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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

|ý                                           | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934    
|------------------------------------------- | ----------------------------------------------------------------------------------------
|For the fiscal year ended December 31, 2003
|OR                                         
|o                                           | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-31297

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HERITAGE PROPERTY INVESTMENT TRUST, INC.(Exact name of registrant as specified in its charter)

|Maryland(State or other jurisdiction of
incorporation or organization) |  | 04-3474810(I.R.S. Employer Identification No.)
|---------------------------------------------------------------------- |  | ----------------------------------------------

131 Dartmouth Street
Boston, Massachusetts 02116(Address, including zip code, of principal executive offices) Registrant's telephone number, including area code: (617) 247-2200

|Securities registered pursuant to Section 12(b) of the Act: |  | Common Stock, par value $.001 per share
New York Stock Exchange
|----------------------------------------------------------- |  | ---------------------------------------------------------------
|Securities registered pursuant to Section 12(g) of the Act: |  | None                                                           

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 ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act). Yes ý    No o

As of June 30, 2003, the aggregate market value of the voting stock held by nonaffiliates of the Registrant was $492.4 million.

As
of March 8, 2004, the number of shares outstanding of the Registrant's common stock was 46,592,569.

Documents Incorporated by Reference

Portions
of the proxy statement for the 2004 Annual Meeting of Stockholders are incorporated by reference in Part III:

Part III:
Items 10, 11, 12, 13 and 14 of this report.



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HERITAGE PROPERTY INVESTMENT TRUST, INC.
ANNUAL REPORT ON FORM 10-K
INDEX



|Item No. |  |                                                                                      
|-------- |  | -------------------------------------------------------------------------------------
|PART I  
|Item 1:  |  | Business                                                                             
|Item 2:  |  | Properties                                                                           
|Item 3:  |  | Legal Proceedings                                                                    
|Item 4:  |  | Submission of Matters to a Vote of Security Holders                                  
|PART II 
|Item 5:  |  | Market for Registrant's Common Equity and Related Stockholder Matters                
|Item 6:  |  | Selected Financial Data                                                              
|Item 7:  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations
|Item 7a: |  | Quantitative and Qualitative Disclosures About Market Risk                           
|Item 8:  |  | Financial Statements and Supplementary Data                                          
|Item 9:  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|Item 9A: |  | Controls and Procedures                                                              
|PART III
|Item 10: |  | Directors and Executive Officers of the Registrant                                   
|Item 11: |  | Executive Compensation                                                               
|Item 12: |  | Security Ownership of Certain Beneficial Owners and Management                       
|Item 13: |  | Certain Relationships and Related Party Transactions                                 
|Item 14: |  | Principal Accounting Fees and Services                                               
|PART IV 
|Item 15: |  | Exhibits, Financial Statements, Financial Statement Schedule and Reports on Form 8-K 

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PART I

Forward-Looking Statements

This Annual Report on Form 10-K, together with other statements and information publicly disseminated by Heritage Property Investment
Trust, Inc. ("Heritage" or the "Company"), contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar
expressions concerning matters that are not historical facts. The forward-looking statements reflect the Company's current views about future events and are subject to risks, uncertainties,
assumptions and changes in circumstances that may cause the Company's actual results to differ significantly from those expressed in any forward-looking statement. Forward-looking statements involve
known and unknown risks, uncertainties and other factors, which are, in some cases, beyond the Company's control and which could materially affect actual results and therefore should not be relied
upon. The factors that could cause actual results to differ materially from current expectations are discussed under "Item 1BusinessRisk Factors." The forward-looking
statements contained herein represent the Company's judgment as of the date of this report, and the Company cautions readers not to place undue reliance on those statements.

Item 1: Business

Overview

We are a fully integrated, self-administered and self-managed real estate investment trust, or "REIT." We are a Maryland corporation and
one of the nation's largest owners of neighborhood and community shopping centers. We acquire, own, manage, lease and redevelop primarily grocer-anchored neighborhood and community shopping centers
located predominately in the Eastern and Midwestern United States. In 2003, we expanded our operations to include the Southwestern United States with our Trademark Portfolio Acquisition described
below. As of December 31, 2003, we had a shopping center portfolio consisting of 162 shopping centers, located in 29 states and totaling approximately 32.7 million square feet of total
gross leasable area ("GLA"), of which approximately 27.5 million square feet was Company-owned GLA. Our shopping center portfolio was 92.0% leased as of December 31, 2003.

We
are headquartered in Boston, Massachusetts and have sixteen regional offices located in the Eastern, Midwestern, and Southwestern United States. We also own four office buildings.

Heritage
Property Investment Limited Partnership ("Heritage OP") and Bradley Operating Limited Partnership ("Bradley OP") are subsidiaries through which the Company conducts
substantially all of its business and owns (either directly or through subsidiaries) substantially all of its assets. As of December 31, 2003, the Company owned directly or indirectly all of
the ownership interests in the Heritage OP and approximately 99% of the voting interests in the Bradley OP, and is the sole general partner of Heritage OP and Bradley OP. This structure is commonly
referred to as an umbrella partnership REIT or UPREIT.

We
elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code, commencing with our initial taxable year ended December 31, 1999. We believe that we
are organized in conformity with the requirements for qualification as a REIT under the Internal Revenue Code, and that our manner of operation enables us to meet the requirements for taxation as a
REIT for federal income tax purposes. To maintain REIT status, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our REIT
taxable income to our stockholders. As a REIT, we generally will not be subject to federal income tax on REIT taxable income we distribute to our stockholders. If we fail to qualify as a REIT in any
taxable year, we

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will
be subject to federal income tax at regular corporate rates. Even if we qualify for taxation as a REIT, we may be subject to some federal, state and local taxes on our income and property.

2003 Highlights and Recent Developments

Trademark Portfolio Acquisition

During the fourth quarter of 2003, we completed the acquisition of a portfolio of eight properties from Trademark Property Company (the "Trademark Portfolio
Acquisition"). These eight properties are located primarily in the Dallas/Ft. Worth and Houston areas and comprise 1.2 million aggregate square feet of Company-owned GLA. Five of these
properties, all of which were unencumbered, were acquired in October 2003 for $96 million, and funded through a $60 million bridge loan with a primary term of 120 days and
borrowings under our line of credit. The remaining three properties were acquired in November 2003 for $67 million, and funded through the assumption of mortgage debt with an estimated
fair market value of $41 million and borrowings under our line of credit.

Issuance of Public Equity

In December 2003, we completed a secondary public offering of our common stock and sold a total of 3,932,736 shares, including the Underwriter's
over-allotment of 432,736 shares, at a net price of $28.27 per share. The net proceeds of $111 million from this offering were used to repay indebtedness, including the
$60 million bridge loan incurred in connection with the Trademark Portfolio Acquisition. The Company's two largest stockholders at the time, Net Realty Holding Trust, a subsidiary of The New
England Teamsters and Trucking Industry Pension Fund ("NETT"), and the Prudential Insurance Company of America ("Prudential"), also took part in the offering. Prudential sold approximately
$61 million of our stock in the offering, reducing its ownership percentage in the Company to approximately 6.6%. In addition, NETT exercised its contractual preemptive right and purchased
approximately 40%, or $44 million of the shares we sold in the offering.

Bridge Loan

On October 16, 2003, in conjunction with the closing of the Trademark Portfolio Acquisition, we incurred additional indebtedness in the form of a
$60 million bridge loan from Fleet National Bank, the administrative agent of our existing line of credit. This loan was scheduled to mature on February 16, 2004, subject to a
90-day extension, and bore interest and contained substantially identical terms to our line of credit. In December 2003, we repaid this bridge loan in full with a portion of the
proceeds of our secondary public offering.

Shelf Registration Statement

During October 2003, we filed a shelf registration statement on Form S-3 for up to $500 million of debt securities, preferred
stock, common stock and common stock warrants. This shelf registration statement will permit us to utilize the public debt and equity markets as a principal source of capital for our expansion and
other needs. As of March 8, 2004, taking into account our secondary public offering described above, we had approximately $389 million available for issuance under this shelf
registration statement.

Expansion of Shopping Center Portfolio

During 2003, including the Trademark Portfolio Acquisition, we expanded our shopping center portfolio by acquiring eleven properties aggregating
2.1 million square feet of GLA, of which 1.7 million square feet was Company-owned. The aggregate investment for the eleven properties was $224.2 million and these acquisitions
were funded through borrowings under our line of credit, the assumption of mortgage debt, and the bridge loan noted above.

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Disposition of Non-Core Assets

During 2003, we also completed the disposition of ten single tenant properties and one shopping center property. The net proceeds from these dispositions was
$15.5 million, resulting in a gain of $2.7 million. The proceeds from these sales were used to partially repay our line of credit. The sale of these properties was consistent with our
policy to sell non-core assets and redeploy the capital into the acquisition of primarily grocer-anchored shopping centers.

Rating Agency Coverage

Fitch initiated coverage on the Company with an investment grade rating of BBB-/stable in December 2003. This rating adds to the rating of
BBB-/stable from Standard & Poors and Baa3/stable from Moody's.

Payment of Dividends

During 2003, our first full year as a public company, we paid aggregate dividends on our common stock of $2.10 per share.

Redemption of Series B Preferred Operating Partnership Units

On February 23, 2004, we redeemed all outstanding 8.875% Series B Cumulative Redeemable Perpetual Preferred Units of Bradley Operating Limited
Partnership, one of our subsidiary operating partnerships. All 2,000,000 of the outstanding Series B Preferred Units were redeemed at a redemption price of $25.00 per unit, plus approximately
$0.3266 of accrued and unpaid distributions, for an aggregate redemption price of approximately $25.3266 per unit. There were no unamortized issuance costs associated with the Series B
Preferred Units, therefore, we did not incur a charge in connection with this redemption.

Long Meadow Commons Acquisition

In February 2004, we announced that we had entered into an agreement to acquire Long Meadow Commons, a 119,000 square foot grocer-anchored community
shopping center located in Mundelein, Illinois (a northern Chicago suburb) for approximately $19 million. The property, which is 96% leased, is anchored by Dominick's Finer Foods (a subsidiary
of Safeway). The acquisition is expected to be completed in the second quarter of 2004 and is subject to customary closing conditions. We anticipate that we will fund the acquisition through the
assumption of mortgage indebtedness and borrowings under our line of credit.

Board of Director Changes

In February 2004, our Board of Directors elected Michael J. Joyce to join the Board effective in June 2004, following his retirement as an active
partner from the public accounting firm, Deloitte & Touche LLP. Mr. Joyce is currently the New England Managing Partner of Deloitte. Mr. Joyce joined the predecessor firm of
Deloitte in 1967 and became an accounting and auditing partner in 1975. Upon joining the Board, Mr. Joyce will serve on the Audit Committee and be designated as the Board's "audit committee
financial expert."

In
addition to Mr. Joyce's election to the Board, Paul V. Walsh, a director since March 2002, and Robert M. Falzon, a director since September 2000, each stepped
down as of December 31, 2003.

Business and Growth Strategies

Our business strategy has been, and will continue to be, to generate stable and increasing cash flow and asset value by acquiring and managing a portfolio of real
estate properties located in attractive

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markets
with strong economic and demographic characteristics. Our business strategy consists of the following elements:



Our Competitive Strengths

We seek to implement our strategy in a number of ways, including by our:



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Financing Strategy

Our financing strategy is to maintain a strong financial position by maintaining a prudent level of leverage and managing our variable interest rate exposure. We
have accomplished this by being flexible
in selecting the best means available of financing our operations and growth, including accessing the public equity markets.

In
April 2002, we completed our initial public offering and sold 14,080,556 shares of our common stock at a price of $25.00 per share resulting in net proceeds to us of
$323 million. We used the net proceeds of our initial public offering to reduce our indebtedness.

In
December 2003, we completed a secondary public offering of our common stock and sold a total of 3,932,736 shares at a net price of $28.27 per share resulting in net proceeds to
us of $111 million. We used the net proceeds to repay indebtedness, including the $60 million bridge loan incurred in connection with the Trademark Portfolio Acquisition.

At
December 31, 2003, we had approximately $1.1 billion of indebtedness consisting of a combination of our unsecured line of credit, unsecured notes issued by one of our
operating partnerships and mortgage indebtedness. This indebtedness has a weighted average interest rate of

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6.24%
with an average maturity of 4.6 years. As of December 31, 2003, our market capitalization was $2.5 billion, resulting in a debt-to-total market
capitalization ratio of approximately 43.5%.

We
have a three-year $350 million unsecured line of credit with a group of lenders and Fleet National Bank, as agent. Our two operating partnerships are the borrowers
under this line of credit and we, and certain of our other subsidiaries, have guaranteed this line of credit. This line of credit is being used principally to fund growth opportunities and for working
capital purposes. At December 31, 2003, $243 million was outstanding under the line of credit.

In
October, 2003, in conjunction with the closing of the Trademark Portfolio Acquisition, we incurred additional indebtedness in the form of a $60 million bridge loan from Fleet
National Bank, the administrative agent of our line of credit. This loan was scheduled to mature on February 16, 2004, subject to a 90-day extension, and bore interest and contained
substantially identical terms to our line of credit. In December 2003, we repaid this bridge loan in full with a portion of the proceeds of our secondary public offering.

We
intend to finance future growth with the most advantageous source of capital available. These sources may include selling common stock, preferred stock or debt securities through
public offerings or private offerings, incurring or assuming additional indebtedness through secured or unsecured borrowings, issuing units of limited partnership interests of one of our operating
partnerships in exchange for contributed property, and reinvesting proceeds from the disposition of properties. In
addition, we may enter into joint ventures with institutions or developers to acquire properties or portfolios, reducing the amount of capital required by us to make those investments.

During
October 2003, we filed a shelf registration statement on Form S-3 for up to $500 million of debt securities, preferred stock, common stock and
common stock warrants. This shelf registration statement will permit us to utilize the public debt and equity markets as a principal source of capital for our expansion and other needs. As of
March 8, 2004, taking into account our secondary public offering described above, we had approximately $389 million available for issuance under this shelf registration statement.

We
believe that our existing working capital and cash provided by operations should be sufficient to meet our short-term liquidity requirements, consisting primarily of funds
necessary for operating expenses and other property expenditures, recurring maintenance capital expenditures, interest expense and scheduled principal payments on outstanding indebtedness and future
distributions to our stockholders. In addition, we believe that our existing working capital, cash provided by operations, secured and unsecured indebtedness, our line of credit and equity capital
will continue to be available to us in the future to fund our long-term liquidity requirements consisting primarily of funds necessary to pay for scheduled debt maturities, renovations,
expansions and other non-recurring capital expenditures that need to be made periodically to our properties, and the costs associated with acquisitions of properties that we pursue.

Growth Strategy

Acquisitions

We target grocer-anchored, open-air neighborhood and community shopping centers generally containing greater than 100,000 square feet of GLA. In
particular, we focus on those shopping centers anchored by market-leading grocers or those regional operators who have dominant positions in their trade areas. In addition, we focus on the presence
of, or the ability to add, other additional anchor(s) for these centers, including electronics, home improvement, off-price retailers, office superstores, and fabric and clothing
retailers, all of whom we believe to be generally beneficial to the value of the center. In addition to those anchors, we also seek properties with a diverse tenant mix that includes service
retailers, such as banks, florists, video stores, restaurants, and apparel and specialty shops. We

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seek
a convenient and easily accessible location with abundant parking close to residential communities, with excellent visibility for our tenants and easy access for neighborhood shoppers.

With
respect to our geographical focus, historically, our acquisition activities were focused primarily in the Eastern and Midwestern United States. We seek to establish a significant
market presence by owning multiple properties in an area. As our portfolio has grown, we have employed and will, in the future, continue to employ, a dual strategy that focuses our acquisition
activities primarily in the top 50 MSA's. The first part of our strategy is to target properties in geographic areas proximate to our existing neighborhood and community shopping centers, which allows
us to maximize our current resources and manage expenses. During 2003, we acquired three shopping centers in transactions that fit this model.

The
second part of our strategy is to explore opportunities to expand into other geographic markets where the opportunity presented is a sizable portfolio that will allow us to reach an
economy of scale. In 2003, we capitalized on just such an opportunity when we entered the Texas marketplace for the first time through our Trademark Portfolio Acquisition, consisting of eight
properties. In connection with this transaction, we also established a regional office in Dallas, Texas, which will facilitate future growth in Texas. We anticipate that we will use this transaction
to further expand in the Southwestern United States marketplace in the future.

We
will continue to evaluate all potential acquisitions on a property-by-property and market-by-market basis. We evaluate each market
based on similar criteria, including: stable or growing population base; positive job growth; diverse economy, and other competitive factors. In the future, we may also pursue joint venture
arrangements with third party developers and/or institutional investors. These joint ventures would provide us with greater access to potential acquisitions and alternative sources of capital to fund
acquisitions.

Dispositions

We generally hold our properties for investment and the production of rental income and not for sale to buyers in the ordinary course of our business. However, we
continually analyze each asset in our portfolio and will consider those properties that might be sold or exchanged for optimal sale prices or exchange values, given prevailing market conditions and
the particular characteristics of each property. In the future, we may dispose of properties that are not a strategic fit within our overall portfolio.

In-House Leasing and Property Management Program

We believe that effective leasing is the key to successful asset management. We maintain close relationships with our tenants, properties and markets by
maintaining 16 regional offices in addition to our corporate headquarters in Boston. A majority of these offices are staffed with leasing representatives. Our primary goal is for each leasing
representative to become an expert in his or her marketplace by becoming familiar with current tenants as well as potential local, regional and national tenants who would complement our current tenant
mix. The renewal and replacement of tenants is critical to our leasing and management performance.

Our
full time property managers are located throughout our regional offices, which make them easily accessible to our properties. This enables our managers to remain in frequent contact
with our tenants to ensure the proper maintenance of our properties. We periodically renovate and improve our properties in order to keep them in top condition to enable us to attract and retain our
tenants.

Our
leasing and property management functions are supervised and administered by our senior officers at our Boston headquarters. Corporate management, leasing and property management
personnel regularly visit all of our properties to support our regional personnel and to ensure implementation of our policies and directives.

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Competition

We believe that competition for the acquisition and operation of retail shopping centers is highly fragmented. We face competition from institutional pension
funds, other REITs and owner-operators engaged in the acquisition, ownership and leasing of shopping centers as well as from numerous local, regional and national real estate developers and owners in
each of our markets.

We
encounter competition for acquisitions of existing income-producing properties. We also face competition in leasing available space at our properties to prospective tenants. The
actual competition for tenants varies depending upon the characteristics of each local market in which we own and manage property. We believe that the principal competitive factors in attracting
tenants in our market areas are location, price, and the presence of anchor tenants and maintenance of properties.

Employees

At December 31, 2003, we had 140 total employees. Our employees included 29 leasing and support personnel, 52 property management and support personnel, 8
legal and support personnel, and 51 corporate management and support personnel. We believe that our relations with our employees are good. None of our employees are unionized.

Available Information

A copy of this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K
and any amendments to those reports are available free of charge on the Internet at our websitewww.heritagerealty.comas soon as reasonably practicable
after we electronically file those reports with, or furnish those reports to, the Securities and Exchange Commission. The information contained on our website does not constitute incorporation by
reference of the information contained on the website and should not be considered part of this document. We will also furnish copies of those reports free of charge upon written request to our
Investor Relations department at the following address:



Corporate Governance

During 2003, we implemented several corporate governance initiatives to address certain legal requirements promulgated under the Sarbanes-Oxley Act of 2002, as
well as the recently adopted New York Stock Exchange corporate governance listing standards, including the following:



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Risk Factors

An investment in our common stock involves significant risks, which should be considered in addition to other information set forth elsewhere in this
Form 10-K.

Adverse market conditions affect our results of operations.

The economic performance and value of our real estate assets is subject to all of the risks associated with owning and operating real estate, including risks
related to adverse changes in national, regional and local economic and market conditions. Our properties currently are located in 29 states, primarily in the East and the Midwest. The economic
condition of each of our markets may be dependent on one or more industries. An economic downturn generally or in one of these industry sectors may result in an increase in tenant bankruptcies, which
may harm our performance in the affected market. Economic and market conditions also may impact the ability of our tenants to make lease payments. If our properties do not generate sufficient income
to meet our operating expenses, including future debt service, our income and results of operations would be significantly harmed.

Downturns or changes in the retailing industry will have a direct impact on our performance.

Our properties consist of neighborhood and community shopping centers. Our performance, therefore, is linked to economic conditions in the market for retail space
generally. The market for retail space has been, and could in the future be, adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large
retailing companies, the ongoing consolidation in the retail sector, the increasing market strength of Wal-Mart, including its continued growth as a grocer, the excess amount of retail
space in a number of markets, and increasing consumer purchases through catalogues or the Internet. To the extent that any of these conditions occur or continue, they are likely to impact market rents
for retail space.

A downturn in our tenants' businesses, tenant bankruptcies, leasing delays we encounter, particularly with respect to our anchor tenants, will affect
our ability to collect balances due from tenants and would seriously harm our operating results.

At any time, our tenants may experience a downturn in their businesses that may weaken their financial condition. As a result, our tenants may delay lease
commencement, fail to make rental payments when due, or declare bankruptcy. We are subject to the risk that these tenants may be unable to make their lease payments or may decline to extend a lease
upon its expiration. Any tenant bankruptcies, leasing delays, or failure to make rental payments when due could result in the termination of the tenant's lease and material losses to our company and
would harm our operating results.

If
any of our anchor tenants becomes insolvent, suffers a downturn in business, or decides not to renew its lease or vacates a space at a property and prevents us from
re-leasing that space by continuing to pay base rent for the balance of the term, it may seriously harm our business. As of December 31, 2003, we had nine tenants operating under
bankruptcy protection. The leases directly impacted by these bankruptcy filings totaled approximately 0.9% of our annualized base rent for all leases in which tenants were in occupancy at
December 31, 2003. In addition, subsequent to December 31, 2003, four additional tenants, representing 0.5% of our annualized base rent, filed for bankruptcy protection. As a result of our
bankrupt tenants, we have experienced declines in same store net operating income.

Any
bankruptcy filings by or relating to one of our tenants or a lease guarantor would bar all efforts by us to collect pre-bankruptcy debts from that tenant, the lease
guarantor or their property, unless we receive an order permitting us to do so from the bankruptcy court. A tenant or lease guarantor bankruptcy could delay our efforts to collect past due balances
under the relevant leases, and

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could
ultimately preclude full collection of these sums. If a tenant assumes the lease while in bankruptcy, all pre-bankruptcy balances due under the lease must be paid to us in full.
However, if a tenant rejects the lease while in bankruptcy, we would have only a general unsecured claim for pre-petition damages. Any unsecured claim we hold may be paid only to the
extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. It is possible that we may recover substantially less than the full value of any
unsecured claims we hold, which may harm our financial condition.

Certain provisions of our leases with our tenants may harm our operating performance.

We have entered into leases with our tenants that allow the tenant to terminate their lease or to pay reduced rent from us if an anchor tenant in the same
shopping center terminates its lease with us or fails to occupy the premises. In that event, we may be unable to re-lease the vacated space. Similarly, the leases of some anchor tenants
may permit the anchor tenant to transfer its lease to another retailer. The transfer to a new anchor tenant could cause customer traffic in the retail center to decrease, which would reduce the income
generated by that retail center. A transfer of a lease to a new anchor tenant could also allow other tenants to make reduced rental payments or to terminate their leases at the retail center.

In
addition, in many cases, our tenant leases contain provisions giving the tenant the exclusive right to sell particular types of merchandise or provide specific types of services
within the particular retail center, or limit the ability of other tenants within that center to sell that merchandise or provide those services. When re-leasing space after a vacancy by
one of these other tenants, these provisions may limit the number and types of prospective tenants for the vacant space. The failure to re-lease or to re-lease on satisfactory
terms could harm our operating results.

We face considerable competition in the leasing market and may not be able to renew leases or re-let space as leases expire.

We face competition from similar retail centers within the trade areas of each of our centers when renewing leases or releasing space as leases expire. In
addition, any new competitive properties that are developed within the trade areas of our existing properties may result in increased competition. Even if our tenants do re-new or we are
successful in re-letting space, it is possible that the terms of renewal or re-letting may be less favorable than existing lease terms. For example, increased competition for
tenants may require us to make capital improvements to properties which we would not have otherwise planned to make. Any unbudgeted capital expenditures we undertake may divert cash that would
otherwise be available for distributions to stockholders. Ultimately, to the extent we are unable to renew leases or re-lease space as leases expire, cash flow from tenants would be
decreased resulting in lower operating results.

We face increasing competition in the acquisition of additional real estate properties and other assets.

We face competition in making acquisitions of additional real estate properties and other assets. Integral to our business strategy is our ability to expand
through acquisitions, which requires us to identify suitable acquisition candidates or investment opportunities that meet our criteria and are comparable with our growth strategy. We compete with many
other entities engaged in real estate investment activities for acquisitions of retail shopping centers, including institutional pension funds, other REITs and other owner-operators of shopping
centers. These competitors may drive up the price we must pay for the real estate properties, other assets and other companies we seek to acquire, or may succeed in acquiring those companies or assets
themselves. In addition, our potential acquisition targets may find our competitors to be more attractive suitors because they may have greater resources, may be willing to pay more, or may have a
more compatible operating philosophy. In particular, larger REITs may enjoy significant competitive advantages that result from, among other things, a lower cost

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of
capital and enhanced operating efficiencies. In addition, during 2003, the number of entities and the amount of funds competing for suitable investment properties continued to increase. This
resulted in increased demand for these assets and therefore increased prices paid for them. If we pay higher prices for properties, our profitability will be reduced.

Future acquisitions of properties may not yield the results we expect.

We intend to continue acquiring shopping centers. We face the risk that newly acquired properties may fail to perform as we anticipate. For instance, acquired
properties may not perform as well as we anticipate because of changes in demand for retail space that negatively impact our ability to renew leases or re-let space. In addition, our
management may underestimate the costs necessary to integrate acquired properties within our portfolio.

We anticipate that our working capital reserves and cash flow from operations may not be adequate to cover all of our cash needs and we will have to
obtain financing from other sources.

We anticipate that our working capital reserves will not be adequate to cover all of our cash needs. In order to cover those needs, we may have to obtain
financing from other sources. Sufficient financing may not be available or, if available, may not be available on economically feasible terms or on terms acceptable to us. Additional borrowings for
working capital purposes will increase our interest expense, and therefore may harm our financial condition and results of operations.

We have over $1.1 billion of debt, a portion of which is variable rate debt, which may impede our business and operating performance.

We have over $1.1 billion of outstanding indebtedness, approximately $258 million of which bears interest at a variable rate, and we have the
ability to borrow $107 million of additional variable rate debt under our line of credit. Increases in interest rates on our existing indebtedness would increase our interest expense, which
could harm our cash flow and our ability to pay distributions. For example, if market rates of interest on our variable rate debt outstanding at December 31, 2003 increase by 10%, or 23 basis
points, the increase in interest expense on our existing variable rate debt would decrease future earnings and cash flows by $0.6 million annually.

As
we anticipate that our internally generated cash will be adequate to repay only a portion of our indebtedness prior to maturity, we expect that we will be required to repay debt
through refinancings and/or equity offerings. In particular, we have outstanding indebtedness that will require principal amortization and balloon payments of $127 million in 2004. It is likely
that we will not have sufficient funds on hand to repay these balloon amounts at maturity and that we will have to borrow additional funds to make these payments. The amount of our existing
indebtedness may adversely affect our ability to repay debt through refinancings. If we are unable to refinance our indebtedness on acceptable terms, or at all, we might be forced to dispose of one or
more of our properties on disadvantageous terms, which might result in losses to us and which might adversely affect cash available for distributions. If prevailing interest rates or other factors at
the time of refinancing result in higher interest rates on refinancing, our interest expense would increase, which would adversely affect our operating results.

We
also intend to incur additional debt in connection with future acquisitions of real estate. We may, in some instances, borrow under our line of credit or borrow new funds to acquire
properties. In addition, we may incur or increase our mortgage debt by obtaining loans secured by a portfolio of some or all of the real estate properties we acquire. We may also borrow funds, if
necessary, to satisfy the requirement that we distribute to stockholders as distributions at least 90% of our annual REIT taxable income, or otherwise as is necessary or advisable to ensure that we
maintain our qualification as a REIT for federal income tax purposes.

12

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Our
substantial debt may harm our business and operating results, including:



Our financial covenants may restrict our operating or acquisition activities.

The mortgages on our properties contain customary negative covenants such as those that limit our ability, without the prior consent of the lender, to further
mortgage the applicable property or to discontinue insurance coverage. In addition, our outstanding unsecured debt contains customary restrictions, requirements and other limitations on our ability to
incur indebtedness, including total debt to assets ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt, which we must
maintain. Our ability to borrow under our line of credit is subject to compliance with these financial and other covenants. We rely on borrowings under our line of credit to finance acquisitions and
redevelopment activities and for working capital, and if we were unable to borrow under our line of credit or to refinance existing indebtedness, our financial condition and results of operations
would likely be adversely impacted. The indenture under which our subsidiary, the Bradley Operating Limited Partnership ("Bradley OP"), previously issued unsecured public debt also contains
limitations on the Bradley OP's ability to incur future secured and unsecured debt. If we need to pledge properties owned by the Bradley OP in order to borrow additional funds, these covenants could
reduce our flexibility in conducting our operations by limiting our ability to borrow and may create a risk of default on our debt if we cannot continue to satisfy these covenants. If we breach
covenants in our debt agreements, the lender can declare a default and require us to repay the debt immediately and, if the debt is secured, can immediately take possession of the property securing
the loan.

We could become too highly leveraged because our organizational documents do not contain any limitation on the amount of debt we may incur.

Our organizational documents do not limit the amount of indebtedness that we, or our two operating partnerships, may incur. Although we intend to maintain a
balance between our total outstanding indebtedness and the value of our portfolio, we could alter this balance at any time. If we become highly leveraged, then the resulting increase in debt service
could adversely affect our ability to make payments on our outstanding indebtedness and harm our financial condition.

The costs of compliance with laws and changes in laws may harm our operating results.

Costs associated with complying with laws and changes in laws may adversely affect our financial condition and operating results. We have incurred increases in
expenses as a result of regulatory changes and the costs of compliance at the corporate level associated with becoming and maintaining our status as a public company. These expenses are generally not
passed through to our tenants under our leases. As a result, these increased expenses may adversely affect our cash flow and our ability to service our debt and make distributions to our stockholders.

In
addition, our properties are subject to various federal, state and local regulatory requirements, such as the requirements of the Americans with Disabilities Act of 1990 and state and
local fire and life safety requirements. Failure to comply with these requirements could result in the imposition of

13

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fines
by regulatory agencies and governmental authorities or awards of damages to private litigants. In addition, these requirements are subject to change and new requirements could be imposed that
would require significant unanticipated expenditures by us. Any of these events could adversely affect our cash flow and distribution to stockholders.

The costs of compliance with environmental laws may harm our operating results.

Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be liable for the costs of removal or remediation
of hazardous or toxic substances present at, on, under, in, or released from its property. We currently have approximately 18 properties in our portfolio that are undergoing or have been identified as
requiring some form of remediation to clean up contamination. In some cases, contamination has migrated into the groundwater beneath our properties from adjacent properties, such as service stations.
In other cases, contamination has resulted
from on-site uses by current or former owners or tenants, such as gas stations or dry cleaners, which have released pollutants such as gasoline or dry-cleaning solvents into
soil and/or groundwater. Based on our experience with properties in our portfolio, we believe the cost of remediation for contamination resulting from dry-cleaning pollutants will range
from approximately $15,000 to $450,000 per property, and the cost of remediation for contamination from gasoline pollutants will range from approximately $15,000 to $100,000 per property. Any failure
to properly remediate the contamination at our properties may result in liability to federal, state or local governments for damages to natural resources or liability to third parties for property
damage or personal injury and may adversely affect our ability to operate, lease or sell that property.

In
addition to the costs of remediation described above, we may incur additional costs to comply with federal, state and local laws, ordinances and regulations relating to environmental
protection and human health and safety generally. These laws, ordinances and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and
above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials, the management of asbestos and the remediation of contamination. Some of these
laws, ordinances and regulations may impose joint and several liabilities on current or former tenants, owners or operators for the costs of investigation or remediation of contaminated properties,
regardless of fault or the legality of the actions that caused the contamination. Some of these laws and regulations require compliance with new or more stringent standards as of future dates.
Compliance with new or more stringent laws or regulations, stricter interpretation of existing laws or the future discovery of environmental contamination may require material expenditures on our
part. Future laws, ordinances or regulations may impose material environmental liability, or the current environmental condition of our properties may affect the operations of our tenants, the
existing condition of the land, operations in the vicinity of the properties, such as the presence of underground storage tanks, or the activities of unrelated third parties. These laws typically
allow liens to be placed on the affected property. In addition, there are various local, state and federal fire, health, life-safety and similar regulations which may be applicable to our
operations, and which may subject us to liability in the form of fines or damages for noncompliance.

If we suffer losses that are not covered by insurance or that are in excess of our insurance coverage limits, we could lose invested capital and
anticipated profits.

Catastrophic losses, such as losses due to wars, terrorist attacks, earthquakes, floods, hurricanes, pollution or environmental matters, generally are either
uninsurable or not economically insurable, or may be subject to insurance coverage limitations, such as large deductibles or co-payments. If one of these events occurred to, or caused the
destruction of, one or more of our properties, we could lose both our invested capital and anticipated profits from that property.

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Liquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties.

Because real estate investments are relatively illiquid, our ability to promptly sell one or more properties in our portfolio in response to changing economic,
financial and investment conditions is limited. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors,
including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell any property for the price or on the terms set by us, or whether any price or other terms
offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to complete the sale of a property.

We
may be required to expend funds to correct defects or to make improvements before a property can be sold. We may not have funds available to correct those defects or to make those
improvements. In acquiring a property, we may agree to lockout provisions that materially restrict us from selling that property for a period of time or impose other restrictions, such as a limitation
on the amount of debt that can be placed or repaid on that property. These lockout provisions would restrict our ability to sell a property. These factors and any others that would impede our ability
to respond to adverse changes in the performance of our properties could significantly harm our financial condition and operating results.

Further issuances of equity securities may be dilutive to current security holders.

The interest of our existing security holders could be diluted if additional equity securities are issued to finance future acquisition and other working capital
needs as an alternative to incurring additional indebtedness. Our ability to execute our business strategy depends on our access to an appropriate blend of debt financing, including unsecured lines of
credit and other forms of secured and unsecured debt, and equity financing, including common and preferred equity.

Our largest stockholder owns approximately 42% of our common stock, exercises significant control of our company and may delay, defer or prevent us from
taking actions that would be beneficial to our other stockholders.

Our largest stockholder, Net Realty Holding Trust, a wholly-owned subsidiary of NETT, owns approximately 42% of the outstanding shares of our common stock and has
the right to nominate four of our directors. Accordingly, Net Realty Holding Trust is able to exercise significant control over the outcome of substantially all matters required to be submitted to our
stockholders for approval, including decisions relating to the election of our board of directors, and the determination of our day-to-day corporate and management policies. In
addition, Net Realty
Holding Trust is able to exercise significant control over the outcome of any proposed merger or consolidation of our company under Maryland law. Net Realty Holding Trust's ownership interest in our
company may discourage third parties from seeking to acquire control of our company, which may adversely affect the market price of our common stock.

Provisions of the company's charter and bylaws could inhibit changes in control of the company, and could prevent stockholders from obtaining a premium
price for our common stock.

