Principal Real Estate Investors, the fourth largest manager of real estate assets in the U.S. based on tax-exempt assets under management 1, has launched a new small balance loan program, called Principal Commercial Mortgage EdgeSM, to originate, securitize and service small balance commercial real estate loans on a national basis. The new Dallas, Texas-based operation will source, underwrite and close loans ranging from $250,000 to $5 million, and package them for securitization by Des Moines-based Principal Commercial Funding II (PCF II).

?We're very excited about our new small balance loan program,? said Kerry Studer, national sales director for Principal Commercial Mortgage Edge. ?Through this program, we will be able to significantly diversify our borrower base and geographical coverage. By targeting cities with populations of 25,000 or more within a 5-mile radius and borrowers with one to five core properties, we will have access to a much larger number of borrowers in a wider range of real estate markets.?

Loans will be sourced by a sales staff located in various cities around the country utilizing our established network of real estate brokers and strategic alliance partners. Loans will be full recourse and will cover a range of property types, including: office, industrial, multifamily, mixed use, self storage and manufactured housing. Loans will have flexible prepayment options and very low fixed fees -- $3,000, as compared to the $10,000 to $20,000 fixed fees typically charged by other lenders.

?The market for small commercial and multifamily loans is close to $130 billion of annual origination volume,? added Jim Going, managing director of Principal Commercial Mortgage Edge and head of the Dallas office. ?We are confident we can capture a sizeable share of this market by providing the best practices ? reliability, seamless processing and certainty of execution ? that Principal Real Estate Investors is so well known for.?

?This new program will give us an edge in a highly competitive market,? said Rob Best, managing director of Principal Real Estate Investors and head of PCF II. ?Not only will we have more loans to securitize, the securities generated by this venture will be sold under a brand associated with The Principal.?

About Principal Real Estate Investors:

Principal Real Estate Investors is the fourth largest institutional real estate manager in the United States based on tax-exempt assets under management and manages or subadvises $40.0 billion in commercial real estate assets. The firm's real estate capabilities include both public and private equity and debt investment alternatives. Principal Real Estate Investors is the dedicated real estate group of Principal Global Investors.

About Principal Global Investors:

Principal Global Investors is a diversified asset management organization and a member of the Principal Financial Group®, with expertise in equities, fixed income and real estate investments, as well as specialized overlay and advisory services. Principal Global Investors manages $213.6 billion in assets primarily for retirement plans and other institutional clients.2

About the Principal Financial Group:

The Principal Financial Group® (The Principal ®)3 is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $270.1 billion in assets under management4 and serves clients worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.

1 Ranked by U.S. institutional tax-exempt assets, out of 50 managers profiled, as of June 30, 2006. ?Real Estate Managers,? PENSIONS & INVESTMENTS, Oct. 16, 2006.

2 As of March 31, 2007. Principal Global Investors is the asset management arm of the Principal Financial Group ® (The Principal ®) and includes the asset management operations of the following subsidiaries of The Principal: Principal Global Investors, LLC; Principal Real Estate Investors, LLC; Spectrum Asset Management, Inc.; Post Advisory Group, LLC; Columbus Circle Investors, Edge Asset Management, Inc.; Principal Global Investors (Europe) Limited; Principal Global Investors (Singapore) Ltd.; Principal Global Investors (Australia) Ltd.; and the majority owned affiliates of Principal International, Inc.

3 "The Principal Financial Group" and ?The Principal? are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.

4 As of March 31, 2007

Principal Financial Group
Tina Marchetti, 515-248-0065
marchetti.tina@principal.com
or
Joelle Kline, 515-246-4907
kline.joelle@principal.com