Page 1

# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

# FORM 20-F

(Mark One)

|_____ |  | REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|----- |  | ----------------------------------------------------------------------------------------------

|__X__ |  | ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|----- |  | ------------------------------------------------------------------------------------

| | For the fiscal year ended December 31, 2003
| | -------------------------------------------

|_____ |  | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|----- |  | ----------------------------------------------------------------------------------------

| | For the transition period from ____________________  to   _____________________
| | -------------------------------------------------------------------------------

|Commission file number | 0 - 9079
|---------------------- | --------

---

|REVENUE PROPERTIES COMPANY LIMITED                    
|------------------------------------------------------
|                                                      
|(Exact name of Registrant as
specified in its charter)

|Ontario, Canada                                
|-----------------------------------------------
|                                               
|(Jurisdiction of incorporation or
organization)

|The Colonnade
131 Bloor Street West, Suite 300
Toronto, Ontario, Canada M5S 1R1
Tel (416) 963-8100 Fax (416) 963-8512
|---------------------------------------------------------------------------------------------------------------------
|                                                                                                                     
|(Address, telephone and fax of
principal executive office)                                                           

|Securities
registered or to be registered pursuant to Section 12(b) of the Act. None
|------------------------------------------------------------------------------------
|                                                                                    
|(Title of each class)                
(Name of each exchange on which registered)   

Securities registered or to be registered pursuant to Section 12(g) of the Act.

|              |                        
|------------- | -----------------------
|Common Shares | Toronto Stock Exchange 
|              | NASD OTC Bulletin Board

---

|                      |                                            
|--------------------- | -------------------------------------------
|(Title of each class) | (Name of each exchange on which registered)

|Securities for which there is a
reporting obligation pursuant to Section 15(d) of the Act.
None
|-----------------------------------------------------------------------------------------------
|                                                                                               
|(Title of class)                                                                               

Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of
the period covered by the annual report. Common Shares - 9,186,186 shares outstanding as of December 31, 2003

Indicate by check mark whether the
Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES __X__ NO _____

Indicate by check mark which
financial statement item the registrant has elected to follow.

Item 17 __X__ Item 18 _____

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# REVENUE PROPERTIES
COMPANY LIMITED 
December 31, 2003

All dollar amounts are in Canadian
dollars, unless otherwise noted. See historic Canadian dollar to United States exchange
rates included under Item 3 of this report.

# FORWARD-LOOKING
STATEMENTS

This Annual Report contains
forward-looking statements. All statements, other than statements of
historical facts, included in this Annual Report that address activities, events or
developments that the Company expects or anticipates will or may occur in the future,
including, in particular, statements about the Companys plans, strategies, and
prospects, are forward-looking statements. These statements are often, but not always,
made through the use of words or phrases such as will likely result, are
expected to, will continue, believe, is
anticipated, estimated, intends, expects,
plans, seek, projection and outlook. These
statements involve estimates, assumptions and uncertainties, which could cause actual
results to differ materially from those expressed in these statements. Any forward-looking
statements are qualified in their entirety by reference to the factors discussed
throughout this Annual Report. Among the key factors that have a direct bearing on the
Companys results of operations are:

| |  |  | Market
valuations of the Company's shares;
| | - |  | ------------------------------------------

| |  |  | Financial
performance and operations of the Companys rental properties;
| | - |  | ------------------------------------------------------------------------

| |  |  | Real
estate conditions;
| | - |  | -----------------------

| |  |  | Execution
of competing development programs;
| | - |  | --------------------------------------------

| |  |  | Successful,
and timely, completion of renovations;
| | - |  | --------------------------------------------------

| |  |  | Availability
of acquisition targets;
| | - |  | ------------------------------------

| |  |  | Changes
in economic cycles and general uncertainty related to possible terrorist attacks;
| | - |  | -----------------------------------------------------------------------------------------

| |  |  | Our
ability to successfully implement our growth and operating strategies;
| | - |  | --------------------------------------------------------------------------

| |  |  | Competition
from other real estate companies; and
| | - |  | -------------------------------------------------

| |  |  | Changes
in the law and government regulations.
| | - |  | ----------------------------------------------

These and other factors are
discussed under Item 3.  Key Information  Risk Factors, Item
5.  Operating and Financial Review and Prospects and elsewhere in this annual
report.

Although the Company believes that
its plans, intentions, projections and expectations reflected in or suggested by these
forward-looking statements are reasonable, in light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this Annual Report may not occur.
Because the factors referred to in this Annual Report could cause actual results or
outcomes to differ materially from those expressed in any forward-looking statements made
in this Annual Report, you should not place undue reliance on any of these forward-looking
statements. Further, any forward-looking statement speaks only as of the date on which it
is made, and the Company undertakes no obligation to update any forward-looking statement
to reflect events or circumstances after the date on which the statement is made or to
reflect the occurrence of unanticipated events. New factors will emerge in the future, and
it is not possible for the Company to predict which factors they will be. In addition, the
Company cannot assess the impact of each factor on its business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially from
those described in any forward-looking statements.

# PART 1

ITEM 1  IDENTITY OF DIRECTORS,
SENIOR MANAGEMENT AND ADVISERS
Not applicable.

ITEM 2  OFFER STATISTICS AND
EXPECTED TIMETABLE
Not applicable.

---

Page 3

ITEM 3  KEY INFORMATION
Selected Financial Data

The selected financial data presented
below for, and as of the end of, each of the years in the five year period ended December
31, 2003, are derived from the consolidated financial statements of Revenue Properties
Company Limited (Company or Registrant), which financial
statements have been audited by Ernst & Young LLP (year ended December 31, 2003), and
KPMG LLP (years ended December 31, 1999 to 2002), independent chartered accountants. The
consolidated financial statements as of December 31, 2003 and 2002, and for each of the
years in the three year period ended December 31, 2003 and the report thereon, are
included elsewhere in this annual report.

CANADIAN GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES

(in thousands of Canadian dollars,
except per share amounts)

|                                             
|---------------------------------------------
|                                             
|                                             
|Property operating revenue                   
|Real estate sales revenue                    
|Income from continuing operations            
|Per common share - basic                     
|Per common share - diluted                   
|Net income (loss)                            
|Per common share - basic                     
|Per common share - diluted                   
|Total assets                                 
|Capital stock                                
|Shareholders' equity                         
|Cash dividends per common share (Cdn$)       
|Cash dividends per common share (US$)        
|Special cash dividend per common share (Cdn$)
|Special cash dividend per common share (US$) 
|Weighted average number of common            
|shares outstanding (in thousands)            
|Basic                                        
|Diluted                                      
|                                             

---

Page 4

UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES

(in thousands of Canadian dollars,
except per share amounts)

|                                             
|---------------------------------------------
|                                             
|                                             
|Property operating revenue                   
|Real estate sales revenue                    
|Income (loss) from continuing operations     
|Per common share - basic                     
|Per common share - diluted                   
|Net income (loss)                            
|Per common share - basic                     
|Per common share - diluted                   
|Total assets                                 
|Capital stock                                
|Shareholders' equity                         
|Cash dividends per common share (Cdn$)       
|Cash dividends per common share (US$)        
|Special cash dividend per common share (Cdn$)
|Special cash dividend per common share (US$) 
|Weighted average number of common            
|shares outstanding (in thousands)            
|Basic                                        
|Diluted                                      
|                                             

(1)    
          Certain figures have been restated as a result of the adoption of Statement of
          Financial Accounting Standards No.144 (see Note 21(xi)).

# Historic Canadian dollar
to United States exchange rates

The high and low spot rates, average
rates and period end rates for the Canadian dollar equivalent of the United States dollar
as reported by the Federal Reserve Bank of New York were as follows:

|          
|----------
|          
|          
|High      
|Low       
|Average   
|Period end
|          

The monthly high and low spot rates
for the Canadian dollar equivalent of the United States dollar as reported by the Federal
Reserve Bank of New York were as follows:

|    
|----
|    
|    
|High
|Low 
|    

# Risk factors

The Registrant can be subject to
several business risks in the normal course of operations that can impact both short and
long term performance. Management, under the supervision of the Board of Directors,
identifies, and to the extent possible, mitigates the impact of all such risks. The major
risks the Registrant encounters in the normal course of conducting its operations, as
discussed in Item 11, are as follows:

| | Operating
risk, Reliance on anchor tenants, Financing risk, Relative liquidity of real estate,Foreign
exchange risk, and Environmental risk.
| | --------------------------------------------------------------------------------------------------------------------------------------------

---

Page 5

# ITEM 4 
INFORMATION ON THE COMPANY

# History and Development
of the Company

Revenue Properties Company Limited
(the Company or RPC) was incorporated in Ontario, Canada in August
1961, under the Ontario Business Corporations Act, and has been a public company since
1962. The Companys registered address is The Colonnade, 131 Bloor Street West, Suite
300, Toronto, Ontario M5M 1R1. The Companys principal business is the ownership and
management of commercial real estate in Canada.

The Companys present structure
is the result of several amalgamations. The most recent (apart from an amalgamation of
nine wholly owned subsidiaries, which had no impact on the consolidated financial
statements of the Company), was the amalgamation with Pan Pacific Development Corporation
(PPDC), effective January 1, 1997. The Company purchased a controlling
interest in PPDC in April 1992 and the remaining shares in June 1993. The majority of
PPDCs properties were in the United States, which served as a platform for future
growth.

In 1997, the Companys US retail
properties were transferred to a new company, Pan Pacific Retail Properties Inc.
(PNP). PNP then completed an initial public offering on the New York Stock
Exchange with the Company retaining a 51% interest. The public offering increased
PNPs liquidity which, in turn, permitted an accelerated pace of growth. In 2000, PNP
acquired Western Properties Trust (Western) issuing 10.8 million shares to
Western shareholders reducing the Companys ownership to 33%. During 2001, the
Company sold all of its shares of PNP, generating cash of $382 million, which was used to
repay debt, pay a special dividend of $96 million, and to acquire the 50% it did not
already own of Prairie Mall, a rental property in Grande Prairie, Alberta, Canada.

In 1998, RPC completed the purchase
of a 50% interest in P.T. Gaming LLC (P.T.s) that operated sports bars
with gaming in Las Vegas. A decision to sell the gaming investment was made in early 2001
and as a result, the investment was reported as discontinued operations in the 2000
financial statements. A contract to sell the core business of P.T.s, signed in
December 2001, closed in April 2002. The Company then sold its interest in the casino to
its partners, which sale closed at the end of December 2002.

During 2002, the Company sold the
majority of its residential properties in Canada and reinvested the proceeds in the
acquisition of two new, fully leased office properties.

On January 1, 2003, the Company
entered into a property and asset management agreement with Morguard Investments Limited
(MIL), a subsidiary of Morguard Corporation (Morguard), the
Companys controlling shareholder. The management arrangement with MIL provides the
Company with access to a large organizations expertise in all sectors of the real
estate industry, thereby increasing the Companys resources and capacity for growth.

# Takeover bid

On November 16, 2000 the Company
received from 3391361 Canada Inc., a wholly-owned subsidiary of Morguard Corporation
(formerly Acktion Corporation) (Morguard), an unsolicited partial takeover bid
for a number of common shares of the Company for $2.50 (subsequently increased to $2.60
per share) in cash per share which, together with the shares then held by Morguard, would
represent approximately 50.1% of the common shares outstanding. Mark M. Tanz, the
Companys then largest shareholder, ultimately entered into an agreement with
Morguard that resulted in Morguards common share ownership increasing to 40%. Mr.
Tanz continued to hold 23 million common shares (36%) of the Company.

The Morguard-Tanz shareholders
agreement provided for continuity of management, equal Board representation (two nominees
for each of Morguard and Mr. Tanz on the Board of seven directors), the timely disposition
of non-core assets (including gaming assets) and mutual approval rights as shareholders in
relation to other fundamental matters affecting the Company.

In July 2002, Mr. Tanz sold his
shares to Morguard for cash and a note receivable over three years increasing
Morguards ownership to 76%. At December 31, 2003 Morguard directly or indirectly
owned 80% of the Companys common shares.

---

Page 6

# Capital expenditures

The Companys principal expenditures
and divestitures (including interests in other companies), since the beginning of the
Companys last three financial years are as follows:

|                                          
|------------------------------------------
|(000s Canadian unless noted)              
|                                          
|Increase in RPC real estate               
|Investment in gaming assets               
|Divestiture of RPC residential real estate
|Divestiture of PNP                        
|Divestiture of gaming                     
|                                          

# Business Overview

Revenue Properties Company Limited
(the Company) owns a portfolio of high-quality commercial real estate,
aggregating approximately two million square feet of leasable space. The Company has five
core properties in the Greater Toronto Area, with an enclosed shopping centre in Grande
Prairie, Alberta, and a 50% interest in the Saint John City Hall in Saint John, New
Brunswick. The Companys common shares are publicly traded on the Toronto Stock
Exchange (TSX) under the symbol RPC.

On June 20, 2003, the Company
completed a consolidation of its issued and outstanding common shares on the basis of
seven (7) pre-consolidation shares for one (1) post-consolidation share. The seven-for-one
consolidation resulted in the Company having 9,214,384 common shares outstanding as of
June 20, 2003. Income per share amounts for prior years have been restated for comparative
purposes.

# Organizational Structure

The Company is 80% owned by Morguard
as at January 31, 2004.

A listing of the Companys
significant subsidiaries at December 31, 2003 is as follows:

|                            
|----------------------------
|Subsidiary                  
|                            
|Revenue Properties (US) Inc.
|RPC Gaming, Inc.            

---

Page 7

# PROPERTY SUMMARY

The following is a list of properties
owned by the Company together with material information regarding each property for the
year ended December 31, 2003. All properties are held directly by the Company, subject to
any liens and other encumbrances thereon.

# RENTAL PROPERTIES

|                            
|----------------------------
|Property and location       
|                            
|Retail                      
|Centerpoint Mall(1)         
|Toronto, Ontario            
|                            
|East York Town Centre       
|Toronto, Ontario            
|Prairie Mall                
|Grande Prairie, Alberta     
|Guildwood Village           
|Toronto, Ontario            
|Other properties            
|Toronto, Ontario            
|                            
|Totals and weighted averages
|                            
|Office                      
|                            
|Creekside Corporate Centre  
|Mississauga, Ontario        
|Saint John City Hall        
|Saint John, New Brunswick   
|                            
|Totals and weighted averages
|                            
|Commercial / Residential    

|                     
|---------------------
|Property and location
|                     
|The Colonnade(2)     
|Toronto, Ontario     
|                     
|                     
|                     

All properties are 100% owned,
except Saint John City Hall (50%).
(1)    Includes tenant
owned space of 122,251 square feet. 
(2)    Leasehold
(3)    Per residential
unit

PROPERTIES HELD FOR DEVELOPMENT AND
SALE

|                                  
|----------------------------------
|                                  
|                                  
|Property                          
|                                  
|City of Guelph, (Eastview) Ontario
|Simcoe, Ontario                   
|                                  
|                                  
|                                  

---

Page 8

# ITEM 5  OPERATING
AND FINANCIAL REVIEW AND PROSPECTS

The following should be read in
conjunction with the Companys consolidated financial statements and the notes
thereto. Please also see the Forward-Looking Statements, located on page 2 of
this Annual Report, for information about the Companys interpretation of
forward-looking information.

# Significant Accounting
Policies

Change In Accounting Policy

In 2003, the Company prospectively
adopted the CICA new recommendation regarding the expensing of share options. The new
standard requires the fair value of share options granted on or after January 1, 2003 to
be recognized over the applicable share option vesting period as compensation expense in
general and administrative expenses in the consolidated statement of income and
contributed surplus in the consolidated balance sheet. On the exercise of stock options,
consideration received and the accumulated contributed surplus amount are credited to
capital stock. The Company did not issue share options during 2003.

Critical Accounting Estimates

The financial statements are based on
the selection and application of critical accounting policies set forth in the notes to
the financial statements, which require management to make significant estimates and
assumptions. Management believes that there are two critical areas of judgment in the
application of accounting policies that affect the financial condition and results of
operations of the Company: asset valuation and depreciation.

Valuation of Rental Properties

Rental properties, the Companys
major asset class, are carried at the lower of depreciated cost and net recoverable amount
on the assumption that the properties will be held for the long term. Net recoverable
amount represents the estimated future cash flow from the use and residual value of the
property on an undiscounted basis. The Company relies on assumptions of future rental
income and expected future property values that could be impacted by industry performance
and prospects, as well as the business and economic conditions that are expected to
prevail during the holding period. Should the underlying assumptions change materially,
the estimated net recoverable amount could change by a significant amount. As the majority
of the core properties have been owned for over 25 years, management believes that book
cost is well below current estimated market values. The two new office properties were
acquired recently at market prices.

Depreciation

Depreciation on rental properties is
provided under the sinking fund method, an approach that the Company has followed
consistently for a long time in accordance with Canadian generally accepted accounting
principles and the recommendations of CIPPREC. Under this method, depreciation is charged
to income in amounts that increase annually, consisting of fixed annual sums together with
interest, compounded at the rate of 5% per annum so as to fully depreciate the buildings
over their estimated useful lives of 40 years, even though, with proper maintenance, the
actual life should be considerably longer. Use of another method of depreciation, such as
the straight-line method, would result in a different amount of depreciation expense. A
discussion follows of prospective changes to current Canadian accounting standards.

New Accounting Pronouncements

In 2003, the CICA issued Handbook
Section 1100 Generally Accepted Accounting Principles, which is effective for
fiscal years beginning January 1, 2004. CICA 1100 describes what constitutes Canadian
generally accepted accounting principles and its sources. Real Estate industry practice of
using the sinking fund method of depreciation will no longer be acceptable. CICA 1100 does
not require companies to adjust the balance of accumulated depreciation but requires the
company to depreciate the balance at the January 1, 2004 using the new amortization
method, with no cumulative catch-up adjustment. As a result of adopting CICA 1100, it is
estimated that depreciation expense will increase by approximately $2 million in 2004.

CICA issued an exposure draft to
Handbook Section 3860 Financial Instruments, which would require the
Companys subordinated convertible debenture, currently separated into debt and
equity components, to be classified as a liability. The proposed amendments will be
effective for fiscal year ends beginning after November 1, 2004, and are to be applied
retroactively. The Company expects that it will remain in compliance with its financial
covenants.

---

Page 9

# Results of Operations

|                                                           
|-----------------------------------------------------------
|(in thousands of dollars, except per share amounts)        
|                                                           
|Gross revenues                                             
|Gross profit                                               
|Operating profit (loss)                                    
|Loss on redemption and repurchase of convertible debentures
|Gain on sale of rental properties                          
|Reduction of foreign currency translation account          
|Diminution in value of real estate assets                  
|Penalty on early debt repayment                            
|Earnings and gains related to PNP                          
|Income taxes                                               
|Income from continuing operations                          
|Per share - basic                                          
|Per share - diluted                                        
|Net income                                                 
|Per share - basic                                          
|Per share - diluted                                        
|                                                           

Gross revenues decreased to $50.3
million in 2003 from $65.3 million in 2002. The fluctuation of gross revenues was mainly
attributable to land sales, which were $1.2 million in 2003, compared to $10.0 million in
2002. Interest expense for the year ended December 31, 2003, was $8.3 million, compared to
$9.0 million in 2002, and was the major reason the Company recorded operating profits in
2003 and 2002, compared to an operating loss in 2001. Interest expense in 2001 was $19.7
million, which reflected the debt associated with the Companys investment in Pan
Pacific Retail Properties, Inc. (Pan Pacific) and the Nevada gaming interests
(the US Investments). The material non-recurring transactions included the
gain of $30 million from the sales of two residential properties in 2002, which comprised
1,943 units, and the gain of $33 million from the sales of the US Investments in 2001.

# Operating ResultsYears
 2003  2002

The Companys objective for 2003
was to increase operating income through the improvement of its rental operations and the
reduction of expenses. In addition, the Company investigated several real estate
acquisitions that had the potential to increase shareholder value; however, no
transactions were completed.

Selected Quarterly Consolidated
Financial Information(unaudited, in thousands of dollars, except per share amounts)

|                                 
|---------------------------------
|                                 
|                                 
|                                 
|                                 
|Gross revenues                   
|Income from continuing operations
|Per basic share                  
|Per diluted share                
|Net Income                       
|Per basic share                  
|Per diluted share                
|                                 

Fluctuations in quarterly earnings
during 2003 were primarily the result of foreign exchange losses of $2.0 million and $0.8
million recorded during the three months ended June 30, 2003 and December 31, 2003,
respectively. Income from continuing operations for the three months ended March 31, 2003
included a foreign exchange gain of $0.5 million. Fluctuations in quarterly earnings for
the 12 months ended December 31, 2002 were primarily the result of gains realized on the
sales of the residential properties and a reduction of the foreign currency translation
account.

