Bethlehem Steel Corporation
For Immediate Release

BETHLEHEM, Pa., July 7, 2000 In another positive sign that Bethlehem Works is bringing new investment to the City of Bethlehem, Bethlehem Steel Corporation announced today that it has signed a letter of intent with Preferred Real Estate Investments, Inc., Conshohocken, Pa., for the sale of the five-story East Annex that was part of the corporation's former Steel General Office building at 715 E. Third Street on the City's South Side. Closing on the 120,000-square-foot property is expected by November 2000.

Preferred Real Estate Investments has built its reputation and specializes in the restoration and leasing of older industrial and historic structures to office tenants. Preferred has developed over 7.5 million square feet of office space in Pennsylvania, Maryland and Virginia. Major national tenants include: AT&T;, Villanova Capital-Nationwide Insurance, and Cigna Insurance.

Commenting on this latest positive step, Duane R. Dunham, chairman and chief executive officer, Bethlehem Steel Corporation, said, "The renovation and reopening of this property along Third Street will provide additional encouragement to other investors for further development in Bethlehem Works and Bethlehem Commerce Center and will have a significant economic impact on the area.

"We are impressed with Preferred's track record and the energy and creativity of its principals, and we will look forward to the reopening of the former East Annex building and the jobs this high-quality office facility will bring to town," Mr. Dunham said.

Erik Kolar, Preferred Real Estate Investments, said, "Preferred \has managed the renovation and leasing of similarly aged buildings to expand the job base in a number of communities. We are excited about being part of the Bethlehem Works development and bringing to completion the redevelopment and full leasing of the East Annex in a manner that will make the tenants and the community proud."

Preferred Real Estate Investments works with architects and designers to maintain the original integrity of a structure, adding modern elements to create designs that enhance the tenants' corporate environment. "We also work closely with municipal officials to develop a plan for renovation that not only meets the goals of our tenants, but also their neighbors and the community. By breathing new life into these facilities, we help revitalize both the real estate itself and the surrounding community, while building goodwill for the future," Mr. Kolar said.

Preferred is in discussions with several prospective tenants that employ large numbers of people. At full occupancy, the East Annex could house in excess of 500 people.

Parking will be provided in the immediate vicinity of the annex in lots that will be improved by the Bethlehem Works Owners Association, whose membership comprises owners of land and facilities in Bethlehem Works. The lots will be ready before the annex is occupied.

"This is an encouraging step for Bethlehem Works as we move from the planning phase to the building phase," said Stephen G. Donches, vice president of public affairs, Bethlehem Steel Corporation. "Along with other planned uses, reestablishing office space on the South Side will increase the attractiveness of Bethlehem Works as a destination attraction."

"This is another exciting step forward for the revitalization of South Bethlehem and the Third Street corridor," said Mayor Don Cunningham. "We're thrilled that this historic building is planned for renovation and soon will bring 500 new jobs to the heart of Bethlehem."

The office annex is adjacent to Bethlehem Steel Corporation's original 13-story headquarters building that was constructed in several phases beginning in 1906 (basement and four floors) until 1948 (existing lobby and entrance). The annex was constructed in 1952. The two-building complex was used as the steelmaker's corporate headquarters until its current offices at Martin Tower were opened in 1972. From 1972 until 1994 when it closed, the building, known as the Steel General Office, was used by sales and marketing staff until they were relocated to Bethlehem's business units. Castlebrook Development, formerly Wynco Realty Partners, of Pittsburgh, is the designated developer to convert the former headquarters building into a 262-room hotel and conference center. Castlebrook is currently completing the final phase of its due diligence process.

The former headquarters building and its annex are part of the 160-acre tract of Bethlehem Steel property known as Bethlehem Works, a mixed-use development that retains historic and architecturally significant steelmaking-related buildings that will be complemented with new structures, all with new uses. Bethlehem Works will feature a blend of entertainment, recreation, retail and restaurants, and cultural venues, and will be anchored by the National Museum of Industrial History in association with the Smithsonian Institution. The museum's Preview Center will open in summer 2001 and other major components, including movies, retail, restaurants and a family fun center, are also expected to open in summer 2001.

The remaining 1,600 acres of the Bethlehem Steel plant site are being developed as the Bethlehem Commerce Center to include distribution, transportation, warehousing and industrial businesses. Currently, BethIntermodal, a subsidiary of Bethlehem Steel's subsidiary railroads, is servicing Norfolk Southern freight to transfer the rail cars to lines that will move the freight elsewhere in the country. The intermodal center opened in August 1999, establishing Bethlehem as a leading rail hub for the Northeastern United States.

Bethlehem Works and Bethlehem Commerce Center are being developed as a public/private partnership to expand the community's economic base and to return jobs to the 1,800-acre site. The Enterprise Development Company, under contract to Bethlehem Steel, is the master developer and owner's representative for the two-tract project.