REG-Eurocastle Inv. Ltd Over-Allotment Option

Released: 01/02/2006

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE IN, OR INTO, DIRECTLY OR INDIRECTLY, THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN.

EUROCASTLE INVESTMENT LIMITED

Guernsey. 1 February 2006 – Eurocastle Investment Limited (the “Company”) announces that Morgan Stanley & Co. International Limited has given notice that it is exercising, as stabilising manager, the over-allotment option over 1,156,000 ordinary shares referred to in the prospectus issued by the Company on 30 January 2006 relating to the offering of 11,667,000 ordinary shares in the Company. The additional ordinary over-allotment shares will be issued by the Company. The additional ordinary over-allotment shares have been placed with institutional investors at the offering price of €30.00 per share, raising additional gross proceeds for the Company of approximately €34.7 million.

Deutsche Bank AG, Goldman Sachs International and Morgan Stanley and Co. International Ltd acted as Joint Lead Managers, and Dresdner Kleinwort Wasserstein Limited and Kempen & Co. N.V. acted as Co-Lead Managers of the offering.

It is expected that admission of the over-allotment shares to listing on Eurolist by Euronext Amsterdam and to trading on Euronext Amsterdam’s market for listed securities will become effective, and dealing of the new shares on the Amsterdam Stock Exchange will commence, on 6 February 2006.

This announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any shares referred to in this announcement except on the basis of information in the prospectus published by the Company on 30 January 2005 in connection with the admission of the New Shares to listing in Eurolist by Euronext Amsterdam and to trading on Euronext Amsterdam’s market for listed securities. Copies of the prospectus will be available from the Company’s registered office.

Each of Deutsche Bank AG, Goldman Sachs International, Morgan Stanley & Co. International Limited, Kempen & Co N.V. and Dresdner Kleinwort Wasserstein is acting for Eurocastle in connection with the Offer and no one else and will not be responsible to anyone other than Eurocastle for providing the protections offered to clients of Deutsche Bank AG, Goldman Sachs International, Morgan Stanley & Co. International Limited, Kempen & Co N.V. or Dresdner Kleinwort Wasserstein as the case may be nor for providing advice in relation to the Offer or in relation to the contents of this announcement or any other transaction, arrangement or matter referred to herein.

These materials may not be distributed, directly or indirectly, in or into the United States, Canada, Australia or Japan. They are not an offer to sell or the solicitation of an offer to buy the securities discussed herein.

This announcement does not constitute an offer of securities for sale in the United States. The securities mentioned herein have not been, and will not be, registered under the U.S. Securities Act of 1933 (the “Securities Act”), and may not be offered or sold in the United States, or to, or for the account or benefit of, US persons (as such term is defined in Regulation S under the Securities Act) unless they are registered under the Securities Act or pursuant to an exemption from registration. No public offer of securities is being made in the United States. In addition, the issuer of the securities mentioned herein has not been and will not be registered under the U.S. Investment Company Act of 1940 and Investors will not be entitled to the benefits of such act.