FAC REALTY TRUST REPORTS YEAR-END AND FOURTH QUARTER RESULTS; ANNOUNCES CLOSING OF $150 MILLION CREDIT FACILITY.

CARY, N.C.--(BUSINESS WIRE)--Feb. 20, 1997--

ENTERS INTO LETTER OF INTENT FOR PURCHASE OF SIX COMMUNITY CENTERS

FAC Realty Trust, Inc. (NYSE:FAC), a fully integrated shopping center REIT, today reported results for the fourth quarter and year ended December 31, 1996.

For the fourth quarter, funds from operations (FFO), under the new definition as defined by NAREIT, was $3.7 million, or $0.27 per share, compared with negative FFO of $2.5 million, or negative $0.21 per share, for the fourth quarter of 1995. As a result of the Company's decision to sell certain underperforming centers, the Company recognized a fourth quarter charge to earnings of $5.0 million to reduce the carrying amount of one of these centers to its estimated net realizable value. With this nonrecurring charge, the Company reported a net loss for the quarter of $6.3 million, or a loss of $0.53 per share, compared with a net loss for the fourth quarter of 1995 of $20.5 million, or a loss of $1.74 per share. As previously announced, in the fourth quarter of 1995 the Company recognized charges of $8.5 million for the writedown of assets held for sale and $6.5 million related to the termination of the proposed merger and severance costs. Total revenue for the fourth quarter increased 7.6% to $14.0 million from $13.0 million for the same quarter in 1995.

For the year ended December 31, 1996, FFO increased $2.1 million, or 17%, to $14.8 million, or $1.10 per share on 13.5 million fully diluted weighted average shares outstanding, compared with FFO of $12.7 million, or $1.07 per share on 11.8 million fully diluted weighted average shares outstanding, for 1995. The Company reported a net loss for the year of $6.1 million, or a loss of $0.52 per share, compared with a net loss for 1995 of $13.1 million, or $1.11 per share. Both the 1996 and 1995 earnings were significantly impacted by the nonrecurring charges previously stated. Total revenue for the year was $54.3 million compared with $53.3 million for 1995.

Also today, the Company made the following announcements:

-- The Board of Directors has determined that the Company will not pay a fourth quarter dividend for 1996. In addition, the Company announced that future dividends will be equal to 95% of the Company's taxable income which is the minimum dividend required to maintain its REIT status. Determination of any dividends will be made annually following review of the Company's year-end financial results. In 1996, FAC Realty paid total dividends of $0.75 per share, representing 80% of 1996 FAD (Funds Available for Distribution). The Company's decision is driven by its goal to increase the total return to its shareholders. Through the use of internal cash flow to "self-fund" some of its growth, such as expansions at existing successful centers and strategic acquisitions, the Company also will strive to reduce its borrowing levels and interest expense.

-- FAC has closed a $150 million line of credit facility with Nomura Asset Capital Corporation for a term of two years with an option for one additional year. This facility replaces the previous line of credit of $75 million.

-- The Company has entered into a letter of intent to acquire six community shopping centers totaling 686,000 square feet in the Raleigh, North Carolina, area, from North Hills Properties, Inc. The transaction is expected to close by the end of February, subject to completion of the Company~s due diligence and execution of a purchase and sale agreement.

-- J. Dixon Fleming, Jr., chairman of the Board of Directors and a founder of the Company, has resigned from the Board, effective immediately. Mr. Fleming intends to pursue international opportunities. The company intends to conduct a search for a new independent director who will also serve as Chairman.

President and Chief Executive Officer C. Cammack Morton said, "We had to make some very hard decisions in the fourth quarter in order to position FAC Realty Trust for improved profitability from which we can continue to pursue a sound growth strategy. In the past 15 months, we have replaced a majority of senior management within the Company as well as many other key positions and now have a very experienced shopping center team in place.

