Transaction Highlights
    -- $78.5 million sale of five family-style apartment properties in
       Washington State
    -- $102.1 million acquisition of eight industrial properties, of which
       seven have been completed and one is scheduled to close in the first
       quarter 1999
    -- Redeployment of assets consistent with company's stated strategy of
       focusing on industrial properties for tenants of less than 100,000
       square feet
    -- In-fill locations in strong California and Pacific Northwest markets
       that can be managed within company's existing infrastructure
    -- Company establishes beachhead in strong Phoenix market

    NEWPORT BEACH, Calif., Dec. 30 /PRNewswire/ -- Pacific Gulf Properties
Inc. (NYSE: PAG), a real estate investment trust that owns, develops and
manages industrial properties in the West, has sold a portfolio of five
family-style apartment communities located in the state of Washington to a
private New York-based investor group for approximately $78.5 million,
$29 million more than the book value of the portfolio after taking into
account all costs related to the sale.  Upon closing of the sale, Pacific Gulf
used the proceeds to purchase seven industrial properties encompassing nearly
1.3 million square feet of space located in various western markets from The
RREEF Funds for $76.0 million.  Simultaneously, the company has entered into
an agreement to purchase an additional 523,000 square foot industrial property
from The RREEF Funds for $26.1 million.
    "These transactions mark another major step toward exiting the
family-style apartment market, in accordance with the company's strategy to
focus on building Pacific Gulf's portfolio of industrial properties suited to
small to mid-size tenants," said Chairman, President and Chief Executive
Officer Glenn L. Carpenter.  "With the completion of these transactions, we
anticipate that over 80% of the company's net operating income will be
generated from its industrial portfolio, compared with 71% for the first nine
months of 1998.
    "We will continue to assess our options to divest the 11 remaining
traditional multifamily properties, encompassing 1,827 apartment units, within
our portfolio and pursue acquisitions that are consistent with our existing
industrial profile.  In fact, we anticipate a possible one-off deal of this
nature in 1999 and will look to dispose of the remaining family-style
multifamily portfolio in 2000.  In the future, Pacific Gulf will continue to
expand its senior apartment portfolio as well as its industrial portfolio.
    "Pacific Gulf's ability to fund industrial acquisitions in a manner that
is accretive to funds from operations using proceeds from the divestiture of
properties that no longer fit our ideal profile is a significant advantage for
the company and its shareholders in light of current trends in the public
market for REIT stocks," Mr. Carpenter said.  "Our ability to pay cash for the
seven properties on which we closed enabled us to be a very competitive
bidder.  As a result, I am confident in our ability to generate continued
revenue, earnings and cash flow growth."
    The transaction brings Pacific Gulf's industrial portfolio to 74
properties and more than 15.5 million square feet, while decreasing the number
of family-style apartment properties to 11 communities and 1,827 units.

    Family-Style Divestiture Provides Funds for Strategic Acquisitions
    The family-style portfolio included in the sale comprised a total of 1,322
apartment units in five properties located in the greater Seattle area in the
state of Washington.  Of the $78.5 million gross proceeds from the sale,
$76.0 million was subsequently used to acquire the seven industrial properties
summarized below.

                                     Square                       Occupancy
    Industrial Property             Footage       Location             Rate
    Hohokam 10 East                 256,920   Phoenix, Arizona          97%
    Hohokam 10 West                  65,880   Phoenix, Arizona          95%
    Portland Airport Business
      Center                        228,510   Portland, Oregon          93%
    Sierra Trinity Business Park    223,371   Dublin, California        89%
    West Sacramento Business Park   214,900   Sacramento, California    80%
    Hesperian Industrial Park       152,962   Hayward, California      100%
    Contra Costa Diablo
      International                 146,326   Concord, California       69%

    "These properties are a great complement to our portfolio and will allow
us not only to benefit from economies of scale in management, but also to
better serve existing clients," said Pacific Gulf Senior Vice President of
Industrial Operations Robert Dewey.  "All the properties fit within our
current management infrastructure, as each will be managed by one of Pacific
Gulf's eight regional offices.  And they couldn't be more consistent with our
existing product base.  For example, prior to this transaction our average
tenant size was just under 7,000 square feet; among the 187 tenants included
in this acquisition, the average is 6,900 square feet.
    "For existing Pacific Gulf tenants, the addition of these properties means
that we now have more options to offer.  As they grow, we can accommodate
their needs by providing them with more space in a larger selection of
business parks.  That variety and flexibility is one reason that our tenant
turnover tends to be lower than the average among our competitors and our
occupancy rates have been consistently high."
    Occupancy rates among the seven properties range from 69% at the lowest to
100% at the highest and average 88%.  Pacific Gulf believes it can improve
occupancy rates, particularly in Sacramento and Concord, as a result of its
hands-on management and marketing efforts, and anticipates upside growth in
this portfolio in the year 2000.

