Q2 2017 Disclosure Supplement August 8, 2017 NorthStar Realty Europe Corp. 1
Forward Looking Statements This presentation may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements about future results, growth potential, projected leverage, projected occupancy rates, projected weighted average lease terms, projected net operating income, projected supply growth, projected yields, projected demand, projected economic growth, rates of return and performance, anticipated rental growth as a result of of expected inflation, ability to reposition or enhance the performance of existing properties, market and industry trends, investment opportunities, business conditions and other matters, factors that may cause NorthStar Realty Europe Corp.'s,or NRE's, actual results in future periods to differ materially from these forward looking statements include, among other things: the effect of economic conditions, particularly in Europe, on the valuation of NRE's investments and on the tenants of the real property that NRE owns; the effect of NRE's manager's merger on NRE s business; the ability of Colony NorthStar Inc., or CLNS, to scale its operations in Europe to effectively manage NRE; the unknown impact of the exit of the United Kingdom, or Brexit, or one or more other countries from the European Union, or EU, or the potential default of one or more countries in the EU or the potential break-up of the EU; NRE s ability to qualify and remain qualified as a real estate investment trust, or REIT; adverse domestic or international economic geopolitical conditions and the impact on the commercial real estate industry; volatility, disruption or uncertainty in the financial markets; access to debt and equity capital and NRE s liquidity; NRE s substantial use of leverage and NRE s ability to comply with the terms of NRE s borrowing arrangements; NRE s ability to monetize NRE s assets on favorable terms or at all; NRE s ability to obtain mortgage financing on NRE s real estate portfolio on favorable terms or at all; NRE s ability to acquire attractive investment opportunities and the impact of competition for attractive investment opportunities; the affect of increased activist stockholders and stockholder activism generally; the effects of being an externally-managed company, including NRE s reliance on CLNS and its affiliates and sub-advisors/co-venturers in providing management services to NRE, the payment of substantial base management and incentive fees to NRE s manager, the allocation of investments by CLNS among NRE and CLNS s other sponsored or managed companies and strategic vehicles and various conflicts of interest in NRE s relationship with CLNS; performance of NRE s investments relative to NRE s expectations and the impact on NRE s actual return on invested equity, as well as the cash provided by these investments and available for distribution; restrictions on NRE s ability to engage in certain activities and the requirement that NRE may be required to access capital at inopportune times as a result of NRE s borrowings; NRE s ability to make borrowings under NRE s credit facility; the impact of adverse conditions affecting office properties; illiquidity of properties in NRE s portfolio; NRE s ability to realize current and expected return over the life of NRE s investments; tenant defaults or bankruptcy; any failure in NRE s due diligence to identify all relevant facts in NRE s underwriting process or otherwise; the impact of terrorism or hostilities involving Europe; NRE s ability to manage NRE s costs in line with NRE s expectations and the impact on NRE s cash available for distribution, or CAD, and net operating income, or NOI, of NRE s properties; NRE s ability to satisfy and manage NRE s capital requirements; environmental and regulatory requirements, compliance costs and liabilities relating to owning and operating properties in NRE s portfolio and to NRE s business in general; effect of regulatory actions, litigation and contractual claims against NRE and NRE s affiliates, including the potential settlement and litigation of such claims; changes in European, international and domestic laws or regulations governing various aspects of NRE s business; NRE s ability to effectively structure its investments in a tax efficient manner, including foreign, federal, state and local tax purposes; the impact that a rise in future interest rates may have on NRE s floating rate financing; potential devaluation of foreign currencies, predominately the Euro and U.K. Pound Sterling, relative to the U.S. dollar due to quantitative easing in Europe, Brexit and/or other factors which could cause the U.S. dollar value of NRE s investments to decline; general foreign exchange risk associated with properties located in European countries located outside of the Euro Area, including the United Kingdom; the loss of NRE s exemption from the definition of an investment company under the Investment Company Act of 1940, as amended; CLNS ability to hire and retain qualified personnel and potential changes to key personnel providing management services to NRE; the lack of historical financial statements for properties NRE has acquired and 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 NRE s tenants and third-party service providers with such requirements; the potential failure to maintain effective internal controls and disclosure controls and procedures; the historical combined consolidated financial statements included in this Annual Report on Form 10-K not providing an accurate indication of NRE s performance in the future or reflecting what NRE s financial position, results of operations or cash flow would have been had NRE operated as an independent public company during the periods presented; NRE s status as an emerging growth company; and compliance with the rules governing REITs. Forward-looking statements are generally identifiable by use of forwardlooking terminology such as may, will, should, potential, intend, expect, seek, anticipate, estimate, believe, could, project, predict, hypothetical, continue, future