Page 1

# UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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, 2002
| | -------------------------------------------

|_____ |  | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 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, Suite 300
131 Bloor Street West
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 - 64,157,512 shares outstanding as of December 31, 2002

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 _____

---

Page 2

REVENUE PROPERTIES COMPANY LIMITEDDecember 31, 2002

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.

PART 1

ITEM 1 - IDENTITY OF DIRECTORS,
SENIOR MANAGEMENT AND ADVISORSNot applicable.

ITEM 2 - OFFER
STATISTICS AND EXPECTED TIMETABLENot applicable.

ITEM 3 - KEY INFORMATIONSelected 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, 2002, are derived from the consolidated financial statements of Revenue Properties
Company Limited (Company or Registrant), which financial
statements have been audited by KPMG LLP, independent chartered accountants. The
consolidated financial statements as of December 31, 2002 and 2001, and for each of the
years in the three year period ended December 31, 2002 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       
|Special cash dividend per common share
|Weighted average number of common     
|shares outstanding (in thousands)     
|Basic                                 
|Diluted                               
|                                      
|                                      

---

Page 3

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         
|Special cash dividend per common share  
|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 ratesThe 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,Financing risk,Relative liquidity of real estate,Foreign exchange risk, and
Environmental risk.
| | --------------------------------------------------------------------------------------------------------------

---

Page 4

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 M5S 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.

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%.

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               
|Increase in PNP real estate (i)           
|Investment in gaming assets               
|Divestiture of RPC residential real estate
|Divestiture of PNP                        
|Divestiture of gaming                     
|                                          

(i) PNPs amounts were included in the Companys consolidated financial
statements prior to November 12, 2000.

---

Page 5

Business Overview

The Companys principal business
is the acquisition, development and ownership and management of commercial real estate in
Canada. The Company has five core properties in the Greater Toronto Area, plus an enclosed
shopping center in Grande Prairie, Alberta and a 50% interest in the Saint John City Hall
in Saint John, New Brunswick. The Company sold 1,943 apartment units in 2002 and its
investment in a US real estate investment trust in 2001. These asset sales generated
significant profits and cash during the past two years. At the end of 2002, the Company
reinvested a portion of the cash in the acquisition of two first class suburban office
buildings in Mississauga, Ontario, Canada. Operating results in 2002 were adversely
affected to the extent that the cash sale proceeds were not re-invested on an equal or
accretive basis during the year.

The Company has substantial cash and
available borrowing capacity to grow the Companys asset base with accretive
acquisitions of commercial properties with low risk profiles. However, the current lack of
suitable, available product may affect the pace of growth.

Effective January 1, 2003, the
Company entered into a property and asset management agreement with Morguard Investments
Limited (MIL), a subsidiary of Morguard, the Companys controlling
shareholder. MILs strength in acquisitions, leasing and operations enhances the
Companys ability to grow. Most of the Companys staff has been hired by MIL.
The arrangement, together with other steps taken by the Company, will lower overhead costs
in 2003.

Organizational Structure

The Company is 79.8% owned by
Morguard as at March 31, 2003.

A listing of the Companys
significant subsidiaries at December 31, 2002 is as follows:

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

---

Page 6

PROPERTY SUMMARY

The following is a list of properties
owned by the Company together with material information regarding each property for the
years ended December 31, 2002, 2001 and 2000. All properties are held directly by the
Company, subject to any liens and other encumbrances thereon.

As at December 31, 2002

RENTAL PROPERTIES

---

|                             |             |            | Total      | %      |  |                   |                
|---------------------------- | ----------- | ---------- | ---------- | ------ |  | ----------------- | ---------------
|Property and location        |             |            | (sq. ft.)  | Leased |  | Major tenants     | Encumbrances   
|                            
|Retail                       |             |            |            |        |  |                   |                
|Centerpoint                  |             |            | (1)602,029 | 99.7%  |  | The Bay, Zellers, | $ --           
|Toronto, Ontario             |             |            |            |        |  | Loblaws,          |                
|                             |             |            |            |        |  | Canadian Tire     |                
|East York Town Centre        |             |            | 378,720    | 99.5%  |  | Zellers,          | $19,753,000    
|Toronto, Ontario             |             |            |            |        |  | Dominion          |                
|Guildwood Village            |             |            | 53,256     | 92.7%  |  | Valu-Mart         | $ --           
|Toronto, Ontario             |             |            |            |        |  |                   |                
|Prairie Mall                 |             |            | 304,715    | 92.1%  |  | Zellers           | $23,481,000    
|Grande Prairie, Alberta      |             |            |            |        |  |                   |                
|Other properties             |             |            | 13,433     | 93.2%  |  |                   | $--            
|Toronto, Ontario             |             |            |            |        |  |                   |                
|                            
|Totals and weighted averages |             |            | 1,352,153  | 97.6%  |  |                   | $43,234,000    
|                            
|Office                       |             |            |            |        |  |                   |                
|                            
|Creekside Office Campus      |             |            | 301,421    | 100%   |  | The Toronto-      | (3) $44,000,000
|Mississauga, Ontario         |             |            |            |        |  | Dominion Bank     |                
|Saint John City Hall         |             |            | 99,733     | 98.4%  |  | City of           | $1,437,000     
|Saint John, N.B.             |             |            |            |        |  | Saint John        |                
|                            
|Totals and weighted averages |             |            | 401,154    | 99.6%  |  |                   | $45,437,000    
|                            
|Commercial / Residential     |             |            |            |        |  |                   |                
|                            
|                             | No. of      | Commercial |            |        |  |                   |                
|                             | residential | Total      | Total      | %      |  |                   |                
|Property and location        | units       | (sq. ft.)  | (sq. ft.)  | Leased |  |                   | Encumbrances   
|                            
|The Colonnade (2)            | 158         | 94,635     | 251,400    | 92.9%  |  |                   | $--            
|Toronto, Ontario             |             |            |            |        |  |                   |                
|                            
|Grand totals and             |             |            |            |        |  |                   |                
|weighted averages            | 158         | 94,635     | 2,004,707  | 97.4%  |  |                   | $88,671,000    
|                            

All properties are 100% owned, except
Saint John City Hall (50%).(1)    Includes tenant owned space of 122,251 sq. ft.(2)    Leasehold(3)    Mortgage advanced March 21, 2003

PROPERTIES HELD FOR DEVELOPMENT AND SALE

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

---

Page 7

PROPERTY SUMMARY

As at December 31, 2001

RENTAL PROPERTIES

---

|                             |             |            | Total      | %      |  |                   |               
|---------------------------- | ----------- | ---------- | ---------- | ------ |  | ----------------- | --------------
|Property and location        |             |            | (sq. ft.)  | Leased |  | Major tenants     | Encumbrances  
|                            
|Retail                       |             |            |            |        |  |                   |               
|Centerpoint                  |             |            | (1)602,029 | 98.2%  |  | The Bay, Zellers, | $ --          
|Toronto, Ontario             |             |            |            |        |  | Loblaws,          |               
|                             |             |            |            |        |  | Canadian Tire     |               
|East York Town Centre        |             |            | 378,720    | 97.3%  |  | Zellers,          | (3)$20,000,000
|Toronto, Ontario             |             |            |            |        |  | Dominion          |               
|Guildwood Village            |             |            | 53,256     | 92.8%  |  | Valu-Mart         | $1,648,000    
|Toronto, Ontario             |             |            |            |        |  |                   |               
|Prairie Mall                 |             |            | 304,715    | 92.6%  |  | Zellers           | $24,246,000   
|Grande Prairie, Alberta      |             |            |            |        |  |                   |               
|Other properties             |             |            | 23,382     | 81.5%  |  |                   | $568,000      
|Toronto, Ontario             |             |            |            |        |  |                   |               
|                            
|Totals and weighted averages |             |            | 1,362,102  | 96.2%  |  |                   | $46,462,000   
|                            
|Office                       |             |            |            |        |  |                   |               
|                            
|Saint John City Hall         |             |            | 99,733     | 98.9%  |  | City of           | $1,494,000    
|Saint John, N.B.             |             |            |            |        |  | Saint John        |               
|                            
|Commercial / Residential     |             |            |            |        |  |                   |               
|                            
|                             | No. of      | Commercial |            |        |  |                   |               
|                             | residential | Total      | Total      | %      |  |                   |               
|Property and location        | units       | (sq. ft.)  | (sq. ft.)  | Leased |  |                   | Encumbrances  
|                            
|The Colonnade (2)            | 158         | 94,635     | 251,400    | 95.1%  |  |                   | $--           
|Toronto, Ontario             |             |            |            |        |  |                   |               
|The Oaks (2)                 | 1,215       | --         | 888,767    | 97.8%  |  |                   | $18,299,000   
|Toronto, Ontario             |             |            |            |        |  |                   |               
|Kipling Avenue (2)           | 728         | --         | 690,585    | 96.7%  |  |                   | $--           
|Toronto, Ontario             |             |            |            |        |  |                   |               
|                            
|Totals and weighted averages | 2,101       | 94,635     | 1,830,752  | 97.0%  |  |                   | $18,299,000   
|                            
|Grand totals and             |             |            |            |        |  |                   |               
|weighted averages            | 2,101       | 94,635     | 3,292,587  | 96.8%  |  |                   | $66,255,000   
|                            

All properties are 100% owned, except
Saint John City Hall (50%).(1)    Includes tenant owned space of 122,251 sq. ft.(2)    Leasehold(3)    Mortgage advanced February 2002

PROPERTIES HELD FOR DEVELOPMENT AND SALE

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

---

Page 8

PROPERTY SUMMARY

As at December 31, 2000

RENTAL PROPERTIES

---

|                             |             |            | Total      | %      |  |                   |             
|---------------------------- | ----------- | ---------- | ---------- | ------ |  | ----------------- | ------------
|Property and location        |             |            | (sq.ft.)   | Leased |  | Major tenants     | Encumbrances
|                            
|Retail                       |             |            |            |        |  |                   |             
|Centerpoint                  |             |            | (1)602,029 | 99.6%  |  | The Bay, Zellers, | $39,520,000 
|Toronto, Ontario             |             |            |            |        |  | Loblaws,          |             
|                             |             |            |            |        |  | Canadian Tire     |             
|East York Town Centre        |             |            | 378,720    | 99.7%  |  | Zellers,          | $25,480,000 
|Toronto, Ontario             |             |            |            |        |  | Dominion          |             
|Guildwood Village            |             |            | 53,256     | 100%   |  | Valu-Mart         | $1,757,000  
|Toronto, Ontario             |             |            |            |        |  |                   |             
|Prairie Mall                 |             |            | 152,358    | 84.8%  |  | Zellers           | $12,480,000 
|Grande Prairie, Alberta      |             |            |            |        |  |                   |             
|Other properties             |             |            | 32,678     | 98.3%  |  |                   | $1,878,000  
|Toronto, Ontario             |             |            |            |        |  |                   |             
|                            
|Totals and weighted averages |             |            | 1,219,041  | 97.8%  |  |                   | $81,115,000 
|                            
|Office                       |             |            |            |        |  |                   |             
|                            
|Saint John City Hall         |             |            | 99,733     | 99.0%  |  | City of           | $1,548,000  
|Saint John, N.B.             |             |            |            |        |  | Saint John        |             
|                            
|Commercial / Residential     |             |            |            |        |  |                   |             
|                            
|                             | No. of      | Commercial |            |        |  |                   |             
|                             | residential | Total      | Total      | %      |  |                   |             
|Property and location        | units       | (sq. ft.)  | (sq. ft.)  | Leased |  |                   | Encumbrances
|                            
|The Colonnade (2)            | 158         | 94,635     | 251,400    | 98.7%  |  |                   | $--         
|Toronto, Ontario             |             |            |            |        |  |                   |             
|The Oaks (2)                 | 1,215       | --         | 888,767    | 99.0%  |  |                   | $18,779,000 
|Toronto, Ontario             |             |            |            |        |  |                   |             
|Kipling Avenue (2)           | 728         | --         | 690,585    | 98.8%  |  |                   | $--         
|Toronto, Ontario             |             |            |            |        |  |                   |             
|                            
|Totals and weighted averages | 2,101       | 94,635     | 1,830,752  | 98.9%  |  |                   | $18,779,000 
|                            
|Grand totals and             |             |            |            |        |  |                   |             
|weighted averages            | 2,101       | 94,635     | 3,149,526  | 98.4%  |  |                   | $101,442,000
|                            

All properties are 100% owned, except
Prairie Mall and Saint John City Hall (50%).(1)    Includes tenant owned space of 122,251 sq. ft.(2)    Leasehold

PROPERTIES HELD FOR DEVELOPMENT AND SALE

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

---

Page 9

ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Certain matters discussed below are
forward-looking statements within the meaning of federal securities laws in the United
States. Although the Company believes the expectations reflected in such forward-looking
statements are based on reasonable assumptions, it can give no assurance that its
expectations will be attained. Factors that could cause actual results to differ
materially from the Companys expectations include market valuations of its shares,
financial performance and operations of its rental properties, real estate conditions,
execution of competing development programs, successful completion of renovations, changes
in the availability of acquisitions, changes in local or national economic conditions, and
other risks detailed from time to time in reports filed with the Securities and Exchange
Commission, including the Annual Report on Form 20-F.

