Fitch Affs Newcastle Investment's U.S. CRE CDO Asset Mgr Rtg of 'CAM1-'; Outlook Negative

Business Wire, Jan 17, 2008

NEW YORK -- Fitch Ratings affirms its 'CAM1-' U.S. commercial real estate (CRE) (collateralized debt obligation) CDO asset manager rating of Newcastle Investment Corp. (Newcastle), with a Negative Outlook. Newcastle's 2006 'CAM1' rating was re-scaled to match 2007 criteria prior to Fitch's annual review and CAM rating update.

Key drivers of the rating affirmation include the stable, deep firm-wide real estate expertise, the detailed underwriting of CRE assets, and the strong middle- and back-office support of the CDO platform. The Negative Outlook is based on the sector-wide financial and liquidity challenges facing many REITs as well as Newcastle's exposure to subprime RMBS and the possibility of future CDO performance deterioration.

Newcastle's 'CAM1-' rating is based on the firm's composite score, which represents a weighted average based on the scores assigned for each group of criteria factors summarized below. This composite score is used to establish a systematically applied quantitative link between its asset manager rating and Fitch's CDO rating criteria, in accordance with the approach outlined in the Fitch report 'Reviewing and Rating CDO Asset managers' dated Jan. 2, 2007, available on the Fitch web site at www.fitchratings.com.

--Company and Management Experience '1-';

--Staffing '1-';

--Procedures and Controls '2 ';

--Portfolio Management '1-';

--CDO Administration '2 ';

--Technology '2 ';

--CDO Portfolio Performance '2 '.

Newcastle (NYSE:NCT), a publicly traded real estate investment trust (REIT), was formed in June 2002 as a successor to Newcastle Investment holdings. Subject to the direction and oversight of Newcastle's board of directors, Newcastle is externally managed by an affiliate of Fortress Investment Group LLC (Fortress). Newcastle's management relationship with Fortress enables it to take advantage of the existing business relationships, operational and risk management systems, service, and economies of scale associated with Fortress and its business operations. Newcastle finances a substantial portion of its real estate securities and loans through the issuance of CDOs. As of Sept. 30, 2007, Newcastle had $8.9 billion in assets under management including over $5 billion in eight CDOs.

Fitch rates CDO asset managers by asset class, on a scale of 1 to 5, with 1 being the highest rating. The rating scale includes plus (' ') and minus ('-') designations, along with flat ratings. These ratings are based on a standardized scorecard methodology that includes factors in each of the seven groups as noted above.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.