NEW YORK, Oct. 24, 2005 (PRIMEZONE) -- NorthStar Realty Finance Corp. (NYSE:NRF) announced today that it has entered into a definitive purchase agreement with Allied Capital Corporation to acquire Timarron Capital, Inc. Timarron, based in Dallas, Texas, was organized by former senior executives of Principal Financial and other leading financial institutions to develop a nationwide commercial mortgage loan origination platform. The closing of the acquisition is expected to occur in January of 2006. Allied Capital has agreed to continue to provide Timarron with warehouse financing to fund its origination activities through the closing. The purchase price will be between $2.0 million and $2.6 million, depending upon whether certain performance hurdles are achieved. Following the closing of the acquisition, Timarron will be renamed NorthStar Mortgage Capital. NorthStar Mortgage Capital will originate commercial mortgage loans for NorthStar's commercial real estate debt portfolio.

David Hamamoto, President and Chief Executive Officer of NorthStar, commented, "This acquisition represents an exciting strategic opportunity for NorthStar to expand its origination capability by acquiring a team of very experienced and well respected real estate lending professionals. We believe there are significant benefits associated with originating more commercial first mortgage loans directly, including the opportunity to develop closer relationships with a growing customer base while retaining greater control over the structuring process."

Timarron is led by Craig Barnes, who held senior positions in real estate lending and investment at Principal Financial prior to forming Timarron. The senior management team at Timarron has an average of approximately 18 years of experience at major financial institutions in real estate and related fields, and the majority of the team has worked together for 15 years.

About NorthStar Realty Finance Corp.

NorthStar Realty Finance Corp. is an internally managed REIT that makes investments in commercial real estate debt, real estate securities and net lease properties.

About Allied Capital

Allied Capital Corporation (NYSE:ALD) is a leading business development company with total assets of more than $3.0 billion. Founded in 1958, Allied Capital provides long-term debt and equity capital to profitable, middle market companies to finance growth, buyouts, acquisitions and recapitalizations. For more information, please visit www.alliedcapital.com.

Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. NorthStar Realty can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from NorthStar Realty's expectations include, but are not limited, to changes in economic conditions generally and the real estate and bond markets specifically, legislative or regulatory changes (including changes to laws governing the taxation of REITs), availability of capital, interest rates and interest rate spreads, policies and rules applicable to REITs, the continued service of key management personnel, the effect of competition in the real estate finance industry, the costs associated with compliance and corporate governance, including the Sarbanes-Oxley Act and related regulations and requirements, and other risks detailed from time to time in NorthStar Realty's SEC reports. Such forward-looking statements speak only as of the date of this press release. NorthStar Realty expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.