Significant Accounting Policies

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.

Asset Valuation of Real Estate

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 major 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 the Canadian Institute of Public and Private Real
Estate Companies. 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, even though, with proper maintenance, the actual life should be
considerably longer. The use of another method of depreciation, such as the straight-line
method, would result in a different amount of depreciation expense.

Operating resultsYears 2002 - 2001

Revenue Properties stated objective
for 2002 was to focus on its core real estate business, by improving real estate
operations and paying down debt. In addition, the Company investigated new real estate
opportunities where they were likely to increase cash flow and enhance shareholder value.

|                                                           
|-----------------------------------------------------------
|(000's)                                                    
|                                                           
|Gross revenues                                             
|Gross profit                                               
|Operating profit / (loss)                                  
|Gain on sale of rental properties                          
|Reduction of foreign currency translation account          
|Loss on redemption and repurchase of convertible debentures
|Diminution in value of real estate assets                  
|Penalty on early debt repayment                            
|Earnings and gains related to PNP                          
|Income taxes                                               
|Income from continuing operations                          
|Net income                                                 
|Funds from continuing operations                           
|                                                           
|                                                           

---

Page 10

Selected Quarterly Consolidated
Financial Information(unaudited, in thousands of Canadian 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 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 the year, and was the major reason the Company recorded an
operating profit for the year 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.

A key performance measure for real
estate companies is the funds generated from operations. Funds from operations, which
exclude the non-recurring and non-cash transactions, are generated primarily from rents
realized less operating costs, including property taxes, interest and overhead. Results
are improved if vacancy levels can be kept low and rental rates can be increased. Funds
from operations increased 8% to $10.9 million in 2002, a result of the reduction of
interest expense offset in part by lower rental income due to the sales of the residential
properties.

The computation of funds from
operations may differ from the methodology used by other real estate companies and,
therefore, may not be comparable to such other real estate companies. Funds from
operations are not indicative of funds available to meet the Companys cash
requirements.

Rental Operations

|                                  
|----------------------------------
|                                  
|                                  
|(000's)                           
|                                  
|Rental income                     
|Property operating expenses       
|                                  
|Same property comparisons         
|Acquired / sold properties        
|                                  
|Total rental income               
|                                  
|Gross profit % for same properties
|Re-leasing costs incurred         
|                                  

The key controllable factors in
creating value for the Companys stakeholders are rental rates, vacancy rates, tenant
sales (for retail tenants) and operating costs. External factors include the general
economic environment, demand for real estate properties and the supply of rental
accommodation available in our markets.

Properties held throughout the year
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%.

Land Sales

Significant progress was achieved
during 2002 to monetize the Companys investment in land. Sales 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 totaled $10.0 million, generating a profit of $1.1 million. The Company
anticipates that the next phase of lots will be available for sale in the fourth quarter
of 2003. 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 11

Interest Expense And Coverage Ratio

|                                                   
|---------------------------------------------------
|(000's)                                            
|                                                   
|Total interest expense                             
|Plus: amortization of debt discount                
|Plus: interest capitalized                         
|Plus: interest allocated to discontinued operations
|Less: interest income                              
|                                                   
|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 2.19 times from 1.54 times in 2001.

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 were non-recurring expenses, including a settlement payment to a director
of $0.5 million, and $1.6 million reserve for taxes.

During the year, 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 which compares 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.

The ratio calculations may differ
from the approach adopted by other real estate companies and, therefore, may not be
comparable to such other real estate companies.

Income Taxes

The Company recorded 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,
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, the Company, together with its partners,
completed the sale of the sports bar business. In December, 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 for the year of $0.6 million.

Prospective Analysis

The net incomes reported for 2002 and
2001 were affected by significant non-recurring events, such as the sales of the
residential properties in 2002 and the sales of US investments in 2001. Going forward, the
Company anticipates that the level of operating profit of $5.4 million recorded in 2002 is
a better indication of the base target for 2003. Factors that will impact the 2003 results
positively are the acquisition of two fully leased office properties and a full year of
lower debt levels.

---

Page 12

# Operating Results
Years 2001 - 2000

|                                                      
|------------------------------------------------------
|(000s)                                                
|                                                      
|Gross revenues                                        
|Gross profit                                          
|Operating loss                                        
|Earnings of PNP                                       
|Income from continuing operations before unusual items
|Unusual items                                         
|Income taxes                                          
|Income from continuing operations                     
|Dividend received from PNP                            
|Funds from continuing operations                      
|Funds as reported                                     
|Pro forma  (1)                                        
|                                                      

(1)    
          Pro forma 2000 gives effect to including only PNP dividends in FFO.

# Selected Quarterly
Consolidated Financial Information

|                                  | 2001   | 2000   |       
|--------------------------------- | ------ | ------ | ------
|(unaudited, 000s except           |        |        |       
|per share amounts)                | 4th Qr | 3rd Qr | 2nd Qr
|                                 
|                                  |        |        |       
|Gross revenues                    |        |        | $     
|Income from continuing operations |        |        |       
|Per basic share                   |        |        |       
|Per diluted share                 |        |        |       
|Net income                        |        |        |       
|Per basic share                   |        |        |       
|Per diluted share                 |        |        |       
|                                 

Income  from  continuing  operations
 for 2001 was $43  million  ($15  million in 2000) as a result of a number of  unusual
 events, primarily the gain arising on the sales of the PNP shares.

Rental  revenues  increased 6% to $60
million due in part to the  purchase in  September  of the 50% of Prairie Mall not
 previously owned and in part to a 7% increase in residential  rental  income.  Revenues
from lot sales totaled $1.9 million as compared to $6.4 million  in 2000 due to the
 smaller  size of the  current  phase and the timing of  completion,  with only a third
of the lot sales closed prior to year end.

Interest  expense  declined by $10
million as a result of the debt  reduction.  In  addition,  the  Company  earned $2.6
 million of interest income on cash balances.  General and  administrative  expenses
 decreased by $1.4 million from the previous year, of which $1.1 million  represented a
provision for employee  severance and retirement  benefits recorded in 2000. The balance
resulted from a reduction in salary expense.

The earnings from PNP declined as a
result of the sales of PNP shares during the year.

Unusual  items  included  the PNP
share sales,  which  generated a profit of $34 million,  and  resulted in the
 recognition  of $18 million of the foreign  currency  translation  balance as income.
 These gains were reduced by a non-cash  provision of $9.5 million for the  diminution
 in value of certain  property  assets  identified  for sale and a penalty of $3 million
 incurred  on the early redemption of the 9.54% mortgage bonds.

The primary indicator of performance
for management  continues to be funds from continuing  operations (FFO). The reduction
of the Companys  interest in PNP  required  that the Company  apply  three  different
 accounting  principles  over 2000 and 2001,  making meaningful  comparisons  difficult.
 To  establish  a basis  for  future  comparison,  the  Company  has  provided  as
 supplemental information,  its FFO for the year 2000 on a pro forma basis,  including
 dividends  received  from PNP but  excluding  the non-cash equity recorded as a result
of consolidating PNPs results in prior years.

On  comparable  pro forma basis,  FFO
for 2001 was $10.0 million and $10.2 million in 2000.  The  statements  prepared in
accordance with generally accepted accounting  principles showed a decline in FFO to $10
million from $25 million reported in 2000,  reflecting the changes in the Companys PNP
ownership position.

The 2001 PNP share  sales  resulted
 in lower  dividend  income,  which was offset in part by lower  interest  costs.  The
 interest savings  were  limited  since funds were  invested on a  short-term  basis in
low  yielding  investments  pending the payment of the special dividend in October 2001
and the redemption of the 7.5% debentures in January 2002.

---

Page 13

For the three months ended  December
31, 2001,  FFO was $105,000,  compared to $3.9 million  reported for the  comparable
 period in 2000. The 2000 pro forma  shortfall was $1.5 million.  The Company  stopped
 consolidating  the results of PNP in the fourth quarter 2000 and adopted the equity
 method.  As a result,  the  reported  FFO  included a  contribution  from PNP in excess
of the dividend received.  The  increase  from last  years  pro forma  results  also
 reflected  the timing of the debt  reduction  and the cost of responding to the takeover
bid.

The  computation  of funds from
 continuing  operations  may differ from the  methodology  used by other real estate
 companies and, therefore,  may not be  comparable  to such other real  estate
 companies.  FFO is not  indicative  of funds  available  to fund the Companys cash
requirements.

# Rental Operations

|                           
|---------------------------
|                           
|                           
|(000s)                     
|                           
|Gross rental income        
|Property operating expenses
|                           
|Same property comparison   
|                           
|Acquired / sold properties 
|                           
|Total                      
|                           
|Gross profit %             
|Re-leasing costs incurred  
|                           

The retail property  operating
 expenses for 2001 included a $0.7 million adjustment to realty taxes in prior years. The
residential contribution increased as a result of higher rents and a reduction of
in-suite repairs, offset by higher utility costs.

# Lot Sales

In December 2001, 56 lot sales closed
and 109 lots, being the balance of the phase, closed in early January 2002.

# Interest Expense

|                                   
|-----------------------------------
|(000s)                             
|                                   
|Total interest                     
|Plus: amortization of debt discount
|Plus: interest capitalized         
|Less: Interest income on cash      
|                                   
|Net cash interest                  
|                                   
|FFO before interest                
|                                   
|Interest coverage                  
|                                   

|(1) | Pro
forma 2000 gives effect to including only PNP dividends in FFO.
|--- | -------------------------------------------------------------------

|(2) | FFO
is calculated by adding non-cash expenses (depreciation, amortization, future income
taxes, diminution in value of real estate assets, penalty on early debt repayment
and other such expenses) to income from continuing operations.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Total cash  interest  declined in
2001 by 38% from the level  incurred in 2000 as a result of retiring  debt with the
proceeds  from the PNP share sales.  The effect of the interest  savings was an
improvement  in interest  coverage to 1.55 times from 1.35 based on pro forma 2000 FFO
and 1.42 as reported in 2000.

The ratio  calculations may differ
from the approach adopted by other real estate  companies and,  therefore,  may not be
comparable to such other real estate companies.

# Income Taxes

The Company  adopted the new standard
of the Canadian  Institute of  Chartered  Accountants  (CICA) for income taxes in 2000.
 The standard  required the measurement of future income tax assets and liabilities
 using the appropriate tax rates that are expected to apply when the temporary
differences reverse.

---

Page 14

# Gaming - Discontinued
Operations

|                                               
|-----------------------------------------------
|(000s)                                         
|                                               
|Revenues                                       
|Gaming                                         
|Beverage                                       
|Food and other                                 
|                                               
|                                               
|                                               
|Expenses                                       
|P.T.s                                         
|RPCs                                          
|                                               
|                                               
|                                               
|Gross Profit                                   
|Less: interest                                 
|depreciation and amortization                  
|provision  for loss on disposal                
|                                               
|                                               
|                                               
|Gain (loss) from discontinued gaming operations
|                                               

Revenues and gross profit  increased
 during 2001, as two units were opened and  performance of the casino improved during its
first full year of  operations.  As a result of an offer to purchase the sports bar
 business in December  and the expected  price for the casino,  management  recorded a
provision of $0.4 million in 2001 to reduce the book value of its  investment  to the
 estimated net realizable value. The combined provision recorded in 2001 and 2000 totaled
$5.8 million.

# Liquidity and Capital
Resources

# Years  2002 - 2001

The Company has no off-balance  sheet
financing  arrangements.  The Company has the resources to meet its maturing debt
 obligations and the capacity to grow the business as a result of selling its residential
 properties and US  investments.  The net cash proceeds from these capital  transactions
 have been applied to pay down debt with the balance invested until the funds are
required for real estate acquisitions.

# Cash on Hand and
Portfolio Investments

During the year 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.

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,  $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.

# Property and Other Assets

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  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.

In  summary,  management  believes
 that the value of the  property  portfolio  exceeds  book cost by  approximately  $100
 million. 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.

---

Page 15

The Company has receivables and
sundry assets  totaling $9.5 million,  the majority of which relates to the Guelph land
 development project, with collection related to the continued success of the
homebuilders who purchased the lots in the project.

