<SUBMISSION>
<ACCESSION-NUMBER>0000950116-04-000843
<TYPE>10-K
<PUBLIC-DOCUMENT-COUNT>22
<PERIOD>20031231
<FILING-DATE>20040315
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ACADIA REALTY TRUST
<CIK>0000899629
<ASSIGNED-SIC>6798
<IRS-NUMBER>232715194
<STATE-OF-INCORPORATION>MD
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-K
<ACT>34
<FILE-NUMBER>001-12002
<FILM-NUMBER>04670271
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>20 SOUNDVIEW MARKETPLACE
<STREET2>PO BOX 1679
<CITY>PORT WASHINGTON
<STATE>NY
<ZIP>11050
<PHONE>5167678830
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>600 THIRD AVE
<STREET2>PO BOX 1679
<CITY>KINGSTON
<STATE>PA
<ZIP>18704
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>MARK CENTERS TRUST
<DATE-CHANGED>19930329
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>b330630-10k.htm
<DESCRIPTION>FORM 10-K
<TEXT>
<!DOCTYPE HTML PUBLIC "2003 10K 3-11-04">


<html>
<head>
   <title>Prepared and filed by St Ives Burrups</title>

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<p align="center"><b><font size="4" face="serif">United States</font></b><font size="4"><br>
    <b><font face="serif">Securities and Exchange Commission<br>
    <font size="2">    </font></font></b></font><font size="2"><b><font face="serif">Washington, D.C. 20549 </font></b></font></p>
<hr width="150" size="2" noshade>
<p align="center"><b><font size="5" face="serif">FORM 10-K </font></b></p>
<table width="60%" border="0" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="5%" valign="top"><img src="tickedbox.gif" width="12" height="12"></td>
    <td valign="top"><b><font size=2 face="serif">ANNUAL REPORT PURSUANT TO SECTION
    13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></b> </td>
  </tr>
</table>
<p align="center"><font size=2 face="serif"><b>For the fiscal year ended December 31, 2003</b></font></p>
<table width="60%" border="0" align="center" cellpadding="0" cellspacing="0">
  <tr>
    <td width="5%" valign="top"><img src="emptybox.gif" width="12" height="12"></td>
    <td valign="top"><b><font size=2 face="serif">TRANSITION REPORT PURSUANT
    TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </font></b></td>
  </tr>
</table>
<p align="center"><font size=2 face="serif"><b>For the transition period from to</b></font></p>
<p align="center">
  <font size=2 face="serif"><b>Commission File Number 1-12002</b><i> </i></font></p>
<p align="center">
<b><font size=5 face="serif">ACADIA REALTY TRUST<br>
</font></b><font size=2 face="serif">(Exact name of registrant as specified in its charter)</font></p>
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    <td width="20%">&nbsp;</td>
    <td width="30%" align="center"><b><font size=2 face="serif">Maryland<br>
      </font></b><font size=2 face="serif"> (State
    of incorporation)</font></td>
    <td width="30%" align="center"><p><b><font size=2 face="serif">23-2715194<br>
    </font></b><font size=2 face="serif">(I.R.S. employer identification no.)</font></p>
    </td>
    <td width="20%">&nbsp;</td>
  </tr>
</table>
<p align="center">
<b><font size=2 face="serif">1311 Mamaroneck Avenue, Suite 260<br>
White Plains, NY 10605<br>
</font></b><font size=2 face="serif"> (Address of principal executive offices)</font></p>
<p align="center">
<b><font size=2 face="serif">(914) 288-8100<br>
</font></b><font size=2 face="serif">(Registrant&#146;s
telephone number)</font></p>
<p align="center">
<b><font size=2 face="serif">Securities registered pursuant to Section 12(b) of the Act: </font></b><font size=2 face="serif"></font></p>
<p align="center">
<font size=2 face="serif">Common Shares of Beneficial Interest, $.001 par value<br>
(Title of Class)</font></p>
<p align="center">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">New York Stock Exchange<br>
(Name of Exchange on which registered)</font></p>
<p align="center">
<b><font size=2 face="serif">Securities registered pursuant to Section 12(g) of the Act: </font></b><font size=2 face="serif"></font></p>
<p align="center">
<font size=2 face="serif"><b>None</b></font></p>
<p align="left">
<font size=2 face="serif">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.</font></p>
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  <tr>
    <td width="48%" align="right"><font size=2 face="serif">YES <img src="tickedbox.gif" width="12" height="12"></font></td>
    <td width="4%">&nbsp; </td>
    <td width="48%"><font size=2 face="serif">NO <img src="emptybox.gif" width="12" height="12"></font></td>
  </tr>
</table>
<p><font size=2 face="serif">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&#146;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.</font></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="5%"><img src="emptybox.gif" width="12" height="12"></td>
    <td valign="top"><font size=2 face="serif">Indicate by check mark whether
          the registrant is an accelerated filer (as defined in Rule 12b-2 of
    the Act).</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
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    <td width="48%" align="right"><font size=2 face="serif">YES <img src="tickedbox.gif" width="12" height="12"></font></td>
    <td width="4%">&nbsp; </td>
    <td width="48%"><font size=2 face="serif">NO <img src="emptybox.gif" width="12" height="12"></font></td>
  </tr>
</table>
<p>&nbsp;</p>
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<div style="page-break-before:always"></div><page>

<a name="p2"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<p>
<font size=2 face="serif">The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of the last business day of the Registrant's most recently completed second fiscal quarter was $247.3 million, based on a price of $9.14 per share, the average sales price for the Registrant&#146;s shares of beneficial interest on the New York Stock Exchange on that date.</font></p><p>
<font size=2 face="serif">The number of shares of the Registrant&#146;s Common Shares of Beneficial Interest outstanding on March 12, 2004 was 27,449,472.</font></p>
<p align="center">
<b><font size=2 face="serif">DOCUMENTS INCORPORATED BY REFERENCE </font></b><font size=2 face="serif"></font></p><p>
<font size=2 face="serif">Part III &#150; Definitive proxy statement for the 2004 Annual Meeting of Shareholders presently scheduled to be held May 6, 2004, to be filed pursuant to Regulation 14A.</font></p>
<p align="center">
<font size=2 face="serif">.</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td align="left">&nbsp;</td>
   <td align="center"><b><font size=2 face="serif">TABLE OF CONTENTS</font></b></td>
   <td align="right">&nbsp;</td>
  </tr>
<tr>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
  </tr>
<tr>
   <td align="left">&nbsp;</td>
   <td align="center"><b><font size=2 face="serif">Form 10-K Report</font></b></td>
   <td align="right">&nbsp;</td>
  </tr>
<tr>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
  </tr>
<tr>
   <td align="left"><b><font size=1 face="serif">Item No.</font></b></td>
   <td>&nbsp;</td>
   <td align="right"><b><font size=1 face="serif">Page</font></b></td>
  </tr>
<tr>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">PART I</font></td>
   <td align="right">&nbsp;</td>
  </tr>
<tr>
   <td width=4% align="left"><a href="#p4"><font size=2 face="serif">1.</font></a></td>
   <td><a href="#p4"><font size=2 face="serif">Business</font></a></td>
   <td width=5% align="right"><a href="#p4"><font size=2 face="serif">4</font></a></td>
  </tr>
<tr>
   <td align="left"><a href="#p15"><font size=2 face="serif">2.</font></a></td>
   <td><a href="#p15"><font size=2 face="serif">Properties</font></a></td>
   <td align="right"><a href="#p15"><font size=2 face="serif">16</font></a></td>
  </tr>
<tr>
   <td align="left"><a href="#p23"><font size=2 face="serif">3.</font></a></td>
   <td><a href="#p23"><font size=2 face="serif">Legal Proceedings</font></a></td>
   <td align="right"><a href="#p23"><font size=2 face="serif">23</font></a></td>
  </tr>
<tr>
   <td align="left"><a href="#p23a"><font size=2 face="serif">4.</font></a></td>
   <td><a href="#p23a"><font size=2 face="serif">Submission of Matters to a Vote of Security Holders</font></a></td>
   <td align="right"><a href="#p23a"><font size=2 face="serif">23</font></a></td>
  </tr>
<tr>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">PART II</font></td>
   <td align="right">&nbsp;</td>
  </tr>
<tr>
   <td align="left"><a href="#p23b"><font size=2 face="serif">5.</font></a></td>
   <td><a href="#p23b"><font size=2 face="serif">Market for the Registrant&#146;s
    Common Equity and Related Shareholder Matters</font></a></td>
   <td align="right"><a href="#p23b"><font size=2 face="serif">23</font></a></td>
  </tr>
<tr>
   <td align="left"><a href="#p25"><font size=2 face="serif">6</font></a>.</td>
   <td><a href="#p25"><font size=2 face="serif">Selected Financial Data</font></a></td>
   <td align="right"><a href="#p25"><font size=2 face="serif">25</font></a></td>
  </tr>
<tr>
   <td align="left"><a href="#p26"><font size=2 face="serif">7.</font></a></td>
   <td><a href="#p26"><font size=2 face="serif">Management&#146;s Discussion
    and Analysis of Financial Condition and Results of Operations</font></a></td>
   <td align="right"><a href="#p26"><font size=2 face="serif">26</font></a></td>
  </tr>
<tr>
   <td align="left"><a href="#p36"><font size=2 face="serif">7a.</font></a></td>
   <td><a href="#p36"><font size=2 face="serif">Quantitative and Qualitative Disclosures about Market Risk</font></a></td>
   <td align="right"><a href="#p36"><font size=2 face="serif">36</font></a></td>
  </tr>
<tr>
   <td align="left"><a href="#p36a"><font size=2 face="serif">8.</font></a></td>
   <td><a href="#p36a"><font size=2 face="serif">Financial Statements and Supplementary Data</font></a></td>
   <td align="right"><a href="#p36a"><font size=2 face="serif">36</font></a></td>
  </tr>
<tr>
   <td align="left"><a href="#p36b"><font size=2 face="serif">9.</font></a></td>
   <td><a href="#p36b"><font size=2 face="serif">Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</font></a></td>
   <td align="right"><a href="#p36b"><font size=2 face="serif">36</font></a></td>
  </tr>
<tr>
   <td align="left"><a href="#p37"><font size=2 face="serif">9A.</font></a></td>
   <td><a href="#p37"><font size=2 face="serif">Controls and Procedures</font></a></td>
   <td align="right"><a href="#p37"><font size=2 face="serif">37</font></a></td>
  </tr>
<tr>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">PART III</font></td>
   <td align="right">&nbsp;</td>
  </tr>
<tr>
   <td align="left"><a href="#p37a"><font size=2 face="serif">10.</font></a></td>
   <td><a href="#p37a"><font size=2 face="serif">Directors and Executive Officers of the Registrant</font></a></td>
   <td align="right"><a href="#p37a"><font size=2 face="serif">37</font></a></td>
  </tr>
<tr>
   <td align="left"><a href="#p37b"><font size=2 face="serif">11.</font></a></td>
   <td><a href="#p37b"><font size=2 face="serif">Executive Compensation</font></a></td>
   <td align="right"><a href="#p37b"><font size=2 face="serif">37</font></a></td>
  </tr>
<tr>
   <td align="left"><a href="#p37c"><font size=2 face="serif">12.</font></a></td>
   <td><a href="#p37c"><font size=2 face="serif">Security Ownership of Certain Beneficial Owners and Management</font></a></td>
   <td align="right"><a href="#p37c"><font size=2 face="serif">37</font></a></td>
  </tr>
<tr>
   <td align="left"><a href="#p37d"><font size=2 face="serif">13.</font></a></td>
   <td><a href="#p37d"><font size=2 face="serif">Certain Relationships and Related Transactions</font></a></td>
   <td align="right"><a href="#p37d"><font size=2 face="serif">37</font></a></td>
  </tr>
<tr>
   <td align="left"><a href="#p37e"><font size=2 face="serif">14.</font></a></td>
   <td><a href="#p37e"><font size=2 face="serif">Principal Accountant Fees and Services</font></a></td>
   <td align="right"><a href="#p37e"><font size=2 face="serif">37</font></a></td>
  </tr>
<tr>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">PART IV</font></td>
   <td align="right">&nbsp;</td>
  </tr>
<tr>
   <td align="left"><a href="#p38"><font size=2 face="serif">15.</font></a></td>
   <td><a href="#p38"><font size=2 face="serif">Exhibits, Financial Statements, Schedules and Reports on Form 8-K</font></a></td>
   <td align="right"><a href="#p38"><font size=2 face="serif">38</font></a></td>
  </tr>
</table>
<p align="center">&nbsp;</p>
<p align="center"><font size=2 face="serif">2</font></p>
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<a name="p3"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left"> <b><font size=2 face="serif">SPECIAL NOTE REGARDING FORWARD-LOOKING
  STATEMENTS </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">Certain statements contained in this
  Annual Report on Form 10-K may contain forward-looking statements within the
  meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
  Securities and Exchange Act of 1934 and as such may involve known and unknown
  risks, uncertainties and other factors which may cause the Company's actual results, performance
  or achievements to be materially different from future results, performance
  or achievements expressed or implied by such forward-looking statements. Forward-looking
  statements, which are based on certain assumptions and describe the Company&#146;s
  future plans, strategies and expectations are generally identifiable by use
  of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe,"
  "intend" or "project" or the negative thereof or other variations thereon or
  comparable terminology. Factors which could have a material adverse effect on
  the operations and future prospects of the Company include, but are not limited
  to those set forth under the heading "Risk Factors" in this Annual Report on
  Form 10-K. These risks and uncertainties should be considered in evaluating
  any forward-looking statements contained or incorporated by reference herein.</font></p>
<p align="center">
<font size=2 face="serif">3</font></p>

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<p align="center"> <b><font size=2 face="serif">PART I</font></b> </p>
<p align="left"> <b><font size=2 face="serif">ITEM 1. BUSINESS </font></b><font size=2 face="serif"></font></p>
<p align="left"> <b><font size=2 face="serif">GENERAL </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">Acadia Realty Trust (the &#147;Company&#148;)
    was formed on March 4, 1993 as a Maryland Real Estate Investment Trust (&#147;REIT&#148;).
    The Company is a fully integrated, self-managed and self-administered equity
    REIT focused primarily on the ownership, acquisition, redevelopment and management
    of neighborhood and community shopping centers. The Company currently operates
    62 properties, which it owns or has an ownership interest in, consisting
    of 58 neighborhood and community shopping centers, one enclosed mall, one
    mixed-use property (retail/residential) and two multi-family properties,
    which are located primarily in the Northeast, Mid-Atlantic and Midwestern
    regions of the United States and, in total, comprise approximately nine million
    square feet.</font></p>
<p align="left"> <font size=2 face="serif">All of the Company&#146;s assets are
    held by, and all of its operations are conducted through, Acadia Realty Limited
    Partnership, a Delaware limited partnership (the &#147;Operating Partnership&#148;)
    and its majority-owned subsidiaries. As of December 31, 2003, the Company
    controlled 96% of the Operating Partnership as the sole general partner.
    As the general partner, the Company is entitled to share, in proportion to
    its percentage interest, in the cash distributions and profits and losses
    of the Operating Partnership. The limited partners represent entities or
    individuals who contributed their interests in certain properties or partnerships
    to the Operating Partnership in exchange for common or preferred units of
    limited partnership interest (&#147;Common OP Units&#148; or &#147;Preferred
    OP Units&#148;). Limited partners holding Common OP Units are generally entitled
    to exchange their units on a one-for-one basis for common shares of beneficial
    interest of the Company (&#147;Common Shares&#148;). This structure is commonly
    referred to as an umbrella partnership REIT or &#147;UPREIT&#148;.</font></p>
<p align="left"> <font size=2 face="serif">A total of 2,212 Series A Preferred
    OP Units were issued November 16, 1999 in connection with the acquisition
    of all the partnership interests of the limited partnership which owns the
    Pacesetter Park Shopping Center. These units have a stated value of $1,000
    each and are entitled to a quarterly preferred distribution of the greater
    of (i) $22.50 (9% annually) per Preferred OP Unit or (ii) the quarterly distribution
    attributable to a Preferred OP Unit if such unit were converted into a Common
    OP Unit. The Preferred OP Units are currently convertible into Common OP
    Units based on the stated value divided by $7.50. After the seventh anniversary
    following their issuance, either the Company or the holders can call for
    the conversion of the Preferred OP Units at the lesser of $7.50 or the market
    price of the Common Shares as of the conversion date. A total of 1,580 Series
    A Preferred OP Units were outstanding as of December 31, 2003 following the
    conversion of 632 Preferred OP Units to Common OP Units during 2003.</font></p>
<p align="left"> <font size=2 face="serif">On January 27, 2004, the Operating
    Partnership issued 4,000 Series B Preferred Units in connection with the
    acquisition from Klaff Realty, L.P. (&#147;Klaff&#148;) of its rights to
    provide asset management, leasing, disposition, development and construction
    services for an existing portfolio of retail properties. These units have
    a stated value of $1,000 each and are entitled to a quarterly preferred distribution
    of the greater of (i) $13.00 (5.2% annually) per Preferred OP Unit or (ii)
    the quarterly distribution attributable to a Preferred OP Unit if such unit
    were converted into a Common OP Unit. The Preferred OP Units are convertible
    into Common OP Units based on the stated value of $1,000 divided by $12.82
    at any time. Additionally, the holder of the Preferred OP Units may redeem
    them at par for either cash or Common OP Units (at the Company&#146;s option)
    after the earlier of the third anniversary of their issuance, or the occurrence
    of certain events including a change in control of the Company. Finally,
    after the fifth anniversary of the issuance, the Company may redeem the Preferred
    OP Units and convert them into </font> <font size=2 face="serif">Common OP
    Units at market value as of the redemption date. In response to a subsequent
    request from Klaff, the Company&#146;s Board of Trustees approved a waiver
    on February 24, 2004 which allows Klaff to redeem 1,500 Preferred OP Units
    at any time for cash.</font></p>
<p align="left"> <font size=2 face="serif">On August 12, 1998, the Company completed
    a major reorganization (&#147;RDC Transaction&#148;) in which it acquired
    12 shopping centers, five multi-family properties and a 49% interest in one
    shopping center along with certain third party management contracts and promissory
    notes from real estate investment partnerships (&#147;RDC Funds&#148;) managed
    by affiliates of RD Capital, Inc. In exchange for these and a cash investment
    of $100.0 million, the Company issued 11.1 million Common OP Units and 15.3
    million Common Shares to the RDC Funds. These OP Units and Common Shares
    were distributed to the respective limited partners of the RDC Funds during
    2000. After giving effect to the conversion of the Common OP Units the RDC
    Funds beneficially owned 72% of the Common Shares as of the closing of the
    RDC Transaction. During February of 2003, the Company issued additional Common
    OP Units and cash valued at $2.8 million to certain limited partners in connection
    with its obligation under the RDC Transaction. The payment was due upon the
    commencement of rental payments from a designated tenant at one of the properties
    acquired in the RDC Transaction.</font></p>
<p align="left"> <font size=2 face="serif">During 2001, certain of the Company&#146;s
    larger shareholders expressed a desire for liquidity. The Company determined
    that it was in the best interest of the Company to provide an opportunity
    for all shareholders wishing to sell their Common Shares to be able to do
    so in a manner that would not negatively impact its share price. To accomplish
    this goal, the Company conducted a &#147;Modified Dutch Auction&#148; tender
    offer (the &#147;Tender Offer&#148;) which permitted it to provide liquidity
    to some shareholders and at the same time benefit its remaining shareholders
    by acquiring shares at an attractive price. Upon completion of the Tender Offer
    in February 2002, the Company purchased 4,136,321 Common Shares and 1,387,653
    Common OP Units (collectively, &#147;Shares&#148;), at a Purchase Price of
    $6.05. This included 600,000 Shares purchased from Ross Dworman, former Chairman
    of the Board of Trustees, who participated in the Tender Offer. The aggregate
    purchase price paid for the 5,523,974 Shares was $33.4 million.</font></p>
<p align="center"> <font size=2 face="serif">4</font></p>
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<p align="left"> <b><font size=2 face="serif">RECENT DEVELOPMENTS </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">On January 27, 2004, the Company entered
    into a venture (the &#147;Venture&#148;) with Klaff and Klaff&#146;s long
    time capital partner Lubert-Adler Management, Inc. (&#147;Lubert-Adler&#148;)
    for the purpose of making investments in surplus or underutilized properties
    owned by retailers. The initial size of the Venture is expected to be approximately
    $300 million in equity based on anticipated investments of approximately
    $1 billion. The Venture is currently exploring investment opportunities,
    but has not yet made any commitments. Each participant in the Venture has
    the right to opt out of any potential investment. The Company and its current
    acquisition fund, Acadia Strategic Opportunity Fund (&#147;ASOF&#148;), as
    well as possible subsequent joint venture funds sponsored by the Company,
    anticipate investing 20% of the equity of the Venture. Cash flow is to be
    distributed to the partners until they have received a 10% cumulative return
    and a full return of all contributions. Thereafter, remaining cash flow is
    to be distributed 20% to Klaff (&#147;Klaff&#146;s Promote&#148;) and 80%
    to the partners (including Klaff). Profits earned on up to $20.0 million
    of the Company&#146;s contributed capital is not subject to Klaff&#146;s
    Promote. The Company will also earn market-rate fees for property management,
    leasing and construction services on behalf of the Venture.</font></p>
<p align="left"> <font size=2 face="serif">The Company has also acquired Klaff&#146;s
    rights to provide asset management, leasing, disposition, development and
    construction services for an existing portfolio of retail properties and/or
    leasehold interests comprised of approximately 10 million square feet of
    retail space located throughout the United States (the &#147;Klaff Properties&#148;).
    The acquisition involves only Klaff&#146;s rights associated with operating
    the Klaff Properties and does not include equity interests in assets owned
    by Klaff or Lubert-Adler. The Operating Partnership issued $4.0 million of
    Preferred OP Units to Klaff in consideration of this acquisition as discussed
    in further detail under Item 1. - Business &#150; General of this Form 10-K.</font></p>
<p align="left"> <b><font size=2 face="serif">BUSINESS OBJECTIVES AND STRATEGIES</font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">The Company&#146;s primary business
    objective is to acquire and manage commercial retail properties that will
    provide cash for distributions to shareholders while also creating potential
    for capital appreciation to enhance investor returns. The Company focuses
    on the following fundamentals to achieve this objective:</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="left" valign="top">&#8211;</td>
    <td><font size=2 face="serif">Own and operate a portfolio of community and
        neighborhood shopping centers anchored by necessity-based and value-oriented
        retail and located in markets with strong demographics</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8211;</td>
    <td><font size=2 face="serif">Maintain a strong and flexible balance sheet
        through conservative financial practices while ensuring access to sufficient
        capital to fund future growth</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8211;</td>
    <td><font size=2 face="serif">Generate internal growth within the portfolio
        through aggressive redevelopment, re-anchoring and leasing activities</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8211;</td>
    <td><font size=2 face="serif">Generate external growth through an opportunistic
        yet disciplined acquisition program. The emphasis is on targeting transactions
        with high inherent opportunity for the creation of additional value through
        redevelopment and leasing and/or transactions requiring creative capital
        structuring to facilitate the transactions</font></td>
  </tr>
</table>
<p align="left"><b><font size=2 face="serif">Operating and Growth Strategies </font></b></p>
<p align="left"> <font size=2 face="serif">Currently, the primary conduits for
    the Company&#146;s acquisition program is through its existing acquisition
    joint venture, ASOF, as well as the new Venture established to invest in
    surplus or underutilized properties owned or controlled by retailers as discussed
    under &#147;Recent Developments&#148;.</font></p>
<p align="left"> <font size=2 face="serif">Through ASOF, the Company focuses
    on targeting assets for acquisition that have superior in-fill locations,
    restricted competition due to high barriers of entry and in-place below-market
    anchor leases with the potential to create significant additional value through
    re-tenanting, timely capital improvements and property redevelopment. The
    Company considers both single assets and portfolios in its acquisition program.
    Although the Company currently operates properties in the Northeast, Mid-Atlantic
    and Midwest region, and therefore focuses on potential acquisitions within
    these geographic areas, it would consider portfolio acquisitions outside
    its current geographic footprint.</font></p>
<p align="left"> <font size=2 face="serif">Through the new Venture, the Company
    will seek to invest opportunistically in any of the following three ways:</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&#8211;</td>
    <td><font size=2 face="serif">working with financially healthy retailers
        to create value from their surplus real estate;</font></td>
  </tr>
  <tr>
    <td>&#8211;</td>
    <td><font size=2 face="serif">acquiring properties, designation rights or
        other control of real estate or leases associated with retailers in bankruptcy;
        and</font></td>
  </tr>
  <tr>
    <td>&#8211;</td>
    <td><font size=2 face="serif">completing sale leasebacks with retailers in
        need of capital.</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<p align="center"> <font size=2 face="serif">5</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="p6"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="left"> <font size=2 face="serif">The Company also regularly engages
    in discussions with public and private entities regarding business combinations.
    Furthermore, the Company may consider engaging in additional joint ventures
    related to property acquisition and development. The requirements that acquisitions
    be accretive on a long-term basis based on the Company&#146;s cost of capital,
    as well as increase the overall portfolio quality and value, are core to
    the Company&#146;s acquisition program. As such, the Company constantly evaluates
    the blended cost of equity and debt and adjusts the amount of acquisition
    activity to align the level of investment activity with capital flows.</font></p>
<p align="left"> <font size=2 face="serif">Operating functions such as leasing,
    property management, construction, finance and legal (collectively, the &#147;Operating
    Departments&#148;) are provided by Company personnel, providing for fully
    integrated property management and development. The Operating Departments
    involvement in acquisitions is an essential component to the acquisition
    program. By incorporating the Operating Departments in the acquisition process,
    acquisitions are appropriately priced giving effect to each asset&#146;s
    specific risks and returns. Also, because of the Operating Departments involvement
    with, and corresponding understanding of, the acquisition process, transition
    time is minimized and management can immediately execute on an asset&#146;s
    strategic plan.</font></p>
<p align="left"> <font size=2 face="serif">The Company typically holds its properties
    for long-term investment. As such, it continuously reviews the existing portfolio
    and implements programs to renovate and modernize targeted centers to enhance
    the property&#146;s market position. This in turn strengthens the competitive
    position of the leasing program to attract and retain quality tenants, increasing
    cash flow and consequently property value. The Company also periodically
    identifies certain properties for disposition and redeploys the capital to
    existing centers or acquisitions with greater potential for capital appreciation.
    The Company&#146;s portfolio consists primarily of neighborhood and community
    shopping centers, which are generally dominant centers in high barrier-to-entry
    markets. The anchors at these centers typically pay market or below-market
    rents and have low rent-to-sales ratios, which are, on average, less than
    5%. Furthermore, supermarkets anchor approximately two-thirds of the core
    portfolio. These attributes enable the properties to better withstand a weakening
    economy while also creating opportunities to increase rental income.</font></p>
<p align="left"> <b><font size=2 face="serif">Financing Strategy</font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">The Company intends to continue financing
    acquisitions and property redevelopment with sources of capital determined
    by management to be the most appropriate based on, among other factors, availability,
    pricing and other commercial and financial terms. The sources of capital
    may include cash on hand, bank and other institutional borrowing, the sale
    of properties and issuance of equity securities. The Company continually
    focuses on maintaining a strong balance sheet when considering the sourcing
    of capital. The Company manages its interest rate risk primarily through
    the use of variable and fixed rate debt. It also utilizes LIBOR swap agreements
    in managing its exposure to interest rate fluctuations. See Item 7A for a
    discussion on the Company&#146;s market risk exposure related to its mortgage
    debt.</font></p>
<p align="left"> <b><font size=2 face="serif">PROPERTY ACQUISITIONS THROUGH ASOF </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">In September of 2001, the Company
    committed $20.0 million to a newly formed joint venture formed with four
    of its institutional shareholders, who committed $70.0 million, for the purpose
    of acquiring a total of approximately $300.0 million of community and neighborhood
    shopping centers on a leveraged basis. Since the formation of ASOF, the Company
    has used it as the primary vehicle for the acquisitions of assets.</font></p>
<p align="left"> <font size=2 face="serif">The Company is the manager and general
    partner of ASOF with a 22% interest. In addition to a pro-rata return on
    its invested equity, the Company is entitled to a profit participation based
    upon certain investment return thresholds. Cash flow is distributed pro-rata
    to the partners (including the Company) until they have received a 9% cumulative
    return on, and a return of all capital contributions. Thereafter, remaining
    cash flow is distributed 80% to the partners (including the Company) and
    20% to the Company. The Company also earns a fee for asset management services
    equal to 1.5% of the total equity commitments, as well as market-rate fees
    for property management, leasing and construction services.</font></p>
<p align="left"> <font size=2 face="serif">To date, ASOF has purchased a total
    of 30 assets in three separate transactions. Details of these transactions
    are as follows:</font></p>
<p align="left"> <u><font size=2 face="serif">2003 Acquisitions</font></u><font size=2 face="serif"></font></p>
<p align="left"> <u><font size=2 face="serif">Brandywine Portfolio</font></u><font size=2 face="serif"> -
    In January of 2003, ASOF acquired a major open-air retail complex located
    in Wilmington, Delaware. The approximately 1.0 million square foot value-based
    retail complex consists of the following two properties:</font></p>
<p align="left"> <font size=2 face="serif">Market Square Shopping Center -A 103,000
    square foot community shopping center (including a 15,000 square foot outparcel
    building) which is 100% leased and anchored by a T.J. Maxx and a Trader Joe&#146;s
    gourmet food market.</font></p>
<p align="left"> <font size=2 face="serif">Brandywine Town Center - A two phase
    open-air value retail center. The first phase (&#147;Phase I&#148;) is approximately
    450,000 square feet and 99% occupied, with tenants including Lowe&#146;s,
    Bed Bath &amp; Beyond, Regal Cinema, Michaels, Petsmart, Old Navy, Annie
    Sez, Thomasville Furniture and Dick&#146;s Sporting Goods. The second phase
    (&#147;Phase II&#148;) consists of approximately 420,000 square feet of existing
    space, of which Target occupies 138,000 square feet. The balance of Phase
    II is currently not occupied.</font></p>
<p align="center"> <font size=2 face="serif">6</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="p7"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="left"> <font size=2 face="serif">The initial investment for this portfolio
    was approximately $86.3 million, inclusive of closing and other related acquisition
    costs. ASOF will also pay additional amounts for the current vacant space
    in Phase II when and if it is leased and occupied (the &#147;Earn-out&#148;).
    The additional investment, depending on the Earn-out, is projected to be
    between $42.0 million and $62.0 million.</font></p>
<p align="left"> <u><font size=2 face="serif">Kroger/Safeway Portfolio</font></u><font size=2 face="serif"> &#8211; In
    January of 2003, ASOF formed a joint venture (the &#147;Kroger/Safeway JV&#148;)
    with an affiliate of real estate developer and investor AmCap Incorporated
    (&#147;AmCap&#148;) for the purpose of acquiring a portfolio of twenty-five
    supermarket leases for $48.9 million inclusive of the closing and other related
    acquisition costs. The portfolio, which aggregates approximately 1.0 million
    square feet, consists of 25 anchor-only leases with Kroger (12 leases) and
    Safeway supermarkets (13 leases). The majority of the properties are free-standing
    and all are triple-net leases. The Kroger/Safeway JV acquired the portfolio
    subject to long-term ground leases with terms, including renewal options,
    averaging in excess of 80 years, which are master leased to a non-affiliated
    entity. The rental options for the supermarket leases at the end of their
    primary lease term in approximately seven years (&#147;Primary Term&#148;)
    are at an average of $5.13 per square foot. Although there is no obligation
    for the Kroger/Safeway JV to pay ground rent during the Primary Term, to
    the extent it exercises an option to renew a ground lease for a property
    at the end of the Primary Term, it will be obligated to pay an average ground
    rent of $1.55 per square foot.</font></p>
<p align="left"> <font size=2 face="serif">The following table sets forth more
    specific information with respect to the 25 supermarket leases:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td align="left"><font size="1">&nbsp;</font></td>
    <td rowspan="3" align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td width="2%" rowspan="3" align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td rowspan="3" align="left"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td rowspan="3" align="left"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td rowspan="3" align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Lease expiration</font></b></td>
    <td rowspan="3" align="center"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td align="center"><font size="1">&nbsp;</font> </td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1"> &nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Rent upon initial</font></b></td>
    <td align="center"><b><font size=1 face="serif">year/ Last option</font></b></td>
  </tr>
  <tr>
    <td align="center"><font size="1"><b><font face="serif">Location </font></b></font></td>
    <td align="center"><b><font size=1 face="serif">Tenant</font></b></td>
    <td align="center"><b><font size=1 face="serif">GLA</font></b></td>
    <td align="center"><b><font size=1 face="serif">Current rent</font></b></td>
    <td align="center"><b><font size=1 face="serif">option commencement</font></b></td>
    <td align="center"><b><font size=1 face="serif">expiration year</font></b></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td align="left" bgcolor="#eeeeee">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Great
        Bend, KS </font></td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="13%" align="left"><font size=2 face="serif">Kroger Co. (1)</font></td>
    <td width=2% align="right">&nbsp;</td>
    <td width=13% align="right"><font size=2 face="serif">48,000</font></td>
    <td width=2% align="left"><font size=2 face="serif">&nbsp;$ </font></td>
    <td width=13% align="right"><font size=2 face="serif">4.13</font></td>
    <td width=2% align="left"><font size=2 face="serif">&nbsp;$ </font></td>
    <td width=16% align="right"><font size=2 face="serif">2.40</font></td>
    <td width=2%>&nbsp;</td>
    <td width=13% align="right"><font size=2 face="serif">2009/2049</font></td>
    <td width=2% align="right">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Cincinnati,
        OH </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Kroger Co.</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">32,200</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">9.29</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">5.36</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Conroe, TX </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Kroger Co. (2)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">75,000</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">7.97</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.60</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Harahan, LA </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Kroger Co. (2)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">60,000</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">7.95</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.61</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Indianapolis,
        IN </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Kroger Co.</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">34,000</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">6.71</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">3.87</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Irving, TX</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Kroger Co.</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">43,900</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">7.49</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.32</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Pratt, KS </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Kroger Co. (1)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">38,000</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">6.53</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">3.78</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Roanoke, VA </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Kroger Co.</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">36,700</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">14.94</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">8.62</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Shreveport,
        LA </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Kroger Co.</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">45,000</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">12.07</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">6.96</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Wichita, KS </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Kroger Co. (1)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">50,000</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">12.90</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">7.48</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Wichita, KS </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Kroger Co. (1)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">40,000</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">12.03</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">6.97</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Atlanta, TX </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Safeway (3)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">31,000</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">8.47</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">3.98</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Batesville,
        AR</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Safeway (1)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">29,000</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">12.15</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">5.72</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Benton, AR </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Safeway (1)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">33,500</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">10.01</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.71</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Carthage, TX </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Safeway (1)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">27,700</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">8.75</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.12</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Little Rock,
        AR</font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Safeway (1)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">36,000</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">14.00</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">6.58</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Longview, WA </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Safeway</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">48,700</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">9.53</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.48</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Mustang, OK </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Safeway (1)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">30,200</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">8.83</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.15</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Roswell, NM </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Safeway (2)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">36,300</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">12.63</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">5.94</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Ruidoso, NM </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Safeway (1)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">38,600</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">12.69</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">5.97</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">San Ramon, CA </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Safeway</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">54,000</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">10.56</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.96</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Springerville,
        AZ </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Safeway</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">30,500</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">10.28</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.83</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Tucson, AZ </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Safeway</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">41,800</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">9.95</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.68</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Tulsa, OK </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Safeway (1)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">30,000</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">10.54</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.96</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Cary, NC </font></td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size=2 face="serif">Kroger Co. (3)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">48,000</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">7.89</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.55</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2009/2049</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </td>
    <td align="left">&nbsp;</td>
    <td align="center"><font size=2 face="serif">Total</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,018,100</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
</table>
<table width="100%" cellpadding="0" cellspacing="0">
  <tr>
    <td colspan="2" valign="top"><font size=1 face="serif">Notes:</font> </td>
  </tr>
  <tr>
    <td valign="top"><font size="1">&nbsp;</font></td>
    <td valign="top"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="3%" valign="top"><font size=1 face="serif">(1)</font></td>
    <td valign="top"><font size=1 face="serif">The tenant is obligated to pay
        rent pursuant to the lease and has sub-leased this location to a supermarket
        sub-tenant.</font></td>
  </tr>
  <tr>
    <td valign="top"><font size=1 face="serif">(2)</font></td>
    <td valign="top"><font size=1 face="serif">The tenant is obligated to pay
        rent pursuant to the lease and has sub-leased this location to a non-supermarket
        sub-tenant.</font></td>
  </tr>
  <tr>
    <td valign="top"><font size=1 face="serif">(3)</font></td>
    <td valign="top"><font size=1 face="serif">The tenant is currently not operating
        at this location although they continue to pay rent in accordance with
        the lease.</font></td>
  </tr>
</table>
<p align="left"> <u><font size=2 face="serif">2002 Acquisitions</font></u><font size=2 face="serif"></font></p>
<p align="left"> <u><font size=2 face="serif">Ohio Portfolio </font></u><font size=2 face="serif">&#8211;  In September of 2002, ASOF acquired three supermarket-anchored shopping centers
    located in Cleveland and Columbus, Ohio for a total purchase price of $26.7
    million. Additional information on these properties is included in Item 2
    of this Form 10-K.</font></p>
<p align="center"> <font size=2 face="serif">7</font></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page>

