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Newcastle Announces First Quarter 2013 Results



  Newcastle Announces First Quarter 2013 Results

First Quarter 2013 Highlights

  * $716 million of unrestricted cash invested or committed
  * GAAP income of $0.15 per diluted share
  * Core Earnings of $0.16 per diluted share
  * Declared common dividend of $0.22 per share
  * GAAP book value increased by $1.21 per share

FIRST QUARTER 2013 FINANCIAL RESULTS

Business Wire

NEW YORK -- May 03, 2013

Newcastle Investment Corp. (NYSE: NCT) reported that in the first quarter of
2013, income available for common stockholders (“GAAP income”) was $36.6
million, or $0.15 per diluted share, compared to $72.1 million, or $0.68 per
diluted share, in the first quarter of 2012.

GAAP income of $36.6 million consisted of the following:

Core Earnings:

  * $37.4 million, or $0.16 per diluted share, which is equal to net interest
    income and other revenues less expenses excluding depreciation and
    amortization, net of preferred dividends, plus

Other Income/Loss:

  * $4 million of other income primarily related to $3 million gain of on
    non-hedge derivative instruments and $1 million gain on the extinguishment
    of debt, less
  * $4 million of depreciation and amortization

If the Company had fully invested $630 million of average uninvested capital
in the quarter, then core earnings would have been $0.12 higher.

On March 14, 2013, the Board of Directors declared a quarterly dividend of
$0.22 per common share, or $56 million, for the quarter. The Board of
Directors also declared dividends of $0.609375, $0.503125 and $0.523438 per
share on the 9.75% Series B, 8.05% Series C and 8.375% Series D preferred
stock, respectively, for the period beginning February 1, 2013 and ending
April 30, 2013.

As of March 31, 2013, GAAP book value was $7.07 per share, an increase of
$1.21 per share from December 31, 2012.

The following table summarizes the Company’s operating results ($ in millions,
except per share data):

                                      
                                       Three Months Ended
                                       Mar 31,       Dec 31,       Mar 31,
                                       2013          2012          2012
Summary Operating Results:
                                                                    
GAAP income                            $  36.6       $  55.6       $  72.1
                                                                    
GAAP income, per diluted share         $  0.15       $  0.32       $  0.68
                                                                    
                                                                    
Non-GAAP Results:
                                                                    
Core earnings                          $  37.4       $  32.6       $  35.3
                                                                    
Core earnings, per diluted share       $  0.16       $  0.19       $  0.33
                                                                       

For a reconciliation of income available for common stockholders to core
earnings, please refer to the tables following the presentation of GAAP
results.

FIRST QUARTER 2013 ACTIVITY

$780 million of common equity raised:

During the first quarter of 2013, the Company completed the sale of
approximately 80.5 million shares of its common stock for gross proceeds of
approximately $780 million.

$716 million of unrestricted cash invested or committed to invest primarily in
the following:

$346 million: Excess MSRs investments

Invested or committed to invest approximately $319 million to purchase a 33%
interest in Excess MSRs on four portfolios of residential mortgage loans with
a total unpaid principal balance (“UPB”) of approximately $196 billion. The
Company expects the four investments to generate an average unlevered yield of
16%. During the first quarter of 2013, the Company closed on two of the four
pools and funded a total of $80 million. The Company anticipates the closing
and funding of the remaining pools to occur throughout the next several
months.

Invested $27 million to purchase a 33% interest in the Excess MSRs on a
residential mortgage loan portfolio with a UPB of $13 billion. The Company
expects the investment to generate an unlevered yield of 16%.

$227 million: Non-Agency RMBS investments

Invested $227 million to purchase $374 million face amount of Non‐Agency RMBS
at an average price of 60.8% of par, with an expected unlevered yield of 5.4%.

$66 million: Bank Loans

Invested $66 million to purchase two bank loans with a $186 million face
amount in an existing investment at an average price of 35.5% of par, with an
expected unlevered yield of 6.6%.

$35 million: Reverse mortgage loan portfolio

Invested $35 million to purchase a 70% interest in a pool of reverse mortgage
loan portfolio with a total UPB of $83 million at a price of 59.7% of par, and
an expected unlevered yield of 10%.

$10 million: Newcastle CDO senior bond

Invested $10 million to repurchase $11 million face amount of a Newcastle CDO
senior bond at a price of 89% of par, with an expected unlevered yield of 10%.

