BRE Properties and Trammell Crow Residential Announce Definitive Agreement to Combine Western U.S. Assets and Operations; Transaction Valued at $600 Million Creates One of Nation's Largest Apartment REITs.

SAN FRANCISCO--(BUSINESS WIRE)--Sept. 30, 1997--BRE Properties, Inc. (NYSE:BRE) and Trammell Crow Residential today announced the execution of a definitive agreement in which BRE Properties will acquire the assets and operations of Trammell Crow Residential in the Western U.S. (TCR-West). The combined company will be one of the nation's largest multifamily real estate investment trusts (REITs).

The transaction is valued at approximately $600 million dollars. The purchase price is based on a share price of $26.93 and includes payment in common stock, operating company units ("OP units"), cash, and the assumption of debt and other liabilities. Consideration received by the TCR-West management partners will be primarily in the form of common stock and OP units.

The OP units will be convertible into shares of BRE common stock on a 1:1 basis, or into an equivalent amount of cash at BRE's election, beginning one year after the closing. Certain adjustments will be made to the number of shares of common stock and OP units to be issued at closing should BRE's average stock price fall below $26.93. The parties also have certain rights to terminate or to elect to proceed with the transaction under certain circumstances should BRE's average price fall below $25.00 per share. The closing price on the New York Stock Exchange on September 29, 1997 was $27.63.

The combination will create the preeminent apartment REIT on the West Coast with a 21,021-unit portfolio. The transaction will combine 7,478 of TCR-West's apartment homes (including approximately 2,445 units of development-pipeline properties) with BRE's 13,543 units, extending BRE's Western market focus to 12 major metropolitan areas from the nine it currently serves.

Using the recent market price of BRE stock, and the number of common shares and OP units estimated to be outstanding at the time of closing, BRE will have an equity market capitalization of approximately $1.2 billion dollars and an overall capitalization of approximately $1.7 billion. Based on announced consolidations within the REIT industry, the transaction will establish BRE among the five largest multifamily REITs in the U.S.

In addition to purchasing existing properties and development projects, BRE will also acquire TCR-West's development, construction, and third-party property management operations. BRE expects the transaction to be accretive to funds from operations (FFO) by approximately $0.06 per share in 1998 and by increasing levels in subsequent years. The 1998 accretion will be attributable primarily to the contribution of net operating income from stabilized apartment communities acquired in the transaction.

"The acquisition significantly advances BRE's objective of becoming the preeminent multifamily REIT in the West," said Frank C. McDowell, President and Chief Executive Officer of BRE. "In a single transaction, we will add approximately 7,500 high-quality apartment homes in markets where BRE has current investment and gain entry into markets we have targeted for expansion-including Denver and Salt Lake City. Additionally we will add a presence in Albuquerque -- a market which has recently come onto our radar screen. At closing, the combined company will own 82 apartment communities, including development properties, in eight Western states."

BRE's business plan calls for the balancing of its apartment investments across Western markets with diverse economic and employment characteristics. "Our task is to build a portfolio that produces high, sustainable levels of risk-adjusted returns for our shareholders," said McDowell. "We believe our investment approach allows shareholders to participate in the upside of Western growth markets while minimizing our investors' exposure to individual market risk.

"The geographic fit of the two portfolios is uniquely compatible," said McDowell. "The combination of our properties allows expansion in six of BRE's current markets and provides increased levels of portfolio diversification through entry into three new markets that demonstrate positive demographics for apartment ownership."

"This transaction is more than an acquisition of high-quality apartment communities," said Jay W. Pauly, BRE's Chief Operating Officer. "By combining our companies, we complete the vertical integration of BRE's operating company by adding the demonstrated expertise of TCR-West's development staff to BRE's management team. Further, we expand our residential customer service abilities by adding TCR-West's profitable 12,000 unit third-party property management business. We believe we can combine the best practices of BRE's internal property management system with those of TCR-West to create a new standard of residential management excellence and property-level performance."

Bruce C. Ward, Group Managing Partner of TCR-West, will become Executive Vice President of BRE with primary responsibility for acquisition and development. "As prospective shareholders, we are very enthusiastic and motivated by the company's growth prospects. We believe our development efforts will contribute to BRE's ability to accelerate its FFO growth rate in a number of ways. First, we can supplement BRE's acquisition program by building in markets where costs to develop are lower than costs to acquire. In other words, the combined company can now build what it cannot buy. Further, by internalizing the development function, BRE can better control the quality and location of the product in which it invests and participate in the value created through the development process."

TCR's National Managing Partner Ron Terwilliger said, "TCR's partners believe this combination will contribute to making BRE the finest REIT in the Western United States. Since we will be significant owners of the company's equity, we are clearly betting that BRE will continue to perform at the top of the apartment REIT sector."