<a name="p8"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left">
<b><font size=2 face="serif">ASSET SALES</font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">A significant component of the Company&#146;s business has been its multi-year plan to dispose of non-core real estate assets. The Company began this initiative following the RDC Transaction and completed it in 2002. Non-core assets were identified based on factors including property type and location, tenant mix and potential income growth as well as whether a property complemented other assets within the Company&#146;s portfolio. The Company sold 28 non-core assets in connection with this initiative comprising a total of approximately 4.6 million square feet of retail properties and 800 multi-family units, for a total sales price of $158.4 million which generated net sale proceeds to the Company of $82.5 million.</font></p>
<p align="left">
<b><font size=2 face="serif">Property Redevelopment and Expansion </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">The Company&#146;s redevelopment program focuses on selecting well-located neighborhood and community shopping centers and creating significant value through re-tenanting and property redevelopment. During 2003, the Company substantially completed the redevelopment of three shopping centers and added an additional project to its redevelopment pipeline as follows:</font></p>
<p align="left">
<font size=2 face="serif">Gateway Shopping Center &#150; The redevelopment of the Gateway Shopping Center, formerly a partially enclosed mini-mall with an undersized Grand Union, included the demolition of 90% of the existing building and the construction of a new anchor supermarket. The center has been converted into a new open-air community shopping center anchored with a 72,000 square foot Shaw&#146;s supermarket which opened during March of 2003. Approximately 11,000 square feet of small shop space remains to be leased at the property. Total costs for this project, including the original acquisition costs, aggregated $17.9 million.</font></p>
<p align="left">
<font size=2 face="serif">Plaza 422 &#8211; Home Depot held its grand opening during fourth quarter of 2003 at the Plaza 422 redevelopment project located in Lebanon, Pennsylvania. The expansion of the former 83,000 square foot Ames space to a 104,000 square foot Home Depot included the recapture and demolition of the formerly enclosed portion of this center. The Company is now collecting triple the base rent of that which was paid by Ames. In connection with the redevelopment project, the Company also recaptured another 48,000 square feet of space, for which re-leasing is currently underway. The majority of redevelopment costs were paid directly by Home Depot. The Company&#146;s share of costs for this project totaled $402,000.</font></p>
<p align="left">
<font size=2 face="serif">New Loudon Center &#150;  The Bon Ton Department Store also opened for business during the fourth quarter of 2003 as part of the redevelopment of the New Loudon Center located in Latham, New York. Occupying 66,000 square feet formerly occupied by an Ames department store, Bon Ton is paying base rent at a 15% increase over that of Ames. In addition, the Company has leased the balance of the former Ames space to Marshall&#146;s, an existing tenant at the center, which will be expanding its current 26,000 square foot store to 37,000 square feet. The Company will also install a new 49,000 square foot Raymour and Flanigan Furniture store at this center. Following the completion of this project in mid-2004, this community shopping center will be 100% occupied. Costs incurred to date by the Company for this project totaled $418,000. The remaining costs to complete this redevelopment project are to be paid directly by the above tenants.</font></p>
<p align="left">
<font size=2 face="serif">Town Line Plaza &#150; This project, located in Rocky Hill, Connecticut, was added to the Company&#146;s redevelopment pipeline in December of 2003. The Company is re-anchoring the center with a new Super Stop &amp; Shop supermarket, replacing a former GU Markets supermarket. The existing building is being demolished and will be replaced with a 66,000 square foot Super Stop &amp; Shop. The new supermarket anchor is paying gross rent at a 33% increase over that of the former tenant with no interruption in rent payments. Costs to date for this project totaled $1.7 million. All remaining redevelopment costs associated with this project, which is anticipated to be completed during the first quarter of 2005, are to be paid by Stop &amp; Shop.</font></p>
<p align="left">
<b><font size=2 face="serif">FINANCIAL INFORMATION ABOUT MARKET SEGMENTS </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">The Company has two reportable segments: retail properties and multi-family properties. The accounting policies of the segments are the same as those described in the notes to the consolidated financial statements appearing in Item 8 of this Annual Report on Form 10-K. The Company evaluates property performance primarily based on net operating income before depreciation, amortization and certain non-recurring items. The reportable segments are managed separately due to the differing nature of the leases and property operations associated with retail versus residential tenants. The Company does not have any foreign operations. See the consolidated financial statements and notes thereto included in Item 8 of this Annual Report on Form 10-K for certain information on industry segments as required by Item 1.</font></p>
<p align="left">
<b><font size=2 face="serif">CORPORATE HEADQUARTERS AND EMPLOYEES </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">The Company&#146;s executive offices are located at 1311 Mamaroneck Avenue, Suite 260, White Plains, New York 10605, and its telephone number is (914) 288-8100. The Company has 112 employees, of which 52 are located at the executive office, 7 at the Pennsylvania regional office and the remaining property management personnel are located on-site at the Company&#146;s properties.</font></p>
<p align="center">
<font size=2 face="serif">8</font></p>

<hr noshade align="center" width="100%" size="2"><div align="left" style="page-break-before:always"></div>
<div align="left"><page>

<a name="p9"></a></div>
<p align="left"><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left">
<b><font size=2 face="serif">COMPANY WEBSITE</font></b>
</p>
<p align="left"> <font size=2 face="serif">All of the Company&#146;s filings with
  the Securities and Exchange Commission, including the Company's annual reports
  on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
  and amendments to those reports filed or furnished pursuant to Section 13(a)
  or 15(d) of the Securities Exchange Act of 1934, are available free of charge
  at the Company&#146;s website at www.acadiarealty.com, as soon as reasonably
  practicable after the Company electronically file such material with, or furnish it to,
  the Securities and Exchange Commission. These filings can also be accessed through
  the Securities and Exchange Commission&#146;s website at www.sec.gov. Alternatively,
  the Company will provide paper copies of its filings free of charge upon request.</font></p>
<p align="left">
<b><font size=2 face="serif">CODE OF ETHICS AND WHISTLEBLOWER POLICIES</font></b>
</p>
<p align="left">
<font size=2 face="serif">During 2003, the Company&#146;s Board of Trustees adopted a Code of Ethics for Senior Financial Officers that applies to the Company&#146;s Chief Executive Officer, Chief Financial Officer, Director of Financial Reporting, Controller and Assistant Controller. The Board also adopted a Code of Business Conduct and Ethics applicable to all employees, as well as a &#147;Whistleblower Policy&#148;. Copies of these documents are available in the Investor Information section of the Company&#146;s website.</font></p>
<p align="left">
<b><font size=2 face="serif">RISK FACTORS </font></b>
</p>
<p align="left">
<font size=2 face="serif">If any of the following risks actually occur, the Company&#146;s business, results of operations and financial condition would likely suffer. This section includes or refers to certain forward-looking statements. Refer to the explanation of the qualifications and limitations on such forward-looking statements discussed elsewhere in this Annual Report on Form 10-K.</font></p>
<p align="left">
<b><font size=2 face="serif">The Company relies on revenues derived from major tenants.</font></b>
</p>
<p align="left">
<font size=2 face="serif">The Company derives significant revenues from certain
anchor tenants that occupy more than one center. The Company could be adversely
affected in the event of the bankruptcy or insolvency of, or a downturn in the
business of, any of the Company&#146;s major tenants, or in the event that any
such tenant does not renew its leases as they expire or renews at lower rental
rates. Vacated anchor space not only would reduce rental revenues if not re-tenanted
at the same rental rates but also could adversely affect the entire shopping
center because of the loss of the departed anchor tenant&#146;s customer drawing
power. Loss of customer drawing power also can occur through the exercise of
the right that most anchors have to vacate and prevent re-tenanting by paying
rent for the balance of the lease term, or the departure of an anchor tenant
that owns its own property. In addition, in the event that certain major tenants
cease to occupy a property, such an action may result in a significant number
of other tenants having the right to terminate their leases, or pay a reduced
rent based on a percentage of the tenant&#146;s sales, at the affected property,
which could adversely affect the future income from such property.</font></p>
<p align="left">
<font size=2 face="serif">Tenants may seek the protection of the bankruptcy laws, which could result in the rejection and termination of their leases and thereby cause a reduction in the cash flow available for distribution by the Company. Such reduction could be material if a major tenant files bankruptcy. For example, Kmart Corporation (&#147;Kmart&#148;), which represents 4.3% of the Company&#146;s annual base rental income, filed for bankruptcy protection under Chapter 11 of the United States bankruptcy laws (&#147;Chapter 11 Bankruptcy&#148;) and while it did not do so, it could have rejected its leases. See the discussion of bankruptcy risks under Risk Factors.</font></p>
<p align="left">
<b><font size=2 face="serif">Limited control over joint venture investments</font></b><font size=2 face="serif">.</font></p>
<p align="left">
<font size=2 face="serif">The Company&#146;s joint venture investments may involve risks not otherwise present for investments made solely by the Company, including the possibility that the Company&#146;s joint venture partner might have different interests or goals than the Company does. Other risks of joint venture investments include impasse on decisions, such as a sale, because neither the Company nor a joint venture partner would have full control over the joint venture. Also, there is no limitation under the Company&#146;s organizational documents as to the amount of funds that may be invested in joint ventures.</font></p>
<p align="left">
<font size=2 face="serif">Under the terms of the Company&#146;s ASOF joint venture, the Company is required to first offer to ASOF all of the Company&#146;s opportunities to acquire retail shopping centers. Only if (i) the Company&#146;s joint venture partner elects not to approve ASOF&#146;s pursuit of an acquisition opportunity (ii) the ownership of the acquisition opportunity by ASOF would create a material conflict of interest for the Company, (iii) the Company requires the acquisition opportunity for a &#147;like-kind&#148; exchange; or (iv) the consideration payable for the acquisition opportunity is the Company&#146;s Common Shares, OP Units or other securities, may the Company pursue the opportunity directly. As a result, the Company may not be able to make attractive acquisitions directly and may only receive a minority interest in such acquisitions through ASOF.</font></p>
<p align="center">
<font size=2 face="serif">9</font></p>

<hr noshade align="left" width="100%" size="2">
<div align="left" style="page-break-before:always"></div>
<div align="left"><page>

<a name="p10"></a></div>
<p align="left"><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left">
<b><font size=2 face="serif">The Company operates through a partnership structure, which could have an adverse effect on the Company&#146;s ability to manage the Company&#146;s assets.</font></b>
</p>
<p align="left">
<font size=2 face="serif">The Company&#146;s primary property-owning vehicle is the Operating Partnership, of which the Company is the general partner. The Company&#146;s acquisition of properties through the Operating Partnership in exchange for interests in the Operating Partnership may permit certain tax deferral advantages to limited partners who contribute properties to the Operating Partnership. Since properties contributed to the Operating Partnership may have unrealized gain attributable to the difference between the fair market value and adjusted tax basis in such properties prior to contribution, the sale of such properties could cause adverse tax consequences to the limited partners who contributed such properties.</font>
<font size=2 face="serif">Although the Company, as the general partner of the
Operating Partnership, generally has no obligation to consider the tax consequences
of the Company&#146;s actions to any limited partner, there can be no assurance that the Operating Partnership will not acquire properties in the future subject to material restrictions designed to minimize the adverse tax consequences to the limited partners who contribute such properties. Such restrictions could result in significantly reduced flexibility to manage the Company&#146;s
assets.</font></p>
<p align="left">
<b><font size=2 face="serif">There are risks relating to investments in real estate.</font></b>
</p>
<p align="left"><i><font size=2 face="serif">Value of Real Estate is Dependent
      on Numerous Factors. </font></i><font size=2 face="serif">Real property
      investments are subject to varying degrees of risk. Real estate values
      are affected by a number of factors, including: changes in the general
      economic climate, local conditions (such as an oversupply of space or a
      reduction in demand for real estate in an area), the quality and philosophy
      of management, competition from other available space, the ability of the
      owner to provide adequate maintenance and insurance and to control variable
      operating costs. Shopping centers, in particular, may be affected by changing
      perceptions of retailers or shoppers regarding the safety, convenience
      and attractiveness of the shopping center and by the overall climate for
      the retail industry generally. Real estate values are also affected by
      such factors as government regulations, interest rate levels, the availability
      of financing and potential liability under, and changes in, environmental,
      zoning, tax and other laws. As substantially all of the Company&#146;s
      income is derived from rental income from real property, the Company&#146;s
      income and cash flow would be adversely affected if a significant number
      of the Company&#146;s tenants were unable to meet their obligations, or
      if the Company were unable to lease on economically favorable terms a significant
      amount of space in the Company&#146;s properties. In the event of default
      by a tenant, the Company may experience delays in enforcing, and incur
      substantial costs to enforce, the Company&#146;s rights as a landlord.
      In addition, certain significant expenditures associated with each equity
      investment (such as mortgage payments, real estate taxes and maintenance
      costs) are generally not reduced when circumstances cause a reduction in
income from the investment.</font></p>
<p align="left">
<b><font size=2 face="serif">The bankruptcy of, or a downturn in the business of, any of the Company&#146;s major tenants may adversely affect the Company&#146;s cash flows and property values.</font></b>
</p>
<p align="left">
<font size=2 face="serif">The bankruptcy of, or a downturn in the business of, any of the Company&#146;s major tenants causing them to reject their leases, or not renew their leases as they expire, or renew at lower rental rates may adversely affect the Company&#146;s cash flows and property values. Furthermore, the impact of vacated anchor space and the potential reduction in customer traffic may adversely impact the balance of tenants at the center.</font></p>
<p align="left">
<font size=2 face="serif">Certain of the Company&#146;s tenants have experienced
financial difficulties and have filed for Chapter 11 Bankruptcy. Pursuant to
bankruptcy law, tenants have the right to reject their leases. In the event the
tenant exercises this right, the landlord generally has the right to file a claim
for lost rent equal to the greater of either one year&#146;s rent (including
tenant expense reimbursements) for remaining terms greater than one year, or
15% of the rent remaining under the balance of the lease term, but not to exceed
three years rent. Actual amounts to be received in satisfaction of those claims
will be subject to the tenant&#146;s final plan of reorganization and the availability
of funds to pay its creditors.</font></p>
<p align="left">
<font size=2 face="serif">Since January 1, 2002, there have been three significant tenant bankruptcies within the Company&#146;s portfolio. On January 22, 2002 Kmart filed for protection under Chapter 11 Bankruptcy. This tenant currently operates in five locations in the Company&#146;s wholly-owned portfolio totaling approximately 520,000 square feet. Rental revenues from Kmart at these locations totaled $2.8 million and $2.7 million for the years ended December 31, 2003 and 2002, respectively. Kmart also operated in a location occupying 101,000 square feet at a property in which the Company holds a 49% ownership interest. The Company&#146;s pro-rata share of rental revenues from the tenant at this location were $558,000 and $564,000 for the years ended December 31, 2003 and 2002, respectively. On May 5, 2003, Kmart emerged from bankruptcy and continues to operate at all of the above locations.</font></p>
<p align="left">
<font size=2 face="serif">On May 30, 2003, The Penn Traffic Company (&#147;Penn Traffic&#148;) filed for protection under Chapter 11 Bankruptcy. Penn Traffic operates in one location in the Company&#146;s wholly-owned portfolio in 52,000 square feet. Rental revenues from this tenant at this location were $516,000 and $493,000 for the years ended December 31, 2003 and 2002, respectively. Penn Traffic also operated in a location occupying 55,000 square feet at a property in which the Company, through ASOF, holds a 22% ownership interest. The Company&#146;s pro-rata share of rental revenues from the tenant at this location were $147,000 and $36,000 for the years ended December 31, 2003 and 2002, respectively. Penn Traffic continues to operate in the Company&#146;s wholly-owned location, but has neither assumed nor rejected this lease. Penn Traffic has ceased operations at the joint venture location and rejected the lease at this location on February 20, 2004.</font></p>
<p align="center">
<font size=2 face="serif">10</font></p>