# Liabilities

|                                                      
|------------------------------------------------------
|(000s)                                               
|                                                      
|Mortgages on rental properties                        
|Loan payable on land under development                
|Loan on discontinued gaming operations                
|Bank indebtedness                                     
|                                                      
|Long-term debt and bank indebtedness                  
|Convertible debentures (including equity component)   
|                                                      
|Total debt                                            
|                                                      
|Excess of estimated market value over book value      
|Shareholders equity                                  
|                                                      
|Equity at market value                                
|7% Convertible debentures (including equity component)
|                                                      
|Market value after conversion of debentures           
|                                                      
|                                                      
|If convertible debentures are debt                    
|If 7% convertible debentures are equity               
|                                                      

# Aggregate Obligations,
Liabilities and Commitments

|                       
|-----------------------
|Contractual Obligations
|                       
|(000s)                
|                       
|Mortgages              
|Convertible debentures 
|MIL contract           
|Land lease             
|                       
|Total                  
|                       

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.  The 7% convertible  debentures
 mature in December 2006 with the principal due on maturity or redemption payable, at the
Companys option, in either cash or common shares.

The Company has measured its debt by
applying  common  ratios to the equity  balance.  For the  analysis,  management
 believes it is appropriate to include the excess of the market value of its rental
 properties over the book cost. On a consistent  basis,  the debt to equity ratio,
 assuming the  convertible  debentures are debt,  improved to 1.07:1 from 2.28:1 in 2001,
as a result of the profits from the major  transactions  and the application of a portion
of the proceeds to reduce debt. If the 7% convertible  debentures were treated as equity,
 the ratio improves to 0.20:1 in 2002,  compared to 0.49:1 in 2001. The 6%  convertible
 debentures,  due in April 2004, are assumed to be debt, since the conversion price is
out of the money.

The Company has  entered  into a
property  management  agreement  with MIL.  The  agreement  is 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 16

# Interest Rate Structure

|                                                   
|---------------------------------------------------
|(000s)                                            
|                                                   
|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.

# Normal Course Issuer Bid

The Company  maintains a Normal
 Course Issuer Bid in  accordance  with the rules of the Toronto Stock  Exchange for the
purchase of its shares from time to time,  which bid,  expires August 18, 2003.  The
Company also had a Bid for the purchase of its  convertible debentures,  which expired in
March 2002. During 2002, the Company did not acquire any shares or convertible
debentures,  other than those pursuant to a substantial issuer bid for the 6% convertible
debentures.

Non-capital  resources  critical to
the Company include  qualified staff and the appropriate  computer  hardware and
software.  Such resources have been available in the past, reflective of the Companys
activities.  Going forward, the management  arrangements with MIL will provide the
Company access to a much larger organizations  experience in all sectors of the real
estate industry,  thereby increasing the Companys resources and capacity to carry on and
grow the business.

# Liquidity and Capital
Resources

# Years  2001 - 2000

# Cash on Hand

At December 31, 2001, the Companys
cash  equivalents  totaled $126 million,  most held in a subsidiary in US dollars.  Prior
to the year-end,  the Company entered into three forward foreign exchange  contracts
totaling US $30 million to swap into Canadian funds in January 2002 at an average rate of
$1.5784.  In January  2002, an  additional  US$32 million was converted to Canadian
 dollars at a rate of $1.5909,  generating an average  conversion  rate of $1.5849.  Of
the Canadian dollar  proceeds,  $45 million was applied to redeem the 7.5% debentures and
$45 million was used to retire a bridge loan.

# Property and Other Assets

The Companys  principal  business is
the ownership and  management of three  shopping  centres,  one mixed-use and two
 residential properties.  The Companys key accounting  policy is the valuation with its
principal  properties  recorded at the lower of cost and net recoverable  amounts.
 Properties  held for  development and sale are carried at the lower of cost and net
realizable  value. In determining  net recoverable  and net realizable  amounts,  the
Company made estimates and assumptions on the future revenue streams and valuations.
 Properties  held for  development  and sale have been marked to managements  estimate
of market value less selling costs.

Such valuations  could change by a
material amount if any of the underlying  assumptions  should change.  Since most
properties have been owned for over 25 years,  management believes that book value, which
reflects  historical costs less accumulated  depreciation, is substantially below the
aggregate value of the properties.

# Assets of Discontinued
Gaming Operations

The Company and its partner have
 accepted an offer to purchase the sports bar business of P.T.  Gaming LLC,  subject to
approval of the relevant  gaming  authorities.  The sale of the sports bars should
generate  proceeds of $13 million on closing,  with a further $1 million in five years,
based on the current exchange rate.

---

Page 17

# Liabilities

|                                                      
|------------------------------------------------------
|(000s)                                                
|                                                      
|Mortgages on rental properties                        
|Loan payable on land under development                
|Loan payable on investment in PNP and on              
|discontinued gaming operations                        
|Bank indebtedness                                     
|                                                      
|Long-term debt and bank indebtedness                  
|Convertible debentures (including equity component)   
|                                                      
|Total debt                                            
|                                                      
|Excess of market value over book value                
|Shareholders equity                                  
|                                                      
|Equity at market value                                
|7% Convertible debentures (including equity component)
|                                                      
|Market equity after conversion                        
|                                                      
|If convertible debentures are debt                    
|If convertible debentures are equity                  
|                                                      

|(1) | Pro
forma 2001 gives effect to the debt reduction in January 2002.
|--- | ------------------------------------------------------------------

Long-term  debt and bank
 indebtedness  decreased by $126 million  during 2001.  In addition,  in early  January
 2002,  convertible debentures  and bank and other  indebtedness  decreased  by $45
million and $50  million,  respectively.  In  February  2002,  a new mortgage  loan
 secured on East York Town  Centre in the amount of $20 million  was  advanced.  The
 interest  rate is 6.55%,  which compares to 9.54% on the previous debt.

The Companys  debt has been
 measured to its equity using common  ratios with an  adjustment  to reflect a current
 market value of properties,  which have low book values since they have been held for a
long time.  For the analysis,  management  has estimated the excess  market value over
book value of the rental  properties to be  approximately  $110  million.  Market value
was  determined by applying an  appropriate  capitalization  rate to the budgeted 2002
rental  income for each property  minus an allowance for capital expenses.  The overall
 result was supported by independent  valuations on two  properties.  The ratios
 declined as a result of the special  dividend.  For greater  clarity,  the 2001 pro
forma  calculations are provided to reflect the proceeds of the new mortgage and
repayment of debt in January 2002.

The calculations may differ from the
approach adopted by other real estate companies and,  therefore,  may not be comparable
to such other real estate companies.

# Interest Rate Structure

|                                                   
|---------------------------------------------------
|(000s)                                             
|                                                   
|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                           
|                                                   

|(1) | Pro
forma 2001 gives effect to the debt reduction in January 2002.
|--- | ------------------------------------------------------------------

In October 2001, bank  indebtedness
was increased by $50 million to pay the special  dividend.  The loan was repaid in early
January 2002 thereby increasing the fixed rate percentage to 99%.

# Research and development,
patents, licenses, etc.

Not applicable.

# Trend information

See item 5 above.

---

Page 18

# ITEM 6  - DIRECTORS,
SENIOR MANAGEMENT AND EMPLOYEES

# Directors and Senior
Management

The following  table sets forth the
names of the  Registrants  nominees to the Board of Directors  and  officers,  together
with all positions and offices held with the  Registrant by such directors and executive
 officers as at March 31, 2003.  Officers hold office until the board of directors has
elected their successors.

|                                        
|----------------------------------------
|Name (age) and position with the Company
|                                        
|James R. Bullock (58)                   
|Director (1, 2, 3)                      
|                                        
|                                        
|                                        
|David A. King (65)                      
|Director (1)                            
|                                        
|                                        
|Wayne P.E. Mang (65)                    
|Director                                
|                                        
|                                        
|                                        
|K. Rai Sahi (56)                        
|Director (3)                            
|                                        
|                                        
|Antony K. Stephens (61)                 
|Director (3)                            
|                                        
|                                        
|                                        
|                                        
|Mark M. Tanz (71)                       
|Director (3)                            
|                                        
|Jack Winberg (51)                       
|Director (1, 2)                         
|                                        
|William I. Kennedy (47)                 
|President                               
|                                        
|                                        
|                                        
|                                        
|                                        
|Richard E. Fletcher (58)                
|Vice-President, Finance                 
|and Chief Financial                     
|Officer                                 
|                                        
|                                        
|Judie Hart (51)                         
|Vice-President, Leasing                 
|                                        
|                                        
|Paul Miatello (33)                      
|Secretary                               
|                                        
|                                        
|                                        
|                                        

|(1) | Member
of the Audit Committee
|--- | -----------------------------

|(2) | Member
of the Corporate Governance Committee
|--- | --------------------------------------------

|(3) | Member
of Executive Committee
|--- | -----------------------------

---

Page 19

All of the persons named in the above
table,  other than Messrs.  Mang and Stephens,  were elected members of the Board of
Directors at the last annual meeting.  Mr. Abbey A. Lipson and Mr. William I.Kennedy,
 both currently members of the Board of Directors,  will not stand for re-election at the
next annual meeting of the Company.

# Compensation

The table below sets forth the
 compensation  paid by the Company to its President and the other  executive  officers of
the Company within the meaning of applicable legislation, in each case, in respect of the
fiscal years 2000, 2001 and 2002.

# SUMMARY COMPENSATION
TABLE

|                   
|-------------------
|                   
|                   
|                   
|                   
|                   
|                   
|William I. Kennedy 
|President (1)      
|                   
|                   
|Richard E. Fletcher
|Vice-President,    
|Finance & CFO      
|                   
|Judie Hart         
|Vice-President,    
|Leasing            
|                   
|Mark Robinson      
|Vice-President,    
|Operations (4)     
|                   
|Mark M. Tanz       
|Director (5,6)     
|                   
|                   

Notes:

|(1) | Mr.
 Kennedy  joined the  Company as Vice  President  on  November  1, 2000 and became
 President  on January 1, 2002.  Mr.       Kennedy has resigned as President and Director
effective April 30, 2003.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Bonus
amounts were paid during 2002.
|--- | ------------------------------------

|(3) | Amount
includes bonus paid in 2000 for the year 1999 of $29,000.
|--- | ----------------------------------------------------------------

|(4) | Mr.
Robinson resigned from the Company effective October 31, 2002
|--- | -----------------------------------------------------------------

|(5) | US
compensation  converted to Canadian dollars using average  conversion rate for 2000 of
1.4848,  2001 of 1.5486, and 2002       1.5702.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

|(6) | These
amounts represent  consulting fees earned by Amcan Financial  Consultants  (Amcan),  a
sole proprietorship owned by       Mark M. Tanz, for services rendered in regard to
potential mergers,  acquisitions,  financings or development opportunities in
      Canada and the United States and includes  directors  fees in the amount of
$25,000 for 2000,  $35,208 for 2001,  and $35,500       for 2002.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Amount
includes early termination settlement payment of $492,500.
|--- | -----------------------------------------------------------------

---

Page 20

The table below sets forth share
options granted under the 1995 Plan to each of the named  executive  officers during the
fiscal year ended December 31, 2002.

# OPTION GRANTS DURING
THE MOST RECENTLY COMPLETED FINANCIAL YEAR

|                   
|-------------------
|Name               
|                   
|William I. Kennedy 
|                   
|Richard E. Fletcher
|                   
|Judie Hart         
|                   
|Mark Robinson      
|                   
|Mark M. Tanz       
|                   

|(1) | Common
Shares of the Company.  During the first year  following  the grant of each option,  such
option may be exercised as      to not more than one-third of the Common Shares covered
thereby,  and during the second year a further one-third of such Common      Shares,
 together with any Common Shares with respect to which such option was exercisable during
the first year of each option      and which  were not taken up, may be  exercised.
 Thereafter,  to the  extent not  already  exercised,  the  options  are fully
     exercisable.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Employment and
Termination Contracts

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 will continue as President of the Company without  compensation.  Mr.
Kennedy has resigned as an officer and director of the Corporation and its subsidiaries
 effective April 30, 2003.

Effective May 1, 2003 the Corporation
appointed Antony K. Stephens to the position of President.

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 the 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. The agreement could be terminated  by the  Company
 without  cause on the  payment  of a  severance  amount  equal to 1.25  times the
 annual  salary  plus one-twelfth  thereof for each year of employment  over eight years
 employment  completed by the executive,  to a maximum  severance payment of one and a
half times the executives  annual base compensation.  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.

The Company has appointed Paul
Miatello,  an MIL employee,  to the positions of Vice-President,  Finance and Chief
Financial Officer effective May 1, 2003.

