American Capital Invests $122 Million in Four Commercial Mortgage Backed Securities

BETHESDA, Md., Aug. 23 /PRNewswire-FirstCall/ -- American Capital Strategies Ltd. (NASDAQ: ACAS) announced today that in the second quarter of 2006, it invested $122 million to purchase bonds issued by four commercial mortgage backed securities trusts (CMBS). The aggregate face value of the bonds was $224 million, with the purchase price representing a 45% discount from the face value.

"We are delighted with these four new CMBS investments, which demonstrate the growing momentum of our Commercial Real Estate Asset Management Group," said American Capital Chairman, President and CEO Malon Wilkus. "The Group has completed ten investments since its inception in late 2005. As in all of our investments, we have set a high standard for due diligence for these investments."

American Capital has invested approximately $4.7 billion in the last twelve months, $3 billion year to date and $549 billion quarter to date. These amounts do not include American Capital's unfunded equity commitment and debt funded to its portfolio company European Capital. Since the establishment of American Capital's Commercial Real Estate Asset Management Group ten months ago, American Capital has invested $323 million in the unrated tranches through BBB- tranches of CMBS. For more information about American Capital's portfolio, go to http://www.acas.com/our_portfolio/our_portfolio.cfm

"Our recent investments have provided us not only with the opportunity to invest in four excellent pools of mortgage loans, but also develop new relationships as well as build on current relationships with market leaders in the CMBS industry," said American Capital Managing Director Doug Cooper. "These new CMBS investments are all complementary additions to American Capital's CMBS portfolio, which give the portfolio added geographic, property type and sponsorship diversity."

$40 Million in Merrill Lynch Mortgage Trust 2006-C1

American Capital invested $40 million in the BB+, BB, BB-, B+, B, B- and non-rated tranches of bonds issued by Merrill Lynch Mortgage Trust 2006-C1 (MLMT 2006-C1), a $2.5 billion CMBS trust. This CMBS is a pool of mortgage loans sold to the trust by Merrill Lynch & Co., LaSalle Bank N.A., PNC Bank N.A. and Artesia Mortgage Capital Corporation. The portfolio is comprised of 244 loans, which are secured by first liens on 299 properties. The average loan balance for MLMT 2006-C1 is $10.2 million while the average loan balance per mortgaged property is $8.3 million. MAI appraisals performed on the underlying properties result in a weighted average loan amount to property value of 67%.

$32 Million in Merrill Lynch Countrywide Funding Corp. Trust 2006-C2

American Capital invested $32 million in the BB+, BB, BB-, B+, B, B- and non-rated tranches of bonds issued by Merrill Lynch Countrywide Funding Corp. Trust 2006-C2 (MLCFC 2006-C2), a $1.8 billion CMBS. This CMBS is a pool of approximately 191 commercial mortgage loans, which are backed by 216 commercial properties and which were sold to the trust by Merrill Lynch & Co., Countrywide Real Estate Finance Corp. and KeyBank. The average loan balance for MLCFC 2006-C2 is $9.6 million while the average loan balance per mortgaged property is $8.5 million. MAI appraisals performed on the underlying properties result in a weighted average loan amount to property value of 68%.

$24 Million in Wachovia Bank Commercial Mortgage Trust 2006-C26

American Capital invested $24 million in the BB+, BB, BB-, B+, B, B- and non-rated tranches of bonds issued by Wachovia Bank Commercial Mortgage Trust 2006-C26 (WBCMT 2006-C26), a $1.7 billion CMBS. This CMBS is a pool of approximately 114 commercial mortgage loans, which are backed by 124 commercial properties and which were sold to the trust by Wachovia Bank Commercial Mortgage Trust and Artesia Mortgage Capital Corporation. The average loan balance for WBCMT 2006-C26 is $15.2 million while the average loan balance per mortgaged property is $14 million. MAI appraisals performed on the underlying properties result in a weighted average loan amount to property value of 70%.

$26 Million in Lehman Brothers-UBS Commercial Mortgage Trust 2006-C4

American Capital invested $26 million in the BB+, BB, BB-, B+, B, B- and non-rated tranches of bonds issued by Lehman Brothers-UBS Commercial Mortgage Trust 2006-C4 (LBUBS 2006-C4), a $2 billion CMBS. This CMBS is a pool of approximately 145 commercial mortgage loans, which are backed by 167 commercial properties and which were sold to the trust by Lehman Brothers and UBS. The average loan balance for LBUBS 2006-C4 is $13.7 million while the average loan balance per mortgaged property is $11.9 million. MAI appraisals performed on the underlying properties result in a weighted average loan amount to property value of 66%.

The four trusts and tranches in which American Capital has invested, along with ratings and corresponding face values, are shown below.

