Newcastle Staying at Moat-Levels

Newcastle Investment Corporation (NCT - Analyst Report) is a mortgage real estate investment trust (REIT) that specializes in real estate securities and other real estate-related assets. The company owns a diversified portfolio of real estate debt investments including securities and loans.

NCT reported a loss of ($2.83) per share in 3Q08 primarily due to impairment charges of $160.9 million. Residential mortgage markets have not yet bottomed and the liquidity crisis is getting worse. Commercial real estate could be the next shoe to drop in 2009, in which case future margin calls could force NCT into bankruptcy.

On the other hand, delinquencies are still low in the company's loan portfolio and most commercial investments are performing. If the company can weather the current downturn, and commercial real estate values remain somewhat stable, now could be a good buying
opportunity.

In either case, expect a large dividend cut, possibly to zero over the next couple of quarters as the company tries to conserve cash.

Read the full analyst report on NCT

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