Exhibit 99.1

		NEWCASTLE INVESTMENT CORP.

Contact:

Lilly H. Donohue
Director of Investor Relations
212-798-6118

Nadean Finke
Investor Relations
212-479-5295

Newcastle Announces Third Quarter 2008 Results

Highlights

•		GAAP loss of $149.5 million or $2.83 per diluted share for the quarter ended September 30, 2008.
•		Operating Income (net of preferred dividends) was $25.9 million, or $0.49 per diluted share, for the quarter ended September 30, 2008.
•		GAAP book value of $(9.33) per share and adjusted book value of $21.91 per share at September 30, 2008.
•		Unrestricted cash of $108 million as of November 5, 2008.

Third Quarter 2008 Financial Results

New York, NY, November 7, 2008 — Newcastle Investment Corp. (NYSE: NCT) reported that for the quarter ended September 30, 2008, Adjusted Funds from Operations (“AFFO”)⁽¹⁾ loss was $154.7 million or $2.93 per diluted share and GAAP loss was $149.5 million or $2.83 per diluted share. This compares to an AFFO and GAAP loss of $0.74 per diluted share for the quarter ended September 30, 2007.

The GAAP loss of $149.5 million consists of Operating Income (net of preferred dividends) of $25.9 million less realized and other losses of $14.5 million and impairments of $160.9 million. Operating Income (net of preferred dividends) return on average invested equity was 16.1%.

(1) AFFO is equivalent to our previously stated FFO.

Book Value

Our GAAP book value decreased to $(9.33) per share, or $(492.6) million at September 30, 2008, down from $(1.08) per share, or $(56.8) million at June 30, 2008. The decrease in book value was primarily attributable to a market value decline in our portfolio.

Our securities portfolio is predominantly financed to maturity with long-term collateralized debt obligations (“CBOs”) that are not callable as a result of changes in value and are non-recourse to the Company. While the assets in the CBOs are consolidated on our books for GAAP purposes, our exposure to losses is limited to our investment in each CBO. Our September 30, 2008 GAAP book value reflects approximately $789.4 million of unrealized losses in assets in our CBOs that could not be realized by the Company.

At September 30, 2008, our adjusted book value per share was $21.91. Our GAAP book value would equal our adjusted book value if we elected to mark all of our financial assets and liabilities to fair value under SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities.”

The following table compares Newcastle’s book value per share as of September 30, 2008 and June 30, 2008:

		September 30, 2008				June 30, 2008
Adjusted book value (1)		$	21.91			$	20.01
GAAP book value		$	(9.33	)		$	(1.08	)

For a reconciliation and discussion of GAAP net income (loss) attributable to common stockholders to AFFO, Operating Income (net of preferred dividends), and GAAP book equity to invested common equity, as well as GAAP book value to adjusted book value, please refer to the tables following the presentation of GAAP results.

Dividends

For the quarter ended September 30, 2008, Newcastle’s Board of Directors declared a dividend of $0.25 per common share. We also declared dividends on our 9.75% Series B, 8.05% Series C and 8.38% Series D Cumulative Redeemable Preferred Stock in the amounts of $0.609375, $0.503125 and $0.523438 per share, respectively.

Investment Portfolio

Newcastle’s current $6.6 billion investment portfolio consists of commercial, residential and corporate debt. During the quarter, the portfolio decreased by $71.6 million primarily as a result of paydowns of $112.1 million, sales of $34.1 million and realized writedowns of $56.1 million, offset by purchases of $127.2 million.

The following table describes our investment portfolio ($ in millions):

