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(COVER PAGE OF 2002 ANNUAL REPORT, BOARDWALK LOGO AND PICTURES)





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(PICTURE)
    Letter
to Shareholders
    
    

2Q
& A with Boardwalk Management
    
    

6Industry
Leader
    
    

8Portfolio
Expansion
    
    

10Competitive
Advantages
    
    
    12Quality Properties, Dynamic Markets
    
    
    14Portfolio Summary
    
    
    16Our Community Commitment
    
    
    19Managements Discussion and Analysis
    
    
    20Consolidated Financial Statements
    
    
    38Notes to Consolidated Financial Statements
    
    
    42Corporate Information
    
    
    60Market Information
    
    
    64
  Corporate Profile BOARDWALK EQUITIES INC. is Canadas largest owner/operator of multi-family
rental communities. The Company currently owns and operates in excess of 250
properties, with more than 30,000 units totalling approximately 26 million net
rentable square feet. The companys portfolio is concentrated in the provinces of Alberta,
Saskatchewan, Ontario and Quebec. The Company has assets of over $1.7 billion
at book value and approximately 1,000 associate employees. Boardwalks common shares are listed on both the Toronto and New York Stock Exchanges, trading
under the symbol BEI. The Companys total market capitalization at December 31,
2002 was $2.1 billion.      Our Mission BOARDWALKS MISSION is to serve and provide our residents with quality rental
communities.






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(PICTURE) Operating Results
       
 Rental revenues increased 18% to $242 million
 
 NOI increased by 19% to $163 million
 
 Funds From Operations(1) (FFO), excluding gains, grew by 24% to $62 million
 
 FFO per share (diluted), excluding gains, increased by 25% to $1.24
 
 Same-property rental revenue growth of 5.5% and same-property NOI growth of 7.5%Portfolio Growth
 
 Completed over $230 million of acquisitions on a highly accretive basis
 
 Acquisitions totalled over 3,500 units, increasing the portfolio by 14%
 
 Expanded our geographic platform into Montreal and Quebec City marketsFinancing
 
 Successfully refinanced or renewed over $300 million of mortgage debt
 
 Reduced average interest rate to 5.9% at year endPerformance
 
 Common shares provided a 31.5% total return during 2002(1) Funds From Operations (FFO) is a generally accepted measure of operating
performance of real estate companies,
however is a non-GAAP measurement. The Company calculates FFO by taking Net
Earnings and adding non cash items
including Future Income Taxes and Amortization. The amount is currently
referenced on Boardwalks Consolidated
Statement of Cash Flows. The determination of this amount may differ from that
of other real estate companies.
    2002Highlights (BAR CHART) (BAR CHART) (BAR CHART) (BAR CHART)






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(LETTER TO SHAREHOLDERS COVER)





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Boardwalk delivered record results, reflecting both solid internal growth as
well as a significant contribution from acquisitions. We strategically expanded
the Companys base of operations into attractive new major market areas,
broadening and strengthening our platform and enhancing our long-term growth
potential.


We are pleased to report that Boardwalk produced industry-leading results in
2002, meeting or exceeding all of the goals we set at the beginning of the
year.

Our
performance is a direct result of adhering to our successful, focused strategy  owning and operating quality rental communities in attractive
markets and delivering superior value and service to our residents. Our
continued success would not be possible without the hard work of the dedicated
and talented people throughout the Company.

In 2002, Boardwalk generated solid internal growth and record performance in
our core rental portfolio reflecting the attractive fundamentals of our major
markets, the quality of our portfolio and our continued focus on operations.

From an external growth perspective, we generated a significant contribution
from acquisitions completed during the year. Our most significant purchase, the
Nuns Island portfolio in Montreal, was the largest single acquisition in
Boardwalks history and was completed on terms that were highly accretive to
our results.

For our shareholders, Boardwalks shares generated a total return of 31.5% in
the year, outperforming the NAREIT Equity REIT Index, the S&P/TSX Composite and
the S&P500 Indices, which posted total returns in 2002 of 3.8%, -12.4% and
-22.1%, respectively.



2002 Financial and Operational Highlights Highlights of our results for the year ended December 31, 2002
include:  
 
 Rental revenues increased by 18% to $242 million  
 
 Net operating income (NOI), grew by 19% to $163 million  
 
 Funds from operations (FFO), excluding gains, increased 24% to $62 million  
 
 FFO per share (diluted), excluding gains on sales of properties,
increased 25% to $1.24. Our portfolio continued to perform solidly in 2002, with the
following highlights:  
 
 Average monthly rents realized in 2002 were $716 per unit, up $52, or 8%,
compared to last year  
 
 The average occupancy rate of our portfolio was 95.0% in 2002, down slightly
from 95.1% in the previous year  
 
 Our same-property results for our stabilized portfolio continued to show
improved performance with rental revenue growth of 5.5%, and NOI growth of 7.5%
in 2002  
 
 Our in-place monthly rents at the end of the year were below market by an
estimated $36 per unit. This translates into an estimated loss-to-lease of
approximately $12 million.








Maintaining Financial Strength and Flexibility Boardwalk maintained its strong financial position throughout 2002. Our solid
balance sheet, combined with our significant and increasing internally
generated cash flows and low payout ratio, will provide us with the resources
and financial flexibility to enable us to take advantage of growth
opportunities that may arise. At year-end 2002, we had total debt of $1.3
billion, of which 93% was CMHC-insured first mortgages on our properties. All
of this mortgage debt was at fixed rates, with an average term to maturity of
approximately five years. The average interest rate on our total debt was
reduced to 5.9% at the end of the year, compared to 6.2% at the end of 2001. In 2002, our interest coverage ratio, excluding gains, improved to 1.93 times,
up from 1.84 in the previous year, and our debt-to-total market capitalization
was 63.2% at year-end, compared to 66% at the end of 2001. During the year, we successfully renewed or refinanced over $300 million of
mortgage debt. The largest mortgage refinancing completed was on the Nuns
Island portfolio. In November 2002, we obtained a new five-year $152.6 million
CMHC-insured first mortgage on this portfolio at a rate of 5.23%. This replaced
$107.4 million of mortgage debt with an average interest rate of 9.3%.




2002
ANNUAL
REPORT    03



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(GROWTH, DIVERSIFICATION PIE CHARTS AND VACANCY RATES LINE CHART)



Significant External Growth and Market Expansion During 2002, Boardwalk completed the acquisition of over 3,500 units,
significantly exceeding our original acquisition forecast of between 1,000 and
2,000 units. The acquisitions completed during the year totalled $231 million,
or approximately $64,800 per unit. This represents over a 50% discount to estimated replacement cost. These
acquisitions added 3.4 million square feet to our portfolio, increasing our
portfolio by approximately 14% over the year. These acquisitions were of exceptionally high quality and served to
significantly expand the Companys geographic platform. During 2002, Boardwalk entered two new major markets  Montreal  the largest
multi-family rental market in the country  and Quebec City. The most
significant acquisitions in 2002 were:  
 
 In May 2002, Boardwalk completed the purchase of the 3,100-unit Nuns Island
portfolio  a unique high-quality portfolio situated immediately south of
downtown Montreal.  
 
 In November 2002, the Company acquired a luxury residential rental property
in Quebec City with a total of 346 residential units. Since year-end, Boardwalk has acquired an additional 1,129 units, which closed
in January and February of 2003. This includes the Companys first property in
Gatineau, Quebec, and additional properties in the Montreal market. Over the past 12 months, the Company has expanded its geographic presence into
major market areas that are, in aggregate, close to two and a half times larger
in terms of the universe of rental units than all of its previous major markets
combined. This is expected to provide Boardwalk with even greater abilities to
explore growth opportunities going forward. Sector Outlook Industry fundamentals point to healthy operating conditions in 2003 and beyond
in most Canadian markets. Supply growth of new multi-family rental properties
remains modest across the country. This reflects the fact that rents remain well below those required to
economically justify new rental construction in most markets.








On the demand side, demographic trends are expected to have a positive impact
on the multi-family rental sector throughout the current decade. The age groups
having the highest likelihood of renting are projected to be among the fastest
growing population segments. The double-cohort occurring this year in Ontario  two classes of high school
graduating together in June 2003  are expected to result in a swelling of the
student population in university and college cities not only in Ontario but
across Canada, beginning in the fall of this year. This should lead to
increased demand for rental housing in these markets. Vacancy rates continue to be low in most markets across the country. CMHC is
forecasting that vacancy rates will continue to be relatively stable in Canada,
projecting vacancy rates of 2.5% in 2003 and 2.6% in 2004. The positive fundamentals for the multi-family rental sector in Canada were
recognized in a recent report by Moodys, which ranked it as being the most
attractive among real estate asset classes in North America. Canadas
multi-family rental sector had a ranking of 94 out of 100  well above the U.S.
multi-family sector (at 74) and other real estate sectors in Canada. Our Markets Boardwalks portfolio is concentrated in some of the most dynamic markets in
the country, which should enable the Company to continue to generate solid
internal growth. With residential mortgage rates at historically low levels, Boardwalk
experienced a modest increase in turnover in 2002 due to more residents leaving
to buy homes, townhomes and condominiums. In several of our markets we
experienced increases in vacancies; however, we were successful at continuing
to show healthy growth in our overall portfolio performance. This is due in
large part to our proactive leasing, marketing and operational
efforts. With the most experienced team in our history, we are continuing to
make quick adjustments and occupancy at the beginning of 2003 has increased.




04    ANNUAL
REPORT2002



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At least partially offsetting the impact of lower mortgage rates on home
affordability has been the significant increase in house prices in our core
markets. In Calgary, for example, the average single family home resale price
rose by 11% year-over-year to more than $227,500 in January 2003  a record
high. The rent level in the majority of Boardwalks rental communities is in the
mid-priced range, averaging $716 per month in 2002. We believe this provides greater stability for our overall portfolio and
long-term appreciation potential as rents continue to climb towards replacement
cost levels. The underlying fundamentals of our core markets remain attractive. Edmonton and
Calgary, our two largest markets, are projected to continue showing among the
highest economic growth rates. The Conference Board of Canada forecasts that
these two cities will be among the leading Canadian cities for real GDP growth
from 2003 to 2007. A Focused Vision and Strategy Boardwalk is committed to being the industry leader in Canadas multi-family
rental industry and in growing our operations into a truly national platform. We have a clear business strategy. We are focused on acquiring, owning and
managing quality rental communities concentrated in attractive markets
characterized by high barriers to new supply. For our residents, we will continue to provide superior value and service. We have a balanced growth strategy  focused on maximizing internal growth
combined with an aggressive but disciplined acquisition program. We will also pursue co-investment opportunities to broaden our platform,
increase our returns on investment and enhance our future growth. As always, our primary goal is to deliver consistent, sustainable and superior
long-term growth in value and FFO per share for our shareholders. Looking Ahead  Our Business Outlook We remain very positive and optimistic about Boardwalks future. We are in a
better position today than at any time in our history to capitalize on future
opportunities in our business. We expect operating fundamentals to remain favourable due to the positive
supply-demand relationship that exists in our core markets.








Our strengths:  
 
 We enjoy record growing cash flows.  
 
 We are in the strongest financial position in our history.  
 
 We have a high-quality, well-maintained portfolio concentrated in some of the
best apartment markets in the country with high barriers to new supply.  
 
 We enjoy strong local market positions in the markets in which we operate.  
 
 We have excellent operational capabilities and a proven and
performance-driven management team. With our broadened geographic platform, Boardwalk is in a better position
than ever to capitalize on growth opportunities going forward. In summary, Boardwalk is in an excellent position to continue to deliver value,
growth and performance in the years ahead. Final Thoughts We have an outstanding team at Boardwalk, from our Board of Directors, to our
senior management team, to our 1,000 talented employee associates. We are committed to continually improving our corporate governance. We are
extremely pleased to have an outstanding Board of Directors dominated by
experienced and independent directors. We thank our Board for their significant
contributions to date and for their continued support and guidance. We are truly grateful for the ongoing dedication of our associate employees. In
the first two months of 2003, we again had the chance to visit and spend time
with all of our associates. We are extremely gratified by the enthusiasm and support of this dedicated
team. We also thank our shareholders for your confidence and your investment in
Boardwalk. Your support has enabled the Company to become the leader in the
Canadian multi-family rental sector. We will continue our dedication to
building long-term shareholder value in the years ahead.  Sincerely, (-s- Sam kolias)
    
    (-s- Mike Hough)Sam Kolias
President and CEO
March 14, 2003
    
    Mike Hough
Senior Vice President




2002ANNUAL
REPORT    05



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(QUESTIONS AND ANSWERS WITH BOARDWALK MANAGEMENT HEADER)



(SAM KOLIAS PIC)
        

Q:What do you see as the biggest
opportunities for the Company?Sam Kolias, President and CEO
A:We have a positive long-term
outlook for our business and I see two
major opportunities for the Company
going forward. First, a very significant area of opportunity for
our Company will be from the internal growth we
believe is embedded in our existing portfolio as
rents and values continue to rise towards
replacement cost levels in our markets. The
potential upside from this is very significant.
From a rent level perspective, every $25 net
increase in our monthly rent per unit translates
into an additional $0.17 per share of FFO. From a replacement cost perspective, the gap
between our current market capitalization and the
estimated replacement value of our portfolio
stands today at well over $1 billion  or over $20
per share  and we are convinced that this gap
will close over time. Second, we believe we will continue to generate
significant future growth through acquisitions. The
multi-family market in Canada remains highly
fragmented. While Boardwalk is the largest
owner/manager in Canada, we own less than 2% of the
total market. And we are still in the early stages
of a major shift in the ownership of multi-family
rental property to larger professionally managed
companies, REITs and institutional investors such
as pension funds. Boardwalk is well positioned to continue to grow
within this environment because of our experience,
size, reputation, broad operating capabilities,
access to capital and proven acquisition
expertise. We also have a competitive advantage in
dealing with the significant pool of property
owners whose inclination to sell is affected by
tax considerations. As a publicly-traded company,
we can offer the potential seller various
tax-deferral alternatives.








(KEVIN SCREPNECHUK PIC)
        

Q:How successful was the integration
of the nuns Island acquisition?Kevin Screpnechuk, Senior Vice
President, Rental Operations
A:It went extremely well for several reasons.
First, we were able to retain over 60 talented and
dedicated on-site associates who had been operating
and managing the properties, the majority of whom
had been working at the site for many years. Second, we recruited two senior real estate
professionals with significant experience in the
local Montreal market to oversee the management and
operations of the portfolio, working together with
the existing managers. Third, we retained the name Structures
Metropolitaines, which was a strong brand and
which had been associated with the Nuns Island
project since it was developed. This resulted in a
seamless transition from the perspective of our
residents. Finally, we successfully integrated their
operations into our existing property management
systems within six months  much quicker than our
original projection of 18 months. These factors, along with the strength of the
local market, has enabled us to operate the
portfolio with a very low vacancy and achieve
strong operational performance since we acquired
it.  (BILL CHIDLEY PIC)
        

Q:What were the characteristics of the
markets and properties that led you to
make your first acquisitions in
Montreal, Quebec City and the
Gatineau/Hull region?Bill
Chidley
Senior Vice President, Corporate Development A:The properties we acquired in Quebec all
met the core characteristics we look for when
assessing acquisitions. The properties were all
purchased at a significant




06    ANNUAL
REPORT2002



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discount to replacement cost. The going-in returns were
attractive, and the acquisitions were highly accretive to our
financial results. And we believe there are further opportunities
to enhance those returns going forward. In addition, the quality and location of the real estate we
acquired over the past year has been truly exceptional  we
consider the Nuns Island portfolio and the properties acquired
in Quebec City and Montreals South Shore as being among the
best multi-family properties in the country. From a market perspective, we thought the fundamentals and
the timing were attractive for a market entry into the Quebec
market. Vacancy rates have fallen considerably in these markets
over the past several years to the point where they now are
all among the lowest in the country. In addition, rental rates
in the cities remain relatively low compared to other major
market areas.  (JEAN DENIS PIC)
        

Q:Are you looking at expanding your
holdings in the new markets you entered
over the past 12 months?Jean Denis, Vice President, Quebec Acquisitions
A:Yes, we expect to be able to expand our
presence in each of these new markets. Historically, after initially establishing a position in any new
market, we have been able to source additional attractive
opportunities to grow  whether through one-off acquisitions or
through the acquisition of portfolios. We are also optimistic about the potential to grow given the size
of these markets. For example, Montreal is the largest
multi-family market in the country with over 460,000 units.
To put that into perspective, Edmonton and Calgary, our two
largest markets, have about 110,000 units combined. We have established a strong local operating platform and
team in Montreal, and we have the personnel in place to
manage significant additional growth. So we are optimistic that we will be able to capitalize on further
acquisition opportunities in these markets over time.  (JOHN DILL PIC)
        
        Q:Are you targeting additional new
markets to enter?John Dill, Vice President, Eastern Acquisitions
A:Yes. Over time we anticipate having
a presence in additional major market
areas in Canada. So far in 2003, we have
purchased our first property in the Ottawa/Hull region. We have dedicated significant time and resources to investigating
and researching other market areas, have an extensive property
database and have relationships with property owners in all of our
major target markets across Canada.








Given the highly fragmented nature of the industry, we believe
Boardwalk will continue to identify attractive new acquisition
opportunities. We remain, however, very disciplined with respect
to our acquisition criteria. We will not grow just for the sake of
growing or enter additional markets unless it will contribute
positively to our results and to building shareholder value.  (MIKE HOUGH PIC)
        
        Q:What are your plans with respect to
establishing joint-venture arrangements?
Mike Hough, Senior Vice President
A:Part of our strategic plan involves
pursuing co-investment opportunities
with institutional partners. This would serve to leverage our existing platform and core
capabilities to increase the returns we can generate on our
invested capital, and enhance the Companys long-term growth
potential. It also would broaden our access to alternative sources
of capital, which we think will prove to be beneficial over the
longer term. Our size, operating expertise and our demonstrated ability to source
and execute major acquisitions, have established the Company as a
prime candidate for potential institutional partners. We are working
towards establishing one or more such relationships.  (ROB GEREMIA PIC)
        
        Q:Boardwalk reported strong growth in
financial results in 2002. Can you give us
a sense of what you expect in 2003?
Rob Geremia, Senior Vice President,
Finance and CFO
A:We believe Boardwalk will be able to
post solid results again in 2003. There are several main factors that will drive our growth this
year. First, we expect to continue to deliver healthy internal
growth from our stabilized portfolio. Second, we will have
the full-year impact of the accretive acquisitions completed
in 2002. For example, the Nuns Island portfolio acquisition
contributed to our results for only eight months in 2002. Third,
we will benefit from the positive impact of mortgage debt
refinancing completed in the second half of 2002, including the
Nuns Island portfolio. Finally, the Company will benefit from
the contribution of the additional acquisitions we have
concluded in early 2003. So we believe that Boardwalk is well positioned to deliver
above-average growth and performance again in 2003. We are
comfortable with current estimates of FFO per share of
between $1.40 and $1.44 for 2003, which does not include
any contribution from property sales. This would indicate
growth in our core rental FFO per share of between 13% and
16% in 2003.




2002ANNUAL
REPORT    07



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(INDUSTRY LEADER COVER)





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Our Company Since becoming a public company in 1994, Boardwalks property
portfolio has grown from approximately 2,500 units to over
30,000 units today. We are currently Canadas premier owner and
manager of apartment communities. Our portfolio consists of over
250 properties, totalling approximately 26 million net rentable
square feet in 15 cities across the country. The average size of our
units is just over 850 square feet, with an average monthly rent
of $716 in 2002. Boardwalk has a total market capitalization of $2.1 billion  over
two and a half times that of the largest Apartment REIT in Canada. We are, or plan to be, a dominant owner of apartment communities
in each of our core markets. Our market share currently
exceeds 10% in the majority of our core western markets. Our Vision Boardwalk is committed to being Canadas leading multi-family
Company and to expanding our operations into a truly
national platform. Our Strategy Boardwalk has a clear business strategy. We are focused on
acquiring, owning, and managing quality multi-family rental
properties concentrated in attractive markets characterized by
high barriers to new supply. Our internal growth strategy is concentrated on enhancing
returns on our existing assets through:  
 
 Active property management focused on:  
 
 Maximizing revenues by maintaining an optimal mix of occupancy rates and
rental rates  
 
 Controlling operating expenses  
 
 Empowering our associates to become bottom-line decision makers within the
framework of our corporate mission, vision and values  
 
 Selectively renovating/repositioning properties which can
result in sustainable improvement in returns, property
values and their competitive positioning  
 
 Implementing cost-saving capital expenditure programs.  
 
 Optimizing economies of scale arising from the size and geographic scope of
our portfolio.  
 
 Deriving additional non-rental sources of revenue from
third-party goods and services providers.  
 
 Using leading-edge technology to increase our productivity,
processes and operations and enhance customer service. Our external growth strategy is focused on pursuing an
aggressive, but disciplined, acquisition program. The key
elements of our acquisition strategy include:









 
 Acquiring well-located properties and portfolios that meet our
investment criteria and long-term strategic objectives.  
 
 Continuing to acquire properties in existing markets in order
to achieve economies of scale in operations, to strengthen our
brand identity and to enhance local market knowledge.  
 
 Pursuing acquisitions in selective new target markets where
portfolios can be acquired or sufficient scale can be achieved
over time.  
 
 Focusing primarily on supply-constrained markets with strong
economic fundamentals and high or rising single-family
housing prices.  
 
 Purchasing assets at prices under replacement cost.  
 
 Pursuing under-performing properties where value can be
added through proactive management and/or capital
improvements and repositioning. An additional element of our growth strategy is pursuing
co-investment opportunities to broaden our platform, increase
our returns on investment and enhance our future growth. We have the vision as well as the right strategy and the right
people to maintain and build on our leadership position. (CANADA MAP - EXISTING MARKETS)(TOTAL PORTFOLIO BAR GRAPH)(MARKET SHARE BAR GRAPH)




2002ANNUAL
REPORT    09



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(PORTFOLIO EXPANSION COVER)





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Boardwalk had been strategically targeting major markets in the
Province of Quebec for some time with a view to entering those
markets if attractive acquisition opportunities arose. During 2002, we entered the Montreal and Quebec City markets,
and in early 2003 we expanded into the Gatineau/Hull region. In
total, since May 2002, we completed the acquisition of over 4,500
units in Quebec. In a short period of time, we have amassed what we consider to
be the highest quality multi-family rental portfolio in Quebec.
More importantly, we believe this portfolio will continue to
provide superior returns over both the short and long terms.
In addition, our Quebec investments have strategically
positioned Boardwalk to take advantage of additional growth
opportunities in these markets.








The Montreal, Quebec City, Gatineau/Hull and nearby Ottawa
regions have an aggregate of over 600,000 rental units.
This represents over 40% of the total rental units in all of the
central market areas in Canada. These new major market areas are close to two and a half times
larger in terms of the universe of rental apartment units than all
of Boardwalks previous major markets combined. We are now in markets representing over 55% of the total universe
of rental apartments in Canada, up from 15% at the beginning
of 2002. With our strong operating platform, we believe Boardwalk has
significantly enhanced its ability to capitalize on additional
growth opportunities in these and other markets going forward.






Nuns Island  MontrealIn the second quarter of 2002, Boardwalk completed the
acquisition of a 3,100-unit portfolio located on Nuns Island
at a total cost of approximately $200 million. Nuns Island is a unique,
high-end community, located immediately south of Montreals
downtown core. Nuns Island is noted for its natural setting and amenities,
including parks and bike trails. It is an extremely popular location
for people attracted to the lifestyle aspects of living on the island, yet
still being very close to downtown. The portfolio consists of 59 apartment buildings and 260 townhouse units, all
within an 80-acre land parcel. The clustered nature of the
properties provides for significant operating and administrative efficiencies.
The portfolio includes high-rise, mid-rise and townhouse-style rental
buildings, with a total of 3.1 million rentable square feet and an average unit
size of approximately 1,000 square feet. On Nuns Island, we operate under the Structures Metropolitaines banner, a
well-recognized name in the local market that had been associated with
the high-quality Nuns Island property since development of the project started
in the 1960s. With the acquisition, the Company was able to bring
on board over 60 dedicated and talented associates who, together with the
addition of two local managers, will oversee our operations in Montreal.




Quebec City In November 2002, Boardwalk completed the acquisition of 5-8
Place de Merici at Les Jardins de Merici in Quebec City, which
represented the Companys first acquisition in the Quebec City
market. The 346-unit luxury residential rental property consists
of four concrete high-rise buildings. The acquisition price was
$27.1 million, which equates to $78,300 per unit. The property is exceptionally located, situated in the heart of
Quebec City on the north bank of the St. Lawrence River. It is
adjacent to the Battlefields Park (Parc des Champs-de-Batailles),








also known as the Plains of Abraham, and within minutes drive
of Quebec Citys historical district. The suites feature tremendous
panoramic views of the St. Lawrence River and of the Quebec
City skyline. Gatineau/Hull In January 2003, Boardwalk completed the acquisition of the
Parc de la Montagne apartment complex in Gatineau, Quebec.
The property consists of three concrete high-rise buildings with
a total of 321 residential units. The acquisition price was
$13.7 million, equating to $42,700 per unit.




(PICTURE)

2002ANNUAL
REPORT    11



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(COMPETITIVE ADVANTAGES COVER)





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Market Leader and largest in Size in the Sector. Boardwalk is
Canadas largest owner/manager of multi-family rental assets
with over 30,000 units in 15 cities across the country. Critical mass in targeted markets. We are the largest multi-family
operator in the majority of the markets in which we operate.
Our scale, concentration and clustering of properties enable us
to achieve operating efficiencies and economies of scale. They
also permit Boardwalk to build strong local market expertise and
better brand recognition, and they provide significant marketing
and cross-marketing opportunities. Broad Geographic Platform. Boardwalks broad geographic platform
provides the Company with several advantages: an exceptional
level of market knowledge; the ability to quickly assess growth
opportunities across our markets; the ability to effectively
integrate additional acquisitions given our existing operating
platform; and enhanced long-term stability through greater diversification
across many regions. High-quality Portfolio. Our high-quality portfolio provides us
with a distinct advantage in our local marketplace with respect
to attracting and retaining customers. The curb appeal of
Boardwalks professional landscaping and building exteriors
is complemented by renovated lobbies, hallways and suites 
compelling and attractive offerings for residents. Superior Customer Service. We pride ourselves on providing
superior customer service. First and foremost, this is provided by
our dedicated and trained on-site customer service representatives.
In addition, our 24/7 call centre is also available for residents with
any questions or maintenance requests.








