AGREEMENT OF LIMITED PARTNERSHIP OF NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP

THIRD

AMENDMENT

TO THE

AGREEMENT OF LIMITED PARTNERSHIP

OF

NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP

Dated as of February 7, 2007

THIS THIRD AMENDMENT TO THE AGREEMENT OF LIMITED PARTNERSHIP OF NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP (this " Amendment "), dated as of February 7, 2007, is hereby adopted by NorthStar Realty Finance Corp., a Maryland corporation (defined in the Agreement, hereinafter defined, as the " General Partner "), as the general partner of NorthStar Realty Finance Limited Partnership, a Delaware limited partnership (the " Partnership "). For ease of reference, capitalized terms used herein and not otherwise defined have the meanings assigned to them in the Agreement of Limited Partnership of NorthStar Realty Finance Limited Partnership, dated as of October 19, 2004, as amended by the First Amendment to the Agreement of Limited Partnership, dated as of March 14, 2006 and the Second Amendment, dated September 14, 2006 (as so amended, the " Agreement ").

WHEREAS, the General Partner desires to establish and set forth the terms of a new series of Partnership Interests designated as 8.25% Series B Cumulative Redeemable Preferred Units (the " Series B Preferred Units ");

WHEREAS, Section 4.2(a) of the Agreement grants the General Partner authority to cause the Partnership to issue interests in the Partnership in one or more classes or series, with such designations, preferences and relative, participating, optional or other special rights, powers and duties as may be determined by the General Partner in its sole and absolute discretion;

WHEREAS, Section 4.2(b) of the Agreement grants the General Partner authority to cause the Partnership to issue to the General Partner Partnership Units (other than Partnership Common Units) in connection with an issuance of Preferred Stock;

WHEREAS, the General Partner desires to amend the Agreement to set forth the terms of the Series B Preferred Units;

WHEREAS, Section 7.3(c) of the Agreement grants the General Partner power and authority to amend the Agreement without the consent of any of the Partnership’s limited partners to issue additional Partnership Interest in accordance with Section 4.2 and requires that the General Partner provide notice to the limited partners when any action is taken under Section 7.3(c);

NOW, THEREFORE, the General Partner hereby amends the Agreement as follows:

1.   The exhibit attached to this Amendment as Attachment 1 is hereby added to the Agreement as Exhibit H thereof.

2.   Section 4.2 to the Agreement is hereby supplemented by adding the following paragraph to the end thereof:

"(e)   Issuance of Series B Preferred Units. The Partnership is authorized to issue a series designated as "Series B Preferred Units", which units shall have the terms set forth in Exhibit H attached hereto and made part hereof. Exhibit H shall constitute a Partnership Unit Designation for purposes of this Agreement."

3.   In making distributions pursuant to Section 5.1 of the Agreement, the General Partner of the Partnership shall take into account the provisions of Paragraph 2 of Exhibit H to the Agreement, including, but not limited to, Paragraph 2.F(iii) thereof.

4.   Section 8.6 of the Agreement is hereby supplemented by adding the following paragraph to the end thereof:

"(l)   Series B Preferred Unit Exception. Holders of Series B Preferred Units shall not be entitled to the right of Redemption provided for in Section 8.6(a) of this Agreement."

5.   Exhibit A of the Agreement is hereby deleted and is replaced in its entirety by new Exhibit A attached hereto as Attachment 2 .

6.   Section 2.(F)(ii) of Exhibit G to the Agreement is hereby deleted and is replaced in its entirety by the following:

"(ii)   As of the date hereof, no Partnership Units are Parity Units with respect to the Series A Preferred Units and the holders of Series A Preferred Units shall be entitled to the receipt of distributions and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accumulated and unpaid distributions per Partnership Unit or liquidation preference, without preference or priority one over the other, except that:

(a)   The Series A Preferred Units shall be Preferred Partnership Units and shall receive distributions on a basis pari passu with other Partnership Units, if any, receiving distributions pursuant to Section 5.1(i) of the Agreement; and

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(b)   Distributions made pursuant to Subsection F(ii)(a) of this Exhibit G shall be made pro rata with other distributions made to other Partnership Units as to which they rank pari passu based on the ratio of the amounts to be paid the Series A Preferred Units and such other Partnership Units, as applicable, to the total amounts to be paid in respect of the Series A Preferred Units and such other Partnership Units taken together on the Partnership Record Date."

7.   The Agreement and this Amendment shall be read together and shall have the same force and effect as if the provisions of the Agreement and this Amendment (including attachments hereto) were contained in one document. Any provisions of the Agreement not amended by this Amendment shall remain in full force and effect as provided in the Agreement immediately prior to the date hereof.

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IN WITNESS WHEREOF, the General Partner has executed this Amendment as of the date first written above.

