HENDERSON, Nev., (April 3, 2009) - Desert Capital REIT, Inc. today announced that its net loss for the fourth quarter of 2008 totaled $21.5 million or ($1.28) per share, as compared to a net loss of $30.9 million or ($1.84) per share reported for the fourth quarter of 2007.  For the twelve months ended December 31, 2008, the net loss totaled $37.5 million or ($2.23) per share, as compared to a net loss of $21.8 million or ($1.35) per share for the same period in 2007. 

Total gross revenues, including interest income, non-interest income and fees on loans brokered to third parties, for the quarter ended December 31, 2008, totaled $823,000, as compared to $9.1 million for the same period in 2007.  For the twelve months ended December 31, 2008, total gross revenues amounted to $8.5 million compared to $32.6 million for the same period in 2007.  Total revenues for the quarter and year ended December 31, 2008, were made up of interest income of $536,000 and $7.4 million and non-interest income of $288,000 and $1.1 million, compared to interest income of $4.3 million and $20.3 million and non-interest income of $4.8 million and $12.3 million for the same periods in 2007, respectively.  The decreases in revenues were primarily due to the sale of Consolidated Mortgage in November 2007, of which a gain on sale of $3.4 million and origination and servicing fees of $1.2 million were recognized during the quarter ended December 31, 2007 and origination and servicing fees of $7.9 million during the year ended 2007.  In addition, interest income on loans decreased due to a 31% decrease in the average balance of the loan portfolio from $154.3 million for 2007 to $106.4 million in 2008.  The increase in non-performing loans from $38.7 million in 2007 to $83.7 million in 2008 lowered the average yield on the portfolio to 5.4% in 2008 from 12.2% in 2007.

Total expenses, including interest expense and non-interest expenses, for the quarter ended December 31, 2008, totaled $22.3 million, as compared to $39.9 million for the same period in 2007.  For the twelve months ended December 31, 2008, total expenses amounted to $46.0 million compared to $54.4 million for the same period in 2007.  Total expenses for the quarter and year ended December 31, 2008, were made up of interest expense of $757,000 and $3.1 million, allowance for loan losses and real estate owned impairments of $19.6 million and $37.3 million, and other non-interest expenses of $1.9 million and $5.6 million, compared to interest expense of $974,000 and $4.1 million, allowance for loan losses and real estate owned impairments of $3.8 million and $38.2 million, and other no-interest expenses of $2.6 million and $12.2 million for the same periods in 2007, respectively.  The increases were primarily due to the 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.

“Although the current market conditions have had a negative impact on our portfolio, we continue to face the challenges,” commented Todd B. Parriott, CEO and Chairman of the Board of Directors of Desert Capital REIT, Inc.  “We are looking at all available alternatives in order to enhance the value of our assets and determine the most beneficial outcomes for our stockholders in each situation.”

Portfolio Activity
During the fourth quarter of 2008, DCR funded all or a portion of 16 loans totaling $10.6 million, the majority of which were acquisition and development loans.  As of December 31, 2008, DCR's loan portfolio contained 37 loans with a net outstanding principal balance of $69.5 million, and a weighted average yield of 12.5%, representative of the stated rates of the loans.

Dividend
Desert Capital REIT did not declare dividends for the fourth 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.

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