Eurocastle Investment Limited and Subsidiaries Interim Financial Results for the half year and quarter ended 30 June 2008

Released: 14/08/2008

Eurocastle Investment Limited ("the Company") owns and invests primarily in German commercial property. The Company and its subsidiaries ("the Group") has Euro denominated shares in issue 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.

Highlights

Financial

• FFO* was €32.5 million or €0.51 per share for the quarter ended 30 June 2008 and €55.1 million or €0.86 per share for the half year ended 30 June 2008, compared with €57.2 million or €0.90 per share and €85.1 million or €1.34 per share for the quarter and half year ended 30 June 2007 respectively.
• FFO* return on average invested capital was 8.9 % for the quarter ended 30 June 2008 and 7.5% for the half year ended 30 June 2008, compared to 15.6% and 11.7% for the quarter and half year ended 30 June 2007 respectively.
• NAV per share of €18.42 as at 30 June 2008 comprising of (€0.63) for the debt investment business and €19.05 for the commercial property portfolio (31 December 2007: €23.05 comprising €2.11 for the debt investment business and €20.94 for the commercial property portfolio).
• Adjusted NAV** reflects the mark-to-market of all our financial assets and liabilities within the debt investment portfolio and amounted to €23.09 per share for the group as a whole and to €4.04 per share for the debt investment business (31 December 2007: €23.47 per share for the group as a whole and €2.54 per share for the debt investment business).
• Net loss after tax was €31.6 million for the quarter ended 30 June 2008 and €115.7 million for the half year ended 30 June 2008, compared with a profit of €236.2 million and €290.5 million for the quarter and half year ended 30 June 2007 respectively. The losses primarily relate to non-cash valuation adjustments to our portfolio.

Dividends and buy-backs

• Given the large gap between the current share price and adjusted NAV, the board has decided that accelerating our share buy-back program at this time is in the best long term interest of our shareholders. Therefore, a semi-annual distribution to shareholders of €0.60 per share (€38.4 million) is available to be made in the following manner; €0.30 per share (€19.2 million) will be paid as a direct dividend distribution and €0.30 per share (€19.2million) will be used by the company to launch a cash tender offer for up to 3.2 million shares at a fixed price of €6.00 per share. The cash dividend will be paid August 29, 2008 to all holders of Eurocastle shares, on record, on 19 August 2008, and the cash tender offer will commence upon publication of a shareholder circular, which is expected to be by August 22, 2008.****

Business review

Eurocastle’s focus in the first half of the year has been in three major areas: first, reducing short-term funding risks, second, harvesting fully valued assets, and third, continuing to lease-up the property portfolio. In all three areas, it has been a successful year thus far. Since the beginning of 2008 we have financed or refinanced over €730 million of debt. Additionally we have sold, or entered into binding agreements to sell approximately €400 million of commercial real estate and increased physical occupancy on a like-for-like*** basis from 83.4% to 84.0% during the quarter. We look forward to continued progress on all of these fronts for the remainder of the year.

* For an explanation of FFO, see Note 32.
** For a reconciliation of NAV to adjusted NAV, see the section headed "Net asset value" on page 8.
*** Like-for-like occupancy reflects only those properties owned at the end of each reporting period.
**** Refer to page 18 for more details.

Conference Call

Management will conduct a conference call today, 14 August 2008, to review the Group's financial results for the six months and quarter ended 30 June 2008. The conference call is scheduled for 1:00 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 Second Quarter 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 Thursday, 21 August 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 "58788798."

Forward-Looking Statements

This release contains statements that constitute forward-looking statements. Such forward-looking statements relate to, among other things, future commitments to acquire real estate and achievement of acquisition targets, availability of attractive investment opportunities, methods of funding portfolios, timing of completion of acquisitions, the operating performance of our investments and financing needs. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may", "will", "should", "potential", "intend", "expect", "endeavour", "seek", "anticipate", "estimate", "overestimate", "underestimate", "believe", "could", "project", "predict", "continue", "plan", "forecast" or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Our ability to predict results or the actual effect of future plans or strategies is limited. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance may differ materially from those set forth in the forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors that may cause our actual results in future periods to differ materially from forecasted results or stated expectations, including the risk that leasing markets will continue to be strong or that Eurocastle will be able to achieve its targets regarding asset disposals, operational growth particularly any increase in leasing of vacant space on acceptable terms or take advantage of widening credit spreads to acquire good quality collateral at discounted prices.

View the full Eurocastle Investment Limited and Subsidiaries Interim Financial Results for the half year and quarter ended 30 June 2008 in PDF format (325 KB, opens in a new window).