46 MD&A MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS Preferred Stock Issue CAPITAL STRATEGY  AND FINANCING ACTIVITY Dividend Reinvestments Management believes that the Company’s capital resources, which at December 31, 2004 included cash balances of $33.6 million and borrowing availability of $125 million on its revolving line of credit ($80 million  for general corporate use and $45 million for qualified future acquisitions), will be sufficient to meet its liquidity needs for the foreseeable future. Plan are paid by the Company. The Company issued 497,282 and 552,170 shares under the Plan at a weighted average discounted price of $27.70 and $24.18 per share during the years ended December 31, 2004 and 2003, respectively. Additionally, the Operating Partnership issued 11,557 and 12,440 limited partnership units under a dividend reinvestment plan mirroring the Plan at a weighted average discounted price of $27.70 and $24.18 per unit during the years ended December 31, 2004 and 2003, respectively. On July 16, 2003, the Company filed a shelf registration statement (the “Shelf Registration Statement”) with the SEC relating to the future offering of up to an aggregate of $100 million of preferred stock and depositary shares. On November 5, 2003, the Company sold 3,500,000 depositary shares, each representing 1/100th of a share of 8% Series A Cumulative Redeemable Preferred Stock. The underwriters exercised an over-allotment option, purchasing  an additional 500,000 depositary shares on  November 26, 2003.  As a general policy, the Company intends to maintain a ratio of its total debt to total asset value of 50% or less and to actively manage the Company’s leverage and debt expense on an ongoing basis in order to maintain prudent coverage of fixed charges. Asset value is the aggregate fair market value of the Current Portfolio Properties and any subsequently acquired properties  as reasonably determined by management by reference to the properties’ aggregate cash flow. Given the Company’s current debt level, it is management’s belief that the ratio of the Company’s debt to total asset value was below 50% as of December 31, 2004.  The depositary shares may be redeemed, in whole  or in part, at the $25.00 liquidation preference at the Company’s option on or after November 5, 2008. The depositary shares pay an annual dividend of $2.00 per depositary share, equivalent to 8% of the $25.00 liquidation preference. The first dividend, paid on January 15, 2004 was for less than a full quarter  and covered the period from November 5 through December 31, 2003. The Series A preferred stock  has no stated maturity, is not subject to any sinking fund or mandatory redemption and is not convertible into any other securities of the Company. Investors in the depositary shares generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters (whether or not declared or consecutive) and in certain other events. The organizational documents of the Company do  not limit the absolute amount or percentage of indebtedness that it may incur. The Board of Directors may, from time to time, reevaluate the Company’s  debt capitalization policy in light of current economic conditions, relative costs of capital, market values  of the Company property portfolio, opportunities for acquisition, development or expansion, and such other factors as the Board of Directors then deems relevant. The Board of Directors may modify the Company’s debt capitalization policy based on such a reevaluation without shareholder approval and consequently, may increase or decrease the Company’s debt to total asset ratio above or below 50% or may waive the policy for certain periods of time. The Company selectively continues to refinance or renegotiate the terms of its outstanding debt in order to achieve longer maturities, and obtain generally more favorable loan terms, whenever management determines the financing environment is favorable. In December 1995, the Company established a Dividend Reinvestment and Stock Purchase Plan (the “Plan”) to allow its common stockholders and holders  of limited partnership interests an opportunity to buy additional shares of common stock by reinvesting all  or a portion of their dividends or distributions. The  Plan provides for investing in newly issued shares of common stock at a 3% discount from market price without payment of any brokerage commissions, service charges or other expenses. All expenses of the 