Press release

Exhibit 99.1


		NEWCASTLE INVESTMENT CORP.

Contact:

Nadean Novogratz

Investor Relations

212-479-5295

Newcastle Announces Fourth Quarter & Year End 2010 Results

FINANCIAL RESULTS

Fourth Quarter 2010

New York, NY, March 1, 2011 – Newcastle Investment Corp. (NYSE: NCT) reported that in the fourth quarter of 2010, income applicable to common stockholders (“GAAP income”) was $197 million, or $3.18 per diluted share, compared to $17 million, or $0.31 per diluted share, in the fourth quarter of 2009.

GAAP income of $197 million consisted of the following: $26 million of net interest income less expenses (net of preferred dividends), $136 million of other income and $35 million representing the reversal of prior valuation allowances on loans net of impairment recorded on securities.

Other income was primarily related to a $124 million gain on the extinguishment of CDO debt and a $35 million net gain on the sale of investments, primarily offset by a $24 million one time non-cash mark-to-market loss related to an interest rate swap agreement in connection with the repurchase of the Newcastle CDO VI Class I-MM notes.

In the fourth quarter, Newcastle repurchased $316 million of CDO bonds for $190 million, recording a $124 million gain on the extinguishment of debt. Of the $316 million, $257 million represented all of the outstanding Newcastle CDO VI Class I-MM notes (the “Notes”), which were repurchased in December 2010 at a price of 67.5% of par. The Company purchased the Notes using a combination of restricted cash, unrestricted cash and proceeds from a new limited recourse repurchase facility. The $19 million repurchase facility has a one-year term and bears interest at a rate of LIBOR + 1.50%. Although the repurchase facility requires margin to be posted in the event that the value of the Notes decreases, recourse to the Company is limited to twenty-five percent of the then-outstanding balance of the repurchase facility. As of December 31, 2010, the recourse amount was $4.7 million.

Full Year 2010

In 2010, GAAP income was $657 million, or $10.96 per diluted share, compared to a loss applicable to common stockholders (“GAAP loss”) of $223 million, or $4.23 per diluted share, in 2009.

GAAP income of $657 million consisted of the following: $91 million of net interest income less expenses (net of preferred dividends), $282 million of other income, $241 million representing the reversal of prior valuation allowances on loans net of impairment recorded on securities and $43 million representing the excess of the carrying amount of exchanged preferred stock over the fair value of consideration paid.

Other income was primarily related to a $266 million gain on the extinguishment of CDO debt and $52 million of net gain on the sale of investments, primarily offset by a $37 million net loss related to the Company’s derivatives. In 2010, the Company repurchased $484 million of CDO bonds for $216 million, recording a $266 million gain on the extinguishment of debt.

For a reconciliation of income (loss) applicable to common stockholders to net interest income less expenses (net of preferred dividends), please refer to the tables following the presentation of GAAP results.

SUBSEQUENT EVENTS

In February 2011, Newcastle purchased the management rights with respect to certain C-BASS Investment Management LLC (“C-BASS”) CDOs pursuant to a bankruptcy proceeding for approximately $2 million. As a result, Newcastle became the collateral manager of certain CDOs previously managed by C-BASS and will earn, on average, a 20 basis point annual senior management fee on a portion of the total collateral, which is currently $1.3 billion.

In February 2011, two mezzanine loan investments with a total outstanding principal balance of $89 million were paid off in full. The payoff increased our restricted cash available for reinvestment by $61 million in CDOs VIII and IX and increased the Company’s unrestricted cash by $28 million.

Recently, Newcastle purchased $63 million current face amount of FNMA and FHLMC one-year ARM securities for $66 million. The Company financed the purchase with a $63 million repurchase agreement that has a three-month term.

Since year end, the repurchase facility financing the Newcastle CDO VI Class I-MM notes was reduced by $2 million, from $19 million to $17 million, through principal received on the underlying bonds.

RECOURSE DEBT FINANCING AND CASH

In the fourth quarter of 2010, the Company’s unrestricted cash decreased by $24 million, from $58 million to $34 million, mainly as a result of the repurchase of the Company’s CDO bonds, offset by the receipt of net operating cash flows.

