize the Purchasers to exercise and assert such rights in its own name upon Transfer of Possession. If the Purchaser exercises such rights and claims in the name of a Seller, the respective Purchaser herewith indemnifies this Seller from any damages, and proper expenses or disadvantages actually incurred resulting from the exercise of such rights, especially from third party’s claims. This shall also apply in case this Umbrella SPA may cease to exist for whatever reason.

15.5.6

The Parties will allocate rental payments and payments of service charges according to Section 15 with effect from Transfer of Possession. The Sellers will transfer payments of rent or service charges for periods after Transfer of Possession within ten Business Days after the respective receipt of payment without interest into the rent account of the Purchaser, except as otherwise provided in the Individual Transfers.

15.5.7

Except as provided differently in any Individual Transfer, the service charges for the period until 31 December 2014 shall be accounted for and settled by the relevant Seller with the lessees. The service charge for periods beginning on 1 January 2015 shall be accounted for and settled by the relevant Purchaser with the lessees. The balances for the period between 1 January 2015 and the Transfer of Possession shall be settled between the Purchasers and the Sellers internally, i.e. without an interim calculation for the lessees as follows:


(a)	Any payments made by the Sellers in settlement of costs recoverable from the tenants and accrued up to the Transfer of Possession shall be set off against the advance payments made by the lessees in respect of service charges up to that date and that may be allocated to the lessees, and any balance determined in this regard shall be settled by the relevant Seller and Purchase inter se.

(b)

In addition, the Parties shall draw up an interim statement of accounts as of the Transfer of Possession, with all costs and charges incurred with respect to the relevant Property being split up between the Parties inter se (pro rata temporis and, if appropriate, in relative proportion to the size of the premises). A final statement of account will be drawn up by the Parties as soon as reasonably practicable following the relevant Closing Date and in any event within three month of the relevant Closing Date and any balancing payments shall be paid by the relevant Party.


15.6	Securities for Rent

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15.6.1	The Sellers shall not be entitled to draw upon any security for rent provided by the lessees. The security for rent in the amount specified in Annex 10.3.2(i) shall be assigned in accordance with the following Section 15.6.2.


15.6.2	All deposited funds (including any accrued interest up to such time) and all bank guarantees or similar security for rent provided by the lessees as security shall be transferred to the relevant Purchaser upon Transfer of Possession.

15.6.3

The relevant Seller of the Milan Property undertakes to cooperate to procure that the lessees under the Lease Agreements for the Milan Property issue new guarantees for the benefit of the Milan Purchaser to replace the guarantees provided pursuant to the relevant Lease Agreements and the Seller of the Milan Property undertakes that until such a time when the Milan Purchaser has received all such guarantees the Seller will cooperate to allow the Milan Purchaser to enforce under Italian law the existing guarantees.


15.7	Brussels Lease

On the Closing Date of the Brussels Property, SEB shall and the Brussels Shares Purchaser shall procure that Chrysalis shall execute a lease agreement materially in the form as set forth in the draft lease agreement attached as Annex 15.7 .


15.8	Sale of the Balni Share

In due time on or around the Closing Date of the Shares in Chrysalis to the relevant Purchaser, the relevant Purchaser shall cause Chrysalis to enter into a sale and purchase agreement with SEB for the sale and transfer of the Balni Share. The transfer shall occur free of any representations and warranties at the book value of the Balni Share.

SEB undertakes to Chrysalis to buy the Balni Share from Chrysalis ( Vertrag zugunsten Dritter ) at the conditions indicated above.


16.	RIGHTS OF RESCISSION


16.1	The Agreement

Except as explicitly stated in this Umbrella SPA or the Individual Transfers, neither party is entitled to rescind from this Agreement or the Individual Transfers.


16.2	Individual Transfers

In addition to any other rights of rescission under this Umbrella SPA,

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16.2.1	a Party shall be entitled to rescind any of the Individual Transfers - but only the concerned Individual Transfer - if so agreed in the relevant Individual Transfer and the reasons for the rescission apply thereunder;

16.2.2

both parties shall be entitled to rescind any of the Individual Transfers - but only the concerned Individual Transfer - if a statutory pre-emption right (or similar pre-emptive right not privately agreed) is exercised in respect of the relevant Property transferred thereunder (whereby the statutory obligations of the relevant Seller vis-à-vis the party exercising the pre-emption right shall remain unaffected thereof).

16.2.3

Both Parties shall be entitled to rescind this Umbrella SPA and the Individual Transfers in the event that the Purchaser does not obtain Merger Control Clearance by the Long Stop Date. For the avoidance of doubt, rescission pursuant to this Section 16.2.3 shall not give rise to any entitlement for the Seller to the Contractual Penalty and the Escrow Amount plus all accrued interest and the Corporate Guarantee shall be returned to the Purchaser without delay following on the Long Stop Date (and the Notary shall be instructed accordingly).


16.3	General Provision on Rescission Rights

16.3.1

Unless provided differently in this Umbrella SPA or any Individual Transfer any rescission rights under this Umbrella SPA or the Individual Transfers shall be exercised within four weeks after the Party entitled to rescind gains knowledge of the occurrence of the event giving rise to the rescission right by written declaration to the German Notary. The Sellers and the Purchasers herewith entitle the German Notary to receive such declarations on their behalf; after the lapse of the four-week-period, the respective rescission right shall lapse.


16.3.2	In case of a rescission pursuant to Section 16.2.2 or Section 16.2.3, there shall be, except in the case of fault, no damage or reimbursement claims.


16.3.3	The rescission from this Agreement shall at the same time be a rescission from all Individual Transfers. To the extent an Individual Transfer has already closed prior to the notification of such rescission, a rescission from this Agreement shall at the same time be a rescission of the remaining Individual Transfers that are not closed only.


16.3.4	Any rescission from an Individual Transfer shall only affect the Individual Transfer and shall have no effect on the other Individual Transfers or this Agreement except that the rescinded Individual Transfer shall no longer be part of this Agreement.

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17.	MERGER CONTROL CLEARANCE

Parties obtained merger control clearance on 16 January 2015.


18.	COSTS, REAL ESTATE TRANSFER TAX

All costs, except as provided below, connected with the Reference Deed, this Umbrella SPA, the Individual Transfers, the Escrow Account any additional required local agreements and transfer documents and its completion, including the costs and fees for the required public law consents and declarations and any real estate transfer tax (or similar duties as applicable under the local laws) shall be borne by the Purchasers. SEB, for the respective selling fund, bears all fees for (i) releasing the Purchase Objects or Shares or Properties from any securities granted or from any other encumbrances to be deleted and (ii) provision of the required consents of SEB AG and/or BaFin.

Each Party shall bear the costs of its own legal and other advisors and agents including negotiating and agreeing all aforementioned agreements and documents.


19.	NOTIFICATIONS


19.1	Purchasers’ Agent


19.1.1	Each Purchaser by its execution of this Umbrella SPA irrevocably appoints

Prime HoldCo C-T S.à r.l.,
6A Route De Treves - 6th Floor,
Senningerberg,
L 2633 Luxembourg

to act on its behalf as its agent (“ Purchaser’s Agent ”) in relation to this Umbrella SPA and irrevocably authorizes on its behalf to give and receive all notices and instructions, to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Purchaser notwithstanding that they may affect the Purchaser without further reference to or the consent of that Purchaser; and in each case the Purchaser shall be bound as though the Purchaser itself had given or received the notices and instructions or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.

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19.1.2


19.1.3	Each Purchaser hereby – to the extent applicable and legally possible - exempts the Purchaser’s Agent from the restrictions provided for in Section 181 of the German Civil Code.


19.1.4	Purchaser’s Agent must not cease to be a Purchasers’ Agent unless a replacement Purchasers’ Agent has been appointed to the reasonable satisfaction of the Sellers.


19.2	Declarations or notifications to the Sellers


19.2.1	Declarations or notifications to any of the Sellers shall be made in writing together with a pdf copy by e-mail and be addressed to:

SEB Investment GmbH
Rotfeder-Ring 7
D – 60327 Frankfurt am Main
Attn.: Mr. Nils Hübener

E-mail: nils.huebener@sebam.de

With a copy to:

Dr Jens Ortmanns,
McDermott Will & Emery
Stadttor 1
40219 Düsseldorf, Germany

E-Mail: jortmans@mwe.com


19.3	Declarations or notifications to the Purchaser’s Agent


19.3.1	Declarations or notifications to the Purchaser’s Agent shall be made in writing together with a pdf copy by e-mail and be addressed to:


(a)	Purchaser’s Agent and


(b)	For all Purchasers to:

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(i)	c/o NorthStar Asset Management Group, attn. General Counsel, 6A Route de Trèves, 6th Floor, 2633 Luxembourg, Luxembourg, Email: legal@nsamgroup.com

and


(ii)	c/o NorthStar Asset Management Group, attn. Shawana McGee, 6A Route de Trèves, 6th Floor, 2633 Luxembourg, Luxembourg, Email: smcgee@nsamgroup.eu

and


(iii)	c/o NorthStar Realty Finance Corp., attn. Ronald J. Lieberman, Esq., 399 Park Avenue, 18th Floor, New York, NY 10022, USA, Fax: +1 (212) 547-2704, Email: rlieberman@nsamgroup.com

With a copy to:


(iv)	Clifford Chance Deutschland LLP, attn. Thomas Reischauer, Mainzer Landstraße 46, 60325 Frankfurt am Main, Germany, Fax: +49 (0)69 7199 4000


19.4	Purchasers’ Domestic Process Agent

The Purchasers herewith appoint

Zeidler Outsourcing Services UG (haftungsbeschraenkt)
c/o Process Agent Services
Bettinastrasse 48
60325 Frankfurt am Main
Germany

as domestic German process agent for service. The Purchasers shall be entitled to replace the German process agent from time to time provided that at all times during the term of this Agreement a German domestic process agent is appointed. The Purchasers shall inform the Sellers about any replacement of the German domestic process agent with due notice.


19.5	Receipt of Notices


19.5.1	In the absence of evidence of earlier receipt, any notice shall take effect from the time that it is deemed to be received:


(a)	in the case of a notice left at the address of the addressee, upon delivery at that address; and

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(b)	in the case of a posted letter, on the third day after posting.


19.5.2	A notice received or deemed to be received in accordance with Section 19.5.1 above on a day which is not a Business Day in the place of receipt or after 5 p.m. on any Business Day, according to local time in the place of receipt, shall be deemed to be received on the next following Business Day in the place of receipt.


19.5.3	Each Party undertakes to notify the other Parties by notice served in accordance with this Section 19.5 if the address specified herein is no longer an appropriate address for the service of notices.


20.	CONFIDENTIALITY, ANNOUNCEMENTS


20.1	No Disclosure of Confidential Information

Each Party agrees to maintain in confidence the economic terms contained in this Agreement, information and data furnished or made available by Sellers, its agents or representatives in connection with Purchaser's investigation of the Properties and Shares and the transactions contemplated by this Agreement (collectively, the " Confidential Matters "); provided however, that each Party, its agents and representatives may disclose such information and data (i) to such Party's direct and indirect accountants, attorneys, prospective lenders, investment bankers, underwriters, partners, members, investors (prospective and current), employees, affiliates, officers, directors, consultants and advisors (collectively, " Representatives "), in each case, solely to the extent that such Representatives reasonably need to know such information in connection with assisting Purchaser in connection with the transaction contemplated herein, and Purchaser shall be liable to the Sellers for any action or omission prohibited under this Agreement by any of its Representatives; (ii) to the extent required by an applicable statute, law, regulation, governmental authority or securities exchange; (iii) to the extent required by Purchaser's reporting requirements under the rules and regulations of the Securities and Exchange Commission, including, without limitation, the necessity of filing Form 8-k disclosure with respect to the transaction contemplated hereby or as required by any securities exchange, (iv) if in the opinion of counsel to the disclosing Party, disclosure is required to comply with any mandatory provision of law, of any directive from a government recognized stock exchange, or of a binding decision from a court or another government body, (v) with respect to generic disclosures about business and pipeline of the Purchaser or any affiliate of the Purchaser made in the ordinary course of business that would not reasonably be expected to identify Seller with the specific transaction contemplated hereby; or (vi) if required by subpoena issued in connection with any litigation or proceeding.

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20.2	Announcements

Each Party shall use reasonable efforts to notify the other of impending press-releases regarding the conclusion of this Agreement and the Individual Transfers; provided that the Sellers shall not release any press release or otherwise publicly announce in advance of the Purchaser without the Purchaser’s prior written consent; provided further that substantially similar press-releases shall not require additional notification. The Parties shall so far as reasonably practicable, coordinate with each other to achieve consistency in the factual content of any press-releases.


21.	DISPUTE RESOLUTION


21.1	Disputes

The Parties shall attempt in good faith to resolve any dispute by mutual agreement by the following procedure:

21.1.1

In the event of any dispute between the Parties arising out of or relating to this Umbrella SPA, the responsible representatives of the Parties shall, within fifteen (15) Business Days of a written notice from one Party to the other Party (the " Dispute Notice "), hold a meeting (the " Dispute Meeting ") in an effort to resolve the dispute in fair dealing and good faith. In the absence of agreement to the contrary the Dispute Meeting shall be held at the registered office for the time being of SEB.

21.1.2

Each Party shall use all reasonable efforts to send a senior representative who has authority to settle the dispute to attend the Dispute Meeting (the " Dispute Representative "). Each Party shall give notice of the appointment of its Dispute Representative to the other Party. The Dispute Representatives shall use all reasonable efforts to resolve disputes arising out of this Umbrella SPA or Individual Transfers by amicable settlement.


21.1.3	Any dispute which is not resolved within forty (40) Business Days after the service of a Disputes Notice/ the service of the first notice of the appointment of a Dispute Representative, whether or not a Dispute Meeting has been held, shall, at the request of either Party be referred to the dispute resolution procedure pursuant to Section 21.2.

21.1.4

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21.2	Litigation


22.	SEC FILINGS AND REIT STATUS


22.1	SEC Filings

Sellers acknowledge that they have been advised that the Purchasers are subsidiaries of a publicly registered company (the “ Company ”). Sellers further acknowledge that, as a publicly registered company, the Company is required to make certain filings with and/or disclosures to the Securities and Exchange Commission (collectively, the “ SEC Filings ”) that relate, among other things, to the most recent pre-acquisition fiscal year (the “ Audited Year ”) and the current fiscal year through the date of acquisition (the “ Stub Period ”) for the Prime Properties. To assist the Company in preparing the SEC Filings, Seller agrees to provide Purchasers, at or before Closing, with the following: (i) access to bank statements for the Audited Year and Stub Period, (ii) rent roll as of the end of the Audited Year and Stub Period, (iii) operating statements for the Audited Year and Stub Period (iv) access to the general ledger for the Audited Year and Stub Period, (v) cash receipts schedule for each month in the Audited Year and Stub Period, (vi) access to invoices for expenses and capital improvements in the Audited Year and Stub Period, (vii) accounts payable ledger and accrued expense reconciliations in the Audited Year and Stub Period, (viii) check register for the three (3) months following the Audited Year and Stub Period, (ix) the Lease and five (5) year lease schedules, to the extent applicable, (x) copies of all insurance documentation for the Audited Year and Stub Period, (xi) copies of accounts receivable aging as of the end of the Audited Year and Stub Period along with an explanation for all accounts over thirty (30) days past due as of the end of the Audited Year and Stub Period, and (xii) signed representation letter and audit inquiry letter substantially in the forms attached hereto as Annex 22a and Annex 22b , respectively. Sellers agree that if after Closing Purchasers are required by the Securities and Exchange Commission to provide any additional financial or other information regarding any SEC Filings, Sellers will fully cooperate with Purchasers in connection with the preparation of

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such information, including providing access to certain information at Sellers' offices. Further, Sellers agree that if a Purchaser is required by the Securities and Exchange Commission to provide additional items related to such information, Sellers shall fully cooperate with Purchasers to deliver such related items. The provisions of this Section 22 shall survive the Closing.


22.2	REIT Status

Sellers acknowledge that the Company is a public real estate investment trust (“ REIT ”). Sellers further acknowledge that as a REIT, the Company is subject to certain filing and reporting requirements in accordance with federal laws and regulations, including, but not limited to, regulations promulgated by the Securities and Exchange Commission. Accordingly, and notwithstanding any provision of this Agreement or the provisions of any other existing agreement between the parties hereto to the contrary, Purchasers may publically file, disclose, report or publish any and all information related to this transaction that may be reasonably interpreted as being required by federal law or regulation. Notwithstanding the foregoing, the Purchasers will consult with the Sellers on any publications referring to the Sellers before publishing them and shall consider, to the extent legally permitted, the Sellers' comments.

Sellers further agree that they shall fully cooperate with Purchasers in complying with any and all laws, regulations, ordinances, requirements and restrictions in maintaining its status as a REIT. The provisions of this Section 22.2 shall survive the Closing.


22.3	Common Provisions on SEC Filings and REIT Status


22.3.1	Parties acknowledge that the foregoing undertakings of the Sellers are best efforts obligations only and not absolute undertakings and, subject to the Sellers using best efforts to comply with the requirements above, the Sellers under no circumstances shall be liable for any consequences should the Purchasers' requirements pursuant to Sections 21.1 and 21.2 not be fulfilled .


22.3.2	All costs of actions of the Sellers required under the above provisions shall be borne by the Purchasers.


23.	MISCELLANEOUS


23.1	Restrictions on Assignment


23.1.1	Unless otherwise provided in this Umbrella SPA, claims of any of the Purchasers arising out of or in connection with this Umbrella SPA may only be assigned with the prior written consent of SEB except customary assignments to equity providers or financing parties or assignments to

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intra-group companies of the Purchasers and subject to regulatory requirements on assignment limitations.

23.1.2

The Sellers shall, at the written request of the Purchasers, and at the Purchasers' cost, take all necessary legal and factual steps to assist in procuring a full transfer of the contractual relationship under this Umbrella SPA or any part referable to a Purchase Object or Shares and the relevant corresponding Individual Transfer(s) from any Purchaser to, or the assignment or novation of the corresponding benefits and obligations to, or the nomination of, an affiliated entity of the Purchasers (“ Internal Designee ”). Affiliated entity is determined according to Secs. 15 et seq. German Stock Corporation Act ( Aktiengesetz ) accordingly and it being understood that in interpreting this German law concept the specifics of other jurisdictions shall reasonably be taken into account. A transfer under this clause would lead to a complete exchange of the contractual position on the Purchaser’s side, i.e. only the Internal Designee would from then on be entitled and obliged under this Umbrella SPA (or the relevant part as the case may be) and the relevant corresponding Individual Transfer.


23.2	Payments, Bank Accounts

Any payment under this Agreement must be made free of all taxes, bank charges and other deductions by wire transfer of immediately available funds and in the currency agreed herein. Any such payment shall be deemed to have been duly made only upon the irrevocable and unconditional crediting of the amount payable (without deduction of any costs or charges) to the relevant bank account on, and on a value date no later than, the relevant due date.

All payments due under this Agreement shall be made to the bank accounts notified by the Sellers or the Purchasers, as appropriate, unless Section 4.2 or the Individual Transfers provide otherwise.


23.3	Liability of Sellers


23.4	Joint and Several Liability of Purchasers

Any Purchaser shall be jointly liable together with all other Purchasers and each Purchaser assumes to fulfill all obligations of any other Purchaser and assignee under this Umbrella SPA ( gesamtschuldnerische Haftung ).

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23.5	Amendments

Any amendments to this Agreement shall be in writing, signed by each of the Parties to be valid and require the explicit reference to this Agreement but must be in notarial form if this is required by mandatory law. This is also applicable for an amendment of this Section 23.5.


23.6	Severability

Should a provision of this Agreement or a provision later on included in this Agreement be or become null and void as a whole or in part, or should a gap in this Agreement become evident, this does not affect the validity of the remaining provisions. The Parties are aware of the German Federal Supreme Court's ( Bundesgerichtshof ) decision according to which a severability Section merely reverses the burden of proof. However, it is the express intention of the Parties to maintain the validity of the remaining provisions at all events and thus to exclude the applicability of section 139 BGB as a whole. Instead of the null and void provision, or in order to fill the gap, such valid and practicable regulation is deemed to be agreed with effect ex tunc that in legal and economic terms comes closest to what the Parties intended or would have intended in accordance with the purpose of this Agreement if they had considered the point at the time of conclusion of this Agreement.

If the nullity of a provision is due to a degree of performance or time (period or deadline) laid down in this provision, then the provision is deemed to be agreed with a legally permissible degree that comes closest to the original degree. However, the Agreement is null and void as a whole if it is null and void in relation to individual Parties or if the partial nullity concerns the contractual main performance obligations or a part of them.


23.7	Governing Law


23.7.1	Except as otherwise provided in this Agreement, this Agreement ( except its Schedules 3.1 to 3.11 ) shall be exclusively governed by and construed in accordance with the law of the Federal Republic of Germany applicable to parties residing within the Federal Republic of Germany without regard to the conflicts of law provisions of the law of the Federal Republic of Germany.


23.7.2	The transactions under the Individual Transfer(s) pursuant to Schedules 3.1 to 3.11 are subject to the law provided for therein, or, if not provided therein, subject to the Law in which the Property in question is situated.


23.8	Entire Agreement

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23.8.1

This Agreement including its Schedules and Annexes and the Schedules and Annexes to such Schedules together with all other agreements and their respective Schedules and Annexes as provided in the Umbrella Agreement dated 22 December 2014, Roll of Deeds No. 376/2014 of Notary Dr. Hans Hofmann, comprise the entire agreement between the Parties concerning the subject matter hereof and supersedes and replaces all prior negotiations, agreements and undertakings of the Parties whether oral or written, with respect to the subject matter hereof.

In case of discrepancies between this Agreement and the Umbrella Agreement, the terms and conditions of this Agreement and its Annexes and Schedules shall prevail.


23.9	Further Assurances

Each Party shall from time to time execute and deliver all such further documents and agreements and take all such further actions as the other Party may reasonably require in order to effectively consummate the transactions contemplated by this Agreement and the Individual Transfers as provided herein.


23.10	No Contract for the Benefit of a Third Party ( kein Vertrag zugunsten Dritter )

This Agreement shall not grant any rights to, and is not intended to operate for, the benefit of third parties unless otherwise explicitly provided for herein.


23.11	No Set-off

Except as expressly provided otherwise in this Agreement, with respect to the payment of any Individual Purchase Price, no Party shall be entitled (i) to set-off ( aufrechnen ) any rights and claims it may have under the Agreement, or (ii) to refuse to perform on the grounds of a right of retention ( Zurückbehaltungsrecht ) unless the rights or claims of the relevant Party claiming a right of set-off ( Aufrechnung ) or retention ( Zurückbehaltung ) have been acknowledged ( anerkannt ) in writing by the relevant other Party/Parties or have been confirmed by final decision of a competent court ( Gericht ) or arbitration court ( Schiedsgericht ).

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Exhibit 10.9

Deed No. 519 of the notarial roll of Deeds for the year 2015 CW

Recorded

in Frankfurt am Main on 11 and 12 June 2015

before the undersigned Notary

in the district of the Higher Regional Court ( Oberlandesgericht ) of Frankfurt am Main

Dr. Christian Wicker

with official seat in

Bockenheimer Landstraße 13-15, 60325 Frankfurt am Main

appeared today


1.	Dr Timo Elsner, born on 12 May 1975, with business address at Freshfields Bruckhaus Deringer LLP, Bockenheimer Anlage 44, 60322 Frankfurt am Main, who is personally known to the notary,

hereinafter acting not in his own name but – excluding any personal liability – for and on behalf of

Madison Trianon S.à r.l. , a private limited liability company ( société à responsabilité limitée ) incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 55, Avenue Pasteur, L - 2311 Luxembourg, registered with the Luxembourg Register of Trade and Companies ( Registre de Commerce et des Sociétés de Luxembourg ) under registration no. B 167964,

- hereinafter " Seller 1 " –,

based on the power of attorney dated 5 June 2015 the original of which was presented for this notarisation and a copy of which is attached to this deed and herewith certified,

b) Wesselton GmbH & Co. KG , a limited partnership incorporated and existing under the laws of Germany, having its office at Mainzer Landstraße 46, 60325 Frankfurt am Main, registered with the commercial register of the local court of Frankfurt am Main under registration number HRA 44290,

- hereinafter " Wesselton " -,

based on the power of attorney dated 8 and 9 June, the original of which was presented for this notarisation and a copy of which is attached to this deed and herewith certified,


2.	Mr Stefan Koch, born on 15 October 1978, with business address at 64, Avenue de la Liberté, L - 1930 Luxembourg, who identified himself by valid identity card,

hereinafter not acting in his own name but – excluding any personal liability – for and on behalf of

MSEOF Trianon S.à r.l. , a private limited liability company ( société à responsabilité limitée ) incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 64, Avenue de la Liberté, L - 1930 Luxembourg, registered with the Luxembourg Register of Trade and Companies ( Registre de Commerce et des Sociétés de Luxembourg ) under registration no. B 126206,

- hereinafter " Seller 2 " -,

Based on today's inspection of the Luxembourg Register of Trade and Companies ( Registre de Commerce et des Sociétés de Luxembourg ) the notary herewith confirms that MSEOF Trianon S.à r.l. is registered therein under registration no. B 126206 and that Mr Stefan Koch is registered as its managing director with the power of sole representation.


