CharterMac's Subsidiary Completes $104 Million Preferred Equity Offering; Issuer and Securities Receive Investment Grade Rating from Moody's.

Business Editors

NEW YORK--(BUSINESS WIRE)--May 14, 2004

CharterMac (AMEX:CHC) today announced that Charter Mac Equity Issuer Trust (the "Issuer"), a wholly owned subsidiary of CharterMac, has completed a $104 million preferred equity offering to institutional investors.

Through the offering, the Issuer sold 60 of its 5.75% Series A-4-1 Perpetual Preferred Shares with an aggregate Liquidation Amount of $30 million (the "Series A-4-1 Preferred Shares") and 58 of its 6.00% Series A-4-2 Perpetual Preferred Shares with an aggregate Liquidation Amount of $29 million (the "Series A-4-2 Preferred Shares", and, together with the Series A-4-1 Preferred Shares, the "Series A-4 Preferred Shares"). The Issuer also sold 50 of its 6.00% Series B-3-1 Subordinate Perpetual Preferred Shares with an aggregate Liquidation Amount of $25 million (the "Series B-3-1 Preferred Shares") and 40 of its 6.30% Series B-3-2 Subordinate Perpetual Preferred Shares with an aggregate Liquidation Amount of $20 million (the "Series B-3-2 Preferred Shares", and, together with the Series B-3-1 Preferred Shares, the "Series B-3 Preferred Shares").

In addition, Moody's Investors Service, Inc. ("Moody's") has assigned ratings to the Issuer's preferred shares, as well as the Issuer, for the first time. Moody's issued an "A3" rating to the Series A-4 Preferred Shares and a "Baa1" rating to the Series B-3 Preferred Shares. Moody's also concurrently assigned similar ratings to the Issuer's $273.5 million outstanding parity preferred shares. Furthermore, Moody's assigned an "A2" rating to the Issuer based on its portfolio composition, loan performance, coverage ratios, and real estate management expertise.

"We were extremely pleased with the results of this offering, particularly given the current market conditions," said Alan P. Hirmes, Chief Financial Officer of CharterMac and the Issuer. "This was the first time that CharterMac or one of its subsidiaries has received a rating, which we believe has resulted in a lower cost of capital. The ratings also reflect well on the quality of our revenue bond portfolio, as well as our underwriting and asset management platform."

The net proceeds of the offering will be used to invest in revenue bonds secured by mortgages on multifamily housing properties and other bond-related investments that are expected to produce tax-exempt income and for general trust purposes.

Terms of the Series A-4 Preferred Shares and the Series B-3 Preferred Shares

The Series A-4 Preferred Shares rank pari passu to the previously issued Series A, Series A-1, Series A-2, and Series A-3 Preferred Shares and senior to the previously issued Series B, Series B-1, and Series B-2 Preferred Shares, the newly issued Series B-3 Preferred Shares, and the Issuer's common shares with respect to payment of distributions and amounts upon liquidation, dissolution, or winding up of the Issuer. The Series B-3 Preferred Shares rank pari passu to the previously issued Series B, Series B-1, and Series B-2 Preferred Shares and senior to the Issuer's common shares with respect to payment of distributions and amounts upon liquidation, dissolution, or winding up of the Issuer.

The Series A-4 Preferred Shares and the Series B-3 Preferred Shares have not been registered under the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction. Unless they are registered, the Series A-4 Preferred Shares and Series B-3 Preferred Shares may be offered only in transactions that are exempt from registration under the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction.

The Series A-4-1 Preferred Shares and the Series B-3-1 Preferred Shares will not be redeemable by the Issuer prior to April 30, 2015. The Series A-4-2 Preferred Shares and the Series B-3-2 Preferred Shares will not be redeemable by the Issuer prior to April 30, 2019. The terms of the Series A-4 Preferred Shares prohibit us from redeeming any of the Series B-3 Preferred Shares while the Series A-4 Shares are outstanding.

Merrill Lynch & Co. acted as the initial purchaser of the Series A-4 Preferred Shares and the Series B-3 Preferred Shares.

About CharterMac

CharterMac, through its subsidiaries, is the nation's leading financial services provider to the multifamily housing industry. CharterMac offers capital solutions to developers and owners of multifamily rental housing throughout the country and quality investment products to institutional and retail investors. For more information, please visit CharterMac's website at http://www.chartermac.com or contact the Shareholder Services Department directly at [phone].

Certain items contained in this press release may contain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Such forward-looking statements speak only as of the date of this press release. You should review the risk factors contained in the offering memorandum issued in connection with the offering described in this press release for a discussion of the risks related to the ownership of CharterMac Equity Issuer Trust's preferred shares. CharterMac and Charter Mac Equity Issuer Trust expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in CharterMac or Charter Mac Equity Issuer Trust's expectations with regard thereto or change in events, conditions or circumstances on which any such statement is based.