Certain details regarding the Company’s cash and current financings are set forth below as of February 25, 2011, including the impact of the subsequent events mentioned above:

•

Cash – The Company had unrestricted cash of $58 million. In addition, the Company had $193 million of restricted cash available for reinvestment within its consolidated CDOs;

•

Margin Exposure – The Company had margin exposure of $17 million related to the financing of the Newcastle CDO VI Class I-MM notes (of which only $4 million is recourse) and $63 million related to the financing of FNMA and FHLMC securities.

The following table illustrates the change in cash and recourse financings, excluding junior subordinated notes ($ in millions):


	Feb 25, 2010		Dec 31, 2010		Sep 30, 2010
CDO Cash for Reinvestment	$	193	$	150	$	147

Unrestricted Cash		58		34		58

Recourse Financings
Non-FNMA/FHLMC (non-agency)
NCT CDO senior bonds		4		5		—

Subtotal		4		5		—

FNMA/FHLMC Securities		63		—		—

Total Recourse Financings	$	67	$	5	$	—

CDO FINANCINGS

The following table summarizes the cash receipts in the fourth quarter of 2010 from the Company’s consolidated CDO financings, their related coverage tests and negative watch assets ($ in thousands):


	Primary				Interest Coverage % Excess (Deficiency)			Over Collateralization Excess (Deficiency)																		Assets on
	Collateral		Cash		February 25,			February 25, 2011 ⁽²⁾						December 31, 2010 ⁽²⁾						September 30, 2010 ⁽²⁾						Negative
	Type		Receipts ⁽¹⁾		2011 ⁽²⁾			%			$			%			$			%			$			Watch ⁽³⁾
CDO IV		Securities	$	116		223.1	%		-10.8	%		(33,908	)		-10.8	%		(33,908	)		-15.3	%		(54,513	)	$	32,664
CDO V		Securities		143		165.6	%		-8.3	%		(30,319	)		-8.3	%		(30,319	)		0.5	%		1,991			43,003
CDO VI		Securities		115		-38.5	%		-51.5	%		(184,846	)		-46.9	%		(178,604	)		-42.1	%		(167,624	)		45,637
CDO VIII		Loans		3,746		272.7	%		7.3	%		47,223			9.9	%		63,954			16.2	%		104,652			10,994
CDO IX		Loans		3,205		415.3	%		14.2	%		91,474			18.5	%		119,317			16.5	%		106,526			—
CDO X		Securities		6,555		122.4	%		4.2	%		50,929			4.0	%		48,480			3.2	%		39,543			133,925

Total			$	13,880																						$	266,223

(1)

Represents cash received from each CDO based on all of the interests in such CDO (including senior management fees but excluding principal received from CDO bonds owned by the Company). Cash receipts for the quarter ended December 31, 2010 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.

(2)

Represents 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 deficiency is corrected. The information regarding coverage tests is based on data from the most recent remittance date on or before February 25, 2011, December 31, 2010, or September 30, 2010, as applicable. The CDO IV and V tests are conducted only on a quarterly basis (December, March, June and September).

(3)

Represents the face amount of assets on negative watch for possible downgrade by at least one rating agency (Moody’s, S&P or Fitch). Amounts are as of the determination date pertaining to December 2010 remittances for CDO IV and V (these tests are conducted only on a quarterly basis) and as of the determination date pertaining to February 2011 remittances for all other CDO’s. The amounts include $53 million of bonds issued by Newcastle, which are eliminated in consolidation and not reflected in the investment portfolio disclosures.

•

$2 million of the $14 million CDO cash receipts were senior collateral management fees, which were not subject to the related CDO coverage tests.

•

The cash receipts above also include $2.5 million of non-recurring interest and extension fees.

BOOK VALUE

In the fourth quarter of 2010, GAAP book value increased $344 million or $5.54 per share. As of December 31, 2010, GAAP book value was $(309) million or $(4.98) per share, compared to $(653) million or $(10.52) per share as of September 30, 2010.

DIVIDENDS

For the fourth quarter of 2010, Newcastle’s Board of Directors elected not to pay a dividend on its common stock. On January 6, 2011, the Board of Directors declared dividends on the Company’s Series B, Series C and Series D Preferred Stock for the period beginning May 1, 2010 and ending January 31, 2011. The Company paid total dividends of $1.828125, $1.509375 and $1.570313 per share on the 9.75% Series B, 8.05% Series C and 8.375% Series D preferred stock, respectively. As of January 31, 2011, there were no unpaid dividends with respect to any of Newcastle’s Preferred Stock.

