PRESS RELEASES

CalPERS Selects Office Real Estate Managers

Real Estate Firms to Co-invest With Pension Fund

4/13/1998

SACRAMENTO, CA - The California Public Employees' Retirement System (CalPERS) today selected Hines Interests Limited Partnership (Hines) and Commonwealth Pacific to manage the System's largest real estate portfolio of more than $1.3 billion in office properties.

In a significant move, the firms will co-invest equity with CalPERS in its existing office investments and future office investments.

Hines captured the majority of the System's office portfolio. The firm will manage CalPERS office investment program in the eastern and northwestern United States. The regions include 16 office properties valued at more than $950 million. Hines will invest up to $50 million in CalPERS office portfolio, including approximately $20 million immediately in the existing portfolio and up to an additional $30 million in future office investments.

Commonwealth Pacific, L.L.C., based in Los Angeles, California, will manage $375 million of CalPERS existing office investments and will be responsible for all of CalPERS office investing in the southwest U.S. in the future. The firm will oversee seven office properties in the southwestern region of CalPERS office portfolio valued at approximately $310 million, and will also manage three net-leased office properties valued at $65 million from CalPERS real estate portfolio. Commonwealth will co-invest a total of $2 million alongside CalPERS in a newly formed operating company.

"Hines and Commonwealth are well-positioned to manage CalPERS office portfolio," said David Gilbert, CalPERS Senior Investment Officer for Real Estate. "These firms offer us a commitment of dedicated office investment professionals, capital, and an operating philosophy that is consistent with our real estate investment objectives. These strategic alliances are sure to create an environment where responsibility and accountability are clear."

Hines and Commonwealth will assist in the design and structure of CalPERS office investment strategies and will implement these strategies through acquisitions, asset management, development and disposition of office investments.

The management contract awards are contingent upon final contract negotiations.

Today's selection of office real estate managers marks the third management selection of managers that have committed to co-invest in CalPERS real estate portfolio. Last year, CalPERS selected SSR Realty Advisors and General Investment Development to manage its $539 million apartment portfolio, and chose RREEF and LaSalle Advisors to manage the System's $807 million industrial portfolio. The four firms combined agreed to co-invest a total of $64 million alongside CalPERS in its real estate portfolio.

CalPERS core real estate portfolio of apartment, industrial, office and retail properties is valued at approximately $4.0 billion. CalPERS has strategically allocated a range of 25-40 percent of the System's core real estate assets for investment in office properties.

Hines is a global real estate development, investment and management firm. Founded in 1957, the company manages assets nationwide, including office, retail, residential, industrial and mixed-use properties valued at more than $10 billion. The firm has offices in 53 cities nationwide and 13 international markets, including regional offices in San Francisco, Chicago, New York, Atlanta, and Houston. CalPERS dedicated management team will be headed by Daniel MacEachron, the former CEO of the Yarmouth Group, a national real estate advisory firm.

Commonwealth Pacific is a fully diversified commercial real estate company with expertise in asset management, acquisitions, land and vertical development, leasing and property management. The firm is active across a range of real estate capital and operating markets and manages prime office and mixed-use properties.

Commonwealth Partners was founded in 1996 by the former senior partners and other members of senior management of Maguire Thomas Partners. CalPERS dedicated management team will be headed by Mike Croft, CEO of the newly formed entity.

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. For further information about CalPERS, please visit the System's Web site at http://www.calpers.ca.gov.