Yet in recent years the Mid-Atlantic office investor has won some attention in spite of itself. In December 1997, the $1 billion company attracted a sizable investment from New York City-based Lazard Freres Real Estate Investors, and more recently it has become the largest owner of Class A office space in Philadelphia.

"They're aggressive investors. They have actually captured a great deal of (the Philadelphia) market -- both downtown and suburban," said Binswanger chairman John Binswanger. "They're very independent and a very strong-willed group. They've done very well in the investments they've had and are certainly a big player in the area."

Overall, The Rubenstein Co., together with its affiliates, is a fully integrated real estate operating company that owns, manages, leases and operates in excess of 9 million square feet of office buildings in Pennsylvania, Delaware, Virginia and Georgia. Headquartered in Philadelphia, the company maintains regional offices in Atlanta, Pittsburgh and Northern Virginia. Its services include acquisitions, development, leasing, portfolio management, property management, legal and accounting.

"We've developed a unique niche," Rubenstein said. "We're a private REIT. We don't have a lot of properties, but they're very large and very high-quality."

The purchases that took the company's Philadelphia ownership over the top, for instance, were buyouts of just two buildings: One and Two Logan Square, in the heart of Philadelphia's Center City. One Logan Square is a 594,000-square-foot office tower, while Two Logan

STRATEGIC GOALS Acquisitions: to purchase real estate at prices below replacement cost and to invest for long-term appreciation Development: to provide several hundred thousand square feet of new product, with projects being constructed each year, and to have risks and returns complement and balance the company's existing portfolio Portfolio Management: to add value through operations

Square is 694,000 square feet. Rubenstein had purchased interests in the buildings in joint venture with The Blackstone Group in February 1997 and June 1996, respectively. It bought out the majority of its partners' interests in December 1998, refinancing the buildings at the time.

The Rubenstein Co. now owns majority interests in roughly 3.5 million square feet of suburban and Center City Philadelphia office space -- especially interesting since the company, which got its start in Delaware, did not even enter Philadelphia's Center City market until 1994. Of its Philadelphia space, 93 percent is leased. The company has likewise expanded in the Washington, D.C., area. It opened its Northern Virginia office this year, with the intention of being not just a buyer or developer there but a leasing agent as well.

"Now that we've opened an office in Northern Virginia, we'll be able to attract some local talent," said Peter Talman, director of leasing & president of The Rubenstein Brokerage Group Inc., the firm's leasing arm. Organized as a commercial real estate brokerage company, the leasing arm focuses its efforts on two principal business activities: the leasing of the company's portfolio and, more recently, the representation of third-party tenants in the search for and negotiation of their real estate facilities. Third-party tenant representation currently makes up 20 percent of its business; Talman hopes to increase that to 40 to 50 percent during the next two to three years.

Rubenstein in general has been very active in Northern Virginia during 1999. Earlier this year, the company broke ground on the 145,000 square-foot Greens II speculative office building

Rubenstein Expands Across Mid-Atlantic VA - 30-Year-Old Firm Aims to Close $100M in Deals by Jan. 31, 2000

at Westfields Corporate Center in Chantilly, Va. It has also been negotiating to buy several Northern Virginia properties. Rubenstein intends to close on two office buildings in Tysons Corner and one in Westfields.

Prior to this year, Rubenstein's involvement in the region had been limited to leasing and managing 1751 Pinnacle Drive and 1970 Chain Bridge Road in Tysons Corner and the Aerospace Building at 15049 Conference Center Drive in Westfields. All of those properties -- in addition to the Westfields development site -- are owned by Commonwealth Atlantic Properties, formerly the State of Virginia Retirement System's RF&P office and industrial portfolio, on which Lazard Freres had led the buyout in 1996. That common link, in fact, has made most deals easier.

The expansion of The Rubenstein Co.'s Washington, D.C., presence, along with the establishment of a new leasing office in Northern Virginia, illustrates the company's own business development. "We have been struggling with our growth, learning how to do business as a fast-growing firm," remarked Talman. "We really need to coordinate constantly going forward. We haven't always had time to do prior planning. David (the company's president) and Mark Rubenstein, however, have gotten the best people they can get, and they work their shorts off."

"We're never going to be a glamour company, but we're going to be real solid all of the time," said founder and chairman Mark Rubenstein. Its solidity as a developer and manager attracted Lazard Freres & Co. in late 1997.	"We're trying to be a company that is somewhere between an opportunity fund and a large REIT that has several hundred assets," said David Rubenstein. "We're in the business of long-term ownership and management."

