Capstone Capital Corporation announces increased fourth quarter and year end funds from operations and earnings.

BIRMINGHAM, Alabama--(BUSINESS WIRE)--January 26, 1996--Capstone Capital Corporation (NYSE:CCT) today announced operating results for the fourth quarter and year ended December 31, 1995.

For the fourth quarter, funds from operations for the quarter grew 24% to $3.6 million, or $0.51 per primary share and $0.48 per share fully diluted, as compared to the $2.9 million, or $0.48 per primary share, reported in the similar period last year. Net income for the quarter was $2.8 million, or $0.40 per share, compared to $2.4 million, or $0.40 per share for last year's comparable period. Revenues increased 61% to $7.2 million from the $4.5 million reported in last year's fourth quarter. Weighted average shares outstanding for the quarter grew approximately 19% on a primary basis and 65% on a fully diluted basis.

For the year, funds from operations were $12.5 million, or $2.00 per primary share and $1.91 per share fully diluted. Net income for the period was $9.7 million, or $1.55 per share. Revenues reached $24.7 million. Comparative results for the year ended December 31, 1994 are not applicable since the company commenced operations on June 30, 1994.

On January 22, 1996 the Company reported that its Board of Directors had declared a dividend of $0.445 per share for the quarter ended December 31, 1995. The dividend is payable on February 15, 1996, to shareholders of record on February 1, 1996. At this rate, quarterly dividends will approximate an annualized dividend payment of $1.78 per share.

John W. McRoberts, President and Chief Executive Officer, commented, "Having completed our first full year as a public company, we are pleased with what we accomplished and are encouraged by our prospects for the future. Since the beginning of 1995, we have grown and diversified our portfolio by adding 13 new properties, raising the total to 44. To fund this growth and provide for future growth, we successfully completed two public offerings raising approximately $110 million in new capital."

Mr. McRoberts continued, "The success we achieved in 1995 positions us well to excel in 1996 and beyond. We remain focused on our strategy of acquiring ancillary hospital, outpatient and other alternate site facilities. This strategy, combined with our current capital position, makes us confident that we will be able to continue the growth we've experienced since our inception in June 1994."

Capstone Capital Corporation is a self-administered real estate investment trust (REIT) which currently owns, leases and provides financing for 44 healthcare related properties located in 13 states that are diversified as to operator, facility type and healthcare industry segment.

                       CAPSTONE CAPITAL CORPORATION
                           FINANCIAL HIGHLIGHTS
                                (Unaudited)

                         Quarter Ended              Year Ended
                           December 31              December 31
                         1995       1994         1995       1994  (1)
Revenues:
  Rental income       $6,521,781  $4,044,640   $22,774,371 $7,674,494
Mortgage interest income
 and other income        653,140     425,486     1,932,901    565,668
Total revenues         7,174,921   4,470,126    24,707,272  8,240,162
Expenses:
  General and
   administrative        424,843     331,538     1,515,130    536,662
  Depreciation and
   amortization        1,340,430     834,734     4,696,838  1,501,906
  Interest             2,608,615     911,321     8,786,913  1,438,860
 Total expenses        4,373,888   2,077,593    14,998,881  3,477,428
Net income            $2,801,033  $2,392,533    $9,708,391 $4,762,734
Funds from operations $3,580,461  $2,882,196   $12,523,303 $5,628,243

Per share amounts (primary):
  Net income               $0.40       $0.40         $1.55      $0.80
  Funds from operations    $0.51       $0.48         $2.00      $0.94
Per share amounts (diluted):
  Net income               $0.40           -         $1.55          -
  Funds from operations    $0.48           -         $1.91          -

Weighted average shares outstanding:
  Primary              7,086,409   5,980,000     6,271,242   5,980,000
  Diluted              9,876,663           -     8,596,663           -

(1) Reflects operations from June 30, 1994, the date the Company commenced operations, to December 31, 1994.

CONTACT: Capstone Capital Corporation

Andrew L. Kizer, 205-967-2092

or

Morgen-Walke Associates

Robert Jones/Adam Steinberg/Sue Rodney

Media Contact:Michelle Zawrotny, 212-850-5600