CAPITAL EXPENDITURES, TENANT IMPROVEMENTS AND LEASING COSTS The following table shows total and weighted average per square foot property related capital expenditures, tenant improvements and leasing costs (all of which are added to the basis of the properties) related to our life science facilities (excluding capital expendi- tures and tenant improvements that are recoverable from tenants, revenue-enhancing or related to properties that have undergone redevelopment) for the years ended December 31, 2003, 2002, 2001, 2000 and 1999, attributable to leases that commenced at our properties after our acquisition. Capital expenditures fluctuate in any given period due to the nature, extent and timing of improvements required and the extent to which they are recoverable from our tenants. Approximately 91% of our leases provide for the recapture of certain capital expendi- tures (such as HVAC systems maintenance and/or replacement, roof replacement and parking lot resurfacing). In addition, we main- tain an active preventative maintenance program at each of our properties to minimize capital expenditures required. Tenant improvements and leasing costs also fluctuate in any given year depending upon factors such as the timing and extent of vacancies, property age, location and characteristics, the type of lease (renewal tenant or retenanted space), the involvement of exter- nal leasing agents and overall competitive market conditions. As of December 31, 2003, approximately 88% of our leases (on a square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses (including increases thereto). In addition, approximately 7% of our leases (on a square footage basis) require the tenants to pay a majority of operating expenses. Approximately 93% of our leases (on a square footage basis) contain effective annual rent escalations that are either fixed (generally ranging from 3% to 3.5%) or indexed based on the consumer price index or another index. Accordingly, we do not believe that our earnings or cash flow from real estate operations are subject to any significant risk of inflation. An increase in inflation, however, could result in an increase in the cost of our variable rate borrowings, including our unsecured line of credit and unsecured term loan. INFLATION 28 Total/Weighted Average 2003 2002 2001 2000 1999 Capital expenditures: Major capital expenditures (1) $ 3,346,000 $ 1,632,000 (2) $ 959,000 $ 616,000 $ 139,000 $ - Recurring capital expenditures $ 4,056,000 $ 853,000 $ 1,472,000 (3) $ 614,000 $ 639,000 $ 478,000 Weighted average square feet in portfolio 24,611,677 5,708,635 5,499,660 5,131,176 4,448,916 3,823,290 Per weighted average square foot in portfolio Major capital expenditures (1) $ 0.14 $ 0.29 (2) $ 0.17 $ 0.12 $ 0.03 $ - Recurring capital expenditures $ 0.16 $ 0.15 $ 0.27 (3) $ 0.12 $ 0.14 $ 0.13 Tenant improvements and leasing costs: Retenanted space (4) Tenant improvements and leasing costs $ 6,104,000 $ 2,890,000 $ 498,000 $ 466,000 $ 796,000 $ 1,454,000 Retenanted square feet 1,050,974 248,488 318,642 151,161 (4) 112,286 (4) 220,397 Per square foot leased of retenanted space $ 5.81 $ 11.63 $ 1.56 $ 3.08 $ 7.09 $ 6.60 Renewal space Tenant improvements and leasing costs $ 1,355,000 $ 105,000 $ 526,000 $ 451,000 $ 124,000 $ 149,000 Renewal square feet 1,286,615 271,236 255,978 432,717 233,017 93,667 Per square foot leased of renewal space $ 1.05 $ 0.39 $ 2.05 $ 1.04 $ 0.53 $ 1.59 (1) Major capital expenditures consist of roof replacements and HVAC systems which are typically identified and considered at the time a property is acquired. Major capital expenditures also include one-time costs related to the implementation of our national branding and signage program. (2) Major capital expenditures for 2003 include $1,072,000 ($0.19 per square foot in portfolio) in one-time costs related to the implementation of our national branding and signage program. (3) Recurring capital expenditures for 2002 include $552,000 ($0.10 per square foot in portfolio) related to a fully leased property in San Diego, California that underwent substantial renovation in 2002. (4) Excludes space that has undergone redevelopment before retenanting.