# Pensions

The Company  does not have a pension
 plan,  instead,  the Company  contributes  annually to each  employee an amount  equal
to five percent of the employees  annual salary as a contribution to that employees
 registered  retirement  savings plan, up to an annual limit of $13,500.

# BOARD PRACTICES

# Directors Term

The present term of office of each
director will expire immediately prior to the election of directors at the next annual
meeting of shareholders.  It is proposed that each of the persons whose name appears
above be elected as a director of the Corporation 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

---

Page 21

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, 2002,
each director, other than William I. Kennedy, 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 Executive Committee, Audit Committee, Gaming Compliance 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 2002, the total remuneration paid to the directors of the
Company for their services amounted to $210,500. In addition to fees paid to Mark Tanz as
a director, he received consulting fees as set out in the Summary Compensation Table
pursuant to an agreement with the Company. See page 19. As at March 31, 2003, the Company
had no service contracts with any members of the Board of Directors that would provide for
a benefit upon termination.

# 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 policy contains a limit of
$10,000,000 for each loss and for all payments in each policy year. The policy provides
for a deductible amount of $50,000 in connection with claims against the Company brought
in Canada and of US$250,000 for claims brought in the United States. The policy provides
for certain exclusions to the insurers liability, including an exclusion with
respect to claims by a shareholder owning 10% or more of the Common Shares of the Company,
and contains certain limitations with respect to claims in connection with pollution. The
annual premium for 2002 was $50,000.

# 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:

# Executive Committee

The Executive Committee (established
in 2001), which consists of Messrs. Bullock, Sahi, Tanz and the President of the Company,
reviews and makes recommendations to the Board of Directors concerning Fundamental
Matters. For this purpose, the term Fundamental Matter means:

|1. | For aggregate proceeds in excess of $1,000,000 in any one transaction or series
          of related transactions or for aggregate proceeds in excess of $1,000,000 in any
          financial year of the Company, the (i) sale, lease or exchange of any assets,
          (ii) the making of any investment, loan or advance, (iii) the purchase, lease or
          acquisition of any property from any Person;
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | The incurrence of debt by the Company, or the grant of security in connection
          therewith, or the imposition on any lien on the assets, business or undertaking
          of the Company, in each case, in excess of $1,000,000;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Any amalgamation or merger or other business combination or any change to the
          articles or by-laws of the Company; or
|-- | ------------------------------------------------------------------------------------------------------------------------------

|4. | Any matter equivalent to any of the matters referred to in (a), (b) and (c)
          above by any subsidiary of the Company.
|-- | -----------------------------------------------------------------------------------------------------------------------------

No Fundamental Matter shall be
proceeded with unless it shall first be approved by the Executive Committee and, upon such
approval, shall have been referred to the Board of Directors

# Audit Committee

The Audit Committee consists of
Messrs. Bullock, King, and Winberg.

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

---

Page 22

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 Corporation
          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,
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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
consists of three unrelated  directors  (Messrs.  Bullock,  Lipson, and Winberg).  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.
|-- | ------------------------------------------------------

---

Page 23

|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

For the year ended December 31, 2002,
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. These objectives were met by the three
principal components of the executive compensation package: (1) an annual component, i.e.
salary; (2) a bonus component; and (3) a long-term component, i.e. share options. Primary
emphasis was given to the annual component.

The Corporate Governance Committee
receives complete compensation information for each employee of the Company and its
subsidiaries who earns more than $100,000 and the same information on a general basis for
all other employees of the Company.

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 and middle 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.

The Company has established
guidelines for the participation in the 1995 plan and the extent of options granted. These
guidelines reflect the seniority of the employee and his or her base salary level. Share
options are granted at 100% of market value.

Compensation of President

For the year ended December 31, 2002,
the compensation of the President was based on the following factors and criteria, no one
of which was given more weight than the others: comparison with compensation of senior
officers of other public real estate companies, internal equity, the contribution made by
the President to the Company as perceived by the Corporate Governance Committee and by the
Board of Directors, and the Companys financial performance with reference to the
level of corporate cash flow and profitability. Submitted by the Corporate Governance
Committee: Jack Winberg, James R. Bullock and Abbey A. Lipson.

# Employees

The total number of employees as at
December 31 for each of the last three years was as follows:

|Year | Number of employees
|---- | -------------------
|    
|2002 | 78                 
|2001 | 125                
|2000 | 115                

---

Page 24

The reduction in the number of
employees at December 31, 2002 is primarily a result of the sales of the two
residential properties. Effective January 1, 2003 MIL has hired substantially all of
the Companys employees. See Business Overviewabove.

# Share Ownership

# 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. For residents of the United  States,
 the 1995 Plan provides for the issuance of incentive  stock options and  non-qualified
 stock options as defined or referred to in the Internal  Revenue Code of the United
States.

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 6.5 million common shares.
The 6.5 million Common Shares would be adjusted upon a consolidation of the Common Shares.

The table below sets forth share
options granted under the 1995 Plan to each of the named executive officers.

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

|                   
|-------------------
|Name               
|                   
|William I. Kennedy 
|                   
|Richard E. Fletcher
|                   
|Judie Hart         
|                   
|Mark Robinson      
|                   
|Mark M. Tanz       
|                   

|* | Closing
price of one Common Share on December 31, 2002 was $1.57.
|- | -----------------------------------------------------------------

# ITEM 7  - MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

# Major shareholders

Holders of over 5% of the
Registrants Common Shares as of March 31, 2003 are as follows:

|Name of holder                                                        | Number of
common shares | Percent of class
|--------------------------------------------------------------------- | ----------------------- | ----------------
|                                                                     
|3391361 Canada Inc. (wholly owned subsidiary of Morguard Corporation) |                         |                 
|                                                                     
|Number of shares in Canada                                            |                         |                 
|Number of shareholders in Canada                                      |                         |                 
|                                                                     

The Company is controlled by 3391361
Canada Inc.

On March 14, 2003,  Morguard
 announced that it had acquired  2,329,202  additional shares,  including 790,000 shares
held by Jack Winberg,  a director.  On July 31,2002,  Morguard acquired 23,025,000 shares
from Mark Tanz. On January 15, 2001, Morguard acquired 20,137,100 shares pursuant to a
partial takeover bid.

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

# Related party transactions

# Transactions with
directors and major shareholders

Amcan Financial Consultants:

---

Page 25

In 2002, the Company entered into a
new 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.

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

Advance to related corporation:

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 owned 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.
Interest earned from the loan was $399,000. The Company advanced a further $6,000,000,
pursuant to the revolving loan agreement, in January 2003 and $14,000,000 in March 2003.

Property management
agreement:

Effective January 1, 2003, the
Company entered into a property management agreement with Morguard Investments Limited
(MIL), a wholly owned subsidiary of Morguard which directly or indirectly
owned 76.4% of the Companys common shares as at December 31, 2002. The fee payable
by the Company is dependent on the performance of its properties but is estimated to be
approximately $900,000 per year. Under the terms of the property management agreement, MIL
assumed the employment obligations of all but three of the Companys employees.

Fee paid to related corporation:

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 was capitalized to the cost of the
properties.

Tenancy agreement:

A company controlled by a director
paid, under the terms of its tenancy agreement, $107,000 (2001: $104,000) to lease a
residential suite owned by the Company.

# Indebtedness of
Directors, Executive Officers and Others

As at March 31, 2003, 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, as of March 31, 2003, who to the knowledge of
the Corporation 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 Corporation and its directors and officers, or any associate or
affiliate thereof, had any material interest, direct or indirect, in any transaction since
January 1, 2002 or in any proposed transaction which has materially affected or will
materially affect the Company or any of its subsidiaries, other than as set out elsewhere
in this Annual Report.

# ITEM 8 - FINANCIAL
INFORMATON

Consolidated Statements and Other
Financial InformationFinancial 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

---

Page 27

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.

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

---

Page 28

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.

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

---

Page 29

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;
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 has issued three series
of debentures, which are convertible into common shares under differing terms and
conditions. One series of debentures was redeemed in January 2002. Each of these series of
convertible 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.

---

Page 30

# 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.

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:

---

Page 31

|(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.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 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 financial statements for the year ended December 31, 2002 and subsequent
interim financial statements of the Company, a Notice of Intention to make a Normal Course
Issuer Bid for Common Shares dated July 26, 2001 and three separate Notices of Intention
to make a Normal Course Issuer Bid dated March 5, 2001 for three series of Convertible
Subordinated Debentures are available (without charge to shareholders) upon request to the
Secretary of the Company at its head office at The Colonnade, 131 Bloor Street West,
Toronto, Ontario, M5S 1R1, telephone no. (416) 963-8100.

---

Page 32

# 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 financial condition of the tenants.

While there has been economic
uncertainty in the United States reflected by stock market turbulence and the aftermath of
corporate scandals, Canada generated respectable economic growth in 2002, including strong
job growth, which supported consumer expenditures. As a result, there were few retail
bankruptcies and occupancy rates remained high. Average sales per square feet on a same
store basis in 2002 were $471 compared to $478 in 2001. The expected rate of growth in
Canada is forecast to decline marginally in 2003 but management believes the decline will
not affect its projected earnings for the year.

Interest rates are at historically
low levels, and as a result, consumers have been buying homes in record numbers. This has
had a negative impact on residential occupancies and the Company mitigated its exposure by
selling the majority of its residential units during the year.

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.

# Financing Risk

The Companys debt, including
convertible debentures at December 31, 2002, was $151 million, all of which was at fixed
interest rates, compared to $280 million a year earlier. The only debt maturing over the
next three years is the US denominated convertible debentures, which total $27 million at
current exchange rates. In addition to the cash and investments on hand at year-end, the
Company has four properties on which, management estimates, additional debt of
approximately $110 million can be placed (including $44 million of new mortgage debt with
a 15 year term secured against the two office properties).

Interest rate fluctuations have been
eliminated at December 31, 2002, since all floating rate debt has been repaid.

# 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 the general and local economic conditions can affect the time
needed to complete the sales process.

# Foreign Exchange Risk

The Company has a net US dollar
liability of US$4.2 million. Canadian dollar assets will be converted to meet the
obligation, which will expire in 2004 when the US denominated convertible debentures are
redeemed.

At December 31, 2002, the Canadian
dollar value was US 63.39 cents compared to US 62.78 cents a year earlier. The average
exchange rate for the year was US 63.69 cents compared to US 64.57 cents in 2001.

Management does not acquire or issue
derivative instruments for trading purposes and believes that it is not an appropriate
time to hedge the foreign exchange conversion risk.

# 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.

---

Page 33

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.

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. As at March 31, 2003, the Company had not drawn on its
line of credit. 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, 2002 Expected Maturity Date

# LONG-TERM DEBT

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

CONVERTIBLE DEBENTURES

|                              
|------------------------------
|                              
|                              
|                              
|(000s 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 PROCEEDSNone.

# ITEM 15 - CONTROLS
AND PROCEDURES

Within 90 days prior to the filing
date of this annual report on Form 20-F, the Companys, President and Chief Financial
Officer carried out an evaluation of the effectiveness of the Companys disclosure
controls and procedures as defined in Exchange Act Rule 13a-14 and 15d-15. Based upon that
evaluation, the President and Chief Financial Officer have concluded that the
Companys disclosure controls and procedures were effective.

---

Page 34

There have been no significant
changes in the Companys internal controls or in other factors that could
significantly affect internal controls subsequent to the date of the evaluation by the
President and Chief Financial Officer.

The design of any system of controls
and procedures is based in part upon certain assumptions about the likelihood of future
events. There can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions, regardless of how remote.

# ITEM 16 - [RESERVED]

---

Page 35

# PART III

# ITEM 17 - FINANCIAL
STATEMENTS

---



| | 
| | 

|(A)     Consolidated Statements and Other Financial Information | Page Number
|--------------------------------------------------------------- | -----------
|Auditors' Report                                                |            
|Consolidated Balance Sheet                                      |            
|Consolidated Statements of Income                               |            
|Consolidated Statements of Deficit                              |            
|Consolidated Statements of Funds from Continuing Operations     |            
|Consolidated Statements of Cash Flow                            |            
|Notes to Consolidated Financial Statements                      |            

Financial Statement
Schedules

|Schedule III  - Real estate and accumulated depreciation |  |  |  | 61 - 62 | 
|-------------------------------------------------------- |  |  |  | ------- | 

---

Page 36

kpmg logo



| | KPMG LLP                       |  |                         
| | ------------------------------ |  | ------------------------
| | Chartered Accountants          |  | Telephone (416) 777-8500
| | Suite 3300 Commerce Court West |  | Telefax (416) 777-8818  
| | PO Box 31 Stn Commerce Court   |  | www.kpmg.ca             
| | Toronto ON M5L 1B2             |  |                         

# AUDITORS REPORT

To the Board of Directors,
Revenue Properties Company Limited:

We have audited the consolidated
balance sheets of Revenue Properties Company Limited as at December 31, 2002 and 2001 and
the consolidated statements of income, deficit, funds from continuing operations and cash
flow for each of the years in the three-year period ended December 31, 2002. In connection
with our audit of the consolidated financial statements we also audited the related
consolidated financial statement schedule. These consolidated financial statements and
financial statement schedule are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial statements and
financial statement schedule based on our audits.

