The Greater Washington, D.C. office market is comprised of approximately 5,500 buildings containing approximately 360 million square feet of office space. Of these totals, Class A and B office space accounts for approximately 330 million square feet of office space in over 3,700 individual buildings. Drawing on the region’s attractive demographics, knowledge-based firms in biotechnology, telecommunications, computer, information services, management services, media and data communications have clustered in the Greater Washington, D.C. area. The region’s economy is diversified further by an extensive professional and business services market. The region is one of the country’s primary legal centers and is home to over 5,300 associations and trade groups, the largest such concentration in the United States. With over 170 foreign embassies and headquarters for The World Bank, the International Monetary Fund, the Inter-American Development Bank and the Organization of American States, the region has experienced a significant increase in the number of trade-related and international financial firms that have offices in the area.

As the home of the U.S. Government, the Greater Washington, D.C. area is one of the country’s primary centers for national and international business, law and politics. The federal government’s presence provides stability for the economy through both direct employment and the procurement of goods and services, and generates approximately one-third of the area’s gross regional product, serving as a powerful generator of employment and income and tempering the negative impact of national economic cycles on the region. During the late 1990s, the federal government’s percentage of the area’s gross regional product grew at an annual average rate of approximately 4%. Driven by increased levels of defense and security spending, the federal government’s percentage of the area’s gross regional product grew by 9.8% in 2003 and is projected to grow by 8.5% in 2004. The non-government sectors of the Washington, D.C. market are expected to increase their contribution to the area’s gross regional product over 2003 levels.

The Fair Oaks property, built in 1985, is a four-building, single-story office park totaling 126,949 rentable square feet located approximately seven miles west of the Capital Beltway in Fairfax County, Virginia. The Greenbriar property, built in 1985 and extensively renovated in 1998, is a three-story, 111,721 rentable square foot office building located approximately ten miles west of the Capital Beltway in Fairfax, Virginia.

Meadows IV is a 148,160 square foot office building located in Fairfax County, Virginia approximately three miles south of Dulles International Airport in the Westfields Corporate Center. The three-story building was built in 1988 and significantly renovated in 1997. Sherwood Plaza, built in 1984, is a five-story, 92,840 rentable square foot office building located three and one-half miles west of the Capital Beltway in the city of Fairfax, Virginia. The Atrium property, built in 1978 and extensively renovated in 1999, is a five-story, 138,507 rentable square foot office building located in the city of Alexandria, Virginia.

The King Street property, which was built in 1984 and had its interior common areas renovated in 2004, is a six-story, 149,080 rentable square foot office building located approximately six and one-half miles south of the District of Columbia, in the city of Alexandria, Virginia. Madison Place, built in 1989, is an eight-story, 107,960 rentable square foot office building located approximately five miles south of the District of Columbia in the city of Alexandria, Virginia. Independence Center is a six-story, 275,002 rentable square foot office building located in Fairfax County Virginia, approximately three miles south of Dulles International Airport, in the Westfields Corporate Center.

The 1575 Eye Street property, built in 1979, is a twelve-story, 210,372 rentable square foot office building in the District of Columbia’s Central Business District. Meadows V was built in 1989 and contains 147,743 square feet of space. The property is located on the east side of the Westfields Corporate Center. The property includes additional land for development which would support approximately 100,000 square feet of new office space.

Combined revenues for the real estate entities increased $10.6 million or 51.8%, to $31.0 million for the year ended December 31, 2004, compared to $20.4.million for the year ended December 31, 2003.

Combined operating and other expenses for the real estate entities increased by $4.3 million or 58.7%, to $11.7 million for the year ended December 31, 2004, compared to $7.4 million for the year ended December 31, 2003.

Combined interest expense for the real estate entities increased by 14.0% to $9.6 million for the year ended December 31, 2004, compared to $8.4 million for the year ended December 31, 2003.

Combined depreciation and amortization expense for the real estate entities increased $3.3 million or 68.5%, to $8.1 million for the year ended December 31, 2004, compared to $4.8 million for the year ended December 31, 2003.