LTIP UNIT VESTING AGREEMENT

                    UNDER THE NORTHSTAR REALTY FINANCE CORP.
                        2004 OMNIBUS STOCK INCENTIVE PLAN

Name of Grantee:  NRF Employee, LLC
No. of LTIP Units: 728,800, subject to increase upon the issuance of any
Overallotment IPO Shares as described below
Grant Date:  October 29, 2004
Final Acceptance Date:  October 29, 2004

     Pursuant to the NorthStar Realty Finance Corp. 2004 Omnibus Stock Incentive
Plan (the "Plan") as amended through the date hereof and the Amended and
Restated Agreement of Limited Partnership of NorthStar Realty Finance Limited
Partnership, as amended through the date hereof (the "Partnership Agreement"),
of NorthStar Realty Finance Limited Partnership, a Delaware limited partnership
(the "Partnership"), NorthStar Realty Finance Corp., a Maryland corporation and
the general partner of the Partnership (the "Company") hereby grants to the
Grantee named above an Other Award (an "Award") in the form of, and by causing
the Partnership to issue to the Grantee named above, LTIP Units (as defined in
the Partnership Agreement) having the rights, voting powers, restrictions,
limitations as to distributions, qualifications and terms and conditions of
redemption and conversion set forth herein and in the Partnership Agreement.
Upon the close of business on the Final Acceptance Date, if this LTIP Unit
Vesting Agreement (this "Agreement") is accepted, the Grantee shall receive the
number of LTIP Units specified above, subject to the restrictions and conditions
set forth herein, in the Plan and in the Partnership Agreement. In addition,
pursuant to this Agreement, upon each issuance of Overallotment IPO Shares (as
defined in the Plan), the Grantee shall receive an additional number of LTIP
Units equal to 2.8518% of the number of such Overallotment IPO Shares, subject
to the restrictions and conditions set forth herein, in the Plan and in the
Partnership Agreement. This Award is being granted to the Grantee in connection
with the Grantee's issuance of all of the membership interests in the Grantee
that entitle members to an interest in the LTIP Units granted herein to certain
officers, employees and service providers of the Partnership.

1. Acceptance of Agreement. The Grantee shall have no rights with respect to
this Agreement unless it has accepted this Agreement prior to the close of
business on the Final Acceptance Date specified above by (i) signing and
delivering to the Partnership a copy of this Agreement and (ii) unless the
Grantee is already a Limited Partner (as defined in the Partnership Agreement),
signing, as a Limited Partner, and delivering to the Partnership a counterpart
signature page to the Partnership Agreement (attached hereto as Annex A). Upon
the close of business on the Final Acceptance Date, if this Agreement is
accepted by the Grantee, and any automatic grant of LTIP Units under this
Agreement as a result of the issuance of any Overallotment IPO Shares, the
Partnership Agreement shall be amended to reflect the issuance to the Grantee of
the LTIP Units so accepted or automatically granted and the Partnership shall

deliver to the Grantee a certificate of the Company certifying the number of
LTIP Units then issued to the Grantee. Thereupon, the Grantee shall have all the
rights of a Limited Partner of the Partnership with respect to the number of
LTIP Units then issued to the Grantee, as set forth in the Partnership
Agreement, subject, however, to the restrictions and conditions specified in
Section 2 below.

     2. Restrictions and Conditions.

     (a) The records of the Partnership evidencing the LTIP Units granted herein
shall bear an appropriate legend, as determined by the Partnership in its sole
discretion, to the effect that such LTIP Units are subject to restrictions as
set forth herein, in the Plan and in the Partnership Agreement.

     (b) The LTIP Units granted herein will be fully vested upon grant, provided
that if, at any time, the Grantee holds all or a portion of the LTIP Units
granted herein and there are no vested or unvested membership interests of the
Grantee outstanding that entitle, or, if vested, would entitle, any member to an
interest in such LTIP Units, then the Partnership shall have the right, at the
discretion of the Administrator, to acquire such LTIP Units from the Grantee
without consideration. The Grantee must promptly provide written notice to the
Partnership in the event that there are no vested or unvested membership
interests of the Grantee outstanding that entitle, or, if vested, would entitle,
any member to an interest in any of the LTIP Units granted herein. The
Partnership may exercise the right to acquire such LTIP Units without
consideration by written notice to the Grantee at any time after receiving the
written notice from the Grantee described in the preceding sentence and prior to
receiving further notice from the Grantee that it has issued membership interest
that, if vested, would entitle a member to an interest in such LTIP Units.

     3. Distributions. Distributions on the LTIP Units shall be paid currently
to the Grantee in accordance with the terms of the Partnership Agreement.