3.	Mr Thomas Reischauer, born on 26 November 1973, with business address at Clifford Chance Deutschland LLP, Mainzer Landstraße 46, 60325 Frankfurt am Main, who is personally known to the notary,

hereinafter not acting in his own name but – excluding any personal liability – for and on behalf of

a) Symbol I – T S.à r.l. , a private limited liability company ( société à responsabilité limitée ) incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 6A route de Trèves, Senningerberg, L-2633 Luxembourg, currently under the process of being registered at the Luxembourg Register of Trade and Companies ( Registre de Commerce et des Sociétés de Luxembourg ),

- hereinafter " Purchaser 1 " -,

b) Symbol II – T S.à r.l. , a private limited liability company ( société à responsabilité limitée ) incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 6A route de Trèves, Senningerberg, L-2633 Luxembourg, currently under the process of being registered at the Luxembourg Register of Trade and Companies ( Registre de Commerce et des Sociétés de Luxembourg ),

- hereinafter " Purchaser 2 " -,

c) Symbol III – T S.à r.l. , a private limited liability company ( société à responsabilité limitée ) incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 6A route de Trèves, Senningerberg, L-2633 Luxembourg, currently under the process of being registered at the Luxembourg Register of Trade and Companies ( Registre de Commerce et des Sociétés de Luxembourg ),

- hereinafter " Purchaser 3 " -,

d) Symbol IV – T S.à r.l. , a private limited liability company ( société à responsabilité limitée ) incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 6A route de Trèves, Senningerberg, L-2633 Luxembourg, currently under the process of being registered at the Luxembourg Register of Trade and Companies ( Registre de Commerce et des Sociétés de Luxembourg ),

- hereinafter " Purchaser 4 " -,

e) Symbol V – T S.à r.l. , a private limited liability company ( société à responsabilité limitée ) incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 6A route de Trèves, Senningerberg, L-2633 Luxembourg, currently under the process of being registered at the Luxembourg Register of Trade and Companies ( Registre de Commerce et des Sociétés de Luxembourg ),

- hereinafter " Purchaser 5 " -,

for a) through e) based on the power of attorney dated 8 June 2015, the original of which (without Apostille) was presented for this notarisation and a certified copy of which (with Apostille) will be attached to this deed,

f) Symbol Holdco C-T S.à r.l. , a private limited liability company ( société à responsabilité limitée ) incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 6A route de Trèves, Senningerberg, L-2633 Luxembourg, currently under the process of being registered at the Luxembourg Register of Trade and Companies ( Registre de Commerce et des Sociétés de Luxembourg ),

- hereinafter " Purchaser 6 " -,

based on the power of attorney dated 8 June 2015, the original of which (without Apostille) was presented for this notarisation and a certified copy of which (with Apostille) will be attached to this deed.

The acting notary is hereinafter referred to as "Notary".

Neither the Notary nor the persons appearing assume any liability as to the validity and/or the scope of the powers of attorney presented.

The Notary asked the persons appearing regarding a prior involvement according to sec. 3 para. 1 sentence 1 no. 7 of the German Notarisation Act ( Beurkundungsgesetz ). After having been instructed by the Notary the persons appearing and the Notary declared that there had been no such prior involvement.

The Notary did not – unless stated otherwise above – inspect the commercial registers of the companies involved nor has he any knowledge about the legal and economic conditions of these companies and the legal authority to represent these companies. He advised the persons appearing about the resulting risk. The persons appearing expressly released the Notary from any such obligation and requested the prompt recording of the following deed.

The persons appearing requested this deed to be recorded in the English and regarding German translations of legal terms partly in the German language. The acting Notary who is in sufficient command of the English language ascertained that the persons appearing are also in adequate command of the English and the German language. After having been instructed by the Notary, the persons appearing waived the right to obtain the assistance of a sworn interpreter and to obtain a certified translation of this deed.

All references to annexes in this deed are references to annexes to the notarial deed of the acting Notary dated 9, 10, 11 and 12 June 2015 (no. 518 of the roll of deeds for 2015 CW), hereinafter referred to as “ Reference Deed ”. Formal reference ( Verweisung ) is herewith made to the Reference Deed pursuant to Section 13a of the German Notarisation Act ( Beurkundungsgesetz ) and the contents of the Reference Deed shall be part of this agreement. The original of the Reference Deed was available ( lag vor ) during the present notarisation. The persons appearing confirmed that they are fully aware of the contents of the Reference Deed. Acting for and on behalf of the parties which they represent, the persons appearing hereby authorise ( genehmigen ) all declarations made in the Reference Deed. After having been instructed by the acting Notary about the meaning of their declarations, the persons appearing waived their right to have the Reference Deed read aloud to them and that the Reference Deed be attached to this notarial protocol. After having been instructed by the acting Notary, the persons appearing waived their right to obtain the assistance of a sworn interpreter and to obtain a certified translation of the Reference Deed including the annexes thereto.

All approvals, consents and similar declarations that may still be required shall take effect for and against all parties upon receipt by the officiating notary.

The notary is entitled to issue complete or partial executed as well as certified copies of this deed and of the schedules hereto ( Ausfertigungen oder Teilausfertigungen ).

Requesting its notarisation, the persons appearing then declared the following:



Project Icon
	Share Sale and Purchase Agreement

CONTENTS



Clause		Page
INDEX OF DEFINITIONS		1
INDEX OF ANNEXES		6
1.	CERTAIN DEFINITIONS	8
2.	SALE OF THE SOLD SHARES	13
3.	PREPARATORY ACTIONS	16
4.	PURCHASE PRICE; PAYMENTS	16
5.	CLOSING; WITHDRAWAL RIGHTS	24
6.	CLOSING DATE ACCOUNTS	32
7.	COMPLETION OF CERTAIN CONSTRUCTION WORKS	35
8.	SELLERS’ GUARANTEES; NO OTHER REMEDIES	46
9.	REMEDIES FOR BREACH OF SELLERS’ GUARANTEES	53
11.	PERIOD BETWEEN SIGNING DATE AND CLOSING DATE	65
12.	INDEMNIFICATION	69
13.	PURCHASERS’ GUARANTEES / FURTHER SELLERS' GUARANTEES	70
14.	SUBMISSION TO IMMEDIATE ENFORCEMENT	72
15.	CONFIDENTIALITY AND ANNOUNCEMENTS	73
16.	ASSIGNMENT OF RIGHTS AND OBLIGATIONS	74
17.	TRANSFER TAXES AND COSTS	75
18.	NOTICES	75
19.	SEC FILINGS AND REIT STATUS	77
20.	MISCELLANEOUS	79

INDEX OF DEFINITIONS



Term	Defined in clause
Actual CIT LCF Assessment, Actual TT LCF Assessment	10.2.2(a)
Actual CIT LCF, Actual TT LCF	10.2.2(b)
Adjusting Events	4.2.4(e)
Affiliate	20.3.2
Agreement	Caption
Anticipated Outstanding Costs	7.7.2(b)
Anti-Corruption Laws	13.1(e)
Audited Year	19.1
Basket	9.2
BGB	1.3.3
Bond Cash Collateral	7.1.2
Buba Fit-Out Escrow	5.6.1(c)
Bundesbank Lease	5.3.1(b)
Business Day	20.3.1
CIT Leakage	10.2.2(c)
Closing	5.1.1
Closing Conditions	5.2
Closing Date	5.1.1
Closing Date Accounts	6.1.2
Closing Guarantee Breach	5.3.2
Completion	7.4.1
Confidential Matters	15.1
Construction Compensation Amount	7.2.1
Construction Cost Escrows	7.7.1
Construction Works	7.1.1
Construction-related Agreements	7.1.1



Term	Defined in clause
Cut-Off-Date	9.4.1
Data Room	8.3.2(b)
Deemed Official Acceptance	7.5.1(b)
De Minimis Amount	9.2
Deka Settlement Agreement	7.2.2
DekaBank	7.2.2
Deposit	5.6.3
Deposit Escrow	5.6.1(a)
Directive	13.1(h)
Effective Time	6.1.1
Elevator Modernisation	7.1.1(c)
Environmental Damage	8.2.2(e)
Escrow Accounts, Escrow Rules	5.6.1,5.6.2
Estimated Purchase Prices	4.3.2
Excess Cash	4.2.6
Expected CIT LCF, Expected TT LCF	10.2.2
FCO	11.1.1
Fire Protection Concept	7.1.1(a)
Fire Protection Escrow	5.6.1(b)
Fixed GMS Asset Value	1.3.5
Fixed Property Value	1.3.5
GMS Bundesbank Lease	7.2.1(iii)
GWB	11.1.1(a)
Helaba Land Charge	1.4
Helaba Lenders	1.4
Helaba Loan Agreement	1.4
Helaba Loan Amount, Helaba Qualifications	3.1
Helaba Loan Amount Notification	3.1
Helaba Security	1.4



Term	Defined in clause
HGB	4.2.1(b)(i)
Indemnifiable Tax	10.2.4
Lease, Lease Agreements	8.2.3(a)
Liability Caps	9.3
Listed Company	19.1
Long Stop Date	5.5.1
MAC	5.3.1
Notices	18.1
Official Acceptance	7.4.2
OpCo	1.1(b)
OpCo Value	4.2.2
Other Construction Costs Escrow	5.6.1(d)
Overaccrual	10.3.1(b)
Over-Indemnification	10.3.1(c)
Parties	Caption (5)
Pre-Closing Date Period, Pre-Closing Date Tax, Pre-Closing Date Tax Refund,	10.1
Preliminary Closing Date Accounts	6.1.2
Preliminary Purchase Price Calculation	6.1.3
Project Managers	7.3.1(b)
PropCo	1.1(a)
PropCo Value	4.2.1
Public Law Agreement	7.1.1(a)
Purchase Price	4.1.5
Purchaser 1	Caption (4)
Purchaser 1 Account	4.6.3
Purchaser 2	Caption (5)
Purchaser 2 Account	4.6.4
Purchaser 3	Caption (6)
Purchaser 3 Account	Caption 4.6.5



Term	Defined in clause
Purchaser 4	Caption (7)
Purchaser 4 Account	Caption 4.6.6
Purchaser 5	Caption (8)
Purchaser 5 Account	Caption 4.6.7
Purchaser 6	Caption (9)
Purchaser 6 Account	Caption 4.6.8
Purchasers	Caption (5)
REAG	7.3.1(a)
Real Property	1.3.1
Reimbursement Claims	7.2.2
REIT	19.2
Relevant Agreements	7.3.2(a)
Relevant Tax Proceeding	10.1
Remaining Defects	7.4.4
Representatives	15.1
Sanctions	13.1(f)
SEC Filings	19.1
Seller 1	Caption (1)
Seller 1 Account	4.6.1
Seller 2	Caption (2)
Seller 2 Account	4.6.2
Sellers’ Knowledge	8.4
Sellers	Caption (2)
Signing Date	1.3.4
Snagging Items	7.4.2(b)(ii)
Sold Shares	1.2.6
Sold Shares 1.1	1.2.1(a)
Sold Shares 1.2	1.2.1(b)
Sold OpCo Share 1	1.2.2



Term	Defined in clause
Sold Shares 2.1	1.2.3(a)
Sold Shares 2.2	1.2.3(b)
Sold OpCo Share 2	1.2.4
Stub Period	19.1
Target Companies	1.1
Tax De Minimis Amount, Tax Basket	10.7.1
Tax, Tax Asset, Tax Authority, Tax Credit, Tax Proceeding, Tax Refund, Tax Return	10.1
Tenant Fit-Out Bundesbank	7.1.1(b)
Threshold	9.2
Transaction	11.1.1
Trianon Highrise	1.3.2
TT Leakage	10.2.2(c)
VAT	4.7
Wesselton	Caption (3)
Wesselton Shares	1.1.2
W&I Insurance	9.9

INDEX OF ANNEXES



Annex 1.1.1	Shareholder lists of PropCo and OpCo
Annex 1.1.2	Agreement between Seller 2 and Wesselton
Annex 1.3.1	Real Property
Annex 1.4	Helaba Loan Agreement
Annex 4.3.1	Pro-Forma Balance Sheets
Annex 4.3.2	Estimated Purchase Prices
Annex 5.4.1(c)	New Articles of Association
Annex 5.4.4	Closing Memorandum
Annex 5.6.2	Escrow Rules
Annex 7.1.1	Construction-related Agreements
Annex 7.1.2	Bond Credit Agreement with Commerzbank AG
Annex 7.3.1	Project Management Agreements
Annex 8.2.1(b)	Corporate Documents Target Companies
Annex 8.2.2(d)	Public Subsidies
Annex 8.2.3(a)	Existing Lease Agreements
Annex 8.2.3(b)	Rent Securities
Annex 8.2.3(c)	Payments received from tenants
Annex 8.2.3(e)	Terminated Leases
Annex 8.2.3(f)	OP List GAG and OP List GMS
Annex 8.2.4(a)	Service Contracts
Annex 8.2.6	Pending Law Suits and other Official Proceedings
Annex 8.2.7(a)	Target Companies’ Bank Accounts
Annex 8.4	Sellers’ Knowledge
Annex 9.4.3	Purchasers’ Knowledge
Annex 9.9	W&I Insurance
Annex 11.2.4	Insurance Contracts
Annex 19.1.2	Documentation in relation to the Target Companies

Project Icon

Share Sale and Purchase Agreement

dated 11 and 12 June 2015

BETWEEN

(1)

(2)

(the Seller 1 and Seller 2 together the “ Sellers ” )


(3)	Wesselton GmbH & Co. KG , a limited partnership incorporated and existing under the laws of Germany, having its office at Mainzer Landstraße 46, 60325 Frankfurt am Main, registered with the commercial register of the local court of Frankfurt am Main under registration number HRA 44290 (“ Wesselton ”)


(4)	Symbol I – T S.à r.l. , with registered office 6A, route de Trèves, L-2633 Senningerberg, incorporated by notarial deed of the notary Henri Hellinckx, residing in Luxembourg, Grand Duchy on June 4, 2015 (the “ Purchaser 1 ”);


(5)	Symbol II – T S.à r.l. , with registered office 6A, route de Trèves, L-2633 Senningerberg, incorporated by notarial deed of the notary Henri Hellinckx, residing in Luxembourg, Grand Duchy on June 4, 2015 (the “ Purchaser 2 ”);


(6)	Symbol III – T S.à r.l. , with registered office 6A, route de Trèves, L-2633 Senningerberg, incorporated by notarial deed of the notary Henri Hellinckx, residing in Luxembourg, Grand Duchy on June 4, 2015 (the “ Purchaser 3 ”);


(7)	Symbol IV – T S.à r.l. , with registered office 6A, route de Trèves, L-2633 Senningerberg, incorporated by notarial deed of the notary Henri Hellinckx, residing in Luxembourg, Grand Duchy on June 4, 2015 (the “ Purchaser 4 ”);


(8)	Symbol V – T S.à r.l. , with registered office 6A, route de Trèves, L-2633 Senningerberg, incorporated by notarial deed of the notary Henri Hellinckx, residing in Luxembourg, Grand Duchy on June 4, 2015 (the “ Purchaser 5 ”);

and


(9)	Symbol Holdco C-T S.à r.l. , with registered office 6A, route de Trèves, L-2633 Senningerberg, incorporated by notarial deed of the notary Henri Hellinckx, residing in Luxembourg, Grand Duchy on June 4, 2015 (the “ Purchaser 6 ”)

(the Purchaser 1 to the Purchaser 6 together the “ Purchasers ”)

(the Sellers and the Purchasers together the “ Parties ”).

The Parties and Wesselton herewith enter into the following agreement

(the “ Agreement ”):

1. CERTAIN DEFINITIONS


1.1	Target Companies

1.1.1 The Sellers and Wesselton hold, as set out in more detail in clauses 1.1.2 and 1.2 below, all shares in the following companies (the “ Target Companies ”):


(a)	Geschäftshaus am Gendarmenmarkt GmbH , Junghofstr. 13-15, 60311 Frankfurt am Main, registered with the commercial register of the local court of Frankfurt am Main under registration no. HRB 82647 (the “ PropCo ”), and


(b)	GMS Gebäudemanagement und Service GmbH , Junghofstr. 13-15, 60311 Frankfurt am Main, registered with the commercial register of the local court of Frankfurt am Main under registration no. HRB 36774 (the “ OpCo ”). OpCo operates the canteen and the parking garage of the Trianon Highrise.

Most recent shareholder lists of PropCo and OpCo included in the commercialregister dated May 7, 2012 and June 20, 2012 were available as a print out of the electronic commercial register at the notarisation and are attached as Annex 1.1.1.

1.1.2 Seller 2 owns only 44.921875% of the shares in PropCo, while 5.078125% of the shares in PropCo (the “ Wesselton Shares ”) are being held by Wesselton. As regards the sale and assignment of the Wesselton Shares, the Parties and Wesselton herewith agree as follows:


(a)	The sale and assignment of the Wesselton Shares pursuant to clause 2.1.13 to 2.1.17 is made, to the extent legally permitted, under full exclusion of any liability of Wesselton except for the primary obligation ( Primärleistungspflicht ) of Wesselton to assign the shares to the Purchasers 1 to 5.


(b)	Seller 2 assumes vis-à-vis the Purchasers all rights and obligations contained in this Agreement with regard to the Wesselton Shares, which therefore in the following are deemed to be part of the sold shares held by the Seller 2 in PropCo. Wesselton herewith authorises the Seller 2 to receive the part of the Estimated Purchase Price and the Purchase Price allocated to the Wesselton Shares.

For reflecting the arrangements set out in lit. (b) above, the Seller 2 and Wesselton herewith enter into the agreement attached as Annex 1.1.2 . This agreement shall have no impact on the sale and transfer of the Wesselton Shares in relation between Wesselton and the Purchasers 1 to 5.


1.2	The Shares

1.2.1 The Seller 1 holds 12,800 shares with a nominal value of EUR 1.00 each (serial numbers 11,504 to 24,303) in PropCo. For the purposes of this Agreement,


(a)	2,880 of these shares, namely the shares with the serial numbers 11,504 to 14,383, representing 11.25% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 1.1 ”, and


(b)	2,880 of these shares, namely the shares with the serial numbers 14,384 to 17,263, representing 11.25% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 1.2 ”,


(c)	2,880 of these shares, namely the shares with the serial numbers 17,264 to 20,143, representing 11.25% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 1.3 ”,


(d)	2,880 of these shares, namely the shares with the serial numbers 20,144 to 23,023, representing 11.25% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 1.4 ”,


(e)	1,280 of these shares, namely the shares with the serial numbers 23,024 to 24,303, representing 5% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 1.5 ”.

1.2.2 Furthermore, the Seller 1 holds one share with a nominal value of EUR 13,000.00 (serial number 1) in OpCo (the “ Sold OpCo Shares 1 ”).

1.2.3 The Seller 2 holds 11,500 shares with a nominal value of EUR 1.00 each (serial numbers 4 to 11.503) in PropCo. For the purposes of this Agreement,


(a)	2,588 of these shares, namely the shares with the serial numbers 4 to 2,591, representing 10.109375% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 2.1 ”, and


(b)	2,588 of these shares, namely the shares with the serial numbers 2,592 to 5,179, representing 10.109375% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 2.2 ”,


(c)	2,587 of these shares, namely the shares with the serial numbers 5,180 to 7,766, representing 10.10546875% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 2.3 ”,


(d)	2,587 of these shares, namely the shares with the serial numbers 7,767 to 10,353, representing 10.10546875% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 2.4 ”,


(e)	1,150 of these shares, namely the shares with the serial numbers 10,354 to 11,503, representing 4.4921875% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 2.5 ”.

1.2.4 Wesselton holds 1,300 shares with a nominal value of EUR 1.00 each (serial numbers 24,304 to 25,603) in PropCo. For the purposes of this Agreement,


(a)	292 of these shares, namely the shares with the serial numbers 24,304 to 24,595, representing 1.140625% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 3.1 ”,


(b)	292 of these shares, namely the shares with the serial numbers 24,596 to 24,887 representing 1.140625% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 3.2 ”,


(c)	293 of these shares, namely the shares with the serial numbers 24,888 to 25,180, representing 1.14453125% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 3.3 ”,


(d)	293 of these shares, namely the shares with the serial numbers 25,181 to 25,473, representing 1.14453125% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 3.4 ”,


(e)	130 of these shares, namely the shares with the serial numbers 25,474 to 25,603, representing 0.5078125% of the registered share capital of PropCo, shall be referred to as the “ Sold Shares 3.5 ”.

1.2.5 Furthermore, the Seller 2 holds one share with a nominal value of EUR 13,000.00 (serial number 2) in OpCo (the “ Sold OpCo Shares 2 ”).

1.2.6 The aforementioned shares held by the Sellers and Wesselton in the Target Companies are herein collectively referred to as the “ Sold Shares ”:


1.3	Real Property

1.3.1 PropCo is the owner of or, as indicated in Annex 1.3.1 , holder of a ground lease ( Erbbaurecht ) for the real property shown in the land register excerpts attached as Annex 1.3.1 (collectively the “ Real Property ”).

1.3.2 The Real Property comprises the Trianon highrise building located Mainzer Landstraße 16, Frankfurt am Main (the “ Trianon Highrise ”), and two adjoining residential properties located Klüberstraße 6-10 and Zimmerweg 8, Frankfurt am Main.

1.3.3 The term Real Property also includes the properties’ constituent parts ( wesentliche Bestandteil e) and, to the extent owned by the Target Companies on the Closing Date, its equipment ( Zubehör ) in the meaning of sec. 97 of the German Civil Code (the “ BGB ”).

1.3.4 The Purchasers shall (indirectly through the acquisition of the Sold Shares) acquire and assume the Real Property with all registered and unregistered encumbrances and restrictions to which it is subject on the Closing Date (provided that, with regard to encumbrances capable of registration in the land register, this shall only apply to those encumbrances that exist at the date of the signing of this Agreement (" Signing Date "), are permitted under this Agreement or to which the Purchasers have granted their written consent); sec. 442 para. 2 BGB shall not apply. Clause 8.2.2 remains unaffected.

1.3.5 The Parties have, for the purposes of this Agreement, agreed on a debt free fixed value of the Real Property of EUR 534,130,000 (“ Fixed Property Value ”) and a fixed value of GMS’ fixed assets and contracts of EUR 200,000 (" Fixed GMS Asset Value ") (together, i.e. an amount of EUR 534,330,000).


1.4	Existing third party financing

The PropCo is borrower under a EUR 248,000,000.00 bank loan agreement dated 25 September 2014 with Landesbank Hessen-Thüringen Girozentrale as lender (together with all associated security and other finance documents as set out conclusively in Annex 1.4 , the “ Helaba Loan Agreement ”; the lenders and agents thereunder, the “ Helaba Lenders ”). The Helaba Loan Agreement is, inter alia , secured by a land charge in favour of the Helaba Lenders that encumbers the Real Property (the “ Helaba Land Charge ”; together with all other security granted in connection with the Helaba Loan

Agreement, the “ Helaba Security ”). The Helaba Loan Agreement shall be retained by PropCo as further set out in clause 3.1.


1.5	Relation of the Sellers

1.5.1 The Sellers are only several debtors ( Teilschuldner ) and are not jointly and severally liable ( keine gesamtschuldnerische Haftung ) for their obligations under this Agreement. To the extent not explicitly stated otherwise, all obligations of the Sellers shall be allocated between the Sellers as follows:


(a)	If and to the extent obligations of the Sellers concern the Sold Shares as such (i.e. transfer obligations as well as the guarantees pursuant to clause 8.2.1 to the extent they refer to the Sold Shares), each Seller is only responsible for the Sold Shares sold by it (regarding the Wesselton Shares clause 1.1.2(b) applies);

(b)

If and to the extent a guarantee is incorrect or this Agreement is otherwise breached by the Sellers, only that Seller is liable which gave the incorrect guarantee or breached the Agreement, provided that clause 1.5.4 shall remain unaffected. If the Sellers fail to notify the Purchasers within two (2) weeks after receipt of a claim, how the liability pursuant to the preceding sentence is to be allocated between them, lit. (c) below shall apply in relation to the Purchasers (whilst, between the Sellers internally, the allocation of liability pursuant to lit. (b) shall remain unaffected); for the avoidance of doubt, (i) the trust instructions included in this Agreement regarding the Escrow Accounts remain unaffected and (ii) for the breach of payment obligations, in any event only the Seller who owes that payment obligation is liable;


(c)	in all other cases each of the Sellers shall be liable for 50% of the respective obligation.