																				Weighted
		Face				Basis				% of				Number of						Average
		Amount $				Amount $				Basis				Investments				Credit (1)		Life (years) (2)
Commercial Assets
CMBS		$	2,268			$	2,153				36.1	%			259			BBB-			5.3
Mezzanine Loans			759				755				12.7	%			23			67%			3.3
B-Notes			388				366				6.1	%			14			58%			3.0
Whole Loans			87				86				1.4	%			4			63%			2.5
ICH Loans			5				5				0.1	%			3			—			3.3
Total Commercial Assets			3,507				3,365				56.4	%									4.5
Residential Assets
MH and Residential Loans			572				548				9.2	%			14,478			696			5.7
Subprime Securities			564				257				4.3	%			121			BB-			4.6
Subprime Retained Securities			80				9				0.2	%			7			CCC+			2.4
Subprime Residual Interests			3				3				0.1	%			2			647			0.6
Real Estate ABS			101				95				1.6	%			26			BBB			4.6
			1,320				912				15.4	%									4.9
FNMA/FHLMC Securities			466				467				7.8	%			17			AAA			3.8
Total Residential Assets			1,786				1,379				23.2	%									4.6
Corporate Assets
REIT Debt			653				662				11.1	%			65			BBB-			4.9
Corporate Bank Loans			606				554				9.3	%			16			B-			3.0
Total Corporate Assets			1,259				1,216				20.4	%									4.0
Total/Weighted Average (3)		$	6,552			$	5,960				100.0	%									4.5

The following table compares certain supplemental data relating to our investment portfolio ($ in millions):

		September 30,				June 30,
		2008				2008
Face Amount ($)			6,552				6,624
Weighted average asset yield			7.03	%			6.62	%
Weighted average liability cost			5.05	%			4.47	%
Weighted average net spread			1.98	%			2.15	%

Excluding the FNMA/FHLMC securities, our weighted average net spread was 2.06% as of September 30, 2008 and 2.23% as of June 30, 2008.

Commercial Assets

We own $3.5 billion of commercial assets, which includes CMBS, mezzanine loans, B-Notes and whole loans.

	•		During the quarter, we purchased $39.3 million, sold $14.5 million, had paydowns of $47.0 million and realized writedowns of $31.1 million for a net decrease of $53.3 million. The asset paydowns primarily consisted of $24.0 million of mezzanine loans, $14.8 million of CMBS and $5.9 million of ICH loans.
	•		We had no CMBS upgraded and five securities or $44.1 million downgraded (from an average rating of BBB- to BB+).

CMBS portfolio ($ in thousands):

		Minimum						Face				Basis				% of				Delinquency				Principal				Average
Vintage		Rating		Number				Amount $				Amount $				Basis				60+/FC/REO				Subordination				Life (yr)
Pre 2004		BBB+			78				401,252				397,188				18.4	%			1.0	%			9.5	%			4.2
2004		BBB-			59				435,494				428,785				19.9	%			0.2	%			5.0	%			5.3
2005		BB+			49				576,187				545,233				25.3	%			0.4	%			4.6	%			6.3
2006		BBB-			37				455,308				429,361				20.0	%			0.1	%			4.8	%			3.8
2007		BBB+			36				400,056				352,749				16.4	%			0.1	%			9.2	%			6.6
TOTAL/WA		BBB-			259				2,268,297				2,153,316				100.0	%			0.3	%			6.4	%			5.3

Mezzanine loans, B-Notes and whole loan portfolio ($ in thousands):

										Whole
		Mezzanine				B-Note				Loan				Total
Face Amount ($)			759,219				388,168				86,566				1,233,953
Basis Amount ($)			754,571				365,669				86,474				1,206,714
WA First $ Loan To Value (1)			55.6	%			46.0	%			0.0	%			48.7	%
WA Last $ Loan To Value (1)			67.0	%			58.4	%			62.9	%			64.0	%
Delinquency			0.0	%			0.0	%			0.0	%			0.0	%

In the quarter, we recorded a $4.8 million charge on a B-Note secured by residential land, reducing our basis to zero. We also recorded a $21.3 million charge on two B-Notes secured by hotel/casino properties. Our remaining basis in these assets is $10.3 million. Additionally, we recorded a $20.2 million impairment on three CMBS with a principal face amount of $45.0 million.

Residential Assets

We own $1.8 billion of residential assets, which includes manufactured housing loans (“MH”), residential loans, subprime securities and FNMA/FHLMC securities.

	•		During the quarter, we purchased $87.9 million, sold $3.6 million, had paydowns of $54.9 million and realized writedowns of $25.0 million for a net increase of $4.4 million. The asset paydowns primarily consisted of $18.2 million of subprime securities, $16.7 million of MH loans, $11.6 million of agency securities and $6.6 million of residential mortgage loans.
	•		We had no ABS securities upgraded and 20 securities or $99.8 million downgraded (from an average rating of BB to CCC+).