     4. Transfers of LTIP Units. LTIP Units granted herein may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of by the
Grantee; provided that the Grantee may transfer LTIP Units to members of the
Grantee in redemption of vested membership interests in the Grantee. Any such
transfer shall be made in compliance with the provisions of the Partnership
Agreement regarding transfers of Partnership Common Units. Upon any such
transfer, the Grantee's Capital Account in the Partnership will be reduced, and
the transferee's Capital Account in the Partnership will be credited, with such
portion of the Grantee's Capital Account as the Grantee may specify, provided
that such credit shall not cause the transferee to be credited with an Economic
Capital Account Balance (as defined in the Partnership Agreement) that exceeds
the product of (a) the number of LTIP Units transferred and (b) the Partnership
Common Unit Economic Balance (also as defined in the Partnership Agreement), in
each case as determined as of the date of the transfer.

     5. Incorporation of Plan. Notwithstanding anything herein to the contrary,
this Agreement shall be subject to and governed by all the terms and conditions
of the Plan. Capitalized terms used but not defined in this Agreement shall have
the meanings specified in the Plan, unless the context requires otherwise.

                                       2

     6. Covenants, Representation and Warranties. The Grantee hereby makes the
covenants, representations and warranties and set forth on Annex B attached
hereto as of the date of acceptance of this Agreement and the date of each
automatic grant of additional LTIP Units under this Agreement after such date.
All of such covenants, warranties and representations shall survive the
execution and delivery of this Agreement by the Grantee. The Grantee shall
immediately notify the Partnership upon discovering that any of the
representations or warranties set forth on Annex B were false when made or have,
as a result of changes in circumstances, become false.

     7. Transferability. This Agreement is personal to the Grantee, is
non-assignable and is not transferable in any manner, by operation of law or
otherwise.

     8. Amendment. The Grantee acknowledges that the Plan may be amended or
discontinued in accordance with Section 12 thereof and that this Agreement may
be amended or canceled by the Administrator, on behalf of the Partnership, for
the purpose of satisfying changes in law or for any other lawful purpose,
provided that no such action shall impair the Grantee's rights under this
Agreement without the Grantee's written consent.

     9. No Obligation to Continue Employment. Neither the Company, the
Partnership nor any subsidiary of either of them is obligated by or as a result
of the Plan or this Agreement to continue to have the Grantee provide services
to it or to continue any of the members of the Grantee in employment and neither
the Plan nor this Agreement shall interfere in any way with the right of the
Company, the Partnership or any subsidiary of either of them to terminate its
relationship with the Grantee or the employment of any of the members of the
Grantee at any time.

     10. Notices. Notices hereunder shall be mailed or delivered to the
Partnership at its principal place of business and shall be mailed or delivered
to the Grantee at the address on file with the Partnership or, in either case,
at such other address as one party may subsequently furnish to the other party
in writing.

     11. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, applied without regard to
conflict of law principles. The parties hereto agree that any action or
proceeding arising directly, indirectly or otherwise in connection with, out of,
related to or from this Agreement, any breach hereof or any action covered
hereby, shall be resolved within the State of New York and the parties hereto
consent and submit to the jurisdiction of the federal and state courts located
within the City of New York, New York. The parties hereto further agree that any
such action or proceeding brought by either party to enforce any right, assert
any claim, obtain any relief whatsoever in connection with this Agreement shall
be brought by such party exclusively in federal or state courts located within
the State of New York.

                  [Remainder of page intentionally left blank.]

                                       3

                                 NORTHSTAR REALTY FINANCE CORP.

                                 By: /s/ Mark E. Chertok
                                     -------------------------------
                                     Name: Mark E. Chertok
                                     Title: Chief Financial Officer and
                                            Treasurer

                                 NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP

                                 By:  NorthStar Realty Finance Corp., its
                                      general partner

                                      By: /s/ Mark E. Chertok
                                          ----------------------------------
                                          Name: Mark E. Chertok
                                          Title: Chief Financial Officer and
                                                 Treasurer

                                       4

The foregoing Agreement is hereby accepted and the terms and conditions thereof
hereby agreed to by the Grantee.

                                   NRF EMPLOYEE, LLC

                                   By: NorthStar Realty Finance Limited
                                       Partnership, its sole manager

                                   By: NorthStar Realty Finance Corp., its
                                       general partner

Dated: October 29, 2004            By: /s/ Mark E. Chertok
                                       ----------------------------------------
                                       Name: Mark E. Chertok
                                       Title: Chief Financial Officer and
                                              Treasurer

                                   Grantee's address:

                                   c/o NorthStar Realty Finance Corp.

