Catellus Reports 82% Increase in Earnings Before Depreciation and Deferred Taxes Per Share in 1997 Over 1996.

SAN FRANCISCO--(BUSINESS WIRE)--Jan. 29, 1998--Catellus Development Corp. (NYSE:CDX) today reported 1997 earnings before depreciation and deferred taxes (EBDDT) of $62.8 million compared to $25.9 million for 1996. On a per share basis, EBDDT for the year was $0.62 per share, an 82% increase over $0.34 per share in 1996. Net income applicable to common shareholders for 1997 was $23.9 million, or $0.24 per share, versus $1.9 million in 1996, or $0.03 per share.

For the fourth quarter of 1997, Catellus reported EBDDT of $18.7 million compared to $10.0 million in the fourth quarter of 1996. On a per share basis, EBDDT for the fourth quarter was $0.17 per share, a 31% improvement over $0.13 per share in the same period in 1996. Net income applicable to common shareholders was $8.2 million, or $0.07 per share versus $7.1 million, or $0.09 per share in the fourth quarter of 1996. All per share amounts reported are diluted.

"1997 has been a tremendous year for Catellus," said Nelson C. Rising, president and chief executive officer. "We reported a 143% increase in earnings before depreciation and deferred taxes. On a per share basis, because of a 33% increase in our average shares outstanding from conversion of our preferred stock, this represents an 82% improvement over last year. We significantly strengthened the capital structure of the company during 1997 by reducing the ratio of our debt and preferred stock to total market capitalization from 47% to 21%. In addition, we exceeded our development goal for the year by starting construction on 3.9 million square feet of new industrial and retail buildings compared to 3.3 million started in 1996."

"As a result of these and other accomplishments during 1997, we experienced an increase in the price of our common stock from $11 3/8 at year-end 1996 to $18 3/16 at the close of trading yesterday. Combined with the increased number of outstanding shares, this reflects an overall increase in common stock market capitalization of over $1.0 billion."

"An improved capital structure and steady cash flow from our income-producing portfolio gives us a platform of financial strength from which we can continue to support future development activities. This financial strength, combined with an extensive developable land portfolio and a strong management team, uniquely positions us for growth in 1998 and beyond," concluded Rising. "In 1997, we invested over $200 million into our industrial and residential development activities."

Highlights of the fourth quarter and year ended December 31, 1997 include:

- Development activity:

-- Industrial development -- During the fourth quarter, the company started construction on 2.6 million square feet of new industrial development, which brings total industrial construction starts for the company in 1997 to 3.8 million square feet. Of the 3.8 million square feet of industrial development started in 1997, 1.8 million will be added to the company's portfolio, 1.1 million will be sold upon completion and 900,000 is being developed on a fee basis for land purchasers.

In the fourth quarter of 1997, the company completed development of 670,000 square feet of industrial space, which brings total industrial development completed for the year to 2.4 million square feet.

During the quarter, the company also acquired 91 acres of industrial land for $15.5 million, which is capable of supporting 1.9 million square feet of development. This brings the total industrial acreage purchased in 1997 to 412 acres. 1997 industrial land acquisitions were: 294 acres in Denver, Colorado (adjacent to the Stapleton Airport), 27 acres in Oakland, California, 16 acres in San Jose, California, 62 acres in Mira Loma, California, and 13 acres in Richmond, California.

At year-end, the company had an additional 352,000 square feet of signed contracts for new industrial development. One of these is a pre-sale contract for 272,000 square feet of development at the newly acquired San Jose site in California.

At December 31, 1997, Catellus had a total of 1,991 acres of industrial land available for development or sale in its portfolio, which has the potential for up to an estimated 26.6 million square feet of new industrial space upon completion of entitlements.

-- Commercial development property sales -- The company had a total of approximately $15.0 million in sales of commercial properties in the fourth quarter of 1997 which resulted in $2.0 million in gains. This brings total sales of commercial development properties for the year to $39.6 million with resulting gains of $7.9 million.

-- Residential development -- During 1997, Catellus Residential Group ("CRG") contributed over $6.7 million to pre-tax earnings compared to last year's contribution of $2.2 million.

During the quarter, CRG closed an acquisition of a 44-acre merchant housing site in Playa del Rey, California. Residential acquisitions in California for 1997, purchased directly or in joint venture, totaled 3,579 acres and have a development potential of up to 5,351 lots/units, upon completion of entitlements. These acquisitions are located throughout Southern California in San Clemente, Tustin, Playa del Rey, Carlsbad and Long Beach.

