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Prudential Real Estate Investors: U.S. Economic Recovery Should Gain Strength, Property Fundamentals May Improve in 2003.

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Business Editors

PARSIPPANY, N.J.--(BUSINESS WIRE)--Feb. 6, 2003

Economic recovery should continue to gain strength as corporate confidence picks up in 2003, leading to stabilized property fundamentals, and perhaps some improvement in the real estate industry in the second half of the year, Prudential Real Estate Investors (PREI) said today in its annual market outlook. PREI is the real estate investment and advisory business of Prudential Financial, Inc. (NYSE:PRU).

PREI expects 2003 income returns of between five percent and seven percent for the NCREIF Property Index, with income returns of roughly two percent per quarter and further property value declines likely before market fundamentals begin to improve.

"As we look ahead, we remain optimistic that the seeds of economic recovery have already taken root," said Charles Lowrey, CEO of PREI. "Over the last year, a significant amount of economic activity has taken place and continues to take place in the course of everyday life, even as we wait for some concrete evidence that the economic weakness is behind us."

For the real estate sector, risks have increased in most property types and markets, and the timing for improved market fundamentals depends largely on the timing of the economic recovery.

"It seems clear that property market fundamentals will not begin to improve materially...

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