CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2003 2002 2001  OPERATING ACTIVITIES Net income $ 12,849 $ 11,007 $ 7,112  Adjustments to reconcile net income to net cash  provided by operating activities Depreciation and amortization 29,697 28,989 28,572  Amortization of deferred financing costs 1,304 1,209 1,309 Equity in earnings of unconsolidated joint ventures (819) (392) —  Minority interest consolidated joint venture 941 — — Minority interest operating partnership 3,550 3,273 2,042 Loss on extinguishment of debt —  —  338  Compensation under Unit Option Plan 102 — — (Gain) loss on sale of real estate 147 (1,702) —  (Gain) on sale of outparcels of land —  (728) —  Amortization of premium on assumed indebtedness (149) — — Market rent rate adjustment (37) — — Straight-line base rent adjustment 149 248 342 Increase (decrease) due to changes in Other assets (6,194) (2,168) 2,213  Accounts payable and accrued expenses 3,246 (569) 2,698  Net cash provided by operating activites 44,786 39,167 44,626 INVESTING ACTIVITIES Acquisition of rental properties (324,557) (37,500) —  Additions to rental properties (9,342) (5,847) (20,368) Additions to investments in unconsolidated joint ventures (4,270) (130) (4,068) Additions to deferred lease costs (1,576) (1,630) (1,618) Net proceeds from sale of real estate 8,671 21,435 723 Increase (decrease) in escrow from rental property sale 4,008 (4,008) —  Distributions received from unconsolidated joint ventures 1,775 520 — Other (2) 797 2,062 Net cash used in investing activities (325,293) (26,363) (23,269) FINANCING ACTIVITIES Cash dividends paid (25,101) (21,958) (21,085) Distributions to minority interest operating partnership (7,453) (7,424) (7,394) Net proceeds from sale of common shares 87,992 27,960 — Contributions from minority interest partner in consolidated joint venture 217,207 — — Proceeds from issuance of debt 133,631 126,320 279,075 Repayments of debt (136,574) (139,510) (267,723) Additions to deferred financing costs (672) (429) (4,550) Payments for redemption of preferred shares (372) — — Proceeds from exercise of share and unit options 20,613 2,794 201 Net cash provided by (used in) financing activities $ 289,271 $ (12,247) $ (21,476) Net increase (decrease) in cash and cash equivalents 8,764 557 (119) Cash and cash equivalents, beginning of period 1,072 515 634 Cash and cash equivalents, end of period $ 9,836 $ 1,072 $ 515  The accompanying notes are an integral part of these consolidated financial statements. 40 | 2003 ANNUAL REPORT