1.5.2 The Sellers are only several creditors ( Teilgläubiger ) and are not jointly and severally entitled ( keine Gesamtgläubiger ) with regard to payment and other claims of the Sellers under this Agreement. To the extent not explicitly stated otherwise (e.g. pursuant to clauses 5.4.1 and 4.4), all claims of the Sellers under this Agreement shall be allocated between the Sellers as follows:


(a)	If and to the extent claims of the Sellers relate to the Sold Shares or a specific Seller, each Seller is only entitled to the claims with regard to the Sold Shares sold by it (regarding the Wesselton Shares clause 1.1.2(b) applies), or the claim specifically relating to it; and


(b)	in all other cases, each of the Sellers shall be entitled to 50% of the respective payment.

1.5.3 All withdrawal and election rights of the Sellers under or in connection with this Agreement may only be exercised by the Sellers jointly.

1.5.4 Irrespective of to which Seller the individual listed in Annex 8.4 belongs, its knowledge or awareness shall be attributed to both Sellers and Wesselton.


1.6	Relation of Purchasers

1.6.1 The Purchasers are only several debtors ( Teilschuldner ) and are not jointly and severally liable ( keine gesamtschuldnerische Haftung ) for their obligations under this Agreement. To the extent not explicitly stated otherwise, all obligations of the Purchasers shall be allocated between the Purchasers as follows:


(a)	If and to the extent obligations of the Purchasers (e.g. payment obligations or guarantees of the Purchasers) concern the Sold Shares or a specific Purchaser, each Purchaser is only responsible for the Sold Shares acquired by it or the claim specifically relating to it;


(b)	in all other cases, the Purchasers 1 to 5 shall be liable in the percentage of their respective shareholding in PropCo only and Purchaser 6 in full relating to OpCo.

1.6.2 The Purchasers are not joint creditors ( keine Gesamtgläubiger ). All payment claims of the Purchasers under this Agreement shall, to the extent not expressly stated otherwise, be allocated to the respective Purchaser in accordance with the percentage of their respective participation in PropCo to the extent that these relate to the participation in PropCo and 100% to Purchaser 6 to the extent that these relate to OpCo. All non-payment claims of the Purchasers under this Agreement which are not expressly allocated to one of them may only be asserted by the Purchasers jointly, and any action insofar taken by the Sellers vis-à-vis one of the Purchasers shall discharge the Sellers also with effect vis-à-vis the other Purchaser.

1.6.3 All withdrawal and election rights of the Purchasers under or in connection with this Agreement may only be exercised by the Purchasers jointly.

1.6.4 The Purchasers authorise ( bevollmächtigen ) each other to give and receive all declarations under this Agreement for and on behalf of the relevant other Purchaser.

2. SALE OF THE SOLD SHARES


2.1	Sale of the Sold Shares

2.1.1 The Seller 1 hereby sells and, subject to the condition precedent set out in clause 2.3, assigns the Sold Shares 1.1 to the Purchaser 1, who accepts such sale and assignment.

2.1.2 The Seller 1 hereby sells and, subject to the condition precedent set out in clause 2.3, assigns the Sold Shares 1.2 to the Purchaser 2, who accepts such sale and assignment.

2.1.3 The Seller 1 hereby sells and, subject to the condition precedent set out in clause 2.3, assigns the Sold Shares 1.3 to the Purchaser 3, who accepts such sale and assignment.

2.1.4 The Seller 1 hereby sells and, subject to the condition precedent set out in clause 2.3, assigns the Sold Shares 1.4 to the Purchaser 4, who accepts such sale and assignment.

2.1.5 The Seller 1 hereby sells and, subject to the condition precedent set out in clause 2.3, assigns the Sold Shares 1.5 to the Purchaser 5, who accepts such sale and assignment.

2.1.6 The Seller 1 hereby sells and, subject to the condition precedent set out in clause 2.3, assigns the Sold OpCo Shares 1 to the Purchaser 6, who accepts such sale and assignment.

2.1.7 The Seller 2 hereby sells and, subject to the condition precedent set out in clause 2.3, assigns the Sold Shares 2.1 to the Purchaser 1, who accepts such sale and assignment.

2.1.8 The Seller 2 hereby sells and, subject to the condition precedent set out in clause 2.3, assigns the Sold Shares 2.2 to the Purchaser 2, who accepts such sale and assignment.

2.1.9 The Seller 2 hereby sells and, subject to the condition precedent set out in clause 2.3, assigns the Sold Shares 2.3 to the Purchaser 3, who accepts such sale and assignment.

2.1.10 The Seller 2 hereby sells and, subject to the condition precedent set out in clause 2.3, assigns the Sold Shares 2.4 to the Purchaser 4, who accepts such sale and assignment.

2.1.11 The Seller 2 hereby sells and, subject to the condition precedent set out in clause 2.3, assigns the Sold Shares 2.5 to the Purchaser 5, who accepts such sale and assignment.

2.1.12 The Seller 2 hereby sells and, subject to the condition precedent set out in clause 2.3, assigns the Sold OpCo Shares 2 to the Purchaser 6, who accepts such sale and assignment.

2.1.13 Wesselton hereby sells and, subject to the condition precedent set out in clause 2.3 below, assigns the Sold Shares 3.1 to the Purchaser 1, who accepts such sale and assignment.

2.1.14 Wesselton hereby sells and, subject to the condition precedent set out in clause 2.3 below, assigns the Sold Shares 3.2 to the Purchaser 2, who accepts such sale and assignment.

2.1.15 Wesselton hereby sells and, subject to the condition precedent set out in clause 2.3 below, assigns the Sold Shares 3.3 to the Purchaser 3, who accepts such sale and assignment.

2.1.16 Wesselton hereby sells and, subject to the condition precedent set out in clause 2.3 below, assigns the Sold Shares 3.4 to the Purchaser 4, who accepts such sale and assignment.

2.1.17 Wesselton hereby sells and, subject to the condition precedent set out in clause 2.3 below, assigns the Sold Shares 3.5 to the Purchaser 5, who accepts such sale and assignment.


2.2	Right to Profits

The sale of the Sold Shares shall include any and all rights pertaining to the Sold Shares, including the rights to receive profits of the Target Companies that have not been distributed prior to the Closing Date, it being understood that any other provision of this Agreement commercially allocating assets and liabilities of the Target Companies between the Parties (in particular clause 6) shall remain unaffected.


2.3	Condition Precedent

Each of the assignments of the Sold Shares pursuant to clause 2.1 is made subject to the condition precedent ( aufschiebend bedingt ) that (i) the Transaction has been cleared or is deemed to have been cleared by the FCO pursuant to clause 11.1 and (ii) all relevant recipients have received all amounts payable by the Purchasers pursuant to clause 5.4.1(a). The Sellers shall at Closing after receipt of these amounts confirm to the Purchasers in writing (in the form of the closing memorandum as referred to in clause 5.4.4, and with a copy to the Notary) that the amounts payable by the Purchasers pursuant to clause 5.4.1(a) were fully received and that the condition precedent occurred.

In any event upon the acting notary's receipt of an executed copy of the closing memorandum (transmission via e-mail or facsimile shall suffice), any and all conditions precedent to the transfer of the Sold Shares shall be deemed fulfilled irrespective of their factual, timely and proper fulfilment and the transfer of the Sold Shares shall be effective. The officiating notary is at the same time released from any investigation obligation as regards the factual fulfilment of the conditions precedent for the transfer of the Sold Shares.


2.4	Shareholders' meeting

The Sellers and Wesselton hereby hold an extraordinary shareholder's meeting of PropCo and unanimously resolve the following:

The sale and transfer of all shares in PropCo to the Purchasers pursuant to this deed is hereby approved.

No other resolution is passed and the shareholders' meeting herewith closed.

3. PREPARATORY ACTIONS


3.1	Retention of Helaba Loan

The Sellers shall procure that Helaba confirms, subject to qualifications made by Helaba in line with its standards or other requirements (the “ Helaba Qualifications ”), in writing to PropCo prior to Closing the outstanding loan amount including any accrued interest, fees and costs including any costs of the break of any hedging instrument, if any, as at 1 July 2015 (the " Helaba Loan Amount ") and state the daily interest from that day onwards or otherwise shows the amount payable as at the Closing (the " Helaba Loan Amount Notification "), and the Sellers shall forward the Helaba Loan Amount Notification to the Purchasers.


3.2	Refinancing Support

3.2.1 From the date hereof, Sellers will, and will also procure that PropCo will, support the Purchasers in good faith in providing all information/documentation reasonably required by them for the conclusion of an amended and/or restated loan agreement with Helaba or another bank to be entered into by PropCo shortly after Closing. The Parties agree that a breach by the Sellers of their obligations hereunder shall not entitle the Purchasers to delay Closing or to withdraw from this Agreement. Damage claims of the Purchasers remains unaffected.

3.2.2 To the extent and when required for the Helaba Lenders releasing the Sellers and Wesselton from their obligations in relation to the Helaba Loan Agreement (in particular the security assignment agreement and the subordination agreement signed by them) the Purchasers shall sign corresponding security assignment agreements and subordination agreements.

4. PURCHASE PRICE; PAYMENTS


4.1	Purchase Price

4.1.1 The purchase price for the Sold Shares 1.1 shall amount to 11.25% of the PropCo Value. The purchase price for the Sold Shares 1.2 shall amount to 11.25% of the PropCo Value. The purchase price for the Sold Shares 1.3 shall amount to 11.25% of the PropCo Value. The purchase price for the Sold Shares 1.4 shall amount to 11.25% of the PropCo Value. The purchase price for the Sold Shares 1.5 shall amount to 5% of the PropCo Value.

4.1.2 The purchase price for the Sold Shares 2.1 shall amount to 10.109375% of the PropCo Value. The purchase price for the Sold Shares 2.2 shall amount to 10.109375% of the PropCo Value. The purchase price for the Sold Shares 2.3 shall amount to 10.10546875% of the PropCo Value. The purchase price for the Sold Shares 2.4 shall amount to 10.10546875% of the PropCo Value. The purchase price for the Sold Shares 2.5 shall amount to 4.4921875% of the PropCo Value.

4.1.3 The purchase price for the Sold Shares 3.1 shall amount to 1.140625% of the PropCo Value. The purchase price for the Sold Shares 3.2 shall amount to 1.140625% of the PropCo Value. The purchase price for the Sold Shares 3.3 shall amount to 1.14453125% of the PropCo Value. The purchase price for the Sold Shares 3.4 shall amount to 1.14453125% of the PropCo Value. The purchase price for the Sold Shares 3.5 shall amount to 0.5078125% of the PropCo Value.

4.1.4 The purchase price for the Sold OpCo Shares 1 shall amount to 50% of the OpCo Value, and the purchase price for the Sold OpCo Shares 2 shall amount to 50% of the OpCo Value.

4.1.5 Each of the purchase prices referred to under clauses 4.1.1 to 4.1.4 is referred to as a “ Purchase Price ”.


4.2	Definitions and calculations

4.2.1 The “ PropCo Value ” shall amount to and be calculated as follows:


(a)	the Fixed Property Value,


(b)	plus, as at the Effective Time,

(i)

PropCo’s current assets and Tax receivables, excluding (a) rent securities received from and by tenants (including interest), (b) the Bond Cash Collateral (including interest), (c) cash and cash equivalents in excess of EUR 2,120,000.00, which, for the avoidance of doubt, shall be dealt with in accordance with clause 4.2.6, (d) receivables (including insurance receivables) which have not been collected by the Cut-off Time (which shall be dealt with in accordance with clause 4.2.7), and (e) reimbursement claims against insurers or

other third parties triggered in favour of PropCo in case of damage to the Property occurring after the Signing Date for which no accrual is to be made pursuant to lit. (c)(ii) below, and (f) any amounts relating to the deferral of rent free periods, cash incentives paid to tenants or any other expenditure related to tenant incentives,


(ii)	prepaid expenses except for assets for fees under the Helaba Loan Agreement or any other capitalised debt issue costs and


(iii)	any third-party costs reasonably incurred by the Sellers or PropCo in connection with the New Finance Documents,


(c)	less, as at the Effective Time,

(i)

all liabilities in the meaning of sec. 266 para. 3 C. HGB of the PropCo including Tax liabilities, but (1) excluding the obligation to return rent securities received from tenants and liabilities under the New Finance Documents, and (2) provided that all obligations of the PropCo under and in connection with the Helaba Loan Agreement shall be reflected at an amount equal to the Helaba Loan Amount plus, if any, the amount of the Helaba Qualifications,

(ii)

accruals, except for accruals that (1) are made in connection with the condition of the fixed assets (in particular the Real Property and the buildings), e.g. accruals for outstanding maintenance, environmental risks, vacancy (provided that clause 4.2.4(a)(iv) remains unaffected), impending losses, and reconstruction obligations under lease agreements (clause 4.2.4(b) below remains unaffected) or (2) which relate to regular payments as currently registered in the land register (e.g. the ground rent being payable in relation to the ground lease referred to in clause 1.3.1 and Annex 1.3.1 (" Ground Rent ") and the payments pursuant to the pension right ( Reallast ) in favour of Sonderhausen von Gläsernthal’sche Stiftung encumbering parts of the Real Property as set out in Annex 1.3.1 ), other than unpaid Ground Rent relating to the period prior to the Ef-fective Time;


(iii)	(intentionally left blank);


(iv)	deferred liabilities in relation to amounts received or receivable in advance in respect of rent from tenants which relates to periods after the Effective Time;


(v)	an amount of EUR 733,200.00 as compensation for the W&I insurance premium to be paid by the Purchasers.

4.2.2 The "OpCo Value" shall amount to and be calculated on a mutatis mutandis basis, i.e. is based on the Fixed GMS Asset Value instead of the Fixed Property Value applying the increases and decreases as per OpCo's balance sheet as at the Effective Time in accordance with the principles set out in clauses 4.2.1(a) to 4.2.1(c). The cash and cash equivalent amount referred to in clause 4.2.1(b)(i)(c) above, for OpCo amounts to EUR 470,000.00.

4.2.3 The items referred to in clauses 4.2.1(b) and 4.2.1(c) must, for the calculation of the Purchase Price pursuant to clause 6, each be set at the amounts at which they are shown in the Closing Date Accounts.

4.2.4 The following principles shall apply with regard to the calculation of the PropCo Value and the OpCo Value:


(a)	If and to the extent based on a reasonable estimation, for which the property manager’s view shall be obtained and that is to be made as per the Closing Date,


(i)	the tenants will in aggregate be entitled to claim the recharge of over-paid service charges for 2014 and 2015, the respective amount shall be deducted,


(ii)	the tenants will, upon the respective annual ancillary costs reconciliations for the years 2014 and 2015, in aggregate owe the payment of ancillary costs, the respective amount shall be added (for the avoidance of doubt, this is not exclusive, i.e. the outstanding claims against tenants for service charges 2012 and 2013 shall also be activated pursuant to clause 4.2.1(b)(i) above),


(iii)	payments have been made by PropCo on ancillary costs prior to the Closing Date that relate to (i) empty spaces (i.e. are not recoverable from tenants) and (ii) the time period after the Closing Date, the respective amount shall be added/activated, and


(iv)	payments are expected to be made by PropCo on ancillary costs after the Closing Date that relate to (i) empty spaces (i.e. are not recoverable from tenants) and (ii) the time period prior to the Closing Date, the respective amount shall be deducted/passivated.


(b)	An asset for prepaid expenses shall be included in the Closing Date Accounts in respect of amounts paid or accrued by the Target Companies at the Effective Time only in relation to goods and services to be supplied to the Target Companies after the Effective Time, to the extent the benefit of which will be available to the Target Companies following Closing. Full accrual

shall be included in the Closing Date Accounts in respect of all goods and services (including the pro rate element for FY15 up to the Effective Time) received up to the Effective Time, to the extent unpaid at the Effective Time.


(c)	If any of the items referred to in clauses 4.2.1(b) and 4.2.1(c) falls under more than one of the categories set out therein, it shall nevertheless only be counted once (no double counting).

(1) Any obligation of the Target Companies (and any accruals made with regard to such obligations) for which the Sellers shall grant compensation payments as per clause 7, as well as (2) the respective Reimbursement Claims of the Target Companies (in particular those under the Deka Settlement Agreement) shall be excluded from the Closing Date Accounts.

(d)

For the avoidance of doubt, no accrual, deferred liability or other reduction shall be made in the Closing Date Accounts with regard to the one-time flat compensation payment of EUR 1,300,000 made by Credit Suisse Asset Management Immobilien Kapitalanlagegesellschaft mbH pursuant to clause 2.1 of the 6 ^th amendment to the lease agreement with Linklaters LLP and received by PropCo prior to the signing of this Agreement.


(e)	The Closing Date Accounts shall take into account information after the Effective Time that provide further evidence of conditions that existed at the Effective Time (“ Adjusting Events ”) up until the Cut-Off Time.


(f)	No balances classified as non-current or fixed assets in the audited accounts of the Target Companies at 31 December 2014 (or assets acquired after 31 December 2014 of a similar nature to such assets) shall be reclassified as current assets in the Closing Date Accounts.


(g)	The Closing Date Accounts shall include full provision for any Transaction-related costs of the Seller (or its affiliates or related parties) and the Target Companies, including advisor fees (including Tax), to the extent payable by the Target Companies after the Effective Time.


(h)	The calculation of any Tax receivables, Tax provisions and Tax liabilities for purposes of the Closing Date Accounts shall be made in line with the provisions in clause 10.1 “Pre-Closing Date Tax” and “Pre-Closing Date Tax Refund”.


(i)	A full reconciliation shall be performed of balances between the Target Companies and any unreconciled balances shall be written off in the receiving entity.

4.2.5 Further guidelines for the calculation of the Purchase Price are set out in clause 6.2.

4.2.6 The Parties agree that the cash and cash equivalents existing on the Closing Date that are disregarded for the purpose of the calculation of the PropCo Value and the OpCo Value pursuant to clause 4.2.1(b)(i)(c) and 4.2.2 above (the “ Excess Cash ”) shall commercially be for the account of the Sellers. The Sellers shall therefore be entitled to resolve the distribution of the Excess Cash to them prior to the Closing Date. If, for whatever reason, the distribution is not fully implemented prior to the Closing Date, the Parties shall cooperate in good faith to achieve the distribution of the Excess Cash to the Seller in another manner. Any withholding tax (including solidarity surcharge) on such a distribution of Excess Cash shall be borne by the Purchasers if and to the extent such withholding tax is triggered by further distributions PropCo may have made on or after the Closing Date provided the tax contribution account of PropCo in the meaning of section 27 Corporate Income Tax Act amounts at least to Euro 322 million on 31 December 2014 and the equity in the tax balance sheet of PropCo as of 31 December 2014 does not exceed EUR 202 million.

4.2.7 At any time that PropCo or OpCo recover receivables which have, pursuant to clause 4.2.1(b)(i)(d) above, been disregarded for the purpose of the calculation of the PropCo Value and the OpCo Value, an amount equalling the amount so recovered shall be paid by the Purchasers to the Sellers as additional Purchase Price. The Purchasers herewith undertake to ensure that the Target Companies pursue and enforce those receivables in their ordinary course of business. The Purchasers’ obligations under this clause 4.2.7 shall terminate twelve (12) months after the Closing Date.


4.3	Estimated Purchase Price

4.3.1 Based on the pro-forma balance sheets attached as Annex 4.3.1 , the Parties estimate the PropCo Value to amount to EUR 287,224,795.21 and the OpCo Value to amount to EUR 515,824.34 as per the Closing Date.

4.3.2 On that basis, the Purchasers shall at the Closing Date pay the estimated purchase prices as set out in Annex 4.3.2 (the “ Estimated Purchase Prices ”) to the Sellers, whereby it is agreed between the Sellers, Wesselton and the Purchasers that the amounts required to fill the Escrow Accounts pursuant to clause 5.6.1(b) to (f) shall be paid directly on the Escrow Accounts in accordance with clause 5.4.1(a) and that such payments, upon transfer pursuant to clause 5.6.4(e)(i), shall be credited against the Estimated Purchase Price and as such reduce the payment obligation of the Purchasers vis à vis the Sellers/Wesselton in proportion to their respective share in PropCo.


4.4	Purchase Price Adjustment

4.4.1 In the event that any of the Purchase Prices as finally determined pursuant to clause 6 (i) exceeds or (ii) falls short of the respective Estimated Purchase Price pursuant to clause 4.3.2, the difference must be paid within ten (10) Business Days after the Preliminary Purchase Price Calculation (as defined in clause 6.1.3) becomes binding with regard to the relevant portion of the Purchase Price, in the event of “(i)” by the Purchasers to the respective Seller and in the event of “(ii)” by the respective Seller to the Purchasers (to them pro rata to the portion of the Purchase Price attributable to Sold Shares acquired by each of them).

4.4.2 (intentionally left blank)


4.5	Default interest; Interest Calculation

4.5.1 If any Party fails to make a payment owed by it under this Agreement when due (in each case the receipt of payment is decisive), it shall be in default without further notice from the other relevant Party(ies) being required and interest at a rate of 10% p.a. shall be charged on the outstanding amount for the period beginning on the day following the due date and ending on and including the date of its payment.

4.5.2 Interest owed under this Agreement shall be calculated on the basis of actual days elapsed and a calendar year with 365 days.


4.6	Payment Procedures

4.6.1 Payments by the Purchasers to the Seller 1 based on this Agreement must, except as otherwise provided in this Agreement, be paid by the Purchasers in euros via bank transfer, free of charges and fees, with same day value to the following account of the Seller 1 (“ Seller 1 Account ”):

IBAN: LU93 0610 1463 7260 0EUR
BIC: SGABLULL
Bank: Société Générale Bank & Trust, 11 avenue Emile Reuter, L-2420 Luxembourg, Luxembourg.

4.6.2 Payments by the Purchasers to the Seller 2/Wesselton based on this Agreement must, except as otherwise provided in this Agreement, be paid by the Purchasers in euros via bank transfer, free of charges and fees, with same day value to the following account of the Seller 2 (“ Seller 2 Account ”):

IBAN: LU80 0141 8444 5860 0000
BIC: CELLLULL
Bank: ING Luxembourg S.A., 52, Route d’Esch, L-2965 Luxembourg.

4.6.3 Payments by the Sellers to the Purchaser 1 based on this Agreement must, except as otherwise provided in this Agreement, be paid by the Sellers in euros via bank transfer, free of charges and fees, with same day value, on a bank ac-count the details of which shall be given to the Sellers and the Notary without undue delay after Signing Date (“ Purchaser 1 Account ”).

4.6.4 Payments by the Sellers to the Purchaser 2 based on this Agreement must, except as otherwise provided in this Agreement, be paid by the Sellers in euros via bank transfer, free of charges and fees, with same day value, on a bank ac-count the details of which shall be given to the Sellers and the Notary without undue delay after Signing Date (“ Purchaser 2 Account ”).

4.6.5 Payments by the Sellers to the Purchaser 3 based on this Agreement must, except as otherwise provided in this Agreement, be paid by the Sellers in euros via bank transfer, free of charges and fees, with same day value, on a bank ac-count the details of which shall be given to the Sellers and the Notary without undue delay after Signing Date (“ Purchaser 3 Account ”).

4.6.6 Payments by the Sellers to the Purchaser 4 based on this Agreement must, except as otherwise provided in this Agreement, be paid by the Sellers in euros via bank transfer, free of charges and fees, with same day value, on a bank ac-count the details of which shall be given to the Sellers and the Notary without undue delay after Signing Date (“ Purchaser 4 Account ”).

4.6.7 Payments by the Sellers to the Purchaser 5 based on this Agreement must, except as otherwise provided in this Agreement, be paid by the Sellers in euros via bank transfer, free of charges and fees, with same day value, on a bank ac-count the details of which shall be given to the Sellers and the Notary without undue delay after Signing Date (“ Purchaser 5 Account ”).

4.6.8 Payments by the Sellers to the Purchaser 6 based on this Agreement must, except as otherwise provided in this Agreement, be paid by the Sellers in euros via bank transfer, free of charges and fees, with same day value, on a bank ac-count the details of which shall be given to the Sellers and the Notary without undue delay after Signing Date (“ Purchaser 6 Account ”).