INVESTMENT PORTFOLIO

Newcastle’s $4.3 billion investment portfolio (with a basis of $3.0 billion) consists of commercial, residential and corporate debt. During the quarter, the weighted average carrying value on the December 31, 2010 portfolio changed from 67.0% to 70.3%, an increase of $145 million. The face amount of the portfolio decreased by $377 million, primarily as a result of principal repayments of $152 million, sales of $150 million and actual principal write-downs of $136 million, offset by purchases of $101 million at a weighted average price of 93% of par, a weighted average yield of 6%, a weighted average life of 4.6 years, and a weighted average rating of single A.

The following table describes the investment portfolio as of December 31, 2010 ($ in millions):


	Face Amount $		Basis Amount $ ⁽¹⁾		% of Total Basis			Carry Value Amount $		Number of Investments		Credit ⁽²⁾			Weighted Average Life (yrs) ⁽³⁾
Commercial Assets
CMBS	$	1,971	$	1,265		42.7	%	$	1,301		261		BB		3.1
Mezzanine Loans		580		389		13.1	%		389		17		64	%	1.9
B-Notes		233		155		5.2	%		155		9		77	%	1.8
Whole Loans		31		31		1.0	%		31		3		48	%	2.8
Other Investment ⁽⁴⁾		25		25		0.8	%		25		1		—		—

Total Commercial Assets		2,840		1,865		62.8	%		1,901						2.8

Residential Assets
MH and Residential Loans		428		371		12.5	%		371		11,287		704		6.6
Subprime Securities		353		161		5.4	%		178		88		B-		5.0
Real Estate ABS		66		43		1.5	%		45		20		BB		3.6

		847		575		19.4	%		594						5.7

FNMA/FHLMC Securities		3		3		0.1	%		3		1		AAA		3.2

Total Residential Assets		850		578		19.5	%		597						5.7

Corporate Assets
REIT Debt		317		316		10.7	%		329		40		BB+		3.5
Corporate Bank Loans		309		208		7.0	%		208		9		CC		3.4

Total Corporate Assets		626		524		17.7	%		537						3.4

Total/Weighted Average ⁽⁵⁾	$	4,316	$	2,967		100.0	%	$	3,035						3.4

(1)	Net of impairment.

(2)

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, or the FICO score for non-rated residential assets and an implied 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 (including a “negative watch” assignment) at any time.

(3)	Weighted average life is based on the timing of expected principal reduction on the asset.

(4)	Relates to equity investment in a REO property.

(5)	Excludes unconsolidated CDO securities with a face amount of $123 million, as they are valued at zero in the current period, operating real estate held for sale of $9 million and loans subject to call option with a face amount of $406 million.

Commercial Assets

The Company owns $2.8 billion of commercial assets (with a basis of $1.9 billion), which includes CMBS, mezzanine loans, B-Notes, whole loans and other investments.

•

During the quarter, the Company had $119 million of actual principal write-downs, sold $106 million, received principal repayments of $101 million and purchased $97 million of new CMBS assets with a weighted average rating of single A.

•

Regarding the Company’s CMBS portfolio, two securities or $10 million were upgraded (from a weighted average rating of A+ to AA), four securities or $24 million were affirmed and 60 securities or $486 million were downgraded (from a weighted average rating of BB- to CCC+).

•

The weighted average carrying value of these assets changed from 62.3% to 66.9%, an increase of $132 million in the quarter.

CMBS portfolio ($ in thousands):


Vintage ⁽¹⁾	Average Minimum Rating ⁽²⁾	Number		Face Amount $		Basis Amount $		% of Total Basis			Carry Value Amount $		Delinquency 60+/FC/REO ⁽³⁾			Principal Subordination ⁽⁴⁾			Weighted Average Life (yrs)⁽⁵⁾
Pre 2004	BB+		82		425,785		384,726		30.4	%		362,743		5.7	%		10.8	%		2.3
2004	B+		61		417,733		245,642		19.4	%		205,078		4.2	%		6.0	%		2.8
2005	B+		37		383,212		177,506		14.0	%		210,487		5.3	%		8.1	%		3.2
2006	BB+		54		492,424		346,327		27.4	%		390,691		4.5	%		12.4	%		3.5
2007	B+		24		203,871		66,699		5.3	%		86,823		9.8	%		11.5	%		2.9
2010	BB		3		48,000		44,460		3.5	%		44,912		0.0	%		2.4	%		9.8

TOTAL/WA	BB		261		1,971,025		1,265,360		100.0	%		1,300,734		5.3	%		9.5	%		3.1

(1)	The year in which the securities were originally issued.

