FLORIDA EAST COAST INDUSTRIES, INC.

FLORIDA EAST COAST INDUSTRIES, INC.

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Company Overview
Florida East Coast Industries, Inc (FECI). is an American holding company of the railroad and major land development company Florida East Coast Railway LLC (FECR). The company was founded in December of 1886 when Henry Morrison Flagler, a cofounder of Standard Oil Co bought the Jacksonville, St. Augustine and Halifax River Railroad. Its registered business address is located in Jacksonville, Florida, United States of America.
FECR is a regional freight railroad that operates 351 miles of mainline track from Jacksonville to Miami and provides intermodal drayage services at terminals located in Atlanta, Jacksonville, Ft. Pierce, Ft. Lauderdale and Miami. FECR is one of the best run railroads in North America.
In July 2007, FECI was acquired in a merger transaction by a company formed by certain private equity funds managed by affiliates of Fortress Investment Group LLC. Operations of the company are conducted by Flagler Development Group (Flagler), a commercial real estate operation, and FECR. Flagler owns, develops, leases and holds in joint ventures, approximately 8.8 million square feet of Class-A office and industrial space, as well as an additional 1,851,888 square feet under construction. Flagler space consists of Class-A office and industrial properties, primarily in Jacksonville, Orlando, Ft. Lauderdale and Miami.
Business Summary
Florida East Coast Industries, Inc. (FECI) is a holding company engaged in the railroad and real estate businesses through its wholly owned subsidiaries. The Company’s railroad subsidiary, Florida East Coast Railway, LLC, connects many of the major population centers and port facilities of Florida’s east coast, and provides service for its customers through multiple competitive connections to the rest of North America. FECI, primarily through its real estate subsidiary, Flagler Development Company, is engaged in the acquisition, entitlement, development, management, construction, leasing, operation and selected sale of real estate in Florida, primarily office and industrial property, as well as undeveloped land. On April 27, 2006, the Company acquired Codina Group, Inc. In July 2007, FECI completed the merger transaction, in which the Company has been acquired by Fortress Investment formed by certain private equity funds managed by affiliates of Fortress Investment Group LLC.
Description and history
Florida East Coast Industries, Inc. (FECI), incorporated in 1983, is a holding company engaged in the railroad and real estate businesses through its wholly owned subsidiaries. The Company’s railroad subsidiary, Florida East Coast Railway, LLC (FECR), connects many of the major population centers and port facilities of Florida’s east coast, and provides service for its customers through multiple competitive connections to the rest of North America. FECI, primarily through its real estate subsidiary, Flagler Development Company (Flagler), is engaged in the acquisition, entitlement, development, management, construction, leasing, operation and selected sale of real estate in Florida, primarily office and industrial property, as well as undeveloped land. On April 27, 2006, the Company acquired privately held Codina Group, Inc. (Codina). In July 2007, FECI completed the merger transaction, in which the Company has been acquired by Fortress Investment formed by certain private equity funds managed by affiliates of Fortress Investment Group LLC.

Railway

FECR operates a Class II railroad along 351 miles of mainline track between Jacksonville and Miami, Florida. FECR also owns and operates approximately 268 miles of branch, switching and other secondary track and 167 miles of yard track, all within Florida. FECR has the only coastal right-of-way between Jacksonville and Miami and is the exclusive rail-service provider to the Port of Palm Beach, Port Everglades (Fort Lauderdale) and the Port of Miami. FECR serves approximately 1,000 carload and intermodal customers combined. During the year ended December 31, 2006, the number of customers included approximately 200 drayage customers. FECR’s freight shipments by commodity group are crushed stone, construction materials, vehicles, foodstuffs and kindred products, chemicals and distillants, paper and lumber, and other products.

