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Catellus Announces Fourth Quarter Results and Annual Meeting of Stockholders Record Date SAN FRANCISCO, Feb. 18 /PRNewswire-FirstCall/ -- Catellus Development Corporation today reported earnings per fully diluted share ("EPS") for the fourth quarter of 2003 of $1.65, compared to $0.21 for the same period in 2002. EPS for the year ended December 31, 2003, was $2.30, compared to $1.01 for the same period in 2002. Net income for the fourth quarter of 2003 was $171.2 million, compared to $20.9 million for the same period in 2002. Net income for the year ended December 31, 2003, was $234.8 million, compared to $100.7 million for the same period in 2002. The extraordinary year-over-year increase in net income was due, in large part, to the reversal of certain deferred taxes associated with the company's conversion to a real estate investment trust, or REIT. The per share numbers are affected by the stock portion of the earnings and profits dividend in the fourth quarter of 2003, resulting in aretroactive increase in shares outstanding in prior years. Without the effects of the REIT conversion, EPS would have increased 23 percent year-over-year. "2003 was a great year for Catellus. We successfully completed our conversion from a C corporation to a REIT, which we believe will provide the best structure for continuing to grow shareholder value. We posted strong operating results, and we made significant progress toward monetizing our non-core assets, providing future capital to reinvest in our core industrial business," said Nelson C. Rising, chairman and CEO of Catellus. Rental Portfolio -- For the fourth quarter of 2003, rental revenue less property operating costs, including equity in earnings of operating joint ventures, was $52.2 million, compared to $53.9 million for the same period in 2002. For the year ended December 31, 2003, rental revenue less property operating costs, including equity in earnings of operating joint ventures, was $219.0million, compared to $204.2 million for the same period in 2002. -- At December 31, 2003, the rental portfolio totaled 38.2 million square feet and was 95.2 percent occupied, compared to 95.3 percent at September 30, 2003, and 94.5percent at year-end 2002. -- As announced during the quarter, Toto USA, Inc., a wholly owned subsidiary of Toto Ltd., signed a 62-month lease for an existing 406,000 square foot building located at Ontario Pacific Distribution Center in Ontario, California. -- Also announced during the quarter, TSA Stores Inc., a wholly owned subsidiary of The Sports Authority, Inc., signed a 123-month lease for a 616,500 square foot speculative development building at Kaiser Commerce Center in Fontana, California. -- During the quarter, Catellus executed a lease for an 84,000 square foot speculative warehouse development in Portland, Oregon. Development and Investment Activity -- At December 31, 2003, Core Segment construction in progress was 4.3 million square feet, of which 3.3 million square feet will be added to Catellus' rental portfolio upon completion; 58,000 square feet is build-to-suit-for-sale; and one million square feet is development for fee. -- For the 3.3 million square feet under construction that will be added to Catellus' rental portfolio upon completion, the projected total cost of development is $103.9 million. These buildings are 77 percent preleased and when fully leased are projected to yield a return on cost of 10.2 percent. -- During the quarter, construction commenced on 1.9 million square feet in three projects: a 758,000 square foot speculative warehouse in San Bernardino County in Southern California, for which a lease for 100 percent of the space is out for signature; a 117,000 square foot expansion of an existing 240,000 square foot distribution facility leased to APL Logistics in Woodridge, Illinois; and a one million square foot fee development in Southern California. -- During the quarter, construction was completed on a 200,000 square foot build-to-suit-for-sale development in Gresham, Oregon. Urban, Residential& Other -- During the year, Catellus made significant progress in monetizing assets in the Urban, Residential & Other Segment. The company realized $96 million, net of taxes and the continued investment required in that segment, while still leaving approximately $408 million of net book value remaining to be monetized. -- Several significant residential land transactions contributed to the net $96 million monetized in 2003, including the previously announced redemption of a wholly owned subsidiary's interest in Talega, a residential-community development project located in San Clemente, California, for a pre-tax gain of $41.9 million; and the divesture of Catellus' interest in Vista Range in Denver, Colorado, for a pre-tax gain of $11.7 million. -- During the year, Catellus executed three separate land transactions at two of its three urban projects for a total pre-tax gain of $15.7 million. -- During the fourthquarter, Catellus sold 84,500 acres of desert land in seven transactions for a pre-tax gain of $14.7 million. Desert sales for the full year totaled $27.1 million, for a pre-tax gain of $23.0 million. Annual Meeting of Stockholders Record Date -- The record date for Catellus' 2004 Annual Meeting of Stockholders is March 16, 2004. The meeting will be held on May 4, 2004, at 9:00 a.m. local time at the Palace Hotel in San Francisco, California. At the Annual Meeting, stockholders of record will be asked to elect the company's directors and to vote upon any and all such other matters as may properly come before the Annual Meeting. The mailing of the proxy statement, Annual Report to Stockholders, voting materials, and meeting information will begin on or about April 1, 2004. REIT Conversion -- As previously announced, Catellus completed its conversion from a C corporation to a REIT, effective January 1, 2004. -- As previously announced, during the fourth quarter, the company distributed a one time, special dividend of accumulated earnings and profits, as part of its REIT conversion. The stock issued in the E&P distribution was approximately 10.655 million shares, and the cash portion was approximately $100 million. Supplemental Reporting Measure -- The company provides a supplemental performance measure of Funds From Operations ("FFO"), as defined by the National Association of Real Estate Investment Trusts ("NAREIT"), which Catellus believes provides a useful measure, along with GAAP net income, of its operating performance. -- Additionally, the company provides FFO in two segments: Core Segment and Urban, Residential & Other Segment. The first segment, or Core Segment, reflects that part of Catellus' business it expects will be ongoing and central to its future operations. -- The second segment, or Urban, Residential & Other Segment, reflects the company's urban and residential businesses, including residential lot development, urban development, and desert land sales, which the company intends to transition out of over time. This segment also includes REIT conversion costs, including third party costs, and the effects of the stock option exchange offer, which will continue for three years. -- In presenting FFO prior to operating as a REIT (which began January 1, 2004), Catellus included "hypothetical tax savings" (including the tax effects of the REIT conversion) that would have occurred had it been a REIT during the periods presented. -- FFO, including both segments as defined above, for the fourth quarter of 2003 was $77.5 million, compared to $41.0 million for the same period in 2002, and for the years ended December 31, 2003, and December 31, 2002, FFO was $209.0 million and $174.4 million, respectively. -- Core Segment FFO for the fourth quarter of 2003 was $28.4 million, compared to $31.9 million for the same period in 2002. On a fully diluted per share basis, Core Segment FFO for the fourth quarter of 2003 was $0.27, compared to $0.32 for the same period in 2002. Core Segment FFO for the year ended December 31, 2003, was $138.0 million, compared to $134.8 million for the same period in 2002. On a fully diluted per share basis, Core Segment FFO for the year ended December 31, 2003, was $1.35, compared to $1.35 for the same period in 2002. Catellus Development Corporation will host a conference call on Thursday, February 19, 2004, at 9:00 a.m. Pacific Time (10:00 a.m. Mountain, 11:00 a.m. Central, and noon Eastern)to discuss