What is the experience of our sponsor?

vii • In this prospectus, we refer to an entity that qualifies and elects to be taxed as a REIT for U.S. federal income tax purposes as a REIT. We believe that we have qualified as a REIT for U.S. federal income tax purposes commencing with our taxable year that ended on December 31, 2013 and we intend to continue to operate in a manner so that we continue to qualify as a REIT. Q: What is an “UPREIT”? A: We currently own and plan to continue to own substantially all of our assets and conduct our operations, directly or indirectly, through a limited partnership called NorthStar Real Estate Income Operating Partnership II, LP, or our operating partnership. We refer to partnership interests and special partnership interests in our operating partnership, respectively, as common units and special units. We are the sole general partner of our operating partnership. Because we conduct substantially all of our operations through an operating partnership, we are organized as an umbrella partnership real estate investment trust, or “UPREIT.” Q: Why should I invest in CRE investments? A: Allocating some portion of your investment portfolio to CRE may provide you with portfolio diversification, reduction of overall risk, a hedge against inflation and attractive risk-adjusted returns. For these reasons, institutional investors like pension funds and endowments have embraced CRE as a significant asset class for purposes of asset allocations within their investment portfolios. According to survey data published by Preqin in 2016, private pension plans in the United States planned to increase their allocation to real estate assets from an average of 7.9 to 9.9, while public pension plans planned to increase their allocation to real estate from an average of 9.0 to 10.1. In addition, 95 of institutional investors planned to maintain or increase their allocation to real estate investments in the future. Individual investors can also benefit by adding a real estate component to their investment portfolios. You and your financial advisor should determine whether investing in real estate would benefit your investment portfolio. Q: Why should I invest specifically in a company that is focused on CRE debt, equity and securities investments? A: We believe that the market for CRE lending, including investments in CRE debt, equity and securities investments continues to be very compelling from a riskreturn perspective. As a CRE lender, we favor a strategy weighted toward targeting debt or securities investments which maximize current income, with significant subordinate capital and downside structural protections. We believe that our lending-focused investment strategy, combined with the experience and expertise of our advisor’s management team, will provide opportunities to: i originate loans with attractive current returns and strong structural features directly with borrowers, thereby taking advantage of market conditions in order to seek the best risk-return dynamic for our stockholders; ii make other select CRE equity investments to participate in potential market and property upside; and iii purchase CRE debt and securities from third parties, in some instances at discounts to their face amounts or par value. We believe the combination of these strategies and the application of prudent leverage to our CRE investments may also allow us to: i realize appreciation opportunities in the portfolio; and ii diversify our capital and enhance returns. Q: What is the experience of our sponsor? A: NSAM is a global asset management firm focused on strategically managing real estate and other investment platforms in the United States and internationally. NSAM commenced operations on July 1, 2014 upon the spin-off by NorthStar Realty NYSE: NRF, a publicly traded, diversified commercial real estate company that completed its initial public offering in October 2004, of its asset management business into NSAM, as a Delaware corporation and separate publicly-traded company, with its common stock listed on the New York Stock Exchange, or NYSE, under the ticker symbol “NSAM.” As a result of the completion of the spin-off, affiliates of NSAM now manage NorthStar Realty pursuant to a long-term management contract for an initial term of 20 years. In addition, on October 31, 2015, NorthStar Realty completed the spin-off of its European real estate business into a separate publicly-traded REIT, NorthStar Realty Europe Corp. NYSE: NRE, or NorthStar Europe, which is now managed by affiliates of NSAM pursuant to a long-term management contract on substantially similar terms as NorthStar Realty’s management agreement with NSAM. We refer to NorthStar Realty and NorthStar Europe collectively as the NorthStar Listed Companies. Affiliates of NSAM also manage companies that raise capital through the retail market, including NorthStar Real Estate Income Trust, Inc., or NorthStar Income, NorthStar Healthcare Income, Inc., or NorthStar Healthcare, NorthStarRXR New York Metro Income, Inc., or NorthStarRXR, NorthStar Corporate Income Master Fund and its two feeder funds, or collectively, NorthStar Corporate Income Fund, and us, which we refer to collectively as the Sponsored Companies. We refer to the NorthStar Listed Companies and the Sponsored Companies collectively as the NSAM Managed Companies. As of December 31, 2015, adjusted for Townsend Holdings LLC, or Townsend, and sales, acquisitions and commitments to sell or acquire investments by the NSAM Managed Companies, NSAM had 38 billion of assets under management. Following its acquisition of Townsend in January 2016, NSAM had 383 employees, domestically and internationally, with its viii principal executive offices located in New York, New York and additional offices in Denver, Colorado, Dallas, Texas, Bethesda, Maryland, Los Angeles, California, Cleveland, Ohio, Hong Kong, China, San Francisco, California, London, England, Luxembourg, and Bermuda. NSAM’s management team averages over 23 years of real estate investment and capital markets expertise and has a demonstrated track record of positive returns to shareholders for the last decade. Q: How do we differ from other publicly traded and public, non-traded REITs sponsored or managed by NSAM? A: NSAM sponsors and manages the NSAM Managed Companies, including us and three other existing public, non-traded REITs: NorthStar Income, NorthStar Healthcare and NorthStarRXR. We differ from NorthStar Healthcare in several respects. NorthStar Healthcare’s investment strategy is focused on healthcare real estate and, accordingly, may be considered a specialty REIT. In addition, NorthStarRXR, a public, non-traded REIT co-sponsored by our sponsor, which had its registration statement declared effective by the SEC on February 9, 2015, was formed to make commercial real estate investments located in the New York metropolitan area. In contrast, we were formed to originate, acquire and asset manage a diversified portfolio of CRE debt, equity and securities investments and we expect that a significant portion of our investment portfolio will be comprised of CRE debt investments. As a result, our investment strategy is more broadly diversified than that of NorthStar Healthcare and NorthStarRXR and does not specifically target investments in healthcare real estate or real estate investments in the New York metropolitan area. Our investment strategy is substantially similar to that of NorthStar Income. Although NorthStar Income successfully completed its offering in July 2013 and has invested substantially all of the related proceeds, as its investments are repaid or sold it may redeploy capital into investments with similar characteristics as our target investments. We also differ from the NorthStar Listed Companies. NorthStar Realty is a diversified commercial real estate company and, while it makes CRE debt investments, 85 of its total assets invested directly or indirectly in real estate, of which 78 is invested in direct real estate. NorthStar Europe is a European focused commercial real estate company with predominantly prime office properties in key cities within Germany, the United Kingdom and France, and therefore has a substantially different investment focus. Q: What is the impact of being an “emerging growth company”?