Management Team. Our management depth and experience are
second to none in the industry. Proven Acquisition Capability. Our proven, experienced and
professional acquisition team is exceptionally skilled at
identifying, evaluating, negotiating and closing on property
acquisitions. Property Repositioning and Rehabilitation Expertise. Boardwalk
personnel are highly experienced in adding value to properties
through repositioning and upgrading. Balance Sheet Flexibility/Capital Market Expertise. Boardwalks
solid financial base combined with its access to and experience in
capital markets is a significant advantage for the company, giving
us the ability to act quickly on attractive opportunities and the
ability to participate in large-scale transactions. Leading-edge Property Management Systems. Technology
leadership is a critical element in our overall strategy and has
long been a source of competitive advantage for Boardwalk.
Throughout our Company, our people continue to creatively
apply technological solutions to maximize operating and
administrative efficiencies and to improve our level of customer
service. Boardwalk utilizes a proprietary state-of-the-art
property management system that gives our associate employees
better and easier-to-use tools. Access to real-time information
enables them to provide superior service to our residents.
These systems are fully web-enabled and are highly flexible and
scalable, enabling Boardwalk to easily add new assets and
expand into new markets.




Talented People...Our Biggest Advantage.

Of all Boardwalks strengths, none is more important than our people. We have
an outstanding team of approximately 1,000 talented
associates across our Company. This includes on-site personnel including
customer service associates; our maintenance, landscaping
and cleaning service associates, who work together to provide our nearly 70,000
residents with a superior living experience; our area
coordinators and regional directors; our warehouse associates; and our regional
support personnel. All our areas are supported by an
experienced and talented team of associates at our corporate head office in
Calgary.

Our people are professionally trained in all aspects of our business and
exemplify our key company values of integrity, teamwork
and customer service. Our local and regional associates are directly
responsible for the day-to-day operation and maintenance of
our properties and for providing superior service to our residents. Their hard
work and dedication has been directly responsible for the
record of progress and success that our Company has achieved to date.

Given the importance of our people to our continued success, we are placing
increased emphasis on attracting, retaining and investing
in the ongoing training, development and support of our associates.

(PICTURES OF PEOPLE)

2002ANNUAL
REPORT    13



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##### 



(QUALITY PROPERTIES, DYNAMIC MARKETS COVER)





---



##### 



Quality Portfolio

Reinvesting in our assets has been and will continue to be an important element
of our strategy. It enables us to deliver better value to
our customers, to drive sustainable revenue growth, and to maximize the
investment value of our properties over time.

We have significantly enhanced the market position of our properties and
strengthened our portfolio by investing over $300 million over
the past five years in capital improvements. This represents the most extensive
renovation and upgrade program ever undertaken in our
industry in Canada. As a result, Boardwalks current portfolio is in
exceptional physical condition.

These capital improvements have included: 1) renovating and enhancing the
appearance of lobbies, hallways, suites, parking lots, garages
and other expenditures that have a direct impact on our residents; 2) boilers,
building envelopes and energy-efficient windows, and other
structural items that extend the life of the properties and/or reduce utility
costs.

This program has enhanced the appeal of our properties to our current and
prospective residents, reduced our operating expenses and
improved the long-term value of our portfolio. It has also enabled us to
capture and sustain a position of superior product quality over
many competitors who lack the financial resources or desire to follow suit.

(CANADIAN MARKET APARTMENT VACANCY RATES BAR GRAPH AND PORTFOLIO BREAKDOWN BY PROVINCE PIE CHART)



Dynamic Markets One of the most important elements of Boardwalks long-term
internal growth strategy is the concentration of its portfolio in
attractive major markets with solid underlying fundamentals and
high barriers to new entry. Boardwalks portfolio is concentrated in some of Canadas most
dynamic economic markets. These markets also have among the
best demand/supply apartment sector dynamics in the country.
The vacancy rates in all of Boardwalks major markets are below
4% according to CMHCs latest statistics. Many of our markets
have among the lowest vacancy rates in the country. Boardwalks portfolio has its largest weighting in Alberta, which
accounts for 56% of our total units. Alberta has led Canadas
economic and job growth over the past five years, and economists
are projecting that Alberta will continue to show one of the
highest GDP growth rates over the next several years. The Conference Board of Canada is projecting that Calgary and
Edmonton, Boardwalks two largest markets, will continue to
rank among the top cities for economic growth in the country
through to 2007. In 2003, they are projecting real GDP growth for
Calgary and Edmonton of 4.9% and 3.8%, respectively, well above
the national average of 3.4%.








Alberta has also been the provincial leader in population growth:
from 1996 to 2001 the population of Alberta grew by 10.3% while
the Canadian population grew 4.0%. Calgary and Edmonton had
population growth of 15.8% and 8.7%, respectively, over this period,
and they are projected to continue to show population growth
at well above the national average going forward. For 2003, CMHC is forecasting that average market rental rates in
Calgary and Edmonton will increase by 4% and 6%, respectively. There continues to be limited new supply of rental units in all
of Boardwalks markets. In Calgary and Edmonton, the universe
of rental units has actually declined over the past decade as
condominium conversions have far outpaced the limited new
supply of rental product. Combined with the rapid population
growth, the number of rental units per population has declined
significantly over this period. In Calgary, there are now
approximately 50 units per 1,000 population, down from 67 in
1991, while in Edmonton there are approximately 76 units per
1,000 population, down from 96 in 1991. Boardwalk remains well positioned to deliver superior long-term
internal growth with a quality portfolio which is concentrated in
some of the most dynamic markets in the country.




2002ANNUAL
REPORT    15



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##### 



(PICTURES, PORTFOLIO SUMMARY HEADER, TOTAL PORTFOLIO BAR GRAPH AND CANADA MAP)



(PORTFOLIO BREAKDOWN BY CITY PIE CHART)








BY CITY Core cities
    
    Number of units
    
    
    Percentage
    
    
    Net rentable
    
    
    Percent of
    
    
    Averageof units
    
    
    square footage
    
    
    square footage
    
    
    unit sizeCalgary, AB
    
    
    4,648
    
    
    
    15.3
    %
    
    
    3,774,685
    
    
    
    15
    %
    
    
    812Edmonton, AB
    
    
    10,593
    
    
    
    34.8
    %
    
    
    9,172,423
    
    
    
    36
    %
    
    
    866Fort McMurray, AB
    
    
    352
    
    
    
    1.2
    %
    
    
    281,954
    
    
    
    1
    %
    
    
    801Grande Prairie, AB
    
    
    401
    
    
    
    1.3
    %
    
    
    337,060
    
    
    
    1
    %
    
    
    841Red Deer, AB
    
    
    851
    
    
    
    2.8
    %
    
    
    688,347
    
    
    
    3
    %
    
    
    809other-AB
    
    
    239
    
    
    
    0.8
    %
    
    
    184,260
    
    
    
    1
    %
    
    
    771Regina, SK
    
    
    2,672
    
    
    
    8.8
    %
    
    
    2,163,015
    
    
    
    8
    %
    
    
    810Saskatoon, SK
    
    
    1,988
    
    
    
    6.5
    %
    
    
    1,692,643
    
    
    
    7
    %
    
    
    851Gatineau (Hull), QC
    
    
    321
    
    
    
    1.1
    %
    
    
    204,055
    
    
    
    1
    %
    
    
    636Montreal, QC
    
    
    3,908
    
    
    
    12.8
    %
    
    
    3,703,770
    
    
    
    14
    %
    
    
    948Quebec City, QC
    
    
    346
    
    
    
    1.1
    %
    
    
    300,000
    
    
    
    1
    %
    
    
    867Kitchener, ON
    
    
    329
    
    
    
    1.1
    %
    
    
    263,020
    
    
    
    1
    %
    
    
    799London, ON
    
    
    2,256
    
    
    
    7.4
    %
    
    
    1,867,146
    
    
    
    7
    %
    
    
    828Windsor, ON
    
    
    1,551
    
    
    
    5.1
    %
    
    
    1,170,129
    
    
    
    5
    %
    
    
    754Total
    
    
    30,455
    
    
    
    100
    %
    
    
    25,802,507
    
    
    
    100
    %
    
    
    847
 BY PROVINCE Province
    
    Number of units
    
    
    Percentage
    
    
    Net rentable
    
    
    Percent of
    
    
    Averageof units
    
    
    square footage
    
    
    square footage
    
    
    unit sizeAlberta
    
    
    17,084
    
    
    
    56
    %
    
    
    14,438,729
    
    
    
    56
    %
    
    
    845Saskatchewan
    
    
    4,660
    
    
    
    15
    %
    
    
    3,855,658
    
    
    
    15
    %
    
    
    827Ontario
    
    
    4,136
    
    
    
    14
    %
    
    
    3,300,295
    
    
    
    13
    %
    
    
    798Quebec
    
    
    4,575
    
    
    
    15
    %
    
    
    4,207,825
    
    
    
    16
    %
    
    
    920Total
    
    
    30,455
    
    
    
    100
    %
    
    
    25,802,507
    
    
    
    100
    %
    
    
    847




16
    ANNUAL
REPORT2002



---



##### 



(PICTURES OF BUILDINGS)



City/
    
    Property name
    
    
    Building
    
    
    Number
    
    
    Net rentable
    
    
    AverageProvince
    
    
    
    
    type
    
    
    of units
    
    
    sq footage
    
    
    unit sizeCalgary, AB
    
    Boardwalk Heights
    
    Highrise
    
    
    202
    
    
    
    160,894
    
    
    
    797Boardwalk Plaza
    
    Highrise
    
    
    115
    
    
    
    80,424
    
    
    
    699Brentview Towers
    
    Highrise
    
    
    239
    
    
    
    151,440
    
    
    
    634Cedar Court Gardens
    
    Townhouse
    
    
    65
    
    
    
    58,560
    
    
    
    901Centre Point West
    
    Highrise
    
    
    123
    
    
    
    110,611
    
    
    
    899Century Towers
    
    Highrise
    
    
    90
    
    
    
    73,411
    
    
    
    816Chateau Apartments
    
    Highrise
    
    
    145
    
    
    
    110,545
    
    
    
    762Elbow Towers
    
    Highrise
    
    
    158
    
    
    
    108,280
    
    
    
    685Flintridge Place
    
    Highrise
    
    
    68
    
    
    
    55,023
    
    
    
    809Glamis Green
    
    Townhouse
    
    
    156
    
    
    
    173,881
    
    
    
    1,115Glamorgan Manor
    
    Garden
    
    
    86
    
    
    
    63,510
    
    
    
    738Heritage Gardens
    
    Highrise
    
    
    91
    
    
    
    64,250
    
    
    
    706Hillside Estates
    
    Garden
    
    
    76
    
    
    
    58,900
    
    
    
    775Lakeside Estates
    
    Garden
    
    
    89
    
    
    
    77,732
    
    
    
    873Leighton House
    
    Highrise
    
    
    38
    
    
    
    27,352
    
    
    
    720Lynnridge Village
    
    Townhouse
    
    
    160
    
    
    
    151,080
    
    
    
    944McKinnon Court
    
    Garden
    
    
    48
    
    
    
    36,540
    
    
    
    761McKinnon Manor
    
    Garden
    
    
    60
    
    
    
    43,740
    
    
    
    729Northwest Pointe
    
    Garden
    
    
    150
    
    
    
    102,750
    
    
    
    685Oakhill
    
    Townhouse
    
    
    240
    
    
    
    236,040
    
    
    
    984ONeil Towers
    
    Highrise
    
    
    187
    
    
    
    131,281
    
    
    
    702Patrician Village
    
    Garden
    
    
    392
    
    
    
    295,600
    
    
    
    754Pineridge Apartments
    
    Garden
    
    
    76
    
    
    
    52,275
    
    
    
    688Prominence Place
    
    Garden
    
    
    75
    
    
    
    55,920
    
    
    
    746Radisson I
    
    Townhouse
    
    
    124
    
    
    
    108,269
    
    
    
    873Radisson II
    
    Townhouse
    
    
    124
    
    
    
    108,015
    
    
    
    871Radisson III
    
    Townhouse
    
    
    118
    
    
    
    124,379
    
    
    
    1,054Royal Park Plaza
    
    Highrise
    
    
    86
    
    
    
    66,137
    
    
    
    769Russet Court
    
    Townhouse
    
    
    206
    
    
    
    213,264
    
    
    
    1,035Skygate Tower
    
    Highrise
    
    
    142
    
    
    
    113,350
    
    
    
    798Spruce Ridge Estates
    
    Garden
    
    
    284
    
    
    
    196,464
    
    
    
    692Travois Apartments
    
    Garden
    
    
    89
    
    
    
    61,350
    
    
    
    689Vista Gardens
    
    Garden
    
    
    100
    
    
    
    121,040
    
    
    
    1,210Westwinds Village
    
    Garden
    
    
    180
    
    
    
    137,815
    
    
    
    766Willow Park Gardens
    
    Garden
    
    
    66
    
    
    
    44,563
    
    
    
    6754,648
    
    
    
    3,774,685
    
    
    
    812Edmonton, ABAlexander Plaza
    
    Garden
    
    
    252
    
    
    
    203,740
    
    
    
    808Aspen Court
    
    Garden
    
    
    80
    
    
    
    68,680
    
    
    
    859Boardwalk Arms A & B
    
    Garden
    
    
    78
    
    
    
    64,340
    
    
    
    825Boardwalk Centre
    
    Highrise
    
    
    597
    
    
    
    471,871
    
    
    
    790Boardwalk Village I II & III
    
    Townhouse
    
    
    255
    
    
    
    258,150
    
    
    
    1,012Breton Manor
    
    Garden
    
    
    66
    
    
    
    57,760
    
    
    
    875Briarwynd Court
    
    Townhouse
    
    
    172
    
    
    
    144,896
    
    
    
    842Brookside Terrace
    
    Garden
    
    
    131
    
    
    
    196,779
    
    
    
    1,502Cambrian Place
    
    Garden
    
    
    105
    
    
    
    105,008
    
    
    
    1,000Camelot
    
    Garden
    
    
    64
    
    
    
    54,625
    
    
    
    854Capital View Towers
    
    Highrise
    
    
    115
    
    
    
    71,281
    
    
    
    620Carmen
    
    Garden
    
    
    64
    
    
    
    54,625
    
    
    
    854Castle Court
    
    Garden
    
    
    89
    
    
    
    93,950
    
    
    
    1,056Castleridge Estates
    
    Townhouse
    
    
    108
    
    
    
    124,524
    
    
    
    1,153Cedarville
    
    Garden
    
    
    144
    
    
    
    122,120
    
    
    
    848Christopher Arms
    
    Garden
    
    
    45
    
    
    
    29,900
    
    
    
    664Corian Apartments
    
    Garden
    
    
    153
    
    
    
    167,400
    
    
    
    1,094Deville Apartments
    
    Highrise
    
    
    66
    
    
    
    47,700
    
    
    
    723Ermineskin Place
    
    Highrise
    
    
    226
    
    
    
    181,788
    
    
    
    804Fairmont Village
    
    Garden
    
    
    424
    
    
    
    362,184
    
    
    
    854Fontana
    
    Highrise
    
    
    62
    
    
    
    40,820
    
    
    
    658Fort Garry House
    
    Highrise
    
    
    93
    
    
    
    70,950
    
    
    
    763Galbraith House
    
    Highrise
    
    
    163
    
    
    
    110,400
    
    
    
    677Garden Oaks
    
    Garden
    
    
    56
    
    
    
    47,250
    
    
    
    844








City/
    
    Property name
    
    
    Building
    
    
    Number
    
    
    Net rentable
    
    
    AverageProvince
    
    
    
    
    type
    
    
    of units
    
    
    sq footage
    
    
    unit sizeGranville
    
    Townhouse
    
    
    48
    
    
    
    53,376
    
    
    
    1,112Greentree Village
    
    Garden
    
    
    192
    
    
    
    156,000
    
    
    
    813Habitat Village
    
    Townhouse
    
    
    151
    
    
    
    129,256
    
    
    
    856Imperial Tower
    
    Highrise
    
    
    138
    
    
    
    112,050
    
    
    
    812Kew Place
    
    Townhouse
    
    
    108
    
    
    
    105,776
    
    
    
    979Lansdowne Park
    
    Highrise
    
    
    62
    
    
    
    48,473
    
    
    
    782Leewood
    
    Garden
    
    
    142
    
    
    
    129,375
    
    
    
    911Lord Byron I II & III
    
    Highrise
    
    
    158
    
    
    
    133,994
    
    
    
    848Lord Byron Townhomes
    
    Townhouse
    
    
    144
    
    
    
    170,969
    
    
    
    1,187Lorelei House
    
    Garden
    
    
    78
    
    
    
    65,870
    
    
    
    844Maple Gardens
    
    Garden
    
    
    181
    
    
    
    163,840
    
    
    
    905Marlborough Manor
    
    Garden
    
    
    56
    
    
    
    49,582
    
    
    
    885Maureen Manor
    
    Highrise
    
    
    91
    
    
    
    64,918
    
    
    
    713Meadowside Estates
    
    Garden
    
    
    148
    
    
    
    104,036
    
    
    
    703Meadowview Manor
    
    Garden
    
    
    348
    
    
    
    284,490
    
    
    
    818Monterey Pointe
    
    Garden
    
    
    104
    
    
    
    83,548
    
    
    
    803Morningside
    
    Garden
    
    
    220
    
    
    
    165,562
    
    
    
    753Northridge Estates
    
    Garden
    
    
    180
    
    
    
    103,270
    
    
    
    574Oak Tower
    
    Highrise
    
    
    70
    
    
    
    51,852
    
    
    
    741Parkside Towers
    
    Highrise
    
    
    179
    
    
    
    162,049
    
    
    
    905Parkview Estates
    
    Townhouse
    
    
    104
    
    
    
    88,432
    
    
    
    850Peace Grove
    
    Garden
    
    
    40
    
    
    
    32,000
    
    
    
    800Pembroke Estates
    
    Garden
    
    
    198
    
    
    
    198,360
    
    
    
    1,002Pinetree Village
    
    Garden
    
    
    142
    
    
    
    106,740
    
    
    
    752Pointe West Townhouses
    
    Townhouse
    
    
    69
    
    
    
    72,810
    
    
    
    1,055Primrose Lane Apartment
    
    Garden
    
    
    153
    
    
    
    151,310
    
    
    
    989Prominence Place
    
    Highrise
    
    
    91
    
    
    
    73,310
    
    
    
    806Redwood Court
    
    Garden
    
    
    116
    
    
    
    107,680
    
    
    
    928Riverview Manor
    
    Garden
    
    
    81
    
    
    
    62,092
    
    
    
    767Royal Heights
    
    Highrise
    
    
    74
    
    
    
    41,550
    
    
    
    561Sandstone Pointe
    
    Garden
    
    
    81
    
    
    
    83,800
    
    
    
    1,035Sir William Place
    
    Garden
    
    
    220
    
    
    
    126,940
    
    
    
    577Solano House
    
    Highrise
    
    
    91
    
    
    
    79,325
    
    
    
    872Southgate Tower
    
    Highrise
    
    
    170
    
    
    
    153,385
    
    
    
    902Summerlea Place
    
    Garden
    
    
    39
    
    
    
    43,297
    
    
    
    1,110Suncourt Place
    
    Garden
    
    
    62
    
    
    
    55,144
    
    
    
    889Tamarack East and West
    
    Townhouse
    
    
    132
    
    
    
    212,486
    
    
    
    1,610Terrace Gardens
    
    Garden
    
    
    114
    
    
    
    101,980
    
    
    
    895Terrace Towers
    
    Highrise
    
    
    84
    
    
    
    66,000
    
    
    
    786The Palisades
    
    Highrise
    
    
    94
    
    
    
    77,200
    
    
    
    821The Westmount
    
    Highrise
    
    
    133
    
    
    
    124,825
    
    
    
    939Tower Hill Apartments
    
    Highrise
    
    
    82
    
    
    
    46,360
    
    
    
    565Tower on the Hill
    
    Highrise
    
    
    100
    
    
    
    85,008
    
    
    
    850Valley Ridge Tower
    
    Highrise
    
    
    49
    
    
    
    30,546
    
    
    
    623Victorian Arms
    
    Garden
    
    
    96
    
    
    
    91,524
    
    
    
    953Viking Arms
    
    Highrise
    
    
    240
    
    
    
    257,410
    
    
    
    1,073Village Acres
    
    Garden
    
    
    186
    
    
    
    156,464
    
    
    
    841Village Plaza
    
    Townhouse
    
    
    68
    
    
    
    65,280
    
    
    
    960Warwick Apartments
    
    Garden
    
    
    60
    
    
    
    49,092
    
    
    
    818West Edmonton Court
    
    Garden
    
    
    82
    

    
    
    73,209
    
    
    
    893Westborough Court
    
    Garden
    
    
    60
    
    
    
    50,250
    
    
    
    838Westbrook Estates
    
    Garden
    
    
    172
    
    
    
    148,616
    
    
    
    864Westmoreland Apartments
    
    Garden
    
    
    56
    
    
    
    45,865
    
    
    
    819Westpark Ridge
    
    Garden
    
    
    102
    
    
    
    99,280
    
    
    
    973Westridge Estates B
    
    Garden
    
    
    91
    
    
    
    56,950
    
    
    
    626Westridge Estates C
    
    Garden
    
    
    90
    
    
    
    56,950
    
    
    
    633Westridge Manor
    
    Townhouse
    
    
    64
    
    
    
    69,038
    
    
    
    1,079Westwinds of Summerlea
    
    Garden
    
    
    48
    
    
    
    53,872
    
    
    
    1,122Willow Glen Apartments
    
    Garden
    
    
    88
    
    
    
    71,800
    
    
    
    816Wimbledon
    
    Highrise
    
    
    165
    
    
    
    117,216
    
    
    
    71010,593
    
    
    
    9,172,423
    
    
    
    866




2002ANNUAL
REPORT    17



---



##### 



(PICTURES OF BUILDINGS)



City/Province
    
    Property name
    
    
    Building
    
    
    Number
    
    
    Net rentable
    
    
    Averagetype
    
    
    of units
    
    
    sq footage
    
    
    unit sizeFort McMurray, ABBirchwood Manor
    
    Garden
    
    
    24
    
    
    
    18,120
    
    
    
    755Chanteclair
    
    Garden
    
    
    79
    
    
    
    68,138
    
    
    
    863Edelweiss Terrace Apts
    
    Garden
    
    
    32
    
    
    
    27,226
    
    
    
    851Heatherton
    
    Garden
    
    
    23
    
    
    
    16,750
    
    
    
    728Hillside Manor
    
    Garden
    
    
    30
    
    
    
    21,248
    
    
    
    708Mallard Arms
    
    Garden
    
    
    36
    
    
    
    30,497
    
    
    
    847McMurray Manor
    
    Garden
    
    

    44
    
    
    
    30,350
    
    
    
    690The Granada
    
    Garden
    
    
    44
    
    
    
    35,775
    
    
    
    813The Valencia
    
    Garden
    
    
    40
    
    
    
    33,850
    
    
    
    846352
    
    
    
    281,954
    
    
    
    801London, ONAbbey Estates
    
    Townhouse
    
    
    53
    
    
    
    59,794
    
    
    
    1,128Castlegrove Estates
    
    Highrise
    
    
    144
    
    
    
    126,420
    
    
    
    878Forest City Estates
    
    Highrise
    
    
    272
    
    
    
    221,000
    
    
    
    813Heritage Square
    
    Garden/Highrise
    
    
    359
    
    
    
    270,828
    
    
    
    754Landmark Tower
    
    Highrise
    
    
    213
    
    
    
    173,400
    
    
    
    814Maple Ridge On The Parc
    
    Highrise
    
    
    257
    
    
    
    247,166
    
    
    
    962Meadow Crest Apts
    
    Garden
    
    
    162
    
    
    
    110,835
    
    
    
    684Noel Meadows
    
    Garden
    
    
    105
    
    
    
    72,600
    
    
    
    691Ridgewood Estates
    
    Townhouse
    
    
    29
    
    
    
    31,020
    
    
    
    1,070Sanford Apts
    
    Highrise
    
    
    96
    
    
    
    77,594
    
    
    
    808The Bristol
    
    Highrise
    
    
    138
    
    
    
    109,059
    
    
    
    790Topping Lane Towers
    
    Highrise
    
    
    189
    
    
    
    177,880
    
    
    
    941Villages of Hyde Park
    
    Townhouse
    
    
    60
    
    
    
    57,850
    
    
    
    964Westmount Ridge
    
    Highrise
    
    
    179
    
    
    
    131,700
    
    
    
    7362,256
    
    
    
    1,867,146
    
    
    
    828Montreal, QC600 Cote-Vertu (St. Laurent, QC)
    
    Midrise
    
    
    88
    
    
    
    67,750
    
    
    
    770Domaine dIberville Apts(Longueuil, QC)
    
    Highrise
    
    
    720
    
    
    
    560,880
    
    
    
    779Nuns Island Portfolio
    
    Garden/Highrise/Townhouse
    
    
    3,100
    
    
    
    3,075,140
    
    
    
    9923,908
    
    
    
    3,703,770
    
    
    
    948Red Deer, ABCanyon Pointe Apartments
    
    Garden
    
    
    163
    
    
    
    114,039
    
    
    
    700Inglewood Terrace
    
    Garden
    
    
    68
    
    
    
    42,407
    
    
    
    624Riverbend Village Apartments
    
    Garden
    
    
    150
    
    
    
    114,750
    
    
    
    765Rivercrest Manor
    
    Highrise
    
    
    120
    
    
    
    102,225
    
    
    
    852Saratoga
    
    Highrise
    
    
    48
    
    
    
    53,762
    
    
    
    1,120Taylor Heights Apartments
    
    Garden
    
    
    140
    
    
    
    103,512
    
    
    
    739Watson
    
    Highrise
    
    
    50
    
    
    
    43,988
    
    
    
    880Westridge Estates
    
    Townhouse
    
    
    112
    
    
    
    113,664
    
    
    
    1,015851
    
    
    
    688,347
    
    
    
