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Codina Sale To Shake Up Florida's Real Estate Market

Florida East Coast Industries to Acquire Codina Group and Related Property Interests for $270 Million
January 9, 2006
In a move that promises to shake-up South Florida's commercial real estate power structure, Florida East Coast Industries, Inc. (NYSE:FLA) a railroad and real estate conglomerate based in St. Augustine, announced that it plans to acquire privately held Codina Group and several related South Florida properties for approximately $270 million under an agreement the companies signed last Friday.

Under the agreement, a newly formed holding company of Florida East Coast Industries will acquire the Coral Gables-based commercial real estate powerhouse founded by Armando Codina and several related property interests. In separate transactions, subsidiaries of FECI will acquire certain land parcels and a general partnership interest in Beacon City Center.

The $270 million agreement is structured in the following manner:

* $168 million in equity for the company and $36 million of debt to be assumed or repaid at closing. The agreement includes up to $55 million in unspecified performance incentives, up to $30 million contingent upon partnership distributions; and approximately $12 million of restricted stock to be granted to certain Codina Group employees.

* In separate transactions totaling $66 million, Florida East Coast Industries' two main operating subsidiaries will buy the Beacon Commons, a proposed, large-scale mixed-use development controlled by Codina. Flagler Development Company will buy Beacon Commons, a 92- acre project in Doral proposed as the future site of a retail, office and residential development project. Florida East Coast Railway will acquire 40 acres adjacent to Beacon Countyline proposed for an industrial park. Both entities will use tax-deferred sales proceeds to fund the acquisitions.

The agreement also includes several joint venture interests held by Codina Group, including: Beacon Lakes, 21.2% interest in a venture with AMB Properties that owns a 432-acre industrial park, including three industrial buildings and entitlements for an additional 6.2 million square feet in West Dade; Red Road Commons, a proposed 50% interest in a venture with an affiliate of Fairfield Properties, Inc. to build 407-unit residential apartments on land to be leased in South Miami; Beacon City Center, a venture with an affiliate of JPMorgan that holds an exclusive option to acquire and redevelop a 77-acre property in Doral into approximately 2,840 residential units and 72 office condominiums; and Burger King headquarters, a 30% interest in a venture with an affiliate of JPMorgan to acquire land and construct a 15-story, 250,000-square-foot building for Burger King's corporate headquarters

Armando Codina will join the FECI management team as president and CEO of the combined Flagler and Codina Group entities at closing. He will also join the FECI Board of Directors. The transaction is subject to various closing conditions and is expected to be completed in the first quarter of 2006.

The combined Flagler and Codina Group businesses will rank as one of the largest landowners and developers in Florida, controlling 7.8 million square feet of existing office and industrial space plus another 430,000 square feet under construction in the South Florida, Jacksonville, and Orlando markets. Approximately 749 acres with entitlements or zoning in place and another 2,118 acres in the process of obtaining zoning approval.

"The tremendous growth in the population and economy of Florida and the increasing limits on available land will place an ever-growing premium on having capacity for future development, as well as the expertise to manage complex projects involving divergent interests," commented Adolfo Henriques, Chairman, President and CEO of Florida East Coast Industries.

"This combination will bring us land and developments in some of the most attractive markets in the state led by one of the most reputable and innovative real estate professionals. We believe the expertise of Mr. Codina and his team will provide us with the full range of capabilities to realize the extraordinary value in our unique asset base across the state," he added.

Morgan Stanley acted as exclusive financial advisor and Greenberg Traurig and Davis Polk & Wardwell acted as legal advisors to FECI. White & Case acted as legal advisor to Codina and the Codina Group.
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