(2)

Ratings provided above were determined by third party rating agencies as of a particular date, which may not be current and are subject to change (including a “negative watch” assignment) at any time. The Company had approximately $204 million of CMBS assets that were on negative watch for possible downgrade by at least one rating agency as of December 31, 2010.

(3)	The percentage of underlying loans that are 60+ days delinquent, in foreclosure or considered real estate owned (REO).

(4)	The percentage of the outstanding face amount of securities that is subordinate to the Company’s investments.

(5)	Weighted average life is based on the timing of expected principal reduction on the asset.

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


Asset Type	Number		Face Amount ($)		Basis Amount ($)		% of Total Basis			Carrying Value Amount ($)		WA First $ Loan to Value⁽¹⁾			WA Last $ Loan to Value⁽¹⁾			Delinquency (%) ⁽²⁾
Mezzanine Loans		17		579,579		388,510		67.7	%		388,510		52.5	%		64.0	%		13.2	%
B-Notes		9		233,132		154,760		26.9	%		154,760		62.2	%		76.6	%		19.3	%
Whole Loans		3		30,970		30,970		5.4	%		30,970		0.0	%		48.2	%		0.0	%

Total/WA		29		843,681		574,240		100.0	%		574,240		53.3	%		66.9	%		14.4	%

(1)	Loan to Value is based on the appraised value at the time of purchase or refinancing.

(2)	The percentage of underlying loans that are non-performing, in foreclosure, under bankruptcy filing or considered real estate owned.

Residential Assets

The Company owns $850 million of residential assets (with a basis of $578 million), which include manufactured housing (“MH”) loans, residential loans, subprime securities, real estate ABS and FNMA/FHLMC securities.

•

During the quarter, the Company had actual principal write-downs of $17 million, received principal repayments of $24 million and sold $12 million of real estate ABS. The Company did not purchase any ABS assets.

•

Regarding the Company’s ABS portfolio, two securities or $9 million were upgraded (from weighted average rating of A to AA), no securities were affirmed and seven securities or $18 million were downgraded (from a weighted average rating of CCC to CCC-).

•

The weighted average carrying value of these assets changed from 69.9% to 70.3%, an increase of $4 million in the quarter.

Manufactured housing and residential loan portfolios ($ in thousands):


Deal	Average FICO Score		Face Amount $		Basis Amount $		% of Total Basis			Carrying Value Amount $		Average Loan Age (months)		Original Balance $		Delinquency 90+/FC/REO ⁽¹⁾			Cumulative Loss to Date
MH Loans Portfolio 1		703		152,450		123,042		33.2	%		123,042		111		327,855		1.3	%		6.8	%
MH Loans Portfolio 2		702		212,036		198,275		53.4	%		198,275		140		434,743		1.4	%		4.9	%
Residential Loans Portfolio 1		715		59,604		46,235		12.5	%		46,235		90		646,357		8.2	%		0.3	%
Residential Loans Portfolio 2		737		3,795		3,495		0.9	%		3,495		74		83,950		0.0	%		0.0	%

TOTAL/WA		704		427,885		371,047		100.0	%		371,047		122		1,492,905		2.3	%		4.9	%

(1)	The percentage of loans that are 90+ days delinquent, in foreclosure or considered real estate owned (REO).

Subprime Securities portfolio ($ in thousands):

Security Characteristics:


Vintage ⁽¹⁾	Average Minimum Rating ⁽²⁾	Number		Face Amount $		Basis Amount $		% of Total Basis			Carrying Value Amount $		Principal Subordination ⁽³⁾			Excess Spread ⁽⁴⁾
2003	B		15		19,154		10,649		6.6	%		10,741		22.6	%		4.0	%
2004	B		28		82,845		28,277		17.5	%		30,924		16.9	%		3.9	%
2005	CCC+		25		93,269		28,341		17.6	%		36,520		28.2	%		4.5	%
2006	CCC+		10		83,095		46,425		28.7	%		48,477		31.6	%		4.8	%
2007 & Later	B+		10		74,943		47,772		29.6	%		51,344		19.5	%		3.1	%

