Crystal River Reports Fourth Quarter And Full Year 2008 Financial Results

Market Wire, February, 2009

Crystal River Capital, Inc. ("Crystal River" or the "Company") (OTCBB: CYRV) -

Crystal River's management will host a dial-in teleconference to review its fourth quarter and full year 2008 financial results on February 26, 2009 at 4:30 p.m. (EST). The teleconference can be accessed by dialing 866-288-0543 or 913-981-4902 (International). A replay of the recorded teleconference will be available through March 12, 2009. The replay can be accessed by dialing 888-203-1112 or 719-457-0820 (International) and entering passcode 7984693. A live audio webcast of the call will be accessible on the Company's website, www.crystalriverreit.com , via a link from the Investor Relations section. A replay of the audio webcast will be archived in the Investor Relations section of the Company's website.

Crystal River Capital, Inc. ("Crystal River" or the "Company") (OTCBB: CYRV) today announced its results for the quarter and the year ended December 31, 2008.

Separately, the Company announced that its Board of Directors has declared a first quarter 2009 dividend of $0.10 per share.

For additional information, please refer to Crystal River's letter to stockholders, which has been posted to the Investor Relations section of the Company's website at www.crystalriverreit.com .

I. FOURTH QUARTER UPDATE

- Liquidity and leverage update: Crystal River continued its focus on reducing leverage by eliminating its repurchase agreement debt at December 31, 2008. The amount drawn under the Company's revolving credit facility was reduced to $32.9 million at December 31, 2008 from $41.4 million at September 30, 2008.

- Operating results: The net loss for the quarter ended December 31, 2008 totaled $37.1 million, or $1.48 per share. Operating Earnings (defined below) for the quarter ended December 31, 2008 totaled $17.1 million, or $0.68 per share, compared to $17.3 million, or $0.70 per share, for the fourth quarter of 2007 and $13.9 million, or $0.56 per share, for the third quarter of 2008. The increase over the third quarter of 2008 was primarily attributable to the receipt of principal payments on previously written-off residential mortgage-backed securities.

- Dividend: Cash flow from operations for the fourth quarter represented in excess of three times coverage of the quarterly dividend of approximately $2.5 million, and the remainder was used to pay down liabilities.

- Portfolio activity: Crystal River sold a mezzanine loan for $11.4 million that the Company had previously designated for sale. The proceeds from the sale were used to repay debt.

Discussion of Fourth Quarter Results

Net Investment Income (defined below) for the quarter ended December 31, 2008 totaled $21.4 million compared to Net Investment Income of $19.9 million for the fourth quarter of 2007 and Net Investment Income of $18.3 million for the third quarter of 2008. The increase over the third quarter of 2008 was primarily attributable to the receipt of principal payments on previously written-off residential mortgage-backed securities.

The net loss for the quarter ended December 31, 2008 totaled $37.1 million, or $1.48 per share, compared to a net loss of $250.4 million, or $10.10 per share, for the fourth quarter of 2007 and a net loss of $56.7 million, or $2.28 per share, for the third quarter of 2008. The primary contributors to the fourth quarter 2008 net loss were a $30.6 million impairment charge against the Company's available-for-sale securities and realized and unrealized losses on derivatives totaling $26.5 million, which was partially offset by operating earnings for the quarter and a $10.8 million net increase in assets and liabilities valued under fair value option. Finally, the Company also recorded a $6.2 million loan loss allowance on its real estate loan holdings during the quarter ended December 31, 2008.

Discussion of Full Year Results

Net Investment Income for the year ended December 31, 2008 increased to $85.9 million compared to Net Investment Income of $81.9 million for the year ended December 31, 2007. Operating Earnings for the year ended December 31, 2008 totaled $67.1 million, or $2.70 per share, compared to Operating Earnings of $69.9 million, or $2.80 per share, for the year ended December 31, 2007. The increase in Net Investment Income for 2008 was mainly due to an increase in rental income from the Company's commercial properties. The decrease in Operating Earnings for 2008 was primarily due to lower interest income resulting from the sale of Crystal River's Agency MBS portfolio in the first half of 2008.

The net loss for the year ended December 31, 2008 totaled $307.1 million, or $12.35 per share, compared to a net loss of $345.9 million, or $13.86 per share, for the year ended December 31, 2007. The primary contributors to the net loss for 2008 were non-cash impairment charges of $142.9 million, a $123.7 million net decrease in assets and liabilities valued under fair value option and $70.7 million of realized and unrealized losses on derivatives, which was partially offset by operating earnings for the year. Finally, the Company also recorded a $27.1 million loan loss allowance on its real estate loan holdings during the year ended December 31, 2008.