Desert Capital REIT, Inc. Announces Third Quarter 2006 Results.

HENDERSON, Nev. -- Desert Capital REIT, Inc., today announced that its net income for the third quarter of 2006 totaled $3.6 million or $0.26 per share, as compared to net income of $1.3 million or $0.25 per share reported for the third quarter of 2005. For the nine months ended September 30, 2006, net income totaled $10.1 million or $0.78 per share, as compared to $2.9 million or $0.78 per share for the same period in 2005.

Total revenues for the quarter ended September 30, 2006, totaled $7.5 million, as compared to $4.1 million for the same period in 2005. Interest income for the third quarter was $5.4 million, as compared to $1.3 million reported for the same period in 2005. Included in revenues were non-interest income, primarily from fees on loans brokered to third parties, of $2.1 million for the quarter ended September 30, 2006, as compared to $2.8 million for the same period in 2005.

For the nine months ended September 30, 2006, total revenues amounted to $20.4 million, compared to $9.7 million for the same period on 2005. Total revenues for the nine months ended September 30, 2006, were made up of interest income of $12.5 million and non-interest income of $7.9 million, compared to interest income of $2.7 million and non-interest income of $7.0 million for the same period in 2005.

At September 30, 2006, the net balance in the mortgage investment portfolio was $138 million, as compared to $134 million at June 30, 2006. The average balance of the loan and investment portfolio during the third quarter was $137 million and the average yield on these assets for the quarter was 13.5% compared to an average yield of 13.5% for the second quarter of 2006.

"We continue to show solid performance with a strong third quarter showing, which marks the 10th straight quarter of positive growth," commented Todd B. Parriott, CEO and Chairman of the Board of Directors of Desert Capital REIT, Inc. "We predicted the slowdown in housing last year and began repositioning our portfolio to reduce exposure to residential development in favor of commercial. This move has paid off for Desert Capital, even though our markets have not been as negatively impacted by the change in housing as certain other areas of the country. We look for our markets to remain healthy for the foreseeable future and anticipate increased growth opportunities through acquisitions and organic growth."

Portfolio Activity

During the third quarter of 2006, DCR funded all or a portion of 15 loans totaling $13.3 million. Of the new loans, 14 were acquisition and development loans totaling $12.3 million and 1 was a construction loan totaling $1 million.

At September 30, 2006, DCR's loan portfolio contained 121 loans with a net outstanding principal balance of $138 million, and a weighted average current interest rate of 13.5%.

Dividend

Desert Capital REIT declared dividends of $0.30 per share for the third quarter of 2006.

About Desert Capital REIT, Inc.

Desert Capital REIT, Inc., is a Henderson, Nev.-based real estate investment trust that invests in loans to owners and developers of real estate properties. Formed in December 2003, Desert Capital's portfolio of mortgage loans consists of acquisition and development, construction, commercial property and residential loans. For more information, please call 800-419-2855 or visit www.desertcapitalreit.com.

About Consolidated Mortgage, LLC 

With nearly 30 years of continuous real estate investment success, Consolidated Mortgage, LLC is one of the largest private trust deed investment firms in Nevada, with over $450 million currently under management. The company is located at 1291 Galleria Drive, Suite 220, Henderson, NV 89104. For information, please call 702-739-9090 or visit www.consolidatedmortgage.com.

Safe Harbor Statement

Statements included herein that state the company's or management's intentions, hopes, beliefs, expectations or predictions of the future are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 which by their nature involve known and unknown risks and uncertainties. The company's actual results, performance or achievements could differ materially from those expressed or implied by such statements.

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