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Falcon Offering US and Agribusiness Funds:

Falcon Announces US Real Estate Fund

Falcon Real Estate Investment Company, LP is now offering the Falcon US Real Estate Fund, which is part of the Falcon Family of Funds that has been established in Luxembourg as a Specialized Investment Fund (S.I.F.). The investment emphasis of this fund will be on buying high-quality, stabilized properties in major markets across the United States. Because of the credit crisis and the recession, many quality properties are available at extremely attractive prices, and Falcon believes that there is currently an historic buying opportunity in the US commercial real estate market.

The US real estate market has been affected by the recession, with increases in vacancy rates in every category of real estate, and with generally lower rental rates across the country. However, the market is not suffering from the overbuilding that plagued past downturns, and with little or no new construction being planned, the market should recover relatively quickly after the economy begins to improve. The main problem affecting the market at the present time is the lack of mortgage financing. Many owners will be unable to replace the highly leveraged debt on their properties that will mature in the next 12 to 18 months, and these owners will be forced to sell. The Falcon US Real Estate Fund, having cash available, will be able to take advantage of these forced sales. Since prices have declined quite considerably in major markets across the United States – in some cases between 20% and 40% from the peaks reached just two years ago – Falcon believes that this is an excellent time to be acquiring first class properties.

The Fund is targeting a subscription amount of $500 million, and it will have a projected life of five years. The Fund will invest primarily in stabilized properties that are leased to credit quality tenants on fairly long-term leases. Asset types will include office, both single and multi-tenanted, logistics, retail and rental apartment complexes. Annual cash yields of approximately 5% are anticipated, and the Fund has a targeted Internal Rate of Return of 12-15% per annum to the investors.

Note: The Falcon US Real Estate Fund is being offered only outside the United States and U.S. persons are not permitted to subscribe for units in this Fund.

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Agribusiness Fund to be Offered by a Falcon/Knightsbridge Partners Joint Venture

Falcon Real Estate of New York and Knightsbridge Partners of Buenos Aires, Argentina, are jointly offering the Falcon/Knightsbridge Agribusiness Fund. This Fund will be part of the Falcon Family of Funds that has been established in Luxembourg as a Specialized Investment Fund (S.I.F.). The Fund will invest in agricultural land in Argentina, Brazil and Uruguay, seeking to benefit from attractive yields and consistent appreciation in the value of such land over time. Assets will include land in core agricultural areas, non-traditional agriculture, such as olive plantations, land conversion opportunities and land used for bio-energy.
At the present time, global macro-economic trends favor investment in agricultural land and related businesses. The population of the world is growing and, despite the current recession, living standards are rising globally. The dramatic growth that has occurred in emerging and developing countries has led to improving diets for millions of people, raising the demand for a wide variety of agricultural products. This increasing demand for food places pressure on non-urbanized land that is used for cultivation. At the same time that the demand for food is increasing, the ethanol and bio-diesel industries have surged due to the worldwide demand for renewable energy. This has put even more pressure on agricultural land.

Agriculture is a very important component of the gross domestic product in each of Argentina, Brazil and Uruguay. Brazil and Argentina alone accounted for over $73 billion in agribusiness commodity exports in 2007. These countries are world leaders in the export of both corn and soybeans. The Fund’s investment strategy for Argentina involves securing prime producing agricultural land, together with a key focus on investment in alternative agricultural products. In Brazil, the Fund plans to secure clusters of small operations that have the potential to be united into more efficient large operations. With investments planned in 2009 and 2010, management will take advantage of the very great price declines for farm land that have resulted at least partly from the fall in value of the Brazilian currency. The investment strategy for Uruguay involves securing agricultural land and converting land currently used for grazing into higher margined cropland. Uruguay has also been benefiting in recent years from the influx of Argentinean technology and biotechnology, a trend that is expected to continue.

The Agribusiness Fund is targeting a subscription amount of $250 million, and it will have a projected life of five years. The Fund will be managed by Knightsbridge Partners of Buenos Aires, under the overall supervision of Falcon Real Estate Luxembourg S. á. r. l. The partners of Knightsbridge have extensive experience in farm operations and development since their families are large owners of agricultural land, and have been pioneers investing in South America in corn, soybeans, wheat, sugar cane and livestock. It is anticipated that the Agribusiness Fund will make income distributions that will average 4% to 6% annually, and the combination of income and capital appreciation will result in an Internal Rate of Return of 14% to 16% per annum to the investors.

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Announcements
June 2009