At December 31, 1997, CRG and its joint ventures owned a total of 15 projects, exclusive of proposed residential development at Mission Bay in San Francisco. When fully entitled, these projects have a development potential of 11,342 lots or single-family homes and 220 multi-family units. At year-end, CRG had in escrow or under control land sites in California and Colorado with a development potential of an additional 4,613 residential lots/units, once entitled and approved.

-- Retail/entertainment development -- During the fourth quarter, the company started construction on an 81,000-square-foot, 18-screen theater for Loews Theatres, a subsidiary of Sony Pictures Entertainment, Inc. The new 4,405-seat theater is located at the company's Internationale Centre business park in Woodridge, Illinois (metropolitan Chicago). Location of the theater at the northern end of this industrial business park allows for the possibility of future office and retail uses on the 70-acre section of the park surrounding it. Construction on the theater is expected to be complete by late-1998.

- Mixed-use development:

Mission Bay, San Francisco -- The company continued to work during the fourth quarter to obtain approvals on its Mission Bay project. These activities build on the company's third quarter agreement with the University of California Board of Regents for the transfer of 29.3 acres of Catellus land in Mission Bay for the expansion campus of the University of California at San Francisco (UCSF). The effort, which involves the City of San Francisco, the Redevelopment Agency and UCSF, will require an environmental impact report, owner participation agreements with the San Francisco Redevelopment Agency, and other related documents, all of which are currently in preparation.

Proposed development by the company at Mission Bay includes: 4,300 market-rate and 300 affordable housing units; 5.0 million square feet of office, research and development (R&D), and biotechnology space; 350,000 square feet of entertainment retail; 500,000 square feet of neighborhood and community-supporting retail; and a 500-room hotel. The Mission Bay proposal also includes 1,400 affordable housing units to be developed by other developers.

Pacific Commons, Fremont, CA -- During the year, the company received habitat mitigation approvals necessary to proceed with 1.2 million square feet of development on a 78-acre portion of its 840-acre Pacific Commons project. The City of Fremont and the company are co-applicants in a pending permit process to receive additional approvals regarding wetland mitigation requirements for the rest of the 8.5 million-square-foot park.

In August, construction was started on two buildings located in the 78-acre area of Pacific Commons cleared for development: a 51,000-square-foot research and development facility and a 186,000-square-foot light industrial building. At year-end, the company completed the 376,000-square-foot Office Depot distribution facility also located in this 78-acre area, which can now support and is entitled for up to 574,000 square feet of additional development.

- Elimination of preferred stock dividend -- In 1997, the company called for redemption the remainder of its Series A preferred stock, as well as all of its Series B preferred. As a result, the company eliminated its previous total annual preferred dividend requirement of $23.8 million. Preferred dividends in 1997 and 1996 totaled $1.4 million and $22.2 million, respectively.

- Increased development and management fee income -- Development and management fee income for the fourth quarter of 1997 increased to $2.1 million from $1.4 million in the fourth quarter of 1996. The company's focus on its fee service business resulted in total income from development and management fees increasing to $6.4 million in 1997 from $3.4 million in 1996 and $1.9 million in 1995.

- Income-producing portfolio -- At December 31, 1997, the company's income-producing portfolio included 18.1 million square feet of buildings and was 97% leased. Operating income from income-producing properties, including equity in earnings from joint ventures, was $97.7 million in 1997 versus $82.5 million in 1996.

- Sales of non-strategic assets -- Sales of non-strategic assets totaled $12.0 million in the fourth quarter of 1997 and $31.1 million for the year. The backlog of sales under contract but not yet closed was $58.8 million at December 31, 1997.

David Friedman, Catellus Resources Group president, announced he would be leaving the company on February 3, 1998 to follow personal interests. "David has made many important contributions to Catellus over the past two years," said Rising. "In particular, he has been extremely effective in helping the company understand its desert portfolio and in the completion of the contract with regional and state park agencies for the sale of the company's 1,430-acre East Bay shoreline property, located along the San Francisco Bay. We will miss him and wish him continued success in his future endeavors."

"I am interested in devoting more of my time to pursuing personal print and broadcast media opportunities," said Friedman. "I have enjoyed my work with Catellus and I believe the company is now well-positioned to pursue exchanges with its resources portfolio." Friedman was recently named a contributing editor to the Los Angeles Times Opinion section and a contributor to Inc. Magazine. He will continue to provide on-going transaction support as a consultant following his departure.