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Page 10

Net Property Income

|                           
|---------------------------
|(in thousands of dollars)  
|                           
|Property revenues          
|Property operating expenses
|                           
|Net property income        
|                           

Property revenues decreased 11% to
$49.1 million in 2003 from $55.3 million in 2002. The decrease was primarily due to the
2002 sale of the residential buildings. The resulting decrease in property revenues was
offset by the acquisition of two office buildings on December 30, 2002. The residential
buildings sold yielded lower net property income to the Company and, accordingly, net
property income increased 10% to $25.5 million for the year ended December 31, 2003.

Rental Operations

|                                         
|-----------------------------------------
|                                         
|                                         
|(in thousands of dollars)                
|                                         
|Property revenues                        
|Property operating expenses              
|                                         
|Same property comparisons                
|Acquired / sold properties               
|                                         
|Total rental income                      
|                                         
|Net property income % for same properties
|Re-leasing costs incurred                
|                                         

Properties held throughout the year
reported net property income of $21.4 million, an increase of 3% compared to $20.8 million
for the same period in 2002. Net property income from the Companys retail properties
increased 3% to $21.0 million, compared to $20.4 million in 2002. The occupancy rate of
the retail properties held throughout the year ended December 31, 2003 was 97.7%,
unchanged from December 31, 2002.

# Lot Sales

The Company continues to monetize its
investment in its land development in Guelph, Ontario. Sales of developed land included
blocks for a school, a townhouse site and one for commercial use. The Companys share
of gross revenues totaled $1.2 million for the year ended December 31, 2003 compared to
$10.0 million in 2002. During 2003, the Company received cash distributions of $0.9
million as a result of the sales and collection of receivables.

Interest Expense and Coverage Ratio

|                                                            
|------------------------------------------------------------
|(in thousands of dollars)                                   
|                                                            
|Total interest expense                                      
|Plus: interest on equity component of convertible debentures
|Less: amortization of debt issue costs                      
|Plus: interest capitalized                                  
|Plus: interest allocated to discontinued operations         
|Less: cash income from investments                          
|                                                            
|Net interest                                                
|                                                            
|Funds from operations before interest                       
|                                                            
|Interest coverage ratio                                     
|                                                            

Interest expense for mortgages and
debentures payable decreased by 8% to $8.3 million in 2003 compared to $8.9 million in
2002. The decrease reflects the $23.1 million redemption of the 6% subordinated
convertible debentures in July 2003 and debt reductions resulting from the 2002 sales of
residential assets, offset by the $44 million mortgage secured by the newly acquired
office properties. Cash income earned from portfolio investments and amounts receivable
increased to $3.4 million in 2003 compared to $2.5 million in 2002. As a result of the
foregoing, interest coverage increased to 2.73 in 2003 compared to 2.20 in 2002.

---

Page 11

The Companys weighted average
interest rate on mortgages payable and debentures payable was 6.8% as of December 31,
2003, compared to 6.7% as of December 31, 2002. The increase is attributable to the
redemption of the 6.0% subordinated convertible debentures.

# General and
Administrative Expenses

General and administrative expenses
decreased to $3.0 million in 2003 compared with $4.5 million in 2002. This represents a
34% decrease and primarily reflects the benefits derived from the Companys property
and asset management agreement with MIL. During 2003, the Company paid $1.0 million to MIL
under its contractual arrangement, which approximates fair value, for property and asset
management services.

# Interest and Other Income

Total income earned on investments
was $3.7 million in 2003 compared to $2.7 million in 2002. This represents an increase of
37% and was achieved despite the decline in the US dollar during 2003. Investment income
in 2003 includes $2.9 million generated on portfolio investments and loans receivable, and
$0.8 million earned on the revolving loan to Morguard. A $1.6 million reserve for taxes
offset investment income in 2002, although $1.0 million of the amount was reversed in
2003.

# Foreign Exchange Loss

The foreign exchange loss for the
year ended December 31, 2003 was $2.3 million compared to $0.5 million for 2002. The
foreign exchange loss is the result of the Company holding certain portfolio investments
in US dollars.

Amortization

|                         
|-------------------------
|(in thousands of dollars)
|                         
|Building                 
|Leasing costs            
|                         
|                         
|                         

Building amortization decreased to
$3.2 million from $3.4 million mainly due to the sale of the residential assets.
Amortization of leasing costs decreased to $1.5 million from $1.9 million. Deferred
leasing costs are amortized over the term of related leases.

# Income Taxes

The Company recorded a current tax
expense of $1.6 million in 2003 compared to $0.1 million in 2002. During 2002, the Company
utilized all available Canadian income tax losses.

The current standard for income taxes
requires measurement of future income tax assets and liabilities using the currently
enacted, or substantively enacted, tax rates and laws expected to apply when temporary
differences reverse. During 2003, the newly elected government in Ontario announced its
intention to reverse previously scheduled reductions to provincial income tax rates. This
change will increase the future income tax liability of the Company. As a result, the
Companys 2003 future income tax expense was increased by approximately $0.8 million.

# Prospective Analysis

The Company continues to enjoy high
occupancy levels across its portfolio. However, some degree of softening in real estate
fundamentals is possible, which could result in downward pressure on rental rates.
Interest rates remain at historical lows and are not forecast to increase in the near
term. An increase in interest rates could have an adverse effect on real estate returns.
There is little speculative construction, which provides a measure of stability to the
industry.

The Company holds attractive capital
reserves for new investment activity. The Companys main challenge is finding
suitable acquisitions. Acquisition pricing in the current environment remains aggressive
due to the shortage of product and the favourable spread between returns and the cost of
mortgage debt. The Company intends to maintain its focus on prudently managing the
existing portfolio and developing value-creation opportunities within the current asset
base.

---

Page 12

# Operating Results
Years 2002  2001

Selected Quarterly Consolidated
Financial Information(unaudited, in thousands of dollars, except per share
amounts)

|                                 
|---------------------------------
|                                 
|                                 
|                                 
|                                 
|Gross revenues                   
|Income from continuing operations
|Per basic share                  
|Per diluted share                
|Net income                       
|Per basic share                  
|Per diluted share                
|                                 

Gross revenues in 2002 increased over
2001 due primarily to a more successful year of land sales; which offset lower rental
income, the result of the residential property sales. The level of debt was reduced,
resulting in lower interest expense for 2002, and was the major reason the Company
recorded an operating profit for 2002 compared to an operating loss in 2001. The material
non-recurring transactions included the gain of $30 million from the two sales of the
residential buildings in 2002. The sales of US investments resulted in a profit of $34
million in 2001.

Net Property Income

|                           
|---------------------------
|(in thousands of dollars)  
|                           
|Property revenues          
|Property operating expenses
|                           
|Net property income        
|                           

Rental Operations

|                                  
|----------------------------------
|                                  
|                                  
|(in thousands of dollars)         
|                                  
|Rental income                     
|Property operating expenses       
|                                  
|Same property comparisons         
|Acquired / sold properties        
|                                  
|Total rental income               
|                                  
|Gross profit % for same properties
|Re-leasing costs incurred         
|                                  

Properties held throughout 2002
reported an increase in gross profit of 4.9%, due to lower vacancies in retail properties
(2.3% compared to 3.4% in 2001) and a higher monthly average rent for the remaining
residential property ($1,963 per unit compared to $1,823 per unit in 2001), partially
offset by an increase in residential vacancy (10% compared to 8% in 2001). At the end of
2002, nine units (6%) were being held vacant for renovations prior to being rented at
higher rental rates. Retail sales for the Companys four key retail properties on a
same store basis averaged $471 for 2002 compared to $478 in 2001, a decline of 1%.

# Lot Sales

Significant progress was achieved
during 2002 to monetize the Companys investment in land. Sales in 2002 in Guelph of
developed land included 109 lots, a block for a school, a 15-acre block for retail use and
a parcel of land held for future development. In all, the Companys share of gross
revenues in 2002 totaled $10.0 million, generating a profit of $1.1 million in 2002.
During 2002, as a result of the sales and collection of receivables, the Company received
cash distributions from the project of $8.3 million ($0 in 2001).

---

Page 13

Interest Expense and Coverage Ratio

|                                                            
|------------------------------------------------------------
|(in thousands of dollars)                                   
|                                                            
|Total interest expense                                      
|Plus: interest on equity component of convertible debentures
|Less: amortization of debt issue costs                      
|Plus: interest capitalized                                  
|Plus: interest allocated to discontinued operations         
|Less: cash income from investments                          
|                                                            
|Net interest                                                
|                                                            
|Funds from operations before interest                       
|                                                            
|Interest coverage ratio                                     
|                                                            

During 2002, the Company repaid $73
million of mortgage and bank debt, using the proceeds from the sales of residential
properties and the repatriation of funds from the US, while a new mortgage of $20 million
was arranged. These changes reduced the average interest rate of the mortgage debt by 0.6%
to 6.7% in 2002. In addition, the 7.5% convertible debentures in the amount of $45 million
were redeemed in January 2002, and $27 million of the 6% US denominated convertible
debentures were purchased for cancellation in April 2002. As a result, interest expense
declined by 55%, to $9.0 million from $19.7 million in 2001. The lower interest expense
resulted in the interest coverage ratio increasing to 2.20 times from 1.54 times in 2001.

During 2002, interest income on the
sales proceeds, included in other income, was $2.4 million, including interest of $1.3
million generated on the portfolio of corporate bonds and $0.4 million on a revolving loan
to Morguard (see Cash on hand and portfolio investments below). Offsetting the
interest income in 2002 were non-recurring expenses, including a settlement payment to a
director of $0.5 million, and $1.6 million reserve for taxes.

During 2002, two residential
properties on leasehold land were sold, generating a profit of $30 million. Cash
repatriated from the US in January 2002 resulted in the recognition of $10.5 million of
the foreign currency translation balance as income compared to $18.5 million recognized in
2001. The sale in 2001 of the shares in Pan Pacific Retail Properties, Inc. generated a
profit of $34 million.

# Income Taxes

The Company recorded in 2002 a
current tax liability for the year of $0.1 million as a result of the capital gains
generated by the sale of the residential buildings and the repatriation of investment
funds from the US offset by a US tax refund of $2.3 million received during 2002 because
the estimate for 2001 taxes had been too high. A future income tax expense of $7.1 million
was recorded in 2002, reflecting the draw down of all Canadian net operating losses
carried forward from previous years. The difference between the expected tax expense on
the recorded income and the actual expense was the non-taxable portion of the capital
gains recorded on the sale of the residential properties and the repatriation of
investment funds from the US.

# Discontinued Gaming
Operations

During 2002, the Company completed
its exit from the gaming business. In April 2002, the Company, together with its partners,
completed the sale of the sports bar business. In December 2002, the Company completed the
sale of its interest in the casino to its partners. As a result of the transactions, the
Company recorded a loss of $0.6 million in 2002.

---

Page 14

Liquidity and Capital Resources

Changes In Financial Condition

|                                                   
|---------------------------------------------------
|(in thousands of dollars, except per share amounts)
|                                                   
|Rental properties                                  
|Cash and cash equivalents                          
|Portfolio investments                              
|Loan to Morguard                                   
|All other assets                                   
|Discontinued assets                                
|                                                   
|Total assets                                       
|                                                   
|Long-term debt and convertible debentures          
|Dividends per share                                
|Special dividend per share                         
|Total cash dividends declared and paid             
|                                                   

Using proceeds from the 2001 sale of
the investment in Pan Pacific, the Company declared and paid a special dividend of
totaling $95.8 million and repaid $173 million of long-term debt. Using proceeds from the
2002 sales of the residential assets, the Company redeemed $71 million of subordinated
convertible debentures in 2002 and invested the remaining cash.

The Company has the resources to meet
its maturing debt obligations and the capacity to grow the business as a result of selling
certain non-core assets in previous years. The Company has no off-balance sheet financing
arrangements. Significant changes in financial condition are reviewed below

Years 2003  2002

Funds from Operations

A key performance measure for real
estate companies is the cash or funds generated from operations. Funds from operations
(FFO) is defined as net income prior to non-cash items, amortization and
future income tax expense. The Company computes FFO in accordance with the definitions of
the Canadian Institute of Public and Private Real Estate Companies (CIPPREC)
and is not a recognized measure under Canadian generally accepted accounting principles.
Funds from operations are not indicative of funds available to meet the Companys
cash requirements.

Funds from operations increased 32%
in 2003 to $14.3 million, from $10.9 million in 2002. The increase was primarily due to
higher net operating income earned from the properties and enhanced income realized on the
Companys surplus cash position, despite the negative impact of the foreign exchange
loss.

# Rental Properties

The Companys principal business
is the ownership and management of three shopping centers, one mixed-use and two office
properties. Three of the core properties have been held for over 25 years, so management
believes that book costs are well below current estimated market values. The two office
properties and a 50% interest in Prairie Mall were acquired in the past two years, so
management believes that cost of the properties approximates market values.

# Portfolio Investments
and Mortgages and Loans Receivable

The balance of portfolio investments
decreased to $27.5 million at the end of 2003 compared to $28.9 million at the end of
2002. As at December 31, 2003, the Company invested in a portfolio of corporate bonds and
real estate investment trusts (REITs). As of December 31, 2003, the corporate
bonds, which generally mature before the end of 2006, had a weighted average yield to
maturity of 4.4%. The REIT investments have a weighted average distribution yield of 6.3%.
The Company loaned Morguard $20 million, pursuant to a revolving loan agreement. The
demand loan was advanced at an interest rate equivalent to 175 basis points over the
30-day bankers acceptance rate that Morguard pays to a Canadian chartered bank. As
of December 31, 2003, the Company had loaned $8.6 million in short-term, mezzanine
real-estate loans. The loans are secured through charges on the underlying assets. The
weighted average interest rate on the mezzanine loans was 7.5%.

---

Page 15

# Development Properties
and Other Assets

The Company had receivables and
sundry assets totaling $10.7 million as at December 31, 2003, compared to $11.0 million in
2002. A majority of the assets relate to the Guelph land development project.

# Liabilities

Long-term debt and bank indebtedness
at December 31, 2003 was $92.5 million compared to $44.7 million at December 31, 2002. The
increase is primarily due to a new $44.0 million mortgage, secured by the newly acquired
office properties, for a 15-year term at an interest rate of 6.7%. The Companys
credit facility bears interest at the prime rate of a Canadian chartered bank plus 50
basis points.

In July 2003, the Company redeemed
and cancelled its remaining 6.0% subordinated convertible debentures, which were to mature
on March 1, 2004. The debentures were redeemed at the principal amount plus accrued and
unpaid interest. The redemption resulted in a non-cash loss of $0.3 million. The 7%
subordinated convertible debentures mature in December 2006 with the principal due on
maturity, at the Companys option, in either cash or common shares. As of December
31, 2003, the 7% subordinated convertible debentures are the Companys next
significant debt scheduled to mature.

Aggregate Obligations, Liabilities
and Commitments

|                         
|-------------------------
|                         
|                         
|(in thousands of dollars)
|                         
|Mortgages                
|Convertible debentures   
|MIL contract             
|Land lease               
|                         
|Total                    
|                         

The property and asset management
agreement with MIL is renewable, at the Companys option, for additional terms of one
year. Under the agreement, MIL assumed the employment obligations for all the
Companys employees. The fee payable by the Company to MIL is dependent on the
performance of its properties but is estimated to be approximately $0.9 million per year.

The Company leases the land under one
of its properties, which lease expires in 2060 with the rent fixed until 2010 at $2.8
million per annum. Thereafter, the rent for the next 20 years is adjusted based on the
fair market value of the land.

Interest Rate Structure

|                                                   
|---------------------------------------------------
|(in thousands of dollars)                          
|                                                   
|Mortgages on rental properties                     
|Convertible debentures (including equity component)
|                                                   
|Fixed-rate debt                                    
|                                                   
|Weighted average interest rate                     
|Bank indebtedness                                  
|Weighted average interest rate                     
|                                                   
|Total debt                                         
|                                                   
|Total fixed-rate debt %                            
|Total variable-rate debt %                         
|                                                   

As at December 31, 2003, all of the
Companys mortgage debt was fixed-rate. The Companys bank indebtedness
represents funds drawn under its credit facility. Interest on the bank indebtedness is
payable on the outstanding balances at the rate of 50 basis points over the prime rate
charged by a Canadian chartered bank.

---

Page 16

# Shareholders Equity

Shareholders equity as at
December 31, 2003 was $108.7 million, compared to $106.7 million in the prior year. The
Company maintained its quarterly dividend policy during 2003, declaring $5.2 million in
dividends, or $0.56 per share. The Company maintains a Normal Course Issuer Bid in
accordance with the rules of the TSX for the purchase of its common shares from time to
time, which Bid expires August 26, 2004. During 2003, 33,000 common shares were purchased
at an average cost of $11.67. Management expects the Bid to be renewed in 2004.

# Cash Flow

Cash flow from operating activities
was $13.6 million in 2003, compared to $11.2 million in 2002. The cash provided from
operating activities, mortgage financing and bank indebtedness has been used to meet the
Companys liquidity requirements, which consisted primarily of property re-leasing
costs, maintenance costs and dividends to shareholders. Management expects to be able to
meet all of the Companys ongoing obligations and finance future growth using its
investments and conventional real estate debt. The Company currently has acquisition
capacity of approximately $300 million, utilizing conservative leverage scenarios.

Liquidity and Capital Resources

Years 2002  2001

Changes In Financial Condition

|                                                   
|---------------------------------------------------
|(in thousands of dollars, except per share amounts)
|                                                   
|Rental properties                                  
|Cash and cash equivalents                          
|Portfolio investments                              
|Loan to Morguard                                   
|All other assets                                   
|Discontinued assets                                
|                                                   
|Total assets                                       
|                                                   
|Long-term debt and convertible debentures          
|Dividends per share                                
|Special dividend per share                         
|Total cash dividends declared and paid             
|                                                   

Using proceeds from the 2001 sale of
the investment in Pan Pacific, the Company declared and paid a special dividend of
totaling $95.8 million and repaid $173 million of long-term debt. Using proceeds from the
2002 sales of the residential assets, the Company redeemed $71 million of subordinated
convertible debentures in 2002 and invested the remaining cash.

The Company had the resources to meet
its maturing debt obligations and the capacity to grow the business as a result of selling
certain non-core assets in previous years. The Company has no off-balance sheet financing
arrangements. Significant changes in financial condition are reviewed below.

# Rental Properties

The Companys principal business
is the ownership and management of three shopping centers, one mixed-use property and two
office properties. Three of the properties have been held for over 25 years, so management
believed that book costs were well below the current estimated market values. The two
office properties and a 50% interest in Prairie Mall were acquired in the past two years,
so management believed that the cost of the properties approximated market values.

In summary, management believed that
the value of the property portfolio exceeded the book cost by approximately $100 million
at December 31, 2002. Management estimated market value for the various properties by
applying an appropriate capitalization rate to each propertys budgeted 2003 rental
income less an allowance for capital repairs.

# Cash on Hand and
Portfolio Investments

During 2002 the Company sold
residential properties for gross proceeds of $102 million. In connection with the sales,
the Company repaid $18 million of mortgage debt and paid $29 million to acquire the
freehold title of one property. After selling and closing costs, the net cash received was
$52 million.

---

Page 17

In July 2002, to generate a higher
return on its cash balances, the Company invested $44 million in a portfolio of 10
corporate bonds, with maturities generally in 2003 and 2004, and loaned $20 million,
pursuant to a revolving loan agreement, to Morguard. The loan was advanced at an interest
rate equivalent to 175 basis points over the 30-day bankers acceptance rate that Morguard
pays to a Canadian chartered bank.

In December 2002, $11 million of
bonds were sold, generating a yield of 8% for the five-month holding period, and Morguard
repaid its loan. At December 31, 2002, after paying $56 million (including a fee of $0.4
million paid to MIL) to acquire the two office buildings in Mississauga, the
Companys cash and cash equivalents were $6 million and its portfolio investments
totaled $29 million (market value of $30 million). In January 2003, the Company loaned $6
million to Morguard pursuant to the revolving loan agreement.

In February 2003, the Company signed
a commitment letter for mortgage financing on the two office properties acquired in
December 2002 in the amount of $44 million. The mortgage, which was advanced in March
2003, has a term of 15 years, an amortization period of 19 years and an interest rate of
6.7%. The funds will be used for general corporate purposes.

# Other assets

At December 31, 2002, the Company had
receivables and sundry assets totaling $9.5 million, the majority of which related to the
Guelph land development project, with collection related to the continued success of the
homebuilders who purchased the lots in the project.

# Liabilities

Long-term debt and bank indebtedness
declined by $55 million during 2002, reflecting the repayment of bank indebtedness and $18
million of mortgages secured on the residential properties sold during the year, offset by
a new $20 million mortgage secured against East York Town Centre.

The Companys 7.5% convertible
debentures, in the amount of $45 million due in 2003, were redeemed in January 2002. A
substantial issuer bid for the 6% US denominated convertible debentures, due in 2004, at a
price of US$950 cash for each US$1,000 principal amount outstanding, resulted in $27
million of debentures being tendered and cancelled in 2002. The 7% subordinated
convertible debentures mature in December 2006 with the principal due on maturity, at the
Companys option, in either cash or common shares.