4.7	Value Added Tax

The Parties assume that no value-added tax (“ VAT ”) shall accrue for the transaction provided for in this Agreement and the Sellers undertake not to waive any VAT exemption.


4.8	No Set-Off

Any right of the Parties to set-off and/or to withhold any payments due to the other Parties under this Agreement is hereby expressly waived and excluded except for claims which are undisputed or res iudicatae .


4.9	Treatment of Payments

Any payment of the Sellers to the Purchasers pursuant to this Agreement shall be considered a reduction of the Purchase Price in the relationship between the relevant Sellers and the relevant Purchasers, and any payment of the Purchasers to the Sellers pursuant to clause 4.4 shall be considered an increase of the Purchase Price in the relationship between the Sellers and the Purchasers.

5. CLOSING; WITHDRAWAL RIGHTS


5.1	Closing Date

5.1.1 The Parties shall perform the closing actions set forth in clause 5.3.2 (the “ Closing ”) on the third (3 ^rd ) Business Day following the day at which the last of the Closing Conditions (as defined in clause 5.2) occurs or is legitimately waived by all Parties jointly (provided that any such waiver shall be subject to a confirmation from the insurer of the W&I Insurance, not unreasonably withheld or delayed), but not before 28 July 2015 unless otherwise agreed by the Purchasers. The day on which the Closing actually takes place shall be referred to as the “ Closing Date ”.

5.1.2 The Closing shall take place at the offices of Freshfields Bruckhaus Deringer LLP in Frankfurt am Main at 9:00 CET, unless the Parties agree on a different location and/or different time.


5.2	Closing Conditions

The Parties shall (only) be obligated to carry out the Closing after all of the following conditions to Closing (the “ Closing Conditions ”) have been satisfied or legitimately waived (provided that any such waiver shall be subject to a confirmation from the insurer of the W&I Insurance, not unreasonably withheld or delayed):


(a)	the Transaction has been cleared or is deemed to have been cleared by the FCO pursuant to clause 11.1;


(b)	the Helaba Loan Amount Notification has been delivered to the Purchasers as set out in clause 3.1;

(c)

two Business Days prior to Closing Date an inspection of the electronic land register ( elektronisches Grundbuchblatt ) and the list of pending applications ( Markentabelle ) of the Real Property by the Notary confirms compliance of the land register with the description in Annex 1.3.1 , with the exception only of such applications or entries that comply with this Agreement, have been consented to by the Purchasers or only constitute formal corrections by the land register that do not materially change the content of such encumbrance.


5.3	Material Adverse Change; Closing Guarantee Breach

5.3.1 The Purchasers are not obliged to carry out the Closing in the event of a MAC. The Parties agree that a “ MAC ” shall only exist


(a)	in case that between the Signing Date and Closing such a deterioration or destruction of the Real Property occurs that would entitle DekaBank or Bundesbank to terminate their leases or automatically end these leases, or


(b)	in case either the the lease agreements dated 22 July 2014 between Deutsche Bundesbank and PropCo (the “ Bundesbank Lease ”) or the Deka Lease is terminated (receipt of termination notice sufficient) unless such termination is based on grounds that cannot reasonably be considered a valid cause for termination.

In any event, the Purchasers may not reject Closing pursuant to this clause 5.3.1 and no MAC shall exist if the respective event (i) was caused by the Purchasers or (ii) occurred after any of the Purchasers breached any of their obligations pursuant to clause 11.1, this caused a delay of the satisfaction of the Closing Condition pursuant to clause 5.2(a), and the respective event occurred after the date in time in which Closing would have occurred without such breach by the Purchasers, or (iii) occurred after the Purchasers breached their obligations pursuant to clause 5.4.1(a).

5.3.2 If circumstances occur between the Signing Date and Closing by which any of the guarantees pursuant to clause 8.2 that is given by the Sellers as per the Closing Date is breached without the Purchasers being responsible for that breach (a “ Closing Guarantee Breach ”), the Sellers shall be obliged to notify the Purchasers in writing and sufficient detail, having made due and careful enquiries with the asset managers,

property managers and the Project Managers, at the latest one day prior to the Closing Date. In this event, the following shall apply in the following order:

(a)

If the damages (as relevant pursuant to clause 9.1.2) resulting from the Closing Guarantee Breach, in the Purchasers' reasonable view, do not exceed an amount of EUR 40,000,000, the Purchasers shall be entitled to pay a part of the Purchase Price, as reasonably assessed by the Purchasers as potential full and final remedial amount for such relevant damage (along with a reasonable amount of contingency) (“ Remedial Amount ”) into an additional Escrow Account with the Notary to be established at that point in time (“ Remedial Escrow ”).

(b)

If the damages (as relevant pursuant to clause 9.1.2) resulting from the Closing Guarantee Breach, in the Purchasers' reasonable view, exceed an amount of EUR 40,000,000, the Parties agree that the Closing shall be postponed by a period of 4 weeks (“ Determination Period ”) to allow the Purchasers, acting reasonably, and in good faith, to determine the quantum of such damages with the assistance of third party advisors using all reasonable endeavours provided that:

If after the expiry of the Determination Period the damages remain likely to be, in the Purchasers’ reasonable view,


(i)	less than EUR 40,000,000, then the Purchasers shall be entitled to retain a relevant portion of the Remedial Amount in the Remedial Escrow in order to serve as security for the related claims of the Purchasers under clauses 8 and 9 of this Agreement, and release any excess to the Sellers; or

(ii)

if in excess of EUR 40,000,000, the Purchasers shall be entitled to reject Closing, such rejection to be made in writing and within 10 Business Days after the Determination Period, and shall be entitled (i) to withdraw from this Agreement within a further period of twenty (20) Business Days and (ii) to have the Deposit immediately released and (iii) to be paid a penalty in the amount of EUR 2.5 Million.


(c)	If lit. (a) or (b)(i) applies, then:


(i)	the Parties shall cooperate in good faith using all reasonable endeavours to ensure a full and final cure of the relevant Closing Guarantee Breach with the effect that such cure shall put the Purchasers in an equivalent position as if the Closing Guarantee Breach had not occurred;

(ii)

upon such cure being satisfied to the Purchasers’ satisfaction, acting reasonably, any excess standing to the credit of the Remedial Escrow shall be released to the Sellers and to the extent not cured to the satisfaction of the Purchasers, the remaining amount shall serve as security for the Purchasers' claims under clauses 8 and 9 under this Agreement, provided that in each of the above cases the respective Closing Guarantee Breach shall not fall under the Liability Caps;

(iii)

the amount in the Remedial Escrow shall be released to the Purchasers to the extent they have a respective claim against the Sellers under clauses 8 and 9 of this Agreement, and in the remaining amount to the Sellers. The Parties shall instruct the Notary accordingly. In this case, the Notary is instructed to release the respective amount in the Remedial Escrow only if and to the extent he has received either (i) an official copy of such court ruling endorsed as res iudicata ( Ausfertigung des Urteils mit Rechtskraftvermerk ) instructing the Notary to release the respective amount in the Remedial Escrow or (ii) a joint written instruction by the Parties.


5.4	Closing

5.4.1 On the Closing Date, the Parties shall undertake the following actions in the following order:


(a)	the Purchasers shall pay the Estimated Purchase Prices


(i)	in an aggregate amount of EUR 24,100,000 into the Escrow Accounts in the order pursuant to clause 5.6.1(b) to (f), it being understood that this amount is (1) to be paid in the amount of EUR 20,000,000 from the Deposit Escrow by issuing, together with the Sellers, a respective instruction to the Notary and (2) to be otherwise paid by the Purchasers in the amount of EUR 4,100,000, and


(ii)	in the remaining amount, into the respective Sellers’ Accounts as set out in more detail in this Agreement; and


(b)	the Sellers shall deliver to the Purchasers written declarations of the existing managing directors and general representatives ( Prokuristen ) of the Target Companies by means of which they resign from their offices of the Target Company by no later than the Closing Date; and


(c)	the Purchasers shall hold an extraordinary shareholders meeting of both Target Companies, with the Sellers confirming the right of the Purchasers to hold that meeting, for discharging the resigned management from all

liability ( entlasten ) and appointing new managing directors to the Target Companies to be named by Purchaser 2 (the managing directors to have sole power of representation and to be released from the restrictions of Section 181 second alternative German Civil Code) and adopting new articles of association for the Target Companies as set out in Annex 5.4.1(c) .

5.4.2 The Sellers shall hand-over all original lease agreements and original rent security to the Purchasers.

5.4.3 The Purchasers shall procure that the persons that have resigned from their offices in the Target Companies pursuant to clause 5.4.1(b) are discharged from all liability ( entlastet ), and that their resignation is registered in the commercial register as soon as possible.

5.4.4 All Closing actions shall be recorded in a closing memorandum substantially in the form as set out in Annex 5.4.4 .


5.5	Withdrawal rights

5.5.1 The Parties are entitled to withdraw from ( zurücktreten ) this Agreement if (i) the Closing Conditions pursuant to clause 5.2 have not occurred or been waived by 30 September 2015 (the “ Long Stop Date ”). No such right of withdrawal shall exist for any Party that has hindered the satisfaction of the relevant Closing Condition in bad faith ( wider Treu und Glauben ) or, in case of the Purchasers, if the non-occurrence is due to the Purchasers having breached any of their obligations pursuant to clause 11.1.

5.5.2 The Purchasers are entitled to withdraw from this agreement if Closing has not occurred on or before the Long Stop Date due to a MAC having occurred and continuing that entitles them to reject Closing pursuant to clause 5.3.1 until the Long Stop Date.

5.5.3 If one of the Parties breaches any of the duties referred to in clause 5.3.2.1, the other Party (which itself is not in breach of any of its duties referred to in clause 5.3.2.1) may initially set a grace period of ten (10) Business Days by written notice specifying the breach; following the unsuccessful expiration of the ten-Business Days grace period, the Party that set the grace period may withdraw ( zurücktreten ) from this Agreement.

5.5.4 Any withdrawal under this Agreement must be effected by written notice to the respective other Parties.

5.5.5 Any withdrawal from this Agreement pursuant to clause 5.5.1 shall be valid only if the other Parties received the written notice of withdrawal prior to the day on which the last Closing Condition has occurred or been waived. For the avoidance of doubt, the withdrawal rights pursuant to clauses 5.3.2, 5.5.1, 5.5.2 and 5.5.3 shall not apply anymore once Closing has occurred.

5.5.6 In the event of any withdrawal pursuant to this Agreement, all obligations between the Parties under this Agreement, with the exception of the obligations resulting from the unwinding as such ( Rückabwicklungsschuldverhältnis ) and under clauses (Confidentiality and Announcements), 17 (Transfer Taxes and Costs), 18 (Notices) and 20 (Miscellaneous), shall lapse, provided that any obligations due to a breach of this Agreement prior to the withdrawal shall remain unaffected.

5.5.7 Any withdrawal rights of the Parties that are not agreed in this Agreement shall be excluded.


5.6	Escrow Account; Deposit; contractual penalty

5.6.1 Prior to the signing of this Agreement, the Notary has set up the following escrow accounts (the “ Escrow Accounts ”) for the purpose of the following escrows:


(a)	“ Deposit Escrow ” shall be the following escrow:

Initial amount:    EUR 20,000,000.00
Account holder:    Dr. Christian Wicker, LL.M., Frankfurt am Main
Bank:            Commerzbank AG, Frankfurt am Main
Bank code:        500 400 00

BIC:            COBADEFFXXX
Account no.:        324027227
IBAN:        DE79 5004 0000 0324 0272 27
Secured claims:    As set out in clauses 5.6.3 et. seqq.


(b)	“ Fire Protection Escrow ” shall be in the amount standing to the credit of the respective account from time to time, the escrow with the following specific details (other details are as set out in lit. (a) above):

Initial amount:    EUR 10,000,000
Account no.:        324027228
IBAN:        DE52 5004 0000 0324 0272 28
Secured claims:    As set out in clauses 7.7.1, 7.2.1(ii), 7.2.4


(c)	“ Buba Fit-Out Escrow ” shall be in the amount standing to the credit of the respective account from time to time, the escrow with the following specific details (other details are as set out in lit. (a) above):

Initial amount:    EUR 10,000,000
Account no.:        324027229
IBAN:        DE25 5004 0000 0324 0272 29
Secured claims:    As set out in clauses 7.7.1, 7.2.1(iii), 7.2.4


(d)	“ Other Construction Costs Escrow ” shall be in the amount standing to the credit of the respective account from time to time, the escrow with the following specific details (other details are as set out in lit. (a) above):

Initial amount:    EUR 2,100,000
Account no.:        324027230
IBAN:        DE95 5004 0000 0324 0272 30
Secured claims:    As set out in clauses 7.7.1, 7.2.4


(e)	(intentionally left blank)


(f)	“ Tax Claims Escrow ” shall be, in the amount standing to the credit of the respective account from time to time, the escrow with the following specific details (other details are as set out in lit. (a) above):

Initial amount:    EUR 2,000,000.00
Account no.:        324027232
IBAN:        DE41 5004 0000 0324 0272 32
Secured claims:    As set out in clause 10

5.6.2 The Escrow Accounts shall be administered pursuant to the terms of this Agreement and the escrow rules set out in Annex 5.6.2 (the “ Escrow Rules ”). Any fee charged for holding the Escrow Accounts shall be borne by the Purchasers.

5.6.3 As security for the claims of the Sellers against the Purchasers, the Purchasers have, immediately prior to signing, placed a deposit in the amount of EUR 20,000,000.00 (in words: twenty million euros) (the “ Deposit ”) into the Deposit Escrow. The Deposit Escrow is, as set out in clause 5.4.1(a)(i), to be credited against the Purchase Price or, as the case may be, credited against the contractual penalty pursuant to clause 5.6.5.

5.6.4 The Deposit shall be immediately released in the following events and as follows:


(a)	in case (i) the satisfaction of the Closing Conditions was hindered by one or both of the Purchasers in bad faith ( wider Treu und Glauben ) or on the basis of a breach of this Agreement by one or both of the Purchasers and (ii) the Sellers thereupon withdraw from this Agreement pursuant to clause 5.5.1, into the Sellers’ Accounts;


(b)	in case the Sellers withdraw from this Agreement pursuant to clause 5.5.3, into the Sellers’ Accounts;


(c)	in case the Purchasers withdraw from this Agreement pursuant to clause 5.3.2, 5.5.2 or clause 5.5.3, into the Purchasers’ Accounts;


(d)	in case the Closing has not occurred and one of the Parties has withdrawn from this Agreement pursuant to clause 5.5.1 (other than in case of lit. (a)), into the Purchasers’ Accounts;

In any of the cases in clauses 5.6.4(a) to (d) and 11.3.3 last sentence the Parties withdrawing from this Agreement shall provide the Notary with a copy of the withdrawal declaration and shall request in writing the release of the Deposit stating which amount should be paid into which of the bank accounts named in clause 4.6. Upon receipt, the Notary will forward (by fax) to the Parties to which the withdrawal declaration is addressed a copy of the withdrawal declaration and of the request to release the Deposit informing them that he will release the Deposit as requested by the Parties withdrawing from this Agreement 2 weeks after having dispatched the fax to the fax number specified in clause 18. The Notary is instructed not to release the Deposit as requested by the Parties withdrawing from this Agreement if within the aforementioned 2-week-period the Notary has received a written (fax being sufficient) objection by Parties to which the withdrawal declaration is addressed to the release. In this case, the Notary is instructed to release the Deposit only if and to the extent he has received either (i) an official copy of such court ruling endorsed as res iudicata ( Ausfertigung des Urteils mit Rechtskraftvermerk ) instructing the Notary to release the Deposit or (ii) a joint written instruction by the Parties.


(e)	notwithstanding the aforesaid, (i) by crediting it into the respective other Escrow Accounts in the order in which the Escrow Accounts are listed in clause 5.6.1 (b) to (f) and (ii) in any other event upon mutual agreement between and a corresponding joint written instruction by the Sellers and the Purchasers.

The aforementioned payments of the Deposit shall in all cases be made plus interest accrued on the Deposit, if any.

5.6.5 The Sellers may claim from the Purchasers a contractual penalty ( Vertragsstrafe ) in an amount equaling the amount of the Deposit if the Sellers withdraw from this Agreement as set out in clause 5.6.4(a) or clause 5.5.3. The Deposit is then, once it has been received by the Sellers pursuant to clause 5.6.4(a) or clause 5.6.4(b), credited against such claim. Any further claims of the Sellers, to the extent they exceed the contractual penalty, shall be excluded. The Purchasers shall not be obliged to pay the contractual penalty if the Transaction is not cleared by or deemed to have been cleared by the FCO in accordance with clause 11.1 and the Purchasers are not in breach with any obligation pursuant to clause 11.1.

5.6.6 The Purchasers shall be entitled to a contractual penalty ( Vertragsstrafe ) in the amount of EUR 2,500,000 if the Purchasers withdraw from this Agreement pursuant to clauses 5.3.2, 5.5.1 through 5.5.3, in case of 5.5.2 and 5.5.3 only if Sellers have hindered

the satisfaction of the relevant Closing Condition, or have caused the MAC, and generally acted in bad faith ( wider Treu und Glauben ), or the Sellers withdraw pursuant to clause 11.3.3 last sentence. Any further claims of the Purchasers shall be excluded.

6. CLOSING DATE ACCOUNTS


6.1	Closing Date; Establishment of Closing Date Accounts

6.1.1 The Sellers shall - at their own costs but with the reasonable support of the Target Companies (for the avoidance of doubt, the costs to prepare the Closing Date Accounts, i.e. to pay Hauck Schuchardt are on the Sellers) - prepare, without undue delay after the Closing Date, pursuant to the terms of this Agreement, balance sheets for each of the Target Companies as per 00:00 hours CET (i.e. start of the day) of the Closing Date (the “ Effective Time ”) and, on the basis of such balance sheet, a calculation of the items relevant for the calculation of the PropCo Value and the OpCo Value pursuant to clauses 4.2.1(b), 4.2.1(c) and 4.2.2 through 4.2.4. Any item of clauses 4.2.1(b) and 4.2.1(c) that refers to the Closing Date shall be balanced as per the Effective Time.

6.1.2 The balance sheet to be prepared by the Sellers under clause 6.1.1 is referred to as the “ Closing Date Accounts ”. In the version existing before becoming binding pursuant to clauses 6.3.2, 6.3.3 or 6.4.2, these accounts shall be referred to as “ Preliminary Closing Date Accounts ”.

6.1.3 Subsequently, on the basis of the Preliminary Closing Date Accounts, the Sellers shall calculate the Purchase Prices in accordance with clause 4.1 (the “ Preliminary Purchase Price Calculation ”).

6.1.4 The Sellers shall deliver the Preliminary Closing Date Accounts and the Preliminary Purchase Price Calculation to the Purchasers within 45 Business Days after the Closing Date (the " Cut-Off Time ").


6.2	Accounting Principles

6.2.1 The Closing Date Accounts must be prepared (i) in accordance with the specific accounting principles, practices, rules, estimation techniques and procedures set out in clauses 4.2.1, 4.2.2 and 4.2.4; and (ii) subject to (i) complying with the accounting principles, practices, rules, estimation techniques and procedures actually applied in the financial statements of the Target Companies for the fiscal year 2014; and (iii) subject to (i) and (ii) in accordance with the applicable provisions of German law (generally accepted principles of accounting under the HGB ( Grundsätze ordnungsgemäßer Buchführung )) as at 31 December 2014. For the avoidance of doubt, (i) shall take precedence over (ii) and (iii), and (ii) shall take precedence over (iii).

6.2.2 The Closing Date Accounts will be prepared in the same format as the balance sheets set out in Annex 4.3.1 (but not the amounts shown therein) and subject always that the inclusion or exclusion of a line item or an amount shall be governed by the requirements of clauses 4.2.1 to 4.2.4 and 6.2.1.


6.3	Review of the Preliminary Closing Date Accounts

6.3.1 The Purchasers have the right to review and have an advisor of their choice review the Preliminary Closing Date Accounts and the Preliminary Purchase Price Calculation within a time period of two (2) months upon their receipt from the Sellers. The Sellers shall fully co-operate with the Purchasers and their advisors and deliver all information and make accessible all documents and information that is held by the Sellers and is required by the Purchasers and their advisors, and provide copies of such documents at the cost of the Purchasers.

6.3.2 Any objections to the Preliminary Closing Date Accounts and the Preliminary Purchase Price Calculation must be notified by the Purchasers to the Sellers in writing within the two (2) months period pursuant to clause 6.3.1. If and to the extent the Purchasers do not assert objections within such deadline, the Preliminary Closing Date Accounts and the Preliminary Purchase Price Calculation shall become binding for the Parties.

6.3.3 If the Purchasers notify the Sellers of their objections against the Preliminary Closing Date Accounts and the Preliminary Purchase Price Calculation within the two (2) months period pursuant to clause 6.3.1, the Parties shall attempt to reach an agreement regarding the handling of these objections within twenty (20) Business Days after receipt of the notice. If and to the extent such an agreement is reached, the results thereof shall be transferred to the Preliminary Closing Date Accounts and the Preliminary Purchase Price Calculation, which will then become binding for the Parties in this respect and to this extent in the versions thus amended.


6.4	Expert Proceedings

6.4.1 If the Parties cannot reach an agreement on the handling of all of the objections within the (20) Business Days period pursuant to clause 6.3.3, they shall have three (3) Business Days after the expiration of this period to jointly nominate an expert ( Schiedsgutachter ) who must be an accounting expert of an accounting firm of international repute. Either Party can demand, acting reasonably, an extension of further 20 Business Days if at the end of the first 20 Business Days period the discussions regarding the objections are still ongoing.

6.4.2 With respect to the points in dispute between the Parties, the expert shall examine whether the requirements of clause 6.2 were complied with for the preparation of the Preliminary Closing Date Accounts. The expert shall give each Party a reasonable opportunity to present its views in writing. The expert must – but only on the remaining matters that are in dispute between the Parties but not on any other matters - prepare a written expert's opinion ( Schiedsgutachten ) in his/her reasonable discretion ( billiges Ermessen ) in this regard within thirty (30) Business Days after receipt of the required supporting information from the Sellers and the Purchasers, which shall be binding upon the Parties (save in the event of manifest error or fraud). The expert shall specify the grounds for his/her decision with respect to all points of contention between the Sellers and the Purchasers. The results of the expert's opinion shall be transferred to the Preliminary Closing Date Accounts and the Preliminary Purchase Price Calculation, which shall then become binding on the Parties in the versions thus amended.

6.4.3 If the Parties cannot agree on the nomination of an expert within three (3) Business Days after the expiration of the (20) Business Days period pursuant to clause 6.3.3, the expert shall, at the request of the Sellers and/or the Purchasers, be appointed by the chairman of the management board of the Institute of Public Auditors in Germany ( Vorsitzender des Vorstands des Instituts der Wirtschaftsprüfer in Deutschland e.V .) in Düsseldorf.

6.4.4 The costs and expenditures for the expert and the expert proceedings shall be initially advanced and borne by the Sellers (50%) and the Purchasers (50%) in equal shares. Both Parties shall bear their own costs and the costs of their advisors themselves, unless the expert reaches a different decision on the distribution of costs pursuant to clause 6.4.5.

6.4.5 Without prejudice to any other provision under this Agreement to the contrary, the expert shall ultimately decide in his/her reasonable discretion ( billiges Ermessen ) having regard to his/her decision and the original points of view and requests of the Parties pursuant to sec. 91 of the German Code of Civil Procedure ( Zivilprozessordnung

– ZPO ) regarding the distribution of his/her costs and expenses and the costs of the expert proceedings, including reasonable fees and expenditures of the Parties for their advisors.


6.5	Access to Information

6.5.1 Each Party shall ensure that the respective other Party, their auditors/advisors involved pursuant to clause 6.3 and any expert involved pursuant to clause 6.4 receives, after the Closing Date, all information and documentation required by them for the purposes of this clause 6.

6.5.2 The Parties must (each of them to the extent available to it) further ensure that the respective other Parties, the auditors involved pursuant to clause 6.3 and any expert involved pursuant to clause 6.4 have unrestricted access to the annual accounts from prior years of the Target Companies and receive the records of the Target Companies.