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<p>
<font size=2 face="serif">On January 14, 2004, KB Toys (&#147;KB&#148;) filed
for protection under Chapter 11 Bankruptcy. KB operates in five locations in
the Company&#146;s
wholly-owned portfolio totaling approximately 41,000 square feet. Rental revenues
from KB at these locations aggregated $739,000 and $724,000 for the years ended
December 31, 2003 and 2002, respectively. KB also operates in a location occupying
20,000 square feet at a property in which the Company holds a 22% ownership interest.
Through ASOF, the Company&#146;s pro-rata share of rental revenues from the tenant
at this location were $87,000 and $0 for the years ended December 31, 2003 and
2002, respectively. KB continues to operate in the Company&#146;s wholly-owned
location, but has ceased operations at the joint venture location. KB has neither
assumed nor rejected any of these leases.</font></p>
<p>
<b><font size=2 face="serif">The Company could be adversely affected by poor market conditions where properties are geographically concentrated. </font></b>
</p>
<p>
<font size=2 face="serif">The Company&#146;s performance depends on the economic conditions in markets in which the Company&#146;s properties are concentrated. The </font><font size=2 face="serif">Company
has significant exposure to the New York region, from which the Company derives
48.1% of the annual base rents within its wholly-owned portfolio. The Company&#146;s
operating results could be adversely affected if market conditions, such as an
oversupply of space or a reduction in demand for real estate, in this area becomes
more competitive relative to other geographic areas.</font></p><p>
<b><font size=2 face="serif">The Company&#146;s ability to change the Company&#146;s portfolio is limited because real estate investments are illiquid</font></b><font size=2 face="serif">.</font></p><p>
<font size=2 face="serif">Equity investments in real estate are relatively illiquid and, therefore, the Company&#146;s ability to change the Company&#146;s portfolio promptly in response to changed conditions will be limited. The Company&#146;s board of trustees may establish investment criteria or limitations as it deems appropriate, but currently does not limit the number of properties in which the Company may seek to invest or on the concentration of investments in any one geographic region. The Company could change the Company&#146;s investment, disposition and financing policies without a vote of the Company&#146;s shareholders.</font></p><p>
<b><font size=2 face="serif">Market interest rates could have an adverse effect on the Company&#146;s share price.</font></b>
</p>
<p>
<font size=2 face="serif">One of the factors that may influence the trading price of the Company&#146;s Common Shares is the annual dividend rate on the Company&#146;s Common Shares as a percentage of its market price. An increase in market interest rates may lead purchasers of the Company&#146;s Common Shares to demand a higher annual dividend rate, which could adversely affect the market price of the Company&#146;s Common Shares and the Company&#146;s ability to raise additional equity in the public markets.</font></p><p>
<b><font size=2 face="serif">The Company could become highly leveraged, resulting in increased risk of default on the Company&#146;s obligations and in an increase in debt service requirements which could adversely affect the Company&#146;s financial condition and results of operations and the Company&#146;s ability to pay distributions</font></b><b><i><font size=2 face="serif">.</font></i></b>
</p>
<p>
<font size=2 face="serif">The Company has incurred, and expects to continue to incur, indebtedness in furtherance of the Company&#146;s activities. Neither the Company&#146;s Declaration of Trust nor any policy statement formally adopted by the Company&#146;s board of trustees limits either the total amount of indebtedness or the specified percentage of indebtedness that the Company may incur. Accordingly, the Company could become more highly leveraged, resulting in increased risk of default on the Company&#146;s obligations and in an increase in debt service requirements which could adversely affect the Company&#146;s financial condition and results of operations and the Company&#146;s ability to make distributions.</font></p>
<p>
<font size=2 face="serif">The Company&#146;s loan agreements contain customary
representations, covenants and events of default. Certain loan agreements require
the Company to comply with certain affirmative and negative covenants, including
the maintenance of certain debt service coverage and leverage ratios. In addition,
as of December 31, 2003, loans secured by five of the Company&#146;s properties,
totaling $50.7 million, are subject to cross-collateralization and cross-default
provisions, loans secured by three other properties, aggregating $12.0 million,
are also subject to cross-collateralization and cross- default provisions and
two loans, aggregating $24.1 million, are also subject to cross- collateralization
and cross-default provisions.</font></p>
<p>
<font size=2 face="serif">Of the Company&#146;s total outstanding debt, $57.8 million will become due in 2005. As the Company intends on refinancing some or all of such debt at the then-existing market interest rates which may be greater than the current interest rate, the Company&#146;s interest expense would increase by approximately $578,000 annually if the interest rate on the refinanced debt increased by 100 basis points. Furthermore, interest expense on the Company&#146;s variable debt as of December 31, 2003 would increase by $340,000 annually for a 100 basis point increase in interest rates. The Company may seek additional variable-rate financing if and when pricing and other commercial and financial terms warrant. As such, the Company would consider hedging against the interest rate risk related to such additional variable-rate debt through interest rate swaps and protection agreements, or other means.</font></p>
<p align="center">
<font size=2 face="serif">11</font></p>