TOTAL/WA	B-		88		353,306		161,464		100.0	%		178,006		24.2	%		4.1	%

Collateral Characteristics:


Vintage ⁽¹⁾	Average Loan Age (months)		Collateral Factor ⁽⁵⁾		3 Month CPR ⁽⁶⁾			Delinquency 90+/FC/REO ⁽⁷⁾			Cumulative Loss to Date
2003		94		0.10		8.8	%		19.7	%		3.2	%
2004		80		0.13		9.8	%		21.0	%		3.6	%
2005		68		0.19		8.6	%		33.0	%		8.5	%
2006		56		0.39		10.1	%		31.4	%		16.6	%
2007 & Later		40		0.45		7.8	%		19.7	%		13.2	%

TOTAL/WA		64		0.28		9.1	%		26.3	%		9.9	%

Real Estate ABS portfolios ($ in thousands):

Security Characteristics:


Asset Type	Average Minimum Rating ⁽²⁾	Number		Face Amount $		Basis Amount $		% of Total Basis			Carrying Value Amount $		Principal Subordination ⁽³⁾			Excess Spread ⁽⁴⁾
Manufactured Housing	BBB+		7		35,137		34,101		80.3	%		35,215		39.4	%		1.5	%
Small Business Loans	CCC		13		30,228		8,374		19.7	%		9,963		15.1	%		3.4	%

TOTAL/WA	BB		20		65,365		42,475		100.0	%		45,178		28.1	%		2.4	%

Collateral Characteristics:


Asset Type	Average Loan Age (months)		Collateral Factor ⁽⁵⁾		3 Month CPR ⁽⁶⁾			Delinquency 90+/FC/REO ⁽⁷⁾			Cumulative Loss to Date
Manufactured Housing		138		0.28		6.2	%		2.3	%		12.6	%
Small Business Loans		75		0.54		6.7	%		29.4	%		7.2	%

TOTAL/WA		109		0.40		6.4	%		14.8	%		10.1	%

(1)	The year in which the securities were issued.

(2)

Ratings provided above were determined by third party rating agencies as of a particular date, may not be current and are subject to change (including a “negative watch” assignment) at any time. The Company had approximately $96 million of subprime and ABS securities that were on negative watch for possible downgrade by at least one rating agency as of December 31, 2010.

(3)	The percentage of the outstanding face amount of securities and residual interests that is subordinate to the Company’s investments.

(4)	The annualized amount of interest received on the underlying loans in excess of the interest paid on the securities, as a percentage of the outstanding collateral balance.

(5)	The ratio of original unpaid principal balance of loans still outstanding.

(6)	Three month average constant prepayment rate.

(7)	The percentage of underlying loans that are 90+ days delinquent, in foreclosure or considered real estate owned (REO).

Corporate Assets

The Company owns $626 million of corporate assets (with a basis of $524 million), including REIT debt and corporate bank loans.

•

During the quarter, the Company sold $32 million of REIT debt, received $27 million of principal repayments from REIT debt and purchased a $4 million corporate bank loan.

•

Regarding the Company’s REIT debt portfolio, no securities were upgraded, two securities or $27 million were affirmed and two securities or $27 million were downgraded (from a weighted average rating of BBB to BBB-).

•

The weighted average carrying value of these assets changed from 84.3% to 85.7%, an increase of $9 million in the quarter.

REIT debt portfolio ($ in thousands):


Industry	Average Minimum Rating ⁽¹⁾	Number		Face Amount $		Basis Amount $		% of Total Basis			Carrying Value Amount $
Retail	BBB+		10		75,665		71,962		22.8	%		81,911
Diversified	CCC+		8		71,036		71,613		22.7	%		67,305
Office	BBB-		9		80,127		81,304		25.7	%		83,869
Multifamily	BBB		3		12,765		12,818		4.0	%		13,539
Hotel	BBB-		3		29,220		29,598		9.4	%		30,785
Healthcare	BBB-		5		41,600		41,673		13.2	%		44,215
Storage	A-		1		5,000		5,052		1.6	%		5,360
Industrial	BB-		1		2,000		2,065		0.6	%		1,986

TOTAL/WA	BB+		40		317,413		316,085		100.0	%		328,970

Corporate bank loan portfolio ($ in thousands):


