Realty Finance Corporation Provides Company Update

Agreement Reached To Retire Trust Preferred Securities

2007 Class Action Lawsuit Dismissed

Vincent Costantini, Current Director, Appointed Interim CEO and President; Kenneth Witkin, former CEO, to Remain on Board of Directors

HARTFORD, Conn., Aug. 7 /PRNewswire-FirstCall/ -- Realty Finance Corporation (Pink Sheets: RTYFZ.PK) today announced:

• On July 30, 2009, the Company entered into an agreement to retire its $50.0 million of trust preferred securities;
• On July 29, 2009, the class action lawsuit that commenced on October 30, 2007 in the United States District Court for the District of Connecticut was dismissed; and
• On August 3, 2009, Vincent Costantini, a current member of the Board of Directors, was appointed Interim Chief Executive Officer and President. Mr. Costantini follows Kenneth Witkin as Chief Executive Officer and President of the Company. Mr. Witkin will remain on the Board of Directors.
  

Agreement to Retire Trust Preferred Securities

On July 30, 2009, the Company entered into an agreement to retire, no later than August 28, 2009, its $50.0 million of trust preferred securities for $9.0 million in cash and a $1.5 million promissory note made by a subsidiary of the Company. The promissory note has a maturity date of July 30, 2036 and an interest rate of 8.1025% through July 30, 2016 and thereafter the interest rate will be equal to 90 day LIBOR plus 249 basis points. The promissory note is solely payable from and recourse is limited to a portion of any future distributions arising from the Company's interest in its 1515 Market Street joint venture property. The note is non-recourse to the Company.

The Company will record a realized gain in the third quarter of 2009 of approximately $40.5 million related to the extinguishment of the trust preferred securities.

Dismissal of Class Action Lawsuit

A putative class action lawsuit was filed on October 30, 2007 in the United States District Court for the District of Connecticut seeking certain remedies under the Securities Act of 1933 as amended. The Company filed a revised motion to dismiss with the court to dismiss the second amended complaint, argued its motion before the court in April 2009, and received a notice on July 29, 2009 that the court had granted the revised motion to dismiss.

Appointment of Interim Chief Executive Officer and President

On August 3, 2009, Vincent Costantini, a current member of the Board of Directors, was appointed Interim Chief Executive Officer and President of the Company for no additional remuneration. Mr. Costantini follows Kenneth Witkin as Chief Executive Officer and President of the Company. The Board terminated Mr. Witkin given that a full-time CEO was no longer required as a result of the resolution of the trust preferred securities, the dismissal of the class action lawsuit, and the removal of the Company as the collateral manager for its CDO 2007. Mr. Witkin will remain on the Board of Directors.

"As a Board member since 2005, Vince has participated in overseeing and reviewing the strategies we have been putting in place and knows our business well. The Board will continue to work with our management team to execute on these strategies," Mr. Ray Wirta, Chairman of the Board of Directors said. "We want to thank Ken for his valuable contributions in leading the company through this unprecedented time in the commercial real estate markets. We are pleased that we will benefit from Ken's extensive real estate experience with his continued Board seat. We wish Ken well in the future."

About Realty Finance Corporation

Realty Finance Corporation is a commercial real estate specialty finance company primarily focused on managing a diversified portfolio of commercial real estate-related loans and securities. The Company has elected to qualify to be taxed as a real estate investment trust, or REIT, for U. S. federal income tax purposes commencing with the taxable year ended December 31, 2005. As a REIT, the Company generally will not be subject to U. S. federal income tax on that portion of income that is distributed to stockholders if at least 90% of the its REIT taxable income is distributed to its stockholders. The Company conducts its operations so as to not be regulated as an investment company under the Investment Company Act of 1940, as amended, or the 1940 Act. For more information on the Company, please visit the Company's website at http://www.realtyfinancecorp.com.

The Company's common stock is currently quoted on the Pink OTC Markets, or Pink Sheets. While not a requirement, the Pink Sheets encourages companies having their securities quoted thereon to provide adequate current information in accordance with its disclosure guidelines. The Company will no longer be issuing quarterly earnings releases.

Forward-Looking Information

This press release contains forward-looking statements based upon the Company's beliefs, assumptions and expectations of its future performance, taking into account all information currently available. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to the Company or are within its control. If a change occurs, the Company's business, financial condition, liquidity and results of operations may vary materially from those expressed in its forward-looking statements. The factors that could cause actual results to vary from the Company's forward-looking statements include: the risk factors included as part of the Company's Annual Report on Form 10-K for the period December 31, 2008 filed on March 16, 2009; the Company's future operating results; its business operations and prospects; general volatility of the securities market in which the Company invests and the market prices of its common stock; the effect of trading on the Pink Sheets; the Company's ability to begin making investments in the future; availability, terms and deployment of short-term and long-term capital; availability of qualified personnel; changes in the industry; interest rates; the debt securities, credit and capital markets, the general economy or the commercial finance and real estate markets specifically; performance and financial condition of borrowers and corporate customers; increased prepayments of the mortgage and other loans underlying the Company's investments; the potential derivative shareholder claim and any future litigation that may arise; the ultimate resolution of the Company's seven non-performing loans having an unpaid principal balance of $146.1 million and the Company's seven watch list loans having an unpaid principal balance of $194.2 million; the monetization of the Company's joint venture investments; the ability to come back into compliance with the overcollateralization tests in CDO I and CDO II; the ability to continue as a going concern; availability of liquidity; and other factors, which are beyond the Company's control. The Company undertakes no obligation to publicly update or revise any of the forward-looking statements. For further information, please refer to the Company's previous periodic filings with the Securities and Exchange Commission. The Company is no longer a Securities and Exchange Commission reporting company since March 16, 2009.

SOURCE Realty Finance Corporation