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<p> <b><font size=2 face="serif">The Company may not be able to renew current
      leases and the terms of re-letting (including the cost of concessions to
      tenants) may be less favorable to the Company than current lease terms.</font></b> </p>
<p> <font size=2 face="serif">Upon the expiration of current leases for space
    located in the Company&#146;s properties, the Company may not be able to
    re-let all or a portion of that space, or the terms of re-letting (including
    the cost of concessions to tenants) may be less favorable to the Company than current
    lease terms. If the Company is unable to re-let promptly all or a substantial
    portion of the space located in the Company&#146;s properties or if the rental
    rates the Company receives upon re-letting are significantly lower than current
    rates, the Company&#146;s net income and ability to make expected distributions
    to the Company&#146;s shareholders will be adversely affected due to the
    resulting reduction in rent receipts. There can be no assurance that the Company will be able
    to retain tenants in any of the Company&#146;s properties upon the expiration
    of their leases. See Item 2 &#150; Properties &#150; Lease Expirations in
    this Annual Report on Form 10-K for additional information as to the scheduled
    lease expirations in the Company&#146;s portfolio.</font></p>
<p> <b><font size=2 face="serif">Possible liability relating to environmental
      matters.</font></b> </p>
<p> <font size=2 face="serif">Under various federal, state and local environmental
    laws, statutes, ordinances, rules and regulations, as an owner of real property,
    the Company may be liable for the costs of removal or remediation of certain
    hazardous or toxic substances at, on, in or under the Company&#146;s property,
    as well as certain other potential costs relating to hazardous or toxic substances
    (including government fines and penalties and damages for injuries to persons
    and adjacent property). These laws may impose liability without regard to
    whether the Company knew of, or were responsible for, the presence or disposal
    of those substances. This liability may be imposed on the Company in connection with
    the activities of an operator of, or tenant at, the property. The cost of
    any required remediation, removal, fines or personal or property damages
    and the </font><font size=2 face="serif">Company&#146;s liability therefore
    could exceed the value of the property and/or the Company&#146;s aggregate
    assets. In addition, the presence of those substances, or the failure to
    properly dispose of or remove those substances, may adversely affect the
    Company&#146;s ability to sell or rent that property or to borrow using that
    property as collateral, which, in turn, would reduce the Company&#146;s revenues
    and ability to make distributions.</font></p>
<p> <font size=2 face="serif">A property can also be adversely affected either
    through physical contamination or by virtue of an adverse effect upon value
    attributable to the migration of hazardous or toxic substances, or other
    contaminants that have or may have emanated from other properties. Although
    the Company&#146;s tenants are primarily responsible for any environmental
    damages and claims related to the leased premises, in the event of the bankruptcy
    or inability of any of the Company&#146;s tenants to satisfy any obligations
    with respect to the property leased to that tenant, the Company may be required
    to satisfy such obligations. In addition, the Company may be held directly
    liable for any such damages or claims irrespective of the provisions of any
    lease.</font></p>
<p> <font size=2 face="serif">From time to time, in connection with the conduct
    of the Company&#146;s business, and prior to the acquisition of any property
    from a third party or as required by the Company&#146;s financing sources,
    the Company authorizes the preparation of Phase I environmental reports and,
    when necessary, Phase II environmental reports, with respect to the Company&#146;s
    properties. Based upon these environmental reports and the </font> <font size=2 face="serif">Company&#146;s
    ongoing review of the Company&#146;s properties, as of the date of this prospectus
    supplement, the Company is not aware of any environmental condition with
    respect to any of the Company&#146;s properties that the Company believes
    would be reasonably likely to have a material adverse effect on the Company. There
    can be no assurance, however, that the environmental reports will reveal
    all environmental conditions at the Company&#146;s properties or that the
    following will not expose the Company to material liability in the future:</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="left" valign="top">&#8226;</td>
    <td><font size=2 face="serif">the discovery of previously unknown environmental
        conditions;</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="serif">changes in law;</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="serif">activities of tenants; or</font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&#8226;</td>
    <td><font size=2 face="serif">activities relating to properties in the vicinity
        of the Company&#146;s properties.</font></td>
  </tr>
</table>
<p> <font size=2 face="serif">Changes in laws increasing the potential liability
    for environmental conditions existing on properties or increasing the restrictions
    on discharges or other conditions may result in significant unanticipated
    expenditures or may otherwise adversely affect the operations of the Company&#146;s
    tenants, which could adversely affect the Company&#146;s financial condition
    or results of operations.</font></p>
<p> <b><font size=2 face="serif">Competition may adversely affect the Company&#146;s
      ability to purchase properties and to attract and retain tenants.</font></b> </p>
<p> <font size=2 face="serif">There are numerous commercial developers, real
    estate companies, financial institutions and other investors with greater
    financial resources than the Company has that compete with the Company in seeking
    properties for acquisition and tenants who will lease space in the Company&#146;s
    properties. The Company&#146;s competitors include other REITs, financial
    institutions, insurance companies, pension funds, private companies and individuals.
    This competition may result in a higher cost for properties that the Company
    wishes to purchase.</font></p>
<p> <font size=2 face="serif">In addition, retailers at the Company&#146;s properties
    face increasing competition from outlet malls, discount shopping clubs, internet
    commerce, direct mail and telemarketing, which could (i) reduce rents payable
    to the Company; (ii) reduce the Company&#146;s ability to attract and retain tenants
    at the Company&#146;s properties; and (iii) lead to increased vacancy rates
    at the Company&#146;s properties.</font></p>
<p align="center"> <font size=2 face="serif">12</font></p>
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<p align="left"> <b><font size=2 face="serif">The Company has pursued, and may
      in the future continue to pursue extensive growth opportunities which may
      result in significant demands on the Company&#146;s operational, administrative
      and financial resources. </font></b> </p>
<p align="left"> <font size=2 face="serif">The Company has pursued extensive
    growth opportunities. This expansion has placed significant demands on the
    Company&#146;s operational, administrative and financial resources. The continued
    growth of the Company&#146;s real estate portfolio can be expected to continue
    to place a significant strain on its resources. The Company&#146;s future
    performance will depend in part on the Company&#146;s ability to successfully
    attract and retain qualified management personnel to manage the growth and
    operations of the Company&#146;s business and to finance such acquisitions.
    In addition, acquired properties may fail to operate at expected levels due
    to the numerous factors which may affect the value of real estate. There
    can be no assurance that the Company will have sufficient resources to identify
    and manage acquired properties or otherwise be able to maintain the Company&#146;s
    historic rate of growth.</font></p>
<p align="left"> <b><font size=2 face="serif">The Company&#146;s inability to
      carry out the Company&#146;s growth strategy could adversely affect the
      Company&#146;s financial condition and results of operations.</font></b> </p>
<p align="left"> <font size=2 face="serif">The Company&#146;s growth strategy
    is based on the acquisition and development of additional properties, including
    acquisitions through co-investment programs such as joint ventures. In the
    context of the Company&#146;s business plan, &#147;development&#148; generally
    means an expansion or renovation of an existing property. The consummation
    of any future acquisitions will be subject to satisfactory completion of
    the Company&#146;s extensive valuation analysis and due diligence review
    and to the negotiation of definitive documentation. The Company cannot be
    sure that the Company will be able to implement the Company&#146;s strategy
    because the Company may have difficulty finding new properties, negotiating
    with new or existing tenants or securing acceptable financing.</font></p>
<p align="left"> <font size=2 face="serif">Acquisitions of additional properties
    entail the risk that investments will fail to perform in accordance with
    expectations, including operating and leasing expectations. Redevelopment
    is subject to numerous risks, including risks of construction delays, cost
    overruns or force majeure that may increase project costs, new project commencement
    risks such as the receipt of zoning, occupancy and other required governmental
    approvals and permits, and the incurrence of development costs in connection
    with projects that are not pursued to completion.</font><b><font size=2 face="serif"> </font></b> </p>
<p align="left"> <b><font size=2 face="serif">The Company&#146;s board of trustees
      may change the Company&#146;s investment policy without shareholder approval.</font></b> </p>
<p align="left"> <font size=2 face="serif">The Company&#146;s board of trustees will determine the Company&#146;s investment
    and financing policies, the Company&#146;s growth strategy and the Company&#146;s
    debt, capitalization, distribution, acquisition, disposition and operating
    policies. The Company&#146;s board of trustees may establish investment criteria
    or limitations as it deems appropriate, but currently does not limit the
    number of properties in which the Company may seek to invest or on the concentration
    of investments in any one geographic region. Although the Company&#146;s
    board of trustees has no present intention to revise or amend the Company&#146;s
    strategies and policies, it may do so at any time without a vote by the Company&#146;s
    shareholders. Accordingly, the Company&#146;s shareholders&#146; control
    over changes in the Company&#146;s strategies and policies is limited to
    the election of trustees, and changes made by the Company&#146;s board of
    trustees may not serve the interests of the Company&#146;s shareholders and
    could adversely affect the Company&#146;s financial condition or results
    of operations, including the Company&#146;s ability to distribute cash to
    shareholders or qualify as a REIT.</font></p>
<p align="left"> <b><font size=2 face="serif">There can be no assurance that
      the Company has qualified or will remain qualified as a REIT for federal
      income tax purposes.</font></b> </p>
<p align="left"> <font size=2 face="serif">The Company believes that the Company
    has met the requirements for qualification as a REIT for federal income tax
    purposes beginning with the Company&#146;s taxable year ended December 31,
    1993, and the Company intends to continue to meet these requirements in the
    future.</font> <font size=2 face="serif">However, qualification as a REIT
    involves the application of highly technical and complex provisions of the
    Internal Revenue Code, for which there are only limited judicial or administrative
    interpretations. No assurance can be given that the Company has qualified
    or will remain qualified as a REIT. The Internal Revenue Code provisions
    and income tax regulations applicable to REITs are more complex than those
    applicable to corporations. The determination of various factual matters
    and circumstances not entirely within the Company&#146;s control may affect
    the Company&#146;s ability to continue to qualify as a REIT. In addition,
    no assurance can be given that legislation, regulations, administrative interpretations
    or court decisions will not significantly change the requirements for qualification
    as a REIT or the federal income tax consequences of such qualification. If
    the Company does not qualify as a REIT, the Company would not be allowed
    a deduction for distributions to shareholders in computing the Company&#146;s
    net taxable income. In addition, the Company&#146;s income would be subject
    to tax at the regular corporate rates. The Company also could be disqualified
    from treatment as a REIT for the four taxable years following the year during
    which qualification was lost. Cash available for distribution to the Company&#146;s
    shareholders would be significantly reduced for each year in which the Company
    does not qualify as a REIT. In that event, the Company would not be required
    to continue to make distributions.</font></p>
<p align="center"> <font size=2 face="serif">13</font></p>
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<p align="left"> <font size=2 face="serif">Although the Company currently intends
    to continue to qualify as a REIT, it is possible that future economic, market,
    legal, tax or other considerations may cause the Company, without the consent of the
    shareholders, to revoke the REIT election or to otherwise take action that
    would result in disqualification.</font></p>
<p align="left"> <b><font size=2 face="serif">Distribution requirements imposed
      by law limit the Company&#146;s operating flexibility.</font></b> </p>
<p align="left"> <font size=2 face="serif">To maintain the Company&#146;s status
    as a REIT for federal income tax purposes, the Company is generally required
    to distribute to the </font> <font size=2 face="serif">Company&#146;s shareholders
    at least 90% of the Company&#146;s taxable income for that calendar year.
    The Company&#146;s taxable income is determined without regard to any deduction
    for dividends paid and by excluding net capital gains. To the extent that
    the Company satisfies the distribution requirement, but distribute less than
    100% of the Company&#146;s taxable income, the Company will be subject to
    federal corporate income tax on the Company&#146;s undistributed income.
    In addition, the Company will incur a 4% nondeductible excise tax on the
    amount, if any, by which the Company&#146;s distributions in any year are
    less than the sum of (i) 85% of the Company&#146;s ordinary income for that
    year, (ii) 95% of the Company&#146;s capital gain net income for that year
    and (iii) 100% of the Company&#146;s undistributed taxable income from prior
    years. The </font> <font size=2 face="serif">Company intends to continue
    to make distributions to the Company&#146;s shareholders to comply with the
    distribution requirements of the Internal Revenue Code and to reduce exposure
    to federal income and nondeductible excise taxes. Differences in timing between
    the receipt of income and the payment of expenses in determining the Company&#146;s
    income and the effect of required debt amortization payments could require
    us to borrow funds on a short-term basis in order to meet the distribution
    requirements that are necessary to achieve the tax benefits associated with
    qualifying as a REIT.</font></p>
<p align="left"> <b><font size=2 face="serif">Uninsured losses or a loss in excess
      of insured limits could adversely affect the Company&#146;s financial condition.</font></b> </p>
<p align="left"> <font size=2 face="serif">The Company carries comprehensive
    liability, fire, extended coverage and rent loss insurance on most of the
    Company&#146;s properties, with policy specifications and insured limits
    customarily carried for similar properties. However, with respect to those
    properties where the leases do not provide for abatement of rent under any
    circumstances, the Company generally does not maintain rent loss insurance.
    In addition, there are certain types of losses, such as losses resulting
    from wars, terrorism or acts of God that generally are not insured because
    they are either uninsurable or not economically insurable. Should an uninsured
    loss or a loss in excess of insured limits occur, the Company could lose
    capital invested in a property, as well as the anticipated future revenues
    from a property, while remaining obligated for any mortgage indebtedness
    or other financial obligations related to the property. Any loss of these
    types would adversely affect the Company&#146;s financial condition.</font> </p>
<p align="left"> <b><font size=2 face="serif">Limits on ownership of the Company&#146;s
      capital shares.</font></b> </p>
<p align="left"> <font size=2 face="serif">For the Company to qualify as a REIT for federal
    income tax purposes, among other requirements, not more than 50% of the value
    of the Company&#146;s capital shares may be owned, directly or indirectly,
    by five or fewer individuals (as defined in the Internal Revenue Code to
    include certain entities) during the last half of each taxable year after
    1993, and such capital shares must be beneficially owned by 100 or more persons
    during at least 335 days of a taxable year of 12 months or during a proportionate
    part of a shorter taxable year (in each case, other than the first such year).
    The Company&#146;s Declaration of Trust includes certain restrictions regarding
    transfers of the Company&#146;s capital shares and ownership limits that
    are intended to assist the Company in satisfying these limitations. These restrictions
    and limits may not be adequate in all cases, however, to prevent the transfer
    of the Company&#146;s capital shares in violation of the ownership limitations.
    The ownership limit discussed above may have the effect of delaying, deferring
    or preventing someone from taking control of the Company.</font></p>
<p align="left"> <font size=2 face="serif">Actual or constructive ownership of
    the Company&#146;s capital shares in excess of the share ownership limits
    contained in the Company&#146;s Declaration of Trust would cause the violative
    transfer or ownership to be null and void from the beginning and
    subject to purchase by the Company at a price equal to the lesser of (i)
    the price stipulated in the challenged transaction and (ii) the fair market
    value of
    such shares (determined in accordance with the rules set forth in the Company&#146;s
    declaration of trust). As a result, if a violative transfer were made, the
    recipient of the shares would not acquire any economic or voting rights attributable
    to the transferred shares. Additionally, the constructive ownership rules
    for these limits are complex and groups of related individuals or entities
    may be deemed a single owner and consequently in violation of the share ownership
    limits.</font></p>
<p align="left"> <b><font size=2 face="serif">Adverse legislative or regulatory
      tax changes could have an adverse effect on the Company.</font></b> </p>
<p align="left"> <font size=2 face="serif">There are a number of issues associated
    with an investment in a REIT that are related to the federal income tax laws,
    including, but not limited to, the consequences of failing to continue to
    qualify as a REIT. At any time, the federal income tax laws governing REITs
    or the administrative interpretations of those laws may be amended. Any of
    those new laws or interpretations may take effect retroactively and could
    adversely affect the Company or the Company's shareholders. Recently enacted legislation
    reduces tax rates applicable to certain corporate dividends paid to most
    domestic noncorporate shareholders. REIT dividends generally would not be
    eligible for reduced rates because a REIT&#146;s income generally is not
    subject to corporate level tax. As a result, investment in non-REIT corporations
    may be viewed as relatively more attractive than investment in REITs by domestic
    noncorporate investors. This could adversely affect the market price of the
    Company&#146;s shares.</font></p>
<p align="center"> <font size=2 face="serif">14</font></p>
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<p align="left"> <b><font size=2 face="serif">Concentration of ownership by certain
      investors.</font></b> </p>
<p align="left"> <font size=2 face="serif">Yale University currently owns or controls 8.8 million of the Company&#146;s
    Common Shares, representing 32.2% of the Company&#146;s total outstanding
    voting securities. However, the Company and Yale have established a voting
    trust whereby all shares that Yale owns in excess of 30% of the Company&#146;s
    outstanding Common Shares, will be voted in the same proportion as all other
    shares voted, excluding Yale. In addition, three other shareholders own more
    than 5% individually, and 20.1% in the aggregate, of the Company&#146;s Common
    Shares.</font></p>
<p align="left"> <font size=2 face="serif">A significant concentration of ownership
    may allow an investor to exert a greater influence over the Company&#146;s
    management and affairs and may have the effect of delaying, deferring or
    preventing a change in control of the Company.</font> </p>
<p align="left"> <b><font size=2 face="serif">Restrictions on a potential change
      of control.</font></b> </p>
<p align="left"> <font size=2 face="serif">The Company&#146;s Board of Trustees
    is authorized by the Company&#146;s Declaration of Trust to establish and
    issue one or more series of preferred shares without shareholder approval.
    The Company has not established
    any series of preferred shares, however the establishment and issuance of
    a series of preferred shares could make more difficult
    a change of control of the Company that could be in the best interest of the shareholders.</font></p>
<p align="left"> <font size=2 face="serif">In addition, the Company has entered
    into an employment agreement with the Chief Executive Officer of the Company
    and severance agreements are in place with the Company&#146;s senior vice
    presidents which provide that, upon the occurrence of a change in control
    of the Company, those executive officers would be entitled to certain termination
    or severance payments made by the Company (which may include a lump sum payment
    equal to defined percentages of annual salary and prior years' average bonuses, paid in accordance with the terms and conditions of the
    respective agreement, which could deter a change of control of the Company
    that could be in the Company&#146;s best interest.</font></p>
<p align="left"> <b><font size=2 face="serif">The loss of a key executive officer
      could have an adverse effect on the Company. </font></b> </p>
<p align="left"> <font size=2 face="serif">The success of the Company depends
    on the contribution of key management members. The loss of the services of
    Kenneth F. Bernstein, President and Chief Executive Officer, or other key
    executive-level employees could have a material adverse effect on the Company&#146;s
    results of operations. Although the Company has entered into an employment
    agreement with the Company&#146;s President, Kenneth F. Bernstein, the loss
    of his services could have an adverse effect on the Company&#146;s operations.</font></p>
<p align="center"> <font size=2 face="serif">15</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="p16"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="left"> <b><font size=2 face="serif">ITEM 2. &nbsp;&nbsp;&nbsp;PROPERTIES </font></b></p>
<p align="left"> <b><font size=2 face="serif">SHOPPING CENTER PROPERTIES </font></b></p>
<p align="left"> <font size=2 face="serif">The discussion and tables in Item
    2 includes six properties held through joint ventures in which the Company
    owns a partial interest (&#147;Joint Venture Portfolio&#148;). Except where
    noted, it does not include the Company&#146;s partial interest in 25 anchor-only
    leases with Kroger and Safeway supermarkets as previously discussed in Item
    1. &#150; Property Acquisitions, as the majority of these properties are
    free-standing and all are triple-net leases.</font></p>
<p align="left"> <font size=2 face="serif">As of December 31, 2003, the Company
    owned and operated 35 shopping centers as part of its wholly-owned portfolio
    and the Joint Venture Portfolio, which included a mixed-use property (retail
    and residential) and three properties under redevelopment. The Company&#146;s
    shopping centers, which total approximately 6.5 million square feet of gross
    leasable area (&#147;GLA&#148;), are located in 12 states and are generally
    well-established, anchored community and neighborhood shopping centers. The
    properties are diverse in size, ranging from approximately 31,000 to 614,000
    square feet with an average size of 185,000 square feet. As of December 31,
    2003, the Company&#146;s wholly-owned portfolio and the Joint Venture Portfolio
    were approximately 88% and 98% occupied, respectively. The Company&#146;s
    shopping centers are typically anchored by supermarkets or value-oriented
    retail.</font></p>
<p align="left"> <font size=2 face="serif">The Company had approximately 500
    leases as of December 31, 2003, of which 63%, 24% and 13% of the rental revenues
    received therefrom were from national, regional and local tenants, respectively.
    A majority of the income from the properties consists of rent received under
    long-term leases. Most of these leases provide for the payment of fixed minimum
    rent monthly in advance and for the payment by tenants of a pro-rata share
    of the real estate taxes, insurance, utilities and common area maintenance
    of the shopping centers. Minimum rents and expense reimbursements accounted
    for approximately 92% of the Company&#146;s total revenues for the year ended
    December 31, 2003.</font></p>
<p align="left"> <font size=2 face="serif">As of December 31, 2003, approximately
    50% of the Company&#146;s existing leases also provided for the payment of
    percentage rents either in addition to, or in place of, minimum rents. These
    arrangements generally provide for payment to the Company of a certain percentage
    of a tenant&#146;s gross sales in excess of a stipulated annual amount. Percentage
    rents accounted for approximately 1% of the total 2003 revenues of the Company.</font></p>
<p align="left"> <font size=2 face="serif">Four of the Company&#146;s shopping
    center properties are subject to long-term ground leases in which a third
    party owns and has leased the underlying land to the Company. The Company
    pays rent for the use of the land at three locations and is responsible for
    all costs and expenses associated with the building and improvements at all
    four locations.</font></p>
<p align="left"> <font size=2 face="serif">No individual property contributed
    in excess of 10% of the Company&#146;s total revenues for the years ended
    December 31, 2003, 2002 and 2001.</font></p>
<p align="left"> <font size=2 face="serif">Reference is made to the Company&#146;s
    consolidated financial statements in Item 8 of this Annual Report on form
    10-K for information on the mortgage debt pertaining to the Company&#146;s
    properties.</font></p>
<p align="left"> <font size=2 face="serif">The following sets forth more specific
    information with respect to each of the Company&#146;s shopping centers at
    December 31, 2003:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><font size="1">&nbsp;</font> </td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><div align="center"><font size="1" face="serif"><b>Year</b></font></div>
    </td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><div align="right"><font size="1">&nbsp;</font></div>
    </td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Occupancy (1) </font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Anchor Tenants (2)</font></b></td>
  </tr>
  <tr>
    <td align="left"><b><font size=1 face="serif">Shopping Center </font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><div align="center"><font size="1" face="serif"><b>Constructed(C)</b></font></div>
    </td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Ownership</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><div align="right"><font size="1">&nbsp;</font></div>
    </td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">%</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Current Lease Expiration</font></b></td>
  </tr>
  <tr>
    <td align="left"><font size="1"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></td>
    <td align="center"><b><font size=1 face="serif">Location</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><div align="center"><font size="1" face="serif"><b>Acquired(A)</b></font></div>
    </td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Interest</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><div align="center"><font size="1" face="serif"><b>GLA</b></font></div>
    </td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">12/31/03</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Lease Option Expiration</font></b></td>
  </tr>
  <tr>
    <td align="left"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td><hr align="left" size=1 noshade>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr align="right" size=1 noshade>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
  </tr>
  <tr>
    <td align="center"><b><font size=2 face="serif">NEW ENGLAND </font></b></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr>
    <td align="center"><b><font size=2 face="serif">REGION </font></b></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr>
    <td align="left"> </td>
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr>
    <td align="left"><font size=2 face="serif"><u>Connecticut</u> </font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">239 Greenwich
        Avenue</font></td>
    <td width="12%" align="left"><font size=2 face="serif">Greenwich</font></td>
    <td width=2% align="right">&nbsp;</td>
    <td width=8% align="right"><div align="left"><font size=2 face="serif">1998(A)</font></div></td>
    <td width=2%><font size=2 face="serif">&nbsp; </font></td>
    <td width=8%><font size=2 face="serif">Fee</font></td>
    <td width=2%>&nbsp;</td>
    <td width=8% align="left"><div align="right"><font size=2 face="serif">16,834</font></div></td>
    <td width=2%><font size=2 face="serif">(3)</font></td>
    <td width=8% align="right"><font size=2 face="serif">100%</font></td>
    <td width=2% align="right">&nbsp;</td>
    <td width=24% align="left"><div align="left"><font size=2 face="serif"> Restoration Hardware
        2015/2025</font></div>      <div align="left"><font size=2 face="serif">Chico&#146;s
      Fashion 2010/2020</font></div></td>
  </tr>
  <tr>
    <td align="left"></td>
    <td align="left"></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Town Line Plaza</font></td>
    <td align="left"><font size=2 face="serif">Rocky
        Hill</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><div align="left"><font size=2 face="serif">1998(A)</font></div></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td>&nbsp;</td>
    <td align="left"><div align="right"><font size=2 face="serif">206,178</font></div></td>
    <td><font size=2 face="serif">(4)</font></td>
    <td align="right"><font size=2 face="serif">100% </font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><div align="left"><font size=2 face="serif">Stop &amp; Shop
    2023/2063(5)</font></div>      <div align="left"><font size=2 face="serif">Wal*Mart(4)</font></div></td>
  </tr>
  <tr>
    <td align="left"><font size=2 face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr>
    <td align="left"><font size=2 face="serif"><u>Massachusetts </u></font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Methuen Shopping
        Center</font></td>
    <td align="left"><font size=2 face="serif">Methuen</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><div align="left"><font size=2 face="serif">1998(A)</font></div></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td><font size=2 face="serif">LI/Fee (7)</font></td>
    <td>&nbsp;</td>
    <td align="left"><div align="right"><font size=2 face="serif">130,238</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">100% </font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><div align="left"><font size=2 face="serif">Wal*Mart 2011/2051</font></div>      <div align="left"><font size=2 face="serif">DeMoulas Market 2005/2015</font></div></td>
  </tr>
  <tr>
    <td align="left"></td>
    <td align="left"></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Crescent Plaza</font></td>
    <td align="left"><font size=2 face="serif">Brockton</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><div align="left"><font size=2 face="serif">1984(A)</font></div></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td>&nbsp;</td>
    <td align="left"><div align="right"><font size=2 face="serif">218,277</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">100%</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><div align="left"><font size=2 face="serif"> Home Depot 2021/2051</font></div>      <div align="left"><font size=2 face="serif">Shaw&#146;s
    2012/2042</font></div></td>
  </tr>
  <tr>
    <td align="left"></td>
    <td align="left"></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr>
    <td align="left"><font size=2 face="serif"><u>Rhode Island </u></font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Walnut Hill
        Plaza </font></td>
    <td align="left"><font size=2 face="serif">Woonsocket</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><div align="left"><font size=2 face="serif">1998(A)</font></div></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td>&nbsp;</td>
    <td align="left"><div align="right"><font size=2 face="serif">285,773</font></div></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">100% </font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><div align="left"><font size=2 face="serif">Sears 2008/2033</font></div>      <div align="left"><font size=2 face="serif">Shaw&#146;s
    2013/2043</font></div></td>
  </tr>
  <tr>
    <td align="left"></td>
    <td align="left"></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr>
    <td align="left"><font size=2 face="serif"><u>Vermont</u> </font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr>
    <td align="left">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">The Gateway Shopping<br>
<div style="margin-left: 10%">Center</div></font></td>
    <td align="left"><font size=2 face="serif">South Burlington</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><div align="left"><font size=2 face="serif">1999(A)</font></div></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td>&nbsp;</td>
    <td align="left"><div align="right"><font size=2 face="serif">100,563</font></div></td>
    <td><font size=2 face="serif">(6)</font></td>
    <td align="right"><font size=2 face="serif">84%</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif"> Shaw&#146;s 2024/2054</font></td>
  </tr>
</table>
<p align="center"><font size=2 face="serif">16</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="p17"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr valign="bottom">
    <td><b><font size=1 face="serif">Shopping Center<br>
      Property</font></b></td>
    <td align="center"><b><font size=1 face="serif">Location</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Year<br>
      Constructed(C)<br>
      Acquired(A)</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><div align="center"><b><font size=1 face="serif">Ownership<br>
  Interest </font></b></div></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td align="right"><div align="center"><b><font size=1 face="serif">GLA</font></b></div></td>
    <td>&nbsp;</td>
    <td align="center"><div align="center"><b><font size=1 face="serif">Occupancy (1)<br>
        % <br>
      12/31/03</font></b></div></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Anchor Tenants (2)<br>
      Current Lease Expiration<br>
      Lease Option Expiration</font></b></td>
  </tr>
  <tr valign="top">
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="right"><hr align="right" size=1 noshade>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">NEW YORK REGION</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><u><font size=2 face="serif">New Jersey</font></u></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Berlin Shopping Center</font></td>
    <td width=12%><font size=2 face="serif">Berlin</font></td>
    <td width=2%><font size="2" face="serif">&nbsp;</font></td>
    <td width=8%><font size=2 face="serif">1994 (A)</font></td>
    <td width=2%><font size=2 face="serif">&nbsp; </font></td>
    <td width=8%><font size=2 face="serif">Fee</font></td>
    <td width=2%><font size="2" face="serif">&nbsp;</font></td>
    <td width=8% align="right"><font size=2 face="serif">188,717</font></td>
    <td width=2%>&nbsp;</td>
    <td width=8% align="right"><div align="right"><font size=2 face="serif">80%</font></div></td>
    <td width=2%>&nbsp;</td>
    <td width=24%><font size=2 face="serif">Kmart 2004/2029<br>
    Acme 2005/2015 </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Elmwood Park Shopping<br>
    <div style="margin-left: 10%">Center</div></font></td>
    <td><font size=2 face="serif">Elmwood Park</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1998 (A)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">149,676</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">100%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Pathmark 2017/2052<br>
      Walgreen&#146;s 2022/2062 </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Ledgewood Mall</font></td>
    <td><font size=2 face="serif">Ledgewood</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1983 (A)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">515,980</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">88%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">The Sports&#146; Authority
      2007/2037<br>
      Macy&#146;s 2005/2030<br>
      Wal*Mart 2019/2049<br>
      Circuit City 2020/2040<br>
    Marshall&#146;s 2007/2027 </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Marketplace of Absecon</font></td>
    <td><font size=2 face="serif">Absecon</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1998 (A)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">105,251</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">93%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Eckerd Drug 2020/2040<br>
      Acme 2015/2055 </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><u><font size=2 face="serif">New York</font></u></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Branch Shopping Plaza</font></td>
    <td><font size=2 face="serif">Smithtown</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1998 (A)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">LI (7)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">125,640</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">96%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Waldbaum&#146;s 2013/2028</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;New Loudon Center</font></td>
    <td><font size=2 face="serif">Latham</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1982 (A)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">254,332</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">75%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Price Chopper 2015/2035<br>
      Marshall&#146;s 2014/2029(8) <br>
      Bon Ton 2014/2034 (8)</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Village Commons Shopping<br>
<div style="margin-left: 10%">Center</div></font></td>
    <td><font size=2 face="serif">Smithtown</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1998 (A)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">87,285</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">96%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Daffy&#146;s 2008/2028<br>
      Walgreens 2021/none </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Soundview Marketplace</font></td>
    <td><font size=2 face="serif">Port Washington</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1998 (A)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">LI/Fee (7)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">182,367</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">92%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">King Kullen 2007/2042<br>
      Clearview Cinema
      2010/2030 </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Pacesetter Park Shopping<br>
<div style="margin-left: 10%">Center</div></font></td>
    <td><font size=2 face="serif">Pomona</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1999 (A)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">96,252</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">84%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Stop &amp; Shop 2020/2040</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">MID-ATLANTIC REGION</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><u><font size=2 face="serif">Pennsylvania</font></u></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Abington Towne Center</font></td>
    <td><font size=2 face="serif">Abington</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1998 (A)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">216,542</font></td>
    <td><font size=2 face="serif">(9)</font></td>
    <td align="right"><div align="right"><font size=2 face="serif">98%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">TJ Maxx 2010/2020
      Target (9) </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Blackman Plaza</font></td>
    <td><font size=2 face="serif">Wilkes-Barre</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1968 (C)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">121,341</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">92%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Kmart 2004/2049 (10)</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Bradford Towne Centre</font></td>
    <td><font size=2 face="serif">Towanda</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1993 (C)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">256,939</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">89%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Kmart 2019/2069<br>
      P&amp;C Foods 2014/2024 (16) </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;East End Centre</font></td>
    <td><font size=2 face="serif">Wilkes-Barre</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1986 (C)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">308,283</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">52%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Price Chopper 2008/2028</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Greenridge Plaza</font></td>
    <td><font size=2 face="serif">Scranton</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1986 (C)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">198,393</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">53%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Giant Food 2021/2051</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Luzerne Street<br>
<div style="margin-left: 10%">Shopping Center</div> </font></td>
    <td><font size=2 face="serif">Scranton</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1983 (A)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">57,988</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">94%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Price Chopper 2004/2024 (11)<br>
      Eckerd Drug 2004/2019 </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Mark Plaza</font></td>
    <td><font size=2 face="serif">Edwardsville</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1968 (C)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">LI/Fee (7)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">214,036</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">91%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Kmart 2004/2054 (10)<br>
      Redner&#146;s Markets
      2018/2028</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Pittston Plaza</font></td>
    <td><font size=2 face="serif">Pittston</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1994 (C)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">79,494</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">98%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Redner&#146;s Markets
      2018/2028<br>
    Eckerd Drug 2006/2016 </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Plaza 422</font></td>
    <td><font size=2 face="serif">Lebanon</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1972 (C)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">155,026</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">69%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Home Depot 2028/2058 (12)</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Route 6 Mall</font></td>
    <td><font size=2 face="serif">Honesdale</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1994 (C)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">175,507</font></td>
    <td>&nbsp;</td>
    <td align="right"><div align="right"><font size=2 face="serif">99%</font></div></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Kmart 2020/2070</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<p align="center"><font size="2" face="serif"> 17</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="p18"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr valign="bottom">
    <td><font size="1" face="serif"><b>Shopping Center<br>
Property</b></font></td>
    <td align="center"><font size="1" face="serif"><b>Location</b></font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="center"><font size="1" face="serif"><b>Year<br>
Constructed(C)<br>
Acquired(A)</b></font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><div align="center"><font size="1" face="serif"><b>Ownership<br>
Interest </b></font></div>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="center"><font size="1" face="serif"><b>GLA</b></font></div>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="center"><div align="center"><font size="1" face="serif"><b>Occupancy
            (1)<br>
% <br>
12/31/03</b></font></div>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="center"><font size="1" face="serif"><b>Anchor Tenants (2)<br>
Current Lease Expiration<br>
Lease Option Expiration</b></font></td>
  </tr>
  <tr valign="top">
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="right"><hr align="right" size=1 noshade>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">MIDWEST REGION</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif"><u>Illinois</u></font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size="2" face="serif">&nbsp;&nbsp;&nbsp;Hobson West Plaza</font></td>
    <td width=12%><font size=2 face="serif">Naperville</font></td>
    <td width=2%><font size="2" face="serif">&nbsp;</font></td>
    <td width=8%><font size=2 face="serif">1998 (A)</font></td>
    <td width=2%><font size=2 face="serif">&nbsp; </font></td>
    <td width=8%><font size=2 face="serif">Fee</font></td>
    <td width=2%><font size="2" face="serif">&nbsp;</font></td>
    <td width=8% align="right"><font size=2 face="serif">99,044</font></td>
    <td width=2%><font size="2" face="serif">&nbsp;</font></td>
    <td width=8% align="right"><div align="right"><font size=2 face="serif">99%</font></div>
    </td>
    <td width=2%>&nbsp;</td>
    <td width=24%><font size=2 face="serif">Bobak&#146;s Market &amp; Restaurant
        2007/2032 </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif"><u>Indiana</u></font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;&nbsp;&nbsp;Merrillville Plaza</font></td>
    <td><font size=2 face="serif">Merrillville</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1998 (A)</font></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">235,603</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size=2 face="serif">100%</font></div>
    </td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">JC Penney 2008/2018<br>
      Office Max 2008/2028 <br>
      TJ Maxx 2004/2014</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif"><u>Michigan</u></font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size="2" face="serif">&nbsp;&nbsp;&nbsp;Bloomfield Town Square</font></td>
    <td><font size=2 face="serif">Bloomfield Hills</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1998 (A)</font></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">217,499</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size=2 face="serif">88%</font></div>
    </td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">TJ Maxx 2009/2014<br>
      Marshalls 2011/2026<br>
      Home Goods 2010/2025</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif"><u>Ohio</u></font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;&nbsp;&nbsp;Mad River Station</font></td>
    <td><font size=2 face="serif">Dayton</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1999 (A)</font></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td><font size=2 face="serif">Fee</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">154,325</font></td>
    <td><font size="2" face="serif">(13)</font></td>
    <td align="right"><div align="right"><font size=2 face="serif">80%</font></div>
    </td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Office Depot 2005/2010<br>
      Babies &#145;R&#146; Us 2005/2020 </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><hr align="right" size=1 noshade>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="center"><font size="2" face="serif">&nbsp;</font></td>
    <td colspan=3 align="center"><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div>
    </td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="center"><font size="2" face="serif">&nbsp;</font></td>
    <td colspan=3 align="center"><font size=2 face="serif">Wholly-owned portfolio</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">5,153,383</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size=2 face="serif">88%</font></div>
    </td>
    <td>&nbsp;</td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
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  <tr valign="top">
    <td colspan=12><font size=2 face="serif">PROPERTIES HELD IN JOINT VENTURES<br>
      NEW YORK REGION </font></td>
  </tr>
  <tr valign="top">
    <td><u><font size=2 face="serif">New York</font></u></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
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    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size="2" face="serif">&nbsp;&nbsp;&nbsp;Crossroads Shopping Center </font></td>
    <td><font size=2 face="serif">White Plains</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">1998 (A)</font></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td><font size=2 face="serif">JV (14)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">310,919</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size=2 face="serif">99%</font></div>
    </td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Kmart 2012/2037<br>
      Waldbaum&#146;s 2007/2032 <br>
      B. Dalton 2012/2022<br>
      Modell&#146;s 2009/2019 <br>
      Pay Half 2018/none</font></td>
  </tr>
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    <td><font size="2" face="serif">&nbsp;</font></td>
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  <tr valign="top">
    <td><font size=2 face="serif">MIDWEST REGION</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
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    <td align="right"><div align="right"><font size="2" face="serif">&nbsp;</font></div>
    </td>
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    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif"><u>Ohio</u></font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
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    <td><font size="2" face="serif">&nbsp;</font></td>
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    </td>
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    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;&nbsp;&nbsp;Amherst Marketplace</font></td>
    <td><font size=2 face="serif">Cleveland</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">2002 (A)</font></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td><font size=2 face="serif">JV (15)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">79,937</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size=2 face="serif">100%</font></div>
    </td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Giant Eagle 2021/2041</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
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  </tr>
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    <td><font size="2" face="serif">&nbsp;&nbsp;&nbsp;Granville Centre</font></td>
    <td><font size=2 face="serif">Columbus</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">2002 (A)</font></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td><font size=2 face="serif">JV (15)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">131,543</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size=2 face="serif">88%</font></div>
    </td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Big Bear 2020/2050 (16)<br>
      California Fitness 2017/2027 </font></td>
  </tr>
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    <td><font size="2" face="serif">&nbsp;</font></td>
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  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;&nbsp;&nbsp;Sheffield Crossing</font></td>
    <td><font size=2 face="serif">Cleveland</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">2002 (A)</font></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td><font size=2 face="serif">JV (15)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">112,634</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size=2 face="serif">94%</font></div>
    </td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Giant Eagle 2022/2042</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
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    </td>
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    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">MID-ATLANTIC REGION</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
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    </td>
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  </tr>
  <tr valign="top">
    <td><font size=2 face="serif"><u>Delaware</u></font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
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    </td>
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  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Brandywine Town Center<br>
<div style="margin-left: 10%">(17) </div></font></td>
    <td><font size=2 face="serif">Wilmington</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">2003 (A)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">JV (15)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">614,289</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size=2 face="serif">99%</font></div>
    </td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Target 2018/2068<br>
      Lowe&#146;s Home Centers 2018/2048<br>
      Dick&#146;s Sporting Goods 2013/2028<br>
      Bed Bath &amp; Beyond 2014/2029<br>
      Old Navy (Gap) 2011/2016 </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
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    </td>
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    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;&nbsp;&nbsp;Market Square Shopping<br>
        <div style="margin-left: 10%">Center</div></font></td>
    <td><font size=2 face="serif">Wilmington</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">2003 (A)</font></td>
    <td><font size=2 face="serif">&nbsp; </font></td>
    <td><font size=2 face="serif">JV (15)</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">87,760</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size=2 face="serif">100%</font></div>
    </td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Trader Joe&#146;s 2013/2028<br>
      TJ Maxx 2006/2016 </font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
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    <td align="right"><hr noshade size=1>
    </td>
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    <td align="right"><hr align="right" size=1 noshade>
    </td>
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  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td colspan=5 align="center"><font size="2" face="serif">&nbsp;</font></td>
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    <td align="right"><font size="2" face="serif">&nbsp;</font></td>
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    </td>
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    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#eeeeee">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td colspan=3 align="center"><font size=2 face="serif">Joint Venture Portfolio</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">1,337,082</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><div align="right"><font size=2 face="serif">98%</font></div>
    </td>
    <td>&nbsp;</td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
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    <td><font size="2" face="serif">&nbsp;</font></td>
    <td colspan=5><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
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    </td>
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    </td>
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  </tr>
</table>
<p>&nbsp;</p>
<p align="center"><font size="2" face="serif"> 18</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="p19"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td colspan="2" valign="top"><font size=2 face="serif">Notes:</font></td>
  </tr>
  <tr>
    <td width="3%" valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(1)</font></td>
    <td><font size=2 face="serif">Does not include space leased for which rent
        has not yet commenced.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(2)</font></td>
    <td><font size=2 face="serif">Generally, anchors represent those tenants
        whose leases comprise at least 10% of the GLA of the center.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(3)</font></td>
    <td><font size=2 face="serif">In addition to the 16,834 square feet of retail
        GLA, this property also has 21 apartments comprising 14,434 square feet.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(4)</font></td>
    <td><font size=2 face="serif">Includes a 92,500 square foot Wal*Mart which
        is not owned by the Company.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(5)</font></td>
    <td><font size=2 face="serif">Following the recapture, demolition and reconstruction
        of the existing supermarket building, a new Super Stop &amp; Shop supermarket</font><font size=2 face="serif"> will
        open at this center during the first quarter of 2005. Although not yet
        open, rent has commenced pursuant to the lease.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(6)</font></td>
    <td><font size=2 face="serif">The newly built 72,000 square foot Shaw&#146;s
        supermarket opened during the second quarter 2003 at this redevelopment
        project.</font><font size=2 face="serif"> The balance of the newly constructed
        small shop space is in its initial lease-up phase.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(7)</font></td>
    <td><font size=2 face="serif">The Company is a ground lessee under a long-term
        ground lease.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(8)</font></td>
    <td><font size=2 face="serif">The Bon Ton Department Store opened for business
        in 66,000 square feet on November 21, 2003 as part of the redevelopment
        of this</font><font size=2 face="serif"> property. Additional space which
        has been leased, but is not yet occupied consists of approximately 11,000
        square feet to</font><font size=2 face="serif"> Marshall&#146;s, an existing
        tenant at the center, which will be expanding its current 26,000 square
        foot store to 37,000 square feet, and</font><font size=2 face="serif"> 49,000
        square feet to Raymour and Flanigan Furniture.</font><font size=2 face="serif"> Following
        these tenants taking occupancy in mid-2004, this community</font><font size=2 face="serif"> shopping
        center will be 100% leased.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(9)</font></td>
    <td><font size=2 face="serif">Includes a 157,616 square foot Target Store
        that is not owned by the Company.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(10)</font></td>
    <td><font size=2 face="serif">Kmart has notified the Company of its intentions
        to exercise its option to renew the lease upon expiration of the current
        lease term.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(11)</font></td>
    <td><font size=2 face="serif">This tenant has ceased operating in their space
        but continues to pay rent pursuant to the lease.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(12)</font></td>
    <td><font size=2 face="serif">Home Depot opened in 104,000 square feet at
        this shopping center redevelopment in December 2003. In connection with
        the project,</font><font size=2 face="serif"> the Company also recaptured
        another 48,000 square feet of space, for which re-leasing is underway.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(13)</font></td>
    <td><font size=2 face="serif">The GLA for this property includes 28,205 square
        feet of office space.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(14)</font></td>
    <td><font size=2 face="serif">The Company has a 49% investment in this property.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(15)</font></td>
    <td><font size=2 face="serif">The Company has a 22% investment in this property.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(16)</font></td>
    <td><font size=2 face="serif">This is a subsidiary of Penn Traffic, which
        is currently operating under Chapter 11 bankruptcy. Penn Traffic continues
        to operate at </font><font size=2 face="serif">the Bradford Towne Centre,
        but has neither accepted nor rejected this lease. Penn Traffic ceased
        operations at the Granville Centre </font><font size=2 face="serif">and
        rejected the lease at this location on February 20, 2004.</font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size=2 face="serif">(17)</font></td>
    <td><font size=2 face="serif">Does not include 240,000 square feet of new
        space in Phase II of the Brandywine Town Center, which will be paid for
        by the </font><font size=2 face="serif">Company on an Earn-out basis
        only if, and when, it is leased.</font></td>
  </tr>
</table>
<p align="center"> <font size=2 face="serif">19</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>
<a name="p20"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left">
<b><font size=2 face="serif">MAJOR TENANTS </font></b><font size=2 face="serif"></font></p>
<p align="left">
  <font size=2 face="serif">No individual retail tenant accounted for more than 4.7%
  of minimum rents for the year ended December 31, 2003 or 9.9% of total leased
  GLA as of December 31, 2003. The following table sets forth certain information
  for the 25 largest retail tenants based upon minimum rents in place as of December
  31, 2003. The table includes leases related to the Company&#146;s partial interest in 25 anchor-only leases with Kroger and Safeway supermarkets. The below amounts include the Company&#146;s
  pro-rata share of GLA and annualized base rent for its partial ownership interest
in properties (GLA and rent in thousands):</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td colspan=4 align="center"><font size="1"><b><font face="serif">Percentage of Total</font></b>&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td colspan=4 align="center"><font size="1"><b><font face="serif">Represented by Retail Tenant</font></b>&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
<tr>
  <td><font size="1">&nbsp;</font></td>
  <td align="center"><font size="1">&nbsp;</font></td>
  <td><font size="1">&nbsp;</font></td>
  <td><font size="1">&nbsp;</font></td>
  <td><font size="1">&nbsp;</font></td>
  <td><font size="1">&nbsp;</font></td>
  <td><font size="1">&nbsp;</font></td>
  <td><font size="1">&nbsp;</font></td>
  <td colspan="4"><hr size="1" noshade></td>
</tr>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Number of</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Stores in</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Total</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><font size="1">&nbsp;</font></td>
   <td align="center"><font size="1">&nbsp;<b><font face="serif">Annualized Base</font></b></font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Total</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Annualized Base</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><b><font size=1 face="serif">Retail Tenant</font></b></td>
   <td align="center"><b><font size=1 face="serif">Portfolio</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">GLA</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><font size="1">&nbsp;</font></td>
   <td align="center"><font size="1">&nbsp;<b><font face="serif">Rent (1)</font></b></font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Portfolio GLA (2)</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Rent (2)</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
  <td><hr size="1" noshade></td>
  <td align="right"><hr size="1" noshade></td>
  <td><hr size="1" noshade></td>
  <td align="right"><hr size="1" noshade></td>
  <td><hr size="1" noshade></td>
  <td align="center"><hr size="1" noshade></td>
  <td align="right"><hr size="1" noshade></td>
  <td><hr size="1" noshade></td>
  <td align="right"><hr size="1" noshade></td>
  <td><hr size="1" noshade></td>
  <td align="right"><hr size="1" noshade></td>
  <td><hr size="1" noshade></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Shaw&#146;s</font></td>
   <td width=8% align="right"><font size=2 face="serif">3</font></td>
   <td width=2%><font size="2">&nbsp;</font></td>
   <td width=8% align="right"><font size=2 face="serif">175</font></td>
   <td width=2%><font size="2">&nbsp;</font></td>
   <td width=1% align="left"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">2,337</font></td>
   <td width=2%><font size="2">&nbsp;</font></td>
   <td width=8% align="right"><font size=2 face="serif">3.0</font></td>
   <td width=2%><font size=2 face="serif">%</font></td>
   <td width=8% align="right"><font size=2 face="serif">4.7</font></td>
   <td width=2%><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Kmart</font></td>
   <td align="right"><font size=2 face="serif">6</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">570</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">2,148</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">9.9</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">4.3</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">T.J. Maxx</font></td>
   <td align="right"><font size=2 face="serif">9</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">245</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,923</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">4.3</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">3.9</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Ahold (Giant, Stop &amp; Shop) (3)</font></td>
   <td align="right"><font size=2 face="serif">3</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">179</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,549</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">3.1</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">3.1</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Wal*Mart</font></td>
   <td align="right"><font size=2 face="serif">2</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">210</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,515</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">3.6</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">3.1</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Price Chopper (4)</font></td>
   <td align="right"><font size=2 face="serif">3</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">168</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,296</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">2.9</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">2.7</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">A&amp;P / Waldbaum&#146;s</font></td>
   <td align="right"><font size=2 face="serif">2</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">82</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,168</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1.4</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">2.4</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Eckerd Drug (5)</font></td>
   <td align="right"><font size=2 face="serif">8</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">90</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,054</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1.6</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">2.1</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Home Depot</font></td>
   <td align="right"><font size=2 face="serif">2</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">211</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,010</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">3.7</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">2.0</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Pathmark</font></td>
   <td align="right"><font size=2 face="serif">1</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">48</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">955</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.8</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.9</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Restoration Hardware</font></td>
   <td align="right"><font size=2 face="serif">1</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">12</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">930</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.2</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.9</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Acme (Albertson&#146;s)</font></td>
   <td align="right"><font size=2 face="serif">2</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">76</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">919</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1.3</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.9</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Redners Supermarket</font></td>
   <td align="right"><font size=2 face="serif">2</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">112</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">863</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">2.0</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.7</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Safeway (6)</font></td>
   <td align="right"><font size=2 face="serif">13</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">104</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">832</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1.8</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.7</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Kroger (7)</font></td>
   <td align="right"><font size=2 face="serif">12</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">122</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">829</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">2.1</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.7</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">KB Toys (8)</font></td>
   <td align="right"><font size=2 face="serif">6</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">46</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">669</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.8</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.4</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Macy&#146;s</font></td>
   <td align="right"><font size=2 face="serif">1</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">73</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">611</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1.3</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.2</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Clearview Cinema (9)</font></td>
   <td align="right"><font size=2 face="serif">1</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">25</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">596</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.5</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.2</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">JC Penney</font></td>
   <td align="right"><font size=2 face="serif">2</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">73</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">592</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1.3</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.2</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Payless Shoe Source</font></td>
   <td align="right"><font size=2 face="serif">12</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">41</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">589</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.7</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.2</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Walgreen&#146;s</font></td>
   <td align="right"><font size=2 face="serif">2</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">24</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">589</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.4</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.2</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">King Kullen</font></td>
   <td align="right"><font size=2 face="serif">1</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">48</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">563</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.8</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.1</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Blockbuster Video</font></td>
   <td align="right"><font size=2 face="serif">5</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">23</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">505</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.4</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.0</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Fashion Bug (Charming Shoppes) (10)</font></td>
   <td align="right"><font size=2 face="serif">9</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">88</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">470</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1.5</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1.0</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size="2">&nbsp;&nbsp;&nbsp;<font face="serif">Total</font></font></td>
   <td align="right"><font size=2 face="serif">108</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">2,845</font></td>
   <td>&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">24,512</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">49.4</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">49.6</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
</table>
<table width="100%" cellpadding="0" cellspacing="0">
<tr>
  <td colspan="2" valign="top"><font size="1" face="serif">Notes:</font></td>
  </tr>
<tr>
  <td valign="top"><font size="1">&nbsp;</font></td>
  <td valign="top"><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td width="3%" valign="top"><font size="1" face="serif">(1)</font></td>
   <td valign="top"><font size="1" face="serif">Base rents do not include percentage rents (except where noted), additional rents for property expense reimbursements, and contractual rent escalations due after December 31, 2003.</font></td>
</tr>
<tr>
   <td valign="top"><font size="1" face="serif">(2)</font></td>
   <td valign="top"><font size="1" face="serif">Represents total GLA and annualized base
       rent for the Company&#146;s retail properties including its pro-rata share
    of joint venture properties.</font></td>
</tr>
<tr>
   <td valign="top"><font size="1" face="serif">(3)</font></td>
   <td valign="top"><font size="1" face="serif">The Company will be installing a new Super
       Stop &amp; Shop supermarket in connection with the redevelopment of Town Line Plaza. Although not yet open, rent has commenced pursuant to the lease.</font></td>
</tr>
<tr>
   <td valign="top"><font size="1" face="serif">(4)</font></td>
   <td valign="top"><font size="1" face="serif">The tenant is currently not operating the store at the Luzerne Street Shopping Center. They are obligated, and continue, to pay annual minimum rent of $178 until the lease expires on April 30, 2004.</font></td>
</tr>
<tr>
   <td valign="top"><font size="1" face="serif">(5)</font></td>
   <td valign="top"><font size="1" face="serif">Subsidiary of JC Penney. The store at the Berlin Shopping Center has ceased operating, but continues to pay annual rent of $30 pursuant to the lease which expires November 30, 2004. The Route 6 Plaza location has been sublet to Advance Auto and expires 2011.</font></td>
</tr>
<tr>
   <td valign="top"><font size="1" face="serif">(6)</font></td>
   <td valign="top"><font size="1" face="serif">Safeway has sub-leased seven of these locations to supermarket tenants, one location to a non-supermarket tenant and ceased operations at one other location. Safeway is obligated to pay rent through the full term of all these leases which expire in 2009.</font></td>
</tr>
<tr>
   <td valign="top"><font size="1" face="serif">(7)</font></td>
   <td valign="top"><font size="1" face="serif">Kroger has sub-leased four of these locations to supermarket tenants, two locations to a non-supermarket tenant and ceased operations at one other location. Kroger is obligated to pay rent through the full term of these leases which expire in 2009.</font></td>
</tr>
<tr>
   <td valign="top"><font size="1" face="serif">(8)</font></td>
   <td valign="top"><font size="1" face="serif">The tenant is currently operating under Chapter 11 bankruptcy and, to date has neither affirmed nor rejected its leases at any of these locations.</font></td>
</tr>
<tr>
   <td valign="top"><font size="1" face="serif">(9)</font></td>
   <td valign="top"><font size="1" face="serif">Subsidiary of Cablevision.</font></td>
</tr>
<tr>
   <td valign="top"><font size="1" face="serif">(10)</font></td>
   <td valign="top"><font size="1" face="serif">This tenant pays percentage rent
       only (no minimum rent) at four of its locations. Included in the above
       rent is $245 of percentage rent paid for calendar 2003.</font></td>
</tr>
</table>
<p align="center"><font size=2 face="serif">20</font></p>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page>
<a name="p21"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left">
<b><font size=2 face="serif">LEASE EXPIRATIONS </font></b><font size=2 face="serif"></font></p>
<p align="left">
  <font size=2 face="serif">The following table shows scheduled lease expirations for
  retail tenants in place as of December 31, 2003, assuming that none of the
  tenants exercise renewal options. 255,000 square feet of GLA owned by anchor
  tenants are not included in the below table. Leases related to the Company&#146;s joint venture properties are shown separately below before the Company&#146;s
pro-rata share of annual base rent and GLA (GLA and rent in thousands):</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td><b><font size=2 face="serif">Wholly-Owned</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><b><font size=2 face="serif">Portfolio:</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td colspan="4" align="center"><font size="1"><b><font face="serif">Annualized Base</font></b></font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td colspan="4" align="center"><font size="1"><b><font face="serif">Rent (1)</font></b></font></td>
   <td><font size="1">&nbsp;</font></td>
   <td colspan=3 align="center"><font size="1"><b><font face="serif">GLA</font></b></font></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Number of</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="1">&nbsp;&nbsp;&nbsp;<b><font face="serif">Leases maturing in</font></b></font></td>
   <td align="center"><b><font size=1 face="serif">Leases </font></b></td>
   <td align="right"><font size="1">&nbsp;</font></td>
   <td colspan=2 align="center"><b><font size="1" face="serif">Current Annual</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Percentage of</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Percentage</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td colspan="2" align="center"><b><font size=1 face="serif">Rent</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Total</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Square feet</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">of Total</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2004</font></font></td>
   <td width=8% align="right"><font size=2 face="serif">65</font></td>
   <td width=2%><font size="2">&nbsp;</font></td>
   <td width=1%><font size=2 face="serif"> $</font></td>
   <td width=8% align="right"><font size=2 face="serif">2,734</font></td>
   <td width=2%><font size="2">&nbsp;</font></td>
   <td width=8% align="right"><font size=2 face="serif">6</font></td>
   <td width=2%><font size=2 face="serif">%</font></td>
   <td width=8% align="right"><font size=2 face="serif">354</font></td>
   <td width=2%><font size="2">&nbsp;</font></td>
   <td width=8% align="right"><font size=2 face="serif">8</font></td>
   <td width=2%><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2005</font></font></td>
   <td align="right"><font size=2 face="serif">54</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">4,403</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">10</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">434</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">10</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2006</font></font></td>
   <td align="right"><font size=2 face="serif">54</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,447</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">6</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">199</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">5</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2007</font></font></td>
   <td align="right"><font size=2 face="serif">56</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">4,181</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">10</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">377</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">9</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2008</font></font></td>
   <td align="right"><font size=2 face="serif">57</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">4,694</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">11</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">424</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">10</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2009</font></font></td>
   <td align="right"><font size=2 face="serif">39</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">3,354</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">8</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">460</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">11</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2010</font></font></td>
   <td align="right"><font size=2 face="serif">19</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,426</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">6</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">212</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">5</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2011</font></font></td>
   <td align="right"><font size=2 face="serif">18</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,120</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">5</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">195</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">5</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2012</font></font></td>
   <td align="right"><font size=2 face="serif">8</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">988</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">73</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2013</font></font></td>
   <td align="right"><font size=2 face="serif">15</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,312</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">5</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">164</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">4</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">Thereafter</font></font></td>
   <td align="right"><font size=2 face="serif">30</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">13,011</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">31</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1,366</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">31</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">Total</font></font></td>
   <td align="right"><font size=2 face="serif">415</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size=2 face="serif"> $</font></td>
   <td align="right"><font size=2 face="serif">42,670</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">100</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">4,258</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">100</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
  <td><font size="2">&nbsp;</font></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
</tr>
</table>
<p>&nbsp;</p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><b><font size=2 face="serif">Joint Venture</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><b><font size=2 face="serif">Portfolio:</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td colspan="3" align="center"><font size="1"><b><font face="serif">Annualized
            Base</font></b>&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td colspan="3" align="center"><font size="1"><b><font face="serif">Rent
            (1)</font></b>&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;<b><font face="serif">GLA</font></b></font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;<b><font face="serif">Number of</font></b></font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;&nbsp;&nbsp;<b><font face="serif">Leases maturing
            in</font></b></font></td>
    <td align="center"><font size="1"><b><font face="serif">Leases </font></b>&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1"><b><font face="serif">Current Annual</font>&nbsp;</b></font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;&nbsp;<b><font face="serif">Percentage
            of</font></b></font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Percentage</font></b></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1"><b><font face="serif">Rent</font>&nbsp;</b></font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;&nbsp;<b><font face="serif">Total</font></b></font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;<b><font face="serif">Square feet</font></b></font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">of Total</font></b></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2004</font></font></td>
    <td width="8%" align="right"><font size=2 face="serif">14</font></td>
    <td width="2%"><font size="2">&nbsp;</font></td>
    <td width="1%"><font size=2 face="serif"> $</font></td>
    <td width="8%" align="right"><font size=2 face="serif">1,554</font></td>
    <td width="2%"><font size="2">&nbsp;</font></td>
    <td width="8%" align="right"><font size=2 face="serif">8</font></td>
    <td width="2%"><font size=2 face="serif">%</font></td>
    <td width="8%" align="right"><font size=2 face="serif">65</font></td>
    <td width="2%" align="right">&nbsp;</td>
    <td width="8%" align="right"><font size=2 face="serif">5</font></td>
    <td width="2%"><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2005</font></font></td>
    <td align="right"><font size=2 face="serif">7</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">512</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">3</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">21</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2006</font></font></td>
    <td align="right"><font size=2 face="serif">9</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">760</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">4</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">52</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2007</font></font></td>
    <td align="right"><font size=2 face="serif">12</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">1,458</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">7</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">78</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">6</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2008</font></font></td>
    <td align="right"><font size=2 face="serif">11</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">927</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">5</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">38</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">3</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2009</font></font></td>
    <td align="right"><font size=2 face="serif">4</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">366</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">2</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">30</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2011</font></font></td>
    <td align="right"><font size=2 face="serif">5</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">1,645</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">9</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">73</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">6</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2012</font></font></td>
    <td align="right"><font size=2 face="serif">7</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">1,752</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">9</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">160</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">12</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">2013</font></font></td>
    <td align="right"><font size=2 face="serif">7</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">2,007</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">11</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">117</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">9</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">Thereafter</font></font></td>
    <td align="right"><font size=2 face="serif">15</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">8,008</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">42</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">673</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">51</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">Total</font></font></td>
    <td align="right"><font size=2 face="serif">91</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">18,989</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">100</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">1,307</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">100</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td colspan="2"><font size=1 face="serif">Note:</font></td>
  </tr>
  <tr valign="top">
    <td width="3%"><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size=1 face="serif">(1)</font></td>
    <td><font size=1 face="serif">Base rents do not include percentage rents,
        additional rents for property expense reimbursements, nor contractual
    rent escalations due after December 31, 2003.</font></td>
  </tr>
</table>
<p align="center">
<font size=2 face="serif">21</font></p>