During the past few years, Rubenstein has made investments in assets located in the firm's target markets valued at more than $400 million. The focus of the organization's acquisition strategy is to purchase real estate at prices below replacement cost and to invest for long-term appreciation. Acquisitions will continue to be a primary focus of the firm, with each purchase always to be based on fundamental real estate asset values, according to the firm's executives.

Currently, the acquisition criteria call for properties at least 300,000 square feet in size in the company's target markets -- the Mid-Atlantic region and Atlanta. The pricing has to "make sense," noted David Rubenstein -- usually $30 million or more. The property also has to be an asset an institution might buy eventually.

"Generally, when we buy things, we don't look to sell. We buy assuming we will hold the property," said David Rubenstein. "But every year, we look at our portfolio to see what assets are not as strategic as they once were." Rubenstein currently owns 7 million square feet in its own account, with the remaining 2 million square feet belonging to Commonwealth Properties.

Lazard's Gift of Flexibility
The company became better able to make purchases after signing its agreement with Lazard Freres. The investor arm of the investment bank, which had been actively buying into both private and public real estate companies nationwide, offered it $220 million, $112 million at the closing in January 1998 and the remaining $107.5 million accessible on an as-needed basis. Rubenstein used the initial injection to buy out its existing joint venture partners and pay down some of its $600 million in debt. The rest was earmarked for future acquisitions, development and general working capital. At the same time, the company secured a $180 million line of credit from CoreStates Bank to help further its acquisition plans.

At the time of the investment, Robert Freeman, then a principal of Lazard Freres Real Estate Investors and managing director of Lazard Freres & Co., said Lazard chose Rubenstein as an expansion vehicle in the Mid-Atlantic region because of its property management and development skills. "We think they are a very, very well run company that has been successful at investing in a variety of property types and being nimble in adjusting to changing market conditions," he observed. Lazard, through its Prometheus real estate investment subsidiary, became involved with the company when Atlantic American Properties Trust, the Bell Atlantic office and industrial portfolio it had purchased in 1997, helped Rubenstein buy 2000 Market St. in Philadelphia.

The Lazard deal gave Rubenstein a certain amount of flexibility as a low profile owner and operator of high profile office buildings. In addition to being able to shift from its longtime strategy of owning property through real estate partnerships, Rubenstein became a private REIT. That gave it some of the financing flexibility and tax savings of a REIT while protecting it from the fluctuations of the public markets. The decision to become a private REIT while investors were clearly enthusiastic about public REITs proved to be a wise choice, since the capital markets debacle in August-September 1998 would surely have left Rubenstein vulnerable to acquisition as a small public REIT.

With the Lazard investment, Rubenstein also shifted its focus from buying individual properties to buying portfolios and developing again. Being a private REIT helped it there, too, since public REITs were so aggressively buying high-quality office properties that most private companies could not compete. REITs could start with portfolio loans and then move to unsecured portfolio loans, finally getting a bond rating. Each step of that process made REITs more capital efficient, and because their cost of debt was much lower, they could bid much higher than private companies. Though Rubenstein was never a company to become involved in highly aggressive bidding wars, the firm gained the cash to remain competitive.

"We're trying to be a company that is somewhere between an opportunity fund and a large REIT that has several hundred assets," said David Rubenstein. "We're in the business of long-term ownership and management."

The company has built up its portfolio sizably since the cash injection. Before the transaction, The Rubenstein Co. maintained ownership interests in office properties in Pennsylvania, Delaware and Georgia totaling more than 7 million square feet. Since the Lazard investment, it has added 2 million square feet to its portfolio.

"We'll continue to increase in size. We'll continue to grow our areas of expertise and to get more and more sophisticated," stated David Rubenstein. "We'll continue to grow our asset base. We only have about 15 assets now. If we grow to 30 or 50 assets, we'll still be a lot different from REITs with hundreds of assets."

Though Rubenstein Co. now has a reserve of capital and is seeking to acquire properties, however, the 60 percent leveraged firm has not purchased any office projects from REITs that have been selling due to troubles in the capital markets. The company recently purchased a property in the Buckhead area of Atlanta from REIT Spieker Properties, according to David Rubenstein. However, that deal was not related to the mass selloffs in which many REITs are engaged, he noted. By the end of January 2000, David Rubenstein expects that the company will have closed on $100 million in transactions.

