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MELLON PARTICIPATING MORTGAGE TRUST ANNOUNCES LOAN RESTRUCTURING AND ADDITIONAL INVESTMENT VALUATION RESERVES

 /EDITORS: Mellon/McMahan Real Estate Advisors, Inc., a wholly owned subsidiary of Mellon Bank, N.A., acts as the investment advisor to Mellon Participating Mortgage Trust. The trust's assets are not assets of Mellon Bank Corporation (NYSE: MEL) and the trust's financial results are not included in the financial results of Mellon Bank Corporation./
 SAN FRANCISCO, March 31 /PRNewswire/ -- Mellon Participating Mortgage Trust, Commercial Properties Series 85/10 (the "trust") (NASDAQ: MPMTS), today announced that the trust, with the unanimous approval of its four co-lenders, has entered into a letter agreement to modify the terms of a $68 million participating first mortgage loan (the "loan"), effective Jan. 1, 1993.
 The trust also announced additional valuation reserves against the carrying value of three of its investments, effective Dec. 31, 1992: the trust's $20 million interest in the above $68 million loan, the trust's research and development facility located in Hawthorne, Calif., and the trust's loan secured by the Hall Street Industrial Complex located in Brooklyn, N.Y.
 -- Loan Restructuring
 The loan is secured by six department store properties located in the greater Chicago area leased by the trust's borrower to Carson Pirie Scott (CPS). CPS, along with its parent company, P.A. Bergner & Co., filed for protection in August 1991 under Chapter 11 of the U.S. Bankruptcy Code.
 The borrower is an independent partnership which is not affiliated with the trust, CPS or P.A. Bergner & Co. Although CPS continues to remit the monthly lease payments to the trust's borrower and the trust's borrower continues to pay all regularly scheduled interest payments, the loan remains in default for the non-payment of pre-petition real property taxes and related penalties, default rate interest, and late charges.
 The terms of the modified loan and related guaranty are not conditioned upon the six CPS leases being assumed, rejected or renegotiated, nor are they conditioned upon the ability of CPS to successfully conclude its bankruptcy proceedings. The parties contemplate, however, that CPS will continue to use the properties after its bankruptcy proceeding is over. The terms of the following modifications will be embodied in documents to be executed by all of the parties as soon as possible.
 The restructuring converts the loan from a non-amortizing to a nearly fully amortizing loan and extends the maturity date from Feb. 3, 1996, to Jan. 1, 2013. In addition, the trust will receive a cash flow guaranty from The Dial Corporation ("Dial") sufficient to service the loan. The unamortized loan balance of approximately $12.7 million at maturity, however, is secured solely by the real estate. The Dial guaranty is being provided to resolve disputes among the trust, the borrower and Greyhound-Dobbs Incorporated ("GDI") regarding possible GDI liability for certain CPS lease payments. Dial is the parent company of GDI.
 The effective interest rate of the modified loan is approximately 7.4 percent. The stated interest rate was lowered to 7 percent for the first 10 years and increased to 7.75 percent for the remaining 10 years. In addition, the borrower is required to pay "additional interest" of $250,000 per year in years six through 10 and 16 through 20. The new 7 percent interest rate will reduce the trust's annual revenues by approximately 16 cents per share.
 The trust is also entitled to receive "appreciation interest" equal to 25 percent of the property's value in excess of $68 million at the loan's maturity or upon the prepayment of the loan. The borrower may not prepay the loan before Feb. 1, 2000.
 Under the terms of the modified loan, Dial has the option to purchase the loan (including the right to any "appreciation interest") if Dial is called upon to honor its guaranty. The effect of the purchase option price has been considered in determining the year-end valuation reserve for the loan.
 John McMahan, president of the trust, said that "the obligations of both the borrower and Dial to perform under the terms of the restructuring, regardless of the developments in the CPS bankruptcy proceedings, represent important concessions to the lenders given the uncertainty surrounding the CPS bankruptcy and the very difficult retail real estate market. Furthermore, the addition of the Dial guaranty will enhance and facilitate the marketability of the trust's loan."
 Based upon the terms of the modified loan and the trust's present intention to sell its interest prior to the loan's maturity date, the trust adjusted the carrying value of its $20 million interest to $16.5 million, effective Dec. 31, 1992. This reserve resulted in a non-cash charge against fourth quarter earnings of $3.5 million or $.40 per share. In addition, the trust wrote off approximately $2.5 million or $.28 per share in a related deferred interest receivable, effective Dec. 31, 1992.
 -- Hawthorne Research and Development Facility and the Hall Street Industrial Complex
 Due to deteriorating market conditions, the trust increased its investment reserves against the carrying values of both the Hawthorne, research and development facility and the Brooklyn Hall Street Industrial Complex, effective Dec. 31, 1992. The demand for research and development space in Southern California continues to be unfavorably impacted by the decline in federal defense spending, and the current recession has decreased demand for warehouse space in Brooklyn. These situations have resulted in lower rental rates in both markets.
 The Hawthorne research and development facility is leased to Northrop Corporation ("Northrop") through Jan. 31, 1994. Lease payments are current, and it is not known at this time whether Northrop will extend its lease.
 "Given the expected low level of future job growth as the economy recovers, both of these investments present unique leasing challenges," said McMahan. He added that "the need for additional reserves, although disappointing, reflects the trust's continuing commitment to present investments at their fair value."
 Accordingly, the trust provided for additional investment reserves totaling approximately $6.2 million or 72 cents per share for both the Hawthorne research and development facility and the Hall Street Industrial Complex. The adjusted carrying values for each of these investments at Dec. 31, 1992, was $6.150 and $5.325 million, respectively.
 The trust reported 1992 earnings of $6 million or 70 cents per share before investment gains, losses and valuation reserves and a net loss of $10.5 million or $1.21 per share after investment gains, losses and valuation reserves. After adjustmet? for the above valuation reserves, the trust's net book value was $7.06 per share at Dec. 31, 1992.
 Mellon Participating Mortgage Trust is a fully invested, finite-life real estate investment trust. The trust intends to make no additional real estate investments, but will distribute to shareholders the net proceeds of each liquidating transaction, subject to any reserve requirements.
 -0- 3/31/93
 /CONTACT: Brian Zywiciel of Mellon/McMahan Real Estate Advisors, Inc., 415-433-7770/
 (MPMT MEL)


CO: Mellon/McMahan Real Estate Advisors, Inc.; Mellon Bank, N.A.;
 Mellon Participating Mortgage Trust; Mellon Bank Corporation ST: Pennsylvania, California IN: FIN SU:


CD -- PG015 -- 1638 03/31/93 16:02 EST
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Date:Mar 31, 1993
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