Eurocastle Announces 2016 AGM Results and First Quarter 2016 Financial Results

Guernsey, 19 May 2016 - Eurocastle Investment Limited (Euronext Amsterdam: ECT) today announces the results of its 2016 Annual General Meeting held yesterday, 18 May 2016. All ordinary and extraordinary business tabled before the meeting in accordance with the Notice of Annual General Meeting circulated to shareholders on 28 April 2016 was approved. This includes the approval of the standing share buyback authority. Under this program, the Company may repurchase a maximum of 18,100,374 shares at the minimum price of €0.01 per share and the maximum price equal to 97.5% of the Company's most recently published net asset value per share as at the date of the acquisition. The definition of net asset value for these purposes was clarified by an amendment to resolution 5 to refer to 'adjusted net asset value' as reported by the Company. A copy of the Notice of Meeting is available on Eurocastle's website at www.eurocastleinv.com.

In addition, the Company today released its financial results for the first quarter ended 31 March 2016.  

FINANCIAL HIGHLIGHTS

• Normalised FFO¹
  • €10.5 million, or €0.15 per share, for the first quarter of 2016 reflecting the first full quarter ownership of doBank and including €0.02 per share one-off impacts from the Legacy Business^2,6 (Q4 2015: €8.1 million, or €0.11 per share).
  • Before costs, Italian Investments³ alone generated €12.0 million, or €0.17 per share of Normalised FFO, resulting in a return on average net invested capital⁴ of 15% (Q4 2015: €9.7 million, or €0.13 per share).
• Adjusted Net Asset Value⁵
  • €532.2 million, or €7.35 per share, in line with previous quarter after paying €9.1 million of quarterly dividend (Q4 2015: €532.5 million, or €7.35 per share).
• First Quarter 2016 Dividend
  • €9.1 million or €0.125 per share paid in April.

BUSINESS HIGHLIGHTS
  
 Italian Investments - On 8 March 2016, Eurocastle entered into a structured transaction ("Fund Investment IV") investing €1.0 million out of an anticipated €7.0 million to acquire substantially all of the units of a newly established unlisted Italian real estate fund set up to restructure and monetise real estate properties owned by an over-levered real estate fund. The portfolio owned by the fund consists of a retail portfolio in Northern Italy and 3 office assets with a combined value of €132 million.
  
 Italian Investment Performance - During the first quarter, these investments in aggregate generated €10.9 million, or €0.15 per share, of cash flow. This includes €2.0 million from the NPLs within doBank and €5.5 million from doBank's servicing business.
  
 Legacy Business - The Company continued making progress towards its goal of fully disposing of these assets, collecting €4.7 million over the period including €3.6 million from the sale of the Zama portfolio. As at 31 March 2016, the Legacy Business has a remaining NAV of €13.0 million, or €0.18 per share, representing only 2% of the Group's Adjusted NAV.Since January 2015 the gacy Business has generated €82.5 million of cash flow.

HIGHLIGHTS SUBSEQUENT TO 31 MARCH 2016

• At its Annual General Meeting, amongst other items, the Company received approval to buy back up to 25% of outstanding shares at a price not exceeding 97.5% of its most recently published Adjusted Net Asset Value per share.
   
• On 10 May 2016, Eurocastle invested an additional €6.0 million into the Fund Investment IV transaction bringing the Company's total equity investment to €7.0 million. On completion, Eurocastle's share of the implied net asset value of this fund was €14.2 million indicating an acquisition at approximately a 50% discount to the implied NAV.
   
• In May 2016, Eurocastle received €6.8 million, or 63% of its original investment in Fund Investment III. The distribution followed the sale of an asset which represented 26% of the fund's total assets, with the sale price representing a 5% premium to reported market value. The units in this fund were acquired by the Company at a 56% discount to the fund's reported NAV at acquisition.
   
• In May 2016, the Company invested €5.0 million to acquire an interest in mezzanine tranches of a securitisation of senior Italian real estate fund debt at a significant discount to expected recovery.

ADDITIONAL INFORMATION

For additional information that management believes to be useful for investors, please refer to the latest presentation posted on the Investor Relations section of the Company's website, www.eurocastleinv.com. For consolidated investment portfolio information, please refer to the Company's most recent Financial Report, which is available on the Company's website (www.eurocastleinv.com).

EARNINGS CALL INFORMATION

Eurocastle's management will host an earnings conference call at 2:00 P.M. London time (9:00 A.M. New York time) later today. All interested parties are welcome to participate on the live call. You can access the conference call by dialing first +1-800-215-5243 (from within the U.S.) or +1-330-863-8154 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference "Eurocastle First Quarter 2016 Earnings Call" or "conference ID number 1385711."

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 19 August 2016 by dialing +1-855-859-2056 (from within the U.S.) or +1-404-537-3406 (from outside of the U.S.); please reference access code "1385711"

NORMALISED FFO

Normalised FFO is a non-IFRS financial measure that, with respect to the Company's Italian Investments, recognises income on an expected yield basis allowing Eurocastle to report the run rate earnings from these investments in line with their projected annualised returns. On Eurocastle's Legacy Business the measure excludes realised gains and losses, sales related costs (including realised swap losses), impairment losses and foreign exchange movementsand any movements on portfolios with a negative NAV other than sales or asset management fees realised.

Eurocastle believes that, given the strategy of seeking to monetise the existing value of the Legacy Business, focusing on the Normalised FFO of the Company's Italian Investments will further enable investors to understand current and future earnings given annualised returns achieved and the average net invested capital over the relevant period.

Q1 2016 NORMALISED FFO

In the first quarter of 2016, Eurocastle generated Normalised FFO of €10.5 million, or €0.15 per share compared to a dividend of €9.1 million, or €0.125 per share. Before corporate costs, Italian Investments generated €12.0 million, or €0.17 per share. Given the average net invested capital in the period was approximately €310 million, this equates to a yield of 15%.

Q1 2016 INCOME STATEMENT

For the first three months of 2016, the total net gain after taxation and non-controlling interests as reported under IFRS was €8.2 million. Within the Group's Italian Investments, where the majority of these assets are accounted for at fair value under a discounted cash flow approach, net income after taxation and non-controlling interest for the first quarter of 2016 was €8.6 million, or €0.12 per share.

Excluding losses arising within those legacy portfolios that have a negative NAV, the Group generated a net profit after taxation of €9.5 million or €0.13 per share. As at 31 March 2016, the remaining adjusted NAV of the legacy portfolios was €13.0 million, or €0.18 per share which represents just 2.0% of the Company's Adjusted NAV.

 Q1 2016 BALANCE SHEET AND ADJUSTED NAV RECONCILIATION