FRANKFURT, GERMANY – 15 March 2005 - GE Commercial Finance Real Estate Germany (“GE”) has secured its first German residential transaction by acquiring HPE Hausbau Group ("HPE") from the Peabody Funds managed by O’Connor Capital Partners.

HPE is a full service residential real estate investment and management company with 80 professionals focusing on asset and property management, located primarily in Ludwigshafen and Berlin. It owns 4,400 apartments in primarily 10 cities in the Rhine-Ruhr region, Germany's most densely populated area, the Rhineland-Palatinate region (south/southwest of Frankfurt), and Berlin, and it also manages 3,000 apartments on behalf of third party investors. Over the past five years, HPE has developed a strong track record in tenant privatisations and ‘en bloc’ sales to investors.

The acquisition significantly expands GE's platform in Germany and enhances its ability to execute on a broad range of acquisitions in the future, in the following core focus areas: residential privatisations, corporate outsourcing, and non-performing loan portfolios. Concurrently, GE closed this month its €100 million structured sale-and-leaseback portfolio transaction with Marseille-Kliniken AG, one of Germany's leading private healthcare operators.

Olivier Piani, President of GE Commerical Finance Real Estate Europe said:

“Germany is a key focus for us in 2005 and a market where we see significant potential for growth. This transaction is an important strategic move that not only gives us access to a new sector, but also immediately increases our presence on the ground from 15 to 95 highly skilled local professionals, whose expertise we can leverage for our future growth plans.”

Commenting on the deal, Michael Gerlich, Managing Director of GE Commercial Finance Real Estate Germany, said:

“I am pleased to have been able to secure a wholly-owned platform for growth in one of our main focus areas - residential privatisations. In addition to owning an attractive and well-maintained portfolio of assets, HPE comes with a significant and experienced team that possesses a demonstrated track record in tenant privatisations and ‘en bloc’ sales to investors, as well as in acquisitions. This platform acquisition and the acquisition of the Marseille-Kliniken portfolio increases GE’s equity investment in German real estate to over €300 million and both are important steps forward in our drive to grow to over €1 billion of direct investments in the near term.”

John McCarthy, Managing Director of O’Connor Capital Partners European business said:
“The acquisition of HPE Hausbau in 2000 presented the opportunity for the Peabody Funds to enter the attractive Germany Housing market as an early entrant. We’re proud that working with management we succeeded in changing the strategic focus of the company to create one of the leading owners and managers of residential real estate in Germany. We’re confident that GE, working with management, will continue the track record that we’ve built, by selectively acquiring portfolios and generating attractive returns through active asset management”.

Metzler Corporate Finance advised the Peabody Funds on the transaction.

Learn more about HPE:
http://www.hpe-gruppe.de/index.html

Press contacts:

Financial Dynamics, London
Dido Laurimore, +44 (0)20 7831 3113
dido.laurimore@fd.com