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                                                                    EXHIBIT 10.3


                                 PROMISSORY NOTE
                     GRAN PARK AT BEACON STATION PHASE 1 (B)
                                  DEFINED TERMS

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EXECUTION DATE:   JUNE 28, 2001                              CITY AND STATE OF SIGNING:   JACKSONVILLE, FLORIDA

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                                                             INTEREST RATE:    7.24% PER ANNUM
LOAN AMOUNT:          $42,700,000.00

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BORROWER:                          FLAGLER DEVELOPMENT COMPANY, A FLORIDA CORPORATION
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BORROWER'S ADDRESS:        10151 DEERWOOD PARK BOULEVARD, BUILDING 100, SUITE 330, JACKSONVILLE, FLORIDA  32256
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HOLDER: METROPOLITAN LIFE INSURANCE COMPANY, A NEW YORK CORPORATION
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HOLDER'S ADDRESS:  METROPOLITAN LIFE INSURANCE COMPANY
                   200 PARK AVENUE  12TH FLOOR
                   NEW YORK, NEW YORK 10166
                   ATTENTION:  SENIOR VICE-PRESIDENT,

                           AND

                   METROPOLITAN LIFE INSURANCE COMPANY
                   2400 LAKEVIEW PARKWAY, SUITE 400
                   ALPHARETTA, GA 30004
                   ATTENTION:  MORTGAGE PORTFOLIO SERVICES
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MATURITY DATE:    JULY 1, 2011                               ADVANCE DATE: THE DATE FUNDS ARE DISBURSED TO BORROWER.

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INTEREST ONLY PERIOD: THE PERIOD FROM THE ADVANCE DATE AND   PRINCIPAL AND INTEREST INSTALLMENT DATE: THE FIRST DAY
ENDING ON THE LAST DAY OF THE MONTH IN WHICH THE ADVANCE     OF THE SECOND CALENDAR MONTH FOLLOWING THE ADVANCE DATE.
DATE OCCURS.
------------------------------------------------------------ ----------------------------------------------------------

MONTHLY INSTALLMENT: EQUAL MONTHLY INSTALLMENTS OF           PREPAYMENT: PREPAYMENT OF THE LOAN IS PERMITTED ONLY
PRINCIPAL AND INTEREST AT THE INTEREST RATE EACH IN THE      UPON THE TERMS AND CONDITIONS SET FORTH IN PARAGRAPHS 8
AMOUNT OF                                                    AND 9 HEREOF.
$ 290,999.71.

THE MONTHLY INSTALLMENT IS BASED UPON AN AMORTIZATION
PERIOD OF 30 YEARS.
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LIABLE PARTIES:   FLAGLER DEVELOPMENT COMPANY

ADDRESSES OF LIABLE PARTIES:  10151 DEERWOOD PARK BOULEVARD, BUILDING 100, SUITE 330, JACKSONVILLE, FLORIDA  32256
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LATE CHARGE: AN AMOUNT EQUAL TO FOUR PERCENT (4%) OF ANY AMOUNT NOT RECEIVED WITHIN SEVEN (7) DAYS OF THE DATE WHEN
DUE.