<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div><page>

<a name="p22"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left">
<b><font size=2 face="serif">GEOGRAPHIC CONCENTRATIONS </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">The following table summarizes the Company&#146;s retail properties by region as of December 31, 2003. (GLA and rent in thousands):</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><font size="1"> &nbsp;</font></td>
    <td rowspan="5" align="center" valign="bottom"><font size="1">&nbsp;</font><font size="1">&nbsp;</font><font size="1">&nbsp;</font><font size="1"><b></b></font><b><font size=1 face="serif">GLA (1)</font></b></td>
    <td rowspan="5" align="center"><font size="1">&nbsp;</font></td>
    <td rowspan="5" align="center" valign="bottom"><font size="1">&nbsp;</font><font size="1">&nbsp;</font><font size="1">&nbsp;</font><font size="1"><b></b></font><b><font size=1 face="serif">Occupied % (2)</font></b></td>
    <td rowspan="5" align="center"><font size="1">&nbsp;</font></td>
    <td rowspan="5" align="center"><font size="1">&nbsp;</font></td>
    <td rowspan="5" align="center" valign="bottom"><font size="1">&nbsp;</font><font size="1">&nbsp;</font><font size="1">&nbsp;</font><b><font size=1 face="serif">Annualized
          Base<br>
    </font></b><b><font size=1 face="serif">Rent (2)</font></b></td>
    <td rowspan="5" align="center"><font size="1">&nbsp;</font></td>
    <td rowspan="5" align="center"><font size="1"><b></b></font></td>
    <td rowspan="5" align="center" valign="bottom"><font size="1">&nbsp;</font><font size="1">&nbsp;</font><b><font size=1 face="serif">Annualized
          Base</font></b><b><font size=1 face="serif"> Rent per Leased</font></b><b><font size=1 face="serif"> Square
          Foot</font></b></td>
    <td rowspan="5" align="center"><font size="1">&nbsp;</font></td>
    <td colspan=4 align="center"><b><font size=1 face="serif">Percentage of Total</font></b></td>
    <td rowspan="5"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td colspan=4 align="center"><b><font size=1 face="serif">Represented by
          Region</font></b></td>
  </tr>
  <tr>
    <td><font size="1"> &nbsp;</font></td>
    <td align="center"><hr noshade size=1>
    </td>
    <td align="center"><hr noshade size=1>
    </td>
    <td align="center"><hr noshade size=1>
    </td>
    <td align="center"><hr noshade size=1>
    </td>
  </tr>
  <tr>
    <td><font size="1"> &nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Annualized Base</font></b></td>
  </tr>
  <tr>
    <td><b><font size=1 face="serif">Region</font></b></td>
    <td align="center"><b><font size=1 face="serif">GLA</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Rent</font></b></td>
  </tr>
<tr>
   <td>&nbsp;</td>
   <td align="center"><hr noshade size=1>     <b></b></td>
   <td align="center">&nbsp;</td>
   <td align="center"><hr noshade size=1>     <b></b></td>
   <td align="center">&nbsp;</td>
   <td align="center">     <hr noshade size=1>     <b></b></td>
   <td align="center"><hr noshade size=1></td>
   <td align="center">&nbsp;</td>
   <td align="center"><hr noshade size=1></td>
   <td align="center"><hr noshade size=1></td>
   <td align="center">&nbsp;</td>
   <td align="center"><hr noshade size=1>     <b></b></td>
   <td align="center">&nbsp;</td>
   <td align="center">&nbsp;</td>
   <td align="center"><hr noshade size=1>     <b></b></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Wholly-Owned Portfolio:</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">New York Region</font></td>
   <td width=9% align="right"><font size=2 face="serif">1,706</font></td>
   <td width=2%>&nbsp;</td>
   <td width=9% align="right"><font size=2 face="serif">88</font></td>
   <td width=2%><font size=2 face="serif">%</font></td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=9% align="right"><font size=2 face="serif">19,116</font></td>
   <td width=2%>&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=9% align="right"><font size=2 face="serif">12.77</font></td>
   <td width=2%>&nbsp;</td>
   <td width=9% align="right"><font size=2 face="serif">33</font></td>
   <td width=2%><font size=2 face="serif">%</font></td>
   <td width=1% align="right">&nbsp;</td>
   <td width=9% align="right"><font size=2 face="serif">45</font></td>
   <td width=2%><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">New England</font></td>
   <td align="right"><font size=2 face="serif">958</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">98</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">9,106</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">10.78</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">19</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">22</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Midwest</font></td>
   <td align="right"><font size=2 face="serif">706</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">92</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">7,001</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">10.80</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">14</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">16</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Mid-Atlantic</font></td>
   <td align="right"><font size=2 face="serif">1,783</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">80</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">7,447</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">6.28</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">34</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">17</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Total Wholly-Owned Portfolio</font></td>
   <td align="right"><font size=2 face="serif">5,153</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">88</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">42,670</font></td>
   <td>&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">10.22</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">100</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">100</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td width="9%"><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Joint Venture Portfolio:</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Midwest (3)</font></td>
   <td align="right"><font size=2 face="serif">324</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">93</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">3,193</font></td>
   <td>&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">10.56</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">24</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">17</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Mid-Atlantic (3,4)</font></td>
   <td align="right"><font size=2 face="serif">702</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">99</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">10,272</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">14.72</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">52</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">54</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">New York Region (5)</font></td>
   <td align="right"><font size=2 face="serif">311</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">99</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">5,524</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">17.99</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">24</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">29</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Total Joint Venture Portfolio</font></td>
   <td align="right"><font size=2 face="serif">1,337</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">98</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">18,989</font></td>
   <td>&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">14.53</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">100</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">100</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
</tr>
</table>
<p>
<font size=1 face="serif">Notes</font><font size=2 face="serif">:</font></p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr>
   <td align="left" valign="top"><font size=1 face="serif">(1)</font></td>
   <td align="left" valign="top"><font size=1 face="serif">Property GLA includes a total of 255 square feet which is not owned by the Company. This square footage has been excluded for calculating annualized base rent per square foot.</font></td>
</tr>
<tr>
   <td width="3%" align="left" valign="top"><font size=1 face="serif">(2)</font></td>
   <td align="left" valign="top"><font size=1 face="serif">The above occupancy and rent amounts do not include space which is currently leased, but for which rent payment has not yet commenced</font></td>
</tr>
<tr>
   <td align="left" valign="top"><font size=1 face="serif">(3)</font></td>
   <td align="left" valign="top"><font size=1 face="serif">The Company has a 22% interest in Acadia Strategic Opportunity Fund which owns these properties.</font></td>
</tr>
<tr>
   <td align="left" valign="top"><font size=1 face="serif">(4)</font></td>
   <td align="left" valign="top"><font size=1 face="serif">Does not include 240 square feet of new space in Phase II of the Brandywine Town Center, which will be paid for by the Company on an Earn-out basis only if, and when it is leased.</font></td>
</tr>
<tr>
   <td align="left" valign="top"><font size=1 face="serif">(5)</font></td>
   <td align="left" valign="top"><font size=1 face="serif">The Company has a 49% interest in two partnerships which, together, own the Crossroads Shopping Center.</font></td>
</tr>
</table>
<p align="left">
<b><font size=2 face="serif">MULTI-FAMILY PROPERTIES </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">The Company owns two multi-family properties located in the Mid-Atlantic and Midwest regions. The properties average 737 units and as of December 31, 2003, had an average occupancy rate of 94%. The following sets forth more specific information with respect to each of the Company&#146;s multi-family properties at December 31, 2003:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td height="15"><font size="1">&nbsp;&nbsp;&nbsp;<b><font face="serif">Multi-Family
            Property </font></b></font></td>
    <td align="center"><font size="1"><b><font face="serif">Location</font></b>&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Year Acquired</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Ownership</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Units</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">% Occupied</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font> </td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Interest</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
  </tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=1></td>
  <td width="2%">&nbsp;</td>
  <td><hr noshade size=1></td>
  <td width="2%">&nbsp;</td>
  <td><hr noshade size=1></td>
  <td width="2%">&nbsp;</td>
  <td><hr noshade size=1></td>
  <td>&nbsp;</td>
  <td><hr noshade size=1></td>
  <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Missouri </font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Gate House, Holiday House, Tiger Village and </font></td>
   <td width=10% align="right"><font size=2 face="serif">Columbia</font></td>
   <td width=2% align="right">&nbsp;</td>
   <td width=10% align="right"><font size=2 face="serif">1998</font></td>
   <td width=2% align="right">&nbsp;</td>
   <td width=10% align="right"><font size=2 face="serif">Fee</font></td>
   <td width=2% align="right">&nbsp;</td>
   <td width=10% align="right"><font size=2 face="serif">874</font></td>
   <td width=2% align="right">&nbsp;</td>
   <td width=10% align="right"><font size=2 face="serif">98</font></td>
   <td width=2%><font size=2 face="serif">%</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Colony Apartments(1) </font></td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">North Carolina </font></td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Village Apartments </font></td>
   <td align="right"><font size=2 face="serif">Winston Salem</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">1998</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">Fee</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">600</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">89</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><hr noshade size=1></td>
   <td align="right">&nbsp;</td>
   <td align="right"><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td> </td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">Totals</font></td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,474</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">94</font></td>
   <td><font size=2 face="serif">%</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><hr noshade size=2></td>
   <td align="right">&nbsp;</td>
   <td align="right"><hr noshade size=2></td>
   <td>&nbsp;</td>
</tr>
</table>
<p>
<font size=1 face="serif">Notes:</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="left" valign="top"><font size=1 face="serif">(1)</font></td>
    <td align="left" valign="top"><font size=1 face="serif">The Company owns four contiguous residential
        complexes in Columbia, Missouri which, although owned in two separate
        entities, are managed as a single property and therefore reflected as
    such.</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
</table>
<p align="center">
<font size=2 face="serif">22</font></p>