Our organizational documents contain provisions which may have the effect of delaying, deferring or preventing a change in control of our company or the removal
of existing management and, as a result, could prevent our stockholders from being paid a premium for their shares of common stock over the then-prevailing market prices. These provisions
include staggered terms for our directors, advance notice requirements for stockholder proposals and the absence of cumulative voting rights. In addition, our organizational documents permit our board
of directors to issue up to 50,000,000 shares of preferred stock, having those preferences, conversion or other rights, voting powers, restrictions,

15

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limitations
as to distributions, qualifications, or terms or conditions of redemption as determined by our board. Thus, our board could authorize the issuance of preferred stock with terms and
conditions which could have the effect of discouraging a takeover or other transaction in which holders of some or a majority of our shares might receive a premium for their shares over the
then-prevailing market price of our shares.

Our board of directors has adopted the limitations available in Maryland law on changes in control that could prevent transactions in the best interests
of stockholders.

Certain provisions of Maryland law applicable to us prohibit "business combinations," including certain issuances of equity securities, with any person who
beneficially owns 10% or more of the voting power of outstanding shares, or with an affiliate of ours who, at any time within the two-year period prior to the date in question, was the
beneficial owner of 10% or more of the voting power of the outstanding voting shares (which is referred to as a so-called "interested stockholder"), or with an affiliate of an interested
stockholder. These prohibitions last for five years after the most recent date on which the interested stockholder became an interested stockholder. After the five-year period, a business
combination with an interested stockholder must be approved by two super-majority stockholder votes unless, among other conditions, our common stockholders receive a minimum price for their shares and
the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares of common stock.

Our share ownership limit may discourage a takeover of the company and depress our stock price.

In order for us to qualify as a REIT, no more than 50% of the value of outstanding shares of our capital stock may be owned, actually or constructively, by five
or fewer individuals at any time during the last half of each taxable year. To make sure that we will not fail to qualify as a REIT under this test, subject to some exceptions, our articles prohibit
any stockholder from owning actually or constructively more than 9.8% of the value or number of outstanding shares of our capital stock. Our board of directors may exempt a person from the 9.8%
ownership limit if the board determines, in its sole discretion that exceeding the 9.8% ownership limit as to any proposed transferee would not jeopardize our qualification as a REIT. This restriction
may: discourage a tender offer or other transactions or a change in management or control that might involve a premium price for our shares or otherwise be in the best interests of our stockholders;
or compel a stockholder who had acquired more than 9.8% of our stock to dispose of the additional shares and, as a result, to forfeit the benefits of owning the additional shares.

If we fail to remain qualified as a REIT, our distributions will not be deductible by us, and our income will be subject to taxation, reducing our
earnings available for distribution.

We intend to remain qualified as a REIT under the Internal Revenue Code, which will afford us significant tax advantages. The requirements for this qualification,
however, are complex. If we fail to meet these requirements, our distributions will not be deductible by us and we will have to pay a corporate level tax on our income. This would substantially reduce
our cash available to pay distributions. In addition, such a tax liability might cause us to borrow funds, liquidate some of our investments or take other steps, which could negatively affect our
operating results. Moreover, if our REIT status is terminated because of our failure to meet a technical REIT requirement or if we voluntarily revoke our election, we would generally be disqualified
from electing treatment as a REIT for the four taxable years following the year in which REIT status is lost.

Even REITs are subject to federal and state income taxes.

Even if we qualify and maintain our status as a REIT, we may become subject to federal income taxes and related state taxes. For example, if we have net income
from a "prohibited transaction," that income will be subject to a 100% tax. A "prohibited transaction" is, in general, the sale or other

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disposition
of inventory or property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. We may not be able to make sufficient distributions to
avoid excise taxes applicable to REITs. We may also decide to retain income we earn from the sale or other disposition of our property and pay income tax directly on that income. In that event, our
stockholders would be treated as if they earned that income and paid the tax on it directly. However, stockholders that are tax-exempt, such as charities or qualified pension plans would
have no benefit from their deemed payment of that tax liability.

We
may also be subject to state and local taxes on our income or property, either directly or at the level of our operating partnerships or at the level of the other companies through
which we indirectly own our assets. We may not be able to continue to satisfy the REIT requirements, or it may not be in our best interests to continue to do so.

Item 2: Properties

Shopping Centers

As of December 31, 2003, we had a shopping center portfolio consisting of 162 shopping centers, located in 29 states and totaling approximately
32.7 million square feet of total GLA, of which approximately 27.5 million square feet is company-owned GLA. Our shopping center portfolio was approximately 92.0% leased as of
December 31, 2003. We believe that our shopping center properties are adequately covered by insurance.

In
February 2004, we announced that we entered into an agreement to acquire Long Meadow Commons, a 119,000 square foot grocer-anchored community shopping center located in
Mundelein,
Illinois (a northern Chicago suburb) for approximately $19 million. The property, which is 96% leased, is anchored by Dominick's Finer Foods (a subsidiary of Safeway). The acquisition is
expected to be completed in the first quarter of 2004 and is subject to customary closing conditions. We anticipate that we will fund this acquisition through the assumption of mortgage indebtedness
and borrowings under our line of credit.

Other Properties

As of December 31, 2003, the Company owned four office buildings, two in New York and two in Boston, totaling 281,000 square feet. We believe that our
office buildings are adequately covered by insurance.

On
January 9, 2004, we entered into an agreement to sell one of our office buildings, the Fortune Office Building, located in New York, for a purchase price of
$7.7 million. We expect that this transaction will be completed during the second quarter of 2004. We are not actively attempting to sell any of our remaining office buildings at this time.

Offices

In February 2004, we moved our corporate headquarters from 535 Boylston Street, Boston, Massachusetts to 131 Dartmouth Street, Boston, Massachusetts, a new
office building located in the Back Bay constructed and owned by a joint venture that we entered into with our largest stockholder. We lease our new corporate headquarters space from the joint
venture. Under this lease, which contains a term of eleven years, we lease approximately 31,000 square feet. We will begin to pay rent under this lease in February 2005.

In
addition, we also manage our properties through 16 regional offices, strategically located throughout our portfolio states. We own 15 of our 16 regional offices, some of which are
located in our shopping center properties. We believe that our current and anticipated facilities are adequate for our present and future operations.

The
following tables provide information about our properties, our tenants and lease expirations.

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|Property Name
and Location |  | Year Built/
Renovated(1) |  | % Leased as of
12/31/2003 |   | Company-
Owned GLA(2) |  | Total
GLA(3) |  | Anchor
SF(4) |  | Anchors(5)                                                                                                                             |  | Annualized
Base Rent(6) |           | Annualized
Base Rent/Sq. Ft.(7)
|-------------------------- |  | ------------------------ |  | ------------------------- | - | --------------------- |  | ------------ |  | ------------ |  | -------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | --------- | -------------------------------
|Shopping Centers:          |  |                          |  |                           |   |                       |  |              |  |              |  |                                                                                                                                        |  |                         |           |                                
|Alabama                    |  |                          |  |                           |   |                       |  |              |  |              |  |                                                                                                                                        |  |                         |           |                                
|Montgomery Commons         |  | 1999                     |  | 94                        | % | 95,300                |  | 299,050      |  | 257,550      |  | Super Wal-Mart (Non-Owned)
Marshalls
Michaels                                                                                          |  | $                       | 956,739   |                                
|Montgomery Towne Center    |  | 1996                     |  | 98                        | % | 176,361               |  | 266,895      |  | 225,415      |  | Winn Dixie Supermarket
(Non-Owned)
Bed, Bath & Beyond
Circuit City
Carmike Cinemas (Non-Owned)
Just for Feet
Barnes & Noble
Office Max |  | $                       | 2,166,627 |                                
|Riverchase Village SC      |  | 1994                     |  | 93                        | % | 178,511               |  | 190,611      |  | 128,225      |  | Bruno's Supermarket
Best Buy
Barnes & Noble                                                                                            |  | $                       | 1,747,985 |                                
|Connecticut                |  |                          |  |                           |   |                       |  |              |  |              |  |                                                                                                                                        |  |                         |           |                                
|Torrington Plaza           |  | 1963/1994                |  | 91                        | % | 125,730               |  | 132,930      |  | 42,037       |  | TJ Maxx
Staples                                                                                                                        |  | $                       | 1,194,167 |                                
|Florida                    |  |                          |  |                           |   |                       |  |              |  |              |  |                                                                                                                                        |  |                         |           |                                
|Barton Commons             |  | 1989                     |  | 42                        | % | 215,049               |  | 218,049      |  | 52,039       |  | Bealls Dept. Store
Bealls Outlet                                                                                                       |  | $                       | 606,409   |                                
|Naples Shopping Center     |  | 1962/1997                |  | 99                        | % | 198,904               |  | 202,404      |  | 162,486      |  | Publix Supermarket
Marshalls
Linens N Things
Office Depot
Books A Million                                                              |  | $                       | 1,956,661 |                                
|Park Shore Shopping Center |  | 1973/1993                |  | 100                       | % | 231,830               |  | 240,330      |  | 188,180      |  | Fresh Market
K-Mart
Rhodes Furniture
Homegoods
Sound Advice                                                                            |  | $                       | 1,890,994 |                                

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|Shoppers Haven Shopping Center   |  | 1959/1998 |  | 76  | % | 207,049 |  | 207,049 |  | 88,404  |  | Winn Dixie Supermarket
Walgreens
Bealls Outlet                                              |  | $ | 1,639,549 |  | $ | 7.92 
|-------------------------------- |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | ------------------------------------------------------------------------------------------- |  | - | --------- |  | - | -----
|Venetian Isle Shopping Center(8) |  | 1959/1992 |  | 100 | % | 183,467 |  | 186,967 |  | 111,831 |  | Publix Supermarket
TJ Maxx
Linens 'N Things
PetsMart                                        |  | $ | 1,760,475 |  | $ | 9.60 
|Georgia                          |  |           |  |     |   |         |  |         |  |         |  |                                                                                             |  |   |           |  |   |      
|Shenandoah Plaza                 |  | 1987      |  | 100 | % | 141,072 |  | 144,072 |  | 113,922 |  | Ingles Market
Wal-Mart/Big Lots/ACS                                                         |  | $ | 710,513   |  | $ | 5.04 
|Illinois                         |  |           |  |     |   |         |  |         |  |         |  |                                                                                             |  |   |           |  |   |      
|Bartonville Square               |  | 1972      |  | 100 | % | 61,678  |  | 61,678  |  | 41,824  |  | Kroger Supermarket                                                                          |  | $ | 290,342   |  | $ | 4.71 
|Butterfield Square               |  | 1997      |  | 100 | % | 106,767 |  | 121,370 |  | 51,677  |  | Sunset Foods                                                                                |  | $ | 1,502,629 |  | $ | 14.07
|The Commons of Chicago Ridge     |  | 1992/1999 |  | 100 | % | 324,080 |  | 324,080 |  | 263,589 |  | Home Depot
Office Depot
Marshalls
Pep Boys (Ground Lease)
Old Navy
X Sport Fitness
Michaels |  | $ | 3,677,300 |  | $ | 11.35
|The Commons of Crystal Lake      |  | 1995/1998 |  | 96  | % | 273,060 |  | 365,335 |  | 210,569 |  | Jewel Foods/Osco Drugs
Marshalls
Toys R Us
Hobby Lobby (Non-Owned)                          |  | $ | 3,117,087 |  | $ | 11.42
|Crossroads Centre                |  | 1975/1988 |  | 98  | % | 242,470 |  | 247,970 |  | 129,468 |  | Malan Realty Investors, Inc./Hobby Lobby
(Ground Lease)
TJ Maxx                             |  | $ | 1,625,510 |  | $ | 6.70 

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|Fairhills Shopping Center |  | 1971/1989 |  | 79  | % | 107,614 |  | 117,714 |  | 49,330  |  | Jewel Foods/Osco Drugs                                                                                                                                                                        |  | $ | 553,672   |  | $ | 5.14 
|------------------------- |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | --------- |  | - | -----
|Heritage Square           |  | 1992      |  | 98  | % | 210,852 |  | 210,852 |  | 164,706 |  | Circuit City
Carson Furniture Gallery
DSW Shoe Warehouse
Rhodes Furniture                                                                                                                     |  | $ | 2,589,184 |  | $ | 12.28
|High Point Centre         |  | 1988      |  | 96  | % | 240,002 |  | 240,002 |  | 141,068 |  | Cub Foods
Office Depot
Babies R Us
Big Lots                                                                                                                                                   |  | $ | 2,365,916 |  | $ | 9.86 
|Parkway Pointe            |  | 1996      |  | 100 | % | 38,737  |  | 222,037 |  | 179,300 |  | Wal-Mart (Non-Owned)
Target (Non-Owned)
Party Tree (Non-Owned)                                                                                                                                |  | $ | 510,209   |  | $ | 13.17
|Rivercrest                |  | 1992/1999 |  | 100 | % | 488,680 |  | 847,635 |  | 711,859 |  | Dominick's Supermarket
Best Buy
PetsMart
TJ Maxx
Kimco Realty Corp./K-Mart
Sears
OfficeMax
Hollywood Park
Target (Non-Owned)
Kohl's (Non-Owned)
Menards (Non-Owned)
Sony Theaters (Non-Owned) |  | $ | 4,384,220 |  | $ | 8.97 
|Rollins Crossing          |  | 1995/1998 |  | 100 | % | 150,576 |  | 344,696 |  | 283,704 |  | Super K-Mart (Non-Owned)
Sears Paint & Hardware
Regal Cinema (Ground Lease)                                                                                                                   |  | $ | 973,461   |  | $ | 6.46 

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|Sangamon Center North      |  | 1970/1996 |  | 98  | % | 139,907 |  | 151,107 |  | 79,257  |  | Schnuck's Supermarket
U.S. Post Office                                                               |  | $ | 1,120,653 |  | $ | 8.01 
|-------------------------- |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | ---------------------------------------------------------------------------------------------------- |  | - | --------- |  | - | -----
|Sheridan Village           |  | 1954/1995 |  | 91  | % | 303,896 |  | 303,896 |  | 177,409 |  | Bergner's Dept Store
Cohen's Furniture Co.                                                           |  | $ | 2,272,727 |  | $ | 7.48 
|Sterling Bazaar            |  | 1992      |  | 95  | % | 84,535  |  | 84,535  |  | 52,337  |  | Kroger Supermarket                                                                                   |  | $ | 763,116   |  | $ | 9.03 
|Twin Oaks Centre           |  | 1991      |  | 96  | % | 98,197  |  | 98,197  |  | 59,682  |  | Hy-Vee Supermarket                                                                                   |  | $ | 696,272   |  | $ | 7.09 
|Wardcliffe Shopping Center |  | 1976/1977 |  | 89  | % | 67,681  |  | 67,681  |  | 48,341  |  | CVS
Big Lots                                                                                         |  | $ | 331,693   |  | $ | 4.90 
|Westview Center            |  | 1992      |  | 75  | % | 326,072 |  | 416,872 |  | 184,265 |  | Cub Foods
Marshalls
Value City Dept. Store
(Non-Owned)
Fashion Bug                                   |  | $ | 2,564,558 |  | $ | 7.87 
|Indiana                    |  |           |  |     |   |         |  |         |  |         |  |                                                                                                      |  |   |           |  |   |      
|Apple Glen Crossing        |  | 2001/2002 |  | 97  | % | 150,446 |  | 440,987 |  | 384,426 |  | Super Wal-Mart (Non-Owned)
Kohl's (Non-Owned)
Dick's Sporting Goods
Best Buy (Ground Lease)
PetsMart |  | $ | 1,758,768 |  | $ | 11.69
|County Line Mall           |  | 1976/1991 |  | 91  | % | 265,596 |  | 268,396 |  | 213,950 |  | Kroger Supermarket
OfficeMax
Old Time Pottery
Sofa Express                                           |  | $ | 1,468,216 |  | $ | 5.53 
|Double Tree Plaza          |  | 1996      |  | 100 | % | 98,342  |  | 110,342 |  | 49,773  |  | Amelia's Supermarket                                                                                 |  | $ | 758,815   |  | $ | 7.72 
|Germantown Shopping Center |  | 1985      |  | 72  | % | 230,640 |  | 237,840 |  | 114,905 |  | Beuhlers Supermarket
Elder Beerman Dept Store
Peebles Dept Store                                     |  | $ | 1,078,200 |  | $ | 4.67 

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|King's Plaza                |  | 1965      |  | 87  | % | 102,788 |  | 104,888 |  | 60,200  |  | Cub Foods                                                                                           |  | $ | 424,644   |  | $ | 4.13 
|--------------------------- |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | --------------------------------------------------------------------------------------------------- |  | - | --------- |  | - | -----
|Lincoln Plaza               |  | 1968      |  | 86  | % | 95,814  |  | 95,814  |  | 39,104  |  | Kroger Supermarket                                                                                  |  | $ | 636,918   |  | $ | 6.65 
|Martin's Bittersweet Plaza  |  | 1992      |  | 99  | % | 78,245  |  | 81,255  |  | 61,079  |  | Martin's Supermarket
Osco Drug                                                                      |  | $ | 539,676   |  | $ | 6.90 
|Meridian Village            |  | 1990      |  | 98  | % | 130,772 |  | 130,772 |  | 65,030  |  | O'Malia's Supermarket
Godby Home Furnishings                                                        |  | $ | 1,283,938 |  | $ | 9.82 
|Rivergate Shopping Center   |  | 1982      |  | 94  | % | 133,086 |  | 137,486 |  | 108,086 |  | Super Foods
Wal-Mart                                                                                |  | $ | 504,524   |  | $ | 3.79 
|Sagamore Park Centre        |  | 1982      |  | 95  | % | 118,436 |  | 118,436 |  | 66,063  |  | Payless Supermarket                                                                                 |  | $ | 945,946   |  | $ | 7.99 
|Speedway SuperCenter        |  | 1960/1998 |  | 91  | % | 569,879 |  | 569,879 |  | 252,624 |  | Kroger Supermarket
AJ Wright
Kohl's
Sears
Factory Card Outlet
Old Navy
Petco                        |  | $ | 4,710,831 |  | $ | 8.27 
|The Village                 |  | 1950      |  | 79  | % | 312,187 |  | 314,987 |  | 98,025  |  | US Factory Outlet
AJ Wright
Ind. Dept of Employment                                                 |  | $ | 1,726,131 |  | $ | 5.53 
|Washington Lawndale Commons |  | 1957/1993 |  | 81  | % | 331,912 |  | 331,912 |  | 168,409 |  | Stein Mart
Dunham's Sporting Goods
Gensic's Furniture House
Jo-Ann Fabrics
Books A Million
Big Lots |  | $ | 1,740,768 |  | $ | 5.24 
|Iowa                        |  |           |  |     |   |         |  |         |  |         |  |                                                                                                     |  |   |           |  |   |      
|Burlington Plaza West       |  | 1989      |  | 28  | % | 88,118  |  | 92,118  |  | N/A     |  | N/A                                                                                                 |  | $ | 216,788   |  | $ | 2.46 
|Davenport Retail Center     |  | 1996      |  | 100 | % | 62,588  |  | 229,588 |  | 214,433 |  | Staples
PetsMart
Super Target (Non-Owned)                                                           |  | $ | 645,534   |  | $ | 10.31

22

---

|Kimberly West             |  | 1987/1997 |  | 86  | % | 113,713 |  | 116,513 |  | 76,896  |  | Hy-Vee Supermarket                                 |  | $ | 596,780   |  | $ | 5.25
|------------------------- |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | -------------------------------------------------- |  | - | --------- |  | - | ----
|Parkwood Plaza            |  | 1992      |  | 40  | % | 126,369 |  | 126,369 |  | N/A     |  | N/A                                                |  | $ | 401,110   |  | $ | 3.17
|Southgate Shopping Center |  | 1972/1996 |  | 86  | % | 155,399 |  | 155,399 |  | 102,065 |  | Hy-Vee Supermarket
Big Lots                        |  | $ | 483,179   |  | $ | 3.11
|Spring Village            |  | 1980/1991 |  | 94  | % | 90,263  |  | 92,763  |  | 45,763  |  | Eagle Foods                                        |  | $ | 455,550   |  | $ | 5.05
|Warren Plaza              |  | 1980/1993 |  | 96  | % | 90,102  |  | 187,135 |  | 148,525 |  | Hy-Vee Supermarket
Target (Non-Owned)              |  | $ | 680,812   |  | $ | 7.56
|Kansas                    |  |           |  |     |   |         |  |         |  |         |  |                                                    |  |   |           |  |   |     
|Mid State Plaza           |  | 1971      |  | 82  | % | 286,601 |  | 293,101 |  | 152,692 |  | Food 4 Less
Sutherlands Lumber
Hobby Lobby         |  | $ | 730,121   |  | $ | 2.55
|Santa Fe Square           |  | 1987      |  | 100 | % | 133,698 |  | 133,698 |  | 55,820  |  | Hy-Vee Supermarket/Office Depot                    |  | $ | 1,281,391 |  | $ | 9.58
|Shawnee Parkway Plaza     |  | 1979/1995 |  | 95  | % | 92,213  |  | 92,213  |  | 59,128  |  | Price Chopper Supermarket                          |  | $ | 677,276   |  | $ | 7.34
|Village Plaza             |  | 1975      |  | 96  | % | 55,698  |  | 55,698  |  | 31,431  |  | Falley's Food 4 Less                               |  | $ | 280,898   |  | $ | 5.04
|Westchester Square        |  | 1968/1998 |  | 91  | % | 164,944 |  | 168,644 |  | 63,000  |  | Hy-Vee Supermarket                                 |  | $ | 1,339,497 |  | $ | 8.12
|West Loop Shopping Center |  | 1986/1998 |  | 86  | % | 199,032 |  | 199,032 |  | 78,558  |  | Dillons Supermarket
Waters True Value              |  | $ | 1,215,372 |  | $ | 6.11
|Kentucky                  |  |           |  |     |   |         |  |         |  |         |  |                                                    |  |   |           |  |   |     
|Camelot Shopping Center   |  | 1969/1997 |  | 69  | % | 150,571 |  | 150,571 |  | 61,500  |  | Winn Dixie Supermarket
Gatti's Pizza               |  | $ | 745,311   |  | $ | 4.95
|Dixie Plaza               |  | 1987      |  | 100 | % | 48,021  |  | 82,804  |  | 59,383  |  | Winn Dixie Supermarket
Frank's Nursery (Non-Owned) |  | $ | 384,247   |  | $ | 8.00

23

---

|Midtown Mall              |  | 1970/1994 |  | 94  | % | 153,828 |  | 153,828 |  | 106,271 |  | Kroger Supermarket
Big Lots/Odd Lots
Gatti's Pizza                                                          |  | $ | 913,407   |  | $ | 5.94 
|------------------------- |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | ----------------------------------------------------------------------------------------------------------- |  | - | --------- |  | - | -----
|Plainview Village Center  |  | 1977      |  | 96  | % | 164,454 |  | 186,254 |  | 39,399  |  | Kroger Supermarket                                                                                          |  | $ | 1,454,103 |  | $ | 8.84 
|Stony Brook               |  | 1988      |  | 100 | % | 137,013 |  | 238,213 |  | 169,775 |  | Kroger Supermarket
H.H. Gregg (Non-Owned)                                                                   |  | $ | 1,607,536 |  | $ | 11.73
|Maine                     |  |           |  |     |   |         |  |         |  |         |  |                                                                                                             |  |   |           |  |   |      
|Pine Tree Shopping Center |  | 1958/1973 |  | 100 | % | 254,378 |  | 254,378 |  | 200,178 |  | Shaw's Supermarket (Ground Lease)
Ames Department Stores, Inc.
Mardens
Jo-Ann Fabrics
AJ Wright             |  | $ | 1,464,847 |  | $ | 5.76 
|Massachusetts             |  |           |  |     |   |         |  |         |  |         |  |                                                                                                             |  |   |           |  |   |      
|Berkshire Crossing        |  | 1996      |  | 100 | % | 441,412 |  | 441,412 |  | 389,561 |  | Price Chopper Supermarket
Wal-Mart (Ground Lease)
Home Depot (Ground Lease)
Staples
Michaels
Barnes & Noble |  | $ | 3,430,852 |  | $ | 7.77 
|Lynn Market Place         |  | 1966/1993 |  | 100 | % | 78,092  |  | 78,092  |  | 52,620  |  | Shaw's Supermarket                                                                                          |  | $ | 625,475   |  | $ | 8.01 
|Watertower Plaza          |  | 1988/1998 |  | 89  | % | 296,320 |  | 296,320 |  | 194,078 |  | Shaw's Supermarket
TJ Maxx
OfficeMax
Barnes & Noble
Linens 'N Things
Petco
Michaels                         |  | $ | 3,657,382 |  | $ | 12.34
|Westgate Plaza            |  | 1969/1996 |  | 100 | % | 103,903 |  | 103,903 |  | 77,768  |  | Stop & Shop/Staples/Ocean State Job Lot
TJ Maxx                                                             |  | $ | 1,019,227 |  | $ | 9.81 

24

---

|Michigan                |  |           |  |     |   |         |  |         |  |         |  |                                                                                                            |  |   |           |  |   |      
|----------------------- |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | ---------------------------------------------------------------------------------------------------------- |  | - | --------- |  | - | -----
|Cherry Hill Marketplace |  | 1992/1999 |  | 89  | % | 122,132 |  | 125,032 |  | 53,739  |  | Farmer Jacks                                                                                               |  | $ | 1,284,335 |  | $ | 10.52
|Grand Traverse Crossing |  | 1996      |  | 100 | % | 387,273 |  | 387,273 |  | 339,156 |  | Wal-Mart (Ground Lease)
Home Depot (Ground Lease)
Borders (Ground Lease)
Toys R Us
Staples
PetsMart        |  | $ | 2,672,301 |  | $ | 6.90 
|The Courtyard           |  | 1989      |  | 100 | % | 125,967 |  | 265,622 |  | 219,421 |  | V.G. Food Center
OfficeMax
Dunhams Sporting Goods
Home Depot (Non-Owned)                                   |  | $ | 1,068,046 |  | $ | 8.48 
|Redford Plaza           |  | 1956/1987 |  | 98  | % | 284,943 |  | 284,943 |  | 194,014 |  | Kroger Supermarket
Burlington Coat Factory
Bally Total Fitness
AJ Wright
Aco Hardware
The Resource Network |  | $ | 2,340,897 |  | $ | 8.22 
|Minnesota               |  |           |  |     |   |         |  |         |  |         |  |                                                                                                            |  |   |           |  |   |      
|Austin Town Center      |  | 1999      |  | 47  | % | 110,680 |  | 200,680 |  | 170,789 |  | Staples
Target (Non-Owned)                                                                                 |  | $ | 481,584   |  | $ | 4.35 
|Brookdale Square        |  | 1971/1994 |  | 92  | % | 185,883 |  | 185,883 |  | 159,402 |  | Circuit City
Office Depot
Brookdale Theater
Pep Boys
Heart Alive
Hennepin County                           |  | $ | 1,172,764 |  | $ | 6.31 
|Burning Tree Plaza      |  | 1987/1998 |  | 99  | % | 173,929 |  | 173,929 |  | 117,716 |  | Best Buy
TJ Maxx
Hancock Fabrics
Dunham's Sporting Goods                                                   |  | $ | 1,549,819 |  | $ | 8.91 

25

---

|Central Valu Center     |  | 1961/1984 |  | 95  | % | 123,350 |  | 123,350 |  | 90,946  |  | Rainbow Foods
Slumberland Clearance                                                           |  | $ | 855,545   |  | $ | 6.94 
|----------------------- |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | --------------------------------------------------------------------------------------------- |  | - | --------- |  | - | -----
|Division Place          |  | 1991      |  | 96  | % | 129,353 |  | 134,353 |  | 24,016  |  | TJ Maxx                                                                                       |  | $ | 1,446,723 |  | $ | 11.18
|Elk Park Center         |  | 1995/1999 |  | 100 | % | 204,992 |  | 302,635 |  | 192,843 |  | Cub Foods
Target (Non-Owned)
OfficeMax                                                        |  | $ | 2,018,972 |  | $ | 9.85 
|Har Mar Mall            |  | 1965/1992 |  | 92  | % | 434,228 |  | 434,228 |  | 226,838 |  | Cub Foods
Barnes & Noble
Marshalls
TJ Maxx
AMC Theatres
Michaels                              |  | $ | 4,404,439 |  | $ | 10.14
|Hub West(9)             |  |           |  |     |   |         |  |         |  |         |  |                                                                                               |  |   |           |  |   |      
|Richfield Hub           |  | 1952/1992 |  | 100 | % | 214,855 |  | 217,655 |  | 129,400 |  | Rainbow Foods
Bally Total Fitness
Marshalls
Michaels                                          |  | $ | 2,372,796 |  | $ | 11.04
|Marketplace at 42       |  | 1999      |  | 91  | % | 120,343 |  | 150,543 |  | 72,371  |  | Rainbow Foods
Walgreens (Non-Owned)                                                           |  | $ | 1,428,995 |  | $ | 11.87
|Roseville Center        |  | 1950/2000 |  | 89  | % | 76,885  |  | 155,685 |  | 65,000  |  | Rainbow Foods (Non-Owned)                                                                     |  | $ | 808,814   |  | $ | 10.52
|Southport Centre        |  | 1992      |  | 100 | % | 124,937 |  | 426,985 |  | 346,566 |  | Cub Foods (Non-Owned)
Best Buy
Frank's Nursery
Super Target (Non-Owned)
OfficeMax (Non-Owned) |  | $ | 1,630,481 |  | $ | 13.05
|Sun Ray Shopping Center |  | 1958/1992 |  | 82  | % | 284,962 |  | 284,962 |  | 141,575 |  | Cub Foods (Ground Lease)
TJ Maxx
Bally Total Fitness
Michaels                                 |  | $ | 1,498,004 |  | $ | 5.26 
|Ten Acres Center        |  | 1972/1986 |  | 99  | % | 162,364 |  | 162,364 |  | 133,894 |  | Cub Foods
Burlington Coat Factory                                                             |  | $ | 1,101,736 |  | $ | 6.79 

26

---

|Terrace Mall                |  | 1979/1993 |  | 90  | % | 135,031 |  | 250,031 |  | 212,430 |  | Rainbow Foods
Montgomery Ward
(Non-Owned)
North Memorial Medical                             |  | $ | 1,000,502 |  | $ | 7.41 
|--------------------------- |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | -------------------------------------------------------------------------------------------- |  | - | --------- |  | - | -----
|Westwind Plaza              |  | 1985      |  | 100 | % | 87,933  |  | 147,933 |  | 80,245  |  | Cub Foods (Non-Owned)
Northern Tool and Equipment                                            |  | $ | 1,110,815 |  | $ | 12.63
|White Bear Hills            |  | 1990/1996 |  | 100 | % | 73,095  |  | 81,895  |  | 45,679  |  | Festival Foods                                                                               |  | $ | 634,791   |  | $ | 8.68 
|Mississippi                 |  |           |  |     |   |         |  |         |  |         |  |                                                                                              |  |   |           |  |   |      
|County Line Plaza           |  | 1997      |  | 98  | % | 221,567 |  | 268,367 |  | 171,062 |  | Haverty's Furniture
OfficeMax
Barnes & Noble
Old Navy
Just For Feet
Circuit City (Non-Owned) |  | $ | 2,984,346 |  | $ | 13.47
|Missouri                    |  |           |  |     |   |         |  |         |  |         |  |                                                                                              |  |   |           |  |   |      
|Clocktower Place            |  | 1987      |  | 100 | % | 214,198 |  | 222,348 |  | 129,807 |  | Dierberg's Market
TJ Maxx
Office Depot                                                       |  | $ | 2,325,807 |  | $ | 10.86
|Ellisville Square           |  | 1990      |  | 98  | % | 146,052 |  | 149,552 |  | 107,772 |  | K-Mart
Lukas Liquors                                                                         |  | $ | 1,363,386 |  | $ | 9.33 
|Grandview Plaza             |  | 1961/1991 |  | 90  | % | 296,008 |  | 296,008 |  | 200,075 |  | Schnuck's Supermarket
Old Time Pottery
OfficeMax
Walgreens                                   |  | $ | 1,990,074 |  | $ | 6.72 
|Hub Shopping Center         |  | 1972/1995 |  | 100 | % | 163,072 |  | 163,072 |  | 103,322 |  | Price Chopper Supermarket                                                                    |  | $ | 918,485   |  | $ | 5.63 
|Liberty Corners             |  | 1987/1996 |  | 100 | % | 125,432 |  | 214,932 |  | 136,500 |  | Price Chopper Supermarket
Sutherlands (Non-Owned)                                            |  | $ | 980,967   |  | $ | 7.82 
|Maplewood Square            |  | 1998      |  | 100 | % | 71,590  |  | 75,590  |  | 57,575  |  | Shop n' Save Supermarket                                                                     |  | $ | 526,619   |  | $ | 7.36 
|Marketplace at Independence |  | 1988      |  | 98  | % | 241,898 |  | 253,398 |  | 133,942 |  | Price Chopper Supermarket
Old Navy                                                           |  | $ | 2,279,450 |  | $ | 9.42 
|Prospect Plaza              |  | 1979/1999 |  | 100 | % | 189,996 |  | 189,996 |  | 136,566 |  | Hen House Grocery
Hobby Lobby
Factory Oak Outlet                                             |  | $ | 1,573,770 |  | $ | 8.28 

27

---

|Watts Mill Plaza         |  | 1973/1997 |  | 100 | % | 161,717 |  | 169,717 |  | 91,989  |  | Price Chopper Supermarket
Westlake Hardware                                                    |  | $ | 1,478,030 |  | $ | 9.14
|------------------------ |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | ---------------------------------------------------------------------------------------------- |  | - | --------- |  | - | ----
|Nebraska                 |  |           |  |     |   |         |  |         |  |         |  |                                                                                                |  |   |           |  |   |     
|Bishop Heights           |  | 1971/1997 |  | 100 | % | 34,388  |  | 128,448 |  | 106,992 |  | Russ's IGA Supermarket
Shopko (Non-Owned)                                                      |  | $ | 188,947   |  | $ | 5.49
|Cornhusker Plaza         |  | 1988      |  | 96  | % | 84,083  |  | 163,063 |  | 121,723 |  | Hy-Vee Supermarket
Wal-Mart (Non-Owned)                                                        |  | $ | 460,335   |  | $ | 5.47
|Eastville Plaza          |  | 1986      |  | 97  | % | 68,546  |  | 139,636 |  | 99,046  |  | Hy-Vee Supermarket
Menard's (Non-Owned)                                                        |  | $ | 556,597   |  | $ | 8.12
|Edgewood Shopping Center |  | 1980/1994 |  | 96  | % | 172,729 |  | 399,279 |  | 210,020 |  | SuperSaver Supermarket
Osco Drug
Target (Non-Owned)                                            |  | $ | 1,457,610 |  | $ | 8.44
|The Meadows              |  | 1998      |  | 100 | % | 67,840  |  | 70,840  |  | 50,000  |  | Russ' IGA Supermarket                                                                          |  | $ | 521,199   |  | $ | 7.68
|Miracle Hills Park       |  | 1988      |  | 58  | % | 69,638  |  | 139,638 |  | 66,000  |  | Cub Foods (Non-Owned)                                                                          |  | $ | 467,759   |  | $ | 6.72
|Stockyards Plaza         |  | 1988      |  | 100 | % | 129,459 |  | 148,659 |  | 85,649  |  | Hy-Vee Supermarket
Movies 8                                                                    |  | $ | 1,031,740 |  | $ | 7.97
|New Hampshire            |  |           |  |     |   |         |  |         |  |         |  |                                                                                                |  |   |           |  |   |     
|Bedford Grove            |  | 1989      |  | 97  | % | 216,941 |  | 216,941 |  | 175,745 |  | Shop N' Save
Wal-Mart (Ground Lease)                                                           |  | $ | 1,645,248 |  | $ | 7.58
|Bedford Mall             |  | 1963/1999 |  | 91  | % | 264,564 |  | 264,564 |  | 188,607 |  | Marshalls
Bob's Stores
Staples
Linens 'N Things
Decathalon Sports (Ground Lease)
Hoyts Cinemas |  | $ | 2,420,091 |  | $ | 9.15

