Fitch Ratings Upgrades Newcastle CDO II, Ltd.

NEW YORK -- Fitch Ratings upgrades two classes and affirms two classes of the notes issued by Newcastle CDO II, Ltd. (Newcastle II). The following rating actions are effective immediately:

--$412,800,000 class I notes affirmed at 'AAA';

--$15,000,000 class II-FL notes upgraded to 'A+' from 'A' and removed from Rating Watch Positive;

--$35,000,000 class II-FX notes upgraded to 'A+' from 'A' and removed from Rating Watch Positive;

--$9,200,000 class III notes affirmed at 'BBB'.

Newcastle II is a collateralized debt obligation, which closed March 19, 2003. As of the June 2006 trustee report, Newcastle II is supported by a managed pool of commercial mortgage-backed securities (52.7%), senior unsecured real estate investment trust (22.3%) securities, commercial asset-backed securities (3.6%) and residential mortgage-backed securities (21.4%). The collateral was selected and is currently administered by Newcastle Investment Corp., who is sponsored and externally managed by Fortress Investment Group LLC. Newcastle Investment Corp. is currently rated 'CAM1' by Fitch.

The upgrades are due to an increase in par value, improved credit quality and seasoning of the collateral, and the strength of the manager as reflected in its rating. Since the effective date of July 31, 2003, Newcastle II has had an increase of over $5.7 million in par value, resulting in greater credit enhancement to the rated notes. In addition, 41.9% of the portfolio has been upgraded a weighted average of 3.6 notches while only 9.3% has been downgraded a weighted average of 2.6 notches. The overall credit quality of the portfolio has improved significantly as evidenced by the change in the weighted average rating factor (WARF) to 12.97 as of the June 2006 trustee report from 17.12 as of the effective date.

Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at www.fitchratings.com. For more information on the Fitch VECTOR model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Sept. 13, 2004, also available at www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.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.