                                   527 Madison Avenue, 16th Floor

                                   New York, NY 10022

                                     ANNEX A

                     FORM OF LIMITED PARTNER SIGNATURE PAGE

         The Grantee, desiring to become one of the within named Limited
Partners of NorthStar Realty Finance Limited Partnership, hereby becomes a party
to the Amended and Restated Agreement of Limited Partnership of NorthStar Realty
Finance Limited Partnership, as amended through the date hereof (the
"Partnership Agreement"). The Grantee agrees that this signature page may be
attached to any counterpart of the Partnership Agreement.

                  Signature Line for Limited Partner:

                                   NRF EMPLOYEE, LLC

                                   By:      NorthStar Realty Finance Limited
                                            Partnership, its sole manager

                                   By:      NorthStar Realty Finance Corp., its
                                            general partner

Dated: October 29, 2004            By:__________________________________________
                                         Name:  Mark E. Chertok
                                         Title: Chief Financial Officer and
                                         Treasurer

                                   Address of Limited Partner:

                                   c/o NorthStar Realty Finance Corp.

                                   527 Madison Avenue, 16th Floor

                                   New York, NY 10022

                                     ANNEX B

               GRANTEE'S COVENANTS, REPRESENTATIONS AND WARRANTIES

         The Grantee hereby represents, warrants and covenants as follows:

     (a) Other than interests issued in exchange for previously issued interests
or interests that will not entitle a Person to any interest in the LTIP Units
granted herein, the Grantee will only issue membership interests to a Person if
(i) the issuance is for the provision of services to or for the benefit of the
Partnership and (ii) the Person enters into a vesting agreement in form and
substance satisfactory to the Company and the Partnership, in their sole
discretion, pursuant to which, among other things, the interests issued to such
Person vest at such times and in such amounts as are agreed to by the Company
and the Partnership and the Person makes representations, warranties and
covenants for the benefit of the Company and the Partnership that are
substantially the same as those listed below in Paragraphs (b) through (g)
together with such other representations, warranties and covenants as either the
Company or the Partnership may require in their sole discretion.

     (b) The Grantee has received and had an opportunity to review the following
documents (the "Background Documents"):

          (i) The Company's latest Annual Report to Stockholders that has been
     provided to stockholders after the Company's initial public offering, if
     available;

          (ii) The Company's Proxy Statement for its most recent Annual Meeting
     of Stockholders following the Company's initial public offering, if
     available;

          (iii) The Company's Report on Form 10-K for the fiscal year most
     recently ended following the Company's initial public offering, if
     available;

          (iv) If any of the documents described in clauses (i) - (iii) above is
     not available, the Company's Registration Statement on Form S-11
     registering the Company's initial public offering of its common stock;

          (v) The Company's Form 10-Q for the most recently ended quarter if one
     has been filed by the Company with the Securities and Exchange Commission
     since the filing of the Form 10-K described in clause (iii) above or, if a
     Form 10-K has not been filed by the Company, since the filing of the Form
     S-11 described in clause (iv) above;

          (vi) Each of the Company's Current Report(s) on Form 8-K, if any,
     filed since the later of the end of the fiscal year most recently ended for
     which a Form 10-K has been filed by the Company or the filing of the Form
     S-11 described in clause (iv) above;

          (vii) The Partnership Agreement;

          (viii) The Plan; and

          (ix) The Company's Certificate of Incorporation, as amended.

     The Grantee also acknowledges that any delivery of the Background Documents
and other information relating to the Company and the Partnership prior to the
determination by the Partnership of the suitability of the Grantee as a holder
of LTIP Units shall not constitute an offer of LTIP Units until such
determination of suitability shall be made.

     (c) The Grantee hereby represents and warrants that

          (i) The Grantee either (A) is an "accredited investor" as defined in
     Rule 501(a) under the Securities Act of 1933, as amended (the "Securities
     Act"), or (B) by reason of the business and financial experience of the
     Grantee, together with the business and financial experience of those
     persons, if any, retained by the Grantee to represent or advise him, her or
     it with respect to the grant to him, her or it of LTIP Units, the potential
     conversion of LTIP Units into common units of the Partnership ("Common
     Units") and the potential redemption of such Common Units for shares of
     common stock ("REIT Shares"), has such knowledge, sophistication and
     experience in financial and business matters and in making investment
     decisions of this type that the Grantee (I) is capable of evaluating the
     merits and risks of an investment in the Partnership and potential
     investment in the Company and of making an informed investment decision,
     (II) is capable of protecting his, her or its own interest or has engaged
     representatives or advisors to assist him, her or it in protecting his, her
     or its interests, and (III) is capable of bearing the economic risk of such
     investment.