We conducted our audits, in
accordance with Canadian generally accepted auditing standards and auditing standards
generally accepted in the United States of America. 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, 2002 and 2001 and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31, 2002 in
accordance with Canadian generally accepted accounting principles. Also in our opinion,
the related consolidated financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.



kpmg_sig

Chartered Accountants

Toronto, Canada
February 21, 2003

---

Page 37

REVENUE PROPERTIES
COMPANY LIMITED
CONSOLIDATED BALANCE SHEETS
As at December 31

---

|(in thousands of Canadian dollars)               |  |  |  | Note     |  |   | 2002     |  |   | 2001     | 
|------------------------------------------------ |  |  |  | -------- |  | - | -------- |  | - | -------- | 
|                                                
|ASSETS                                           |  |  |  |          |  |   |          |  |   |          | 
|Rental properties                                |  |  |  | 2        |  | $ | 161,962  |  | $ | 147,822  | 
|Properties held for development and sale         |  |  |  | 3        |  |   | 6,787    |  |   | 11,664   | 
|Cash and cash equivalents                        |  |  |  |          |  |   | 5,700    |  |   | 126,444  | 
|Portfolio investments                            |  |  |  |          |  |   | 28,985   |  |   | --       | 
|Mortgages and advances receivable                |  |  |  | 4        |  |   | 5,318    |  |   | 8,728    | 
|Other assets                                     |  |  |  | 5        |  |   | 4,216    |  |   | 2,911    | 
|Future income tax asset                          |  |  |  | 14       |  |   | --       |  |   | 1,184    | 
|Discontinued operations                          |  |  |  | 18       |  |   | --       |  |   | 19,345   | 
|                                                
|                                                 |  |  |  |          |  |   | $212,968 |  |   | $318,098
|                                                
|LIABILITIES AND SHAREHOLDERS' EQUITY             |  | 
|Long-term debt                                   |  |  |  | 6        |  | $ | 44,671   |  | $ | 49,157   | 
|Convertible debentures                           |  |  |  | 7        |  |   | 44,408   |  |   | 118,210  | 
|Bank and other indebtedness                      |  |  |  | 8        |  |   | --       |  |   | 50,833   | 
|Accounts payable and accrued liabilities         |  |  |  |          |  |   | 11,295   |  |   | 15,819   | 
|Future income tax liability                      |  |  |  | 14       |  |   | 5,899    |  |   | --       | 
|                                                
|                                                 |  |  |  |          |  |   | 106,273  |  |   | 234,019 
|                                                
|Commitments, contingencies and subsequent events |  |  |  | 13,15,19
|Shareholders' equity                             |  |  |  | 10       |  |   | 106,695  |  |   | 84,079   | 
|                                                
|                                                 |  |  |  |          |  |   | $212,968 |  |   | $318,098
|                                                

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

---

Page 38

REVENUE PROPERTIES
COMPANY LIMITED
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31

---

|(in thousands of Canadian dollars, except per share amounts) |  |  |  | Note    |  |   | 2002    |   |   | 2001    |   |   | 2000    |  
|------------------------------------------------------------ |  |  |  | ------- |  | - | ------- | - | - | ------- | - | - | ------- | -
|                                                            
|RENTAL OPERATIONS                                           
|Revenue                                                      |  |  |  |         |  | $ | 55,269  |   | $ | 60,519  |   | $ | 57,038  |  
|Property operating expenses                                  |  |  |  |         |  |   | 32,003  |   |   | 37,593  |   |   | 35,975  |  
|                                                            
|                                                             |  |  |  |         |  |   | 23,266  |   |   | 22,926  |   |   | 21,063  |  
|                                                            
|REAL ESTATE SALES                                            |  | 
|Sales                                                        |  |  |  |         |  |   | 10,010  |   |   | 1,865   |   |   | 6,399   |  
|Cost of sales                                                |  |  |  |         |  |   | 8,887   |   |   | 1,689   |   |   | 6,084   |  
|                                                            
|                                                             |  |  |  |         |  |   | 1,123   |   |   | 176     |   |   | 315     |  
|                                                            
|Other operating expenses (income):                           |  | 
|Interest                                                     |  |  |  |         |  |   | 8,959   |   |   | 19,744  |   |   | 29,274  |  
|General and administrative                                   |  |  |  |         |  |   | 4,522   |   |   | 5,044   |   |   | 6,429   |  
|Interest and other income                                    |  |  |  |         |  |   | (395    | ) |   | (1,715  | ) |   | (251    | )
|Foreign exchange loss (gain)                                 |  |  |  |         |  |   | 520     |   |   | (164    | ) |   | --      |  
|Depreciation and amortization                                |  |  |  |         |  |   | 5,372   |   |   | 5,667   |   |   | 4,963   |  
|                                                            
|                                                             |  |  |  |         |  |   | 18,978  |   |   | 28,576  |   |   | 40,415  |  
|                                                            
|OPERATING INCOME (LOSS)                                      |  |  |  |         |  |   | 5,411   |   |   | (5,474  | ) |   | (19,037 | )
|Gain on sale of rental properties                            |  |  |  |         |  |   | 30,199  |   |   | --      |   |   | --      |  
|Reduction of foreign currency translation account            |  |  |  | 1(h)    |  |   | 10,520  |   |   | 18,487  |   |   | --      |  
|Loss on redemption and repurchase of convertible debentures  |  |  |  | 7(a, c) |  |   | (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  | ) |   | --      |  
|Gain from reduction of interest in PNP                       |  |  |  |         |  |   | --      |   |   | --      |   |   | 5,638   |  
|Cost of responding to takeover bid                           |  |  |  |         |  |   | --      |   |   | --      |   |   | (1,887  | )
|                                                            
|                                                             |  |  |  |         |  |   | 39,727  |   |   | 39,681  |   |   | 3,751   |  
|                                                            
|Earnings of PNP                                              |  | 
|Revenue                                                      |  |  |  |         |  |   | --      |   |   | --      |   |   | 147,926 |  
|Operating and other expenses                                 |  |  |  |         |  |   | --      |   |   | --      |   |   | (89,879 | )
|Minority interest                                            |  |  |  |         |  |   | --      |   |   | --      |   |   | (30,219 | )
|Equity in earnings                                           |  |  |  |         |  |   | --      |   |   | 12,018  |   |   | 3,118   |  
|Dividend income                                              |  |  |  |         |  |   | --      |   |   | 1,935   |   |   | --      |  
|                                                            
|INCOME FROM CONTINUING OPERATIONS                            |  | 
|BEFORE INCOME TAXES                                          |  |  |  |         |  |   | 45,138  |   |   | 48,160  |   |   | 15,660  |  
|Income taxes                                                 |  | 
|Current                                                      |  |  |  |         |  |   | 119     |   |   | 3,728   |   |   | 312     |  
|Future                                                       |  |  |  |         |  |   | 7,083   |   |   | 1,900   |   |   | 344     |  
|                                                            
|                                                             |  |  |  | 14      |  |   | 7,202   |   |   | 5,628   |   |   | 656     |  
|                                                            
|INCOME FROM CONTINUING OPERATIONS                            |  |  |  |         |  |   | 37,936  |   |   | 42,532  |   |   | 15,004  |  
|Income (loss) from discontinued operations                   |  |  |  | 18      |  |   | (575    | ) |   | 1,144   |   |   | (7,493  | )
|                                                            
|NET INCOME                                                   |  |  |  |         |  | $ | 37,361  |   | $ | 43,676  |   | $ | 7,511   |  
|                                                            
|Per basic and diluted common share                           |  |  |  | 11      | 
|Income per common share from continuing operations           |  | 
|Basic                                                        |  |  |  |         |  | $ | 0.54    |   | $ | 0.62    |   | $ | 0.18    |  
|Diluted                                                      |  |  |  |         |  | $ | 0.33    |   | $ | 0.30    |   | $ | 0.15    |  
|Income per common share                                      |  | 
|Basic                                                        |  |  |  |         |  | $ | 0.53    |   | $ | 0.64    |   | $ | 0.07    |  
|Diluted                                                      |  |  |  |         |  | $ | 0.32    |   | $ | 0.31    |   | $ | 0.07    |  
|Weighted average number of shares (in thousands)             |  | 
|Basic                                                        |  |  |  |         |  |   | 64,110  |   |   | 63,382  |   |   | 65,235  |  
|Diluted                                                      |  |  |  |         |  |   | 122,491 |   |   | 151,831 |   |   | 90,568  |  

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

---

Page 39

REVENUE PROPERTIES
COMPANY LIMITED
CONSOLIDATED STATEMENTS OF DEFICIT 
Years ended December 31

---

|(in thousands of Canadian dollars)   |  |  |   | 2002    |   |   | 2001    |   |   | 2000    |  
|------------------------------------ |  |  | - | ------- | - | - | ------- | - | - | ------- | -
|                                    
|Deficit at beginning of year         |  |  | $ | 174,981 |   | $ | 112,071 |   | $ | 108,820 |  
|Net income                           |  |  |   | (37,361 | ) |   | (43,676 | ) |   | (7,511  | )
|Dividends                            |  |  |   | 5,132   |   |   | 7,564   |   |   | 7,783   |  
|Special dividend                     |  |  |   | --      |   |   | 95,769  |   |   | --      |  
|Settlement of convertible debentures |  |  |   | 3,472   |   |   | 3,253   |   |   | 2,979   |  
|                                    
|Deficit at end of year               |  |  | $ | 146,224 |   | $ | 174,981 |   | $ | 112,071 |  
|                                    

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)                          |  |  |   | 2002    |   |   | 2001    |   |   | 2000   |  
|----------------------------------------------------------- |  |  | - | ------- | - | - | ------- | - | - | ------ | -
|                                                           
|Income from continuing operations                           |  |  | $ | 37,936  |   | $ | 42,532  |   | $ | 15,004 |  
|Add (deduct) non-cash items:                                |  | 
|Depreciation and amortization                               |  |  |   | 5,657   |   |   | 6,301   |   |   | 6,555  |  
|Future income taxes                                         |  |  |   | 7,083   |   |   | 1,900   |   |   | 344    |  
|Gain on sale of rental properties                           |  |  |   | (30,199 | ) |   | --      |   |   | --     |  
|Reduction of foreign currency translation account           |  |  |   | (10,520 | ) |   | (18,487 | ) |   | --     |  
|Loss on redemption and repurchase of convertible debentures |  |  |   | 992     |   |   | --      |   |   | --     |  
|Other                                                       |  |  |   | (71     | ) |   | 1,064   |   |   | 186    |  
|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  | ) |   | (6,232 | )
|Gain resulting on issuance of capital stock by subsidiary   |  |  |   | --      |   |   | --      |   |   | (5,638 | )
|Adjustment as a result of consolidation of PNP              |  |  |   | --      |   |   | --      |   |   | 15,153 |  
|                                                           
|FUNDS FROM CONTINUING OPERATIONS                            |  |  | $ | 10,878  |   | $ | 10,033  |   | $ | 25,372 |  
|                                                           

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

---

Page 40

REVENUE PROPERTIES
COMPANY LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOW 
Years ended December 31