Aggregate Obligations, Liabilities
and Commitments

|                         
|-------------------------
|                         
|                         
|(in thousands of dollars)
|                         
|Mortgages                
|Convertible debentures   
|MIL contract             
|Land lease               
|                         
|Total                    
|                         

In 2002, the Company entered into a
property management agreement with MIL. The agreement was for a term of one year, which
may be renewed at the option of the Company for additional terms of one year. Under the
agreement, MIL assumed the employment obligations for all but three of the Companys
employees. The fee payable by the Company is dependant on the performance of its
properties but is estimated to be approximately $900,000 per year, being the contracted
amount of $1.2 million less an estimated $300,000 of costs agreed to be assumed by
Morguard for 2003.

The Company leases the land under one
of its properties, which lease expires in 2060 with the rent fixed until 2010 at
$2,779,000 per annum. Thereafter, the rent for the next 20 years is adjusted based on the
fair market value of the land.

---

Page 18

Interest Rate Structure

|                                                   
|---------------------------------------------------
|(in thousands of dollars)                          
|                                                   
|Mortgages on rental properties                     
|Term bank loan                                     
|Convertible debentures (including equity component)
|                                                   
|Fixed rate debt                                    
|                                                   
|Weighted average interest rate                     
|                                                   
|Variable rate debt                                 
|Weighted average interest rate                     
|Bank indebtedness                                  
|                                                   
|Total debt                                         
|                                                   
|Total fixed rate debt %                            
|Total variable rate debt %                         
|                                                   

The Company had no floating rate debt
outstanding at December 31, 2002 as all bank overdraft facilities had been repaid.

# Shareholders Equity

Shareholders equity as at
December 31, 2002 was $106.7 million, compared to $84.0 million in the prior year. The
Company maintained its quarterly dividend policy during 2002 declaring $5.1million in
dividends, or $0.56 per share. During 2002 the Company maintained a Normal Course Issuer
Bid in accordance with the rules of the TSX for the purchase of its common shares from
time to time, which Bid expired August 18, 2003. During 2002, the Company did not acquire
any shares.

# Cash Flow

Cash flow from operating activities
was $11.2 million in 2002, compared to $4.4 million in 2001. The cash provided from
operating activities, sale of its residential properties, mortgage financing and bank
indebtedness had been used to meet the Companys liquidity requirements, which
consisted primarily of property re-leasing costs, maintenance costs and dividends to
shareholders, to acquire two new fully-leased office properties and to redeem and
repurchase the Companys convertible debentures.

# Research and
development, patents, licenses, etc.

Not applicable.

# Trend information

See item 5 above.

---

Page 19

# ITEM 6  DIRECTORS,
SENIOR MANAGEMENT AND EMPLOYEES

# Directors and Senior
Management

The following table sets forth the
names of the nominees, their ages, their municipalities of residence, all major positions
and offices with the Registrant and its significant affiliates currently held by them,
their principal occupations and business experience, the year they became a director and
the approximate number of common shares of the Company (Common Shares)
beneficially owned, directly or indirectly, or over which control or direction is
exercised by each of them as at March 31, 2004. The information as to Common Shares
beneficially held or controlled, not being within the knowledge of the Registrant, has
been furnished by the nominees. Officers hold office until the board of directors has
elected their successors.

|                                                |  |                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                | 
|----------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Name (age) and municipality
 of residence       |  | Number of
 outstanding
 common shares
 beneficially
 owned or over
 which control or
 direction was
 exercised as at
 March 31, 2004 |  | Principal  occupation  and  business  experience  during  the past  five
 years,  including  all  other  major  positions  and  offices  with  the
 Company's significant affiliates                                                                                                                                                                          
|                                               
|David A. King  (66)
 Toronto, ON
 Canada        |  |                                                                                                                                      |  | President of David King Corporation, a private investment company.
Also Vice-Chairman and Director of Morguard Corporation and Chairman
and Trustee of Morguard Real Estate Investment Trust. Director since
January 30, 2001.(1)                                                                                                                             
|                                                |  |                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                | 
|Wayne P.E. Mang (66)
 Oakville, ON
 Canada      |  |                                                                                                                                      |  | President of Mang Enterprises, a private company. Previously President
and Director of Russel Metals Inc., a Canadian public company. A
director of Wainbee Holdings Ltd., Maverick Tube Corporation, and
Vicwest Corporation. Director since May 14, 2003.(1,2)                                                                                              
|                                                |  |                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                | 
|K. Rai Sahi  (57)
 Mississauga, ON
 Canada      |  |                                                                                                                                      |  | Chairman  and  Chief  Executive  Officer  of  Morguard  Corporation,   a
 Canadian public  company.  Director since January 30, 2001 and currently
 Chairman of the Board.                                                                                                                                                                                    
|                                                |  |                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                | 
|Antony K. Stephens (62)
 Toronto, ON
 Canada    |  |                                                                                                                                      |  | President  of the  Company  effective  May 1,  2003.  A Trustee  of, and
  previously  President and Chief Executive Officer,  Morguard Real Estate
  Investment  Trust.  Vice-Chairman  of Morguard  Investments  Limited,  a
   wholly owned  subsidiary  of Morguard  Corporation.  Director  since May
   14, 2003.                                       
|                                                |  |                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                | 
|Mark M. Tanz  (72)
 Lyford Cay, Nassau
 Bahamas |  | 7,143                                                                                                                                |  | Consultant,   Amcan  Financial  Consultants.  A
        Director of Morguard Corporation.  Director since 1985.                                                                                                                                                                                                                                               
|                                                |  |                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                | 
|Jack Winberg  (52)
 Toronto, ON 
 Canada        |  | (3) 1,810                                                                                                                            |  | Chief Executive Officer of the Rockport Group of Companies, a real
estate investment company. Director of ClubLink Corporation. Director
since 1991.(2)                                                                                                                                                                                                       
|                                                |  |                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                | 
|Judie Hart
 (52)
 Vice-President, Leasing       |  |                                                                                                                                      |  | Vice-President, Leasing of the Company since August 16, 1999.
  Previously, Director of Leasing for O & Y Enterprise (formerly Counsel
  Corporation) from September 1989 to August 1999.                                                                                                                                                                     
|                                                |  |                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                | 
|Paul Miatello  (34)
 Secretary                  |  |                                                                                                                                      |  | Vice-President,  Finance and Chief  Financial  Officer since May 1, 2003
  and  Secretary  of the  Company  since  January  2,  2002.  Director  of
  Finance of the Company  from August 2000 to April 30,  2003.  Controller
  of  Royop  Properties  Corporation  from  August  1999 to  August  2000.
  Previously, Manager at PricewaterhouseCoopers LLP.

Notes:
(1)     Member
of the Audit Committee
(2)     Member
of the Corporate Governance Committee
(3)    
Includes shares held by Mr. Winberg, his spouse, and his children.

---

Page 20

# Compensation of Officers

The table below sets forth the
compensation paid by the Company to its President, Chief Financial Officer and the other
executive officers of the Company within the meaning of applicable legislation (Named
Executive Officers, or NEOs), in each case, in respect of the
fiscal years 2001, 2002 and 2003. Effective January 1, 2003, the Company entered into a
property management and asset agreement (the Property and Asset Management
Agreement) with Morguard Investments Limited (MIL), a wholly owned
subsidiary of Morguard Corporation (Morguard), which directly and indirectly
owns 80% of the Companys Common Shares. Pursuant to the Property and Asset
Management Agreement, MIL provides its employees to the Company to perform all functions,
services and tasks formerly provided by the Companys employees. Accordingly, the
Company had no employees as of December 31, 2003 (December 31, 2002  78).

# SUMMARY COMPENSATION
TABLE

|                   
|-------------------
|                   
|                   
|                   
|                   
|                   
|                   
|Antony K. Stephens 
|President(1)       
|                   
|William I. Kennedy 
|President(2)       
|                   
|                   
|Richard E. Fletcher
|Vice-President,    
|Finance & CFO(4)   
|                   
|Paul Miatello      
|Vice-President,    
|Finance & CFO(5)   
|                   

Notes:

|(1) |  | Mr.
Stephens joined the Company as President on May 1, 2003. Mr.Stephens               arrangement
with the Company provides that he be remunerated only in his                capacity as a
director, in the amount of $35,000 per annum. Mr. Stephens               entitlement
for the fourth quarter of 2003 was paid on January 14, 2004.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Mr.
Kennedy joined the Company as Vice President on November 1, 2000 and became
               President on January 1, 2002. Mr. Kennedy employment contract was
terminated, by                mutual consent, on February 1, 2003. From that time until
April 30, 2003, Mr.                Kennedy continued as President of the Company without
remuneration.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Bonus
amounts were paid during 2002.
|--- |  | ------------------------------------

|(4) |  | As
a result of the property management arrangement with MIL, the Company elected
               to terminate Mr. Fletchers employment agreement without cause
effective                April 30, 2003. Amounts referred to in All Other
Compensation               represent termination payments made to Mr. Fletcher
pursuant to terms of his                employment agreement.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | Mr.
Paul Miatello, who is an MIL employee, was appointed to the positions of
               Vice-President, Finance and Chief Financial Officer effective May 1, 2003.
Mr.                Miatello received no compensation from the Company during the 2003
financial                year.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Employment and
Termination Contracts

Management functions of the Company
are performed by individuals who are not employed by the Company but some of whom have
been elected or appointed directors and senior officers of the Company. The Companys
Property and Asset Management Agreement with MIL pursuant to which MIL, and companies
affiliated to MIL, provide managerial and consultative services.

The Company had an employment
agreement with William I. Kennedy, as its President, effective January 1, 2002, which was
terminated by mutual consent on February 1, 2003. From that time until April 30, 2003, Mr.
Kennedy continued as President of the Company without compensation. Mr. Kennedy resigned
as an officer and director of the Company and its subsidiaries effective April 30, 2003.
Mr. Kennedy received no payments under the terms of his employment contract.

---

Page 21

The Company had an employment
agreement with Richard E. Fletcher providing for annual salary of $200,000, subject to
annual review, bonus compensation that shall not exceed 50% of his base compensation and
the right to employee stock options under the 1995 Plan. The agreement with Mr. Fletcher
provided for usual corporate benefits including broad insurance coverage and the
additional payment of 5% of salary to the executives or his spouses registered
retirement savings plan. As a result of the execution of the property management agreement
with MIL, the Company elected to terminate Mr. Fletchers employment agreement
without cause, effective April 30, 2003. Mr. Fletcher received payment under the terms of
his employment agreement, as disclosed in the Summary Compensation Table.

# Property Management and
Asset Management Agreement

Under the Property and Asset
Management Agreement, MIL is to provide advisory, asset management, management and
administrative services, as well as having general responsibility for the overall
management of the Companys properties. Management functions of the Company are
performed to a substantial degree by MIL employees. Subject to changes as the Company and
MIL might agree, the individuals performing significant management duties on behalf of the
Company, along with their place of residence are listed below:

Scott MacDonald, Oakville,
Ontario,Paul Miatello, Toronto, Ontario,Bart Munn, Toronto, Ontario,Mark Robinson,
Toronto, Ontario, andStephen Taylor, Oakville, Ontario.

The initial term of the Agreement was
for one year, and is renewable for additional terms of one year, at the option of the
Company. MIL may terminate the Agreement by providing written notice to the Company not
less than 180 days prior to the end of the then current term, provided that such
termination by MIL cannot occur prior to 2005.

The Company paid MIL $970,000 under
the terms of the Agreement for the year ended December 31, 2003. The fee payable by the
Company is dependant on the performance of its properties and cost savings realized. Under
the terms of the property management agreement, MIL assumed the employment obligations of
all but three of the Companys employees. See Interests of Management and
Others in Material Transactions for a discussion of a $20 million revolving term
loan facility made to Morguard. As of December 31, 2003, $20 million was outstanding under
this facility.

# BOARD PRACTICES

# Directors Term

The present term of office of each
director will expire immediately prior to the election of directors at the Meeting. It is
proposed that each of the persons whose name appears above be elected as a director of the
Company to serve until the close of the next annual meeting of Shareholders or until his
successor is elected or appointed. It is intended that on any ballot that may be called
for relating to the election of directors, the Common Shares represented by proxies in
favour of the nominees will be voted in favour of the election of such persons as
directors of the Company, unless a Shareholder has specified in his proxy that his Common
Shares are to be withheld from voting in the election of directors. In the event that any
vacancies occur in the slate of such nominees, it is intended that discretionary authority
shall be exercised to vote the Common Shares represented by such proxies for the election
of such other person or persons as directors nominated in accordance with the best
judgment of the persons appointed as proxy.

# Compensation of
Directors

In the year ended December 31, 2003,
each director, other than Mr. Stephens, was paid a retainer for his services as a director
of $15,000 per annum plus $1,000 for each meeting of the Board or any committee thereof of
which he was a member and which he attended.

The Chairman of the Board and the
Chairman of each of the Audit Committee and the Corporate Governance Committee received an
additional $3,500 per annum. In addition, directors may be paid additional fees for
undertaking special assignments on behalf of the Company. During 2003, the total
remuneration paid to the directors of the Company for their services amounted to $164,083.

---

Page 22

# Directors and
Officers Liability Insurance

The Company provides insurance for
the benefit of the directors and officers of the Company and of certain subsidiaries
against liability incurred by them in these capacities. The Company maintains insurance
coverage under Morguards Directors and Officers Liability Insurance
Policy, which contains a limit of $15,000,000 for each loss and for all payments in
each policy year. The policy provides for a deductible amount of $250,000 in connection
with claims brought against the Company. The policy contains certain limitations with
respect to claims in connection with pollution and with liabilities resulting from or
contributed to by the fraud or dishonesty of a director, officer, or employee. The annual
premium for 2003 was $77,760.

# Committees of the Board
of Directors

To effectively carry out certain of
its responsibilities, the Board of Directors has delegated some of its duties to specific
committees of the Board. The existing Committees and their responsibilities are as
follows:

# Audit Committee

The Audit Committee currently
consists of Messrs.  Bullock,  King, and Mang, each of whom are unrelated  directors.
Following the Meeting, Mr. Bullock will no longer be a director of the Company.

The Audit Committee of the Board of
Directors shall have three members, a majority of whom shall be unrelated
directors as defined in the Toronto Stock Exchange Requirements, Policies and
Guidelines in effect from time to time. All of the members of the Audit Committee shall be
financially literate and at least one member shall have accounting or related financial
experience as determined by the Board. In determining financial literacy, the
Board shall take into consideration, among other things, prior experience with publicly
listed, Canadian real estate companies, as well as the ability to understand and analyze a
full set of financial statements of a real estate company, including the notes thereto, in
accordance with generally accepted accounting principles.

The mandate of the Audit Committee is
to:

|1. |  | Review
the nature and scope of the annual audit,
|-- |  | ------------------------------------------------

|2. |  | Make
recommendations to the Board of Directors concerning the appointment of the
          auditors (who shall be accountable to the Board of Directors and Audit
Committee           as representatives of the shareholders) and the terms thereof for the
ensuing           year,
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Review
the annual and quarterly financial statements prior to submission to the           Board
of Directors for approval,
|-- |  | --------------------------------------------------------------------------------------------------------------------------

|4. |  | Approve
all audit engagement fees and terms as well as the provision of any           legally
permissible, non-audit services provided by the external auditors,           having
regard to the need to maintain the independence of the external auditors,
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | Review
with the external auditors any audit issues, problems or difficulties and
          managements response thereto,
|-- |  | -------------------------------------------------------------------------------------------------------------------------

|6. |  | Establish
and maintain procedures for the receipt and treatment of complaints           concerning
accounting or auditing matters and procedures for the confidential           submission
by employees (or, in the case of services provided to the Company by           third
parties, whether related or not, by employees of the third party service
          provider) of concerns regarding accounting or auditing,
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. |  | Annually
discuss the quality and acceptability of the Companys accounting
          principles,
|-- |  | ------------------------------------------------------------------------------------------------

|8. |  | Review
the independence and objectivity of the external auditors, including           reviewing
relationships between the external auditors and the Company, which may           impact
their independence and objectivity,
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9. |  | Oversee
the work of the external auditors, including resolution of           disagreements,
|-- |  | -------------------------------------------------------------------------------------------

|10. |  | Review
and oversee the adequacy of internal accounting and control procedures,
          including requiring management to implement and maintain appropriate systems of
          internal control,
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

Page 23

|11. |  | Determine
the necessity or desirability of employing an internal auditor and           setting the
internal auditors mandate, or in the case of services provided           to the
Company by third parties, whether related or not, satisfying itself by
          communicating directly with the internal auditor or other suitable
          representative of the third party service provider, and
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12. |  | Oversee
the disclosure of all financial and related information.
|--- |  | ----------------------------------------------------------------

In carrying out its mandate, the
Audit Committee shall be entitled, in its discretion, to engage third party advisors whom
it considers necessary or desirable to assist it, at the expense of the Company. The Board
of Directors will continue to review the composition of the Audit Committee from time to
time.

# Corporate Governance
Committee

The Corporate Governance Committee
currently consists of Messrs. Bullock, Mang, and Winberg. Following the Meeting, Mr.
Bullock will no longer be a director of the Company. The role of the Corporate Governance
Committee is to:

|1. |  | Develop
and monitor the Companys system of Corporate Governance including
               the Board of Directors independence from management and recommend to
the                Board of Directors a report thereon for inclusion in the annual
management proxy                and information circular;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | Review
annually the membership and chairs of the committees and make
               recommendations as necessary to the Board of Directors;
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Review
annually the powers and the mandates of the committees of the Board of
               Directors and make recommendations to the Board of Directors thereon;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | Review
periodically the performance of all directors and the Board of Directors
               as a whole;
|-- |  | ----------------------------------------------------------------------------------------------------------

|5. |  | Recommend
annually the members proposed for election to the Board of Directors;
|-- |  | -------------------------------------------------------------------------------

|6. |  | Review
annually the compensation of directors and their capacity as directors                and
make recommendations to the Board of Directors;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------

|7. |  | Evaluate
potential nominees to the Board of Directors.
|-- |  | ------------------------------------------------------

|8. |  | Review
the performance of the senior officers of the Company;
|-- |  | -------------------------------------------------------------

|9. |  | Recommend
compensation for the senior officers of the Company and other                personnel in
the Company in accordance with the compensation policies;
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|10. |  | Establish
guidelines for transactions between the Company and parties related to                the
Company, review compliance with these guidelines and monitor the repayment
               of amounts, if any, due from related parties;
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11. |  | Review
the Companys long range plans and policies for recruiting,
               developing and motivating personnel and for the succession of senior
management;
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12. |  | Make
recommendations to the Board of Directors concerning all of the above; and
|--- |  | -------------------------------------------------------------------------------

|13. |  | Review
and approve a request, if appropriate, by an individual director to                engage
an outside advisor at the expense of the Company.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------

# Report on Executive
Compensation

Effective May 1, 2003, the Named
Executive Officers of the Company were Messrs. Stephens and Miatello. Mr. Stephens is
remunerated only in his capacity as a director of the Company, in the amount of $35,000
per annum. Mr. Miatello is an MIL employee for whom the Company pays no salary or other
remuneration.

In accordance with the requirements
in Multi-lateral Policy 51-102, approved on February 16, 2004, the Company is required to
provide a report on executive compensation. Given the current circumstances of the
Company, as previously described, the report provided relates only to former executives of
the Company. The executive compensation objectives of the Company were to provide
compensation levels necessary to attract and retain high-quality executives and to
motivate key executives to contribute to the interests of the shareholders.

---

Page 24

Base Salary

Individual compensation arrangements
are based on performance, level of responsibility, internal equity considerations and the
Companys financial performance. The Corporate Governance Committee also reviews and
gives consideration to compensation information of other public real estate companies.

Bonus

The Corporate Governance Committee
recommends bonuses for senior management as a part of their compensation, in amounts that
take into consideration extraordinary efforts or results.

Long Term
Incentives

The Company motivates executive
officers and other employees of the Company to act in the interests of shareholders
through the use of the 1995 Plan. This plan provides compensation over a number of years,
which is dependent upon value created for shareholders through appreciation in the market
price of the Companys Common Shares. In 2003, no share options were granted.

Submitted by the Corporate
Governance Committee: Jack Winberg, James R. Bullock and Wayne P.E. Mang.

# Share Option Plan

The Amended and Restated Share Option
Plan of the Company (the 1995 Plan) was established to advance the interest of
the Company by providing key employees, officers, directors and consultants of the Company
and its subsidiaries with the opportunity, through share options, to acquire an increased
proprietary interest in the Company.

The 1995 Plan is administered by the
Board of Directors and the number of Common Shares that may be issued at any time pursuant
to options granted under the 1995 Plan is limited to 928,571 Common Shares. The limit was
adjusted due to the consolidation of Common Shares that occurred on June 20, 2003.

No share options were granted under
the 1995 Plan to any of the NEOs during the fiscal year ended December 31, 2003.

