Newcastle to Acquire $1.7 Billion Portfolio of Residential Mortgage Loans
NEW YORK, March 16 /PRNewswire-FirstCall/ -- Newcastle Investment Corp. (NYSE: NCT) today executed an agreement to purchase a $1.7 billion portfolio of approximately 7,300 subprime residential mortgage loans which is expected to close over the next 30 days. We are currently conducting due diligence on the portfolio. Based upon the results of our due diligence, the final pool may be different than that described herein.
Kenneth M. Riis, Newcastle's Chief Executive Officer and President commented "We are very excited about this transaction. Constrained liquidity and the re-pricing of credit risk in the subprime mortgage market have created a unique opportunity for us to purchase a portfolio of loans at an attractive price with early payment default protection. We have underwritten this investment to generate an attractive return on capital using conservative default and loss assumptions."
The loans are secured by residential homes located throughout the U.S. Approximately 28% of the assets are located in California, 13% in Florida, 10% in New York and the remaining balance diversified throughout 45 states. Approximately 94% of the portfolio is secured by first liens and 92% of the assets are owner occupied. The weighted average coupon is 8.02%. 74% of the mortgage loans are adjustable rate and 26% are fixed rate. The majority of the adjustable rate mortgage loans are fixed for a period of 2 to 3 years and then adjust over LIBOR subject to periodic and lifetime interest rate caps. The current weighted average FICO score of the borrowers is 644.
The loans will be serviced by Nationstar Mortgage LLC, an affiliate of our manager.
The acquisition will initially be financed under a repurchase agreement. The Company expects to finance this investment on a long-term basis through the securitization markets in the upcoming months, following which we expect to have approximately $75 million of capital invested in this portfolio.
Newcastle Investment Corp. invests in real estate debt securities and other real estate related assets. Newcastle is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes. Newcastle is managed by an affiliate of Fortress Investment Group LLC, a global alternative investment and asset management firm with over $30 billion in assets under management as of December 31, 2006. For more information regarding Newcastle Investment Corp. or to be added to our e-mail distribution list, please visit www.newcastleinv.com.
Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including statements relating to the ultimate return characteristics of the loan portfolio, equity to be deployed, and ability to finance the portfolio on a long-term basis and the character of our underwriting assumptions. 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; 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, changes in performance of the underlying loans and in values of the real property securing the loans, changes in the capital markets which would affect the ability to finance the portfolio or prepayment rates on the portfolio, and other risks detailed from time to time in Newcastle's SEC reports. 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.
SOURCE Newcastle Investment Corp.
Released March 16, 2007