28

---

|Capitol Shopping Center      |  | 1961/1999 |  | 96  | % | 182,971 |  | 189,971 |  | 129,551 |  | Demoulas Market Basket
Ames Department Stores, Inc.
Marshalls |  | $ | 1,038,896 |  | $ | 5.68 
|---------------------------- |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | ------------------------------------------------------------- |  | - | --------- |  | - | -----
|Tri City Plaza               |  | 1968/1992 |  | 100 | % | 146,947 |  | 146,947 |  | 84,920  |  | Demoulas Market Basket
TJ Maxx                                |  | $ | 958,683   |  | $ | 6.52 
|New Jersey                   |  |           |  |     |   |         |  |         |  |         |  |                                                               |  |   |           |  |   |      
|Cross Keys Common            |  | 1995      |  | 72  | % | 371,128 |  | 371,128 |  | 139,095 |  | Wal-Mart
Staples                                              |  | $ | 2,732,423 |  | $ | 7.36 
|Morris Hills Shopping Center |  | 1957/1994 |  | 100 | % | 159,454 |  | 159,454 |  | 109,161 |  | Mega Marshalls
Clearview Cinema (Ground Lease)
Michaels       |  | $ | 2,343,181 |  | $ | 14.70
|New Mexico                   |  |           |  |     |   |         |  |         |  |         |  |                                                               |  |   |           |  |   |      
|St. Francis Plaza            |  | 1992/1993 |  | 100 | % | 35,800  |  | 35,800  |  | 20,850  |  | Wild Oats Market                                              |  | $ | 417,366   |  | $ | 11.66
|New York                     |  |           |  |     |   |         |  |         |  |         |  |                                                               |  |   |           |  |   |      
|College Plaza                |  | 1975/1994 |  | 96  | % | 175,086 |  | 175,086 |  | 126,812 |  | Bob's Stores
Marshalls
Eckerd Drugs
Staples                   |  | $ | 1,425,709 |  | $ | 8.14 
|Dalewood I Shopping Center   |  | 1966/1995 |  | 97  | % | 58,969  |  | 58,969  |  | 36,989  |  | Pathmark                                                      |  | $ | 840,540   |  | $ | 14.25
|Dalewood II Shopping Center  |  | 1970/1995 |  | 100 | % | 81,326  |  | 81,326  |  | 59,326  |  | Turco's Supermarket
Bed, Bath & Beyond                        |  | $ | 1,849,828 |  | $ | 22.75
|Dalewood III Shopping Center |  | 1972/1995 |  | 100 | % | 48,390  |  | 48,390  |  | 28,361  |  | TJ Maxx                                                       |  | $ | 1,192,247 |  | $ | 24.64
|Falcaro's Plaza              |  | 1968/1993 |  | 100 | % | 61,295  |  | 63,295  |  | 29,887  |  | OfficeMax                                                     |  | $ | 992,838   |  | $ | 16.20

29

---

|Kings Park Shopping Center       |  | 1963/1985 |  | 100 | % | 71,940  |  | 73,940  |  | 48,870  |  | Key Foods
TJ Maxx                                                                                                                 |  | $ | 1,052,201 |  | $ | 14.63
|-------------------------------- |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | --------------------------------------------------------------------------------------------------------------------------------- |  | - | --------- |  | - | -----
|Nesconset Shopping Center        |  | 1961/1999 |  | 99  | % | 122,996 |  | 124,996 |  | 33,460  |  | Office Depot/HomeGoods                                                                                                            |  | $ | 1,584,959 |  | $ | 12.89
|Parkway Plaza                    |  | 1973/1992 |  | 100 | % | 89,704  |  | 89,704  |  | 31,600  |  | TJ Maxx                                                                                                                           |  | $ | 1,880,613 |  | $ | 20.96
|Roanoke Plaza                    |  | 1972/1994 |  | 100 | % | 87,161  |  | 89,661  |  | 43,590  |  | Best Yet Market
TJ Maxx                                                                                                           |  | $ | 1,014,576 |  | $ | 11.64
|Rockville Centre Shopping Center |  | 1975      |  | 100 | % | 44,131  |  | 44,131  |  | 27,781  |  | HomeGoods                                                                                                                         |  | $ | 583,245   |  | $ | 13.22
|Salmon Run Plaza                 |  | 1993      |  | 100 | % | 68,761  |  | 181,195 |  | 164,614 |  | Hannaford's Supermarket
K-Mart (Non-Owned)                                                                                        |  | $ | 1,088,024 |  | $ | 15.82
|Suffolk Plaza                    |  | 1967/1998 |  | 100 | % | 84,480  |  | 89,680  |  | 56,759  |  | Waldbaum's Supermarket                                                                                                            |  | $ | 724,145   |  | $ | 8.57 
|Three Village Plaza              |  | 1964/1991 |  | 93  | % | 77,458  |  | 77,458  |  | 40,455  |  | Swezey and Newins                                                                                                                 |  | $ | 789,250   |  | $ | 10.19
|Turnpike Plaza                   |  | 1971/1994 |  | 100 | % | 52,950  |  | 52,950  |  | 30,700  |  | Waldbaum's Supermarket                                                                                                            |  | $ | 935,792   |  | $ | 17.67
|North Carolina                   |  |           |  |     |   |         |  |         |  |         |  |                                                                                                                                   |  |   |           |  |   |      
|The Commons at Chancellor Park   |  | 1994      |  | 99  | % | 341,860 |  | 351,460 |  | 309,041 |  | Home Depot (Ground Lease)
Hobby Lobby
Circuit City
Marshalls
Value City
Gold's Gym                                                |  | $ | 2,150,430 |  | $ | 6.29 
|Crown Point Shopping Center      |  | 1990      |  | 100 | % | 147,200 |  | 164,200 |  | 135,200 |  | Lowe's Home Centers
Babies R US                                                                                                   |  | $ | 1,022,890 |  | $ | 6.95 
|Franklin Square                  |  | 1990      |  | 97  | % | 318,435 |  | 517,735 |  | 379,568 |  | Super Wal-Mart (Non-Owned)
Best Buy
Ross Dress for Less
Bed, Bath & Beyond
Dollar Tree
Pep Boys (Ground Lease)
OfficeMax
Michaels |  | $ | 3,092,489 |  | $ | 9.71 

30

---

|Innes Street Market                |  | 1998 |  | 99  | % | 349,356 |  | 349,356 |  | 296,740 |  | Food Lion Supermarket
Lowe's Home Centers
Tinseltown Cinema
Marshalls
Staples
Circuit City
Old Navy |  | $ | 3,350,394 |  | $ | 9.59 
|---------------------------------- |  | ---- |  | --- | - | ------- |  | ------- |  | ------- |  | --------------------------------------------------------------------------------------------------- |  | - | --------- |  | - | -----
|McMullen Creek Shopping Center(10) |  | 1988 |  | 89  | % | 283,637 |  | 293,237 |  | 98,222  |  | Winn Dixie Supermarket
Burlington Coat Factory                                                      |  | $ | 2,570,607 |  | $ | 9.06 
|New Centre Market                  |  | 1998 |  | 97  | % | 143,763 |  | 266,263 |  | 202,040 |  | Target (Non-Owned)
Marshalls
PetsMart
OfficeMax                                                     |  | $ | 1,661,989 |  | $ | 11.56
|Tarrymore Square                   |  | 1989 |  | 80  | % | 260,405 |  | 260,405 |  | 85,447  |  | Marshalls
Dick's Sporting Goods                                                                     |  | $ | 2,092,062 |  | $ | 8.03 
|University Commons                 |  | 1989 |  | 99  | % | 231,943 |  | 231,943 |  | 131,873 |  | Lowes Foods
TJ Maxx
AC Moore                                                                        |  | $ | 2,249,351 |  | $ | 9.70 
|University Commons Greenville      |  | 1996 |  | 100 | % | 232,821 |  | 338,021 |  | 270,249 |  | Kroger Supermarket
TJ Maxx
Circuit City
Barnes & Noble
Target (Non-Owned)
Linens 'N Things          |  | $ | 2,631,034 |  | $ | 11.30

31

---

|Wendover Place         |  | 1997      |  | 97 | % | 415,775 |  | 547,075 |  | 441,954 |  | Harris-Teeter/Michaels
Kohl's
Dick's Sporting Goods
Babies R Us
PetsMart
Old Navy
Linens 'N Things
Target (Non-Owned) |  | $ | 4,329,324 |  | $ | 10.41
|---------------------- |  | --------- |  | -- | - | ------- |  | ------- |  | ------- |  | --------------------------------------------------------------------------------------------------------------------- |  | - | --------- |  | - | -----
|Ohio                   |  |           |  |    |   |         |  |         |  |         |  |                                                                                                                       |  |   |           |  |   |      
|30th Street Plaza      |  | 1951/1999 |  | 96 | % | 157,055 |  | 157,055 |  | 111,251 |  | Giant Eagle Supermarket
Marc's Pharmacy                                                                               |  | $ | 1,470,107 |  | $ | 9.36 
|Clock Tower Plaza      |  | 1989      |  | 99 | % | 237,975 |  | 244,475 |  | 172,300 |  | Ray's Supermarket
Wal-Mart                                                                                            |  | $ | 1,379,906 |  | $ | 5.80 
|Salem Consumer Square  |  | 1988      |  | 92 | % | 274,652 |  | 274,652 |  | 131,650 |  | Cub Foods
Office Depot
Michigan Sporting Goods
AJ Wright                                                              |  | $ | 2,273,649 |  | $ | 8.28 
|Pennsylvania           |  |           |  |    |   |         |  |         |  |         |  |                                                                                                                       |  |   |           |  |   |      
|Boyertown Plaza        |  | 1961      |  | 33 | % | 83,229  |  | 88,629  |  | N/A     |  | N/A                                                                                                                   |  | $ | 401,544   |  | $ | 4.82 
|Lehigh Shopping Center |  | 1955/1999 |  | 76 | % | 364,466 |  | 368,466 |  | 211,215 |  | Giant Foods (Ground Lease)
Mega Marshalls
Staples
D&D Budget & Clearance
Frank's Nursery                              |  | $ | 2,118,620 |  | $ | 5.81 

32

---

|Warminster Towne Center     |  | 1997      |  | 100 | % | 237,223 |  | 317,906 |  | 260,066 |  | Shop Rite Supermarket
Kohl's (Non-Owned)
Ross Dress for Less
PetsMart
OfficeMax
Pep Boys
Rag Shop
Old Navy |  | $ | 3,012,390 |  | $ | 12.70
|--------------------------- |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | ---------------------------------------------------------------------------------------------------------- |  | - | --------- |  | - | -----
|South Dakota                |  |           |  |     |   |         |  |         |  |         |  |                                                                                                            |  |   |           |  |   |      
|Baken Park                  |  | 1962/1997 |  | 96  | % | 195,526 |  | 195,526 |  | 95,039  |  | Nash Finch Supermarket
Ben Franklin
Boyd's Drug                                                            |  | $ | 1,406,844 |  | $ | 7.20 
|Tennessee                   |  |           |  |     |   |         |  |         |  |         |  |                                                                                                            |  |   |           |  |   |      
|Oakwood Commons (11)        |  | 1989/1997 |  | 66  | % | 291,527 |  | 294,277 |  | 105,800 |  | Publix Supermarket
Peebles Dept. Store                                                                     |  | $ | 1,673,156 |  | $ | 5.74 
|Watson Glen Shopping Center |  | 1989      |  | 100 | % | 264,360 |  | 264,360 |  | 206,427 |  | Bi-Lo Foods
K-Mart
Goody's Family Clothing
World Gym                                                       |  | $ | 1,966,405 |  | $ | 7.44 
|Williamson Square (12)      |  | 1988/1993 |  | 88  | % | 331,931 |  | 342,181 |  | 167,287 |  | Kroger Supermarket
Hobby Lobby
USA Baby
Hancock Fabrics                                                    |  | $ | 2,359,369 |  | $ | 7.11 
|Texas                       |  |           |  |     |   |         |  |         |  |         |  |                                                                                                            |  |   |           |  |   |      
|Buckingham Place            |  | 1980/1997 |  | 93  | % | 150,228 |  | 156,228 |  | 96,274  |  | Minyard Food Stores
Big Lots                                                                               |  | $ | 1,017,116 |  | $ | 6.77 

33

---

|The Crossing              |  | 2000/2001 |  | 92  | % | 186,925 |  | 253,304 |  | 150,963 |  | Kroger Signature (Non-Owned)
Kohl's (Ground Lease)                                                |  | $ | 2,036,230 |  | $ | 10.89
|------------------------- |  | --------- |  | --- | - | ------- |  | ------- |  | ------- |  | ------------------------------------------------------------------------------------------------- |  | - | --------- |  | - | -----
|Las Colinas Village       |  | 2001/2002 |  | 82  | % | 104,803 |  | 131,803 |  | 24,025  |  | Staples                                                                                           |  | $ | 1,713,891 |  | $ | 16.35
|Randall's Bay Area        |  | 1989/2001 |  | 100 | % | 78,650  |  | 78,650  |  | 55,200  |  | Randall's Food Market                                                                             |  | $ | 677,995   |  | $ | 8.62 
|Randall's Fairmont        |  | 1985/2003 |  | 93  | % | 104,708 |  | 110,908 |  | 55,008  |  | Randall's Food Market                                                                             |  | $ | 984,311   |  | $ | 9.40 
|Royal Oaks Village        |  | 2001/2002 |  | 97  | % | 145,286 |  | 145,286 |  | 83,652  |  | HEB Grocery                                                                                       |  | $ | 2,829,022 |  | $ | 19.47
|Trinity Commons (13)      |  | 1998      |  | 96  | % | 197,356 |  | 197,356 |  | 84,228  |  | Tom Thumb
DSW Shoe Warehouse                                                                      |  | $ | 2,914,979 |  | $ | 14.77
|Vermont                   |  |           |  |     |   |         |  |         |  |         |  |                                                                                                   |  |   |           |  |   |      
|Rutland Plaza             |  | 1966/1996 |  | 100 | % | 224,514 |  | 224,514 |  | 182,264 |  | Price Chopper Supermarket
Wal-Mart
TJ Maxx
Plaza Movie Plex                                       |  | $ | 1,851,335 |  | $ | 8.25 
|Virginia                  |  |           |  |     |   |         |  |         |  |         |  |                                                                                                   |  |   |           |  |   |      
|Spradlin Farm             |  | 2000/2001 |  | 99  | % | 181,055 |  | 442,055 |  | 366,962 |  | Home Depot (Non-Owned)
Target (Non-Owned)
TJ Maxx
Barnes & Noble
Michaels
Goody's Family Clothing |  | $ | 2,322,035 |  | $ | 12.83
|Wisconsin                 |  |           |  |     |   |         |  |         |  |         |  |                                                                                                   |  |   |           |  |   |      
|Fairacres Shopping Center |  | 1992      |  | 100 | % | 79,736  |  | 82,486  |  | 58,678  |  | Pick 'N Save Supermarket                                                                          |  | $ | 692,785   |  | $ | 8.69 
|Fitchburg Ridge           |  | 1980      |  | 80  | % | 50,555  |  | 61,805  |  | 16,631  |  | Wisconsin Dialysis                                                                                |  | $ | 299,846   |  | $ | 5.93 

34

---

|Fox River Plaza              |  | 1987      |  | 99  | % | 169,883    |  | 173,383    |  | 137,113    |  | Pick 'N Save Supermarket
K-Mart             |  | $ | 801,189     |  | $ | 4.72 
|---------------------------- |  | --------- |  | --- | - | ---------- |  | ---------- |  | ---------- |  | ------------------------------------------- |  | - | ----------- |  | - | -----
|Garden Plaza                 |  | 1990      |  | 86  | % | 80,099     |  | 80,099     |  | 49,564     |  | Pick 'N Save Supermarket                    |  | $ | 469,649     |  | $ | 5.86 
|Madison Plaza                |  | 1988/1994 |  | 37  | % | 127,584    |  | 127,584    |  | N/A        |  | N/A                                         |  | $ | 458,939     |  | $ | 3.60 
|Mequon Pavilions             |  | 1967/1991 |  | 92  | % | 211,425    |  | 211,425    |  | 65,995     |  | Jewel Foods / Osco Drugs
Bed, Bath & Beyond |  | $ | 2,558,341   |  | $ | 12.10
|Moorland Square              |  | 1990      |  | 99  | % | 98,288     |  | 195,388    |  | 149,674    |  | Pick 'N Save Supermarket
K-Mart (Non-Owned) |  | $ | 790,213     |  | $ | 8.04 
|Oak Creek Centre             |  | 1988      |  | 99  | % | 91,510     |  | 99,510     |  | 50,000     |  | Sentry Supersaver                           |  | $ | 639,742     |  | $ | 6.99 
|Park Plaza                   |  | 1959/1993 |  | 93  | % | 113,828    |  | 113,828    |  | 74,213     |  | Sentry Foods
Big Lots                       |  | $ | 702,756     |  | $ | 6.17 
|Spring Mall                  |  | 1967/1994 |  | 90  | % | 210,421    |  | 210,421    |  | 140,041    |  | Pick 'N Save Supermarket
TJ Maxx
Walgreens  |  | $ | 1,539,315   |  | $ | 7.32 
|Taylor Heights               |  | 1989      |  | 100 | % | 85,072     |  | 223,862    |  | 158,630    |  | Piggly Wiggly Foods
Wal-Mart (Non-Owned)    |  | $ | 905,473     |  | $ | 10.64
|                             |  |           |  |     |   |            |  |            |  |            |  |                                             |  |   |             | 
|TOTAL SHOPPING CENTERS       |  |           |  | 92  | % | 27,501,815 |  | 32,696,281 |  | 20,700,689 |  |                                             |  | $ | 234,767,795 |  | $ | 8.54 
|                             |  |           |  |     |   |            |  |            |  |            |  |                                             |  |   |             | 
|Office Buildings:            |  |           |  |     |   |            |  |            |  |            |  |                                             |  |   |             |  |   |      
|William J. McCarthy Building |  | 1963/1995 |  | 97  | % | 93,211     |  | 93,211     |  |            |  | NETT
Heritage
Clarke & Company              |  | $ | 3,810,267   |  | $ | 40.88
|545 Boylston Street          |  | 1972/1996 |  | 99  | % | 89,208     |  | 89,208     |  |            |  | Allied Advertising
Trinity Church           |  | $ | 3,398,322   |  | $ | 38.09

35

---

|Executive Office Building |  | 1970 |  | 95 | % | 40,180     |  | 40,180     |  |  |  | Lipner Gordon & Co.
Norca Corporation
Sol G Atlas Realty
Heritage |  | $ | 980,606     |  | $ | 24.41
|------------------------- |  | ---- |  | -- | - | ---------- |  | ---------- |  |  |  | ----------------------------------------------------------------- |  | - | ----------- |  | - | -----
|Fortune Office Building   |  | 1969 |  | 89 | % | 58,503     |  | 58,503     |  |  |  | N/A                                                               |  | $ | 1,197,648   |  | $ | 20.47
|                          |  |      |  |    |   |            |  |            |  |  |  |                                                                   |  |   |             | 
|TOTAL OFFICE BUILDINGS    |  |      |  | 96 | % | 281,102    |  | 281,102    |  |  |  |                                                                   |  | $ | 9,386,843   |  | $ | 33.39
|                          |  |      |  |    |   |            |  |            |  |  |  |                                                                   |  |   |             | 
|TOTAL PORTFOLIO           |  |      |  | 92 | % | 27,782,917 |  | 32,977,383 |  |  |  |                                                                   |  | $ | 244,154,638 |  | $ | 8.79 
|                          |  |      |  |    |   |            |  |            |  |  |  |                                                                   |  |   |             | 

---

36

---



Top Tenants by Annualized Base Rent

|Tenant                          |  | # of Stores |  | Total GLA |  | GLA as a % of Total |   | Tenant
Annualized
Base Rent(1) |            | % of Total
Annualized
Base Rent(2) |      | Type of Business
|------------------------------- |  | ----------- |  | --------- |  | ------------------- | - | ------------------------------ | ---------- | ---------------------------------- | ---- | ----------------
|TJX Companies(3)                |  | 46          |  | 1,437,140 |  | 5.17                | % | $                              | 12,582,837 |                                    | 5.15 | %               
|Kroger(4)                       |  | 13          |  | 720,708   |  | 2.59                | % |                                | 5,050,338  |                                    | 2.07 | %               
|Supervalu(5)                    |  | 10          |  | 674,962   |  | 2.43                | % |                                | 4,369,097  |                                    | 1.79 | %               
|Roundy's(6)                     |  | 9           |  | 546,032   |  | 1.97                | % |                                | 3,591,942  |                                    | 1.47 | %               
|Wal-Mart                        |  | 9           |  | 842,962   |  | 3.03                | % |                                | 3,554,692  |                                    | 1.46 | %               
|Barnes & Noble                  |  | 8           |  | 203,436   |  | 0.73                | % |                                | 3,297,311  |                                    | 1.35 | %               
|Charming Shoppes(7)             |  | 38          |  | 316,183   |  | 1.14                | % |                                | 3,208,397  |                                    | 1.31 | %               
|Home Depot                      |  | 4           |  | 459,073   |  | 1.65                | % |                                | 3,061,173  |                                    | 1.25 | %               
|OfficeMax                       |  | 12          |  | 317,020   |  | 1.14                | % |                                | 3,020,690  |                                    | 1.24 | %               
|Staples                         |  | 11          |  | 278,043   |  | 1.00                | % |                                | 2,907,544  |                                    | 1.19 | %               
|Hy-Vee                          |  | 9           |  | 535,066   |  | 1.93                | % |                                | 2,601,987  |                                    | 1.07 | %               
|Hallmark                        |  | 40          |  | 205,722   |  | 0.74                | % |                                | 2,437,241  |                                    | 1.00 | %               
|Blockbuster                     |  | 24          |  | 149,198   |  | 0.54                | % |                                | 2,409,678  |                                    | 0.99 | %               
|Walgreens                       |  | 15          |  | 192,330   |  | 0.69                | % |                                | 2,334,466  |                                    | 0.96 | %               
|PetsMart                        |  | 8           |  | 195,836   |  | 0.70                | % |                                | 2,222,520  |                                    | 0.91 | %               
|Circuit City                    |  | 6           |  | 181,149   |  | 0.65                | % |                                | 2,188,855  |                                    | 0.90 | %               
|Associated Wholesale Grocers(8) |  | 6           |  | 401,848   |  | 1.45                | % |                                | 2,175,092  |                                    | 0.89 | %               
|Linens N Things                 |  | 6           |  | 179,705   |  | 0.65                | % |                                | 2,157,807  |                                    | 0.88 | %               
|Dollar Tree                     |  | 30          |  | 242,607   |  | 0.87                | % |                                | 2,118,525  |                                    | 0.87 | %               
|Safeway(9)                      |  | 4           |  | 261,433   |  | 0.94                | % |                                | 2,054,368  |                                    | 0.84 | %               

---

37

---

Total Lease Expiration Roll OutDecember 31, 2003

|Lease Expiration Year |        | Number of
Expiring
Leases |       | Expiring
Square Feet |            | % of Total
Sq. Ft. Expiring |       | Expiring
Base Rent(1) |            | % of Total
Base Rent |      | Expiring
Base Rent /
Sq. Ft.(2)
|--------------------- | ------ | ------------------------- | ----- | -------------------- | ---------- | --------------------------- | ----- | --------------------- | ---------- | -------------------- | ---- | -------------------------------
|2004                  |        | 517                       |       | 1,915,335            |            | 7.5                         | %     | $                     | 20,009,572 |                      | 8.0  | %                              
|2005                  |        | 574                       |       | 2,388,935            |            | 9.3                         | %     |                       | 27,654,292 |                      | 11.0 | %                              
|2006                  |        | 573                       |       | 3,084,465            |            | 12.1                        | %     |                       | 30,309,437 |                      | 12.0 | %                              
|2007                  |        | 422                       |       | 2,574,136            |            | 10.1                        | %     |                       | 26,568,993 |                      | 10.6 | %                              
|2008                  |        | 409                       |       | 2,712,085            |            | 10.6                        | %     |                       | 28,366,997 |                      | 11.3 | %                              
|2009                  |        | 209                       |       | 2,184,246            |            | 8.5                         | %     |                       | 21,811,261 |                      | 8.7  | %                              
|2010                  |        | 119                       |       | 1,411,670            |            | 5.5                         | %     |                       | 14,977,814 |                      | 6.0  | %                              
|2011                  |        | 97                        |       | 1,451,655            |            | 5.7                         | %     |                       | 14,245,609 |                      | 5.7  | %                              
|2012                  |        | 85                        |       | 1,004,169            |            | 3.9                         | %     |                       | 11,994,571 |                      | 4.8  | %                              
|2013                  |        | 82                        |       | 1,433,004            |            | 5.6                         | %     |                       | 12,782,026 |                      | 5.1  | %                              
|2014 and Thereafter   |        | 166                       |       | 5,404,325            |            | 21.1                        | %     |                       | 42,834,030 |                      | 17.0 | %                              
|                      |        |                           |       |                      |            |                             |       |                       |            |                      |      |                                
|                      | Totals |                           | 3,253 |                      | 25,564,025 |                             | 100.0 | %                     | $          | 251,554,602          |      | 100.0                          
|                      |        |                           |       |                      |            |                             |       |                       |            |                      |      |                                

---

Item 3: Legal Proceedings

On October 31, 2001, a complaint was filed against us in the Superior Court of Suffolk County of the Commonwealth of Massachusetts by Weston Associates and
its president, Paul Donahue, alleging that we owe Mr. Donahue and his firm a fee in connection with services he claims he performed on our behalf in connection with our acquisition of Bradley
Real Estate, Inc. On September 18, 2000, we acquired Bradley, a publicly traded REIT based in Illinois with nearly 100 shopping center properties located primarily in the Midwest, at an
aggregate cost of approximately $1.2 billion. Through his personal relationships with the parties involved, Mr. Donahue introduced us to Bradley and its senior management team.
Mr. Donahue alleges, however, that he played an instrumental role in the negotiation and completion of our acquisition of Bradley beyond merely introducing the parties. For these alleged
efforts, Mr. Donahue demands that he receive a fee equal to 2% of the aggregate consideration we paid to acquire Bradley, or a fee of approximately $24 million. In addition,
Mr. Donahue also seeks treble damages based on alleged unfair or deceptive business practices under Massachusetts's law.

On
December 30, 2001, we filed a motion to dismiss all of Mr. Donahue's claims. Mr. Donahue filed an opposition to our motion and on March 22, 2002, a hearing
was held by the court. On November 29, 2002, the court granted our motion to dismiss Mr. Donahue's claims. Mr. Donahue has since filed an appeal of the court's decisions. On
March 4, 2004, an oral argument was heard with respect to Mr. Donahue's appeal, although no decision was rendered at that time. It is not possible at this time to predict the outcome of
this litigation and we intend to vigorously defend against these claims.

Except
as set forth above, we are not involved in any material litigation nor, to our knowledge, is any material litigation threatened against us, other than routine litigation arising
in the ordinary course of business, which is generally expected to be covered by insurance. In the opinion of our management, based upon currently available information, this litigation is not
expected to have a material adverse effect on our business, financial condition or results of operations.

Item 4: Submission of Matters to a Vote of Security Holders

None

38

---



PART II

Item 5: Market for Registrant's Common Equity and Related Stockholder Matters

Our common stock began trading on the New York Stock Exchange on April 24, 2002, under the symbol "HTG". As of March 8, 2004, we had approximately
4,100 common stockholders of record.

The
following table sets forth, for the periods indicated and on a per-share basis, the high and low closing prices as reported by the New York Stock Exchange and
per-share distributions declared since our initial public offering:

High

Low

DistributionsSecond Quarter 2002 (April 24, 2002 to June 30, 2002)

$
26.71

$
24.60

$
0.363Third Quarter 2002

$
25.50

$
23.65

$
0.525Fourth Quarter 2002

$
25.00

$
23.06

$
0.525First Quarter 2003

$
25.92

$
23.81

$
0.525Second Quarter 2003

$
27.90

$
25.01

$
0.525Third Quarter 2003

$
29.20

$
27.30

$
0.525Fourth Quarter 2003

$
29.62

$
27.35

$
0.525


We intend to continue to declare quarterly distributions. No assurance, however, can be provided as to the amounts or timing of future
distributions, as the maintenance of those distributions is subject to various factors, including the discretion of our Board of Directors, limitations contained in our debt instruments, the ability
to pay dividends under Maryland law, the availability of cash to make the necessary dividend payments and the effect of REIT distribution requirements. In order to qualify for the beneficial tax
treatment accorded to REITs under the Internal Revenue Code, we are required to make distributions to holders of our shares in an amount equal to 90% of our "real estate investment trust taxable
income," as defined in Section 857 of the Internal Revenue Code.

Item 6: Selected Financial Data

The following selected historical consolidated financial and operating data should be read together with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our consolidated financial statements on page F-1 of this Form 10-K. Our historical financial information has been presented on
an accrual basis in accordance with generally accepted accounting principles, ("GAAP"), applicable to real estate investment trusts for all periods presented since our commencement of operations on
July 9, 1999. Prior to our formation, our business was operated by The New England Teamsters and Trucking Pension Fund's ("NETT") real estate company. Accordingly, the historical financial
information presented for all periods prior to our formation was prepared by NETT on a fair value basis in accordance with GAAP applicable to pension funds such as NETT.

The
major differences between the two types of GAAP are:



39

---



|                                                                                    |                                                             | Year Ended December 31, |           |         |        
|----------------------------------------------------------------------------------- | ----------------------------------------------------------- | ----------------------- | --------- | ------- | -------
|
|
|
|STATEMENT OF OPERATIONS DATA:                                                       |                                                             |                         |           |         |        
|Revenue:                                                                            |                                                             |                         |           |         |        
|                                                                                    | Rentals and recoveries                                      |                         | $         | 300,678 |        
|                                                                                    | Interest and other                                          |                         |           | 320     |        
|                                                                                    |                                                             |                         |           |         |        
|                                                                                    |                                                             | Total revenue           |           |         | 300,998
|                                                                                    |                                                             |                         |           |         |        
|Expenses:                                                                           |                                                             |                         |           |         |        
|                                                                                    | Operating                                                   |                         |           | 87,714  |        
|                                                                                    | General and administrative                                  |                         |           | 20,965  |        
|                                                                                    | Depreciation and amortization                               |                         |           | 78,964  |        
|                                                                                    | Interest                                                    |                         |           | 69,415  |        
|                                                                                    | Loss on prepayment of debt                                  |                         |           |        |        
|                                                                                    |                                                             |                         |           |         |        
|                                                                                    |                                                             | Total expenses          |           |         | 257,058
|                                                                                    |                                                             |                         |           |         |        
|Income before net gains                                                             |                                                             |                         | 43,940    |         |        
|                                                                                    | Net gains on sales of real estate investments and equipment |                         |           |        |        
|                                                                                    | Net derivative (losses) gains                               |                         |           |        |        
|                                                                                    |                                                             |                         |           |         |        
|Income before allocation to minority interests and discontinued operations          |                                                             |                         | 43,940    |         |        
|                                                                                    | Income allocated to minority interests                      |                         |           | (6,913  | )      
|                                                                                    | Income from discontinued operations                         |                         |           | 3,706   |        
|                                                                                    |                                                             |                         |           |         |        
|Net income                                                                          |                                                             |                         | 40,733    |         |        
|                                                                                    | Preferred stock distributions                               |                         |           |        |        
|                                                                                    | Accretion of redeemable equity                              |                         |           |        |        
|                                                                                    |                                                             |                         |           |         |        
|Net income (loss) attributable to common shareholders                               |                                                             | $                       | 40,733    |         | $      
|                                                                                    |                                                             |                         |           |         |        
|Per Share Data:                                                                     |                                                             |                         |           |         |        
|                                                                                    | Basic income (loss) attributable to common shareholders     |                         | $         | 0.97    |        
|                                                                                    | Diluted income (loss) attributable to common shareholders   |                         | $         | 0.96    |        
|Weighted average common shares outstandingBasic                                    |                                                             |                         | 41,963    |         |        
|Weighted average common and common equivalent shares outstandingDiluted            |                                                             |                         | 42,536    |         |        
|BALANCE SHEET DATA: (at end of period)                                              |                                                             |                         |           |         |        
|Real estate investments, before accumulated depreciation                            |                                                             | $                       | 2,409,928 |         | $      
|Total assets                                                                        |                                                             |                         | 2,227,468 |         |        
|Total liabilities                                                                   |                                                             |                         | 1,183,901 |         |        
|Minority interests                                                                  |                                                             |                         | 85,095    |         |        
|Redeemable equity                                                                   |                                                             |                         |          |         |        
|Shareholders' equity                                                                |                                                             |                         | 958,472   |         |        
|OTHER DATA:                                                                         |                                                             |                         |           |         |        
|# of shopping centers (at end of period)                                            |                                                             |                         | 162       |         |        
|Gross leasable area of shopping centers (sq. ft. at end of period, in thousands)(2) |                                                             |                         | 27,502    |         |        
|% leased (at end of period)                                                         |                                                             |                         | 92        | %       |        
|Total portfolio net operating income                                                |                                                             | $                       | 212,964   |         | $      
|Funds from Operations(3)                                                            |                                                             |                         | 116,397   |         |        
|Cash flow from operating activities                                                 |                                                             |                         | 138,840   |         |        
|Cash flow from investing activities                                                 |                                                             |                         | (155,283  | )       |        
|Cash flow from financing activities                                                 |                                                             |                         | 20,440    |         |        

---

40

---

HERITAGE
PREDECESSOR(1)Oct. 1, 1998
to July 8, 1999(in thousands)INCOME STATEMENT DATA:Revenue:Rentals and recoveries

$
55,941Interest and other


393Total revenue


56,334Expenses:Operating


17,247General and administrative


3,757Interest


2,155Total expenses


23,159Net additions from operations


33,175Unrealized gain (loss) in fair value of assets


35,170Net gains (losses) on sales of real estate investments and equipment


(8,807
)Net additions after gains (losses)


59,538Distributions to NETT


(25,858
)Net increase (decrease) in net assets

$
33,680BALANCE SHEET DATA:(at end of period)Real estate investments, before accumulated depreciation

$
578,200Total assets


585,592Total liabilities


35,592OTHER DATA:# of shopping centers (at end of period)


41Gross leasable area of shopping centers (sq. ft. at end of period, in thousands)


7,155% leased (at end of period)


92
%Total portfolio net operating income

$
38,694


---

41

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Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the selected financial data and the historical consolidated financial
statements and related notes thereto.

Overview

We are a fully integrated, self-administered and self-managed real estate investment trust, or "REIT." We are one of the nation's largest
owners of neighborhood and community shopping centers. As of December 31, 2003, we had a shopping center portfolio consisting of 162 shopping centers, located in 29 states and totaling
approximately 32.7 million square feet of GLA, of which approximately 27.5 million square feet was Company-owned GLA. Our shopping center portfolio was approximately 92.0% leased as of
December 31, 2003.

Our
operating strategy is to own and manage a quality portfolio of community and neighborhood shopping centers that will provide stable cash flow and investment returns. Our focus is to
own grocer-anchored centers with a diverse and multi-anchored tenant base in attractive geographic locations with strong demographics. We derive substantially all of our revenues from rentals and
recoveries received from tenants under existing leases on each of our properties. Our operating results therefore depend primarily on the ability of our tenants to make required rental payments.

Generally,
we do not expect that our net operating income will deviate significantly in the short-term. This is because our leases with our tenants provide us a stable cash
flow over the long-term. In addition, other than in unusual circumstances such as higher than anticipated snow removal costs, utility expenses or real estate taxes, our operating expenses
generally remain predictable.

