Management’s Discussion and Analysis  continued 2003 FOURTH QUARTER RESULTS Quarterly Analysis The Company acquired three properties during the fourth quarter of 2003, for $97 million, increasing the size of the portfolio by 514,000 square feet. These properties were financed with $51 million fixed rate mortgage debt at a weighted average rate of 6.27%. In addition, 279,000 square feet of newly developed space came on line during the quarter. Net operating income increased to $27.8 million from $23.4 million in the fourth quarter of the prior year. $4.0 million of the increase was due to 2003 acquisitions, $0.2 million was the incremental impact of acquisitions made in the fourth quarter of the prior year, $1.5 million was due to developments coming on line during the year, $0.3 million was from same property growth. These increases were partially offset by a $1.6 million one-time lease termination income received in the fourth quarter of 2002. The strength of the acquisitions and leasing in the fourth quarter is further reflected in the increase in the occupancy levels of the portfolio from 92.8% at September 30, 2003 to 93.1% at the end of December. In addition to the growth in the portfolio, the Company also increased the number of shares outstanding during the quarter, by issuing 5.9 million new shares. The redemption and conversions of the 8.5% convertible debentures resulted in the issuance of 3.9 million shares; 1.6 million shares were issued as a result of exercise of the share purchase warrants; and 0.4 million shares were issued as a result of satisfying the interest payment on the 7.25% convertible debentures in shares. 32 First Capital Realty Annual Report 2003 ($000s except per share and Other Data) 2003 2002 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Property Rental  Revenue 43,561 38,145 37,002 35,948 36,470 31,388 30,490 27,287 Net Operating Income 27,775 24,084 22,495 21,503 23,353 19,629 18,663 16,672 Net Income 9,394 10,824 8,892 14,916 7,602 7,503 6,381 8,148 Net Income/share 0.13 0.19 0.17 0.49 0.15 0.18 0.13 0.28  Net Income/share diluted 0.13 0.19 0.17 0.38 0.15 0.18 0.13 0.27 Funds from operations 17,654 16,085 13,451 12,863 14,709 11,212 10,496 8,824 Funds from operations/ Share diluted 0.35 0.34 0.35 0.34 0.41 0.33 0.33 0.30 Weighted average shares  outstanding 30,434,449 27,338,724 20,029,131 19,338,504 18,622,255 17,290,154 15,983,188 15,377,024 Weighted average  diluted shares  outstanding 52,348,299 49,901,914 41,760,502 40,336,384 38,503,915 37,406,882 35,841,750 33,035,160 Dividend 0.29 0.29 0.28 0.28 0.28 0.27 0.27 0.27 Total assets 1,538,689 1,420,010 1,312,484 1,251,559 1,195,738 1,156,501 1,096,377 1,027,409 Total mortgages and  credit facilities 786,301 704,651 632,647 657,090 587,083 568,047 537,682 502,806 Shareholders’ equity 664,994 633,048 588,414 510,790 507,756 478,125 447,341 411,535 OTHER DATA Number of properties 82 79 72 70 65 64 62 53 Gross leasable area 10,708,000 9,915,000 9,009,000 8,720,000 8,454,000 8,189,000 7,851,000 6,857,000 Occupancy % 93.1% 92.8% 91.9% 91.9% 91.7% 90.8% 92.6% 93.0%