Newcastle Investment Corporation (NCT) is a mortgage real estate investment trust (REIT) that specializes in real estate securities and other real estate-related assets. The company's business activity is segmented into Real Estate Securities, Operating Real Estate, Residential Mortgage Loans, and Real Estate Loans. The Real Estate Securities segment issues and manages investments in mortgage-backed assets (such as commercial mortgage-backed securities, or CMBS) and securitized real estate debt instruments. Operating Real Estate includes credit-leased real estate located in the U.S., Canada, and Belgium. Real estate leased to tenants with investment-grade credit ratings is known as credit-leased real estate. The purchase of residential mortgage loans advanced to high-risk borrowers comprises the Residential Mortgage Loans segment. Real Estate Loans consists of loan and mortgage pools. Newcastle funds its investments with secured borrowings, such as collateralized bond/debt obligations (CBOs/CDOs) and equity offerings. Formed in June 2002, the company is the result of a reverse spin-off from Newcastle Investment Holdings Corporation (NCT Holding), whereby it is treated as the continuing entity. Newcastle went public in October 2002, and is managed externally by Fortress Investment Group. As of September 30, 2007, the company had a core investment portfolio of $8.9 billion, which consisted of $4.1 billion of commercial real estate securities and loans, $2 billion of residential securities and loans, $927 million of REIT debt, $597 million of corporate bank loans. 84.6% of the total portfolio had an implied rating of AAA, with a weighted average rating of BBB.

NCT reported FFO of $(39.0) million, or $(0.74) per share. FFO included impairments of $74.9 million. Excluding the effect of charges, FFO was $0.68 per share. Net Income was $(39.3) million, or $(0.74) per share. Excluding the effect of non-recurring impairments, net income was $35.6 million, or $0.67 per diluted share. Recurring EPS was $0.09 below our estimates, which was due to a slowdown in new originations.

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