PREI and Madison Capital Create New Real Estate Investment Management Platform

Business Wire, July 12, 2004

PARSIPPANY, N.J. -- Prudential Real Estate Investors (PREI) announced today that it has launched a joint venture with Madison Capital Management, LLC (Madison) to sponsor and manage a series of hedge and/or private equity funds focusing on fractionalized real estate-related investment interests. PREI is the real estate investment management business of Prudential Financial, Inc. (NYSE:PRU). Madison is a New York-based alternative investment management firm, specializing in distressed, real estate and special situations financial assets.

PREI's Global Real Estate Private Equity Group, on behalf of Prudential Investment Management, the asset management business of Prudential, and Madison are managing the venture, Madison/Prudential Realty Partners, LLC. The venture will also work with PREI's Munich-based operation, TMW Immobilien GmbH, through its network of offices in Europe, and with Madison's European business development office, which opened in Paris in mid-2003. The joint venture partners will initially provide $31 million to fund the program.

"Over the years, we have been quite intrigued by Madison's unique investment focus and operating platform, and we are excited to be able to create a new product line for PREI through this partnership," said Robert Falzon, managing director of PREI's Global Real Estate Private Equity Group. "Madison has an operating infrastructure and knowledge of fractionalized investments that is unrivaled in the United States, and we look forward to partnering with them as we broaden our growing global real estate platform and expand our products beyond traditional direct real estate investments."

The venture's board comprises two senior executives from PREI, including Falzon and John Gregorits, principal, along with Bryan E. Gordon, chairman and managing director of Madison.

"Joining forces with PREI, one of the largest global real estate investment managers, is a great endorsement of the success Madison has achieved over the past eight years investing in partnership units, private REIT shares, bankruptcy claims, distressed/defaulted tax-exempt bonds, and other fractionalized, sub-institutional financial assets. The synergies to be gained through the combination of PREI's traditional real estate knowledge and network with Madison's expertise in the non-traditional segment of real estate investment will be immense. In addition, in mid-2003 Madison opened a European business development office in Paris to further develop relationships with potential investors and European transaction sourcing channels, and this joint venture with PREI will greatly enhance Madison's efforts in Europe," said Madison's Gordon.

In January 2004, PREI combined its United States and United Kingdom-based real estate private equity and merchant banking teams into the Global Real Estate Private Equity Group, in recognition of the increasingly global nature of PREI's initiatives in this area. The team has originated, arranged and invested about $950 million in the United States and EUR 860 million in Europe in 20 transactions, including FountainGlen Properties, Lillibridge Health Trust, CRIC Capital, Heritage Property Investments and Red Stone in the United States, and Arlington Securities and Big Yellow in Europe. Global Real Estate Private Equity advises and co-invests with clients in high return real estate investment strategies.

Founded in 1996 by Bryan Gordon, Madison is a recognized leader in the United States in the direct acquisition of fractionalized distressed, real estate and special situations financial assets. The firm has offices in New York, Denver and Kansas City, and through Madison (Europe), in Paris. Utilizing an event-driven and value-orientated investment approach, Madison has invested more than US$250 million in capital. For more information, visit www.madisoncap.com.

PIM, among the largest managers of institutional assets in the United States serving corporations, public funds, Taft-Hartley plans, insurance companies, foundations and endowments, had more than $310 billion in assets under management as of March 31, 2004. PIM offers an array of products across the risk/return spectrum, covering a wide range of asset types.

PREI provides global real estate investment management services in the United States, Europe, Asia and Latin America. PREI managed total assets of $22.3 billion on behalf of more than 400 clients as of March 31, 2004; net assets under management (i.e., after deduction of associated debt and liabilities) were $15.2 billion. For more information, visit www.prei.com.

Prudential Financial companies, with approximately $454 billion in total assets under management as of March 31, 2004, serve individual and institutional customers worldwide and include The Prudential Insurance Company of America, one of the largest life insurance companies in the United States. These companies offer a variety of products and services, including life insurance, mutual funds, annuities, pension and retirement related services and administration, asset management, securities brokerage, banking and trust services, real estate brokerage franchises and relocation services. For more information, visit www.prudential.com.