PRESS RELEASES

Hines Acquires Share Of $1 Billion CalPERS Real Estate Portfolio

CalPERS/Hines Joint Venture Acquires Three Office Properties

10/30/1998

(HOUSTON, TEXAS) - Hines, the international real estate firm, announced today that it has assumed the management of the California Public Employees’ Retirement System's (CalPERS') $1 billion office portfolio and simultaneously co-invested a substantial amount of its own capital in the holdings. The portfolio consists of approximately 5.9 million square feet of office space located in 14 properties (including 22 buildings) across the country. In line with its strategic goal of adding additional investments to the portfolio through development and acquisition, the CalPERS/Hines joint venture also announced that it has acquired two office buildings in Greenwich, Connecticut, and a major office tower in Chicago, Illinois.

Hines is the general partner in the Hines/CalPERS partnership, which has been named National Office Partners Limited Partnership. As a general partner, Hines has discretion in the venture with respect to property investment. Hines will invest up to $50 million in the venture, including an initial investment of $15 million in the existing portfolio and as much as an additional $35 million in future office acquisitions and developments.

National Office Partners' new acquisitions include: Plaza 55, a 120,000-square-foot Class A office building in downtown Greenwich that was completed in 1975; Two Soundview, a 40,000-square-foot Class A office building also in downtown Greenwich that was completed in 1979; and 225 West Wacker Drive, a 650,000-square-foot Class A office building in downtown Chicago, that was completed in 1989.

Plaza 55 was designed by Emery Roth & Sons. Formerly known as the Amax building, Plaza 55 is currently master-leased to Cyprus Amax, a Colorado-based mineral development concern that has subleased all of the space to prominent tenants including: AON; Boardroom Reports; Rollins Hudig Hall; and American Century Services.

Two Soundview was designed by Emery Roth & Sons. The building is currently 100% leased to tenants such as Citi Group’s Private Banking division. Both Plaza 55 and Two Soundview were purchased from a local real estate entrepreneur who originally developed the buildings and has owned them since they were first built.

225 West Wacker was designed by Kohn Pedersen Fox. The building is currently 98% leased to tenants such as: Morningstar, Inc.; Wildman, Harrold, Allen & Dixon; Booz-Allen & Hamilton; PPM American; and Merrill Lynch. According to Jeff Hines, President of Hines, "The CalPERS/Hines relationship represents a long-term strategic partnership between a private real estate company (Hines) and a large public pension fund (CalPERS). Both partners are committed to invest additional capital in the venture over the next several years. Structured to provide CalPERS the benefits of an entity-level investment, the partnership is well positioned both strategically and tactically to compete with publicly traded companies."

Hines Vice President Daniel MacEachron will oversee the CalPERS portfolio with a dedicated nationwide team of Hines management personnel. The team will operate CalPERS' existing portfolio and provide ongoing strategic management of CalPERS’ office investment program. "The discretion CalPERS has given Hines to make investment decisions on acquisitions as well as development projects is evidence of the responsibility and accountability we have undertaken as a fiduciary," MacEachron said. "In creating our venture - and others like it - CalPERS’ key objectives included a dedicated management team, significant co-investment and additional alignment of interests through a performance-oriented compensation structure. We are pleased to have been able to satisfy those venture-level objectives. Of equal importance, Hines’s operating and investment philosophies are highly consistent with those of CalPERS."

National Office Partners will manage most of CalPERS’ national office investment program with the exception of properties in Southern California and selected cities in the southwestern United States. Commonwealth Pacific, L.L.C., based in Los Angeles, California, will manage seven properties for CalPERS in Southern California, certain Southwest markets and Hawaii. The Commonwealth portfolio is valued at approximately $400 million.

CalPERS is the nation’s largest public pension fund with assets totaling more than $135 billion. The System provides retirement and health benefits to more than one million state and public employees and their families.

Founded in 1957, Hines is a privately owned, international real estate firm involved in developing, managing and acquiring real estate as well as providing a wide range of advisory services. Based in Houston, Texas, Hines controls a real estate portfolio that includes more than 570 properties representing more than 185 million square feet of office, mixed-use, industrial, retail and residential properties as well as large master-planned communities and land developments. Hines’ real estate portfolio is valued in excess of eight billion dollars.