                                                                   AMERICAN
                                                      AMERICAN     CAPITAL
                                                      CAPITAL      PURCHASE
  TRANCHE      RATING FITCH/S&P        FACE VALUE     DISCOUNT %   PRICE

                      Merrill Lynch Mortgage Trust 2006-C1

   A - I    AAA through BBB-         $2,418,255,001
   J        BB+/BB+                      $6,225,000
   K        BB/BB                        $9,337,000
   L        BB-/BB-                      $6,224,000
   M        B+/B+                        $6,225,000
   N        B/B                          $6,225,000
   P        B-/B-                        $6,224,000
   Q        Non-Rated                   $31,123,694
   J - Q    BB+ through Non-Rated       $71,583,694       43%    $40,487,325
   All      AAA through Non-Rated    $2,489,838,695


                                                                   AMERICAN
                                                      AMERICAN     CAPITAL
                                                      CAPITAL      PURCHASE
  TRANCHE     RATING S&P/MOODY'S       FACE VALUE     DISCOUNT %   PRICE

           Merrill Lynch Countrywide Funding Corp. Trust 2006-C2

   A-I      AAA through BBB-         $1,783,902,000
   J        BB+/Ba1                      $9,207,000
   K        BB/Ba2                       $4,604,000
   L        BB-/Ba3                      $6,905,000
   M        B+/B1                        $2,302,000
   N        B/B2                         $4,604,000
   P        B-/B3                        $4,603,000
   Q        Non-Rated                   $25,320,786
   J-Q      BB+/Ba1 through Non-Rated   $57,545,786       45%    $31,874,752
   All      AAA through Non-Rated    $1,841,447,786


                                                                   AMERICAN
                                                      AMERICAN     CAPITAL
                                                      CAPITAL      PURCHASE
  TRANCHE     RATING S&P/MOODY'S       FACE VALUE     DISCOUNT %   PRICE

                                      Wachovia Bank
                                        Commercial
                                      Mortgage Trust
                                         2006-C26

   A-K      AAA through BBB-         $1,677,723,000
   L        BB+/Ba1                      $2,209,000
   M        BB/Ba2                       $3,312,000
   N        BB-/Ba3                      $2,209,000
   O        B+/B1                        $4,329,000
   P        B/B2                         $6,495,000
   Q        B-/B3                        $4,329,000
   S        Non-Rated                   $23,813,767
   L-S      BB+ through Non-Rated       $46,696,767       48%    $24,059,406
   All      AAA through Non-Rated*   $1,731,843,767*


                                                                   AMERICAN
                                                      AMERICAN     CAPITAL
                                                      CAPITAL      PURCHASE
  TRANCHE     RATING S&P/MOODY'S       FACE VALUE     DISCOUNT %   PRICE

                                    Lehman Brothers-
                                     UBS Commercial
                                     Mortgage Trust
                                        2006-C4

   A - K    AAA through BBB-         $1,922,860,000
   L        BB+/Ba1                      $3,791,000
   M        BB/Ba2                       $5,055,000
   N        BB-/Ba3                      $2,527,000
   P        B+/B1                        $7,434,000
   Q        B/B2                         $4,956,000
   S        B-/B3                        $4,956,000
   T        Non-Rated                   $19,823,524
   L-T      BB+/Ba1 through Non-Rated   $48,542,524       46%    $26,244,464
   All      AAA through Non-Rated*   $1,982,330,524*

        * A minority of the bonds were acquired by another party.


  ABOUT AMERICAN CAPITAL

American Capital is a publicly traded buyout and mezzanine fund with capital resources of $8.9 billion. American Capital invests in and sponsors management and employee buyouts, invests in private equity buyouts, provides capital directly to early stage and mature private and small public companies and through its asset management business is a manager of debt and equity investments in private companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions, recapitalizations and securitizations. American Capital invests up to $350 million per transaction.

As of July 31 2006, American Capital shareholders have enjoyed a total return of 420% since the Company's IPO -- an annualized return of 20%, assuming reinvestment of dividends. American Capital has paid a total of $1.2 billion in dividends and paid or declared $21.56 dividends per share since its August 1997 IPO at $15 per share.

Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Senior Vice President, Business Development, at (800) 248-9340, or visit http://www.americancapital.com/.

Performance data quoted above represents past performance of American Capital. Past performance does not guarantee future results and the investment return and principal value of an investment in American Capital will likely fluctuate. Consequently, an investor's shares, when sold, may be worth more or less than their original cost. Additionally, American Capital's current performance may be lower or higher than the performance data quoted above.

This press release contains forward-looking statements. The statements regarding expected results of American Capital Strategies are subject to various factors and uncertainties, including the uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional, national or international economic conditions, or changes in the conditions of the industries in which American Capital has made investments.