    809Regina, SKAshok Portfolio
    
    Garden
    
    
    164
    
    
    
    95,000
    
    
    
    579Boardwalk Estates
    
    Garden
    
    
    687
    
    
    
    467,696
    
    
    
    681Boardwalk Manor
    
    Garden
    
    
    72
    
    
    
    60,360
    
    
    
    838Centennial South
    
    Townhouse
    
    
    170
    
    
    
    129,080
    
    
    
    759Centennial West
    
    Garden
    
    
    60
    
    
    
    46,032
    
    
    
    767Eastside Estates
    
    Townhouse
    
    
    150
    
    
    
    167,550
    
    
    
    1,117Evergreen Estates
    
    Garden
    
    
    150
    
    
    
    125,660
    
    
    
    838Grace Manor
    
    Townhouse
    
    
    72
    
    
    
    69,120
    
    
    
    960Greenbriar Apts
    
    Garden
    
    
    72
    
    
    
    57,600
    
    
    
    800Lockwood Arms
    
    Garden
    
    
    96
    
    
    
    69,000
    
    
    
    719Pines of Normanview
    
    Townhouse
    
    
    133
    
    
    
    115,973
    
    
    
    872Quappelle Village I & II
    
    Garden
    
    
    154
    
    
    
    133,200
    
    
    
    865Quappelle Village III
    
    Garden
    
    
    180
    
    
    
    144,160
    
    
    
    801Southpointe Plaza
    
    Highrise
    
    
    140
    
    
    
    117,560
    
    
    
    840The Meadows
    
    Townhouse
    
    
    52
    
    
    
    57,824
    
    
    
    1,112Wascanna Park Estates
    
    Townhouse
    
    
    320
    
    
    
    307,200
    
    
    
    9602,672
    
    
    
    2,163,015
    
    
    
    810








City/Province
    
    Property name
    
    
    Building
    
    
    Number
    
    
    Net rentable
    
    
    Averagetype
    
    
    of units
    
    
    sq footage
    
    
    unit sizeSaskatoon, SKCarleton Towers
    
    Highrise
    
    
    158
    
    
    
    155,138
    
    
    
    982Chancellor Gate
    
    Garden
    
    
    138
    
    
    
    126,396
    
    
    
    916Dorchester Towers
    
    Highrise
    
    
    52
    
    
    
    48,608
    
    
    
    935Heritage Pointe Estates
    
    Townhouse
    
    
    104
    
    
    
    99,840
    
    
    
    960Lawson Village
    
    Garden
    
    
    96
    
    
    
    75,441
    
    
    
    786Meadow Parc Estates
    
    Townhouse
    
    
    200
    
    
    
    192,000
    
    
    
    960Palace Gate
    
    Garden
    
    
    206
    
    
    
    142,525
    
    
    
    692Penthouse Apartments
    
    Highrise
    
    
    82
    
    
    
    61,550
    
    
    
    751Regal Tower 1 & 2
    
    Highrise
    
    
    161
    
    
    
    122,384
    
    
    
    760Reid Park Estates
    
    Garden
    
    
    179
    
    
    
    128,700
    
    
    
    719St. Charles Place
    
    Garden
    
    
    156
    
    
    
    123,000
    
    
    
    788St. James Place
    
    Garden
    
    
    140
    
    
    
    105,750
    
    
    
    755Stonebridge Apartments
    
    Garden
    
    
    162
    
    
    
    131,864
    
    
    
    814Stonebridge Townhomes I & II
    
    Townhouse
    
    
    100
    
    
    
    135,486
    
    
    
    1,355Wildwood Ways B
    
    Garden
    
    
    54
    
    
    
    43,961
    
    
    
    8141,988
    
    
    
    1,692,643
    
    
    
    851Windsor, ONAnchorage Apartments
    
    Highrise
    
    
    135
    
    
    
    110,245
    
    
    
    817Askin Tower
    
    Highrise
    
    
    60
    
    
    
    39,675
    
    
    
    661Buckingham Towers
    
    Highrise
    
    
    34
    
    
    
    30,805
    
    
    
    906Caron Towers
    
    Highrise
    
    
    47
    
    
    
    36,947
    
    
    
    786Empress
    
    Garden
    
    
    40
    
    
    
    28,250
    
    
    
    706Frances Tower Apartments
    
    Highrise
    
    
    53
    
    
    
    43,906
    
    
    
    828Glenwood Apartments
    
    Highrise
    
    
    33
    
    
    
    25,619
    
    
    
    776Janisse Tower
    
    Highrise
    
    
    75
    
    
    
    45,000
    
    
    
    600Karita Tower
    
    Highrise
    
    
    41
    
    
    
    28,950
    
    
    
    706Lauzon Towers
    
    Highrise
    
    
    178
    
    
    
    137,784
    
    
    
    774Marine Court
    
    Highrise
    
    
    68
    
    
    
    49,206
    
    
    
    724Randal Court
    
    Garden
    
    
    47
    
    
    
    38,775
    
    
    
    825Regency Colonade
    
    Highrise
    
    
    133
    
    
    
    113,205
    
    
    
    851Riverdale Manor
    
    Townhouse
    
    
    97
    
    
    
    77,850
    
    
    
    803Rivershore Tower Apts
    
    Highrise
    
    
    96
    
    
    
    63,300
    
    
    
    659Sandilands Tower
    
    Highrise
    
    
    47
    
    
    
    38,775
    
    
    
    825Sanwich Tower
    
    Highrise
    
    
    66
    
    
    
    40,650
    
    
    
    616Seaway Tower
    
    Highrise
    
    
    152
    
    
    
    112,037
    
    
    
    737Sun Crest Tower
    
    Highrise
    
    
    58
    
    
    
    43,100
    
    
    
    743Sun Ray Manor
    
    Highrise
    
    
    41
    
    
    
    29,950
    
    
    
    730University Towers
    
    Highrise
    
    
    50
    
    
    
    36,100
    
    
    
    7221,551
    
    
    
    1,170,129
    
    
    
    754OTHERGrande Prairie, ABBoardwalk Park Estates 2
    
    Townhouse
    
    
    32
    
    
    
    30,210
    
    
    
    944Parkview Portfolio
    
    Garden
    
    
    369
    
    
    
    306,850
    
    
    
    832Kitchener, ONKings Tower
    
    Highrise
    
    
    226
    
    
    
    171,100
    
    
    
    757Westheights Place
    
    Highrise
    
    
    103
    
    
    
    91,920
    
    
    
    892Quebec City, QCLes Jardins de Merici
    
    Highrise
    
    
    346
    
    
    
    300,000
    
    
    
    867Banff, ABMountainview Estates
    
    Garden
    
    
    76
    
    
    
    53,340
    
    
    
    702Gatineau/Hull, QCParc De La Montagne
    
    Highrise
    
    
    321
    
    
    
    204,055
    
    
    
    636Airdrie, ABTower Lane I & II
    
    Garden
    
    
    163
    
    
    
    130,920
    
    
    
    8031,636
    
    
    
    1,288,395
    
    
    
    788TOTAL
    
    
    
    
    
    
    
    
    
    
    30,455
    
    
    
    25,802,507
    
    
    
    847




18    ANNUAL
REPORT2002



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(OUR COMMUNITY COMMITMENT HEADER)

Boardwalk is committed to the communities where we operate, and the
Company takes its role as a good corporate citizen seriously. We know
that we must balance our customers needs with the needs of our
surrounding communities and our shareholders.




Boardwalk is proud of its role in funding or sponsoring a variety
of community and charitable initiatives and of our many associate
employees who devote substantial amounts of their personal
time to participate in community activities. We take pride in
forming innovative and collaborative partnerships with a variety
of community-oriented organizations whose programs are
aimed at building stronger communities. Boardwalks Community Development and Social Services
Department is one of the many ways we target the needs of
our customers and communities through development of and
participation in a wide variety of programs. Our internally
developed policies combined with community action and
involvement on the part of Boardwalk and its associates is a
powerful demonstration of our commitment to our stated value,
We will contribute to our community and encourage our
associates to contribute in ways that reflect the Golden Rule,
balancing our needs with those of others. Boardwalk offers compassionate policies that limit rental
increases or, in some cases, provide rental subsidies for long-term
tenants who are experiencing financial hardship. Many seniors
and fixed-income residents have benefited from these programs.
Boardwalk continues to actively support affordable subsidized
housing through its participation in rent supplement programs
whenever possible.








Last year, Boardwalk was singled out for community service
awards by the Canadian Mental Health Association and by The
Junior League. Boardwalk is also an active partner with the
National Sports Centre, Crisis Pregnancy Centre, and a variety of
community-based social service outreach organizations. Volunteer activity is practiced and encouraged by our associates
in Boardwalk-sponsored events. One of our biggest volunteer
activities in 2002 was a Habitat for Humanity house building
project. In addition to a financial contribution, Boardwalk
matched its associates contribution of man-hours during the
course of the house build. The outcome was approximately 500
man-hours of labour donated and, more importantly, a family was
given a new home and a fresh start filled with hope. In addition,
Boardwalk again participated in Christmas hamper deliveries
in various cities, in the preparation and serving of meals for the
homeless and in the construction of two homes in conjunction
with Homes of Hope. We remain committed to making Boardwalk an even better
company for all of our stakeholders  our associates, our
residents, our shareholders and the communities we serve.




2002ANNUAL
REPORT    19



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##### 



(MANAGEMENT'S DISCUSSION AND ANALYSIS HEADER)



Overview of the Structure of the MDA Boardwalk Equities Inc. (hereafter Boardwalk, the
Company, or the Corporation) is Canadas
largest publicly held owner and operator of
multi-family apartment communities. At December 31,
2002, the Company owned and managed a total of
29,326 units in over 250 rental communities across
the provinces of Alberta, Saskatchewan, Ontario,
and Quebec. Boardwalk is listed on both The Toronto
Stock Exchange and The New York Stock Exchange and
trades under the symbol BEI. Being listed on
separate international exchanges requires that we
report under both U.S. and Canadian Generally
Accepted Accounting Principles (GAAP). The
Managements Discussion and Analysis (MDA)
discussed below will focus its discussion based on
those results obtained under Canadian GAAP. For
those readers who wish to view Boardwalks results
on a U.S. GAAP basis, we refer you to Note 13, page
53, of the 2002 audited consolidated financial
statements, where reconciliations of the
consolidated balance sheet and consolidated
statement of earnings are provided. The MDA focuses on key statistics from the
consolidated financial statements and pertains to
known risks and uncertainties relating to the real
estate industry. This discussion should not be
considered all-inclusive as it excludes changes
that may occur in general economic, political, and
environmental conditions. Additionally, other
elements that may or may not occur which could
affect the Corporation in the future. To ensure
that the reader is obtaining the best overall
perspective, this discussion should be read in
conjunction with material contained in other parts
of the Annual Report, the Corporations audited
consolidated financial statements for the years
ended December 31, 2002 and 2001 and the Annual
Information Form. The MDA will be presented in the following structure: Values, Vision and Objectives,page 21, provides
an overview of Boardwalks principles, as well as
a comparison of the Companys actual posted
financial results versus our originally projected
financial objectives for fiscal 2002.








Financial Performance Summary,page 23, provides a
high-level overview of the Corporations
performance in 2002. Please note that a more
detailed discussion of the results is provided in
later sections of the MDA. Financial Statement Analysis,page 23, provides an
analysis of the financial performance of the
Company for 2002. Liquidity and Risk,page 30, provides a detailed
look at the Corporations principal liquidity
requirements and the related sources for these
funds, as well as a discussion of any significant
risks and our management of these risks. Critical Accounting Policies,page 34, provides an
outline of some of the Corporations critical
accounting policies, the details of which are
included in Note 1 to the consolidated financial
statements. Future Objectives,page 35, provides an overview
of Boardwalks key performance targets for 2003. Special Note Regarding Forward-looking Statements Certain statements in this Annual Report constitute
forward-looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act
of 1995. You can identify forward-looking
statements by our use of the words believe,
expect, anticipate, intend, estimate,
assume, project, and other similar terms that
predict or indicate future events and trends or
that do not relate to historical matters. Such
forward-looking statements involve known and
unknown risks, uncertainties and other factors that
may cause our actual results,
performance or achievements to be materially
different from any future results, performance or
achievements expressed or implied by such
forward-looking statements. The forward-looking statements made in this
discussion and in the materials incorporated
herein by reference are based on assumptions and
judgments of Management regarding future events
and results. These assumptions and judgments may
prove




20    ANNUAL
REPORT2002



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##### 





to be inaccurate as a result of a number of factors, many
of which are beyond our control, and our actual results may
differ materially from the results contemplated in such forward-looking
statements. Such factors include, but are not limited to,
the following:  
 
 Changes in national, international or regional economic
conditions may affect the real estate market, which is cyclical
in nature and highly sensitive to such changes, including,
among other factors, levels of employment, discretionary
disposable income, consumer confidence, available financing
and interest rates.  
 
 We may be unsuccessful in managing our current growth
in the number of properties and the related growth of our
business operations.  
 
 Our previous and possible future expansion into new
geographic market areas may not produce financial results
that are consistent with our historical performance.  
 
 We may not be able to locate suitable property acquisitions.  
 
 We may have additional compliance costs due to changes in
any environmental or other laws and regulations that govern
the acquisition or sale of real estate and various aspects of
our financing operation or our failure to comply with any law
or regulation.  
 
 Renovation costs may exceed our original estimates.  
 
 We may not lease-up properties under renovation on
schedule, resulting in a lower than expected return on asset
and return on equity.  
 
 Market forces may change and the anticipated loss-to-lease
amounts may not materialize as anticipated.  
 
 Loss of key management may result in a significant increase
in administrative expenses.  
 
 Occupancy rates and market rents may be adversely affected
by local economic and market conditions, which are beyond
our control.  
 
 We may be unable to locate external sources of liquidity on
favourable terms to support our operations and acquisition
and renovation strategies, or satisfy our debt and other
obligations.  
 
 Our cash flow may be insufficient to meet required payments
of principal and interest and we may be unable to refinance
existing indebtedness or the terms of such refinancing may
not be as favourable as the terms of existing indebtedness.  
 
 Our sales and marketing techniques may not be successful,
may not be accepted by consumers, may impose limitations
on our operations, or may be adversely impacted by legal or
other requirements. We disclaim any intent or obligation to update publicly these
forward-looking statements, whether as a result of new
information, future events or otherwise.








Values, Vision and Objectives Boardwalk Equities Inc. is a fully integrated, customer-oriented,
multi-family residential real estate ownership and management
company. It is Canadas largest publicly traded multi-family
residential corporation and specializes in the acquisition,
operation, value enhancement and sale of multi-family
residential properties within Canada. Boardwalks portfolio is
located in the provinces of Alberta, Saskatchewan, Ontario and
Quebec. The Corporations head office is in Calgary, Alberta. A Commitment to Value Boardwalks vision and business strategy are targeted on
effectively meeting the needs of our customers. It is our belief
that this focus will result in the most significant long-term value
creation for all our stakeholders. Boardwalks key stakeholders
include Boardwalk associates, our major financial and mortgage
partners, the Canada Mortgage and Housing Corporation
(CMHC), strategic operational partners and our shareholders. Boardwalks Vision Boardwalks vision is to be Canadas leading multi-family
rental provider. We believe we will accomplish this through the
continued careful cultivation of internal growth combined with
a targeted and disciplined external acquisition program. Boardwalks employee associates are expected to adhere to these
guiding principles: We will:  
 
 maintain a team-oriented work environment where mutual
respect, trust and honesty exists between all associates and
customers.  
 
 serve our customers needs for quality, affordable and well-kept
homes.  
 
 maintain building exteriors and landscaping, thereby
increasing curb appeal.  
 
 have well-kept common areas and ensure our properties are
clean and well-maintained.  
 
 maintain an equitable balance between the needs of our
customers, associates, shareholders, community and families.  
 
 nurture and promote a learning environment where our
associates skills and capabilities grow with the needs of both
the Company and our customers, and accept that these needs
will constantly evolve and improve.  
 
 utilize the latest tools and technology designed to increase the
operating efficiency of the Company as a whole.




2002ANNUAL
REPORT    21



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##### 





We Value:  
 
 Integrity We will be honest, respectful and trusting in our dealings with
others, appreciating their views and differences.  
 
 Teamwork We will effectively work as a team, appreciating and benefiting
from each others unique talents and skills in an open
environment while recognizing that the teams successes are our
successes.  
 
 Customer Service We will promptly respond to customer concerns and needs with
thoughtfulness, compassion and innovation. We will strive to
develop proactive solutions though a support network and a
positive service attitude.  
 
 Social Responsibility We will contribute to our community and encourage our
associates to contribute in ways that reflect the Golden Rule,
balancing our needs with those of others.  
 
 Our Associates We will provide a safe and respectful work environment that
attracts, supports, develops and recognizes high-performing and
innovative team members. Boardwalk believes by adhering to its vision and values and by
implementing strategies consistent with these principles, the
Company will produce higher sustainable operating cash flows
and a continued appreciation in its property values. The result
will be enhanced value for all Boardwalk stakeholders. Achieving these goals requires the full integration of our core
strategies of focused investing, superior property management
and the implementation and effective use of new technologies. Our proactive property asset management strategy includes the
following:  
 
 Acquisition of existing multi-family residential properties
throughout Canada.  
 
 Selective renovation and repositioning of existing projects
resulting in increased operating returns.  
 
 Continued enhancement of cash flow from existing properties.  
 
 Stabilization of new projects to increase cash flows.  
 
 Utilization of a focused sales discipline.  
 
 Reinvestment of released equity back into the portfolio to
create additional value-added opportunities.








To support the Corporations overall operating strategy, it is
necessary to:  
 
 Ensure ample capital is available at all times for acquisitions
and value-added enhancements.  
 
 Appropriately allocate available capital to existing project
enhancement and continuing new acquisitions.  
 
 Utilize suitable levels of leverage.  
 
 Determine and utilize the lowest cost of capital sources.  
 
 Actively manage the Corporations exposure to interest rate
and renewal risk.  
 
 Optimize the use of National Housing Act (NHA) insurance
through CMHC to enhance leverage and access lower
financing rates. Key Performance Objectives Boardwalk generates revenues, cash flows and earnings from two
separate sources: rental operations and the sale of real estate
properties. Boardwalks largest and most consistent source of income comes
from its rental operations. Income from this source is derived
from leasing individual apartment units to customers who have
lease terms ranging from month-to-month to 12 months. The Company also generates additional income from the periodic
sale of selective real estate properties. The sale of these properties
is part of Boardwalks overall operating strategy whereby the
equity generated through the sale is then used by the Corporation
to acquire new rental properties, to assist in its property value
enhancement program or to acquire the Corporations common
stock in public markets. The Company assesses and measures segment operating results
based on a performance measure referred to as Funds From
Operations (FFO). FFO is a generally accepted measure of
operating performance of real estate companies; however, it is a
non-GAAP measurement. The Company calculates FFO by
taking net earnings and adding back non-cash items, including
future income taxes and amortization. FFO is currently
referenced on Boardwalks consolidated statement of cash flows.
The Corporations calculation methodology for FFO may differ
from that of other real estate companies and REITs. At the beginning of the 2002 fiscal year, Management set out
selective performance targets for fiscal 2002. The following chart
compares Boardwalks forecasted performance to its actual
results in fiscal 2002. Explanations for any significant variances
are provided below the chart.




22    ANNUAL
REPORT2002



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##### 





Actual Results 02 Actuals
    
    

02 Projected
    
    

01 ActualsFFO Rental Operations
    
    $
    1.24
    
    
    $
    1.09
    
    
    $
    0.99FFO Property Sales
    
    $
    0.02
    
    
    $
    0.10
    
    
    $
    0.16Total FFO
    
    $
    1.26
    
    
    $
    1.19
    
    
    $
    1.15New Unit Acquisitions
    
    
    3,558
    
    
    
    1,000 to 2,000
    
    
    
    1,362Stabilized Building NOI
    
    
    7.5%
    
    
    
    3.0%
 (all figures are on a per share basis unless noted otherwise) The actual total FFO results posted for fiscal 2002 were well ahead
of the original projected amount. The main reasons for these
higher-than-expected results are as follows: Rental Operations  
 
 In the first quarter of 2002, Boardwalk received a rebate on
the sale of a Viking-Kinsella production plant by ATCO Gas. Under existing regulations, the proceeds of this sale were
required to be rebated to natural gas consumers in northern
Alberta. The amount of the rebate was approximately
$3.4 million, or $0.06 per share.  
 
 On May 1, 2002, Boardwalk acquired 3,100 units in Montreal,
Quebec. This acquisition contributed approximately $0.09 per
share to FFO during fiscal 2002, significantly above the
original contribution projected for new acquisitions. The companys core rental operations also exceeded our original
expectations, as detailed in our Stabilized Properties NOI
narrative below. One area of our 2002 forecast, that was below original
projection, was the contribution from property sales during
the year. The reason for this variance was that management
determined that there were other lower cost of capital
alternatives available to assist in the funding of existing
liquidity requirements. New Unit Acquisitions We exceeded our projection of between 1,000 and 2,000 new unit
acquisitions in fiscal 2002 mainly as a result of our Montreal
acquisition of 3,100 units. Stabilized Properties NOI NOI, or Net Operating Income, includes all rental revenue
generated at the rental property level, less related direct
costs such as utilities, property taxes, insurance and on-site
maintenance wages and salaries. Stabilized Properties are defined as properties that have been
owned by the Corporation for 24-months period or longer.








Boardwalks stabilized propertiesreported an increase in
reported NOI of 7.5% as compared to an expectation of 3.0%.
The higher-than-expected result was the combined effect of
the gas rebate received in the first quarter due to the sale of a
Viking-Kinsella production plant by ATCO Gas, along with
higher than anticipated revenue and lower than anticipated
operating costs. FINANCIAL PERFORMANCE SUMMARYAt a Glance in 000s except per share amounts 2002
    
    
    2001
    
    
    % changeTotal Assets
    
    $
    1,708,490
    
    
    $
    1,489,291
    
    
    
    15Total Revenue
    
    $
    249,394
    
    
    $
    227,269
    
    
    
    10Total Rental Revenue
    
    $
    241,896
    
    
    $
    205,281
    
    
    
    18Net Earnings (loss)
    
    $
    11,576
    
    
    $
    (12,802
    )
    
    
    N/AFunds from Operations
    
    $
    63,052
    
    
    $
    57,941
    
    
    
    9Net Earnings (loss)
per Share
    
    $
    0.23
    
    
    $
    (0.26
    )
    
    
    N/AFunds from Operations
per Share
    
    $
    1.26
    
    
    $
    1.15
    
    
    
    10Funds from Operation per
Share Excluding Gains
    
    $
    1.24
    
    
    $
    0.99
    
    
    
    25
 Total Assetsincreased by 15% over the amount
reported in 2001. The increase was mainly the
result of the large property acquisition in
Montreal. Total Revenue & Total Rental Revenueincreased by
10% and 18% respectively, the result of increased
rental rates enhanced by revenue generated by new
acquisitions. Net Earningsincreased from 2001 reported amounts,
mainly the result of improvements to rental
property performance, partially offset by reduced
contribution from sales of properties held for
resale. In addition, a technology provision charge
of $29.8M was taken in fiscal 2001. This charge
will be discussed later in the MDA. Funds from Operations per Shareincreased by 10%
andFunds from Operations per Share Excluding
Gainsincreased 25% compared to the prior fiscal
year, the result of improvements to rental
property performance, enhanced by new property
acquisitions. FINANCIAL STATEMENT ANALYSIS
Consolidated Statement of Earnings Rental Operations The amount reported as rental revenue excludes
interest revenue generated. Boardwalk, from time to
time, will generate revenue from interest charged
on vendor mortgages receivable (a more detailed
discussion on this will be provided later in the
MDA) and from the investment of excess cash
available.




2002ANNUAL
REPORT    23



---



##### 





These excess funds are invested in low-risk
interest-bearing investments. The amount of
interest revenue reported for fiscal 2002 was $1.8
million as compared to $1.4 million for fiscal
2001. Due to the insignificance of these amounts,
they are included in rental income in the
statement of earnings. However, the amounts
referred to as rental revenues in the remainder of
the MDA exclude the interest revenue component. In
addition, certain comparative figures for fiscal
2001 have been reclassified to conform with the
current years presentation or as a result of
accounting changes. in 000s except per unit amounts 2002
    
    
    2001
    
    
    % changeRental Revenue
    
    $
    240,082
    
    
    $
    203,894
    
    
    
    18ExpensesOperating expenses
    
    $
    26,229
    
    
    $
    21,969
    
    
    
    19Utilities
    
    $
    32,547
    
    
    $
    31,549
    
    
    
    3Utility rebate
    
    $
    (3,705
    )
    
    $
    (4,967
    )
    
    
    -25Property taxes
    
    $
    23,686
    
    
    $
    19,743
    
    
    
    20$
    78,757
    
    
    $
    68,294
    
    
    
    15Net rental
operating income
    
    $
    161,325
    
    
    $
    135,600
    
    
    
    19Average rent
per unit per month
    
    $
    716
    
    
    $
    664
    
    
    
    8Operating costs
per unit per month
    
    $
    235
    
    
    $
    223
    
    
    
    5
 Overall, Boardwalks rental operations reported strong results.
The reported increase of 18% in rental revenueis the combined
effect of increased rental levels on existing properties together
with new revenue generated through the acquisition of
apartment units throughout the year. Total rental expenses
increased by 15%, again the combined result of increased costs
from existing operations plus the additional costs associated with
new unit acquisitions. A significant reduction in the amount of
utility rebatesreceived in 2002 also placed upward pressure on
overall reported costs year-over-year. Boardwalk closely and individually manages the performance
of each of its rental properties. For the readers convenience,
we have provided a summary of our operating results on a
province-by-province basis.