---

|(in thousands of Canadian dollars)                                         |  |  |   | 2002     |   |   | 2001     |   |   | 2000    |  
|-------------------------------------------------------------------------- |  |  | - | -------- | - | - | -------- | - | - | ------- | -
|                                                                          
|OPERATING ACTIVITIES                                                       |  | 
|Funds from continuing operations                                           |  |  | $ | 10,878   |   | $ | 10,033   |   | $ | 25,372  |  
|Re-leasing costs                                                           |  |  |   | (1,484   | ) |   | (1,733   | ) |   | (1,559  | )
|Amortization of discount of convertible debentures                         |  |  |   | 684      |   |   | 1,596    |   |   | 1,565   |  
|Adjustment as a result of consolidation of PNP                             |  |  |   | --       |   |   | --       |   |   | (15,153 | )
|Net change in other assets and liabilities                                 |  |  |   | 1,490    |   |   | (7,543   | ) |   | 13,173  |  
|                                                                          
|                                                                           |  |  |   | 11,568   |   |   | 2,353    |   |   | 23,398  |  
|Net decrease from PNP's other assets and liabilities                       |  |  |   | --       |   |   | --       |   |   | 6,891   |  
|Cash flow from discontinued operations                                     |  |  |   | (359     | ) |   | 2,043    |   |   | 704     |  
|                                                                          
|                                                                           |  |  |   | 11,209   |   |   | 4,396    |   |   | 30,993  |  
|                                                                          
|INVESTING ACTIVITIES                                                       |  | 
|Acquisition and development of rental properties                           |  |  |   | (90,776  | ) |   | (15,018  | ) |   | (9,727  | )
|Net proceeds from sales of rental properties                               |  |  |   | 101,520  |   |   | 355      |   |   | --      |  
|Net proceeds from (investment in) properties held for development and sale |  |  |   | 4,449    |   |   | (2,135   | ) |   | 1,049   |  
|Portfolio investments - acquisitions                                       |  |  |   | (44,378  | ) |   | --       |   |   | --      |  
|- settlement and sales                                                     |  |  |   | 15,393   |   |   | --       |   |   | --      |  
|Advance to Morguard Corporation                                            |  |  |   | (20,000  | ) |   | --       |   |   | --      |  
|Repayment of advance to Morguard Corporation                               |  |  |   | 20,000   |   |   | --       |   |   | --      |  
|Change in restricted cash                                                  |  |  |   | (334     | ) |   | 5,750    |   |   | (1,552  | )
|Decrease in cash due to reduction of interest in PNP                       |  |  |   | --       |   |   | --       |   |   | (7,351  | )
|Net proceeds from sale of PNP shares                                       |  |  |   | --       |   |   | 381,858  |   |   | --      |  
|                                                                          
|                                                                           |  |  |   | (14,126  | ) |   | 370,810  |   |   | (17,581 | )
|Net decrease from PNP's investing activities                               |  |  |   | --       |   |   | --       |   |   | (68,328 | )
|Net proceeds from (investment in) discontinued operations                  |  |  |   | 14,882   |   |   | (1,478   | ) |   | (4,164  | )
|                                                                          
|                                                                           |  |  |   | 756      |   |   | 369,332  |   |   | (90,073 | )
|                                                                          
|FINANCING ACTIVITIES                                                       |  | 
|Repayment of mortgage principal and bank indebtedness                      |  |  |   | (72,742  | ) |   | (169,520 | ) |   | (3,826  | )
|Redemption and repurchase of convertible debentures                        |  |  |   | (71,064  | ) |   | (602     | ) |   | --      |  
|Proceeds of mortgage financing and bank indebtedness                       |  |  |   | 20,000   |   |   | 44,990   |   |   | 14,347  |  
|Dividends paid                                                             |  |  |   | (5,132   | ) |   | (103,333 | ) |   | (7,783  | )
|Repurchase of capital stock                                                |  |  |   | --       |   |   | (6,405   | ) |   | (9,045  | )
|Issue of capital stock                                                     |  |  |   | 185      |   |   | 3,019    |   |   | 181     |  
|Settlement of convertible debentures                                       |  |  |   | (3,472   | ) |   | (3,253   | ) |   | (2,978  | )
|                                                                          
|                                                                           |  |  |   | (132,225 | ) |   | (235,104 | ) |   | (9,104  | )
|Net increase in PNP's financing activities                                 |  |  |   | --       |   |   | --       |   |   | 65,052  |  
|Decrease in debt of discontinued operations                                |  |  |   | --       |   |   | (15,566  | ) |   | 1,789   |  
|                                                                          
|                                                                           |  |  |   | (132,225 | ) |   | (250,670 | ) |   | 57,737  |  
|                                                                          
|TOTAL CASH PROVIDED (USED)                                                 |  |  |   | (120,260 | ) |   | 123,058  |   |   | (1,343  | )
|Effect of foreign currency translation on cash balances                    |  |  |   | (484     | ) |   | (419     | ) |   | 1,803   |  
|Cash and cash equivalents at beginning of year                             |  |  |   | 126,444  |   |   | 3,805    |   |   | 3,345   |  
|                                                                          
|Cash and cash equivalents at end of year                                   |  |  | $ | 5,700    |   | $ | 126,444  |   | $ | 3,805   |  
|                                                                          

Supplemental cash flow information:

The Company's share of proceeds from
real estate sales was $10,010 (2001: $1,865, 2000: $6,399) satisfied by mortgages
receivable of $3,148 (2001: $1,585, 2000: $5,350) 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.

Cash interest paid in the year was
$13,027 (2001: $23,463, 2000: $68,969).

Cash income taxes recovered in the year
was $1,980 net (cash taxes paid of $9,794 in 2001 and $385 in 2000).

The accompanying notes form an
integral part of these financial statements

---

Page 41

REVENUE PROPERTIES
COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
December 31, 2002

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

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

1.    
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)    General

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

(b)    
Subsidiaries, joint ventures, equity and cost investments

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. The Company sold its investment in gaming that had been classified as
discontinued operations as described in Note 18.

All intercompany accounts and
transactions have been eliminated.

As at January 1, 2001, the Company
held a 33% ownership interest in Pan Pacific Retail Properties, Inc. (PNP),
and accordingly, accounted for its investment under the equity method. During 2001, the
Company sold PNP shares and as a result adopted the cost method of accounting for its
investment on June 1, 2001, when the Companys ownership interest decreased to below
20%.

(c)    Asset valuation

(i)    Rental properties

Rental properties are carried at the
lower of depreciated cost and net recoverable amount. 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.

(ii)    
          Properties 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.

(iii)    Valuation principles

The use of a net recoverable amount
to assess the amount at which a property is carried in the accounts assumes that the
property will be held for the long term. Otherwise, the use of net realizable value method
may be more appropriate. Net recoverable amount represents the estimated future cash flow
expected to be received from the use and residual value of the property on an undiscounted
basis. Estimated net realizable value represents the estimated selling price reduced by
any costs expected until final disposition, assuming a reasonable sales period and market
conditions.

In determining estimates of net
recoverable amounts and net realizable values for its rental properties, properties held
for sale or development, amounts receivable and investments, the Company makes assumptions
regarding applicable industry performance and prospects, as well as general business and
economic conditions that prevail and are expected to prevail. Should the underlying
assumptions change materially, the estimated net recoverable amounts and net realizable
values could change by a material amount. By nature, asset valuations are subjective and
do not necessarily result in precise determinations.

(d)    Income recognition

(i)    Rental properties

Revenues and earnings from rental
properties under development are recorded in income when a rental occupancy of 70% has
been achieved or when a predetermined time limit expires, whichever comes sooner. Prior to
this time, the properties are categorized as rental properties under development and net
rental income is recorded as a reduction of development costs.

---

Page 42

(ii)    
          Real estate sales

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

(e)    
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.

Depreciation on furniture and
equipment is provided at 20% on a declining balance basis.

Re-leasing costs for commercial
properties are amortized on a straight-line basis over the term of the leases.

(f)    
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.

No compensation expense is recognized
when share options are issued to employees and directors. Any consideration paid by
employees or directors on exercise of share options is credited to capital stock. The
accounting for the share option plan has not changed as a result of the new standard. The
required pro forma disclosures for all share options issued after January 1, 2002 is
included in Note 12.

(g)    Portfolio investments

The portfolio of marketable
securities is carried at cost plus accrued interest of $458,000. In the event of a decline
in the value of a security that is other than temporary, the investment will be written
down to recognize the loss. The market value of such securities was $29,830,000 at
December 31, 2002.

(h)    Foreign exchange

Assets and liabilities of foreign
operations are translated at the exchange rates in effect at the balance sheet date, and
revenues and expenses are translated at average exchange rates for the year. The
Companys investments in the United States (foreign operations) are
considered to be self-sustaining until there is a disposition of the Companys
investment in the foreign operations. During the year, there was a reduction in the
Companys net investment in the foreign operations. As a result, $10,520,000 (2001
 $18,487,000) of the foreign currency translation account was included in income.

|                                                       
|-------------------------------------------------------
|                                                       
|                                                       
|Canadian dollar to United States dollar exchange rates:
|- December 31                                          
|- Average during year                                  
|United States dollar to Canadian dollar exchange rates:
|- December 31                                          
|- Average during year                                  
|                                                       

(i)    
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.

(j)    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.

(k)    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.

(l)    Financial instruments

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

---

Page 43

2.    
RENTAL PROPERTIES

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

3.    
PROPERTIES HELD FOR DEVELOPMENT AND SALE

|                             
|-----------------------------
|                             
|                             
|Held for development and sale
|Held for development         
|                             
|                             
|                             

4.    
MORTGAGES AND ADVANCES RECEIVABLE

|                                         
|-----------------------------------------
|                                         
|                                         
|Mortgages and notes receivable           
|Advances receivable, non interest bearing
|                                         
|                                         
|                                         

Mortgages, notes and advances
receivable bear interest at rates which vary from 0% to 8% (weighted average rate 2.4%)
and are to be repaid as follows:

|2003                |  |  | $ | 4,135 | 
|------------------- |  |  | - | ----- | 
|2004 and subsequent |  |  |   | 1,183 | 
|                   
|                    |  |  | $ | 5,318 | 
|                   

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               
|Loan payable on land under development       
|Loan payable on discontinued operations      
|                                             
|                                             
|                                             
|Fixed interest rate debt                     
|Range of interest rates at December 31       
|Weighted average interest rate at December 31
|Variable interest rate debt                  
|Range of interest rates at December 31       
|Weighted average interest rate at December 31
|                                             

---

Page 44

Principal
payments are due as follows:

|2003                |  |  | $ | 1,228  | 
|------------------- |  |  | - | ------ | 
|2004                |  |  |   | 1,312  | 
|2005                |  |  |   | 1,403  | 
|2006                |  |  |   | 2,652  | 
|2007                |  |  |   | 19,278 | 
|2008 and subsequent |  |  |   | 18,798 | 
|                   
|                    |  |  | $ | 44,671 | 
|                   

Debt on rental properties and
properties held for development and sale are secured by mortgages and assignments of
various assets of the Company.

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

7.    
CONVERTIBLE DEBENTURES

The Company issued three series of
convertible debentures 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.

(a)    
Issue amount - US$35,000,000 (US$17,158,000 and US$34,599,000 outstanding
at December 31, 2002 and 2001 respectively) issued in US funds, bearing interest
at 6% per annum, payable semi-annually and maturing March 1, 2004. All amounts
due are payable in cash.

The debentures are unsecured and are
convertible into common shares at a price of US$1.82 per common share at any time prior to
the earlier of February 27, 2004 and the last business day immediately preceding the date
specified for redemption. The debentures are redeemable by the Company at any time at par
plus accrued and unpaid interest.

In April 2002, the Company
repurchased $27,403,000 (US$17,441,000) principal amount of the 6% US denominated
convertible debentures, due March 1, 2004, resulting in a gain of $101,000 and a net
increase to shareholders equity of $250,000. The debentures were repurchased
pursuant to a substantial issuer bid at the price of US$950 cash for each US$1,000
principal amount plus accrued and unpaid interest.

(b)    
Issue amount - $85,000,000 ($79,715,000 outstanding at both December 31,
2002 and 2001) 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 $1.74 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 each 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 rates used reflect 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 in (b) 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.

(c)    
Issue amount - $45,002,000, (nil and $44,961,000 outstanding at December
31, 2002 and 2001 respectively) bearing interest at 7.5% per annum, payable
semi-annually and maturing October 1, 2003. All amounts due are payable in cash.

In January 2002, the Company redeemed
and cancelled all of its outstanding 7.5% convertible debentures, which were to mature
October 1, 2003. The redemption resulted in a loss of $1,093,000 and a net reduction to
shareholders equity of $900,000.

---

Page 45

The components of the convertible
debentures are classified as follows:

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

8.    
BANK AND OTHER INDEBTEDNESS

|                                              
|----------------------------------------------
|                                              
|                                              
|Bank indebtedness                             
|Short-term bank loan                          
|                                              
|                                              
|                                              
|Average debt outstanding                      
|Weighted average interest rate at December 31 
|Weighted average interest rate during the year
|                                              

At December 31, 2002, the
Companys unused line of credit for general corporate purposes was $2,200,000 (2001:
$2,100,000).

The interest rate on any borrowings
under the line of credit is 0.35% (2001: 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.