DEFAULT RATE: AN ANNUAL RATE EQUAL TO THE INTEREST RATE PLUS FOUR HUNDRED (400) BASIS POINTS.
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NOTE: THIS PROMISSORY NOTE. MORTGAGE: MORTGAGE, SECURITY AGREEMENT, AND FIXTURE FILING DATED AS OF THE EXECUTION DATE
GRANTED BY BORROWER TO HOLDER IN CONNECTION WITH THIS NOTE. LOAN DOCUMENTS: THIS NOTE, THE MORTGAGE AND ANY OTHER
DOCUMENTS RELATED TO THIS NOTE AND/OR THE MORTGAGE INCLUDING WITHOUT LIMITATION THAT CERTAIN MORTGAGE LOAN APPLICATION
FROM THE BORROWER TO THE HOLDER, ACCEPTED BY THE HOLDER ON JUNE 4, 2001 (THE "APPLICATION") AND ALL RENEWALS,
AMENDMENTS, MODIFICATIONS, RESTATEMENTS AND EXTENSIONS OF THESE DOCUMENTS. INDEMNITY AGREEMENT: UNSECURED INDEMNITY
AGREEMENT DATED AS OF THE EXECUTION DATE AND EXECUTED BY BORROWER AND LIABLE PARTIES IN FAVOR OF HOLDER IN CONNECTION
WITH THIS NOTE. THE INDEMNITY AGREEMENT IS NOT A LOAN DOCUMENTS AND SHALL SURVIVE REPAYMENT OF THE LOAN OR OTHER
TERMINATION OF THE LOAN DOCUMENTS.
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AFFILIATE: FLORIDA EAST COAST INDUSTRIES, INC., A FLORIDA CORPORATION ("FECI") OR ANY ENTITY IN WHICH FECI OR FLAGLER
DEVELOPMENT COMPANY, A FLORIDA CORPORATION OWNS, DIRECTLY OR INDIRECTLY, AT LEAST FIFTY-ONE PERCENT (51%) OF THE EQUITY
INTEREST AND RETAINS MANAGEMENT CONTROL.
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APPROVAL: UNLESS A DIFFERENT STANDARD IS SPECIFICALLY SET FORTH HEREIN, WHENEVER REFERENCE IS MADE IN THE NOTE TO
HOLDER'S "APPROVAL" BY HOLDER, SUCH TERM MEANS ACCEPTED OR APPROVED IN WRITING BY AN OFFICER OF HOLDER USING A STANDARD
OF COMMERCIAL REASONABLENESS IN GOOD FAITH.
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                  FOR VALUE RECEIVED, Borrower promises to pay to the order of
Holder, at Holder's Address or such other place as Holder may from time to time
designate, the Loan Amount with interest payable in the manner described below,
in money of the United States of America that at the time of payment shall be
legal tender for payment of all obligations.

                  Capitalized terms which are not defined in this Note shall
have the meanings set forth in the Mortgage.

         1. Payment of Principal and Interest. Principal and interest under this
Note shall be payable as follows:

                  (a) Interest on the funded portion of the Loan Amount shall
accrue from the Advance Date at the Interest Rate and shall be paid on the first
day of the first calendar month following the Advance Date;

                  (b) Commencing on the Principal and Interest Installment Date
and on the first day of each calendar month thereafter, to and including the
first day of the calendar month immediately preceding the Maturity Date,
Borrower shall pay the Monthly Installment; and

                  (c) On the Maturity Date, a final payment in the aggregate
amount of the unpaid principal sum evidenced by this Note, all accrued and
unpaid interest, and all other sums evidenced by this Note or secured by the
Mortgage and/or any other Loan Documents as well as any future advances under
the Mortgage that may be made to or on behalf of Borrower by Holder following
the Advance Date (collectively, the "SECURED INDEBTEDNESS"), shall become
immediately payable in full.

         Borrower acknowledges and agrees that a substantial portion of the
original Loan Amount shall be outstanding and due on the Maturity Date.

         Interest shall be calculated on the basis of a thirty (30) day month
and a three hundred sixty (360) day year, except that (i) if the Advance Date
occurs on a date other than the first day of a calendar month, interest payable
for the period commencing on the Advance Date and ending on the last day of the
month in which the Advance Date occurs shall be calculated on the basis of the
actual number of days elapsed over a 365 day or 366 day year, as applicable, and
(ii) if the Maturity Date occurs on a date other than the last day of the month,
interest payable for the period commencing on the first day of the month in
which the Maturity Date occurs and ending on the Maturity Date shall be
calculated on the basis of the actual number of days elapsed over a 365 day or
366 day year, as applicable.

         2. Application of Payments. At the election of Holder, and to the
extent permitted by law, all payments shall be applied in the order selected by
Holder to any expenses, prepayment fees, late charges, escrow deposits and other
sums due and payable under the Loan Documents, and to unpaid interest at the
Interest Rate or at the Default Rate, as applicable. The balance of any payments
shall be applied to reduce the then unpaid Loan Amount.

         3. Security. The covenants of the Mortgage are incorporated by
reference into this Note. This Note shall evidence, and the Mortgage shall
secure, the Secured Indebtedness.