Alberta Rental Operations in 000s except per unit amounts 2002
    
    
    2001
    
    
    % changeRental Revenue
    
    $
    151,397
    
    
    $
    141,609
    
    
    
    7ExpensesOperating expenses
    
    $
    15,502
    
    
    $
    14,229
    
    
    
    9Utilities
    
    $
    21,036
    
    
    $
    21,442
    
    
    
    -2Utility rebate
    
    $
    (3,399
    )
    
    $
    (4,921
    )
    
    
    -31Property taxes
    
    $
    11,380
    
    
    $
    10,281
    
    
    
    11$
    44,519
    
    
    $
    41,031
    
    
    
    9Net operating income
    
    $
    106,878
    
    
    $
    100,578
    
    
    
    6Average rent
per unit per month
    
    $
    739
    
    
    $
    694
    
    
    
    6Operating costs
per unit per month
    
    $
    217
    
    
    $
    200
    
    
    
    9Operating margins
    
    
    70.6
    %
    
    
    71.0
    %
 Boardwalks Alberta operations continued to report
strong results showing a 7% increase in rental
revenuein 2002, the result of increased rental
rates combined with new revenue derived from third
party communication services and product providers.
Total rental expensesincreased by 9%, mainly due
to increased property tax assessments in both
Calgary and Edmonton. The Company has launched
appeals of many these tax increases; however, the
amount posted does not reflect any potential
reductions in this area. During the year, the Company also received a
utility rebateof $3.4 million. The rebate resulted
from the sale of a Viking-Kinsella production plant
by ATCO Gas. Under existing regulations, the
proceeds of this sale were required to be rebated
to natural gas consumers in northern Alberta. The $4.9 million utility rebatereported in 2001
was the result of two separate rebate programs
implemented by the Government of Alberta. The first
rebate program was provided to assist with the
increasing cost of natural gas. Natural gas prices
in 2001 had increased more than 300% from previous
periods as a result of increased demand in North
America. The natural gas rebate program consisted
of a rebate of $6.00 per gigajoule used by
residential users. This program, which ran from
January 1, 2001 to March 31, 2001, accounted for
the majority of Boardwalks 2001 utility rebate.




(FUNDS FROM OPERATIONS BAR GRAPH)
    
    (NET RENTAL OPERATING INCOME BAR GRAPH)
    

(TOTAL RENTAL REVENUE BAR GRAPH)


24    ANNUAL
REPORT2002



---



##### 





The remainder of the 2001 utility rebaterelates to an electrical
rebate program offered during the 2001 fiscal year. Effective
January 1, 2001, Alberta deregulated its electrical industry; this,
combined with a significant increase in demand, resulted during
2001 in an electrical rate increase three times higher than in
previous years. To assist residential customers with the sudden
increase, the Alberta government instituted an electrical rebate
program based on usage whereby residential customers were
rebated $0.03 per Kwh of usage. Saskatchewan Rental Operations in 000s, except per unit amounts 2002
    
    
    2001
    
    
    % changeRental Revenue
    
    $
    32,893
    
    
    $
    31,858
    
    
    
    3ExpensesOperating expenses
    
    $
    4,163
    
    
    $
    3,512
    
    
    
    19Utilities
    
    $
    3,979
    
    
    $
    4,223
    
    
    
    -6Property taxes
    
    $
    4,778
    
    
    $
    4,808
    
    
    
    -1$
    12,920
    
    
    $
    12,543
    
    
    
    3Net operating income
    
    $
    19,973
    
    
    $
    19,315
    
    
    
    3Average rent
per unit per month
    
    $
    592
    
    
    $
    573
    
    
    
    3Operating costs
per unit per month
    
    $
    233
    
    
    $
    225
    
    
    
    3Operating margins
    
    
    60.7
    %
    
    
    60.6
    %
 Boardwalks Saskatchewan portfolio reported higher operating
results in 2002 than those in the prior year. Rental revenuewas
up 3%, due mainly to an increase in average rental rates from
$573 per unit per month in 2001 to $592 in 2002. New revenue
was also derived from third-party communication services and
product providers during 2002. Total rental expensesas a whole
were slightly higher compared to those reported in the prior year.
The Corporation experienced a significant increase in operating
expenses in 2002, particularly as a result of higher staff turnover
and insurance costs. These increased costs were partially offset
by the decrease in reported utility expense, the combined result
of decreased usage and lower overall resource prices. Ontario Rental Operations in 000s, except per unit amounts 2002
    
    
    2001
    
    
    % changeRental Revenue
    
    $
    33,327
    
    
    $
    29,645
    
    
    
    12ExpensesOperating expenses
    
    $
    4,473
    
    
    $
    3,425
    
    
    
    31Utilities
    
    $
    5,074
    
    
    $
    5,800
    
    
    
    -13Property taxes
    
    $
    5,364
    
    
    $
    4,662
    
    
    
    15$
    14,911
    
    
    $
    13,887
    
    
    
    7Net operating income
    
    $
    18,416
    
    
    $
    15,758
    
    
    
    17Average rent
per unit per month
    
    $
    672
    
    
    $
    642
    
    
    
    5Operating costs
per unit per month
    
    $
    301
    
    
    $
    301
    
    
    
    0Operating margins
    
    
    55.3
    %
    
    
    53.2
    %








Boardwalks Ontario properties reported strong financial results
in 2002 in comparison to fiscal 2001. Rental revenue increased
by 12% over the fiscal 2001 reported results while total rental
expenses increased by 7% over fiscal 2001. These increases
were primarily due to properties acquired partially through the
2001 fiscal year having a full year impact on fiscal 2002. Other
contributing factors to the increase in total rental expenses in
2002 were increased staff turnover costs, insurance costs and
property taxes. Property taxes increased as a result of an increase
in property tax assessments. The Company has launched appeals
of many these tax increases; however, the amount posted does
not reflect any potential reductions in this area. Quebec Rental Operations (8 months operations) in 000s, except per unit amounts 2002
    
    
    2001Rental Revenue
    
    $
    21,962
    
    
    $
    ExpensesOperating expenses
    
    $
    2,147
    
    
    $
    Utilities
    
    $
    1,906
    
    
    $
    Property taxes
    
    $
    2,074
    
    
    $
    $
    6,127
    
    
    $
    Net operating income
    
    $
    15,835
    
    
    $
    Average rent
per unit per month
    
    $
    871
    
    
    $
    Operating costs
per unit per month
    
    $
    243
    
    
    $
    Operating margins
    
    
    72.1
    %
    
    
    
 In May of 2002, the Company closed on an acquisition in
Montreal, Quebec. Specific details of this transaction will be
discussed later in the MDA. This acquisition of 3,100 units
marked Boardwalks initial foray into the Quebec property rental
market. In November 2002, the Company added an additional
346 units in Quebec City. The Quebec acquisitions occurred
during fiscal 2002; thus, there are no reported comparative
amounts for fiscal 2001. Operational Sensitivities Given the nature of Boardwalks rental operations, certain
sensitivities exist that may have a material impact on the
Corporations overall operational outcome. The most significant
of these sensitivity factors is vacancy. As with all real estate rental operators, Boardwalk has
sensitivity toward vacancy. Based on the current reported
market rent, a 1% annualized change in reported vacancy would
impact overall rental revenues by approximately $2.6 million,
or $0.05 per share on a diluted basis.




2002ANNUAL
REPORT    25



---



##### 





Stabilized Building Analysis Boardwalks stabilized buildings continue to report strong
results. As the reader may recall, a stabilized property is defined
as a property that has been owned by the company for a period
of 24 months or longer. Year ended December 31, 2002 Rev %
    
    Op%
    
    NOI%Calgary
    
    
    2.8
    %
    
    
    8.9
    %
    
    
    0.7
    %Edmonton
    
    
    8.6
    %
    
    
    -2.5
    %
    
    
    13.9
    %Other Alberta
    
    
    1.5
    %
    
    
    3.7
    %
    
    
    0.6
    %Ontario
    
    
    5.3
    %
    
    
    -0.4
    %
    
    
    10.0
    %Saskatchewan
    
    
    2.9
    %
    
    
    3.5
    %
    
    
    2.5
    %5.5
    %
    
    
    1.4
    %
    
    
    7.5
    %
 With the 2002 net operating income up 7.5% compared to
the prior year on Boardwalks stabilized buildings, the overall
value of Boardwalks portfolio continues to increase. Fiscal 2002
revenues increased by 5.5%, mainly the result of higher than
average rental rates per unit per month. Operating costs
increased in 2002 by 1.4%; however, the reader is cautioned that
the 2002 operating costs were reduced by a one-time utility
rebate of approx $3.4 million, the majority of which was
absorbed by the Edmonton properties. This rebate is not
anticipated to be available in fiscal 2003. Furthermore, the 2001
operating costs were reduced by one-time utility rebates totaling
approximately $5 million, exceeding the 2002 rebate by
$1.6 million. Financing Costs Boardwalks acquisition strategy involves locating and acquiring
good properties at prices below replacement value. Once acquired,
these properties undergo value-enhancing upgrades as part of the
Companys stabilization program. Boardwalk utilizes external
financing to leverage these properties up to 85% of the purchase
price and, where appropriate, the Corporation adds additional
financing for all upgrades performed on the properties. Boardwalk concentrates on multi-family residential real estate,
thus it is eligible to obtain government-backed insurance through
the National Housing Act (NHA), administered by CMHC.
The benefits of purchasing this insurance are threefold. The
first
benefit of using this insurance allows Boardwalk to increase the
lending limit on its properties from the conventional 75% threshold to 85%.








The second benefit of using CMHC insurance is that the Company
can normally obtain a lower interest rate spread on its property
financing. Although the amount of the interest rate spreads will
vary, they are currently between 50 and 80 basis points above
the respective Government of Canada Bonds. This compares
favourably to the spreads on conventional financing, which
currently range from 120 to 175 basis points. The third benefit relates to the lowering of Boardwalks overall
renewal risk. Once insurance is obtained on the related mortgage,
the insurance is transferable and follows the mortgage for
the complete amortization period, usually 25 years. With the
insurance being transferable between lenders, it lowers the
overall risk of the Corporation not being able to refinance the
asset on maturity. Boardwalks financing costs for fiscal 2002 were $74.3 million,
up $8.7 million from $65.6 million reported for the 12 months
ended December 31, 2001. The increase occurred as the
Corporation increased its leverage on existing properties to assist
in the acquisition of new properties and to assist in Boardwalks
capital improvements program. The increase in financing costs in fiscal 2002 was partially
offset by a decrease in the Companys overall weighted average
interest rate. On December 31, 2002, the Corporations mortgage
portfolio of $1.3 billion had a weighted average interest rate of
5.88% compared to 6.15% on December 31, 2001. The decrease
in average interest rates during fiscal 2002 was the result of the
Company refinancing existing and new mortgages at rates lower
than in the past. With the lower interest rate environment in
2002, Boardwalk was able to fill in certain parts of its reported
maturity schedule yet still not overly expose the company to any
one particular year of interest rate fluctuations. Interest Rate Sensitivity Although Boardwalk manages its financing risk in a variety
of ways (as discussed later in this MDA), it is important for the
reader to understand the potential impact to the Corporation
as a whole with respect to significant interest rate changes.
An annualized 1% change in the market interest rate on all of
Boardwalks outstanding debt would have an estimated impact of
$13 million, or $0.26 per diluted share. The reader should
note that Boardwalk carefully manages the maturity dates of




(UNITS PIE CHART)
    
    (GROSS RENTAL PIE CHART)
    

(RENTAL INTEREST COVERAGE BEFORE CORPORATE CHARGES BAR CHART)


26    ANNUAL
REPORT2002



---



##### 





its outstanding mortgages; thus, the Corporation has only
$199 million of maturing debt for fiscal 2003. The sensitivity for
debt maturing in fiscal 2003 to a 1% interest rate change is
approximately $2 million. Properties Held For Resale Although not considered core operations, the selective sale of
non-core and other properties continues to be a part of
Boardwalks overall operating strategy. These asset sales permit
Boardwalk to access additional equity, which is then reinvested
in new acquisitions or utilized in Boardwalks value added
capital program. in 000s, except per share amounts 2002
    
    
    2001Total proceeds
    
    $
    7,498
    
    
    $
    21,988Net book value
    
    $
    6,531
    
    
    $
    13,939Gain on sale
    
    $
    967
    
    
    $
    8,049FFO per share
    
    $
    0.02
    
    
    $
    0.16Units sold
    
    $
    121
    
    
    $
    307
 During 2002, the Company sold a total of 121 units for an
average price of $62 thousand per unit. This compares to the 307
units sold in 2001 at an average price of $72 thousand per unit.
The sale price per unit depends on a number of factors,
including the type and location of the building. Overall, the
contribution to the Corporations FFO from property sales
represented $0.02 per share in 2002, down from the $0.16 per
share reported in 2001. The decrease in contribution in fiscal
2002 was the result of the lower number of units sold, along with
a lower price per unit sold. Administration Included in administration expenses are costs associated with
Boardwalks centralized administrative functions, its regional
distribution centers, provincial capital tax, as well as the
Corporations on-site marketing and service associates. The $19.9
million reported for fiscal 2002 was an increase of $3.4 million
over the prior year. The increase resulted from the expansion of
the Corporations apartment base in 2002, along with an increase
in the wage costs for existing associates. Also, in January 2002,
Boardwalk implemented a new executive compensation plan
through which senior executives began to receive a base salary
along with a target-based bonus incentive. Prior to 2002, the
Companys senior executives were compensated solely through
the granting of stock options. Amortization Amortization expense is a charge taken against the Corporations
earnings to reflect the estimated depreciation to the Companys
fixed assets that has occurred during the reporting period
in question. Although multi-family property assets have
historically appreciated in value over time, under existing Generally Accepted Accounting








Principles, amortization charges
are required during each reporting period. To address the
uniqueness of the amortization of these long-term assets, many
corporations amortize their building assets using the sinking
fund method. Boardwalk reviews its key amortization estimates on an ongoing
basis and, if warranted, will adjust these estimates on a prospective
basis. On October 1, 2001, the Corporation revised the estimated
useful life on its concrete low-rise and wood-frame construction
buildings, including town homes, to have a maximum life
not exceeding 40 years for amortization purposes. As per the
Companys previous reporting practices, high-rise concrete
buildings were determined to have a maximum life of 50 years. Each project was also reviewed on an individual basis, and a
shorter amortization life was given to projects where warranted
(factors reviewed include construction materials, location
of property and capital maintenance). These changes in
amortization estimates resulted in a one-time $700,000 charge
against the Companys 2001 fourth quarter results. For 2002, Boardwalk revised the estimates on the economic
benefits of certain non-building asset classifications. This change
in accounting estimate was treated prospectively. Gain on Debt Settlement Under current Canadian GAAP, when the interest rate charged on
the associated debt for an acquired asset is higher (lower) than
the prevailing market rate at the time of the purchase, a fair value
adjustment is added (deducted) to (from) the asset purchase price.
In 2002, with the purchase of the Nuns Island portfolio in
Montreal, Boardwalk assumed the existing debt of the portfolio.
At the time of the purchase, the interest rate on this assumed debt
was deemed to be higher than the prevailing market interest
rates. In the fourth quarter of 2002, the Corporation was able to
refinance this assumed debt and, with the resulting reduction in
interest rates realized a gain of $700,000 on the debt settlement. Provision for Loss on Technology During the third quarter of fiscal 2001, Boardwalk took a
one-time estimated write-down of $27.5 million associated with
the technology initiative referred to as Suite Systems Inc. (SSI)
and for the Corporations investment in Homexpress Limited
(HomeXpress). This provision estimate was increased in the
fourth quarter of 2001 by an additional $2.3 million, bringing the
total provision to $29.8 million. SSI was to provide customers
a complete bundled communication solution including digital
cable, Internet and telephone over one common fiber connection.
After numerous assessments of alternative business models, it
became clear that the economic and capital market environment,
combined with delays in obtaining access rights in our target
markets and the high cost of capital, placed the value of
this reported asset in question. No such provision was recorded
in fiscal 2002.




2002ANNUAL
REPORT    27



---



##### 





Future Income Taxes During 2002, the Corporation reported future income taxes of
$5.4 million. This amount can be attributed to reported earnings
for the 2002 year. This future income tax liability has been
partially offset to reflect the corporate income tax reductions
contained in the recent provincial and federal budget proposals.
More detail on this calculation is found in Note 8 of the 2002
consolidated financial statements on page 51. The reader should
note that this is not a cash tax payable, and in fact, that
Corporation has an estimated $185.2 million available to offset
future income taxes. The reported tax shield will begin to expire
in 2005. Under current Canada Customs and Revenue Agency
administrative policy, companies are allowed to re-file historic
returns if they wish to remove or reduce selective elective
expenditure such as tax depreciation. If warranted, it is
Boardwalks intention to re-file these returns lowering the elective
expenses in an attempt to recapture these expiring losses. Net Earnings For fiscal 2002, Boardwalk reported net earnings of $11.6 million,
or $0.23 per share. This compares favorably to a net loss of $12.8
million, or $0.26 per share for fiscal 2001. The significant
increase in earnings in fiscal 2002 is the combined result of new
acquisitions and improved performance by Boardwalks existing
portfolio. Further, as noted previously, the Corporation recorded
a significant charge in 2001 for losses associated with its SSI and
Homexpress initiatives. The increases year-over-year were partially
offset by a decrease in property sales during fiscal 2002. Consolidated Statement of Cash Flows OPERATING ACTIVITIES
Cash Flow from Operations Boardwalk prepares its financial statements in accordance with
the recommendations of the Canadian Institute of Public and
Private Real Estate Companies (CIPPREC) and the Canadian
Institute of Chartered Accountants (CICA). CIPPREC has adopted
a measurement of FFO to supplement net income as a measure
of operating performance. This is considered to be a meaningful
and useful measure of real estate operating performance.
Boardwalks presentation of FFO is consistent with the definition provided








by CIPPREC. This measure is not necessarily
indicative of cash available to fund cash needs and should not
be considered as an alternative to cash flow as a measure of
liquidity. FFO does not represent cash flow from operations as
defined by Canadian GAAP. Boardwalk considers FFO to be an
appropriate measure of the performance of a publicly listed
multi-family residential corporation. In order to facilitate a
clear understanding of the combined historical operating
results of the Company, Management feels FFO should be
considered in conjunction with net earnings as presented in
the consolidated financial statements, as referenced in this
document. The Corporation computes FFO as follows: in 000s, except per share amounts 2002
    
    
    2001Net Earnings
    
    $
    11,576
    
    
    $
    (12,802
    )Add backIncome taxes (recovery)
    
    $
    5,420
    
    
    $
    (12,678
    )Amortization
    
    $
    46,748
    
    
    $
    53,584Gain on settlement debt
    
    $
    (692
    )
    
    $
    Provision for loss on
technology investment
    
    $
    
    
    
    $
    29,837$
    63,052
    
    
    $
    57,941Funds from Operations per Share
    
    
    1.26
    
    
    
    1.15
 The reader is cautioned that Boardwalks calculation of FFO may
be different from other real estate corporations or REITs, and as
such, a straight comparison may not be warranted. For the fiscal
period ended December 31, 2002, Boardwalk reported FFO of
$63.1 million, or $1.26 per fully diluted share; this was up 9%
compared to the $57.9 million, or $1.15 per fully diluted share,
reported for fiscal 2001. The increase is the combined result of
new acquisitions and the increased performance by Boardwalks
existing apartment portfolio, and was partially offset by the
decrease in funds from the sales of properties held for resale. FINANCING ACTIVITIESRepurchase of Capital Stock Boardwalk continued its normal course issuer bid during
fiscal 2002. During 2002, a total of $1.2 million (96,600 shares  average purchase price of $12.07 per share) was allocated to the
purchase of its own capital stock in the market. This compares
to $10.3 million (879,600 shares  average purchase price of
$11.72 per share) for fiscal 2001. The normal course issuer bid




(NET EARNINGS CDN BAR CHART)
    
    (NET EARNINGS BAR CHART)


28    ANNUAL
REPORT2002



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allows the Company to purchase up to 3,267,840 common shares,
representing 10% of its public float, through the facilities of the
Toronto Stock Exchange. Boardwalk believes that the current and
recent market prices of its common shares do not reflect their
underlying value. Boardwalks management expects to continue
with this program on a periodic basis, depending on the market
price and other factors, including alternative uses for the
Companys capital. Financing of Revenue Producing Properties During the year ended December 31, 2002, the financing for new
acquisitions and the refinancing of existing properties totalled
approximately $305.8 million versus $169.1 million for the year
ended December 31, 2001. With this new financing, Boardwalk
was able to reduce the weighted average interest rate on its mortgage
portfolio from 6.15% at December 31, 2001 to 5.88% at
December 31, 2002. Deferred Financing Costs Incurred Deferred financing costs incurred relate to the amount of
premiums paid during the current year for NHA mortgages.
As was discussed in detail in the Financing Costs section,
there are significant advantages of obtaining this insurance.
The $5.5 million reported in 2002 is up significantly from the
prior years $2.6 million, the result of an increased number of
mortgages obtaining this insurance. The insurance itself is tied
directly to the mortgage and is good for the entire amortization
of the mortgage, in general 25 years. The most significant
addition in 2002 was the refinancing of the 3,100 units in
Montreal in the fourth quarter of 2002. This transaction alone
accounted for approximately $3.2 million, or 58.0% of the
amount reported in 2002. INVESTING ACTIVITIES
Purchase of Revenue Producing Properties During 2002, the Corporation acquired 3,558 new rental units
for a total purchase price, including fair value adjustment, of
$233.3 million, or an average of approximately $66,000 per unit.
This compares to 1,362 apartment units acquired during fiscal 2001
with an average purchase price of approximately $43,000 per unit.








in 000s, except per share amounts 2002
    
    
    2001Purchase Price
    
    $
    213,755
    
    
    $
    58,298Fair Value Adjustment
    
    $
    19,500
    
    
    $
    $
    233,255
    
    
    $
    58,298Average Price Per Unit
    
    $
    65,600
    
    
    $
    42,800
 On May 1, 2002, the Corporation acquired 3,100 apartment units
in Montreal, Quebec. The acquisition cost of $199.7 million,
including property transfer charges and fair value adjustment,
was funded by a combination of cash on hand and available
acquisition facilities. The Corporation also assumed $129.1
million of existing first and second mortgage financing,
adjusted for fair value. The assumed debt had a weighted
average interest rate of 9.32%. The purchase price equated to
approximately $64,000 per unit and under $65 per net rentable
square foot. The estimated going-in return for the acquisition
was 10.8%, excluding financing costs. The high-quality Nuns Island portfolio consists of 59 apartment
buildings and 260 townhouse units, all clustered within an
80-acre land parcel. The portfolio includes high-rise, mid-rise
and townhouse-style rental buildings, a total of approximately
3.1 million rentable square feet with an average unit size of
approximately 1,000 square feet. The Nuns Island portfolio is situated on property controlled
by a ground lease that expires in November 2064. The ground
lease contains a rent revision clause, which is phased in on a
property-by-property basis commencing on December 1, 2008
and continuing to 2015. The rent revisions will be based on
75% of the land value in its current use. After that revision,
the land rent will remain constant until 2064. There are no
participation clauses in the ground lease. Additional apartment acquisitions occurred in London, Regina
and Quebec City; however, none of these was as significant as
the one in Montreal. Project Improvements to Revenue Producing Properties Boardwalks value enhancement program creates long-term
benefits for the enhanced properties. As a result, the Corporation
capitalizes selected value enhancements under the category of
project improvements and amortizes them accordingly. The total
amount of funds expended for renovations and project




(TOTAL ASSETS BAR CHART)
    
    (AVERAGE ACQUISITION COST PER UNIT BAR CHART)
    

(PORTFOLIO BY PROVINCE PIE CHART)


2002ANNUAL
REPORT    29



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improvements in 2002 was approximately $39.4 million
compared to $52.9 million for fiscal 2001. Included in these
amounts was Managements estimate with respect to the
capitalization of on-site associate wages and salaries that
assisted in the enhancement program. The project improvements
reported in fiscal 2002 included $4.7 million of capitalized
on-site wages and salaries. This compares to the $4.5 million of
capitalized wages for 2001. The amount is up slightly from
previous years. The result of the increased number of units
offset by an increase in the estimated amount. This is consistent
with the continued maturing of Boardwalks portfolio. CONSOLIDATED
BALANCE SHEET
Mortgages and Accounts Receivable The majority of the amounts reported as mortgages and accounts
receivable in the Boardwalk financial statements consist of
vendor mortgages, obtained as part of the normal course of the
building sale process. All mortgages are to unrelated third
parties. The decrease in the amount reported on December 31,
2002, compared to December 31, 2001, was the result of the
settlement on maturity of some of these vendor mortgages.
All outstanding mortgages are in good standing. On the sale of
the properties, many of these vendor mortgages earned a lower
interest rate compared to market; as a result, the Corporation
had discounted the value of these mortgages and reduced the
reported gain on the associated property sales. Mortgages Payable Boardwalks long-term debt consists mainly of low-rate, fixed-term
mortgage financing. All amounts are secured by individual
mortgages or debentures registered against the appropriate real
estate assets. The maturity dates for this debt has been staggered
to lower the Corporations overall interest rate risk. The Corporations mortgages payable on December 31, 2002 was
$1.3 billion, compared to $1.1 billion reported on December 31,
2001. This increase is the result of the continued growth of the
Company, including the assumption and refinancing of existing
debt on some new acquisitions. After a new acquisition and during the stabilization period,
Boardwalks strategy is to complete value-added upgrades, as
appropriate. The resulting increased property value then enables
the Corporation to obtain additional mortgage proceeds to
finance additional capital improvements or acquisitions.