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Attachment 1

EXHIBIT H

DESIGNATION OF THE PREFERENCES, CONVERSION

AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS,

LIMITATIONS AS TO DISTRIBUTIONS, QUALIFICATIONS AND TERMS

AND CONDITIONS OF REDEMPTION

OF THE

SERIES B PREFERRED UNITS

1.    Definitions .

In addition to those terms defined in the Agreement, the following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in the Agreement and this Exhibit H :

" Board of Directors " shall mean the Board of Directors of the General Partner or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Series B Preferred Stock.

" Unit Business Day " shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

" change of control " shall be deemed to have occurred at such time as (i) the date a "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Securities Exchange Act")) becomes the ultimate "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act, except that a person or group shall be deemed to have beneficial ownership of all shares of voting stock that such person or group has the right to acquire regardless of when such right is first exercisable), directly or indirectly, of voting stock representing more than 50% of the total voting power of the total voting stock of the General Partner; (ii) the date the General Partner sells, transfers or otherwise disposes of all or substantially all of its assets; or (iii) the date of the consummation of a merger or share exchange of the General Partner with another entity where stockholders of the General Partner immediately prior to the merger or share exchange would not beneficially own, immediately after the merger or share exchange, shares representing 50% or more of all votes (without consideration of the rights of any class of stock to elect directors by a separate group vote) to which all stockholders of the corporation issuing cash or securities in the merger or share exchange would be entitled in the election of directors, or where members of the Board of Directors immediately prior to the merger or share exchange would not immediately after the merger or share exchange constitute a majority of the board of directors of the corporation issuing cash or securities in the merger or share exchange.

" Common Stock " shall mean the common stock, of the General Partner, par value $0.01 per share.

" Distribution Payment Date " shall mean February 15, May 15, August 15 and November 15, in each year, commencing on or about May 15, 2007; provided , however , that if any Distribution Payment Date falls on any day other than a Unit Business Day, the distribution payment due on such Distribution Payment Date shall be paid on the first Unit Business Day immediately following such Distribution Payment Date.

" Distribution Periods " shall mean quarterly distribution periods commencing on February 15, May 15, August 15 and November 15 of each year and ending on and including the day preceding the first day of the next succeeding Distribution Period (other than the initial Distribution Period with respect to each Series B Preferred Unit, which, (i) for Series B Preferred Units issued prior to May 15, 2007, shall commence on, but exclude, the date of original issue by the Partnership of any Series B Preferred Units and end on and include the day preceding the first day of the next succeeding Distribution Period; and (ii) for Series B Preferred Units issued on or after May 15, 2007, shall commence on the Distribution Payment Date with respect to which distributions were actually paid on Series B Preferred Units that were outstanding immediately preceding the issuance of such Series B Preferred Units and end on and include the day preceding the first day of the next succeeding Distribution Period).

" Dividend Payment Date " shall mean a dividend payment date with respect to the Series B Preferred Stock.

" Dividend Periods " shall mean the quarterly dividend periods with respect to the Series B Preferred Stock.

" Series B Preferred Stock " means the 8.25% Series B Cumulative Redeemable Preferred Stock (liquidation preference $25.00 per share), par value $0.01 per share, issued by the General Partner.

" Series A Preferred Unit " means a Partnership Preferred Unit issued by the Partnership to the General Partner in consideration of the Contribution by the General Partner to the Partnership of the entire net proceeds received by the General Partner from the Issuance of 8.75% Series A Cumulative Redeemable Preferred Stock (liquidation preference $25.00 per share), par value $0.01 per share, issued by the General Partner. The Series A Preferred Units have the preferences, conversion and other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption as are set forth in the Exhibit G to the Agreement.

" Series B Preferred Unit " means a Partnership Unit issued by the Partnership to the General Partner in consideration of the contribution by the General Partner to the Partnership of the entire net proceeds received by the General Partner from the issuance of the Series B Preferred Stock. The Series  B Preferred Units are Partnership Preferred Units. The Series B Preferred Units shall have the preferences, conversion and other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption as are set forth in this Exhibit H . It is the intention of the General Partner, in establishing the Series B Preferred Units that each Series B Preferred Unit shall be substantially the economic equivalent of a Series B Preferred Share.

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" set apart for payment " shall be deemed to include, without any action other than the following, the recording by the Partnership or the General Partner on behalf of the Partnership in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of a distribution by the General Partner, the allocation of funds to be so paid on any series or class of Partnership Units; provided , however , that if any funds for any class or series of Junior Units or any class or series of Partnership Units ranking on a parity with the Series B Preferred Units as to the payment of distributions are placed in a separate account of the Partnership or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Series B Preferred Units shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

" voting stock " shall mean stock of any class or kind of the General Partnership having the power to vote generally in the election of directors.

2.    Terms of the Series B Preferred Units .

A.   Number . As of the close of business on the date of the amendment pursuant to which this Exhibit was adopted, the tot