During 1997, the Catellus Resources Group completed its comprehensive assessment of the company's 784,000-acre resources portfolio. This evaluation included an in-depth analysis of the portfolio's water, mineral, land, sales, agricultural and development potential. The company has concluded from this assessment that the land, although valuable, is non-strategic for Catellus and will continue to pursue sale opportunities involving public and private buyers, as well as other arrangements to maximize the value of this land. These exchanges and arrangements are complicated in nature and therefore may take a significant amount of time to complete.

Catellus Development Corporation is one of the nation's premier diversified real estate operating companies with one of the largest portfolios of developable land in the western United States. The company develops, manages and owns a broad range of product types including industrial, residential, office, retail and major mixed-use projects. Catellus' strategic land portfolio has a development potential of over 49.1 million square feet of new commercial development and an estimated 21,000 residential units. At December 31, 1997, the company's portfolio included 18.1 million square feet of income-producing buildings, 5,300 acres of income-producing land leases, interests in a variety of joint ventures and approximately 784,000 acres of desert and agricultural land.

-0-

The company expects the variability of its quarterly and annual net income to continue. The timing of development sales and non-strategic asset sales have resulted in significant variability in the company's historic operating results, particularly on a quarterly basis. Many of the company's projects require a lengthy process to complete the development cycle before they are sold. Sales of non-strategic assets are generally subject to lengthy negotiations and contingencies that need to be resolved prior to closing. These factors tend to "bunch" income in particular periods rather than producing a more even pattern throughout a year. In addition, gross margins vary significantly as the mix of properties varies. The cost basis of the properties sold varies because a) a number of properties have been owned for many decades; b) some properties were acquired within the last ten to fifteen years; and c) properties are owned in various geographical locations.

The statements contained herein which are not historical facts are forward-looking statements based on economic forecasts, strategic plans and other factors, which by their nature, involve risk and uncertainties. In particular, among the factors that could cause actual results to differ materially are the following: business conditions and general economy; competitive facts; political decisions affecting land use permits; discretionary government decisions affecting use of and access to land; interest rates and other risks inherent in the real estate business. For further information on factors which could affect the company and the statements, the reader should refer to the company's filings with the Securities and Exchange Commission. -0-

                    CATELLUS DEVELOPMENT CORPORATION
                  CONSOLIDATED STATEMENT OF OPERATIONS
                  (In thousands, except per share data)

                            Three months ended         Year ended
                               December 31,            December 31,
                             1997       1996         1997       1996
                               (Unaudited)

Income producing
 properties

 Rental revenue            $33,826    $ 29,866     $128,953   $115,886
 Property operating
  costs                     (9,822)    (10,540)     (38,670)   (39,408)
 Equity in earnings of
  joint ventures, net        1,473       1,533        7,436      5,993
                            25,477      20,859       97,719     82,471

Development activities
 and fee services

 Gain on development
  property sales             6,191       6,308       13,197     15,623
 Development and
  management fee
   income, net               2,072       1,437        6,449      3,432
 Equity in earnings of
  joint ventures, net          616         800        2,123        758
 Land holding
  costs, net                  (407)       (806)      (1,241)    (3,724)
                             8,472       7,739       20,528     16,089

Interest expense            (9,954)    (10,205)     (39,988)   (42,521)
 Depreciation and
  amortization              (8,207)     (7,907)     (31,245)   (30,561)
 General and
  administrative expense    (2,655)     (2,301)     (10,897)    (8,019)
 Gain on non-strategic
  land and other
   asset sales                 401      12,630        5,029     24,405
 Litigation and
  environmental
   costs, net                1,409         143        2,551      1,093
 Other, net                 (1,158)       (458)      (1,113)       (19)

Income before
 income taxes               13,785      20,500       42,584     42,938

Income tax expense          (5,616)     (8,382)     (17,343)   (17,537)

  Net income                 8,169      12,118       25,241     25,401

    Preferred stock
     dividends                   -      (5,052)      (1,353)   (22,173)
    Premium on
     redemption
      of preferred
       stock                     -           -            -     (1,334)
  Net income applicable
   to common
    stockholders           $ 8,169     $ 7,066     $ 23,888    $ 1,894

  Net income per
   share of common
    stock                   $ 0.08      $ 0.09       $ 0.24     $ 0.03
  Net income per share
   of common stock -
    diluted                 $ 0.07      $ 0.09       $ 0.24     $ 0.03

  Average number of
   common shares
    outstanding            106,497      77,018       97,601     74,947
  Average number of
   common shares
    outstanding -
     diluted               109,871      78,318      100,768     75,835