<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="p23"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left">
<b><font size=2 face="serif">ITEM 3.&nbsp;&nbsp;&nbsp;LEGAL PROCEEDINGS </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">In 2002, the Company settled its lawsuit against The Great Atlantic &amp; Pacific Tea Company (&#147;A&amp;P&#148;) which had been filed in July 2001. The terms of the settlement are subject to a confidentiality agreement. The Company had alleged that A&amp;P defaulted under its lease at the Elmwood Park Shopping Center by failing to accept delivery of its site at the center. The Company believed A&amp;P wrongfully refused acceptance of the site and sought to have the Court declare the lease in default, terminate the lease and accelerate the rent that totaled approximately $24.4 million over the 20 year lease term.</font></p>
<p align="left">
<font size=2 face="serif">The Company is involved in other various matters of litigation arising in the normal course of business. While the Company is unable to predict with certainty the amounts involved, management is of the opinion that, when such litigation is resolved, the Company&#146;s resulting liability, if any, will not have a significant effect on the Company&#146;s consolidated financial position or results of operations.</font></p>
<p align="left">
<b><font size=2 face="serif">ITEM 4.&nbsp;&nbsp;&nbsp;SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">No matter was submitted to a vote of security holders through the solicitation of proxies or otherwise during the fourth quarter of 2003.</font></p>
<p align="center"><b><font size=2 face="serif">PART II</font></b></p>
<p align="left"><b><font size=2 face="serif">ITEM 5.&nbsp;&nbsp;&nbsp;MARKET FOR THE REGISTRANT&#146;S
COMMON EQUITY AND RELATED SHAREHOLDER MATTERS</font></b></p>
<p align="left"><font size=2 face="serif">(a)&nbsp;&nbsp;&nbsp;Market Information</font></p>
<p align="left"><font size=2 face="serif">The following table shows, for the
    period indicated, the high and low sales price for the Common Shares as reported
on the New York Stock Exchange, and cash dividends paid during the two years
    ended
December 31, 2003 and 2002.</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td><font size="1"> &nbsp;</font></td>
   <td align="right"><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="right"><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Dividend</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><b><font size=1 face="serif">Quarter Ended</font></b></td>
   <td align="right"><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">High</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="right"><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Low</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Per Share</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><hr noshade size=1></td>
   <td align="right">&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td align="right"><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif"><u>2003</u></font></td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">March 31, 2003</font></td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=10% align="right"><font size=2 face="serif">8.15</font></td>
   <td width=2%>&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif">$ </font></td>
   <td width=10% align="right"><font size=2 face="serif">7.40</font></td>
   <td width=2%>&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif">$ </font></td>
   <td width=10% align="right"><font size=2 face="serif">0.145</font></td>
   <td width=2%>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">June 30, 2003</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">9.25</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">8.02</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.145</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">September 30, 2003</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">11.50</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">9.06</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.145</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">December 31, 2003</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">12.68</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">10.81</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.16</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif"><u>2002</u></font></td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">March 31, 2002</font></td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">7.59</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$ </font></td>
   <td align="right"><font size=2 face="serif">6.16</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$ </font></td>
   <td align="right"><font size=2 face="serif">0.13</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">June 30, 2002</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">8.65</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">6.45</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.13</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">September 30, 2002</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">8.15</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">6.87</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.13</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">December 31, 2002</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">7.79</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">6.77</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.13</font></td>
   <td>&nbsp;</td>
</tr>
</table>
<p align="left">
<font size=2 face="serif">At March 12, 2004, there were 288 holders of record of the Company&#146;s Common Shares.</font></p>
<p align="left">
<font size=2 face="serif">(b)&nbsp;&nbsp;&nbsp;Dividends</font></p>
<p align="left">
<font size=2 face="serif">The Company has determined that 100% of the total dividends distributed to shareholders in 2003 represented ordinary income. The Company&#146;s cash flow is affected by a number of factors, including the revenues received from rental properties, the operating expenses of the Company, the interest expense on its borrowings, the ability of lessees to meet their obligations to the Company and unanticipated capital expenditures. Future dividends paid by the Company will be at the discretion of the Trustees and will depend on the actual cash flows of the Company, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and such other factors as the Trustees deem relevant.</font></p>
<p align="left">
<font size=2 face="serif">(c)&nbsp;&nbsp;&nbsp;</font><font size=2 face="serif">Issuer purchases of equity securities</font></p>
<p align="left">
<font size=2 face="serif">The Company has an existing share repurchase program that authorizes management, at its discretion, to repurchase up to $20.0 million of the Company&#146;s outstanding Common Shares. Through March 12, 2004, the Company had repurchased 1,899,486 Common Shares (net of 155,199 shares reissued) at a total cost of $11.6 million. The program may be discontinued or extended at any time and there is no assurance that the Company will purchase the full amount authorized. There were no Common Shares repurchased by the Company during the fourth quarter of the fiscal year ended December 31, 2003.</font></p>
<p align="center">
<font size=2 face="serif">23</font></p>

<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div><page>

<a name="p24"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%"><font size=2 face="serif">(d)</font></td>
    <td><font size=2 face="serif"> Securities authorized for issuance under equity
      compensation</font> </td>
  </tr>
</table>
<p align="left">
<font size=2 face="serif">The following table provides information related to the Company&#146;s 1999 Share Incentive Plan (the &#147;1999 Plan&#148;) and 2003 Share Incentive Plan (the &#147;2003 Plan&#148;) as of December 31, 2003:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td colspan="8" align="center"><b><font size=2 face="serif">Equity Compensation Plan Information</font></b></td>
  </tr>
  <tr align="center">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">(a)</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">(b)</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">(c)</font></b></td>
    <td align="right"><font size="1" face="serif">&nbsp;</font></td>
  </tr>
  <tr align="center">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">Number of securities to</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">Weighted- average</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">Number of securities</font></b></td>
    <td align="right"><font size="1" face="serif">&nbsp;</font></td>
  </tr>
  <tr align="center">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">be issued upon exercise</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">exercise price of</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">remaining available</font></b></td>
    <td align="right"><font size="1" face="serif">&nbsp;</font></td>
  </tr>
  <tr align="center">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">of outstanding options,</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">outstanding options,</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">for future issuance under</font></b></td>
    <td align="right"><font size="1" face="serif">&nbsp;</font></td>
  </tr>
  <tr align="center">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">warrants and rights</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">warrants and rights</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">equity compensation plans</font></b></td>
    <td align="right"><font size="1" face="serif">&nbsp;</font></td>
  </tr>
  <tr align="center">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">(excluding securities</font></b></td>
    <td align="right"><font size="1" face="serif">&nbsp;</font></td>
  </tr>
  <tr align="center">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td align="right"><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td align="right"><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td><b><font size=1 face="serif">reflected in column a)</font></b></td>
    <td align="right"><font size="1" face="serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Equity compensation plans</font></td>
    <td align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">approved
      by security holders</font></td>
    <td width=12% align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,095,150</font></td>
    <td width=2% bgcolor="#eeeeee">&nbsp;</td>
    <td width=1% bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width=12% align="right" bgcolor="#eeeeee"><font size=2 face="serif">7.04</font></td>
    <td width=2% bgcolor="#eeeeee">&nbsp;</td>
    <td width=12% align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,101,622</font></td>
    <td width=2% align="right" bgcolor="#eeeeee"><font size=2 face="serif">(1)</font></td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Equity compensation plans</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Not approved by security holders</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Total</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,095,150</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">7.04</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,101,622</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(1)</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2" valign="top"><font size=1 face="serif">Notes:</font></td>
  </tr>
  <tr>
    <td valign="top"><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="3%" valign="top"><font size=1 face="serif">(1)</font></td>
    <td><font size=1 face="serif">The 1999 and 2003 Plans authorize the issuance
      of options equal to up to a total of 12% of the total Common Shares outstanding
      from time to time on a fully diluted basis. However, not more than 4,000,000
      of the Common Shares in the aggregate may be issued pursuant to the exercise
      of options and no participant may receive more than 5,000,000 Common Shares
      during the term of the 1999 and 2003 Plans. Remaining available is based
      on 27,409,141 outstanding Common Shares and 1,139,017 OP Units as of December
      31, 2003, less the issuance of a total of 229,007 restricted shares granted
      through the same date.</font></td>
  </tr>
</table>


<p align="center">
<font size=2 face="serif">24</font></p>

<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="p25"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left">
<b><font size=2 face="serif">ITEM 6.&nbsp;&nbsp;&nbsp;SELECTED FINANCIAL DATA </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">The following table sets forth, on a historical basis, selected financial data for the Company. This information should be read in conjunction with the audited consolidated financial statements of the Company and Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere in this Annual Report on Form 10-K.</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td>&nbsp;</td>
    <td colspan="14" align="center"><b><font size=1 face="serif">Years ended December
      31,</font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2003</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2001</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2000</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td colspan="2" align="center"><b><font size=1 face="serif">1999</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size=2 face="serif">OPERATING DATA:</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Revenues</font></td>
    <td width=1% align="right"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">69,445</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif"> $</font></td>
    <td width=8% align="right"><font size=2 face="serif">69,347</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif"> $</font></td>
    <td width=8% align="right"><font size=2 face="serif">61,282</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif"> $</font></td>
    <td width=8% align="right"><font size=2 face="serif">63,450</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif"> $</font></td>
    <td width=8% align="right"><font size=2 face="serif">58,933</font></td>
    <td width=2%>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Operating expenses</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">34,703</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">30,894</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">29,049</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">28,736</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">27,651</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Interest expense</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">11,231</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">11,017</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">12,370</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">15,877</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">13,686</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Depreciation and amortization</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">17,909</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">14,804</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">13,745</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">13,136</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">12,241</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Abandoned project costs</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">274</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Gain in sale of land</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,187</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,530</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Equity in earnings of unconsolidated</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">partnerships</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,411</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">628</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">504</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">645</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">584</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Minority interest</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,347</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(2,999</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,466</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,952</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,832</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Income from continuing operations</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">7,853</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">11,517</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">5,156</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4,394</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4,107</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Income from discontinued operations</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">7,882</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4,795</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">15,513</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">3,088</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Income before cumulative effect of</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">a change in accounting principle</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">7,853</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">19,399</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">9,951</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">19,907</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">7,195</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Cumulative effect of a change in</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">accounting principle</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(149</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Net income</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">7,853</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">19,399</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">9,802</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">19,907</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">7,195</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Basic earnings per share:</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Income from continuing operations</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.30</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.46</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.18</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.16</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.16</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Income from discontinued operations</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">0.31</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">0.18</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">0.59</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">0.12</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Cumulative effect of a change in</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">accounting principle</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(0.01</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Basic earnings per share</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.30</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.77</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.35</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.75</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.28</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Diluted earnings per share:</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Income from continuing operations</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.29</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.45</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.18</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.16</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.16</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Income from discontinued operations</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">0.31</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">0.18</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">0.59</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">0.12</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Cumulative effect of a change in</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">accounting principle</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(0.01</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=1></td>
    <td align="center"> <hr noshade size=1></td>
    <td align="center"><font size="1">&nbsp;</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Diluted earnings per share</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.29</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.76</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.35</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.75</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">0.28</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><hr noshade size=2></td>
    <td align="center"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Weighted average number of Common</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Shares outstanding</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">- basic</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">26,589</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">25,321</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">28,313</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">26,437</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">25,709</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">- diluted
      (1)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">27,496</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">25,806</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">BALANCE SHEET DATA:</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Real estate before accumulated</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">depreciation</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">427,628</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">413,878</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">398,416</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">387,729</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">389,111</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Total assets</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">388,184</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">410,935</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">493,939</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">523,611</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">570,803</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Total mortgage indebtedness</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">190,444</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">202,361</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">211,444</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">193,693</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">213,154</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Minority interest &#150; Operating</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Partnership</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">7,875</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">22,745</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">37,387</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">48,959</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">74,462</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Total equity</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">169,734</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">161,323</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">179,098</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">179,317</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">152,487</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">OTHER:</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Funds from Operations (2)</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">27,664</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">30,162</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">13,487</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">31,789</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">31,160</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Cash flows provided by (used
      in):</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Operating
      activities</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">19,082</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">24,918</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">20,521</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">19,197</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">25,886</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Investing
      activities</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(19,400</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">24,646</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(11,199</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(11,165</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(19,930</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Financing
      activities</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(30,187</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(58,807</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(7,047</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(45,948</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">14,201</font></td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="center">
<font size=2 face="serif">25</font></p>

<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div>
<page> <a name="p26"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2" align="left"><font size=1 face="serif">Notes:</font></td>
  </tr>
  <tr>
    <td width="3%" align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" align="left" valign="top"><font size=1 face="serif">(1)</font><font size="1">&nbsp;</font></td>
    <td><font size=1 face="serif">For 1999 through 2001, the weighted average
        number of shares outstanding on a diluted basis is not presented as the
        inclusion of additional shares was anti-dilutive.</font><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="3%" align="left" valign="top"><font size=1 face="serif">(2)</font><font size="1">&nbsp;</font></td>
    <td><font size=1 face="serif">The Company considers funds from operations
        (&#147;FFO&#148;) as defined by the National Association of Real Estate
        Investment Trusts</font><font size="1"> <font face="serif">(&#147;NAREIT&#148;)
        to be an appropriate supplemental disclosure of operating performance
        for an equity REIT due to its widespread acceptance and use within the
        REIT and analyst communities. FFO is presented to assist investors in
        analyzing the performance of the Company. It is helpful as it excludes
        various items included in net income that are not indicative of the operating
        performance, such as gains (or losses) from sales of property and depreciation
        and amortization. However, the Company&#146;s method of calculating FFO
        may be different from methods used by other REITs and, accordingly, may
        not be comparable to such other REITs. FFO does not represent cash generated
        from operations as defined by generally accepted accounting principles
        (&#147;GAAP&#148;) and is not indicative of cash available to fund all
        cash needs, including distributions. It should not be considered as an
        alternative to net income for the purpose of evaluating the Company&#146;s
        performance or to cash flows as a measure of liquidity. Consistent with
        the NAREIT definition, the Company defines FFO as net income (computed
        in accordance with GAAP), excluding gains (or losses) from sales of depreciated
        property, plus depreciation and amortization, and after adjustments for
        unconsolidated partnerships and joint ventures. The Company historically
        had added back impairments in real estate in calculating FFO, in accordance
        with prior NAREIT guidance. However, NAREIT, based on discussions with
        the SEC, has provided revised guidance that provides that impairments
        should not be added back to net income in calculating FFO. As such, historical
        FFO has been restated consistent with this revised guidance. See Management&#146;s
        Discussion and Analysis of Financial Condition and Results of Operations &#150; Funds
        from Operations for the reconciliation of net income to FFO.</font></font></td>
  </tr>
</table>
<p> <b><font size=2 face="serif">ITEM 7.&nbsp;&nbsp;&nbsp;MANAGEMENTS DISCUSSION
      AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS </font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">The following discussion should be read in conjunction
    with the consolidated financial statements of the Company (including the
    related notes thereto) appearing elsewhere in this Annual Report on Form
    10-K. Certain statements contained in this Annual Report on Form 10-K may
    contain forward-looking statements within the meaning of Section 27A of the
    Securities Act of 1933 and Section 21E of the Securities and Exchange Act
    of 1934 and as such may involve known and unknown risks, uncertainties and
    other factors which may cause our actual results, performance or achievements
    to be materially different from future results, performance or achievements
    expressed or implied by such forward-looking statements. Forward-looking
    statements, which are based on certain assumptions and describe the Company&#146;s
    future plans, strategies and expectations are generally identifiable by use
    of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend" or "project" or
    the negative thereof or other variations thereon or comparable terminology.
    Factors which could have a material adverse effect on the operations and
    future prospects of the Company include, but are not limited to those set
    forth under the heading "Risk Factors" in this Annual Report on Form 10-K.
    These risks and uncertainties should be considered in evaluating any forward-looking
    statements contained or incorporated by reference herein.</font></p>
<p> <b><font size=2 face="serif">OVERVIEW</font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">The Company currently operates 62 properties, which
    it owns or has an ownership interest in, consisting of 58 neighborhood and
    community shopping centers, one enclosed mall, one mixed-use property (retail/residential)
    and two multi-family properties, which are located primarily in the Northeast,
    Mid-Atlantic and Midwestern regions of the United States and, in total, comprise
    approximately nine million square feet. The Company receives income primarily
    from the rental revenue from its properties, including recoveries from tenants,
    offset by operating and overhead expenses.</font></p>
<p><font size=2 face="serif">The Company focuses on three primary areas in executing
    its business plan as follows:</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2" align="left" valign="top"><font size=2 face="serif">&#8211;</font><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Focus
        on maximizing the return on its existing portfolio through leasing and
        property redevelopment activities. The Company&#146;s redevelopment program
        is a significant and ongoing component of managing its existing portfolio
        and focuses on selecting well-located neighborhood and community shopping
        centers and creating significant value through re-tenanting and property
        redevelopment. </font></td>
  </tr>
  <tr>
    <td width="3%" align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" align="left" valign="top"><font size=2 face="serif">&#8211;</font><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Pursue
        above-average returns though an disciplined and opportunistic acquisition
        program. The primary conduits for the Company&#146;s acquisition program
        are through its existing acquisition joint venture, ASOF, as well as the
        new venture established to invest in surplus or underutilized properties
        owned or controlled by retailers as discussed under Item 1. Business
        - Recent Developments in this Annual Report on Form 10-K. </font></td>
  </tr>
  <tr>
    <td width="3%" align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" align="left" valign="top"><font size=2 face="serif">&#8211;</font><font size=2 face="serif">&nbsp;</font><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Maintain
        a strong balance sheet, which provides the Company with the financial
        flexibility to fund both property redevelopment and acquisition opportunities.</font> </td>
  </tr>
</table>
<p align="center"> <font size=2 face="serif">26</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="p27"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <b><font size=2 face="serif">RESULTS OF OPERATIONS</font></b> </p>
<p> <b><font size=2 face="serif">Comparison of the year ended December 31, 2003
      (&#147;2003&#148;) to the year ended December 31, 2002 (&#147;2002&#148;) </font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">Total revenues increased $98,000 to $69.4 million
    for 2003 compared to $69.3 million for 2002.</font></p>
<p> <font size=2 face="serif">Minimum rents increased $1.7 million, or 3%, to
    $50.2 million for 2003 compared to $48.5 million for 2002. This increase
    was attributable to an increase in rents following the redevelopment of the
    Elmwood Park and Gateway shopping centers and an increase in rents from re-tenanting
    activities and renewals of tenant leases across the portfolio. These increases
    were partially offset by a decrease in rents following Ames Department Stores&#146; bankruptcy.</font></p>
<p> <font size=2 face="serif">In total, expense reimbursements increased $2.1
    million, or 19%, from $11.4 million for 2002 to $13.5 million for 2003. CAM
    expense reimbursements increased $1.6 million, or 34%, from $4.7 million
    in 2002 to $6.3 million in 2003. This resulted primarily from tenant reimbursements
    of higher snow removal costs following the harsh winter of 2003 as well as
    tenant reimbursements of higher insurance costs throughout the portfolio.
    Real estate tax reimbursements increased $457,000 primarily as a result of
    the variance in real estate tax expense as discussed below.</font></p>
<p> <font size=2 face="serif">Lease termination income of $3.9 million in 2002
    was primarily the result of the settlement of the Company&#146;s claim against
    a former tenant.</font></p>
<p> <font size=2 face="serif">Other income increased $97,000, or 3%, from $3.9
    million in 2002 to $4.0 million in 2003. This was primarily due to a lump
    sum additional rent payment of $1.2 million received from a former tenant
    during 2003 in connection with the re-anchoring of the Branch Plaza and an
    increase of $527,000 in management fee income received from ASOF in 2003.
    These increases were partially offset by a decrease in interest income during
    2003 due to lower interest earning assets, including cash investments and
    notes receivable, as well as the decline in interest rates.</font></p>
<p> <font size=2 face="serif">Total operating expenses increased $6.6 million,
    or 14%, to $52.6 million for 2003, from $46.0 million for 2002.</font></p>
<p> <font size=2 face="serif">Property operating expenses increased $2.9 million,
    or 24%, to $15.2 million for 2003 compared to $12.3 million for 2002. This
    was a result of higher snow removal costs due to the harsh winter of 2003
    and higher insurance costs throughout the portfolio.</font></p>
<p> <font size=2 face="serif">Real estate taxes increased $352,000, or 4%, from
    $8.4 million in 2002 to $8.8 million in 2003. This increase was attributable
    to higher real estate taxes experienced generally throughout the portfolio
    and a 2002 adjustment of accrued real estate taxes for an acquired property.
    These increases were primarily offset by a real estate tax refund agreed
    to in 2003 related to the appeal of taxes paid in prior years at the Greenridge
    Plaza.</font></p>
<p> <font size=2 face="serif">General and administrative expense increased $561,000, or 6%, from $10.2 million for 2002 to $10.7 million for 2003. This
    increase was primarily attributable to stock-based compensation. These increases were offset
    by additional costs paid in 2002 related to the Company&#146;s tender offer
    and repurchase of its Common Shares.</font></p>
<p> <font size=2 face="serif">Depreciation and amortization increased $3.1 million,
    or 21%, from $14.8 million for 2002 to $17.9 million for 2003. Depreciation
    expense increased $3.5 million. This was a result of the write-off of $2.7
    million of unamortized tenant improvement costs related to the buyout and
    termination of the former anchor at the Town Line Plaza redevelopment project.
    In addition, depreciation expense increased following the Elmwood Park redevelopment
    project being placed in service during the fourth quarter of 2002 and the
    Gateway project being placed in service during the first quarter of 2003.
    Amortization expense decreased $443,000, which was primarily attributable
    to the write-off of deferred leasing costs during 2002 related to certain
    tenant leases.</font></p>
<p> <font size=2 face="serif">Interest expense of $11.2 million for 2003 increased
    $214,000, or 2%, from $11.0 million for 2002. This was primarily attributable
    to a decrease of $528,000 in capitalized interest in 2003 and a $198,000
    increase in interest expense as a result of higher average interest rates
    on the portfolio debt for 2003. These increases were offset by a $512,000
    decrease resulting from lower average outstanding borrowings during 2003.</font></p>
<p> <font size=2 face="serif">Income from discontinued operations decreased $7.9
    million due to the timing of property sales in 2002.</font></p>
<p align="center"> <font size=2 face="serif">27</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="p28"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="left"> <b><font size=2 face="serif">Comparison of the year ended December
      31, 2002 (&#147;2002&#148;) to the year ended December 31, 2001 (&#147;2001&#148;) </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">Total revenues increased $8.0 million,
    or 13%, to $69.3 million for 2002 compared to $61.3 million for 2001.</font></p>
<p align="left"> <font size=2 face="serif">Minimum rents increased $1.4 million,
    or 3%, to $48.5 million for 2002 compared to $47.1 million for 2001. This
    increase was attributable to increases in rents from re-tenanting activities
    and contractual rent increases for existing tenants offset by a decrease
    in rents following certain tenant bankruptcies.</font></p>
<p align="left"> <font size=2 face="serif">Percentage rents decreased $117,000,
    or 10%, to $1.1 million for 2002 compared to $1.2 million for 2001. This
    decrease was primarily attributable to certain tenant bankruptcies and tenants
    experiencing lower sales volume.</font></p>
<p align="left"> <font size=2 face="serif">In total, expense reimbursements increased
    $535,000, or 5%, from $10.9 million for 2001 to $11.4 million for 2002. Common
    area maintenance (&#147;CAM&#148;) expense reimbursements, which comprise
    the majority of the variance between years, increased $511,000, or 12%, from
    $4.2 million in 2001 to $4.7 million in 2002. This resulted primarily from
    tenant reimbursement of higher insurance costs experienced throughout the
    portfolio and an increase in tenant reimbursement due to increased portfolio
    occupancy in 2002.</font></p>
<p align="left"> <font size=2 face="serif">Lease termination income of $3.9 million
    in 2002 was primarily the result of the settlement of the Company&#146;s
    claim against a former tenant.</font></p>
<p align="left"> <font size=2 face="serif">Other income increased $2.4 million,
    or 154%, from $1.5 million in 2001 to $3.9 million in 2002. This was primarily
    due to an increase of $795,000 in asset and property management fees earned
    in 2002 from ASOF, $1.0 million in interest earned on purchase money notes
    from the sales of properties in 2002 and an increase in interest income due
    to higher interest earning assets in 2002</font></p>
<p align="left"> <font size=2 face="serif">Total operating expenses increased
    $3.2 million, or 7%, to $46.0 million for 2002, from $42.8 million for 2001.</font></p>
<p align="left"> <font size=2 face="serif">Property operating expenses increased
    $677,000, or 6%, to $12.3 million for 2002 compared to $11.6 million for
    2001. This variance was primarily the result of a general increase during
    2002 in property and liability insurance costs across the portfolio and a
    reduction in 2001 of estimated property liability insurance claims related
    to prior year policies based on actual claims filed under these policies.
    In addition, there was an increase in non-recurring repairs and maintenance
    expense experienced throughout the portfolio. These increases were offset
    by lower utility expenses following the redevelopment of the Elmwood Park
    Shopping Center and a decrease in bad debt expense in 2002.</font></p>
<p align="left"> <font size=2 face="serif">General and administrative expense
    increased $1.2 million, or 13%, from $9.0 million for 2001 to $10.2 million
    for 2002. This increase was primarily attributable to an increase in third-party
    professional fees in 2002 as well as an increase in leasing related salary
    expense as a result of the Company&#146;s current accounting policy to expense
    all internal leasing costs commencing in 2002.</font></p>
<p align="left"> <font size=2 face="serif">Depreciation and amortization increased
    $1.1 million, or 8%, from $13.7 million for 2001 to $14.8 million for 2002.
    Depreciation expense increased $591,000. This was principally a result of
    increased depreciation expense related to capitalized tenant installation
    costs during 2001 and 2002 and the write-off of tenant improvement costs
    related to certain tenant leases. Amortization expense increased $468,000,
    which was primarily attributable to the write-off of deferred leasing costs
    related to certain tenant leases and increased loan amortization expense
    related to financing activity in 2002.</font></p>
<p align="left"> <font size=2 face="serif">Interest expense of $11.0 million
    for 2002 decreased $1.4 million, or 11%, from $12.4 million for 2001. Of
    the decrease, $1.6 million was the result of a lower average interest rate
    on the portfolio mortgage debt and $559,000 was due to higher capitalized
    interest in 2002. These decreases were offset by a $822,000 increase in interest
    expense for 2002 due to higher average outstanding borrowings during 2002.</font></p>
<p align="left"> <font size=2 face="serif">The $149,000 cumulative effect of
    a change in accounting principle in 2001 was a transition adjustment related
    to the valuation of LIBOR caps recognized in connection with the January
    1, 2001 adoption of SFAS No. 133.</font></p>
<p align="left"> <font size=2 face="serif">Income from discontinued operations
    increased $3.1 million due to the timing of property sales in 2002 and 2001.</font></p>
<p align="left"> <b><font size=2 face="serif">Funds from Operations </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">The Company considers funds from operations
    (&#147;FFO&#148;) as defined by the National Association of Real Estate Investment
    Trusts (&#147;NAREIT&#148;) to be an appropriate supplemental disclosure
    of operating performance for an equity REIT due to its widespread acceptance
    and use within the REIT and analyst communities. FFO is presented to assist
    investors in analyzing the performance of the Company. It is helpful as it
    excludes various items included in net income that are not indicative of
    the operating performance, such as gains (or losses) from sales of property
    and depreciation and amortization. However, the Company&#146;s method of
    calculating FFO may be different from methods used by other REITs and, accordingly,
    may not be comparable to such other REITs. FFO does not represent cash generated
    from operations as defined by generally accepted accounting principles (&#147;GAAP&#148;)
    and is not indicative of cash available to fund all cash needs, including
    distributions. It should not be considered as an alternative to net income
    for the purpose of evaluating the Company&#146;s performance or to cash flows
    as a measure of liquidity.</font></p>
<p align="center"> <font size=2 face="serif">28</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="p29"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="left"> <font size=2 face="serif">Consistent with the NAREIT definition,
    the Company defines FFO as net income (computed in accordance with GAAP),
    excluding gains (or losses) from sales of depreciated property, plus depreciation
    and amortization, and after adjustments for unconsolidated partnerships and
    joint ventures. The Company historically had added back impairments in real
    estate in calculating FFO, in accordance with prior NAREIT guidance. However,
    NAREIT, based on discussions with the SEC, has provided revised guidance
    that provides that impairments should not be added back to net income in
    calculating FFO. As such, historical FFO has been restated consistent with
    this revised guidance. The reconciliations of net income to FFO for the years
    ended December 31, 2003, 2002, 2001, 2000 and 1999 are as follows:</font></p>
<p align="left"> <b><font size=2 face="serif">Reconciliation of Net Income to
      Funds from Operations </font></b><font size=2 face="serif"></font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td colspan="14"><div align="center"><font size="1">&nbsp;<b><font face="serif">For the Years
    Ended December 31,</font></b></font></div></td>
    <td><font size="1">&nbsp;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><hr noshade size=1>
    </td>
    <td align="center"><hr noshade size=1>
    </td>
    <td align="center"><hr noshade size=1>
    </td>
    <td colspan="2" align="center"><hr noshade size=1>
    </td>
    <td align="center"><hr noshade size=1>
    </td>
    <td colspan="2" align="center"><hr noshade size=1>
    </td>
    <td align="center"><hr noshade size=1>
    </td>
    <td colspan="2" align="center"><hr noshade size=1>
    </td>
    <td align="center"><hr noshade size=1>
    </td>
    <td colspan="2" align="center"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2003</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2001</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2000</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td colspan="2" align="center"><b><font size=1 face="serif">1999</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF">
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><font size="1">&nbsp;</font></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><font size="1">&nbsp;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Net income</font></td>
    <td width=1% align="right"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">7,853</font></td>
    <td width=2% align="right">&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">19,399</font></td>
    <td>&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">9,802</font></td>
    <td>&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">19,907</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">7,195</font></td>
    <td width=2% align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Depreciation of real estate and <font size=2 face="serif">amortization
          of leasing costs:</font></font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Wholly
        owned and consolidated partnerships</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">16,957</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">15,305</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">18,422</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">19,325</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">18,949</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Unconsolidated
        partnerships</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,107</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">662</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">627</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">625</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">626</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Income attributable to minority <font size=2 face="serif">interest
          (1)</font></font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">747</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,928</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,221</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">5,674</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">3,106</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">(Gain)loss on sale of properties</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(8,132</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(17,734</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(13,742</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,284</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Cumulative effect of change in accounting <font size=2 face="serif">principle</font></font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">149</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right">&nbsp;</td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Funds from operations</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">27,664</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">30,162</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">13,487</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">31,789</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">31,160</font></td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2"><font size=1 face="serif">Notes:</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="3%"><font size=1 face="serif">(1)</font></td>
    <td><font size=1 face="serif">Represents income attributable to Common Operating
        Partnership Units and does not include distributions paid on Preferred
        OP Units.</font> </td>
  </tr>
</table>
<p align="left"><b><font size=2 face="serif">LIQUIDITY AND CAPITAL RESOURCES </font></b><font size=2 face="serif"></font></p>
<p align="left"> <b><font size=2 face="serif">USES OF LIQUIDITY </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">The Company&#146;s principal uses
    of its liquidity are expected to be for distributions to its shareholders
    and OP unitholders, debt service and loan repayments, and property investment
    which includes the funding of its joint venture commitments, acquisition,
    redevelopment, expansion and re-tenanting activities.</font></p>
<p align="left"> <b><font size=2 face="serif">Distributions </font></b> </p>
<p align="left"> <font size=2 face="serif"> In order to qualify as a REIT for
    Federal income tax purposes, the Company must currently distribute at least
    90% of its taxable income to its shareholders. For the first three quarters
    during 2003, the Company paid a quarterly dividend of $0.145 per Common Share
    and Common OP Unit. In December of 2003, the Board of Trustees approved and
    declared a 10% increase in the Company&#146;s quarterly dividend to $0.16
    per Common Share and Common OP Unit for the fourth quarter of 2003 which
    was paid January 15, 2004. On February 26, 2004, the Board of Trustees approved
    and declared a quarterly dividend of $0.16 per Common Share and Common OP
    Unit payable April 15, 2004 to shareholders and OP unitholders of record
    as of March 31, 2004.</font></p>
<p align="left"> <b><font size=2 face="serif">Acadia Strategic Opportunity Fund,
      LP (&#147;ASOF&#148;) </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">In September of 2001, the Company
    committed $20.0 million to a newly formed joint venture formed with four
    of its institutional shareholders, who committed $70.0 million, for the purpose
    of acquiring a total of approximately $300.0 million of community and neighborhood
    shopping centers on a leveraged basis. Since the formation of ASOF, the Company
    has used it as the primary vehicle for the acquisition of assets.</font></p>
<p align="left"> <font size=2 face="serif">The Company is the manager and general
    partner of ASOF with a 22% interest. In addition to a pro-rata return on
    its invested equity, the Company is entitled to a profit participation based
    upon certain investment return thresholds. Cash flow is to be distributed
    pro-rata to the partners (including the Company) until they have received
    a 9% cumulative return on, and a return of all capital contributions. Thereafter,
    remaining cash flow is to be distributed 80% to the partners (including the
    Company) and 20% to the Company. The Company also earns a fee for asset management
    services equal to 1.5% of the total equity commitments, as well as market-rate
    fees for property management, leasing and construction services.</font></p>
<p align="center"> <font size=2 face="serif">29</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="p30"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left"> <font size=2 face="serif">To date, ASOF has purchased a total
  of 30 assets in three separate transactions. Details of the transactions completed
  during 2003 are as follows:</font></p>
<p align="left"> <u><font size=2 face="serif">Brandywine Portfolio</font></u><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">In January of 2003, ASOF acquired a
  major open-air retail complex located in Wilmington, Delaware. The approximately
  1.0 million square foot value-based retail complex consists of the following
  two properties:</font></p>
<p align="left"> <font size=2 face="serif">Market Square Shopping Center is a
  103,000 square foot community shopping center which is 100% leased and anchored
  by a T.J. Maxx and a Trader Joe&#146;s gourmet food market.</font></p>
<p align="left"> <font size=2 face="serif">Brandywine Town Center is a two phase
  open-air value retail center. The first phase (&#147;Phase I&#148;) is approximately
  450,000 square feet and 99% occupied, with tenants including Lowe&#146;s, Bed
  Bath &amp; Beyond, Regal Cinema, Michaels, Petsmart, Old Navy, Annie Sez, Thomasville
  Furniture and Dick&#146;s Sporting Goods. The second phase (&#147;Phase II&#148;)
  consists of approximately 420,000 square feet of existing space, of which Target
  occupies 138,000 square feet. The balance of Phase II is currently not occupied.</font></p>
<p align="left"> <font size=2 face="serif">The initial investment for the portfolio
  was approximately $86.3 million, inclusive of closing and other related acquisition
  costs. ASOF assumed $38.1 million of fixed rate debt on the two properties at
  a blended rate of 8.1%. A new $30.0 million, 4.7% fixed-rate loan was also obtained
  in conjunction with the acquisition and is collateralized by a portion of the
  Brandywine Town Center. The balance of the purchase price was funded by ASOF,
  of which the Company&#146;s share was $4.3 million. ASOF will also pay additional
  amounts in conjunction with the lease-up of the current vacant space in Phase
  II (the &#147;Earn-out&#148;). The additional investment, depending on the Earn-out,
  is projected to be between $42.0 million and $62.0 million, of which the Company&#146;s
  share would be between $9.3 million and $13.8 million. To the extent ASOF places
  additional mortgage debt upon the lease-up of Phase II, the required equity
  contribution for the Earn-out would be less. The Earn-out is structured such
  that ASOF has no time requirement or payment obligation for any portion of currently
  vacant space which it is unable to lease.</font></p>
<p align="left"> <u><font size=2 face="serif">Kroger/Safeway Portfolio</font></u>
</p>
<p align="left"> <font size=2 face="serif">In January of 2003, ASOF formed a joint
  venture (the &#147;Kroger/Safeway JV&#148;) with an affiliate of real estate
  developer and investor AmCap Incorporated (&#147;AmCap&#148;) for the purpose
  of acquiring a portfolio of twenty-five supermarket leases. The portfolio, which
  aggregates approximately 1.0 million square feet, consists of 25 anchor-only
  leases with Kroger (12 leases) and Safeway supermarkets (13 leases). The majority
  of the properties are free-standing and all are triple-net leases. The Kroger/Safeway
  JV acquired the portfolio subject to long-term ground leases with terms, including
  renewal options, averaging in excess of 80 years, which are master leased to
  a non-affiliated entity. The base rental options for the supermarket leases
  at the end of their primary lease term in approximately seven years (&#147;Primary
  Term&#148;) are at an average of $5.13 per square foot. Although there is no
  obligation for the Kroger/Safeway JV to pay ground rent during the Primary Term,
  to the extent it exercises an option to renew a ground lease for a property
  at the end of the Primary Term, it will be obligated to pay an average ground
  rent of $1.55 per square foot.</font></p>
<p align="left"> <font size=2 face="serif">The Kroger/Safeway JV acquired the
  portfolio for $48.9 million (inclusive of closing and other related acquisition
  costs), which included the assumption of an aggregate of $34.5 million of existing
  fixed-rate mortgage debt, which is at a blended fixed interest rate of 6.6%
  and is fully amortizing over the Primary Term. The individual mortgages are
  secured by each individual property and are not cross-collateralized. ASOF invested
  90%, or $11.3 million, of the equity capitalization, of which the Company&#146;s
  share was $2.5 million. AmCap contributed 10%, or $1.2 million. Cash flow is
  to be distributed to the Kroger/Safeway JV partners until they have received
  an 11% cumulative return and a full return of all contributions. Thereafter,
  remaining cash flow is to be distributed 75% to ASOF and 25% to AmCap. The Kroger/Safeway
  JV agreement also provides for additional allocations of cash based on ASOF
  achieving certain minimum investment returns to be determined on a &#147;look-back&#148;
  basis.</font></p>
<p align="left"> <b><font size=2 face="serif">Venture with Klaff Realty, L.P.
  (&#147;Klaff&#148;) </font></b> </p>
<p align="left"> <font size=2 face="serif">On January 27, 2004, the Company entered
     into a venture (the &#147;Venture&#148;) with Klaff and Klaff&#146;s long
     time  capital partner Lubert-Adler </font> <font size=2 face="serif">Management,
  Inc. (&#147;Lubert-Adler&#148;)
  for the purpose of making investments in surplus or underutilized properties
   owned by retailers. The initial size of the Venture is expected to be approximately