SUBSEQUENT EVENTS & INVESTMENT ACTIVITY:

$297 million of unrestricted cash invested primarily in the following:

$250 million: Consumer Loan Portfolio

Invested approximately $250 million to purchase a 30% equity interest in a
consumer loan portfolio with a total UPB of $4.2 billion as of December 31,
2012. The total purchase price of the portfolio was $3.0 billion, which was
financed using $2.2 billion of asset backed notes at a fixed coupon of 3.75%.

On April 26, 2013, Newcastle announced that its Board of Directors had
formally declared the distribution of shares of common stock of New
Residential Investment Corp. (“New Residential”), a wholly owned subsidiary of
Newcastle. The distribution will complete the spin-off of New Residential from
Newcastle. Following the distribution, New Residential will be an independent,
publicly-traded real estate investment trust (“REIT”) primarily focused on
investing in residential mortgage related assets. The distribution will be
made on or about May 15, 2013 to Newcastle stockholders of record as of 5:00
p.m., Eastern Time, on May 6, 2013.

I. NEW RESIDENTIAL INVESTMENT CORP ASSETS

As of March 31, 2013, New Residential Investment Corp’s assets consisted of
eight Excess MSRs investments with a total carrying value of $329 million,
Non-Agency RMBS with a total carrying value of $519 million, a 70% interest in
a reverse mortgage loan pool with a $83 million UPB and a total carrying value
of $35 million, and Agency RMBS with a total carrying value of $1.1 billion.

During the quarter, this portfolio generated total cash flow of $43 million.

Excess MSRs

As of March 31, 2013, the total carrying value of the Company’s Excess MSR
investments was $329 million, representing an interest in the net MSR cash
flows on eight loan portfolios with a total unpaid principal balance of $140
billion.

During the quarter, these investments generated $25 million of total cash
flow.

  * The average IRR, updated for actual performance was 19%, compared to an
    initial expected IRR of 17%.
  * Received $81 million of total cash flow from inception through the end of
    March, or 21% of the initial investment of $392 million over an average
    term of 8 months.
  * The life-to-date weighted average constant prepayment rate (“CPR”) was 18%
    compared to the Company’s initial CPR projection of 21%.

Non-Agency RMBS

As of March 31, 2013, the Company’s Non-Agency RMBS portfolio consisted of
$784 million face amount of assets (valued at 66.1% of par, or $519 million).
During the quarter, these investments generated $18 million of total cash flow
and increased in value by $18 million.

Reverse Mortgage Loan Portfolio

As of March 31, 2013, the Company’s reverse mortgage loan portfolio consisted
of $59 million face amount of assets (valued at 59.4% of par, or $35 million).

II. COMMERCIAL REAL ESTATE DEBT & OTHER ASSETS

As of March 31, 2013, the Company’s commercial real estate debt and other
assets portfolio included $2.6 billion of diversified assets financed with
$1.5 billion of primarily match funded, non-recourse debt. In addition, the
portfolio included $188 million of senior living properties financed with $121
million of non-recourse mortgage notes. The portfolio consisted of 193
commercial, residential and corporate real estate securities and loan
investments with an average investment size of $12 million, 8,595 mortgage
loans backed by residential real estate, and 12 senior living properties.

During the quarter, this portfolio generated total cash flow of $39 million
and the real estate debt portfolio increased in value by $14 million.

Newcastle CDO financings

As of March 31, 2013, Newcastle’s four consolidated CDOs consisted of $1.7
billion face amount of collateral (valued at 80.6% of par) financed with $1.0
billion of non-recourse debt. During the quarter, the CDOs generated $22.9
million of total cash flow, which included: $11.0 million of excess interest,
$2.5 million of interest on retained and repurchased CDO debt, $0.8 million of
senior collateral management fees, and $8.6 million of principal repayments on
repurchased CDO debt.

