Notes to the Consolidated Financial Statements  continued 5 Investment in  Equity One, Inc. 6 Loans and Mortgages Receivable 56 First Capital Realty Annual Report 2003 The Company and Equity One are each indirectly controlled subsidiaries of Gazit Globe (1982) Ltd. (“Gazit”), an Israeli corporation trading on the Tel Aviv Stock Exchange.  Equity One, Inc. (“Equity One”) (NYSE: EQY), is a self-administered and self-managed real estate investment trust in the United States. The following table summarizes the activity of the investment in Equity One. (thousands of dollars) 2003 2002 Investment in Equity One, beginning of year $ 208,972 $ 190,774 Equity income 19,095 21,606 Less dividends received (19,033) (18,575) Purchase of Equity One common shares (a) 29,375 13,209 Dilution gain (b) 17,911 3,290 Cumulative currency effect  (44,908) (1,332) Investment in Equity One, end of year (c) $ 211,412 $ 208,972 Weighted average ownership interest in Equity One 20% 33% (thousands of dollars) 2003 2002 Loans receivable from development partners (a) $ 17,885 $ 12,148  Loans and mortgages receivable (b) 1,969 4,690 $ 19,854 $ 16,838 (a) In connection with a private placement and a public offering of Equity One’s common shares and through participation in Equity One’s dividend reinvestment plan, the Company’s U.S. subsidiaries acquired an additional 1,396,169 (2002 – 630,286) common shares of Equity One at an average price of US$14.35 (2002 – US$13.26) per share. (b) Equity One’s number of common shares outstanding increased from 34.2 million to 68.7 million, resulting in a reduction of the Company’s ownership interest in Equity One from 33% at December 31, 2002 to 18% at December 31, 2003. As a result, the Company has recorded a dilution gain of $17.9 million (2002 – $3.3 million) during the year. (c) The closing price on the NYSE of Equity One’s common shares at December 31, 2003 was US$16.88 (December 31, 2001 – US$13.35) per share. The book value per share of the Company’s investment in Equity One at December 31, 2003 is US$13.02 (December 31, 2002 – US$11.90). At December 31, 2003, 68.7 million (December 31, 2002 – 34.2 million) shares of Equity One were outstanding, of which 12.5 million shares (December 31, 2002 – 11.1 million shares) were held by the Company. (a) The Company has funded its partners’ share of certain development activities. The loans bear interest at an average of 10% and are repayable from the partners’ share of proceeds generated from refinancings or sales. The Company has taken assignments of the development partners’ equity interests in the development partnerships as security for the loans receivable. (b) The Company has interests in various loans and mortgages receivable which bear interest at varying rates currently ranging from 8% to 9% per annum, are secured by real estate assets similar in nature to the Company’s shopping centres and mature over varying periods through 2021.