Fitch Affirms Newcastle CDO VII Limited.

NEW YORK -- Fitch affirms seven classes of notes issued by Newcastle CDO VII Limited as follows:

--$336,000,000 class I-A floating-rate notes at 'AAA';

--$21,800,000 class I-B floating-rate notes at 'AAA';

--$53,000,000 class II floating-rate notes at 'AA';

--$26,000,000 class III floating-rate deferrable notes at 'A'.

--$20,000,000 class IV-FL deferrable notes at 'BBB';

--$6,000,000 class IV-FX deferrable notes at 'BBB';

--$16,000,000 class V fixed-rate notes at 'BB';

Newcastle CDO VII Limited is a managed collateralized debt obligation (CDO) that closed on Dec. 20, 2005. Newcastle Investment Corp. (NCT) selected the initial collateral and serves as the collateral administrator. NCT is currently rated 'CAM1' as a commercial real estate CDO asset manager by Fitch. Newcastle CDO VII has a portfolio composed of approximately 68.2% commercial mortgage-backed securities (CMBS), 16.2% real estate investment trust (REIT) debt, and 15.6% residential mortgage backed securities (RMBS).

The affirmations are due to the stable performance of the transaction. The weighted average rating factor (WARF) has improved slightly but remains 'BBB/BBB-'. The weighted average life decreased to 7.3 years from 8.3 years. All overcollateralization (OC) and interest collateralization (IC) tests have remained stable since issuance. There are no defaulted assets in the portfolio.

The ratings of the class I-A, I-B, and II notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class III, IV-FL, IV-FX and V notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date.

Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Derivative Fitch web site at www.derivativefitch.com. For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralized Debt Obligations,' dated Oct. 4, 2006 and also available at www.derivativefitch.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.derivativefitch.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. Fitch means Fitch, Inc., Fitch Ratings, Ltd. and their subsidiaries including Derivative Fitch, Inc. and Derivative Fitch Ltd. and any successor or successors thereto.