7. COMPLETION OF CERTAIN CONSTRUCTION WORKS


7.1	Construction Works and Construction-related Agreements

7.1.1 PropCo has concluded the agreements listed in Annex 7.1.1 (as amended from time to time and together with new agreements signed pursuant to clause 7.3.2(b) for implementing Construction Works, the " Construction-related Agreements ") which relate to the following construction works (the “ Construction Works ”):

(a)

The implementation of the fire protection concept (the “ Fire Protection Concept ”) set out in the public law agreement with the City of Frankfurt am Main dated 26/28 January 2011 (as amended on 26 August/5 September 2011, 16/22 December 2011 and 17 February 2012) (the “ Public Law Agreement ”) and the building permit B-2012-521-4 granted by the City of Frankfurt am Main on 28 August 2013,


(b)	the preparation of the rental spaces for the tenant Deutsche Bundesbank for occupation by Deutsche Bundesbank referred to under clauses 1.2.1, 1.2.2, 1.2.3 and 1.2.4 (i.e. all rental spaces to be handed over in the course of 2015 and 2016) of the Bundesbank Lease as required pursuant to clause 1.6 of the Bundesbank Lease (the “ Tenant Fit-Out Bundesbank ”), and


(c)	the modernisation of the elevators of the Trianon Highrise as defined in Annex 2 to the construction contract with ThyssenKrupp dated 19 September 2014 (the “ Elevator Modernisation ”).

7.1.2 Pursuant to the bond credit agreement ( Avalkreditvertrag ) and the pledge agreement attached hereto as Annex 7.1.2 , PropCo has pledged its fixed deposit account

with IBAN DE98 7004 0041 0660 3237 03 held at Commerzbank AG, providing for a deposit in the amount of EUR 2,500,000 (the “ Bond Cash Collateral ”), to Commerzbank AG as collateral for securing a EUR 2,500,000 bond ( Bürgschaft ) issued by Commerzbank AG in favour of Deka Immobilien GmbH. This bond has been provided to Deka Immobilien GmbH as security for its claims under the general contractor agreement with PropCo referred to in Annex 7.1.1 . If the bond is returned or reduced by Deka Immobilien GmbH to Commerzbank AG, the Bond Cash Collateral or the partial amount of the Bond Cash Collateral equal to such reduction, as the case may be, plus any interest thereon shall be paid (i) into the Fire Protection Escrow but (ii) provided Completion of the Fire Protection Concept occurred and all possible relevant Construction Compensation Amounts were paid, then to the Sellers.


7.2	Compensation

7.2.1 Subject to the limitations set forth in clause 7.2.3 and 7.2.4, the Sellers, each of them 50%, shall pay to the Purchasers (as set out in clause 7.6) an amount equal to


(i)	all claims by contractors against PropCo under the Construction-related Agreements,


(ii)	up to a maximum amount of EUR 500,000 in aggregate, all fee claims of third parties and experts that are involved by the Purchasers or the Target Companies to monitor, check or accompany the Construction Works and related services carried out, including but not limited to the Purchaser’s future asset manager or experts, and


(iii)	up to a maximum amount of EUR 500,000 in aggregate, rent reductions of the monthly rent legitimately made by the tenant Deutsche Bundesbank under the Bundesbank Lease and the lease agreement dated 22 July 2014 between OpCo (the “ GMS Bundesbank Lease ”) (in each case as agreed at the Signing Date) due to disturbance by Construction Works,

in each case exclusive of any VAT included in such a claim which shall be treated in accordance with clause 7.2.4 (the amount pursuant to lit. (i), the “ Construction Compensation Amount ”) if and to the extent they


(a)	relate to the implementation and completion of the Fire Protection Concept, and/or


(b)	relate to the Tenant Fit-Out Bundesbank and are not additional or increased costs caused by any changes to the scope of work as set out in Annexes 1.6-1 and 1.6-2 to the Bundesbank Lease requested by Deutsche Bundesbank pursuant to clauses 1.6.1 and 1.6.2 of the Bundesbank Lease, and/or


(c)	relate to the Elevator Modernisation

and are incurred (incurred means that the relevant third party works are undertaken by and until the dates below irrespective of the receipt of the relevant – final – invoices by the Target Companies) by the Target Companies until the earlier of (1) Completion (as defined below) for the respective works having occurred and (2) in case of the Tenant Fit-Out Bundesbank and the Elevator Modernisation: 31 October 2016. If Completion with regard to the Fire Protection Concept has not occurred by 31 March 2016 at the latest, the Sellers’ liability under this clause 7 (if any) for claims against PropCo in relation to the Fire Protection Concept that are incurred between that date and Completion shall be capped at an amount of EUR 4,000,000 (i.e. EUR 2,000,000 per Seller).

7.2.2 The Purchasers shall ensure that the Sellers will, as from Closing and upon request of the Sellers, be authorised by the Target Companies from time to time in the required manner to claim for and in the name of the Target Companies reimbursement and other compensatory payments against third parties, such as warranty claims under Construction-related Agreements, claims under the settlement agreement between, inter alia , PropCo and DekaBank Deutsche Girozentrale (“ DekaBank ”) dated 24 May 2011 (notarial deed no. 273-2001 of the notary Dr. Nikolaus Hensel, Frankfurt am Main as amended by the agreement on certain separate issues ( Einzelfragen ) with regard to the Fire Protection Concept dated 19 December 2013 (notarial deed no. 769-2013 G of the notary Ronald Gerns, Frankfurt am Main)) (the “ Deka Settlement Agreement ”), under relevant insurances, etc. (the “ Reimbursement Claims ”). The Purchasers shall ensure that, after the Closing Date, the Target Companies at all times reasonably cooperate with the Sellers, at the Seller’s sole expense, in connection with the making of Reimbursement Claims, and that no action is taken after the Closing Date that may lead to a reduction or expiration of the Reimbursement Claims.

7.2.3 The Sellers shall not be required to compensate the Purchasers and/or the Target Companies pursuant to clause 7.2.1if and to the extent the respective claims of the contractors under the Construction-related Agreements


(a)	(not used);


(b)	are covered by Reimbursement Claims; insofar, the following shall apply:

(i)

as long as no legal action against the Target Companies is taken by a third party requesting the payment, the Sellers may decide in their equitable discretion ( billiges Ermessen ) whether the claims shall be compensated pursuant to clause 7.6 or whether first the Reimbursement Claims shall be enforced. If, however, legal action is taken by the third party, the Sellers shall immediately agree that the respective claims are to be settled as per clause 7.6; The Sellers shall, if they decide that the claims shall not yet be compensated, indemnify

( freistellen ) the Purchasers and/or the Target Companies from any damage suffered by them due to any late payment to a third party and such indemnity claims shall also be covered by the respective Escrow Accounts to which the underlying claims relate. The Purchasers will cause the Target Companies to assign any damage claims against obligors of reimbursement claims pertaining to the late fulfillment of such reimbursement claims to the Sellers.

(ii)

if claims are compensated pursuant to clause 7.6, any later reimbursement shall be paid into the respective Construction Cost Escrow (if the reimbursement is paid to PropCo, the Purchasers shall ensure that PropCo pays the respective amount into the respective Construction Cost Escrow); if at that point in time no further claims against the Sellers under this clause 7 can be made, the Purchasers shall pay a respective amount to the Sellers; or


(c)	have been caused or increased, or Reimbursement Claims have been decreased or expired, by any non-compliance of the Purchasers or the Target Companies after the Closing Date with any of the provisions of this Agreement or any Relevant Agreement.

7.2.4 As the Target Companies may suffer from a non-recoverability of VAT connected with a Construction Compensation Amount, Seller 1 at 50% and Seller 2 at 50% shall furthermore and simultaneously pay an amount equal to


(a)	(i) 75% of the statutory VAT for all Construction Compensation Amounts where the underlying claims to be compensated attract statutory VAT and (ii) 100% of the statutory VAT for all Construction Compensation Amounts in relation to the Bundesbank Fit-Out (Clause 7.1.1(b)) where the underlying claims to be compensated attract statutory VAT,


(b)	less any VAT that is covered by Reimbursement Claims or would be covered by Reimbursement Claims if the Purchasers and the Target Companies had complied with any of the provisions of this Agreement or any Relevant Agreement.

It is understood that the VAT for which PropCo may claim for input VAT ( Vorsteuer ) is after Closing the sole responsibility of the Purchasers. This shall not exclude any claim of the Purchasers under clause 10.

7.2.5 The Purchasers will reimburse to the Sellers any amounts paid by the tenant Deutsche Bundesbank after Closing as compensation for additional costs incurred by PropCo prior to Closing. The respective compensation claims of PropCo against

Deutsche Bundesbank shall, if they should exist at the Closing Date, not be reflected in the Closing Date Accounts.


7.3	Operational completion of the Construction Works

7.3.1 Without undue delay after the Signing Date, the Target Companies and the Sellers will sign


(a)	in relation to the Fire Protection Concept, a project management agreement with REAG GmbH Real Estate Advisory Group Germany (“ REAG ”), and


(b)	in relation to the Tenant Fit-Out Bundesbank and the Elevator Modernisation, requested project management services under the asset management agreement with Bilfinger Real Estate Argoneo GmbH (together with REAG, the “ Project Managers ” and each a " Project Manager "),

in each case materially in the form as attached hereto as Annex 7.3.1 .

7.3.2 The Parties agree inter partes that the Sellers shall, as long as they may be liable under this clause 7, be entitled to direct the Project Managers and any other party under a Relevant Agreement (as defined below) in relation to the Construction Works and the settlement of the costs incurred for them and that the Sellers shall make reasonable and proper use of these operational powers vested in them under this Agreement to support, to the extent required giving regard to the involvement of the Project Managers and other contractors, the implementation of the Construction Works in a continuous and expeditious manner. The Purchasers shall ensure that the Target Companies will fully support and do not interfere with that direction, but only to the extent that this does not severely interfere with the operation of the Trianon and PropCo’s business and is reasonable, in particular that the Target Companies will

(a)

not enter into any supplements (incl. the acceptance of settlements ( Schlussrechnungen )) or amendments to, or terminate any, or give instructions under any, of the following agreements (the “ Relevant Agreements ”) without the prior written consent of the Sellers, not to be unreasonably withheld or delayed: the Construction-related Agreements, the Public Law Agreement, the Bundesbank Lease (to the extent this is required in connection with the Construction Works), the Deka Settlement Agreement, any (other) agreement providing for Reimbursement Claims, as well as any other agreements (incl., for instance, insurances) to which the Target Companies are party in connection with the Construction Works;


(b)	enter into any supplements (incl. settlement agreements) or amendments to the Relevant Agreements as well as new respective agreements with third

parties (in each case as deemed reasonably necessary by the Sellers in connection with the Construction Works),


(c)	formally accept ( abnehmen ) Construction Works if and to the extent so reasonably requested by the Sellers and if and to the extent the Construction Works have no major defects ( wesentliche Mängel ), and in general cooperate with the Sellers and the Project Managers in connection with the Construction Works;


(d)	arrange the official acceptance of the Fire Protection Concept and hand over of completed parts of the Tenant Fit-Out Bundesbank to the tenant Deutsche Bundesbank in accordance with the respective Bundesbank Lease, in each case as reasonably instructed by the Sellers in consultation with the relevant Project Manager; and


(e)	keep the Sellers and the Project Managers upon request regularly informed about all aspects relevant for them in connection with the Construction Works and allow them – or any representatives appointed by them – to take part in meetings with the authorities, the handing over and acceptances, etc.

7.3.3 The Sellers shall in relation to the Purchasers and the Target Companies be obliged in exercising the operational powers granted to it under or in connection with this clause 7 to give regard to the best interests of the Target Companies. The Sellers shall not actively delay the timely completion of the Construction Works and, without the consent of the Purchasers (not unreasonably to be withheld), give any instructions or omit to give reasonable instructions if such instructions or lack of instructions would not be compliant with the reasonable recommendations of the Project Managers.

7.3.4 The Sellers do not assume, and none of the provisions contained in this clause 7 shall be construed to the effect that they would assume, any liability towards the Purchasers or any Target Company for the completion of the Construction Works, its timeliness or the absence of any defects ( Mangelfreiheit ) with regard to the Construction Works.


7.4	Completion

7.4.1 “ Completion ” shall mean


(a)	with regard to the implementation of the Fire Protection Concept pursuant to clause 7.1.1(a): the Official Acceptance has occurred or is deemed to have occurred pursuant to clause 7.4.2 et. seqq.,


(b)	with regard to the Tenant Fit-Out Bundesbank pursuant to clause 7.1.1(b): hand-over of the relevant rental spaces to Deutsche Bundesbank subject to

remediation of only Remaining Defects (if any) with regard to the relevant rental spaces, and


(c)	with regard to the Elevator Modernisation the final acceptance of the works by the Target Companies which shall be done without undue delay after final acceptance is recommended ( Abnahmeempfehlung ) by the consulting engineer Jappsen Ingenieure.

7.4.2 The “ Official Acceptance ” ( behördliche Abnahme ) in the meaning of this Agreement has occurred, or is deemed to have occurred, if


(a)	an official visit ( behördliche Begehung/Bauzustandsbesichtigung ) has been carried out by the competent authorities in relation to the Fire Protection Concept, and


(b)	either


(i)	the competent authority has issued a compliance certificate (such as a compliance certificate pursuant to sec. 74 para. 3 Hessian Building Code ( HBO ) as referred to in sec. 2 para. 5 of the Public Law Agreement) confirming completion of the Fire Protection Concept (possibly including Construction Works taken in deviation of the initially agreed concept), or

(ii)

(1) the competent authority has issued a decree ( Bescheid ) enumerating certain outstanding items (the “ Snagging Items ”) to be done for it issuing a compliance certificate pursuant to no. (i) above in relation to the Fire Protection Concept (items required by the authority which are (a) based on changes of law or applicable regulations after Closing or (b) caused by action taken by the Target Companies after Closing outside the implementation of the Fire Protection Concept shall be disregarded), and then (2) respective further Construction Works have thereupon been carried out to complete the Snagging Items pursuant to clause 7.3, and then (3) the sufficient completion of the Snagging Items pursuant to no. (1) above has been confirmed by the authority in compliance with the decree, or Deemed Official Acceptance occurred pursuant to clauses 7.4.3 and 7.5.

7.4.3 If after the issuance of a decree ( Bescheid ) enumerating the Snagging Items for the Fire Protection Concept referred to in clause 7.4.2(b) above the subsequent confirmation of the authority regarding the completion of the Snagging Items pursuant to clause 7.4.2(b)(ii)(3) shall not have been received despite (i) the Snagging Items being completed (and such completion being confirmed by the relevant Project Manager and Aecom) and (ii) such completion being notified to the competent authority and (iii) the

laps of 6 months after such notification to the competent authority, the Parties shall initiate the proceedings set forth in clause 7.5 below for determining with binding effect between them whether the Snagging Items have been completed and, therefore, the Official Acceptance is deemed to have occurred.

7.4.4 “ Remaining Defects ” for the purpose of this clause 7 means all defects in relation to the Tenant Fit-Out Bundesbank that have legitimately been complained about ( berechtigterweise gerügt ) by the tenant Deutsche Bundesbank at the time of handover ( Übergabe ) of the rental spaces referred to under clauses 1.2.1, 1.2.2, 1.2.3 and 1.2.4 of the Bundesbank Lease and have, thereupon, been listed in the respective handover protocol ( Übergabeprotokoll ) executed pursuant to clause 3.2 of the Bundesbank Lease on the occasion of the relevant handover and in the presence of representatives of the Sellers and the Project Manager. If the Parties are in dispute on whether or not a defect has legitimately been complained about by Deutsche Bundesbank, each of them may initiate the proceedings set forth in clause 7.5 below for determining this with binding effect between them.

7.4.5 The Purchasers shall ensure that the Sellers and their advisors (such as, for instance, technical experts) receive, after the Closing Date, all information and documentation required by them for the purposes of the Sellers complying with their obligations or exercising their rights under this clause 7, provided that the Purchasers or the Target Companies have that information available and at hand.


7.5	Compliance review proceedings to determine deemed Completion

7.5.1 The proceedings referred to in clauses 7.4.2 through 7.4.4 above shall be implemented as follows and if necessary repeated until all issues which shall be confirmed in these proceedings have been settled:

(a)

Within two weeks upon the written request of a Party to implement these proceedings in any of the cases pursuant to clauses 7.4.2 through 7.4.4, as applicable, the Parties and the relevant Project Manager shall meet with each other and Technical Expert in the Trianon Highrise in order to agree in good faith on a list with the outstanding measures and works to be taken to achieve completion of the relevant Construction Works including (if any) any Remaining Defects, and, if any, the time schedule for their completion. The Sellers shall then direct the relevant Project Manager to ensure completion of these works and shall instruct the relevant Project Manager to inform the Parties once in the relevant Project Manager’s view the works have been completed. Upon request by either Party, the Parties, the Project Manager and Technical Expert shall meet again as set out in sentence 1 to confirm completion.

(b)

If and to the extent that the Parties have within one month after their first meeting referred to in lit. (a) above still not found agreement on the issues reviewed by them, each Party may instruct Technical Expert to prepare on behalf of all Parties a written expert's opinion ( Schiedsgutachten ) within thirty (30) Business Days after his/her instruction. This expert’s opinion shall, with binding effect for the Parties, determine in the reasonable view of the expert, as the case may be, (i) whether in relation to the Snagging Items under dispute the respective pre-requisites for the competent authority (if acting reasonably and in line with past practice) issuing a decree pursuant to clause 7.4.2(b)(ii)(3) above have been achieved (“ Deemed Official Acceptance ”), and/or (ii) the Construction Works taken for the Tenant Fit-Out Bundesbank comply with the respective provisions of the Bundesbank Lease and therefore have to be accepted by Bundesbank. The expert shall specify the grounds for his/her decision with respect to all points of contention between the Sellers and the Purchasers. Clauses 6.4.4 and 6.4.5 shall apply mutatis mutandis .

If and to the extent that during the proceedings referred to in clauses 7.4.2 through 7.4.4 above the matter is solved by site visits or decrees of competent authorities, agreements with Deutsche Bundesbank, etc., the proceedings shall insofar be terminated and, from then on, solely the action/measures ordered by the competent authorities or, as the case may be, the respective confirmation from Bundesbank shall be relevant.

7.5.2 Prior to the Closing the Parties shall agree on two technical experts (" Technical Expert ") and which of them shall be the first and which of them shall be the second choice. If the Parties cannot agree on a Technical Expert by the Closing Date, clause 6.4.3 shall apply mutatis mutandis whereas the president of the Chamber of Commerce (IHK) in Frankfurt am Main shall appoint the Technical Expert.


7.6	Payment of compensation claims

7.6.1 Any amount to be “paid” by the Sellers pursuant to clause 7.2 shall be paid


(a)	as further set out in clause 7.6.3 and the Escrow Rules, from the relevant Construction Cost Escrow as long as the respective Construction Cost Escrow has not been used up or released; and


(b)	if and to the extent the overall amount payable by the Sellers under clause 7.2 exceeds the initial amount set out for the respective Construction Cost Escrow in clause 5.6.1, by respective payment by the Sellers pursuant to clause 7.6.2 and 7.6.3.

7.6.2 Any direct payment by the Sellers as per clause 7.6.1(b) shall be made every month in arrears.

7.6.3 For purposes of initiating the payments pursuant to clauses 7.6.1 and 7.6.2 the following shall apply:

(a)

The relevant Project Manager or the Purchasers will forward a copy of the respective invoice to the Sellers. The relevant invoice shall have been approved by a Project Manager or another expert (architect, etc.) being engaged by both Parties for reviewing the invoice. The relevant Construction Compensation Amount shall be paid upon the relevant claim becoming due. The payment of the respective amount shall be made directly to the respective third party.


(b)	The relevant invoices with VAT shall be paid in full without deduction of the VAT amount. The amount of VAT that shall not be compensated hereunder shall then be paid by the Purchasers or the Target Companies into the relevant Construction Cost Escrow.


(c)	For the avoidance of doubt, if the Target Companies are entitled to withholdings ( Sicherungseinbehalte or the like), then the relevant invoice shall be paid without that withholding. Any such withheld amount shall be released from the respective Construction Cost Escrow to the respective Target Company.

(d)

As long as clause 7.6.1(a) applies, the Notary is herewith instructed to release funds from the Construction Cost Escrows only as provided in the joint written instruction by all Parties to the Notary, which the Parties undertake to give in line with this clause 7.6. The payment instruction shall in each case specify (i) the relevant Construction Cost Escrow from which the funds are to be released, (ii) the amount to be released and (iii) the details of the bank account (including the account holder) to which the payment is to be made. If the Parties instruct the Notary to release funds from a Construction Cost Escrow to a third party, the Notary shall pay the respective amount directly to that third party.

7.6.4 Any payment of a compensation amount shall be considered by the Parties as a reduction of the Purchase Price for tax purposes. The total amount of each payment shall be allocated (i) to the Purchase Prices to be paid by Seller 1 and payable by Seller 1 at 50%, and (ii) to the Purchase Prices to be paid by Seller 2 and payable by Seller 2 at 50%.

7.6.5 Any compensation claims pursuant to clause 7.2 becomes time-barred one year after the statutory commencement ( gesetzlicher Verjährungsbeginn ) pursuant to section 199 para. (1) BGB, i.e. commencement is the end of the year in which the relevant compensation claim came into existence.


7.7	Construction Cost Escrows

7.7.1 The Fire Protection Escrow, the Buba Fit-out Escrow and the Other Construction Costs Escrow (together the “ Construction Cost Escrows ” and each a " Construction Cost Escrow ")) shall be administered pursuant to the Escrow Rules and shall serve as the Purchasers’ security with respect to the relevant claims of the Purchasers pursuant to clause 7.2, i.e.


(a)	the Fire Protection Escrow shall secure the Purchasers’ claims pursuant to clause 7.2 to the extent they relate to the implementation of the Fire Protection Concept and the monitoring of the Construction Works pursuant to clause 7.2.1 (ii),


(b)	the Buba Fit-out Escrow shall secure the Purchasers’ claims pursuant to clause 7.2 to the extent they relate to the Tenant Fit-Out Bundesbank including the claim for compensation of any rent reductions by Deutsche Bundesbank pursuant to clause 7.2.1 (iii), and


(c)	the Other Construction Costs Escrow shall secure the Purchasers’ claims pursuant to clause 7.2 to the extent they relate to the implementation of the Elevator Modernisation,

in each case (i) unless such claims are eligible for reimbursement under the Reimbursement Claims, (ii) including any VAT compensation amounts pursuant to clause 7.2.4 and (iii) including any claims associated with the secured claims in case of default ( Verzugsschaden ) or breach by the Sellers of any obligation under this clause 7.

7.7.2 Monies on the Construction Cost Escrows shall (unless otherwise agreed in clause 7.6.3) be paid out as follows:

Only as provided in the joint written instruction by all Parties to the Notary, which the Parties herewith undertake to give in line with the following provisions:


(a)	Regularly pursuant to clause 7.6.1(a);

(b)

(i) An amount equal to the remainder of the funds on the Fire Protection Escrow less the Anticipated Outstanding Costs within one week after Completion of the Construction Works for the Fire Protection Concept has occurred, and (ii) the remaining part of the funds on the Fire Protection Escrow within one week after all respective invoices have been paid; “ Anticipated Outstanding Costs ” means two times the costs reasonably estimated by the Project Manager or, in case of the proceedings pursuant to

clause 7.5, the appointed expert, to still be paid by the Sellers under this clause 7 in relation to the Fire Protection Concept;


(c)	The remainder of the funds on the Buba Fit-out Escrow to the Sellers within 10 (ten) Business Days after Completion of the Construction Works for the Tenant Fit-Out Bundesbank has occurred and the Remaining Defects have been remediated and the respective invoices have been paid, in each case less any amount that has been withheld from any contractor's invoice; and


(d)	The remainder of the funds on the Other Construction Costs Escrow to the Sellers within 10 (ten) Business Days after Completion of the Construction Works for the Elevator Modernisation has occurred and the Remaining Defects have been remediated and the respective invoices have been paid, in each case less any amount that has been withheld from any contractor's invoice.

8. SELLERS’ GUARANTEES; NO OTHER REMEDIES


8.1	Form and Scope of Seller’s Guarantees

8.1.1 The Sellers hereby guarantee to the Purchasers, subject to the requirements and limitations provided for in clauses 8 and 9 below, by way of an independent promise of guarantee ( selbständiges Garantieversprechen ) within the meaning of sec. 311 para. 1 BGB that the statements made in clause 8.2 are correct on the Signing Date or such other date explicitly so provided in clause 8.2.

8.1.2 The Sellers and the Purchasers agree and explicitly confirm that the guarantees in clause 8.2 shall be qualified and construed as neither quality guarantees concerning the object of the purchase ( Garantien für die Beschaffenheit der Sache ) within the meaning of sec. 443, 444 BGB nor quality agreements ( Beschaffenheitsvereinbarungen ) within the meaning of sec. 434 para. 1 sentence 1 BGB and that sec. 444 BGB shall not and does not apply to the guarantees contained herein.


