Desert Capital Real Estate Investment Trust, Inc.

DESERT CAPITAL REIT, INC. ANNOUNCES SECOND QUARTER 2008 RESULTS

HENDERSON, Nev., (August 15, 2008) --- Desert Capital REIT, Inc. today announced that its net income for the second quarter of 2008 totaled negative $7.9 million or a loss of $.47 per share, as compared to net income of $4.4 million or $.27 per share gain reported for the second quarter of 2007. For the six months ended June 30, 2008, net income totaled negative $7.1 million or a loss of $.42 per share, as compared to $8.3 million or $.53 per share gain for the same period in 2007.

Total revenues for the quarter ended June 30, 2008, totaled $2.5 million, as compared to $9.2 million for the same period in 2007. Total revenues were comprised of $2.3 million of interest income for the second quarter, as compared to $5.7 million reported for the same period in 2007. Also included in total revenues was non-interest income, primarily from fees on loans brokered to third parties, of $247,000 for the quarter ended June 30, 2008, as compared to $3.5 million for the same period in 2007.

As of June 30, 2008, the net balance in the mortgage investment portfolio was $92 million, as compared to $150 million on June 30, 2007. The average balance of the mortgage portfolio during the second quarter was $121.3 million and the average yield on these assets for the quarter was 5.89% compared to an average yield of 12.97% for the second quarter of 2007.

“Although current real estate and credit market conditions have adversely affected Desert Capital REIT, we continue to maintain an operational structure with relatively low debt obligations,” commented Todd B. Parriott, CEO and Chairman of the Board of Directors of Desert Capital REIT, Inc. “We believe our strong debt to capital ratio will enhance our ability to work through this challenging real estate market.”

Portfolio Activity

During the second quarter of 2008, DCR funded 7 loans totaling $606,300. Of the new loans, 6 were acquisition and development loans totaling $336,300, and 1 was a construction loan totaling $270,000.

As of June 30, 2008, DCR's loan portfolio contained 65 loans with a net outstanding principal balance of $92.1 million, and a weighted average yield of 12.8%.

Dividend
Desert Capital REIT declared dividends of $.075 per share for the second quarter of 2008.

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 of mortgage loans consists of acquisition and development, construction, commercial property and residential loans. 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.