or other similar words or expressions. The calculation of implied net asset value (NAV) included in the presentation is subject to numerous assumptions and may not be the best metric to use in evaluating the value of NRE and thus investors should not unduly rely on it as an indicator of value or otherwise. All forward-looking statements included in this presentation are based upon information available to NRE on the date hereof and NRE undertakes no duty to update any of the forward-looking statements after the date of this presentation to conform these statements to actual results. The forward-looking statements involve a number of significant risks and uncertainties. Factors that could have a material adverse effect on NRE s operations and future prospects are set forth in NorthStar Realty Europe Corp. s Form 10-K for the year ended December 31, 2016, including the sections entitled Risk Factors. The factors set forth in the Risk Factors sections of the aforementioned filings and otherwise described in NorthStar Realty Europe Corp. filings with the SEC could cause actual results to differ significantly from those contained in any forward-looking statement contained in this presentation. NRE does not guarantee that the assumptions underlying such forward-looking statements are free from errors. This presentation is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of NorthStar Realty Europe Corp. The endnotes herein contain important information that is material to an understanding of this presentation and you should read this presentation only with and in context of the endnotes. NorthStar Realty Europe Corp. 2
Corporate Overview NorthStar Realty Europe (NYSE:NRE) is a NYSE listed real estate investment trust (REIT) focused on prime office properties located in key cities within Germany, the United Kingdom and France Experienced management team with established local networks Proven track record of sourcing, managing and successfully exiting European investments generating attractive total returns for investors Creating stockholder value through stable and recurring income stream supplemented by capital growth over time Portman Square, London, UK Berges de Seine, Paris,France Condor House, London, UK NorthStar Realty Europe Corp. 3
NRE Evolution 2014 2015 2016 2017 Q1 2014: NorthStar Realty Finance Corp. (NYSE: NRF) explores opportunities in the European markets Q1 2016: NRE announced a revised strategy focusing primarily on office properties in key cities within Germany, the UK and France More than 35,000 sqm renewed or leased in the second quarter through July 31, 2017 (10% of the portfolio) Q3 2014: Dukes Court (Woking, UK) acquired in September 2014 Q4 2014: Signed binding contracts for two portfolios: SEB Portfolio 11 office properties in seven countries Trias Portfolio 37 properties (predominantly office) located in eight countries Q2 2015: Completed acquisition of SEB and Trias portfolios Q3 2015: Acquisition of Trianon Iconic office tower in CBD Frankfurt & 6th tallest tower in Germany Sale of 18 non-strategic properties ($420 million sales price) through individual transactions in line with the independent valuation Approximately 27,000 sqm (7% of the portfolio) leased or renewed in 2016, contributing to an improved WALT Cushman & Wakefield portfolio valuation of $2.0 billion as of December 31, 2016 Further four non-core assets sold through July 31, 2017 Preferred equity investment into 20 Gresham Street in London (UK) in partnership with China Resources Land Cushman & Wakefield portfolio valuation of $2.1 billion as of June 30, 2017 Commenced active asset management program $340 million stock settable notes repurchased or repaid at maturity Spin-off from NRF completed on October 31, 2015 and commenced trading on NYSE $59 million of common stock repurchased in 2016 (5.7 million shares) $100 million of common stock repurchased in total (weighted average price of $10.71 per share) NorthStar Realty Europe Corp. 4
NRE Strategy Focus on prime office properties in key cities within Germany, the United Kingdom and France - the largest, most established, stable and liquid markets in Europe 1 NRE's primary objective is to provide investors with a stable and recurring income stream supplemented by capital growth over time 2 Utilize established local networks to source properties that are capable of generating stable and recurring cash flows with potential for capital growth through active asset management 3 Long term investment approach with active asset management 4 Moderate leverage target of 40-50% loan-to-value over time NorthStar Realty Europe Corp. 5
NRE - Q2 Snapshot (1) $2.2 billion $17.29 83% (86%) c 5.9 (6.5) c years Portfolio Market Value a EPRA NAV per share b Real Estate Portfolio Occupancy Real Estate Portfolio WALT to Expiry Q2 2017 Results Real Estate Portfolio of 27 Properties $25.0 million Net Operating Income (NOI) b $11.7 million Cash Available For Distribution (CAD) b $0.21 CAD per diluted share b $0.15 Dividend per share 56% Leverage based on Portfolio Market Value NRE core markets Office Retail Logistics Hotel a. $2.1 billion real estate portfolio market value based on the independent valuation by Cushman & Wakefield plus $34 million of preferred equity, together the "Portfolio Market Value" b. NOI, CAD and EPRA NAV are non-gaap financial measures. For reconciliations of these non-gaap financial measures to the most comparable measures prepared in accordance with GAAP, please refer to the tables on the following pages, endnotes to this Disclosure Supplement and NRE's filings with the SEC at www.sec.gov c. Proforma occupancy and weighted average remaining contractual lease term adjusted for new leases signed, but commencing through remainder of 2017 and early 2018 NorthStar Realty Europe Corp. 6