During fiscal 2002, Boardwalk refinanced certain maturing
mortgages to higher levels, demonstrating the value creation
that is occurring in its portfolio. The Corporation utilized
these additional funds to assist in the financing of capital
improvement projects. Although there has been an increase in debt per unit in 2002,
Boardwalks overall weighted average interest rate has decreased
from the prior year. The Corporations weighted average interest
rate on December 31, 2002 was 5.88% compared to 6.15% on
December 31, 2001. To better maintain cost effectiveness and flexibility of capital,
Boardwalk continuously monitors short-term and long-term
interest rates. If the environment warrants, the Corporation will
convert short-term, floating-rate debt to longer term, fixed
rate mortgages. Boardwalks Debt Maturity Schedule Mortgage BalanceFiscal Year
    
    Dec. 31, 2002 (000s)
    
    
    Yearly Average2003
    
    $
    199,183
    
    
    
    5.27
    %2004
    
    $
    97,438
    
    
    
    6.24
    %2005
    
    $
    71,548
    
    
    
    6.28
    %2006
    
    $
    93,343
    
    
    
    5.80
    %2007
    
    $
    226,785
    
    
    
    5.44
    %2008
    
    $
    227,024
    
    
    
    6.14
    %2009
    
    $
    162,168
    
    
    
    6.06
    %2010
    
    $
    62,576
    
    
    
    6.89
    %2011
    
    $
    74,974
    
    
    
    6.23
    %2012
    
    $
    36,830
    
    
    
    6.27
    %2013
    
    $
    22,017
    
    
    
    5.67
    %Subsequent
    
    $
    33,291
    
    
    
    6.36
    %Total
    
    $
    1,307,177
    
    
    
    5.88
    %
 LIQUIDITY
AND RISK
Liquidity Boardwalks objective is to ensure, in advance,
that ample capital resources are available for the
execution of its business plan. Capital resources
are defined as the combination of mortgage debt,
share capital equity, internally generated equity




(CAPITAL UPGRADES BAR CHART)
    
    (DEBT TO EQUITY BAR CHART)


30    ANNUAL
REPORT2002



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and cash on hand. Significant liquidity provides greater
certainty as to execution, which in turn gives the Corporation a
competitive advantage in its negotiation and acquisition
of additional investments. The selective conversion of
lower-yielding mature properties into cash for reinvestment
into higher-yielding properties is another source of potential
liquidity for the Company. The Companys principal liquidity demands in the future are
expected to be the repayment of maturing mortgage debt and
the payment for ongoing operating costs, capital improvements
and acquisition of new rental units. The Company has also
engaged in the past, and may continue to engage in the future,
the re-purchasing of its own stock from the public market as part
of its previously announced normal course issuer bid or other
available vehicles. The Company intends to meet its short-term liquidity
requirements through net cash flows provided by operating
activities, the financing or refinancing of its real estate
properties and the use of existing cash reserves. If warranted,
the Company will also issue common stock. Over 90% of
Boardwalks mortgage debts are insured under Canadas
National Housing Act insurance program. This program allows
the Company to purchase insurance that essentially gives
the mortgage debt the backing of the Government of Canada
in case of default. The insurance itself is good for the entire
amortization period of the mortgage, which is usually 25 years.
At the end of the mortgage term, the debt (and its associated
insurance) is transferable to any accredited lenders. The addition
of this insurance significantly lowers the Corporations mortgage
renewal risk while allowing the Company to obtain rates at
significant discounts to conventional mortgage debt due to the
government backing. Currently, the Corporation has an operating and demand facility
with a Canadian chartered bank. This facility is secured by a
pledge of a group of specific assets. The amount available through
the demand facility varies with the value of pledged assets,
with the maximum limit not to exceed $100 million. This facility
carries an interest rate varying from prime plus 0.5% to prime
plus 1.5% per annum depending on the facility drawn, and it
has no fixed repayment terms. The facility is subject to annual
review by the bank. Currently, this facility has a credit limit of $57
million with approximately $34 million available for use. Cash
and cash equivalents of $23.6 million, as reported at December 31,
2002, has been used to assist in the acquisition of 1,129 units after
the end of the year. Details of these acquisitions are reported in
Note 12 to the 2002 audited consolidated financial statements. Risk and Risk Management Boardwalk, like most real estate rental companies, is exposed
to a variety of risk areas. These are classified between general
and specific risk areas. General risks are associated with general
economic conditions in the real estate sector and consist mainly of








commonly exposed risks affecting the industry.
Specific risks focus more on risks uniquely identified for
the Company, such as credit risk, market risk, liquidity risk and
operational risk. The following will address each of these risks
in more details. General Risks Real Estate Industry Risk:Real estate investments are generally
subject to varying degrees of risk, depending on the nature of the
property. These risks include: (i) changes in general economic
conditions (e.g., the availability and cost of mortgage funds),
(ii) changes in local conditions (such as an oversupply of space
or a reduction in demand for real estate in the area), (iii) changes
to government regulations (such as new or revised residential
tenant legislations), (iv) the attractiveness of a property to
potential tenants, (v) competition from others with available
space, and (vi) the ability of the landlord or owner to provide
adequate maintenance economically. Boardwalk currently operates in Canada, in the provinces of
Alberta, Saskatchewan, Ontario and Quebec. Neither Alberta nor
Saskatchewan is subject to rent control legislation; however,
under Alberta legislation the landlord is entitled to increase rents
only once every six months. A more detailed discussion on rent
controls will follow later in this section. Certain significant expenditures, including property taxes,
maintenance costs, mortgage payments, insurance costs and
related charges, must be made regardless of whether or not
a property is producing sufficient income to service these
expenses. Boardwalks properties are subject to mortgages, which
require significant debt service payments. If the Corporation were
unable or unwilling to meet the mortgage payments on any of
its properties, losses could be sustained as a result of the
mortgagees exercise of its rights of foreclosure or of sale.
Real estate is also relatively illiquid. Such illiquidity will tend to
limit Boardwalks ability to rebalance its portfolio promptly in
response to changing economic or investment conditions.
In addition, financial difficulties of other property owners,
resulting in distress sales, may depress real estate values in the
markets in which the Corporation operates. Multi-Family Residential Sector Risk:Boardwalks income-producing
properties generate income through rent payments
made by tenants. Upon the expiry of any lease, there can be no
assurance that the lease will be renewed or the tenant replaced.
The terms of any subsequent lease may also be less favourable to
Boardwalk than the existing lease. To mitigate this risk, the
Corporation does not have any one or small group of significant
tenants. Each operating lease signed is usually for a period
of 12 months or less. The Corporation depends on the leasing
markets to ensure vacant residential space is leased, expiring
leases are renewed, and new tenants are found to fill vacancies.
While it is not expected that markets will significantly change
in the near future, a disruption in the economy could have a




2002ANNUAL
REPORT    31



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significant impact on how much space tenants will lease and
the rental rates paid by tenants. This would affect the income
produced by Boardwalks properties as a result of downward
pressure on rents. Environmental Risk:As an owner and manager of real property,
Boardwalk is subject to various Canadian federal, provincial
and municipal laws relating to environmental matters. These
laws could saddle Boardwalk with liability for the costs of
removal and remediation of certain hazardous substances or
wastes released or deposited on or in its properties or disposed of
at other locations. The failure to remove or remediate such
substances, if any, could adversely affect Boardwalks ability to
sell its real estate or to borrow using real estate as collateral, and
could potentially also result in claims or other proceedings
against Boardwalk. Boardwalk is not aware of any material
non-compliance with environmental laws at any of its properties.
The Corporation is also not aware of any pending or threatened
investigations or actions by environmental regulatory authorities
in connection with any of its properties or any material pending
or threatened claims relating to environmental conditions at its
properties. Boardwalk has formal policies and procedures to
review and monitor environmental exposure. The Corporation
has made, and will continue to make, the necessary capital
expenditures for compliance with environmental laws and
regulations. Environmental laws and regulations can change
rapidly, and the Corporation may become subject to more
stringent environmental laws and regulations in the future.
Compliance with more stringent environmental laws and
regulations could have a material adverse effect on Boardwalks
business, financial condition, or results of operation. Ground Lease Risk:Four of Boardwalks properties, one in
Calgary, one in Edmonton and two in Montreal, are subject to
long-term ground leases and similar arrangements in which
the underlying land is owned by a third party and leased to the
Corporation. Under the terms of a typical ground lease, the
lessee must pay rent for the use of the land and is generally
responsible for all costs and expenses associated with the
building and improvements. Unless the lease term is extended,
the land together with all improvements made will revert to
the owner of the land upon the expiration of the lease term.
These leases are set to expire between 2028 and 2096.
The ground lease for the Montreal property, known as the Nuns
Island portfolio, is also subjected to a rent revision clause,
which commences on December 1, 2008. It is phased in on a
property-by-property basis through to 2015, and is based on 75%
of the land value in its current use. After that revision, the land
rent will remain constant thereafter until 2064. An event of
default by Boardwalk under the terms of a ground lease could
also result in a loss of the property subject to such ground lease
should the default not be rectified in a reasonable period of time.
The Corporation is not aware of any default under the terms of
the ground leases. Competition Risk:Each segment of the real estate business
is competitive. Numerous other residential developers and








apartment owners compete for potential tenants. Although it
is Boardwalks strategy to own multi-family properties in
premier locations in each market in which it operates, some of
the apartments of Boardwalks competitors may be newer, better
located or better capitalized. The existence of alternative housing
could have a material adverse effect on Boardwalks ability
to lease space in its properties and on the rents charged or
concessions granted, and could adversely affect Boardwalks
revenues and its ability to meet its obligations. General Uninsured Losses:Boardwalk carries comprehensive
general liability, fire, flood, extended coverage and rental loss
insurance with policy specifications, limits and deductibles
customarily carried for similar properties. There are, however,
certain types of risks (generally of a catastrophic nature such
as war or environmental contamination) that are either
uninsurable or not economically insurable. Boardwalk currently
has insurance for earthquake risks, subject to certain policy
limits, deductibles and self-insurance arrangements, and will
continue to carry such insurance if it is economical to do so.
Should an uninsured or underinsured loss occur, Boardwalk
could lose its investment in, and anticipated profits and cash
flows from, one or more of its properties, and would continue to
be obligated to repay any recourse mortgage indebtedness on
such properties. Insurance Covering Acts of Terrorism:Subsequent to the events
occurring on September 11, 2001, insurance companies for
the most part have specifically excluded acts of terrorism from
general property policies. With this new exposure, the Company
has acquired a separate insurance policy covering acts of
terrorism, exclusive of nuclear bombs and related devices, for up
to $100 million of damage on our property portfolio. This amount
represented the highest coverage possible on an economically
reasonable basis to protect the interest of our shareholders.
Any damage or business interruption costs as a result of
terrorism could result in a material cost to the Corporation. Specific Risks Credit Riskis the risk of loss due to failure of a contracted
customer to fulfill the obligation of required payments.
For Boardwalk, the key credit risk involves the possibility that its
customers will be unable or unwilling to fulfill their lease term
commitments. To mitigate this risk, the Company continues to
diversify its portfolio to various major centers across Canada.
Further, each of the Corporations rental units has its own
individual lease agreement; thus, Boardwalk has no material
financial exposure to any particular customer or group of
customers. The Company continues to utilize extensive screening
processes for all potential customers including, but not limited
to, detailed credit checks. Market Riskis the risk that the Company could be adversely
affected due to market changes in product supply, interest rates
and regional rent controls. Boardwalks principal exposures to
market risk are in the areas of new multi-family housing supply,




32    ANNUAL
REPORT2002



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changes to rent controls, utility price increases, property tax
increases, higher interest rates and mortgage renewal risk. Supply Riskis the risk that the Corporation would be negatively
affected by the new supply of, and demand for, multi-family
residential units in its major market areas. Key drivers of demand
include employment levels, population growth, demographic
trends and consumer confidence. Any significant amount of new
construction will typically result in an imbalance in supply
and cause downward price pressure on rents. No signs of
significant new rental construction are currently evident in any
of Boardwalks existing markets. Studies have shown that in
order to economically justify new rental construction in
Boardwalks major markets, an increase in existing rental rates of
hundreds of dollars will be necessary. However, in certain
market areas such as Calgary, Alberta, there has been a
significant increase in the number of new condominiums
constructed over the past few years. Although these normally
are earmarked as owner-occupied properties, a significant
number of these condominium units have been, or may be,
converted to rental stock. Risk Management for Supply Boardwalks performance will always be affected by the supply
and demand for multi-family rental real estate in Canada.
The potential for reduced rental revenue exists in the event that
Boardwalk is not able to maintain its properties at a high level of
occupancy, or in the event of a downturn in the economy, which
could result in lower rents or higher vacancy rates. Boardwalk
has minimized these risks by:  
 
 Increasing customer satisfaction.  
 
 Diversifying its portfolio across Canada, particularly with
the recent expansion into the eastern market, thus lowering its
exposure to regional economic swings.  
 
 Acquiring properties only in desirable locations, where
vacancy rates for properties are higher than city-wide
averages but can be reduced by repositioning the properties
through better management and selective upgrades.  
 
 Holding a balanced portfolio which includes a variety of
multi-family building types including high-rise, townhouse,
garden and walkups, each with its own market niche.  
 
 Maintaining a wide variety of suite mix, including bachelor
suites, one, two, three and four-bedroom units.  
 
 Building a broad and varied customer base, thereby avoiding
economic dependence on larger-scale tenants.  
 
 Focusing on affordable multi-family housing, which is
considered a stable commodity.  
 
 Developing a specific rental program characterized by rental
adjustments that are the result of enhanced service and
superior product.









 
 Developing regional management teams with significant
experience in the local marketplace and combining this
experience with Boardwalks existing operations and
management expertise. Interest Riskis the combined risk that the Company would
experience a loss as the result of its exposure to a higher
interest rate environment (Interest Rate Risk) and the possibility
that at the term maturity of a mortgage the Company would be
unable to renew the maturing debt either with the existing lender
or with a new lender (Renewal Risk). The Company manages its Interest Rate Risk by maintaining a
balanced mortgage portfolio with varying terms to maturity,
whereby no significant amount comes due in any particular
period. In addition, the majority of Boardwalks debt is insured
with NHA insurance. This insurance allows Boardwalk to
increase the overall credit quality of a mortgage and, as such,
enables the Company to obtain preferential interest rates.
The majority of Boardwalks mortgage debt is financed for
periods between five and 10 years, although given the current
interest rate environment, the Company is currently exploring
the possibility of increasing the amount of its floating rates. The use of NHA insurance also assists Boardwalk in managing its
Renewal Risk. With this increased credit quality of its pledged
debt, the likelihood of the Company being unable to renew the
maturing debt or transfer this debt to another accredited lending
institution is significantly reduced. Rent Control Riskis the risk of the implementation or
amendment of new or existing legislative rent controls in the
markets in which Boardwalk operates, which may have an
adverse impact on the Companys operations. The two newest
markets for Boardwalk are Ontario and Quebec, both of which
currently have rent control legislation. Under Ontarios rent control legislation, commonly known as
rent de-control, a landlord is entitled to increase the rent for
existing tenants once every 12 months by no more than the
guideline amount established by regulation. For 2002 and
2003, the guideline amounts have been established at 3.9% and
2.9%, respectively. This adjustment is meant to take into account
the income of the building and the changes to municipal and
school taxes, insurance bills, utility costs, and maintenance and
service costs. When a unit is vacated, however, the landlord is
entitled to lease the unit to a new tenant at any rental amount,
after which annual increases are limited to the applicable
guideline amount. The landlord may also be entitled to a greater
increase in rent for a unit under certain circumstances, including,
for example, where extra expenses have been incurred as a result
of a renovation of that unit. Under Quebecs rent control legislation, a landlord is entitled to
increase the rent for existing tenants once a year for the rent
period starting after April 1st of the current year but before April
1st or 2nd of the following year. While there is no fixed rate
increase specified by regulation, rent increases normally take




2002ANNUAL
REPORT    33



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into account a return on capital expenditures (for 2003, this
return is 4.9%) if such expenditures were incurred, and an
indexing of the net income of the building. Average rent increase
estimates for the period starting after April 1st, 2003 and before
April 2nd, 2004, before any consideration for increases to
municipal and school taxes and capital expenditures, are: 1.4%
for electricity-heated dwellings, 0.7% for gas-heated dwellings,
0.2% for oil-heated dwellings and 1.6% for non heated dwellings. Presently, rent control legislation does not exist for the provinces
of Alberta and Saskatchewan, and there are no plans for
implementing rent control legislation in the near future. To manage this risk, prior to entering a market where rent
controls are in place, the Corporation expends considerable
time researching and understanding the existing legislation
and regulations. The Company ensures that it employs
associates experienced in working in each of these controlled
environments. The Company also adjusts forecast assumptions
on new acquisitions to ensure they are reasonable given the rent
control environment. Utility and Property Tax Riskrelates to the potential loss the
Company may experience as a result of higher resource
prices and well as its exposure to significant increases in
property taxes. Over the past few years, property taxes have increased as a result
of re-valuations of municipal properties and their adherent
tax rates. For Boardwalk, these re-valuations have resulted in
significant increases in some property assessments due to
enhancements, that are not represented on Boardwalks balance
sheet (as such representations are contrary to existing GAAP
reporting standards). To address this risk, Boardwalk has
assembled a specialized team of property reviewers who, with
the assistance of outside authorities, constantly review property
tax assessments and, where warranted, appeal them. Utility expenses, mainly consisting of natural gas and electricity
service charges, have been subject to considerable price
fluctuations over the past several years. Any significant increase
in these resource costs that Boardwalk cannot pass on to the
customer may have a negative material impact on the Company.
To mitigate this risk, the Company has begun to play a more
active role in controlling the fluctuation and predictability of this
risk. Through the combined use of financial instruments and
resource contracts with varying maturity dates, exposure to these
fluctuations has been reduced. In addition to this, the following
steps have been implemented:  
 
 Where possible, economical electrical sub-metering devices
are being installed, passing on the responsibility for electricity
charges to the end customer.  
 
 In other cases, rents have been, or will be, adjusted upward to
cover these increased costs.








Operational Riskis the risk that a direct or indirect loss
may result from an inadequate or failed technology, from a
human process or from external events. The impact of this
loss may be financial losses, loss of reputation, or legal and
regulatory proceedings. The Company endeavors to minimize losses in this area by
ensuring that effective infrastructure and controls exist.
These controls are constantly reviewed and improvements are
implemented, if deemed necessary. Critical Accounting Policies Boardwalks accounting policies are described in Note 1 of
the consolidated financial statements. These statements were
prepared in accordance with the recommendations of the
handbook of the Canadian Institute of Chartered Accountants
(CICA Handbook) and with the recommendations of the
Canadian Institute of Public and Private Real Estate Companies
(CIPPREC). These recommendations differ in certain areas
with those generally accepted in the United States. The Company
has provided a detailed explanation and reconciliation of
these differences in Note 13 of the consolidated financial
statements. In applying these policies, in certain cases it
is necessary to use estimates. In determining estimates,
Management uses the information available to the Corporation at
the time. Management reviews key estimates on a quarterly
basis to determine their appropriateness. Any change to these
estimates is applied prospectively in compliance with Canadian
Generally Accepted Accounting Principles. The Corporation
considers the following policies to be critical in determining
the judgments that are involved in the preparation of the
consolidated financial statements and the uncertainties that
could affect the reported results. Amortization of Building Asset Boardwalks policy with respect to the amortization of its
building assets is the use of the sinking fund method. Using this
methodology, amortization charges increase as an asset ages.
The sinking fund method of amortization is not permitted
under U.S. GAAP. In the determination of the amortization
amount, it is necessary to estimate the useful life of the asset, the
discount rate, and the salvage value, if any. A significant change
to any of these estimates may result in a material charge to the
Corporations earnings during the period in question. Net Recoverable Amount On a quarterly basis, Boardwalk reviews the valuation of
its real estate assets. It compares the reported book value to the
calculated net recoverable values as described in Note 1 to
the consolidated financial statements. In determining the net
recoverable amount, it is necessary, on a non-discounted basis,




34    ANNUAL
REPORT2002



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to pro forma the results of each individual real estate building
for a period of 10 years. At the same time an estimated residual
value is also determined. The sum of these amounts is compared
to the outstanding debt and equity in each asset. If it is
determined that the combined 10-year cash flow and estimated
residual is less than the amount reported as outstanding
debt and equity, the asset is written down to this amount with an
offsetting charge to current period earnings. In calculating the residual value of its properties, Boardwalk
must determine the appropriate capitalization rate to be
applied to the estimated cash flows. Due to the value cycle of
real estate, market capitalization rates may change over time.
Boardwalk performs this analysis with a range of capitalization
rates designed to provide sensitivity for these market changes.
The actual capitalization rate and estimated pro forma results
may differ materially from actual performance, which may
also result in a charge to the Corporations earnings. To date,
Boardwalk has never been required to record a charge against its
earnings due to this calculation procedure. Standardized wage costs On a quarterly basis, the Company estimates the amount of time
its onsite maintenance associates spend working on capital
projects. The assumptions used in making the estimates and any
changes made are treated prospectively.








Future Objectives It is Managements current belief that the Company is well
positioned for continued growth. In terms of internal growth, Management will continue to focus
on operations, with an emphasis on maximizing revenues,
increasing efficiency and cost control. With average rents well
below new construction rates, low vacancy percentages, and
strong market fundamentals, the Corporation expects continued
upward pressure on our rents over the next several years
in most of our major markets. Given that estimated market
rents are currently above Boardwalks rent levels, the Company
should also continue to benefit from closing this gap over the
next several years on lease renewals and unit turnovers or as rent
increases occur. In terms of external growth, Management continues to be focused
on acquiring properties in existing and selected new markets that
meet its investment criteria. Although Boardwalk does not
currently anticipate rates of portfolio growth similar to those
experienced in some prior years, the Company believes there are
significant opportunities for future expansion and diversification. Overall, the following are the objectives set by the Company for
fiscal 2003: 03 Objectives
    
    
    02 Actuals
    
    
    01 ActualsFFO Rental Operations
    
    $
    1.40 to 1.44
    
    
    $
    1.24
    
    
    $
    0.99FFO Property Sales
    
    $
    
    
    
    $
    0.02
    
    
    $
    0.16Total FFO
    
    $
    1.40 to 1.44
    
    
    $
    1.26
    
    
    $
    1.15New Unit Acquisitions
    
    
    1,000 to 2,000
    
    
    
    3,558
    
    
    
    1,362Stabilized BuildingNOI Growth
    
    3% to 5.0%
    
    
    7.5
    %
 (-s- R. A. GEREMIA) Roberto A. Geremia
Senior Vice President, Finance and Chief Financial Officer




2002ANNUAL
REPORT    35



---



##### 



MANAGEMENTS REPORT

To the Shareholders of Boardwalk Equities Inc.:

The accompanying consolidated financial statements and all information in the
Annual Report are the responsibility of management.
The consolidated financial statements have been prepared by management in
accordance with the accounting policies in the notes
to the consolidated financial statements. In the opinion of management, the
consolidated financial statements have been prepared
within acceptable limits of materiality, and are in accordance with Canadian
generally accepted accounting principles appropriate in
the circumstances. The financial information elsewhere in the Annual Report has
been reviewed to ensure consistency with that in the
consolidated financial statements.

Management maintains appropriate systems of internal control. Policies and
procedures are designed to give reasonable assurance that
transactions are properly authorized, assets are safeguarded and financial
records properly maintained to provide reliable information
for the preparation of consolidated financial statements.

The consolidated financial statements have been further examined by the Board
of Directors and by its audit committee which meets
regularly with the auditors and management to review the activities of each.
The audit committee, which comprises of three
independent directors, reports to the Board of Directors.

Deloitte & Touche LLP, an independent firm of chartered accountants, has been
engaged to audit the consolidated financial statements
in accordance with Canadian generally accepted auditing standards and provide
an independent auditors opinion.

(-s- S. KOLIAS)
Sam Kolias
President and Chief Executive Officer
    
    (-s- R. A. GEREMIA)
Roberto A. Geremia
Senior Vice President, Finance and Chief Financial Officer


36    ANNUAL
REPORT2002



---



##### 



AUDITORS REPORT

To the Shareholders of Boardwalk Equities Inc.:

We have audited the consolidated balance sheets of Boardwalk Equities Inc. as
at December 31, 2002 and 2001, and the consolidated
statements of earnings (loss), retained earnings and cash flows for the years
then ended December 31, 2002 and 2001.
These consolidated financial statements are the responsibility of the
Corporations management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall consolidated financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Corporation
as at December 31, 2002 and 2001, and the results of its operations and its
cash flows for the years then ended, in accordance with
Canadian generally accepted accounting principles.

(DELOITTE & TOUCHE LLP SIGNATURE)

Chartered Accountants
Calgary, Alberta
February 7, 2003

2002ANNUAL
REPORT    37



---



##### 



BOARDWALK EQUITIES INC.