# AGGREGATED
OPTION EXERCISES DURING THE MOST RECENTLY COMPLETED
                                     FINANCIAL YEAR AND FINANCIAL YEAR-END OPTION VALUES

|                   
|-------------------
|Name               
|                   
|Antony K. Stephens 
|                   
|William I. Kennedy 
|                   
|Richard E. Fletcher
|                   
|Paul Miatello      
|                   

*    Closing price of the Common
Shares on December 31, 2003 was $11.85.

# ITEM 7  MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

# Major shareholders

Holders of over 5% of the
Registrants Common Shares as of January 31, 2004 are as follows:

|Name of holder                   |  | Number ofcommon shares |  | Percent of class
|-------------------------------- |  | ---------------------- |  | ----------------
|                                
|Morguard Corporation  *          |  | 7,336,315              |  | 80              
|                                
|Number of shares in Canada       |  | 9,102,293              |  |                 
|Number of shareholders in Canada |  | 264                    |  |                 
|                                

*    Held directly and through its
wholly-owned subsidiary, 3391361 Canada Inc.

---

Page 25

All the shareholders, including the
major shareholder listed above has the same voting rights, as described in Item 10.

# Related party
transactions

# Indebtedness of
Directors, Executive Officers and Others

As at March 31, 2004, there was no
indebtedness from current and former officers or directors of the Company to the Company
or its subsidiaries, nor does the Company or its subsidiaries provide any guarantee,
support or other similar arrangement to the indebtedness of any such directors or officers
to another entity.

# Interests of Management
of the Company and Others in Material Transactions

No director or officer of the
Company, nor any security holder of record, other than as described below, as of March 31,
2004, who to the knowledge of the Company and its directors and officers, beneficially
owned, directly or indirectly or exercised control or direction over more than 10% of the
outstanding Common Shares, or to the knowledge of the Company and its directors and
officers, or any associate or affiliate thereof, had any material interest, direct or
indirect, in any transaction since January 1, 2003 or in any proposed transaction
which has materially affected or will materially affect the Company or any of its
subsidiaries, other than as described below or elsewhere in this Annual Report.

Effective January 1, 2003, the
Company entered into a property management and asset management agreement with MIL, under
which MIL provides services to the Company. See Property Management and Asset
Management Agreement above for further details.

During 2003, the Company advanced
$20,000,000, pursuant to a revolving loan agreement on an unsecured basis to Morguard,
which directly or indirectly owns 80% of the Companys Common Shares. The demand loan
is interest bearing at the 30-day bankers acceptance rate plus 175 basis points that
Morguard pays to a Canadian chartered bank on similar borrowings.

# ITEM 8  FINANCIAL
INFORMATON

Consolidated Statements and Other
Financial Information

Financial information has been reported in Item 17 of this
annual report.

# Dividend policy

The Company maintains a policy of
distributing a quarterly dividend to common shareholders. Information on dividends paid in
prior years can be found elsewhere in this annual report.

# Significant Changes

None reportable.

---

Page 26

# ITEM 9  THE OFFER
AND LISTING

# Listing Details

The following is a summary of prices
per Common Share on the Toronto Stock Exchange, the principal market for these shares. The
Companys Common Shares are also listed on the NASD OTC Bulletin Board.

|                     
|---------------------
|(in Canadian dollars)
|                     
|High                 
|Low                  
|                     
|                     

|                     
|---------------------
|                     
|                     
|(in Canadian dollars)
|                     
|High                 
|Low                  
|                     
|                     

|                     
|---------------------
|                     
|                     
|(in Canadian dollars)
|                     
|High                 
|Low                  
|                     

# ITEM 10 
ADDITIONAL INFORMATION

# Share Capital

The Company is authorized to issue:
(a) an unlimited number of First Preference Shares in series; (b) an unlimited number of
Second Preference Shares in series; (c) an unlimited number of Third Preference Shares;
and (d) an unlimited number of Common Shares.

The shares of the  Company  rank and are  subject in all  respects  to the  rights,  privileges,  restrictions  and
conditions attaching to the respective shares in the following order:

| | 1. |  | First
Preference Shares; then
| | -- |  | -----------------------------

| | 2. |  | Second
Preference Shares; then
| | -- |  | ------------------------------

| | 3. |  | Third
Preference Shares; then
| | -- |  | -----------------------------

| | 4. |  | Common
Shares.
| | -- |  | --------------

Except as otherwise required by law
or in accordance with any voting rights which may from time to time be attached to any
series of First Preference, Second Preference or Third Preference Shares, the holders of
First Preference, Second Preference and Third Preference Shares as classes are not
entitled as such to receive notice of, attend or to vote at any meeting of the
shareholders of the Company.

# First Preference Shares

The Board of directors of the Company
may issue the First Preference Shares at any time and from time to time in one or more
series. Before the first shares of a particular series are issued, the board of directors
of the Company shall fix the number of shares in such series and shall determine, subject
to the limitations set out in the articles, the designation, rights, privileges,
restrictions and conditions to attach to the shares of such series including, the rate or
rates, amount or method or methods of calculation of preferential dividends, whether
cumulative or non-cumulative or partially cumulative, and whether such rate, amount or
method of calculation shall be subject to change or adjustment in the future, the currency
or currencies of payment, the date or dates and place or places of payment thereof and the
date or dates from which such preferential dividends shall accrue, the redemption price
and terms and conditions of redemption, the rights of retraction (if any), and the prices
and other terms and conditions of any rights of retraction and whether any additional
rights of retraction may be vested in such holders in the future, voting rights and
conversion rights (if any) and any sinking fund, purchase fund or other provisions
attaching thereto.

Except with the approval of the
holders of the First Preference Shares, no dividends shall at any time be declared or paid
on or set apart for payment on the Second Preference Shares, Third Preference Shares,
Common Shares or any other shares of the Company ranking junior to the First Preference
Shares unless all dividends up to and including the dividend payable for the last
completed period for which such dividends shall be payable on each series of First
Preference Shares then issued and outstanding shall have been declared and paid or set
apart for payment at the date of such declaration or payment or setting apart for payment
on the Second Preference Shares, Third Preference Shares, Common Shares or such other
shares of the Company ranking junior to the First Preference Shares nor shall the Company
call for redemption or redeem or purchase for cancellation or reduce or otherwise pay off
any of the First Preference Shares (less than the total amount outstanding) or any Second
Preference Shares, Third Preference Shares, Common Shares or any other shares of the
Company ranking junior to the First Preference Shares unless all dividends up to and
including the dividend payable for the last completed period for which such dividends
shall be payable on each series of First Preference Shares then issued and outstanding
shall have been declared and paid or set apart for payment at the date of such call for
redemption, purchase, reduction or other payment.

---

Page 27

In the event of the liquidation,
dissolution or winding-up of the Company or other distribution of assets of the Company
among shareholders for the purpose of winding-up its affairs, the holders of the First
Preference Shares of any series shall, before any amount shall be paid to or any property
or assets of the Company distributed among the holders of the Second Preference Shares,
Third Preference Shares, the Common Shares or any other shares of the Company ranking
junior to the First Preference Shares, be entitled to receive from the property and assets
of the Company for each First Preference Shares of such series held by them respectively,
an amount specified in the rights, privileges, restrictions and conditions attaching to
the First Preference Shares of such series as set forth in the resolution of the board of
directors of the Company and the certificate of amendment relating to such series.

The First Preference Shares of any
series may be purchased or made subject to a redemption by the Company at such times and
at such prices and upon such other terms and conditions as may be specified in the rights,
privileges, restrictions and conditions attaching to the First Preference Shares of such
series as set forth in the resolution of the board of directors of the Company and the
certificate of amendment relating to such series.

The approval of the holders of First
Preference Shares to add to, change or remove any right, privilege, restriction or
condition attaching to the First Preference Shares as a class or to any other matter
requiring the consent of the holders of the First Preference Shares as a class may be
given in such a manner as may then be required by law, subject to a minimum requirement
that such approval shall be given by resolution passed by the affirmative vote of at least
two-thirds of the votes cast as a meeting of the holders of the First Preference Shares
duly called for that purpose.

# Second Preference Shares

The board of directors of the Company
may issue the Second Preference Shares at any time and from time to time in one or more
series. Before the first shares of a particular series are issued, the board of directors
of the Company shall fix the number of shares in such series and shall determine, subject
to the limitations set out in the articles, the designation, rights, privileges,
restrictions and conditions to attach to the shares of such series including, the rate or
rates, amount or method or methods of calculation of preferential dividends, whether
cumulative or non-cumulative or partially cumulative, and whether such rate, amount or
method of calculation shall be subject to change or adjustment in the future, the currency
or currencies of payment, the date or dates and place or places of payment thereof and the
date or dates from which such preferential dividends shall accrue, the redemption price
and terms and conditions of redemption, the rights of retraction (if any), and the prices
and other terms and conditions of any rights of retraction and whether any additional
rights of retraction may be vested in such holders in the future, voting rights and
conversion rights (if any) and any sinking fund, purchase fund or other provisions
attaching thereto.

Except with the approval of the
holders of the Second Preference Shares, no dividends shall at any time be declared or
paid on or set apart for payment on the Third Preference Shares, Common Shares or any
other shares of the Company ranking junior to the Second Preference Shares unless all
dividends up to and including the dividend payable for the last completed period for which
such dividends shall be payable on each series of Second Preference Shares then issued and
outstanding shall have been declared and paid or set apart for payment at the date of such
declaration or payment or setting apart for payment on the Third Preference Shares, Common
Shares or such other shares of the Company ranking junior to the Second Preference Shares
nor shall the Company call for redemption or redeem or purchase for cancellation or reduce
or otherwise pay off any of the Second Preference Shares (less than the total amount
outstanding) or any Third Preference Shares, Common Shares or any other shares of the
Company ranking junior to the Second Preference Shares unless all dividends up to and
including the dividend payable for the last completed period for which such dividends
shall be payable on each series of Second Preference Shares then issued and outstanding
shall have been declared and paid or set apart for payment at the date of such call for
redemption, purchase, reduction or other payment.

In the event of the liquidation,
dissolution or winding-up of the Company or other distribution of assets of the Company
among shareholders for the purpose of winding-up its affairs, the holders of the Second
Preference Shares of any series shall, before any amount shall be paid to or any property
or assets of the Company distributed among the holders of the Third Preference Shares, the
Common Shares or any other shares of the Company ranking junior to the Second Preference
Shares, be entitled to receive from the property and assets of the Company for each Second
Preference Shares of such series held by them respectively, an amount specified in the
rights, privileges, restrictions and conditions attaching to the Second Preference Shares
of such series as set forth in the resolution of the board of directors of the Company and
the certificate of amendment relating to such series.

The Second Preference Shares of any
series may be purchased or made subject to a redemption by the Company at such times and
at such prices and upon such other terms and conditions as may be specified in the rights,
privileges, restrictions and conditions attaching to the Second Preference Shares of such
series as set forth in the resolution of the board of directors of the Company and the
certificate of amendment relating to such series.

---

Page 28

The approval of the holders of Second
Preference Shares to add to, change or remove any right, privilege, restriction or
condition attaching to the Second Preference Shares as a class or to any other matter
requiring the consent of the holders of the Second Preference Shares as a class may be
given in such a manner as may then be required by law, subject to a minimum requirement
that such approval shall be given by resolution passed by the affirmative vote of at least
two-thirds of the votes cast as a meeting of the holders of the Second Preference Shares
duly called for that purpose.

# Third Preference Shares

The holders of the Third Preference
Shares shall not be entitled to receive any dividends.

In the event of the liquidation,
dissolution or winding-up of the Company or other distribution of assets of the Company
among shareholders for the purpose of winding-up its affairs, the holders of the Third
Preference Shares shall be entitled to receive from the assets and property of the Company
for each Third Preference Share held by them respectively the sum of $10.00 before any
amount shall be paid or any property or assets of the Company distributed to the holders
of any Common Shares or shares of any other class ranking junior to the Third Preference
Shares of the amount so payable to them as provided, they shall not be entitled to share
in any further distribution of the property or assets of the Company.

Subject to the provisions of the
Business Corporations Act (Ontario), the Company may at any time or from time to time
purchase (if obtainable) all or any part of the outstanding Third Preference Shares at the
lowest price at which, in the opinion of the directors, such shares are obtainable, but
not exceeding the redemption price.

Subject to the provisions of the
Business Corporations Act (Ontario), the Company may, upon giving notice, redeem at any
time the whole or from time to time any part of the then outstanding Third Preference
Shares on payment for each share to be redeemed of the sum of $10.00.

The approval of the holders of Third
Preference Shares to add to, change or remove any right, privilege, restriction or
condition attaching to the Third Preference Shares as a class or to any other matter
requiring the consent of the holders of the Third Preference Shares as a class may be
given in such a manner as may then be required by law, subject to a minimum requirement
that such approval shall be given by resolution passed by the affirmative vote of at least
two-thirds of the votes cast as a meeting of the holders of Third Preference Shares duly
called for that purpose.

# Common Shares

Subject to the prior rights provided
to the holders of the First Preference Shares, Second Preference Shares, Third Preference
Shares and to any other shares ranking senior to the Common Shares with respect to
priority in the payment of dividends, the holders of Common Shares shall be entitled to
receive dividends and the Company shall pay dividends thereon, as and when declared by the
board of directors of the Company out of moneys properly applicable to the payment of
dividends, in such amount and in such form as the board of directors may from time to time
determine and all dividends which the directors may declare on the Common Shares shall be
declared and paid in equal amounts per share on all Common Shares at the time outstanding.

In the event of the dissolution,
liquidation or winding-up of the Company, whether voluntary or involuntary, or any other
distribution of assets of the Company among its shareholders for the purpose of winding-up
its affairs, subject to the prior rights of the holders of the First Preference Shares,
Second Preference Shares, Third Preference Shares and to any other shares ranking senior
to the Common Shares with respect to priority in the distribution of assets upon
dissolution, liquidation or winding-up, the holders of the Common Shares shall be entitled
to receive the remaining property and assets of the Company.

Except for meetings at which only
holders of other specified class or series of shares of the Company are entitled to vote
separately as a class or series, the holders of Common Shares shall be entitled to receive
notice of and attend all meetings of the shareholders of the Company and shall have one
vote for each common share held at all meetings of the shareholders of the Company.

# Restrictions of Class
Voting

The holders of shares of any class
and the holders of shares of any series of any class are not entitled to vote separately
as a class or series, as the case may be, upon, and shall not be entitled to dissent in
respect of, any proposal to amend the articles to:

|a) |  | increase
or decrease any maximum number of authorized shares of such class or
               series, or increase any maximum number of authorized shares of a class or
series                having rights or privileges equal or superior to the shares of such
class or                series;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

Page 29

|b) |  | effect
an exchange, reclassification or cancellation of the shares of such class
               or series; or
|-- |  | -------------------------------------------------------------------------------------------------------------

|c) |  | create
a new class or series of shares equal or superior to the                shares of such
class or series.
|-- |  | --------------------------------------------------------------------------------------------------------------

The charter documents of the Company
contain no limitation on the rights to own securities, including the rights of
non-resident or foreign shareholders to hold or exercise voting rights.

The Company had issued three series
of debentures, which are convertible into common shares under differing terms and
conditions. Only one series of debentures is outstanding at December 31, 2003. The series
of outstanding debentures is fully described in Note 7 to the financial statements. See
Item 17, Financial Statements. In addition, members of the Board of Directors
and Senior Management of the Company hold options granted under the stock option plan
instituted by Revenue Properties Company Limited. See Compensation and
Share Ownership in Item 6.

# Memorandum and Articles
of Association

Organization and Register

Revenue Properties Company Limited is
a Company organized under the Business Corporations Act (Ontario). The Companys
Ontario Corporation Number, allotted by the Ontario Ministry of Consumer and Commercial
Relations, is 1454264.

The Articles of the Company contain
no restrictions on business the Company may carry on or powers the Company may exercise.

# Directors

Under the Articles of the Company,
the board of directors of the Company may, without authorization of the shareholders of
the Company, in such amounts and on such terms as it deems expedient, borrow money upon
the credit of the Company; issue, reissue, sell or pledge debt obligations of the Company;
subject to the provisions of the Business Corporations Act (Ontario), give a guarantee on
behalf of the Company to secure performance of an obligation of any person; and charge,
mortgage or hypothecate.

The Companys directors are not
required to own shares of the Company.

# Shareholder Meetings

Annual meetings of shareholders are
held at such time in each year as is determined by the board of directors and, unless the
board of directors otherwise determines, at the place where the Companys registered
office is located.

Subject to the Business Corporation
Act (Ontario) the Board of Directors have the power to call a special meeting of
shareholders at any time.

Notice of the time and place of each
meeting of shareholders must be given not less than thirty (30) days and not more than
fifty five (55) days before the date of the meeting to each director, to the auditor and
to each shareholder who at the close of business on the record date (fixed by the Board),
if any, for notice is entered into the securities register as the holder of one or more
shares carrying the right to vote at or entitled to notice of the meeting.

The only persons entitled to be
present at a meeting of shareholders shall be those entitled to vote thereat, the
directors and auditors of the Company and others who, although not entitled to vote, are
entitled or required under any provisions of the Business Corporations Act (Ontario) or
the articles or by-laws of the Company to be present at the meeting. Any other person may
be admitted only on the invitation of the chairman of the meeting or with the consent of
the meeting.

# Material Contracts

In July 2002, the Company advanced
$20,000,000 pursuant to a revolving loan agreement on an unsecured basis to Morguard,
which directly or indirectly owns 76.4% of the Companys common shares as at December
31, 2002. The advance was repaid at the end of December 2002. The demand loan was interest
bearing at the 30-day bankers acceptance rate plus 175 basis points. The Company
advanced a further $6,000,000, pursuant to the revolving loan agreement, in February 2003
and $14,000,000 in March 2003.

Effective January 1, 2003, the
Company entered into a property management agreement with MIL, under which MIL provides
property management and corporate services to the Company. See Related Party
Transactions above for further details.

---

Page 30

During 2002, the Company sold its
interest in The Oaks, a 1,215 unit multi-tenant residential complex in Toronto, Ontario,
Canada. The sale price was approximately $50,000 per unit and the Company recorded a gain
from the sale of approximately $24,800,000.

During 2002, the Company sold its
interest in Riverside Apartments, a 728 unit multi-tenant residential complex in Toronto,
Ontario, Canada. The price was approximately $57,000 per unit and the Company recorded a
gain from the sale of approximately $5,400,000.

During 2002, the Company acquired two
Class A suburban office buildings, with an aggregate rentable area of 301,421 square feet,
located at 4720 and 4880 Tahoe Boulevard, Mississauga, Ontario, Canada. The purchase price
was $56,000,000.

# Exchange Controls

# Exchange controls and
other limitations affecting security holders

There is no law or governmental
decree or regulation in Canada that restricts the export or import of capital, or affects
the remittance of dividends, interest or other payments to a non-resident holder of common
shares, other than withholding tax requirements. See Item 10, Taxation.

There is no limitation imposed by
Canadian law or by the charter or other constituent documents of the Company on the right
of a non-resident or foreign owner to hold or vote common shares, other than as provided
in the Investment Canada Act (Canada) (the Investment Canada Act). The
following summarizes the principal features of the Investment Canada Act.

With the exception of investments
made by WTO investors (being generally individuals who are nationals or
permanent residents of World Trade Organization (WTO) members (except Canada),
governments of WTO members (except Canada) and entities ultimately controlled by the
foregoing WTO investors as provided in the Investment Canada Act) and certain other
limited exceptions, the Investment Canada Act generally prohibits implementation of a
reviewable investment by an individual, government or agency thereof, corporation,
partnership, trust or joint venture that is not a Canadian as defined in the
Investment Canada Act (a non-Canadian), unless, after review, the Minister
responsible for the Investment Canada Act (the Minister) is satisfied that the
investment is likely to be of net benefit to Canada having regard to criteria set forth in
the Investment Canada Act. An investment in common shares by a non-Canadian (other than a
WTO investor) would be reviewable under the Investment Canada Act if it was an investment
to acquire direct control of the Company and the value of the assets of the Company was
$5,000,000 or more, or indirect control of the Company and the value of the assets of the
Company was $50,000,000 or more and in some cases $5,000,000 or more or if an order for
review is made by the Federal Cabinet on the ground that the investment falls within a
prescribed specific type of business activity that is related to Canadas cultural
heritage and national identity.

An investment in common shares by a
WTO investor would generally be reviewable under the Investment Canada Act if it was an
investment to acquire direct control of the Company and the value of the assets of the
Company equals or exceeds for each year $150,000,000 in constant 1992 dollars; that amount
is $223,000,000 for year 2003. An investment by a WTO investor to acquire indirect control
of the Company would generally not be reviewable.

The Investment Canada Act provides
detailed rules for the determination of whether control has been acquired. For example,
any non-Canadian would acquire direct control of the Company for the purposes of the
Investment Canada Act if it acquired a majority of the common shares. The acquisition of
less than a majority but one-third or more of the common shares would be presumed to be an
acquisition of direct control of the Company unless it could be established that the
Company was not controlled in fact by the acquirer through the ownership of common shares.

