Colony Capital Invests in Trainer Wortham, First Republic Bank CBO.

Business Editors

LOS ANGELES/SAN FRANCISCO--(BUSINESS WIRE)--March 10, 2000

In an innovative investment for a real estate opportunity fund, Colony Capital, Inc. has made an investment in a newly-issued $500 million Collateralized Bond Obligation (CBO) which will be actively managed by a subsidiary of First Republic Bank (NYSE: FRC).

Colony believes this initial move into real estate-backed structured financial products strategically positions it to capitalize upon currently attractive pricing opportunities in the capital markets. Since the Russian debt default in late 1998, public markets have demonstrated limited appetite for many real estate-related securities, in spite of generally strong underlying performance in most domestic property markets.

The floating-rate, five-year CBO was formed by issuing four senior tranches of `AA' and better-rated notes and commercial paper, with Colony acquiring the majority of the remaining tranche of the preferred stock. Proceeds from these securities will be used to acquire the CBO's "collateral," a diversified portfolio of primarily U.S. government agency and other high grade, mortgage-related securities.

Trainer Wortham and Co., a wholly-owned subsidiary of First Republic Bank, will actively manage the investment portfolio. Bear, Stearns & Co. Inc. was exclusive underwriter and structuring agent for the transaction.

"Timing for this investment, we believe, is auspicious, particularly given the current pricing environment in the capital markets," said Thomas J. Barrack, Chairman and CEO of Colony Capital. "We are constantly looking for opportunities to capitalize on market inefficiency. This investment is one example of a complex execution where we expect to achieve high rates of return while remaining substantially insulated from real estate market downturns in this late-cycle economy. Furthermore, we are extremely pleased to be investing alongside our long-standing strategic partner, First Republic Bank, whose top-notch investment advisory subsidiary, Trainer Wortham, is well positioned to manage this type of security."

"This CBO represents the first in what we hope will be several structured financial offerings managed by First Republic and Trainer Wortham," said James H. Herbert, President and CEO of First Republic Bank. "The strategic combination of First Republic and Trainer Wortham provides both a depth of fixed-income management expertise coupled with a day to day knowledge of market directions through the Bank's retail activities."

First Republic Bank is a NYSE-traded commercial bank. The Bank has total assets of $3.6 billion and specializes in private banking, investment management, trust services, and real estate lending. Its wholly-owned investment advisory subsidiary, Trainer, Wortham & Company, manages $3.6 billion in assets in equity, balanced, and fixed income accounts. Additionally, the Bank holds an equity interest in Froley, Revy Investment Company which manages approximately $3.3 billion of assets primarily in convertible securities. First Republic Bank provides its services in five major metropolitan markets including San Francisco/Silicon Valley, Los Angeles/Beverly Hills, San Diego, Las Vegas and New York City.

Colony Capital is a private, international, real estate-related investment firm. Since its formation in 1991, Colony has been one of America's most active and innovative real estate investors, investing US$6 billion in more than 60 distinct property, corporate, and portfolio transactions. The firm is headquartered in Los Angeles, with offices in Singapore (its regional headquarters for the Asia-Pacific region), Tokyo, New York City, Fort Worth, Hawaii, and Paris, France.

Bear Stearns is a leader in structured mortgage deals, having raised nearly $2 billion for mortgage and asset backed managers over the last 12 months.