    Acquisition Signals Company's Entrance into a New Market
    While the majority of properties in the transaction are located in Pacific
Gulf's existing markets, two signal the company's entrance into the new market
of Phoenix.
    With 73 tenants averaging 4,422 square feet of space, Hohokam 10 East and
West fit squarely into Pacific Gulf's strategy to target small and mid-size
tenants.  The properties, which combined total 322,800 square feet, are
divided by Highway 143 and located in central Phoenix less than two miles from
Sky Harbor International Airport.  The properties enjoy freeway visibility
from Interstate 10, the city's major transportation artery.
    By purchasing Hohokam 10 East and West, the company establishes a foothold
in the Phoenix market and can continue to analyze its opportunities there
while owning and managing property.
    "We have studied the fundamentals of the Phoenix market for the past few
years and identified it as one that would fit well into our strategy when we
found the right opportunity," said Executive Vice President of Operations J.R.
Wetzel.  "The Phoenix market has matured significantly over the past 10 years.
The size of the industrial base, the strong historical absorption, and the
robust population and job growth make it a market we find very attractive.
    "Although there has been some overbuilding in the large warehouse market,
particularly on the west side of Phoenix, the Tempe and Airport markets remain
quite healthy with relatively low vacancy and very strong absorption.
Furthermore, because of the lack of available land in those markets, few
competitive properties can be built in those markets in the future."
    At present, the total industrial base in Phoenix is 173 million square
feet.  Annual net absorption in recent years has been between 8 million and 12
million square feet.  Vacancy now stands at a comfortable 7.8%.  Employment in
the market is projected to increase 3.5%, higher than the national average,
while population growth is estimated at 2.8% on a base of more than 2.6
million people.

    Agreement to Purchase Additional Property in Phoenix
    Simultaneous with the acquisitions, Pacific Gulf entered into an agreement
to purchase Broadway Business Park, also located in Phoenix.  The company will
determine within the next 90 days whether to close on the 522,811 square foot
industrial property, based on its preliminary assessment of the performance of
the Hohokam 10 properties and the Phoenix market.
    "With nearly 1 million square feet of industrial space in our Phoenix
portfolio after the purchase of Broadway, Pacific Gulf will have a strong
presence with the real estate brokerage community and will continue to grow
the portfolio as we find appropriate opportunities," Mr. Wetzel said.  "The
Tempe and Airport markets in Phoenix have many business park properties that
will enable us to build a portfolio of complementary properties to accommodate
our tenants' growth."
    Pacific Gulf will use a third-party property manager on a fee basis to
oversee the management and leasing of the Hohokam 10 properties.  If it
subsequently closes on the Broadway acquisition, the company will hire a local
real estate professional with experience in the Phoenix market to serve as
regional manager, reporting to the Pacific Gulf corporate office in Newport
Beach, Calif.
    "During 1998, Pacific Gulf added $186 million of industrial product to its
portfolio consisting of 18 properties encompassing approximately 3.3 million
square feet in our western markets," said Lonnie Nadal, Pacific Gulf's senior
vice president of acquisitions.  "Our industrial portfolio now totals over
15.5 million square feet, which makes us one of the largest owners of this
property type in the West.  With this acquisition, Pacific Gulf continues to
progress toward its goal of becoming the dominant owner of multi-tenant
business parks in the western United States."
    Pacific Gulf Properties is a real estate investment trust that owns,
develops and manages a growing portfolio of industrial properties targeting
small to mid-size tenants in selected high-growth western markets.  The
company's industrial portfolio includes 74 properties encompassing more than
15.5 million square feet of space.  Pacific Gulf also maintains a smaller
multifamily portfolio that includes eight rental communities comprising almost
1,500 units designed for the burgeoning population of active seniors age 55
and older.  The company is headquartered in Newport Beach, Calif.
    Forward-looking statements and comments in this press release are made
pursuant to the safe harbor provisions of Section 21E of the Securities
Exchange Act of 1934.  Such statements relating to, among other things,
events, conditions, prospects and financial trends that may affect the
company's future plans of operations, business strategy, growth of operations
and financial position, are not guarantees of future performance and are
necessarily subject to risks and uncertainties, some of which are significant
in scope and nature, including without limitation, increased competition,
adverse economic trends, increasing interest rates and other factors.

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