However,
as an owner of community and neighborhood shopping centers, our performance is linked to economic conditions in the retail industry in those markets in which our centers are
located. During the past few years, there has been an economic downturn in the retail industry and in the U.S. economy generally. In addition, the retail sector has changed dramatically as a result of
continued industry
consolidation due to the continuing strength of Wal-Mart and large retail bankruptcies resulting in an excess amount of available retail space and greater competition. We believe that the
nature of the properties that we primarily own and invest ingrocer-anchored neighborhood and community shopping centersprovides a more stable revenue flow in uncertain
economic times, as they are more resistant to economic down cycles. This is because consumers still need to purchase food and other goods found at grocers, even in difficult economic times.

In
the face of these challenging market conditions, we follow a dual growth strategy. First, we continue to focus on increasing our internal growth by leveraging our existing tenant
relationships to improve the performance of our existing shopping center portfolio. We believe that there are meaningful opportunities to increase our cash flow from our existing properties because of
their desirable locations. For instance, during 2002 and 2003, we were adversely affected by large retail bankruptcies that created vacant space within our portfolio and by the increasingly
competitive leasing environment resulting from the economic downturn. As a result, we experienced a decline of approximately 0.7% in our same store net operating income. However, as a result of our
efforts to re-let space recovered from bankrupt tenants, we anticipate modest increases in same store net operating income during the latter part of 2004 and into 2005.

Secondly,
we focus on achieving external growth by expansion of our portfolio and we will continue to pursue targeted acquisitions of primarily grocer-anchored neighborhood and community
shopping centers in attractive markets with strong economic and demographic characteristics. We will pursue acquisitions in our existing markets as well as in new markets where a portfolio of
properties might be available to enable us to establish a platform for further growth. In recent years, the market for acquisitions has been particularly competitive with a greater number of potential
buyers pursuing

42

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fewer
attractive acquisition targets. The favorable interest rate environment and lower costs of funds have further served to increase dramatically prices paid for shopping center properties. In the
future, to take advantage of these favorable market conditions we may dispose of properties that are not a strategic fit within our overall portfolio.

We
currently expect to incur additional debt in connection with any future acquisitions of real estate. As of December 31, 2003, we had $1.1 billion of indebtedness. This
indebtedness will require balloon payments starting in August 2004. We anticipate that we will not have sufficient funds on hand to repay these balloon amounts at maturity. Therefore, we expect
to refinance our debt and to fund our growth either through unsecured private or public debt offerings, additional debt financings secured by individual properties or groups of properties or by
additional equity offerings. We may also finance those payments through borrowings under our line of credit facility. In the future, we may also pursue joint venture arrangements with third party
developers and/or institutional investors. These joint ventures would provide us with greater access to potential acquisitions and alternative sources of capital to fund these acquisitions.

Critical Accounting Policies

In response to guidance of the Securities and Exchange Commission, we have identified the following critical accounting policies that affect our more significant
judgments and estimates used in the preparation of our consolidated financial statements. The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates
and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities.

On
an ongoing basis, we evaluate our estimates, including those related to revenue recognition and the allowance for doubtful accounts receivable, real estate investments and asset
impairment, and derivatives used to hedge interest-rate risks. We state these accounting policies in the notes to our consolidated financial statements and at relevant sections in this
discussion and analysis. Our estimates are based on information that is currently available to us and on various other assumptions that we believe are reasonable under the circumstances. Actual
results could differ from those estimates and those estimates could be different under varying assumptions or conditions.

Revenue Recognition

Rental income with scheduled rent increases is recognized using the straight-line method over the term of the leases. The aggregate excess of rental
revenue recognized on a straight-line basis over cash received under applicable lease provisions is included in accounts receivable. Leases for both retail and office space generally
contain provisions under which the tenants reimburse us for a portion of property operating expenses and real estate taxes incurred by us. In addition, certain of our operating leases for retail space
contain contingent rent provisions under which tenants are required to pay a percentage of their sales in excess of a specified amount as additional rent. We defer recognition of contingent rental
income until those specified targets are met.

We
must make estimates of the uncollectibility of our accounts receivable related to minimum rent, deferred rent, expense reimbursements and other revenue or income. We specifically
analyze accounts receivable and historical bad debts, tenant concentrations, tenant credit worthiness, current economic trends and changes in our tenant payment terms when evaluating the adequacy of
the allowance for doubtful accounts receivable. These estimates have a direct impact on our net income, because a higher bad debt allowance would result in lower net income.

43

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Real Estate Investments

At our formation in July 1999, contributed real estate investments were recorded at the carry-over basis of our predecessor, which was fair
market value of the assets in conformity with GAAP applicable to pension funds. Subsequent acquisitions of real estate investments, including those acquired in connection with our acquisition of
Bradley in September 2000 and other acquisitions since our formation, are recorded at cost. Expenditures that substantially extend the useful life of a real estate investment are capitalized.
Expenditures for maintenance, repairs and betterments that do not materially extend the useful life of a real estate investment are charged to operations as incurred.

The
provision for depreciation and amortization has been calculated using the straight-line method over the following estimated useful lives:

Land improvements

15 yearsBuildings and improvements

20-39 yearsTenant improvements

Shorter of useful life or term of related lease


We
are required to make subjective assessments as to the useful lives of our properties for purposes of determining the amount of depreciation to reflect on an annual basis with respect
to our properties. These assessments have a direct impact on our net income because if we were to shorten the expected useful life of our properties or improvements, we would depreciate them over
fewer years, resulting in more depreciation expense and lower net income on an annual basis during these periods.

We
apply Statement of Financial Accounting Standards (SFAS) No. 144,Accounting for the Impairment or Disposal of Long-Lived
Assets, to recognize and measure impairment of long-lived assets. We review each real estate investment for impairment whenever events or circumstances indicate
that the carrying value of a real estate investment may not be recoverable. The review of recoverability is based on an estimate of the future undiscounted cash flows, excluding interest charges,
expected to result from the real estate investment's use and eventual disposition. These cash flows consider factors such as expected future operating income, trends and prospects, as
well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a real estate investment, an impairment loss is
recorded to the extent that the carrying value exceeds estimated fair market value. No such impairment losses have been recognized to date.

Real
estate investments held for sale are carried at the lower of carrying amount or fair value, less cost to sell. Depreciation and amortization are suspended during the period held for
sale.

We
are required to make subjective assessments as to whether there are impairments in the value of our real estate properties. These assessments have a direct impact on our net income,
because taking an impairment loss results in an immediate negative adjustment to net income.

We
apply Statement of Financial Accounting Standards No. 141,Business Combinations, to property acquisitions. Accordingly, the
fair value of the real estate acquired is allocated to the acquired tangible assets, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases,
other value of in-place leases and value of tenant relationships, based in each case on their fair values.

The
fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, and the "as-if-vacant" value is then
allocated based on management's determination of the relative fair values of these assets. Management determines the as-if-vacant fair value of a property using methods similar
to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods
considering current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of
lost rental revenue during the expected lease-up periods based on current market demand.

44

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Management
also estimates costs to execute similar leases including leasing commissions, legal and other related costs.

In
allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded
based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the
in-place leases and (ii) management's estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining
non-cancelable term of the lease. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of the
respective leases. The capitalized below-market
lease values are amortized as an increase to rental income over the initial term and any fixed rate renewal periods in the respective leases.

The
aggregate value of other acquired intangible assets, consisting of in-place leases and tenant relationships, is measured by the excess of (i) the purchase price
paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as if vacant, determined as set forth above.
This aggregate value is allocated between in-place lease values and tenant relationships, if any, based on management's evaluation of the specific characteristics of each tenant's lease;
however, the value of tenant relationships has not been separated from in-place lease value for the additional interests in real estate entities because such value and its consequence to
amortization expense is estimated to be immaterial for these particular acquisitions. Should future acquisitions of properties result in allocating material amounts to the value of tenant
relationships, an amount would be separately allocated and amortized over the estimated life of the relationship. The value of in-place leases exclusive of the value of above-market and
below-market in-place leases is amortized to expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated
expiration, all unamortized amounts relating to that lease would be written off.

Hedging Activities

From time to time, we use derivative financial instruments to limit our exposure to changes in interest rates. We were not a party to any hedging agreement with
respect to our floating rate debt as of December 31, 2003 or 2002. We have in the past used derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings,
from lines of credit to medium and long-term financings. We require that hedging derivative instruments are effective in reducing the interest rate risk exposure that they are designed to
hedge. We do not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based on their credit rating and other factors.

If
interest rate assumptions and other factors used to estimate a derivative's fair value or methodologies used to determine hedge effectiveness were different, amounts reported in
earnings and other comprehensive income and losses expected to be reclassified into earnings in the future could be affected. Furthermore, future changes in market interest rates and other relevant
factors could increase the fair value of a liability for a derivative, increase future interest expense, and result in lower net income.

Results of Operations

The following discussion is based on our consolidated financial statements for the years ended December 31, 2003, 2002, and 2001.

From
January 1, 2001 through December 31, 2003, we increased our total portfolio of properties from 145 properties to 166 properties and from 23.2 million
Company-owned GLA to 27.8 million Company-owned GLA. As a result of this growth of our total portfolio, the financial data presented

45

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below
with respect to the Total Portfolio shows significant changes in revenues and expenses from period-to-period and, as a result, we do not believe our
period-to-period financial data, with respect to the Total Portfolio are comparable in any meaningful way. Therefore, the comparison of operating results for the years ended
December 31, 2003, 2002, and 2001 show changes resulting from net operating income for properties that we owned for each period compared (we refer to this comparison as our "Same Property
Portfolio" for the applicable period) and the changes for income before net gains attributable to our Total Portfolio. Unless otherwise indicated, increases in revenue and expenses attributable to the
Total Portfolio are due to the acquisition of properties during the years being compared. In addition, amounts classified as discontinued operations in the accompanying consolidated financial
statements are excluded from the Total Portfolio information.

Comparison of the year ended December 31, 2003 to the year ended December 31, 2002

The table below shows selected operating information for our total portfolio and the 145 properties acquired prior to January 1, 2002 that remained in the
total portfolio through December 31, 2003, which constitute the Same Property Portfolio for the years ended December 31, 2003 and 2002, (in thousands):

|                             |                               | Same Property Portfolio           |   | Total Portfolio |        
|---------------------------- | ----------------------------- | --------------------------------- | - | --------------- | -------
|
|Rental and recovery revenue: |                               |                                   |   |                 |        
|                             | Rentals                       |                                   | $ | 198,656         |        
|                             | Percentage rent               |                                   |   | 3,875           |        
|                             | Recoveries                    |                                   |   | 59,869          |        
|                             | Other property                |                                   |   | 1,629           |        
|                             |                               |                                   |   |                 |        
|                             |                               | Total rental and recovery revenue |   |                 | 264,029
|Expenses:                    |                               |                                   |   |                 |        
|                             | Property operating expenses   |                                   |   | 40,205          |        
|                             | Real estate taxes             |                                   |   | 39,661          |        
|                             |                               |                                   |   |                 |        
|                             |                               | Net operating income              |   | $               | 184,163
|                             |                               |                                   |   |                 |        
|Add:                         |                               |                                   |   |                 |        
|                             | Interest and other income     |                                   |   | 320             |        
|Deduct:                      |                               |                                   |   |                 |        
|                             | Depreciation and amortization |                                   |   | 78,964          |        
|                             | Interest                      |                                   |   | 69,415          |        
|                             | General and administrative    |                                   |   | 20,965          |        
|                             | Loss on prepayment of debt    |                                   |   |                |        
|                             |                               |                                   |   |                 |        
|                             | Income before net gains       |                                   | $ | 43,940          |        
|                             |                               |                                   |   |                 |        

The increase in rental revenue, including termination fees, for our Same Property Portfolio is primarily the result of new leases and rollovers of
existing tenants at higher rental rates and an increase in termination fees of $1.6 million. Although our actual occupancy on a same property basis declined slightly to 91.7% as of
December 31, 2003 from 93.3% as of December 31, 2002, this new leasing activity offset any loss of rental income related to (i) new vacancies and bankruptcies, primarily Ames,
Kmart and Fleming and (ii) additional charges to bad debts of $0.6 million.

Percentage
rent revenue decreased for our Same Property Portfolio primarily due to the loss of three anchor tenants with significant percentage rent components comprising
$0.7 million as well as the difference from the prior year timing of notification that sales thresholds have been met.

Recoveries
revenue remained relatively flat for our Same Property Portfolio primarily due to an overall increase in property operating and real estate tax expenses offset by lower
recovery rates

46

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resulting
from higher vacancies. Recovery rates for recoverable property operating expenses decreased to 82.0% from 85.0% and recovery rates for real estate taxes decreased to 82.7% from 85.2%. The
decrease in recovery rates for property operating expenses and real estate taxes is due to higher vacancies, including the loss of anchor tenants whose parcels were separately assessed and paid by the
former tenants directly to the taxing authority.

Other
property revenue decreased primarily as a result of the timing of notification that sales thresholds have been met for tax incentive financing revenue.

Property
operating expenses increased primarily as a result of $1.5 million of snow removal costs associated with heavy snowfall across the portfolio during the first few calendar
months of 2003 and December 2003 and $0.5 million of lease buyout expense incurred in 2003.

Real
estate tax expense increased primarily as a result of an increase in tax rates across the portfolio, particularly those properties located in Illinois as well as additional tax
expense related to the vacancy of certain anchor tenants who paid their property taxes directly to the taxing authorities.

Interest
expense decreased due to lower average interest rates throughout the year as the Company's weighted average interest rate decreased to 6.24% at December 31, 2003 from
6.45% at December 31, 2002. This decrease was offset by an increase in mortgage loans payable as result of the assumption of debt from various property acquisitions.

General
and administrative expenses decreased primarily as a result of lower stock compensation expense incurred in 2003 than in 2002. During 2003, we incurred $6.6 million of
stock compensation expense from the amortization of stock grants made by the Company in 2002 and 2003 and anticipated to be made by the Company in 2004, which included the reimbursement of taxes paid
by one employee and $0.6 million of accelerated stock compensation expense in connection with the departure of a former senior officer. In 2003, we also incurred $1.1 million of
additional compensation expense related to the departure of a former senior officer. During 2002, we incurred $11.0 million of stock compensation expense from the amortization of stock grants made by
the Company, which included the reimbursement of taxes paid by two employees. Included in 2002 stock compensation expense was $6.8 million of expense incurred by us as a result of the accelerated
vesting of all previously granted restricted shares upon completion of our IPO. Excluding stock compensation expense and severance costs, our general and administrative expenses, consisting primarily
of salaries, bonuses, employee benefits, insurance and other corporate-level expenses increased by $0.9 million in 2003. This increase consisted primarily of higher salary and bonus expense due
to a larger workforce and higher expenses associated with being a public company for the entire 2003 fiscal year.

Comparison of the year ended December 31, 2002 to year ended December 31, 2001

The table below shows selected operating information for our Total Portfolio and the 153 properties acquired prior to January 1, 2001 that remained in our
Total Portfolio through December 31, 2002 (which constitute the Same Property Portfolio for the years ended December 31, 2002 and 2001).

47

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Certain
2002 and 2001 amounts for the Total Portfolio have been reclassified to conform to the current presentation of discontinued operations (in thousands):

|                             |                               | Same Property Portfolio           |   | Total Portfolio |        
|---------------------------- | ----------------------------- | --------------------------------- | - | --------------- | -------
|
|Rental and recovery revenue: |                               |                                   |   |                 |        
|                             | Rentals                       |                                   | $ | 192,029         |        
|                             | Percentage rent               |                                   |   | 5,048           |        
|                             | Recoveries                    |                                   |   | 58,634          |        
|                             | Other property                |                                   |   | 2,031           |        
|                             |                               |                                   |   |                 |        
|                             |                               | Total rental and recovery revenue |   |                 | 257,742
|Expenses:                    |                               |                                   |   |                 |        
|                             | Property operating expenses   |                                   |   | 34,739          |        
|                             | Real estate taxes             |                                   |   | 38,407          |        
|                             |                               |                                   |   |                 |        
|                             |                               | Net operating income              |   | $               | 184,596
|                             |                               |                                   |   |                 |        
|Add:                         |                               |                                   |   |                 |        
|                             | Interest and other income     |                                   |   | 88              |        
|Deduct:                      |                               |                                   |   |                 |        
|                             | Depreciation and amortization |                                   |   | 70,023          |        
|                             | Interest                      |                                   |   | 72,312          |        
|                             | Interest-related party        |                                   |   |                |        
|                             | General and administrative    |                                   |   | 23,351          |        
|                             | Loss on prepayment of debt    |                                   |   | 6,749           |        
|                             |                               |                                   |   |                 |        
|                             |                               | Income before net gains           |   | $               | 24,166 
|                             |                               |                                   |   |                 |        

The increase in rental revenue, including termination fees, for our Same Property Portfolio is primarily the result of an increase in minimum rent
of $2.6 million related to new leases and rollovers of existing tenants at higher rental rates. Although our actual occupancy on a same property basis remained relatively flat at 92.7% as of
December 31, 2002, the new leasing activity offset any loss of income related to new vacancies and bankruptcies. Additionally, rental revenue increased $0.7 million due to an additional
charge made to bad debts in 2001 primarily associated with bankruptcies, principally Kmart, and other delinquent tenants. These increases are partially offset by a reduction in termination fees over
the prior year of $0.6 million in 2002.

Percentage
rent revenue increased for our Same Property Portfolio primarily due to the timing of notification that sales thresholds have been met and due to the increased sales
performance over the prior sales year for tenants who pay percentage rent.

Recoveries
revenue increased for our Same Property Portfolio primarily due to an overall increase in the recovery rate of property operating and real estate tax expenses from 80.2% in
2001 to 84.3% in 2002. The increase in the rate is due to recoveries recorded in 2002 from bankrupt tenants, primarily Kmart, as these leases were not rejected and continued to remain open and
operating. In addition, recoveries revenue increased due to higher reimbursable expenses in 2002.

The
decrease in interest and other income in the Total Portfolio is primarily due to lower rates and lower average cash balances during 2002.

Property
operating expenses increased primarily as a result of an increase of $0.9 million in repairs and maintenance expense, an increase of $0.5 in insurance expense, and an
increase of $0.2 million in landscaping expense, partially offset by a decrease in snow removal expense of $0.7 million due to a mild early 2002 snow season.

Real
estate tax expense increased primarily as a result of an increase in the real estate tax rate for our properties in New York and Illinois.

48

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Interest
expense, including related party interest expense, decreased due to the payoff of certain indebtedness with the proceeds from the IPO, offset by an increase in mortgage loans
payable as result of the assumption of debt from various property acquisitions.

General
and administrative expenses increased primarily as a result of the effect of accelerated stock compensation expense in connection with the IPO. Upon completion of the IPO, all
contractual restrictions on transfer and forfeiture provisions that existed on restricted shares previously granted to members of our senior management and other key employees terminated. As a result,
the Company incurred compensation expense, including the reimbursement of taxes paid by two employees, of $6.8 million, which is comprised of $4.3 million of stock compensation expense
and $2.5 million for the reimbursement of a portion of such taxes. In addition, general and administrative expense increased $2.6 million as a result of compensation expense related to
the issuance of 155,000 shares of restricted stock in July 2002. These shares were subject to contractual restrictions on transfer and forfeiture provisions, which terminated on March 1,
2003. The increase is also due in part to a $0.7 million increase in the Company's supplemental executive retirement plan costs and increased corporate expenses associated with being a public
company.

Liquidity and Capital Resources

At December 31, 2003, we had $5.5 million in available cash and cash equivalents. As a REIT, we are required to distribute at least 90% of our
taxable income to our stockholders on an annual basis. Therefore, as a general matter, it is unlikely that we will have any substantial cash balances that could be used to meet our liquidity needs.
Instead, these needs must be met from cash generated from operations and external sources of capital.

At
December 31, 2003, we had $1.1 billion of indebtedness. This indebtedness has a weighted average interest rate of 6.24% with an average maturity of 4.6 years. As
of December 31, 2003, our market capitalization was $2.5 billion, resulting in a debt-to-total market capitalization ratio of approximately 43.5%.

Short-Term Liquidity Requirements

Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated
with our properties, including:



We
incur maintenance capital expenditures at our properties, which include such expenses as parking lot improvements, roof repairs and replacements and other non-revenue
enhancing capital expenditures. Maintenance capital expenditures were approximately $8.4 million, or $0.31 per square foot, for the year ended December 31, 2003. We expect total
maintenance capital expenditures to be approximately $8.1 million, or $0.29 per square foot, for the year ended December 31, 2004. We also expect to incur revenue enhancing capital
expenditures such as tenant improvements and leasing commissions in connection with the leasing or re-leasing of retail space.

We
believe that we qualify and we intend to continue to qualify as a REIT under the Internal Revenue Code. As a REIT, we are allowed to reduce taxable income by all or a portion of our
distributions paid to shareholders. We believe that our existing working capital and cash provided by

49

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operations
will be sufficient to allow us to pay distributions necessary to enable us to continue to qualify as a REIT.

However,
under some circumstances, we may be required to pay distributions in excess of cash available for those distributions in order to meet these distribution requirements, and we
may need to borrow funds to pay distributions in the future.

Historically,
we have satisfied our short-term liquidity requirements through our existing working capital and cash provided by our operations as well as with borrowings
under the Company's line of credit facility. We believe that our existing working capital and cash provided by operations
should be sufficient to meet our short-term liquidity requirements. Cash flows provided by operating activities increased to $138.8 million for the year ended December 31,
2003 from $121.2 million for the year ended December 31, 2002. The increase in cash flows from operations is primarily attributable to the combined effect of a $16.5 million
increase in net operating income, primarily as a result of property acquisitions in 2002 and 2003, and a $2.9 million decrease in interest expense, primarily as a result of the repayment of
indebtedness from proceeds received from the Company's initial public offering.

There
are a number of factors that could adversely affect our cash flow. The continuation of an economic downturn in one or more of our markets may impede the ability of our tenants to
make lease payments and may impact our ability to renew leases or re-lease space as leases expire. In addition, an economic downturn or recession could also lead to an increase in tenant
bankruptcies, increases in our overall vacancy rates or declines in rents we can charge to re-lease properties upon expiration of current leases. In all of these cases, our cash flow would
be adversely affected.

As
of December 31, 2003, the Company had nine tenants operating under bankruptcy protection, the largest of which is Fleming Companies ("Fleming"). The leases directly impacted by
these bankruptcy filings totaled approximately 0.9% of our annualized base rent for all leases in which tenants were in occupancy at December 31, 2003. In addition, subsequent to
December 31, 2003, four additional tenants, representing 0.5% of our annualized base rent filed for bankruptcy protection.

On
April 1, 2003, Fleming filed for bankruptcy protection. As part of this bankruptcy, Fleming's motion to reject leases at three of our 13 Fleming store locations was allowed by
the Bankruptcy Court in April 2003. The three rejected leases aggregated approximately 178,000 square feet and represented approximately 0.6% of total annualized base rent for all leases in
which tenants were in occupancy on March 31, 2003.

In
June 2003, leases at four of our store locations aggregating 234,000 square feet were assumed by Fleming and assigned to Roundy's, Inc., as part of Roundy's acquisition
of Rainbow Foods. In December 2003, a fifth lease was assumed by Knowlan's Food. We currently lease space to Fleming at five of our other shopping centers. These five locations, all of which
were physically occupied on December 31, 2003, represented approximately 0.5% of our total annualized base rent for all leases in which tenants were in occupancy on December 31, 2003.
Fleming has until March 31, 2004 to decide whether or not to reject the remaining leases. A motion is pending which would allow B&R Foods to assume three of the five remaining leases and to
reject the remaining two leases. In the event the remaining two leases are rejected, a subtenant occupying one of the stores has entered into an agreement to assume that lease and we are actively
pursuing tenants to lease the remaining location. We are not able to fully predict the impact on our business of Fleming's bankruptcy filing at this time.

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On January 22, 2002, Kmart Corporation filed for bankruptcy protection. At December 31, 2002, we leased space to Kmart at seven of our shopping centers. In addition, Kmart
owns store locations at four of our shopping centers and subleases space from a third party tenant at one of our other locations. In connection with its bankruptcy reorganization, the bankruptcy court
approved the rejection of leases at three of these twelve store locations. These store closings totaled approximately 290,000 square feet and represented approximately 0.7% of our total annualized
base rent for all leases in which tenants were in occupancy at March 31, 2003. On May 5, 2003, Kmart emerged from bankruptcy with no other store closings or lease terminations. At this
time, we do not expect any future impact from Kmart's 2002 bankruptcy filing.

As
a result of our current and past bankrupt tenants, particularly of anchor tenants like Fleming and Kmart, the Company has experienced slight declines in same store net operating
income. Any future bankruptcies of tenants in our portfolio, particularly major or anchor tenants, may have additional negative impact on our operating results.

Long-Term Liquidity Requirements

Our long-term liquidity requirements consist primarily of funds necessary to pay for scheduled debt maturities, renovations, expansions and other
non-recurring capital expenditures that need to be made periodically to our properties, and the costs associated with acquisitions of properties that we pursue. Historically, we have
satisfied our long-term liquidity requirements through various sources of capital, including our existing working capital, cash provided by operations, long-term property
mortgage indebtedness, our credit facility, bridge financing, and through the issuance of additional equity securities. We believe that these sources of capital will continue to be available to us in
the future to fund our long-term liquidity requirements. However, there are certain factors that may have a material adverse effect on our access to these capital sources.

Our
ability to incur additional debt is dependent upon a number of factors, including our degree of leverage, the value of our unencumbered assets, our credit rating and borrowing
restrictions imposed by existing lenders. Currently, we have a credit rating from three major rating agenciesStandard & Poor's, which has given us a rating of BBB-,
Moody's Investor Service, which has given us a rating of Baa3, and Fitch, which has given us a rating of BBB-, all three have stated the outlook as stable. A downgrade in outlook or rating
by a rating agency can occur at any time if the agency perceives adverse change in our financial condition, results of operations or ability to service our debt.

Based
on our internal evaluation of our properties, the estimated value of our properties exceeds the outstanding amount of mortgage debt encumbering those properties as of
December 31, 2003. Therefore, at this time, we believe that additional funds could be obtained, either in the form of mortgage debt or additional unsecured borrowings. In addition, we believe
that we could obtain additional financing without violating the financial covenants contained in our unsecured public notes.

Our
ability to raise funds through the issuance of equity securities is dependent upon, among other things, general market conditions for REITs and market perceptions about us. We will
continue to analyze which source of capital is most advantageous to us at any particular point in time, but the equity markets may not be consistently available on terms that are attractive or at all.

51

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Contractual Obligations and Contingent Liabilities

All of our indebtedness is disclosed in our consolidated financial statements, and the notes thereto, appearing elsewhere in this report. The following table
summarizes our repayment obligations under our indebtedness outstanding as of December 31, 2003 (in thousands):

|                                               |  | 2004 |         | 2005 |         | 2006 |        | 2007 |        | 2008 |         | Thereafter |         | Total(1)
|---------------------------------------------- |  | ---- | ------- | ---- | ------- | ---- | ------ | ---- | ------ | ---- | ------- | ---------- | ------- | --------
|Mortgage loans:                                |  |      |         |      |         |      |        |      |        |      |         |            |         |         
|Miracle Hills Park                             |  | $    | 3,594   |      |        |      |       |      |       |      |        |            |        |         
|The Commons of Chancellor Park                 |  |      | 12,374  |      |        |      |       |      |       |      |        |            |        |         
|Franklin Square                                |  |      | 436     |      | 13,583  |      |       |      |       |      |        |            |        |         
|Williamson Square                              |  |      | 337     |      | 10,833  |      |       |      |       |      |        |            |        |         
|Riverchase Village Shopping Center             |  |      | 310     |      | 9,764   |      |       |      |       |      |        |            |        |         
|Meridian Village Plaza                         |  |      | 270     |      | 292     |      | 4,841  |      |       |      |        |            |        |         
|Spring Mall                                    |  |      | 109     |      | 120     |      | 8,021  |      |       |      |        |            |        |         
|Southport Centre                               |  |      |        |      | 76      |      | 160    |      | 9,764  |      |        |            |        |         
|Innes Street Market                            |  |      | 326     |      | 352     |      | 380    |      | 12,098 |      |        |            |        |         
|Southgate Shopping Center                      |  |      | 101     |      | 110     |      | 119    |      | 2,166  |      |        |            |        |         
|Salem Consumer Square                          |  |      | 408     |      | 455     |      | 504    |      | 558    |      | 8,778   |            |        |         
|St. Francis Plaza                              |  |      | 176     |      | 191     |      | 207    |      | 225    |      | 243     |            |        |         
|Buckingham Place                               |  |      | 57      |      | 63      |      | 69     |      | 74     |      | 79      |            | 5,054   |         
|County Line Plaza                              |  |      | 185     |      | 205     |      | 222    |      | 240    |      | 256     |            | 16,002  |         
|Trinity Commons                                |  |      | 154     |      | 171     |      | 185    |      | 200    |      | 214     |            | 13,776  |         
|8 shopping centers, cross collateralized       |  |      | 1,577   |      | 1,705   |      | 1,843  |      | 1,993  |      | 2,154   |            | 72,132  |         
|Montgomery Commons                             |  |      | 71      |      | 79      |      | 86     |      | 94     |      | 100     |            | 7,437   |         
|Warminster Towne Center                        |  |      | 235     |      | 260     |      | 283    |      | 307    |      | 329     |            | 18,657  |         
|Clocktower Place                               |  |      | 108     |      | 121     |      | 132    |      | 144    |      | 154     |            | 12,009  |         
|545 Boylston St. and William J. McCarthy Bldg. |  |      | 603     |      | 655     |      | 711    |      | 772    |      | 838     |            | 31,808  |         
|29 shopping centers, cross collateralized      |  |      | 2,276   |      | 2,520   |      | 2,728  |      | 2,955  |      | 3,147   |            | 224,115 |         
|Spradlin Farm                                  |  |      | 172     |      | 189     |      | 203    |      | 219    |      | 232     |            | 16,440  |         
|Bedford Grove                                  |  |      | 349     |      | 377     |      | 408    |      | 441    |      | 477     |            | 2,451   |         
|Berkshire Crossing                             |  |      | 591     |      | 611     |      | 630    |      | 651    |      | 671     |            | 11,940  |         
|Grand Traverse Crossing                        |  |      | 338     |      | 364     |      | 392    |      | 422    |      | 455     |            | 11,671  |         
|Salmon Run Plaza                               |  |      | 292     |      | 319     |      | 349    |      | 381    |      | 417     |            | 3,192   |         
|Elk Park Center                                |  |      | 275     |      | 297     |      | 321    |      | 346    |      | 374     |            | 6,906   |         
|Grand Traverse Crossing  Wal-Mart             |  |      | 154     |      | 165     |      | 179    |      | 193    |      | 208     |            | 4,415   |         
|Montgomery Towne Center                        |  |      | 351     |      | 382     |      | 393    |      | 307    |      | 335     |            | 5,626   |         
|Bedford Grove  Wal-Mart                       |  |      | 141     |      | 152     |      | 164    |      | 178    |      | 191     |            | 3,382   |         
|Berkshire Crossing  Home Depot/Wal-Mart       |  |      | 221     |      | 239     |      | 258    |      | 278    |      | 300     |            | 5,542   |         
|                                               |  |      |         |      |         |      |        |      |        |      |         |            |         |         
|Total mortgage loans                           |  |      | 26,591  |      | 44,650  |      | 23,788 |      | 35,006 |      | 19,952  |            | 472,555 |         
|                                               |  |      |         |      |         |      |        |      |        |      |         |            |         |         
|Unsecured notes                                |  |      | 100,000 |      |        |      | 1,490  |      |       |      | 100,000 |            |        |         
|Line of credit facility                        |  |      |        |      | 243,000 |      |       |      |       |      |        |            |        |         
|                                               |  |      |         |      |         |      |        |      |        |      |         |            |         |         
|Total indebtedness                             |  | $    | 126,591 |      | 287,650 |      | 25,278 |      | 35,006 |      | 119,952 |            | 472,555 |         
|                                               |  |      |         |      |         |      |        |      |        |      |         |            |         |         

---

The indebtedness described in the table above will require balloon payments, including $16.0 million starting in August 2004. It is
likely that we will not have sufficient funds on hand to repay these balloon amounts at maturity. We currently expect to refinance this debt through unsecured private or public debt offerings,
additional debt financings secured by individual properties or groups of

52

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properties
or additional equity offerings. We may also refinance balloon payments through borrowings under our unsecured credit facility.

On
March 8, 2004, in anticipation of completing an unsecured debt financing during the late first or second quarter of 2004, the Company entered into forward starting interest rate swaps
with a total notional amount of $192,450,000. The purpose of these forward swaps is to mitigate the risk of changes in interest rates in the near term. These swaps will have no impact on our current
unsecured indebtedness. These is no assurance that the Company will complete an unsecured debt financing during the period in which the interest rate swaps will be in place or at all.

As
of December 31, 2003, we have future contractual payment obligations relating to construction contracts, ground leases, and leases for the rental of office space as follows (in
thousands):

|                                                      |  | 2004 |       | 2005 |       | 2006 |       | 2007 |       | 2008 |       | Thereafter |        | Total
|----------------------------------------------------- |  | ---- | ----- | ---- | ----- | ---- | ----- | ---- | ----- | ---- | ----- | ---------- | ------ | -----
|Construction contracts/Tenant improvement obligations |  | $    | 7,371 |      |      |      |      |      |      |      |      |            |       |      
|Ground leases                                         |  |      | 802   |      | 802   |      | 802   |      | 802   |      | 859   |            | 37,417 |      
|Office leases                                         |  |      | 79    |      | 1,060 |      | 1,116 |      | 1,067 |      | 1,067 |            | 7,247  |      
|                                                      |  |      |       |      |       |      |       |      |       |      |       |            |        |      
|Total                                                 |  | $    | 8,252 |      | 1,862 |      | 1,918 |      | 1,869 |      | 1,926 |            | 44,664 |      
|                                                      |  |      |       |      |       |      |       |      |       |      |       |            |        |      

We have various existing service contracts with vendors and utility contracts related to our property management. We enter into these contracts in
the ordinary course of business, which vary based on usage and may extend beyond one year. These contracts are generally for one year or less and include terms that provide for termination with
insignificant or no cancellation penalties.

We
have obligations under postretirement benefit plans, which are more fully described in Note 12 of the "Notes to Consolidated Financial Statements" included under Item 8 of this
Annual Report, and which are not included in the above table. Funding requirements for postretirement benefits after 2004 cannot be estimated due to the significant variability in the assumptions
required to project the timing of future cash payments.

Line of Credit

On April 29, 2002, the Company entered into a three-year $350 million unsecured line of credit with a group of lenders and Fleet
National Bank, as agent. Our two operating partnerships are the borrowers under the line of credit and we, and certain of our other subsidiaries, have guaranteed this line of credit. This line of
credit is being used principally to fund growth opportunities and for working capital purposes. At December 31, 2003, $243 million was outstanding under the line of credit.

Our
ability to borrow under this line of credit is subject to our ongoing compliance with a number of financial and other covenants. This line of credit, except under some circumstances,
limits our ability to make distributions in excess of 90% of our annual funds from operations. In addition, this line of credit bears interest at either the lender's base rate or a floating rate based
on a spread over LIBOR ranging
from 80 basis points to 135 basis points, depending upon our debt rating. In addition, this line of credit has a facility fee based on the amount committed ranging from 15 to 25 basis points,
depending upon our debt rating, and requires quarterly payments. The variable rate in effect at December 31, 2003, including the lender's margin of 105 basis points and borrowings outstanding
at the base rate was 2.22%.