Manufactured housing loan portfolios ($ in thousands):

														Weighted
														Average												Actual				Projected
		Face				Basis				% of				Loan Age				Original				Delinquency				Cumulative				Cumulative
Deal		Amount $				Amount $				Total				(months)				Balance $				90+/FC/REO				Loss to Date				Loss to Date
Portfolio 1			195,807				182,886				39.6	%			85				327,855				0.9	%			3.9	%			5.6	%
Portfolio 2			289,791				278,787				60.4	%			115				434,743				0.6	%			2.2	%			3.8	%
TOTAL/WA			485,598				461,673				100.0	%			103				762,598				0.7	%			2.9	%			4.5	%

Subprime securities portfolio excluding our residuals and retained interests in our own securitizations ($ in thousands):

Security Characteristics:

		Minimum								Face				% of				Basis				% of				Principal				Excess
Vintage		Rating				Number				Amount $				Total				Amount $				Total				Subordination				Spread
2003			A-				15				29,792				5.3	%			25,177				9.8	%			19.8	%			2.2	%
2004		BBB					30				129,614				23.0	%			94,794				36.9	%			13.2	%			2.5	%
2005			B				43				189,960				33.6	%			78,802				30.6	%			12.9	%			3.3	%
2006			B				27				181,032				32.1	%			41,552				16.2	%			9.2	%			3.0	%
2007			A+				6				33,656				6.0	%			16,760				6.5	%			21.0	%			3.1	%
TOTAL/WA		BB-					121				564,054				100.0	%			257,085				100.0	%			12.7	%			3.0	%

Collateral Characteristics:

		Average
		Loan Age				Collateral				3 Month				Delinquency				Cumulative
Vintage		(months)				Factor				CPR (1)				90+/FC/REO				Loss to Date
2003			66				0.12				11.3	%			12.8	%			2.0	%
2004			53				0.16				14.6	%			14.8	%			2.0	%
2005			40				0.31				23.9	%			26.1	%			3.3	%
2006			27				0.65				21.3	%			27.4	%			3.5	%
2007			21				0.81				13.4	%			26.0	%			1.7	%
TOTAL/WA			39				0.41				19.6	%			23.2	%			2.9	%

In the quarter, we recorded a $43.8 million charge related to our subprime securities portfolio. The majority of the charge was related to a $27.6 million impairment on 36 of our 2005 vintage securities and a $13.3 million impairment on 18 of our 2004 vintage securities.

Residuals and retained securities

We own $80.4 million of retained securities with a basis of $9.2 million and $2.6 million of residual interests in two subprime portfolio securitizations from 2006 (“Portfolio 1”) and 2007 (“Portfolio 2”). The following table summarizes our subprime portfolio securitizations ($ in thousands):

		Security Characteristics												Portfolio Characteristics
														Average				Original												Actual				Projected
		Face				Basis				% of				Loan Age				Securitization				Current				Delinquency				Cumulative				Cumulative
Deal		Amount $				Amount $				Basis				(months)				Balance $				Balance $				90+/FC/REO				Loss to Date				Loss to Date
Portfolio 1			41,719				5,311				45.2	%			37				1,502,181				756,073				17.9	%			2.1	%			1.4	%
Portfolio 2			41,234				6,446				54.8	%			20				1,087,942				951,107				14.7	%			0.9	%			0.3	%
TOTAL/WA			82,953				11,757				100.0	%			28				2,590,123				1,707,180				16.1	%			1.5	%			0.8	%

In the quarter, we updated our future loan loss and prepayment assumptions. Based on current market conditions we lowered our prepayment assumptions which resulted in higher projected loan defaults and future loan losses. Under the new assumptions, our basis in the residuals was reduced by a $9.5 million impairment charge and $1.2 million return of principal. In addition, we recorded impairments of $42.4 million on the retained securities. The following summarizes the changes in our basis, loss assumptions and prepayment assumptions on both portfolios ($ in thousands):

