Guernsey, 16 March 2017 - Eurocastle Investment Limited (Euronext Amsterdam: ECT) today has released its annual report for the twelve months ended 31 December 2016.

Normalised FFO[1]of €46.0 million or €0.70 per share[2] for the full year of which €12.5 million, or €0.212 per share for the fourth quarter of 2016.
Before costs, Italian Investments[3]alone generated €55.4 million of Normalised FFO in 2016, resulting in a return on average net invested capital[4] of 17.7%.

Adjusted Net Asset Value[5] of €550.6 million, or €9.16 per share2, an increase of €1.81 per share (25%) over the year, reflecting:
An increase of €0.36 per share for the first three quarters following valuation increases of Italian Investments, the €75 million share repurchase and dividends of €0.375 per share.
An increase of €1.45 per share for the fourth quarter after the dividend of €0.15 per share, following revaluation gains on doBank and Real Estate Fund Investment III.

Annual Dividend of €33.1 million, or €0.525 per share reflecting the increased fourth quarter dividend of €0.15 per share.
In addition, the Board of Directors has declared a first quarter 2017 dividend of €0.15 per share payable on 31 May 2017 to shareholders of record at close of business on 23 March 2017, with an ex-dividend date of 22 March 2017.

FY 2016 FY 2015 Q4 2016 Q3 2016 € million € per share2 € million € per share2 € million € per share2 € million € per share2
Normalised FFO1 46.0 0.70 17.1 0.29 12.5 0.21 11.9 0.20
Legacy Business[6] Cash Flow Received 11.6 0.17 77.8 1.31 4.7 0.07 2.1 0.04
Adjusted NAV5 550.6 9.16 532.5 7.35 550.6 9.16 463.5 7.71


FULL YEAR & FOURTH QUARTER 2016 BUSINESS HIGHLIGHTS
Capital Activity - In 2016, the Company deployed substantially all of its available capital through:

A €75 million repurchase of 12.3 million, or 17.0%, of ordinary shares at a price of €6.10 per share increasing Normalised FFO per share by 20%, or €0.03 per share, and NAV per share by 3%, or €0.25 per share;

Investments of €17 million and commitments estimated at up to a further €76 million across six transactions through:

A commitment to acquire, alongside other affiliates of FIG LLC, a significant portion of a €17.7 billion portfolio of Italian non-performing loans from UniCredit S.p.A. in a project known as "FINO". The transaction entails an anticipated equity investment for Eurocastle of between €50 million and €70 million.
A 25% share of three NPL portfolios with a total combined gross book value ("GBV") of approximately €86 million for €4.4 million.
A €12.1 million investment in the units and senior debt of a newly established unlisted Italian real estate fund ("RE Fund Investment IV"), set up to restructure and monetise real estate properties owned by an over-levered real estate fund.
A €6.6 million expected commitment in the Company's second investment in an Italian real estate redevelopment fund ("RE Fund Investment V"). In December 2016, an initial €0.3 million was funded with the majority of the remaining commitment expected to be deployed during 2017.

doBank - In October 2016, doBank (50% owned by Eurocastle) completed its strategic acquisition of Italfondiario S.p.A. ("Italfondiario") to form the largest independent servicing group in Italy (the "doBank Group"), specialising in the credit management and collection of performing and non-performing loans with over €81 billion GBV of loans under management as at 31 December 2016, more than six times larger than its nearest competitor. The companies have since reported a combined EBITDA of €61.6 million[7] for the year ended 31 December 2016. In March 2017, the board of doBank approved a dividend of €52.3 million expected to be paid in May 2017 (of which Eurocastle's share is €26.2 million).

Legacy Business - The Company achieved its goal of fully disposing of the legacy real estate assets in Germany with all assets sold or under binding sales agreement by the end of 2016. This resulted in €11.6 million of proceeds in 2016 with a further €2.4 million to be collected upon closing of those assets under binding agreements. The sales have resulted in a write back of all losses on the relevant legacy real estate portfolios which previously were reported with negative net asset values in the Group's accounts as reported under IFRS. As at 31 December 2016, the Legacy Business has a remaining Adjusted NAV of €0.4 million, or €0.01 per share.

BUSINESS HIGHLIGHTS SUBSEQUENT TO 31 DECEMBER 2016
Italian Real Estate Fund Investment III sale - In February 2017, Eurocastle sold its interest in the units of Real Estate Fund Investment III. The transaction, together with other distributions received in Q1 2017, has resulted in total proceeds of €20.9 million, or €0.35 per share. The units were acquired in September 2015 for a total consideration of €10.7 million. Taking into account €7.8 million of prior distributions from the investment, this represents a total profit of €18.0 million and an IRR of 137%. As at 31 December 2016, the investment's fair value was €19.5 million, or €0.33 per share, reflecting an offer received at the time, an increase of €7.4 million or €0.12 per share to the previous quarter.

NEW DISTRIBUTION POLICY
The Company is pleased to announce the adoption of a new policy with the goal of generating substantial liquidity to shareholders by accelerating distributions of Normalised FFO ("NFFO") and surplus capital.

The policy will see the establishment of a new three part program whereby going forward the Company intends to:

continue to pay a regular quarterly dividend, currently set at €0.15 per share;
supplement this on a quarterly basis with undistributed NFFO realised in cash; and
supplement this on a semi-annual basis with 50% of the capital held by the Company at the previous half-year end that has not been invested or designated for investment in an opportunity being actively pursued at the time,

in each case subject to the applicable legal requirements and reserves for working capital, distributions and expenses.

The supplemental distributions will take the form considered by the Directors to be in the best interests of the Company at the relevant time, and may be made in any manner available to the Board, including, among others, by way of increased dividends, returns of capital or share buybacks.

In connection with this new policy, the Board of Directors will review any supplemental amount for the first quarter of 2017 in alignment with the announcement of the Company's results for that quarter.

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 expected annualised returns. On Eurocastle's Legacy Business the measure excludes realised gains and losses, sales related costs (including realised swap losses), impairment losses, foreign exchange movements and 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 residual value of the Legacy Business, focusing on the Normalised FFO of the Company's Italian Investments[8] will enhance investors understanding of current and future earnings given annualised returns achieved and the average net invested capital[9] over the relevant period.

For more information regarding Eurocastle Investment Limited and to be added to our email distribution list, please visit www.eurocastleinv.com