ATLANTIC REALTY TRUST
                                747 THIRD AVENUE
                            NEW YORK, NEW YORK 10017
                                 (212) 355-1255


                              FOR IMMEDIATE RELEASE



                  NEW YORK, NY, MARCH 5, 2003 -- ATLANTIC REALTY TRUST, A REAL
         ESTATE INVESTMENT TRUST WHICH IS INCLUDED FOR QUOTATION ON THE NASDAQ
         SMALL CAP MARKET (ATLRS), REPORTED THE INTERNAL REVENUE SERVICE ("IRS")
         HAS ISSUED AN EXAMINATION REPORT IN CONNECTION WITH AN AUDIT OF THE
         1996 AND 1997 INCOME TAX RETURNS OF ATLANTIC REALTY TRUST. THE
         EXAMINATION REPORT PROPOSES TO DISALLOW ALL OF THE TRUST'S BAD DEBT
         DEDUCTIONS AND ALL OF THE TRUST'S DEDUCTIONS FOR LOSSES SUSTAINED ON
         THE DISPOSITION OF ITS REAL ESTATE ASSETS. THE ADJUSTMENTS PROPOSED IN
         THE EXAMINATION REPORT, IF SUSTAINED IN THEIR ENTIRETY, WOULD INCREASE
         THE TRUST'S TAXABLE INCOME DURING THE PERIOD COVERED BY THE REPORT BY
         APPROXIMATELY $10,625,000. THE REPORT PROPOSES TO INCREASE THE FEDERAL
         INCOME TAXES OWED BY THE TRUST FOR THIS PERIOD, WITH THE ADDITION OF
         THE PENALTIES ASSERTED IN THE REPORT, BY APPROXIMATELY $3,639,000, PLUS
         INTEREST. IF THE ADJUSTMENTS PROPOSED IN THE EXAMINATION REPORT WERE
         SUSTAINED IN THEIR ENTIRETY, THE TRUST WOULD BE REQUIRED TO DISTRIBUTE
         A "DEFICIENCY DIVIDEND" OF APPROXIMATELY $10,100,000 TO ITS
         SHAREHOLDERS IN ORDER TO MAINTAIN ITS CLASSIFICATION AS A REAL ESTATE
         INVESTMENT TRUST FOR FEDERAL INCOME TAX PURPOSES.

                  IN REACHING THE POSITIONS ADOPTED IN THE EXAMINATION REPORT
         DISALLOWING THE TRUST'S BAD DEBT DEDUCTIONS AND OTHER LOSSES, THE
         REVENUE AGENT DISREGARDED THE FACT THAT THE LOANS OR PROPERTIES WERE
         DISPOSED OF FOR CASH AT A LOSS IN CLOSED AND COMPLETED TRANSACTIONS.
         THE ISSUANCE OF THE EXAMINATION REPORT IS THE FIRST STEP IN THE IRS
         ADMINISTRATIVE PROCESS FOR DETERMINING WHETHER THERE IS ANY DEFICIENCY
         IN THE TAX LIABILITY OF THE TRUST FOR THE YEARS AT ISSUE AND IS SUBJECT
         TO ADMINISTRATIVE AND JUDICIAL APPEAL. THE TRUST INTENDS TO FILE AN
         ADMINISTRATIVE APPEAL CHALLENGING THE POSITIONS ADOPTED IN THE
         EXAMINATION REPORT.