The following table summarizes the cash receipts in the quarter from the
Company’s consolidated CDO financings and the results of their related
coverage tests ($ in thousands):

                                                                                                                             
                                            
                                            
                                           Interest
                                           Coverage         Over-Collateralization Excess (Deficiency) ^(2)(3)
                                           % Excess
                                           (Deficiency)
              Primary        Cash          April 30,        April 30, 2013             March 31, 2013             December 31, 2012
              Collateral
              Type           Receipts      2013 ((2))       %           $              %           $              %           $
                             ^(1)
    CDO       Securities     $ 324         46.0      %      -3.0  %     (4,117   )     -3.0  %     (4,117   )     -3.7  %     (5,586   )
    IV
    CDO       Securities       109         -280.9    %      -74.2 %     (179,218 )     -74.1 %     (179,515 )     -70.4 %     (171,434 )
    VI
    CDO       Loans            5,547       375.9     %      12.5  %     83,665         11.3  %     78,797         10.6  %     74,593
    VIII
    CDO       Loans            8,302       488.7     %      27.0  %     145,501        24.7  %     139,681        23.4  %     134,675
    IX
    Total                    $ 14,282
                                                                                                                               
    Cash receipts exclude $8.6 million of principal repayments from repurchased bonds.  Cash receipts for the quarter ended March 31,
(1) 2013 may not be indicative of cash receipts for subsequent periods.  See Forward-Looking Statements below for risks and
    uncertainties that could cause cash receipts for subsequent periods to differ materially from these amounts.
    Represents the excess or deficiency under the applicable interest coverage or over-collateralization test to the first threshold at
    which cash flow would be redirected.  The Company generally does not receive material interest cash flow from a CDO until a
(2) deficiency is corrected.   The information regarding coverage tests is based on data from the most recent remittance date on or
    before April 30, 2013, March 31, 2013 or December 31, 2012, as applicable.  The CDO IV test is conducted only on a quarterly basis
    (December, March, June and September).
(3) As of the April 2013 remittance, no assets were on negative watch for possible downgrade by any rating agency (Moody’s, S&P, or
    Fitch) for CDOs VIII and IX.
                                                                                                                               

Other Real Estate Related Investments

As of March 31, 2013, other real estate related investments consisted of $1.0
billion face amount of assets (valued at 73.5% of par) financed with $0.5
billion of debt. During the quarter, these investments generated $13.9 million
of total cash flow.

Senior Living Property Investments

As of March 31, 2013, the Company owned 12 senior living properties consisting
of $188 million of assets financed with $121 million of debt.

During the quarter, the investments generated $2.6 million of total cash flow,
$0.5 million more than projected.

  * The average occupancy rate was 87.5%, compared to 85.9% in the Company’s
    initial projection
  * The average monthly revenue per occupied unit was $3,517, compared to
    $3,576 initially projected
  * Total operating expenses were $8.3 million, compared to $8.5 million
    initially projected

INVESTMENT PORTFOLIO

The following table describes the investment portfolio as of March 31, 2013 ($
in millions):

                                                                                                     
                         Face        Basis       % of        Carry       Number of                  Weighted
                                                             Value                                  Average
                         Amount      Amount                  Amount                      Credit     Life
                         $           $ ^(8)      Basis       $           Investments     ^(9)       (years)
                                                                                                    ^(10)
     I. New
     Residential
     Investment Corp.
     Assets
       Excess MSRs       $ 329       $ 319       7.9   %     $ 329       8               --         5.7
       Investments^(1)
       Non-Agency RMBS     784         489       12.0  %       519       53              CC         7.6
       ^(2)
       Reverse             59          35        0.9   %       35        331             --         3.9
       Mortgage Loans
       FNMA/FHLMC          1,020       1,079     26.6  %       1,080     53              AAA        4.1
       Securities^(3)
     Total New
     Residential           2,192       1,922     47.4  %       1,963                                5.6
     Assets
                                                                                                     
     II. Commercial Real Estate
     Debt & Other Assets
     Commercial
     Assets
       CMBS                469         332       8.2   %       384       75              BB-        3.0
       Mezzanine           518         432       10.6  %       432       17              77  %      1.5
       Loans
       B-Notes             121         111       2.7   %       111       5               77  %      1.1
       Whole Loans         30          30        0.7   %       30        2               48  %      0.9
       Third-Party CDO     94          67        1.7   %       72        5               BB         3.0
       Securities ^(4)
       Other
       Investments         25          25        0.6   %       25        1               --         --
       ^(5)
       Total
       Commercial          1,257       997       24.5  %       1,054                                2.1
       Assets
                                                                                                     