"The decision not to pay a dividend for the fourth quarter is a component of our financial restructuring. While establishing future dividends equal to 95% of the Company's taxable income will result in lower dividends than we paid in 1996, this policy will help ensure a better overall return to our shareholders and protect our ability to generate internal funds for future growth. We intend to gauge our ability to self-fund through an analysis of Funds Available for Distribution (FAD) which we intend to refer to as Funds Available for Reinvestment (FAR). FAR, like FAD, is defined as FFO adjusted to include recurring capital expenditures and capitalized tenant allowances and leasing costs. As an example of self-funding, the Company will commence construction on a 32,400 square-foot expansion of our Crossville, Tennessee, center. The existing center is currently 100% leased -- the expansion project was initiated as a result of tenant demand and is anticipated to open this fall. A majority of the funding for this project is being provided from internal cash flow.

"We look forward to completing the pending acquisition of North Hills, whose centers are well-located within the Raleigh-Durham area, have an average occupancy rate of 96% and feature key regional tenants. While the outlet industry continues to be a primary focus of FAC Realty, with the strength of our management team and the ultimate merging of retail types, this acquisition is a key component of our strategy going forward. Due to the centers' locations both in one of the Southeast's fastest growing areas and in our backyard, I can't think of a better area to begin our diversification strategy. This is a very positive acquisition for us and is a good strategic fit for our shopping center management and development expertise. More importantly, it should immediately produce positive cash flow and an increase in FFO for 1997."

Concerning the Nomura credit facility, Patrick M. Miniutti, the Company's executive vice president and chief financial officer, said, "This is a significant transaction which provides FAC Realty a number of benefits over our previous credit facilities, including: 1) It provides us with an additional $65 million to fund future acquisitions and expansions. 2) In addition to our internal cash flow, it provides capacity to buy back shares of FAC's stock which management anticipates will be approved by the Board of Directors. 3) It enabled the Company to retire $9.5 million of short-term debt which had an average interest rate of approximately 12%. 4) It bears interest, based on LIBOR, at a rate that is 50 basis points less than the retired $75 million line of credit and has related loan fees and costs that are another 50 basis points less than the retired line of credit. 5) It establishes a relationship with one of the country's preeminent real estate capital markets firms that provides financial instruments ranging from the traditional to the very creative." David Murdoch, director of Nomura Asset Capital, said "We've provided a significant amount of capital to the outlet real estate industry over the last several years. We are very positive about the prospects for the outlet industry and have a great deal of confidence in the future of FAC Realty under its current management."

Morton added, "In 1996 my primary role as chief operating officer was to focus on stabilizing our properties, reorganizing the Company, and bringing the right people on board to position us for future growth. In assuming the position of chief executive officer, my goal, along with our management team's, is to improve shareholder value and put us in a position to grow and diversify with our changing industry."

Investors are cautioned that any foregoing statements with respect to the availability of funding, improved operations, growth in FFO or FAR in 1997, reduction of borrowing levels and interest expense, the ability of FAC to self-fund its growth, future cash flow and FFO increases as a result of the North Hills acquisition, and future returns to shareholders, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in the future to differ materially from expected results. These risks and uncertainties include, among others, general and local real estate and economic conditions, including the interest rate environment, competitive factors in markets in which the Company operates, the financial performance of tenants, tenant occupancy levels, the Company's ability to recover costs from tenants and the risks and uncertainties identified in the Company's filings with the Securities and Exchange Commission. With respect to the North Hills acquisition, such forward-looking statements are subject to consummation of the acquisition on terms and conditions contemplated in the letter of intent, the accuracy of information provided to the Company in connection with the transaction, continuation of current occupancy levels and changes in economic conditions and real estate markets.

