Eurocastle Investment : Releases Fourth Quarter and Year End 2016 Financial Results and Announces Quarterly Dividend of €0.15 per share and New Distribution Policy

Contact:

International Administration Group (Guernsey) Limited Company Administrator

Attn: Mark Woodall Tel: +44 1481 723450

FOR IMMEDIATE RELEASE

Eurocastle Releases Fourth Quarter and Year End 2016 Financial Results

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 FFO1 of €46.0 million or €0.70 per share2 for the full year of which €12.5 million, or €0.212 per share for the fourth quarter of 2016.

  • Before costs, Italian Investments3 alone generated €55.4 million of Normalised FFO in 2016, resulting in a return on average net invested capital4 of 17.7%.

• Adjusted Net Asset Value5 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 Business6 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.

    1 Normalised FFO ("NFFO") is a non-IFRS measure used to provide additional information regarding the underlying performance of the Company, as outlined in note 30 of the Annual Report.

    2 Amounts per share are calculated on the following basis for the relevant period: FY 2016 NFFO and Legacy cash flow - 66.1 million of weighted average shares. FY 2016, Q4 2016 and Q3 2016 Adjusted Net Asset Value ("Adjusted NAV") - 60.1 million ordinary shares in issue (net of 6.0 million shares held in treasury). FY 2015 NFFO and Legacy

    cash flow - 59.5 million of weighted average shares. FY 2015 Adjusted NAV - 72.4 million ordinary shares in issue. Q3 2016 NFFO and Legacy cash flow - 60.1 million of weighted average shares.

    3 All investments acquired by the Group since the establishment of its new strategy in April 2013, previously labelled as "New Investments".

    4 Time weighted average of investments made (net of any capital returned) over the relevant period.

    5 Adjusted Net Asset Value excludes the net asset value ("NAV") of those Legacy portfolios with negative NAV whose debt is non-recourse to Eurocastle.

    6 All investments owned by the Group prior to April 2013.

• 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 million1 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.

1 Unaudited management data. Consolidated EBITDA for doBank, Italfondiario and their subsidiaries pro forma for the full year 2016. Consolidated 2016 EBITDA in accordance with IFRS for the doBank Group is €58.1 million reflecting the EBITDA generated from Italfondiario and its subsidiaries from the date of acquisition in October 2016.

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 Investments1 will enhance investors understanding of current and future earnings given annualised returns achieved and the average net invested capital2 over the relevant period.

€Thousands Yield € Thousands € Thousands € Thousands

€Thousands Yield € Thousands € Thousands € Thousands

During 2016, Eurocastle generated Normalised FFO of €46.0 million, or €0.70 per share compared to a dividend of €33.1 million, or

€0.525 per share. Before corporate costs, Italian Investments generated €55.4 million, or €0.84 per share. Given the average net invested capital in the period was approximately €313 million, this equates to a yield of 18%.

In the fourth quarter of 2016, Eurocastle generated Normalised FFO of €12.5 million, or €0.21 per share. Before corporate costs, Italian Investments generated €15.0 million, or €0.25 per share. Given the average net invested capital in the period was approximately €317 million, this equates to a yield of 19%.

1 All investments acquired by the Group since the establishment of its new strategy in April 2013, previously labelled as "New Investments".

2 Time weighted average of invested capital (net of any capital returned) over the relevant period.

3 Excludes the Romeo NPL pool which is included under the doBank Investment.

4 Normalised FFO per share based on 66.1 million weighted average ordinary shares for 2016.

Portfolio Returns

Fair value movements on joint ventures:

€ Thousands

€ Thousands

€ Thousands

For the year ended 31 December 2016, the total profit after taxation and non-controlling interests as reported under IFRS was €175.1 million, or €2.65 per share. Within the Group's Italian Investments, where the majority of these assets are accounted for at fair value, net income after taxation and non-controlling interest for 2016 was €134.3 million, or €2.03 per share.

Italian Investments

€ Thousands

Legacy

€ Thousands

Total

€ Thousands

Net profit attributable to ordinary shareholders after taxation 134,337 40,740 175,077 Reversal of Net profit attributed to negative NAV portfolios2 - (43,634) (43,634) Adjusted net profit / (loss) 134,337 (2,894) 131,443

Per Share1 2.03 (0.04) 1.99

Excluding i) the net gains that have resulted from the resolution of those legacy portfolios that previously had a negative NAV and ii) losses from CDO V, the Groups remaining legacy investment with a negative NAV, the Group generated a net profit after taxation of

€131.4 million or €1.99 per share. As at 31 December 2016, the remaining Adjusted NAV of the legacy portfolios was €0.4 million, or €0.01 per share which represents less than 0.1% of the Company's Adjusted NAV.

1 Earnings per share based on 66.1 million weighted average ordinary shares for the year ended 31 December 2016.

2 Reverses gains and losses arising from portfolios with a negative net asset value net of any cash distributions or fees received by the Company.