Full Description

Newcastle Investment Corp. (Newcastle) manages real estate related investments and related financing vehicles. The Company invests in, and manages a portfolio of, real estate securities, loans, and other real estate related assets. Newcastle conducts its business through four segments: Real Estate Securities, Real Estate Related Loans, Residential Mortgage Loans, and Operating Real Estate. The Company is externally managed and advised by an affiliate of Fortress Investment Group LLC.

Real Estate Securities

Newcastle underwrites, acquires, and manages a portfolio of credit sensitive real estate securities, including commercial mortgage backed securities (CMBS), senior unsecured REIT debt issued by property REITs, real estate related asset backed securities (ABS), including subprime securities, and Federal National Mortgage Association/Federal Home Loan Mortgage Corporation (FNMA/FHLMC) securities. As of December 31, 2008, the real estate securities represented 48% of the Company’s assets.

Real Estate Related Loans

Newcastle acquires and originates loans to real estate owners, including B-notes, mezzanine loans, corporate bank loans, and whole loans. The Company has entered into total rate of return swaps with investment banks to finance certain loans whereby it receives the sum of all interest, fees and any positive change in value amounts (the total return cash flows) from a reference asset with a specified notional amount, and pay interest on such notional amount plus any negative change in value amounts from such asset. As of December 31, 2008, the real estate related loans represented 24.3% of the Company’s assets.

Residential Mortgage Loans

The Company acquires residential mortgage loans, including manufactured housing loans and subprime mortgage loans. Residential mortgage loans, manufactured housing loans, and subprime mortgage loans are secured by single-family residential property. As of December 31, 2008, the residential mortgage loans represented 11.8% of Newcastle’s assets.

Operating Real Estate

Newcastle acquires and manages direct and indirect interests in operating real estate. As of December 31, 2008, the operating real estate represented 0.3% of the Company’s assets.