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News and Information Article
NEW YORK, April 7 /-FirstCall/ -- Newcastle Investment Corp.
(NYSE: NCT) today announced the securitization of the residential mortgage
loan portfolio it acquired in March 2006. Newcastle, through Newcastle
Mortgage Securities Trust 2006-1, issued $1.45 billion of investment grade
debt to term finance the portfolio. Newcastle will initially retain $38
million of the low investment grade notes as well as the equity of the
Trust. Following this financing, Newcastle will have approximately $70
million of capital invested in the portfolio. For accounting purposes, a
majority of this financing will be treated as off-balance sheet. The
proceeds from this securitization were used to repay short-term financing
provided by an investment bank. Approximately 81% of the issued debt was
rated AAA. The issued debt has a stated maturity of March 25, 2036.
The $1.5 billion portfolio is comprised of loans to subprime borrowers
who own residential homes located throughout the U.S. Approximately 92% of
the portfolio is secured by first liens, substantially all the assets are
owner occupied and the borrowers have a weighted average FICO score of 612.
The loans have a weighted average gross coupon of 7.6% and an average loan
to value of 81.0%. Substantially all of the loans are current. The loans
will be serviced by Centex Home Equity Company, LLC, a leading subprime
home equity mortgage lender.
Kenneth Riis, Newcastles President, remarked, "We are pleased with the
timing of the securitization as credit spreads in the subprime market have
tightened since we purchased the portfolio, resulting in a lower cost of
funds and a higher return on equity than previously expected."
Newcastle Investment Corp. invests in real estate securities and other
real estate-related assets. Newcastle is organized and conducts its
operations to qualify as a real estate investment trust (REIT) for federal
income tax purposes. For more information regarding Newcastle Investment
Corp. and to be added to our email distribution list, please visit
http://www.newcastleinv.com.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of these
securities in any state or jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction.
Certain items in this press release may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995 including statements relating to expected returns. These
statements are based on managements current expectations and beliefs and
are subject to a number of trends and uncertainties that could cause actual
results to differ materially from those described in the forward-looking
statements; Newcastle can give no assurance that its expectations will be
attained. Factors that could cause actual results to differ materially from
Newcastles expectations include, but are not limited to, the performance
of the loans in the residential mortgage loan portfolio, changes in
estimated default or recovery rates, and other risks detailed from time to
time in Newcastles SEC reports. Such forward-looking statements speak only
as of the date of this press release. Newcastle expressly disclaims any
obligation to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in
Newcastles expectations with regard thereto or change in events,
conditions or circumstances on which any statement is based.
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