NRE Overview (2) Real Estate Portfolio - 27 properties in 5 countries $2.1 billion Real Estate Portfolio Value value based on mid-year 2017 independent valuation by Cushman & Wakefield, slightly above the year end 2016 valuation Three non-core properties sold in the quarter through July 31, 2017, exiting Spain and further reducing NRE's presence in the Netherlands As of June 30, 2017. Adjusted for sales through July 31, 2017 Core Portfolio Germany UK France Total Core Portfolio Other Real Estate Portfolio Total Number of Assets 11 5 4 20 7 27 Area (Sqm) 154,294 46,520 32,075 232,888 118,626 351,514 Occupancy 89% 99% 100% 93% 65% 83% Proforma Occupancy a 94% 99% 100% 96% 65% 86% WALT to Expiry (years) 7.4 6.7 3.8 6.5 2.8 5.9 Proforma WALT to Expiry a (years) 7.6 6.7 3.8 6.6 5.7 6.5 Real Estate Portfolio Value ($ million) 989 567 343 1,899 237 2,136 Real Estate Portfolio Value (% of Total) 46% 27% 16% 89% 11% 100% Contractual Rent (% of Total) 43% 25% 17% 85% 15% 100% Preferred Equity In May 2017, NRE partnered with China Resources Land Limited ( CRL ), a leading property developer in China, to acquire 20 Gresham Street (London, UK) NRE invested approximately $34 million as preferred equity with an expected yield of 8% plus equity participation rights a. Proforma occupancy ("Proforma Occupancy") and weighted average remaining contractual lease term ("Proforma WALT") based on rent roll as of June 30, 2017, adjusted for new leases signed, but commencing through remainder of 2017 and early 2018 NorthStar Realty Europe Corp. 7
Real Estate Portfolio 2017 To-Date Progress Update More than 35,000 sqm renewed or leased in the second quarter through July (10% of the portfolio) 6.5 year Proforma WALT (6.6 years in the Core Portfolio) 86% Proforma Occupancy (96% in the Core Portfolio) Leases executed during and subsequent to the second quarter 2017 include Trianon, Frankfurt, Germany: 10-year lease with Deutsche Bundesbank (7,000 sqm), increasing occupancy to 98% from 87% and increasing WALT from 7.2 years to 7.4 years Uhlandstrasse, Frankfurt, Germany: 2,850 sqm lease increasing occupancy to 96% Valentinskamp, Hamburg, Germany: 15 year lease with Euroeyes to lease 1,640 sqm Maastoren, Rotterdam, Netherlands: 10 year extension with Deloitte (c. 22,800 sqm office space), increasing WALT to expiry from 2.5 years to 6.6 years Improved Income Expiry Profile Unexpired Contractual Rent (%), same store 98% 95% 96% 93% 89% 77% Q4 2016 Proforma Q2 2017 81% 65% 64% 69% 57% 56% 2017 2018 2019 2020 2021 2022 NorthStar Realty Europe Corp. 8
Real Estate Portfolio Tenancy Overview (3) Tenants by Industry Top 10 Tenants Industry % Contractual Rent Tenant Area (sqm) Remaining Lease Term (in years) % Contractual Rent Finance 42.6% Legal, Tax & Management Consultancy 21.6% Public Authorities, Organizations & Educational Organization 10.6% Consumer Goods Industry & Retail 4.2% Technology & Software 3.8% Hotel & Gastronomy 2.4% Media & Entertainment Industry 1.5% Construction 0.8% Public Utilities & Telecommunications 0.3% Other 12.2% Total 100.0% DekaBank Deutsche Girozentrale 35,972 6.9 19% BNP PARIBAS RE 15,406 2.6 9% Deloitte Holding B.V. 23,684 2.4 7% Deutsche Bundesbank 15,120 9.4 5% BNP PARIBAS SA 11,235 3.8 5% Cushman & Wakefield LLP 5,150 7.8 5% Morgan Lewis & Bockius LLP 4,848 8.2 4% PAREXEL International GmbH 18,254 17.0 3% Moelis & Co UK LLP 3,366 7.8 3% Bigpoint GmbH 11,916 3.9 2% Total Top 10 144,951 6.4 62% Lease Expiry Profile (through contractual term, as of June 30, 2017) Expiring Income (Cumulative) NorthStar Realty Europe Corp. 9
Real Estate Portfolio Same Store Performance (4) NRE Core Portfolio: Occupancy NRE Core Portfolio: WALT to Expiry (years) 93% 92% 93% 7.0 6.5 6.5 Q2 2016 Q1 2017 Q2 2017 Q2 2016 Q1 2017 Q2 2017 NRE Other Portfolio: Occupancy NRE Other Portfolio: WALT to Expiry (years) Other Other Other excluding Marly (logistics) 86% 85% 86% 4.3 4.2 Other excluding Marly (logistics) 65% 65% 65% 3.0 3.4 2.8 3.1 Q2 2016 Q1 2017 Q2 2017 Q2 2016 Q1 2017 Q2 2017 NorthStar Realty Europe Corp. 10
Preferred Equity - Gresham Street 20 Gresham Street, London Location City of London, UK Area 22,557 sqm / 242,807 sqft (8 floors) Occupancy (June 30, 2017) 100% WALT to Expiry (June 30, 2017) 6.8 years During Q2 2017, NRE partnered with China Resources Land Limited, the third largest Chinese developer listed on HKSE (approximately $19 billion market cap) to acquire a prime freehold office property in the City of London, 20 Gresham Street, from AXA Property description Class A office property designed by Kohn Pedersen Fox and developed in 2008 Fully leased to four tenants (ICBC Standard Bank is the anchor tenant) Passing rent of 55.0 psf (~24% below prime market rent of 69 psf) Transaction Structure NRE funded $34 million in the form of preferred equity with a fixed coupon of 8.0%, a term of 3 years and equity participation rights NorthStar Realty Europe Corp. 11
NRE Capitalization (5) Leverage reduced from 57% as of March 31, 2017 to 56% as of June 30, 2017 Debt Maturity Profile (Mortgage and other notes payable) $ millions NRE Capitalization $ millions (cumulative %) $1,026 $219 Non Recourse Mortgage Notes $1,140 (52%) 2017 2018 2019 2020 2021 2022+ Mortgage notes and other notes payable are denominated in local currencies 25% GBP 75% EUR No maturity prior to January 2020 Weighted average margin: 1.75% Preferred Equity Common Equity $104 (56%) $983 (100%) NorthStar Realty Europe Corp. 12
