(1) Includes depreciation and amortization related to assets “held for sale” reflected as discontinued operations (for the periods prior to when such assets  were designated as “held for sale”).  (2) During the second quarter of 2004, we elected to redeem the 9.50% Series A cumulative redeemable preferred stock (“Series A preferred stock”). Accordingly, in compliance with Emerging Issues Task Force Topic D-42, we recorded a charge of $1,876,000, or $0.10 per common share (diluted) in the second quarter of 2004 for costs related to the redemption of the Series A preferred stock. (3) Gain/loss on sales of property relates to the disposition of a property in the Suburban Washington D.C. market during the first quarter of 2004, the disposition of a property in the Suburban Washington D.C. market during the fourth quarter of 2003, the disposition of a property in the Eastern Massachusetts market during the third quarter of 2003, and the disposition of a property in the San Francisco Bay market during the first quarter of 2003. Gain/loss on sales of property is included in the income statement in income from discontinued operations, net. (4) GAAP basis accounting for real estate assets utilizes historical cost accounting and assumes real estate values diminish over time. In an effort to over- come the miscorrelation between real estate values and historical cost accounting for real estate assets, the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) established the measurement tool of Funds From Operations (“FFO”). Since its introduction, FFO has become a widely used non-GAAP financial measure by REITs. We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT. We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper (the “White Paper”) and related implementation guidance, which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs. In 2003, NAREIT issued guidance, which modifies the calculation of FFO for both past and future periods. In accordance with NAREIT’s revised guidance, we now include losses from early extinguishment of debt and real estate impairment charges in our calculation of FFO. As such, the reported amounts of FFO for the year ended December 31, 2002 have been modified from those previ- ously reported. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. While FFO is a relevant and widely used measure of operating performance for REITs, it should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. We believe that net income is the most directly com- parable GAAP financial measure to FFO. For a more detailed discussion of FFO, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Funds from Operations”. Year Ended December 31, (Dollars in thousands) 2004 2003 2002 2001 2000 BALANCE SHEET DATA (AT YEAR END): Rental properties, net $ 1,427,853 $ 982,297 $ 976,422 $ 796,626 $ 679,653 Total assets  $ 1,872,284 $ 1,272,577 $ 1,159,243 $ 962,146 $ 780,984 Secured notes payable, unsecured line  of credit and unsecured term loan  $ 1,186,946 $ 709,007 $ 614,878 $ 573,161 $ 431,256 Total liabilities $ 1,251,811 $ 765,442 $ 673,390 $ 629,508 $ 461,832 Stockholders’ equity $ 620,473 $ 507,135 $ 485,853 $ 332,638 $ 319,152 RECONCILIATION OF NET INCOME  TO FUNDS FROM OPERATIONS: Net income $ 60,195 $ 59,643 $ 40,032 $ 30,277 $ 26,009 Add: Depreciation and amortization  (1) 42,523 38,901 34,071 30,578 24,251 Impairment of investments - - 2,545 -  -  Subtract: Dividends on preferred stock (12,595) (8,898) (8,579) (3,666) (3,666) Preferred stock redemption charge  (2) (1,876) -  -  -  -  Gain/loss on sales of property  (3) (1,627) (8,286) -  -  -  Funds from operations  (4) $ 86,620 $ 81,360 $ 68,069 $ 57,189 $ 46,594 OTHER DATA: Cash flows from operating activities  $ 67,752 $  74,847 $  67,050  $  60,340  $  32,931 Cash flows from investing activities  $ (450,688) $ (139,810) $ (227,840) $ (192,179) $ (132,480) Cash flows from financing activities  $ 381,109 $  66,158  $  162,204  $  131,439  $  98,879  Number of properties owned at year end  112 89 89 83 76 Rentable square feet of properties  owned at year end 7,431,380 5,694,466 5,765,558 5,338,481 4,885,391 Occupancy of properties owned at year end  87% 88%  89%  89% 91% Occupancy of properties owned at year end,  excluding properties under redevelopment 95% 94% 96% 99% 98% P 3