San Francisco

Real Estate Alert, June 9, 2004

* The leasing market has finally stabilized after the dot-com implosion, with the occupancy rate at 86.8% (82.7% excluding sublease space). While still below the peak in the late 1990s, the level is high enough to lure buyers back into the market.

* American Financial Realty agreed to pay an undetermined price for the 374,000-sf building at 215 Fremont Street, along with Pleasanton Corporate Commons in the East Bay community of Pleasanton. The seller is Charles Schwab.

* Wells Fargo may be pursuing the 339,000-sf building at 550 California Street, which owner SPI Holdings hasn't listed. Wells agreed to buy 333 Market Street in another off-market deal.

                                                           Hit
On the Market                   Seller                     Market

55 and 101 Second Street        Cousins, Myers             June
Hills Plaza (2 Harrison         Shorenstein Co.            June
  Street, 345 Spear Street)
450 Sansome Street              GMAC Commercial Mortgage   June

Recent Deals                    Buyer                      Closed

425 Market Street (67% stake)   Walton Street              (Pending)
333 Market Street               Wells Forgo                (Pending)
One South Van Ness              Martin Group               (Pending)

                                  SF     Estimated Value
On the Market                   (000)   ($Mil.)   (Per SF)  Broker

55 and 101 Second Street          760     $289      $380    CB Richard
                                                              Ellis
Hills Plaza (2 Harrison
  Street, 345 Spear Street)       610      200       327    Eastdil
                                                              Realty
450 Sansome Street                131       30       230    Grubb &
                                                              Ellis

                                  SF        Sales Price
Recent Deals                    (000)   ($Mil.)   (Per SF)  Broker

425 Market Street (67% stake)     909     $160      $260    Jones Lang
                                                              LaSalle
333 Market Street                 632      158       250    (None)
One South Van Ness                450       40        89    Jones Lang
                                                              LaSalle