Financial Highlights Consolidated Balance Sheet $ thousands June 30, 2017 (Unaudited) December 31, 2016 Assets Operating real estate, gross $ 1,738,608 $ 1,614,432 Less: accumulated depreciation (88,242) (63,585) Operating real estate, net 1,650,366 1,550,847 Preferred equity investment 34,064 Cash and cash equivalents 69,256 66,308 Restricted cash 10,654 10,242 Receivables, net of allowance of $579 and $553 as of June 30, 2017 and December 31, 2016, respectively 6,882 6,015 Assets held for sale 9,427 28,208 Derivative assets, at fair value 9,839 13,729 Intangible assets, net 149,352 148,403 Other assets, net 25,393 21,640 Total assets $ 1,965,233 $ 1,845,392 Liabilities Mortgage and other notes payable, net $ 1,232,354 $ 1,149,119 Credit facility 23,000 Accounts payable and accrued expenses 26,778 28,004 Due to related party 3,544 4,991 Derivative liabilities, at fair value 3,666 Intangible liabilities, net 31,010 30,802 Liabilities held for sale 2,041 Other liabilities 33,349 28,918 Total liabilities 1,353,701 1,243,875 Commitments and contingencies Redeemable non-controlling interest 1,749 1,610 Equity NorthStar Realty Europe Corp. Stockholders Equity Preferred stock, $0.01 par value, 200,000,000 shares authorized, no shares issued and outstanding as of June 30, 2017 and December 31, 2016 Common stock, $0.01 par value, 1,000,000,000 shares authorized, 55,258,084 and 55,395,143 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively 553 554 Additional paid-in capital 934,136 925,473 Retained earnings (accumulated deficit) (325,158) (282,769) Accumulated other comprehensive income (loss) (5,276) (51,424) Total NorthStar Realty Europe Corp. stockholders equity 604,255 591,834 Non-controlling interests 5,528 8,073 Total equity 609,783 599,907 Total liabilities, redeemable non-controlling interest and equity $ 1,965,233 $ 1,845,392 NorthStar Realty Europe Corp. 13
Financial Highlights - Consolidated Statement of Operations (6) $ thousands, other than per share data Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Revenues Rental income $ 26,025 $ 33,990 $ 51,561 $ 68,823 Escalation income 5,558 5,908 10,719 11,998 Interest income 297 297 Other income 508 46 537 749 Total revenues 32,388 39,944 63,114 81,570 Expenses Properties - operating expenses 7,680 8,540 15,002 17,771 Interest expense 6,722 11,641 13,105 24,183 Transaction costs 973 1,652 1,233 2,483 Impairment loss 27,468 27,468 Management fee, related party 3,572 3,500 7,131 7,000 Other expenses 2,608 3,041 4,608 6,731 General and administrative expenses 1,555 1,502 4,152 2,978 Compensation expense 1,385 3,766 17,255 7,034 Depreciation and amortization 12,520 18,404 25,083 37,275 Total expenses 37,015 79,514 87,569 132,923 Other income (loss) Unrealized gain (loss) on derivatives and other (7,655) 1,159 (8,596) (14,594) Realized gain (loss) on sales and other 1,981 4,622 6,951 2,174 Income (loss) before income tax benefit (expense) (10,301) (33,789) (26,100) (63,773) Income tax benefit (expense) (237) (520) 36 139 Net income (loss) (10,538) (34,309) (26,064) (63,634) Net (income) loss attributable to non-controlling interests 91 400 267 743 Net income (loss) attributable to NorthStar Realty Europe Corp. common stockholders $ (10,447) $ (33,909) $ (25,797) $ (62,891) Earnings (loss) per share: Basic $ (0.19) $ (0.57) $ (0.47) $ (1.06) Diluted $ (0.19) $ (0.57) $ (0.47) $ (1.06) Weighted average number of shares: Basic 55,023,535 59,115,895 54,928 59,266,850 Diluted 55,587,897 59,805,545 55,547 59,957,559 Dividends per share of common stock $0.15 $0.15 $0.30 $0.30 NorthStar Realty Europe Corp. 14
Financial Highlights - CAD (7) $ thousands, other than per share data Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net income (loss) attributable to common stockholders $ (10,447) $ (33,909) $ (25,797) $ (62,891) Non-controlling interests (91) (400) (267) (743) Adjustments: Depreciation and amortization items 14,990 25,134 44,560 50,434 Impairment losses 27,468 27,468 Unrealized (gain) loss on derivatives and other 7,655 (1,159) 8,596 14,594 Realized (gain) loss on sales and other (1,342) (5,398) (5,495) (3,368) Transaction costs and other 973 1,623 2,148 2,769 CAD $ 11,738 $ 12,008 $ 23,745 $ 28,263 CAD per share $ 0.21 $ 0.22 $ 0.42 $ 0.46 NorthStar Realty Europe Corp. 15
Financial Highlights - NOI (8) NOI $ thousands Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Rental income $ 26,025 $ 33,990 $ 51,561 $ 68,823 Escalation income 5,558 5,908 10,719 11,998 Other income 508 46 537 749 Total property and other income 32,091 39,944 62,817 81,570 Properties - operating expenses 7,680 8,540 15,002 17,771 Adjustments: Interest income 297 297 Amortization and other items 253 1,220 533 2,651 NOI $ 24,961 $ 32,624 $ 48,645 $ 66,450 Note: Year on year NOI decrease driven primarily by sales. Please refer to the further slides for same store performance. Reconciliation of Net Income (Loss) to NOI $ thousands Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net income (loss) $ (10,538) $ (34,309) $ (26,064) $ (63,634) Remaining segments(i) 13,109 12,041 35,952 32,229 Real estate segment adjustments: Interest expense 6,451 8,691 12,571 17,117 Other expenses 2,415 3,007 4,443 6,697 Depreciation and amortization 12,520 18,404 25,083 37,275 Unrealized (gain) loss on derivatives and other 1,293 3,400 960 14,385 Realized (gain) loss on sales and other (1,336) (7,794) (5,491) (7,709) Income tax (benefit) expense 237 520 (36) (139) Impairment losses 27,468 27,468 Other items 810 1,196 1,227 2,761 Net (income) loss - Real estate segment 22,390 54,892 38,757 97,855 NOI $ 24,961 $ 32,624 $ 48,645 $ 66,450 NorthStar Realty Europe Corp. 16
Financial Highlights Same Store NOI (quarter over quarter) (9) $ thousands Three Months Ended Increase (Decrease) Increase (Decrease) June 30, 2017 March 31, 2017 Amount Percentage Occupancy (end of period) 83.4% 82.9% Rental income $ 25,972 $ 26,134 $ (162) Escalation income 5,489 5,135 354 Other income 409 26 383 Total revenues 31,870 31,295 575 1.8% Utilities 2,015 2,311 (296) Real estate taxes and insurance 1,477 1,250 227 Non-recoverable value added tax 468 338 130 Management fees 557 578 (21) Repairs and maintenance 2,446 2,348 98 Ground rent 184 167 17 Other 424 362 62 Properties - operating expenses 7,571 7,354 217 3.0% Same store net operating income $ 24,299 $ 23,941 $ 358 1.5% Reconciliation of Net Income (Loss) to Same Store NOI $ thousands Three Months Ended June 30, 2017 March 31, 2017 Net income (loss) $ (10,538) $ (15,526) Corporate segment net (income) loss 12,860 22,843 Interest income (297) Other (income) loss 22,736 17,297 Net operating income 24,761 24,614 Sale of real estate investments and other (462) (436) Same store net operating income $ 24,299 $ 23,941 NorthStar Realty Europe Corp. 17