  $300 million in equity based on anticipated investments of approximately $1
   billion. The Venture is currently exploring investment opportunities, but
  has
  not yet made any commitments. Each participant in the Venture has the right
   to opt out of any potential investment. The Company and its current acquisition

  fund, ASOF, as well as possible subsequent joint venture funds sponsored by
   the Company, anticipate investing 20% of the equity of the Venture. Cash flow

  is to be distributed to the partners until they have received a 10% cumulative
   return and a full return of all contributions. Thereafter, remaining cash
  flow
  is to be distributed 20% to Klaff (&#147;Klaff&#146;s Promote&#148;) and 80%
   to the partners (including Klaff). Profits earned on up to $20.0 million of

  the Company&#146;s contributed capital is not subject to Klaff&#146;s Promote.
  The Company will also earn market-rate fees for property management, leasing
  and construction services on behalf of the Venture.</font></p>
<p align="center">
<font size=2 face="serif">30</font></p>

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<a name="p31"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left"> <font size=2 face="serif">The Company has also acquired Klaff&#146;s
  rights to provide asset management, leasing, disposition, development and construction
  services for an existing portfolio of retail properties and/or leasehold interests
  comprised of approximately 10 million square feet of retail space located throughout
  the United States (the &#147;Klaff Properties&#148;). The acquisition involves
  only Klaff&#146;s rights associated with operating the Klaff Properties and
  does not include equity interests in assets owned by Klaff or Lubert-Adler.
  The Operating Partnership issued $4.0 million of Preferred OP Units to Klaff
  in consideration of this acquisition.</font></p>
<p align="left"> <b><font size=2 face="serif">Other </font></b> </p>
<p align="left"> <font size=2 face="serif"> In March 2004, the Company invested $4.1 million in a loan secured by a shopping center property.</font></p>
	<p align="left"> <b><font size=2 face="serif">Property Redevelopment and Expansion
  </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">The Company&#146;s redevelopment program
  focuses on selecting well-located neighborhood and community shopping centers
  and creating significant value through re-tenanting and property redevelopment.
  During 2003, the Company substantially completed the redevelopment of three
  shopping centers and added an additional project to its redevelopment pipeline
  as follows:</font></p>
<p align="left"> <font size=2 face="serif">Gateway Shopping Center &#150; The
  redevelopment of the Gateway Shopping Center, formerly a partially enclosed
  mini-mall with an undersized Grand Union, included the demolition of 90% of
  the existing building and the construction of a new anchor supermarket. The
  center has been converted into a new open-air community shopping center anchored
  with a 72,000 square foot Shaw&#146;s supermarket which opened during March
  of 2003. Approximately 11,000 square feet of small shop space remains to be
  leased at the property. Total costs for this project, including the original
  acquisition costs, aggregated $17.9 million.</font></p>
<p align="left"> <font size=2 face="serif">Plaza 422 &#150; Home Depot held its
  grand opening during fourth quarter of 2003 at the Plaza 422 redevelopment project
  located in Lebanon, Pennsylvania. The expansion of the former 83,000 square
  foot Ames space to a 104,000 square foot Home Depot included the recapture and
  demolition of the formerly enclosed portion of this center. The Company is now
  collecting triple the base rent of that which was paid by Ames. In connection
  with the redevelopment project, the Company also recaptured another 48,000 square
  feet of space, for which re-leasing is currently underway. The majority of redevelopment
  costs were paid directly by Home Depot. The Company&#146;s share of costs for
  this project totaled $402,000.</font></p>
<p align="left"> <font size=2 face="serif">New Loudon Center &#150; The Bon Ton Department
  Store also opened for business during the fourth quarter of 2003 as part of
  the redevelopment of the New Loudon Center located in Latham, New York. Occupying
  66,000 square feet formerly occupied by an Ames department store, Bon Ton is
  paying base rent at a 15% increase over that of Ames. In addition, the Company
  has leased the balance of the former Ames space to Marshall&#146;s, an existing
  tenant at the center, which will be expanding its current 26,000 square foot
  store to 37,000 square feet. The Company will also install a new 49,000 square
  foot Raymour and Flanigan Furniture store at this center. Following the completion
  of this project in mid-2004, this community shopping center will be 100% occupied.
  Costs incurred to date by the Company for this project totaled $418,000. The
  remaining costs to complete this redevelopment project are to be paid directly
  by the above tenants.</font></p>
<p align="left"> <font size=2 face="serif">Town Line Plaza &#150; This project,
  located in Rocky Hill, Connecticut, was added to the Company&#146;s redevelopment
  pipeline in December of 2003. The Company is re-anchoring the center with a
  new Super Stop &amp; Shop supermarket, replacing a former GU Markets supermarket.
  The existing building is being demolished and will be replaced with a 66,000
  square foot Super Stop &amp; Shop. The new supermarket anchor is paying gross
  rent at a 33% increase over that of the former tenant with no interruption in
  rent payments. Costs to date for this project totaled $1.7 million. All remaining
  redevelopment costs associated with this project, which is anticipated to be
  completed during the first quarter of 2005, are to be paid by Stop &amp; Shop.</font></p>
<p align="left"> <font size=2 face="serif">Additionally, for the year ending December
  31, 2004, the Company currently estimates that capital outlays of approximately
  $</font><font size=2 face="serif">3.0</font><font size=2 face="serif"> million
  to $</font><font size=2 face="serif">7.0 </font><font size=2 face="serif">million
  will be required for tenant improvements, related renovations and other property
  improvements.</font></p>
<p align="left"> <b><font size=2 face="serif">Share Repurchase </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">The Company&#146;s repurchase of its
  Common Shares is an additional use of liquidity. Upon completion of a tender
  offer in February 2002, the Company purchased a total of 5,523,974 Common Shares
  and Common OP Units (collectively, &#147;Shares&#148;), comprised of 4,136,321
  Common Shares and 1,387,653 Common OP Units (which were converted to Common
  Shares upon tender), at a Purchase Price of $6.05 per Share. The aggregate purchase
  price paid for the 5,523,974 Shares was $33.4 million. In addition to the tender
  offer, the Company has an existing share repurchase program that authorizes
  management, at its discretion, to repurchase up to $20.0 million of the Company&#146;s
  outstanding Common Shares. Through March 12, 2004, the Company had repurchased
  1,899,486 Common Shares (net of 152,199 shares reissued) at a total cost of
  $11.6 million. The program may be discontinued or extended at any time and there
  is no assurance that the Company will purchase the full amount authorized.</font></p>
<p align="center">
<font size=2 face="serif">31</font></p>

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<a name="p32"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left"> <b><font size=2 face="serif">SOURCES OF LIQUIDITY </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">The Company intends on using ASOF and
  the Venture as the primary vehicle for future acquisitions. Sources of capital
  for funding the Company&#146;s joint venture commitments, other property acquisitions,
  redevelopment, expansion and re-tenanting, as well as future repurchases of
  Common Shares are expected to be obtained primarily from cash on hand, additional
  debt financings and future sales of existing properties. As of December 31,
  2003, the Company had a total of approximately $51.1 million of additional capacity
  with six lenders, of which the Company is required to draw $12.7 million by
  December 2004, or forego the ability to draw these funds at any time during
  the remaining term of the loans. Of the remaining capacity, approximately $3.0
  million is subject to additional leasing requirements at the collateral properties,
  which the Company has not yet satisfied. The Company also had cash and cash
  equivalents on hand of $14.7 million at December 31, 2003 as well as nine properties
  that are currently unencumbered and therefore available as potential collateral
  for future borrowings. The Company anticipates that cash flow from operating
  activities will continue to provide adequate capital for all debt service payments,
  recurring capital expenditures and REIT distribution requirements.</font></p>
<p align="left"> <b><font size=2 face="serif">Financing and Debt </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">At December 31, 2003, mortgage notes
  payable aggregated $190.4 million and were collateralized by 22 properties and
  related tenant leases. Interest on the Company&#146;s outstanding mortgage indebtedness
  ranged from 2.6% to 8.1% with maturities that ranged from April 2005 to June
  2013. Taking into consideration $86.7 million of notional principal under variable
  to fixed-rate swap agreements currently in effect, $156.4 million of the portfolio,
  or 82%, was fixed at a 6.6% weighted average interest rate and $34.0 million,
  or 18% was floating at a 2.9% weighted average interest rate. There is no debt
  maturing in 2004, and $57.8 million is scheduled to mature in 2005 at a weighted
  average interest rate of 2.9%. As the Company does not anticipate having sufficient
  cash on hand to repay such indebtedness, it will need to refinance this indebtedness
  or select other alternatives based on market conditions at that time.</font></p>
<p align="left"> <font size=2 face="serif">The following summarizes the financing
  and refinancing transactions since December 31, 2002:</font></p>
<p align="left"> <font size=2 face="serif">In January 2003, the Company drew down
  $5.0 million of an available $10.0 million facility with a bank and used the proceeds
  to partially pay down the outstanding principal on another loan with the same
  lender.</font></p>
<p align="left"> <font size=2 face="serif">In March 2003, the Company repaid a
  $3.6 million loan with a life insurance company.</font></p>
<p align="left"> <font size=2 face="serif">In April 2003, the Company extended
  an existing $7.4 million revolving facility with a bank through March 1, 2008.
  As of December 31, 2003, there were no outstanding amounts under this loan.</font></p>
<p align="left"> <font size=2 face="serif">On May 30, 2003, the Company refinanced
  a $13.3 million loan with a bank, increasing the outstanding principal to $16.0
  million. The loan, which is secured by one of the Company&#146;s properties,
  requires monthly payment of interest at the fixed-rate of 5.2%. Payments of
  principal amortized over 30 years commences June 2005 with the loan maturing
  in May 2013.</font></p>
<p align="left"> <font size=2 face="serif">On October 27, 2003, the Company paid
  off maturing loans totaling $7.4 million, which were secured by two of the Company&#146;s
  properties.</font></p>
<p align="left"> <font size=2 face="serif">Effective December 1, 2003, the Company
  amended an $8.6 million loan with a bank. An additional $5.0 million has been
  made available under the loan as well as extending the maturity of the loan
  until December 1, 2008 with two one-year extension options. In addition, the
  interest rate has been reduced to LIBOR plus 140 basis points. The loan, which
  is secured by one of the Company&#146;s properties, requires the monthly payment
  of interest and fixed principal commencing January 1, 2004.</font></p>
<p align="left"> <font size=2 face="serif">In January 2004, the Company entered
  into a forward starting swap agreement which commences April 1, 2005. The swap
  agreement, which extends through January 1, 2011, provides for a fixed rate
  of 4.345% on $37.7 million of notional principal.</font></p>
<p align="left"> <font size=2 face="serif">In February 2004, the Company entered
  into three forward starting swap agreements as follows:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><b><font size=1 face="serif">Commencement Date </font></b></td>
    <td align="left"><b><font size=1 face="serif">Maturity Date</font></b></td>
    <td align="left"><b><font size=1 face="serif">Notional Principal</font></b></td>
    <td align="left"><b><font size=1 face="serif">Rate</font></b></td>
  </tr>
  <tr>
    <td><hr noshade size=1></td>
    <td align="left"><hr noshade size=1></td>
    <td align="left"> <hr noshade size=1></td>
    <td align="left"> <hr noshade size=1></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td width="25%"><font size=2 face="serif">10/2/2006 </font></td>
    <td width=25% align="left"><font size=2 face="serif">10/1/2011</font></td>
    <td width=25% align="left"><font size=2 face="serif">$11.4 million</font></td>
    <td width=25% align="left"><font size=2 face="serif">4.895%</font></td>
  </tr>
  <tr>
    <td><hr noshade size=1></td>
    <td align="left"><hr noshade size=1></td>
    <td align="left"> <hr noshade size=1></td>
    <td align="left"> <hr noshade size=1></td>
  </tr>
  <tr>
    <td><font size=2 face="serif">10/2/2006 </font></td>
    <td align="left"><font size=2 face="serif">1/1/2010</font></td>
    <td align="left"><font size=2 face="serif">$ 4.6 million</font></td>
    <td align="left"><font size=2 face="serif">4.710%</font></td>
  </tr>
  <tr>
    <td><hr noshade size=1></td>
    <td align="left"><hr noshade size=1></td>
    <td align="left"> <hr noshade size=1></td>
    <td align="left"> <hr noshade size=1></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">6/1/2007 </font></td>
    <td align="left"><font size=2 face="serif">3/1/2012</font></td>
    <td align="left"><font size=2 face="serif">$ 8.4 million</font></td>
    <td align="left"><font size=2 face="serif">5.140%</font></td>
  </tr>
  <tr>
    <td><hr noshade size=1></td>
    <td align="left"><hr noshade size=1></td>
    <td align="left"> <hr noshade size=1></td>
    <td align="left"> <hr noshade size=1></td>
  </tr>
</table>
<p align="left"> <font size=2 face="serif">These swap agreements have been executed
  in contemplation of the finalization of the extension and modification of certain
  mortgage loans currently being negotiated, although there can be no assurance
  that such extensions will be finalized.</font></p>
<p align="center">
<font size=2 face="serif">32</font></p>

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<a name="p33"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left"> <b><font size=2 face="serif">Asset Sales </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">Asset sales are an additional source
  of liquidity for the Company. A significant component of the Company&#146;s
  business has been its multi-year plan to dispose of non-core real estate assets.
  The Company began this initiative following the RDC Transaction and completed
  it in 2002. Non-core assets were identified based on factors including property
  type and location, tenant mix and potential income growth as well as whether
  a property complemented other assets within the Company&#146;s portfolio. The
  Company sold 28 non-core assets in connection with this initiative comprising
  a total of approximately 4.6 million square feet of retail properties and 800
  multi-family units, for a total sales price of $158.4 million which generated
  net sale proceeds to the Company of $82.5 million.</font></p>
<p align="left"> <font size=2 face="serif">Additionally the Company completed
  the following two land sales in 2003 and 2002:</font></p>
<p align="left"> <font size=2 face="serif">In January 2002, the Company with a
  joint venture partner, purchased a three-acre site located in the Bronx, New
  York for $3.1 million. Simultaneously, the Company sold approximately 46% of
  the land to a self-storage facility for $3.3 million. The Company&#146;s share
  of net proceeds totaled $1.4 million. The Company currently plans to build and
  lease a 15,000 square foot retail building on the remaining parcel.</font></p>
<p align="left"> <font size=2 face="serif">On November 8, 2002, a joint venture
  between the Company and an unaffiliated joint venture partner completed the
  sale of a contract to purchase land in Bethel, Connecticut, to the Target Corporation
  for $2.4 million. The joint venture received a $1.6 million note receivable
  for the net purchase price and additional reimbursements due from the buyer,
  which was paid in full during 2003. The Company&#146;s share of the net proceeds
  totaled $1.4 million.</font></p>
<p align="left"> <b><font size=2 face="serif">CONTRACTUAL OBLIGATIONS AND OTHER
  COMMITMENTS </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">At December 31, 2003, maturities on
  the Company&#146;s mortgage notes ranged from April 2005 to June 2013. In addition,
  the Company has non-cancelable ground leases at three of its shopping centers.
  The Company also leases space for its White Plains corporate office for a term
  expiring in 2010. The following table summarizes the Company&#146;s debt maturities,
  excluding scheduled monthly amortization payments, and obligations under non-cancelable
  operating leases of December 31, 2003:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><div align="center"><b><font size=1 face="serif">(amounts in millions)</font></b></div></td>
    <td><font size="1">&nbsp;</font></td>
    <td colspan="13" align="center"><b><font size=1 face="serif">Payments due
      by period</font></b></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Less than</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">1 to 3</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">3 to 5</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">More than</font></b></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><b><font size=1 face="serif">Contractual obligation</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Total</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1"><b></b></font></td>
    <td align="center"><b><font size=1 face="serif">1 year</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">years</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">years</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">5 years</font></b></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><hr noshade size=1></td>
    <td><font size="1">&nbsp;</font></td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><hr noshade size=1></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><hr noshade size=1></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><hr noshade size=1></td>
    <td><font size="1">&nbsp;</font></td></tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Future debt maturities</font></td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">176.1</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">&#151;</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=8%><div align="right"><font size=2 face="serif">57.8</font></div></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=8%><div align="right"><font size=2 face="serif">69.3</font></div></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=8% align="center"><div align="right"><font size=2 face="serif">49.0</font></div></td>
    <td width=2%>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Operating lease obligations</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">23.1</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">1.0</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><div align="right"><font size=2 face="serif">2.0</font></div></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><div align="right"><font size=2 face="serif">2.0</font></div></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="center"><div align="right"><font size=2 face="serif">18.1</font></div></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr align="right" size=1 noshade></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr align="right" size=1 noshade></td>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr align="right" size=1 noshade></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Total</font></td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">199.2</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1.0</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td><div align="right"><font size=2 face="serif">59.8</font></div></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td><div align="right"><font size=2 face="serif">71.3</font></div></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="center"><div align="right"><font size=2 face="serif">67.1</font></div></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="left"> <b><font size=2 face="serif">OFF BALANCE SHEET ARRANGEMENTS</font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">The Company has two off balance sheet
  joint ventures for the purpose of investing in operating properties as follows:</font></p>
<p align="left"> <font size=2 face="serif">The Company owns a 49% interest in
  two partnerships which own the Crossroads Shopping Center (&#147;Crossroads&#148;).
  The Company accounts for its investment in Crossroads using the equity method
  of accounting as it has a non-controlling investment in Crossroads, but exercises
  significant influence. As such, the Company&#146;s financial statements reflect
  its share of income from, but not the assets and liabilities of, Crossroads.
  The Company&#146;s pro rata share of Crossroads mortgage debt as of December
  31, 2003 was $16.2 million. Interest on the debt, which matures in October 2007,
  has been effectively fixed at 7.2% through variable to fixed-rate swap agreements.</font></p>
<p align="left"> <font size=2 face="serif">Reference is made to the discussion
  of ASOF under &#147;Uses of Liquidity&#148; in this Item 7 for additional detail
  related to the Company&#146;s investment in and commitments to ASOF. The Company
  owns a 22% interest in ASOF for which it also uses the equity method of accounting.
  The Company&#146;s pro rata share of ASOF fixed-rate mortgage debt as of December
  31, 2003 was $24.0 million at a weighted average interest rate of 6.4%. The
  Company&#146;s pro rata share of ASOF variable-rate mortgage debt as of December
  31, 2003 was $1.3 million at an interest rate of 3.1%. Maturities on these loans
  range from October 2007 to January 2023.</font></p>
<p align="center">
<font size=2 face="serif">33</font></p>

