Silicon Valley/South Bay

Real Estate Alert, May 19, 2004

* The occupancy rate has fallen slightly over the past year, to 87.8% (82.4% excluding space available for subleasing). The 101 Tech Corridor and the South 880 Corridor are performing best, but other submarkets are still weakening.

* Asking rents have stabilized over the past three quarters, at roughly $25/sf. But that's less than one-third of the 2000 peak.

                                                              Hit
On the Market                 Seller                          Market

Pacific Plaza, Daly City      Mack-Cali, Summit               April
2515-2545 North First St.,    Lehman Brothers                 November
  San Jose (50% stake)
Regency Plaza, Santa          Lennar Partners                 April
  Clara (nonperfoming
  loan)

Recent Deals                  Buyer                           Closed

Mathilda Research Center,     ING Clarion Partners            (Pending)
  Sunnyvale
Murphy Ranch Technology       Prudential Real Estate Inv.     February
  Park, Milpitas
160 West Santa Clara,         RREEF                           (Pending)
  San Jose
Century Centre II,            Spear Street Capital            April
  San Mateo

                                  SF        Estimated Value
Seller                          (000)     ($Mil.)     (Per SF)

Mack-Cali, Summit                 470        $135         $287
Lehman Brothers                   250         $55         $221
Lennar Partners                   226          33          146

                                  SF           Sales Price
Buyer                           (000)     ($Mil.)     (Per SF)

ING Clarion Partners              267         $90         $337
Prudential Real Estate Inv.       351          70          200
RREEF                             270          60          222
Spear Street Capital              172          25          145

Seller                          Broker

Mack-Cali, Summit               Secured Capital
Lehman Brothers                 Marcus & Millichap
Lennar Partners                 Secured Capital

Buyer                           Broker

ING Clarion Partners            Secured Capital
Prudential Real Estate Inv.     Eastdil Realty
RREEF                           Secured Capital
Spear Street Capital            Eastdil Realty