Financial Highlights Same Store NOI (year over year) (10) $ thousands Three Months Ended June 30 Increase (Decrease) Increase (Decrease) 2017 2016 Amount Percentage Occupancy (end of period) 83.4% 83.5% Rental income $ 25,972 $ 25,885 $ 87 Escalation income 5,489 4,633 856 Other income 409 31 378 Total revenues 31,870 30,549 1,321 4.3 % Utilities 2,015 1,833 182 Real estate taxes and insurance 1,477 1,211 266 Non-recoverable value added tax 468 339 129 Management fees 557 560 (3) Repairs and maintenance 2,446 1,834 612 Ground rent 184 167 17 Other 424 55 369 Properties - operating expenses 7,571 5,999 1,572 26.2 % Same store net operating income a $ 24,299 $ 24,550 $ (251) (1.0)% a. NOI decrease due to timing of certain non-recoverable operating expenses Reconciliation of Net Income (Loss) to Same Store NOI $ thousands Three Months Ended June 30 2017 2016 Net income (loss) $ (10,538) $ (34,309) Corporate segment net (income) loss 12,860 12,041 Interest income (297) Impairment losses 27,468 Other (income) loss 22,736 27,424 Net operating income 24,761 32,624 Sale of real estate investments and other (462) (8,074) Same store net operating income $ 24,299 $ 24,550 NorthStar Realty Europe Corp. 18
Financial Highlights EPRA NAV (11) European Public Real Estate Association ("EPRA") - an association of Europe s leading property companies, investors and consultants EPRA Net Asset Value ("EPRA NAV") is a proportionally consolidated measure representing the IFRS net assets excluding the mark-to-market on effective cash flow hedges and related debt adjustments, the mark-to-market on the convertible bonds as well as deferred taxation on property and derivative valuations $ thousands, other than per share data June 30, 2017 Total equity $ 609,783 Adjustments Revaluation of real estate properties 363,607 IFRS NAV 973,390 Diluted NAV, after the exercise of options, convertibles and other equity interests 973,390 Fair value of financial instruments (Interest Rate Caps) (8,674) EPRA NAV 964,715 Total equity per diluted share $ 10.93 EPRA NAV per diluted share $ 17.29 NorthStar Realty Europe Corp. 19
Appendix Real Estate Portfolio Overview (12) Asset Core Portfolio Location Primary Asset Type Area (sqm) Occupancy Proforma Occupancy WALT to Expiry (Years) Proforma WALT to Expiry (Years) % Contractual Rent UK Portman Square London, West End Office 10,447 100% 100% 6.5 6.5 10% Multi-let Condor House London, City Office 11,311 99% 99% 7.8 7.8 8% Multi-let Dukes Court Greater London Office 20,794 100% 100% 6.0 6.0 6% Multi-let Chiswick Greater London Office 2,022 82% 82% 5.3 5.3 1% Multi-let St Albans Greater London Office 1,946 100% 100% 3.1 3.3 1% Multi-let Germany Trianon Frankfurt Office 68,524 87% 98% 7.2 7.4 28% Multi-let Valentinskamp Hamburg Office 14,881 73% 75% 6.3 6.5 3% Multi-let Parexel Berlin Office 18,254 100% 100% 17.0 17.0 3% Single-let Drehbahn Hamburg Office 11,916 100% 100% 3.9 3.9 2% Single-let Ludwigstrasse Cologne Office 10,622 88% 88% 4.1 4.1 2% Multi-let Dammtorwall Hamburg Office 7,496 100% 100% 2.0 2.0 1% Multi-let Uhlandstrasse Frankfurt am Main Office 6,832 87% 96% 3.1 6.3 1% Multi-let IC Hotel Berlin Hotel 8,457 100% 100% 12.8 12.8 2% Single-let Ibis Berlin Berlin Hotel 3,828 100% 100% 6.7 6.7 1% Single-let Neuermarkt Werl Retail 3,483 50% 50% 1.2 1.2 % Multi-let France Berges de Seine Paris, Issy Office 15,406 100% 100% 2.6 2.6 9% Single-let Mac Donald Paris, Other Office 11,235 100% 100% 3.8 3.8 5% Single-let Marceau Paris, CBD Office 3,806 100% 100% 6.9 6.9 2% Multi-let Joubert Paris, CBD Office 1,628 100% 100% 6.5 6.5 1% Single-let Subtotal Core Portfolio 232,888 93% 96% 6.5 6.6 85% Other - Non Core Locations / Asset Types Maastoren Netherlands (Other) Office 37,894 100% 100% 2.5 6.6 11% Multi-let Munster Germany (Other) Office 5,434 100% 100% 14.2 14.2 1% Single-let Office123 Portugal (Lisbon) Office 4,325 68% 68% 1.4 1.4 1% Multi-let Glasgow UK (Other) Office 3,168 100% 100% 3.6 3.6 1% Multi-let De Meern Netherlands (Other) Office 6,517 18% 18% 0.8 0.8 % Single-let Marly France (Greater Paris) Industrial 59,095 45% 45% 0.3 0.3 2% Single-let Kirchheide Germany (Other) Retail 2,192 19% 19% 4.8 4.8 % Multi-let Total 351,514 83% 86% 5.9 6.5 100% NorthStar Realty Europe Corp. 20 Tenant Profile
Appendix Trianon, Frankfurt, Germany Iconic office tower in CBD Frankfurt, the 6th tallest office tower in Germany (65,600 sqm over 45 floors) Strong Income Profile 98% occupied, ~90% of rent derived from long-term leases to Deutsche Bundesbank (German central bank) and Dekabank which has an investment grade credit rating Asset Management Initiatives Recent leasing of 7,000 sqm to Deutsche Bundesbank, simultaneously extending the leases on their 11 existing floors by a further two years Significant investment into the building since ownership including renovation of lobby and lifts, canteen refurbishment (ongoing) and full upgrade to latest Fire, Life & Safety standards Occupancy WALT to Expiry (years) 7.4 7.1 7.4 98% Acquisition Q1 2017 Q2 2017 Proforma Acquisition July 2015 NorthStar Realty Europe Corp. 98% 87% July 2015 Q1 2017 Q2 2017 Proforma 21
Appendix Uhlandstrasse, Frankfurt, Germany Stabilized asset located within close proximity to the headquarters of the European Central Bank in Frankfurt Asset Stabilized Through Leasing to Near Full Occupancy 4,800 sqm released since acquisition (70% of the property area) Improving the asset's occupancy to 96% and increasing the WALT to break to 6.3 years 33% contractual income growth since acquisition WALT to Break (years) Occupancy 6.3 73% 87% 96% 2.8 3.4 Acquisition Q1 2017 Q2 2017 April 2015 Proforma Acquisition Q1 2017 Q2 2017 April 2015 Proforma NorthStar Realty Europe Corp. 22
