Allied Capital Raises $64 Million of Equity from Shelf Registration.

Business Editors

WASHINGTON--(BUSINESS WIRE)--Sept. 25, 2001

Allied Capital Corporation (NYSE:ALD) announced it has completed the sale of 3,000,000 shares of its common equity at $22.50 on September 20, 2001.

The sale of these shares resulted in net proceeds of $64 million after the underwriters' discount. The proceeds from this offering will be immediately used to repay a portion of Allied Capital's line of credit and to finance various transactions. The shares were sold to both retail and institutional investors.

Bill Walton, Chairman and CEO, remarked, "Capital markets remain turbulent in the wake of the events of September 11. However, we believe that our transaction demonstrates that investors continue to recognize that there are solid investment opportunities in companies like Allied Capital with our strong portfolio cash flow and history of growing dividends. The country faces a difficult period, but our people and our economy are resilient and resourceful. As we see it, our task here at Allied Capital is to continue to prudently build and support a diversified portfolio of well-established middle market companies and real estate investments. Our business is to provide long-term growth capital and this type of capital is likely to be in short supply in the near term. The equity raise last week provides us with additional capital resources to meet this need."

Over the last three years, Allied Capital has raised more than $725 million of equity capital from its shelf registration statement to fuel the company's growth. Annual dividends per share have increased from $1.43 in 1998 to an annualized $2.04 based on the current quarterly dividend.

Net asset value per share has increased from $8.79 at December 31, 1998 to $12.79 at June 30, 2001, demonstrating the accretive nature of the company's equity raises.

About Allied Capital

Allied Capital is the nation's largest business development company, and provides long-term investment capital to support the expansion of growing middle-market companies. The company provides mezzanine debt and equity financing, and also participates in the real estate capital markets as an investor in commercial mortgage-backed securities.

The company is headquartered in Washington, DC. For more information, please visit the web site at www.alliedcapital.com www.alliedcapital.com, call Allied Capital Investor Relations toll-free at 888/253-0512, or e-mail us at [e-mail].

Forward-Looking Statements

The information contained in this press release contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions.

Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, and these factors are enumerated in the company's periodic filings with the Securities and Exchange Commission.