the fourth quarter results. To participate in the conference call, dial 800-884-5695 (domestic) or 617-786-2960 (international) and enter access code 64863687 prior to the beginning of the call. Access the live webcast of the conference call from the Investor Relations section of Catellus' website at http://www.catellus.com/. You may also access the live webcast through http://www.streetevents.com/. The telephonic replay will be available through March 4, 2004, at 888-286-8010 (domestic) or 617-801-6888 (international) with the access code 90980546. The webcast replay will be available through February 19, 2005, from the Investor Relations section of Catellus' website at http://www.catellus.com/ or at http://www.streetevents.com/. The fourth quarter 2003 Supplemental Financial Package will be available from our home page and the Investor Relations section of our website at http://www.catellus.com/. These materials are also available by contacting Investor Relations at 415-974-4500 or by sending an email to . Catellus Development Corporation is a publicly traded real estate development company that began operating as a real estate investment trust effective January 1, 2004. The company owns and operates approximately 38.2 million square feet of predominately industrial property in many of the country's major distribution centers and transportation corridors. Catellus' principal objective is sustainable, long-term growth in earnings, which it seeks to achieve by applying itsstrategic resources: a lower-risk/ higher-return rental portfolio, a focus on expanding that portfolio through development, and the deployment of its proven land development skills to select opportunities where it can generate profits to recycle back into its business. More information on the company is available at http://www.catellus.com/ Except for historical matters, the matters discussed in this release are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements about plans, opportunities, and development. We caution you not to place undue reliance on these forward-looking statements, which reflect our current beliefs and are based on information currently available to us. We do not undertake any obligation to publicly revise these forward-looking statements to reflect future events or changes in circumstances, except as may be required by law. These forward-looking statements are subject to risks and uncertainties that could cause our actual results, performance, or achievements to differ materially from those expressed in or implied by these statements. In particular, among the factors that could cause actual results to differ materially are: changes in the real estate market or in general economic conditions, including a worsening economic slowdown or recession; product and geographical concentration; industry competition; availability of financing and changes in interest rates and capital markets; changes in insurance markets; discretionary government decisions affecting the use of land, and delays resulting therefrom; changes in the management team; weather conditions and other natural occurrences that may affect construction or cause damage to assets; changes in income taxes or tax laws; liability for environmental remediation and changes in environmental laws and regulations; failure or inability of third parties to fulfill their commitments or to perform their obligations under agreements; failure of parties to reach agreement or definitive terms or to close transactions; increases in the cost of land and construction materials and availability of properties for future development; limitations on, or challenges to, title to our properties; risks related to the financial strength of joint venture projects and co-owners; changes in policies and practices of organized labor groups; shortages or increased costs of electrical power; other risks inherent in the real estate business; and acts ofwar, other geopolitical events and terrorists activities that could adversely affect any of the above factors. For further information, including more detailed risk factors, you should refer to Catellus Development Corporation's annual report on Form10-K/A for the fiscal year ended December 31, 2002, and its reports on