As
of December 31, 2003, we were in compliance with all of the financial covenants under this line of credit. However, if our properties do not perform as expected, or if
unexpected events occur that require us to borrow additional funds, compliance with these covenants may become difficult and may restrict our ability to pursue some business initiatives. In addition,
these financial covenants may restrict our ability to pursue particular acquisition transactions, including for example, acquiring a portfolio of properties that is highly leveraged. These constraints
on acquisitions could significantly impede our growth.

53

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Equity Financings

In April 2002, we completed our initial public offering and sold 14,080,556 shares of our common stock at a price of $25.00 per share resulting in net
proceeds to us of $323 million. We used the net proceeds of the IPO to repay outstanding indebtedness. In connection with our IPO, all shares of our Series A Cumulative Convertible
Preferred Stock and redeemable equity then outstanding converted automatically into shares of our common stock on a one for one basis.

In
December 2003, we completed a secondary public offering of our common stock and sold a total of 3,932,736 shares at a net price of $28.27 per share, resulting in net proceeds
to us of $111 million. We used the net proceeds of this offering to repay outstanding indebtedness.

Funds From Operations

We calculate Funds from Operations in accordance with the best practices described in the April 2001 National Policy Bulletin of the National Association
of Real Estate Investment Trusts, referred to as NAREIT, and NAREIT's 1995 White Paper on Funds from Operations. The White Paper defines Funds From Operations as net income (loss) (computed in
accordance with GAAP), excluding gains (or losses) from extraordinary items and sales of property, plus real estate related depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. Funds from Operations should not be considered as an alternative to net income (determined in accordance with
GAAP) as an indicator of our financial performance or to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available
to fund our cash needs, including our ability to make distributions. We believe that Funds from Operations is helpful to investors as a measure of our performance as an equity REIT because, along with
cash flows from operating activities, financing activities and investing activities, it provides investors with an understanding of our ability to incur and service debt and make capital expenditures.
Our computation of Funds from Operations may, however, differ from the methodology for calculating Funds from Operations utilized by other equity REITs and, therefore, may not be comparable to such
other REITs.

The
following table reflects the calculation of Funds from Operations (in thousands):

Year Ended December 31,2003

2002(*)

2001Net income

$
40,733

$
14,443

$
12,236Add (deduct):Depreciation and amortization (real-estate related)


78,347


69,498


63,723Net gains on sales of real estate investments and equipment (including gain of $384 included in discontinued operations in 2002)


(2,683
)

(3,308
)

(4,159
)Preferred stock distributions





(14,302
)

(43,345
)Accretion of redeemable equity





(328
)

(995
)Funds from Operations

$
116,397

$
66,003

$
27,460


---

Related Party Transactions

We have in the past engaged in and currently engage in a number of transactions with related parties. The following is a summary of ongoing transactions with
related parties that may significantly impact our future operating results.

54

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The TJX Companies

In July 1999, Bernard Cammarata became a member of our board of directors. Mr. Cammarata is Chairman of the Board of TJX Companies, Inc., our
largest tenant, and was President and Chief Executive Officer of TJX until June 1999. We received annualized base rent from the TJX Companies of $12.6 million in 2003, which represented
approximately 5.2% of our total annualized base rent for all leases in which tenants were in occupancy at December 31, 2003. TJX pays us rent in accordance with 46 written leases at our
properties.

Advisory Fee

In 2002, the Prudential Insurance Company of America, previously our second largest stockholder, received advisory and other fees totaling $3.4 million in
connection with our IPO.

Warrants

In connection with advisory services provided to us by Prudential, we formerly issued to Prudential warrants to purchase 375,000 shares of our common stock at an
exercise price of $25.00 per share. Effective February 7, 2003, we extended the exercise period of these warrants until April 29, 2007 and incurred a charge of $0.1 million. If
not extended, 75,000 of these warrants would have expired on July 9, 2003 and the remaining warrants would have expired on September 18, 2004.

On
March 11, 2004, Prudential informed the Company that it was exercising all of its 375,000 warrants in accordance with the cashless exercise provisions of its warrant agreement.
Pursuant to the warrant agreement, on March 12, 2004, the Company issued Prudential 68,166 shares of common stock in full settlement of the warrants. The Company will not incur any
additional expense under SFAS No. 123 as a result of the exercise of the warrants.

Equity Offering

In December 2003, we completed a secondary public offering of our common stock and sold a total of 3,932,736 shares. Net Realty Holding Trust, our largest
stockholder, exercised its contractual preemptive right and purchased approximately 40% of the shares we sold in the offering on the same terms as third parties purchased shares.

131 Dartmouth Street Joint Venture

In November 1999, we entered into a joint venture with NETT for the acquisition and development of a 365,000 square foot commercial office building at 131
Dartmouth Street, Boston, Massachusetts. This joint venture is owned 94% by NETT and 6% by us. We were issued this interest as part of a management arrangement with the joint venture pursuant to which
we will manage the building. We have no ongoing capital contribution requirements with respect to this office building, which was completed in January 2003. The first tenants began occupying
this office building in January 2004. We account for our interest in this joint venture using the cost method and we have not expended any amounts on the office building through
December 31, 2003.

In
February 2004, we entered into an eleven-year lease with our joint venture with NETT for the lease of approximately 31,000 square feet of space and we moved our
corporate headquarters to this space during the first quarter of 2004. The terms of this lease, which were negotiated on an arms-length basis, were approved by our Audit Committee and by
our Board of Directors.

Boston Office Lease

In 1974, NETT and Net Realty Holding Trust entered into an agreement providing for the lease of 14,400 square feet of space in an office building at 535 Boylston
Street to NETT for its Boston offices. Net Realty Holding Trust assigned this lease to us as part of our formation. The current term of this lease expires on June 30, 2005 and under this lease,
NETT pays us $648,000 per year in minimum rent.

55

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Contingencies

Legal and Other Claims

We are subject to legal and other claims incurred in the normal course of business. Based on our review and consultation with counsel of those matters known to
exist, including those matters described on page 38, we do not believe that the ultimate outcome of these claims would materially affect our financial position or results of operations.

Non-Recourse Loan Guarantees

In connection with the Bradley acquisition, we entered into a special securitized facility with Prudential Mortgage Capital Corporation ("PMCC") pursuant to which
$244 million of collateralized mortgage-backed securities were issued by a trust created by PMCC. The trust consists of a single mortgage loan due from a subsidiary we created, Heritage SPE
LLC, to which we contributed 29 of our properties. This loan is secured by all 29 properties we contributed to the borrower.

In
connection with the securitized financing with PMCC, we entered into several indemnification and guaranty agreements with PMCC under the terms of which we agreed to indemnify PMCC for
various bad acts of Heritage SPE LLC and with respect to specified environmental liabilities with respect to the properties contributed by us to Heritage SPE LLC.

We
also have agreed to indemnify other mortgage lenders for bad acts and environmental liabilities in connection with other mortgage loans that we have obtained.

Inflation

Inflation has had a minimal impact on the operating performance of our properties. However, many of our leases contain provisions designed to mitigate the adverse
impact of inflation. These provisions include clauses enabling us to receive payment of additional rent calculated as a percentage of tenants' gross sales above pre-determined thresholds,
which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. These escalation clauses often are at fixed rent increases or
indexed escalations (based on the consumer price index or other measures). Many of our leases are also for terms of less than ten years, which permits us to seek to increase rents to market rates upon
renewal. In addition, most of our leases require the tenant to pay an allocable share of operating expenses, including common area maintenance costs, real estate taxes and insurance. This reduces our
exposure to increases in costs and operating expenses resulting from inflation.

New Accounting Standards and Accounting Changes

In December 2003, the Financial Accounting Standards Board, ("FASB") issued FASB interpretation No. 46,Consolidation of
Variable Interest Entities, ("FIN 46R"), which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means
other than voting rights and accordingly should consolidate the entity. FIN 46R applies to entities in which the equity investors do not bear the economic risks and rewards of the entity.
    An enterprise that is involved with another entity generally must assess whether that involvement requires consolidation under FIN 46R. Public companies must apply FIN 46R immediately
to entities created after January 31, 2003 and no later than the end of the first reporting period that ends after December 15, 2003. We do not believe the adoption of FIN 46R will have
a material impact on the results of our operations, financial position, or liquidity.

56

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Item 7a:    Quantitative and Qualitative Disclosures About Market Risk

Market risk is the exposure to loss resulting from adverse changes in market prices, interest rates, foreign currency exchange rates, commodity prices and equity
prices. The primary market risk to which we are exposed is interest rate risk, which is sensitive to many factors, including governmental monetary and tax policies, domestic and international economic
and political considerations and other factors that are beyond our control. Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest
rates.

The
following table presents our fixed rate debt obligations, at their carrying values, sorted by maturity date and our variable rate debt obligations sorted by maturity date (in
thousands):

|                |               | 2004 |   | 2005    |  | 2006 |         | 2007 |   | 2008   |  | 2009+ |        | Total |   | Estimated
Fair Value |  | Weighted
Average
Interest
Rate |        
|--------------- | ------------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------ |  | ----- | ------ | ----- | - | -------------------- |  | ------------------------------ | -------
|Secured Debt:   |               |      |   |         |  |      |         |      |   |        |  |       |        |       |   |                      |  |                                |        
|                | Fixed rate    |      | $ | 26,000  |  | $    | 44,039  |      | $ | 23,508 |  | $     | 34,355 |       | $ | 19,281               |  | $                              | 470,688
|                | Variable rate |      |   | 591     |  |      | 611     |      |   | 630    |  |       | 651    |       |   | 671                  |  |                                | 11,940 
|Unsecured Debt: |               |      |   |         |  |      |         |      |   |        |  |       |        |       |   |                      |  |                                |        
|                | Fixed rate    |      |   | 100,000 |  |      |        |      |   | 1,490  |  |       |       |       |   | 100,000              |  |                                |       
|                | Variable rate |      |   |        |  |      | 243,000 |      |   |       |  |       |       |       |   |                     |  |                                |       
|                |               |      |   |         |  |      |         |      |   |        |  |       |        |       |   |                      |  |                                |        
|                | Total         |      | $ | 126,591 |  | $    | 287,650 |      | $ | 25,628 |  | $     | 35,006 |       | $ | 119,952              |  | $                              | 482,628
|                |               |      |   |         |  |      |         |      |   |        |  |       |        |       |   |                      |  |                                |        

We were not a party to any hedging agreements with respect to our floating rate debt as of December 31, 2003. We have in the past used
derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings, from lines of credit to medium- and long-term financings. We require that hedging
derivative instruments be effective in reducing the interest rate risk exposure that they are designed to hedge. We do not use derivatives for trading or speculative purposes and only enter into
contracts with major financial institutions based on their credit rating and other factors. We do not believe that the interest rate risk represented by our floating rate debt is material as of
December 31, 2003 in relation to total assets and our total market capitalization.

Item 8:    Financial Statements

See "Index to Consolidated Financial Statements and Financial Statement Schedule" on page F-1 of this Form 10-K

Item 9:    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A: Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this report, the Company's
principal executive officer, principal financial officer, and other members of senior management have evaluated the design and operations of the disclosure controls and procedures of the Company.
Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures effectively ensure that information required to
be disclosed in the Company's filings and submissions with the Securities and Exchange Commission under the Exchange Act, is accumulated and communicated to our management (including the principal
executive officer and principal financial officer) and is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission. In addition, there
have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)
since December 31, 2003 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

57

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PART III

Item 10:    Directors and Executive Officers of the Registrant

The information contained in the sections captioned "Proposal One: Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" of
the Proxy Statement is incorporated herein by reference.

Item 11:    Executive Compensation

The information contained in the section captioned "Executive Compensation" of the Proxy Statement is incorporated herein by reference.

Item 12:    Security Ownership of Certain Beneficial Owners and Management

The information contained in the section captioned "Security Ownership of Certain Beneficial Owners and Management" of the Proxy Statement is incorporated herein
by reference.

The
following table summarizes the equity compensation plans under which common stock may be issued as of December 31, 2003:

|Plan Category                                          |  | Number of shares to be issued upon exercise of outstanding options, warrants and rights |     | Weighted average exercise price of outstanding options, warrants and rights |  | Number of shares remaining available for future issuance
|------------------------------------------------------ |  | --------------------------------------------------------------------------------------- | --- | --------------------------------------------------------------------------- |  | --------------------------------------------------------
|Equity compensation plans approved by stockholders     |  | 2,528,823                                                                               | (1) | $24.79                                                                      |  | 2,593,295                                               
|Equity compensation plans not approved by stockholders |  |                                                                                        |     |                                                                            |  |                                                        
|Total                                                  |  | 2,528,823                                                                               |     | $24.79                                                                      |  | 2,593,295                                               

---

Item 13:    Certain Relationships and Related Transactions

The information contained in the section captioned "Certain Relationships and Related Transactions" of the Proxy Statement is incorporated herein by reference.

Item 14:    Principal Accounting Fees and Services

The information contained in the section captioned "Principal Accounting Fees and Services" of the Proxy Statement is incorporated herein by reference.

58

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PART IV

Item 15:    Exhibits, Financial Statements, Financial Statement Schedule and Reports on Form 8-K

Financial Statements.

See page F-1 for the index of the financial statements included in the Form 10-K.

Financial Statement Schedule.

See page F-1 for the index of the financial statement schedule included in the Form 10-K.

Exhibits.

|3.1  |  | Articles of Amendment and Restatement (Third) of Heritage Property Investment Trust, Inc.(1)                                                                                                                              
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.2  |  | Amended and Restated Bylaws of Heritage Property Investment Trust, Inc.(1)                                                                                                                                                
|4.1  |  | Form of Common Stock Certificate of Heritage Property Investment Trust, Inc.(1)                                                                                                                                           
|4.2  |  | Indenture, dated as of November 24, 1997, by and between Bradley Operating Limited Partnership and LaSalle National Bank relating to the Senior Debt Securities of Bradley Operating Limited Partnership(1)               
|4.3  |  | Definitive Supplemental Indenture No. 1, dated as of November 24, 1997, between Bradley Operating Limited Partnership and LaSalle National Bank(1)                                                                        
|4.4  |  | Definitive Supplemental Indenture No. 2, dated as of January 28, 1998, between Bradley Operating Limited Partnership and LaSalle National Bank(1)                                                                         
|4.5  |  | Definitive Supplemental Indenture No. 3, dated as of March 10, 2000, between Bradley Operating Limited Partnership and LaSalle National Bank(1)                                                                           
|4.6  |  | Warrant Agreement for 75,000 shares of Registrant's common stock issued to The Prudential Insurance Company of America(1)                                                                                                 
|4.7  |  | Warrant Agreement for 300,000 shares of Registrant's common stock issued to The Prudential Insurance Company of America(1)                                                                                                
|4.8  |  | Amendment to Warrant Agreements issued to The Prudential Insurance Company of America, dated as of February 7, 2003                                                                                                       
|10.1 |  | Amended and Restated Limited Partnership Agreement of Heritage Property Investment Limited Partnership, dated as of April 29, 2003(1)                                                                                     
|10.2 |  | Second Amended and Restated Agreement of Limited Partnership of Bradley Operating Limited Partnership dated as of September 2, 1997(1)                                                                                    
|10.3 |  | Amendment, dated August 6, 1998, to Second Restated Agreement of Limited Partnership of Bradley Operating Limited Partnership, designating the 8.4% Series A Convertible Preferred Units(1)                               
|10.4 |  | Amendment, dated February 23, 1999, to Second Restated Agreement of Limited Partnership of Bradley Operating Limited Partnership, designating the 8.875% Series B Cumulative Redeemable Perpetual Preferred Units(1)      
|10.5 |  | Amendment, dated as of September 7, 1999, to Second Restated Agreement of Limited Partnership of Bradley Operating Limited Partnership, designating the 8.875% Series C Cumulative Redeemable Perpetual Preferred
Units(1)
|10.6 |  | Amendment, dated as of September 18, 2000, to Second Restated Agreement of Limited Partnership of Bradley Operating Limited Partnership(1)                                                                                
|     |  |                                                                                                                                                                                                                           

59

---

|10.7  |  | Amendment, dated as of April 29, 2002, to Second Restated Agreement of Limited Partnership of Bradley Operating Limited Partnership(1)                                                                                       
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.7  |  | Amendment, dated as of May 17, 2002, to Second Restated Agreement of Limited Partnership of Bradley Operating Limited Partnership(2)                                                                                         
|10.8  |  | Amended and Restated 2000 Equity Incentive Plan, as amended                                                                                                                                                                  
|10.9  |  | Form of restricted stock and stock option agreements(1)                                                                                                                                                                      
|10.10 |  | Supplemental Executive Retirement Plan(1)                                                                                                                                                                                    
|10.11 |  | Revolving Credit and Guaranty Agreement, dated as of April 29, 2003, among Heritage Property Investment Limited Partnership, Bradley Operating Limited Partnership, the Company and the lending institutions named
therein(2)
|10.12 |  | Loan Agreement, dated as of September 18, 2000, between Heritage SPE LLC and Prudential Mortgage Capital Company, LLC(1)                                                                                                     
|10.13 |  | Promissory Note, dated as of December 14, 1999, by and among Heritage Property Investment Limited Partnership, NH Heritage Limited Partnership and Metropolitan Life Insurance Company, as amended(1)                        
|10.14 |  | Promissory Note, dated as of September 13, 2000, by Heritage Property Investment Limited Partnership in favor of The Variable Annuity Life Insurance Company(1)                                                              
|10.15 |  | Employment Agreement with Thomas C. Prendergast, as amended by the First Amendment, dated as of April 3, 2000(1)                                                                                                             
|10.15 |  | Amendment, dated July 24, 2002, to Employment Agreement with Thomas C. Prendergast(3)                                                                                                                                        
|10.16 |  | Form of Change in Control/Severance Agreement(1)                                                                                                                                                                             
|10.17 |  | PIMS Indemnification Letter, dated as of July 9, 1999, by and between the Registrant and Prudential Investment Management Services, LLC(1)                                                                                   
|10.18 |  | Separation Agreement dated as of June 16, 2003, between the Company and Gary Widett, former Senior Vice President and Chief Operating Officer of the Company(4)                                                              
|10.19 |  | Second Amended and Restated Stockholders Agreement, by and among the Registrant, Net Realty Holding Trust and The Prudential Insurance Company of America(5)                                                                 
|10.20 |  | Registration Rights, Lock-Up and Redemption Agreement, dated as of May 17, 2002, by and among Heritage Property Investment Trust, Inc., Bradley Operating Limited Partnership and the holders named therein(6)               
|21.1  |  | List of Subsidiaries of the Registrant                                                                                                                                                                                       
|23.1  |  | Consent of KPMG LLP                                                                                                                                                                                                          
|31.1  |  | Certification of Chief Executive Officer of the Company Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14                                                                                                          
|31.2  |  | Certification of Chief Financial Officer of the Company Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14                                                                                                          
|32.1  |  | Chief Executive Officer's Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2003.                                                                            
|32.2  |  | Chief Financial Officer's Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2003.                                                                            

---

60

---

Reports on Form 8-K.

On October 7, 2003, the Company filed a Current Report on Form 8-K to amend its historical financial statements contained in its Annual
Report on Form 10-K for the year ended December 31, 2002 in connection with the adoption of Statement of Financial Accounting Standards ("SFAS") No. 145, "Rescission
of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections."

On
October 22, 2003, the Company filed a Current Report on Form 8-K to (i) describe a property portfolio acquisition that was one of several individually
insignificant acquisitions under Rule 3-14 of Regulation S-X of the rules and regulations of the Securities and Exchange Commission completed during the year
ended December 31, 2002 that in the aggregate were significant under Rule 3-14, and (ii) file required historical financial statements for this acquisition, and pro
forma financial information with respect to the Company reflecting the acquisition as of January 1, 2002.

On
November 3, 2003, the Company filed a Current Report on Form 8-K with respect to its financial results for the fiscal quarter ended September 30,
2003.

On
November 13, 2003, the Company filed a Current Report on Form 8-K to (i) describe a property portfolio acquisition that was one of several
individually insignificant acquisitions under Rule 3-14 of Regulation S-X of the rules and regulations of the Securities and Exchange Commission completed during
the year ending December 31, 2003 that in the aggregate were significant under Rule 3-14, and (ii) file required historical financial statements for this acquisition,
and pro forma financial information with respect to the Company.

On
December 16, 2003, the Company filed an amendment to its Current Report on Form 8-K filed on February 10, 2003 with respect to the issuance of a press release announcing the Company's
results for the quarter ended December 31, 2002. The purpose of the amendment was to change the Item number under which the press release was included in the 8-K.

On
December 17, 2003, the Company filed a Current Report on Form 8-K with respect to a press release it issued announcing that that it had completed a public
offering of 3,500,000 shares of common stock at $28.27 per share, after the underwriting discount.

On
December 29, 2003, the Company filed a Current Report on Form 8-K with respect a press release it issued announcing that Deutsche Bank
Securities Inc., the underwriter of its equity offering, had exercised its over-allotment option and purchased an additional 672,045
shares of common stock, 432,736 shares from the Company, and 239,309 shares from The Prudential Insurance Company of America, the Company's second largest stockholder at the time.

61

---



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

|                      |  | HERITAGE PROPERTY INVESTMENT TRUST, INC.
|--------------------- |  | ----------------------------------------
|                      |  | By:                                     
|Dated: March 12, 2004 |  |                                         

Pursuant
to the requirements of the Securities Act of 1934, as amended, this Annual Report on Form 10-K has been signed by the following persons in the capacities and
on the dates indicated.

|Signature                                       |  | Title                                                                                      |  | Date          
|----------------------------------------------- |  | ------------------------------------------------------------------------------------------ |  | --------------
|                                                |  |                                                                                            |  |               
|/s/THOMAS C. PRENDERGASTThomas C. Prendergast   |  | President and Chief Executive Officer, Director (principal executive officer)              |  | March 12, 2004
|/s/DAVID G. GAWDavid G. Gaw                     |  | Senior Vice President, Chief Financial Officer and Treasurer (principal financial officer) |  | March 12, 2004
|/s/PATRICK O'SULLIVANPatrick O'Sullivan         |  | Vice President of Finance and Assistant Treasurer (principal accounting officer)           |  | March 12, 2004
|/s/JOSEPH L. BARRYJoseph L. Barry               |  | Director                                                                                   |  | March 12, 2004
|/s/DAVID W. LAUGHTONDavid W. Laughton           |  | Director                                                                                   |  | March 12, 2004
|/s/WILLIAM M. VAUGHN, IIIWilliam M. Vaughn, III |  | Director                                                                                   |  | March 12, 2004
|                                                |  |                                                                                            |  |               

62

---

|/s/BERNARD CAMMARATABernard Cammarata             |  | Director |  | March 12, 2004
|------------------------------------------------- |  | -------- |  | --------------
|/s/ROBERT J. WATSONRobert J. Watson               |  | Director |  | March 12, 2004
|/s/KENNETH K. QUIGLEY, JR.Kenneth K. Quigley, Jr. |  | Director |  | March 12, 2004
|/s/KEVIN C. PHELANKevin C. Phelan                 |  | Director |  | March 12, 2004
|/s/RICHARD C. GARRISONRichard C. Garrison         |  | Director |  | March 12, 2004

63

---



HERITAGE PROPERTY INVESTMENT TRUST, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

|                                                                                                                 |  | Financial Page
|---------------------------------------------------------------------------------------------------------------- |  | --------------
|Independent Auditors' Report                                                                                     |  | F-2           
|Consolidated Balance Sheets as of December 31, 2003 and 2002                                                     |  | F-3           
|Consolidated Statements of Operations for the years ended December 31, 2003, 2002, and 2001                      |  | F-4           
|Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2003, 2002, and 2001 |  | F-5           
|Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002, and 2001                      |  | F-6           
|Notes to Consolidated Financial Statements                                                                       |  | F-7           
|Financial Statement ScheduleSchedule III                                                                        |  | S-III-1       

All
other schedules for which a provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or
are inapplicable, and therefore have been omitted.

F-1

---



Independent Auditors' Report

The
Board of Directors and Shareholders
    Heritage Property Investment Trust, Inc.:

We
have audited the accompanying consolidated balance sheets of Heritage Property Investment Trust, Inc. and subsidiaries (the Company) as of December 31, 2003 and 2002 and
the consolidated statements of operations, changes in shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 2003. In connection with
our audits of the consolidated financial statements, we also have audited the financial statement schedule III listed in the accompanying index to consolidated financial statements and
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 auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain
reasonable assurance about 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.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2003 and
2002, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2003, in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the related financial statement schedule III, 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.

| |  | /s/ KPMG LLP
| |  | ------------

Boston,
Massachusetts
February 6, 2004, except for note 11, which is
    as of March 1, 2004, and note 15,
    which is as of March 12, 2004

F-2

---



HERITAGE PROPERTY INVESTMENT TRUST, INC.        Consolidated Balance Sheets        December 31, 2003 and 2002        (In thousands, except for share amounts)

|                                                                                                 |                                                                                                                                                                   | 2003 |                                            | 2002      |  
|------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ------------------------------------------ | --------- | -
|Assets                                                                                           |                                                                                                                                                                   |      |                                            |           |  
|Real estate investments, net                                                                     |                                                                                                                                                                   | $    | 2,166,975                                  |           | $
|Cash and cash equivalents                                                                        |                                                                                                                                                                   |      | 5,488                                      |           |  
|Accounts receivable, net of allowance for doubtful accounts of $8,770 in 2003 and $6,389 in 2002 |                                                                                                                                                                   |      | 25,514                                     |           |  
|Prepaids and other assets                                                                        |                                                                                                                                                                   |      | 13,477                                     |           |  
|Deferred financing costs and other assets                                                        |                                                                                                                                                                   |      | 16,014                                     |           |  
|                                                                                                 |                                                                                                                                                                   |      |                                            |           |  
|                                                                                                 |                                                                                                                                                                   |      | Total assets                               |           | $
|                                                                                                 |                                                                                                                                                                   |      |                                            |           |  
|Liabilities and Shareholders' Equity                                                             |                                                                                                                                                                   |      |                                            |           |  
|Liabilities:                                                                                     |                                                                                                                                                                   |      |                                            |           |  
|                                                                                                 | Mortgage loans payable                                                                                                                                            |      | $                                          | 632,965   |  
|                                                                                                 | Unsecured notes payable                                                                                                                                           |      |                                            | 201,490   |  
|                                                                                                 | Line of credit facility                                                                                                                                           |      |                                            | 243,000   |  
|                                                                                                 | Accrued expenses and other liabilities                                                                                                                            |      |                                            | 82,008    |  
|                                                                                                 | Accrued distributions                                                                                                                                             |      |                                            | 24,438    |  
|                                                                                                 |                                                                                                                                                                   |      |                                            |           |  
|                                                                                                 |                                                                                                                                                                   |      | Total liabilities                          |           |  
|                                                                                                 |                                                                                                                                                                   |      |                                            |           |  
|Series B Preferred Units                                                                         |                                                                                                                                                                   |      | 50,000                                     |           |  
|Series C Preferred Units                                                                         |                                                                                                                                                                   |      | 25,000                                     |           |  
|Exchangeable limited partnership units                                                           |                                                                                                                                                                   |      | 7,670                                      |           |  
|Other minority interests                                                                         |                                                                                                                                                                   |      | 2,425                                      |           |  
|                                                                                                 |                                                                                                                                                                   |      |                                            |           |  
|                                                                                                 |                                                                                                                                                                   |      | Total minority interests                   |           |  
|                                                                                                 |                                                                                                                                                                   |      |                                            |           |  
|Shareholders' equity:                                                                            |                                                                                                                                                                   |      |                                            |           |  
|                                                                                                 | Common stock, $.001 par value; 200,000,000 shares authorized; 46,208,574 and 41,504,208 shares issued and outstanding at December 31, 2003 and 2002, respectively |      |                                            | 46        |  
|                                                                                                 | Additional paid-in capital                                                                                                                                        |      |                                            | 1,136,516 |  
|                                                                                                 | Cumulative distributions in excess of net income                                                                                                                  |      |                                            | (176,267  | )
|                                                                                                 | Unearned compensation                                                                                                                                             |      |                                            | (1,823    | )
|                                                                                                 |                                                                                                                                                                   |      |                                            |           |  
|                                                                                                 |                                                                                                                                                                   |      | Total shareholders' equity                 |           |  
|                                                                                                 |                                                                                                                                                                   |      |                                            |           |  
|                                                                                                 |                                                                                                                                                                   |      | Total liabilities and shareholders' equity |           | $
|                                                                                                 |                                                                                                                                                                   |      |                                            |           |  

See
accompanying notes to consolidated financial statements.

F-3

---



HERITAGE PROPERTY INVESTMENT TRUST, INC.        Consolidated Statements of Operations        Years ended December 31, 2003, 2002 and 2001        (In thousands, except per-share
data)

|                                                            |                                                                                  | 2003                                                  |        | 2002    |         | 2001    |        
|----------------------------------------------------------- | -------------------------------------------------------------------------------- | ----------------------------------------------------- | ------ | ------- | ------- | ------- | -------
|Revenue:                                                    |                                                                                  |                                                       |        |         |         |         |        
|                                                            | Rentals and recoveries                                                           |                                                       | $      | 300,678 |         | $       | 276,173
|                                                            | Interest and other                                                               |                                                       |        | 320     |         |         | 88     
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|                                                            |                                                                                  | Total revenue                                         |        |         | 300,998 |         |        
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|Expenses:                                                   |                                                                                  |                                                       |        |         |         |         |        
|                                                            | Property operating expenses                                                      |                                                       |        | 44,038  |         |         | 38,937 
|                                                            | Real estate taxes                                                                |                                                       |        | 43,676  |         |         | 40,723 
|                                                            | Depreciation and amortization                                                    |                                                       |        | 78,964  |         |         | 70,023 
|                                                            | Interest                                                                         |                                                       |        | 69,415  |         |         | 72,312 
|                                                            | Interest-related party                                                           |                                                       |        |        |         |         |       
|                                                            | General and administrative                                                       |                                                       |        | 20,965  |         |         | 23,351 
|                                                            | Loss on prepayment of debt                                                       |                                                       |        |        |         |         | 6,749  
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|                                                            |                                                                                  | Total expenses                                        |        |         | 257,058 |         |        
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|                                                            |                                                                                  | Income before net gains                               |        |         | 43,940  |         |        
|Net gains on sales of real estate investments and equipment |                                                                                  |                                                       |       |         |         | 2,924   |        
|Net derivative (losses) gains                               |                                                                                  |                                                       |       |         |         | (7,766  | )      
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|                                                            |                                                                                  | Income before allocation to minority interests        |        |         | 43,940  |         |        
|Income allocated to exchangeable limited partnership units  |                                                                                  |                                                       | (257   | )       |         | (216    | )      
|Income allocated to Series B and C Preferred Units          |                                                                                  |                                                       | (6,656 | )       |         | (6,656  | )      
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|                                                            |                                                                                  | Income before discontinued operations                 |        |         | 37,027  |         |        
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|Discontinued operations:                                    |                                                                                  |                                                       |        |         |         |         |        
|                                                            |                                                                                  | Operating income from discontinued operations         |        |         | 1,023   |         |        
|                                                            |                                                                                  | Gain on sale of discontinued operations               |        |         | 2,683   |         |        
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|                                                            |                                                                                  | Income from discontinued operations                   |        |         | 3,706   |         |        
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|                                                            |                                                                                  | Net income                                            |        |         | 40,733  |         |        
|Preferred stock distributions                               |                                                                                  |                                                       |       |         |         | (14,302 | )      
|Accretion of redeemable equity                              |                                                                                  |                                                       |       |         |         | (328    | )      
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|                                                            |                                                                                  | Net income (loss) attributable to common shareholders |        | $       | 40,733  |         | $      
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|Basic per-share data:                                       |                                                                                  |                                                       |        |         |         |         |        
|                                                            | Income (loss) attributable to common shareholders before discontinued operations |                                                       | $      | 0.88    |         | $       | (0.07  
|                                                            | Income from discontinued operations                                              |                                                       |        | 0.09    |         |         | 0.06   
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|                                                            | Income (loss) attributable to common shareholders                                |                                                       | $      | 0.97    |         | $       | (0.01  
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|                                                            | Weighted average common shares outstanding                                       |                                                       |        | 41,963  |         |         | 30,257 
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|Diluted per-share data:                                     |                                                                                  |                                                       |        |         |         |         |        
|                                                            | Income (loss) attributable to common shareholders before discontinued operations |                                                       | $      | 0.87    |         | $       | (0.07  
|                                                            | Income from discontinued operations                                              |                                                       |        | 0.09    |         |         | 0.06   
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|                                                            | Income (loss) attributable to common shareholders                                |                                                       | $      | 0.96    |         | $       | (0.01  
|                                                            |                                                                                  |                                                       |        |         |         |         |        
|                                                            | Weighted average common and common equivalent shares outstanding                 |                                                       |        | 42,536  |         |         | 30,286 
|                                                            |                                                                                  |                                                       |        |         |         |         |        

See accompanying notes to consolidated financial statements.

