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VANGUARD REAL ESTATE FUND II ANNOUNCES DEFAULTS IN TWO MORTGAGE INVESTMENTS

 VANGUARD REAL ESTATE FUND II ANNOUNCES
 DEFAULTS IN TWO MORTGAGE INVESTMENTS
 VALLEY FORGE, Pa., Feb. 21 /PRNewswire/ -- Vanguard Real Estate Fund II (AMEX: VRT) today announced that the borrowers under two of the fund's mortgage investments have recently defaulted in making periodic interest payments to the fund.
 Interest income from these two mortgage investments (consisting of the Sequoia Commerce Center in Torrance, Calif., and the Raleigh Building in Chicago) contributed, in total, approximately $1.2 million, or $0.18 per share, to the fund's reported funds from operations for the year ended Dec. 31, 1991. The impact of these defaults upon the fund's cash flow for 1992 and later years cannot be reasonably projected at this time.
 The fund's investment in Sequoia Commerce Center consists of an $8.7 million shared-appreciation senior mortgage loan, while the Raleigh investment consists of a $4.55 million shared-appreciation senior mortgage loan. Together, the two properties represent approximately 20 percent of the fund's appraised value.
 With respect to the Sequoia Commerce Center investment, the fund has been notified that the borrower filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code. Accordingly, the fund is not expected to receive monthly interest payments of any additional cash flow at least until a plan of reorganization has been approved by the bankruptcy court. The fund said it cannot predict, at this time, when such a plan will be approved and its ultimate effect upon the fund.
 With respect to the Raleigh investment, the fund said it intends to vigorously pursue its rights and exercise its remedies under the documents governing the loan and mortgage.
 Both of these situations reflect the challenging real estate environment that currently exists due to the weak economy and the difficulty of retaining tenants during a period of intense competition and significant oversupply of commercial and retail space.
 -0- 2/21/92
 /CONTACT: Jeremy G. Duffield, senior vice president of The Vanguard Group, 215-669-6091/ CO: The Vanguard Group ST: Pennsylvania IN: FIN SU:


CC-MK -- PH036 -- 1526 02/21/92 16:38 EST
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Publication:PR Newswire
Date:Feb 21, 1992
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