Certain transactions in relation to
common shares would be exempt from the Investment Canada Act, including among others:

|(a) |  | Acquisition
of common shares by a person in the ordinary course of that persons business as a
trader or dealer in securities;
|--- |  | ------------------------------------------------------------------------------------------------------------------------------

|(b) |  | Acquisition
of control in connection with the realization of a security interest granted for a loan
or other financial assistance and not for any purpose related to the provisions of the
Investment Canada Act; and
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | Acquisition
of control of the Company by reason of an amalgamation, merger, consolidation or
corporate reorganization following which the ultimate direct or indirect control in fact
of the Company, through the ownership of voting interests (as defined in the
Investment Canada Act), remains unchanged.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

Page 31

# Taxation

The following is a general discussion
of the principal income tax considerations under the Income Tax Act (Canada) (the
Canadian Tax Act) relating to ownership of the Companys common shares.
These income tax aspects will vary according to the circumstances of each shareholder,
including his place of residence and the place in which he carries on business or has a
permanent establishment, as the case may be, so that a shareholder must investigate the
tax consequences of his personal situation by obtaining advice from his own tax advisor.
This summary does not consider US federal or state income tax provisions or Canadian
provincial income tax provisions, which may be at variance with the provisions contained
in the Canadian Tax Act and is not intended to be, nor should it be construed as, legal or
tax advice. This summary only applies to a shareholder who holds the Companys common
shares as capital property and does not apply to a shareholder who is either a
non-resident insurer or a financial institution.

Dividends paid to a non-resident of
Canada, including distributions or redemptions which are treated as dividends and certain
stock dividends, are subject to Canadian withholding tax. The Canadian non-resident
withholding tax would be withheld by the Company which would then pay the dividend net of
withholding tax to the shareholder. By virtue of Article X of the Canada-United States
Income Tax Convention, 1980 (the Convention), the rate of tax for dividends
paid to a resident of the U.S. for the purposes of the Convention is limited to 15% (or,
where the beneficial owner of the dividends is a company that owns at least 10% of the
voting stock of the Company, 5%). In the absence of any treaty reduction, the rate of
withholding tax imposed would be 25% of the amount of the dividend.

Stock dividends received by
non-residents from the Company would be subject to Canadian non-resident withholding tax
as noted above, to the extent that the paid-up capital of the Company has been increased
as a result of the stock dividend.

A capital gain from the sale of
common shares of the Company by a non-resident of Canada will not be subject to Canadian
tax provided that the common shares are not taxable Canadian property. In
general, common shares will not be taxable Canadian property if, (a) the
shareholder, persons with whom the shareholder did not deal at arms length or the
shareholder together with such persons, did not own (or have an interest in or option to
acquire) 25% or more of the shares of any class or series of stock in the Company at any
time in the five years preceding a disposition; and (b) the common shares are not used by
the non-resident shareholder in carrying on a business in Canada.

# Dividends and Paying
Agents

Not applicable.

# Statements by Experts

Not applicable.

# Documents on Display

A copy of the most recent Annual
Report of the Company on Form 20-F under the Securities Exchange Act of 1934, Annual
Report, including comparative financial statements for the year ended December 31, 2003,
together with a report of the auditors thereon, subsequent interim financial statements of
the Company, and a Notice of Intention to make a Normal Course Issuer Bid for Common
Shares are available on (i) SEDAR at www.sedar.com and (ii) on EDGAR at
www.edgar.com and are otherwise available (without charge to shareholders) upon
request to the Secretary of the Company at its head office at The Colonnade, 131 Bloor
Street West, Suite 300, Toronto, Ontario, M5S 1R1, telephone no. (416) 963-8100. Copies of
this material are also available by mail from the Public Reference Section of the SEC, at
450 Fifth Street, N.W., Washington, D.C. 20549, at established rates.

# Subsidiary Information

Not applicable.

ITEM 11  QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company expects to face the
following risks in the normal course of its operations.

# Operating Risk

The Companys primary business
is the ownership and operation of a portfolio of commercial properties. The income stream,
generated by tenants paying rent, can be affected by general and local economic conditions
and by a change in the credit and financial stability of tenants. The Company may be
adversely affected if tenants become unable to meet their financial obligations under
their leases.

---

Page 32

The Companys retail properties
generated 82% of the rental income, of which the three core retail properties in the
Greater Toronto Area generated 73%. The Companys high-quality portfolio and active
leasing program are mitigating factors to this risk. The two office properties acquired at
the end of 2002 are fully leased for a 15-year term to a Canadian financial institution
with the intent of limiting leasing and tenant credit risk to the Company.

# Reliance on Anchor
Tenants

Retail shopping centers traditionally
rely on anchor tenants (department store, junior department stores or grocery stores) as a
source of significant revenue and in terms of generating traffic for the mall.
Accordingly, the risk is present that an anchor tenant will move out or experience a
failure, which would have a negative impact on the subject property.

# Financing Risk

The Companys long-term debt,
including convertible debentures at December 31, 2003, was $166.4 million, compared to
$151.5 million a year earlier. The only significant debt maturing over the next three
years is the 7.0% subordinated convertible debentures, which can be repaid in common
shares, at the Companys option. Interest rate fluctuations have been eliminated at
December 31, 2003, as all long-term debt is fixed-rate. The Company will be subject to the
risks associated with debt financing, including the risk that mortgages and credit
facilities secured by the Companys properties will not be able to be re-financed or
that the terms of such re-financing will not be as favourable as the terms of existing
indebtedness. The Company manages this risk by attempting to appropriately stagger timing
of debt maturities to minimize the amount of debt expiring in any given year.

# Relative Liquidity of
Real Estate

Real estate is not considered to be a
liquid investment, as it requires a reasonable sales period and normal market conditions
to generate multiple bids to complete the sales process. The characteristics of the
property being sold and general and local economic conditions can affect the time to
complete the sales process.

# Foreign Exchange Risk

The Company has a net US dollar
position of US$13.5 million. At December 31, 2003, the Canadian dollar value was US77.13
cents compared to US63.39 cents a year earlier. The average exchange rate for the year was
US71.39 cents compared to US63.69 cents in 2002. The Company holds certain portfolio
investments and notes receivable in US dollars.

FOREIGN EXCHANGE  Balance sheet position

|                                 
|---------------------------------
|                                 
|                                 
|(000's of Canadian dollars)      
|                                 
|Portfolio investments            
|Mortgages and advances receivable
|                                 

The monthly high and low spot rates
for the Canadian dollar equivalent of the United States dollar as reported by the Federal
Reserve Bank of New York were as follows:

|    
|----
|    
|    
|High
|Low 
|    

# Environmental Risk

The portfolio is comprised of mature
properties with the exception of the two office properties acquired at December 31, 2002.
Properties comply with current environmental guidelines, or where required, are
remediated, in which case a full provision for the work is accrued in the accounts.

As a landlord, the Company is subject
to an environmental risk as a result of the possible use of foreign substances by retail
tenants who handle, store and generate small quantities of hazardous waste. The Company
attempts to mitigate this risk through the terms of its leases and by periodic inspections
by both management and technical consultants.

---

Page 33

While the Company believes that it
complies with current standards, there can be no assurance that the laws or regulations
will not be changed in the future or that tenants or adjacent landowners will not affect
its properties. A governmental authority has not notified the Company nor is the Company
aware of any material non-compliance relating to hazardous or toxic substances in any of
its properties.

# Interest Rate Sensitivity

The Company is exposed to interest
rate changes primarily as a result of its line of credit from time to time, used to
maintain liquidity and operations. The Companys interest rate risk management
objective is to limit the impact of interest rate changes on earnings and cash flows and
to lower its overall borrowing costs. To achieve its objective the Company borrows
primarily at fixed rates and could enter into derivative financial instruments such as
interest rate swaps, caps and treasury locks in order to mitigate its interest rate risk
on a related financial instrument. The Company does not enter into derivative or interest
rate transactions for speculative or trading purposes.

The Companys interest rate risk
is monitored using a variety of techniques. The table below presents the principal
amounts, weighted average interest rates, fair values and other terms required by year of
expected maturity to evaluate the expected cash flows and sensitivity to interest rate
changes.

DEBT OBLIGATIONS  December 31, 2003
Expected Maturity Date

LONG-TERM DEBT

|                              
|------------------------------
|                              
|                              
|(000's of Canadian dollars)   
|                              
|Fixed rate debt               
|Weighted average interest rate
|                              

# CONVERTIBLE DEBENTURES

|                              
|------------------------------
|                              
|                              
|(000's of Canadian dollars)   
|                              
|Fixed rate debt               
|Weighted average interest rate
|                              

# ITEM 12 
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

# PART II

# ITEM 13  DEFAULTS,
DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14  MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

# ITEM 15  CONTROLS
AND PROCEDURES

# Evaluation of Disclosure
Controls and Procedures

The Companys Chief Executive
Officer and Chief Financial Officer evaluated the effectiveness of the Companys
disclosure controls and procedures as of December 31, 2003. Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that as of the end of the
year, the design and operation of the Companys disclosure controls and procedures
were effective to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in Securities and Exchange Commission rules
and forms.

---

Page 34

# Changes to Internal
Controls and Procedures for Financial Reporting

During the period covered by this
annual report there were no significant changes to the Companys internal control
over financial reporting or in other factors that has materially affected, or is
reasonably likely to materially affect, the Companys internal control over financial
reporting.

It should be noted that while the
Companys principal executive officer and principal financial officer believe that
the Companys disclosure controls and procedures provide a reasonable level of
assurance that they are effective, they do not expect that the Companys disclosure
controls and procedures or internal control over financial reporting will prevent all
errors and fraud. A control system, no matter how well conceived or operated, can provide
only reasonable, not absolute, assurance that the objectives of the control system are
met.

# ITEM 16 (RESERVED)

# ITEM 16A  AUDIT
COMMITTEE FINANCIAL EXPERT

The Board of Directors has determined
that Wayne P.E. Mang, a Chartered Accountant, has appropriate qualifications to be designated as the Companys
Audit Committee financial expert. For the purposes of this section, an audit committee
financial expert means that the following qualifications are met:

|1) |  | An
understanding of generally accepted accounting principles and financial
          statements,
|-- |  | ------------------------------------------------------------------------------------------------

|2) |  | The
ability to assess the general application of such principles in connection           with
the accounting for estimates, accruals and reserves,
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------

|3) |  | Experience
preparing, auditing, analyzing or evaluating financial statements           that present
a breadth and level of complexity of accounting issues that are           generally
comparable to the breadth and complexity of issues that can reasonably           be
expected to be raised by the Companys financial statements, or           experience
actively supervising one or more persons engaged in such activities,
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4) |  | An
understanding of internal controls over financial reporting, and
|-- |  | -------------------------------------------------------------------

|5) |  | An
          understanding of Audit Committee functions.
|-- |  | --------------------------------------------------------

# ITEM 16B  CODE OF
ETHICS

The Company has adopted a Code
of Conduct and Conflict of Interest Guidelines which is applicable to all directors,
including the President. The Company has also adopted a Code of Business Conduct and
Ethics which is applicable to all employees of MIL, including the Chief Financial
Officer. Copies of the Code of Conduct and Conflict of Interest Guidelines and the Code of
Business Conduct and Ethics may be obtained free of charge by writing to Revenue
Properties Company Limited, Suite 300, 131 Bloor Street West, Toronto, Ontario, M5S 1R1,
Attention: Secretary.

# ITEM 16C 
PRINCIPAL ACCOUNTANT FEES AND SERVICES

Ernst & Young LLP
(E&Y) has served as the Companys auditors since September 24, 2003.
Prior to E&Ys appointment the Companys auditors were KPMG LLP.   The
auditor is elected annually at the Annual General Meeting. The Audit Committee will
propose to the Annual General Meeting convening on May 18, 2004 that E&Y be elected as
the auditor for 2004.

The following table presents the
aggregate fees for professional services and other services rendered by E&Y and KPMG
in 2003 and 2002.

|                                   
|-----------------------------------
|(in thousands of dollars)          
|                                   
|AUDIT FEES                         
|Ernst & Young  2003 year-end audit
|KPMG - 2002 year-end audit         
|AUDIT-RELATED FEES                 
|Ernst & Young                      
|KPMG                               
|TAX FEES                           
|KPMG                               
|ALL OTHER FEES                     
|KPMG                               
|                                   
|Total                              
|                                   

---

Page 35

Audit Fees consist of fees billed for
the annual audit and quarterly review of the Companys consolidated financial
statements. They also include fees billed for other audit services, which are those
services that only the external auditor reasonably can provide, and include a provision
for the review of documents filed with the SEC. The fees for the 2003 year-end audit
have not billed until 2004; the fees for the 2002 year-end audit were not billed until
2003.

Audit-related Fees consist of fees
billed for assurance and related services that are reasonably related to the performance
of the audit or review of the companys financial statements or that are
traditionally performed by the external auditor, and include consultations concerning
financial accounting and reporting standards; internal control reviews; review of security
controls and operational effectiveness of systems; due diligence related to acquisitions;
and employee benefit plan audits.

Tax Fees include fees billed for tax
compliance services, including the preparation of original and amended tax returns and
claims for refund; tax consultations, such as assistance and representation in connection
with tax audits and appeals, tax advice related to mergers and acquisitions, deductibility
of interest, common share redemptions, transfer pricing, and requests for rulings or
technical advice from taxing authorities; tax planning services; consultation and planning
services.

Policy on Pre-Approval of Audit
and Non-Audit Services of Independent Auditors

The Audit Committee of the Company is
responsible for the oversight of the Companys independent auditors services.
The Audit Committees policy is to pre-approve all audit services provided by
E&Y. These services may include audit services, audit-related services, tax services
and other services, as described below. In such an event, the Audit Committee sets forth
its pre-approval in detail, listing the particular services or categories of services
which are pre-approved, and setting forth a specific budget for such services. Additional
services may be pre-approved on an individual basis. E&Y and management then report to
the Audit Committee on a quarterly basis regarding the extent of services actually
provided in accordance with the applicable pre-approval, and regarding the fees for the
services performed.

# ITEM 16D 
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

# ITEM 16E  PURCHASES
OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

The following table sets out certain
information concerning purchases of the Companys shares by Revenue Properties
Company Limited during 2003.

|                               
|-------------------------------
|Period                         
|                               
|December 1 to December 31, 2003

On August 25, 2003, the Company filed
and The Toronto Stock Exchange accepted a Notice of Intention to Make a Normal Course
Issuer Bid to acquire through the facilities of The Toronto Stock Exchange up to 460,000
of its outstanding common shares, representing approximately 5% of the outstanding as at
August 15, 2003.

On August 15, 2002, the Company filed
and The Toronto Stock Exchange accepted a Notice of Intention to Make a Normal Course
Issuer Bid to acquire through the facilities of The Toronto Stock Exchange up to 1,000,000
of its outstanding common shares, representing approximately 1.6% of the outstanding as at
August 12, 2002. During 2002 the Company did not acquire any shares.

---

Page 36

# PART III

# ITEM 17  FINANCIAL
STATEMENTS

|                   |                                                                                    |            
|------------------ | ---------------------------------------------------------------------------------- | -----------
|                  
|(A)                | Consolidated Statements and Other Financial Information                            | Page Number
|                  
|                   | Auditors Report                                                                   | 37         
|                   | Consolidated Balance Sheets                                                        | 38         
|                   | Consolidated Statements of Income                                                  | 39         
|                   | Consolidated Statements of Deficit                                                 | 40         
|                   | Consolidated Statements of Funds from Continuing Operations                        | 40         
|                   | Consolidated Statements of Cash Flow                                               | 41         
|                   | Notes to Consolidated Financial Statements                                         | 42 - 57    
|                  
|ITEM 19  EXHIBITS |                                                                                   
|                   | Certification of President                                                         | 58         
|                   | Certification of Chief Financial Officer                                           | 59         
|                   | Certification of President pursuant to Title 18, United States Code,               | 60         
|                   | Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act          |            
|                   | of 2002                                                                            |            
|                   | Certification of Chief Financial Officer pursuant to Title 18, United States Code, | 61         
|                   | Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act          |            
|                   | of 2002                                                                            |            
|                  
|                   | Financial Statement Schedules                                                      |            
|                   | Schedule III  Real estate and accumulated depreciation                            | 63 - 64    

---

Page 37

# AUDITORS REPORT

To the Board of Directors,Revenue
Properties Company Limited:

We have audited the consolidated
balance sheet of Revenue Properties Company Limited as at December 31, 2003 and the
consolidated statements of income, deficit, cash flow from continuing operations and cash
flow for the year then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of the Company as of December 31,
2002, were audited by other auditors whose report dated February 21, 2003, expressed an
unqualified opinion on those statements.

We conducted our audit in accordance
with Canadian generally accepted auditing standards and United States 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 financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.

In our opinion, these consolidated
financial statements present fairly, in all material respects, the financial position of
the Company as at December 31, 2003 and the results of its operations and cash flow for
the year then ended in accordance with Canadian generally accepted accounting principles.



Chartered Accountants

Toronto, CanadaFebruary 20, 2004

---

Page 38

REVENUE PROPERTIES
COMPANY LIMITED
CONSOLIDATED BALANCE SHEETS
As at December 31

|                                         |  |        |  |           |  |           | 
|---------------------------------------- |  | ------ |  | --------- |  | --------- | 
|                                        
|(in thousands of Canadian dollars)       |  | Note   |  | 2003      |  | 2002      | 
|                                        
|ASSETS                                   | 
|Rental properties                        |  | 3      |  | $159,687  |  | $161,962  | 
|Land held for development and sale       |  |        |  | 7,678     |  | 6,787     | 
|Cash and cash equivalents                |  |        |  | 2,784     |  | 5,700     | 
|Portfolio investments                    |  |        |  | 27,480    |  | 28,985    | 
|Mortgages and loans receivable           |  | 4      |  | 31,607    |  | 5,318     | 
|Other assets                             |  | 5      |  | 3,042     |  | 4,216     | 
|                                        
|                                         |  |        |  | $232,278  |  | $212,968  | 
|                                        
|LIABILITIES AND SHAREHOLDERS EQUITY     | 
|Long-term debt                           |  | 6      |  | $  86,652 |  | $  44,671 | 
|Convertible debentures                   |  | 7      |  | 14,102    |  | 44,408    | 
|Bank indebtedness                        |  | 8      |  | 5,837     |  | --        | 
|Accounts payable and accrued liabilities |  |        |  | 8,419     |  | 11,295    | 
|Future income tax liability              |  | 14     |  | 8,530     |  | 5,899     | 
|                                        
|                                         |  |        |  | 123,540   |  | 106,273   | 
|Commitments and contingencies            |  | 13, 15 | 
|Shareholders' equity                     |  | 10     |  | 108,738   |  | 106,695   | 
|                                        
|                                         |  |        |  | $232,278  |  | $212,968  | 
|                                        

The accompanying notes form an
integral part of these financial statements.