F-4

---



HERITAGE PROPERTY INVESTMENT TRUST, INC.        Consolidated Statements of Changes in Shareholders' Equity        Years ended December 31, 2003, 2002 and 2001        (In
thousands, except per-share data)

|                             |                                                             | Series A
Cumulative
Convertible
Participating
Preferred
Stock                                    |    | Common
Stock |   | Additional
Paid-in
Capital |    | Cumulative
Distributions
in Excess of
Net Income |           | Unearned
Compensation |   | Accumulated
Other
Comprehensive
Income (Loss) |         | Total |       
|---------------------------- | ----------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | -- | ------------ | - | -------------------------- | -- | ------------------------------------------------ | --------- | --------------------- | - | --------------------------------------------- | ------- | ----- | ------
|Balance at December 31, 2000 |                                                             | $                                                                                                | 16 |              | $ | 6                          |    | $                                                | 552,654   |                       | $ | (19,384                                       | )       | $     | (1,500
|                             | Net income                                                  |                                                                                                  |    |             |   |                            |   |                                                  |           |                      |   |                                               | 12,236  |       |       
|                             | Other comprehensive loss:                                   |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|                             | Unrealized derivative losses                                |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|                             |                                                             | Cumulative transition adjustment of interest rate collar as of Jan. 1, 2001                      |    |              |  |                            |    |                                                 |           |                       |  |                                               |         |      |       
|                             |                                                             | Effective portion of interest rate collar for the year ended December 31, 2001                   |    |              |  |                            |    |                                                 |           |                       |  |                                               |         |      |       
|                             |                                                             |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|                             | Total other comprehensive loss                              |                                                                                                  |    |             |   |                            |   |                                                  |           |                      |   |                                               |        |       |       
|                             |                                                             |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|                             |                                                             | Comprehensive income                                                                             |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|                             |                                                             |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|                             | Preferred stock distributions ($2.13 per share)             |                                                                                                  |    |             |   |                            |   |                                                  |           |                      |   |                                               | (43,345 | )     |       
|                             | Common stock distributions ($0.73 per share)                |                                                                                                  |    |             |   |                            |   |                                                  |           |                      |   |                                               | (4,942  | )     |       
|                             | Accretion of redeemable equity                              |                                                                                                  |    |             |   |                            |   |                                                  |           | (995                  | ) |                                               |        |       |       
|                             | Issuance of restricted stock                                |                                                                                                  |    |             |   |                            |   |                                                  |           | 2,067                 |   |                                               |        |       |       
|                             | Compensation expense associated with restricted stock plans |                                                                                                  |    |             |   |                            |   |                                                  |           |                      |   |                                               |        |       |       
|                             |                                                             |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|Balance at December 31, 2001 |                                                             |                                                                                                  | 16 |              |   | 6                          |    |                                                  | 553,726   |                       |   | (55,435                                       | )       |       | (2,103
|                             | Net income                                                  |                                                                                                  |    |             |   |                            |   |                                                  |           |                      |   |                                               | 14,443  |       |       
|                             | Other comprehensive income:                                 |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|                             | Unrealized derivative gains:                                |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|                             |                                                             | Effective portion of interest rate collar for the period from Jan. 1, 2002Apr. 29, 2002         |    |              |  |                            |    |                                                 |           |                       |  |                                               |         |      |       
|                             |                                                             | Reclassification adjustment to earnings for realized loss on termination of interest rate collar |    |              |  |                            |    |                                                 |           |                       |  |                                               |         |      |       
|                             |                                                             |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|                             | Total other comprehensive income                            |                                                                                                  |    |             |   |                            |   |                                                  |           |                      |   |                                               |        |       |       
|                             |                                                             |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|                             | Comprehensive income                                        |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|                             |                                                             |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|                             | Issuance of common stock                                    |                                                                                                  |    |             |   |                            | 14 |                                                  |           | 352,000               |   |                                               |        |       |       
|                             | Equity issuance costs                                       |                                                                                                  |    |             |   |                            |   |                                                  |           | (29,527               | ) |                                               |        |       |       
|                             | Conversion of preferred stock to common stock               |                                                                                                  |    | (16          | ) |                            | 16 |                                                  |           |                      |   |                                               |        |       |       
|                             | Accretion of redeemable equity                              |                                                                                                  |    |             |   |                            |   |                                                  |           | (328                  | ) |                                               |        |       |       
|                             | Conversion of redeemable equity to common stock             |                                                                                                  |    |             |   |                            | 6  |                                                  |           | 123,416               |   |                                               |        |       |       
|                             | Preferred stock distributions ($0.70 per share)             |                                                                                                  |    |             |   |                            |   |                                                  |           |                      |   |                                               | (14,302 | )     |       
|                             | Common stock distributions ($1.89 per share)                |                                                                                                  |    |             |   |                            |   |                                                  |           |                      |   |                                               | (71,509 | )     |       
|                             | Issuance of restricted stock                                |                                                                                                  |    |             |   |                            |   |                                                  |           | 6,379                 |   |                                               |        |       |       
|                             | Compensation expense associated with restricted stock plans |                                                                                                  |    |             |   |                            |   |                                                  |           | 750                   |   |                                               |        |       |       
|                             |                                                             |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|Balance at December 31, 2002 |                                                             |                                                                                                  |   |              |   | 42                         |    |                                                  | 1,006,416 |                       |   | (126,803                                      | )       |       | (1,047
|                             | Net income                                                  |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               | 40,733  |       |       
|                             | Issuance of common stock                                    |                                                                                                  |    |              |   |                            | 4  |                                                  |           | 126,424               |   |                                               |         |       |       
|                             | Equity issuance costs                                       |                                                                                                  |    |              |   |                            |    |                                                  |           | (3,375                | ) |                                               |         |       |       
|                             | Common stock distributions ($2.10 per share)                |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               | (90,197 | )     |       
|                             | Amendment of warrants                                       |                                                                                                  |    |              |   |                            |    |                                                  |           | 86                    |   |                                               |         |       |       
|                             | Issuance of restricted stock                                |                                                                                                  |    |              |   |                            |    |                                                  |           | 6,183                 |   |                                               |         |       |       
|                             | Compensation expense associated with restricted stock plans |                                                                                                  |    |              |   |                            |    |                                                  |           | 782                   |   |                                               |         |       |       
|                             |                                                             |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       
|Balance at December 31, 2003 |                                                             | $                                                                                                |   |              | $ | 46                         |    | $                                                | 1,136,516 |                       | $ | (176,267                                      | )       | $     | (1,823
|                             |                                                             |                                                                                                  |    |              |   |                            |    |                                                  |           |                       |   |                                               |         |       |       

See accompanying notes to consolidated financial statements.

F-5

---



HERITAGE PROPERTY INVESTMENT TRUST, INC.        Consolidated Statements of Cash Flows        Years ended December 31, 2003, 2002 and 2001        (In thousands)

|                                                     |                                                                                   | 2003                                                                                      |                                                  | 2002     |        | 2001     |         
|---------------------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ------------------------------------------------ | -------- | ------ | -------- | --------
|Cash flows from operating activities:                |                                                                                   |                                                                                           |                                                  |          |        |          |         
|                                                     | Net income                                                                        |                                                                                           | $                                                | 40,733   |        | $        | 14,443  
|                                                     | Adjustments to reconcile net income to net cash provided by operating activities: |                                                                                           |                                                  |          |        |          |         
|                                                     |                                                                                   | Depreciation and amortization                                                             |                                                  |          | 78,964 |          |         
|                                                     |                                                                                   | Amortization of deferred debt financing costs                                             |                                                  |          | 2,066  |          |         
|                                                     |                                                                                   | Amortization of debt premiums                                                             |                                                  |          | (821   | )        |         
|                                                     |                                                                                   | Amortization of stock-based compensation                                                  |                                                  |          | 6,085  |          |         
|                                                     |                                                                                   | Net gains on sales of real estate investments and equipment                               |                                                  |          | (2,683 | )        |         
|                                                     |                                                                                   | Net derivative losses (gains)                                                             |                                                  |          |       |          |         
|                                                     |                                                                                   | Loss on prepayment of debt                                                                |                                                  |          |       |          |         
|                                                     |                                                                                   | Income allocated to Series B and C preferred units                                        |                                                  |          | 6,656  |          |         
|                                                     |                                                                                   | Income allocated to minority interests                                                    |                                                  |          | 257    |          |         
|                                                     |                                                                                   | Changes in operating assets and liabilities, net of effect of Bradley acquisition in 2000 |                                                  |          | 7,583  |          |         
|                                                     |                                                                                   |                                                                                           |                                                  |          |        |          |         
|                                                     |                                                                                   |                                                                                           | Net cash provided by operating activities        |          |        | 138,840  |         
|                                                     |                                                                                   |                                                                                           |                                                  |          |        |          |         
|Cash flows from investing activities:                |                                                                                   |                                                                                           |                                                  |          |        |          |         
|                                                     | Net cash used for acquisition of Bradley                                          |                                                                                           |                                                  |         |        |          | (220    
|                                                     | Acquisitions and additions to real estate investments                             |                                                                                           |                                                  | (165,083 | )      |          | (134,449
|                                                     | Net proceeds from sales of real estate investments                                |                                                                                           |                                                  | 15,528   |        |          | 10,400  
|                                                     | Expenditures for capitalized leasing commissions                                  |                                                                                           |                                                  | (4,933   | )      |          | (4,292  
|                                                     | Expenditures for furniture, fixtures and equipment                                |                                                                                           |                                                  | (795     | )      |          | (696    
|                                                     |                                                                                   |                                                                                           |                                                  |          |        |          |         
|                                                     |                                                                                   |                                                                                           | Net cash used by investing activities            |          |        | (155,283 | )       
|                                                     |                                                                                   |                                                                                           |                                                  |          |        |          |         
|Cash flows from financing activities:                |                                                                                   |                                                                                           |                                                  |          |        |          |         
|                                                     | Proceeds from mortgage loans payable                                              |                                                                                           |                                                  |         |        |          | 4,599   
|                                                     | Repayments of mortgage loans payable                                              |                                                                                           |                                                  | (16,390  | )      |          | (22,339 
|                                                     | Repayments of unsecured notes payable                                             |                                                                                           |                                                  |         |        |          |        
|                                                     | Proceeds from draws under line of credit facility                                 |                                                                                           |                                                  | 134,000  |        |          | 373,000 
|                                                     | Repayments of draws under line of credit facility                                 |                                                                                           |                                                  | (125,000 | )      |          | (482,000
|                                                     | Interest rate collar termination payment                                          |                                                                                           |                                                  |         |        |          | (6,788  
|                                                     | Proceeds from subordinated debt                                                   |                                                                                           |                                                  |         |        |          |        
|                                                     | Proceeds from subordinated debt issued through related parties                    |                                                                                           |                                                  |         |        |          |        
|                                                     | Repayment of subordinated debt to related party                                   |                                                                                           |                                                  |         |        |          | (100,000
|                                                     | Distributions paid to exchangeable limited partnership unit holders               |                                                                                           |                                                  | (715     | )      |          | (290    
|                                                     | Distributions paid to Series B and C preferred unit holders                       |                                                                                           |                                                  | (6,656   | )      |          | (6,656  
|                                                     | Preferred stock distributions paid                                                |                                                                                           |                                                  |         |        |          | (25,109 
|                                                     | Common stock distributions paid                                                   |                                                                                           |                                                  | (87,727  | )      |          | (50,953 
|                                                     | Expenditures for debt financing costs                                             |                                                                                           |                                                  | (180     | )      |          | (3,902  
|                                                     | Expenditures for issuance of common stock                                         |                                                                                           |                                                  | (3,320   | )      |          | (28,146 
|                                                     | Proceeds from issuance of common stock                                            |                                                                                           |                                                  | 126,428  |        |          | 352,014 
|                                                     |                                                                                   |                                                                                           |                                                  |          |        |          |         
|                                                     |                                                                                   |                                                                                           | Net cash provided (used) by financing activities |          |        | 20,440   |         
|                                                     |                                                                                   |                                                                                           |                                                  |          |        |          |         
|Net (decrease) increase in cash and cash equivalents |                                                                                   |                                                                                           | 3,997                                            |          |        | (4,655   | )       
|Cash and cash equivalents:                           |                                                                                   |                                                                                           |                                                  |          |        |          |         
|                                                     | Beginning of year                                                                 |                                                                                           |                                                  | 1,491    |        |          | 6,146   
|                                                     |                                                                                   |                                                                                           |                                                  |          |        |          |         
|                                                     | End of year                                                                       |                                                                                           | $                                                | 5,488    |        | $        | 1,491   
|                                                     |                                                                                   |                                                                                           |                                                  |          |        |          |         

See accompanying notes to consolidated financial statements.

F-6

---



HERITAGE PROPERTY INVESTMENT TRUST, INC.        Notes to Consolidated Financial Statements        Years ended December 31, 2003, 2002 and 2001

1.    Organization

Background

Heritage Property Investment Trust, Inc. ("Heritage" or the "Company") is a Maryland corporation organized as a real estate investment trust ("REIT").
Heritage was formed on July 1, 1999 and commenced operations on July 9, 1999 through the contribution of $550 million of real estate investments and related assets, net of
liabilities, by Net Realty Holding Trust, a wholly-owned subsidiary of the New England Teamsters & Trucking Industry Pension Fund ("NETT") and $25 million of cash from the Prudential
Insurance Company of America ("Prudential"). Heritage qualifies as a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code").

Heritage
is a fully-integrated, self-administered and self-managed REIT and is focused on the acquisition, ownership, management, leasing and redevelopment of
primarily grocer-anchored neighborhood and community shopping centers principally in the Eastern and Midwestern United States. In 2003, the Company expanded its operations to include the Southwestern
U.S. with its Trademark Portfolio Acquisition consisting of 8 properties. At December 31, 2003, the Company owned 162 shopping centers and four office buildings.

Heritage
Property Investment Limited Partnership ("Heritage OP") and Bradley Operating Limited Partnership ("Bradley OP") are subsidiaries through which the Company conducts
substantially all of its business and owns (either directly or through subsidiaries) substantially all of its assets. As of December 31, 2003, the Company owned directly or indirectly all of
the ownership interests in the Heritage OP and approximately 99% of the voting interests in the Bradley OP, and is the sole general partner of Heritage OP and Bradley OP. This structure is commonly
referred to as an umbrella partnership REIT or UPREIT.

Initial Public Offering

On April 29, 2002, the Company completed its initial public offering ("IPO") of its common stock and, when combined with the exercise of the Underwriter's
overallotment, sold a total of 14,080,556 shares of its common stock in the IPO at a price of $25.00 per share.

The
net proceeds from the IPO, after deducting the underwriters' discount and offering expenses, were $322.5 million and were used by the Company to repay $215.7 million of
the outstanding indebtedness under its prior line of credit facility, to repay in full the $100.0 million of subordinated debt then outstanding, and to pay the $6.8 million fee
associated with terminating the collar previously in place with respect to the $150.0 million term loan under the prior line of credit facility.

In
connection with the IPO, all shares of Series A Cumulative Convertible Preferred Stock and redeemable equity outstanding converted automatically into shares of the Company's
common stock on a one for one basis.

Issuance of Public Equity

In December 2003, the Company completed a secondary public offering of our common stock and sold a total of 3,932,736 shares, including the Underwriter's
over-allotment of 432,736 shares, at a net price of $28.27 per share. The net proceeds of $111 million from this offering were used to repay indebtedness, including the
$60 million bridge loan incurred in connection with the Trademark Portfolio

F-7

---

Acquisition.
The Company's two largest stockholders at the time, Net Realty Holding Trust, a subsidiary of NETT, and Prudential, also took part in the offering. Prudential sold approximately
$61 million of stock in the offering, reducing its ownership percentage to approximately 6.6%. In addition, NETT exercised its contractual preemptive right and purchased approximately 40%, or
$44 million of the shares sold in the offering.

2.    Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements are prepared on the accrual basis in accordance with accounting principles generally accepted in the United States of
America ("GAAP"). Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities
at the dates of the consolidated financial statements and the reporting of revenue and expenses during the periods presented to prepare these consolidated financial statements in conformity with GAAP.
The Company bases its estimates on historical experience and other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates under different
assumptions or conditions.

Management
considers those estimates and assumptions that are most important to the portrayal of the Company's financial condition and results of operations, in that they require
management's most subjective judgments, to form the basis for the accounting policies deemed to be most critical to the Company. These critical accounting policies include the useful lives used to
calculate depreciation and amortization expense on real estate investments, judgments regarding the recoverability or impairment of each real estate investment, judgments regarding the ultimate
collectibility of accounts receivable,
and assumptions used in accounting for and disclosures of the Company's interest rate hedging activities.

If
the useful lives of real estate investments were different, future operating results would be affected. Future adverse changes in market conditions or poor operating results could
result in an inability to recover real estate investment carrying values that may not be reflected in current carrying values and could require an impairment charge in the future. Future adverse
changes in market conditions could also impact the Company's tenants and may affect the adequacy of the allowance for doubtful accounts receivable. If the methodologies and assumptions used to
estimate the fair value of the Company's interest rate hedging instruments or to determine hedge effectiveness were different, amounts reported in earnings and other comprehensive income and amounts
expected to be recognized in earnings in the future could be affected. Further, future changes in market interest rates and other relevant factors could affect the fair value of such instruments and
future interest expense.

The
consolidated financial statements of the Company include the accounts and operations of the Company and its subsidiaries. All significant inter-company accounts and transactions have
been eliminated in consolidation.

Real Estate Investments

Real estate investments contributed in July 1999 were recorded at the carry-over basis of the Company's predecessor, which was fair market
value of the assets in conformity with GAAP applicable

F-8

---

to
pension funds. Subsequent acquisitions of real estate investments, including those acquired in the Bradley acquisition in 2000 and other additions, are recorded at cost. The cost of buildings and
improvements includes the purchase price of property, legal fees, and acquisition costs.

Real
estate investments held for sale are carried at the lower of carrying amount or fair value less costs to sell. Depreciation and amortization are suspended during the period held for
sale. There were no properties classified as held for sale at December 31, 2003. The net carrying value of properties held for sale at December 31, 2002 was $1.6 million and were
sold during the first quarter of 2003.

Statement
of Financial Accounting Standards ("SFAS") No. 144,Accounting for the Impairment or Disposal of Long-Lived
Assets, ("SFAS No. 144") requires the Company to periodically perform reviews of its properties to determine if their carrying amounts will be recovered from future
operating cash flows. If the Company determines that impairment has occurred, those assets shall be reduced to fair value. No such impairment losses have been recognized to date.

In
addition, SFAS No. 144 retains the basic provisions of Opinion No. 30,Reporting the Results of OperationsReporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for presenting discontinued operations in the statement of
operations but broadens that presentation to include a component of an entity (rather than a segment of a business). The Company adopted SFAS No. 144 on January 1, 2002 and accordingly,
the operating results of real estate sold or classified as held for sale during the years ended December 31, 2003 and 2002, have been reclassified and reported as discontinued operations for
the years ended December 31, 2003, 2002 and 2001. SFAS No. 144 did not affect the operating results of properties sold or classified as held for sale prior to January 1, 2002 (see
Note 3).

The
Company applies Statement of Financial Accounting Standards No. 141,Business Combinations, to property acquisitions.
Accordingly, SFAS No. 141,Business Combinations, the fair value of the real estate acquired is allocated to the acquired tangible assets and
identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases and value of tenant relationships, based in
each case on their fair values.

The
fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, and the "as-if-vacant" value is then
allocated based on management's determination of the relative fair values of these assets. Management determines the as-if-vacant fair value of a property using methods similar
to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods
considering current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of
lost rental revenue during the expected lease-up periods based on current market demand. Management also estimates costs to execute similar leases including leasing commissions, legal and
other related costs.

In
allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded
based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the
in-place leases and (ii) management's estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the

F-9

---

remaining
non-cancelable term of the lease. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of
the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term and any fixed rate renewal periods in the respective leases.

The
aggregate value of other acquired intangible assets, consisting of in-place leases and tenant relationships, is measured by the excess of (i) the purchase price
paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as if vacant, determined as set forth above.
This aggregate value is allocated between in-place lease values and tenant relationships, if any, based on management's evaluation of the specific characteristics of each tenant's lease;
however, the value of tenant relationships has not been separated from in-place lease value for the additional interests in real estate entities because such value and its consequence to amortization
expense is estimated to be immaterial for these particular acquisitions. The value of in-place leases exclusive of the value of above-market and below-market in-place leases is
amortized to expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating
to that lease would be written off.

Expenditures
for maintenance, repairs and betterments that do not materially extend the useful life of a real estate investment are charged to operations as incurred and amounted to
$6.3 million, $6.0 million and $5.6 million for the years ended December 31, 2003, 2002 and 2001, respectively. Expenditures that substantially extend the useful life of a
real estate investment are capitalized. Upon sale or other disposition of the real estate investment, the cost and related accumulated depreciation and amortization are removed and the resulting gain
or loss, if any, is reflected in net income. Interest on significant construction projects is capitalized as part of the cost of real estate investments. Interest capitalized for the years ended
December 31, 2003, 2002 and 2001 was $0, $151,000 and $65,000, respectively.

The
provision for depreciation and amortization has been calculated using the straight-line method over the following estimated useful lives:

Land improvements

15 yearsBuildings and improvements

20 - 39 yearsTenant improvements

Shorter of useful life or term of related lease


The
Company recognizes gains from sales of real estate at the time of sale using the full accrual method, provided that various criteria related to the terms of the transactions are met
and no
subsequent involvement is required. If the criteria are not met, or if subsequent involvement is required, the Company defers the gains and recognizes them when the criteria are met or subsequent
involvement is completed.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash in banks and short-term investments with maturities at the date of purchase of three months or less. The
majority of the Company's cash and cash equivalents

F-10

---

are
held at major commercial banks. The Company has not experienced any losses to date on its invested cash.

Deferred Financing Costs and Other Assets

Deferred financing costs and other assets include costs incurred in connection with securing financing for, or leasing space in, the Company's real estate
investments. Such charges are capitalized and amortized over the terms of the related financing or lease. Unamortized deferred charges are charged to expense upon prepayment of the financing or early
termination of the related lease.

The
Company capitalizes internal leasing costs in accordance with SFAS No. 91,Nonrefundable Fees & Costs Associated with Originating or Acquiring
Loans and Initial Direct Costs of Leases. These costs amounted to $2.9 million and $2.3 million during the years ended December 31, 2003 and 2002,
respectively.

Revenue Recognition

Management has determined that all of the Company's leases with its various tenants are operating leases. Rental income from such leases with scheduled rent
increases is recognized using the straight-line method over the terms of the leases. The aggregate excess of rental revenue recognized on a straight-line basis over cash
received under applicable lease provisions amounted to $16.5 million and $11.4 million at December 31, 2003 and 2002, respectively, and is included in accounts receivable, net of
an allowance for doubtful accounts. Rental revenue recognized over cash
received is included in revenue from rental and recoveries for the years ended December 31, 2003, 2002 and 2001 and amounted to $6.0 million, $4.2 million and $3.8 million,
respectively.

Leases
for both retail and office space generally contain provisions under which the tenants reimburse the Company for a portion of property operating expenses and real estate taxes
incurred by the Company. In addition, certain of the Company's operating leases for retail space contain contingent rent provisions under which tenants are required to pay a percentage of their sales
in excess of a specified amount as additional rent. The Company defers recognition of contingent rental income until such specified targets are met. Reimbursements for both operating expenses and real
estate taxes as well as contingent rental income during the years ended December 31, 2003, 2002 and 2001 were $70.0 million, $67.4 million and $59.5 million, respectively.
These items are included in revenue from rentals and recoveries in the consolidated statements of income.

Allowances
for uncollectible receivables are charged against revenue from rentals and recoveries and amounted to $4.8 million, $3.8 million and $4.5 million for the
years ended December 31, 2003, 2002 and 2001, respectively.

Credit Risk

The Company operates in one industry, which is the acquisition, ownership, management, leasing and redevelopment of real estate, and no single tenant accounts for
more than 10% of total revenue. Financial instruments potentially subjecting the Company to concentrations of credit risk consist principally of (1) temporary cash and equivalent instruments,
which are held at financial institutions of

F-11

---

high
credit quality; and (2) tenant receivables, whose credit risk is distributed among tenants in different industries and across several geographical areas.

Fair Value of Financial Instruments

SFAS No. 107,Disclosures about Fair Value of Financial Instruments, requires the Company to disclose fair
value information about all financial instruments, whether or not recognized in the balance sheets, for which it is practicable to estimate fair value. The Company's financial instruments, other than
debt, are generally short-term in nature and consist of cash and cash equivalents, rents and other receivables, and accounts payable. The carrying values of these assets and liabilities,
which are recorded at net realizable value in the consolidated balance sheets, are assumed to be at fair value.

The
fair value of the Company's fixed rate mortgage loans and unsecured notes payable, which is based on estimates made by management for rates currently prevailing for comparable loans
and notes of comparable maturities, exceeds the aggregate carrying value by approximately $47 million and $51 million at December 31, 2003 and 2002, respectively. The Company's
line of credit facility and former subordinated debt are at variable rates, resulting in carrying values that approximate fair value at December 31, 2003 and 2002.

Hedging Activities

From time to time, the Company uses derivative financial instruments to limit its exposure to changes in interest rates. The Company was not a party to any
hedging agreement with respect to its floating rate debt as of December 31, 2003 or 2002. The Company has in the past used derivative financial instruments to manage, or hedge, interest rate
risks related to its borrowings, from lines of credit to medium and long-term financings. The Company requires that hedging derivative instruments are effective in reducing the interest
rate risk exposure that they are designed to hedge. The Company does not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based on
their credit rating and other factors.

If
interest rate assumptions and other factors used to estimate a derivative's fair value or methodologies used to determine hedge effectiveness were different, amounts reported in
earnings and other comprehensive income and losses expected to be reclassified into earnings in the future could be affected. Furthermore, future changes in market interest rates and other relevant
factors could increase the fair value of a liability for a derivative, increase future interest expense, and result in lower net income.

Stock-Based Compensation

The Company adopted the disclosure provisions of SFAS No. 148,Accounting for Stock-Based CompensationTransition and
Disclosure, during the year ended December 31, 2002. At December 31, 2003, the Company has one stock-based employee compensation plan, which is described more
fully in Note 11. The Company accounts for this plan under the recognition and measurement principles of APB Opinion No. 25,Accounting for Stock Issued to
Employees, and related Interpretations. No stock-based employee compensation cost related to stock option grants is reflected in the Company's reported results, as all options
granted under the plan have an exercise price equal to the market value

F-12

---

of
the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share as if the Company had applied the fair value recognition provisions
of SFAS No. 123,Accounting for Stock-Based Compensation, to stock-based employee compensation (in thousands, except per-share data):

Year ended December 31,2003

2002

2001Net income (loss) attributable to common shareholders, as reported

$
40,733

$
(187
)
$
(32,104
)Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards*


619


403


Pro forma net income (loss) attributable to common shareholders

$
40,114

$
(590
)
$
(32,104
)Income (loss) per share:Basicas reported

$
0.97

$
(0.01
)
$
(4.71
)Basicpro forma

$
0.96

$
(0.02
)
$
(4.71
)Dilutedas reported

$
0.96

$
(0.01
)
$
(4.71
)Dilutedpro forma

$
0.95

$
(0.02
)
$
(4.71
)


---

Earnings Per Share

In accordance with SFAS No. 128,Earnings Per Share("SFAS No. 128") basic earnings per common share
is computed by dividing net income attributable to common shareholders (defined as net income less paid and accrued preferred stock distributions and accretion of redeemable equity) by the weighted
average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common stock and then shared in the earnings of the Company.

Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code. In order to qualify as a REIT for income tax purposes, the Company must, among
other things, distribute to shareholders at least 90% of its taxable income. It is the Company's policy to distribute 100% of its taxable income to shareholders; accordingly, no provision has been
made for federal income taxes.

Reclassifications

Certain prior year balances have been reclassified to conform to the current year presentation.

F-13

---

3.    Real Estate Investments

Summary

A summary of real estate investments follows as of December 31 (in thousands):

2003

2002Land

$
345,618

$
319,129Land improvements


187,799


168,246Buildings and improvements


1,808,759


1,639,494Tenant improvements


46,972


34,694In-Place lease value


9,955


Improvements in process


10,825


16,9702,409,928


2,178,533Accumulated depreciation and amortization


(242,953
)

(170,029
)Net carrying value

$
2,166,975

$
2,008,504


Acquisitions

During the year ended December 31, 2003, the Company completed the acquisition of eleven shopping centers, eight of which are grocer-anchored, aggregating
2,137,000 square feet of gross leasable area ("GLA"), of which the Company acquired 1,716,000 square feet of GLA. The aggregate acquisition price of the shopping centers was $224.2 million,
which was funded with borrowings under the Company's line of credit, assumptions of mortgage loans payable at their estimated fair market value, and a short term bridge loan.

During
the year ended December 31, 2002, the Company completed the acquisition of ten shopping centers, nine of which are grocer-anchored, aggregating 3,147,000 square feet of
GLA, of which the Company acquired 2,355,000 square feet of GLA. The aggregate acquisition price of the shopping centers was $208.5 million, which was funded with borrowings under the Company's
line of credit, assumptions of mortgage loans payable at their estimated fair market value, and the issuance of exchangeable units of limited partnership interest in one of the Company's operating
partnerships. In addition, the Company completed the acquisition of two parcels at company-owned shopping centers aggregating 70,000 square feet GLA, for a total acquisition price of
$6.5 million, which was funded with borrowings under the Company's line of credit facility and cash provided by operations.

During
the year ended December 31, 2001, the Company completed the acquisition of three shopping centers, two of which are grocer-anchored, aggregating 708,000 square feet of GLA,
of which the Company acquired 495,000 square feet of GLA. The aggregate acquisition price of the shopping centers was $40.0 million, which was funded with borrowings under the Company's
previous line of credit and the assumption of a mortgage loan payable. Also during 2001, the Company completed the acquisitions of a development land parcel and a 17,000 square foot parcel at a
company-owned shopping center for acquisition prices of $1.3 million and $1.0 million, respectively. The acquisitions were funded with borrowings under the Company's previous line of
credit and cash provided by operations.

F-14

---

Dispositions

In September 2003, the Company completed the disposition of River Ridge Marketplace located in Asheville, North Carolina for $13.2 million,
resulting in a gain of $1.9 million. The results of operations of River Ridge Marketplace have been reclassified as discontinued operations for all periods presented in the accompanying
financial statements.

In
January and February 2003, the Company completed the sales of its 10 remaining single-tenant properties for $2.4 million, resulting in a gain of $0.8 million.
These single-tenant properties were classified as held for sale at December 31, 2002.

In
March 2002, the Company completed the sale of the Flower Hill office building located in Roslyn, New York, for $4.2 million, resulting in a net gain on sale of
$1.4 million. The Flower Hill building was classified as held for sale at December 31, 2001.

In
September 2002, the Company completed the sale of its only ground-up development property located in Mishawaka, Indiana for $5.7 million, resulting in a net
gain on sale of $1.6 million. There were no clearly distinguishable operations and cash flows from this development entity prior to the sale. Therefore, the gain on sale of this property is
included as a component of income before discontinued operations.

In
September 2002, the Company completed the sale of one of its single-tenant properties for $0.5 million, resulting in a net gain on sale of $0.4 million. The
operations of this property, combined with the operations of the remaining single tenant properties, were reported as income from discontinued operations in 2002 and their respective 2001 results of
operations were reclassified to income from discontinued operations.

During
the year ended December 31, 2001, the Company sold a shopping center and two office buildings at an aggregate sales price of $18.3 million, resulting in an aggregate
net gain on sale of $1.8 million. In addition, the Company sold two single-tenant properties for an aggregate sales price of $5.0 million, resulting in an aggregate net gain on sale of
$2.3 million.

4.    Supplemental Cash Flow Information

During 2003, 2002 and 2001, interest paid was $67.8 million, $70.7 million, and $85.0 million, respectively, and net state income and
franchise tax payments were $0.4 million, $0.1 million, and $0.7 million, respectively.

During
2003, the Company assumed $80.5 million of existing debt in connection with the acquisition of six shopping centers. Included in accrued expenses and other liabilities at
December 31, 2003 are accrued expenditures for real estate investments of $5.7 million and accrued expenses of $0.1 million for the issuance of common stock.

During
2002, the Company assumed $95.1 million of existing debt in connection with the acquisition of seven shopping centers. In addition, the Company issued exchangeable limited
partnership units with a fair value of $7.9 million in connection with the acquisition of four shopping centers. Included in accrued expenses and other liabilities at December 31, 2002
are accrued

F-15

---

expenditures
for real estate investments of $3.7 million and accrued expenses of $0.1 million for the issuance of common stock.

During
2001, the Company assumed $14.9 million of existing debt in connection with the acquisition of a shopping center. Included in accrued expenses and other liabilities at
December 31, 2001 are accrued expenditures for real estate investments of $2.7 million and accrued expenses of $0.8 million for the issuance of common stock.

Only
the cash portion of the above transactions is reflected in the accompanying consolidated statements of cash flows.

5.    Operating Leases

Scheduled future minimum rental payments to be received under the Company's non-cancelable operating leases are as follows at December 31, 2003
(in thousands):

Year Ending December 31

Amount2004

$
233,7482005


215,3272006


188,9402007


164,0332008


134,795Thereafter


728,413Total minimum future rentals

$
1,665,256


6.    Minority Interests

Series B and C Preferred Units

The Bradley OP has outstanding 2,000,000 units of 8.875% Series B Cumulative Redeemable Perpetual Preferred Units and 1,000,000 units of 8.875%
Series C Cumulative Redeemable Perpetual Preferred Units (together, the "Series B and C Preferred Units"). The Series B and C Preferred Units were issued during 1999 to investors
at a price of $25.00 per unit. The Series B and C Preferred Units are callable by the Bradley OP after five years from the date of issuance at a redemption price equal to the redeemed holder's
capital account plus an amount equal to all accumulated, accrued and unpaid distributions or dividends thereon to the date of redemption. In lieu of cash, the Bradley OP may elect to deliver shares of
8.875% Series B or C Cumulative Redeemable Perpetual Preferred Stock, as appropriate, of the Company, on a one-for-one basis, plus an amount equal to all accumulated,
accrued and unpaid distributions or dividends thereon to the date of redemption. Holders of the Series B and C Preferred Units have the right to exchange their Series B and C Preferred
Units for shares of Series B and C Preferred Shares on a one-for-one basis after ten years from the original date of issuance, subject to certain limitations. Income is
allocated to the Series B and C Preferred Units, which have been reported as minority interests in the accompanying financial statements, in amounts equal to the distributions or dividends
thereon. The Series B Cumulative Redeemable Perpetual Preferred Units were redeemed by the Company subsequent to year-end (see note 15).

F-16

---

Exchangeable Limited Partnership Units

Exchangeable limited partnership units consist of 340,270 Bradley OP Units ("OP Units") not owned by the Company. The holders of these Units may present such OP
Units to Bradley OP for redemption at any time (subject to certain restrictions with particular holders). Upon presentation of an OP Unit, the Bradley OP must redeem such OP Unit for cash equal to the
then value of a share of common stock of the Company ("Common Stock"), except that the Company may, at its election, in lieu of a cash redemption, acquire such OP Unit for one share of Common Stock.
One share of Common Stock is generally the economic equivalent of the OP Unit, and the quarterly distribution that may be paid to the holder of an OP Unit equals the quarterly dividend that may be
paid to the holder of a share of Common Stock.

Other Minority Interests

The Company also assumed other minority interests in its acquisition of Bradley that participate in earnings based on terms specified in their partnership
agreements. These minority interests amounted to $2.4 million at December 31, 2003 and 2002.

F-17

---



7.    Debt

Mortgage Loans Payable

Mortgage loans consist of various non-recourse issuances collateralized by 67 and 63 real estate investments with an aggregate net carrying value of
$958.0 million and $869.7 million at December 31, 2003 and 2002, respectively. The loans require monthly payments of principal and interest through 2020 at interest rates ranging
from 3.12% to 10.13% and have a weighted average effective interest rate of 7.50% at December 31, 2003. The loans are generally subject to prepayment penalties.