          (ii) The Grantee understands that (A) the Grantee is responsible for
     consulting his, her or its own tax advisors with respect to the application
     of the U.S. federal income tax laws, and the tax laws of any state, local
     or other taxing jurisdiction to which the Grantee is or by reason of the
     award of LTIP Units may become subject, to his, her or its particular
     situation; (B) the Grantee has not received or relied upon business or tax
     advice from the Company, the Partnership or any of their respective
     employees, agents, consultants or advisors, in their capacity as such; (C)
     the Grantee provides services to the Partnership on a regular basis and in
     such capacity has access to such information, and has such experience of
     and involvement in the business and operations of the Partnership, as the
     Grantee believes to be necessary and appropriate to make an informed
     decision to accept this Award of LTIP Units; and (D) an investment in the
     Partnership and/or the Company involves substantial risks. The Grantee has
     been given the opportunity to make a thorough investigation of matters
     relevant to the LTIP Units and has been furnished with, and has reviewed
     and understands, materials relating to the Partnership and the Company and
     their respective activities (including, but not limited to, the Background
     Documents). The Grantee has been afforded the opportunity to obtain any
     additional information (including any exhibits to the Background Documents)
     deemed necessary by the Grantee to verify the accuracy of information
     conveyed to the Grantee. The Grantee confirms that all documents, records,
     and books pertaining to his, her or its receipt of LTIP Units which were
     requested by the Grantee have been made available or delivered to the
     Grantee. The Grantee has had an opportunity to ask

     questions of and receive answers from the Partnership and the Company, or
     from a person or persons acting on their behalf, concerning the terms and
     conditions of the LTIP Units. THE GRANTEE HAS RELIED UPON, AND IS MAKING
     ITS DECISION SOLELY UPON, THE BACKGROUND DOCUMENTS AND OTHER WRITTEN
     INFORMATION PROVIDED TO THE GRANTEE BY THE PARTNERSHIP OR THE COMPANY. The
     Grantee did not receive any tax, legal or financial advice from the
     Partnership or the Company and, to the extent it deemed necessary, has
     consulted with its own advisors in connection with its evaluation of the
     Background Documents and this Agreement and the Grantee's receipt of LTIP
     Units.

          (iii) The LTIP Units to be issued, the Common Units issuable upon
     conversion of the LTIP Units and any REIT Shares issued in connection with
     the redemption of any such Common Units will be acquired for the account of
     the Grantee for investment only and not with a current view to, or with any
     intention of, a distribution or resale thereof, in whole or in part, or the
     grant of any participation therein, without prejudice, however, to the
     Grantee's right (subject to the terms of the LTIP Units, the Plan and this
     Agreement) at all times to sell or otherwise dispose of all or any part of
     his or her LTIP Units, Common Units or REIT Shares in compliance with the
     Securities Act, and applicable state securities laws, and subject,
     nevertheless, to the disposition of his or her assets being at all times
     within his or her control.

          (iv) The Grantee acknowledges that (A) neither the LTIP Units to be
     issued, nor the Common Units issuable upon conversion of the LTIP Units,
     have been registered under the Securities Act or state securities laws by
     reason of a specific exemption or exemptions from registration under the
     Securities Act and applicable state securities laws and, if such LTIP Units
     or Common Units are represented by certificates, such certificates will
     bear a legend to such effect, (B) the reliance by the Partnership and the
     Company on such exemptions is predicated in part on the accuracy and
     completeness of the representations and warranties of the Grantee contained
     herein, (C) such LTIP Units, or Common Units, therefore, cannot be resold
     unless registered under the Securities Act and applicable state securities
     laws, or unless an exemption from registration is available, (D) there is
     no public market for such LTIP Units and Common Units and (E) neither the
     Partnership nor the Company has any obligation or intention to register
     such LTIP Units or the Common Units issuable upon conversion of the LTIP
     Units under the Securities Act or any state securities laws or to take any
     action that would make available any exemption from the registration
     requirements of such laws, except, that, upon the redemption of the Common
     Units for REIT Shares, the Company currently intends to issue such REIT
     Shares under the Plan and pursuant to a Registration Statement on Form S-8
     under the Securities Act, to the extent that (I) the Grantee is eligible to
     receive such REIT Shares under the Plan at the time of such issuance, (II)
     the Company has filed a Form S-8 Registration Statement with the Securities
     and Exchange Commission registering the issuance of such REIT Shares and
     (III) such Form S-8 is effective at the time of the issuance of such REIT
     Shares. The Grantee hereby acknowledges that because of the restrictions on
     transfer or assignment of such LTIP Units acquired hereby and the Common
     Units issuable upon conversion of the LTIP Units which are set forth in the
     Partnership Agreement or this Agreement, the Grantee may have to bear the
     economic risk of his, her or its ownership of the LTIP Units

     acquired hereby and the Common Units issuable upon conversion of the LTIP
     Units for an indefinite period of time.