---

Page 39

# REVENUE PROPERTIES
COMPANY LIMITEDCONSOLIDATED STATEMENTS OF INCOMEYears ended December 31

|                                                             |  |       |  |           |   |           |   |           |  
|------------------------------------------------------------ |  | ----- |  | --------- | - | --------- | - | --------- | -
|                                                            
|(in thousands of Canadian dollars, except per share amounts) |  | Note  |  | 2003      |   | 2002      |   | 2001      |  
|                                                            
|RENTAL OPERATIONS                                            | 
|Revenue                                                      |  |       |  | $ 49,098  |   | $ 55,269  |   | $ 60,519  |  
|Property operating expenses                                  |  |       |  | 23,565    |   | 32,003    |   | 37,593    |  
|                                                            
|                                                             |  |       |  | 25,533    |   | 23,266    |   | 22,926    |  
|                                                            
|REAL ESTATE SALES                                            | 
|Sales                                                        |  |       |  | 1,186     |   | 10,010    |   | 1,865     |  
|Cost of sales                                                |  |       |  | 777       |   | 8,887     |   | 1,689     |  
|                                                            
|                                                             |  |       |  | 409       |   | 1,123     |   | 176       |  
|                                                            
|Other operating expenses (income):                           | 
|Interest                                                     |  |       |  | 8,285     |   | 8,959     |   | 19,744    |  
|General and administrative                                   |  |       |  | 2,993     |   | 4,522     |   | 5,044     |  
|Interest and other income                                    |  |       |  | (4,240    | ) | (395      | ) | (1,715    | )
|Foreign exchange loss                                        |  |       |  | 2,330     |   | 520       |   | (164      | )
|Depreciation and amortization                                |  |       |  | 4,703     |   | 5,372     |   | 5,667     |  
|                                                            
|                                                             |  |       |  | 14,071    |   | 18,978    |   | 28,576    |  
|                                                            
|OPERATING INCOME (LOSS)                                      |  |       |  | 11,871    |   | 5,411     |   | (5,474    | )
|                                                            
|Gain on sale of rental properties                            |  |       |  | --        |   | 30,199    |   | --        |  
|Reduction of foreign currency translation account            |  | 2     |  | --        |   | 10,520    |   | 18,487    |  
|Loss on redemption and repurchase of convertible debentures  |  | 7     |  | (338      | ) | (992      | ) | --        |  
|Gain on sale of shares of PNP                                |  |       |  | --        |   | --        |   | 33,863    |  
|Diminution in value of real estate assets                    |  |       |  | --        |   | --        |   | (9,530    | )
|Penalty on early debt repayment                              |  |       |  | --        |   | --        |   | (3,139    | )
|                                                            
|                                                             |  |       |  | 11,533    |   | 45,138    |   | 39,681    |  
|                                                            
|Earnings of PNP                                              | 
|Equity of earnings                                           |  |       |  | --        |   | --        |   | 12,018    |  
|Dividend income                                              |  |       |  | --        |   | --        |   | 1,935     |  
|                                                            
|INCOME FROM CONTINUING OPERATIONS                            | 
|BEFORE INCOME TAXES                                          |  |       |  | 11,533    |   | 45,138    |   | 48,160    |  
|                                                            
|Income taxes                                                 | 
|Current                                                      |  |       |  | 1,546     |   | 119       |   | 3,728     |  
|Future                                                       |  |       |  | 2,631     |   | 7,083     |   | 1,900     |  
|                                                            
|                                                             |  | 14    |  | 4,177     |   | 7,202     |   | 5,628     |  
|                                                            
|INCOME FROM CONTINUING OPERATIONS                            |  |       |  | 7,356     |   | 37,936    |   | 42,532    |  
|Loss from discontinued operations                            |  | 19    |  | --        |   | (575      | ) | 1,144     |  
|                                                            
|NET INCOME                                                   |  |       |  | $   7,356 |   | $ 37,361  |   | $ 43,676  |  
|                                                            
|Per basic and diluted common share                           |  | 10,11 | 
|Income per common share from continuing operations           | 
|Basic                                                        |  |       |  | $    0.38 |   | $    3.76 |   | $    4.34 |  
|Diluted                                                      |  |       |  | $    0.38 |   | $    2.27 |   | $    2.12 |  
|Income per common share                                      | 
|Basic                                                        |  |       |  | $    0.38 |   | $    3.70 |   | $    4.46 |  
|Diluted                                                      |  |       |  | $    0.38 |   | $    2.24 |   | $    2.17 |  
|Weighted average number of shares (in thousands)             | 
|Basic                                                        |  |       |  | 9,206     |   | 9,163     |   | 9,059     |  
|Diluted                                                      |  |       |  | 9,214     |   | 17,503    |   | 21,694    |  

The accompanying notes form an
integral part of these financial statements.

---

Page 40

# REVENUE PROPERTIES COMPANY
LIMITEDCONSOLIDATED STATEMENTS
OF DEFICITYears ended December 31

|                                     |  |          |   |          |   |          |  
|------------------------------------ |  | -------- | - | -------- | - | -------- | -
|                                    
|(in thousands of Canadian dollars)   |  | 2003     |   | 2002     |   | 2001     |  
|                                    
|Deficit at beginning of year         |  | $146,224 |   | $174,981 |   | $112,071 |  
|Net income                           |  | (7,356   | ) | (37,361  | ) | (43,676  | )
|Dividends                            |  | 5,151    |   | 5,132    |   | 7,564    |  
|Special dividend                     |  | --       |   | --       |   | 95,769   |  
|Settlement of convertible debentures |  | 3,836    |   | 3,472    |   | 3,253    |  
|                                    
|Deficit at end of year               |  | $147,855 |   | $146,224 |   | $174,981 |  
|                                    

The accompanying notes form an
integral part of these financial statements.

# REVENUE PROPERTIES COMPANY
LIMITED
CONSOLIDATED STATEMENTS
OF FUNDS FROM CONTINUING OPERATIONS
Years ended December 31

|                                                            |  |           |   |          |   |          |  
|----------------------------------------------------------- |  | --------- | - | -------- | - | -------- | -
|                                                           
|(in thousands of Canadian dollars)                          |  | 2003      |   | 2002     |   | 2001     |  
|                                                           
|Income from continuing operations                           |  | $   7,356 |   | $ 37,936 |   | $ 42,532 |  
|Add (deduct) non-cash items:                                | 
|Depreciation and amortization                               |  | 4,941     |   | 5,657    |   | 6,301    |  
|Future income taxes                                         |  | 2,631     |   | 7,083    |   | 1,900    |  
|Gain on sale of portfolio investments                       |  | (392      | ) | (133     | ) | --       |  
|Loss on redemption and repurchase of convertible debentures |  | 338       |   | 992      |   | --       |  
|Gain on sale of rental properties                           |  | --        |   | (30,199  | ) | --       |  
|Reduction of foreign currency translation account           |  | --        |   | (10,520  | ) | (18,487  | )
|Gain on sale of shares of PNP                               |  | --        |   | --       |   | (33,863  | )
|Diminution in value of real estate assets                   |  | --        |   | --       |   | 9,530    |  
|Penalty on early debt repayment                             |  | --        |   | --       |   | 3,139    |  
|Undistributed profit of equity accounted PNP                |  | --        |   | --       |   | (2,083   | )
|Other                                                       |  | (561      | ) | 62       |   | 1,064    |  
|                                                           
|FUNDS FROM CONTINUING OPERATIONS                            |  | $ 14,313  |   | $ 10,878 |   | $ 10,033 |  
|                                                           

The accompanying notes form an
integral part of these financial statements.

---

Page 41

# REVENUE PROPERTIES
COMPANY LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWYears ended December 31

|                                                        |  |             |   |             |   |            |  
|------------------------------------------------------- |  | ----------- | - | ----------- | - | ---------- | -
|                                                       
|(in thousands of Canadian dollars)                      |  | 2003        |   | 2002        |   | 2001       |  
|                                                       
|OPERATING ACTIVITIES                                    | 
|Funds from continuing operations                        |  | $   14,313  |   | $   10,878  |   | $   10,033 |  
|Re-leasing costs                                        |  | (562        | ) | (1,484      | ) | (1,733     | )
|Amortization of discount of convertible debentures      |  | 244         |   | 684         |   | 1,596      |  
|Net change in other assets and liabilities              |  | (406        | ) | 1,490       |   | (7,543     | )
|                                                       
|                                                        |  | 13,589      |   | 11,568      |   | 2,353      |  
|Cash flow from discontinued operations                  |  | --          |   | (359        | ) | 2,043      |  
|                                                       
|                                                        |  | 13,589      |   | 11,209      |   | 4,396      |  
|                                                       
|INVESTING ACTIVITIES                                    | 
|Acquisition and development of rental properties        |  | (1,820      | ) | (90,776     | ) | (15,018    | )
|Net proceeds from sales of rental properties            |  | --          |   | 101,520     |   | 355        |  
|Net proceeds from (investment in) properties            | 
|held for development and sale                           |  | (119        | ) | 4,449       |   | (2,135     | )
|Portfolio investments - acquisitions                    |  | (34,140     | ) | (44,378     | ) | --         |  
|- settlement and sales                                  |  | 32,033      |   | 15,393      |   | --         |  
|Loan to Morguard Corporation                            |  | (20,000     | ) | (20,000     | ) | --         |  
|Repayment of loan to Morguard Corporation               |  | --          |   | 20,000      |   | --         |  
|Loans receivable                                        |  | (8,497      | ) | --          |   | --         |  
|Change in restricted cash                               |  | 343         |   | (334        | ) | 5,750      |  
|Net proceeds from sale of PNP shares                    |  | --          |   | --          |   | 381,858    |  
|                                                       
|                                                        |  | (32,200     | ) | (14,126     | ) | 370,810    |  
|Net proceeds from discontinued operations               |  | --          |   | 14,882      |   | (1,478     | )
|                                                       
|                                                        |  | (32,200     | ) | 756         |   | 369,332    |  
|                                                       
|FINANCING ACTIVITIES                                    | 
|Repayment of mortgage principal and bank indebtedness   |  | (2,020      | ) | (72,742     | ) | (169,520   | )
|Redemption and repurchase of convertible debentures     |  | (23,117     | ) | (71,064     | ) | (602       | )
|Proceeds of mortgage financing and bank indebtedness    |  | 49,837      |   | 20,000      |   | 44,990     |  
|Dividends paid                                          |  | (5,151      | ) | (5,132      | ) | (103,333   | )
|Repurchase of capital stock                             |  | (389        | ) | --          |   | (6,405     | )
|Issue of capital stock                                  |  | 223         |   | 185         |   | 3,019      |  
|Settlement of convertible debentures                    |  | (3,836      | ) | (3,472      | ) | (3,253     | )
|                                                       
|                                                        |  | 15,547      |   | (132,225    | ) | (235,104   | )
|                                                       
|TOTAL CASH PROVIDED (USED)                              |  | (3,064      | ) | (120,260    | ) | --         |  
|Effect of foreign currency translation on cash balances |  | 148         |   | (484        | ) | (15,566    | )
|Cash and cash equivalents at beginning of year          |  | 5,700       |   | 126,444     |   | (250,670   | )
|                                                       
|Cash and cash equivalents at end of year                |  | $     2,784 |   | $     5,700 |   | $ 123,058  |  
|                                                       
|Supplemental cash flow information:                     | 
|Cash interest paid                                      |  | $   11,950  |   | $   13,027  |   | $   23,463 |  
|Cash income taxes paid                                  |  | 2,192       |   | (1,980      | ) | 9,794      |  
|Cash interest received                                  |  | 2,922       |   | 1,258       |   | 2,658      |  

The Companys share of proceeds
from real estate sales was $10,010 in 2002, $1,865 in 2001, satisfied by mortgages
receivable $3,148 in 2002, $1,585 in 2001, and cash for the balance.

The Company purchased 50% of Prairie
Mall not already owned for $21,820, in 2001, satisfied by assumption of the mortgage of
$12,214 and cash for the balance.

The accompanying notes form an
integral part of these financial statements

---

Page 42

# REVENUE PROPERTIES
COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2003

(Tabular amounts are in thousands
of Canadian dollars, except per share amounts)

Revenue Properties Company Limited
(the Company) is engaged primarily in the ownership and operation of
rental properties in Canada.

# 1.    CHANGE IN ACCOUNTING
POLICY

In 2003, the Company prospectively
adopted the Canadian Institute of Chartered Accountants (CICA) new
recommendation regarding the expensing of share options. The new standard requires the
fair value of share options granted on or after January 1, 2003 to be recognized over the
applicable share option vesting period as compensation expense in general and
administrative expenses in the consolidated statement of income and contributed surplus in
the consolidated balance sheet. On the exercise of stock options, consideration received
and the accumulated contributed surplus amount is credited to capital stock. The Company
did not issue share options during 2003.

# 2.    SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

# Basis of presentation

The Companys accounting
policies and its standards of financial disclosure are in accordance with the
recommendations of the CICA and the Canadian Institute of Public and Private Real Estate
Companies.

# Basis of consolidation

The consolidated financial statements
include the accounts of the Company, its subsidiaries and its proportionate share of the
assets, liabilities, revenues, expenses, and cash flows of incorporated and unincorporated
joint ventures. During 2002, the Company sold its investment in gaming that had been
classified as discontinued operations as described in Note 19.

All inter-company accounts and
transactions have been eliminated.

# Use of estimates

The preparation of financial
statements in accordance with Canadian generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and reported amounts of revenue and expenses during the
reporting period. In determining estimates of net recoverable amounts and net realizable
values for its real estate assets, the assumptions underlying estimated values are limited
by the availability of comparable data and the uncertainty of predictions concerning
future events. Should the underlying assumptions change, actual results could differ from
the estimated amounts.

# Asset valuation

(i)    Rental
properties

Rental properties are carried at the
lower of depreciated cost and net recoverable amount. Net recoverable amount represents
the estimated future cash flow expected to be received from the use and residual value of
the property. Cost includes interest, realty taxes, and other carrying charges, applicable
general and administrative expenses incurred in the pre-development and construction
periods and initial leasing costs. Properties held for sale are recorded at the lower of
cost and net realizable value, which is the estimated selling price less costs of
disposition. Major capital expenditures, such as building improvements and renovations,
which extend the useful life of a rental property are amortized over the estimated useful
life.

(ii)              Land
held for development and sale

Land is carried at the lower of cost
and net           realizable value. The cost of land includes pre-development expenses,
interest,           realty taxes and other directly related expenses. General and
administrative           expenses, including salaries, which can be clearly identified
with the           development of a property, are allocated to the cost of that property.
Allocated           costs are charged to saleable acreage on the basis of anticipated
revenues.

# Revenue recognition

(i)    Rental
properties

Revenues from rental properties
include rent from tenants under lease agreements, percentage participation rents, property
tax and operating cost recoveries, parking income and incidental income. Leases which
include contractual increases in basic rents are accounted for on a straight-line basis.
Percentage participation rent is recognized after the minimum sales level has been
achieved in accordance with each lease.

---

Page 43

(ii)              Real
estate sales

Income from the sale of land and
rental properties is           recognized when all material conditions of have been
fulfilled, at least 15% of           the purchase price has been received and the
ultimate collection of the proceeds           is reasonably assured.

# Recoverable repair costs

Major recoverable repair costs are
deferred and subsequently recovered from tenants over varying periods up to 10 years.

# Deferred expenses

Leasing costs are amortized on a
straight-line basis over the terms of the leases to which they relate.

# Depreciation and
amortization

Depreciation on buildings is provided
under the sinking fund method. Under this method, depreciation is charged to income in
amounts which increase annually consisting of fixed annual sums together with interest
compounded at the rate of 5% per annum so as to fully depreciate the buildings over their
estimated useful lives of 40 years.

# Share based compensation
plan

Effective January 1, 2002, the
Company adopted the new CICA accounting standard, Stock-Based Compensation and Other
Stock-Based Payments, Section 3870. The only share-based compensation or payment granted
by the Company is pursuant to its share option plan, which is described in note 12.

In 2003, the Company changed its
accounting policy for share based compensation. Beginning in 2003, the fair value of share
options granted to employees and directors is recognized as compensation expense over the
applicable vesting period. Any consideration paid by employees or directors on exercise of
share options is credited to capital stock along with the related accumulated contributed
surplus amount. The required pro forma disclosures for all share options issued between
January 1, 2002 and December 31, 2002 is included in note 12.

# Portfolio investments

The portfolio of marketable
securities is carried at cost plus accrued interest of $213,000. In the event of a decline
in the value of the portfolio, the investment will be written down to recognize the loss.
The market value of such securities was $29,944,000 at December 31, 2003.

# Foreign exchange

On December 31, 2002, the Company
completed the sale of substantively all of its net investment in the United States.
Accordingly, effective January 1, 2003, the remaining foreign operations were accounted
for as integrated operations. Foreign cash balances and amounts receivable or payable in
foreign currencies are translated into Canadian dollars at the rates of exchange
prevailing at the year-end. Revenue and expenses are translated at the rates of exchange
prevailing on the transaction date. Any resulting gains or losses are included in the
determination of net loss for the year.

During 2002 and 2001, there was a
reduction in the Companys net investment in the foreign operations. As a result,
$10,520,000 in 2002 (2001: $18,487,000) of the foreign currency translation account was
included in income.

|                                                        |  |         |  |         |  |         | 
|------------------------------------------------------- |  | ------- |  | ------- |  | ------- | 
|                                                       
|                                                        |  | 2003    |  | 2002    |  | 2001    | 
|                                                       
|Canadian dollar to United States dollar exchange rates: | 
|- December 31                                           |  | $0.7713 |  | $0.6339 |  | $0.6278 | 
|- Average during year                                   |  | $0.7139 |  | $0.6369 |  | $0.6457 | 
|United States dollar to Canadian dollar exchange rates: | 
|- December 31                                           |  | $1.2965 |  | $1.5776 |  | $1.5928 | 
|- Average during year                                   |  | $1.4008 |  | $1.5702 |  | $1.5486 | 

# Earnings per share

The Company uses the treasury stock
method for the calculation of the dilutive effect of stock options and other dilutive
securities. Earnings per share has been calculated using the weighted average number of
common shares outstanding during the year, divided into net income adjusted for the
provision for settlement of convertible debentures.

# Cash and cash equivalents

For the purposes of the consolidated
financial statements, the Company considers all short-term investments with maturity dates
of three months or less from the date of acquisition to be cash equivalents.

# Income taxes

Future income taxes are determined
based on the difference between the accounting basis and tax basis of assets and
liabilities, and are measured using the currently enacted, or substantively enacted, tax
rates and laws expected to apply when these differences reverse.

---

Page 44

# Financial instruments

The Company does not acquire, hold,
or issue derivative financial instruments for trading purposes.

---

Page 45

# 3.    RENTAL
PROPERTIES

|                          
|--------------------------
|                          
|                          
|Land                      
|Buildings and improvements
|                          
|                          
|Accumulated depreciation  
|                          
|                          
|                          

# 4.    MORTGAGES
AND LOANS RECEIVABLE

|                                         
|-----------------------------------------
|                                         
|                                         
|Mortgages and notes receivable           
|Loan receivable from Morguard Corporation
|Loans receivable                         
|Advances receivable, non interest bearing
|                                         
|                                         
|                                         

Mortgages, notes and advances
receivable bear interest at rates which vary from 0% to 8% (weighted average rate 5.2%)
and are to be repaid as follows:

|2004                |  | $30,586 |  |  | 
|------------------- |  | ------- |  |  | 
|2005 and subsequent |  | 1,021   |  |  | 
|                   
|                    |  | $31,607 |  |  | 
|                   

# 5.    OTHER ASSETS

|                                  
|----------------------------------
|                                  
|                                  
|Restricted cash                   
|Accounts receivable               
|Prepaid expenses and sundry assets
|                                  
|                                  
|                                  

Restricted cash is restricted by debt
or joint venture agreements and is not available to be used for the general purposes of
the Company.

# 6.    LONG-TERM
DEBT

|                                             
|---------------------------------------------
|                                             
|                                             
|Mortgages on rental properties               
|                                             
|Fixed interest rate debt                     
|Range of interest rates at December 31       
|Weighted average interest rate at December 31
|Principal payments are due as follows        
|2004                                         
|2005                                         
|2006                                         
|2007                                         
|2008                                         
|2009 and subsequent                          
|                                             
|                                             
|                                             

For the year ended December 31, 2003,
interest expense related to debt having an initial term of longer than one year was
$8,135,000.

A significant percentage of the
Companys rental properties and related rental revenues have been pledged as
collateral for the long-term debt.

Certain of the Companys debt agreements require
the Company to maintain minimum financial covenants.

---

Page 46

# 7.    CONVERTIBLE DEBENTURES

The Company issued three series of
convertible debentures of which only one series is outstanding at December 31, 2003. The
convertible debentures are summarized below. The conversion prices were adjusted effective
October 19, 2001 as a result of the payment by the Company of a special dividend of $1.50
per common share.

Issue amount  $85,000,000
($79,700,000 and $79,715,000 outstanding at December 31, 2003 and 2002 respectively)
bearing interest at 7% per annum, payable semi-annually and maturing December 31, 2006.
Interest payments are payable in cash. Principal due on maturity or redemption is payable,
at the Companys option, in either cash or common shares.

The debentures are unsecured and are
convertible into common shares at a price of $12.18 per common share at any time prior to
the earlier of December 31, 2006 and the last business day immediately preceding the date
specified for redemption.

The debentures will be redeemable at
par plus accrued interest but only if the weighted average daily closing price at which
the common shares of the Company (the Common Shares) have traded on the
Toronto Stock Exchange during the 20 consecutive trading days ending not more than five
days prior to the date on which notice of redemption is given exceeds: 125% of the
conversion price if given on or after January 1, 2001 and on or prior to December 31,
2001; 120% if given on or after January 1, 2002 and on or prior to December 31, 2002; 115%
if given on or after January 1, 2003 and on or prior to December 31, 2003; 110% if given
on or after January 1, 2004 and on or prior to December 31, 2004; 105% if given on or
after January 1, 2005 and on or prior to December 31, 2005; and 100% if given on or after
January 1, 2006.

The issue amount for the convertible
debenture has been allocated between a liability component and an equity component
(paid-in capital). The liability component has been calculated, effective the date of
issue, by discounting the mandatory cash payments of principal and interest under the
terms of the debenture. The discount rate used reflects the interest rate that would have
been exigible had the Company issued a pure debt instrument of a similar term. Recorded
interest expense related to the convertible debentures is determined by applying the
discount rate to the outstanding liability component, while the differential between the
recorded interest expense and the interest payment is recorded as settlement of
convertible debentures in the consolidated statement of deficit. The principal due on
maturity of the issue referred to above has not been included in the calculation of the
respective liability since the Company has the option to settle the principal amount in
common shares.

The equity component is the
arithmetic difference between the amount issued and the calculated liability component
referred to above, adjusted for issue costs.

