Prescott Forms Real Estate Investment Unit To Serve High Net Worth Marketplace

Growth Capital from Gordon P. Getty Family Trusts Advances Prescott’s Real Estate Investment and Asset Management Activities

October 4, 2004 - The Prescott Group, LLC has announced a significant expansion of its real estate investment and asset management activities in the high net worth marketplace and the creation of two new operating units to conduct the firm’s investment management and investment banking business. Prescott also announced that the Gordon P. Getty Family Trusts have made a substantive investment in the firm at the corporate level and will also participate in future real estate investment vehicles sponsored by Prescott.

As part of the initiative, Prescott’s operations have been organized into two functional entities, Prescott Capital Management and Prescott Capital Advisors. Prescott Capital Management now directs all of Prescott’s investment and asset management operations, including originating and managing separate account investments for private and institutional clients and sponsoring a series of investment partnerships and fund vehicles in conjunction with groups providing wealth management services to significant individual investors, including private banks, brokerages, trust companies, family offices, financial advisors, and other financial service companies. Prescott Capital Advisors coordinates all of Prescott’s real estate investment banking activities, including acting as an advisor and financial intermediary on behalf of a range of investors, institutions, corporations, investment managers, family groups, and property developers. In its investment banking work in the real estate sector, Prescott raises debt and equity capital in the public and private markets for properties and operating entities in the U.S. and internationally.

Theodore R. Gamble, Jr., Managing Director of Prescott, commented, "We are extremely pleased to significantly broaden the scope of Prescott’s investment activities and to welcome as our partners the Getty Trusts. We see tremendous potential in expanding Prescott’s real estate asset management activities by bringing institutional quality real estate investments to the rapidly growing high net worth marketplace." Gamble continued, "There is significant underserved demand among substantial individual investors, both in the U.S. and internationally, for investments in property assets with attractive yield characteristics managed by leading public and private real estate operators. While these types of investment opportunities have typically been available to major institutional investors and sizeable private investment entities, they have been less accessible to affluent individual investors." Gamble added, "Prescott’s strategy is to create investment vehicles offering superior risk-adjusted returns while providing investors an attractive means of participating in high quality investments in the property sector managed by sophisticated and experienced professionals."

As part of its expanded investment and asset management activities, Prescott will sponsor investment vehicles for the high net worth marketplace that will typically acquire between $300 million and $500 million per year of high quality real estate assets. Prescott is targeting diversified portfolios of office, industrial, retail, residential, and hospitality properties in the U.S. that can benefit from, and significantly outperform, other real estate assets at the current stage of the market cycle. Prescott is an active investor, and works closely with a group of major real estate owners and operating partners to originate and structure institutional quality real estate-based private equity transactions.

Susan L. Stupin, Managing Director of Prescott, observed, "The high net worth marketplace is the most rapidly growing component of the financial services industry. It is estimated to control over $40 trillion of wealth worldwide by 2006." Stupin continued, "Current investment market conditions make this a particularly opportune time for significant private individuals to invest in high quality property assets. With interest rates near 40 year lows, U.S. Treasury bills currently yielding 1.6%, and public equity values having experienced significant volatility since 2000, real estate is an increasingly important alternative investment and component of most balanced private as well as institutional investment portfolios."

Prescott, founded in 1987, is a New York-based real estate merchant banking firm active in the U.S. and internationally. Prescott invests as a principal in acquiring assets and operating entities with a group of institutional and private investors and also provides real estate investment banking services to a range of public and private clients. Prescott's principals have been instrumental in the purchase, financing, development, management, and sale of over $10 billion of property assets.

In October 2002, Prescott formed a joint venture with FREO GmbH of Bad Homburg, Germany. The joint venture between FREO and Prescott targets investment in North American real estate assets and develops strategic relationships with selected U.S. institutions and investment groups seeking to increase their investment in property located throughout Europe.

In late 2004, Prescott will relocate its headquarters to expanded offices at 666 Fifth Avenue in New York, where the firm’s offices were located from 1991 through 2000. The formation of Prescott Capital Management and Prescott Capital Advisors, and the investment of growth capital by the Gordon P. Getty Family Trusts, positions Prescott to significantly expand its U.S. investment and asset management activities as well as its domestic and international real estate investment banking business.