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Woodinville Town Center

Single Property Fund #1

In February 1996 Falcon recommended to a group of investors that they purchase the Woodinville Shopping Center in suburban Seattle, Washington, as a turn-around situation. The center was purchased from a real estate fund that was in liquidation and therefore money was not available to maintain the center properly or to bring in new tenants. Because of the condition of the center, Falcon was able to buy it at a price of $10.1 million, assuming a $9 million mortgage and investing $1.1 million of cash. The price was equal to $80 per square foot, which was well below replacement cost.

Falcon’s asset management team put into place an overall strategic plan that attracted new tenants to the center. As a result of the improved leasing, by September 1999 Falcon was able to re-finance the center with a new $12.8 million mortgage, repaying the original $9 million mortgage and providing a $3.8 million return on the $1.1 million equity investment. Subsequently, in 2004 the center was sold at a net price of $18.1 million. The existing mortgage was repaid and the equity owners received an additional $5.3 million cash. Therefore, the original $1.1 million investment grew by over 800% in a little over seven years, for an Internal Rate of Return of over 45%. The sale of this center in 2004 completed an extraordinarily successful re-tenanting and re-positioning of this property.

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Woodinville Town Center