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## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

During 2004, we recorded cost overruns of $1.0 million, compared with $2.0 million for 2003, on fixed fee projects, which represented the estimate of our remaining costs to complete the projects. These cost overruns are first applied against revenues earned on the project during the period and any excess are included in fee and asset management expenses in our consolidated statements of operations. 

## 8. NOTES RECEIVABLE 

We have a mezzanine financing program under which we provided secured financing to owners of real estate properties. We had $44.5 million and $41.4 million in secured notes receivable outstanding as of December 31, 2004 and 2003, respectively. These notes, which mature through 2008, accrue interest at rates ranging from 6% to 16%, which was recognized as earned. 

The following is a summary of our notes receivable under this program excluding notes receivable from affiliates: 

<img src='content_image/43616.jpg'>

We have reviewed the terms and conditions underlying each note and management believes that none of these notes qualify for consolidation. Management believes that these notes are collectable, and no impairment existed at December 31, 2004. 

In December 2003, in connection with a joint venture transaction discussed in Note 6, we provided mezzanine financing to the joint venture, in which we own a 20% interest. As of December 31, 2004 and 2003, the balance of the note receivable totaled $10.4 million and $9.0 million, respectively. This note accrues interest at 14% per year and will mature in 2006. 

In December 2004, two loans totaling $9.3 million were repaid. These loans had rates from 13% to 16%. In connection with these repayments, we recognized $2.0 million in prepayment penalties, which are included in other revenues in our Consolidated Statements of Operations. 