Issue amount  US$35,000,000
(nil and US$17,158,000 outstanding at December 31, 2003 and 2002 respectively) issued in
US funds, bearing interest at 6% per annum, payable semi-annually.

In July 2003, the Company
redeemed and cancelled all of the remaining 6% convertible debentures, which were to
mature March 1, 2004. The debentures were redeemed at US$1,021.21 per US$1,000 principal
amount, being an amount equal to the principal amount of the debentures plus accrued
interest . The redemption resulted in a non-cash loss of $338,000.

The components of the convertible
debentures are classified as follows:

| 
|-
| 
| 
| 
|$
| 
| 
|$
| 

# 8.    BANK INDEBTEDNESS

At December 31, 2003, the
Companys unused line of credit for general corporate purposes was $8,200,000 (2002:
$2,200,000).

The interest rate on any borrowings
under the line of credit is 0.50% (2002: 0.35%) above the prime interest rate charged by a
Canadian chartered bank. The line of credit is secured by a demand debenture and a first
mortgage on one of the Companys properties.

---

Page 47

# 9.    FAIR VALUE OF
FINANCIAL INSTRUMENTS

The carrying value of cash and cash
equivalents, mortgages and advances receivable, accounts receivable, bank and other
indebtedness and accounts payable and accrued liabilities approximates fair value due to
the short-term maturity of these instruments. Financial instruments with a carrying value
different from their fair value include the following:

---

Page 48

|                      
|----------------------
|                      
|                      
|                      
|                      
|Portfolio investments 
|Long-term debt        
|Convertible debentures
|                      

The fair value of long-term debt is
based upon discounted future cash flows using discount rates that reflect current market
conditions for instruments having similar terms and conditions. The fair value of
portfolio investments and convertible debentures is estimated based on published bid
prices.

# 10.    SHAREHOLDERS
EQUITY

Shareholders equity consists of
the following:

|                                                     
|-----------------------------------------------------
|                                                     
|                                                     
|Capital stock  common shares                        
|Paid-in capital  convertible debentures (see Note 7)
|Contributed surplus                                  
|Foreign currency translation adjustment              
|Deficit                                              
|                                                     
|                                                     
|                                                     

# Capital stock 
authorized

---

|First preference shares 
Unlimited number of shares, issuable in series |  |  |  |  | 
|------------------------------------------------------------------------ |  |  |  |  | 
|Second preference shares  Unlimited
number of shares, issuable series   |  |  |  |  | 
|Third preference shares  Unlimited number of shares,
issuable in series |  |  |  |  | 
|Common shares  Voting, unlimited number of shares                       |  |  |  |  | 



# Capital stock 
issued and outstanding

---

# Share consolidation

On June 20, 2003 the issued and
outstanding common shares of the Company were consolidated on the basis of seven
pre-consolidation shares for one post-consolidation share. Income per share and common
shares outstanding for comparative purposes have been restated. Common shares outstanding
as at January 1, 2001, December 31, 2001 and December 31, 2002 were 63,951,828, 63,868,548
and 64,157,512 respectively before the share consolidation.

Changes in the Companys
issued capital stock during the two-year period ended December 31, 2003 were as follows:

|                                   
|-----------------------------------
|                                   
|                                   
|                                   
|                                   
|January 1, 2001                    
|Issued on conversion of debentures 
|Issued on exercise of stock options
|Purchased and cancelled            
|                                   
|December 31, 2001                  
|Issued on conversion of debentures 
|Issued on exercise of stock options
|                                   
|December 31, 2002                  
|Issued on exercise of stock options
|Issued on conversion of debentures 
|Subscription                       
|Purchased and cancelled            
|                                   
|December 31, 2003                  
|                                   

---

Page 49

The following table represents the
maximum number of common shares that would be outstanding if all of the outstanding share
options and subordinated convertible debentures as at December 31, 2003 and 2002 were
exercised or converted:

|                                                        
|--------------------------------------------------------
|                                                        
|                                                        
|(in thousands)                                          
|                                                        
|Weighted average number of common shares issued         
|and outstanding, December 31                            
|Issued on conversion of debentures                      
|Issued on exercise of share options                     
|                                                        
|Total                                                   
|                                                        
|Contributed surplus                                     
|                                                        
|                                                        
|                                                        
|At January 1                                            
|Premium paid on common shares purchased for cancellation
|Redemption of debentures                                
|                                                        
|At December 31                                          
|                                                        

# 11.    INCOME PER SHARE

The following tables set forth the
computation of per share amounts using the treasury stock method:

|     
|-----
|     
|     
|(i)  
|     
|     
|     
|     
|     
|     
|     
|     
|(ii) 
|     
|     
|     
|     
|     
|     
|     
|     
|(iii)
|     
|     
|     
|     
|     
|     

In calculating 2002 and 2001 diluted
income per share, 72,000 and 3,600 common share options respectively were excluded from
the calculations, as the weighted average exercise price of $13.30 and $16.45 per share
respectively was in excess of the average trading price. In 2003, all share options were
included in the calculation of diluted income per share, as the exercise prices were below
the average trading price.

# 12.    SHARE BASED
COMPENSATION PLAN

The Company has a stock option plan
pursuant to which no more than 929,000 common shares may be issued at any time. The
exercise price of each option equals the market price of the Companys stock on the
date of the grant and an options maximum term is five years. Options vest over a
three-year period commencing with the date of grant. The exercise prices range from $3.15
to $10.99 after restatement for the stock consolidation described in Note 10.

There have been no share options
granted in 2003. For share options issued in 2002, if the Company had adopted the fair
value based method of accounting for its share option plan, the following changes would
have occurred:

|                                          
|------------------------------------------
|                                          
|                                          
|Increase to pro forma compensation expense
|Decrease to income per share              
|Basic                                     
|Diluted                                   

---

Page 50

The grant-date fair value of options
granted during the year ended December 31, 2002 was estimated using the Black-Scholes
option pricing model incorporating the following assumptions: expected dividends of 8
cents per share; expected volatility of 48%; risk-free interest rate of 5.3%; and expected
option life of 5 years.

A summary of the status of the
Companys share option plan as of December 31, 2003 and the changes during the period
then ended is presented below. The amounts in the table below have been restated to
account for the stock consolidation described in Note 10.

|                                        
|----------------------------------------
|                                        
|                                        
|(in thousands, except per share amounts)
|                                        
|Outstanding at beginning
      of year  
|Granted                                 
|Exercised                               
|Forfeited                               
|                                        
|Outstanding at end of year              
|                                        
|Options exercisable at year
      end   

For options  outstanding as at December 31, 2003, the range of exercise  prices and the weighted  average  exercise
price are as follows:

|                                                      
|------------------------------------------------------
|(in thousands, except per share amounts)Exercise price
|                                                      
|$3.15 - $3.71                                         
|$10.99                                                
|                                                      

# 13.    COMMITMENTS AND
CONTINGENCIES

The Company is a lessee under two
operating leases that expire at various dates ending in 2060. Rental expenses from
continuing operations are as follows:

|                                                               
|---------------------------------------------------------------
|                                                               
|                                                               
|Gross rental expenses                                          
|Approximate annual rental expenses for each of the next 5 years
|Aggregate rental expense over remaining term of lease          
|                                                               

The Company has provided an
unconditional guarantee to a mortgagee subject to a limit of $1,650,000 (the
Guarantee). The Companys obligation to make payment under the Guarantee
would arise upon an event of default in accordance with the terms of the underlying
mortgage. The Guarantee will expire upon the earlier of: (i) the payment on maturity of
the mortgage term in February 2006, and (ii) upon obtaining a formal discharge of the
mortgage.

# 14.    INCOME TAXES

Income tax expense attributable to
income from continuing operations differs from the amounts computed by applying the
Canadian statutory rate to pre-tax income from continuing operations as a result of the
following:

|                                                              
|--------------------------------------------------------------
|                                                              
|                                                              
|Income from continuing operations before income taxes         
|Combined Canadian federal and provincial statutory rate of tax
|Computed tax based on statutory rate                          
|Impact of lower effective tax rates on operations in the US   
|Large corporation tax                                         
|Change in the valuation allowance for future income tax assets
|Non taxable portion of capital gains                          
|Impact of changes in substantively enacted tax rates          
|Other                                                         
|                                                              
|                                                              
|                                                              

---

Page 51

After applying the expected tax rates
to the temporary differences, the future income tax assets and liabilities at December 31,
2003 and 2002 are presented below:

|                                         
|-----------------------------------------
|                                         
|                                         
|Future income tax assets:                
|Non capital loss carryforwards - Canada  
|- US                                     
|Interest deferred for US tax purposes    
|Corporate minimum tax carryforwards      
|Other                                    
|                                         
|Total gross future income tax assets     
|Less valuation allowances                
|                                         
|Net future income tax assets             
|                                         
|Future income tax liabilities:           
|Rental properties                        
|Other                                    
|                                         
|Total gross future income tax liabilities
|                                         
|Net future income tax asset (liability)  
|                                         

The 2003 gross future income tax
assets do not include $2,903,000 of US non-capital loss carryforwards since it is unlikely
the losses will be utilized prior to their expiry due to annual deduction restrictions as
a result of a change in control during 2002.

The Company has tax losses available in the US which expire as follows:

|2005 |  | $4,938  |    |  |  |  | 
|---- |  | ------- | -- |  |  |  | 
|2006 |  | 8,866   |    |  |  |  | 
|2022 |  | 2,721   |    |  |  |  | 
|    
|     |  | $16,525 | US |  |  |  | 
|    

# 15.    JOINT VENTURE
OPERATIONS

The following amounts included in the
consolidated financial statements are the Companys proportionate interest in joint
ventures excluding gaming operations.

|                           |  |            |   |           |   |            |  
|-------------------------- |  | ---------- | - | --------- | - | ---------- | -
|                          
|                           |  | 2003       |   | 2002      |   | 2001       |  
|                          
|Assets                     |  | $ 11,808   |   | $ 12,783  |   | $ 22,276   |  
|                          
|Liabilities                |  | 2,361      |   | 2,784     |   | 3,999      |  
|Equity and advances        |  | 9,447      |   | 9,999     |   | 18,277     |  
|                          
|                           |  | $ 11,808   |   | $ 12,783  |   | $ 22,276   |  
|                          
|Revenues                   |  | $   2,487  |   | $ 11,365  |   | $   5,938  |  
|Expenses                   |  | 2,018      |   | 10,119    |   | 4,963      |  
|                          
|Income before income taxes |  | $      469 |   | $   1,246 |   | $      975 |  
|                          
|                          
|                           |  | 2003       |   | 2002      |   | 2001       |  
|                          
|Cash provided (used):      | 
|Operating activities       |  | $   1,930  |   | $   4,561 |   | $   4,434  |  
|Investing activities       |  | (119       | ) | (2,418    | ) | (3,343     | )
|Financing activities       |  | (16        | ) | (950      | ) | (2,740     | )
|                          
|                           |  | $   1,795  |   | $   1,193 |   | $(1,649    | )
|                          

The Company includes in its balance
sheet the proportionate share of the assets and liabilities of joint ventures. The Company
is contingently liable for the other participants portion of the liabilities of
these joint ventures. The contingent liability is approximately $1,991,000 at December 31,
2003. Against this contingent liability, the Company has recourse to all of the assets of
the joint ventures to the extent they are required to pay liabilities in excess of their
proportionate share.

---

Page 52

# 16.    RELATED PARTY
TRANSACTIONS

# Loan to Morguard
Corporation

During the year ended December 31,
2003, the Company advanced $20,000,000 pursuant to a revolving loan agreement on an
unsecured basis to Morguard Corporation (Morguard)(the Morguard Loan
Agreement) which directly or indirectly owns 80% of the Companys common shares
as at December 31, 2003. The demand loan was interest bearing at the 30-day bankers
acceptance rate plus 175 basis points that Morguard pays to a Canadian chartered bank.
Interest earned from the loan was $781,000 during the year ended December 31, 2003.

In July 2002, the Company advanced
$20,000,000 under the Morguard Loan Agreement. The advance was repaid at the end of
December 2002. Interest earned from the loan was $399,000 during the year ended December
31, 2002.

# Agreement with Morguard
Investments Limited

Effective January 1, 2003, the
Company entered into a property management and advisory services agreement with Morguard
Investments Limited (MIL), a subsidiary of Morguard. The Company incurred fees
of $970,000 for property management and corporate services for the year ended December 31,
2003 under a contractual agreement at market related prices. The Company also reimbursed
MIL $2,213,000 for property-related payroll expenses. The Company had $54,000 owing to MIL
included in Accounts payable and accrued liabilities as at December 31, 2003.

# Acquisition fee paid to
MIL

In December 2002, the Company paid
$413,000 to MIL in connection with the $55,000,000 acquisition of two office properties,
located at 4720 and 4880 Tahoe Boulevard, Mississauga, Ontario. The fee, based on market
related prices, was capitalized to the cost of the properties.

# Tenancy agreement

A company controlled by a director
paid $113,000 (2002: $107,000) to lease a residential suite owned by the Company under a
tenancy agreement at market related rent.

# Agreement with Amcan
Financial Consultants

In 1998, the Company entered into a
three year agreement with Mark M. Tanz, a director and shareholder at the time, carrying
on business as Amcan Financial Consultants (Amcan), whereby the Company
retained Amcan to provide advice and assistance in connection with mergers, acquisitions,
gaming investment and development opportunities, financings and refinancings
(Transactions). The agreement provided for payment of such reasonable fees
determined on an arms length basis for similar services. During 2000, the agreement was
extended for a fourth year. Annual fees payable were $250,000 and US$300,000. If the
installments paid throughout the term of the agreement exceeded the amount of fees charged
for services during the period, the excess was to be repaid. At the conclusion of the
agreement, the fees charged for services rendered exceeded the installments paid to Amcan.

A new agreement for 2002 was signed
for a term of two years with annual remuneration fixed at $500,000 per year. In December
2002, the Company terminated the agreement with Amcan and paid a discounted amount to
satisfy the 2003 entitlement. The total paid to Amcan during 2002 was $993,000.

# 17.    FINANCIAL
INSTRUMENTS AND RISK MANAGEMENT

The Companys operations are
subject to a number of risks and uncertainties, including, but not limited to, risks
associated with competition, the real estate markets and general economic conditions, the
availability and cost of financing and fluctuations in interest rates.

The Company is exposed to the
following risks related to financial assets and liabilities:

# Interest rate risk

The Company will be subject to the
risks associated with debt financing, including the risk that mortgages and credit
facilities will not be able to be re-financed or that terms of such re-financing will not
be as favourable as the terms of existing indebtedness. As at December 31, 2003, interest
rate risk has been minimized, as all long-term debt is financed at fixed interest rates
with maturities scheduled over a number of years.

# Credit risk

The Company will be subject to the
risks associated with a change in general and local economic conditions and by a change in
the credit and financial stability of tenants. Minimizing the amount of exposure the
Company has on any one tenant and the Companys active leasing program are mitigating
factors to this risk.

# 18.    SEGMENTED INFORMATION

The Companys principal
operations are the ownership and operation of real estate. Prior to 2002, the Company
owned retail and residential properties. By the end of 2002, the mix had become retail and
office properties. On December 31, 2002, the Company acquired two office buildings.

---

Page 53

|                   
|-------------------
|                   
|                   
|BALANCE SHEET      
|                   
|Rental properties  
|                   
|STATEMENT OF INCOME
|                   
|                   
|                   
|Revenues           
|Operating expenses 
|                   
|Gross profit       
|                   

# 19.    DISCONTINUED
OPERATIONS

In April 2002, PT Gaming LLC
(PTs), in which the Company had a 50% interest, concluded the sale of
its gaming assets, excluding the casino. The Companys share of gross proceeds was
$14,100,000 satisfied by a promissory note of $1,200,000 and cash for the balance.

At the end of December 2002, the
Company sold its interest in the casino to its partners for proceeds of $3,100,000
satisfied by the purchaser assuming debt in the amount of $1,950,000 and cash for the
balance. The sales completed the Companys divestiture from gaming.

The summarized statement of
operations for gaming follows:

|                                                   |  |      |  |       |   |        |  
|-------------------------------------------------- |  | ---- |  | ----- | - | ------ | -
|                                                  
|                                                   |  | 2003 |  | 2002  |   | 2001   |  
|                                                  
|Operating income                                   |  | --   |  | $ 124 |   | $1,538 |  
|Loss on disposal of discontinued gaming operations |  | --   |  | (699  | ) | (394   | )
|                                                  
|Income (loss) from discontinued gaming operations  |  | --   |  | $(575 | ) | $1,144 |  
|                                                  

# 20.    COMPARATIVE FIGURES

Certain prior years figures
have been reclassified to conform to the current years presentation.

# 21.    INVESTMENT IN SHARES
OF PNP

In 2001, the Company accounted for
its investment in Pan Pacific Retail Properties, Inc. (PNP) when it was able
to exercise significant influence in accordance with the equity method. Under the equity
method, the original cost of the investment is adjusted for the Companys share of
post-acquisition earnings, losses and capital transactions. When the Company was no longer
able to exercise significant influence, the cost method of accounting was used whereby
dividends received are included in the determination of income.

On November 12, 2000 PNP completed
the acquisition of Western Properties Trust (Western). The acquisition was
effected by PNP issuing shares to Westerns existing unitholders. The issuance of
these shares reduced the Companys percentage ownership in PNP. As a result, the
Company ceased consolidating the assets, liabilities and results of operations of PNP and
adopted the equity method of accounting for its investment in PNP as of November 13, 2000.

During 2001, the Company sold PNP
shares and as a result adopted the cost method of accounting for its investment in PNP as
of June 1, 2001. The Company sold its remaining shares of PNP in October 2001.

# 22.    UNITED STATES
ACCOUNTING PRINCIPLES

The Company follows Canadian
accounting principles which are different in some respects from those applicable in the
United States and from practices prescribed by the United States Securities and Exchange
Commission. The material differences between the Canadian generally accepted accounting
principles (Canadian GAAP) utilized in the preparation of these financial
statements and the applicable United States generally accepted accounting principles
(US GAAP) are the following:

(i)    
          The Company follows the sinking fund method of depreciation on its rental
          properties and includes initial leasing costs as part of the costs of the rental
          properties. This method will write off the cost of the property over 40 years in
          annual amounts increasing at the rate of 5% compounded annually. Under US GAAP,
          the Company would have adopted the straight-line method of depreciation and
          would have amortized the initial leasing costs over the term of the initial
          lease.

(ii)    
          The Company follows the policy of capitalizing direct carrying costs such as
          interest, realty taxes and other related costs to rental properties under
          development. Rental revenues and earnings are recorded in income when a rental
          occupancy of 70% has been achieved or when a pre-determined time limit has
          expired, whichever comes sooner. Under US GAAP when a real estate project is
          substantially completed and held available for occupancy, rental revenues,
          expenses, and carrying costs, such as interest and realty taxes, are no longer
          capitalized. Also, depreciation of the rental property is commenced.

---

Page 54

(iii)    
          Under US GAAP total rental revenues over the term of a lease are recognized on a
          straight-line basis. Under Canadian GAAP, for periods prior to January 1, 2000,
          the Company recognized rental revenues under certain circumstances as they were
          due under the terms of the leases.

(iv)    
          The Company follows the accounting recommendations for accounting for financial
          instruments issued by the Chartered Institute of Chartered Accountants, which
          affects the calculation of interest expense on the three series of convertible
          debentures.

At maturity, the Company is required
to repay the principal due on the 6% debentures in cash and, prior to their redemption in
January 2002, the Company was required to repay the principal due on the 7.5% debentures
in cash. Canadian GAAP requires the Company to record a non-cash interest expense, based
on the interest rate that the debentures would have borne, had the debentures not had a
conversion feature. Under US GAAP the Company would have recorded these debentures as debt
and would not have recorded this non-cash interest expense. During 2002, the Company
repurchased US$17,441,000 principal amount of the 6% debentures and redeemed all of the
7.5% debentures. In 2003, the Company redeemed and cancelled all of the remaining 6%
convertible debentures. As a result of the aforementioned differences between Canadian and
US GAAP, the recorded net loss on repurchase and redemption would be different under US
GAAP. The differences would result in the US GAAP balance sheet showing an amount of
$79,700,000 for Convertible Debentures and a decrease in Shareholders Equity of
$64,041,000.

The principal due on the 7%
convertible debentures can be paid by the Company in shares and therefore, Canadian GAAP
requires the Company to record a reduction of interest expense. Under US GAAP these
debentures would have been recorded as debt and no reduction of interest expense would
have been recorded.

None of the debentures had beneficial
conversion terms at the date of issuance.

(v)    
          Under Canadian GAAP, the impact of a change in income tax rates is reflected
          when the legislation affecting the tax rate is substantially enacted whereas the
          impact under US GAAP is reflected when legislation is enacted.

(vi)    
          In 2001, under Canadian GAAP, the Company included a partial reduction of the
          foreign currency translation account of $18,487,000 in income. Under US GAAP,
          the foreign currency translation account would not have been reduced and
          included in income until sale or substantial liquidation of the investment. A
          substantial liquidation of the investment occurred in 2002.