8.2	Sellers’ Guarantees

8.2.1 Corporate Matters


(a)	The statements made in clause 1.1 and 1.2 regarding the Target Companies and the Sold Shares are correct on the Closing Date. The Target Companies have been duly established under German law and are, on the Signing Date and the Closing Date, validly existing. At the Closing Date, the Sellers are fully authorised to dispose of the Sold Shares. At the Closing Date, the Sold

Shares are fully paid in and have not been repaid, neither in whole nor in part.

(b)

The excerpts from the commercial register as well as the articles of association of the Target Companies attached hereto in Annex 8.2.1(b) are true and correct, and all facts that can be registered in the commercial register are actually registered in the commercial register excerpts attached hereto as Annex 8.2.1(b) . No resolutions which change the terms of the Target Companies’ articles of association as attached hereto in Annex 8.2.1(b) have been passed. As of the Closing Date, there are no other agreements (e.g. shareholder agreements) that could confer rights and obligations in relation to the Sold Shares in the Target Companies onto the Purchasers.


(c)	The Sold Shares are on the Closing Date free from any encumbrances or other rights of third parties, except for encumbrances granted with the consent of the Purchasers or to be released pursuant to this Agreement. There are, on the Closing Date, neither pre-emptive rights or other rights of third parties to acquire the Sold Shares.

(d)

On the Signing Date and the Closing Date, no insolvency proceedings concerning the Target Companies have been applied for by the Target Companies. To the Sellers’ Knowledge, (i) no third party application for insolvency proceedings in relation to the Target Companies’ assets were filed and (ii) no circumstances exist which could justify an application for insolvency proceedings concerning the assets of the Target Companies.

(e)

At the Closing Date, the Target Companies do not hold any interest in any other entity, have no other branch or businesses and are not party to any enterprise agreement within the meaning of sec. 291 subseq. AktG. At the Closing Date, the Target Companies are not obliged to acquire or dispose of (i) interest in any other entity or (ii) real property including the Real Property. There are no profit participation rights or silent partnerships etc. in relation to the Target Companies. There will be no pending liability ( Nachhaftung ) from previous enterprise agreements or business acquisitions agreements.


(f)	The balance sheets of the Target Companies for the fiscal year 2014 include all of the Target Companies’ liabilities in the meaning of clause 4.2.1(c)(i) that were existing and outstanding on 31 December 2014 and that are required to be included in such balance sheets under German GAAP.


(g)	The audited financial statements of PropCo as of 31 December 2014 (i) have been prepared in compliance with the German GAAP, (ii) correctly reflect the state of affairs and the financial and income situation of the relevant

Target Company as per the respective date. There are no contingent liabilities relations as defined in section 251 HGB that – to the extent that they are not to be entered on the liabilities side of the balance sheet – are not disclosed in the notes to the financial statements as of 31 December 2014.


(h)	Taking into consideration the purpose for which they were produced, the management accounts of the Target Companies are prepared in a manner materially consistent with the audited financial statements and present, with reasonable accuracy, the financial position of the Target Companies.


(i)	The Closing Date Accounts will include all of the Target Companies’ liabilities in the meaning of clause 4.2.1(c)(i) that will exist and are outstanding on the Closing Date.


(j)	Each of the Target Companies is in the possession of sufficient documents required to determine VAT adjustments pursuant to section 15a German VAT Act (including but not limited to a documentation in line with section 15a 12 VAT Application Decree ( Umsatzsteueranwendungserlass ) in respect to any input VAT related invoices issued to the Target Companies before the Signing Date.


(k)	At the Closing Date, there are no outstanding claims of the Sellers and their Affiliates (other than the Target Companies) against the Target Companies which will not be included in the Closing Date Accounts.

8.2.2 Real Property


(a)	On the Signing Date and the Closing Date, the Real Property is owned ( Eigentum ), or held on the basis of a ground lease ( Erbbaurecht ), by the PropCo as set out in Annex 1.3.1 .

(b)

On the Signing Date and the Closing Date, except as apparent from the land register extracts and other documents attached hereto as Annex 1.3.1 , no other encumbrances of the Real Property are registered in the land register or the building encumbrances register ( Baulastenverzeichnis ). No disposals ( Verfügungen ) over the Real Property have been made by the PropCo and no further entries in the building encumbrances register have been consented to and/or applied for by PropCo and PropCo is not obliged to consent to or make such disposals or consent to or apply for such entries. To the Sellers’ Knowledge, no old easements ( altrechliche Beschränkungen und Belastungen ) exist that are not registered in the land register. The Sellers are not aware of any process to change the registered encumbrances of the Real Property initiated by a third party.


(c)	Other than in relation to the Fire Protection Concept, PropCo has not received written official notices from the public building authority or any other public authority which are still outstanding and expressly request for a specific case the removal of contamination, the material reconstruction or the material modification of the Real Property or the material change of use of the Real Property.


(d)	Except as set out in Annex 8.2.2(d) , no public subsidies have been granted with respect to the Real Property, and no restrictions are applicable based on any such public subsidies with respect to the Real Property. To the Sellers’ Knowledge no subsidy is subject to a reclaim by the granting authority.

(e)

To the Sellers’ Knowledge, there is no Environmental Damage contained in the Real Property that requires removal under statutory law. " Environmental Damage " within the meaning of this Agreement means damage as defined in the German Environmental Damage Act ( Umweltschadensgesetz ) and any other contamination or pollution of the soil, soil air, leachate, ground water or any surface water, harmful substances on or in buildings or other structures (e.g. asbestos), any underground structures or technical facilities or any parts thereof, warfare agents or any substances that are (either as part of the soil or isolated thereof) waste under the German Waste Act ( Bundesabfallgesetz ). This shall include, without limitation, any contamination of the soil, any residual pollution as defined in section 2 of the Federal Soil Protection Act ( Bundesbodenschutzgesetz ). On the Closing Date, the Sellers have not caused, or allowed to be caused, any Environmental Damage.


(f)	Except for the neighbour agreements which have been disclosed, no neighbour agreements exist to which the Target Companies are parties. The Sellers are not aware of any other neighbour agreements pertaining to the Real Property.


(g)	Except for the public law agreements which have been disclosed, no public law agreements exist to which the Target Companies are parties. The Sellers are not aware of any other public law agreements pertaining to the Real Property.


(h)	To the Sellers' Knowledge the building permits and other material permits required for the construction and use of the buildings on the Real Property have been granted and not revoked.

To the Sellers' Knowledge and except for the fire life safety deficiencies as described in the Fire Protection Concept, the buildings on the Real Property materially comply with the relevant requirements under public building law.

8.2.3 Lease Agreements

(a)

Annex 8.2.3(a) contains a correct and complete list of all lease agreements and amendments to such lease agreements existing as of the Signing Date with respect to the Real Property (each of them a “ Lease ”, together the “ Lease Agreements ”). No oral or written side agreements to a Lease exist other than contained in Annex 8.2.3(a) . To the Seller’s Knowledge, there is no material breach of obligations by the landlord under a Lease, it being understood that any obligations of the Sellers in relation to the Construction Works shall solely be governed by clause 7.


(b)	Annex 8.2.3(b) contains a correct and complete list of all rent securities provided by the tenants under a Lease.


(c)	Annex 8.2.3(c) contains a correct and complete list of all payments that have been received by the Target Companies from tenants under a Lease from January 2015 up to May 2015.


(d)	No anticipatory disposals of rent and/or service charges (except for service charge prepayments) have been made which would have an effect on PropCo beyond the Closing Date, except for such disposals in connection with the Helaba Loan Agreement.


(e)	Except as disclosed in Annex 8.2.3(e) , no tenant under a Lease has up to the Signing Date given written notice of termination of a Lease, and no such termination has been announced by tenants in writing.


(f)	Except as disclosed in Annex 8.2.3(f) , no advance payments of rent have been received by PropCo from a tenant under a Lease, no rent or other payments from tenants under a Lease are outstanding or under reservation, and none of the lessees under the Lease Agreements is asserting or threatening to assert any claim for reduction in rent in writing.


(g)	On the Closing Date any incentives promised to tenants under the Lease Agreements which are due and payable prior to the Closing Date are discharged in full.

8.2.4 Contracts


(a)	Annex 8.2.4(a) contains a list of all contracts between third parties and one of the Target Companies (excluding utilities contracts and utility related

services contracts) that (i) oblige the respective Target Company to pay a fee or other remuneration of more than EUR 20,000 p. a. and (ii) have a minimum term of more than 12 (twelve) months and (iii) can only be terminated by the respective Target Company with notice of more than 3 (three) months or only upon payment of a break fee.


(b)	There are no loan agreements to which the Target Companies are parties (with the exception of the Helaba Loan Agreement and over-drafts granted in the ordinary course of business by the banks where the Target Companies maintain their accounts).


(c)	At the Closing Date, PropCo is not in any breach of any contractual provision under the Helaba Loan and there is no default or a technical “Event of Default” outstanding.

8.2.5 Employment Matters

On the Closing Date, the Target Companies do not have any employees and have not had any employees for the preceding five years. There are no employment or pension liabilities which would, as a result of the consummation of this Agreement, transfer to the Purchasers.

8.2.6 Litigation

Except as set out in Annex 8.2.6 , the Target Companies are not party to (i) any pending ( rechtshängig ) law suits before a court of justice or (ii) any official proceedings with authorities (other than in relation to the Fire Protection Concept), and no such law suit or official proceeding is threatened in writing to be filed against the Target Companies.

8.2.7 Miscellaneous


(a)	Annex 8.2.7(a) contains a complete list of the Target Companies’ bank accounts.


(b)	PropCo is registered in the register of the DPMA ( Deutsches Marken- und Patentamt ) as holder of the trademark “Trianon”. PropCo is further registered as holder of the domains of their current websites www.trianon-frankfurt.de and www.trianon-frankfurt.com.


(c)	The existing insurance has never rejected any settlement of a secured event because of the existing fire protection deficiencies and the ongoing implementation of the Fire Protection Concept.


8.3	No other Remedies of the Purchasers

8.3.1 The Purchasers explicitly acknowledge to purchase and acquire the Sold Shares and – thereby indirectly – the Real Property in the condition they are in on the Closing Date (clause 5.3 remains unaffected), based upon their own inspection, examination and determination with respect thereto, and to undertake the acquisition based upon their own inspection, examination and determination without reliance upon any express or implied representations, warranties or guarantees of any nature made by the Sellers except for the guarantees explicitly given by the Sellers under this Agreement. The Sellers shall only be liable for any deterioration of the Real Property until the Closing Date if so set out in this Agreement.

8.3.2 Without limiting the generality of the foregoing and the guarantees explicitly given herein, the Purchasers acknowledge that the Sellers make no representation, or warranty or guarantee with respect to


(a)	the environmental and technical status of the Real Property,


(b)	the accuracy and completeness of the information, documents and records received by the Purchasers from the Sellers or third parties prior to the conclusion of this Agreement (including the information made available in the Q&A process and the electronic data room operated by Imprima (the “ Data Room ”) except as agreed in clause 8.3.3, or


(c)	any tax matter, except as otherwise provided for in this Agreement.

8.3.3 The Sellers represent with respect to the Sellers' Guarantees under clause 8.2 and any warranty, indemnity, representation or undertaking pursuant to clause 10 that they have disclosed to the Purchasers upon due and careful enquiry of its personnel tasked with the management of the Real Property or the Target Companies, asset managers, property managers and the Project Managers (in particular in relation to the implementation of the Fire Protection Concept) all information that in such a manner that a reasonable buyer would be in a position to make a reasonable informed assessment of the fact, matter or other information and that the Sellers have not put any information in the Data Room in a misleading manner, for example (without limitation) information which the Sellers in each case know is in material respects wrong or inaccurate or incorrectly placed in the Data Room, in each case if the information thereby is misleading.


8.4	Sellers’ Knowledge

In this Agreement, the knowledge or awareness of the Sellers (the “ Sellers’ Knowledge ”) shall solely encompass the actual knowledge ( positive Kenntnis ) of the individuals listed in Annex 8.4 as of the Signing Date. For the avoidance of doubt, to the extent Annex 8.4 includes persons that are not employed by the Sellers, their knowledge shall only be

attributed to the Sellers where a guarantee pursuant to clause 8.2 explicitly refers to the “Sellers’ Knowledge”, but not for any other purpose.

9. REMEDIES FOR BREACH OF SELLERS’ GUARANTEES


9.1	General/Recoverable Damages

9.1.1 Without prejudice to clause 1.5.4, for the avoidance of doubt, where reference is made to the Sellers in this clause 9 this shall only pertain to the Seller(s) concerned pursuant to clause 1.5 of this Agreement.

9.1.2 In the event of any breach or non-fulfilment by the Sellers of any of the guarantees pursuant to clause 8.2, the Purchasers may claim for monetary damages ( Schadenersatz in Geld ), provided, however, that such damages shall only cover actual damages incurred by the Purchasers, but shall not cover consequential damages ( Folgeschäden ) and loss of profits ( entgangener Gewinn ). For the avoidance of doubt the Parties agree that acutal damages on the level of the Target Companies also qualify as actual damages incurred by the Purchasers, i.e. the fact that the damage is incurred at the level of the Target Companies and not on the level of the Purchasers does not qualify these damages as consequential. The Target Companies and the Purchasers are treated as one in that respect. The Parties furthermore agree that any loss of rental income of the Target Companies, whether consequential or not, shall entitle the Purchasers to monetary damages.

9.1.3 The Sellers shall not be liable for, and the Purchasers shall not be entitled to claim for, any damages of the Purchasers under or in connection with this Agreement if and to the extent that the matter to which the claim relates is included as liability, provision, or asset correction ( aktivistische Wertberichtigung ) in the Closing Date Accounts and thus properly reflected in the Purchase Prices.


9.2	De Minimis Amount; Threshold

The Purchasers shall only be entitled to any claims under clauses 8 and 9 to the extent each individual claim exceeds an amount of EUR 30,000 (the “ De Minimis Amount ”) and the aggregate amount of all such individual claims exceeds EUR 200,000 (the “ Threshold ”). In case the De Minimis Amount and the Threshold are exceeded, the Purchasers can claim the full damages and not only the excess . The De Minimis Amount and the Threshold shall not apply where a guarantee given by the Seller was incomplete or incorrect due to the Seller’s intentional conduct ( vorsätzliches Verhalten ).


9.3	Overall Scope of Sellers’ Liability

Given the protection the Purchasers have obtained under the W&I Insurance, the Sellers’ aggregate liability under clauses 8 and 9 shall be limited to an amount equalling for each Seller an amount of EUR 375,000 (i.e. for both Sellers together EUR 750,000) (the “ Liability Caps ”).

The Liability Caps shall not apply to the obligation of the Sellers to transfer the Sold Shares, i.e. to convey ownership to these Sold Shares to the Purchaser, the Sellers' obligations under Clause 19 and/or a breach of any of the guarantees set forth in clauses 8.2.1(a), 8.2.1(c), 8.2.2(a) and 8.2.2(b). Amounts recoverable under the W&I Insurance reduce the liability of the Sellers for damages that do not fall under the Liability Caps. The overall liability of the Sellers under this Agreement shall in no event exceed EUR 20,000,000 per Seller. The relevant liability cap shall not apply where a guarantee given by the respective Seller was incomplete or incorrect due to the Seller’s intentional conduct ( vorsätzliches Verhalten ).


9.4	Exclusion of Claims due to Purchasers’ Knowledge

9.4.1 The Purchasers shall not be entitled to bring any claim under clauses 8 and 9 if the underlying facts or circumstances on which the claim is based were

(a)

Fairly disclosed in the Data Room prior to 9 June 2015 (the “ Cut-Off-Date ”), the Q&A process, this Agreement or an Annex to it. Documents made available in the Data Room shall only be (fairly) disclosed in the meaning of the preceding sentence if they (i) have been made available in a section of the Data Room that relates to the context of the information and in such a manner that on a review of the document, a reasonable buyer would be in a position to make a reasonable informed assessment of the fact, matter or other information, or (ii) have actually been reviewed by a person of the Purchaser’s team that is competent for that context; or


(b)	identifiable ( erkennbar ) during the site visits that the Purchasers were allowed to undertake with their service providers or investors; or


(c)	known by the Purchasers on the Signing Date, it being confirmed by the Purchasers that they had been given the opportunity to a full due diligence with regard to the Target Companies (based on the information provided in the Data Room) and its matters (incl. the Real Property).

However, this clause 9.4.1 shall not apply to a breach of any of the guarantees set forth in clauses 8.2.1(a), 8.2.1(c) and 8.2.2(a), i.e. these guarantees are given regardless of any knowledge of the Purchasers, provided that this shall not apply to the content of any

ground lease agreements made available in the Data Room, which shall be deemed known to the Purchasers.

9.4.2 The information provided to the Purchasers in the Data Room and the Q&A process up to the Cut-Off-Date have been saved on a USB-Stick, one copy of which was handed over to Seller 1, Seller 2, the Purchasers and the Notary together with a letter of the Data Room Provider confirming that the USB-Stick contains an identical copy of the information provided in the Data Room as of the Cut-Off-Date. The Parties will review and sign-off the USB-Stick within 5 Business Days after the Signing Date. If no objections have been raised by either party within the aforementioned 5-Business Day-Period, the Notary will take his copy of the USB-Stick into custody until 31 December 2020. The Notary shall only release the USB-Stick upon request of all Parties, but each Party may at its own costs request at any time before copies of such USB-Stick.

9.4.3 In this Agreement, the knowledge of the Purchasers’ shall solely encompass the actual knowledge (positive Kenntnis) of the individuals listed in Annex 9.4.3 as of the Signing Date. For the avoidance of doubt, to the extent Annex 9.4.3 includes persons that are not employed by the Purchasers, their knowledge shall only be attributed to the Purchasers where a Purchaser’s guarantee refers to the “Purchasers’ Knowledge”, but not for any other purpose.


9.5	(intentionally left blank)


9.6	Mitigation

Sec. 254 BGB shall remain unaffected.


9.7	Limitation Periods

9.7.1 All claims of the Purchasers for any breach by the Sellers of clauses 8.2 and any other breach of this Agreement by the Sellers made prior to the Closing Date shall become time-barred ( verjähren ) eighteen (18) months after the Closing Date.

9.7.2 Clause 9.7.1 shall not apply in case of the Sellers’ intentional conduct ( vorsätzliches Verhalten ); claims based thereon shall become time-barred ( verjähren ) in accordance with the statutory rules pursuant to Secs. 194 et seqq . of the BGB.


9.8	Exclusion of Further Remedies

To the extent permitted by law, any further claims and remedies of the Purchasers (including all withdrawal rights) other than explicitly provided for in this Agreement (including breaches of this Agreement after the Signing Date), are hereby expressly waived and excluded, unless such claim is based on wilful act ( vorsätzliche Handlung ) or fraudulent misrepresentation ( arglistige Täuschung) of the Sellers.


9.9	Security for Purchasers’ Claims

The Purchasers intend to sign, for protecting certain of their claims under this Agreement, the buy-side warranty and indemnity insurance contract attached hereto as Annex 9.9 (the “ W&I Insurance ”).

10. TAX


10.1	Definitions

For the purposes of this Agreement

" Pre-Closing Date Period " means any time period ending on or before the Effective Time.

" Pre-Closing Date Tax " means any Tax attributable to the Pre-Closing Date Period, and, for the avoidance of doubt, the obligation to repay or correct input VAT (with respect to input VAT claimed prior to the Closing Date) pursuant to section 15a German VAT Act provided the facts (e.g. entering into a lease agreement without any VAT option) which triggered such repayment occurred on or prior to the Closing Date (irrespective of whether the input VAT correction has to be made prior or after the Closing Date). For purposes of calculating Pre-Closing Date Taxes attributable to a time period (e.g. a fiscal year ( Wirtschaftsjahr ) or a calendar year) starting before and ending after the Closing Date any such time period will be deemed to have ended on the day prior to the Closing Date.

“Pre-Closing Date Tax Refund” means any Tax Refund attributable to the Pre-Closing Date Period. For purposes of calculating Pre-Closing Date Tax Refunds attributable to a time period (e.g. a fiscal year ( Wirtschaftsjahr ) or a calendar year) starting before and ending after the Closing Date any such time period will be deemed to have ended on the day prior to the Closing Date.

" Relevant Tax Proceeding " means any Tax Proceeding (i) relating fully or partly to Pre-Closing Date Taxes or Pre-Closing Date Periods or (ii) which could give rise to rights or obligations of any party to this Agreement under this clause 10.

" Tax " means (i) any tax and ancillary charges ( Steuer und steuerliche Nebenleistugen ; for the avoidance of doubt including but not limited to interest and penalties) within the meaning of Section 3 of the German Tax Code ( AO ) or any equivalent tax under the laws of any other jurisdiction, including, but not limited to (ii) any taxes to be withheld or paid for the account of a third party ( Steuerabzugsbeträge ), such as (in particular but not limited to) capital withholding or wage taxes ( Kapitalertrag- und Lohnsteuer ) and any taxes imposed as a secondary liability (Steuerhaftungsbeträge), (iii) employer's social security contributions ( Sozialversicherungsbeiträge ), (iv) real estate transfer taxes ( Grunderwerbsteuer ), or (v) subsidies ( Beihilfen) but excluding in any case, for the avoidance of doubt, deferred taxes.

" Tax Asset " means any Tax Refund and Tax Credit.

" Tax Authority " means any competent German or non-German authority responsible for the collection, audit or assessment of Taxes or for the assessment of the Tax base or elements thereof.

"Tax Credit" means an amount of money which could be subtracted from the amount of Tax owed to a Tax Authority.

" Tax Proceeding " means any administrative and judicial proceeding or action relating to Taxes including preparatory measures e.g. preparation of Tax Returns, Tax assessments, Tax audits, objections, appeals, meeting and correspondence with any Tax Authority and courts.

" Tax Refund " means any actually received repayment of any Tax (including – but not limited to – by way of set-off or deduction) and any other claim for a Tax payment from the Tax Authority.

" Tax Return " means any return, declaration or similar document relating to any Tax and to be submitted to any Tax Authority, including any schedule or attachment thereto.


10.2	Tax Indemnification

10.2.1 Subject to the limitations and modifications under clause 1.5.1, the Sellers shall pay to the Purchasers an amount equal to any Pre-Closing Date Tax payable by any of the Target Companies after the Effective Time provided and only to the extent that


(a)	the Pre-Closing Date Tax has not been paid before the Effective Time; and


(b)	the Pre-Closing Date Tax did not reduce the Purchase Price in accordance with clauses 4.1, 4.2.1 or 4.2.4; and


(c)	the Pre-Closing Date Taxes could not be reduced by Tax losses stemming from the Pre-Closing Date Period; and


(d)	the Pre-Closing Date Tax is not caused by a measure initiated or executed by the Purchasers or – after the Closing Date – by any of the Target Companies unless such measure is mandatorily required by applicable law or a compulsory consequence of an action of the Target Companies made on or prior to Closing; and


(e)	none of the Target Companies has effectively recovered any Pre-Closing Date Tax from a party other than a Target Company however (i) without any obligation to litigate against such party unless the Sellers bear the costs of such litigation and (ii) with the obligation to assign – to the extent legally possible – any such claim not yet effectively recovered to the Sellers; and

(f)

the Pre-Closing Date Tax does not correspond to or cannot be offset against a Tax Asset (other than the tax losses stipulated in clause 10.2.2) which can also arise at a different type of Tax and which is based on a circumstance having triggered the Pre-Closing Date Tax, including but not limited to reciprocal effects ( Wechselwirkungen ) resulting e.g. from the extension of depreciation periods or higher depreciation allowances ( Phasenverschiebung ) or from transfer of items relevant for Taxes (e.g. turnover, income, expenses, VAT payable corresponding with a VAT refund etc.) into another calendar year or transfer of Tax items from one entity to another entity any such reciprocal effects after the Effective Time shall (i) only be taken into account to the extent such reciprocal effect reduced the Taxes within five years after Closing and (ii) be discounted by a discount factor of 4.0% over the periods after the Closing Date that such reciprocal effects extents whereby the discount period starts at the date when the claim under this clause 10.2.1 is made by the Purchasers.

