MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS ACQUISITIONS, REDEVELOPMENTS  AND RENOVATIONS Broadlands Village 70% leased at December 31, 2004. A total of 25,000 square feet of the recently completed small shop space remains available. Management anticipates that during the coming year the Company may: i) redevelop certain of the Current Portfolio Properties, ii) develop additional freestanding outparcels or expansions within certain of the Shopping Centers, iii) acquire existing neighborhood and community shopping centers and/or office properties, and iv) develop new shopping center or office sites. Acquisition and development of properties are undertaken only after careful analysis and review, and management’s determination that such properties are expected to provide long-term earnings and cash flow growth. During the coming year, any developments, expansions or acquisitions are expected to be funded with bank borrowings from the Company’s credit line, construction financing, proceeds from the operation of the Company’s dividend reinvestment plan or other external capital resources available to the Company. The Company purchased 24 acres of undeveloped land in the Broadlands section of the Dulles Technology Corridor of Loudoun County, Virginia in April 2002. Broadlands is a 1,500 acre planned community consisting of 3,500 residences, approximately half of which are constructed and currently occupied. In October 2003, the Company completed construction  of the first phase of the Broadlands Village shopping center. The 58,000 square foot Safeway supermarket opened in October 2003 with a pad building and many in-line small shops also opening in the fourth quarter of 2003. The 105,000 square foot first phase is 100% leased. Construction of a 30,000 square foot second phase was substantially completed in November 2004. Total development costs of both phases, including the land acquisition, are expected to total approximately $22 million. The second phase was 96% leased at December 31, 2004. This second phase added a spacious landscaped courtyard and fountain to the center, and includes Original Steakhouse and Bonefish Grill, both quality restaurants that recently opened. The Company has been selectively involved in acquisition, redevelopment and renovation activities. It continues to evaluate the acquisition of land parcels for retail and office development and acquisitions of operating properties for opportunities to enhance operating income and cash flow growth. The Company also continues to take advantage of redevelopment, renovation and expansion opportunities within the portfolio, as demonstrated by its recent activities at Olde Forte Village, Broadlands Village, Thruway and  The Glen. The following describes the acquisitions, redevelopments and renovations which affected the Company’s results of operations in 2003 and 2004. During the fourth quarter of 2003, the Company commenced a 15,725 square foot expansion of the Thruway shopping center located in Winston Salem, North Carolina. The new development includes replacing a former 6,100 square foot single-tenant pad building with a new multi-tenant building. Leases have been executed for 100% of the new space, including Ann Taylor Loft, JoS. A Banks Clothiers, Chico’s and Liz Claiborne. This $2.1 million expansion was completed in April 2004 with tenant openings beginning in March 2004. In July 2003, the Company acquired Olde Forte Village, a 161,000 square foot neighborhood shopping center located in Fort Washington, Maryland. The center is anchored by a newly constructed 58,000 square foot Safeway supermarket which opened in March 2003, relocating from a smaller store within the center. The center then contained approximately 50,000 square feet of vacant space, consisting primarily of the former Safeway space, which the Company redeveloped in 2004. This former anchor space and some adjoining space was reconfigured into new small shop space totaling approximately 33,000 square feet. The redeveloped center totals 142,000 square feet. The Company has substantially completed site improvements and small shop construction and renovation. Total redevelopment costs, including the initial property acquisition cost, were approximately $22 million. Olde Forte Village was  In November 2003, the Company acquired 13 acres  of undeveloped land in Frederick, Maryland at the southeast corner of Maryland Route 26 and Monocacy Boulevard. Construction commenced in early December 2003 of a 107,000 square foot shopping center anchored by a 57,000 square foot Giant grocery store. Total development costs, including the land acquisition, are expected to be approximately $22.3 million upon completion of the final leasing. The center was substantially completed and Giant opened for business during October 2004. The property was  84% leased at December 31, 2004. Shops at Monocacy Olde Forte Village Thruway 50