		Portfolio Characteristics
		Portfolio 1				Portfolio 2
Retained Interest (Basis)
June 30, 2008		$	32,652			$	18,253
Current			5,147				4,037
Change		$	(27,505	)		$	(14,216	)
Residual (Basis)
June 30, 2008		$	1,757			$	11,517
Current			164				2,409
Change		$	(1,593	)		$	(9,108	)
Cumulative Loss Assumptions
June 30, 2008			11.2	%			16.3	%
Revised			17.5	%			30.7	%
Change			+6.3	%			+14.4	%
Lifetime Constant Voluntary Prepayment Rate Assumptions
June 30, 2008			16.9	%			13.3	%
Revised			13.8	%			9.2	%
Change			-3.1	%			-4.1	%

Corporate Assets

We own $1.3 billion of corporate assets, including REIT debt and corporate bank loans.

	•		During the quarter, we made no purchases, sold $16.0 million and had paydowns of $10.2 million for a net decrease of $26.2 million. All of the asset paydowns were from bank loans.
	•		We had three bank loans or $162.0 million downgraded (from an average rating of B+ to B-) and seven REIT securities or $73.1 million downgraded (from BBB to BB+).

REIT debt portfolio ($ in thousands):

		Minimum								Face				Basis				% of
Industry		Rating				Number				Amount $				Amount $				Basis
Retail		BB+					16				200,035				202,529				30.6	%
Diversified		BBB-					14				151,463				152,041				23.0	%
Office		BBB					14				132,919				135,739				20.5	%
Multifamily		BBB+					8				44,508				45,683				6.9	%
Hotel		BBB-					4				42,720				43,403				6.5	%
Healthcare		BBB-					4				36,600				37,197				5.6	%
Storage			A-				2				23,406				24,102				3.6	%
Industrial		BBB					3				20,865				21,701				3.3	%
TOTAL/WA		BBB-					65				652,516				662,395				100.0	%

Corporate bank loan portfolio ($ in thousands):

		Minimum								Face				Basis				% of
Industry		Rating				Number				Amount $				Amount $				Basis
Real Estate		B-					5				174,310				168,296				30.4	%
Resorts		BB-					1				110,488				100,888				18.2	%
Media		CCC+					2				112,000				101,814				18.4	%
Retail		B-					1				100,000				94,515				17.1	%
Restaurant		CCC					2				44,223				34,949				6.3	%
Transportation		C					1				27,000				26,137				4.7	%
Gaming		CCC-					3				29,557				19,067				3.4	%
Theatres		B					1				8,541				8,541				1.5	%
TOTAL/WA		B-					16				606,119				554,207				100.0	%

In the quarter, we recorded a $13.8 million charge related to four senior bank loans.

Financing and Liquidity

In the third quarter, the Company decreased its non-agency recourse debt by $64 million and increased its agency recourse debt by $53 million. As of November 5, 2008, our non-agency recourse debt was reduced to $311 million, our agency recourse debt was reduced to $176 million and our unrestricted cash was $108 million.

The following table compares the face amount of our financings as of September 30, 2008 compared to June 30, 2008 ($ in millions):

		September 30,				June 30,
		2008				2008
Recourse Financings
Real Estate Securities and Loans (1)		$	307			$	332
Manufacturing Housing Loans			53				92
FNMA/FHLMC Securities			451				398
Total Recourse Financings			811				822
Non-Recourse Financings
CBOs and Other			4,719				4,737
Total Financings		$	5,530			$	5,559
Recourse Financings as % of Total Financings			14.7	%			14.8	%

Conference Call

Newcastle’s management will conduct a live conference call today, November 7, 2008, at 11:00 A.M. eastern time to review the financial results for the quarter ended September 30, 2008. All interested parties are welcome to participate on the live call. You can access the conference call by dialing (888) 243-2046 (from within the U.S.) or (706) 679-1533 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “Newcastle Third Quarter 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 from 2:00 P.M. eastern time on November 7, 2008 until 11:59 P.M. eastern time on Friday, November 14, 2008 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference access code “70221244.”