Headquartered in Cary, North Carolina, FAC Realty Trust, Inc. is a self-administered real estate investment trust engaged in the management, leasing, marketing, development and acquisition of outlet shopping centers. The Company currently owns and operates 36 factory outlet shopping centers in 21 states, with a total of 4.8 million square feet. For a complete listing of outlet centers, stores and other information on FAC Realty Trust, Inc., visit the web site at http:\\www.facrealty.com . -0-

                          FAC Realty, Inc.
         consolidated statements of operations - unaudited
               (In thousands, except per share data)

                             Three Months Ended   Twelve Months Ended
                                December 31,          December 31,
                              1996       1995       1996       1995
Revenue:
 Rental revenue              13,959     12,981     54,302     53,317

Expenses:
 Operating                    5,443      6,338     20,488     19,929
 General and
  administrative              2,651     11,992      6,247     15,289
 Depreciation and
  amortization                3,351      3,156     13,803     11,900
 Interest                     3,774      3,513     14,782     11,145
 Adjustment to carrying
  value of assets             5,000      8,500      5,000      8,500

  Total expenses             20,219     33,499     60,320     66,763

Loss from
 operations                  (6,260)   (20,518)    (6,018)   (13,446)

Gain on sale of real
 estate, net of tax of
 $25 and $0, respectively         -          -         37        345

Loss before
 extraordinary item          (6,260)   (20,518)    (5,981)   (13,101)
 Extraordinary item:
  loss on debt
  extinguishment                  -          -       (103)         -

Net Loss                   $ (6,260)  $(20,518)  $ (6,084)  $(13,101)

Earnings Per Common Share:
 Loss before
  extraordinary item       $  (0.53)  $  (1.74)  $  (0.51)  $  (1.11)
 Extraordinary item               -          -      (0.01)         -

 Net Loss                  $  (0.53)  $  (1.74)  $  (0.52)  $  (1.11)

Weighted Average Number
 of Shares Outstanding       11,818     11,814     11,816     11,814


                          FAC Realty, Inc.
        funds from operations - (unaudited) - new definition
                (In thousands, except per share data)

                             Three Months Ended       Year Ended
                                December 31,          December 31,
                              1996       1995       1996       1995
Weighted Average Shares
 Outstanding -
 Fully Diluted               14,040     11,814     13,474     11,814

Net Loss                   $ (6,260)  $(20,518)  $ (6,084)  $(13,101)

Adjustments:
 Unusual items:
  Non-recurring
   administrative costs         927      6,500        927      6,500
  Write down of assets
   held for sale              5,000      8,500      5,000      8,500
 Straight-line rent             446        (49)       383       (626)
 Interest on exchangeable
  notes                           0          0        553          0
 Compensation under
  restricted stock plan         355          0        392          0
 Depreciation and
  amortization of assets
  related to real estate      3,268      3,111     13,513     11,722
 Gain on sale of real estate      0          0        (37)      (345)
 Extraordinary item -
  loss on early
  extinguishment                  0          0        103          0
Funds from Operations      $  3,736   $ (2,456)  $ 14,750   $ 12,650

Funds from Operations
 Per Share                 $   0.27   $  (0.21)  $   1.10   $   1.07


           Funds Available for Distribution/Reinvestment
             (In thousands except for per share data)

Funds from Operations                            $ 14,750   $ 12,650

Adjustments:
 Non-recurring administrative costs                  (927)    (6,500)
 Capitalized tenant allowances                       (316)    (1,380)
 Capitalized leasing costs                           (549)      (407)
 Recurring capital expenditures                      (312)      (796)

Funds Available for Distribution/Reinvestment
                                                 $ 12,646   $  3,567

Funds Available for Distribution/Reinvestment
 Per Share                                       $   0.94   $   0.30

Dividends Declared                               $ 10,142   $ 24,101

Dividends Declared Per Share                     $   0.75   $   2.04

NOTE: The Company cautions that the calculation of Funds from
Operations ("FFO") and Funds Available for Distribution/Reinvestment
("FAD/FAR") may vary from entity to entity and as such the
presentation of FFO and FAD/FAR by the Company may not be comparable
to other similarly titled measures of other reporting companies.
FFO and FAD/FAR do not represent cash generated from operating
activities in accordance with generally accepted principles; are not
necessarily indicative of cash available to fund cash needs; and
should not be considered as an alternative to cash flow as a measure
of liquidity.

CONTACT: FAC Realty Trust, Cary

Patrick M. Miniutti or Linda M. Swearingen, 919/462-8787