Appendix European Real Estate Market Update (13) Q2 2017 investment volume of 74 billion and 130 million year to date (13% above H1 2016) Approx. 33% in office sector Approx. 57% of transactions in Germany, UK and France Property yields remained broadly stable during H1 2017 and continued to remain at a significant premium to sovereign yields Strong occupational markets with growing office take-up and decreasing vacancy rates across all major European cities Limited new supply pipeline 74 billion Invested in European CRE during Q2 2017 Office Retail Industrial Evolution of European CRE Prime Yields Jun-16 Dec-16 Jun-17 6m Delta 1Y Delta Germany 3.65% 3.20% 3.00% (0.20)% (0.65)% France 3.25% 3.00% 3.00% % (0.25)% UK 3.50% 3.75% 3.75% % 0.25% Germany 4.10% 4.00% 4.00% % (0.10)% France 3.50% 3.50% 3.25% (0.25)% (0.25)% UK 4.50% 4.65% 4.65% % 0.15% Germany 5.00% 4.90% 4.75% (0.15)% (0.25)% France 5.75% 5.50% 5.00% (0.50)% (0.75)% UK 5.00% 5.00% 4.85% (0.15)% (0.15)% European CRE Investment Volume Other 31.4 bn 42% Germany 13.9 bn 19% 300 250 200 150 100 50 France 5.4 bn 7% United Kindom 23.5 bn 32% 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q1 Q2 Q3 Q4 NorthStar Realty Europe Corp. 23
Notes 1. NRE - Q2 Snapshot a. Unless stated otherwise, all data is as of June 30, 2017 or the three months ended June 30, 2017 b. The $2.2 billion portfolio market value comprises $2.1 billion real estate portfolio value based on the independent valuation by Cushman & Wakefield LLP and $34 million preferred equity investment (please refer to Note 11, Fair Value in the NRE Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 included in Part I Item 1. Financial Statements. c. $2.1 billion portfolio real estate portfolio market value ("Real Estate Portfolio Value") based on independent valuation by Cushman & Wakefield ("C&W"). The external third-party valuation was prepared by Cushman & Wakefield LLP in accordance with the current U.K. and Global edition of the Royal Institution of Chartered Surveyors' (RICS) Valuation - Professional Standards (the "Red Book") on the basis of "Fair Value", which is widely recognized within Europe as the leading professional standards for independent valuation professionals. Each property is classified as an investment and has been valued on the basis of Fair Value adopted by the International Accounting Standards Board. This is the equivalent to the Red Book definition of Market Value. The Red Book defines Market Value as the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's-length transaction after proper marketing where the parties had each acted knowledgeably, prudently and without compulsion. The Cushman & Wakefield LLP valuation assumes that certain properties would be purchased through market accepted structures resulting in lower purchaser transaction expenses (taxes, duties, and similar costs). This Cushman & Wakefield LLP valuation is as of June 30, 2017. FX rates used as of June 30, 2017 EUR/USD = 1.142, GBP/USD = 1.300 d. As an opinion, appraisals are not a measure of realizable value and may not reflect the amount that would be received if the property in question were sold. Real estate valuation is inherently subjective due to, among other factors, the individual nature of each property, its location, the expected future rental revenues from that particular property and the valuation methodology adopted. Real estate valuations are subject to a large degree of uncertainty and are made on the basis of assumptions and methodologies that may not prove to be accurate, particularly in periods of volatility, low transaction flow or restricted debt availability in the commercial or residential real estate markets. For example, in the appraisal, a number of the properties were valued using the special assumption that such properties would be purchased through a tax-efficient special purpose vehicle, and is therefore subject to lower purchaser transaction expenses. If one or more assumptions are incorrect, the value may be materially lower than the appraised value e. Leverage is calculated as a function of property level debt and portfolio level preferred equity divided by the Portfolio Market Value and unrestricted cash net of the revolving credit facility as of June 30, 2017 f. WALT: Weighted average lease term g. CAD per share for the three months ended June 30, 2017 based on 55.7 million weighted average shares, operating partnership units and RSUs not subject to performance hurdles h. Proforma occupancy and weighted average remaining contractual lease term based on rent roll as of June 30, 2017, adjusted for new leases signed, but commencing through remainder of 2017 and early 2018 i. Number of properties, occupancy and WALT relate to the real estate portfolio and exclude the preferred equity investment 2. NRE Overview a. Core portfolio comprises primarily office properties in key cities within Germany, the United Kingdom and France ("Core Portfolio"). Core Portfolio includes 2 hotel properties (held as net lease) and 1 German retail property b. Unless stated otherwise, all data and FX rates are as of June 30, 2017 c. Portfolio areas reflect contractual rentable areas d. Contractual rent represents annualized in place income based on rent roll as of June 30, 2017 ("Contractual Rent") 3. Real Estate Portfolio - Tenancy Overview a. Based on rent roll as of June 30, 2017 b. Rentable areas for the Top 10 Tenants include office and other rentable areas excluding parking (as applicable) 4. Real Estate Portfolio - Same Store Performance a. Same store statistics refer to properties that were owned in the same manner during both the current period (ownership throughout the whole period through July 31) and previous periods 5. NRE Capitalization a. Loan to Value is a function of property level debt and portfolio level preferred equity divided by the Portfolio Market Value and unrestricted cash net of the revolving credit facility. Capitalization includes property level debt, portfolio level preferred equity and common equity b. Debt maturity profile excludes the revolving credit facility 6. Financial Highlights Consolidated Statement of Operations i. Compensation expense for the three and six months ended June 30, 2017 and 2016 is comprised of equity-based compensation expenses. For the six months ended June 30, 2017, compensation expense includes the impact of substantially all time based and certain performance based awards vesting in connection with the change of control of the manager NorthStar Realty Europe Corp. 24