About Newcastle

Newcastle Investment Corp. owns and manages a $6.6 billion portfolio of highly diversified, credit sensitive real estate debt that is primarily financed with match funded debt. Our business strategy is to “lock in” and optimize the difference between the yield on our assets and the cost of our liabilities. 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 asset manager with approximately $35.1 billion in assets under management as of June 30, 2008. For more information regarding Newcastle Investment Corp. or to be added to our e-mail distribution list, please visit www.newcastleinv.com.

Safe Harbor

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 our liquidity, 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 the ongoing credit and liquidity crisis continues to cause downgrades of a significant number of our securities and recording of 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; 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 and Quarterly Report on Form 10-Q, which 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.

Newcastle Investment Corp.
Consolidated Statements of Operations
(dollars in thousands, except share data)
(Unaudited)

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2008				2007				2008				2007
Revenues
Interest income		$	113,549			$	169,766			$	361,461			$	523,846
			113,549				169,766				361,461				523,846
Expenses
Interest expense			73,651				117,415				236,739				368,064
Loan and security servicing expense			1,718				2,091				5,236				7,772
Provision for credit losses			2,077				2,820				6,450				7,945
General and administrative expense			2,135				1,297				5,619				4,025
Management fee to affiliate			4,597				4,597				13,791				13,048
Incentive compensation to affiliate			—				—				—				6,209
Depreciation and amortization			73				74				218				218
			84,251				128,294				268,053				407,281
Operating Income			29,298				41,472				93,408				116,565
Other Income (Loss)
Gain (Loss) on sale of investments, net			(2,569	)			4,825				3,920				14,014
Other income (loss)			(17,912	)			(7,033	)			(35,793	)			(569	)
Other than temporary impairment			(121,047	)			(67,860	)			(269,216	)			(73,813	)
Loan impairment			(39,831	)			—				(76,916	)			—
Provision for losses, loans held for sale			—				—				—				(5,754	)
Gain (Loss) on extinguishment of debt			5,315				(7,752	)			13,848				(15,032	)
Equity in earnings of unconsolidated subsidiaries			419				488				8,189				2,154
			(175,625	)			(77,332	)			(355,968	)			(79,000	)
Income (loss) from continuing operations			(146,327	)			(35,860	)			(262,560	)			37,565
Income (loss) from discontinued operations			227				(37	)			(8,724	)			(158	)
Net Income (Loss)			(146,100	)			(35,897	)			(271,284	)			37,407
Preferred dividends			(3,375	)			(3,375	)			(10,126	)			(9,265	)
Income Available For Common Stockholders		$	(149,475	)		$	(39,272	)		$	(281,410	)		$	28,142
Net Income Per Share of Common Stock
Basic		$	(2.83	)		$	(0.74	)		$	(5.33	)		$	0.55
Diluted		$	(2.83	)		$	(0.74	)		$	(5.33	)		$	0.55
Income from continuing operations per share of common stock, after preferred dividends
Basic		$	(2.84	)		$	(0.74	)		$	(5.17	)		$	0.55
Diluted		$	(2.84	)		$	(0.74	)		$	(5.17	)		$	0.55
Income from discontinued operations per share of common stock
Basic		$	0.01			$	—			$	(0.16	)		$	—
Diluted		$	0.01			$	—			$	(0.16	)		$	—
Weighted Average Number of Shares of Common Stock Outstanding
Basic			52,788,766				52,779,179				52,784,048				50,894,424
Diluted			52,788,766				52,779,179				52,784,048				51,045,418
Dividends Declared per Share of Common Stock		$	0.25			$	0.72			$	0.75			$	2.13

Newcastle Investment Corp.
Consolidated Balance Sheets
(dollars in thousands, except share data)