The company established its legal division in 1992 by hiring longtime lawyer Frank Ferro as executive v.p. & general counsel. "We have now developed an internal staff of four lawyers, with two doing principally leasing work," noted Ferro.	"We have various projects in the development pipeline for the next several years that are in position already," commented director of development Stephen Evans. "They are in first-class locations where we have existing properties."

The company has also been active on the development side. According to director of development Stephen Evans, who joined the firm in 1998, its strategy for building new properties is centered on complementing the firm's portfolio in existing markets. The company strives to acquire development sites that allow it to create 1.5 million to 3 million-square-foot office parks, sometimes through a combination of acquisition and development. For example, the company sometimes purchases a site adjacent to a property it already owns to create a larger asset.

Development is old hat for The Rubenstein Co., which focused on development without accruing a lot of debt from 1969, when Mark Rubenstein founded his namesake company with only three other people, until 1973. During the 1970s, his firm worked as a consultant to commercial banks, swapping unsecured debt for properties, continuing to build for its own account until 1983, when the company switched to property management. Three years later, The Rubenstein Co. began to buy properties.

The company's portfolio includes development sites it carefully selected based on their unique market qualities, including location, debt level and whether or not Rubenstein saw ways it could add value to them. In addition to its own development sites, Rubenstein provides build-to-suit services for its corporate clients on jointly selected sites.

The Rubenstein Co. currently has two projects under development totaling 300,000 square feet, according to Evans. It also has several projects totaling roughly 2 million square feet in planning phases and expected to begin construction in 2000.

"We have various projects in the development pipeline for the next several years that are in position already," commented Evans. "They are in first-class locations where we have existing properties."

Evans has spent most of his career in the Washington, D.C., area, where he worked as a financial analyst with Cassidy & Pinkard Inc./Sonnenblick Goldman; worked as an acquisitions associate for JMB Realty Corp.; and owned his own company specializing in development, financing and disposition of roughly 400 acres of land and 1.5 million square feet of office, retail and multi-family projects. With his experience in the sometimes very parochial D.C. real estate scene, Evans can help further The Rubenstein Co.'s development plans there. Mark Rubenstein noted that the firm plans to have 1 million square feet in that region shortly, through both acquisitions and development.

"Our goal is to provide several hundred thousand square feet of new product, with projects being constructed each year. Our goal is to have our risks and returns complement and balance our existing portfolio," said Evans.

Keeping Buildings Full
The leasing arm of the company, under Talman's direction, is vital to both the development and acquisition teams. "We are successful as owners of first-class office space only if we can keep them full," said Talman.

The Rubenstein Brokerage Group works closely with both acquisition and development teams as well as property and portfolio managers to keep the properties leased to capacity. "We are blessed partially because of our investment philosophy," remarked Talman. "We look for projects for acquisition or development that have unique things about them that set them apart from the competition."

As an example, Talman pointed to a project in Philadelphia that had a natural advantage over similar projects because it is located near to the intersection of major highways. Radnor Corporate Center in Radnor, Pennsylvania also benefits from an "optimal location," according to Talman. He said that Radnor Corporate Center office space is commanding the same rents as other, newer product in Tysons Corner, Va. "The quality of our assets really helps us lease," he commented.

Going forward, Talman said he would like to capitalize on the fact that some clients have space in many Rubenstein Co.-owned buildings. "Since we have common partnership (interests in multiple buildings), we can take a company in Atlanta and put them in a building we have in Virginia," he theorized.

Talman admitted The Rubenstein Co. does have a reputation for being tough in negotiating leases but pointed out that the firm also has a good reputation as property managers. Very early on, the company recognized that long-term retention of tenants was a major factor in overall profitability. In keeping with Rubenstein's corporate philosophy of holding properties for long-term appreciation, the property management division focuses intently on preventive maintenance and capital programs.

"Rubenstein is the building manager and owner of the building that we have our headquarters in here in Philadelphia. As a result, we have dealt with them as tenant and landlord for a number of years," said Janney Montgomery Scott CFO James Wolitarsky. "What grew out of that -- because they do a very good job with respect to facilities management -- was an expansion of our business relationship in that we now utilize Rubenstein for the purpose of assisting us with new branch locations and the identification of real estate facilities in other areas in which we have business."

Mitchel Sweigart, who runs the property management division, supports each property's on-site management personnel in conjunction with the appropriate portfolio manager. The portfolio management group consists of four portfolio managers, each of which controls a small group of properties and takes a broad financial and operating level responsibility for their portfolio. This unique position requires the portfolio managers to maintain both an overall perspective on each property and a hands-on approach to day-to-day operating issues and decisions.

