Press Release September 17, 2004

Washington State Investment Board approves real estate and private equity investments totaling $1.25 billion
(September 17, 2004)

Olympia - The Washington State Investment Board (WSIB) approved a follow-on investment with Principal Enterprise Capital (PEC) I, and two new investments with Lone Star Fund V (U.S.) LP and Fortress Investment Fund III LP. All three commitments, which total up to $1.2 billion, are subject to continued due diligence and final negotiation of terms and conditions.

Details by fund:

Principal Enterprise Capital (PEC) 1, LLC

	Follow-on real estate investment of up to $600 million
	Combined with WSIB’s previous investments, this follow-on brings the WSIB’s total equity commitments with PEC to $1.4 billion.
	The PEC partnership invests in small to medium sized private real estate operating companies who live and work in the communities in which they invest.
	PEC provides the WSIB with attractive, quality, long-term investments compared to traditional real estate investment products.

Lone Star Fund V (U.S.), LP

	Real estate investment of up to $450 million
	The WSIB has invested in four prior Lone Star funds over the past eight years with commitments of $50 million, $200 million, $400 million, and $400 million respectively.
	The Lone Star management team is a dominant global franchise in the distressed debt industry.
	The aggregate net projected Investment Rate of Return (IRR) for the previous Lone Star funds since inception is 20.6%.

Fortress Investment Fund (FIF) III LP

	Private equity investment of up to $200 million
	The WSIB has previously invested in two Fortress funds and one predecessor fund with commitments of $100 million, $200 million, and $100 million.
	The new fund will make controlling investments backed by real estate and other tangible assets that can be acquired at a discount in the U.S. and Western Europe.
	Over the past ten years Fortress has generated an aggregate net IRR of 21.2%.

In other action, Board Chair George Masten and Vice-Chair Patrick McElligott were re-elected to those positions for another one year term. For further information on Masten and McElligott, click here.