Construction Begins on Major Office Building In Jacksonville

Flagler Development Company ("Flagler"), the wholly owned commercial real estate development subsidiary of Florida East Coast Industries, Inc. (NYSE:FLA) ("FECI"), has begun development of Deerwood North 400, a 113,000 square foot, four-story, Class-A office building located in Jacksonville.

Deerwood North 400 is the final building in Flagler's eight-building Deerwood portfolio, totaling just over 1,000,000 square feet. Flagler is projecting the Deerwood portfolio occupancy percentage at year-end to exceed 93 percent.

"Deerwood has always been a very strong office market for Flagler," said G. John Carey, President of Flagler Development. "With very little available space in Deerwood, this building is needed to accommodate our existing tenant base and potential new tenants. Deerwood North 300, completed in January 2004, and with occupancy expected over 95% by year end, exceeded our leasing expectations, and we expect Deerwood North 400 to have similar success."

Based upon a September 2004 construction start, the building is expected to be completed and available for occupancy by July 2005. Flagler's Ross Carrier and Gary Cox will be responsible for leasing the project.

Deerwood North, formerly Gran Park at Deerwood, is located in Jacksonville, FL in Deerwood Park. The project is situated at the intersection of Southside Boulevard and Touchton Road, north of J. Turner Butler Boulevard. Deerwood North currently consists of three buildings totaling 382,000 square feet. The park won "Best Project Development" at the National Association of Industrial and Office Property (NAIOP) awards in 2002.

Flagler Development Company, headquartered in Jacksonville, FL, owns, develops, leases and manages approximately 6.7 million square feet of Class-A office and industrial space, including 603,000 square feet under construction and in lease up phase. Flagler's space consists of Class-A office and industrial properties, primarily in Jacksonville, Orlando, Ft. Lauderdale and Miami. In addition, Flagler owns 813 acres of entitled land in Florida, which is available for development of up to an additional 13.3 million square feet, and owns approximately 2,470 acres of other Florida properties. For more information, visit the Company's Web site at http://www.flaglerdev.com/.

Florida East Coast Industries, Inc., headquartered in St. Augustine, FL, conducts operations through two wholly owned subsidiaries, Flagler Development Company (Flagler) and Florida East Coast Railway, L.L.C. (FECR). Flagler owns, develops, leases and manages 6.7 million square feet of Class A office and industrial space, including 603,000 square feet under construction and in lease up phase, and owns approximately 813 acres of entitled land and approximately 2,470 acres of additional Florida properties. FECR is a regional freight railroad that operates 351 miles of main line track from Jacksonville to Miami and provides intermodal drayage services at terminals located in Atlanta, Jacksonville and Miami. For more information, visit the Company's Web site at http://www.feci.com/.

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