Form 10-Q for the quarters ended March 31, 2003, June 30, 2003, and September 30, 2003, filed with the Securities and Exchange Commission ("SEC"), as well as the proxy statement/prospectus filed with the SEC on August 15, 2003. Contacts: Margan Mitchell Minnie Wright Corporate Communications Investor Relations 415-974-4616 415-974-4649 CATELLUS DEVELOPMENT CORPORATION CONSOLIDATED BALANCE SHEET (In thousands) (Unaudited) December 31, December 31, 2003 2002 Assets Properties $2,498,015 $2,448,081 Less accumulated depreciation (446,872) (399,923) 2,051,143 2,048,158 Other assets and deferred charges, net 292,312 273,853 Notes receivable, less allowance 119,202 44,947 Accounts receivable, less allowance 19,752 14,211 Assets held for sale 2,352 2,760 Restricted cash and investments 64,617 36,593 Cash and cash equivalents 45,931 274,927 Total $2,595,309 $2,695,449 Liabilities and stockholders' equity Mortgage and other debt $1,378,054 $1,500,955 Accounts payable and accrued expenses 157,036 117,493 Deferred credits and other liabilities 291,530 151,466 Liabilities associated with assets held for sale 2,296 3,233 Deferred income taxes 56,712 318,970 Minority interests -- 57,363 Total liabilities 1,885,628 2,149,480 Stockholders' equity Common stock - 102,724 and 110,817 shares issued at December 31, 2003 and 2002, respectively 1,039 1,108 Paid-in capital 489,143 531,362 Unearned value of restricted stock and restricted stock units (22,720) -- Treasury stock, at cost (23,647 shares at December 31, 2002) -- (401,082) Accumulated earnings 242,219 414,581 Total stockholders' equity 709,681 545,969 Total $2,595,309 $2,695,449 CATELLUS DEVELOPMENT CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, 2003 2002 2003 2002 Revenue Rental revenue $73,936 $71,779 $296,522 $263,809 Sales revenue 125,846 30,613 204,271 139,604 Management, development and other fees 1,228 1,437 11,129 7,088 201,010 103,829 511,922 410,501 Costs and expenses Property operating costs (23,559) (20,261) (85,693) (70,686) Cost of sales (69,240) (19,938) (119,664) (89,661) Selling, general and administrative expenses (20,324) (11,143) (55,747) (43,695) Depreciation and amortization (17,939) (16,874) (70,156) (62,407) (131,062) (68,216) (331,260) (266,449) Operating income 69,948 35,613 180,662 144,052 Other income Equity in earnings of operating joint ventures, net 1,699 1,439 6,898 8,277 Equity in earnings of development joint ventures, net 16,015 9,407 32,849 29,232 Gain on non-strategic asset sales 14,665 22 22,950 7,264 Interest income 1,836 2,031 7,294 9,871 Other 1,214 127 3,744 9,196 35,429 13,026 73,735 63,840 Other expenses Interest expense (12,181) (17,203) (61,849) (59,735) REIT transition costs (2,483) -- (7,262) -- Other (1,934) (844) (2,541) (2,021) (16,598) (18,047) (71,652) (61,756) Income before minority interests, income taxes, and discontinued operations 88,779 30,592 182,745 146,136 Minority interests -- (1,526) -- (6,106) Income before income taxes and discontinued operations 88,779 29,066 182,745 140,030 Income tax benefit (expense) 80,485 (8,891) 45,516 (53,543) Income from continuing operations 169,264 20,175 228,261 86,487 Discontinued operations, net of income tax: Gain from disposal of discontinued operations 1,911 416 6,129 13,748 Income from discontinued operations 10 287 409 421 Net gain from discontinued operations 1,921 703 6,538 14,169 Net income $171,185 $20,878 $234,799 $100,656 Incomeper share from continuing operations Basic $1.65 $0.21 $2.28 $0.89 Assuming dilution $1.63 $0.20 $2.23 $0.86 Income per share from discontinued operations Basic $0.02 $-- $0.07 $0.14 Assuming dilution $0.02 $0.01 $0.07 $0.15 Net income per share Basic $1.67 $0.21 $2.35 $1.03 Assuming dilution $1.65 $0.21 $2.30 $1.01 Average number of common shares outstanding - basic 102,545 97,816 99,941 97,642 Average number of common shares outstanding - diluted 103,698 99,995 102,171 100,118 CATELLUS DEVELOPMENT CORPORATION Reconciliation of Net Income to Funds from Operations (In thousands, except per share data) (Unaudited) Three Months ended December 31, 2003 Urban/Res. Core & Other Segment Segment Consolidated Net income $121,896 $49,289 $171,185 Add depreciation 18,314 (145) 18,169 Less gain on rental property