Caruso Affiliated Makes $1 Billion California Commitment.

Business Editors

LOS ANGELES--(BUSINESS WIRE)--May 20, 2004

Caruso Affiliated:

-- Plans to Enhance Racetrack Visitor Experience at Santa Anita,

Golden Gate Fields 

-- Plans to Create Destinations in Playa Vista, Glendale,

Thousand Oaks, Marina Del Rey 

-- Bay Area to Get First Taste of "CarusoStyle"

-- Largest Retail Development Program in the Nation

-- Company Expands into Urban Housing in Big Way

-- Will Generate Estimated $80 Million in New Annual Taxes,

11,000 Construction Jobs, 8,000 Permanent Jobs

Caruso Affiliated, the company that reinvented the retail experience as stylish gathering places, today unveiled plans for an investment of $1 billion in six new retail destinations in California, the largest single retail development program in the nation. These include the first-ever racetrack retail, entertainment and housing venues at Santa Anita Park in Arcadia, a suburb of Los Angeles, and Golden Gate Fields in Albany -- Caruso Affiliated's first entry into the San Francisco Bay Area. Caruso's new retail development initiative includes destinations in the cities of Glendale, Los Angeles (Playa Vista), Thousand Oaks and Marina del Rey.

"This is a major expansion of our vision and reach and we believe that, with our ability to expand the loyal customer base we currently enjoy plus our uncompromising approach to design, service and quality, we will once again raise the bar in destination gathering places as well as urban living," said Rick J. Caruso, CEO, Caruso Affiliated. He pointed out that the company is expanding into housing for the first time in many of these new urban destinations.

Caruso Affiliated's new family of projects is expected to generate $80 million annually in new taxes for state and local governments as well as 11,000 construction jobs and 8,000 permanent jobs. Based on The Grove's experience of attracting 28 percent tourists among its 16 million guests last year, these new destinations add to California's tourism draw. Further, "CarusoStyle" centers are proven to lift sales at nearby businesses such as the Los Angeles icon The Farmers Market, where sales are at a record high since the opening of The Grove.

As The Grove and other "CarusoStyle" destinations have revolutionized retailing, with the average visitor staying twice as long and spending twice as much as industry standards, the new horse racetrack attractions are aimed at drawing new and greater numbers of visitors to one of America's celebrated pastimes. Santa Anita Park and Golden Gate Fields will represent a substantial portion of the estimated $1 billion+ the company will invest in California.

"We selected Caruso Affiliated to collaborate with us to reinvent the horse racetrack experience because of its stellar record of creating extremely popular destinations where people return again and again," said Frank Stronach, founder and chairman of Magna Entertainment Corp., based in Ontario, Quebec, and listed on NASDAQ and the Toronto Stock Exchange. Magna Entertainment is North America's number one owner and operator of horse racetracks, based on revenues.

Stronach pointed out that both of the tracks are within major metropolitan areas with superb demographics and are convenient to millions of people. "With a Caruso project on our grounds, we are going to introduce the beauty and excitement of horse racing to an entirely new audience," he added.

The "CarusoStyle" projects announced today include:

-- The Americana at Brand, Glendale -- 475,000 square feet of

retail and entertainment, 238 apartments, 100 condominiums,

and a two-acre park on 15.5 acres where Turner Classic Movies

will be shown on a giant outdoor screen.

-- The Playa Vista Town Center -- 195,000 square feet of

neighborhood retail, 175 apartments on 11 acres designed to be

the heart of this new town.

-- The Marina Waterside Center, Marina del Rey -- reinvention of

a 10-acre, 130,000-square-foot retail center that will have

entertainment and public elements integrated.

-- The Lakes at Thousand Oaks -- strengthens the adjacent Civic

Arts Plaza as the town center with 50,000 square feet of

restaurants and retail set on 7.5 acres surrounding two lakes,

one of which will be converted to an ice skating rink in the

winter.

-- Santa Anita Park, Arcadia -- potential for 800,000 to

1,000,000 square feet of retail, entertainment and housing on

85 acres; a hotel is under consideration.

-- Golden Gate Fields, Albany -- potential for 600,000 to 800,000

square feet of retail, entertainment and housing on 45 acres.

"CarusoStyle" begins with partnering with the local community to design venues that fit individual cultures and locations. For example, the romance and history of the racetracks will be central themes for Santa Anita Park and Golden Gate Fields. Santa Anita Park opened in 1934 and was the site of the final race by Seabiscuit, immortalized there in a life-sized sculpture. Golden Gate Fields, opened in 1941, sits atop a bluff with vistas of the Golden Gate Bridge and San Francisco.

Caruso reported that the company intends to redefine residential living through the same high caliber design, amenities and services that create a "5 Star Hotel" experience.

The financial performance at Caruso Affiliated has been solid and steady since developing its first retail project in 1992. Although closely held by Rick Caruso, the firm's financial performance is equal to a blue-chip company. In fact, in the past five years, Caruso Affiliated grew its:

-- Revenues by 23 percent per year

-- Assets by 19 percent per year

-- Shareholder equity by 20 percent per year

Caruso Affiliated's growth is approximately two times that of the largest publicly traded REITs. The success of its properties is evident by many measures, but one key indicator is that sales per square foot are 40 percent higher than the industry average. "We are reinvesting our financial resources in a product we know works well in terms of financial value and human value," Caruso said, noting that capital is in place to finance the proposed expansion program. He cited the company's management team as "the best in the business" to spearhead the new projects.

Caruso Affiliated, for over 10 years, has created a unique mix of culture, community and connection, drawing millions of visitors each year to its quality destinations that focus on people places such as parks, promenades, fountains and plazas integrated with upscale retail. Reading the mood of today's savvy consumer, the company employs rich materials, design integrity and meticulously detailed environments that feel inviting, safe and comfortable for families and people of all ages. Service is also a priority, with employees trained to deliver the best customer experience and concierges on hand for personal shopping and other needs. Its style has become a recognized brand for the company within the retail industry, with other developers attempting to emulate the Caruso signature and describing it as a "caruso."

"CarusoStyle is not always easy to achieve and even harder to describe," concluded Caruso. "But when it works, the alchemy is undeniable. It has been a potent formula for success."