Mortgage
loans payable consisted of the following at December 31 (in thousands):

|Property                                             |                              | Effective
Interest
Rate |   | Contractual
Interest
Rate |  | Maturity       |  | 2003(1) |         | 2002(2)
|---------------------------------------------------- | ---------------------------- | ----------------------- | - | ------------------------- |  | -------------- |  | ------- | ------- | -------
|Kimberly West                                        |                              | 7.88                    | % | 7.88%                     |  | January 2003   |  | $       |        |        
|Martin's Bittersweet Plaza                           |                              | 8.88                    | % | 8.88%                     |  | June 2003      |  |         |        |        
|Miracle Hills Park                                   |                              | 8.28                    | % | 8.28%                     |  | August 2004    |  |         | 3,594   |        
|The Commons of Chancellor Park                       |                              | 8.48                    | % | 8.48%                     |  | November 2004  |  |         | 12,374  |        
|Franklin Square                                      |                              | 9.00                    | % | 9.00%                     |  | June 2005      |  |         | 14,019  |        
|Williamson Square                                    |                              | 8.00                    | % | 8.00%                     |  | August 2005    |  |         | 11,170  |        
|Riverchase Village Shopping Center                   |                              | 7.62                    | % | 7.62%                     |  | September 2005 |  |         | 10,074  |        
|Meridian Village Plaza                               |                              | 5.05                    | % | 7.88%                     |  | May 2006       |  |         | 5,753   |        
|Spring Mall                                          |                              | 9.39                    | % | 9.39%                     |  | October 2006   |  |         | 8,250   |        
|Southport Center                                     |                              | 6.94                    | % | 6.94%                     |  | July 2007      |  |         | 10,000  |        
|Innes Street Market                                  |                              | 7.63                    | % | 7.63%                     |  | October 2007   |  |         | 13,156  |        
|Southgate Shopping Center                            |                              | 8.38                    | % | 8.38%                     |  | October 2007   |  |         | 2,496   |        
|Salem Consumer Square                                |                              | 10.13                   | % | 10.13%                    |  | September 2008 |  |         | 10,703  |        
|St. Francis Plaza                                    |                              | 8.13                    | % | 8.13%                     |  | December 2008  |  |         | 1,042   |        
|Buckingham Place                                     |                              | 5.89                    | % | 7.88%                     |  | August 2009    |  |         | 5,909   |        
|County Line Plaza                                    |                              | 5.64                    | % | 7.91%                     |  | August 2009    |  |         | 18,983  |        
|Trinity Commons                                      |                              | 5.64                    | % | 7.93%                     |  | August 2009    |  |         | 16,323  |        
|8 shopping centers, cross collateralized             |                              | 7.82                    | % | 7.82%                     |  | December 2009  |  |         | 81,404  |        
|Montgomery Commons                                   |                              | 6.38                    | % | 8.48%                     |  | January 2010   |  |         | 8,695   |        
|Warminster Towne Center                              |                              | 6.01                    | % | 8.24%                     |  | February 2010  |  |         | 22,354  |        
|Clocktower Place                                     |                              | 5.75                    | % | 8.56%                     |  | April 2010     |  |         | 14,527  |        
|545 Boylston Street and William J. McCarthy Building |                              | 8.26                    | % | 8.26%                     |  | October 2010   |  |         | 35,387  |        
|29 shopping centers, cross collateralized            |                              | 7.88                    | % | 7.88%                     |  | October 2010   |  |         | 237,741 |        
|Spradlin Farm                                        |                              | 6.53                    | % | 7.25%                     |  | January 2012   |  |         | 18,251  |        
|Bedford Grove                                        |                              | 7.86                    | % | 7.86%                     |  | March 2012     |  |         | 4,503   |        
|Berkshire Crossing                                   |                              | 3.12                    | % | 3.12%                     |  | November 2012  |  |         | 15,094  |        
|Grand Traverse Crossing                              |                              | 7.42                    | % | 7.42%                     |  | January 2013   |  |         | 13,642  |        
|Salmon Run                                           |                              | 8.10                    | % | 8.95%                     |  | September 2013 |  |         | 5,248   |        
|Elk Park Center                                      |                              | 7.64                    | % | 7.64%                     |  | August 2016    |  |         | 8,519   |        
|Grand Traverse CrossingWal-Mart                     |                              | 7.75                    | % | 7.75%                     |  | October 2016   |  |         | 5,314   |        
|Montgomery Towne Center                              |                              | 8.50                    | % | 8.50%                     |  | March 2019     |  |         | 7,394   |        
|Bedford GroveWal-Mart                               |                              | 7.63                    | % | 7.63%                     |  | November 2019  |  |         | 4,208   |        
|Berkshire CrossingHome Depot/Wal-Mart               |                              | 7.63                    | % | 7.63%                     |  | March 2020     |  |         | 6,838   |        
|                                                     |                              |                         |   |                           |  |                |  |         |         |        
|                                                     | Total mortgage loans payable |                         |   |                           |  |                |  |         | $       | 632,965
|                                                     |                              |                         |   |                           |  |                |  |         |         |        

---

F-18

---

Unsecured Notes Payable

In its acquisition of Bradley in September 2000, Heritage assumed unsecured notes payable consisting of a $100 million 7.0% fixed-rate
issue maturing on November 15, 2004; $100 million, 7.2% fixed-rate issue maturing on January 15, 2008; and $2.0 million of other debt. The amount of unsecured
notes payable outstanding at December 31, 2003 and 2002 was $201.5 million.

Line of Credit Facility

On April 29, 2002, the Company entered into a $350 million unsecured line of credit with a group of lenders and Fleet National Bank, as agent. This
line of credit replaced the Company's prior $425 million senior unsecured credit facility, which was repaid with proceeds from the IPO. The prior line of credit consisted of a
$275 million revolving line of credit and a $150 million term loan and bore interest at a variable rate based on LIBOR and had a maturity date of September 18, 2002. The Company's
two operating partnerships are the borrowers under this line of credit, and Heritage and certain of Heritage's other subsidiaries have guaranteed this line of credit. This line of credit is being used
principally to fund growth opportunities and for working capital purposes. At December 31, 2003 and 2002, $243 million and $234 million were outstanding under the line of credit,
respectively.

This
line of credit bears interest at either the lender's base rate or a floating rate based on a spread over LIBOR ranging from 80 basis points to 135 basis points, depending upon the
Company's debt rating, and requires monthly payments of interest. The variable rate in effect at December 31, 2003, including the lender's margin of 105 basis points, and borrowings outstanding
at the base rate, was 2.22%. In addition, this line of credit has a facility fee based on the amount committed ranging from 15 basis points to 25 basis points, depending upon the Company's debt
rating, and requires quarterly payments.

This
line of credit requires the Company to maintain specific financial ratios and restricts the incurrence of indebtedness and the making of investments. This line of credit also,
except under some circumstances, including as necessary to maintain the Company's status as a REIT, limits the Company's ability to make distributions in excess of 90% of annual funds from operations,
as defined. As of December 31, 2003, we were in compliance with all of the financial covenants under the line of credit facility.

Upon
entering into this line of credit and repayment of the prior senior unsecured credit facility, the Company wrote off unamortized deferred financing costs and recognized a loss of
$4.2 million on this transaction in 2002 which was reclassified to an operating expense from an extraordinary item upon the Company's adoption of SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64,
Amendment of FASB Statement No. 13, and Technical Corrections, on January 1, 2003.

Subordinated Debt

In September 2000, Heritage entered into a $100 million term credit agreement (the "Subdebt"), which was subordinated in right of payment to the
line of credit. The Subdebt was scheduled to mature

F-19

---

on
March 18, 2004 and bore interest at a variable rate based on LIBOR. The Subdebt contained covenants that, among other things, required the Company to maintain certain financial ratios. In
addition, the Subdebt contained provisions that required repayment of the Subdebt upon full repayment of the line of credit or upon receipt of aggregate equity proceeds in excess of $250,000.

On
April 30, 2001, the Company modified the interest rate terms under the Subdebt. This modification resulted in the lender's margin being reduced from its originally scheduled 6%
and 8% increasing-rate levels to 5% for the remaining term of the Subdebt. The Company
determined that this modification did not result in an early extinguishment of debt. The fees incurred to modify the terms of the Subdebt were $1.8 million and were being amortized over the
remaining term of the debt.

The
Company used $100 million of the net proceeds from the IPO to repay in full the Subdebt outstanding. In connection with the full repayment, the Company wrote off unamortized
deferred financing costs and recognized a loss of $2.5 million which was reclassified to an operating expense from an extraordinary item upon the Company's adoption of SFAS No. 145, Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections, on January 1, 2003.

Scheduled Principal Repayments

Scheduled principal repayments on aggregate outstanding debt at December 31, 2003 are as follows (in thousands):

Year Ending December 31

Amount2004

$
126,5912005


287,6502006


25,2782007


35,0062008


119,952Thereafter


472,555Total due(1)

$
1,067,032


---

8.    Related Party Transactions

Transactions with NETT

Preferred and common distributions paid to NETT in 2003, 2002 and 2001 were $37.8 million, $47.7 million and $38.0 million, respectively. At
December 31, 2003 and 2002, distributions payable to NETT were $10.3 million and $9.5 million, respectively.

Included
in accounts payable, accrued expenses and other liabilities at December 31, 2002 is $0.7 million due to NETT. This amounts represented standard post closing
adjustments related to the

F-20

---

contribution
of the real estate investments and related assets and liabilities to the Company and was paid in full during 2003.

In
connection with the formation of Heritage, environmental studies were not completed for all of the contributed properties. NETT has agreed to indemnify the Company for environmental
costs up to $50 million. The environmental costs include completing environmental studies and any required remediation. Since our formation in July 1999, the Company has been reimbursed
by NETT for approximately $1.8 million of environmental costs pursuant to this indemnity.

In
November 1999, the Company entered into a joint venture with NETT for the acquisition and development of a 365,000 square foot commercial office building at 131 Dartmouth
Street, Boston, Massachusetts. This joint venture is owned 94% by NETT and 6% by the Company. The Company was issued this interest as part of a management arrangement with the joint venture pursuant
to which the Company will manage the building. The Company has no ongoing capital contribution requirements
with respect to this office building, which was completed in January 2003. The first tenants began occupying this office building in October 2003. The Company accounts for its interest
in this joint venture using the cost method and has not expended any amounts on the office building through December 31, 2003.

In
February 2004, the Company entered into an eleven-year lease with this joint venture for the lease of approximately 31,000 square feet of space and moved its
corporate headquarters to this space during the first quarter of 2004. The terms of this lease, which were negotiated on an arms-length basis, were approved by the Company's Audit
Committee and Board of Directors.

Boston Office Lease

In 1974, NETT and Net Realty Holding Trust entered into an agreement providing for the lease of 14,400 square feet of space at the 535 Boylston Street office
building to NETT for its Boston offices. Net Realty Holding Trust assigned this lease to the Company as part of the Company's formation. The current term of this lease expires on June 30, 2005
and under this lease, NETT pays the Company $648,000 per year in minimum rent.

Transactions with Prudential

Preferred and common distributions paid to Prudential in 2003, 2002 and 2001 were $10.4 million (none of which were preferred distributions),
$11.6 million and $8.6 million, respectively. At December 31, 2003 and 2002, distributions payable to Prudential were $1.4 million and $2.6 million, respectively.

Prudential
received advisory and other fees totaling $3.4 million in connection with the IPO, which have been included as equity issuance costs. These fees were incurred in the
second quarter of 2002. Upon completion of the IPO and payment of these fees, the Company's advisory arrangements with Prudential were terminated.

On
April 30, 2001, in conjunction with the modification of its now repaid $100 million subordinated debt, the Company used the proceeds of a $50 million loan from a
lender to repay the

F-21

---

$50 million
of subordinated debt previously held by Prudential. Interest expense paid to Prudential for this issue during the year ended December 31, 2001 was $2.0 million.

In
connection with its providing of advisory services to the Company, Prudential received warrants to acquire shares of the Company's common stock at an exercise price of $25.00 per
share, which was assumed to be equal to the fair value of the stock at the date the warrants were issued. On July 9, 1999, 75,000 of the warrants were issued with an expiration date of
July 9, 2003, and on September 18, 2000, 300,000 warrants were issued with an expiration date of September 18, 2004. The warrants had an estimated fair value at issuance of
$0.2 million and $0.9 million, respectively, and such amounts were recorded as additional paid-in capital.

In
February 2003 the Company extended the expiration date of all warrants to April 29, 2007. The Company recorded a charge of $0.1 million in connection with this
modification.

A
portion of redeemable equity, representing costs associated with prior equity transactions with Prudential, is reclassified as a charge to earnings for each quarter over the redemption
period. This charge, which is recorded as accretion of redeemable equity in the accompanying consolidated statements of income, amounted to $0.3 million and $1.0 million for the years
ended December 31, 2002, and 2001, respectively. As a result of the IPO, all redeemable equity outstanding converted automatically into shares of the Company's common stock on a one for one
basis.

9.    Segment Reporting

The Company predominantly operates in one industry segmentreal estate ownership and management of retail properties. As of December 31, 2003
and 2002, the Company owned 162 and 152 community and neighborhood shopping centers, respectively. Management reviews operating and financial data for each property separately and independently from
all other properties when making resource allocation decisions and measuring performance. The Company defines operating segments as individual properties with no segment representing more than 10% of
rental revenue.

10.    Earnings Per Share

Earnings per common share ("EPS") has been computed pursuant to the provisions of SFAS No. 128. The following table provides a reconciliation of both net
income and the number of common shares used in the computation of basic EPS, which utilizes the weighted average number of common

F-22

---

shares
outstanding without regard to the dilutive potential common shares, and diluted EPS, which includes all shares, as applicable (in thousands, except per-share data):

For the year ended December 31, 2003Income
(Numerator)

Shares
(Denominator)

Per Share
AmountBasic Earnings Per Share:Net income attributable to common shareholders

$
40,733

41,963

$
0.97Effect of dilutive securities:Stock options and warrants




211


Anticipated stock compensation




22


Operating partnership units


257

340


0.76Diluted income per share:Net income attributable to common shareholders

$
40,990

42,536

$
0.96


For the year ended December 31, 2002Income
(Numerator)

Shares
(Denominator)

Per Share
AmountBasic Earnings Per Share:Net loss attributable to common shareholders

$
(187
)
30,257

$
(0.01
)Effect of dilutive securities:Anticipated stock compensation(1)




29


Diluted loss per share:Net loss attributable to common shareholders

$
(187
)
30,286

$
(0.01
)


---

For the years ended December 31, 2002 and 2001, preferred stock distributions of $14.3 million, and $43.3 million,
respectively, and the effect of the assumed conversion of convertible preferred stock and exchangeable minority interests outstanding into shares of common stock at the beginning of each year were not
included in the computation of diluted loss per common share because the impact on basic loss per common share was anti-dilutive. At December 31, 2002 and 2001, options and warrants
to purchase 2,415,527 and 1,376,500 shares, respectively, of common stock at $25.00 per share were outstanding but were not included in the computation of diluted loss per common share because their
exercise price was not below the fair value of the common shares and would therefore not dilute basic loss per common share.

F-23

---

11.    Stock-Based Compensation

Overview

SFAS No. 123,Accounting for Stock-Based Compensation, ("SFAS No. 123") establishes financial
accounting and reporting standards for stock-based employee compensation plans, including all arrangements by which employees receive shares of stock or other equity instruments of the employer or the
employer incurs liabilities to employees in amounts based on the price of the employer's stock. SFAS No. 123 defines a fair value-based method of accounting for an employee stock option or
similar equity instrument and encourages all entities to adopt that method of accounting for all of their employee stock compensation plans. However, it also allows an entity to continue to measure
compensation cost using the intrinsic value-based method of accounting prescribed by Accounting Principles Opinion No. 25,Accounting for Stock Issued to
Employees("Opinion No. 25"), and to make pro-forma disclosures of net income and earnings per share as if the fair value method of accounting defined in
SFAS No. 123 were applied. The Company uses Opinion No. 25 and related Interpretations to measure compensation costs for its stock-based plans.

The
Company's 2000 Equity Incentive Plan, as amended, (the "Plan") authorizes options and other stock-based compensation awards to be granted to employees and directors for up to
5,700,000 shares of common stock. The Compensation Committee of the Board of Directors administers the Plan and is responsible for selecting persons eligible for awards and for determining the term
and duration of any award.

Stock Options

Pursuant to the Plan, the Company periodically grants options to purchase shares of common stock at an exercise price equal to the estimated per-share
fair value of the Company's common stock. The options vest over periods ranging from three to five years and have an expiration of ten years from the grant date.

Upon
completion of the Company's initial public offering, the vesting of all stock options previously granted to employees (other than 430,000 options granted in April 2002)
accelerated.

F-24

---

A
summary of option transactions during the periods covered by these consolidated financial statements is as follows:

Shares

Weighted Average
Exercise price
per shareOutstanding at December 31, 2000

707,000


25.00Granted

420,750


25.00Cancelled

(126,250
)

25.00Exercised




Outstanding at December 31, 2001

1,001,500


25.00Granted

1,096,352


24.99Cancelled

(46,125
)

25.00Exercised




Outstanding at December 31, 2002

2,051,727

$
24.99Granted

737,751

$
24.39Cancelled

(11,500
)
$
24.65Exercised

(487,655
)
$
24.90Outstanding at December 31, 2003

2,290,323

$
24.79


The
following table summarizes information about stock options outstanding at December 31, 2003:

Options Outstanding



Options ExercisableRange of
Exercise Prices

Number
Outstanding at
12/31/03

Weighted-Average
Remaining
Contractual Life

Weighted-Average
Exercise Price

Number
Exercisable
at 12/31/03

Weighted-Average
Exercise Price$23.95-$25.00

2,290,323

7.78

$
24.79

1,330,272

$
25.00


The
Company has estimated the fair value of options granted prior to September 7, 2001 (the initial filing of the Company's Registration Statement) using the minimum value method,
which SFAS No. 123 indicates may be used by nonpublic companies and which excludes the expected volatility of the Company's stock. The Company applied this method incorporating the following
weighted-average assumptions: dividend yield of 8.25%; risk-free interest rate of 5%; expected life of 4 years; and no expected volatility. Had compensation cost for these options
been determined in accordance with SFAS No. 123, the Company's net income and basic and diluted loss per common share would have been unchanged from reported amounts for the year ended
December 31, 2001. There were no stock options granted between September 7, 2001 and December 31, 2001.

In
addition to the 737,751 options granted during the year ended December 31, 2003, the Company is contractually obligated as of December 31, 2003 to issue an additional
140,000 options to the Company's Chief Executive Officer based on the Company's 2003 performance. For purposes of the pro forma amounts below, the Company recognizes compensation expense over the
performance and vesting periods. The per-share weighted-average fair value of the 737,751 options issued and 140,000 options accrued during the year ended December 31, 2003 was
$1.30. The per-share fair value of each

F-25

---

option
granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

Dividend yield

8.4%Expected life of option

6 yearsRisk-free interest rate

3%Expected stock price volatility

20%


The
compensation cost under SFAS 123 for the stock performance-based plan would have been $0.6 million and $0.4 million for the years ended December 31, 2003
and 2002. Had compensation cost for the Company's grants under stock-based compensation plans been determined consistent with SFAS 123, the Company's net income (loss), and net income (loss)
per common share for 2003, 2002 and 2001 would approximate the pro forma amounts below (in thousands, except per-share data):

Year Ended December 31,2003

2002

2001Net income (loss) attributable to common shareholders

$
40,114

$
(590
)
$
(32,104
)Net income (loss) per common sharebasic

$
0.96

$
(0.02
)
$
(4.71
)Net income (loss) per common sharediluted

$
0.95

$
(0.02
)
$
(4.71
)


The
effects of applying SFAS 123 in the pro-forma disclosure are not indicative of future amounts and anticipated awards.

Subsequent
to December 31, 2003, pursuant to the Plan, the Company granted 539,654 stock options, including the 140,000 options referred to above, at exercise prices ranging from
$28.47 to $28.65 per share. The options vest at a rate of one-third per year on the anniversary of the grant date and have a duration of ten years.

Restricted Shares

In July 2002, the Board of Directors approved the issuance over five years of an aggregate of up to 775,000 shares of restricted stock with no exercise
price to members of senior management of the Company. The Company issued the first installment of 155,000 shares in July 2002 based on a fair market value per share of $23.65 on the grant date.
These shares were subject to risk of forfeiture and transfer restrictions, which terminated on March 1, 2003, based on the continued employment of these individuals with the Company through
that date. During the years ended December 31, 2003 and 2002, the Company recognized $1.1 million and $2.6 million of compensation expense related to these shares, respectively.

On
March 3, 2003, the Company issued the second installment consisting of 155,000 shares based on a value of $24.36 per share. These shares were subject to risk of forfeiture and
transfer restrictions, which terminated on March 3, 2004, based on the continued employment of these individuals with the Company through that date. During the year ended December 31,
2003, the Company recognized $3.3 million of compensation expense related to these shares, including the vesting of 20,000 shares issued to an officer which were accelerated upon his departure
from the Company. The unamortized

F-26

---

compensation
expense of $0.5 million is included as unearned compensation on the accompanying balance sheet and will be amortized over the remaining vesting period.

On
March 1, 2004, the Company issued the third installment consisting of 135,000 shares (reduced from 155,000 to reflect the termination of employment of one of the participants)
based on a value of $29.76 per share. These shares are subject to risk of forfeiture and transfer restrictions, which terminate on March 1, 2005, based on the continued employment of these
individuals with the Company through that date.

During
the year ended December 31, 2001, the Company granted shares of restricted stock with no performance-based conditions and no exercise price to certain employees. Grantees
immediately receive distributions and voting rights on shares granted, and the shares vest over a period of five years. Compensation expense is recognized over the vesting periods. During the year
ended December 31, 2001, compensation expense recognized was $1.5 million based on a fair value per share of $25.00 at the grant date.

Upon
completion of the IPO in the second quarter of 2002, all contractual restrictions on transfer and forfeiture provisions that existed on restricted shares previously granted to
members of senior management and other key employees terminated. As a result, in 2002, the Company incurred compensation expense, including the reimbursement of a portion of the taxes paid by two
employees, of
$6.8 million on the restricted shares, which is comprised of $4.3 million of stock compensation expense and $2.5 million for the reimbursement of a portion of such taxes.

Following
is a table summarizing restricted stock activity during the years ended December 31:

2003

2002

2001Unvested shares outstanding at beginning of year

155,000

84,111

60,000Shares issued

276,500

263,565

84,497Shares forfeited





(1,830
)Shares vested

(193,000
)
(192,676
)
(58,556
)Unvested shares outstanding at end of year

238,500

155,000

84,111


During
the year ended December 31, 2003, the Company accrued $1.1 million of compensation expense, including the reimbursement of a portion of the taxes to be paid by one
employee, related to approximately 110,000 shares of restricted stock that were issued by the Company on February 17, 2004 for 2003 performance. The Company recognizes compensation expense with
respect to performance-based stock grants ratably over the performance and three-year vesting periods.

During
the years ended December 31, 2003 and 2002, the Company recognized $1.2 million and $1.1 million, respectively, of compensation expense, including the
reimbursement of a portion of the
taxes to be paid by one employee, related to approximately 119,500 shares of restricted stock that were issued by the Company on March 3, 2003 for 2002 performance. The Company recognizes
compensation expense with respect to performance-based stock grants ratably over the performance and three-year vesting periods. The unamortized compensation expense of $1.3 million
is included as unearned compensation on the accompanying balance sheet and will be amortized over the remaining vesting period.

F-27

---



12.    Commitments and Contingencies

Retirement Savings Plan

Effective in January 2000, the Company began to offer its employees a retirement savings plan qualified under Section 401(k) of the Internal Revenue
Code. Under the Plan, the Company provides matching contributions. These matching contributions are currently equal to 100% of the employee's contribution up to 3% of the employee's compensation, and
50% of the employee's contribution in excess of 3% and up to 5% of the employee's compensation. These employer contributions aggregated $0.3 million, $0.3 million, and
$0.2 million in 2003, 2002 and 2001, respectively, and vested immediately.

Effective
in January 2000, the Company adopted a non-qualified executive retirement plan ("SERP"). Benefits payable under the SERP are based upon a percentage of each
participant's average annual cash compensation, consisting of base salary and cash bonus, for the three calendar years of the last ten years of employment which produce the highest average amount.
Benefits earned under the SERP vest over varying periods ranging from eight to ten years. Participants may begin to receive payments under the SERP following either their 60th or 65th birthday
depending on the terms of their individual agreement. Benefits under the SERP will terminate upon the participant's death. The Company has accrued a liability pursuant to the SERP of
$4.2 million and $2.9 million, at December 31, 2003 and 2002, respectively.

Legal and Other Matters

The Company is subject to legal and other claims incurred in the normal course of business. Based on its review and consultation with counsel of such matters
known to exist, management does not believe
that the ultimate outcome of these claims would materially affect the Company's financial position or results of operations.

13.    Derivative and Hedging Activities

On January 1, 2001, the Company adopted SFAS No. 133,Accounting for Derivative Instruments and Hedging
Activities, as amended by SFAS No. 138,Accounting for Certain Derivative Instruments and Certain Hedging Activities.
SFAS No. 133, as amended, establishes accounting and reporting standards for derivative instruments. Specifically, SFAS No. 133 requires an entity to recognize all derivatives as either
assets or liabilities in the balance sheet and to measure such instruments at fair value. Fair value adjustments affect either other comprehensive income (a component of shareholders' equity) or net
income, depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity.

The
Company had no derivatives at December 31, 2003 or 2002. The Company's only derivative at December 31, 2001 was an interest rate "collar" entered into pursuant to and
as a condition of the Company's prior line of credit facility. This collar limited the variable interest rate range on the entire $150 million term loan under the prior line of credit to a
floor of 6% and a cap of 8.5% through September 18, 2003, the date of maturity of the prior line of credit. The derivative was classified as a cash flow hedge and the fair value of the
derivative was included in accrued expenses and other liabilities as of December 31, 2001. For purposes of determining hedge effectiveness, the Company excludes the time value element of the
collar. As of January 1, 2001, the adoption of SFAS No. 133 resulted in the recognition of a loss of $2.5 million, which is reported as a cumulative transition

F-28

---

adjustment
to accumulated other comprehensive loss (a component of changes in shareholders' equity). The net increase in the fair value of the liability for the collar during the year ended
December 31, 2001 was $5.3 million, which resulted from a net gain recognized in income during the year ended December 31, 2001 of $1.0 million (representing the time value
component of the collar excluded from the assessment of hedge effectiveness), a net loss of $6.3 million charged to accumulated other comprehensive loss.

Interest
expense attributable to the collar and recognized in earnings in 2002 and 2001 was $2.1 million and $3.0 million, respectively.

On
April 29, 2002, the Company entered into a $350 million unsecured line of credit with a group of lenders and Fleet National Bank, as agent. This line of credit replaced
the Company's prior $425 million senior unsecured credit facility. Upon entering into this new line of credit, the Company paid $6.8 million to terminate the interest rate collar that
was then in place with respect to the $150 million term loan under the prior senior unsecured credit facility. As a result of this termination, the Company
reclassified $7.6 million of accumulated other comprehensive loss, a component of shareholders' equity, to earnings during the year ended December 31, 2002.

14.    Supplementary Quarterly Data (unaudited)

The tables below reflect the Company's selected quarterly information for the years ended December 31, 2003 and 2002. Certain 2003 and 2002 amounts have
been reclassified to conform to the current presentation of discontinued operations (in thousands, except per-share data):

|                                               |  | Quarter ended
|---------------------------------------------- |  | -------------
|
|2003                                           |  |              
|Revenue from rentals and recoveries            |  | $            
|Net income                                     |  | $            
|Net income attributable to common shareholders |  | $            
|Basic and diluted net income per common share* |  | $            

|                                                      |  | Quarter ended
|----------------------------------------------------- |  | -------------
|
|2002                                                  |  |              
|Revenue from rentals and recoveries                   |  | $            
|Net income (loss)                                     |  | $            
|Net (loss) income attributable to common shareholders |  | $            
|Basic and diluted net (loss) income per common share* |  | $            

---

F-29

---

15.    Subsequent Events

On
March 11, 2004, Prudential informed the Company that it was exercising all of its 375,000 warrants in accordance with the cashless exercise provisions of its warrant agreement.
Pursuant to the warrant agreement, on March 12, 2004, the Company issued Prudential 68,166 shares of common stock in full settlement of the warrants. The Company will not incur any
additional expense under SFAS No. 123 as a result of the exercise of the warrants.

On
March 8, 2004, in anticipation of completing an unsecured debt financing during the late first or second quarter of 2004, the Company entered into forward starting interest
rate swaps with a total notional amount of $192,450,000. The purpose of these forward swaps is to mitigate the risk of changes in interest rates in the near term. These swaps will have no impact on
the Company's current unsecured indebtedness.

On
February 23, 2004, the Company redeemed all outstanding 8.875% Series B Cumulative Redeemable Perpetual Preferred Units of Bradley Operating Limited Partnership, a
subsidiary operating partnership. The Company redeemed all 2,000,000 of the outstanding Series B Preferred Units at a redemption price of $25.00 per unit, plus approximately $0.3266 of accrued
and unpaid distributions, for an aggregate redemption price of approximately $25.3266 per unit. There were no unamortized issuance costs associated with the Series B Preferred Units, therefore,
the Company did not incur a charge in connection with this redemption.

On
January 9, 2004, the Company entered into an agreement to sell one of its office buildings, the Fortune Office Building, located in New York, for a purchase price of
$7.7 million. The transaction is expected be completed during the second quarter of 2004.

In
December 2003, the Company entered into a purchase and sale agreement to acquire Long Meadow Commons, a 119,000 square foot grocer-anchored community shopping center for approximately
$19 million. The acquisition is expected to close in the second quarter of 2004, subject to customary closing conditions, and will be funded through the assumption of mortgage indebtedness and
borrowings under the line of credit.

16.    Newly Issued Accounting Standards

In December 2003, the Financial Accounting Standards Board, ("FASB") issued FASB Interpretation No. 46,Consolidation of
Variable Interest Entities, ("FIN 46R"), which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means
other than voting rights and accordingly should consolidate the entity. FIN 46R applies to entities in which the equity investors do not bear the economic risks and rewards of the entity. An
enterprise that is involved with another entity generally must assess whether that involvement requires consolidation under FIN 46R. Public companies must apply FIN 46R immediately to entities created
after January 31, 2003 and no later than the end of the first reporting period that ends after December 15, 2003. The Company does not believe the adoption of FIN 46R will have a
material impact on the results of its operations, financial position, or liquidity.

F-30

---

SCHEDULE III

HERITAGE PROPERTY INVESTMENT TRUST, INC.

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2003

(In thousands)

The
following table sets forth detail with respect to the properties, and related encumbrances, owned by the Company at December 31, 2003.

|                                                   |  |   |           | Initial Cost to the Company |   |       |  | Gross Amount Carried at December 31, 2003 |        |  |   |      
|-------------------------------------------------- |  | - | --------- | --------------------------- | - | ----- |  | ----------------------------------------- | ------ |  | - | -----
|
|RETAIL SHOPPING CENTERS                            |  |   |           |                             |   |       |  |                                           |        |  |   |      
|ALABAMA                                            |  |   |           |                             |   |       |  |                                           |        |  |   |      
|Montgomery Commons
Montgomery, AL                  |  | $ | 8,695     |                             | $ | 2,527 |  | $                                         | 8,459  |  | $ |     
|Mongtomery Towne Center
Montgomery, AL             |  |   | 7,394     |                             |   | 4,307 |  |                                           | 14,421 |  |   | 7    
|Riverchase Village Shopping Center
Hoover, AL      |  |   | 10,074    |                             |   | 4,094 |  |                                           | 13,718 |  |   | 473  
|CONNECTICUT                                        |  |   |           |                             |   |       |  |                                           |        |  |   |      
|Torrington Plaza
Torrington, CT                    |  |   | 237,741(1 | )                           |   | 2,548 |  |                                           | 8,538  |  |   | 251  
|FLORIDA                                            |  |   |           |                             |   |       |  |                                           |        |  |   |      
|Barton Commons
Rockledge, FL                       |  |   | (1        | )                           |   | 1,652 |  |                                           | 5,546  |  |   | 445  
|Naples Shopping Center
Naples, FL                  |  |   | 81,404(2  | )                           |   | 4,783 |  |                                           | 16,029 |  |   | 366  
|Park Shore Shopping Center
Naples, FL              |  |   | (1        | )                           |   | 3,099 |  |                                           | 10,391 |  |   | 1,122
|Shoppers Haven Shopping Center
Pompano Beach, FL   |  |   |          |                             |   | 3,286 |  |                                           | 10,933 |  |   | 2,051
|Venetian Isle Shopping Center
Lighthouse Point, FL |  |   | (1        | )                           |   | 3,605 |  |                                           | 12,084 |  |   | 470  
|GEORGIA                                            |  |   |           |                             |   |       |  |                                           |        |  |   |      
|Shenandoah Plaza
Newnan, GA                        |  |   |          |                             |   | 1,352 |  |                                           | 4,530  |  |   | 17   
|ILLINOIS                                           |  |   |           |                             |   |       |  |                                           |        |  |   |      
|Bartonville Square
Bartonville, IL                 |  |   |          |                             |   | 572   |  |                                           | 1,914  |  |   | 225  
|Butterfield Square
Libertyville, IL                |  |   |          |                             |   | 3,328 |  |                                           | 11,139 |  |   | 164  
|The Commons of Chicago Ridge
Chicago Ridge, IL     |  |   |          |                             |   | 9,254 |  |                                           | 30,982 |  |   | 2,184

S-III-1

---

|The Commons of Crystal Lake
Crystal Lake, IL |  |  |  | 7,193  |  | 24,079 |  | 565   |  | 7,356  |  | 24,481 |  | 31,837 |  | 3,365 |  | 2000 |  | 4 - 39 
|-------------------------------------------- |  | - |  | ------ |  | ------ |  | ----- |  | ------ |  | ------ |  | ------ |  | ----- |  | ---- |  | -------
|Crossroads Centre
Fairview Heights, IL       |  |  |  | 3,614  |  | 12,099 |  | 438   |  | 3,762  |  | 12,389 |  | 16,151 |  | 1,677 |  | 2000 |  | 9 - 39 
|Fairhills Shopping Center
Springfield, IL    |  |  |  | 1,369  |  | 4,583  |  | 81    |  | 1,369  |  | 4,664  |  | 6,033  |  | 633   |  | 2000 |  | 3 - 39 
|Heritage Square
Naperville, IL               |  |  |  | 5,554  |  | 18,593 |  | 484   |  | 5,554  |  | 19,077 |  | 24,631 |  | 2,642 |  | 2000 |  | 5 - 39 
|High Point Centre
Lombard, IL                |  |  |  | 5,621  |  | 18,817 |  | 563   |  | 5,659  |  | 19,342 |  | 25,001 |  | 2,598 |  | 2000 |  | 9 - 39 
|Parkway Pointe
Springfield, IL               |  |  |  | 1,059  |  | 3,546  |  |      |  | 1,059  |  | 3,546  |  | 4,605  |  | 483   |  | 2000 |  | 10 - 39
|Rivercrest
Crestwood, IL                     |  |  |  | 10,043 |  | 33,620 |  | 646   |  | 10,042 |  | 34,267 |  | 44,309 |  | 4,616 |  | 2000 |  | 3 - 39 
|Rollins Crossing
Round Lake Beach, IL        |  |  |  | 3,839  |  | 12,852 |  | 4     |  | 3,839  |  | 12,856 |  | 16,695 |  | 1,755 |  | 2000 |  | 4 - 39 
|Sangamon Center
North Springfield, IL        |  |  |  | 2,450  |  | 8,204  |  | 132   |  | 2,450  |  | 8,336  |  | 10,786 |  | 1,132 |  | 2000 |  | 10 - 39
|Sheridan Village
Peoria, IL                  |  |  |  | 5,293  |  | 17,716 |  | 1,491 |  | 5,505  |  | 18,995 |  | 24,500 |  | 2,533 |  | 2000 |  | 3 - 39 
|Sterling Bazaar
Peoria, IL                   |  |  |  | 1,619  |  | 5,419  |  | 542   |  | 1,750  |  | 5,830  |  | 7,580  |  | 758   |  | 2000 |  | 5 - 39 
|Twin Oaks Centre
Silvis, IL                  |  |  |  | 1,832  |  | 6,131  |  | 295   |  | 1,841  |  | 6,417  |  | 8,258  |  | 884   |  | 2000 |  | 5 - 39 
|Wardcliffe Shopping Center
Peoria, IL        |  |  |  | 503    |  | 1,682  |  | 244   |  | 566    |  | 1,863  |  | 2,429  |  | 266   |  | 2000 |  | 5 - 39 
|Westview Center
Hanover Park, IL             |  |  |  | 6,527  |  | 21,852 |  | 709   |  | 6,909  |  | 22,179 |  | 29,088 |  | 3,091 |  | 2000 |  | 5 - 39 
|INDIANA                                      |  |   |  |        |  |        |  |       |  |        |  |        |  |        |  |       |  |      |  |        
|Apple Glen Crossing
Fort Wayne, IN           |  |  |  | 4,337  |  | 14,518 |  | 6     |  | 4,336  |  | 14,525 |  | 18,861 |  | 589   |  | 2002 |  | 15 - 39
|County Line Mall
Indianapolis, IN            |  |  |  | 4,616  |  | 15,451 |  | 1,423 |  | 4,615  |  | 16,875 |  | 21,490 |  | 2,129 |  | 2000 |  | 3 - 39 