FECR connects with Norfolk Southern Railway Company (NS) and with CSX Transportation, Inc. (CSXT) at Jacksonville, Florida. During 2006, approximately 33% of FECR’s freight revenues were attributable to traffic that originated on other railroads; approximately 6% was attributable to traffic that originated on FECR but bound for other destinations, and 61% was attributable to traffic that both originated and terminated on FECR’s system (local traffic). Haulage agreements with NS and South Central Florida Express, Inc. (SCFE) generated 6% of FECR’s freight revenue in 2006. With the exception of haulage services provided for SCFE, FECR does not receive traffic from one railroad to be passed over its track to another railroad. FECR handles rail cars for SCFE between Fort Pierce and Jacksonville for interchange with CSXT or NS. SCFE is a short-line railroad operating under a Trackage Rights Agreement over a branch line owned by FECR extending from Fort Pierce to Lake Harbor.

FECR also handles certain types of traffic for NS from Jacksonville to Miami under a Haulage Agreement, whereby FECR receives specified revenues for each unit transported. During the year ended December 31, 2001, FECR began offering a service that is known as the Hurricane Train. This extends FECR’s commercial reach into the Atlanta region. This service is operated pursuant to an agreement with NS allowing up to 60 spaces per day dependent upon space availability.

FECR owns or has an interest in approximately 1,455 acres of ancillary properties, including several rail corridors (872 acres) that have been abandoned. The Company is actively discussing the sale of two of the abandoned corridors, totaling approximately 641 acres to the Florida Department of Environmental Protection. FECR also manages its railroad right-of-way to generate miscellaneous rents and right-of-way lease profits. FECR leases its right-of-way to various tenants for use, including telecommunications companies’ fiber optics systems pursuant to long-term leases. FECR also generates revenues from the grant of licenses and leases to use railroad property and rights-of-way for outdoor advertising, parking lots and lateral crossings of wires and pipes by municipalities, and utility and telecommunications companies.

The Company competes with CSXT.

Real Estate

FECI conducts its real estate operations through its real estate arm, Flagler Development Group. Flagler is engaged in the acquisition, entitlement, development, management, construction, leasing, operation and selected sale of real estate in Florida, primarly office and industrial property, as well as undeveloped land. These operations are primarily conducted within its 100% owned properties, as well as those owned with joint venture partners. Flagler provides real estate services to third party owners and related party joint ventures. These include construction, brokerage, property management and development activities. At December 31, 2006, Flagler held one 207,000 square feet stabilized warehouse in an unconsolidated joint venture that was 100% occupied. In addition, at December 31, 2006, there were three buildings with 485,000 square feet that were in lease-up, which includes one warehouse building, totaling 206,000 square feet held in an unconsolidated joint venture.

At December 31, 2006, Flagler had 3.8 million square feet of properties in various phases of development, consisting of approximately 1.9 million square feet under construction, and approximately 1.9 million square feet in the pre-development phase, located in the Jacksonville, Orlando, Broward and Miami-Dade area markets. This includes 970,000 square feet under construction and 468,000 square feet in pre-development that are held in unconsolidated joint ventures. For those projects in the pre-development phase, Flagler is engaged in engineering, architectural planning and design.

Flagler owns 567 acres of developable land with entitlements for the construction of 10 million square feet of additional office, industrial, residential and commercial space. In addition, Flagler has 286 acres with 6.1 million square feet of development entitlements held in unconsolidated joint ventures. Flagler owns approximately 3,089 acres of unimproved, unentitled land or land with limited entitlements in Florida.

Founded when Henry Morrison Flagler, a cofounder of Standard Oil Co bought the Jacksonville, St. Augustine and Halifax River Railroad

Business Line
An American holding company of the railroad and major land development company Florida East Coast Railway LLC
Subsidiary

Advisor
KPMG LLP
IPO date
1/16/1961
US SIC Code
4011
Company Address
Building 100, Suite 360
10151, Deerwood Park Boulevard
City province or state postal code
32256, JACKSONVILLE, FL
Phone: +1 904 996 2810
Fax:
Country address: UNITED STATES OF AMERICA
Website url: www.feci.com