10.2.2 The Sellers expect that as of 31 December 2014 the declared ( erklärte ) tax loss carryforward ( Verlustvortrag ) for corporate income tax ( Körperschaftsteuer ) purposes of PropCo pursuant to sec. 8 para. 1 of the German Corporate Tax Act ( Körperschaftsteuergesetz ) in connection with sec. 10d para. 4 of the German Income Tax Act ( Einkommensteuergesetz ) amounts to at least EUR 22,000,000 (“ Expected CIT LCF ”) and the declared ( erklärte ) loss carryforward ( Verlustvortrag ) for trade tax purposes ( Gewerbesteuer ) purposes of PropCo pursuant to section 10a sentence 6 of the German Trade Tax Act ( Gewerbesteuergesetz ) to at least EUR 19,500,000 (“ Expected TT LCF ”). Subject to the limitations and modifications under clause 1.5.1 and if and to the extent that

(a)

the corporate income tax assessment ( Körperschaftsteuerbescheid ) for the calendar year 2014 for the PropCo, the trade tax assessment ( Gewerbesteuerbescheid ) for the calendar year 2014 for the PropCo, the assessment of corporate income tax loss carryforward ( Gesonderter Festellungsbescheid für den Körperschaftsteuerverlustvortrag ) as of 31 December 2014 for the PropCo (“ Actual CIT LCF Assessment ”) and the assessment of trade tax loss carryforward ( Gesonderter Festellungsbescheid für den Gewerbesteuerverlustvortrag ) as of 31 December 2014 for the PropCo (“ Actual TT LCF Assessment ”) (i) have been assessed or amended and (ii) are not subject of a litigation proceeding ( Einspruchs- oder Klageverfahren ), and


(b)	the loss carryforward assessed (also by virtue of amendment) by the Actual CIT LCF Assessment (“ Actual CIT LCF ”) is – after any reduction of the Actual CIT LCF by a use of tax losses pursuant to clause 10.2.1 (c) of this Agreement - lower than the Expected CIT LCF or the loss carryforward assessed by the

Actual TT LCF Assessment (“ Actual TT LCF ”) is – after any reduction of the Actual TT LCF by a use of tax losses pursuant to clause 10.2.1 (c) of this Agreement - lower than the Expected TT LCF, and

(c)

the corporate income tax, solidarity surcharge ( Solidaritätszuschlag ) or the trade tax owed by PropCo and attributable to periods starting on or after the Closing Date and ending not later than eithteen (18) months after the Closing Date has been assessed higher than it would have been if the Actual CIT LCF – after any reduction of the Actual CIT LCF by a use of tax losses pursuant to clause 10.2.1 (c) of this Agreement - would not be lower than the Expected CIT LCF or the Actual TT LCF – after any reduction of the Actual TT LCF by a use of tax losses pursuant to clause 10.2.1 (c) of this Agreement - not lower than the Expected TT LCF (each of such a difference in respect of corporate income tax and solidarity surcharge the “ CIT Leakage ” and in respect of trade tax the “ TT Leakage ”),

the Sellers shall pay to the Purchasers – subject to the limitations and modifications under clause 1.5.1 - an amount equal to a CIT Leakage or TT Leakage, as the case may be, provided that the respective CIT or TT Leakage is payable by PropCo to the tax authorities no later than eighteen (18) months after the Closing Date. If and to the extent that such a CIT Leakage or TT Leakage amount is refunded to the PropCo no later than eighteen (18) months after the Closing Date the Purchasers shall reimburse the corresponding amount actually paid by the Sellers to the Purchasers under this clause 10.2.2 to the Sellers. Any time limit of eighteen months in this clause 10.2.2 shall be extended to 36 (thirty six) months if and to the extent that a claim under this clause 10.2.2 shall become time-barred pursuant clause 10.7.2 only after 36 (thirty six) months. For the purposes of this clause 10.2.2 the Actual CIT LCF Assessment and the TT LCF Assessment shall deemed not to be subject of a litigation proceeding ( Einspruchs- oder Klageverfahren ) 34 (thirty four) months after the Closing Date. The Sellers shall not be liable under this clause 10 if and to the extent that the Actual CIT LCF or Actual TT LCF is reduced by a conversion of PropCo into a partnership or by any other reorganization of PropCo with tax effect on a date prior to 1 January 2015.

10.2.3 The Sellers hereby guarantee to the Purchasers by way of an independent promise of guarantee ( selbständiges Garantieversprechen ) within the meaning of sec. 311 para. 1 BGB that the following statements are, correct:

The Target Companies have filed all tax returns to be filed when due (taking any extension of time into account) and have paid all Taxes when due (taking any extension of time into account).

The tax book value of the properties ( Grundstücke , Grund und Boden and Gebäude ) of PropCo as of 31 December 2014 amounts in the aggregate to at least EUR 450,000,000.

If and to the extent these guarantees are incorrect the Sellers will indemnify the Purchasers against any damages associated therewith. If and to the extent these guarantees are incorrect the Sellers shall – subject to the limitations and modifications under clause 1.5.1 – pay to the Purchasers an amount equal the Taxes which would not be triggered if and to the extent the guarantee would have been correct.

10.2.4 Any payment to be made by the Sellers pursuant to clauses 10.2.1 and 10.2.3 (“ Indemnifiable Tax ”) is due 10 (ten) Business Days after the Sellers have been notified in writing by the Purchaser about the payment obligation and the corresponding payment date and have received a copy of the underlying Tax assessment or payment order and the bank account details of the competent Tax Authority, but in any case no later than 1 (one) Business Day before the date at which the Tax to be indemnified is due and payable to the Tax Authority.

On request of the Sellers the Purchasers shall procure that the respective Target Company makes its reasonable efforts to achieve a deferred payment date, in particular but not limited to the application for a suspension of enforcement of tax payment obligation ( Aussetzung der Vollziehung ) or equivalent application in foreign jurisdiction provided that the Sellers undertake to reimburse any costs and all interest related thereto occurred by the respective Target Company relating to such deferred payment.


10.3	Understated Tax refund claims, overaccruals and over-indemnification

10.3.1 Subject to the limitations and modifications under clause 1.5.2, the Purchasers shall – unless and not to the extent that the amount has already excluded or reduced the indemnification pursuant to clause 10.2.1 – pay to the Sellers an amount equal to


(a)	any Pre-Closing Date Tax Refund actually received (including by way of deduction or set-off) by any Target Company after the Effective Time unless and not to the extent that the Pre-Closing Date Tax Refund has increased the Purchase Price in accordance with clauses 4.1 or 4.2; and

(b)

any accrual or liability in respect of a Pre-Closing Date Tax that has been dissolved or must have been dissolved under the respective German GAAP (other than for reasons of payment or discharging the related claim to such Tax) to the extent that the accrual or liability has reduced the Purchase Price in accordance with clause 4.1 or 4.2 but has not reduced Sellers’ payment obligation pursuant to clause 10.2.1 (“ Overaccrual ”); and


(c)	the Indemnifiable Tax paid by the Sellers to the Purchasers pursuant to Clause 10.2.1 to the extent that the relevant Tax is subsequently assessed at a lower amount (“ Over-Indemnification ”);

including all interest related thereto.

10.3.2 The Purchasers shall, and shall procure that the Target Companies shall, no later than 5 (five) Business Days notify the Sellers in writing (for the avoidance of doubt including by e-mail) about any Pre-Closing Date Tax Refund, Overaccrual and Over-Indemnification. The Sellers are entitled to appoint certified accounting firm at their own expense – to have the tax assessments regarding any Pre-Closing Date Tax Refund, Overaccrual and Over-Indemnification reviewed and to report the results to the Sellers. If the Sellers have reason to believe that there is a claim under this clause 10.3 and if the review discloses a breach of the obligation of the Purchasers under this clause 10.3.2 sentence 1 then the Purchasers shall bear the reasonable costs for the review and the report.

10.3.3 Any amount payable to the Sellers pursuant to this clause 10.3 shall be due and payable 10 (ten) Business Days after (i) the Pre-Closing Date Tax Refund has been actually refunded (including – but not limited to – by way of set-off or deduction) to the Purchasers or one of the Target Companies, (ii) any Overprovision has been or must have been dissolved according to German GAAP or (iii) any amended Tax assessment giving rise to the Over-Indemnification has become final and binding.


10.4	Tax Returns

10.4.1 In the period between the date hereof and the Closing Date, the Sellers will procure that (i) Tax Returns of the Target Companies shall be prepared and filed in a within the time limitation provided by law and (ii) all Taxes payable under such Tax Returns are paid within the time limitation provided by law.

10.4.2 The Sellers shall procure that the shares in the Target Companies are neither directly nor indirectly transferred during the time period between 31 December 2014 and the Closing Date in a manner which causes a forfeiture of Actual CIT LCF and Actual TT LCF in this time period pursuant to section 8c of the German Corporate Income Tax Act ( Körperschaftsteuergesetz) unless a share transfer is agreed with the Purchasers. For the avoidance of doubt the Purchasers agreed to the sales and transfers of shares contemplated under this Agreement.

10.4.3 After the Closing Date, the Purchasers shall procure that the Target Companies prepare and file when due all their Tax Returns in line with past practice unless mandatory tax law provides otherwise. Any Tax Returns relating to any Relevant Tax Proceeding shall be subject to the review and written consent of Sellers. The Purchasers shall procure that no such Tax Return is submitted to any Tax Authority without written approval of the Sellers which shall not be unreasonably withheld. The Purchasers shall ensure that any Tax Return to be reviewed and approved by the Sellers will be sent to the Sellers not later than 30 (thirty) Business Days prior to the due filing date of the relevant Tax Return and that all Taxes payable under such Tax Returns shall be paid in a timely manner. The Sellers shall be deemed to have given their consent to any Tax Return furnished to

them for review if and to the extent Sellers have not provided any comment or only unlawful comments with respect to the respective Tax Return to the Purchasers or the relevant Target Company within 20 (twenty) Business Days following the receipt ( Zugang ) of the respective Tax Return. Clause 10.5.4 shall apply correspondingly. The Target Companies may engage HauckSchuchardt for the preparation of the tax returns 2015 and release HauckSchuchardt in respect of Pre-Closing Date Taxes from any confidentiality obligation vis-à-vis the Sellers so that HauckSchuchardt can share any information for Pre-Closing Date Taxes with the Sellers. In the latter case the Sellers shall provide on reasonable request of the Purchasers or HauckSchuchardt information and documents that are in their possession.

10.4.4 The Purchasers shall procure that any conversion of any of the Target Companies into a partnership becomes tax effective only as of a date which occurs after the Closing Date.


10.5	Tax Proceedings after Closing

10.5.1 The Purchasers shall notify the Sellers of any announcement and commencement of any Relevant Tax Proceeding. The notification shall be made in writing (for the avoidance of doubt e.g. by e-mail) no later than 5 (five) Business Days after the Purchasers or any Target Company became aware of such event and shall include copies of any assessment, notice or other document received from any Tax Authority related to the respective Relevant Tax Proceeding.

10.5.2 The Purchasers shall, and shall procure that the relevant Target Company shall, (i) give the Sellers the opportunity to reasonably participate from the beginning on in all Relevant Tax Proceedings from their commencement onwards, (ii) upon the Sellers' request and at their own costs and risk, challenge and litigate any Tax assessment or other decision of any Tax Authority or court if and to the extent it is related to a Tax to be indemnified or a Tax Asset of the Seller and (iii) comply with any lawful instructions given by the Sellers in relation to the conduct of the Tax Proceedings referred in (i) and (ii) above. If the Sellers elect by a written request to lead the Relevant Tax Proceedings through a professional German counsel (international law or accounting firm) of their choice and at their expense, then the Purchasers shall authorize, and shall cause the respective Target Companies to authorize, (by power-of-attorney) such a designated representative of the Sellers to represent the respective Target Companies in the Relevant Tax Proceeding and to release such representative from any confidentiality obligations in respect of the Relevant Tax Proceeding so that it can share any information in respect of the Relevant Tax Proceeding with the Sellers. In any case the Purchasers shall procure that after the Closing Date (i) no document or information related to Pre-Closing Date Taxes or Relevant Tax Proceedings is submitted to any Tax Authority or Court without the prior written consent of the Sellers, which shall not be unreasonably withheld, and

that (ii) no Relevant Tax Proceeding is settled or becomes time-barred without the prior written consent of the Sellers.

10.5.3 For the avoidance of doubt, the rights of the Sellers and any of its representative pursuant to clause 10.5.2 shall be limited to the taxation of business transactions ( Geschäftsvorfälle ) occurred in a Pre-Closing Date Period for which the Sellers can be liable pursuant to clause 10.2. In any case the Sellers shall procure that after the Closing Date (i) no document or information related to solely to Taxes or Relevant Tax Proceedings after the Closing Date is submitted to any Tax Authority or Court without the prior written consent of the Purchasers, which shall not be unreasonably withheld, and that (ii) no Relevant Tax Proceeding relating to the calendar year in which Closing occurs is settled or becomes time-barred without the prior written consent of the Purchasers.

10.5.4 Subject to the limitation under clause 10.5.2, the Purchasers shall reasonably cooperate, and shall cause the Target Companies and their representatives to reasonably cooperate with the Sellers with respect to all Relevant Tax Proceedings. On request of the Sellers, the Purchasers shall in particular procure that the Sellers obtain any document or information which is required for the Seller to avoid or reduce any Tax which creates a liability under this clause 10, to protect a Tax Asset of one of the Sellers provided that the respective document or information is reasonable accessible for one of the Target Companies or the Purchasers or can be procured by them with reasonable efforts on the costs of the Sellers. Any reasonable out of pockets costs caused by such information procurement on request of the Sellers will be borne by Sellers. The Purchasers or the respective Target Company shall store all records, documents and information relating to Relevant Tax Proceedings until the expiration of any applicable statute of limitations.

10.5.5 On request and at the expense of Seller 1 the Purchasers shall procure that the Target Companies provide any information and document to Seller 1 required for US tax or accounting purposes not later than 30 Business Days after such a request. The Purchaser and/or the Target Companies are free to consult advisors, at reasonable costs to be borne by the Sellers, bound by professional obligations of confidentiality in the context of fulfilling any of its obligations under this clause 10.5.5.


10.6	Non-compliance of Purchasers

If and to the extent the Purchasers materially fail to comply with an obligations under this clause 10 or if and to the extent the Purchasers or – after Closing – a Target Company materially breach an obligation to mitigate damages in accordance with sec. 254 BGB, the Sellers shall not be liable under this clause 10 provided that such failure or breach caused the relevant claim against the Sellers. If the Purchasers


(i)	do not timely file an objection against a Tax assessment or a court decision and therefore such a Tax assessment or court decision becomes finally binding; or


(ii)	or – after the Closing Date – the Target Companies settle a Tax matter without the prior written consent of the Sellers,

any Tax caused by such binding Tax assessment or court decision or by the settlement shall be deemed to be caused by a non-compliance with the obligations under clause 10.


10.7	Limitations

10.7.1 The aggregate liability of the Sellers for any claim of the Purchasers under this clause 10 is defined in clause 9.3 and is increased by any Tax Refund actually received by the Sellers from the Purchasers.

10.7.2 Any claim under this clause 10 (including for the avoidance of doubt also any claim pursuant to clause 10.2.2) shall become time-barred ( verjähren ) the earlier of (i) six (6) months after the relevant Tax assessment became binding and non-amendable (taking into account any suspension provision ( Anlauf- und Ablaufhemmungen )), (ii) six (6) months after the Sellers have been notified in writing by the Purchasers that they have a specific claim under this clause 10 and (iii) eighteen (18)months after the Closing Date. If and to the extent

(i) that the Purchasers notify the Sellers no later than 18 (eighteen) months after Closing about

(a) an incorrect filing or

(b) an incorrect tax assessment of a Pre-Closing Date Tax or

(c) an incorrect input VAT ratio ( Vorsteuerschlüssel ) which has been used in connection with the preparation of a filed Pre-Closing Date Tax Return

and such a notification is accompanied by copies of court decisions in a comparable case or decrees officially published by the Tax Authority or – in case of (c) above - documentation showing that the input VAT ratio used is not in line with the factual situation (e.g. a calculation of space) or

(ii) that a litigation concerning a Pre-Effective Date Tax or an Actual CIT LCF or an Actual TT LCF is still pending on the date which is 18 (eighteen) months after the Closing Date,

a claim under this clause 10 related to such a notified issue or pending litigation becomes only time-barred after thirty-six (36) months after the Closing Date.

10.7.3 Each of the Sellers can conduct any action or declaration under clause 10.4 and 10.5 only jointly with the other Seller. A joint action is given if either one Seller states in writing that it acts also on behalf of the other Seller, a Seller confirms the action of the other Seller or both Sellers conduct the same action or declaration.


10.8	Tax Escrow

10.8.1 Purchasers shall be entitled to pay EUR 2,000,000.00 of the Preliminary Purchase Price to the Tax Claims Escrow to cover any potential claims under this clause 10 for a time period of 3 years after the Closing Date.

10.8.2 The Notary is instructed to release the Tax Claims Escrow only if and to the extent he has received either (i) an official copy of such court ruling endorsed as res iudicata ( Ausfertigung des Urteils mit Rechtskraftvermerk ) instructing the Notary to release the Tax Claims Escrow or (ii) a joint written instruction by the Parties. If the Notary has received neither of (i) or (ii) he shall release the Tax Claims Escrow in equal shares to Sellers without undue delay after the lapse of the thirty-six months period after the Closing Date.

10.8.3 The Parties shall instruct the Notary to release the Tax Claims Escrow as follows:


(a)	to the Sellers after a time period of 18 months after the Closing Date to the extent the Purchasers have not notified the Sellers pursuant to Clause 10.7.2(i) or (ii);


(b)	to the Sellers after a time period of 36 months after the Closing Date to the extent no claims of the Purchasers under this clause 10 are outstanding anymore;


(c)	to the Purchasers at any time if and to the extent claims they made pursuant to clause 10 are undisputed;


(d)	to the Sellers to the extent that claims that were made by the Purchasers had blocked the release of the respective amount to the Sellers pursuant to lit. (a) and (b) have turned out to be unjustified.

11. PERIOD BETWEEN SIGNING DATE AND CLOSING DATE


11.1	Merger Control Procedure

11.1.1 The Purchasers, in accordance with clause 11.1.2, shall file an application for clearance of the acquisition of all Sold Shares by the Purchasers (the “ Transaction ”) by the German Federal Cartel Office ( Bundeskartellamt ) (the “ FCO ”). Clearance shall be deemed granted if


(a)	the FCO has cleared the proposed concentration in accordance with sec. 40 para. 2 sentence 1 of the German Law against Restraints of Competition ( Gesetz gegen Wettbewerbsbeschränkungen, “ GWB ”); or


(b)	the parties involved ( Zusammenschlussbeteiligte ) have received a written notice from the FCO that the facts of the case do not allow a prohibition of the Transaction under sec. 36 of the GWB; or


(c)	the FCO fails to notify the parties involved ( Zusammenschlussbeteiligte ) in accordance with sec. 40 para. 1 sentence 1 of the GWB within one (1) month after receipt of the pre-merger notification that it has commenced a formal investigation of the proposed concentration; or


(d)	the FCO (i) fails to prohibit the proposed concentration in accordance with sec. 40 para. 2 sentence 1 of the GWB within four (4) months after receipt of the pre-merger notification and (ii) fails to reach an agreement with the parties involved ( Zusammenschlussbeteiligte ) on the extension of such four-month waiting period in accordance with sec. 40 para. 2 sentence 3 no. 1 of the GWB; or

(e)

an agreed extension of a waiting period pursuant to sec. 40 para. 2 sentence 4 no. 1 and/or sec. 40 para. 2 sentence 7 of the GWB elapses and the FCO (i) fails to prohibit the proposed concentration in accordance with sec. 40 para. 2 sentence 1 of the GWB, and (ii) fails to reach an agreement with the parties involved ( Zusammenschlussbeteiligte ) on the further extension of the extension period in accordance with sec. 40 para. 2 sentence 3 no. 1 of the GWB.

Neither the Sellers nor the Purchasers shall grant their consent to any extension of the waiting period without the prior written consent of the other Party.

11.1.2 The Purchasers shall ensure that any filings to be made with the competent merger control authorities or other public authorities, to the extent they have not already been made prior to the Signing Date, will be made on the first Business Day following the Signing Date, unless the applicable laws and regulations require an earlier filing. Such filings shall be made by the Purchasers on behalf of all Parties, provided, however, that such filings (with confidential information being redacted) shall require prior written approval of the Sellers, which shall not unreasonably be withheld or delayed. The Sellers and the Purchasers shall closely cooperate in the preparation of such filings as well as in any discussions and negotiations with the competent merger control or other public authorities with the objective to obtain clearance for the transactions contemplated by this Agreement in the shortest time period possible. Each Party shall without undue delay provide all other Parties with copies of any correspondence with the merger control or other public authorities and with copies of any written statement, order or decision of such authorities. Also, the Parties shall deliver and supply to each other any and all information required for the filing. The Purchasers may withdraw ( zurücknehmen ) filings with the competent authorities or agree with such authorities on the extension of any

examination period only with the Sellers’ written consent, which shall not unreasonably be withheld or delayed.

11.1.3 The Purchasers undertake to ensure that the Transaction and the acquisition structure (to the extent permitted under applicable law) is not structured in a way that the Transaction exceeds the notification thresholds set out in the EU Merger Regulation No. 139/2004.


11.2	Other undertakings

11.2.1 Between the Signing Date and the Closing Date, the Sellers shall procure, to the extent permissible under applicable law, that the Target Companies conduct their respective business operations and conduct and undertake the management of the Real Property as a prudent businessman would ( mit der Sorgfalt eines ordentlichen Kaufmanns ) and in line with past practice, in particular that they take until the Closing Date all emergency action reasonably required to be taken in case damage or environmental harm occurs on the Real Property between the Signing Date and the Closing Date and that they effect, between the Signing and the Closing Date, at their own cost any required routine maintenance and carry out all inspections required by mandatory law, public order or insurance requirements.

11.2.2 In particular, the Target Companies shall during that time with effect beyond the Closing Date not:


(a)	issue any share capital or similar interest to any third party,


(b)	amend the articles of association of the Target Companies,


(c)	enter into any agreements with the Sellers and their Affiliates,


(d)	acquire, dispose of, or encumber any fixed assets outside the ordinary course of business and/or other than at arm’s length conditions, it being understood that any sale, disposal or encumbering of the Real Property or any agreement to do so is not permitted,


(e)	take out any loans or comparable instruments from third parties,


(f)	extend any loan to any third party outside the ordinary course of business,


(g)	subject to clause 4.2.6 above, distribute any profits or reserves to the Sellers or their Affiliates,


(h)	conclude, terminate or amend any lease (except for technical amendments to a lease reasonably required to be made in connection with the implementation of the Construction Works, in which case the Sellers shall

inform the Purchasers prior to the conclusion of such amendment and shall not be entitled if the Purchasers, acting reasonably, reject the conclusion for such amendment),


(i)	take any steps that constitute a relevant violation of the terms of any Lease Agreement;


(j)	acquire (in any manner whatsoever) any shares or other securities in any corporation, company or partnership;


(k)	give any guarantee or other security to secure any liability of any third party;


(l)	create any other security interest on any of its assets, except within the scope of their daily management;


(m)	undertake any business that is outside the ordinary course of business of the Target Companies,


(n)	enter into any agreement or commitment to do any of the above.

in each case unless reasonably required due to an emergency situation or carried out with the prior written consent (e-mail sufficient) of the Purchasers (not to be unreasonably withheld) or in line with the other provisions of this Agreement.

11.2.3 Between the Signing Date and the Closing Date, the Sellers will ensure that the Target Companies deal with official notices in the ordinary course of business and will notify the Purchasers of any such notices without undue delay.

11.2.4 To the extent permitted under the relevant insurance contracts, the Sellers will cause the Target Companies to terminate, with effect as per the Closing Date, the insurance contracts entered into by them and listed in Annex 11.2.4 . The Purchasers shall, prior to the Closing Date, provide written evidence to the Sellers that the Target Companies are properly insured as from the Closing Date.


11.3	Deterioration

11.3.1 The Sellers shall, subject to clauses 11.3.2 and 11.3.3 below, be responsible for any deterioration in the condition of the Real Estate that occurs between the Signing Date and the Closing Date unless such deterioration falls within the limits of normal wear and tear or is only discovered later than four weeks after the Closing Date. In such case, the Sellers shall, subject to clauses 11.3.2 and 11.3.3 below, be obliged to at their choice either (i) remediate the defect or (ii) compensate for any costs of such remediation by agreeing to a corresponding Purchase Price reduction. Remediation has to be undertaken in line with past practice by a reputable firm and without undue delay after the deterioration is discovered.

11.3.2 If and to the extent any deterioration in the condition of the Real Property is covered by insurance, the Sellers shall not be liable pursuant to clause 11.3.1. The same holds true under the circumstances set out in the last paragraph of clause 5.3.1, which insofar shall apply mutatis mutandis .

