The Prudential Insurance Company of America Finalizes Private Equity Investment in Leading German Property Group.

Business/Real Estate Editors

NEWARK, N.J.--(BUSINESS WIRE)--Nov. 30, 2000

The Prudential Insurance Company of America announced today that its European real estate merchant banking arm, PRICOA Property Private Equity Limited ("PPPE"), recently completed a strategic investment in BAUWERT Property Group, GmbH ("BPG") the newly formed parent of BAUWERT, a leading Berlin-based real estate development and investment company. Prudential's PPPE and the existing managers and owners have finalized terms for the provision of new equity and shareholder loans in BPG to facilitate the rapid growth and expansion of BAUWERT's current business plan. Financial terms of the transaction were not disclosed.

"BAUWERT's two managing directors and shareholders, Dr. Jurgen Leibfried and Patrick Reich, have created a focused and profitable business which is now extremely well placed to take advantage of the current upswing in the German real estate markets, particularly in Berlin," said Jonathan Short, managing director of PPPE. "BAUWERT has a strong track record for delivering good quality and profitable developments. We look forward to this opportunity to work with them in the future," said Short.

BAUWERT is currently developing six major projects in Berlin. The company has also secured options on an additional six investment/development opportunities.

Dr. Jurgen Leibfried, managing director of BAUWERT, said, "We are delighted to have finalized terms with PPPE, a step that will greatly enhance our ability to expand the BAUWERT business. We have been impressed with PPPE's professional approach and their understanding of our business requirements."

"BAUWERT has become a highly successful real estate business over the last 17 years and with this new investment by PPPE, we are extremely well positioned to achieve a quantum leap in our business activities and profitability," Leibfried said.

BAUWERT represents PPPE's second continental European private equity investment following the successful acquisition and syndication of Belgian-based Banimmo Real Estate during the summer of 2000. Both investments follow the UK acquisitions of Arlington Securities, Hemingway Properties, and the 29 percent shareholding in Big Yellow, which is listed on the Alternative Investment Market (AIM) in the UK.

"With this investment, PPPE will be able to add real value through providing equity and shareholder loans to facilitate the rapid growth of BAUWERT, as well as providing advice on potential future public market exit strategies," added Short.

BAUWERT has more than 17 years of experience in the Berlin property market, and is now one of the market leaders in developing prime office space in Germany's new capital city. Originally focused on property renovation, BAUWERT's core business today is the development of residential and new commercial properties in prime locations. BAUWERT's initial modernization activities in Berlin encompassed more than 130 buildings that were subsequently sold to investors through closed-end real estate funds.

In 1989 BAUWERT expanded their core business to include publicly funded residential housing and commercial projects such as office buildings, hotels and speciality retail and shopping centers. Since 1983, BAUWERT has developed more than 800,000 square meters of space throughout Germany with a total investment of almost US$2 billion (DM 4.5 billion). Offering a wide range of "one-stop" services, from initial project planning and financing to overseeing completed properties, BAUWERT has developed more than 200 properties to date. BAUWERT's stated primary goal is "to create long-term value for customers."

PPPE invests in equity and equity-related securities of real estate operating companies throughout Europe. The focus is on operating entities which offer access to attractive asset portfolios, possess strong management teams, and where the potential exists to create significant incremental "enterprise value." PPPE's target market is Western Europe.

PPPE's investment opportunities include:

- Private real estate companies with strong growth prospects/superior operating
skills, requiring additional equity capital or scale before going public.

- Real estate operating companies, whether in the process of being privatized
or already private, which can transform revenues and profitability through the
addition of expansion capital and investment expertise. Examples include
Arlington Securities, a business parks developer that is a spin-off from BAe
Systems Plc; and BRE, a Belgian real estate company that is a spin-off from
Axa, the French insurer.

- Publicly held real estate companies, possibly trading at large discounts to
Net Asset Value, where value can be enhanced through restructuring,
recapitalization and/or repositioning, then realized through the sale of the
securities, merger or taking private of the company. A specific example is
Hemingway Properties, a UK real estate company taken private in August 1999.

- New ventures involving operating partners with a proven track record of
creating value, including the formation of ventures focused on "new" property
types (e.g. senior housing; self storage, etc.), which will increasingly
feature in a 'Europe without borders.' An example of this would be Big Yellow
Group Plc, a leading UK self-storage provider.

The Prudential Insurance Company of America, with more than $366 billion in assets under management as of December 31, 1999, is one of the largest life insurance companies in the United States and is among the largest financial services institutions in the world. Prudential serves millions of individual and institutional customers worldwide and offers a variety of products and services, including life insurance, property and casualty insurance, mutual funds, annuities, pension and retirement related services and administration, asset management, securities brokerage, real estate brokerage franchising and relocation services.