Eurocastle Investment Limited (“Eurocastle”) today announced its financial results for the six months ended 30 June 2011.
Eurocastle and its consolidated subsidiaries (together with Eurocastle, the “Group”) primarily own and manage German
commercial property. The Group is Euro denominated and currently listed on Euronext Amsterdam, under the symbol
“ECT”. 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.
Eurocastle First Half 2011 Progress Report to Shareholders
During the first half of 2011, the Group focussed on continuing to make progress towards realising and driving value from its
real estate holdings, on stabilising the Group’s financings and on extracting value from the Group’s debt investment
business.
The first half of 2011 saw a comprehensive restructuring of the Mars Fixed 1 facility. Through a 3 year asset management
service contract between Eurocastle’s German asset management platform and the Mars Fixed 1 portfolio, an immediate
economic benefit has been derived for the Group worth approximately €1.5 million since completion of the restructuring.
The Drive Junior facility also saw a further phase of an anticipated multi-phase restructuring complete in the first half of
2011, which has led to the release of approximately €1.8 million in cash distributions to Eurocastle from its Drive portfolio.
Our adjusted NAV per fully diluted share was €0.46 at the half year-end, compared to €0.55 per fully diluted share at the end
of 2010. The adjusted real estate portion of the NAV was €0.61 per fully diluted share at the half year end compared to €0.73
per fully diluted share at the end of 2010. Of the reduction in the adjusted real estate NAV, €0.05 per fully diluted share is
the result of the deferral of convertible securities interest, and €0.07 per fully diluted share from the decline in property
values and the Mars Fixed 1 facility restructuring.
Non-cash valuation declines in the value of our real estate assets, the deconsolidation of the Mars Fixed 1 portfolio, together
with the non-cash valuation impairments of some of our debt investments, has resulted in a net loss after taxation for the first
six months of 2011 of €72.1 million (of which €31.9 million relates to the real estate business and €40.2 million to the debt
investment business and other), compared to a net loss of €55.3 million for the first six months of 2010. Our Normalised
Funds from Operations for the first half of 2011 totalled €13.0 million compared to €19.8 million for the first half of 2010.
No dividends were declared or paid in the first half of 2011.
Real Estate Portfolio and Market Commentary
At the half year-end, Eurocastle owned 473 German commercial real estate assets, with a value of €2.3 billion, following the
deconsolidation of the Mars Fixed 1 portfolio as described on page 10. Taking into account our 50% economic ownership of
the Mars Floating portfolio, we have €2.2 billion of real estate investments with an NOI yield of 6.1%. The portfolio is
comprised of a diversified mix of high quality office and retail properties concentrated in the five major German cities
(Berlin, Hamburg, Frankfurt, Düsseldorf and Munich).
Positive developments in the German economy, especially in comparison to many other European countries, have continued
in 2011 with a GDP growth forecast of 2.6% for the full-year, year–on-year unemployment down to 6.6%, and year-on-year
exports up 7.5% compared to 2010. Thus far, the investment volume in the first two quarters totalled approximately €11.3
billion, which represents an increase of 20% compared to the six months ended 30 June 2010. Closed- and open-ended funds
as well as international investors were amongst the most active buyers, investing mainly in core ‘prime’ assets in the major
German office markets. While this has not translated directly to Eurocastle’s real estate portfolio, we feel it is broadly
supportive of our asset values over the medium term. Based on the recent external forecasts, the overall commercial real
estate transaction volume in Germany is expected to reach €22-24 billion, which would exceed the total 2010 transaction
volume of approximately €20 billion.

During the first six months of 2011, Eurocastle sold 22 properties with sales proceeds of €126.1 million. In addition, we have
signed sales and purchase agreements for a further 15 properties with sales proceeds of €31.3 million anticipated to close in
the latter half of 2011. Furthermore, subsequent to the half year-end, Eurocastle has signed sales and purchase agreements
for an additional two properties with sale proceeds of €2.2 million. In aggregate, this equates to a total volume of €159.6
million and 96% of current carrying value. We expect our upcoming sales activity in 2011 to be assisted by the ongoing
positive outlook for the German economy and its commercial real estate investment markets.

With regards to the German commercial real estate rental market, the major occupier markets recorded positive rental takeup figures in the first half of 2011, up 17% compared to the same period in 2010. In line with the positive trends in take-up,
office vacancy rates in the major office markets have decreased. Real estate agents forecast a further increase of prime office
rents in the five major office markets while secondary locations will remain unaffected by the favourable environment and
show stagnating rents and low occupier demand.
Physical occupancy in the Eurocastle portfolios decreased on a like-for-like basis from 86.8% at the end of 2010 to 83.8% as
at 30 June 2011, due to large Commerzbank lease expiries as it refocuses its real estate strategy following its acquisition of
Dresdner Bank. Our average lease term in the portfolio is 4.6 years, with 1.5% of the rental income expiring in 2011.

Debt Investment Portfolio
Within our debt investment portfolio, we have €1.7 billion face value of assets which are financed through three separate
term, non-recourse public CDO financings. Despite the relatively stable cash flow performance of our investments, rating
agency downgrades continue to cause our CDO financings to trigger financial ratios which direct the cash they generate to
pay down senior CDO financing. During the first half of 2011, these ratios have benefited from the re-investment of cash
received from repayments of principal into higher yielding assets. However, as these ratios remain significantly below their
trigger levels, our returns from these portfolios continue to be likely to be driven primarily by the return of capital once
senior debt tranches have been repaid.
Financing
The Mars Fixed 1 facility was restructured in the first quarter. The Mars Fixed 1 facility lenders have agreed to modify the
terms of the Mars Fixed 1 loan facility, which matures in July 2014, to include annual amortisation targets expected to be
met from asset sales, the deferral of a significant part of the facility’s current interest margin and new capital loaned from a
junior lender for capital expenditure on the Mars Fixed 1 portfolio. In addition, Eurocastle’s German asset management
platform has been retained to provide asset management services to the portfolio for which it will be compensated over an
anticipated minimum 3 year term. In consideration of these terms, Eurocastle transferred half of its remaining equity
investment in the Mars Fixed 1 portfolio to a junior lender who will control 75% of the equity in the portfolio, leaving
Eurocastle with a 25% residual investment in the portfolio. From a cashflow perspective, excess cash continues to be used to
repay debt.
Preliminary negotiations with lenders in relation to the Mars Floating facility and related contingent guarantees given by
Eurocastle in respect of the Mars Floating facility are currently underway. The Group anticipates the conclusion of a
restructuring in the second half of 2011. From a cashflow perspective, excess cash continues to be used to repay debt.
The Group has signed two phases of an anticipated multi-phase restructuring of the Drive Junior facility. As a result, in
relation to the period from the second half of 2010 and the first half of 2011, the Group has received cash distributions of
approximately €1.8 million from the Drive portfolio. Continuing restructuring negotiations on this facility remain
constructive and in progress.
On 8 June 2011, CDO II once again passed an overcollateralisation financial ratio and therefore came out of a default
originally triggered by a breach of this ratio in September 2010.
The remainder of our financings at Eurocastle continue to perform. At the half year-end, we had €3.4 billion in financing
with a weighted average life of 3.8 years. We remain active in managing our debt and look forward to advancing current
negotiations on the Group’s financings in the second half of 2011.
Outlook
We remain focused on our main priorities of realising the value of our real estate investment portfolio, stabilising our
financing structures and extracting value from our debt investment business. To this end, we will continue to
opportunistically sell assets we consider to be fully valued and take further steps to improve our overall long term capital
structure.

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