Notes (continued) 6. Financial Highlights Cash Available for distribution (CAD) a. We believe that CAD provides investors and management with a meaningful indicator of operating performance. We also believe that CAD is useful because it adjusts for a variety of items that are consistent with presenting a measure of operating performance (such as transaction costs, depreciation and amortization, equity-based compensation, realized gain (loss) on sales and other, asset impairment and non-recurring bad debt expense). We adjust for transaction costs because these costs are not a meaningful indicator of our operating performance. For instance, these transaction costs include costs such as professional fees associated with new investments, which are expenses related to specific transactions. Management also believes that quarterly distributions are principally based on operating performance and our board of directors includes CAD as one of several metrics it reviews to determine quarterly distributions to stockholders. 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. CAD may fluctuate from period to period based upon a variety of factors, including, but not limited to, the timing and amount of investments, repayments and asset sales, capital raised, use of leverage, changes in the expected yield of investments and the overall conditions in commercial real estate and the economy generally. We calculate CAD by subtracting from or adding to net income (loss) attributable to common stockholders, non-controlling interests and the following items: depreciation and amortization items including 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 financings and other and equity-based compensation; unrealized gain (loss) on derivatives and other; realized gain (loss) on sales and other (excluding any realized gain (loss) on foreign currency derivatives); impairment on depreciable property; non-recurring bad debt expense; acquisition gains or losses; transaction costs; foreign currency gains (losses); impairment on goodwill and other intangible assets; 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. CAD should not be considered as an alternative to net income (loss) attributable to common stockholders, determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, our methodology for calculating CAD involves subjective judgment and discretion and 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. b. Three months ended June 30, 2017 represents an adjustment to exclude depreciation and amortization of $12.5 million, amortization expense of capitalized above/below market leases of $0.3 million, amortization of deferred financing costs of $0.8 million and amortization of equity-based compensation of $1.4 million. Three months ended June 30, 2016 represents an adjustment to exclude depreciation and amortization of $18.4 million, amortization of above/below market leases of $0.9 million, amortization of deferred financing costs of $2.0 million and amortization of equity-based compensation of $3.8 million. c. Six months ended June 30, 2017 represents an adjustment to exclude depreciation and amortization of $25.1 million, amortization expense of capitalized above/below market leases of $0.5 million, amortization of deferred financing costs of $1.7 million and amortization of equity-based compensation of $17.3 million. Six months ended June 30, 2016 represents an adjustment to exclude depreciation and amortization of $37.3 million, amortization expense of capitalized above/below market leases of $2.3 million, amortization of deferred financing costs of $3.8 million and amortization of equity-based compensation of $7.0 million. d. Three months ended June 30, 2017 represents an adjustment to exclude a $1.4 million net gain related to the sale of real estate, $0.1 million loss related to the write-off of the deferred financing costs associated with the repayment of the mortgage notes and a $0.1 million net gain related to foreign currency. CAD includes a $0.6 million net gain related to the settlement of foreign currency derivatives. Three months ended June 30, 2016 represents an adjustment to exclude an $8.1 million net gain related to the sale of real estate, $2.4 million loss related to the write-off of the deferred financing costs associated with the repurchase of the Senior Notes and a $0.3 million net loss related to foreign currency. CAD includes a $0.8 million net loss related to the settlement of foreign currency derivatives. e. Six months ended June 30, 2017 represents an adjustment to exclude a $6.0 million net gain related to the sale of real estate investment, $0.2 million loss related to the write-off of the deferred financing costs associated with the repayment of the mortgage notes and a $(0.3) million net loss related to foreign currency. CAD includes a $1.5 million net gain related to the settlement of foreign currency derivatives. Six months ended June 30, 2016 represents an adjustment to exclude a $7.8 million net gain related to the sale of real estate, $4.3 million loss related to the write-off of the deferred financing costs associated with the repurchase of the Senior Notes and a $0.1 million net loss related to foreign currency. CAD includes a $1.2 million net loss related to the settlement of foreign currency derivatives. f. Three months ended June 30, 2017 represents an adjustment to exclude $1.0 million of transaction costs relating to the Mergers and transaction fees related to our preferred equity investment. Three months ended June 30, 2016 represents an adjustment to exclude $1.6 million of transaction costs. g. Six months ended June 30, 2017 represents an adjustment to exclude $1.2 million of transaction costs relating to the Mergers and transaction fees related to our preferred equity investment and $0.9 million of payroll taxes associated with the acceleration of equity awards due to the Mergers. Six months ended June 30, 2016 represents an adjustment to exclude $2.4 million of transaction costs and $0.3 million of other one-time items. h. CAD per share is based on 55.7 million and 55.8 million weighted average shares (common shares outstanding including operating partnership units and RSUs not subject to performance hurdles) for the the three and six months ended June 30, 2017, respectively. Based on 61.4 and 61.1 million weighted average shares (common shares outstanding, including LTIPs and RSUs not subject to performance hurdles) for the three and six months ended June 30, 2016, respectively. CAD per share does not take into account any potential dilution from restricted stock units subject to performance metrics not currently achieved. NorthStar Realty Europe Corp. 25