          (v) The Grantee has determined that the LTIP Units are a suitable
     investment for the Grantee.

          (vi) No representations or warranties have been made to the Grantee by
     the Partnership or the Company, or any officer, director, shareholder,
     agent, or affiliate of any of them, and the Grantee has received no
     information relating to an investment in the Partnership or the LTIP Units
     except the information specified in Paragraph (b) above.

     (d) So long as the Grantee holds any LTIP Units, the Grantee shall disclose
to the Partnership in writing such information as may be reasonably requested
with respect to ownership of LTIP Units as the Partnership may deem reasonably
necessary to ascertain and to establish compliance with provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), applicable to the
Partnership or to comply with requirements of any other appropriate taxing
authority.

     (e) The Grantee hereby agrees to make an election under Section 83(b) of
the Code with respect to the LTIP Units awarded hereunder, and has delivered
with this Agreement a completed, executed copy of the election form attached
hereto as Annex C. The Grantee agrees to file the election (or to permit the
Partnership to file such election on the Grantee's behalf) within thirty (30)
days after the award of the LTIP Units hereunder with the IRS Service Center at
which such Grantee files his or her personal income tax returns, and to file a
copy of such election with the Grantee's U.S. federal income tax return for the
taxable year in which the LTIP Units are awarded to the Grantee.

     (f) The address set forth on the signature page of this Agreement is the
address of the Grantee's principal residence, and the Grantee has no present
intention of becoming a resident of any country, state or jurisdiction other
than the country and state in which such residence is sited.

     (g) The representations of the Grantee as set forth above are true and
complete to the best of the information and belief of the Grantee, and the
Partnership shall be notified promptly of any changes in the foregoing
representations.

                                     ANNEX C
                                     -------

                 ELECTION TO INCLUDE IN GROSS INCOME IN YEAR OF
                 TRANSFER OF PROPERTY PURSUANT TO SECTION 83(B)
                          OF THE INTERNAL REVENUE CODE

         The undersigned hereby makes an election pursuant to Section 83(b) of
the Internal Revenue Code with respect to the property described below and
supplies the following information in accordance with the regulations
promulgated thereunder:

     1.   The name, address and taxpayer identification number of the
          undersigned are:

          Name: NRF Employee, LLC (the "Taxpayer")

          Address: c/o Northstar Realty Finance Corp., 527 Madison Avenue,

          16th Floor, New York, NY 10022

          Social Security No./Taxpayer Identification No.: 71-0973112

     2.   Description of property with respect to which the election is being
          made:

          The election is being made with respect to 728,800 LTIP Units in
          NorthStar Realty Finance Limited Partnership (the "Partnership").

     3.   The date on which the LTIP Units were transferred is October 29, 2004.
          The taxable year to which this election relates is calendar year 2004.

     4.   Nature of restrictions to which the LTIP Units are subject:

          (a)  The LTIP Units may not be transferred in any manner without the
               consent of the Partnership, unless there are vested membership
               interests of the Taxpayer outstanding that entitle a member of
               the Taxpayer to a interest in the LTIP Units.

          (b)  If there are no vested or unvested membership interests of the
               Taxpayer outstanding that entitle, or, if vested, would entitle,
               any member to an interest in such LTIP Units, then the
               Partnership shall have the right, at the discretion of the
               Administrator, to acquire such LTIP Units from the Grantee upon
               notice.

     5.   The fair market value at time of transfer (determined without regard
          to any restrictions other than restrictions which by their terms will
          never lapse) of the LTIP Units with respect to which this election is
          being made was $0 per LTIP Unit.

     6.   The amount paid by the Taxpayer for the LTIP Units was $0 per LTIP
          Unit.

     7.   A copy of this statement has been furnished to the Partnership and to
          its general partner, NorthStar Realty Finance Corp.

Dated: October 29, 2004

                                  NRF EMPLOYEE, LLC

                                  By:      NorthStar Realty Finance Limited
                                           Partnership, its sole manager

                                  By:      NorthStar Realty Finance Corp., its
                                           general partner

                                  By:___________________________________________
                                        Name:  Mark E. Chertok
                                        Title: Chief Financial Officer and
                                        Treasurer