Consolidated Balance Sheets  (CDN$ THOUSANDS)


AS AT
    
    December 31, 2002
    
    
    December 31, 2001ASSETSRevenue producing properties (NOTE 2)
    
    $
    1,604,277
    
    
    $
    1,381,541Properties held for resale
    
    
    7,038
    
    
    
    6,630Mortgages and accounts receivable (NOTE 3)
    
    
    14,704
    
    
    
    22,325Other assets (NOTE 4)
    
    
    13,723
    
    
    
    11,846Deferred financing costs
    
    
    37,521
    
    
    
    32,957Segregated tenants security deposits
    
    
    7,596
    
    
    
    8,320Cash and cash equivalents
    
    
    23,631
    
    
    
    25,672$
    1,708,490
    
    
    $
    1,489,291LIABILITIESMortgages payable (NOTE 6)
    
    $
    1,307,177
    
    
    $
    1,108,406Accounts payable and accrued liabilities
    
    
    21,498
    
    
    
    19,525Refundable tenants security deposits and other
    
    
    10,496
    
    
    
    10,418Capital lease obligations (NOTE 5)
    
    
    4,598
    
    
    
    7,203Future income taxes (NOTE 8)
    
    
    62,976
    
    
    
    58,7551,406,745
    
    
    
    1,204,307SHAREHOLDERS EQUITYShare capital (NOTE 7)
    
    
    266,516
    
    
    
    258,202Retained earnings
    
    
    35,229
    
    
    
    26,782301,745
    
    
    
    284,984$
    1,708,490
    
    
    $
    1,489,291


SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Approved by the Board:

(-s- S. KOLIAS)
Sam Kolias
Director
    
    (-s- D. V. RICHARDS)
David V. Richards
Director


38    ANNUAL
REPORT2002



---



##### 



BOARDWALK EQUITIES INC.
Consolidated Statement of Earnings (Loss)

(CDN$ THOUSANDS, EXCEPT PER SHARE AMOUNTS)


FOR THE YEAR ENDED
    
    December 31, 2002
    
    
    December 31, 2001REVENUERental income
    
    $
    241,896
    
    
    $
    205,281Sales  properties held for resale
    
    
    7,498
    
    
    
    21,988$
    249,394
    
    
    $
    227,269EXPENSESRevenue producing properties:Operating expenses
    
    
    26,229
    
    
    
    21,969Utilities
    
    
    32,547
    
    
    
    31,549Utility rebate (NOTE 1 (h) (iii))
    
    
    (3,705
    )
    
    
    (4,967
    )Property taxes
    
    
    23,686
    
    
    
    19,743Cost of sales  properties held for resale
    
    
    6,531
    
    
    
    13,939Administration
    
    
    19,931
    
    
    
    16,482Financing costs
    
    
    74,284
    
    
    
    65,567Deferred financing costs amortization
    
    
    3,239
    
    
    
    1,800Amortization (NOTE 1)
    
    
    46,748
    
    
    
    53,584$
    229,490
    
    
    $
    219,666Operating earnings before the following:
    
    $
    19,904
    
    
    $
    7,603Gain on debt settlement
    
    
    (692
    )
    
    
    Provision for loss on technology investments (NOTE 5)
    
    
    
    
    
    
    29,837Operating earnings (loss) before income taxes
    
    $
    20,596
    
    
    $
    (22,234
    )Large corporations taxes
    
    
    3,600
    
    
    
    3,246Future income taxes (recovery) (NOTE 8)
    
    
    5,420
    
    
    
    (12,678
    )Net earnings (loss) for the year
    
    $
    11,576
    
    
    $
    (12,802
    )Net earnings (loss) per share(NOTE 1)  Basic
    
    $
    0.23
    
    
    $
    (0.26
    )  Diluted
    
    $
    0.23
    
    
    $
    (0.26
    )


SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2002ANNUAL
REPORT    39



---



##### 



BOARDWALK EQUITIES INC.
Consolidated Statement of Retained Earnings

(CDN$ THOUSANDS)


FOR THE YEAR ENDED
    
    December 31, 2002
    
    
    December 31, 2001Retained earnings, beginning of year
    
    $
    26,782
    
    
    $
    47,788Net earnings (loss)
    
    
    11,576
    
    
    
    (12,802
    )Dividends paid
    
    
    (2,477
    )
    
    
    (2,496
    )Premium on share repurchases (NOTE 7)
    
    
    (652
    )
    
    
    (5,708
    )Retained earnings, end of year
    
    $
    35,229
    
    
    $
    26,782


SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

40    ANNUAL
REPORT
2002



---



##### 



BOARDWALK EQUITIES INC.Consolidated Statement of Cash Flows(CDN$ THOUSANDS, EXCEPT PER SHARE AMOUNTS)

FOR THE YEAR ENDED
    
    December 31, 2002
    
    
    December 31, 2001CASH OBTAINED FROM (APPLIED TO):Operating activitiesNet earnings (loss)
    
    $
    11,576
    
    
    $
    (12,802
    )Income taxes (recovery)
    
    
    5,420
    
    
    
    (12,678
    )Amortization
    
    
    46,748
    
    
    
    53,584Gain on debt settlement
    
    
    (692
    )
    
    
    Provision for loss on technology investments (NOTE 5)
    
    
    
    
    
    
    29,837Funds from operations
    
    $
    63,052
    
    
    $
    57,941Net change in operating working capital
    
    $
    7,434
    
    
    $
    (9,516
    )Net change in properties held for resale
    
    
    5,702
    
    
    
    12,139Total operating cash flows
    
    $
    76,188
    
    
    $
    60,564Financing activitiesIssue of common shares for cash (net of issue costs)
    
    $
    8,828
    
    
    $
    2,097Stock repurchase program
    
    
    (1,167
    )
    
    
    (10,305
    )Dividends paid
    
    
    (2,477
    )
    
    
    (2,496
    )Financing of revenue producing properties
    
    
    305,841
    
    
    
    169,067Repayment of debt on revenue producing properties
    
    
    (238,708
    )
    
    
    (128,681
    )Deferred financing costs incurred (net of amortization of deferred financing costs)
    
    
    (5,544
    )
    
    
    (2,557
    )$
    66,773
    
    
    $
    27,125Investing activitiesPurchases of revenue producing properties (NOTE 2)
    
    $
    (102,926
    )
    
    $
    (15,543
    )Project improvements to revenue producing properties
    
    
    (39,433
    )
    
    
    (52,938
    )Technology for real estate operations
    
    
    (2,643
    )
    
    
    (14,591
    )$
    (145,002
    )
    
    $
    (83,072
    )Increase in cash and cash equivalents balance during year
    
    $
    (2,041
    )
    
    $
    4,617Cash and cash equivalents, beginning of year
    
    $
    25,672
    

    
    $
    21,055Cash and cash equivalents, end of year
    
    $
    23,631
    
    
    $
    25,672Funds from operations per share Basic
    
    $
    1.27
    
    
    $
    1.16 Diluted
    
    $
    1.26
    
    
    $
    1.15Corporate taxes paid
    
    $
    3,691
    
    
    $
    3,477Interest paid
    
    $
    72,486
    
    
    $
    65,342


SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2002ANNUAL
REPORT    41



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##### 



BOARDWALK EQUITIES INC.Notes to Consolidated Financial StatementsFor the years ended December 31, 2002 and 2001(TABULAR AMOUNTS IN CDN$ THOUSANDS, EXCEPT NUMBER OF SHARES AND PER SHARE AMOUNTS)



|1. |  | SIGNIFICANT ACCOUNTING POLICIES
|-- |  | -------------------------------



| | (a) |  | Operations
| | --- |  | ----------



| |  | Boardwalk Equities Inc. (the Corporation) is a real estate corporation that
specializes in multi-family residential housing.
| |  | ------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | Basis of presentation and principles of consolidation
| | --- |  | -----------------------------------------------------



| |  | The Corporations accounting policies and its standards of financial disclosure
conform with the recommendations of the
handbook of the Canadian Institute of Chartered Accountants (CICA Handbook)
and with the recommendations of the Canadian
Institute of Public and Private Real Estate Companies (CIPPREC). These
principles differ in certain respects from those generally
accepted in the United States of America (U.S. GAAP) and to the extent that
they affect the Corporation, these differences are
described in Note 13 Differences from United States Accounting Principles.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The preparation of financial statements in accordance with Canadian generally
accepted accounting principles (Canadian GAAP)
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and to make
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results may differ from those
estimates.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The consolidated financial statements include the accounts of the Corporation,
its wholly owned subsidiaries, Suite Systems Inc.
(SSI) and HomeXpress Ltd. (HomeXpress). The latter is a public company of
which the Corporation owns 63%. The company
is no longer in operation as of October 11, 2001 (see Note 5). All material
inter-company transactions have been eliminated.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) |  | Revenue recognition
| | --- |  | -------------------



| | i. |  | Revenue from a rental property is recognized once the Corporation has
attained substantially all of the benefits and risks
of ownership of the rental property. Rental revenue includes rents, parking and
other sundry revenues. All residential
leases are for one-year terms or less; consequently, the Corporation accounts
for leases with its tenants as operating leases.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii. |  | Revenue from the sales of property held for resale is recognized when all
conditions of the purchase and sale agreement
have been met, a sufficient purchaser deposit (usually 15%) has been received
and there is reasonable assurance on the
collectibility of any outstanding amount.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) |  | Real estate properties
| | --- |  | ----------------------



| | i. |  | Revenue producing properties
| | -- |  | ----------------------------



| |  | Revenue producing real estate properties, which are held for investment, are
stated at the lower of cost less accumulated
amortization or net recoverable amount. Cost includes all amounts relating to
the acquisition and improvement of the
properties. All costs associated with upgrading the existing facilities, other
than ordinary repairs and maintenance, are
capitalized and amortized as project improvements.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The net recoverable amount represents the undiscounted estimated future net
cash flows expected to be received from
the ongoing use of the property plus its residual value. To arrive at this
amount, the Corporation projects future net cash
flows over a maximum of 10 years and includes the proceeds from the estimated
residual sale value at the end of that
period. The projections take into account managements best estimate of the
most probable set of economic conditions
anticipated to prevail in the market area.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii. |  | Properties held for resale
| | --- |  | --------------------------



| |  | The Corporation capitalizes all direct costs, net of related revenue. Direct
costs include property taxes, administration
costs, finance costs and other costs associated with the cost of property held
for resale. Real estate properties held for
resale are recorded at the lower of cost or net realizable value.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

42    ANNUAL
REPORT2002



---



##### 



| | (e) |  | Amortization
| | --- |  | ------------



| |  | Revenue producing real estate properties are amortized over the estimated
useful lives of the assets. Amortization is computed
using the sinking fund method using an interest rate of 4% over a period of 40
to 50 years for buildings and the declining
balance method at rates ranging from 8% to 35% for other non-building assets.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Under the sinking fund method used to amortize revenue producing buildings, an
increasing amount is charged to income
consisting of a fixed annual sum, together with interest compounded a rate of
4%, so as to fully amortize the buildings over
their estimated life from date of acquisition.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Commencing in the current year, the Corporation revised the estimates on the
economic benefits of certain non-building
assets. This change in accounting estimate was treated prospectively.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (f) |  | Deferred financing costs
| | --- |  | ------------------------



| |  | Insurance premiums paid to Canada Mortgage and Housing Corporation to obtain
insurance through the National Housing
Act are amortized over 25 years on a straight-line basis. Upon the refinancing
of a mortgage, any unamortized insurance
premium associated with the previous mortgage is written off to income. Costs
of refinancing are amortized on a straightline
basis over the term of the new loan.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (g) |  | Per share calculation
| | --- |  | ---------------------



| |  | The Corporation has adopted a Canadian Institute of Public and Private Real
Estate Companies (CIPPREC) requirement to
disclose a funds from operations (FFO) calculation versus the traditional
cash flow from operations calculation. Accordingly,
the Corporation calculates funds from operations per share instead of cash flow
per share.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Basic net earnings and funds from operations per share were calculated based on
the weighted average number of shares
outstanding for the year. The calculation of net earnings and funds from
operations per share on a diluted basis considered
the potential exercise of outstanding share purchase options during the period.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The dilutive effects of outstanding share purchase options are computed using
the treasury stock method whereby the
proceeds that would be received from the exercise of options are assumed to
repurchase outstanding shares of the Corporation.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The following table sets forth the computation of basic and diluted earnings
per share and funds from operations (FFO) per
share with respect to earnings (loss) from continuing operations.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

December 31, 2002
    
    
    December 31, 2001NumeratorNet earnings (loss) for the period
    
    $
    11,576
    
    
    $
    (12,802
    )Funds from operations
    
    $
    63,052
    
    
    $
    57,941DenominatorDenominator
for basic earnings per share  weighted average shares
    
    
    49,716,767
    
    
    
    50,015,184Effect of dilutive securities stock options
    
    
    525,683
    
    
    
    287,314Denominator for diluted earnings per share adjusted for weighted
average shares and assumed conversion
    
    
    50,242,450
    
    
    
    50,302,498Basic earnings (loss) per share
    
    $
    0.23
    
    
    $
    (0.26
    )Diluted earnings (loss) per share
    
    $
    0.23
    
    
    $
    (0.26
    )Basic FFO per share
    
    $
    1.27
    
    
    $
    1.16Diluted FFO per share
    
    $
    1.26
    
    
    $
    1.15




| | (h) |  | Risk management and fair value
| | --- |  | ------------------------------



| |  | Risk Management
| |  | ---------------



| |  | The Corporation is exposed to financial risk that arises from the fluctuation
in interest rates, the credit quality of its tenants,
and the fluctuation in utility rates. These risks are managed as follows:
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | i. |  | Interest rate risk
| | -- |  | ------------------



| |  | Interest rate risk is minimized through the Corporations current strategy of
having the majority of its mortgages payable
in fixed term arrangements. In addition, management is constantly reviewing its
operating facility and, if market
conditions warrant, the Corporation has the ability to convert its existing
demand debt to fixed rate debt. At December
31, 2002, the Corporation had demand debt outstanding of $nil (December 31,
2001  $nil). In addition, the Corporation
structures its financings so as to stagger the maturities of its debt, thereby
minimizing the Corporations exposure to
interest rate fluctuations.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2002ANNUAL
REPORT    43



---



##### 



| |  | The majority of the Corporations mortgages are insured by Canada Mortgage and
Housing Corporation (CMHC) under
the National Housing Act (NHA) mortgage program. This added level of
insurance offered to lenders allow the
Corporation to receive the best possible financing and interest rates, and
significantly reduces the potential for a lender
to call a loan prematurely.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii. |  | Credit risk
| | --- |  | -----------



| |  | Credit risk arises from the possibility that tenants may experience financial
difficulty and be unable to fulfill their lease
term commitments. The Corporation mitigates this risk of credit loss by
diversifying its existing portfolio and limiting its
exposure to any one tenant. Thorough credit assessments are conducted in
respect to all new leasing. In addition, where
legislation allows, the Corporation obtains a security deposit to assist in a
potential recovery requirement.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii. |  | Utilities
| | ---- |  | ---------



| |  | The Corporation has long-term supply arrangements with two electrical utility
companies to supply the Corporation
with its electrical power needs for Alberta for the next one to three years at
a blended rate of approximately $0.07/kwh.
These agreements provide that the Corporation purchase its power for all
Alberta properties under contract for the
upcoming years based on an approximation of the current years demand levels.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Corporation has two physical settlement fixed-price supply contracts for
natural gas. These contracts fix the price of
natural gas for 75% of the Corporations requirements in Alberta. The two
contracts are for physical settlement, and each
represents approximately 37.5% of the Corporations Alberta requirements. The
first of these contracts runs from
January 1, 2003 to September 30, 2003, and the second contract runs from
January 1, 2003 to September 30, 2004.
In aggregate, these contracts provide the commodity at $5.43/GJ. The remaining
25% supply will float at spot prices.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | While the above utility contracts for both electrical power and natural gas
reduce the risk of exposure to adverse changes
in commodity prices, they also reduce the potential benefits of favourable
changes in commodity prices. For accounting
purposes, all settlements are recorded as utility expense in the period the
settlement occurs.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | As of March 2, 2002, ATCO Gas, the transporter of all natural gas in Alberta,
distributed a non-recurring rebate.
The Alberta Energy and Utility Board instructed ATCO to rebate a portion of the
sale proceeds of the Viking-Kinsella
producing assets to ATCO North customers in the form of a one time rebate. The
rebate was distributed to all ATCO North
customers, based on historical usage, at a rate of $3.325/GJ.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | For the period ended March 31, 2001, the Alberta Government introduced two
separate rebate programs to assist
corporations with the increase in energy prices in 2001. The natural gas rebate
program expired in April 2001 (resulting
in a disproportionate share of this rebate in the first quarter of 2001) and
the electrical rebate program expired on
December 31, 2001. Due to the current electricity pricing environment, there
was not an extension of this program in 2002.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In accordance with the disclosure requirements of the CICA Handbook, the
Corporation is required to disclose certain information
concerning its financial instruments, defined as a contractual right to
receive or deliver cash or another financial asset. The fair
values of the majority of the Corporations financial assets and liabilities,
representing net working capital, approximate their
recorded values at December 31, 2002 and 2001 due to their short-term nature.
In these circumstances, the fair value is determined to
be the market or exchange value of the assets or
liabilities.

Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial
instrument. These estimates are subjective in nature and involve uncertainties
and matters of significant judgment and therefore cannot
be determined with precision. Changes in assumptions could significantly affect
estimates. The significant financial instruments of
the Corporation and their carrying values as of December 31, 2002 and 2001 are
as follows:

AS AT
    
    December 31, 2002
    
    
    December 31, 2001Mortgages and accounts receivableCarrying value
    
    $
    14,704
    
    
    $
    22,325Fair market value
    
    $
    14,704
    
    
    $
    22,325Mortgages payableCarrying value
    
    $
    1,307,177
    
    
    $
    1,108,406Fair market value
    
    $
    1,349,780
    
    
    $
    1,133,471


44    ANNUAL
REPORT2002



---



##### 



The fair value of the Corporations mortgages payable exceeds the recorded
value by approximately $42.6 million at December 31,
2002 (December 31, 2001  $25.1 million) due to changes in interest rates since
the dates on which the individual mortgages were
assumed. The fair value of the mortgages payable has been estimated based on
the current market rates for mortgages with similar
terms and conditions. The fair value of the Corporations mortgages payable is
an amount computed based on the interest rate
environment prevailing at December 31, 2002; the amount is subject to change
and the future amounts will converge. There is no
additional costs to the Corporation, assuming no early extinguishment of
existing debt is delivered upon.



| | (i) |  | Use of estimates
| | --- |  | ----------------



| |  | The accounting process requires that management make, and periodically review,
a number of estimates including the
following material items:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------



| | i. |  | economic useful life of buildings for purposes of calculating amortization
as disclosed in Note 1(e);
| | -- |  | -----------------------------------------------------------------------------------------------------



| | ii. |  | forecast of economic indicators in order to measure fair values of
buildings for purposes of determining net recoverable
amount under Canadian generally accepted accounting principles as discussed in
Note 1(d);
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii. |  | amount of capitalized on-site wages which relate to project improvements,
as discussed in Note 2;
| | ---- |  | -------------------------------------------------------------------------------------------------



| | iv. |  | amount of utility accrual for charges related to the current period; and
| | --- |  | ------------------------------------------------------------------------



| | v. |  | amount of provision for write-down of technology investments.
| | -- |  | -------------------------------------------------------------



| |  | Actual results may differ from these estimates.
| |  | -----------------------------------------------



| | (j) |  | Cash and cash equivalents
| | --- |  | -------------------------



| |  | The Corporation considers highly liquid investments with an original maturity
of three months or less to be cash equivalents.
| |  | -----------------------------------------------------------------------------------------------------------------------------



| | (k) |  | Stock-based compensation plans
| | --- |  | ------------------------------



| |  | The Corporation has one stock-based compensation plan which is described in
Note 7. The Corporation does not record
compensation expense for stock options granted to directors, executives and
employees in the financial statements because
there is no intrinsic value as defined by CICA Handbook, Section 3870, at the
date of grant. Compensation expense is only
recognized when the purchase or exercise price of a stock or option is less
than the market price of the stock or underlying
stock. Any consideration paid upon the issuance or exercise of stock or stock
options is credited to share capital.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Beginning January 1, 2003, the Corporation will change its accounting policy
for stock options granted on or after that date. The Corporation will recognize the fair value of stock options, using an
accepted option-pricing model, on their grant
date as compensation expense over the period that the stock options vest. This
change in accounting policy will be
treated prospectively.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (l) |  | Comparative figures
| | --- |  | -------------------



| |  | Certain comparative figures have been reclassified to conform with the current
years presentation, or as a result of
accounting changes.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------



|2. |  | REVENUE PRODUCING PROPERTIES
|-- |  | ----------------------------

AS AT
    
    December 31, 2002
    
    
    December 31, 2001Land
    
    $
    96,749
    
    
    $
    95,046Building and non-building assets
    
    
    1,695,092
    
    
    
    1,428,549Total revenue producing properties
    
    
    1,791,841
    
    
    
    1,523,595Less: accumulated amortization
    
    
    (187,564
    )
    
    
    (142,054
    )$
    1,604,277
    
    
    $
    1,381,541DispositionsFOR THE YEAR ENDED
    
    December 31, 2002
    
    
    December 31, 2001Cash received
    
    $
    2,281
    
    
    $
    14,787Vendor take back mortgage
    
    
    500
    
    
    
    4,700Debt assumed
    
    
    4,717
    
    
    
    2,501Total proceeds
    
    $
    7,498
    
    
    $
    21,988Net book value
    
    $
    6,531
    
    
    $
    13,939Gain on sales
    
    $
    967
    
    
    $
    8,049Units sold
    
    
    121
    
    
    
    307


2002ANNUAL
REPORT    45



---



##### 



Acquisitions

FOR THE YEAR ENDED
    
    December 31, 2002
    
    
    December 31, 2001Cash paid
    
    $
    102,926
    
    
    $
    15,543Vendor take back mortgage
    
    
    
    
    
    
    1,452Shares issued
    
    
    
    
    
    
    7,116Debt assumed
    
    
    110,829
    
    
    
    34,187Total purchase price
    
    $
    213,755
    
    
    $
    58,298Fair value adjustment to debt
    
    
    19,500
    
    
    
    Book value
    
    $
    233,255
    
    
    $
    58,298Units acquired
    
    
    3,558
    
    
    
    1,362


Included in revenue producing properties for the year is $4.7 million (December
31, 2001  $4.5 million) of capitalized wages relating
to project improvements. Included in the cost of properties held for resale for
the year are capitalized financing and property taxes
costs of $0.5 million (December 31, 2001  $0.4 million) less net operating
revenue of $nil (December 31, 2001  $nil). Real estate assets
are pledged as security against mortgages payable.

3.    MORTGAGES AND ACCOUNTS RECEIVABLE

The mortgages and accounts receivable comprise an aggregate amount of $14.7
million (December 31, 2001  $22.3 million).
In this balance, mortgages receivable arising on sales of property represents
$8.5 million (December 31, 2001  $15.5 million)
which comes due periodically up to March 2007. The Corporation is currently
earning a weighted average interest rate of 3.04%
(December 31, 2001  2.94%) on these amounts. The remaining balance consists of
mortgage holdbacks and incidental income
earned but not yet received.

4.    OTHER ASSETS

AS AT
    
    December 31, 2002
    
    
    December 31, 2001Corporate technology assets (net of amortization)
    
    $
    4,658
    
    
    $
    5,743Head office building (net of amortization)
    
    
    3,261
    
    
    
    3,134Deposits on properties
    
    
    950
    
    
    
    600Inventory
    
    
    1,606
    
    
    
    1,359Prepaid and other
    
    
    3,248
    
    
    
    1,010$
    13,723
    
    
    $
    11,846


5.    TECHNOLOGY INVESTMENTS

On October 18, 2001, the Corporation terminated its telecommunication
initiative subsequent to a process review. The review
highlighted low returns on investment capital when compared to core real estate
operations, the high cost of capital given
current market conditions and the conclusion that the Corporation would be
unable to reach partnership agreements for rights
of way or access rights in target markets in the near future. For the year
ended December 31, 2001, the Corporation reported
a provision for loss of technology investments of $29.8 million. The provision
represented the write-down of capital assets, the
termination of its investment in HomeXpress and estimated closure costs. To
date, a total of $29.1 million has been applied against
the provision. The remaining balance of the provision is expected to be used in
future periods. No additional provision is
estimated. The following schedule details the provision by product category:

Technology write-down provision

Cable
    
    $
    10,763Telephone
    
    
    12,203Internet
    
    
    2,290Fiber
    
    
    3,781Investment in HomeXpress
    
    
    800$
    29,837


No such provision was made for the current year.

46    ANNUAL
REPORT  2002



---



##### 





| |  | At December 31, 2002, the Corporation had capital leases totalling $4.6 million
outstanding (December 31, 2001  $7.2 million)
with a weighted average interest rate of 9.7% (December 31, 2001  9.5%)
relating to its telecommunication initiative.
Future minimum payments under capital leases together with the balance of the
obligation due under capital leases are as follows
for the year ending:
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

AS AT
    
    December 31, 2002
    
    
    December 31, 20012002
    
    $
    
    
    
    $
    1,8782003
    
    
    1,481
    
    
    
    1,8782004
    
    
    1,481
    
    
    
    1,8782005
    
    
    1,330
    
    
    
    1,7282006
    
    
    1,222
    
    
    
    1,6202007
    
    
    
    
    
    
    67Total
    
    
    5,514
    
    
    
    9,049Less amount representing interest
    
    
    916
    
    
    
    1,846Total net obligation
    
    $
    4,598
    
    
    $
    7,203




| |  | The above capital leases relate to equipment that has been provided for in the
provision for loss on technology investments.
| |  | ------------------------------------------------------------------------------------------------------------------------------



| |  | The remaining
balance of technology assets of $4.7 million (December 31,
2001 
$5.7 million) has been reclassified as
Other Assets (see Note 4) and reflects net book values of technology
anticipated in the ongoing operations of the Corporation,
including hardware, software and software development, system installations and
other related costs.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | MORTGAGES PAYABLE
|-- |  | -----------------

AS AT
    
    December 31, 2002
    
    December 31, 2001(a)   Revenue producing propertiesMortgages payable bearing interest at a weighted average of 5.87%
(December 31, 2001  6.15%) per annum, payable in monthly principal
and interest instalments totalling $8.9 million (December 31, 2001  $7.7
million), mature from 2003 to 2020 and are secured by specific charges
against specific properties.$
    1,305,349
    
    $
    1,106,546(b)   Other assetsMortgages payable bearing interest at a weighted average of 7.79%
(December 31, 2001  7.79%) per annum, payable in monthly principal
and interest instalments totalling $15 thousand (December 31,
2001  $15 thousand), mature in September 2010 and are secured by specific
charges against specific properties.1,828
    
    
    1,860$
    1,307,177
    
    $
    1,108,406


2002ANNUAL
REPORT    47



---



##### 





| | (c) |  | Estimated principal payments required to meet mortgage obligations as at
December 31, 2002 are as follows:
| | --- |  | ----------------------------------------------------------------------------------------------------------

Revenue Producing Properties
    
    
    Other Assets
    
    
    Total2003
    
    
    $0,213,220
    
    
    $
    36
    
    
    $
    213,2562004
    
    
    119,340
    
    
    
    39
    
    
    
    119,3792005
    
    
    92,241
    
    
    
    42
    
    
    
    92,2832006
    
    
    108,709
    
    
    
    45
    
    
    
    108,7542007
    
    
    223,616
    
    
    
    49
    
    
    
    223,665Subsequent
    
    
    548,223
    
    
    
    1,617
    
    
    
