Newcastle Investment Corp. (NYSE: NCT) today announced the securitization of the residential mortgage loan portfolio it acquired in March 2006. Newcastle, through Newcastle Mortgage Securities Trust 2006-1, issued $1.45 billion of investment grade debt to term finance the portfolio. Newcastle will initially retain $38 million of the low investment grade notes as well as the equity of the Trust. Following this financing, Newcastle will have approximately $70 million of capital invested in the portfolio. For accounting purposes, a majority of this financing will be treated as off-balance sheet. The proceeds from this securitization were used to repay short-term financing provided by an investment bank. Approximately 81% of the issued debt was rated AAA. The issued debt has a stated maturity of March 25, 2036.

The $1.5 billion portfolio is comprised of loans to subprime borrowers who own residential homes located throughout the U.S. Approximately 92% of the portfolio is secured by first liens, substantially all the assets are owner occupied and the borrowers have a weighted average FICO score of 612. The loans have a weighted average gross coupon of 7.6% and an average loan to value of 81.0%. Substantially all of the loans are current. The loans will be serviced by Centex Home Equity Company, LLC, a leading subprime home equity mortgage lender.

Kenneth Riis, Newcastle's President, remarked, "We are pleased with the timing of the securitization as credit spreads in the subprime market have tightened since we purchased the portfolio, resulting in a lower cost of funds and a higher return on equity than previously expected."

Newcastle Investment Corp. invests in real estate 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. For more information regarding Newcastle Investment Corp. and to be added to our email distribution list, please visit http://www.newcastleinv.com.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

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 expected returns. 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, the performance of the loans in the residential mortgage loan portfolio, changes in estimated default or recovery rates, 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 Newcastle's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

Source: prnewswire