Management’s Discussion and Analysis  continued Foreign Equity Investments General Uninsured Losses OUTLOOK The Company holds a significant equity investment in Equity One, and may acquire investments in other U.S. REITs or real estate investment vehicles from time to time. The value of the Company’s investments of this nature is subject to the risks inherent in investments in equity securities, including the risk that the financial condition of the issuers of the equity securities held by the Company may become impaired or that the general condition of the stock market may deteriorate. They are also subject to risks associated with real property ownership, which are similar to those described for the Company itself. Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in, and perceptions of, their issuers change. These investor perceptions are based on various and unpredictable factors including expectations regarding government, economic, monetary and fiscal policies, inflation and interest rates, economic expansion or contraction, and global or regional political, economic and banking crises. The Company carries comprehensive general liability, fire, flood, extended coverage and rental loss insurance with policy specifications, limits and deductibles customarily carried for similar properties. There are, however, certain types of risk (generally of a catastrophic nature such as war, terrorist acts or environmental contamination) which may be either uninsurable, in whole or in part, or in the opinion of management, not economically insurable. Should an uninsured or underinsured loss occur, the Company could lose its investment in, and anticipated profit and cash flows from, one or more of its properties, and the Company would continue to be obligated to repay any recourse mortgage indebtedness on such properties. In 2003 First Capital Realty made significant progress in meeting all of its stated goals and objectives. Specifically, the Company grew the business and generated solid increases in funds from operations, while finishing the year with a stronger balance sheet and a larger public float of common shares. In 2003, the Company achieved its objectives of growing the business, increasing funds from operations and the public float of its common shares, resulting in a stronger balance sheet. Key operating performance measures achieved in 2003 are: Key measures of financial condition at December 31 are: • Invested $253 million in the acquisition of income-producing properties comprising 1.7 million square feet of gross leasable area. • Invested $93 million in the acquisition of land, development and redevelopment at the Company’s properties. • Increased the average rental rate per occupied square foot from $11.92 to $12.66 and the portfolio occupancy from 91.7% to 93.1%. • Increased total market capitalization by $0.5 billion to $1.6 billion. • Decreased net debt to total market capitalization (convertible debentures treated as debt) from 81.4% to 66.1%. 42 First Capital Realty Annual Report 2003