                      CATELLUS DEVELOPMENT CORPORATION
         SUMMARY OF EARNINGS BEFORE DEPRECIATION AND DEFERRED TAXES
                   (In thousands, except per share data)

                            Three months ended        Year ended
                                December 31,          December 31,
                              1997      1996        1997       1996

Net income applicable
 to common stockholders    $ 8,169    $ 7,066     $23,888    $ 1,894

Depreciation
 and amortization            8,207      7,907      31,245     30,561
Deferred income taxes        2,737      7,705      12,667     16,468
Gain on non-strategic
 land and other
 asset sales                 (401)    (12,630)     (5,029)   (24,405)
Premium on redemption
 of preferred stock             -           -           -      1,334

Earnings before
 depreciation and
  deferred taxes          $18,712     $10,048     $62,771    $25,852

Earnings before
 depreciation and
  deferred taxes
   per share of
    common stock           $ 0.18      $ 0.13      $ 0.64     $ 0.34

Earnings before
 depreciation and
  deferred taxes
   per share of
    common stock
    - diluted              $ 0.17      $ 0.13      $ 0.62     $ 0.34

Average number of
 common shares
  outstanding             106,497      77,018      97,601     74,947

Average number of
 common shares
  outstanding -
   diluted                109,871      78,318     100,768     75,835


NOTE: The company uses a supplemental performance measure along with
net income to report its operating results.  This measure, Earnings
Before Depreciation and Deferred Taxes (EBDDT), is not a measure of
operating results or cash flows from operating activities as defined
by generally accepted accounting principles.  Additionally, EBDDT is
not necessarily indicative of cash available to fund cash needs and
should not be considered as an alternative to cash flows as a measure
of liquidity.  However, the Company believes that EBDDT provides
relevant information about its operations and is necessary, along
with net earnings, for an understanding of its operating results.
    Depreciation, amortization and deferred income taxes are excluded
from EBDDT as they represent non-cash charges.  Gains on the sale of
non-strategic land and other assets and premium on redemption of
preferred stock represent nonrecurring items and are therefore
excluded from EBDDT.



                   CATELLUS DEVELOPMENT CORPORATION
                      CONSOLIDATED BALANCE SHEET
                   (In thousands, except share data)

                                                 December 31,
                                             1997           1996

Assets
 Properties                              $ 1,358,807    $ 1,235,440
 Less accumulated depreciation              (235,832)      (211,338)
                                           1,122,975      1,024,102

 Other assets and deferred charges            50,138         50,547
 Notes receivable                             30,971         11,924
 Accounts receivable, less allowances         19,641         12,965
 Cash and cash equivalents                    17,294         23,580
                    Total                $ 1,241,019    $ 1,123,118


Liabilities and stockholders' equity
 Mortgage and other debt                   $ 568,699      $ 496,742
 Accounts payable and accrued expenses        62,681         54,178
 Deferred credits and other liabilities       40,035         43,007
 Deferred income taxes                       117,705        106,738
          Total liabilities                  789,120        700,665


Stockholders' equity
 Preferred stock                                  --        274,428
 Common stock - 106,502,949 and
  77,028,099 shares issued at
   December 31, 1997 and
    1996, respectively                         1,065            770
  Paid-in capital                            476,047        197,709
  Accumulated deficit                        (25,213)       (50,454)
          Total stockholders' equity         451,899        422,453
                Total                    $ 1,241,019    $ 1,123,118



                     CATELLUS DEVELOPMENT CORPORATION
                         ADDITIONAL INFORMATION
                  (In thousands, except square feet data)

                         Three months ended          Year ended
                            December 31,            December 31,
                          1997       1996         1997       1996
                            (Unaudited)             (Unaudited)

Income producing
 properties:

 Property operating
  income by property
   type: (1)
 Industrial buildings   $ 14,234   $ 11,003     $ 52,657   $ 41,851
 Office buildings          4,548      3,481       16,960     15,746
 Retail buildings          2,254      2,145        9,341      8,839
 Land development          1,081      1,026        4,296      3,337
 Ground leases             1,887      1,671        7,029      6,705
                          24,004     19,326       90,283     76,478
 Equity in earnings of
  joint ventures, net      1,473      1,533        7,436      5,993
Total                   $ 25,477   $ 20,859     $ 97,719   $ 82,471

(1) Represents rental revenue less property operating costs.


