We view this disparity as very meaningful and believe that as our primary markets continue to improve, development will play an important role in facilitating business expansion. As such, monetizing the six million square feet of office development inventory that we own and control will be an important contributor to our future growth. Of course, we will continue to approach development on a measured risk/reward basis.   On the acquisition front, investor demand for well-leased, high quality office properties strengthened as the year progressed. While this makes our properties even more valuable, it also means that accretive acquisitions that meet our investment criteria are even harder to find. To stay competitive, we are sourcing acquisitions with joint venture partners who are looking to team up with experienced operators. This approach enhances our returns through fees earned in exchange for our expertise.   Although there is ample reason to be optimistic about the future, and we are, it would be imprudent to depart from our disciplined, focused strategy to property management and investing. For 2005, our strategic plan remains virtually the same as the objectives we shared with you last year with a specific emphasis on four principle themes: sign leases in advance of maturities; aggressively and prudently invest our ample liquidity; acquire our common shares which we believe remain undervalued; and as our core markets rebound, capitalize on our development inventory and expand our development capabilities.   Dividend Policy Brookfield’s dividend policy has always been based on the belief that free cash flow should be utilized to grow the business, repurchase shares, and pay prudent sustainable dividends to shareholders at a level that is reflective of the company’s operating cash flows. The allocation of liquidity among these three categories is determined after a careful evaluation of all relevant factors with an aim to maximize value for shareholders over the long term. As Brookfield has benefited from substantial tax losses over the years, it has made sense for the company to reinvest the majority of our liquidity in activities designed to grow the business. In order to expand the appeal of Brookfield common shares to a wider audience, we are raising our quarterly dividend by 70%, and are distributing to shareholders one common share for every two shares held.   This dividend increase is a reflection of our faith in the strength of Brookfield’s underlying business as leasing markets recover across North America.   In Closing In closing, we are encouraged by the positive economic signs that we are seeing and believe that Brookfield’s sound strategy, strong balance sheet and desirable, high quality properties position us well to both capitalize upon opportunities that arise as the economy continues to strengthen and to deliver industry leading results.   We also pay tribute to John “Bud” McCaig, a board member since 1995 and one of our great mentors, who passed away last month after a remarkable life as an entrepreneur, business leader, and philanthropist. Bud was an inspiration to us all and he will be deeply missed.   On behalf of the management and Board of Directors, we remain excited about Brookfield’s future and thank you for your continued support.   Richard B. Clark President and Chief Executive Officer February 9, 2005