HENDERSON, Nev., (May 18, 2009) - Desert Capital REIT, Inc. today announced that its net loss for the first quarter of 2009 totaled $4.2 million or ($0.25) per share, as compared to net income of $806,000 or $.05 per share reported for the first quarter of 2008. 

Total gross revenues, including interest income, non-interest income and fees on loans brokered to third parties, for the quarter ended March 31, 2009, totaled $707,000, as compared to $3.1 million for the same period in 2008.  For the quarter ended March 31, 2009, total revenues were comprised of interest income of $447,000 and non-interest income of $260,000, compared to interest income of $2.8 million and non-interest income of $376,000 for the same periods in 2008, respectively.  The decreases in revenues were primarily due to a decrease in mortgage investment interest income as a result of an increase in nonperforming loans.  Interest income on loans decreased due to a 92% decrease in the average balance of the performing loan portfolio from $76.7 million for 2008 in the first quarter to $6.2 million for the same period in 2009.  This lowered the average yield on the entire portfolio to 1.1% in 2009 from 6.5% in 2008.

Total expenses, including interest expense and non-interest expenses, for the quarter ended March 31, 2009, totaled $5.0 million, as compared to $2.4 million for the same period in 2008.  Total expenses for the first quarter 2009 were made up of interest expense of $619,000, loan losses and real estate owned impairments of $2.1 million and other non-interest expenses of $2.2 million compared to interest expense of $834,000, allowance for loan losses and real estate owned impairments of $312,000 and other non-interest expenses of $1.2 million for the same periods in 2008.  The increases were primarily due to increases in allowances on non-performing loans and impairments of real estate owned which was a direct result of the substantial decline in the real estate and credit markets, causing the value of the loan and real estate owned portfolios to decline. In addition, the increase in non-interest expense includes an increase in management and servicing fees, which was a direct result of the accrual of a 2.5% annual servicing fee. 

“Our focus and endurance to move forward in this challenging market remains steadfast,” commented Todd B. Parriott, CEO and Chairman of the Board of Directors of Desert Capital REIT, Inc.  “On behalf of our stockholders, we constantly evaluate our assets and each situation to determine the most appropriate course of action.”

Dividend
Desert Capital REIT did not declare dividends for the first quarter of 2009.

About Desert Capital REIT, Inc.
Desert Capital REIT, Inc. is a Henderson, NV-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 currently holds a variety of Real Estate Owned (REO) properties acquired through foreclosure reflective of present economic conditions and a restrictive credit market making it more difficult for borrowers to obtain financing.  As a result, Desert Capital has adjusted to the current environment to focus on property management and obtaining resolution for the assets it currently holds.  The REO properties consist of raw and developed land, residential and commercial properties under construction as well as finished structures that are being marketed for sale.  For more information, please call (800) 419-2855 or visit www.desertcapitalreit.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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