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Cox Communications Building

Single-Property Fund #5

The Cox Communications Building is situated in Herndon, Virginia, immediately adjacent to Dulles International Airport. The purchase closed in June 2002 at a total acquisition price of $21.1 million. John Hancock Insurance Company provided a first mortgage loan of $14.1 million and the remaining $7 million was supplied by a number of U.S. and overseas investors. Cox Communications entered into a fifteen-year lease, with a 14% increase at the beginning of the sixth year.

Approximately $5 million was raised from foreign investors, primarily in the form of a portfolio loan, while U.S. investors provided $2 million of equity for the deal. Both the overseas and U.S. investors earned an income return of 10.2% annually, with the portfolio loan having a preferred position in the capital structure. The equity investors participated in the capital gain that was realized at the time of sale. The property was sold in August 2007 at a price of $29.7 million, and the equity investors earned an annual IRR of 21.2% during the five-year holding period.

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Cox Communications