         4. Late Charge. If any payment of interest, any payment of a Monthly
Installment or any payment of a required escrow deposit is not paid within 7
days of the due date, Holder shall have the option to charge Borrower the Late
Charge. The Late Charge is for the purpose of defraying the expenses incurred in
connection with handling and processing delinquent payments and is payable in
addition to any other remedy Holder may have. Unpaid Late Charges shall become
part of the Secured Indebtedness and shall be added to any subsequent payments
due under the Loan Documents.

         5. Acceleration Upon Default. At the option of Holder, if Borrower
fails to pay any sum specified in this Note within 7 days of the due date, or if
an Event of Default occurs (subject to any applicable notice and opportunity to
cure as provided in the Mortgage), the Secured Indebtedness, and all other sums
evidenced and/or



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secured by the Loan Documents, including without limitation any applicable
prepayment fees (collectively, the "Accelerated Loan Amount") shall become
immediately due and payable.

         6. Interest Upon Default. The Accelerated Loan Amount shall bear
interest at the Default Rate which shall never exceed the maximum rate of
interest permitted to be contracted for under the laws of the State of Florida,
as limited pursuant to paragraph 7 below. The Default Rate shall commence upon
the occurrence of an Event of Default and shall continue until all defaults are
cured.

         7. Limitation on Interest. The agreements made by Borrower with respect
to this Note and the other Loan Documents are expressly limited so that in no
event shall the amount of interest received, charged or contracted for by Holder
exceed the highest lawful amount of interest permissible under the laws
applicable to the Loan. If at any time performance of any provision of this Note
or the other Loan Documents results in the highest lawful rate of interest
permissible under applicable laws being exceeded, then the amount of interest
received, charged or contracted for by Holder shall automatically and without
further action by any party be deemed to have been reduced to the highest lawful
amount of interest then permissible under applicable laws. If Holder shall ever
receive, charge or contract for, as interest, an amount which is unlawful, at
Holder's election, the amount of unlawful interest shall be refunded to Borrower
(if actually paid) or applied to reduce the then unpaid Loan Amount. To the
fullest extent permitted by applicable laws, any amounts contracted for, charged
or received under the Loan Documents included for the purpose of determining
whether the Interest Rate would exceed the highest lawful rate shall be
calculated by allocating and spreading such interest to and over the full stated
term of this Note.

         8. Prepayment. Borrower shall not have the right to prepay all or any
portion of the Loan Amount at any time during the term of this Note except upon
payment of any Prepayment Fee required under paragraph 9 hereof, and except as
follows:

                  (a) During the ninety (90) day period immediately preceding
the Maturity Date, the Borrower may prepay the Secured Indebtedness in full, but
not in part, without payment of a Prepayment Fee, upon thirty (30) days prior
written notice to the Holder.

                  (b) Upon a Transfer of the Property encumbered by the Mortgage
(in whole, but not in part) to an approved third party purchaser who assumes the
Loan, in the manner contemplated in Section 10.01 of the Mortgage, at any time
during the term of this Note, but upon forty-five (45) days prior written notice
to the Holder, the Borrower may prepay a portion of the outstanding principal
balance of the Loan Amount an amount which reduces the ratio of the remaining
principal balance of the Loan Amount to the purchase price for such property
(expressed as a percentage) as low as fifty percent (50%). A Prepayment Fee will
be due in connection with such prepayment.

                  (c) Commencing on the first day of the 61st month following
the Advance Date, the Borrower may prepay the Secured Indebtedness, in full but
not in part, subject to payment of the required Prepayment Fee, upon sixty (60)
days prior written notice to the Holder.

If Borrower provides notice of its intention to prepay, the Loan Amount to be
prepaid shall become due and payable on the date specified in the prepayment
notice; provided, however, that in connection with paragraph 8(b) above, the
Loan Amount to be prepaid shall become due and payable on the date of the
closing of the Transfer and Borrower, in the prepayment notice, shall provide
Holder with a good faith, non-binding estimate of such closing date. Any tender
of payment by Borrower or any other person or entity of the Secured
Indebtedness, other than as expressly provided in this Section 8 shall be a
prohibited prepayment.