		September 30, 2008
		(unaudited)				December 31, 2007
Assets
Real estate securities, available for sale		$	2,784,744			$	4,835,884
Real estate related loans, net			1,686,707				1,856,978
Residential mortgage loans, net			560,111				634,605
Subprime mortgage loans subject to call option			396,943				393,899
Investments in unconsolidated subsidiaries			442				24,477
Operating real estate, held for sale			13,150				34,399
Cash and cash equivalents			166,623				55,916
Restricted cash			127,686				133,126
Derivative assets			245				4,114
Receivables and other assets			48,575				64,372
		$	5,785,226			$	8,037,770
Liabilities and Stockholders’ Equity
Liabilities
CBO bonds payable			4,362,958				4,716,535
Other bonds payable			396,134				546,798
Repurchase agreements			699,025				1,634,362
Financing of subprime mortgage loans subject to call option			396,943				393,899
Junior subordinated notes payable (security for trust preferred)			100,100				100,100
Derivative liabilities			141,411				133,510
Dividends payable			15,447				40,251
Due to affiliates			1,532				7,741
Accrued expenses and other liabilities			11,777				16,949
			6,125,327				7,590,145
Stockholders’ Equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized, 2,500,000 shares of 9.75% Series B Cumulative Redeemable Preferred Stock 1,600,000 shares of 8.05% Series C Cumulative Redeemable Preferred Stock, and 2,000,000 shares of 8.375% Series D Cumulative Redeemable Preferred Stock liquidation preference $25.00 per share, issued and outstanding (Series D issued in 2007)			152,500				152,500
Common stock, $0.01 par value, 500,000,000 shares authorized, 52,789,050 and 52,779,179 shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively			528				528
Additional paid-in capital			1,033,416				1,033,326
Dividends in excess of earnings			(557,210	)			(236,213	)
Accumulated other comprehensive income			(969,335	)			(502,516	)
			(340,101	)			447,625
		$	5,785,226			$	8,037,770

Newcastle Investment Corp.
Reconciliation of GAAP Net Income (Loss) to AFFO
(dollars in thousands)
(Unaudited)

		Three Months Ended
		September 30, 2008				September 30, 2007
Net income (loss) attributable to common stockholders		$	(149,475	)		$	(39,272	)
Operating real estate depreciation			(5,223	)			285
Adjusted Funds from operations (“AFFO”)		$	(154,698	)		$	(38,987	)

We believe AFFO is one appropriate measure of the operating performance of real estate companies because it provides investors with information regarding our ability to service debt and make capital expenditures. We also believe that AFFO is an appropriate supplemental disclosure of operating performance for a REIT. Furthermore, AFFO is used to compute our incentive compensation to our manager. AFFO, for our purposes, represents net income available for common stockholders (computed in accordance with GAAP), excluding extraordinary items, plus real estate depreciation, and after adjustments for unconsolidated subsidiaries, if any. We consider gains and losses on resolution of our investments to be a normal part of our recurring operations and therefore do not exclude such gains and losses when arriving at AFFO. Adjustments for unconsolidated subsidiaries, if any, are calculated to reflect AFFO on the same basis. AFFO 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 our operating performance or as an alternative to cash flow as a measure of liquidity and is not necessarily indicative of cash available to fund cash needs. Our calculation of AFFO may be different from the calculation used by other companies and, therefore, comparability may be limited.

As a result of the sale or expected sale of all of our operating real estate, and the resultant discontinuation of depreciation, our income (loss) applicable to common stockholders is now equal to our AFFO.

Newcastle Investment Corp.
Reconciliation of Operating Income (Net of Preferred Dividends)
(dollars in thousands)
(Unaudited)

		Three Months Ended
		September 30, 2008				September 30, 2007
Operating Income		$	29,298			$	41,472
Preferred dividends			(3,375	)			(3,375	)
Operating Income (Net of Preferred Dividends)		$	25,923			$	38,097

Newcastle Investment Corp.
Reconciliation of GAAP Book Equity to Invested Common Equity
(dollars in thousands)
(Unaudited)

		September 30, 2008
Book equity		$	(340,101	)
Preferred stock			(152,500	)
Accumulated depreciation on operating real estate			1,003
Accumulated other comprehensive loss			969,335
Invested common equity		$	477,737

Newcastle Investment Corp.
Reconciliation of GAAP Book Value to Adjusted Book Value
(dollars in thousands, except per share)
(Unaudited)

		Amount				Per Share
GAAP Book Value		$	(492,601	)		$	(9.33	)
Adjustments to Fair Value:
Commercial Real Estate Loans			(343,694	)			(6.51	)
CDO Liabilities			1,988,502				37.67
Other Loan Investments and Debt Obligations			4,505				0.08
Total Adjustments			1,649,313				31.24
Adjusted Book Value		$	1,156,712			$	21.91