Guernsey, 21 March 2018 - Eurocastle Investment Limited (Euronext Amsterdam: ECT) today has released its annual report for the year ended 31 December 2017.

Adjusted Net Asset Value ("Adjusted NAV") of €556.5 million[1], or €10.56 per share[2], an increase of €0.07 per share over the quarter after paying the third quarter dividend of €1.13 per share in December. Total increase for the year of €1.40 per share. Including dividends declared and paid in 2017 this represents a total return on NAV of 35% for the year.

Normalised FFO[3]of €111.1 million, or €1.86 per share2, for the full year, of which €7.8 million, or €0.14 per share, relates to the fourth quarter.

Fourth Quarter 2017 Dividend of €0.27 per share2 declared on 20 March 2018 and to be paid on 5 April 2018 to shareholders of record at close of business on 27 March 2018, with an ex-dividend date of 26 March 2017. This follows €14.7 million of net NFFO received in cash in the quarter, in line with the Company's distribution policy.

FY 2017 FY 2016 Q4 2017 Q3 2017
€ million € per share2 € million € per share2 € million € per share2
€ million € per share2
Adjusted NAV1 556.5 10.56 550.6 9.16 556.5 10.56 641.0 10.49
Normalised FFO3 111.1 1.86 46.0 0.70 7.8 0.14 68.2 1.12
Dividends2 116.3 2.10 33.1 0.525 14.2 0.27 59.6 1.13

FULL YEAR 2017 BUSINESS HIGHLIGHTS

Successful doBank IPO

In July 2017, doBank completed a €704 million IPO at €9.00 per doBank share, (equivalent to approximately 2.5x Eurocastle's original investment, net of distributions received up to the IPO). doBank is the largest & highest rated third party NPL servicing group in Italy.

Eurocastle's holding of 20 million shares, representing 25.6% of doBank's outstanding shares, was valued at €13.55 per doBank share as at 31 December 2017, up from €10.98 per doBank share as at 30 September 2017. This followed the announcement of over €9 billion GBV of new servicing contracts in the fourth quarter. Subsequent to year-end, doBank announced a further €2.4 billion GBV of new contracts.


doBank Financial Performance

The doBank Group reported EBITDA for the full year of 2017 of €70.1 million, up 9% like-for-like[4] over the same period last year (FY 2016: €64.3 million) driven by collections of €1.8 billion, up 8% over last year[5].
Net profit for the same period was €45.0 million, up 11% like-for-like1 over the same period last year (FY 2016: €40.4 million).
In March 2018, the board of doBank approved, subject to shareholder approval, a dividend of €31.5 million expected to be paid in May 2018 (of which Eurocastle's share is approximately €8 million).


Strong Capital Deployment

During 2017, invested or committed over €144 million of capital including €117 million relating to FINO, one of the largest NPL transactions in Italy since the financial crisis.

In the first half of the year deployed €1.3 million in RE Fund IV and €4.1 million of previously committed equity in RE Fund V with an additional €0.6 million deployed in November. Expect to fund remaining investment, estimated to be €0.8 million, during 2018.
In July, deployed €43.9 million to acquire an interest in a €14.4 billion GBV NPL portfolio from UniCredit S.p.A ("FINO")[6]. The portfolio was subsequently split into two securitisation vehicles. A deferred purchase price of €64.7 million is payable over the next few years. In the fourth quarter 2017, committed an additional €8.4 million investment in the mezzanine and junior notes of the two securitisations.
In November, invested €12.2 million for a shared interest in a new NPL pool with a GBV of €293 million.
In December, deployed €9.0 million to acquire a share of a leveraged interest in a performing and sub-performing ("PL/SPL") loan portfolio of €234 million GBV.
Significant Distributions to Shareholders

In 2017 established a new distribution policy and declared total dividends related to the period of €116.3 million representing 100% of NFFO realised in cash. This includes a €14.2 million, or €0.27 per share Q4 dividend declared by the Board on 20 March 2018 and payable on 5 April 2018.
In November 2017, Eurocastle repurchased 8.4 million shares (representing 13.75% of the Company's voting shares in issue) at a price of €10.00 per share, returning €84 million of capital received following the Company's partial sale of its stake in doBank through the IPO. The completed repurchase was NAV and earnings accretive, increasing pro forma NFFO per share by approximately 15% and Q3 NAV per share by approximately 1%.


Other Significant Realisations

In addition to the €166 million of proceeds received from the doBank IPO, the Company also received approximately €26 million relating to doBank's 2016 dividend.
In February 2017, Eurocastle sold its remaining interest in the units of Real Estate Fund Investment III. The sale resulted in total proceeds of €20.9 million and a total lifetime gross profit of €18.0 million, an IRR of 137% and a 2.7x multiple on equity invested.
In May 2017, the Company announced the successful completion on the financing of the secured portion of its Romeo NPL portfolio. As a result, it received approximately €36 million or 50% of the net proceeds after costs and reserves.
In October 2017, the remaining properties held in Real Estate Fund Investment IV were sold, realising gross proceeds to Eurocastle of €33.6 million and €4.6 million ahead of ECT's Q3 carrying value. Taking into account previous distributions, the sale resulted in a total lifetime gross profit of €21.6 million, an IRR of 95% and 2.6x multiple on equity invested.
During 2017, the Company unwound its interest in the last remaining Legacy portfolio[7] (CDO V) and as such has now fully disposed of all Legacy investments.
BUSINESS HIGHLIGHTS SUBSEQUENT TO 31 DECEMBER 2017

Sale of Senior Notes of FINO 1 Securitisation

Raised approximately €48 million of net proceeds through the sale of its share of the senior notes of FINO 1 Securitisation S.r.l., one of the two securitisations that collectively own the FINO NPL portfolio acquired from UniCredit S.p.A. The senior notes are guaranteed by the Italian state under the "GACS" program and are therefore seen as an extremely attractive form of financing.


Follow on Investment in FINO NPL Portfolio

Closed on a €8.4 million follow-on investment to acquire, together with other Fortress affiliates, additional interests in the mezzanine and junior notes of the two securitisations that collectively own the FINO NPL portfolio.
NORMALISED FFO

Normalised FFO ("NFFO") is a non-IFRS financial measure that, with respect to all of the Company's Italian Investments other than the doBank Group, recognises i) income on an expected yield basis updated periodically, allowing Eurocastle to report the run rate earnings from these investments in line with their expected annualised returns and ii) any additional gains or losses not previously recognised through NFFO at the point investments are realised. Cash flow receipts are therefore allocated by the Company between income and capital in accordance with this expected yield methodology. With respect to the doBank Group, following the IPO, the Company now recognises NFFO based on its share of doBank's reported annual net income after tax together with any gains or losses arising from the sale of its shares. The income cash flow profile of each of the Company's investments may not exactly equal the NFFO recognised by the Company each period but will do so over the life of each investment.

see and read more on

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)