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:

|                      
|----------------------
|                      
|                      
|                      
|                      
|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 are 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                                              
|                                                     
|                                                     
|                                                     

(a)    
Capital stock  authorized

|                                                     
|-----------------------------------------------------
|First
preference shares - Unlimited number of shares 
|Second preference shares - Unlimited number of shares

---

Page 46

(b)    
Capital stock - issued and outstanding

---

Changes in the Company's issued
capital stock during the three-year period ended December 31, 2002 were as follows:

---

|                                    |  |  |  | Common shares |  
|----------------------------------- |  |  |  | ------------- | -
|                                   
|                                    |  |  |  | Shares        |  
|                                   
|January 1, 2000                     |  |  |  | 68,223,062    |  
|Issued on exercise of stock options |  |  |  | 86,666        |  
|Purchased and cancelled             |  |  |  | (4,357,900    | )
|                                   
|December 31, 2000                   |  |  |  | 63,951,828    |  
|Issued on conversion of debentures  |  |  |  | 1,146,966     |  
|Issued on exercise of stock options |  |  |  | 1,335,936     |  
|Purchased and cancelled             |  |  |  | (2,566,182    | )
|                                   
|December 31, 2001                   |  |  |  | 63,868,548    |  
|Issued on exercise of stock options |  |  |  | 283,836       |  
|Issued on conversion of debentures  |  |  |  | 5,128         |  
|                                   
|December 31, 2002                   |  |  |  | 64,157,512    |  
|                                   

(c) Contributed surplus

|                                                        
|--------------------------------------------------------
|                                                        
|                                                        
|At January 1                                            
|Premium paid on common shares purchased for cancellation
|Redemption of debentures                                
|Expiry of warrants, September 1, 2000                   
|Other                                                   
|                                                        
|At December 31                                          
|                                                        

11.    
INCOME PER SHARE

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

|                                                                               
|-------------------------------------------------------------------------------
|                                                                               
|                                                                               
|(i) Basic income                                                               
|Income from continuing operations                                              
|Provision for settlement of convertible debentures, net of tax                 
|                                                                               
|Income from continuing operations available to common shareholders             
|Income (loss) from discontinued operations                                     
|                                                                               
|Net income available to common shareholders                                    
|                                                                               
|(ii) Diluted income                                                            
|Income from continuing operations available to common shareholders             
|Imputed interest on liability component of convertible  debentures,  net of tax
|                                                                               
|Diluted income from continuing operations available to common shareholders     
|Income (loss) from discontinued operations                                     
|                                                                               
|Diluted net income available to common shareholders                            
|                                                                               
|(iii) Denominator  (000s)                                                      
|Weighted average basic shares outstanding                                      
|Unexercised options                                                            
|Effect of convertible debentures                                               
|                                                                               
|Diluted shares outstanding                                                     
|                                                                               

For the diluted income per share
calculations, 505,000 common share options (2001: 25,000 and 2000: 2,162,000 common share
options) were not included having a weighted average exercise price of $1.90 per share
(2001: $2.35, 2000: $2.91) which was in excess of the trading price.

---

Page 47

# 12.    SHARE BASED
COMPENSATION PLAN

The Company has a stock option plan
pursuant to which no more than 6.5 million 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 $0.45
to $2.35, after adjustment for the special dividend paid in October 2001.

If the Company had adopted the
fair-value-based method of accounting for its share option plan, the Companys pro
forma compensation expense would have decreased net income by $116,000 for the year ended
December 31, 2002, which would have no impact on the basic and diluted earnings per share
as reported. The grant-date, fair value of options granted during the twelve months 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. As the
accounting standard is to be applied to all awards granted subsequent to January 1, 2002,
the effective date of the Section, the pro forma disclosure excludes the effect of the
awards granted before January 1, 2002. There have been no share options granted to date in
2003.

A summary of the status of the
Companys share option plan as of December 31, 2002 and the changes during the period
then ended is presented below:

|                                      
|--------------------------------------
|                                      
|                                      
|Shares                                
|                                      
|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, 2002, the range of exercise prices and the weighted average exercise price is as
follows:

|              
|--------------
|Exercise price
|              
|$0.45 - $0.53 
|$1.57 - $2.35 
|              

# 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           | 
|                                                                      | 

# 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 48

After applying the expected tax rates
to the temporary differences, the future income tax assets and liabilities at December
31, 2002, 2001 and 2000 are presented below:

|                                               
|-----------------------------------------------
|2001                                           
|
|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                              
|Investment
      in shares of PNP              
|
|Total gross
      future income tax liabilities
|
|                                               
|Net future
      income tax asset (liability)  
|

The 2002 gross future income tax
assets do not include $5,163,000 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 U.S. of $19,700,000, which expire in 2007, and $11,700,000, which expire in 2017.

# 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.

|                                
|--------------------------------
|2002                            
|
|Assets                          
|
|Liabilities                     
|Equity and
      advances       
|
|                                
|
|Revenues                        
|Expenses                        
|
|Income before
      income taxes
|
|Cash provided
      (used):     
|Operating
      activities      
|Investing
      activities      
|Financing
      activities      
|
|                                
|

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 $2,279,000 at December 31,
2002. 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.

# 16.    RELATED PARTY
TRANSACTIONS

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

---

Page 49

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. Total fees paid to Amcan in 2001 were
$713,000 for services provided in prior periods.

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.

Advance to related corporation:

In July 2002, the Company advanced
$20,000,000 pursuant to a revolving loan agreement on an unsecured basis to Morguard
Corporation (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. Interest earned from the loan was $399,000.

Fee paid to related corporation:

The Company paid $413,000 to a
subsidiary of Morguard in connection with the $55,000,000 acquisition of two office
properties, located at 4720 and 4880 Tahoe Boulevard, Mississauga, Ontario. The fee was
capitalized to the cost of the properties.

Tenancy agreement:

A company controlled by a director
paid, under the terms of its tenancy agreement, $107,000 (2001: $104,000) to lease a
residential suite owned by the Company.

# 17.    SEGMENTED INFORMATION

The Companys principal
operations are the ownership and management 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 in Canada. Discontinued operations, which were sold during 2002, had
been in the United States. On December 31, 2002, the Company acquired two office
buildings. Accordingly, office revenues and operating expenses are not being reported as a
segment.

|                                              
|----------------------------------------------
|BALANCE 
      SHEET                          
|                                              
|ASSETS                                        
|Rental properties  - Retail                   
|- Office                                      
|- Residential                                 
|Properties
      held for development and sale
|Discontinued
      operations                 
|Cash and
      other assets                   
|                                              
|                                              
|                                              
|LIABILITIES
      AND SHAREHOLDERS EQUITY    
|Long-term
      debt - Retail                 
|- Residential                                 
|Other liabilities
      and equity            
|                                              
|                                              
|                                              

|                          
|--------------------------
|
|STATEMENT OF INCOME       
|                          
|Retail - Revenue          
|-
      Operating expenses
|                          
|Rental income             
|                          
|Residential - Revenue     
|-
      Operating expenses
|                          
|Rental income             
|                          
|TOTAL RENTAL INCOME       
|                          

# 18.    DISCONTINUED
OPERATIONS

In April 2002, PT Gaming LLC
(PTs), in which the Company has 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.

---

Page 50

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:

|                                                        
|--------------------------------------------------------
|
|                                                        
|                                                        
|Operating income                                        
|Loss on disposal of discontinued
      gaming operations
|                                                        
|Income (loss) from discontinued gaming
      operations 
|                                                        

Summarized balance sheet information
for gaming is as follows:

|                                                              |      | 
|------------------------------------------------------------- | ---- | 
|                                                             
|Assets                                                        | 2002 | 
|                                                             
|Property and equipment, net of accumulated
      depreciation | --   | 
|Other assets                                                  | --   | 
|                                                             
|Total                                                         | --   | 
|                                                             
|                                                              |      | 
|                                                             
|Liabilities                                                   | 2002 | 
|                                                             
|Long-term debt                                                | --   | 
|Accounts payable and deposits                                 | --   | 
|                                                             
|Total                                                         | --   | 
|                                                             

# 19.    SUBSEQUENT EVENT

Effective January 1, 2003, the Company
entered into a management agreement with Morguard Investments Limited (MIL), a
subsidiary of Morguard under which MIL provides property management and corporate services
to the Company.

In January 2003, the Company advanced
$6,000,000 to Morguard, pursuant to the revolving loan agreement and on the same terms and
conditions described in Note 16.

In February 2003, the Company entered
into an agreement to borrow $44,000,000, bearing interest at 6.7%, secured by a first
charge on the Companys two office properties, and due in 2018. The funds will be
used for general corporate purposes.

# 20.    COMPARATIVE FIGURES

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

# 21.    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.

(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

---

Page 51

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. 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 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 $1,330,000 recorded in a
          separate component of shareholders equity.

(x)    
          The financial statements are prepared on the accrual basis in accordance with
          generally accepted accounting principles. The preparation of financial
          statements in conformity with generally accepted accounting principles requires
          management to make estimates and assumptions that affect the reported amounts of
          assets and liabilities and the disclosure of contingent assets and liabilities
          at the date of the financial statements and the reported amounts of revenue and
          expenses during the reporting period. Actual results could differ from these
          estimates.

(xi)    
          For US GAAP purposes, the Company adopted Statement of Financial Accounting
          Standards No.144, Accounting for the Impairment or Disposal of Long-Lived Assets
          (SFAS No. 144) on January 1, 2002 on a prospective basis. SFAS No.
          144 broadens the definition of discontinued operations to include all
          distinguishable components of an entity that will be eliminated from ongoing
          operations. It requires that results of operations of a component of an entity
          that has been disposed of, or is classified as held for sale, be reported in
          discontinued operations if: (1) the operations and cash flows of the component
          have been or will be eliminated as a result of the disposal transaction, and (2)
          the entity will not have any significant continuing involvement in the
          operations of the component after the disposal transaction. Under existing
          Canadian GAAP, operations requiring discontinued operations treatment would be
          different than under US GAAP. SFAS No. 144 is substantially equivalent to the
          new Canadian standards HB 3063, Impairment of Long-Lived Assets, and HB
          3475, Disposal of Long-Lived Assets and Discontinued Operations, which
          are not required to be adopted by the Company until after 2002.

(xii)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.

(xiii)    
          For US GAAP purposes, the Company is required to adopt Statement of Financial
          Accounting Standards No. 143, Accounting for Asset Retirement Obligations
          (SFAS No. 143) on January 1, 2003. SFAS No. 143 requires the fair
          value of an asset retirement obligation to be recorded as a liability in the
          period in which a legal obligation is incurred associated with

---

Page 52

the retirement
of           tangible long-lived assets that result from the acquisition, construction,
          development and/or normal use of the assets. A corresponding asset, which is
          depreciated over the life of the asset, is also required to be recorded.
          Subsequent to the initial measurement of the asset retirement obligation, the
          obligation is required to be adjusted at the end of each period to reflect the
          passage of time and changes in the estimated future cash flows underlying the
          obligation. The Company does not believe that the adoption of this new standard
          will have a material impact on the Companys financial condition or
results           of operations.

(xiv)    New
accounting standards

In November
2002, the FASB issued Interpretation No.           45, Guarantors Accounting and
Disclosure Requirements for Guarantees,           including Indirect Guarantees of
Indebtedness to Others (FIN 45). In           addition to requiring
disclosures by guarantors, FIN 45 requires a guarantor to           recognize, at
inception of a guarantee, a liability for the fair value of the           obligation
undertaken. The initial recognition and measurement provisions of FIN           45 are
applicable to guarantees issued or modified after December 31, 2002.

In January 2003, the FASB issued
Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46).
This Interpretation addresses the consolidation by business enterprises of variable
interest entities as defined. FIN 46 will be applicable for 2003.

The Company does not expect the
implementation of these guidelines to have a material impact on its 2003 consolidated
financial statements.