11.3.3 If the amount for which the Sellers are liable pursuant to clause 11.3.1 exceeds an amount of EUR 10,000,000, the Sellers shall be entitled to withdraw from this Agreement by written notice to the Purchasers. The Sellers shall notify the Purchasers in writing in case they intend to exercise this withdrawal right. If the Purchasers then, within a period of two (2) weeks upon receipt of the written notification, waive their rights pursuant to clause 11.3.1 in writing, the withdrawal right of the Sellers shall expire. In case Sellers rescind from this Agreement pursuant to this clause 11.3.3 prior to Closing, the Deposit shall (in accordance with the process specified in clause 5.6.4) immediately be released to the Purchasers and clause 5.6.6 shall apply.

12. INDEMNIFICATION


12.1	Indemnification

To the extent that after the Closing Date a Target Company (not including an insolvency administrator appointed over the assets of the relevant Target Company) raises a claim against one of the Sellers which is due to action taken prior to the Closing Date and has not been activated in the Closing Date Accounts or otherwise been agreed in this Agreement, the Purchasers shall hold harmless and indemnify the relevant Seller from any such claim as well as any costs and expenses incurred in connection therewith. The Parties agree by way of an agreement in favour of third parties ( echter Vertrag zu Gunsten Dritter ) in the meaning of sec. 328 of the BGB that sentence 1 of this clause 12.1 shall apply mutatis mutandis in the event that a Target Company raises a claim against any Affiliate of the Sellers or any director, manager or officer of any of the Sellers or its Affiliates.

The obligation to indemnify shall not apply to the extent that the relevant claim is incurred by the Target Companies against the Sellers in connection with the proceedings pursuant to clause 7.


12.2	No Claims by Sellers

Unless activated in the Closing Date Accounts or otherwise agreed or referred to in this Agreement, the Sellers hereby undertake to waive or instruct their Affiliates or the other persons mentioned to waive, upon the Purchasers respective written request, any and all claims they or their Affiliates or their managers, directors or officers might have against the Target Companies which roots in any circumstances prior to the Closing Date.


12.3	Access to Financial Information

The Purchasers shall procure that after the Closing Date the Sellers and their representatives are given access to, and are allowed to make copies of,


(a)	the books of accounts of the Target Companies for any fiscal years and parts of fiscal years until the end of the month following the Closing Date, and


(b)	any other financial information required to achieve the deconsolidation on the Closing Date or the end of month following the Closing Date, as the case may be.

13. PURCHASERS’ GUARANTEES / FURTHER SELLERS' GUARANTEES


13.1	Purchasers’ Guarantees

The Purchasers hereby guarantee to the Sellers by way of an independent promise of guarantee ( selbstständiges Garantieversprechen ) that the statements set forth in this clause 13.1 are true and correct as of the Signing Date and the Closing Date.


(a)	The Purchasers have the full corporate power and authority to deliver this Agreement and to carry out the Transaction contemplated hereby and such Transaction has been duly authorised by all required corporate action on the part of the Purchasers. This Agreement has been duly executed on behalf of the Purchasers and constitutes their binding obligations.


(b)	There is no action, suit, investigation or proceeding pending against, or threatened against or affecting the Purchasers before any court or arbitrator or any governmental body, agency, official or other third party which in any manner challenges or seeks to prevent the Transaction contemplated by this Agreement.


(c)	The execution and performance by the Purchasers of this Agreement and the consummation of the Transaction contemplated hereby require no prior approval by, or filing with, any governmental body, public agency or official or other third party, save only for the cartel clearance pursuant to clause 11.1.


(d)	The Purchasers are not insolvent or over-indebted and no insolvency proceedings have been initiated or opened, or rejected because of a lack of assets, and no circumstances exist which would justify the initiation or opening of such insolvency proceedings.

(e)

The Purchasers and their Affiliates have conducted their businesses in compliance with applicable Anti-Corruption Laws and have instituted and maintained policies and procedures reasonably designed to promote and achieve compliance with such laws. “ Anti-Corruption Laws ” means (as applicable): (a) the US Foreign Corrupt Practices Act; (b) the UK Bribery Act 2010; and (c) any other anti-corruption law or measure applicable to any of the Sellers including, without limitation, any law or measure that implements the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

(f)

Neither the Purchasers nor any of their respective subsidiaries nor any director, officer, or employee thereof, nor any agent, Affiliate or representative of the Purchaser, is an individual or entity that is, or is owned or controlled by an individual or entity that is, (i) the subject of any sanctions administered or enforced by the US Department of Treasury’s Office of Foreign Assets Control, the United Nations Security Council, the European Union or Her Majesty’s Treasury (collectively, “ Sanctions ”), nor (ii) located, organised or resident in a country or territory that is the subject of Sanctions (including, without limitation, Cuba, Iran, North Korea, Sudan and Syria).

(g)

The Purchasers and their Affiliates have been and are in compliance with all Sanctions applicable to them or affecting any of their respective businesses, properties, operations or assets. The Purchasers have not received any notice from any governmental authority of non-compliance with Sanctions, nor are subject to any Proceeding, pending or threatened, with respect to any alleged non-compliance or violation thereof.

(h)

In the performance of this Agreement, the Purchasers and their respective shareholders, Affiliates, officers, directors and employees, and agents and representatives, if any, will comply strictly with, and maintain policies and procedures which comply with, all applicable anti-money laundering and counter terrorism financing laws, rules and regulations including (i) the Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing as amended from time to time (the “ Directive ”), and (ii) regulations which contain provisions at least equivalent to those required by the Directive.


(i)	The Purchasers, in compliance with the laws, rules and regulations referred to in lit (h) above, perform procedures to verify the source of funds to be used for the fulfilment of their obligations under this Agreement.


(j)	The Purchasers are, to the best of their knowledge, not subject of any action or proceeding by or before any court or governmental agency, authority or body or any arbitrator, involving the Purchasers with respect to any anti-money laundering and counter terrorism financing laws, rules and regulations as referred to under lit. (h) above.


13.2	Sellers' Additional Guarantees

The Sellers hereby guarantee to the Purchasers by way of an independent promise of guarantee ( selbstständiges Garantieversprechen ) that the statements set forth in clause 13.1 are true and correct as of the Signing Date and the Closing Date for the Sellers mutatis mutandis .


13.3	Remedies for a Breach of Purchasers’ Guarantees

In case of a breach of a guarantee by the Purchasers or the Sellers pursuant to clause 13.1 or 13.2, clauses 9.1.2, 9.2 and 9.7 shall apply mutatis mutandis (it being understood that the respective other party is the beneficiary of damage claims pursuant to clause 9.2).


13.4	Access to Information

Following the Closing Date and at the Sellers’ expense, in any event however for a period of five (5) years after the Closing Date, the Purchasers shall grant the Sellers and their advisors and representatives such access to copies of each Target Companies books and records as the Sellers may reasonably require for their own auditing, tax and other reasonable purposes in connection with tax or regulatory requirements of the Sellers and in each case relating to the time period of Sellers’ ownership of the Shares.

14. SUBMISSION TO IMMEDIATE ENFORCEMENT


14.1	Immediate Enforcement

With regard to the obligations of the Purchasers to pay the Deposit and the Estimated Purchase Prices, each of the Purchasers herewith submits to immediate enforcement into all of the Purchasers’ assets.


14.2	Interest

For purposes of enforcement and in order to satisfy the requirement of certainty in enforcement proceedings, interest is deemed to be owed as of 1 July 2015.


14.3	Enforceable Official Copy

The Notary is irrevocably instructed by the Parties to issue an enforceable official copy ( vollstreckbare Ausfertigung ) of this Agreement at any time to the Sellers without any additional proof of facts being required, however, such enforceable copy shall not be issued prior to 28 July 2015.

15. CONFIDENTIALITY AND ANNOUNCEMENTS


15.1	No Disclosure of Confidential Information

Each Party agrees to maintain in confidence the economic terms contained in this Agreement, information and data furnished or made available by Sellers, its agents or representatives in connection with Purchasers' investigation of the Real Property and the Shares and the transaction contemplated by this Agreement (collectively, the " Confidential Matters "); provided however, that each Party, its agents and representatives may disclose such information and data (i) to such Party's Affiliates and their respective direct and indirect accountants, attorneys, prospective lenders, investment bankers, underwriters, partners, members, investors (prospective and current), employees, officers, directors, consultants and advisors (collectively, " Representatives "), in each case, solely to the extent that such Representatives reasonably need to know such information in connection with assisting the respective Party in connection with the transaction contemplated herein or incidental or related hereto; (ii) to the extent required by an applicable statute, law, regulation, legal process, governmental authority or securities exchange; (iii) to the extent required by the Party's reporting requirements under the rules and regulations of the Securities and Exchange Commission, including, without limitation, any necessary Form 8-K disclosure with respect to the transaction contemplated hereby or as required by any securities exchange, (iv) if in the opinion of counsel to the disclosing Party, disclosure is required to comply with any mandatory provision of law, of any directive from a government recognized stock exchange, or of a binding decision from a court or another government body, (v) with respect to generic disclosures about business and pipeline of the Purchaser or any affiliate of the Purchaser made in the ordinary course of business that would not reasonably be expected to identify Seller with the specific transaction contemplated hereby; or (vi) if required by subpoena issued in connection with any litigation or proceeding.

Confidential Matters shall not include information or data which (i) becomes public or is generally available to the public through no fault of the Purchasers or its Representatives, (ii) is received by the Parties or their Representatives from a third party not known by the Parties to be subject to written or other legal restrictions of confidentiality, after making reasonable inquiry, or (iii) is independently developed by the Parties or their Representatives according to its documented records without reference to the Confidential Matters of the disclosing Party.


15.2	Announcements

Each Party shall use reasonable efforts to notify the other of impending press-releases or public announcements regarding the execution of this Agreement and Closing respectively and to obtain the approval (not to be unreasonably withheld or delayed) of the other Party prior to such press release or public announcement (provided that the Purchasers shall have the right to control the timing of the initial press-release, statement or public announcement regarding the execution of this Agreement and Closing respectively); provided that substantially similar press-releases shall not require additional notification or approvals. The Parties shall so far as reasonably practicable, coordinate with each other on a timely basis to achieve con-sistency in the factual content of any press-releases.

16. ASSIGNMENT OF RIGHTS AND OBLIGATIONS

16.1.1 This Agreement and any rights and obligations hereunder may not be assigned or transferred, in whole or in part, without the prior written consent of the other Parties hereto, and in case of the Purchaser's consent, also of the Insurer under the W&I Insurance (clause 10.1 of the W&I Insurance).

16.1.2 Notwithstanding the foregoing, nothing in this Agreement shall be construed to prevent any direct or indirect change of control in any of the Parties.

16.1.3 With regard to the Purchasers, the entitlement pursuant to clause 16.1.2 shall, for the avoidance of doubt, encompass any direct or indirect transfer of any interest among NorthStar Entities. “NorthStar Entities” means, collectively, including direct and indirect subsidiaries: (a) NorthStar Realty Finance Corp., a Maryland corporation, (b) NorthStar Asset Management Group, Inc., a Delaware corporation, (c) NorthStar Real Estate Income Trust, Inc., a Maryland corporation, (d) NorthStar Real Estate II Income, Inc., a Maryland corporation, (e) NorthStar Realty Finance Limited Partnership, (f) any European Asset Spin-Off Entity, (g) any person that holds or acquires all or substantially all of the assets of any of the forgoing entities by way of merger, consolidation, corporate re-structuring or otherwise. “European Asset Spin-Off Entity” means NorthStar Realty Europe Corp. or any other Person which is formed to hold or acquire (directly or

indirectly) a majority of any class of assets of any NorthStar Entity which are located in Europe.

17. TRANSFER TAXES AND COSTS


17.1	Transfer Taxes and Costs

All transfer taxes, including real estate transfer taxes ( Grunderwerbsteuer) (if any), costs for the notarisation of this Agreement, escrow fees and costs, and all other fees and charges resulting from the execution or consummation of this Agreement shall be borne by the Purchasers. The Purchasers shall further bear all fees and other costs in connection with antitrust proceedings.


17.2	Costs of Advisors

Apart from clause 17.1, each Party shall bear its own costs and expenses incurred in connection with the preparation, execution and consummation of this Agreement, including, without limitation, any professional fees, charges and expenses of its advisors.

18. NOTICES


18.1	Form of Notices

Any legal statements and other notices in connection with this Agreement (collectively the “ Notices ”) shall be made in writing ( Schriftform ) unless notarisation or any other specific form is required by mandatory law. The written form shall include transmission by fax (but no other transmission by way of telecommunication) and exchange of letters. Any electronic transmission (such as by e-mail) shall not be sufficient to satisfy the requirement that Notices must be made in writing.


18.2	Notices to the Sellers

18.2.1 Any Notices to be delivered to the Seller 1 hereunder shall be addressed as follows:

Praxis Luxembourg SA
Attn.: Mr. Robert Kimmels
55, Avenue Pasteur, L - 2311 Luxembourg, Luxembourg
Fax: +352 (26) 20 01 96
Email: robert.kimmels@praxisgroup.lu (for information purposes only)

and

Madison International Realty, LLC
Attn.: Mr. Derek Jacobson
410 Park Avenue 10022 NY, NY, USA
Fax: n.a.
Email: djacobson@madisonint.com (for information purposes only)

with a copy to (for information purposes only):

Freshfields Bruckhaus Deringer LLP
Attn.: Dr. Timo Elsner
Bockenheimer Anlage 44, D-60322 Frankfurt am Main, Germany
Fax: +49 69 27 30 85 81 59
Email: timo.elsner@freshfields.com

18.2.2 Any Notices to be delivered to the Seller 2 hereunder shall be addressed as follows:

MSEOF Trianon S.à r.l.
Attn.: Stefan Koch
64 avenue de la Liberté, L-1930 Luxembourg, Luxemborug
Fax: +352 2618-9340
Email: Stefan.Koch@morganstanley.com (for information purposes only)

with a copy to (for information purposes only):

Freshfields Bruckhaus Deringer LLP
Attn.: Dr. Timo Elsner
Bockenheimer Anlage 44, D-60322 Frankfurt am Main, Germany
Fax: +49 69 27 30 85 81 59
Email: timo.elsner@freshfields.com


18.3	Notices to the Purchasers

Any Notices to be delivered to all Purchasers hereunder shall be addressed as follows:


(a)	c/o NorthStar Asset Management Group

Attn. General Counsel

6A Route de Trèves, 6th Floor,

2633 Luxembourg,

Luxembourg,

Email: legal@nsamgroup.com

and


(b)	c/o NorthStar Asset Management Group,

Attn. Mark Chudik,

6A Route de Trèves, 6th Floor,

2633 Luxembourg,

Luxembourg,

Email: mchudik@nsamgroup.eu

and


(c)	c/o NorthStar Realty Finance Corp.,

attn. Ronald J. Lieberman, Esq.,

399 Park Avenue,

18th Floor,

New York, NY 10022,

USA, Fax: +1 (212) 547-2704


(d)	with a copy to (for information purposes only):

Clifford Chance Deutschland LLP,

Attn. Thomas Reischauer,

Mainzer Landstraße 46,

60325 Frankfurt am Main,

Germany, Fax: +49 (0)69 7199 4000

Email: thomas.reischauer@cliffordchance.com


18.4	Change of Address

The Parties shall communicate in writing changes in any of the addresses set forth in clauses 18.2 and 18.3 as soon as possible to the other Parties. In the absence of such communication, the address stated above shall remain in place.


18.5	Copies to Advisors

The receipt of copies of Notices hereunder by the Parties’ advisors shall not constitute or substitute the receipt of such communication by the Parties themselves, irrespective of whether the delivery of such copy was mandated by this Agreement.

19. SEC FILINGS AND REIT STATUS


19.1	SEC Filings

19.1.1 The Sellers acknowledge that they have been advised that Buyers are subsidiaries of a publicly registered company (the “ Listed Company ”). The Sellers

further acknowledge that, as a publicly registered company, the Listed Company or a European Spin-Off Entity may be required to make certain filings with the Securities and Exchange Commission and/or public disclosures to their stockholders (collectively, the “ SEC Filings ”) that relate, among other things, to the most recent pre-acquisition fiscal year (the “ Audited Year ”) and the current fiscal year through the date of acquisition (the “ Stub Period ”) for the Real Property.

19.1.2 To assist the Listed Company in preparing the SEC Filings, the Sellers agree to use best efforts to provide to the Purchasers, at or before Closing, with the information/documentation in relation to the Target Companies as provided for in Annex 19.1.2 .

19.1.3 The Sellers agree that if after Closing the Purchasers, Listed Company or the European Spin-Off Entity are required to provide any additional financial or other information regarding the Target Companies or their assets, in each case relating to the time period until Closing, to the SEC, the Sellers will, to the extent such information is not obtainable for the Purchasers from the Target Companies, fully cooperate with the Purchasers, Listed Company or European Spin-Off Entity in connection with the preparation of such information, including providing access to certain information at the Sellers' offices. Further, the Sellers agree that if the Purchasers are required by applicable securities laws to provide additional items related to such information, the Sellers shall fully cooperate with the Purchasers to deliver such related items. The provisions of this Section 19.1 shall survive the Closing.

19.1.4 The Purchasers shall at the Purchasers' cost, provide full support and assistance directly or through their advisors required to allow the Sellers to provide the requested information/documentation.


19.2	REIT Status

The Sellers acknowledge that the Listed Company is a real estate investment trust (“ REIT ”) and the European Spin-Off Entity will be a REIT. The Sellers further acknowledge that as a REIT, the Listed Company is subject to certain filing and reporting requirements in accordance with federal laws and regulations, including, but not limited to, regulations promulgated by the Securities and Exchange Commission. Accordingly, and notwithstanding any provision of this Agreement or the provisions of any other existing agreement between the parties hereto to the contrary, the Purchasers may publically file, disclose, report or publish any and all information related to this transaction that may be reasonably interpreted as being required by federal law or regulation. The provisions of this Section 19.2 shall survive the Closing.


19.3	Limitation of legal consequences

19.3.1 The Purchasers agree that the obligations of the Sellers pursuant to and in connection with this clause 19 are only established for allowing the Purchasers compliance with the regulatory requirements set out above, but shall, in no event have an impact on the other arrangements made between the Parties in this Agreement. The Purchasers in particular agree that


(a)	breaches by the Sellers of their obligations pursuant to or in connection with clause 19 shall not entitle the Purchasers to reject or postpone Closing or to withdraw from this Agreement, and


(b)	without prejudice to the Sellers obligation to apply due care in collecting and delivering of the required documents and information pursuant to this clause 19, the delivery by the Sellers of any such document or other information shall not be construed as a guarantee or other warranty by the Sellers as regards the correctness or completeness of that document or other information.

19.3.2 Whenever a failure of the Sellers to meet their obligations under this clause 19 may lead to damages being incurred by the Purchasers or their relevant Affiliates, the Purchasers shall inform the Sellers thereof in writing by outlining the damages in reasonable detail, and shall set the Sellers a reasonable written deadline of not less then ten (10) Banking Days for complying with the respective obligation. The Sellers shall only be liable for damages under this clause 19 if they still have negligently or deliberately not complied with their obligations upon the expiration of this deadline, and then only for the damages previously communicated by the Purchasers.

20. MISCELLANEOUS


20.1	Governing Law

This Agreement shall be governed by, and construed in accordance with, the laws of Germany but excluding the private international laws of Germany that would point to the laws of another jurisdiction and excluding the CISG.


20.2	Place of Jurisdiction

In the event of any dispute between the Parties arising out of or in connection with this Agreement, exclusive jurisdiction shall be with the competent courts in Frankfurt am Main.


20.3	Certain definitions

20.3.1 “ Business Day ” means a day (other than a Saturday or Sunday) on which banks are open for business in Frankfurt am Main, Luxembourg, London and New York.

20.3.2 “ Affiliate ” in the meaning of this Agreement shall be an affiliate within the meaning of sec. 15 of the German Stock Corporation Act ( AktG ).


20.4	Amendments to this Agreement

Any amendment, supplement ( Ergänzung ) or termination ( Aufhebung ) of this Agreement, including this provision, shall be valid only if made in writing, except where notarisation or any other stricter form is required by law. Clause 18.1 sentences 2 and 3 shall apply mutatis mutandis .


20.5	Headings; References to German Legal Terms; Interpretation; References to clauses

20.5.1 The headings and sub-headings of the clauses and paragraphs contained in this Agreement are for convenience and reference purposes only. They shall be disregarded for purposes of interpretation of this Agreement.

20.5.2 Where a set of facts is to be analysed by reference to the laws of a foreign jurisdiction, any reference in this Agreement to any German legal term shall be deemed to include a reference to the equivalent ( funktionsgleich ) legal term under the laws of such jurisdiction. Where foreign law does not provide for any corresponding legal term, such legal term as functionally comes closest to the German legal term shall be used instead.

20.5.3 Where the English wording of this Agreement is followed by a German legal term set in parenthesis and in italics, the German legal term shall prevail.

20.5.4 Unless the context requires otherwise, the phrases “including”, “including, in particular” and “in particular” shall be interpreted to be non-restrictive and without limitation.

20.5.5 Any reference made in this Agreement to any clauses without further indication of a law or an agreement shall mean clauses of this Agreement.


20.6	Annexes

All annexes to this Agreement form an integral part of this Agreement.


20.7	Entire Agreement

This Agreement constitutes the entire agreement between the Parties with respect to the subject matter covered thereby and supersedes all previous agreements and understandings, whether written or verbal, between the Parties with respect to the subject matter of this Agreement or parts thereof. There are no side agreements to this Agreement.


20.8	Severability

Should any provision of this Agreement be or become, in whole or in part, void ( nichtig ), ineffective ( unwirksam ) or unenforceable ( undurchsetzbar ), the validity, effectiveness and enforceability of the remaining provisions of this Agreement shall not be affected. Any such invalid, ineffective or unenforceable provision shall be deemed replaced by such valid, effective and enforceable provision as comes closest to the economic intent and purpose of the invalid, ineffective or unenforceable provision as regards the subject-matter, extent ( Maß ), time, place and scope ( Geltungsbereich ) of the relevant provision. The aforesaid shall apply mutatis mutandis to any gap ( Lücke ) that may be found to exist in this Agreement.

This notarial deed was read to the persons appearing in the presence of the Notary, was presented to them for inspection, approved by them and signed by them and the Notary as follows at 8:02 a.m.:

/s/ Dr. Timo Elsner

/s/ Mr. Stephen Koch

/s/ Mr. Thomas Reischauer

/s/ Dr. Christian Wicker, Notary

Exhibit 23.3

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT

We consent to the inclusion in this Amendment No. 2 to Registration Statement of NorthStar Realty Europe Corp. on Form S-11 (File No. 333-205440) of our report dated July 2, 2015, with respect to our audits of the combined balance sheets of NorthStar Europe Predecessor as of December 31, 2014 and 2013, and the related combined statements of operations, comprehensive income (loss) and cash flows for the periods from January 1, 2014 through September 15, 2014 and September 16, 2014 through December 31, 2014, and the year ended December 31, 2013, which report appears in the Prospectus, which is part of this Registration Statement. We also consent to the reference to our Firm under the heading “Experts” in such Prospectus.

/s/ Marcum LLP

Marcum LLP

Bala Cynwyd, PA

September 28, 2015

Exhibit 23.4

Consent of Independent Accountants

NorthStar Realty Europe Corp.

We hereby consent to the use in this Registration Statement on Form S-11 of NorthStar Realty Europe Corp. of our report dated 30 June 2015 relating to the combined statement of revenues and certain expenses of SEB Portfolio, which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers, Société coopérative

Luxembourg

28 September 2015

Exhibit 23.5

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and to the use of our report dated June 30, 2015 with respect to the combined statement of revenues and certain expenses (Historical Summary) of the Trianon Tower, in the Registration Statement (Form S-11) and related Prospectus of NorthStar Realty Europe Corp. for the registration of shares of its common stock.

Eschborn/Frankfurt am Main, Germany

28 September 2015

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

/s/ Enzenhofer /s/ Hentschel

Wirtschaftsprüfer Wirtschaftsprüfer

(German Public Auditor) (German Public Auditor)

Exhibit 23.6

Consent of Independent Accountants

NorthStar Realty Europe Corp.

We hereby consent to the use in this Registration Statement on Form S-11 of NorthStar Realty Europe Corp. of our report dated 28 September 2015 relating to the combined statement of revenues and certain expenses of IVG Portfolio, which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers, Société coopérative

Luxembourg

28 September 2015

Exhibit 23.7

Consent of Independent Accountants

NorthStar Realty Europe Corp.

We hereby consent to the use in this Registration Statement on Form S-11 of NorthStar Realty Europe Corp. of our report dated 28 September 2015 relating to the combined statement of revenues and certain expenses of Internos Portfolio, which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers, Société coopérative

Luxembourg

28 September 2015