         9. Prepayment Fee. If a prepayment of all or any part of the Secured
Indebtedness is made (i) pursuant to paragraph 8(b) or 8(c) above; or (ii)
following an Event of Default and an acceleration of the Maturity Date; or (iii)
by reason of the application of money to the principal of the Loan after a
casualty or condemnation; or (iv) in connection with a purchase of the Property
or a repayment of the Secured Indebtedness at any time before, during or after,
a judicial or non-judicial foreclosure or sale of the Property, then, and in any
such event, to compensate Holder for the loss of the investment, Borrower shall
pay an amount equal to a Prepayment Fee calculated as follows:



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                  (a) If a prepayment of the Note is made at any time during the
term of this Note (i) following an acceleration of the Maturity Date, (ii)
pursuant to the application of proceeds to the Loan Amount after a casualty or
condemnation, (iii) in connection with a purchase of the Property at a
foreclosure sale or (iv) pursuant to an Additional Permitted Transfer (as
defined in Section 10.01(d) of the Mortgage), then Borrower shall pay a
Prepayment Fee equal to the greater of:

                           (1) (x) the present value of all remaining payments
                  of principal and interest including the outstanding principal
                  due on the Maturity Date, discounted at the rate which, when
                  compounded monthly, is equivalent to the Treasury Rate,
                  compounded semi-annually, less (y) the amount of the principal
                  being prepaid; or

                           (2) one percent (1%) of the amount of the Loan being
                  prepaid; provided, however, that in the event of a casualty or
                  condemnation, as long as Borrower makes a good faith effort to
                  obtain an amount equal to the Prepayment Fee due as a result
                  of the casualty or condemnation as part of its damages from
                  the condemning authority, insurer or party causing the
                  casualty, as applicable, the Prepayment Fee due as a result of
                  the casualty or condemnation shall be waived in the event that
                  such amount is not collected by Borrower.

                  (b) If a prepayment of the Note is made after the 60th month
and before or during the 96th month of the Loan, or if a partial prepayment of
the Note is made at any time before or during the 96th month of the Loan in
connection with a third party Transfer, as contemplated in Section 10.01 of the
Mortgage, that requires Borrower to achieve a reduced loan-to-purchase price
ratio as low as 50%, then Borrower shall pay a Prepayment Fee equal to the
greater of:

                           (1) (x) the present value of all remaining payments
                  of principal and interest including the outstanding principal
                  due on the Maturity Date, discounted at the rate which, when
                  compounded monthly, is equivalent to the Treasury Rate plus 25
                  basis points, compounded semi-annually, less (y) the amount of
                  the principal being prepaid; or

                           (2) one percent (1%) of the amount of the Loan being
                  prepaid.

                  (c) If a prepayment of the Note is made after the 96th month
and before or during the 118th month of the Loan, then Borrower shall pay a
Prepayment Fee equal to the greater of:

                           (1) (x) the present value of all remaining payments
                  of principal and interest including the outstanding principal
                  due on the Maturity Date, discounted at the rate which, when
                  compounded monthly, is equivalent to the Treasury Rate,
                  compounded semi-annually, less (y) the amount of the principal
                  being prepaid; or

                           (2) one percent (1%) of the amount of the Loan being
                  prepaid.

                  (d) If a prepayment of the Note is made after the 118th month
of the Loan, no Prepayment Fee shall be due.

For purposes of the foregoing, the "TREASURY RATE" shall be the annualized yield
on securities issued by the United States Treasury having a maturity equal to
the remaining stated term of the Note, as quoted in the Federal Reserve
Statistical Release [H. 15 (519)] under the heading "U.S. Government Securities
- Treasury Constant Maturities" for the date on which prepayment is being made.
If this rate is not available as of the date of prepayment, then the Treasury
Rate shall be determined by interpolating between the yield on securities of the
next longer and next shorter maturity. If the Treasury Rate is no longer
published, then Holder and Borrower shall cooperate in good faith to establish a
commercially reasonable comparable rate. Holder will, upon request, provide an
estimate of the amount of the Prepayment Fee two weeks before the date of the
scheduled prepayment.

