Newcastle to Buy Excess MSRs, Spin-Off Residential Assets; to Sell 40M Shares in Public Offering

Newcastle Investment Corp. (NYSE: NCT) (“Newcastle” or the “Company”)announced today that it has agreed to acquire an interest in Excess MortgageServicing Rights (“Excess MSRs”). The total unpaid principal balance (“UPB”)of the underlying loans was approximately $215 billion as of November 30,2012. In a separate transaction on January 4, 2013, Newcastle acquired aninterest in the Excess MSRs on a $13 billion Ginnie Mae pool. Thesetransactions are expected to bring Newcastle's total investment in Excess MSRsto approximately $610 million and the UPB of the underlying loans to over $310billion. Newcastle intends to spin off these and certain other residentialassets, as described below.Excess MSR AcquisitionsNewcastle has agreed to acquire Excess MSRs on approximately $215 billion UPBfrom Nationstar Mortgage Holdings Inc. (“Nationstar”), in conjunction withNationstar's purchase of MSRs from Bank of America. Newcastle has committed toinvest approximately $340 million to acquire a one-third interest in theExcess MSRs. The majority of the investment is expected to close in the firstquarter of 2013, subject to regulatory and third-party approvals. Nationstarwill service the loans and will retain a one-third interest in the ExcessMSRs; a Fortress Fund will acquire the remaining one-third interest. The loanscomprise four pools, of which 47% are expected to be loans that are owned,insured or guaranteed by Agency/Government entities and 53% are expected to benon-conforming loans in private label securitizations.Separately, Newcastle invested $27 million for a one-third interest in theExcess MSRs on a $13 billion UPB Ginnie Mae loan pool from Nationstar. As inthe transaction described above, Nationstar is the servicer and owns aone-third interest. The Fortress Fund acquired the remaining one-thirdinterest.Spin-Off of Residential AssetsNewcastle also announced that its Board of Directors has unanimously approveda plan to spin off all of its Excess MSRs and certain other residentialassets. Newcastle intends to effect the spin-off in the first quarter of 2013by distributing shares of its subsidiary, New Residential Investment Corp.(“New Residential”). New Residential will be a publicly traded real estateinvestment trust that primarily targets opportunistic investments in ExcessMSRs, RMBS, servicing advances, non-performing loans and other real estaterelated investments. New Residential will be externally managed by anaffiliate of Fortress Investment Group LLC pursuant to a new managementagreement with terms that are substantially similar to the terms ofNewcastle's management agreement.Separately, the company is planning to make a public offering of 40,000,000 sharesof its common stock. In connection with the offering, the Company intends togrant the underwriters an option for 30 days to purchase up to an additional6,000,000 shares of common stock.