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COLONY FINANCIAL, INC. ANNOUNCES
PRICING OF INITIAL PUBLIC OFFERING

Los Angeles, CA, September 23, 2009 /Business Wire/ -- Colony Financial, Inc. (the "Company") (NYSE: CLNY), a newly formed real estate finance company, announced today the pricing of its initial public offering of 12,500,000 shares of common stock at $20.00 per share. The shares will begin trading on September 24 on the New York Stock Exchange under the symbol "CLNY." The underwriters have been granted a 30-day option to purchase up to an additional 1,875,000 shares at the initial public offering price, less the underwriting discounts and commissions, to cover overallotments, if any. 

The Company will be externally managed and advised by Colony Financial Manager, LLC, an affiliate of Colony Capital, LLC - a privately-held independent global real estate investment firm.

Concurrently with the completion of the initial public offering, the Company will complete a private placement of an aggregate of 250,000 shares of common stock to certain executive officers of the Company and officers of Colony Capital, LLC and its affiliates at the same $20.00 per share.

The gross proceeds of the initial public offering and concurrent private placement, before the underwriting discounts, commissions and expenses related to the offering, are expected to be $255 million, assuming the overallotment option is not exercised. The Company intends to use the proceeds from the offerings to acquire and originate commercial mortgage loans, which may be performing, sub-performing or non-performing loans (including loan-to-own strategies), other commercial real estate-related debt investments, commercial mortgage-backed securities, or CMBS, real estate owned, or REO, properties and other real estate and real estate-related debt assets.

BofA Merrill Lynch, Goldman, Sachs & Co., Morgan Stanley and UBS Investment Bank are the joint book-running managers for the offering. Calyon Securities (USA) Inc., HSBC, JMP Securities, Keefe, Bruyette & Woods and RBC Capital Markets are acting as co-managers.

A registration statement relating to these securities has been declared effective by the Securities and Exchange Commission. A copy of the final prospectus related to the offering will be filed with the Securities and Exchange Commission and can be obtained, when available, by contacting Merrill Lynch, Pierce, Fenner & Smith Incorporated, Attention: Prospectus Department, 4 World Financial Center, New York, New York 10080; Goldman, Sachs & Co., Attention: Prospectus Department, 85 Broad St., New York, NY 10004 or by calling 1-866-471-2526; Morgan Stanley, Attention: Prospectus Department, 180 Varick Street, New York, New York 10014, or by calling 1-866-718-1649; or UBS Investment Bank, Attention: Prospectus Department, 299 Park Avenue, New York, NY 10171, or by calling 1-888-827-7275.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.  This offering is being made solely by means of a prospectus.

About Colony Financial, Inc.

The Company is a newly formed real estate finance company that will focus primarily on acquiring, originating and managing commercial mortgage loans, which may be performing, sub-performing or non-performing loans (including loan-to-own strategies), other commercial real estate-related debt investments, CMBS, REO properties and other real estate-related debt assets. The Company intends to elect and qualify to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ending December 31, 2009. 

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.  In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," or "potential" or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters.  Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company's control, that may cause actual results to differ significantly from those expressed in any forward-looking statement.  Statements regarding the following subjects, among others, may be forward-looking: use of proceeds of the offering; business and investment strategy; projected operating results; actions and initiatives of the U.S. Government, including the establishment of the TALF and the PPIP, and changes to U.S. Government policies and the execution and impact of these actions, initiatives and policies; the ability to obtain financing arrangements; financing and advance rates for the Company's target assets; expected leverage; general volatility of the securities markets in which the Company invests; expected investments; expected co-investment allocations and related requirements; interest rate mismatches between the Company's target assets and its borrowings used to fund such investments; changes in interest rates and the market value of the Company's target assets; changes in prepayment rates on the Company's target assets; effects of hedging instruments on the Company's target assets; rates of default or decreased recovery rates on the Company's target assets; the degree to which hedging strategies may or may not protect the Company from interest rate volatility; impact of changes in governmental regulations, tax law and rates, and similar matters; the Company's ability to maintain its qualification as a REIT for U.S. federal income tax purposes; the Company's ability to maintain its exemption from registration under the 1940 Act; availability of investment opportunities in mortgage-related and real estate-related investments and other securities; availability of qualified personnel; estimates relating to the Company's ability to make distributions to its stockholders in the future; the Company's understanding of its competition; and market trends in the Company's industry, interest rates, real estate values, the debt securities markets or the general economy.

All forward-looking statements reflect the Company's good faith beliefs, assumptions and expectations, but they are not guarantees of future performance.  Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes.  For a further discussion of these and other factors that could cause the Company's future results to differ materially from any forward-looking statements, see the section entitled "Risk Factors" in the Company's final prospectus relating to this offering, and other risks described in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission.

Investor Contact:
Colony Financial, Inc.
Darren Tangen
Chief Financial Officer
(310) 552-7230

Addo Communications, Inc.
Andrew Blazier
(310) 829-5400
andrewb@addocommunications.com