     Residential
     Assets
       MH and
       Residential         319         279       6.9   %       279       8,595           704        5.9
       Loans
       Subprime            121         47        1.2   %       65        40              CCC        4.8
       Securities
       Real Estate         10          1         0.0   %       1         3               CCC-       4.7
       ABS
                           450         327       8.1   %       345                                  5.6
                                                                                                     
       FNMA/FHLMC          290         305       7.5   %       308       30              AAA        4.3
       Securities
       Total
       Residential         740         632       15.6  %       653                                  5.1
       Assets
                                                                                                     
     Corporate
     Assets
       REIT Debt           51          50        1.2   %       54        8               BBB-       1.8
       Corporate Bank      582         278       6.9   %       278       7               CC         1.8
       Loans
       Total Corporate     633         328       8.1   %       332                                  1.8
       Assets
                                                                                                     
     Senior Living
     Property              188         178       4.4   %       178       12              --         --
     Investments^(6)
                                                                                                     
     Total Commercial
     Real Estate Debt      2,818       2,135     52.6  %       2,217                                2.9
     & Other Assets
                                                                                                     
     Total/Weighted      $ 5,010     $ 4,057     100.0 %     $ 4,180                                4.1
     Average ^(7)
                                                                                                     
      
(1)  Represents Excess MSR investments made directly and through equity method investees, excluding our
     share of the non-Excess MSR net assets of the equity method investees.
(2)  Represents Non-Agency RMBS purchased outside of the Company’s CDOs since April 2012.
(3)  Represents Agency RMBS contributed to New Residential Investment Corp. (including contributions made
     subsequent to March 31, 2013.)
(4)  Represents non-consolidated CDO securities, excluding eight securities with a zero value that had an
     aggregate face amount of $108 million.
(5)  Relates to an equity investment in a REO property.
(6)  Face amount of Senior Living Property Investments represents the gross carrying amount, which excludes
     accumulated depreciation and amortization.
(7)  Excludes $9 million investment in real estate and loans subject to a call option with a face amount of
     $406 million.
(8)  Net of impairment.
     Credit represents the weighted average of minimum ratings for rated assets, the Loan to Value ratio
     (based on the appraised value at the time of purchase or refinancing) for non-rated commercial assets,
(9)  or the FICO score for non-rated residential assets and an implied and assumed AAA rating for FNMA/FHLMC
     securities. Ratings provided herein were determined by third-party rating agencies as of a particular
     date, may not be current and are subject to change at any time.
(10) Weighted average life is an estimate based on the timing of expected principal reduction on the asset.
                                                                                                     

ADDITIONAL INFORMATION

For additional information that management believes to be useful for
investors, please refer to the presentation posted on the Investor Relations
section of Newcastle’s website, www.newcastleinv.com. For consolidated
investment portfolio information, please refer to the Company’s Quarterly
Report on Form 10-Q, which is also available on the Company’s website,
www.newcastleinv.com.

CONFERENCE CALL

Newcastle’s management will host a conference call on Friday, May 3, 2013 at
8:30 A.M. Eastern Time. A copy of the earnings release will be posted to the
Investor Relations section of Newcastle’s website, www.newcastleinv.com.

All interested parties are welcome to participate on the live call. The
conference call may be accessed by dialing 1-888-243-2046 (from within the
U.S.) or 1-706-679-1533 (from outside of the U.S.) ten minutes prior to the
scheduled start of the call; please reference “Newcastle First Quarter 2013
Earnings Call.”

A simultaneous webcast of the conference call will be available to the public
on a listen-only basis at www.newcastleinv.com. Please allow extra time prior
to the call to visit the site and download the necessary software required to
listen to the internet broadcast.

A telephonic replay of the conference call will also be available two hours
following the call’s completion through 11:59 P.M. Eastern Time on Friday, May
10, 2013 by dialing 1-855-859-2056 (from within the U.S.) or 1-404-537-3406
(from outside of the U.S.); please reference access code “31571453.”

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 items 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, the average life of an investment, the expected
returns, or expected yield on an investment, statements relating to our
liquidity, future losses and impairment charges, our ability to acquire assets
with attractive returns and the delinquent and loss rates on our subprime
portfolios. 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 market conditions cause
downgrades of a significant number of our securities or the recording of
additional impairment charges or reductions in shareholders’ equity; the risk
that we can find additional suitably priced investments; the risk that
investments made or committed to be made cannot be financed on the basis and
for the term at which we expect; the relationship between yields on assets
which are paid off and yields on assets in which such monies can be
reinvested; actual recapture rates with respect to any Excess MSR investment;
and the relative spreads between the yield on the assets we invest in and the
cost and availability of debt and equity financing. 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 Annual Report on Form
10-K or 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.

