On April 15, 2002, the Company issued 12,301,619 common share purchase warrants entitling holders to acquire common shares at $11.80 per share. The warrants are exercisable during a three- month period commencing on June 1 and ending on August 31 in each year until 2008, are subject to certain terms and conditions, and may be exercisable in certain other limited circumstances.  The warrants were issued under a rights offering in which the maximum number of warrants available under the rights offering were subscribed by holders of common shares. The warrants are listed for trading on the Toronto Stock Exchange under the ticker symbol FCR.WT. The warrants represent an additional means of increasing the Company’s capital base over time without incurring significant issue costs. During the year 4,651,784 share purchase warrants were exercised for proceeds of $54.9 million. As at December 31, 2003, there were 5,776,429 share purchase warrants outstanding, which would represent additional equity of $68.2 million if exercised. Funds from operations for 2003 totalled $60.1 million (2002 – $45.2 million). This amount was available to fund payments on the cash component of the equity portion of convertible debentures totalling $8.7 million, mortgage debt principal amortization of $18.7 million and dividends of $26.3 million. The resulting net generation of cash of $6.4 million, together with net mortgage refinancing, interim financing and the Company’s credit facilities, including the US$84 million facility secured against the investment in Equity One, were used to fund the acquisition, expansion and redevelopment of shopping centres, the acquisition and development of land, tenant inducements and advances to the Company’s development partners.  Cash and cash equivalents were $0.1 million at December 31, 2003 (2002 – $0.4 million). The Company also has undrawn credit facilities totalling $73.0 million at December 31, 2003. In addition, the Company had eight unlevered properties with a book value of approximately $21.6 million. Management believes that it has sufficient resources to meet its operational and investing requirements in the near and longer term.  Financing of unlevered projects and refinancing of existing projects in 2004 is expected to generate additional cash. The actual level of future borrowings will be determined based upon the level of liquidity required, the prevailing interest rate and debt market conditions. The Company has maintained a policy of paying regular quarterly dividends to common shareholders since it commenced operations in 1994. Dividends are set taking into consideration the Company’s capital requirements, its alternative sources of capital and common industry cash distribution practices.  In 2003, the Company paid dividends of $1.14 per common share (2002 – $1.09 per common share). These dividends represented a payout ratio of 83% in 2003 compared to 80% in 2002. The Company is currently paying a quarterly dividend of $0.29 per common share. The annual dividend has grown at a compound rate of approximately 5% since the Company commenced operations in March 1994. Dividends Liquidity  Share Purchase Warrants  First Capital Realty Annual Report 2003 31 The Company has maintained a policy of paying regular quarterly dividends to common shareholders since it commenced operations in 1994.