Industry	Average Minimum Rating ⁽¹⁾	Number		Face Amount $		Basis Amount $		% of Total Basis			Carrying Value Amount $
Real Estate	CC		3		35,898		34,021		16.3	%		34,021
Media	CCC-		2		111,764		44,985		21.6	%		44,985
Resorts	NR		1		116,649		86,649		41.6	%		86,649
Restaurant	B		2		18,136		16,326		7.8	%		16,326
Transportation	NR		1		26,990		26,384		12.7	%		26,384

TOTAL/WA	CC		9		309,437		208,365		100.0	%		208,365

(1)

Ratings provided above were determined by third party rating agencies as of a particular date, may not be current and are subject to change (including a “negative watch” assignment) at any time. The Company had no corporate assets that were on negative watch for possible downgrade as of December 31, 2010.

CONFERENCE CALL

Newcastle’s management will conduct a live conference call today, March 1, 2011, at 11:00 A.M. Eastern Time to review the financial results for the fourth quarter and year ended December 31, 2010. A copy of the earnings press release is posted to the Investor Relations section of Newcastle’s website, www.newcastleinv.com

All interested parties are welcome to participate on the live call. You can access the conference call 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 Fourth 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 until 11:59 P.M. Eastern Time on Friday, March 11, 2011 by dialing 1-800-642-1687 (from within the U.S.) or 1-706-645-9291 (from outside of the U.S.); please reference access code “44397805.”

ABOUT NEWCASTLE

Newcastle Investment Corp. owns and manages a portfolio of diversified, credit sensitive real estate debt that is primarily financed with match funded debt. 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 investment management firm. For more information regarding Newcastle Investment Corp. or to be added to our e-mail distribution list, please visit www.newcastleinv.com.

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, 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; 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, 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.

Newcastle Investment Corp.

Consolidated Statements of Operations

(dollars in thousands, except per share data)


	Three Months Ended December 31,						Year Ended December 31,
	2010			2009			2010			2009
	(unaudited)			(unaudited)
Interest income	$	74,957		$	74,833		$	300,272		$	361,866
Interest expense		40,942			51,256			172,219			218,410

Net interest income		34,015			23,577			128,053			143,456


Impairment
Valuation allowance (reversal) on loans		(47,219	)		(68,086	)		(339,887	)		15,007
Other-than-temporary impairment on securities		(999	)		77,077			101,398			603,768
Portion of other-than-temporary impairment on securities recognized in other comprehensive income (loss), net of reversal of other comprehensive loss into net income (loss)		13,206			17,870			(2,369	)		(70,235	)

		(35,012	)		26,861			(240,858	)		548,540

Net interest income (loss) after impairment		69,027			(3,284	)		368,911			(405,084	)

Other Income (Loss)
Gain (loss) on settlement of investments, net		34,810			3,650			52,307			11,438
Gain on extinguishment of debt		123,958			29,070			265,656			215,279
Other income (loss), net		(23,070	)		(1,792	)		(35,676	)		682

		135,698			30,928			282,287			227,399

Expenses
Loan and security servicing expense		1,107			1,165			4,580			5,034
General and administrative expense		784			1,860			7,696			8,899
Management fee to affiliate		4,259			4,493			17,252			17,968

		6,150			7,518			29,528			31,901


Income (loss) from continuing operations		198,575			20,126			621,670			(209,586	)
Income (loss) from discontinued operations		(194	)		(222	)		(8	)		(318	)

Net Income (Loss)		198,381			19,904			621,662			(209,904	)
Preferred dividends		(1,395	)		(3,375	)		(7,453	)		(13,501	)
Excess of carrying amount of exchanged preferred stock over fair value of consideration paid		—			—			43,043			—

Income (Loss) Applicable to Common Stockholders	$	196,986		$	16,529		$	657,252		$	(223,405	)


Income (loss) Per Share of Common Stock
Basic	$	3.18		$	0.31		$	10.96		$	(4.23	)

Diluted	$	3.18		$	0.31		$	10.96		$	(4.23	)


Income (loss) from continuing operations per share of common stock, after preferred dividends and excess of carrying amount of exchanged preferred stock over fair value of consideration paid
Basic	$	3.18		$	0.32		$	10.96		$	(4.22	)

Diluted	$	3.18		$	0.32		$	10.96		$	(4.22	)


Income (loss) from discontinued operations per share of common stock
Basic	$	—		$	(0.01	)	$	—		$	(0.01	)

Diluted	$	—		$	(0.01	)	$	—		$	(0.01	)


Weighted Average Number of Shares of Common Stock Outstanding
Basic		62,024,969			52,905,413			59,948,827			52,863,993

Diluted		62,024,969			52,905,413			59,948,827			52,863,993


Dividends Declared per Share of Common Stock	$	—		$	—		$	—		$	—

Newcastle Investment Corp.

