St. Augustine is 150 miles north of Downtown Orlando where Flagler owns/operates several commercial real estate properties including the 835,000-sf, 85%-leased GranPark at South Park in Orlando Central Park, south Orlando.

The company's fourth-quarter and year-end financials show FECI lost $1.69 per diluted share versus a profit of $25.8 million or 70 cents per diluted share in 2000.

But Flagler's total realty operating profit was $25.96 million compared to a profit of $20.95 million in 2000.

Flagler's rental and services revenue increased 16% to $63 million from $54 million in 2000. Helping boost the $63 million total was a $1.5 million lease termination fee from an unidentified tenant and an $800,000 development fee from an undisclosed project.

Earnings before interest, taxes, depreciation and amortization also rose 16% to $42 million.

Buildings and land sales brought in $20.2 million versus $17.5 million in 2000. Fourth-quarter sales totaled $4.6 million versus $9 million in the same 2000 period. Flagler will continue to sell off surplus land which currently is listed for sale at asking prices totaling $41 million.

Flagler's operating profit from all real estate sales was $11 million compared to $7.76 million in 2000.

"Our realty business delivered record rental and services revenues, rental operating profit and rental EBITDA, as well as double-digit growth," FECI chairman/president/CEO Robert W. Anestis says in a prepared statement.

He says the realty performance was accomplished "despite a slowing economy and an industry-wide downturn in demand for commercial space." Anestis calls Flagler's results "a testament to the investment we have made in building high-quality properties; developing a diverse, stable group of tenants; and taking inhouse many important management functions that had previously been contracted out."

Flagler's office building occupancy rate from operating properties at year end 2001 was 90% compared with the nationwide rate of 86.5%, as reported by Torto Wheaton Research, Anestis says.

This year, however, FECI's top man feels the real estate division will not be duplicating the 2001 performance. "The company expects the lagging effect of the economic slowdown to constrain Flagler's revenue and profit growth," Anestis says. That means speculative developments will be put on hold until Flagler sees "some recovery in market demand."

Anestis projects Flagler's rental and services revenues are expected to increase 9% to 12% from 2001 to the $66 million-$68 million level. Flagler's EBITDA from operating properties' rents is expected to rise 4% to 9% to the $42 million-$44 million range.

Flagler plans capital investment to range between $60 million and $90 million in 2002, "the amount to depend primarily on the extent of recovery in market demand which the company anticipates will occur in the second half of 2002," Anestis says.

A key strategy move this year for Flagler will be to finance construction of an interchange at Interstate 95 that will provide direct access to the firm's GranPark project in Jacksonville, FL. Flagler "expects land values to increase significantly" at Granpark after the interchange completion, Anestis says.

"This strategy was successful at Flagler's Beacon Station development in Miami after completing an interchange off the Florida Turnpike at the entrance of Beacon Station," the FECI chairman says.

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Flagler Development Posts Robust Financials Despite Parent's Loss

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