Newcastle Agrees to Acquire Excess MSRs and Announces Spin-Off of Residential Assets

  Newcastle Agrees to Acquire Excess MSRs and Announces Spin-Off of
  Residential Assets

Business Wire

NEW YORK -- January 7, 2013

Newcastle Investment Corp. (NYSE: NCT) (“Newcastle” or the “Company”)
announced today that it has agreed to acquire an interest in Excess Mortgage
Servicing Rights (“Excess MSRs”). The total unpaid principal balance (“UPB”)
of the underlying loans was approximately $215 billion as of November 30,
2012. In a separate transaction on January 4, 2013, Newcastle acquired an
interest in the Excess MSRs on a $13 billion Ginnie Mae pool. These
transactions are expected to bring Newcastle’s total investment in Excess MSRs
to approximately $610 million and the UPB of the underlying loans to over $310
billion. Newcastle intends to spin off these and certain other residential
assets, as described below.

Excess MSR Acquisitions

Newcastle has agreed to acquire Excess MSRs on approximately $215 billion UPB
from Nationstar Mortgage Holdings Inc. (“Nationstar”), in conjunction with
Nationstar’s purchase of MSRs from Bank of America. Newcastle has committed to
invest approximately $340 million to acquire a one-third interest in the
Excess MSRs. The majority of the investment is expected to close in the first
quarter of 2013, subject to regulatory and third-party approvals. Nationstar
will service the loans and will retain a one-third interest in the Excess
MSRs; a Fortress Fund will acquire the remaining one-third interest. The loans
comprise four pools, of which 47% are expected to be loans that are owned,
insured or guaranteed by Agency/Government entities and 53% are expected to be
non-conforming loans in private label securitizations.

Separately, Newcastle invested $27 million for a one-third interest in the
Excess MSRs on a $13 billion UPB Ginnie Mae loan pool from Nationstar. As in
the transaction described above, Nationstar is the servicer and owns a
one-third interest. The Fortress Fund acquired the remaining one-third
interest.

Spin-Off of Residential Assets

Newcastle also announced that its Board of Directors has unanimously approved
a plan to spin off all of its Excess MSRs and certain other residential
assets. Newcastle intends to effect the spin-off in the first quarter of 2013
by distributing shares of its subsidiary, New Residential Investment Corp.
(“New Residential”). New Residential will be a publicly traded real estate
investment trust that primarily targets opportunistic investments in Excess
MSRs, RMBS, servicing advances, non-performing loans and other real estate
related investments. New Residential will be externally managed by an
affiliate of Fortress Investment Group LLC pursuant to a new management
agreement with terms that are substantially similar to the terms of
Newcastle’s management agreement.

New Residential has filed a registration statement with the U.S. Securities
and Exchange Commission (“SEC”) with respect to the planned spin-off. The
spin-off is subject to certain conditions, such as the SEC declaring effective
New Residential’s registration statement, the filing and approval of an
application to list New Residential’s common stock on the NYSE and the formal
declaration of the distribution by the Board of Directors. In evaluating the
spin-off, the independent members of Newcastle’s Board of Directors were
advised by Houlihan Lokey.

Kenneth Riis, the Company’s CEO commented, “I am very pleased to announce
these significant investments in Excess MSRs and the spin-off of New
Residential. We believe these investments offer a compelling opportunity to
drive attractive returns for shareholders. In addition, we believe the
separation of Newcastle and New Residential will optimize corporate
transparency and create value for each standalone company.”

ABOUT NEWCASTLE

Newcastle Investment Corp. focuses on opportunistically investing in, and
actively managing, real estate related assets. The Company primarily invests
in two distinct areas: (1) Residential Servicing and Securities and (2)
Commercial Real Estate Debt and Other Assets. The Company is organized and
conducts its operations to qualify as a real estate investment trust (REIT)
for federal income tax purposes. The Company is managed by an affiliate of
Fortress Investment Group LLC, a global investment management firm.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, including, but not limited to statements regarding the expected
closing of the Excess MSR transaction and the planned spin-off of residential
assets. 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, many of which are beyond our control. Newcastle
can give no assurance that its expectations will be attained. Factors that
could cause actual results to differ materially from Newcastle's expectations
include, but are not limited to, the risk that loan prepayment, recapture and
delinquency rates differ from our current assumptions; the risk that Newcastle
is not able to find additional suitably priced investments; and the risk that
investments made or committed to be made cannot be financed on the basis and
for the term at which Newcastle expects. Accordingly, you should not place
undue reliance on any forward-looking statements contained in this press
release. For a discussion of some of the risks and important factors that
could affect such forward-looking statements, see the sections entitled “Risk
Factors” and “Management’s Discussion and Analysis of Financial Condition and
Results of Operation” in the Company’s Quarterly Report on Form 10-Q, which is
available on the Company’s website (www.newcastleinv.com). In addition, new
risks and uncertainties emerge from time to time, and it is not possible for
the Company to predict or assess the impact of every factor that may cause its
actual results to differ from those contained in any forward-looking
statements. Such forward-looking statements speak only as of the date of this
press release. Newcastle expressly disclaims any obligation to release
publicly any updates or revisions to any forward-looking statements contained
herein to reflect any change in the Company's expectations with regard thereto
or change in events, conditions or circumstances on which any statement is
based.

Contact:

Newcastle Investment Corp.
Investor Relations, 212-479-3195
 
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