Consolidated Statements of Cash Flows in thousands of Canadian dollars For the Years Ended December 31, 2013  2012 OPERATING ACTIVITIES net income $40,932 $54,229 Add (deduct) items not affecting cash Fair value gains [5] (13,070) (37,726) Depreciation and amortization 2,233 2,145 Non‑cash compensation expense 385 579 equity income (1,296) (758) Deferred income taxes 9,350 19,234 Loss on disposition 1,101 1,029 Financing costs [20] 35,231 34,633 interest paid [24] (35,156) (34,883) Net change in non‑cash operating activities [24] (630) 7,545 Cash provided by operating activities $39,080 $46,027 FINANCING ACTIVITIES Increase in deferred financing (3,425) (1,260) Proceeds on issuance of common shares 869 46,486 repayment of subordinated debentures (10,000) ‑ Mortgage financing 190,152 56,291 mortgages repaid on maturity (70,015) (27,237) mortgage principal repayments (30,043) (18,829) Proceeds from construction loans 21,223 14,062 Construction loans repaid on maturity (20,511) ‑ Distributions paid to non‑controlling interest (918) (909) Dividends (28,094) (24,726) Cash provided by financing activities $49,238 $43,878 INVESTING ACTIVITIES Decrease in restricted cash 3,160 (65) Acquisition of non‑controlling interest ‑ (17) Investments in joint ventures 116 (1,112) Net proceeds on sale of investment properties 43,122 34,326 Acquisition and development of investment properties, net of debt assumed (141,154) (86,426) Capital expenditures (22,610) (23,233) Cash used in investing activities $(117,366) $(76,527) Net (decrease) increase in cash (29,048) 13,378 cash, beginning of the year 56,726 43,348 Cash, end of year $27,678 $56,726 See accompanying notes to the consolidated financial statements Killam ProPerties inc | 2013 69