S-III-2

---

|Double Tree Plaza
Winfield, IN             |  |      |  | 1,404  |  | 4,703  |  | 110   |  | 1,420  |  | 4,797  |  | 6,217  |  | 662   |  | 2000 |  | 5 - 39 
|------------------------------------------ |  | ----- |  | ------ |  | ------ |  | ----- |  | ------ |  | ------ |  | ------ |  | ----- |  | ---- |  | -------
|Germantown Shopping Center
Jasper, IN      |  |      |  | 1,829  |  | 6,124  |  | 1,715 |  | 1,904  |  | 7,764  |  | 9,668  |  | 1,140 |  | 2000 |  | 3 - 39 
|King's Plaza
Richmond, IN                  |  |      |  | 983    |  | 3,290  |  | 498   |  | 1,111  |  | 3,660  |  | 4,771  |  | 542   |  | 2000 |  | 5 - 39 
|Lincoln Plaza
New Haven, IN                |  |      |  | 1,241  |  | 4,155  |  | 148   |  | 1,241  |  | 4,303  |  | 5,544  |  | 612   |  | 2000 |  | 5 - 39 
|Martin's Bittersweet Plaza
Mishawaka, IN   |  |      |  | 1,110  |  | 3,717  |  | 66    |  | 1,110  |  | 3,783  |  | 4,893  |  | 521   |  | 2000 |  | 3 - 39 
|Meridian Village
Carmel, IN                |  | 5,753 |  | 3,120  |  | 10,446 |  |      |  | 3,120  |  | 10,446 |  | 13,566 |  | 293   |  | 2003 |  | 15 - 39
|Rivergate Shopping Center
Shelbyville, IN  |  |      |  | 1,299  |  | 4,350  |  | 206   |  | 1,299  |  | 4,556  |  | 5,855  |  | 614   |  | 2000 |  | 10 - 39
|Sagamore Park Centre
West Lafayette, IN    |  |      |  | 1,768  |  | 5,919  |  | 736   |  | 1,768  |  | 6,655  |  | 8,423  |  | 851   |  | 2000 |  | 4 - 39 
|Speedway SuperCenter
Indianapolis, IN      |  |      |  | 11,446 |  | 38,322 |  | 2,450 |  | 11,545 |  | 40,673 |  | 52,218 |  | 5,561 |  | 2000 |  | 2 - 39 
|The Village
Gary, IN                       |  |      |  | 2,649  |  | 8,871  |  | 2,211 |  | 2,678  |  | 11,053 |  | 13,731 |  | 1,531 |  | 2000 |  | 3 - 39 
|Washington Lawndale Commons
Evansville, IN |  |      |  | 4,757  |  | 15,924 |  | 1,605 |  | 5,309  |  | 16,977 |  | 22,286 |  | 2,314 |  | 2000 |  | 3 - 39 
|IOWA                                       |  |       |  |        |  |        |  |       |  |        |  |        |  |        |  |       |  |      |  |        
|Burlington Plaza West
Burlington, IA       |  |      |  | 1,409  |  | 4,719  |  | 142   |  | 1,489  |  | 4,781  |  | 6,270  |  | 658   |  | 2000 |  | 4 - 39 
|Davenport Retail Center
Davenport, IA      |  |      |  | 1,355  |  | 4,539  |  |      |  | 1,355  |  | 4,539  |  | 5,894  |  | 619   |  | 2000 |  | 10 - 39
|Kimberly West
Davenport, IA                |  |      |  | 1,380  |  | 4,623  |  | 125   |  | 1,400  |  | 4,728  |  | 6,128  |  | 651   |  | 2000 |  | 5 - 39 
|Parkwood Plaza
Urbandale, IA               |  |      |  | 1,950  |  | 6,527  |  | 136   |  | 1,950  |  | 6,663  |  | 8,613  |  | 903   |  | 2000 |  | 4 - 39 
|Southgate Shopping Center
Des Moines, IA   |  | 2,496 |  | 994    |  | 3,327  |  | 377   |  | 1,200  |  | 3,498  |  | 4,698  |  | 493   |  | 2000 |  | 7 - 39 

S-III-3

---

|Spring Village
Davenport, IA            |  |       |   | 673   |  | 2,255  |  | 533   |  | 762   |  | 2,699  |  | 3,461  |  | 372   |  | 2000 |  | 2 - 39 
|--------------------------------------- |  | ------ | - | ----- |  | ------ |  | ----- |  | ----- |  | ------ |  | ------ |  | ----- |  | ---- |  | -------
|Warren Plaza
Dubuque, IA                |  |       |   | 1,439 |  | 4,818  |  | 162   |  | 1,590 |  | 4,829  |  | 6,419  |  | 664   |  | 2000 |  | 10 - 39
|KANSAS                                  |  |        |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|Mid State Plaza
Salina, KS              |  |       |   | 1,718 |  | 5,752  |  | 1,194 |  | 2,343 |  | 6,321  |  | 8,664  |  | 898   |  | 2000 |  | 4 - 39 
|Santa Fe Square
Olathe, KS              |  |       |   | 2,465 |  | 8,252  |  | 541   |  | 2,680 |  | 8,578  |  | 11,258 |  | 1,183 |  | 2000 |  | 4 - 39 
|Shawnee Parkway Plaza
Shawnee, KS       |  |       |   | 1,176 |  | 3,936  |  | 358   |  | 1,298 |  | 4,172  |  | 5,470  |  | 627   |  | 2000 |  | 2 - 39 
|Village Plaza
Manhattan, KS             |  |       |   | 497   |  | 1,664  |  | 13    |  | 499   |  | 1,675  |  | 2,174  |  | 205   |  | 2001 |  | 10 - 39
|Westchester Square
Lenexa, KS           |  |       |   | 3,128 |  | 10,473 |  | 425   |  | 3,280 |  | 10,746 |  | 14,026 |  | 1,534 |  | 2000 |  | 2 - 39 
|West Loop Shopping Center
Manhattan, KS |  |       |   | 3,285 |  | 10,997 |  | 284   |  | 3,494 |  | 11,072 |  | 14,566 |  | 1,536 |  | 2000 |  | 3 - 39 
|KENTUCKY                                |  |        |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|Camelot Shopping Center
Louisville, KY  |  |       |   | 1,659 |  | 6,198  |  | 52    |  | 1,659 |  | 6,250  |  | 7,909  |  | 793   |  | 2000 |  | 1 - 39 
|Dixie Plaza
Louisville, KY              |  |       |   | 719   |  | 2,406  |  | 19    |  | 719   |  | 2,425  |  | 3,144  |  | 335   |  | 2000 |  | 5 - 39 
|Midtown Mall
Ashland, KY                |  |       |   | 1,924 |  | 6,444  |  | 346   |  | 1,925 |  | 6,789  |  | 8,714  |  | 968   |  | 2000 |  | 3 - 39 
|Plainview Village Center
Louisville, KY |  |       |   | 2,701 |  | 9,044  |  | 865   |  | 2,738 |  | 9,872  |  | 12,610 |  | 1,326 |  | 2000 |  | 2 - 39 
|Stony Brook
Louisville, KY              |  |       |   | 3,319 |  | 11,110 |  | 453   |  | 3,405 |  | 11,477 |  | 14,882 |  | 1,555 |  | 2000 |  | 3 - 39 
|MAINE                                   |  |        |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|Pine Tree Shopping Center
Portland, ME  |  | (1     | ) | 2,390 |  | 8,018  |  | 1,535 |  | 2,401 |  | 9,542  |  | 11,943 |  | 1,806 |  | 1999 |  | 5 - 39 
|MASSACHUSETTS                           |  |        |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|Berkshire Crossing
Pittsfield, MA       |  | 21,932 |   | 6,964 |  | 23,313 |  | 255   |  | 6,966 |  | 23,566 |  | 30,532 |  | 1,402 |  | 2002 |  | 6 - 39 
|Lynn Market Place
Lynn, MA              |  | (1     | ) | 1,340 |  | 4,490  |  | 441   |  | 1,340 |  | 4,931  |  | 6,271  |  | 895   |  | 1999 |  | 5 - 39 

S-III-4

---

|Watertower Plaza
Leominster, MA           |  | (1     | ) | 6,669  |  | 22,350 |  | 4,228 |  | 6,673  |  | 26,574 |  | 33,247 |  | 5,367 |  | 1999 |  | 4 - 39
|----------------------------------------- |  | ------ | - | ------ |  | ------ |  | ----- |  | ------ |  | ------ |  | ------ |  | ----- |  | ---- |  | ------
|Westgate Plaza
Westfield, MA              |  | (1     | ) | 2,062  |  | 6,911  |  | 198   |  | 2,079  |  | 7,092  |  | 9,171  |  | 1,282 |  | 1999 |  | 5 - 39
|MICHIGAN                                  |  |        |   |        |  |        |  |       |  |        |  |        |  |        |  |       |  |      |  |       
|Cherry Hill Marketplace
Westland, MI      |  |       |   | 2,639  |  | 4,113  |  | 6,301 |  | 2,640  |  | 10,413 |  | 13,053 |  | 1,383 |  | 2000 |  | 4 - 39
|Grand Traverse Crossing
Traverse City, MI |  | 18,956 |   | 5,375  |  | 17,993 |  | 295   |  | 5,452  |  | 18,211 |  | 23,663 |  | 1,078 |  | 2002 |  | 5 - 39
|The Courtyard
Burton, MI                  |  |       |   | 2,039  |  | 6,831  |  | 36    |  | 2,040  |  | 6,866  |  | 8,906  |  | 932   |  | 2000 |  | 4 - 39
|Redford Plaza
Redford, MI                 |  |       |   | 5,520  |  | 18,482 |  | 514   |  | 5,521  |  | 18,995 |  | 24,516 |  | 2,600 |  | 2000 |  | 4 - 39
|MINNESOTA                                 |  |        |   |        |  |        |  |       |  |        |  |        |  |        |  |       |  |      |  |       
|Austin Town Center
Austin, MN             |  |       |   | 2,096  |  | 7,015  |  | 118   |  | 2,095  |  | 7,134  |  | 9,229  |  | 1,005 |  | 2000 |  | 3 - 39
|Brookdale Square
Brooklyn Center, MN      |  |       |   | 2,191  |  | 7,335  |  | 539   |  | 2,220  |  | 7,845  |  | 10,065 |  | 1,029 |  | 2000 |  | 3 - 39
|Burning Tree Plaza
Duluth, MN             |  |       |   | 3,355  |  | 11,230 |  | 259   |  | 3,462  |  | 11,382 |  | 14,844 |  | 1,589 |  | 2000 |  | 3 - 39
|Central Valu Center
Columbia Heights, MN  |  |       |   | 2,144  |  | 7,176  |  | 57    |  | 2,193  |  | 7,184  |  | 9,377  |  | 985   |  | 2000 |  | 3 - 39
|Division Place
St. Cloud, MN              |  |       |   | 2,614  |  | 8,751  |  | 206   |  | 2,638  |  | 8,933  |  | 11,571 |  | 871   |  | 2001 |  | 4 - 39
|Elk Park Center
Elk River, MN             |  | 8,519  |   | 4,440  |  | 14,866 |  | 324   |  | 4,446  |  | 15,184 |  | 19,630 |  | 2,128 |  | 2000 |  | 3 - 39
|Har Mar Mall
Roseville, MN                |  |       |   | 10,281 |  | 34,418 |  | 2,757 |  | 10,322 |  | 37,134 |  | 47,456 |  | 5,064 |  | 2000 |  | 3 - 39
|Hub West/Richfield Hub
Richfield, MN      |  |       |   | 3,269  |  | 10,948 |  | 837   |  | 3,270  |  | 11,784 |  | 15,054 |  | 1,605 |  | 2000 |  | 3 - 39
|Marketplace at 42
Savage, MN              |  |       |   | 5,070  |  | 16,973 |  | 87    |  | 5,094  |  | 17,036 |  | 22,130 |  | 2,342 |  | 2000 |  | 4 - 39
|Roseville Center
Roseville, MN            |  |       |   | 1,571  |  | 5,257  |  | 936   |  | 1,570  |  | 6,194  |  | 7,764  |  | 773   |  | 2000 |  | 2 - 39
|Southport Centre
Apple Valley, MN         |  | 10,000 |   | 3,915  |  | 13,106 |  | 83    |  | 3,915  |  | 13,189 |  | 17,104 |  | 1,794 |  | 2000 |  | 5 - 39

S-III-5

---

|Sun Ray Shopping Center
St. Paul, MN         |  |       |  | 4,669 |  | 15,628 |  | 1,713 |  | 4,690 |  | 17,320 |  | 22,010 |  | 2,204 |  | 2000 |  | 2 - 39 
|-------------------------------------------- |  | ------ |  | ----- |  | ------ |  | ----- |  | ----- |  | ------ |  | ------ |  | ----- |  | ---- |  | -------
|Ten Acres Center West
St. Paul, MN           |  |       |  | 2,368 |  | 7,930  |  | 586   |  | 2,345 |  | 8,539  |  | 10,884 |  | 1,178 |  | 2000 |  | 4 - 39 
|Terrace Mall
Robbinsdale, MN                 |  |       |  | 2,030 |  | 6,799  |  | 311   |  | 2,031 |  | 7,109  |  | 9,140  |  | 953   |  | 2000 |  | 4 - 39 
|Westwind Plaza
Minnetonka, MN                |  |       |  | 2,511 |  | 8,409  |  | 1,329 |  | 2,676 |  | 9,573  |  | 12,249 |  | 1,264 |  | 2000 |  | 4 - 39 
|White Bear Hills
White Bear Lake, MN         |  |       |  | 1,412 |  | 4,732  |  | 110   |  | 1,413 |  | 4,841  |  | 6,254  |  | 654   |  | 2000 |  | 5 - 39 
|MISSISSIPPI                                  |  |        |  |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|County Line Plaza
Jackson, MS                |  | 18,983 |  | 6,731 |  | 22,864 |  |      |  | 6,731 |  | 22,864 |  | 29,595 |  | 74    |  | 2003 |  | 15 - 39
|MISSOURI                                     |  |        |  |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|Clocktower Place
Florissant, MO              |  | 14,527 |  | 5,559 |  | 18,612 |  | 9     |  | 5,559 |  | 18,621 |  | 24,180 |  | 348   |  | 2003 |  | 15 - 39
|Ellisville Square
Ellisville, MO             |  |       |  | 2,577 |  | 8,627  |  | 850   |  | 2,827 |  | 9,227  |  | 12,054 |  | 1,253 |  | 2000 |  | 9 - 39 
|Grandview Plaza
Florissant, MO               |  |       |  | 3,555 |  | 11,902 |  | 1,410 |  | 3,850 |  | 13,017 |  | 16,867 |  | 1,674 |  | 2000 |  | 5 - 39 
|Hub Shopping Center
Independence, MO         |  |       |  | 1,578 |  | 5,281  |  | 648   |  | 1,709 |  | 5,798  |  | 7,507  |  | 768   |  | 2000 |  | 2 - 39 
|Liberty Corners
Liberty, MO                  |  |       |  | 1,904 |  | 6,375  |  | 413   |  | 2,000 |  | 6,692  |  | 8,692  |  | 926   |  | 2000 |  | 2 - 39 
|Maplewood Square
Maplewood, MO               |  |       |  | 1,080 |  | 3,616  |  | 67    |  | 1,080 |  | 3,683  |  | 4,763  |  | 527   |  | 2000 |  | 5 - 39 
|Marketplace at Independence
Independence, MO |  |       |  | 4,612 |  | 15,441 |  | 349   |  | 4,663 |  | 15,739 |  | 20,402 |  | 926   |  | 2002 |  | 3 - 39 
|Prospect Plaza
Gladstone, MO                 |  |       |  | 3,479 |  | 11,647 |  | 586   |  | 3,479 |  | 12,233 |  | 15,712 |  | 1,838 |  | 2000 |  | 4 - 39 
|Watts Mill Plaza
Kansas City, MO             |  |       |  | 3,180 |  | 10,645 |  | 230   |  | 3,348 |  | 10,707 |  | 14,055 |  | 1,494 |  | 2000 |  | 5 - 39 
|NEBRASKA                                     |  |        |  |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|Bishop Heights
Lincoln, NE                   |  |       |  | 318   |  | 1,062  |  | 61    |  | 370   |  | 1,071  |  | 1,441  |  | 149   |  | 2000 |  | 10 - 39
|Cornhusker Plaza
South Sioux City, NE        |  |       |  | 1,122 |  | 3,754  |  | 98    |  | 1,190 |  | 3,784  |  | 4,974  |  | 519   |  | 2000 |  | 5 - 39 

S-III-6

---

|Eastville Plaza
Fremont, NE                 |  |      |   | 1,137 |  | 3,805  |  | 56    |  | 1,162 |  | 3,836  |  | 4,998  |  | 522   |  | 2000 |  | 10 - 39
|------------------------------------------- |  | ----- | - | ----- |  | ------ |  | ----- |  | ----- |  | ------ |  | ------ |  | ----- |  | ---- |  | -------
|Edgewood Shopping Center
Lincoln, NE        |  |      |   | 2,890 |  | 9,674  |  | 707   |  | 2,930 |  | 10,341 |  | 13,271 |  | 1,359 |  | 2000 |  | 3 - 39 
|The Meadows
Lincoln, NE                     |  |      |   | 1,037 |  | 3,471  |  | 41    |  | 1,037 |  | 3,512  |  | 4,549  |  | 481   |  | 2000 |  | 4 - 39 
|Miracle Hills Park
Omaha, NE                |  | 3,594 |   | 1,739 |  | 5,824  |  | 156   |  | 1,761 |  | 5,958  |  | 7,719  |  | 832   |  | 2000 |  | 2 - 39 
|Stockyards Plaza
Omaha, NE                  |  |      |   | 2,122 |  | 7,102  |  | 212   |  | 2,180 |  | 7,256  |  | 9,436  |  | 979   |  | 2000 |  | 3 - 39 
|NEW HAMPSHIRE                               |  |       |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|Bedford Mall
Bedford, NH                    |  |      |   | 4,686 |  | 15,708 |  | 314   |  | 4,639 |  | 16,069 |  | 20,708 |  | 2,993 |  | 1999 |  | 3 - 39 
|Bedford Grove
Bedford, NH                   |  | 8,711 |   | 3,595 |  | 12,037 |  | 124   |  | 3,602 |  | 12,154 |  | 15,756 |  | 719   |  | 2002 |  | 5 - 39 
|Capitol Shopping Center
Concord, NH         |  | (2    | ) | 2,300 |  | 7,713  |  | 1,466 |  | 2,353 |  | 9,126  |  | 11,479 |  | 1,644 |  | 1999 |  | 5 - 39 
|Tri City Plaza
Somersworth, NH              |  | (2    | ) | 1,875 |  | 6,287  |  | 295   |  | 2,143 |  | 6,314  |  | 8,457  |  | 1,207 |  | 1999 |  | 5 - 39 
|NEW JERSEY                                  |  |       |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|Cross Keys Commons
Washington Township, NJ  |  |      |   | 7,823 |  | 26,189 |  | 534   |  | 7,829 |  | 26,717 |  | 34,546 |  | 1,816 |  | 2002 |  | 15 - 39
|Morris Hills Shopping Center
Parsippany, NJ |  | (1    | ) | 4,646 |  | 15,565 |  | 705   |  | 4,646 |  | 16,270 |  | 20,916 |  | 3,140 |  | 1999 |  | 10 - 39
|NEW MEXICO                                  |  |       |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|St. Francis Plaza
Santa Fe, NM              |  | 1,042 |   | 891   |  | 2,989  |  | 55    |  | 946   |  | 2,989  |  | 3,935  |  | 410   |  | 2000 |  | 10 - 39
|NEW YORK                                    |  |       |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|College Plaza
Selden, NY                    |  | (1    | ) | 3,093 |  | 10,367 |  | 66    |  | 3,093 |  | 10,433 |  | 13,526 |  | 1,915 |  | 1999 |  | 9 - 39 
|Dalewood I Shopping Center
Hartsdale, NY    |  | (1    | ) | 1,767 |  | 5,918  |  | 73    |  | 1,767 |  | 5,991  |  | 7,758  |  | 1,104 |  | 1999 |  | 10 - 39
|Dalewood II Shopping Center
Hartsdale, NY   |  | (1    | ) | 3,780 |  | 12,661 |  | 4     |  | 3,784 |  | 12,661 |  | 16,445 |  | 2,330 |  | 1999 |  | 10 - 39
|Dalewood III Shopping Center
Hartsdale, NY  |  | (1    | ) | 2,646 |  | 8,861  |  | 73    |  | 2,646 |  | 8,934  |  | 11,580 |  | 1,650 |  | 1999 |  | 5 - 39 
|Falcaro's Plaza
Lawrence, NY                |  | (1    | ) | 1,881 |  | 6,301  |  | 100   |  | 1,881 |  | 6,401  |  | 8,282  |  | 1,189 |  | 1999 |  | 10 - 39

S-III-7

---

|Kings Park Shopping Center
Kings Park, NY             |  | (1     | ) | 1,839 |  | 6,160  |  | 89    |  | 1,839 |  | 6,249  |  | 8,088  |  | 1,148 |  | 1999 |  | 5 - 39 
|----------------------------------------------------- |  | ------ | - | ----- |  | ------ |  | ----- |  | ----- |  | ------ |  | ------ |  | ----- |  | ---- |  | -------
|Nesconset Shopping Center
Port Jefferson Station, NY  |  | (1     | ) | 2,622 |  | 8,787  |  | 770   |  | 2,859 |  | 9,320  |  | 12,179 |  | 1,886 |  | 1999 |  | 3 - 39 
|Parkway Plaza
Carle Place, NY                         |  | (1     | ) | 3,786 |  | 12,678 |  | 302   |  | 3,786 |  | 12,980 |  | 16,766 |  | 2,390 |  | 1999 |  | 5 - 39 
|Roanoke Plaza
Riverhead, NY                           |  | (2     | ) | 1,653 |  | 5,541  |  | 326   |  | 1,653 |  | 5,867  |  | 7,520  |  | 1,097 |  | 1999 |  | 3 - 39 
|Rockville Centre Shopping Center
Rockville Centre, NY |  | (1     | ) | 897   |  | 3,006  |  | 1,252 |  | 897   |  | 4,258  |  | 5,155  |  | 1,018 |  | 1999 |  | 9 - 39 
|Salmon Run Plaza
Watertown, NY                        |  | 5,248  |   | 2,096 |  | 7,015  |  | 163   |  | 2,103 |  | 7,171  |  | 9,274  |  | 411   |  | 2002 |  | 15 - 39
|Suffolk Plaza
East Setauket, NY                       |  | (1     | ) | 1,182 |  | 4,042  |  | 138   |  | 1,182 |  | 4,180  |  | 5,362  |  | 786   |  | 1999 |  | 5 - 39 
|Three Village Plaza
East Setauket, NY                 |  | (1     | ) | 1,763 |  | 5,909  |  | 139   |  | 1,763 |  | 6,048  |  | 7,811  |  | 1,123 |  | 1999 |  | 9 - 39 
|Turnpike Plaza
Huntington Station, NY                 |  | (2     | ) | 908   |  | 3,044  |  | 107   |  | 908   |  | 3,151  |  | 4,059  |  | 575   |  | 1999 |  | 10 - 39
|NORTH CAROLINA                                        |  |        |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|The Commons at Chancellor Park
Charlotte, NC          |  | 12,374 |   | 4,922 |  | 16,502 |  | 665   |  | 4,922 |  | 17,167 |  | 22,089 |  | 3,056 |  | 1999 |  | 5 - 39 
|Crown Point Shopping Center
Charlotte, NC             |  | (1     | ) | 2,096 |  | 7,026  |  | 67    |  | 2,162 |  | 7,027  |  | 9,189  |  | 1,320 |  | 1999 |  | 10 - 39
|Franklin Square
Gastonia, NC                          |  | 14,019 |   | 6,084 |  | 20,369 |  | 385   |  | 6,235 |  | 20,603 |  | 26,838 |  | 1,737 |  | 2001 |  | 5 - 39 
|Innes Street Market
Salisbury, NC                     |  | 13,156 |   | 6,158 |  | 20,615 |  | 4,784 |  | 6,019 |  | 25,538 |  | 31,557 |  | 5,672 |  | 1999 |  | 4 - 39 
|McMullen Creek Shopping Center
Charlotte, NC          |  | (1     | ) | 6,580 |  | 22,047 |  | 573   |  | 6,580 |  | 22,620 |  | 29,200 |  | 4,228 |  | 1999 |  | 3 - 39 
|New Centre Market
Wilmington, NC                      |  | (2     | ) | 3,904 |  | 13,070 |  | 33    |  | 3,904 |  | 13,103 |  | 17,007 |  | 2,003 |  | 1999 |  | 5 - 39 
|Tarrymore Square
Raleigh, NC                          |  | (1     | ) | 4,891 |  | 16,392 |  | 873   |  | 5,016 |  | 17,140 |  | 22,156 |  | 3,123 |  | 1999 |  | 3 - 39 
|University Commons
Wilmington, NC                     |  | (1     | ) | 4,370 |  | 14,646 |  | 806   |  | 4,370 |  | 15,452 |  | 19,822 |  | 2,911 |  | 1999 |  | 5 - 39 
|University Commons Greenville
Greenville, NC          |  | (2     | ) | 5,976 |  | 20,009 |  | 13    |  | 5,977 |  | 20,021 |  | 25,998 |  | 3,063 |  | 1999 |  | 5 - 39 

S-III-8

---

|Wendover Place
Greensboro, NC            |  | (2     | ) | 8,309 |  | 27,819 |  | 8,473 |  | 10,085 |  | 34,516 |  | 44,601 |  | 4,822 |  | 1999 |  | 3 - 39 
|---------------------------------------- |  | ------ | - | ----- |  | ------ |  | ----- |  | ------ |  | ------ |  | ------ |  | ----- |  | ---- |  | -------
|OHIO                                     |  |        |   |       |  |        |  |       |  |        |  |        |  |        |  |       |  |      |  |        
|30th Street Plaza
Canton, OH             |  |       |   | 3,071 |  | 10,279 |  | 15    |  | 3,071  |  | 10,294 |  | 13,365 |  | 1,404 |  | 2000 |  | 8 - 39 
|Clock Tower Plaza
Lima, OH               |  |       |   | 3,409 |  | 11,409 |  | 257   |  | 3,552  |  | 11,523 |  | 15,075 |  | 1,624 |  | 2000 |  | 4 - 39 
|Salem Consumer Square
Trotwood, OH       |  | 10,703 |   | 5,964 |  | 19,965 |  | 356   |  | 6,053  |  | 20,232 |  | 26,285 |  | 2,778 |  | 2000 |  | 3 - 39 
|PENNSYLVANIA                             |  |        |   |       |  |        |  |       |  |        |  |        |  |        |  |       |  |      |  |        
|Boyertown Plaza
Boyertown, PA            |  | (1     | ) | 675   |  | 2,265  |  | 1,166 |  | 675    |  | 3,431  |  | 4,106  |  | 561   |  | 1999 |  | 5 - 39 
|Lehigh Shopping Center
Bethlehem, PA     |  | (1     | ) | 4,125 |  | 13,831 |  | 3,106 |  | 4,125  |  | 16,937 |  | 21,062 |  | 3,395 |  | 1999 |  | 5 - 39 
|Warminster Towne Center
Warminster, PA   |  | 22,354 |   | 7,677 |  | 25,703 |  | 153   |  | 7,677  |  | 25,856 |  | 33,533 |  | 962   |  | 2002 |  | 15 - 39
|SOUTH DAKOTA                             |  |        |   |       |  |        |  |       |  |        |  |        |  |        |  |       |  |      |  |        
|Baken Park
Rapid City, SD                |  |       |   | 3,119 |  | 10,440 |  | 705   |  | 3,119  |  | 11,145 |  | 14,264 |  | 1,635 |  | 2000 |  | 3 - 39 
|TENNESSEE                                |  |        |   |       |  |        |  |       |  |        |  |        |  |        |  |       |  |      |  |        
|Oakwood Commons
Hermitage, TN            |  | (1     | ) | 3,740 |  | 12,542 |  | 265   |  | 3,761  |  | 12,786 |  | 16,547 |  | 2,362 |  | 1999 |  | 3 - 39 
|Watson Glen Shopping Center
Franklin, TN |  | (1     | ) | 3,381 |  | 11,336 |  | 463   |  | 3,381  |  | 11,799 |  | 15,180 |  | 2,145 |  | 1999 |  | 2 - 39 
|Williamson Square
Franklin, TN           |  | 11,170 |   | 4,779 |  | 15,994 |  | 1,494 |  | 4,777  |  | 17,490 |  | 22,267 |  | 2,515 |  | 2000 |  | 3 - 39 
|TEXAS                                    |  |        |   |       |  |        |  |       |  |        |  |        |  |        |  |       |  |      |  |        
|Buckingham Place
Richardson, TX          |  | 5,909  |   | 2,283 |  | 8,222  |  |      |  | 2,283  |  | 8,222  |  | 10,505 |  | 30    |  | 2003 |  | 15 - 39
|The Crossing
North Richland Hills, TX    |  |       |   | 4,916 |  | 18,872 |  |      |  | 4,916  |  | 18,872 |  | 23,788 |  | 147   |  | 2003 |  | 15 - 39
|Las Colinas Village
Irving, TX           |  |       |   | 4,415 |  | 17,045 |  |      |  | 4,415  |  | 17,045 |  | 21,460 |  | 152   |  | 2003 |  | 15 - 39
|Randall's Bay Area
Webster, TX           |  |       |   | 1,635 |  | 6,049  |  |      |  | 1,635  |  | 6,049  |  | 7,684  |  | 44    |  | 2003 |  | 15 - 39
|Randall's Fairmont
Pasadena, TX          |  |       |   | 2,590 |  | 11,860 |  |      |  | 2,590  |  | 11,860 |  | 14,450 |  | 126   |  | 2003 |  | 15 - 39

S-III-9

---

|Royal Oaks Village
Houston, TX        |  |         |   | 7,318 |  | 25,337 |  |      |  | 7,318 |  | 25,337 |  | 32,655 |  | 172   |  | 2003 |  | 15 - 39
|------------------------------------- |  | -------- | - | ----- |  | ------ |  | ----- |  | ----- |  | ------ |  | ------ |  | ----- |  | ---- |  | -------
|Trinity Commons
Fort Worth, TX        |  | 16,323   |   | 2,156 |  | 20,495 |  |      |  | 2,156 |  | 20,495 |  | 22,651 |  | 62    |  | 2003 |  | 15 - 39
|VIRGINIA                              |  |          |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|Spradlin Farm
Christianburg, VA       |  | 18,251   |   | 5,456 |  | 18,267 |  | 40    |  | 5,456 |  | 18,307 |  | 23,763 |  | 627   |  | 2003 |  | 5 - 39 
|VERMONT                               |  |          |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|Rutland Plaza
Rutland, VT             |  | (1       | ) | 4,037 |  | 13,530 |  | 183   |  | 4,037 |  | 13,713 |  | 17,750 |  | 2,528 |  | 1999 |  | 5 - 39 
|WISCONSIN                             |  |          |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|Fairacres Shopping Center
Oshkosh, WI |  |         |   | 1,563 |  | 5,230  |  | 56    |  | 1,612 |  | 5,237  |  | 6,849  |  | 717   |  | 2000 |  | 4 - 39 
|Fitchburg Ridge
Madison, WI           |  |         |   | 481   |  | 1,611  |  | 619   |  | 481   |  | 2,230  |  | 2,711  |  | 244   |  | 2000 |  | 5 - 39 
|Fox River Plaza
Burlington, WI        |  |         |   | 1,654 |  | 5,536  |  | 151   |  | 1,654 |  | 5,687  |  | 7,341  |  | 800   |  | 2000 |  | 7 - 39 
|Garden Plaza
Franklin, WI             |  |         |   | 1,088 |  | 3,642  |  | 94    |  | 1,128 |  | 3,696  |  | 4,824  |  | 513   |  | 2000 |  | 5 - 39 
|Madison Plaza
Madison, WI             |  |         |   | 1,817 |  | 6,082  |  | 319   |  | 1,817 |  | 6,401  |  | 8,218  |  | 885   |  | 2000 |  | 4 - 39 
|Mequon Pavilions
Mequon, WI           |  |         |   | 6,296 |  | 21,075 |  | 1,620 |  | 6,443 |  | 22,548 |  | 28,991 |  | 3,023 |  | 2000 |  | 3 - 39 
|Moorland Square
New Berlin, WI        |  |         |   | 1,881 |  | 6,299  |  | 67    |  | 1,912 |  | 6,335  |  | 8,247  |  | 862   |  | 2000 |  | 5 - 39 
|Oak Creek Centre
Oak Creek, WI        |  |         |   | 1,357 |  | 4,546  |  | 69    |  | 1,380 |  | 4,592  |  | 5,972  |  | 639   |  | 2000 |  | 4 - 39 
|Park Plaza
Manitowoc, WI              |  |         |   | 1,586 |  | 5,305  |  | 291   |  | 1,693 |  | 5,489  |  | 7,182  |  | 784   |  | 2000 |  | 4 - 39 
|Spring Mall
Greenfield, WI            |  | 8,250    |   | 3,136 |  | 10,499 |  | 4,153 |  | 3,176 |  | 14,612 |  | 17,788 |  | 1,586 |  | 2000 |  | 10 - 39
|Taylor Heights
Sheboygan, WI          |  |         |   | 1,976 |  | 6,618  |  | 2     |  | 1,977 |  | 6,619  |  | 8,596  |  | 903   |  | 2000 |  | 7 - 39 
|OFFICE BUILDINGS                      |  |          |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|MASSACHUSETTS                         |  |          |   |       |  |        |  |       |  |       |  |        |  |        |  |       |  |      |  |        
|William J. McCarthy
Boston, MA        |  | 35,387(3 | ) | 4,700 |  | 18,807 |  | 1,768 |  | 4,700 |  | 20,575 |  | 25,275 |  | 2,778 |  | 1999 |  | 3 - 39 
|545 Boylston Street
Boston, MA        |  | (3       | ) | 4,300 |  | 17,206 |  | 1,309 |  | 4,300 |  | 18,515 |  | 22,815 |  | 2,686 |  | 1999 |  | 2 - 39 

S-III-10

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|NEW YORK                                 |  |   |         |  |   |         |  |   |           |  |   |         |  |   |         |  |   |           |  |   |           |  |   |         |  |      |  |       
|---------------------------------------- |  | - | ------- |  | - | ------- |  | - | --------- |  | - | ------- |  | - | ------- |  | - | --------- |  | - | --------- |  | - | ------- |  | ---- |  | ------
|Executive Office Building
Great Neck, NY |  |   |        |  |   | 834     |  |   | 3,338     |  |   | 245     |  |   | 834     |  |   | 3,583     |  |   | 4,417     |  |   | 536     |  | 1999 |  | 3 - 39
|Fortune Office Building
Hartsdale, NY    |  |   |        |  |   | 856     |  |   | 3,430     |  |   | 497     |  |   | 856     |  |   | 3,927     |  |   | 4,783     |  |   | 620     |  | 1999 |  | 2 - 39
|                                         |  |   |         |  |   |         |  |   |           |  |   |         |  |   |         |  |   |           |  |  
|TOTAL                                    |  | $ | 632,965 |  | $ | 524,117 |  | $ | 1,781,465 |  | $ | 104,346 |  | $ | 533,417 |  | $ | 1,876,511 |  | $ | 2,409,928 |  | $ | 242,953 |  |      |  |       
|                                         |  |   |         |  |   |         |  |   |           |  |   |         |  |   |         |  |   |           |  |  

---

|                                        |  | Years ended December 31, |          
|--------------------------------------- |  | ------------------------ | ---------
|
|Cost:                                   |  |                          |          
|Balance, beginning of year              |  | $                        | 2,178,533
|Acquisitions and other additions        |  |                          | 248,095  
|Sale of properties and other deductions |  |                          | (16,700  
|                                        |  |                          |          
|Balance, end of year                    |  | $                        | 2,409,928
|                                        |  |                          |          
|Accumulated Depreciation:               |  |                          |          
|Balance, beginning of year              |  | $                        | 170,029  
|Depreciation provided                   |  |                          | 74,566   
|Sale of properties and other deductions |  |                          | (1,642   
|                                        |  |                          |          
|Balance, end of year                    |  | $                        | 242,953  
|                                        |  |                          |          

S-III-11

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