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Construction Underway on Park Crest Tower #1

In January 2006 ground was broken and construction was started on Tower #1 at the Park Crest condominium development project in Tysons Corner, Virginia. This will be a 19-story building containing 335 condominium units. There will be 167 two-bedroom units, 149 one-bedroom and 19 penthouses. The land for this project was purchased in August 2005 by a joint venture between Falcon, The Penrose Group of Washington D.C. and The Donohoe Companies, Inc., also of Washington. Two acres of that land were transferred to an entity that was created to develop Tower #1. The total development costs for this building are now estimated at slightly over $225 million, and it was necessary that Falcon raise over $40 million of equity to fund the project. In addition, Penrose, Donohoe and Falcon are each making a significant equity contribution to the project. A construction loan was received from Bank of America to cover the costs of Tower #1 and to repay the entire land loan that was arranged with the seller at the time of the purchase of the land.

A sales center was opened for Park Crest Tower #1 in September 2005 at which time there were already 3,000 names on a waiting list that had been set up on a web site by the previous owner of the land. By the end of November, 263 contracts had been signed, with 5% non-refundable cash deposits. A second 5% non-refundable deposit will be required in January 2007. The actual sales prices on these contracts exceeded projected average sales prices by over 15%. However, these higher sales prices were offset to some degree by rising construction costs.

Completion of Tower #1 is now scheduled for the middle of 2008 and it is anticipated that the sale of all the condominium units in that building will be completed during the first half of 2009. We are anticipating that the investors in this project will earn an Internal Rate of Return of over 20%.

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Announcements
February 2006