Notes (continued) 8. Financial Highlights - NOI a. We believe NOI is a useful metric of the operating performance of our real estate portfolio in the aggregate. Portfolio results and performance metrics represent 100% for all consolidated investments. Net operating income represents total property and related revenues, adjusted for: (i) amortization of above/below market leases; (ii) straight-line rent (except with respect to rent free period); (iii) other items such as adjustments related to joint ventures and non-recurring bad debt expense and less property operating expenses. 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) on sales and other 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. NOI should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, our methodology for calculating NOI involves subjective judgment and discretion and 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. b. Three months ended June 30, 2017 primarily includes $0.3 million of amortization of above/below market leases. Three months ended June 30, 2016 primarily includes $1.1 million of amortization of above/below market leases. c. Six months ended June 30, 2017 primarily includes $0.5 million of amortization of above/below market leases. Six months ended June 30, 2016 primarily includes $2.3 million of amortization of above/below market lease and $0.3 million of non-recurring bad debt expense. 9. Financial Highlights - Same Store Net Operating Income (quarter-over-quarter) a. We believe same store net operating income is a useful metric of the operating performance as it reflects the operating performance of the real estate portfolio excluding effects of noncash adjustments and provides a better measure of operational performance for a quarter-over-quarter comparison. Same store net operating income is presented for the same store portfolio, which represents all properties that were owned by us at the end of the reporting period. We define same store net operating income as NOI excluding (i) properties that were acquired or sold during the period, (ii) impact of foreign currency changes and (iii) amortization of above/below market leases. We consider same store net operating income to be an appropriate and useful supplemental performance measure. Same store net operating income should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, our methodology for calculating same store net operating income involves subjective judgment and discretion and 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. Includes 28 properties owned by NRE as of June 30, 2017 (including the Spanish asset sold subsequent to the second quarter). b. Three months ended March 31, 2017 is translated using the average exchange rate for the three months ended June 30, 2017. c. Adjusted to exclude amortization of above/below market leases. Other includes bad debt expense, administrative costs and other non-reimbursable expenses. 10. Financial Highlights - Same Store Net Operating Income (year-over-year) a. Three months ended June 30, 2016 is translated using the average exchange rate for the three months ended June 30, 2017. b. Adjusted to exclude amortization of above/below market leases. Other includes bad debt expense, administrative costs and other non-reimbursable expenses. 11. Financial Highlights EPRA NAV a. European Public Real Estate Association website: http://www.epra.com/ b. We believe that disclosing EPRA NAV, a non-gaap measure used by other European real estate companies, helps investors compare our balance sheet to other European real estate companies; however, EPRA NAV should not be considered as an alternative to net assets determined in accordance with U.S. GAAP as a measure of our asset values. As our entire portfolio is based in Europe, our management calculates European Public Real Estate Association net asset value, or EPRA NAV, a non-gaap measure, to compare our balance sheet to other European real estate companies and believes that disclosing EPRA NAV provides investors with a meaningful measure of our net asset value. We calculate EPRA NAV based on the EPRA best practices recommendations. EPRA NAV makes adjustments to net assets as determined in accordance with U.S. GAAP in order to provide our stockholders a measure of fair value of the Company s assets and liabilities with a long-term investment strategy. This performance measure excludes assets and liabilities that are not expected to be realized in normal circumstances. EPRA NAV includes the revaluation of investment properties and excludes the fair value of financial instruments that we intend to hold to maturity, deferred tax and goodwill that resulted from deferred tax. All other assets, including real property and investments reported at cost are adjusted to fair value based on periodic appraisals. c. Total equity per share and EPRA NAV per share as of June 30, 2017 based on 55.8 common shares, operating partnership units and RSUs not subject to performance hurdles outstanding as of June 30, 2017, does not take into account any potential dilution from restricted stock units subject to performance metrics not currently achieved. 12. Appendix - Real Estate Portfolio Overview a. Contractual Rent represents annualized in place income based on rent roll as of June 30, 2017 b. Core German properties comprise 11 separate buildings 13. Appendix - European Real Estate Market Update a. CRE = Commercial Real Estate b. Publicly available investment yields and investment volumes from CBRE - July 2017 NorthStar Realty Europe Corp. 26