"(Having portfolio managers) is fairly unique in relation to other investment companies," said director of portfolio management Craig Zolot. "It allows us to have the big picture approach and an approach to detail as well."	"We have been struggling with our growth, learning how to do business as a fast-growing firm," remarked Peter Talman, director of leasing and president of the Rubenstein Brokerage Group. "We haven't always had time to do prior planning."

The portfolio managers, led by Craig Zolot, create property-level strategies required to meet the company's objectives, based upon knowledge of both current market conditions and the challenges and opportunities facing each individual property. In executing the company's strategic plan, they are responsible for creating and implementing operating, financial and capital budgets; approving property marketing plans and lease transactions; working closely with on-site management personnel to resolve property issues; maximizing each property's income, cash flow and long-term value; and monitoring adherence to partnership and loan agreements.

"(Having portfolio managers) is fairly unique in relation to other investment companies," said Zolot. "It allows us to have the big-picture approach and an approach to detail as well.

"Rubenstein is a full-service real estate firm, and we're the spoke in the middle of the wheel," he continued. "We're also the group that gives strategic direction to the properties."

Adding value to properties through operations is one of the many goals Rubenstein has as a property owner. The portfolio managers help achieve that goal by working in tandem with the property managers.

"Our response to that (goal of adding value) is having property managers in the field. We want our property managers to have their attention focused on that area," Zolot asserted. "Our property managers have a focus on tenants and facilities. The crafting of annual plans is the responsibility of the portfolio managers."

Each of the portfolio managers has between three and five properties to oversee. They also have extensive backgrounds in the financial community. Zolot, who joined the company in 1994, worked at Coopers & Lybrand from 1993 to 1994, overseeing the management, workout and liquidation of a $750 million real estate loan portfolio under a major RTC contract. Prior to that, he worked at the Prudential Mortgage Capital Co. for seven years.

"The key to being successful is understanding the leasing markets, understanding the competition and the properties' strengths and weaknesses," said Zolot.

In addition to the portfolio managers, The Rubenstein Co. maintains another unique characteristic: an in-house legal department.

THE RUBENSTEIN COMPANY Founded in 1969 by chairman Mark Rubenstein --- A $1 billion, 60-percent leveraged company --- Owns, manages, leases and operates more than 9 million square feet of office space --- Target markets include Pennsylvania, Delaware, Virginia and Georgia --- By end of January 2000, expects to have closed on $100 million in transactions --- Two projects under development totaling 300,000 square feet with a rough total of 2 million square feet in the planning phase

In 1992, management made the decision to bring real estate legal work in house. The company hired longtime lawyer Frank Ferro as its executive vice president & general counsel. Since 1996, The Rubenstein Co. has continued to expand the legal department, and currently all legal aspects relating to acquisitions, development, leasing, management and financing are performed or coordinated internally.

"We have now developed an internal staff of four lawyers, with two doing principally leasing work," noted Ferro. "Our job is to make sure everything is done in the proper way."

Despite having an in-house legal department, though, The Rubenstein Co. does use outside legal counsel. Ferro and his team, however, work closely with such local counsel. "It's basically for quality control, for knowing intuitively what are important aspects for the company on a strategic level," Ferro explained.

Looking ahead, Rubenstein is likely to remain a cautious firm that weathers each cycle well because of the quality of its assets. Mark Rubenstein set an early precedent for the firm to keep debt levels moderately low and he plans to keep it that way. The company will also continue to guard its reputation jealously.

"We are an extremely conservative real estate company," he concluded. "We are careful that whatever we do is what we said we'd do. Our word is our bond."

HEADQUARTERS The Rubenstein Company L.P. 4100 One Commerce Square 2005 Market Street Philadelphia, PA 19103 215.563-3558 tel 215-563-4110 fax	SOUTHEAST REGION One Capital City Plaza 3350 Peachtree Road Suite 1100 Atlanta, GA 30326 404261 9090 tel 404261 4643 fax
MIDWEST REGION Suite 100 875 Greentree Road Pittsburgh, PA 15220 412.920-3100 tel 412-920-3200 fax	MID-ATLANTIC REGION Pinnacle Tower North 1751 Pinnacle Drive Suite 100 McLean, VA 22102 703-790-5114 tel 703-790-3573 fax