CAUTIONARY NOTE REGARDING EXPECTED RETURNS AND EXPECTED YIELDS PRESENTED IN
THIS PRESS RELEASE

Expected returns and expected yields are estimates of the annualized effective
rate of return that we presently expect to be earned over the expected average
life of an investment (i.e., IRR), after giving effect, in the case of
returns, to existing leverage, and calculated on a weighted average basis.
Expected returns and expected yields reflect our estimates of an investment’s
coupon, amortization of premium or discount, and costs and fees, and they
contemplate our assumptions regarding prepayments, defaults and loan losses,
among other things. In the case of Excess MSRs, these assumptions include, but
are not limited to, the recapture rate. Income recognized by the Company in
future periods may be significantly less than the income that would have been
recognized if an expected return or expected yield were actually realized, and
the estimates we use to calculate expected returns and expected yields could
differ materially from actual results.

Statements about expected returns and expected yields in this press release
are forward-looking statements. You should carefully read the cautionary
statement above under the caption “Forward-looking Statements,” which directly
applies to our discussion of expected returns and expected yields.

                                          
  Newcastle Investment Corp.
  Consolidated Statements of Income (unaudited)
  (dollars in thousands, except share data)
   
                                           Three Months Ended March 31,
                                           2013                2012
Interest income                            $ 71,367            $ 74,899
Interest expense                             22,710              30,165       
  Net interest income                        48,657              44,734       
                                                                
Impairment (Reversal)
  Valuation allowance (reversal) on          2,234               (9,031      )
  loans
  Other-than-temporary impairment on         422                 5,883
  securities
  Portion of other-than-temporary
  impairment on

  securities recognized in other             117                 (3,932      )
  comprehensive income (loss),

  net of reversal of other comprehensive
  loss into net income (loss)
                                             2,773               (7,080      )
                                                                
  Net interest income after impairment       45,884              51,814
                                                                
Other Revenues
  Rental income                              12,887              509
  Care and ancillary income                  613                 -            
  Total other revenues                       13,500              509          
                                                                
Other Income (Loss)
  Gain (loss) on settlement of               (3          )       4,823
  investments, net
  Gain on extinguishment of debt             1,206               20,743
  Change in fair value of investments in     1,858               1,216
  excess mortgage servicing rights
  Change in fair value of investments in     969                 -
  equity method investees
  Other income (loss), net                   4,567               2,970        
                                             8,597               29,752       
Expenses
  Loan and security servicing expense        1,034               1,098
  Property operating expenses                8,363               225
  General and administrative expense         6,911               2,286
  Management fee to affiliate                9,565               4,976
  Depreciation and amortization              4,079               2            
                                             29,952              8,587        
                                                                
Income from continuing operations            38,029              73,488
Income (loss) from discontinued              (16         )       (17         )
operations
Net Income                                   38,013              73,471
  Preferred dividends                        (1,395      )       (1,395      )
Income Available for Common Stockholders   $ 36,618            $ 72,076       
Income Per Share of Common Stock
  Basic                                    $ 0.16              $ 0.68         
  Diluted                                  $ 0.15              $ 0.68         
Income from continuing operations per
share of common stock,
  after preferred dividends
  Basic                                    $ 0.16              $ 0.68         
  Diluted                                  $ 0.15              $ 0.68         
Income (loss) from discontinued
operations per share
  of common stock
  Basic                                    $ -                 $ -            
  Diluted                                  $ -                 $ -            
                                                                
Weighted Average Number of Shares of
Common Stock Outstanding
  Basic                                      235,136,756         105,181,009  
  Diluted                                    240,079,144         105,670,102  
                                                                
Dividends Declared per Share of Common     $ 0.22              $ 0.20         
Stock
                                                                              

                                                                
Newcastle Investment Corp.
Consolidated Balance Sheets
(dollars in thousands)
                                                                  
