Highlights of 2004 Generated record funds from operations and gains of $501 million or $2.93 per share, up from $460 million or $2.78 per share during 2003. Generated record funds from operations excluding straight-line rent, lease termination income and gains of $420 million or $2.41 per share, up from $361 million or $2.15 per share during 2003. Achieved a 20% return on equity, excluding gains. Leased 3.6 million square feet of space during the year versus 900,000 square feet of expiries. Participated in three of the largest office deals in North America: an 800,000 square foot sublease to PricewaterhouseCoopers at 300 Madison Avenue in New York City; a 460,000 square foot lease to Cadwalader, Wickersham & Taft at One World Financial Center in New York City; and a 331,000 square foot lease to the Canadian Imperial Bank of Commerce at the Atrium on Bay property in Toronto. Lowered portfolio vacancy by 110 basis points to 4.8% and 2005 portfolio rollover exposure by 270 basis points from 7.2% to 4.5%. Generated approximately $1 billion of liquidity consisting of free cash flow, nonstrategic asset sales, preferred share issuances and other financing activities. Redeployed this capital through acquisitions, purchasing 1.4 million of our common shares, repayment of more costly debt and preferred shares, and by making various other real estate investments. Expanded to a three-building, 1.6 million square foot portfolio in Washington, D.C. with the acquisition of two additional properties, 701 9th Street in the District and Potomac Tower in Rosslyn, V.A. Realized a total return to shareholders of 33%, including a $9 increase in share price to $37.40. As investors continued to view real estate stocks as an attractive investment, the entire sector experienced multiple expansion and resulting share price appreciation. From a financial performance standpoint, Brookfield in particular was a stand-out among the group, given our double digit growth in funds from operations per share. Continued to improve corporate governance practices, building upon the initiatives that we undertook in 2002 and 2003. For 2004, our Board of Directors instituted a formal procedure for evaluating Board and Committee performance and introduced the requirement that each member of the board own a minimum amount of equity in the company. Outlook As we enter the new year and plan our affairs for 2005, we are encouraged by the positive signs that we are seeing. In the supply-constrained markets in which we are primarily invested, we see an increase in tenant demand, particularly for high quality office properties such as the ones that we own.   Most economic indicators such as corporate profits, investment and gross domestic product are improving. Job growth data even suggests a modest recovery. Sustained job growth is, of course, the key to a bright future and, for the first time in four years, the economy is moving in the right direction. Internally, it is interesting to note that one quarter of our leasing activity during 2004, 855,000 square feet, was to our existing tenants looking to accommodate internal expansion. In contrast, we leased 300,000 square feet of expansion space to tenants in each of 2003 and 2002, a trend that may well indicate that businesses are again focusing on facilitating top-line growth.   As we begin to emerge from four years of tough market fundamentals, we are heartened by the fact that relative to past market cycles, the vacancy rates in our primary markets are significantly lower than at the same point in past cycles. Using the Manhattan market as an example, a market which represents 56% of Brookfield’s net operating income, the overall vacancy rate peaked at 18.5% at the bottom of the last cycle. Although vacancy peaked at 12.5% thirteen months ago, today it stands at 11.1%, 110 basis points from what most believe is the equilibrium point, where rental rates spike and transaction costs narrow.