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

|                                                                                            | 
|------------------------------------------------------------------------------------------- | 
|                                                                                            | 
|
|Net income based
      on Canadian GAAP                                                     | 
|Method of depreciation
      (i)                                                            | 
|Depreciation
      expense                                                                  | 
|Rental
      properties - cost of sales                                                     | 
|Equity
      in earnings of PNP                                                             | 
|6% and 7.5% convertible
      debenture interest expense adjustment (iv)                    | 
|7% convertible
      debenture interest expense adjustment (iv)                             | 
|Adjustment to
      loss on redemption and repurchase of convertible                        | 
|debentures
      (iv)                                                                       | 
|Adjustment for
      foreign currency translation account (vi)                              | 
|Adjustment to
      foreign exchange loss (vii)                                             | 
|Adjustment to
      gain on sale of shares of PNP                                           | 
|Adjustment to
      income tax expense for impact of changes                                | 
|in
      substantively enacted rates (v)                                                    | 
|                                                                                            | 
|Adjustment to
      income tax expense for impact of
         all other US GAAP differences | 
|
|                                                                                            | 
|Minority interest
      share of above                                                      | 
|
|Net income (loss)
      based on US GAAP                                                    | 
|

(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:

|                                                                   
|-------------------------------------------------------------------
|                                                                   
|
|Net income (loss) from continuing
      operations based on US GAAP
|Income from discontinued operations
      based on US GAAP         
|
|Net income (loss) based on
      US GAAP                           
|
|                                                                   
|Per share amounts based on
      US GAAP would be as follows:      
|Income (loss) from continuing
      operations per share           
|-
      basic                                                      
|-
      diluted                                                    
|Net income (loss) per share                                        
|-
      basic                                                      
|-
      diluted                                                    

---

Page 53

|                                                       |  |  |         |  |  |         |  |  |        | 
|------------------------------------------------------ |  |  | ------- |  |  | ------- |  |  | ------ | 
|Weighted average number of
      shares (in thousands) | 
|-
      basic                                          |  |  | 64,110  |  |  | 63,382  |  |  | 65,235 | 
|-
      diluted                                        |  |  | 122,491 |  |  | 151,831 |  |  | 65,265 | 

---

Page 54

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

|
|
|
|
|
|
|
|
|
|
|

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

|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|

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:

|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|

---

Page 55

|
|
|
|
|
|
|
|
|
|

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:

|
|
|
|
|
|
|
|
|
|
|
|

Total assets under US GAAP are
calculated as follows:

|
|
|
|
|
|
|
|
|
|
|
|
|

Interest bearing debts under US GAAP
are calculated as follows:

|
|
|
|
|
|
|
|
|

# ITEM 18 - FINANCIAL
STATEMENTS

Not applicable.

---

Page 56

|ITEM 19 - |  | EXHIBITS
|--------- |  | --------

| | CERTIFICATION
OF PRESIDENT
| | --------------------------

| | CERTIFICATION
OF CHIEF FINANCIAL OFFICER
| | ----------------------------------------

I,
William I. Kennedy, certify that:

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

| | 2. |  | Based
on my knowledge, this annual 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
annual report;
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | 4. |  | The
registrants other certifying officers and I are responsible for
               establishing and maintaining disclosure controls and procedures (as
defined in                Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | a) |  | designed
such disclosure controls and procedures to ensure that material
               information relating to the registrant, including its consolidated
subsidiaries,                is made known to us by others within those entities,
particularly during the                period in which this annual report is being
prepared;
| |  | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | b) |  | evaluated
the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this
annual                report (the Evaluation Date); and
| |  | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | c) |  | presented
in this annual report our conclusions about the effectiveness of the
               disclosure controls and procedures based on our evaluation as of the
Evaluation                Date;
| |  | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. |  | The
registrants other certifying officers and I have disclosed, based on
               our most recent evaluation, to the registrants auditors and the
audit                committee of registrants board of directors (or persons
performing the                equivalent function);
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | a) |  | all
significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record,
process,                summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls;
and
| |  | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | b) |  | any
fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls;
and
| |  | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. |  | The
registrants other certifying officers and I have indicated in this
               annual report whether or not there were significant changes in internal
controls                or in other factors that could significantly affect internal
controls subsequent                to the date of our most recent evaluation, including
any corrective actions with                regard to significant deficiencies and
material weaknesses.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

April 30, 2003

---

Date:

William I. Kennedy

---

William I. Kennedy
President

---

Page 57

Item 19 - continued

I,
Richard E. Fletcher, certify that:

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

| | 2. |  | Based
on my knowledge, this annual 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
annual report;
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | 4. |  | The
registrants other certifying officers and I are responsible for
               establishing and maintaining disclosure controls and procedures (as
defined in                Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | a) |  | designed
such disclosure controls and procedures to ensure that material
               information relating to the registrant, including its consolidated
subsidiaries,                is made known to us by others within those entities,
particularly during the                period in which this annual report is being
prepared;
| |  | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | b) |  | evaluated
the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this
annual                report (the Evaluation Date); and
| |  | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | c) |  | presented
in this annual report our conclusions about the effectiveness of the
               disclosure controls and procedures based on our evaluation as of the
Evaluation                Date;
| |  | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. |  | The
registrants other certifying officers and I have disclosed, based on
               our most recent evaluation, to the registrants auditors and the
audit                committee of registrants board of directors (or persons
performing the                equivalent function);
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | a) |  | all
significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record,
process,                summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls;
and
| |  | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | b) |  | any
fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls;
and
| |  | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. |  | The
registrants other certifying officers and I have indicated in this
               annual report whether or not there were significant changes in internal
controls                or in other factors that could significantly affect internal
controls subsequent                to the date of our most recent evaluation, including
any corrective actions with                regard to significant deficiencies and
material weaknesses.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

April 30, 2003

---

Date:

Richard E. Fletcher

---

Richard E. FletcherVice-President,
Finance
Chief Financial Officer

---

Page 58

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, William I. Kennedy, 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,           2002
(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, 2003

William I.
Kennedy

---

William I. KennedyPresident

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 59

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, Richard E. Fletcher, 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,           2002
(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, 2003

Richard E.
Fletcher

---

Richard E. Fletcher
Vice-President, Finance
Chief 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 60

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

William I. Kennedy

---

|William I. KennedyPresident |  | February 21, 2003
|--------------------------- |  | -----------------

Richard E. Fletcher

---

|Richard  E. FletcherVice-President, Finance
Chief Financial Officer |  | February 21, 2003
|------------------------------------------------------------------- |  | -----------------

---

Page 61

# REVENUE PROPERTIES
COMPANY LIMITED
SCHEDULE III - REAL
ESTATE AND ACCUMULATED DEPRECIATION - RENTAL PROPERTIES AND PROPERTIES HELD FOR SALE
December 31, 2002

|                                      |                                                                |                         |                                             |                                                  |                                       |          |                       |          |                         |          |               |          |                                     |  |                |  |                                   |   |                      |  |               |         |                                                                    |   |         |  |   |        |  |  |              |  |  |           |  |  |               | 
|------------------------------------- | -------------------------------------------------------------- | ----------------------- | ------------------------------------------- | ------------------------------------------------ | ------------------------------------- | -------- | --------------------- | -------- | ----------------------- | -------- | ------------- | -------- | ----------------------------------- |  | -------------- |  | --------------------------------- | - | -------------------- |  | ------------- | ------- | ------------------------------------------------------------------ | - | ------- |  | - | ------ |  |  | ------------ |  |  | --------- |  |  | ------------- | 
|                                     
|Column A                              | Column B                                                       |                         | Column C                                    | Column D                                         | Column E                              | Column F |                       | Column G |                         | Column H |               | Column I |                                    
|                                     
|                                      |                                                                | Initial cost to Company | Costs capitalized subsequent to acquisition | Gross amount at which carried at close of period
|                                     
|Description                           | Encumbrances (see Note 8 for additional encumbrances) ($000s) |                         | Land ($000s)                               |                                                  | Buildings and improve- ments ($000s) |          | Improvements ($000s) |          | Carrying costs ($000s) |          | Land ($000s) |          | Buildings and improvements ($000s) |  | Total ($000s) |  | Accumulated depreciation ($000s) |   | Date of construction |  | Date acquired |         | Life on  which depreciation in latest income statement is computed |  
|                                     
|100% OWNED PROPERTIES                 |                                                                |                        
|                                     
|ONTARIO                               |                                                                |                        
|                                     
|Centerpoint                           |                                                                |                         | $                                           |                                                 |                                       | $        | 3,785                 |          | $                       | 29,314   |               |          |                                     |  |                |  |                                   | $ | 3,785                |  | $             | 29,314  |                                                                    | $ | 33,099  |  | $ | 8,683  |  |  | 1961/1980    |  |  |           |  |  | 40 years      | 
|                                     
|East York Town Centre                 |                                                                |                         |                                             | 19,753                                           |                                       |          | 2,664                 |          |                         | 15,801   |               |          |                                     |  |                |  |                                   |   | 2,664                |  |               | 15,801  |                                                                    |   | 18,465  |  |   | 6,685  |  |  | 1961         |  |  |           |  |  | 40 years      | 
|                                     
|The Colonnade                         |                                                                |                         |                                             |                                                 |                                       |          |                      |          |                         | 19,445   |               |          |                                     |  |                |  |                                   |   |                     |  |               | 19,445  |                                                                    |   | 19,445  |  |   | 3,932  |  |  | 1963/1986    |  |  | 1991      |  |  | 36 years      | 
|                                     
|Guildwood Village                     |                                                                |                         |                                             |                                                 |                                       |          | 180                   |          |                         | 2,755    |               |          |                                     |  |                |  |                                   |   | 180                  |  |               | 2,755   |                                                                    |   | 2,935   |  |   | 1,692  |  |  | 1963         |  |  |           |  |  | 40 years      | 
|                                     
|Creekside Office Campus               |                                                                |                         |                                             |                                                 |                                       |          | 7,164                 |          |                         | 49,124   |               |          |                                     |  |                |  |                                   |   | 7,164                |  |               | 49,124  |                                                                    |   | 56,288  |  |   |       |  |  |              |  |  | 2002      |  |  | 40 years      | 
|                                     
|Other properties                      |                                                                |                         |                                             |                                                 |                                       |          |                      |          |                         | 4,673    |               |          |                                     |  |                |  |                                   |   |                     |  |               | 4,673   |                                                                    |   | 4,673   |  |   | 2,225  |  |  | 1966 to 1988 |  |  | 1991/1994 |  |  | 26-38 yrs     | 
|                                     
|ALBERTA                               |                                                                |                        
|                                     
|Prairie Mall                          |                                                                |                         |                                             | 23,481                                           |                                       |          | 7,603                 |          |                         | 36,969   |               |          |                                     |  |                |  |                                   |   | 7,603                |  |               | 36,969  |                                                                    |   | 44,572  |  |   | 2,338  |  |  | 1973         |  |  | 1992/2001 |  |  | 40 years      | 
|                                     
|PROPORTIONATE SHARE OF JOINT VENTURES |                                                                |                        
|                                     
|NEW BRUNSWICK                         |                                                                |                        
|                                     
|Saint John City Hall  (50%)           |                                                                |                         |                                             | 1,437                                            |                                       |          | 284                   |          |                         | 2,823    |               |          |                                     |  |                |  |                                   |   | 284                  |  |               | 2,823   |                                                                    |   | 3,107   |  |   | 1,241  |  |  | 1971         |  |  | 1991      |  |  | 21 years      | 
|                                     
|OTHER ASSETS                          |                                                                |                        
|                                     
|Tenant improvements                   |                                                                |                         |                                             |                                                  |                                       |          |                      |          |                         | 13,516   |               |          |                                     |  |                |  |                                   |   |                     |  |               | 13,516  |                                                                    |   | 13,516  |  |   | 7,342  |  |  |              |  |  |           |  |  | Term of lease | 
|                                     
|TOTALS                                |                                                                |                         | $                                           | 44,671                                           |                                       | $        | 21,680                |          | $                       | 174,420  |               |          |                                     |  |                |  | $                                 |   | 21,680               |  | $             | 174,420 |                                                                    | $ | 196,100 |  | $ | 34,138 |  |  |              |  |  |           |  |  |               | 
|                                     

---

Page 62

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

# December 31, 2002

|LAND, BUILDINGS AND IMPROVEMENTS        |  |  |   |         |   |   |         |  
|--------------------------------------- |  |  | - | ------- | - | - | ------- | -
|                                       
|(in thousands of Canadian dollars)      |  |  |   | 2002    |   |   | 2001    |  
|                                       
|Balance at beginning of year            |  |  | $ | 185,647 |   | $ | 167,519 |  
|Additions during year:                  |  | 
|Acquisitions and additions              |  |  |   | 92,260  |   |   | 29,444  |  
|Deductions during year:                 |  | 
|Cost of real estate sold                |  |  |   | (79,535 | ) |   | (2,563  | )
|Write down and write-off of real estate |  |  |   | (2,272  | ) |   | (8,753  | )
|                                       
|Balance at end of year                  |  |  | $ | 196,100 |   | $ | 185,647 |  
|                                       
|ACCUMULATED DEPRECIATION                |  | 
|                                       
|(in thousands of Canadian dollars)      |  |  |   | 2002    |   |   | 2001    |  
|                                       
|Balance at beginning of year            |  |  | $ | 37,825  |   | $ | 34,848  |  
|Additions during year                   |  | 
|Depreciation expense                    |  |  |   | 4,952   |   |   | 5,158   |  
|Deductions during year:                 |  | 
|Cost of real estate sold                |  |  |   | (6,674  | ) |   | (708    | )
|Write down and write-off of real estate |  |  |   | (1,965  | ) |   | (1,473  | )
|                                       
|Balance at end of year                  |  |  | $ | 34,138  |   | $ | 37,825  |  
|