         10. Waiver of Right to Prepay Note Without Prepayment Fee. Borrower
acknowledges that Holder has relied upon the anticipated investment return under
this Note in entering into transactions with, and in making commitments to,
third parties and that the tender of any prohibited prepayment, shall, to the
extent permitted by law,



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include the applicable Prepayment Fee. Borrower agrees that the applicable
Prepayment Fee represents the reasonable estimate of Holder and Borrower of a
fair average compensation for the loss that may be sustained by Holder as a
result of a prohibited prepayment of this Note and it shall be paid without
prejudice to the right of Holder to collect any other amounts provided to be
paid under the Loan Documents.

EXCEPT AS OTHERWISE SET FORTH HEREIN, BORROWER EXPRESSLY (A) WAIVES ANY RIGHTS
IT MAY HAVE UNDER FLORIDA LAW TO PREPAY THIS NOTE, IN WHOLE OR IN PART, WITHOUT
FEE OR PENALTY, UPON ACCELERATION OF THE MATURITY DATE OF THIS NOTE, AND (B)
AGREES THAT IF, FOR ANY REASON, A PREPAYMENT OF THIS NOTE IS MADE, UPON OR
FOLLOWING ANY ACCELERATION OF THE MATURITY DATE OF THIS NOTE BY HOLDER ON
ACCOUNT OF ANY DEFAULT BY BORROWER UNDER ANY LOAN DOCUMENT, INCLUDING BUT NOT
LIMITED TO ANY TRANSFER, FURTHER ENCUMBRANCE OR DISPOSITION WHICH IS PROHIBITED
OR RESTRICTED BY THE MORTGAGE, THEN BORROWER SHALL BE OBLIGATED TO PAY
CONCURRENTLY THE PREPAYMENT FEE SPECIFIED IN SECTION 9. BY EXECUTING THIS NOTE,
BORROWER AGREES THAT HOLDER'S AGREEMENT TO MAKE THE LOAN AT THE INTEREST RATE
AND FOR THE TERM SET FORTH IN THIS NOTE CONSTITUTES ADEQUATE CONSIDERATION FOR
THIS WAIVER AND AGREEMENT.

         11. Liability of Borrower. Upon the occurrence of an Event of Default,
except as provided in this Section 11, Holder will look solely to the Property
and the security under the Loan Documents for the repayment of the Loan and will
not enforce a deficiency judgment against Borrower. However, nothing contained
in this section shall limit the rights of Holder to proceed against Borrower
and/or the Liable Parties, if any, (i) to enforce any Leases entered into by
Borrower or its Affiliates as tenant, guarantees, or other agreements entered
into by Borrower in a capacity other than as borrower or any policies of
insurance; (ii) to recover damages for fraud, material misrepresentation,
material breach of warranty or intentional waste; (iii) to recover any
Condemnation Proceeds or Insurance Proceeds or other similar funds which have
been misapplied by Borrower or which, under the terms of the Loan Documents,
should have been paid to Holder; (iv) following an Event of Default, to recover
any tenant security deposits, tenant letters of credit or other deposits or fees
paid to Borrower that are part of the collateral for the Loan or prepaid rents
for a period of more than 30 days which have not been delivered to Holder; (v)
to recover Rents and Profits received by Borrower after the first day of the
month in which an Event of Default, as defined in the Mortgage, occurs and prior
to the date Holder acquires title to the Property which have not been applied to
the Loan or in accordance with the Loan Documents to operating and maintenance
expenses of the Property; (vi) to recover damages, costs and expenses arising
from, or in connection with Article VI of the Mortgage pertaining to hazardous
materials or the Indemnity Agreement; (vii) to recover all amounts due and
payable pursuant to Sections 11.06 and 11.07 of the Mortgage, pertaining to out
of pocket expenses incurred by the Holder; and/or (viii) to recover actual
damages arising from Borrower's failure to comply with Section 8.01 of the
Mortgage pertaining to ERISA. In addition, to the extent that the Holder does
not require deposits for the payment of taxes and insurance premiums, the Holder
may proceed against the Borrower to recover the amount of all sums which were
required to be paid by the Borrower for such purposes but which Borrower has
failed to pay.