Development property sales:
 Sales Proceeds:
 Commercial             $ 14,980   $ 13,097     $ 39,587   $ 40,525
 Residential              58,987     21,945       82,632     21,945
                        $ 73,967   $ 35,042     $122,219   $ 62,470
 Gain:
 Commercial             $  1,966   $  4,501     $  7,870   $ 13,816
 Residential               4,225      1,807        5,327      1,807
                        $  6,191   $  6,308     $ 13,197   $ 15,623


                                      December 31,   December 31,
Backlog - sales under contract:           1997           1996
 Development Property:
 Commercial                             $ 7,091         $     -
 Residential (lot and unit sales)
   Joint venture projects (A)(1)        $21,003         $20,901
   Management projects (A)(2)           $ 8,404         $10,878


(A) The amounts shown are 100% of the gross sales price
(1) The Company is entitled to receive 50% of the net profits from
    these joint ventures.
(2) The Company receives a fee based on the sales of these units,
    which averages 5% of revenues.



Additional Information (continued)

                         Three months ended        Year ended
                             December 31,          December 31,
                           1997      1996       1997       1996
                             (Unaudited)          (Unaudited)
Land holding costs:
 Developable properties  $ (201)   $ (342)   $  (404)   $ (1,509)
 Natural resources           18      (126)      (271)       (615)
Properties held for sale   (224)     (338)      (566)     (1,600)
                         $ (407)   $ (806)  $ (1,241)   $ (3,724)


Interest costs and
 preferred stock
  dividends:

 Interest Costs:
 Total interest costs   $12,330   $12,243    $46,684     $45,377
 Interest capitalized    (2,376)   (2,038)    (6,696)     (2,856)
 Interest expensed        9,954    10,205     39,988      42,521
 Interest income           (355)      (94)      (931)     (1,212)
                        $ 9,599    10,111    $39,057     $41,309

Preferred stock
 dividends:             $     -   $ 5,052    $ 1,353     $22,173

Sale of non-strategic
 land and other
  assets:

 Sales Proceeds:
 Non-strategic land     $12,000   $40,753    $28,347     $76,553
 Buildings                    -     1,625      2,775       1,625
 Land leases                  -         -          -       7,500
                        $12,000   $42,378    $31,122     $85,678
 Gain:
 Non-strategic land     $   401   $12,590    $ 3,429     $19,659
 Buildings                    -        40      1,600          40
 Land leases                  -         -          -       4,706
                        $   401   $12,630    $ 5,029     $24,405


                                          December 31,
Backlog - sales under contract:       1997           1996
                                          (Unaudited)

       Non-strategic land (1)      $ 58,800        $ 3,314
       Buildings                         -           2,775
       Total                       $ 58,800        $ 6,089

(1) Includes $19.6 million for an option to purchase Golden Gate
    Fields and $27.5 million for the East Shore Regional Park sale
    (it is estimated the sale will close sequentially over the next
    18 months).



Additional information (continued)

                                        As of or for the
                          Three months ended            Year ended
                              December 31,              December 31,
                         1997          1996         1997           1996
                             (Unaudited)                (Unaudited)

Industrial Development
 (in square feet)
 Construction and
  completion
  Under construction,
   beginning of
    period            1,811,000     1,466,911     2,286,961      641,128
 Construction starts  2,552,000(1)  1,447,000     3,804,000(1) 3,259,308
 Completion            (670,000)     (626,950)    2,397,961    1,613,475
 Under construction,
  end of period       3,693,000(2)  2,286,961     3,693,000(2) 2,286,961


(1) Excludes 81,000 square feet of retail development started in 1997.
(2) Includes 925,000 square feet of 'design-build' development for the
    third party owners.


Buildings owned and leasing statistics         December 31,
   (except percentages)                   1997             1996
                                               (Unaudited)

   Industrial buildings
      Square feet owned                  14,326           12,606
      Square feet leased                 14,061           12,345
      Percent leased                      98.2%            97.9%
   Office buildings
      Square feet owned                   1,620            1,683
      Square feet leased                  1,547            1,460
      Percent leased                      95.5%            86.7%
   Retail buildings
      Square feet owned                     928              928
      Square feet leased                    870              874
      Percent leased                      93.8%            94.2%
   Land development
      Square feet owned                   1,220            1,231
      Square feet leased                    981            1,129
      Percent leased                      80.4%            91.7%
   Total
      Square feet owned                  18,094           16,448
      Square feet leased                 17,459           15,808
      Percent leased                      96.5%            96.1%

CONTACT: Catellus Development Corp., San Francisco

Jennifer Ruddock, 415/974-4649