    549,840$1,305,349
    
    
    $
    1,828
    
    
    $
    1,307,177




| | (c) |  | Canada Mortgage and Housing Corporation (CMHC) provides mortgage loan
insurance in connection with mortgages made
to the Corporation. On September 13, 2002, the Corporation and CMHC entered
into an agreement (the Agreement) whereby
the Corporation will provide certain financial information and be subject to
certain restrictive covenants, including
limitation on additional debt, distribution of dividends in respect of capital
stock in the event of default, and maintenance
of certain financial ratios. In the event of default, the Corporations total
financial liability under this Agreement is limited
to a one-time penalty payment of $250 thousand under a Letter of Credit issued
in favour of CMHC.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) |  | Demand Facilities
| | --- |  | -----------------



| | (c) |  | The Corporation has a demand facility in the form of an acquisition and
operating line. This demand facility is secured by a
first or second mortgage charge of specific assets. The maximum amount
available varies with the value of pledged assets to
a maximum not to exceed $100.0 million (December 31, 2001  $100.0 million). As
at December 31, 2002, approximately
$34.0 million was available from this facility (December 31, 2001  $15.0
million). An amount of $nil was outstanding at
December 31, 2002 (December 31, 2001  $nil). This facility carries an interest
rate ranging from prime plus 0.5% to prime
plus 1.5% per annum, and has no fixed terms of repayment. The facility is
reviewable annually by the Bank.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|7. |  | SHARE CAPITAL
|-- |  | -------------



| | (a) |  | Authorized:
| | --- |  | -----------



| | (a) |  | Unlimited number of common shares
| | --- |  | ---------------------------------



| | (a) |  | Unlimited number of preferred shares, issuable in series
| | --- |  | --------------------------------------------------------



| | (a) |  | Issued:
| | --- |  | -------



| | (a) |  | Preferred shares
| | --- |  | ----------------



| | (a) |  | The Corporation did not issue any preferred shares for the year ended December
31, 2002. For the year ended December 31,
2001, the Corporation issued 3,340,199 preferred shares, with a face value of
$1.00 per share and a face rate of 0%, in
conjunction with the acquisition of certain properties. As at December 31,
2002, the total preferred shares outstanding was
8,945,155 (December 31, 2001  8,945,155). These preferred shares are offset by
non-interest bearing notes receivable from
the holders of the preferred shares for the equivalent amount. Both the
preferred shares and the notes receivable
are retractable at either partys option and may legally be offset against each
other. Accordingly, these have been offset for
consolidated financial statement presentation.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

48    ANNUAL
REPORT  2002



---



##### 





| |  | Common shares
| |  | -------------

Shares
    
    
    AmountDecember 31, 2002
    
    
    50,109,314
    
    
    $
    266,516December 31, 2001
    
    
    49,404,281
    
    
    $
    258,202Details of shares issued are as follows:December 31, 2000
    
    
    49,258,899
    
    
    $
    253,586On acquisition of assets
    
    
    649,125
    
    
    
    7,116On exercise of stock options
    
    
    375,857
    
    
    
    2,097Share buy-back recorded at book value of shares
    
    
    (879,600
    )
    
    
    (4,597
    )December 31, 2001
    
    
    49,404,281
    
    
    
    258,202On exercise of stock options
    
    
    801,633
    
    
    
    8,828Share buy-back recorded at book value of shares
    
    
    (96,600
    )
    
    
    (514
    )December 31, 2002
    
    
    50,109,314
    
    
    $
    266,516




| | (b) |  | The Corporation commenced a normal course issuer bid on March 3, 2000 allowing
it to purchase up to 2,236,400 common
shares for cancellation until its termination on March 2, 2001 or such earlier
time as the bid is complete. This bid was
extended with a termination date to March 22, 2002 or such earlier time as the
bid is complete. On August 6, 2002, the
Corporation commenced another normal course issuer bid allowing it to purchase
up to 3,267,840 common shares for
cancellation until its termination on August 5, 2003 or such earlier time as
the bid is complete. During the year, the
Corporation acquired and cancelled 96,600 (December 31, 2001  879,600) common
shares at a cost of $1.2 million (December
31, 2001  $10.3 million). The excess of the cost over stated value of the
shares acquired of $0.7 million (December 31,
2001  $5.7 million) has been charged to retained earnings.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | Stock Options
| | --- |  | -------------



| | (b) |  | Under the stock option plan, the Company grants options to directors,
executives and employees. The stock option plan provides
for the granting of options to purchase up to 10,643,636
(December 31, 2001 
9,136,441) common shares. The exercise price
is equal to the market value of the common shares at the date of grant. Vesting
periods range from immediate vesting
for certain executives to five year vesting for remaining employees and
directors. Options are granted at managements
discretion with Board of Directors approval being required. No option may be
exercisable more than 10 years from the date
of grant. As at December 31, 2002, there was a total of 3,480,072 (December 31,
2001  3,647,834) options outstanding
to directors, officers and employees. The exercise prices range from $9.11 to
$22.92 (December 31, 2001  $9.11 to $22.92).
These options expire up to August 28, 2012. All options were issued at market
price.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | Changes in options outstanding during year
| | --- |  | ------------------------------------------

| | (b) |  | The following table depicts the changes in options in the years presented:
| | --- |  | --------------------------------------------------------------------------

December 31, 2002
    
    
    December 31, 2001Options
    
    
    Weighted
    
    
    Options
    
    
    Weightedaverage
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exerciseprice
    
    
    
    
    
    
    priceOutstanding at beginning of year
    
    
    3,647,834
    
    
    $
    12.60
    
    
    
    4,399,288
    
    
    $
    12.37Granted
    
    
    930,722
    
    
    $
    12.16
    
    
    
    205,000
    
    
    $
    10.48Exercised
    
    
    (801,633
    )
    
    $
    11.02
    
    
    
    (371,157
    )
    
    $
    5.63Forfeited
    
    
    (296,851
    )
    
    $
    17.14
    
    
    
    (585,297
    )
    
    $
    14.55Outstanding at end of year
    
    
    3,480,072
    
    
    $
    12.46
    
    
    
    3,647,834
    
    
    $
    12.60


2002ANNUAL
REPORT    49



---



##### 





| |  | Options exercisable at year end
| |  | -------------------------------

| |  | The following table summarizes information about the options outstanding at
December 31, 2002:
| |  | ----------------------------------------------------------------------------------------------

Options Outstanding
    
    
    Options ExercisableRange of
    
    Number
    
    
    Weighted
    
    
    Weighted
    
    
    Number
    
    
    Weighted
    
    
    WeightedExercise Prices
    
    Outstanding
    
    
    Average
    
    
    Average
    
    
    Exercisable
    
    
    Average
    
    
    AverageRemaining
    
    
    Exercise
    
    
    
    
    
    
    Remaining
    
    
    ExerciseContractual
    
    
    Price
    
    
    
    
    
    
    Contractual
    
    
    PriceLife (years)
    
    
    
    
    
    
    
    
    
    
    Life (years)$9.01 to $11.00
    
    
    647,800
    
    
    
    7.1
    
    
    $
    9.41
    
    
    
    605,000
    
    
    
    7.1
    
    
    $
    9.40$11.01 to $13.00
    
    
    1,979,222
    
    
    
    6.6
    
    
    $
    11.95
    
    
    
    910,698
    
    
    
    7.4
    
    
    $
    11.76$13.01 to $15.00
    
    
    401,450
    
    
    
    6.1
    
    
    $
    14.03
    
    
    
    275,812
    
    
    
    5.5
    
    
    $
    13.88$15.01 to $17.00
    
    
    279,900
    
    
    
    6.4
    
    
    $
    16.17
    
    
    
    178,520
    
    
    
    6.3
    
    
    $
    16.34$17.01 to $19.00
    
    
    79,700
    
    
    
    0.2
    
    
    $
    17.94
    
    
    
    79,700
    
    
    
    0.2
    
    
    $
    17.94$19.01 to $21.00
    
    
    23,000
    
    
    
    0.2
    
    
    $
    19.73
    
    
    
    23,000
    
    
    
    0.2
    
    
    $
    19.73$21.01 to $23.00
    
    
    69,000
    
    
    
    0.3
    
    
    $
    22.55
    
    
    
    69,000
    
    
    
    0.2
    
    
    $
    22.553,480,072
    
    
    
    6.3
    
    
    $
    12.46
    
    
    
    2,141,730
    
    
    
    6.4
    
    
    $
    12.41




| |  | The Corporation does not record compensation expense for stock options granted
to directors, executives and employees in
the financial statements because there is no intrinsic value, as defined by
CICA Handbook, Section 3870, at the date of grant.
As now required by Canadian GAAP, the impact on compensation costs of using a
fair value based method, as if the
compensation costs had been recorded in net earnings, must be disclosed. If the
fair value basic method had been used, the
Companys net earnings and net earnings per share would approximate the
following pro forma amounts:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

FOR THE YEAR ENDED
    
    December 31, 2002Compensation Costs
    
    $
    (1,931
    )Net EarningsAs reported
    
    $
    11,576Pro forma
    
    $
    9,645Net Earnings per Common ShareBasicAs reported
    
    $
    0.23Pro forma
    
    $
    0.19DilutedAs reported
    
    $
    0.23Pro forma
    
    $
    0.19




| |  | The average fair value of each option granted was estimated to be $6.74 on the
date of grant using the Black-Scholes
option-pricing model with weighted average assumptions for grants as follows:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Risk free interest rate
    
    
    5.33
    %Expected lives (years)
    
    7 - 10 yearsExpected volatility
    
    
    42.56
    %Dividend per share
    $
    
    0.05




| |  | Future change in Accounting Policy
| |  | ----------------------------------



| |  | Beginning January 1, 2003, the Corporation will change its accounting policy
for stock options granted on or after that date.
The Corporation will recognize the fair value of stock options, using an
accepted option-pricing model, on their grant
date as compensation expense over the period that the stock options vest. This
change in accounting policy will be
treated prospectively.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

50    ANNUAL
REPORT  2002



---



##### 





|08. |  | INCOME TAXES
|--- |  | ------------



|00. |  | The Corporation has tax losses of approximately $185.2 million available to
reduce future taxable income, the benefit of which
has been accounted for in computing future income taxes. These losses begin to
materially expire in 2005, subject to the ability
of the Corporation to refile and amend its income tax returns. The adjustment
for changes in the effective tax rate reflects the
benefit of the reduction of the current combined federal and provincial
substantially enacted rates from 39% reducing to 34%
(December 2001  rate change was from 42% reducing to 36%).
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

FOR THE YEAR ENDED
    
    December 31, 2002
    
    
    December 31, 2001Tax
expense (recovery) based on expected rate of 39%
(December 2001  42%)
    
    $
    8,129
    
    
    $
    (9,338
    )Non-taxable portion of capital gain
    
    
    (190
    )
    
    
    (1,444
    )Adjustment to future income tax liabilities
    
    
    1,685
    
    
    
    Adjustment for change in effective tax rate
    
    
    (4,204
    )
    
    
    (1,896
    )Future income tax expense (recovery)
    
    $
    5,420
    
    
    $
    (12,678
    )The future income tax liability is calculated as follows:AS AT
    
    December 31, 2002
    
    December 31, 2001Tax assets related to operating losses
    
    $
    63,254
    
    
    $
    52,991Tax liabilities related to differences in tax and book basis
    
    
    (126,230
    )
    
    
    (111,746
    )Future income tax liability
    
    $
    (62,976
    )
    
    $
    (58,755
    )




|09. |  | RELATED PARTY TRANSACTIONS
|--- |  | --------------------------



|00. |  | During the years ended December 31, 2002 and 2001, there were no related party
transactions.
|--- |  | --------------------------------------------------------------------------------------------



|10. |  | COMMITMENTS AND CONTINGENCIES
|--- |  | -----------------------------



|00. |  | The Corporation has long-term supply arrangements with two electrical utility
companies and commitments for two fixed-price
natural gas supply contracts as described in Note 1(h)(iii).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|00. |  | The Corporation, in the normal course of operations, will become subject to a
variety of legal and other claims against the
Corporation. Management and the Corporations legal counsel evaluate all claims
on their apparent merits, and accrue
Managements best estimate of the estimated costs to satisfy such claims.
Management believes that the outcome of legal and
other claims filed against the Corporation will not be material to the
Corporation.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|00. |  | The Corporation has established a group registered retirement savings plan for
its employees whereby the Corporation will
match the contributions of the employees to a maximum of 3% of regular earnings
earned in a calendar year or one-half the
contribution limit set for registered retirement savings plans, whichever is
less. The Corporations costs for the current year totalled
approximately $127 thousand (December 31, 2001  $nil). There was no
requirement for future contributions in respect of
past service.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2002ANNUAL
REPORT    51



---



##### 





|11. |  | SEGMENTED INFORMATION
|--- |  | ---------------------

|00. |  | The Corporation specializes in multi-family residential housing and operates
primarily within one business segment in four
Canadian provinces. The following summary presents segmented financial
information for the Corporations business by
geographic location:
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

December 31, 2002
    
    
    December 31, 2001AlbertaRevenue
    
    $
    151,397
    
    
    $
    141,609ExpensesOperating
    
    
    15,502
    
    
    
    14,229Utilities
    
    
    21,036
    
    
    
    21,442Utility rebate
    
    
    (3,399
    )
    
    
    (4,921
    )Property taxes
    
    
    11,380
    
    
    
    10,28144,519
    
    
    
    41,031Net operating income
    
    $
    106,878
    
    
    $
    100,578Identifiable AssetsRevenue producing properties
    
    $
    971,598
    
    
    $
    984,122Mortgages and accounts receivable
    
    
    8,550
    
    
    
    14,266Deferred financing costs
    
    
    25,464
    
    
    
    25,346Tenants security deposits
    
    
    6,559
    
    
    
    7,049$
    1,012,171
    
    
    $
    1,030,783SaskatchewanRevenue
    
    $
    32,893
    
    
    $
    31,858ExpensesOperating
    
    
    4,163
    
    
    
    3,512Utilities
    
    
    3,979
    
    
    
    4,236Utility rebate
    
    
    
    
    
    
    (13
    )Property taxes
    
    
    4,778
    
    
    
    4,80812,920
    
    
    
    12,543Net operating income
    
    $
    19,973
    
    
    $
    19,315Identifiable AssetsRevenue producing properties
    
    $
    180,792
    
    
    $
    181,751Mortgages and accounts receivable
    
    
    22
    
    
    
    54Deferred financing costs
    
    
    4,714
    
    
    
    4,561Tenants security deposits
    
    
    1,037
    
    
    
    1,271$
    186,565
    
    
    $
    187,637OntarioRevenue
    
    $
    33,327
    
    
    $
    29,645ExpensesOperating
    
    
    4,473
    
    
    
    3,425Utilities
    
    
    5,369
    
    
    
    5,801Utility rebate
    
    
    (295
    )
    
    
    (1
    )Property taxes
    
    
    5,364
    
    
    
    4,66214,911
    
    
    
    13,887Net operating income
    
    $
    18,416
    
    
    $
    15,758Identifiable AssetsRevenue producing properties
    
    $
    215,175
    
    
    $
    208,148Mortgages and accounts receivable
    
    
    1,166
    
    
    
    5,819Deferred financing costs
    
    
    2,954
    
    
    
    3,022$
    219,295
    
    
    $
    216,989


52    ANNUAL
REPORT2002



---



##### 



Quebec (for 8 months of operations only)Revenue
    
    $
    21,962
    
    
    $
    ExpensesOperating
    
    
    2,147
    
    
    
    Utilities
    
    
    1,906
    
    
    
    Utility rebate
    
    
    
    
    
    
    Property taxes
    
    
    2,074
    
    
    
    6,127
    
    
    
    Net operating income
    
    $
    15,835
    
    
    $
    Identifiable AssetsRevenue producing properties
    
    $
    229,272
    
    
    $
    Mortgages and accounts receivable
    
    
    4,709
    
    
    
    Deferred financing costs
    
    
    4,357
    
    
    
    $
    238,338
    
    
    $
    TotalNet operating income
    
    $
    161,102
    
    
    $
    135,651Unallocated revenue*
    
    
    9,815
    
    
    
    24,157Unallocated expenses**
    
    
    (159,341
    )
    
    
    (172,610
    )Net income (loss)
    
    $
    11,576
    
    
    $
    (12,802
    )AssetsIdentifiable assets
    
    $
    1,656,369
    
    
    $
    1,435,409Unallocated assets***
    
    
    52,121
    
    
    
    53,882$
    1,708,490
    
    
    $
    1,489,291




| | *   |  | Unallocated revenue includes sales of properties held for resale, interest
income and other non-rental income.                                                                   
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | **  |  | Unallocated expenses include cost of properties held for resale, non-rental
operating expenses, administration, financing
costs, amortization, income taxes and other provisions.
| | *** |  | Unallocated assets include properties held for resale, cash and short-term
investments, and other assets.                                                                        



|12. |  | SUBSEQUENT EVENTS
|--- |  | -----------------



|00. |  | Subsequent to December 31, 2002, the Corporation has contracted to acquire
1,129 residential units from third parties for
an aggregate purchase price of $54.0 million. The acquisition will be financed
through cash of $18.8 million, existing credit
facilities of $23.0 million and the assumption of existing mortgages.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|13. |  | DIFFERENCES FROM UNITED STATES ACCOUNTING PRINCIPLES
|--- |  | ----------------------------------------------------



|00. |  | Canadian GAAP varies in many respects from the principles that the Corporation
would follow if its consolidated financial
statements were prepared in accordance with U.S. GAAP. The effects of
significant accounting differences on the Corporations
consolidated balance sheets and statements of earnings (loss), retained
earnings and cash flows are quantified and described in
the accompanying notes.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|00. |  | Under Canadian GAAP, companies in the real estate industry provide
supplementary measures of funds from operations and funds
from operations per share in the consolidated financial statements, provided
that these measures are not given greater prominence
than reported net earnings or earnings per share. For the purpose of reporting
under U.S. GAAP, companies would not provide
supplementary measures of funds from operations and funds from operations per
share in the consolidated financial statements.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2002ANNUAL
REPORT    53



---



##### 





| |  | Statement of Earnings Differences
| |  | ---------------------------------



| |  | The incorporation of the significant differences in accounting principles in
the Corporations income statements for the period
ended December 31, 2002, under U.S. GAAP, would result in a net loss after
extraordinary item of Cdn $0.3 million (December
31, 2001  Cdn $22.9 million). The differences between Canadian GAAP and U.S.
GAAP are summarized in the following tables:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

FOR THE YEAR ENDED (CDN$ THOUSANDS, EXCEPT PER SHARE AMOUNTS)
    
    December 31, 2002
    
    
    December 31, 2001Net earnings (loss) under Canadian GAAP
    
    $
    11,576
    
    
    $
    (12,802
    )AdjustmentsIncrease in amortization of revenue producing properties (a)
    
    
    (16,437
    )
    
    
    (16,691
    )Decrease in amortization of deferred financing costs (b)
    
    
    588
    
    
    
    641Increase in operating expenses due to expensing of capitalized
expenses for property held for resale (c)
    
    
    (457
    )
    
    
    (295
    )Increase in gain on sales due to increased amortization (d)
    
    
    173
    
    
    
    473Increase in gain on sales due capitalized expenses for property
held for resale previously expensed (c)
    
    
    
    
    
    
    197Decrease in future income taxes as a result of foregoing adjustments (e)
    
    
    6,291
    
    
    
    7,229Difference in substantially enacted tax rates (e)
    
    
    (1,714
    )
    
    
    (1,699
    )Reclassification of extinguishment of debt (f)
    
    
    (692
    )
    
    
    Net loss under U.S. GAAP before extinguishment of extraordinary item
    
    $
    (672
    )
    
    $
    (22,947
    )Extraordinary item  extinguishment of debt less applicable
taxes of $273 (December 31, 2001  $nil) (f)
    
    
    419
    
    
    
    Net loss under U.S. GAAP after extraordinary item
    
    $
    (253
    )
    
    $
    (22,947
    )Net loss per share before extraordinary item, basic and fully diluted
    
    $
    (0.01
    )
    
    $
    (0.46

    )Net loss per share after extraordinary item, basic and fully diluted
    
    $
    (0.01
    )
    
    $
    (0.46
    )Statement of Retained Earnings (Deficit)FOR THE YEAR ENDED (CDN$ THOUSANDS)
    
    December 31, 2002
    
    
    December 31, 2001(Deficit) retained earnings, beginning of year
    
    $
    (25,806
    )
    
    $
    5,345Net loss
    
    
    (253
    )
    
    
    (22,947
    )Dividends paid
    
    
    (2,477
    )
    
    
    (2,496
    )Premium on share repurchases (NOTE 7)
    
    
    (652
    )
    
    
    (5,708
    )Deficit, end of year
    
    $
    (29,188
    )
    
    $
    (25,806
    )




| |  | The significant differences in each category between Canadian GAAP and U.S.
GAAP are as follows:
| |  | ------------------------------------------------------------------------------------------------



| | (a) |  | Revenue Producing Properties Amortization                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Under Canadian GAAP, revenue producing properties have been amortized using the
sinking fund method over 40 to 50
years. Under U.S. GAAP, revenue producing properties have been amortized on a
straight-line basis over a 40 year period.
In recomputing amortization on a straight-line basis, the additional
amortization expense for the year ended December 31,
2002 would be Cdn $16.4 million (December 31, 2001  Cdn $16.7 million).
|
| | (b) |  | Deferred Financing                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |     |  | Under U.S. GAAP, amortization under Canadian GAAP for specific costs relating
to mortgage prepayment penalties must be
added back to earnings. The full amount of the mortgage prepayment penalties is
fully charged to income as documented in
note 13(f). This results in a decrease in amortization expense for the year
ended December 31, 2002 by Cdn $0.6 million
(December 31, 2001  Cdn. $0.6 million).                             

54    ANNUAL
REPORT2002



---



##### 





| | (c) |  | Capitalization of Revenue (Expenses) for Property Held for Resale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Under U.S. GAAP, net operating revenue (expenses) for property held for resale
would be recorded as income (expenses)
when incurred. For the year ended December 31, 2002, this would decrease net
income by Cdn $0.5 million (December 31,
2001  Cdn $0.3 million). This adjustment also increased gain on sales due to a
decrease in cost of sales for the year ended
December 31, 2002 by Cdn $nil (December 31, 2001  $0.2 million).                                                                                                                                                                                                                                                                                                                                         
|
| | (d) |  | Increased Gain on Sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |     |  | Under U.S. GAAP, amortized properties will have a lower net book value than
under Canadian GAAP due to increased
annual amortization. The increased gain for the year ended December 31, 2002
would be $0.2 million (December 31, 2001 
Cdn $0.5 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (e) |  | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |     |  | Under Canadian and U.S. GAAP, income taxes are accounted for using the
liability method. For the year ended December 31,
2002, a reduction of future income tax expense of Cdn $6.3 million (December
31, 2001  Cdn $7.2 million) would be
recorded due to the tax effect of the stated differences between Canadian and
U.S. GAAP. Under U.S. GAAP, SFAS No. 109
does not allow the use of substantially enacted tax rates to calculate income
tax expense. Hence, under U.S. GAAP, the
substantially enacted reduction in tax rates will be effective over the course
of the next four years, whereas Canadian GAAP
recognized the benefits in the current period, resulting in an increase of
future income tax expense of Cdn $1.7 million
(December 31, 2001  $1.7 million).
|
| | (f) |  | Extinguishment of Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | Under U.S. GAAP, all gains and losses associated with the extinguishment of
existing mortgage debt are charged to the
period incurred. These are to be disclosed as extraordinary items and reported
net of applicable taxes. For the year ended
December 31, 2002, this would decrease net loss after extraordinary item by Cdn
$0.4 million (December 31, 2001  Cdn $nil).
For Canadian GAAP, these charges were recorded either as gains on debt
settlement or in financing costs. For U.S. GAAP, the
reclassification of extinguishment of debt as an extraordinary item, net of
tax, would increase net loss before extraordinary
item by Cdn $0.4 million for the year ended December 31, 2002 (December 31,
2001  $nil).                                                  

Comprehensive Income

The Financial Accounting Standards Board (FASB) issued SFAS No. 130,
Reporting Comprehensive Income. Comprehensive income,
which incorporates net income, includes all changes in equity during the year.
The Corporations comprehensive income was equal to
net earnings for all years presented.

Segmentation

The Corporation operates in the multi-family residential market and primarily
within one business segment as described in Note 11.

Stock Options Expense

Under Canadian GAAP, no compensation expense was recorded in respect of stock
options granted during the year. Under U.S. GAAP,
the Corporation adopted the recommendations of the Statement of Financial
Accounting Standards No. 123 (SFAS 123), which
is entitled, Accounting for Stock-Based Compensation, which establishes
financial accounting and reporting standards for
stock-based employee compensation plans. The Corporation has elected to follow
Accounting Principles Board No. 25, Accounting for
Stock Issued to Employees (APB 25) and related interpretations in accounting
for its employee stock options. Due to the fact that the
exercise price of the underlying stock equals the market price of the
underlying stock on the date of the grant, no compensation
expense would be recognized.

SFAS No. 123 requires the use of a fair value based method of accounting for
stock options. Under this method, compensation cost is
measured at the grant date based on the fair value of the options granted and
is recognized over the exercise period. However, SFAS
No. 123 allows the Corporation to continue to measure compensation costs in
accordance with APB 25. The weighted average exercise
price of options granted during the year was Cdn $12.16 (December 31, 2001 
Cdn $10.48).

2002ANNUAL
REPORT    55



---



##### 



The following two pro forma financial information tables present the pro forma
net operating results for the year and the pro forma
basic and fully diluted earnings (loss) per share, before and after
extraordinary item, had the Corporation adopted the fair value method
specified in SFAS No. 123 for all stock options issued to employees and
directors.

FOR THE YEAR ENDED(CDN$ THOUSANDS, EXCEPT PER SHARE AMOUNTS)
    
    December 31, 2002
    
    
    December 31, 2001Loss before extraordinary itemPro forma loss before extraordinary item under U.S. GAAP
    
    $
    (7,572
    )
    
    $
    (30,783
    )Pro forma basic loss before extraordinary item per share
    
    $
    (0.15
    )
    
    $
    (0.62
    )Pro forma fully diluted loss before Extraordinary item per share
    
    $
    (0.15
    )
    
    $
    (0.62
    )FOR THE YEAR ENDED(CDN$ THOUSANDS, EXCEPT PER SHARE AMOUNTS)
    
    December 31, 2002
    
    
    December 31, 2001Loss after extraordinary itemPro forma net loss after extraordinary item under U.S. GAAP
    
    $
    (7,153
    )
    
    $
    (30,783
    )Pro forma basic loss after extraordinary item per share
    
    $
    (0.14
    )
    
    $
    (0.62
    )Pro forma fully diluted loss after extraordinary item per share
    
    $
    (0.14
    )
    
    $
    (0.62
    )


Beginning January 1, 2003, the Corporation will change its accounting policy
for Canadian GAAP for stock options granted on or
after that date. The corporation will recognize the fair value of stock
options, using an accepted option-pricing model, on their grant
date as compensation expense over the period that the stock options vest. For
U.S. GAAP, the Corporation will no longer elect to
follow APB 25 and related interpretations in accounting for its employee stock
options. This change in accounting policy will be
treated prospectively.