         12. Waiver by Borrower. Borrower and others who may become liable for
the payment of all or any part of this Note, and each of them, waive presentment
for payment, protest, notice of dishonor and notice of protest, and, except as
may otherwise be provided herein or in the other Loan Documents, diligence,
demand, notice of nonpayment, notice of intent to accelerate and notice of
acceleration and specifically consent to and waive notice of any amendments,
modifications, renewals or extensions of this Note, including the granting of
extension of time for payment, whether made to or in favor of Borrower or any
other person or persons.

         13. Exercise of Rights. No single or partial exercise by Holder, or
delay or omission in the exercise by Holder, of any right or remedy under the
Loan Documents shall waive or limit the exercise of any such right or remedy.
Holder shall at all times have the right to proceed against any portion of or
interest in the Property in the manner that Holder may deem appropriate, without
waiving any other rights or remedies. The release of any party under this Note
shall not operate to release any other party which is liable under this Note
and/or under the other Loan Documents or under the Indemnity Agreement.

         14. Fees and Expenses. If Borrower defaults under this Note, Borrower
shall be personally liable for and shall pay to Holder, in addition to the sums
stated above, those costs and expenses of enforcement and



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collection, including a reasonable sum as an attorney's fee, which are
identified in Section 11.06 and 11.07 of the Mortgage. This obligation is not
limited by Section 11.

         15. No Amendments. This Note may not be modified or amended except in a
writing executed by Borrower and Holder. No waivers shall be effective unless
they are set forth in a writing signed by the party which is waiving a right.
This Note and the other Loan Documents are the final expression of the lending
relationship between Borrower and Holder.

         16. Governing Law. This Note is to be construed and enforced in
accordance with the laws of the State of Florida.

         17. Construction. The words "Borrower" and "Holder" shall be deemed to
include their respective heirs, representatives, successors and assigns, and
shall denote the singular and/or plural, and the masculine and/or feminine, and
natural and/or artificial persons, as appropriate. The provisions of this Note
shall remain in full force and effect notwithstanding any changes in the
shareholders, partners or members of Borrower. If more than one party is
Borrower, the obligations of each party shall be joint and several. The captions
in this Note are inserted only for convenience of reference and do not expand,
limit or define the scope or intent of any section of this Note. TO THE EXTENT
THAT ANY PROVISION OF THIS NOTE CONTRADICTS OR CONFLICTS WITH ANY PROVISION OF
THE APPLICATION, THE APPLICABLE PROVISIONS OF THIS NOTE WILL GOVERN AND BE
CONTROLLING.

         18. Notices. All notices, demands, requests and consents permitted or
required under this Note shall be given in the manner prescribed in the
Mortgage.

         19. Time of the Essence. Time shall be of the essence with respect to
all of Borrower's obligations under this Note.

         20. Severability. If any provision of this Note should be held
unenforceable or void, then that provision shall be deemed separable from the
remaining provisions and shall not affect the validity of this Note, except that
if that provision relates to the payment of any monetary sum, then Holder may,
at its option, declare the Secured Indebtedness (together with the applicable
Prepayment Fee) immediately due and payable.

         21. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER AND HOLDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THEIR
RESPECTIVE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING AND/OR HEARING ON
ANY MATTER WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THIS NOTE,
THE MORTGAGE OR ANY OF THE LOAN DOCUMENTS, OR THE ENFORCEMENT OF ANY REMEDY
UNDER ANY LAW, STATUTE, OR REGULATION. NEITHER PARTY WILL SEEK TO CONSOLIDATE
ANY SUCH ACTION IN WHICH A JURY HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH
A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED. EACH PARTY HAS RECEIVED THE ADVICE
OF COUNSEL WITH RESPECT TO THIS WAIVER.

         IN WITNESS WHEREOF, Borrower has executed this Note as of the Execution
Date.

                                                 FLAGLER DEVELOPMENT COMPANY,
                                                 a Florida corporation


                                                 By: /s/ G. John Carey
                                                     ------------------------
                                                 Name:   G. John Carey
                                                 Title:  President

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Documentary Stamp Tax in the amount of $149,450.00 has been paid on this Note,
and receipt for payment thereof is reflected on the Mortgage securing this Note.
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