"Each member of the board, management and employee team extends BRE's commitment of quality customer service to the new residents we will soon be privileged to serve," said McDowell. "To support that commitment, TCR-West's 600 associates will be invited to join BRE. We welcome our new TCR-West colleagues into the BRE family and look forward to sharing the opportunities for professional growth that will be part of the larger company."

The combined company will continue to be called BRE Properties, Inc. and will be headquartered in San Francisco. The proposed acquisition has received unanimous approval from the directors of BRE. The transaction is subject to customary closing conditions and is expected to close in November, 1997. The acquisition will include a downREIT and will be treated as a purchase for accounting purposes.

Subject to certain adjustments, the number of shares of common stock and OP units to be issued at closing may range in value from a minimum of approximately $150 million to a maximum of $222 million. Correspondingly, the cash portion of the purchase price would range from a maximum of $205 million to a minimum of $133 million. The debt portion of the purchase price is approximately $135 million. Over the next two years, BRE expects to provide funding for development properties with costs to complete of approximately $110 million.

Certain matters discussed in this press release are forward-looking statements within the meaning of federal securities laws. Although BRE believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, the company can give no assurance that such expectations, including the expectation of potential accretion attributable to the TCR-West transaction, will be achieved. Factors that could cause the actual results to differ materially from BRE's current expectations include general economic conditions, local real estate conditions, the timely development and lease-up of apartment communities, legislative or other regulatory decisions, future interest rate levels or capital markets conditions, as well as other risks detailed from time to time in BRE's SEC reports. For more details, please refer to BRE's most recent Annual Report on Form 10-K, as amended, for the year ended December 31, 1996.

BRE Properties, Inc., headquartered in San Francisco, is a self-administered, self-managed and fully integrated real estate investment trust focusing on the ownership and management of multifamily properties in the Western United States. Today, BRE owns and operates 56 apartment communities totaling 13,543 units in nine major markets in California, Arizona, Washington, Oregon and Nevada. Additional information about BRE can be found on the company's web site (http:\\breproperties.com). -0-

Facts about the proposed business combination of BRE Properties, Inc. and Trammell Crow Residential-West

The Transaction Defined:

The Transaction:

-- Estimated value: $600 million

-- Acquisition of 7,478 high-quality, institutional grade apartment units (2,445 in various stages of construction and development)

-- Acquisition of operational assets including internal development expertise and fee management business

-- Addition of approximately 600 associates bringing management and operating talent to all levels of the company

The Resulting Company:

-- Estimated equity market cap, including OP units of $1.2 billion and overall market cap of $1.7 billion placing BRE among the five largest multifamily REITs in the U.S.

-- Creation of a Western-focused portfolio of 82 properties, consisting of 21,021 units (including a 2,445-unit development pipeline)

-- Expected FFO per share accretion of approximately $0.06 in 1998 and increasing levels in subsequent years.

Strategic & Operating Benefits

-- Completes BRE's vertical integration through the addition of property development capabilities

-- Improves the overall quality and diversification of BRE's apartment portfolio

-- Provides greater scale in six of BRE's existing markets and adds presence in the new Western markets

-- Increases the competitive position of BRE by creating the preeminent West Coast REIT

-- Strengthens and deepens the management and operating team

-- Increases the overall capitalization by approximately 40% to over $1.7 billion, creating potential for FFO multiple expansion

-- Provides immediate per share accretion to FFO -0-

Geographic Fit

                       BRE         TCR-West    Development     Total
Market              Stand Alone   Stabilized    Pipeline       Units

Northern California
 San Francisco        2,229          731                       2,960
 Sacramento           1,143          400                       1,543

Southern California
 Los Angeles          1,598          754                       2,352
 San Diego            1,899                                    1,899

Pacific Northwest
 Seattle              1,673                                    1,673
 Portland               620                                      620

Southwest
 Phoenix              2,266        1,063           650         3,979
 Tucson               1,301          535                       1,836
 Albuquerque                         646           595         1,241
 Las Vegas              814                        324         1,138

Mountain States
 Salt Lake City                      904           612         1,516
 Denver                                            264           264

TOTAL                13,543        5,033         2,445        21,021

CONTACT: BRE Properties, Inc.

Frank C. McDowell

Jay W. Pauly

Lauren L. Barr

415/445-6530

or

Trammell Crow Residential

Bruce Ward, 602/381-8181

Drucilla Haskin, 212/734-2313

Randy Pace, 214/922-8433

or

Zelinski Public Relations

Jim Zelinski, 415/546-6166