CRIIMI MAE Announces Plan to Become Self-Managed and Self-Administered; Would Acquire CRI Mortgage Businesses.

ROCKVILLE, Md.--(BUSINESS WIRE)--Jan. 4, 1995--(NYSE:CMM)-- CRIIMI MAE Inc., the largest multifamily mortgage REIT, said today it has agreed in principle to acquire the mortgage businesses of CRI Inc., a private real estate investment firm which, through affiliates, serves as the advisor to CRIIMI MAE and manages its mortgage investments.

As a result of this transaction, CRIIMI MAE would become a self-administered and self-managed company.

The proposal calls for CRIIMI MAE to acquire the CRI mortgage businesses, including CRICO Mortgage Co. and other CRI-affiliates by:

- issuing common stock to CRI's owners, William B. Dockser and H.

William Willoughby, with the exact number of shares determined

by dividing $21.4 million by the aggregate average of the high

and low sales prices of CRIIMI MAE's common stock over the 10

trading days preceding the execution of a definitive merger

agreement; provided that at the closing of the transaction the

stock issued cannot total more than $22.9 million or more than

2,761,290 shares,

- assuming $9.1 million of outstanding debt of CRI and affiliates

related to CRI's mortgage businesses, and

- granting CRI's owners options valued at approximately $1.5

million to purchase an additional three million shares of CRIIMI

MAE common stock. (Options for two million shares will vest pro

rata over five years and are exercisable for an eight-year term

at $1.50 per share over the average high and low sales prices

during the 10 trading days preceding the date of the closing of

this transaction. Options for one million shares will vest pro

rata over five years and are exercisable for an eight-year term

at $4.00 per share over the same average high and low price.)

In addition to being CRI's owners, Messrs. Dockser and Willoughby are also CRIIMI MAE officers and board members. In the proposed transaction, Mr. Dockser, Mr. Willoughby, and certain other CRI executives and personnel, will become employees of CRIIMI MAE. Four percent of the total shares issued to Messrs. Dockser and Willoughby at closing would be transferred to other executive officers of CRIIMI MAE. All shares received in the transaction would be subject to restrictions on transfer for three years.

A special committee of CRIIMI MAE's independent directors was formed to consider the proposed transaction with CRI. These independent directors are not members of management or employees of CRI or CRIIMI MAE. The special committee engaged Duff & Phelps to render an opinion as to whether the transaction is fair to CRIIMI MAE shareholders from a financial point of view.

CRIIMI MAE engaged Merrill Lynch, Pierce, Fenner & Smith to act as its financial adviser in connection with the transaction.

CRIIMI MAE believes there are several potential benefits of the proposed transaction:

First, CRIIMI MAE believes the proposed combination of CRI's mortgage businesses with CRIIMI MAE will add to CRIIMI MAE's 1995 tax basis earnings per share and dividend paying ability by eliminating the payment of all advisory fees payable under the advisory agreement with a CRI affiliate and adding revenues from mortgage servicing, mortgage origination, loan management, and other related activities. CRI and its affiliates today provide loan servicing for a $600 million mortgage portfolio and loan management for an additional $550 million mortgage portfolio. The business of servicing and managing these portfolios would become part of CRIIMI MAE in the proposed transaction.

Second, CRIIMI MAE believes the conversion to a self-administered, self-managed company will enhance CRIIMI MAE's access to equity capital and improve the market price of CRIIMI MAE's shares.

Third, CRIIMI MAE believes this transaction will serve to retain the expertise of those individuals who have been responsible for the management and development of CRIIMI MAE since inception.

This transaction is subject to a number of conditions including negotiation and execution of a definitive merger agreement and employment agreements, board approval, issuance of a fairness opinion by Duff & Phelps, the filing of a proxy statement with the Securities and Exchange Commission, and shareholder approval of the transaction.

CRIIMI MAE Inc. is the largest multifamily mortgage REIT, with total consolidated assets at Sept. 30, 1994 of approximately $945 million. It was formed in 1989. CRIIMI MAE's adviser is an affiliate of CRI Inc., a real estate investment firm based in the Washington, D.C. area.

CONTACT: James T. Pastore, 301/231-0323

Susan B. Railey, 301/468-3120