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Falcon Real Estate Sells Single-Tenant Building for $30.1 Million

Falcon Buys Second Major New Jersey Office Building
On February 16, 2005, Falcon Real Estate completed the acquisition of the Novo Nordisk Headquarters property in Princeton, New Jersey. This is the second major office property that Falcon has acquired in New Jersey in the last six months. In late September, Falcon had closed on the $77 million purchase of the AT&T Consumer Services Headquarters Building in Morris Township, New Jersey.

The Novo Nordisk Headquarters property consists of two adjacent buildings with a total of 225,700 square feet of net rentable area. It is situated on over 23 acres of land directly on Route 1, and adjacent to Princeton University's Forrestal Center. The property was purchased at a price of $71.5 million, equal to a going-in capitalization rate of 6.5% and a price per square foot of $317. However, since there are pre-determined rental increases specified in Novo Nordisk's lease, the average capitalization rate over a projected five year holding period is 7.5%. A $53 million, interest-only mortgage was provided by Citigroup at an interest rate of 5.48%.

Falcon Real Estate acted as general partner of a limited partnership that purchased the property. This limited partnership was primarily composed of overseas investors who provided a portfolio loan, together with a number of U.S. investors who provided the equity. All of the investors will receive annual income distributions of 9.5% during the first five years of ownership.

Kenneth Lorman, a Vice President of Falcon Real Estate in the company's New York office and responsible for real estate acquisitions in the northeastern states, commented, "While Falcon has purchased a number of properties in New Jersey in recent years, this was our first purchase in the Princeton market. We were particularly pleased to obtain this property, since it is relatively new construction, with a credit-quality tenant and in an excellent location. We look forward to making other quality purchases such as this in the greater New York Metropolitan area during the coming months."

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Announcements
February 2005