(vii)    
          Under Canadian GAAP, the Company designated the US dollar 6% convertible
          debentures as a hedge of its foreign currency exposure on its net investment in
          the United States, and recorded related foreign currency translation gains or
          losses in the foreign currency translation adjustment in shareholders
          equity. Under US GAAP, effective January 1, 2001, the US dollar convertible
          debentures would not have been treated as a hedge, and the Company would have
          recorded any related foreign exchange gains or losses in income.

(viii)    
          Under Canadian GAAP, the accounts of all incorporated and unincorporated joint
          ventures and partnerships are proportionately consolidated according to the
          Companys ownership interest. Under US GAAP, the equity method of
          accounting is applied. In circumstances where a proportionately consolidated
          joint ventures significant financial and operating policies are, by
          contractual arrangement, jointly controlled by all parties having an equity
          interest in the entity, United States regulations do not require, for the
          purposes of this reconciliation, adjustment to equity account for the joint
          ventures. The presentation of the Companys joint ventures does not require
          adjustments to the equity method. Refer also to Note 15 to the financial
          statements.

(ix)    
          For US GAAP purposes, the Company has designated its portfolio investments as
          available-for-sale. Under US GAAP, the portfolio investments have
          been recorded at fair value with an unrealized gain of $2,464,000 (2002:
          $1,330,000) recorded in a separate component of shareholders equity.

(x)        RESERVED

(xi)Effective January 1, 2002, the Financial Accounting Standards Board changed
          the accounting standard relating to the accounting for gains and losses on the
          extinguishment of debt. Under the prior standard, gains and losses on the
          extinguishment of debt were classified as extraordinary items, net of related
          income tax, in the consolidated statements of income. The new standard requires
          that gains and losses from the extinguishment of debt be classified as
          extraordinary items only if they meet certain criteria. The method of accounting
          for gains and losses on the extinguishment of debt under US GAAP and Canadian
          GAAP is now substantially the same. For US GAAP purposes, the Company has
          adopted this new accounting standard retroactively, resulting in the removal of
          the 2001 Extraordinary loss on the early repayment of debt, and the
          2001 subtotals Net income (loss) based on US GAAP before extraordinary
          item, Net income (loss) per share, US GAAP before extraordinary item
           basic and Net income (loss) per share, US GAAP before
          extraordinary item  fully diluted.

---

Page 55

The differences would have affected
net income and earnings per share as follows:

|                                                                   |  |         |   |          |     |          |  
|------------------------------------------------------------------ |  | ------- | - | -------- | --- | -------- | -
|                                                                  
|                                                                   |  | 2003    |   | 2002     |     | 2001     |  
|                                                                  
|Net income based on Canadian GAAP                                  |  | $ 7,356 |   | $ 37,361 |     | $ 43,676 |  
|Method of depreciation (i)                                         | 
|Depreciation expense                                               |  | (1,113  | ) | (543     | )   | (726     | )
|Rental properties  cost of sales                                  |  | --      |   | 3,857    |     | 327      |  
|Equity in earnings of PNP (Note 21)                                |  | --      |   | --       |     | (2,197   | )
|6% and 7.5% convertible debenture interest expense adjustment (iv) |  | 244     |   | 684      |     | 1,596    |  
|7% convertible debenture interest expense adjustment (iv)          |  | (3,837  | ) | (3,472   | )   | (3,253   | )
|Adjustment to loss on redemption and repurchase of convertible     | 
|debentures (iv)                                                    |  | 294     |   | 2,362    |     | --       |  
|Adjustment for foreign currency translation account (vi)           |  | --      |   | 21,212   |     | (18,487  | )
|Adjustment to foreign exchange loss (vii)                          |  | --      |   | 156      |     | (3,168   | )
|Adjustment to gain on sale of shares of PNP                        |  | --      |   | --       | (A) | 41,179   |  
|Adjustment to income tax expense for impact of changes             | 
|in substantively enacted rates (v)                                 |  | --      |   | --       |     | 1,853    |  
|Adjustment to income tax expense for impact of                     | 
|all other US GAAP differences                                      |  | 402     |   | (5,397   | )   | 1,267    |  
|                                                                  
|Net income based on US GAAP                                        |  | $ 3,346 |   | $ 56,220 |     | $ 62,067 |  
|                                                                  

(A)    
          The increase in the gain on sale of shares of PNP is primarily due to the
          increase in depreciation expense on the PNP properties under US GAAP and a
          reduction to the carrying value of the Companys investment in PNP.

Effective January 1, 2002, under US
GAAP, the Company adopted SFAS No. 144 (xi), and accordingly rental properties sold during
2002 would be treated as discontinued operations. Revenues and expenses of the sold
properties and the gain on sale, net of income taxes would be included in discontinued
operations under US GAAP, while under Canadian GAAP these amounts would be included in
income from continuing operations. Under US GAAP, income from continuing operations and
income from discontinued operations would be presented as follows:

|                                                              |  |        |  |         |  |         | 
|------------------------------------------------------------- |  | ------ |  | ------- |  | ------- | 
|                                                             
|                                                              |  | 2003   |  | 2002    |  | 2001    | 
|                                                             
|Net income (loss) from continuing operations based on US GAAP |  | $3,346 |  | $29,687 |  | $56,838 | 
|Income from discontinued operations based on US GAAP          |  | --     |  | 26,533  |  | 5,229   | 
|                                                             
|Net income (loss) based on US GAAP                            |  | $3,346 |  | $56,220 |  | $62,067 | 
|                                                             
|Per share amounts based on US GAAP would be as follows:       | 
|Income (loss) from continuing operations per share            | 
|- basic                                                       |  | $0.36  |  | $3.24   |  | $6.27   | 
|- diluted                                                     |  | $0.36  |  | $1.97   |  | $2.92   | 
|Net income (loss) per share                                   | 
|- basic                                                       |  | $0.36  |  | $6.14   |  | $6.85   | 
|- diluted                                                     |  | $0.36  |  | $3.49   |  | $3.16   | 
|Weighted average number of shares (in thousands)              | 
|- basic                                                       |  | 9,206  |  | 9,163   |  | 9,059   | 
|- diluted                                                     |  | 9,214  |  | 17,503  |  | 21,694  | 

The Companys comprehensive
income as determined under SFAS No.130 would differ from net income as shown above:

|                                                  |  |        |  |          |   |         | 
|------------------------------------------------- |  | ------ |  | -------- | - | ------- | 
|                                                 
|                                                  |  | 2003   |  | 2002     |   | 2001    | 
|                                                 
|Net income based on US GAAP                       |  | $3,346 |  | $ 56,220 |   | $62,067 | 
|Other comprehensive income:                       | 
|Change in foreign currency translation adjustment |  | --     |  | (31,888  | ) | 5,989   | 
|Unrealized holding gain                           |  | 2,677  |  | 1,330    |   | --      | 
|                                                 
|Comprehensive income based US GAAP                |  | $6,023 |  | $ 25,662 |   | $68,056 | 
|                                                 

---

Page 56

The cumulative effect of the
application of the above noted United States accounting principles on deficit would be as
follows:

|                                                             |  |             |   |             |   |            |  
|------------------------------------------------------------ |  | ----------- | - | ----------- | - | ---------- | -
|                                                            
|                                                             |  | 2003        |   | 2002        |   | 2001       |  
|                                                            
|Deficit at beginning of year as reported under Canadian GAAP |  | $(146,224   | ) | $(174,981   | ) | $(112,071  | )
|Effect of changes                                            | 
|Depreciation method (i)                                      |  | (10,339     | ) | (13,653     | ) | (83,800    | )
|Classification of rental properties under development (ii)   |  | --          |   | --          |   | 1,088      |  
|Equity in earnings of PNP                                    |  | --          |   | --          |   | (1,177     | )
|Rental revenue adjustment (iii)                              |  | --          |   | --          |   | 10,533     |  
|Debenture equity adjustment (iv)                             |  | 15,209      |   | 12,163      |   | 10,567     |  
|Effect of income tax adjustment (v)                          |  | 2,951       |   | 8,348       |   | 5,228      |  
|Reduction of foreign currency translation account (vi)       |  | 2,725       |   | (18,487     | ) | --         |  
|Foreign exchange loss (vii)                                  |  | (3,012      | ) | (3,168      | ) | --         |  
|Others                                                       |  | (175        | ) | (175        | ) | (175       | )
|Net change to share of income from associated company        |  | 1,008       |   | 1,008       |   | 1,008      |  
|Minority interest                                            |  | --          |   | --          |   | 21,120     |  
|                                                            
|Deficit at beginning of year based on US GAAP                |  | (137,857    | ) | (188,945    | ) | (147,679   | )
|Net income based on US GAAP                                  |  | 3,346       |   | 56,220      |   | 62,067     |  
|Dividends paid during year                                   |  | (5,151      | ) | (5,132      | ) | (103,333   | )
|                                                            
|Deficit at end of year based on US GAAP                      |  | (139,662    | ) | (137,857    | ) | (188,945   | )
|Deficit as reported under Canadian GAAP                      |  | (147,855    | ) | (146,224    | ) | (174,981   | )
|                                                            
|Cumulative effect of applying US GAAP                        |  | $     8,193 |   | $     8,367 |   | $  (13,964 | )
|                                                            

The statements of cash flow prepared
under US GAAP differ from Canadian GAAP as follows:

(a)       
          Under US GAAP, the 7% convertible debentures would have been recorded as debt
          and interest expense would have been recorded. Accordingly, operating and
          financing activities would be restated for US GAAP.

(b)       
          Under US GAAP, the change in restricted cash is reported under operating
          activities rather than under investing activities.

(c)       
          Under US GAAP, sub-totals within the statement of cash flow and separate
          presentation of funds from continuing operations would not be permitted.

The effects of the differences to the
statement of cash flow are as follows:

|                                                     |  |          |   |              |   |             |  
|---------------------------------------------------- |  | -------- | - | ------------ | - | ----------- | -
|                                                    
|                                                     |  | 2003     |   | 2002         |   | 2001        |  
|                                                    
|OPERATING ACTIVITIES                                 | 
|Cash flow based on Canadian GAAP                     |  | $ 13,589 |   | $   11,209   |   | $     4,396 |  
|7% debenture interest expense adjustment (a)         |  | (3,836   | ) | (3,472       | ) | (3,253      | )
|Change in restricted cash (b)                        |  | 343      |   | (334         | ) | 5,750       |  
|                                                    
|Cash flow based on US GAAP                           |  | $ 10,096 |   | $     7,403  |   | $     6,893 |  
|                                                    
|                                                    
|                                                     |  | 2003     |   | 2002         |   | 2001        |  
|                                                    
|INVESTING ACTIVITIES                                 | 
|Cash flow (deficiency) based on Canadian GAAP        |  | $(32,200 | ) | $        756 |   | $ 369,332   |  
|Reverse change in restricted cash (b)                |  | (343     | ) | 334          |   | (5,750      | )
|                                                    
|Deficiency based on US GAAP                          |  | $(32,543 | ) | $     1,090  |   | $ 363,582   |  
|                                                    
|                                                    
|                                                     |  | 2003     |   | 2002         |   | 2001        |  
|                                                    
|FINANCING ACTIVITIES                                 | 
|Cash flow (deficiency) based on Canadian GAAP        |  | $ 15,547 |   | $(132,225    | ) | $(250,670   | )
|Reverse 7% debenture interest expense adjustment (a) |  | 3,836    |   | 3,472        |   | 3,253       |  
|                                                    
|Cash flow based on US GAAP                           |  | $ 19,383 |   | $(128,753    | ) | $(247,417   | )
|                                                    

---

Page 57

Under US GAAP, assets and liabilities are
not netted in the statement of cash flow. Accordingly, the components of the net changes
in other assets and liabilities are as follows:

|                                                               
|---------------------------------------------------------------
|                                                               
|                                                               
|Accounts receivable                                            
|Mortgages and advances receivable                              
|Prepaid expenses                                               
|Accounts payable and accrued liabilities                       
|Rental and sundry deposits                                     
|                                                               
|                                                               
|                                                               
|Total assets under US GAAP are calculated as follows:          
|                                                               
|                                                               
|                                                               
|                                                               
|Total assets based on Canadian GAAP                            
|Effect of GAAP differences:                                    
|Depreciation                                                   
|Portfolio investments
increase to fair value(ix)               
|Share of income from associated company                        
|Debenture issue costs                                          
|                                                               
|Total assets based on US GAAP                                  
|                                                               
|                                                               
|Interest bearing debts under US GAAP are calculated as follows:
|                                                               
|                                                               
|                                                               
|Interest bearing debts based on Canadian GAAP                  
|Add back equity portion of debentures                          
|                                                               
|Interest bearing debts based on US GAAP                        
|                                                               

# ITEM 18  FINANCIAL
STATEMENTS

Not applicable.

---

Page 58

# ITEM 19  EXHIBITS

# CERTIFICATION PURSUANT
TO RULE 13a-14 OR 15d-14 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Antony K. Stephens, certify that:

|1. |  | I
have reviewed this annual report on Form 20-F of Revenue Properties Company
          Limited;
|-- |  | ------------------------------------------------------------------------------------------------

|2. |  | Based
on my knowledge, this report does not contain any untrue statement of a
          material fact or omit to state a material fact necessary to make the statements
          made, in light of the circumstances under which such statements were made, not
          misleading with respect to the period covered by this report;
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Based
on my knowledge, the financial statements, and other financial information
          included in this report, fairly present in all material respects the financial
          condition, results of operations and cash flows of the issuer as of, and for,
          the periods presented in this report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | The
issuers other certifying officer and I are responsible for           establishing
and maintaining disclosure controls and procedures (as defined in           Exchange Act
Rules 13a-15(e) and 15d-15(e)) for the issuer and have:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) |  | Designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material
information relating to the issuer, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the
period in which this report is being prepared;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | Evaluated
the effectiveness of the issuers disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) |  | Disclosed
in this report any change in the issuers internal control over financial
reporting that occurred during the period covered by the annual report that has
materially affected, or is reasonably likely to materially affect, the issuers
internal control over financial reporting; and
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | The
issuers other certifying officer and I have disclosed, based on our           most
recent evaluation of internal control over financial reporting, to the           issuers
auditors and the audit committee of the issuers board of           directors (or
persons performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) |  | All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the issuers ability to record, process, summarize and
report financial information; and
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the issuers internal control over financial
reporting.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                            | 
|----------------------------------------------------------- | 
|Dated: April 30, 2004                                       | 
|                                                            | 
|Antony K. Stephens                                        | 
|                                                            | 
|Antony K. Stephens
President 
(Principal Executive Officer) | 
|                                                            | 

---

Page 59

# CERTIFICATION PURSUANT
TO RULE 13a-14 OR 15d-14 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

# ITEM 19  continued

I, Paul Miatello,
certify that:

|1. |  | I
have reviewed this annual report on Form 20-F of Revenue Properties Company
          Limited;
|-- |  | ------------------------------------------------------------------------------------------------

|2. |  | Based
on my knowledge, this report does not contain any untrue statement of a
          material fact or omit to state a material fact necessary to make the statements
          made, in light of the circumstances under which such statements were made, not
          misleading with respect to the period covered by this report;
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Based
on my knowledge, the financial statements, and other financial information
          included in this report, fairly present in all material respects the financial
          condition, results of operations and cash flows of the issuer as of, and for,
          the periods presented in this report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | The
issuers other certifying officer and I are responsible for           establishing
and maintaining disclosure controls and procedures (as defined in           Exchange Act
Rules 13a-15(e) and 15d-15(e)) for the issuer and have:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) |  | Designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material
information relating to the issuer, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the
period in which this report is being prepared;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | Evaluated
the effectiveness of the issuers disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) |  | Disclosed
in this report any change in the issuers internal control over financial
reporting that occurred during the period covered by the annual report that has
materially affected, or is reasonably likely to materially affect, the issuers
internal control over financial reporting; and
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | The
issuers other certifying officer and I have disclosed, based on our           most
recent evaluation of internal control over financial reporting, to the           issuers
auditors and the audit committee of the issuers board of           directors (or
persons performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) |  | All
significant deficiencies and material weaknesses in the design or operation           of
internal control over financial reporting which are reasonably likely to
          adversely affect the issuers ability to record, process, summarize and
          report financial information; and
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | Any
fraud, whether or not material, that           involves management or other employees who
have a significant role in the           issuers internal control over financial
reporting.
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                             | 
|-------------------------------------------------------------------------------------------- | 
|Dated: April 30, 2004                                                                        | 
|                                                                                             | 
|Paul Miatellos                                                                             | 
|                                                                                             | 
|Paul Miatello
Vice-President, Finance 
Chief Financial Officer (Principal Financial Officer) | 
|                                                                                             | 

---

Page 60

# ITEM 19 
CERTIFICATION OF PRESIDENT PURSUANT TO TITLE 18, UNITED STATES CODE, SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Antony K. Stephens,
President of Revenue Properties Company Limited (the Company), certify,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that,
to the best of my knowledge:

1.    
          The Annual Report on Form 20-F of the Company for the year ended December 31,
          2003 (the Report) fully complies with the requirements of Section
          13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or
          78o(d)); and

2.    
          The information contained in the Report fairly presents, in all material
          respects, the financial condition and results of operations of the Company.

|                                                            | 
|----------------------------------------------------------- | 
|Dated: April 30, 2004                                       | 
|                                                            | 
|Antony K. Stephens                                        | 
|                                                            | 
|Antony K. Stephens
President 
(Principal Executive Officer) | 
|                                                            | 

A signed original of this written
statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission or its
staff upon request.

---

Page 61

# ITEM 19 
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO TITLE 18, UNITED STATES CODE,
SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002

I, Paul Miatello, Chief
Financial Officer of Revenue Properties Company Limited, (the Company),
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350, that, to the best of my knowledge:

1.    
          The Annual Report on Form 20-F of the Company for the year ended December 31,
          2003 (the Report) fully complies with the requirements of Section
          13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or
          78o(d)); and

2.    
          The information contained in the Report fairly presents, in all material
          respects, the financial condition and results of operations of the Company.

|                                                                                             | 
|-------------------------------------------------------------------------------------------- | 
|Dated: April 30, 2004                                                                        | 
|                                                                                             | 
|Paul Miatellos                                                                             | 
|                                                                                             | 
|Paul Miatello
Vice-President, Finance 
Chief Financial Officer (Principal Financial Officer) | 
|                                                                                             | 

A signed original of this written
statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission or its
staff upon request.

---

Page 62

SIGNATURES

The registrant hereby certifies that
it meets all of the requirements for filing on Form 20-F and that it has duly caused and
authorized the undersigned to sign this annual report on its behalf.

REVENUE PROPERTIES COMPANY LIMITED

Antony K. Stephens

---

|Antony K. StephensPresident |  | February 20, 2004
|--------------------------- |  | -----------------

Paul Miatello

---

|Paul MiatelloVice-President, Finance
Chief Financial Officer |  | February 20, 2004
|------------------------------------------------------------ |  | -----------------

---

Page 63

# REVENUE PROPERTIES
COMPANY LIMITED
SCHEDULE III - REAL
ESTATE AND ACCUMULATED DEPRECIATION - RENTAL PROPERTIES AND PROPERTIES HELD FOR SALE
December 31, 2003

|                                     
|-------------------------------------
|Column A                             
|                                     
|                                     
|                                     
|Description                          
|                                     
|100% OWNED PROPERTIES                
|                                     
|ONTARIO                              
|                                     
|Centerpoint                          
|                                     
|East York Town Centre                
|                                     
|The Colonnade                        
|                                     
|Guildwood Village                    
|                                     
|Creekside Office Campus              
|                                     
|Other properties                     
|                                     
|ALBERTA                              
|                                     
|Prairie Mall                         
|                                     
|PROPORTIONATE SHARE OF JOINT VENTURES
|                                     
|NEW BRUNSWICK                        
|                                     
|Saint John City Hall (50%)           
|                                     
|OTHER ASSETS                         
|                                     
|Tenant improvements                  
|                                     
|TOTALS                               
|                                     

---

Page 64

# REVENUE PROPERTIES
COMPANY LIMITED
SCHEDULE  III (CONTINUED) 
REAL ESTATE AND
ACCUMULATED DEPRECIATION  RENTAL PROPERTIES

# December 31, 2003

|LAND, BUILDINGS AND IMPROVEMENTS       
|---------------------------------------
|                                       
|(in thousands of Canadian dollars)     
|                                       
|Balance at beginning of year           
|Additions during year:                 
|Acquisitions and additions             
|Deductions during year:                
|Cost of real estate sold               
|Write down and write-off of real estate
|                                       
|Balance at end of year                 
|                                       
|                                       
|ACCUMULATED DEPRECIATION               
|                                       
|(in thousands of Canadian dollars)     
|                                       
|Balance at beginning of year           
|Additions during year                  
|Depreciation expense                   
|Deductions during year:                
|Cost of real estate sold               
|Write down and write-off of real estate
|                                       
|Balance at end of year                 
|