Consolidated Balance Sheets

(dollars in thousands)


	December 31,
	2010			2009
Assets

Non-Recourse VIE Financing Structures
Real estate securities, available for sale	$	1,859,984		$	1,784,487
Real estate related loans, held for sale, net		750,130			554,367
Residential mortgage loans, held for investment, net		124,974			—
Residential mortgage loans, held for sale, net		252,915			380,123
Subprime mortgage loans subject to call option		403,793			403,006
Operating real estate, held for sale		8,776			—
Other investments		18,883			—
Restricted cash		157,005			200,251
Derivative assets		7,067			—
Receivables and other assets		29,206			36,643

		3,612,733			3,358,877

Recourse Financing Structures and Unlevered Assets
Real estate securities, available for sale		600			46,308
Real estate related loans, held for sale, net		32,475			19,495
Residential mortgage loans, held for sale, net		298			3,524
Operating real estate, held for sale		—			9,966
Other investments		6,024			193
Cash and cash equivalents		33,524			68,300
Receivables and other assets		1,457			7,965

		74,378			155,751

	$	3,687,111		$	3,514,628


Liabilities and Stockholders’ Equity (Deficit)

Liabilities

Non-Recourse VIE Financing Structures
CDO bonds payable	$	3,010,868		$	4,058,928
Other bonds payable		256,809			303,697
Notes payable		4,356			—
Financing of subprime mortgage loans subject to call option		403,793			403,006
Repurchase agreements		14,049			—
Derivative liabilities		176,861			203,054
Accrued expenses and other liabilities		8,445			2,992

		3,875,181			4,971,677

Recourse Financing Structures and Other Liabilities
Repurchase agreements		4,683			71,309
Junior subordinated notes payable		51,253			103,264
Derivative liabilities		—			4,100
Due to affiliates		1,419			1,497
Accrued expenses and other liabilities		2,160			3,433

		59,515			183,603

		3,934,696			5,155,280

Stockholders’ Equity (Deficit)

Preferred stock, $0.01 par value, 100,000,000 shares authorized, 1,347,321 and 2,500,000 shares of 9.75% Series B Cumulative Redeemable Preferred Stock 496,000 and 1,600,000 shares of 8.05% Series C Cumulative Redeemable Preferred Stock, and 620,000 and 2,000,000 shares of 8.375% Series D Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, issued and outstanding as of December 31, 2010 and December 31, 2009, respectively		61,583			152,500
Common stock, $0.01 par value, 500,000,000 shares authorized, 62,027,184 and 52,912,513 shares issued and outstanding at December 31, 2010 and December 31, 2009, respectively		620			529
Additional paid-in capital		1,065,377			1,033,520
Accumulated deficit		(1,328,986	)		(2,193,383	)
Accumulated other comprehensive income (loss)		(46,179	)		(633,818	)

		(247,585	)		(1,640,652	)

	$	3,687,111		$	3,514,628

Newcastle Investment Corp.

Reconciliation of Net Interest Income Less Expenses (Net of Preferred Dividends)

(dollars in thousands)


	Three Months Ended December 31,						Twelve Months Ended December 31,
	2010			2009			2010			2009
Income (Loss) Applicable to Common Stockholders	$	196,986		$	16,529		$	657,252		$	(223,405	)
Add (Deduct):
Impairment (including the reversal of prior valuation allowance on loans)		(35,012	)		26,861			(240,858	)		548,540
Other (Income) Loss		(135,698	)		(30,928	)		(282,287	)		(227,399	)
Excess of carrying amount of exchanged preferred stock over fair value of consideration paid		—			—			(43,043	)		—
Loss from discontinued operations		194			222			8			318

Net Interest Income less Expenses (Net of Preferred Dividends)	$	26,470		$	12,684		$	91,072		$	98,054