sales(3,212) -- (3,212) FFO 136,998 49,144 186,142 Hypothetical tax benefit (108,640) -- (108,640) FFO as adjusted for hypothetical tax benefit $28,358 $49,144 $77,502 FFO as adjusted for hypothetical tax benefit per share: Basic $0.28 $0.48 $0.76 Assuming dilution $0.27 $0.48 $0.75 Average number of common shares outstanding - basic 102,545 102,545 102,545 Average number of common shares outstanding - diluted 103,698 103,698 103,698 Three Months ended December 31, 2002 Urban/Res. Core & Other Segment Segment Consolidated Net income $12,046 $8,832 $20,878 Add depreciation 17,271 208 17,479 Less gain on rental property sales (641) -- (641) FFO 28,676 9,040 37,716 Hypothetical tax savings 3,259 -- 3,259 FFO as adjusted for hypothetical tax savings $31,935 $9,040 $40,975 FFO as adjusted for hypothetical tax savings per share: Basic $0.33 $0.09 $0.42 Assuming dilution $0.32 $0.09 $0.41 Average number of common shares outstanding - basic 97,816 97,816 97,816 Average number of common shares outstanding - diluted 99,995 99,995 99,995 CATELLUS DEVELOPMENT CORPORATION Reconciliation of Net Income to Funds from Operations (In thousands, except per share data) (Unaudited) Twelve Months ended December 31, 2003 Urban/Res. Core & Other Segment Segment Consolidated Net income $164,135 $70,664 $234,799 Add depreciation 70,318 284 70,602 Less gain on rental property sales (10,364) -- (10,364) FFO 224,089 70,948 295,037 Hypothetical tax benefit (86,082) -- (86,082) FFO as adjusted for hypothetical tax benefit $138,007 $70,948 $208,955 FFO as adjusted for hypothetical tax benefit per share: Basic $1.38 $0.71 $2.09 Assuming dilution $1.35 $0.70 $2.05 Average number of common shares outstanding-basic 99,941 99,941 99,941 Average number of common shares outstanding-diluted 102,171 102,171 102,171 Twelve Months ended December 31, 2002 Urban/Res. Core & Other Segment Segment Consolidated Net income $61,987 $38,669 $100,656 Add depreciation 62,880 935 63,815 Less gain on rental property sales (25,742) -- (25,742) FFO 99,125 39,604 138,729 Hypothetical tax savings 35,653 -- 35,653 FFO as adjusted for hypothetical tax savings $134,778 $39,604 $174,382 FFO as adjusted for hypothetical tax savings per share: Basic $1.38 $0.41 $1.79 Assuming dilution $1.35 $0.39 $1.74 Average number of common shares outstanding-basic 97,642 97,642 97,642 Average number of common shares outstanding-diluted 100,118 100,118 100,118 CATELLUS DEVELOPMENT CORPORATION (In thousands and unaudited) Rental revenue less property operating costs (including the portion from discontinued operations) and equity in earnings of operating joint ventures, net (as reflected in the accompanying statements of operations). Rental revenue less property operating costs is commonly used by shareholders, company management and industry analysts as a measurement of operating performance of the company's rental portfolio and is calculated as follows: Three Months ended Twelve Months ended Dcember 31, December 31, 2003 2002 2003 2002 Rental revenue $73,936 $71,779 $296,522 $263,809 Property operating costs (23,559) (20,261) (85,693) (70,686) Equity in earnings of operating joint ventures, net 1,699 1,439 6,898 8,277 Rental revenue from discontinued operations 277 1,278 2,211 3,998 Property operating costs from discontinued operations (151) (313) (899) (1,243) Rental revenue less property operating costs $52,202 $53,922 $219,039 $204,155 CATELLUS DEVELOPMENT CORPORATION Reconciliation showing effects of REIT conversion on EPS (In thousands, except per share data) (Unaudited) Twelve Months Ended December 31, 2003 2002 Net income $234,799 Tax impact of REIT conversion (118,896) REIT transition costs, net of tax (a) 10,391 Adjusted net income $126,294 $100,656 Adjusted net income per share $1.24 $1.01 % increase 23% Average number of common shares outstanding - diluted 102,171 100,118 (a) The REIT transition costs above includes $7,262 of third party REIT conversion costs and $10,100 of REIT related G&A expense, net of tax. DATASOURCE: Catellus, Inc. CONTACT: Margan Mitchell, Corporate Communications, +1-415-974-4616, or Minnie Wright, Investor Relations, +1-415-974-4649, both of Catellus, Inc. Web site: http://www.catellus.com/

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