Balance Sheet Differences

The incorporation of the significant differences in accounting principles in
the Corporations consolidated financial statements as at
December 31, 2002 and 2001 would result in the following balance sheet
presentation under U.S. GAAP:

AS AT(CDN$ THOUSANDS)
    
    December 31, 2002
    
    
    December 31, 2001Assets
Revenue producing properties
    
    $
    1,517,163
    
    
    $
    1,311,138Properties held for resale
    
    
    7,038
    
    
    
    6,630Mortgages and accounts receivable
    
    
    14,704
    
    
    
    22,325Other assets
    
    
    13,723
    
    
    
    11,846Deferred financing costs
    
    
    35,300
    
    
    
    30,148Tenants security deposits
    
    
    7,596
    
    
    
    8,320Cash and short-term investments
    
    
    23,631
    
    
    
    25,672Total assets under U.S. GAAP
    
    $
    1,619,155
    
    
    $
    1,416,079Liabilities and shareholders equityMortgages payable
    
    $
    1,307,177
    
    
    $
    1,108,406Accounts payable and accrued liabilities
    
    
    21,498
    
    
    
    19,525Refundable security deposits and other
    
    
    10,496
    
    
    
    10,418Capital lease obligations
    
    
    4,598
    
    
    
    7,203Taxes payable
    
    
    
    
    
    
    Future income taxes
    
    
    38,058
    
    
    
    38,1311,381,827
    
    
    
    1,183,683Share capital
    
    
    266,516
    
    
    
    258,202Retained earnings
    
    
    (29,188
    )
    
    
    (25,806
    )Total liabilities and equity under U.S. GAAP
    
    $
    1,619,155
    
    
    $
    1,416,079


56    ANNUAL
REPORT2002



---



##### 



The significant differences in each category between Canadian GAAP and U.S.
GAAP would be as follows:

Revenue Producing Properties

AS AT(CDN$ THOUSANDS)
    
    December 31, 2002
    
    
    December 31, 2001Revenue producing properties under Canadian GAAP
    
    $
    1,604,277
    
    
    $
    1,381,541Additional accumulated amortization under U.S. GAAP (a)
    
    
    (90,859
    )
    
    
    (74,432
    )Additional gains on sold assets (b)
    
    
    4,192
    
    
    
    4,019Capitalization of net operating revenues (expenses) reversed under U.S. GAAP (c)
    
    
    (447
    )
    
    
    10Revenue producing properties under U.S. GAAP
    
    $
    1,517,163
    
    
    $
    1,311,138




| | (a) |  | Accumulated Amortization                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The difference between Canadian GAAP and U.S. GAAP affecting the carrying value
of revenue producing properties
relates to U.S. GAAP requiring straight-line amortization to be applied to
depreciable assets rather than the sinking
fund method of amortization. At December 31, 2002, this would result in a
cumulative adjustment of Cdn $90.9 million
(December 31, 2001  Cdn $74.4 million).                                 
|
| | (b) |  | Additional Gains on Sold Assets                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |     |  | As a result of increased amortization on sold assets under U.S. GAAP, at
December 31, 2002, an increase to revenue
producing properties of Cdn $4.2 million (December 31, 2001
 Cdn $4.0 million)
would be required to offset the lower cost
of sales.                                                                                                                                                                             
|
| | (c) |  | Capitalization of Net Operating Revenue Reversed                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     |  | Under U.S. GAAP, the Corporation is required to consider net operating income
(expense) of in-service properties as period
revenue (expense) rather than capitalizing them. This accumulated adjustment at
December 31, 2002 of Cdn $(0.4) million
(December 31, 2001  Cdn $10 thousand), represented the capitalized net
operating (expense) revenue of properties transferred
to revenue producing from property held for resale.

Deferred Financing Costs

AS AT(CDN$ THOUSANDS)
    
    December 31, 2002
    
    
    December 31, 2001Deferred financing costs under Canadian GAAP
    
    $
    37,521
    
    
    $
    32,957Reversal of debt penalty amortization
    
    
    3,188
    
    
    
    2,875Write-off of debt penalty fees
    
    
    (5,409
    )
    
    
    (5,684
    )Deferred financing costs under U.S. GAAP
    
    $
    35,300
    
    
    $
    30,148


The reversal of debt penalty amortization incurred under Canadian GAAP is
described above in Note 13(b) under Statement of Earnings
Differences. This reversal in amortization would increase deferred financing
costs by Cdn $3.2 million (December 31, 2001  Cdn $2.9
million). The second difference requiring the write-off of debt penalty fees
for U.S. GAAP is described above in Note 13(f) under
Statement of Earnings Differences. At December 31, 2002, this would result in a
cumulative adjustment of Cdn $5.4 million (December
31, 2001  Cdn $5.7 million).

2002ANNUAL
REPORT    57



---



##### 



Future Income Taxes

The future income tax liability under U.S. GAAP would be calculated as follows:

AS AT(CDN$ THOUSANDS)
    
    December 31, 2002
    
    
    December 31, 2001Tax assets related to operating losses
    
    $
    73,283
    
    
    $
    62,625Tax liabilities related to differences in tax and book basis
    
    
    (111,341
    )
    
    
    (100,756
    )Future income tax liability under U.S. GAAP
    
    $
    (38,058
    )
    
    $
    (38,131
    )


Recent Accounting Pronouncements

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, which addresses financial accounting
and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs.
SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. Two
of Boardwalks properties in the province of Alberta,
located in Calgary and Edmonton, and the Corporations acquisition in Montreal,
Quebec are subject to long-term ground leases and
similar arrangements in which the underlying land is owned by a third party and
leased to the Corporation. These leases are set
to expire in 2065, 2096, and 2064, respectively. Under the terms of a typical
ground lease, the lessee must pay rent for the use of the
land and is generally responsible for all costs and expenses associated with
the building and improvements. Unless the lease term
is extended, the land together with all improvements made will revert to the
owner of the land upon expiration of the lease term.
There are no material asset retirement costs associated with the ground leases.
Management does not believe that SFAS No. 143 will
have a material impact on the Corporations financial statements.

In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets, which resolves
significant implementation issues related to FASB Statement No. 121, Accounting
for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, and supersedes the accounting and
reporting provisions of APB Opinion No. 30, Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions, for the disposal of a business segment. SFAS
No. 144 is effective for fiscal years beginning
after December 15, 2001, and interim periods within those fiscal years.
Management does not believe that SFAS No. 144 will have
a material impact on the Corporations financial statements.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No.
13, and Technical Corrections. SFAS No. 4, Reporting Gains and Losses from
Extinguishment of Debt, addressed income statement
classification of gains and losses from extinguishment of debt. SFAS No. 64
amended SFAS No. 4 and is no longer necessary due
to the rescission of SFAS No. 4. SFAS No. 145 also amended SFAS No. 13 to
require sale-leaseback accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. Management believes that SFAS No. 145 will
have no retroactive impact on the Corporations financial statements.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities, which requires the
recognition of a liability when incurred for costs associated with an exit or
disposal activity. Management does not believe that SFAS
No. 146 will have a material impact on the Corporations financial statements.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-based
Compensation Transition and Disclosure  an
Amendment of FASB Statement No. 123, to provide alternative methods of
accounting for stock-based employee compensation. SFAS
No. 148 is effective for fiscal years ending after December 15, 2002 and
interim periods beginning after December 15, 2002.
Management does not believe that SFAS No. 148 will have a material impact on
the Corporations financial statements.

58
    ANNUAL
REPORT  
2002



---



##### 



BOARDWALK EQUITIES INC.Supplemental Financial Data
Selected Financial Information in US Currency

FOR THE YEAR ENDED(US$ THOUSANDS, EXCEPT PER SHARE AMOUNTS)
    
    December 31, 2002
    
    
    December 31, 2001Total revenue under Canadian GAAP
    
    $
    158,814
    
    
    $
    146,770Net earnings (loss) under Canadian GAAP
    
    $
    7,372
    
    
    $
    ( 8,267
    )AdjustmentsIncrease in amortization of revenue producing properties
    
    
    (10,467
    )
    
    
    (10,779
    )Decrease in amortization of deferred financing costs
    
    
    374
    
    
    
    414Increase in operating expenses due to property held for resale capitalized revenues
    
    
    (291
    )

    
    
    (190
    )Increase gain on sales due to increased amortization
    
    
    110
    
    
    
    305Increase gain on sales due to property held for resale capitalized expenses
    
    
    
    
    
    
    127Decrease in future income taxes as a result of foregoing adjustments
    
    
    4,006
    
    
    
    4,668Difference in substantially enacted tax rates
    
    
    (1,091
    )
    
    
    (1,097
    )Reclass extinguishment of debt
    
    
    (441
    )
    
    
    Net loss under U.S. GAAP before extinguishment of extraordinary item
    
    $
    (428
    )
    
    $
    (14,819
    )Extraordinary
item  extinguishment of debt less applicable taxes of $174(December 31, 2001  $nil)
    
    
    267
    
    
    
    Net loss under U.S. GAAP after extraordinary item
    
    $
    (161
    )
    
    $
    (14,819
    )Net loss per share before extraordinary item, basic and fully diluted
    
    $
    (0.01
    )
    
    $
    (0.30
    )Net loss per share after extraordinary item, basic and fully diluted
    
    $
    (0.00
    )
    
    $
    (0.30
    )Average
exchange rate (US$ / CDN$)
    
    
    0.6368
    
    
    
    0.6458


2002ANNUAL
REPORT    59



---



##### 



BOARDWALK EQUITIES INC.Corporate Information

Executive Offices
 Calgary
First
West Professional Building
Suite 200, 1501  1 Street SW
Calgary, Alberta T2R 0W1
Telephone: 403.531.9255
Facsimile: 403.531.9565
Website: www.bwalk.com Toronto
Boardwalk
Equities (Ontario) Inc.
Suite 220, 141 Adelaide Street West
Toronto, Ontario M5H 3L5
Telephone: 416.364.0849
Facsimile: 416.866.2156 Board
of Directors 
Paul
J. Hill(1), Chairman of the Board
Regina, Saskatchewan 
Ernest
Kapitza(1)(3)
Calgary, Alberta 
Sam
Kolias
Calgary, Alberta 
Van
Kolias
Calgary, Alberta 
Jon
E. Love(2)
Toronto, Ontario 
Al
W. Mawani(1)
Thornhill, Ontario 
David
V. Richards(1)(2)
Calgary, Alberta 
Kevin
P. Screpnechuk
Calgary, Alberta 
Michael
D. Young(2)(3)
Dallas, Texas
    
    Senior Management 
R.
Douglas Biggs
Vice President, Legal Affairs 
William
Chidley
Senior Vice President, Corporate Development 
Jean
Denis
Vice President, Quebec Acquisitions 
John
Dill
Vice President, Eastern Acquisitions 
Roberto
A. Geremia
Senior Vice President, Finance
and Chief Financial Officer 
Michael
Guyette
Vice President, Technology 
Mike
Hough
Senior Vice President 
Sam
Kolias
President & Chief Executive Officer 
Van
Kolias
Senior Vice President, Quality Control 
Helen
Mix
Vice President, Human Resources 
Shaun
Renneberg
Vice President, Capital Projects 
Lisa
Russell
Vice President, Acquisitions, Western Canada 
Kelly
Sadiura
Vice President, Customer Service and
Process Design 
Kevin
P. Screpnechuk
Senior Vice President, Rental Operations




|(1) |  | Member of the Audit and Risk Management Committee       
|--- |  | --------------------------------------------------------
|(2) |  | Member of the Human Resources and Compensation Committee
|(3) |  | Member of the Corporate Governance Committee            

60
    ANNUAL
REPORT  2002



---



##### 



AT A GLANCE
FIVE-YEAR SUMMARY
(CDN$ THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1998
    
    
    1999
    
    
    2000
    
    
    7 Months
    
    
    2001
    
    
    2002endingDec 31, 2000TOTAL REVENUES
    
    
    108,200
    
    
    
    186,000
    
    
    
    217,971
    
    
    
    147,082
    
    
    
    227,269
    
    
    
    249,394Revenue producing propertiesRental income
    
    
    75,407
    
    
    
    140,590
    
    
    
    178,147
    
    
    
    110,771
    
    
    
    205,281
    
    
    
    241,896Rental guarantee income
    
    
    75,407
    
    
    
    140,590
    
    
    
    178,147
    
    
    
    110,771
    
    
    
    205,281
    
    
    
    241,896OPERATING EXPENSESRevenue producing properties
    
    
    12,546
    
    
    
    19,836
    
    
    
    22,130
    
    
    
    13,854
    
    
    
    21,969
    
    
    
    26,229Property taxes
    
    
    6,781
    
    
    
    12,335
    
    
    
    18,431
    
    
    
    11,004
    
    
    
    19,743
    
    
    
    23,686Utilities
    
    
    7,813
    
    
    
    14,595
    
    
    
    20,140
    
    
    
    14,713
    
    
    
    26,582
    
    
    
    28,842Financing costs
    
    
    26,055
    
    
    
    47,836
    
    
    
    59,547
    
    
    
    37,835
    
    
    
    67,367
    
    
    
    77,523Amortization
    
    
    11,169
    
    
    
    25,110
    
    
    
    36,842
    
    
    
    27,401
    
    
    
    53,584
    
    
    
    46,74864,364
    
    
    
    119,712
    
    
    
    157,090
    
    
    
    104,807
    
    
    
    189,245
    
    
    
    203,028Operating Earnings before corporate charges
    
    
    11,043
    
    
    
    20,878
    
    
    
    21,057
    
    
    
    5,964
    
    
    
    16,036
    
    
    
    38,868Cash flow before corporate charges
    
    
    22,212
    
    
    
    47,988
    
    
    
    57,899
    
    
    
    33,365
    
    
    
    69,620
    
    
    
    85,616Sales of properties held for development and resaleRevenue
    
    
    32,768
    
    
    
    45,382
    
    
    
    39,824
    
    
    
    36,311
    
    
    
    21,988
    
    
    
    7,498Cost of sales
    
    
    21,273
    
    
    
    28,532
    
    
    
    24,017
    
    
    
    24,258
    
    
    
    13,939
    
    
    
    6,531Earnings before corporate charges
    
    
    22,538
    
    
    
    37,728
    
    
    
    36,864
    
    
    
    18,017
    
    
    
    24,085
    
    
    
    39,835Corporate chargesAdministration
    
    
    6,980
    
    
    
    10,608
    
    
    
    17,232
    
    
    
    9,191
    
    
    
    16,482
    
    
    
    19,931Large Corporations Tax
    
    
    1,878
    
    
    
    2,414
    
    
    
    2,881
    
    
    
    1,913
    
    
    
    3,246
    
    
    
    3,600Deferred income taxes
    
    
    5,693
    
    
    
    10,221
    
    
    
    6,306
    
    
    
    (8,652
    )
    
    
    (12,678
    )
    
    
    5,420Provision for loss on technology
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,837
    
    
    
    (692
    )14,551
    
    
    
    23,243
    
    
    
    26,419
    
    
    
    2,452
    
    
    
    36,887
    
    
    
    28,259Net Earnings (Loss)
    
    
    7,987
    
    
    
    14,485
    
    
    
    10,445
    
    
    
    15,565
    
    
    
    (12,802
    )
    
    
    11,576Earnings (loss) per share- diluted
    
    
    0.20
    
    
    
    0.31
    
    
    
    0.21
    
    
    
    0.31
    
    
    
    (0.26
    )
    
    
    0.23Funds from operations
    
    
    24,849
    
    
    
    49,816
    
    
    
    53,593
    
    
    
    34,314
    
    
    
    57,941
    
    
    
    63,052Funds from operations per share- diluted
    
    
    0.63
    
    
    
    1.07
    
    
    
    1.09
    
    
    
    0.69
    
    
    
    1.15
    
    
    
    1.26


2002ANNUAL
REPORT    61



---



##### 



AT A GLANCE
FIVE-YEAR SUMMARY
(CDN$ THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1998
    
    
    1999
    
    
    2000
    
    
    7 Months
    
    
    2001
    
    
    2002endingDec 31, 2000ASSETSRevenue producing properties
    
    
    856,427
    
    
    
    1,113,876
    
    
    
    1,318,658
    
    
    
    1,325,715
    
    
    
    1,381,541
    
    
    
    1,604,277Properties held for resale
    
    
    30,819
    
    
    
    29,771
    
    
    
    6,365
    
    
    
    6,692
    
    
    
    6,630
    
    
    
    7,038887,246
    
    
    
    1,143,647
    
    
    
    1,325,023
    
    
    
    1,332,407
    
    
    
    1,388,171
    
    
    
    1,611,315Other assets
    
    
    42,640
    
    
    
    57,153
    
    
    
    73,005
    
    
    
    111,427
    
    
    
    101,120
    
    
    
    97,175Total assets
    
    
    929,886
    
    
    
    1,200,800
    
    
    
    1,398,028
    
    
    
    1,443,834
    
    
    
    1,489,291
    
    
    
    1,708,490Mortgage payable
    
    
    645,652
    
    
    
    867,757
    
    
    
    1,009,526
    
    
    
    1,034,444
    
    
    
    1,108,406
    
    
    
    1,307,177Other liabilities
    
    
    66,909
    
    
    
    97,057
    
    
    
    102,689
    
    
    
    108,016
    
    
    
    95,901
    
    
    
    99,568712,561
    
    

    
    964,814
    
    
    
    1,112,215
    
    
    
    1,142,460
    
    
    
    1,204,307
    
    
    
    1,406,745Shareholders equity
    
    
    217,325
    
    
    
    235,986
    
    
    
    285,813
    
    
    
    301,374
    
    
    
    284,984
    
    
    
    301,745Total liabilities and shareholders equity
    
    
    929,886
    
    
    
    1,200,800
    
    
    
    1,398,028
    
    
    
    1,443,834
    
    
    
    1,489,291
    
    
    
    1,708,490Common shares outstanding (000)
    
    
    45,500
    
    
    
    46,555
    
    
    
    49,240
    
    
    
    49,259
    
    
    
    49,404
    
    
    
    50,109Share price year end ($)
    
    
    22.00
    
    
    
    16.00
    
    
    
    12.55
    
    
    
    11.50
    
    
    
    11.58
    
    
    
    15.18Market capitalization ($Mm)
    
    
    1.001
    
    
    
    0.745
    
    
    
    0.618
    
    
    
    0.566
    
    
    
    0.577
    
    
    
    0.761Number of units
    
    
    19,507
    
    
    
    22,467
    
    
    
    25,070
    
    
    
    24,856
    
    
    
    25,889
    
    
    
    29,326Real estate asset value per unit
    
    
    45
    
    
    
    49
    
    
    
    53
    
    
    
    53
    
    
    
    53
    
    
    
    55Mortgage payable per unit
    
    
    33
    
    
    
    39
    
    
    
    40
    
    
    
    42
    
    
    
    43
    
    
    
    45Net rentable square feet (000)
    
    
    16,500
    
    
    
    18,810
    
    
    
    20,762
    
    
    
    20,721
    
    
    
    21,590
    
    
    
    24,970Real estate asset value per square foot
    
    
    54
    
    
    
    58
    
    
    
    64
    
    
    
    64
    
    
    
    64
    
    
    
    64Mortgage payable per square foot
    
    
    39
    
    
    
    46
    
    
    
    49
    
    
    
    50
    
    
    
    51
    
    
    
    52Average net rentable SF per unit
    
    
    846
    
    
    
    837
    
    
    
    828
    
    
    
    834
    
    
    
    834
    
    
    
    851Mortgage weighted average interest rate
    
    
    6.45
    %
    
    
    6.33
    %
    
    
    6.29
    %
    
    
    6.27
    %
    
    
    6.15
    %
    
    
    5.88
    %




This annual report contains forward looking statements based on current
expectations that include a number of business risks
and uncertainties.

The factors that could cause the results to differ materially include but are
not limited to national and regional economic conditions.

2002ANNUAL
REPORT    62



---



##### 



AT A GLANCE
QUARTERLY RESULTS 2002
(CDN$ THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Full YearQ1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    2002TOTAL REVENUESRevenue producing propertiesRental income
    
    
    54,762
    
    
    
    59,566
    
    
    
    63,641
    
    
    
    63,927
    
    
    
    241,896Rental guarantee income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,762
    
    
    
    59,566
    
    
    
    63,641
    
    
    
    63,927
    
    
    
    241,896OPERATING EXPENSESRevenue producing properties
    
    
    5,529
    
    
    
    6,268
    
    
    
    6,867
    
    
    
    7,565
    
    
    
    26,229Property Taxes
    
    
    5,206
    
    
    
    5,713
    
    
    
    6,334
    
    
    
    6,433
    
    
    
    23,686Utilities
    
    
    7,060
    
    
    
    5,634
    
    
    
    6,377
    
    
    
    9,771
    
    
    
    28,842Financing costs
    
    
    17,316
    
    
    
    19,089
    
    
    
    21,245
    
    
    
    19,873
    
    
    
    77,523Amortization
    
    
    10,906
    
    
    
    11,608
    
    
    
    11,487
    
    
    
    12,747
    
    
    
    46,74846,017
    
    
    
    48,312
    
    
    
    52,310
    
    
    
    56,389
    
    
    
    203,028Operating earnings before corporate charges
    
    
    8,745
    
    
    
    11,254
    
    
    
    11,331
    
    
    
    7,538
    
    
    
    38,868Cash flow before corporate charges
    
    
    19,651
    
    
    
    22,862
    
    
    
    22,818
    
    
    
    20,285
    
    
    
    85,616Sales of properties held for development and resaleRevenue
    
    
    0
    
    
    
    7,498
    
    
    
    0
    
    
    
    0
    
    
    
    7,498Cost of Sales
    
    
    0
    
    
    
    6,531
    
    
    
    0
    
    
    
    0
    
    
    
    6,531Earnings before corporate charges
    
    
    8,745
    
    
    
    12,221
    
    
    
    11,331
    
    
    
    7,538
    
    
    
    39,835Corporate chargesAdministration
    
    
    4,729
    
    
    
    4,961
    
    
    
    4,681
    
    
    
    5,560
    
    
    
    19,931Large Corporations Tax
    
    
    661
    
    
    
    862
    
    
    
    824
    
    
    
    1,253
    
    
    
    3,600Deferred income taxes
    
    
    1,421
    
    
    
    2,412
    
    
    
    2,383
    
    
    
    (796
    )
    
    
    5,420Provision for loss on technology
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (692
    )
    
    
    (692
    )6,811
    
    
    
    8,235
    
    
    
    7,888
    
    
    
    5,325
    
    
    
    28,259Net Earnings
    
    
    1,934
    
    
    
    3,986
    
    
    
    3,443
    
    
    
    2,213
    
    
    
    11,576Earnings per share- diluted
    
    
    0.04
    
    
    
    0.08
    
    
    
    0.07
    
    
    
    0.04
    
    
    
    0.23Funds from operations
    
    
    14,261
    
    
    
    18,006
    
    
    
    17,313
    
    
    
    13,472
    
    
    
    63,052Funds from operations per share- diluted
    
    
    0.29
    
    
    
    0.36
    
    
    
    0.34
    
    
    
    0.27
    
    
    
    1.26


63
    ANNUAL
REPORT
2002



---



##### 



BOARDWALK EQUITIES INC.
Market Information





Solicitors
Stikeman Elliott
4300 Bankers Hall West
888  3 Street SW
Calgary, Alberta
T2P 5C5
 
Butlin Oke Roberts & Nobles
100, 1501  1 Street SW
Calgary, Alberta
T2R 0W1
 Bankers
TD Canada Trust
340  5 Avenue SW
Calgary, Alberta
T2P 2P6
 Auditors
Deloitte & Touche LLP
3000, 700  2 Street SW
Calgary, Alberta
T2P 0S7
 Registrar & Transfer Agent
Computershare Trust Company of Canada
Our Transfer Agent can help you with
a variety of shareholder related services,
including change of address, lost share
certificates, accounts consolidation and
transfer of stock.
600, 530  8 Avenue SW
Calgary, Alberta
T2P 3S8
Telephone: 403.267.6800
 Corporate Communications
Shareholders seeking financial and
operating information may contact:
 
Paul Moon
Director of Corporate Communications
Telephone: 403.531.9255
Facsimile: 403.261.9269
Website: investor.bwalk.com
E-mail: investor@bwalk.com








Online Information
For an online version of the current and
past annual reports, quarterly reports,
press releases and other corporate
information, please visit our investor
website at investor.bwalk.com. Using this
website, you may also sign up to receive
future press releases and corporate news
via e-mail.
 Annual Meeting
The Annual and Special General Meeting
of the Shareholders of Boardwalk Equities
Inc. will be held in the Calgary Petroleum
Club, 319  5 Avenue SW, Calgary,
Alberta, at 3:00 pm (Calgary time)
on May 13, 2003. Shareholders are
encouraged to attend and those unable
to do so are requested to complete the
Form of Proxy and forward it at their
earliest convenience.
 Exchange Listings
The Toronto Stock Exchange
The New York Stock Exchange Trading Profile
TSX: Jan. 1, 2002, to Dec. 31, 2002
High: $15.50
Low: $11.50
Year-end Closing Price: $15.18
Volume: 12,598,424
 
NYSE: Jan. 1, 2002, to Dec. 31, 2002
High: $10.35 (U.S.)
Low: $7.20 (U.S.)
Year-end Closing Price: $9.59 (U.S.)
Volume: 1,559,000 2002 Trading RangeHigh
    
    
    Low
    
    
    High
    
    
    LowQuarter
    
    (TSX)
    
    
    (TSX)
    
    
    (NYSE)
    
    
    (NYSE)Q1
    
    $
    14.21
    
    
    $
    11.50
    
    
    $
    8.95
    
    
    $
    7.20Q2
    
    $
    15.07
    
    
    $
    13.66
    
    
    $
    9.93
    
    
    $
    8.64Q3
    
    $
    15.50
    
    
    $
    13.25
    
    
    $
    10.00
    
    
    $
    8.40Q4
    
    $
    15.50
    
    
    $
    14.20
    
    
    $
    10.35
    
    
    $
    9.09




64
    ANNUAL
REPORT
2002



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(INSIDE BACK PAGE WITH PICTURE)





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##### 



(BACK PAGE WITH PICTURE, BOARDWALK LOGO, ADDRESS, PHONE, FAX AND WEB PAGE)