Eurocastle Investment Limited and Subsidiaries Financial Results for the year and quarter ended 31 December 2007

Released: 28/03/2008

Eurocastle Investment Limited owns and invests primarily in German commercial property. The Group is Euro denominated and currently listed on Euronext Amsterdam, under the symbol “ECT” and on the Frankfurt Stock Exchange, under the symbol “EUI1”. Eurocastle is managed by an affiliate of Fortress Investment Group LLC. For more information regarding Eurocastle and to be added to our email distribution list, please visit www.eurocastleinv.com.

2007 Highlights

• Net profit after tax of €134.9 million for the year ended 31 December 2007, decreased from €143.8 million for the year ended 31 December 2006.
• FFO* increased by 149.4% to €186.3 million for the year ended 31 December 2007 from €74.7 million for the year ended 31 December 2006.
• FFO return on average invested capital was 12.7% for the year ended 31 December 2007, compared to 9.1% for the year ended 31 December 2006.
• NAV per share decreased to €23.05 at the end of the fourth quarter 2007, from €24.73 at 31 December 2006, a decrease of 6.8%. NAV includes commercial property valued at an average NOI yield of 5.5%.
• 2007 total dividends of €1.95 per share, inclusive of the fourth quarter 2007 dividend of €0.30 per share.
• A dividend of €0.30 per share has been declared for the fourth quarter ended 31 December 2007. The dividend is payable on 11 April 2008 to holders on record of Eurocastle’s shares on 2 April 2008.

Portfolio Activity

• Increased commercial property portfolio to €5.2 billion totalling 591 properties with approximately 2.2 million square meter of lettable space.
• Completed €2.4 billion of commercial property purchases, including the acquisition of 56 German commercial property assets (“the Mars portfolio”) announced in December 2006 and completed in the first quarter 2007.
• Signed 684 commercial leases for approximately 228,000 square meters, including 308 new leases for approximately 84,000 square meters.
• Increased occupancy from 86.3% (on a pro-forma basis) at the end of 2006 to 88.4% at the end of 2007.
• Completed asset sales realising gains on book cost of €71.3 million, net of all transaction costs and incentive fees. Assets sold during 2007 were:
• Portfolio of 77 properties for gross proceeds of €314.0 million.
• Remaining holding of 1,200 Italian Real Estate Fund Units (FIP) for gross proceeds of €169.2 million.
• The Kudamm Karree building in Berlin for gross proceeds of €155.0 million.
• The Promenadeplatz building in Munich for gross proceeds of €54.0 million.
• The credit quality of the €2.1 billion debt portfolio remained strong. The ratio of upgrades to downgrades for 2007 was 44 to 5.
• Subsequent to year end, on the debt investment portfolio:
• Eliminated all mark to market financing
• Extended average maturity of financings to 6.3 years
• Limited recourse financing to €30 million

* For an explanation of FFO, see the section headed “Funds from Operations” in the PDF attached.

Key Performance Indicators

Year Ended 2007

• Net profit after tax of €134.9 million for the year ended 31 December 2007, decreased from €143.8 million for the year ended 31 December 2006.
• Earnings per ordinary share** for the year ended 31 December 2007 of €2.12 compared to €3.20 per ordinary share for the year ended 31 December 2006.
• FFO increased by 149.4% to €186.3 million for the year ended 31 December 2007 from €74.7 million for the year ended 31 December 2006.
• FFO of €2.92 per ordinary share** for the year ended 31 December 2007 compared to €1.66 per ordinary share for the year ended 31 December 2006.
• FFO return on average invested capital* was 12.7% for the year ended 31 December 2007, compared to 9.1% for the year ended 31 December 2007.
• NAV per share decreased to €23.05 at 31 December 2007, from €24.73 at 31 December 2006, a decrease of 6.8%.

Fourth Quarter 2007

• Net loss after tax of €205.1 million for the fourth quarter 2007 compared to a net profit after tax of €9.7 million for the fourth quarter 2006.
• Loss per ordinary share** of €3.21 for the fourth quarter 2007 compared to earnings per ordinary share of €0.19 for the fourth quarter 2006.
• Funds from Operations (“FFO”, see Key Financial Information) increased by 211.0% to €68.1 million for the fourth quarter 2007 from €21.9 million for the fourth quarter 2006.
• FFO of €1.07 per ordinary share** for the fourth quarter 2007 compared to FFO of €0.43 per ordinary share for the fourth quarter 2006.
• FFO return on average invested capital* was 18.6% for the fourth quarter 2007, compared to 8.9% for the fourth quarter 2006.
• NAV per share decreased to €23.05 at the end of the fourth quarter 2007 from €27.95 at the end of the third quarter 2007. This decline primarily relates to a reduction in the fair value of commercial property of €220.1 million and unrealised mark-to-market losses on the debt portfolio of €60.2 million. The mark-to-market losses did not impact earnings or FFO.

* Invested capital represents capital and reserves less hedging reserves, fair value of interest rate swaps and net unrealised losses on available-for-sale securities and cumulative FFO adjustments.

** Loss/Earnings per share and FFO per share, are calculated on the weighted average number of shares in issue during the period ended 31 December 2007.

Conference Call

Management will conduct a conference call today, 28 March 2008, to review the Group's financial results for the quarter ended 31 December 2007. The conference call is scheduled for 12:00 P.M. London time (08:00 A.M. New York time). All interested parties are welcome to participate on the live call. You can access the conference call by dialling +1-877-717-3044 (from within the U.S.) or +1-706-679-1521 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “Eurocastle Year End Earnings Call.”

A webcast of the conference call will be available to the public on a listen-only basis at www.eurocastleinv.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 replay of the webcast will be available for three months following the call.

For those who are not available to listen to the live call, a replay will be available until 11:59 P.M. New York time on Friday, 4 April 2008 by dialling +1-800-642-1687 (from within the U.S.) or +1-706-645-9291 (from outside of the U.S.); please reference access code “40979042.”

View the full Eurocastle Investment Limited and Subsidiaries Financial Results for the year and quarter ended 31 December 2007 in PDF format (340 KB, opens in a new window).