Company OverviewCompany Overview

Today’s discussion covers four topicsToday’s discussion covers four topics

1) Background

2) Improvements made at RailAmerica to date

3) Things we’re working on

4) Our plans going forward

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Let’s start with some historyLet’s start with some history

Fortress Investment Group acquired –

– RailAmerica, Inc., in February 2007

– Florida East Coast Railway (“FECR”) in July 2007 (as part of the Florida East Coast Industries acquisition)

RailAmerica/FECR is the leading short-line rail portfolio in North America with unique, highly profitable, and irreplaceable assets

– RailAmerica, Inc. –

Publicly traded when acquired

Had been struggling, recording a series of disappointing quarters with operating ratios in the 89-90% range

– FECR –

Part of Florida East Coast Industries

Strong and consistent regional nameplate/performer

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Fortress sees value in railroadsFortress sees value in railroads

Favorable Macro Environment

Significant pricing power

Growing businesses, with continued growth in key commodities – coal, grain, chemicals; coming soon: Honda automobiles

Limited supply: No new North American railroads (high replacement cost)

High fuel prices and increasing highway congestion further strengthen railroads’ competitive position (RR’s are 4x more fuel-efficient than trucks)

Long-Lived, Irreplaceable Assets

Irreplaceable infrastructure

High barriers to entry with cost of constructing new railroads prohibitively expensive ($1-2mm per mile + land)

Valuable Real Estate & Right-of-Way

Revenue-growth opportunities

Substantial additional value potential

Short Lines

Greater free cash flow

Lower cost of operations and capex

Opportunities for improvements

Operational Improvement Potential

Centralize key functions

Control capital spending

Streamline corporate structure

Fortress Investment Thesis

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The company operates a portfolio of 42 individual railroads in 26 states and three Canadian provinces

Sizes range from 13 miles in total length to 604 miles

FECR is one of the 42 railroads and the largest revenue and EBITDA contributor in the RailAmerica family

– 351 miles of mainline trackbetween Miami and Jacksonville

– One of North America’s best-performing regionals

– Further diversifies the portfolio

RailAmerica (minus FECR) owns or leases approximately 7,800 track miles and serves over 2,300 customers

RailAmerica operates in 26 states and CanadaRailAmerica operates in 26 states and Canada

West Region

Southeast Region

FEC Region

Mideast Region

Northeast Region

Central Region

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7.3%

5.7%

5.4%

4.9%4.3% 3.9%

3.1%

8.6% 8.8%

9.1%

18.1%

7.5%

3.5%3.7%

6.1%

The rails serve different customers and carry different commodities

The railroads have diverse sources of revenueThe railroads have diverse sources of revenue

Well Diversified Revenue MixRailAmerica, Inc. 2007 Freight Revenue by Commodity (Total: $654 million)

Intermodal

Aggregates

CoalBridge

Chemicals

Metals

Auto

Farm Products

Food

Paper

Lumber

Ores

Petroleum

Minerals

Other

And revenues have been growingAnd revenues have been growing

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Fortress Acquisition

2/2007

Freight Revenues ($mil)

355 378 406 419 457

235238

2004 2005 2006 2007 2008F

654695

RailAmerica

FECRFECR

Each railroad now contributes to earningsEach railroad now contributes to earnings

No single property accounts for more than 10% of EBITDA

We are not a network

Portfolio diversified by commodity, by customer, by geography, and by property

% of EBITDA for Each Property

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Largest delivers <10%

Note: Excludes FECR.

The combined RailAmerica/FECR has already made significant improvementsThe combined RailAmerica/FECR has already made significant improvements

Revenues up

Expenses down

Revenue per car up

Operating ratio better by nearly 10 points

In 2008, the combined FECR/RailAmerica properties will achieve an 80% operating ratio

Through July 2008 the FRA injury-frequency ratio improved from 2.23 to 1.05

Through July 2008 the FRA train accident ratio improved from 0.63 to 0.60

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We started with several underperforming properties and have whittled the list to threeWe started with several underperforming properties and have whittled the list to three

Operating Ratio Ranges 2006 2007 2008 YTD

+90 percent 8 4 3

Below 70 percent 15 16 21

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Case Study: West Coast PropertyCase Study: West Coast Property

Written-off as unmanageable and too complicated

Operating ratio is now 17 points better

– Added strong field leadership

– Brought clarity of purpose

– Focused on safety and operating rules

– Improved service brought more business and customer growth

– Began billing and collecting for all of our services

– Judiciously applied capital

– Mastered and applied governing contracts

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Case Study: Midwest PropertyCase Study: Midwest Property

Within RailAmerica the property was believed to be a perennial “loser”

Operating ratio has improved by 13 points

– Brought in strong leadership and good, accountable management

– Focused on caring, operating practices, education and training

– Intelligently added capital in modest amounts

– Mastered and applied governing contracts

– Nurtured customers yielding growth thru service

– Controlled costs

– Established pricing excellence and hands-on marketing

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Objective: Make RailAmerica better each dayObjective: Make RailAmerica better each day

What we are working on:

Focus on people, customers, assets, and operational excellence

Create value

Strengthen relationships with Class I’s

Special attention on underperforming assets

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Goal: Become a High-Performance Organization

Our plans going forwardOur plans going forward

Primary focus will be building the value of our $1.1B investment in the railroad industry

Will consider other North American railroad acquisitions if attractive

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Two last advertisementsTwo last advertisements

1) We are an ideal place for industrial development

Tailored service – “We do it your way”

Sites located on short lines give the customers connections to multiple Class I’s.

Short lines have become the driveway to industrial development – nobody stops on the expressways!

Short lines are not capacity-constrained

2) Remember the Section 45G Railroad Track Maintenance Credit

Three-year legislation expired 12/31/07

Goal: improve rail service to 12,000 short line-served employers

Strong bi-partisan support, but extension not yet enacted

Thank you.

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