                                              March 31, 2013     December 31,
                                              (Unaudited)        2012
Assets
Real estate securities, available-for-sale    $ 2,495,473        $ 1,691,575
Real estate related loans, held-for-sale,       851,525            843,132
net
Residential mortgage loans,                     317,708            292,461
held-for-investment, net
Residential mortgage loans, held-for-sale,      2,380              2,471
net
Investments in excess mortgage serciving        236,555            245,036
rights at fair value
Investments in equity method investees at       102,588            -
fair value
Subprime mortgage loans subject to call         406,115            405,814
option
Investments in real estate, net of              168,515            169,473
accumulated depreciation
Intangibles, net of accumulated                 16,218             19,086
amortization
Other investments                               24,907             24,907
Cash and cash equivalents                       534,772            231,898
Restricted cash                                 11,494             2,064
Derivative assets                               176                165
Receivables and other assets                    27,577             17,230     
Total Assets                                  $ 5,196,003        $ 3,945,312  
                                                                  
Liabilities and Stockholders' Equity
Liabilities
CDO bonds payable                             $ 1,015,560        $ 1,091,354
Other bonds and notes payable                   173,723            183,390
Repurchase agreements                           1,473,586          929,435
Mortgage notes payable                          120,525            120,525
Financing of subprime mortgage loans            406,115            405,814
subject to call option
Junior subordinated notes payable               51,242             51,243
Derivative liabilities                          26,612             31,576
Dividends Payable                               56,596             38,884
Due to affiliates                               4,611              3,620
Purchase price payable on investments in        59                 59
excess mortgage servicing rights
Accrued expenses and other liabilities          17,875             16,352     
Total Liabilities                             $ 3,346,504        $ 2,872,252  
                                                                  
                                                                  
Stockholders' Equity
Preferred stock, $0.01 par value,
100,000,000 shares authorized,
1,347,321 shares of 9.75% Series B
Cumulative Redeemable Preferred Stock,
496,000 shares of 8.05% Series C Cumulative
Redeemable Preferred Stock, and
620,000 shares of 8.375% Series D
Cumulative Redeemable Preferred Stock,
liquidation
preference $25.00 per share, issued and
outstanding as of March 31, 2013 and          $ 61,583           $ 61,583
December 31, 2012
Common stock, $0.01 par value, 500,000,000
shares authorized, 253,025,645 and
172,525,645 shares issued and outstanding
at March 31, 2013 and December 31, 2012,        2,530              1,725
respectively
Additional paid-in capital                      2,472,931          1,710,083
Accumulated deficit                             (790,143  )        (771,095  )
Accumulated other comprehensive income          102,598            70,764     
(loss)
Total Equity                                  $ 1,849,499        $ 1,073,060  
                                                                  
Total Liabilities and Stockholders' Equity    $ 5,196,003        $ 3,945,312  
                                                                              

 
Newcastle Investment Corp.

Reconciliation of Core Earnings

(dollars in thousands)
 
                                                  Three Months Ended March 31,
                                                  2013             2012
Income (loss) applicable to common                $ 36,618         $ 72,076
stockholders
Add (Deduct):
Impairment (Reversal)                               2,773            (7,080  )
Other income                                        (8,597 )         (29,752 )
(Income) loss from discontinued operations          16               17
Depreciation and amortization                       4,079            2
Core earnings of equity method investees            2,546            -        
Core earnings                                     $ 37,435         $ 35,263   
                                                                    

Core Earnings

Core earnings is used by management to gauge the current performance of
Newcastle without taking into account of gains and losses, which, although
they represent a part of our recurring operations, are subject to significant
variability and are only a potential indicator of future economic performance.
Management views this measure as Newcastle’s “core” current earnings, while
gains and losses (including impairment) are simply a potential indicator of
future earnings. It also excludes the effect of depreciation and amortization
charges, which, in the judgment of management, are not indicative of operating
performance.

Management believes that this measure provides investors with useful
information regarding Newcastle’s “core” current earnings, and it enables
investors to evaluate Newcastle’s current performance using the same measure
that management uses to operate the business. Core earnings does not represent
cash generated from operating activities in accordance with GAAP and therefore
should not be considered an alternative to net income as an indicator of the
Company’s operating performance or as an alternative to cash flow as a measure
of its liquidity and is not necessarily indicative of cash available to fund
cash needs. The Company’s calculation of core earnings may be different from
the calculation used by other companies and, therefore, comparability may be
limited.

Contact:

Investor Relations
212-479-3195
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