Catellus Completes Restructuring of Its Residential Development Group; Timothy L. Unger Named New President of Catellus Residential Group.

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--June 30, 2000

Catellus Development Corporation (NYSE:CDX) announced today that it has entered into an agreement with Brookfield Homes of California, Inc. to transfer a majority of its merchant housing assets to a newly formed limited liability company. Catellus will contribute an estimated 900 lots with a projected total book value at the date of close of approximately $130 million in exchange for a total consideration of approximately $170 million, comprised of $147.5 million in cash and a $ 22.5 million retained interest. Approximately $72.5 million of the initial cash proceeds will be used for debt repayment. The remaining net proceeds will be added to the Company's working capital to be used for general corporate purposes. Catellus will receive 50% of its retained interest in early 2001 and anticipates receiving the balance plus 35% of the associated profits in cash over the following 24 to 36 months as homes are built and sold. Due to the structure of the transaction, it is likely that all or a portion of the gain will be deferred for financial statement and tax purposes.

Brookfield plans to invest $22.5 million in equity with additional financing of $125 million being arranged with a syndicate of banks led by Bank of America. Brookfield will also manage the disposition of the assets after the close of the transaction, which is scheduled for the third quarter of 2000.

Separately, Catellus plans to sell an 80-lot project in Northern California. The sale, which should close by year-end, would generate a pre-tax gain of approximately $6 million and the realization of $10 million in cash. The remaining merchant housing assets will consist of developable land and a joint venture project with a total book value of approximately $50 million. These assets will be retained by Catellus Residential Group and developed or sold during the normal course of business.

Catellus Residential Group currently has more than 8,000 acres in active planning. The group's diverse California portfolio includes the 3,510-acre Talega community in San Clemente, the 3,500-acre Serrano community in Eldorado Hills near Sacramento, the 220-acre New Pacific Properties site in Hercules just north of Berkeley, Westbluffs, a 44-acre development in Los Angeles, and 28 acres in Gilroy. After the two transaction are complete and excluding Catellus Urban Group's projects (Mission Bay in San Francisco and Santa Fe Depot in San Diego), the Residential Group will own or control approximately 10,000 lots in the Western United States.

Nelson C. Rising, Catellus' Chairman and Chief Executive Officer, also announced the appointment of Timothy L. Unger to president of the Newport Beach-based Catellus Residential Group, a wholly-owned subsidiary of Catellus Development Corporation. Rising commented, "These transactions mark the conclusion of our direct home building activity and will allow us to focus our residential operations on land development and community master-planning. Tim has been instrumental in leading the Company's highly successful community development activities and has played an increasingly important strategic role in the acquisition, development, and sale of residential land. Under Tim's experienced leadership, we plan to expand our role in these areas and continue to pursue new land acquisition and development opportunities nationally." Before his appointment to president of Catellus Residential Group, Unger was executive vice president of its Community Development division.

Rising went on to say, "On behalf of the Catellus organization, I would also like to recognize Bruce Lehman, Executive Vice President of Catellus Residential's Merchant Housing Division, and thank him for the contribution he and his talented team have made to the success of our home building operations over the past four years." Following the close of the Brookfield transaction, Lehman plans to leave Catellus to pursue other career opportunities. The majority of the Catellus employees affected by the Brookfield transfer of assets will be offered comparable positions with the new organization.

Catellus Development Corporation is one of the nation's premier diversified real estate development companies. The Company specializes in developing, managing and investing in a broad range of product types including industrial, residential, office, retail and major urban development projects. It owns one of the largest portfolios of developable land in the Western United State which is capable of supporting over 41 million square feet of new commercial development and an estimated 16,300 residential units. More information on the Company is available at http://www.catellus.com.

Except for historical matters, the matters discussed in this release are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements about plans; opportunities; negotiations; markets and economic conditions; and development and sales activities. These forward-looking statements are subject to risks and uncertainties that could cause our actual results, performance, or achievements to differ materially from those expressed in or implied by these statements. In particular, among the factors that could cause actual results to differ materially are:

      --  Changes in the real estate market or in general economic
        conditions in the areas in which we own property.
      --  Competition in the real estate industry.
      --  Availability of financing to meet our capital needs, the
        variability of interest rates, and our ability to use our
        collateral to secure loans.
      --  Delay in receipt of or denial of government approvals and
        entitlements for development projects, other political and
        discretionary government decisions affecting the use of or
        access to land, or legal challenges to the issuance of
        approvals or entitlements.
      --  Changes in tax laws and other circumstances that affect our
        ability to control the timing and recognition of deferred tax
        liability.
      --  Liability for environmental remediation at properties owned,
        managed, or formerly owned or managed by us or our
        predecessors, and changes in environmental laws and
        regulations.
      --  Failure to reach agreement with third parties on definitive
        terms or failure to close transactions.

For more information about these and other risk factors, please review our report on Form 10-Q for the quarter ended March 31, 2000, filed with the Securities and Exchange Commission.