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<a name="p34"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left">
<b><font size=2 face="serif">HISTORICAL CASH FLOW </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">The following discussion of historical cash flow compares the Company&#146;s cash flow for the year ended December 31, 2003 (&#147;2003&#146;) with the Company&#146;s cash flow for the year ended December 31, 2002 (&#147;2002&#148;).</font></p>
<p align="left">
<font size=2 face="serif">Cash and cash equivalents were $14.7 million and $45.2 million at December 31, 2003 and 2002, respectively. The decrease of $30.5 million was a result of the following increases and decreases in cash flows:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr valign="bottom">
   <td><b><font size=1 face="serif">(amounts in millions)</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td colspan="7" align="center"><font size="1">&nbsp;</font><font size="1">&nbsp;</font><b><font size=1 face="serif">Years Ended December 31,</font></b><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr valign="bottom">
  <td><font size="1">&nbsp;</font></td>
  <td><hr size="1" noshade></td>
  <td align="center"><hr size="1" noshade></td>
  <td><hr size="1" noshade></td>
  <td><hr size="1" noshade></td>
  <td align="center"><hr size="1" noshade></td>
  <td><hr size="1" noshade></td>
  <td><hr size="1" noshade></td>
  <td align="center"><hr size="1" noshade></td>
  <td><font size="1">&nbsp;</font></td>
</tr>
<tr valign="bottom">
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">2003</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">2002</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">Variance</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
  <td><font size="1">&nbsp;</font></td>
  <td><hr size="1" noshade></td>
  <td align="right"><hr size="1" noshade></td>
  <td><font size="1">&nbsp;</font></td>
  <td><hr size="1" noshade></td>
  <td align="right"><hr size="1" noshade></td>
  <td><font size="1">&nbsp;</font></td>
  <td><hr size="1" noshade></td>
  <td align="right"><hr size="1" noshade></td>
  <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Net cash provided by operating activities</font></td>
   <td width=2% bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">19.1</font></td>
   <td width=2% bgcolor="#eeeeee">&nbsp;</td>
   <td width=2% bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">24.9</font></td>
   <td width=2% bgcolor="#eeeeee">&nbsp;</td>
   <td width=2% bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">(5.8</font></td>
   <td width=2% bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Net cash (used in) provided by investing activities</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(19.4</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">24.6</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(44.0</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Net cash used in financing activities</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(30.2</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(58.8</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">28.6</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Net cash provided by discontinued operations</font></td>
   <td>&nbsp;</td>
   <td align="right">&#8212;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">20.5</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(20.5</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
</table>
<p align="left">
<font size=2 face="serif">The variance in net cash provided by operating activities was primarily due to $3.9 million of lease termination income received in 2002 which was not repeated in 2003. In addition, there was a net decrease in cash provided by changes in operating assets and liabilities of $2.0 million, primarily rents receivable.</font></p>
<p align="left">
<font size=2 face="serif">The variance in net cash (used in) provided by investing activities was primarily the result of an additional $37.8 million collected on purchase money notes in 2002, a $2.5 million earn-out payment related to a redevelopment project in 2002, an additional $3.1 million invested in ASOF in 2003 and $1.2 million of additional expenditures for real estate acquisitions, development and tenant installation costs during 2003.</font></p>
<p align="left">
<font size=2 face="serif">The decrease in net cash used in financing activities resulted primarily from $33.4 million of cash used in 2002 for the Company&#146;s repurchase of Common Shares offset by $2.8 million of additional cash used in 2003 for the net repayment of debt.</font></p>
<p align="left">
<font size=2 face="serif">The decrease in net cash provided by discontinued operations was primarily a result of $2.9 million in net cash provided by operating activities at the discontinued properties in 2002 and net proceeds in 2002 from the sale of such properties.</font></p>
<p align="left">
<b><font size=2 face="serif">CRITICAL ACCOUNTING POLICIES </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">Management&#146;s discussion and analysis of financial condition and results of operations is based upon the Company&#146;s consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies affect the significant judgments and estimates used by the Company in the preparation of its consolidated financial statements.</font></p>
<p align="left">
<b><font size=2 face="serif">Valuation of Property Held for Use and Sale </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">On a quarterly basis, the Company reviews the carrying value of both properties held for use and for sale. The Company records impairment losses and reduces the carrying value of properties when indicators of impairment are present and the expected undiscounted cash flows related to those properties are less than their carrying amounts. In cases where the Company does not expect to recover its carrying costs on properties held for use, the Company reduces its carrying cost to fair value, and for properties held for sale, the Company reduces its carrying value to the fair value less costs to sell. For the years ended December 31, 2002 and 2001, impairment losses of $197,000 and $15.9 million were recognized related to properties which were held for sale and subsequently sold. Management does not believe that the values of any properties in its portfolio are impaired as of December 31, 2003.</font></p>
<p align="left">
<b><font size=2 face="serif">Bad Debts </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make payments on arrearages in billed rents, as well as the likelihood that tenants will not have the ability to make payment on unbilled rents including estimated expense recoveries and straight-line rent. As of December 31, 2003, the Company had recorded an allowance for doubtful accounts of $2.4 million. If the financial condition of the Company&#146;s tenants were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.</font></p>
<p align="center">
<font size=2 face="serif">34</font></p>

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<a name="p35"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="left">
<b><font size=2 face="serif">INFLATION </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">The Company&#146;s long-term leases contain provisions designed to mitigate the adverse impact of inflation on the Company&#146;s net income. Such provisions include clauses enabling the Company to receive percentage rents based on tenants&#146; gross sales, which generally increase as prices rise, and/or, in certain cases, escalation clauses, which generally increase rental rates during the terms of the leases. Such escalation clauses are often related to increases in the consumer price index or similar inflation indexes. In addition, many of the Company&#146;s leases are for terms of less than ten years, which permits the Company to seek to increase rents upon re-rental at market rates if current rents are below the then existing market rates. Most of the Company&#146;s leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes, insurance and utilities, thereby reducing the Company&#146;s exposure to increases in costs and operating expenses resulting from inflation.</font></p>
<p align="left">
<b><font size=2 face="serif">RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS </font></b><font size=2 face="serif"></font></p>
<p align="left"><font size=2 face="serif">In December 2003, the Financial Accounting
  Statements Board (&#147;FASB&#148;) issued FASB Interpretation No. 46 (revised
  December 2003), Consolidation of Variable Interest Entities (&#147;FIN 46R&#148;).
  FIN 46R replaces FASB Interpretation No. 46, Consolidation of Variable Interest
  Entities, which was issued in January 2003. In general, a variable interest
  entity (&#147;VIE&#148;) is a corporation, partnership, trust, or any other
  legal structure used for business purposes that either (a) does not have equity
  investors with voting rights or (b) has equity investors that do not provide
  sufficient financial resources for the entity to support its activities. A VIE
  often holds financial assets, including loans or receivables, real estate or
  other property. A VIE may be essentially passive or it may engage in activities
  on behalf of another company. Until now, a company generally has included another
  entity in its consolidated financial statements only if it controlled the entity
  through voting interests. FIN 46 changes that by requiring a VIE to be consolidated
  by a company if that company is subject to a majority of the risk of loss from
  the VIE&#146;s activities or entitled to receive a majority of the entity&#146;s
  residual returns or both. The Company will be required to adopt FIN 46R in the
  first fiscal period beginning after March 15, 2004. Upon adoption of FIN 46R,
  the assets, liabilities and non-controlling interests of the VIE initially would
  be measured at their carrying amounts with any difference between the net amount
  added to the balance sheet and any previously recognized interest being recognized
  as the cumulative effect of an accounting change. If determining the carrying
  amounts is not practicable, fair value at the date FIN 46R first applies may
  be used to measure the assets, liabilities and non-controlling interest of the
  VIE. It is not anticipated that the effect on the Company's Consolidated Financial
  Statements would be material.</font></p>
<p align="left">
<font size=2 face="serif">In May 2003, the FASB issued SFAS No. 150 &#147;Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity&#148;. This statement establishes how an issuer classifies and measures certain financial instruments that have characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within the scope of SFAS No. 150 as a liability because that financial instrument embodies an obligation of the issuer. For the Company, SFAS 150 was effective for instruments entered into or modified after May 31, 2003 and otherwise will be effective as of January 1, 2004, except for mandatorily redeemable financial instruments. For certain mandatorily redeemable financial instruments, SFAS 150 will be effective for the Company on January 1, 2005. The effective date has been deferred indefinitely for certain other types of mandatorily redeemable financial instruments. The adoption of SFAS No. 150 had no impact on the Company&#146;s consolidated financial statements. The Company currently is a majority-owner of a finite life partnership which is included in the consolidated accounts of the Company. The application of SFAS 150 as it relates to finite life entities has been deferred indefinitely. Based on the estimated value of the property owned by the partnership at December 31, 2003, the Company estimates that the minority interest in this partnership would be entitled to approximately $2,080 upon the dissolution of the partnership.</font></p>
<p align="left">
<font size=2 face="serif">April 2003, the FASB issued Statement of Financial Accounting Standards (&#147;SFAS&#148;) No. 149 &#147;Amendment of Statement 133 on Derivative Instruments and Hedging Activities&#148;. This statement amends and clarifies financial reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under FASB Statement No. 133, &#147;Accounting for Derivative Instruments and Hedging Activities&#148;. SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of SFAS No. 149 had no impact on the Company&#146;s consolidated financial statements.</font></p>
<p align="center">
<font size=2 face="serif">35</font></p>

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<page> <a name="p36"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <b><font size=2 face="serif">ITEM 7A.&nbsp;&nbsp;&nbsp;QUANTITATIVE AND QUALITATIVE
      DISCLOSURES ABOUT MARKET RISK </font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">The Company&#146;s primary market risk exposure
    is to changes in interest rates related to the Company&#146;s mortgage debt.
    See the consolidated financial statements and notes thereto included in this
    Annual Report on Form 10-K for certain quantitative details related to the
    Company&#146;s mortgage debt.</font></p>
<p> <font size=2 face="serif">Currently, the Company manages its exposure to
    fluctuations in interest rates primarily through the use of fixed-rate debt,
    interest rate swap agreements and LIBOR caps. As of December 31, 2003, the
    Company had total mortgage debt of $190.4 million of which $69.8 million,
    or 37% was fixed-rate and $120.6 million, or 63%, was variable-rate based
    upon LIBOR plus certain spreads. As of December 31, 2003, the Company was
    a party to five interest rate swap transactions to hedge the Company&#146;s
    exposure to changes in interest rates with respect to $86.7 million of LIBOR
    based variable-rate debt, effectively increasing the fixed-rate portion of
    its total outstanding debt as of December 31, 2003 to 82%. The Company also
    has two interest rate swaps hedging the Company&#146;s exposure to changes
    in interest rates with respect to $16.2 million of LIBOR based variable rate
    debt related to its investment in Crossroads.</font></p>
<p> <font size=2 face="serif">The following table sets forth information as of
    December 31, 2003 concerning the Company&#146;s long-term debt obligations,
    including principal cash flows by scheduled maturity and weighted average
    interest rates of maturing amounts (amounts in millions):</font></p>
<p> <b><font size=2 face="serif">Consolidated mortgage debt:</font></b> </p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td align="center" valign="bottom"><div align="left"><b><font size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Year</font></b></div>
    </td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">Scheduled</font></b><b><font size=1 face="serif"><br>
    amortization</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center">&nbsp;</td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center" valign="bottom"><font size="1">&nbsp;</font><b><font size=1 face="serif">Maturities</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center" valign="bottom"><font size="1">&nbsp;</font><b><font size=1 face="serif">Total</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">Weighted
          average<br>
    </font></b><b><font size=1 face="serif">interest rate</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size="2"><font face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2004</font></font></td>
    <td width=1% align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">3.6</font></td>
    <td width=2% align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td width=1% align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif"> $</font></td>
    <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td width=2% align="right" bgcolor="#eeeeee"><font size=2 face="serif">&nbsp; </font></td>
    <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">3.6</font></td>
    <td width=2% align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">n/a</font></td>
    <td width=2% align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="2"><font face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2005</font></font></td>
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">2.8</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">57.8</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">60.6</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">2.9</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size="2"><font face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2006</font></font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2.4</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2.4</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">n/a</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="2"><font face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2007</font></font></td>
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">1.4</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">61.3</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">62.7</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">3.7</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size="2"><font face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2008</font></font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1.2</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">8.0</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">9.2</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2.6</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Thereafter</font></td>
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">2.9</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">49.0</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">51.9</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td align="right"><font size=2 face="serif">7.1</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td><font size="2">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size=1>
    </td>
    <td> <font size="2">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size=1>
    </td>
    <td> <font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size=1>
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">14.3</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif"> $</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">176.1</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif"> $</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">190.4</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
    <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<p> <b><font size=2 face="serif">Mortgage debt in unconsolidated partnerships
      (at Company&#146;s pro rata share):</font></b> </p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td rowspan="2" align="center" valign="bottom"><div align="left"><b><font size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Year</font></b></div>
    </td>
    <td rowspan="2">&nbsp;</td>
    <td rowspan="2"><b></b><b></b></td>
    <td rowspan="2" align="center" valign="bottom"><b><font size=1 face="serif">Scheduled
          amortization</font></b></td>
    <td rowspan="2" align="center">&nbsp;</td>
    <td rowspan="2" align="center">&nbsp;</td>
    <td rowspan="2" align="center"><b></b></td>
    <td rowspan="2" align="center" valign="bottom"><b><font size=1 face="serif">Maturities</font></b></td>
    <td rowspan="2" align="center">&nbsp;</td>
    <td rowspan="2" align="center">&nbsp;</td>
    <td rowspan="2" align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td rowspan="2" align="center">&nbsp;</td>
    <td rowspan="2" align="center" valign="bottom"><b><font size=1 face="serif">Weighted
          average</font></b><b><font size=1 face="serif"><br>
      interest rate</font></b></td>
    <td rowspan="2" align="center">&nbsp;</td>
  </tr>
  <tr>
    <td align="center"><b><font size=1 face="serif">Total</font></b></td>
  </tr>
  <tr>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">2004 &#150; 2006</font></td>
    <td width=1% align="right">&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">4.2</font></td>
    <td width=2% align="left">&nbsp;</td>
    <td width=1% align="right">&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">&#151;</font></td>
    <td width=2% align="left">&nbsp;</td>
    <td width=1% align="right">&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">4.2</font></td>
    <td width=2% align="left">&nbsp;</td>
    <td width=8% align="right"><font size=2 face="serif">n/a</font></td>
    <td width=2% align="left">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">2007</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1.2</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">16.0</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">17.2</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">6.9</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">2008</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1.0</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">6.7</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">7.7</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.7</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Thereafter</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">3.6</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">7.4</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">11.0</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">7.1</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">10.0</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">30.1</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">40.1</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<p> <font size=2 face="serif">Of the Company&#146;s total outstanding debt, $57.8
    million will become due in 2005. As the Company intends on refinancing some
    or all of such debt at the then-existing market interest rates which may
    be greater than the current interest rate, the Company&#146;s interest expense
    would increase by approximately $578,000 annually if the interest rate on
    the refinanced debt increased by 100 basis points. Furthermore, interest
    expense on the Company&#146;s variable debt as of December 31, 2003 would
    increase by $340,000 annually for a 100 basis point increase in interest
    rates. The Company may seek additional variable-rate financing if and when
    pricing and other commercial and financial terms warrant. As such, the Company
    would consider hedging against the interest rate risk related to such additional
    variable-rate debt through interest rate swaps and protection agreements,
    or other means.</font></p>
<p> <b><font size=2 face="serif">ITEM 8.&nbsp;&nbsp;&nbsp;FINANCIAL STATEMENTS
      AND SUPPLEMENTARY DATA </font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">The financial statements and supplementary data
    listed in items 15(a) (1) and 15(a) (2) hereof are incorporated herein by
    reference.</font></p>
<p> <b><font size=2 face="serif">ITEM 9.&nbsp;&nbsp;&nbsp;CHANGES IN AND DISAGREEMENTS
      WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE</font></b> </p>
<p> <font size=2 face="serif">None</font></p>
<p align="center"> <font size=2 face="serif">36</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="p37"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p> <b><font size=2 face="serif">ITEM 9A.&nbsp;&nbsp;&nbsp;CONTROLS AND PROCEDURES </font></b> </p>
<p> <font size=2 face="serif">(a)</font><i><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Evaluation
      of Disclosure Controls and Procedures.</font></i><font size=2 face="serif"> The
      Company&#146;s Chief Executive Officer and Chief Financial Officer have
      evaluated the effectiveness of the Company&#146;s disclosure controls and
      procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
      the Securities Exchange Act of 1934, as amended (&#147;Exchange Act&#148;)
      as of the end of the period covered by this report. Based on such evaluation,
      the Company&#146;s Chief Executive Officer and Chief Financial Officer
      have concluded that, as of the end of such period, the Company&#146;s disclosure
      controls and procedures are effective.</font></p>
<p> <font size=2 face="serif">(b)</font><i><font size=2 face="serif"> &nbsp;&nbsp;&nbsp;Internal
      Control Over Financial Reporting.</font></i><font size=2 face="serif"> There
      have not been any changes in the Company&#146;s internal control over financial
      reporting during the fiscal year to which this report relates that have
      materially affected, or are reasonably likely to materially affect, the
      Company&#146;s internal control over financial reporting.</font></p>
<p align="center"> <b><font size=2 face="serif">PART III </font></b><font size=2 face="serif"></font></p>
<p> <b><font size=2 face="serif">ITEM 10.&nbsp;&nbsp;&nbsp;DIRECTORS AND EXECUTIVE
      OFFICERS OF THE COMPANY </font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">This item is incorporated by reference from the
    definitive proxy statement for the 2004 Annual Meeting of Shareholders presently
    scheduled to be held May 6, 2004, to be filed pursuant to Regulation 14A.</font></p>
<p> <b><font size=2 face="serif">ITEM 11.&nbsp;&nbsp;&nbsp;EXECUTIVE COMPENSATION </font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">This item is incorporated by reference from the
    definitive proxy statement for the 2004 Annual Meeting of Shareholders presently
    scheduled to be held May 6, 2004, to be filed pursuant to Regulation 14A.</font></p>
<p> <b><font size=2 face="serif">ITEM 12.&nbsp;&nbsp;&nbsp;SECURITY OWNERSHIP
      OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT </font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">This item is incorporated by reference from the
    definitive proxy statement for the 2004 Annual Meeting of Shareholders presently
    scheduled to be held May 6, 2004, to be filed pursuant to Regulation 14A.</font></p>
<p> <b><font size=2 face="serif">ITEM 13.&nbsp;&nbsp;&nbsp;CERTAIN RELATIONSHIPS
      AND RELATED TRANSACTIONS </font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">This item is incorporated by reference from the
    definitive proxy statement for the 2004 Annual Meeting of Shareholders presently
    scheduled to be held May 6, 2004, to be filed pursuant to Regulation 14A.</font></p>
<p> <b><font size=2 face="serif">ITEM 14.&nbsp;&nbsp;&nbsp;PRINCIPAL ACCOUNTANT
      FEES AND SERVICES</font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">This item is incorporated by reference from the
    definitive proxy statement for the 2004 Annual Meeting of Shareholders presently
    scheduled to be held May 6, 2004, to be filed pursuant to Regulation 14A.</font></p>
<p align="center"> <font size=2 face="serif">37</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="p38"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
<b><font size=2 face="serif">PART IV </font></b><font size=2 face="serif"></font></p>
<p align="left">
<b><font size=2 face="serif">ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">(a) Financial Statements &#150; Form 10-K. The following consolidated financial information is included as a separate section of this annual report on Form 10-K</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
  <td align="center"><b><font size=2 face="serif">ACADIA REALTY TRUST</font></b></td>
   <td>&nbsp;</td>
  </tr>
<tr>
  <td>&nbsp;</td>
   <td>&nbsp;</td>
  </tr>
<tr>
  <td>&nbsp;</td>
   <td>&nbsp;</td>
  </tr>
<tr>
  <td width="95%"><a href="#f2"><font size=2 face="serif">Report of Independent Auditors</font></a></td>
   <td width=5%><a href="#f2"><font size=2 face="serif">F-2</font></a></td>
  </tr>
<tr>
    <td><font size=2 face="serif">Consolidated Balance Sheets as of</font></td>
    <td>&nbsp;</td>
  </tr>
<tr>
  <td><a href="#f3"><font size=2 face="serif">December 31, 2003 and 2002</font></a></td>
  <td><a href="#f3"><font size=2 face="serif">F-3</font></a></td>
  </tr>
<tr>
  <td><a href="#f4"><font size=2 face="serif">Consolidated Statements of Income for the years ended December 31, 2003, 2002 and 2001</font></a></td>
   <td><a href="#f4"><font size=2 face="serif">F-4</font></a></td>
  </tr>
<tr>
  <td><a href="#f6"><font size=2 face="serif">Consolidated Statements of Shareholders&#146; Equity
    for the years ended December 31, 2003, 2002 and 2001</font></a></td>
   <td><a href="#f6"><font size=2 face="serif">F-6</font></a></td>
  </tr>
<tr>
  <td><a href="#f7"><font size=2 face="serif">Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001</font></a></td>
   <td><a href="#f7"><font size=2 face="serif">F-7</font></a></td>
  </tr>
<tr>
  <td><a href="#f9"><font size=2 face="serif">Notes to Consolidated Financial Statements</font></a></td>
   <td><a href="#f9"><font size=2 face="serif">F-9</font></a></td>
  </tr>
<tr>
  <td><font size=2 face="serif">Financial Statement Schedule:</font></td>
   <td>&nbsp;</td>
  </tr>
<tr>
  <td><a href="#f31"><font size=2 face="serif">Schedule III &#150; Real Estate
    and Accumulated Depreciation</font></a></td>
   <td><a href="#f31"><font size=2 face="serif">F-31</font></a></td>
  </tr>
</table>
<p align="left">
<font size=2 face="serif">All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule.</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%"><font size=2 face="serif">(b)</font></td>
    <td colspan="2"> <font size=2 face="serif"> Reports on Form 8-K filed during the quarter
        ended
December 31, 2003</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td valign="top"><font size=2 face="serif">1)</font></td>
    <td> <font size=2 face="serif"> Form 8-K filed November 3, 2003 (earliest
        event November 3, 2003), reporting in Item 9 certain supplemental information
        concerning the ownership, operations and portfolio of the Registrant
        as of September 30, 2003 and in Item 12 a press release announcing the
        consolidated financial results
for the quarter ended September 30, 2003. </font><b><font size=2 face="serif"> </font></b><font size=2 face="serif">&nbsp; </font> </td>
  </tr>
</table>
<p>&nbsp;</p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td colspan="2" align="left"><font size=2 face="serif">Exhibit No.</font></td>
   <td align="center"><font size=2 face="serif">Description</font></td>
</tr>
<tr>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
</tr>
<tr>
   <td width=5% valign="top"><font size=2 face="serif">3.1</font></td>
   <td width=2%>&nbsp;</td>
   <td><font size=2 face="serif">Declaration of Trust of the Company, as amended (1)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">3.2</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Fourth Amendment to Declaration of Trust (4)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">3.3</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">By-Laws of the Company (5)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">4.1</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Voting Trust Agreement between the Company and Yale University dated February 27, 2002 (14)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.1</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">1999 Share Option Plan (8) (20)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.2</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">2003 Share Option Plan (16) (20)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.3</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Form of Share Award Agreement (17) (20)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.4</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Form of Registration Rights Agreement and Lock-Up Agreement (19)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.5</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Registration Rights and Lock-Up Agreement (RD Capital Transaction) (11)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.6</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Registration Rights and Lock-Up Agreement (Pacesetter Transaction) (11)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.7</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Contribution and Share Purchase Agreement dated
       as of April 15, 1998 among Mark Centers Trust, Mark Centers Limited </font><font size=2 face="serif">Partnership,
       the Contributing Owners and Contributing Entities named therein, RD Properties,
       L.P. VI, RD Properties, L.P.</font><font size=2 face="serif">VIA and RD Properties, L.P. VIB (9)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.8</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Agreement of Contribution among Acadia Realty
       Limited Partnership, Acadia Realty Trust and Klaff Realty, LP and Klaff </font><font size=2 face="serif">Realty,
       Limited (19)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.9</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Employment agreement between the Company and Kenneth F. Bernstein (6) (20)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.10</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Employment agreement between the Company and Ross Dworman (6) (20)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.11</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Amendment to employment agreement between the Company and Kenneth F. Bernstein (19) (20)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.12</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">First Amendment to Employment Agreement between the Company and Kenneth Bernstein dated as of January 1, 2001</font><font size=2 face="serif">(12) (20)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.13</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">First Amendment to Employment Agreement between the Company and Ross Dworman dated as of January 1, 2001 (12)</font><font size=2 face="serif">(20)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.14</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Letter of employment offer between the Company
       and Michael Nelsen, Sr. Vice President and Chief Financial Officer</font><font size=2 face="serif"> dated
       February 19, 2003 (15) (20)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.15</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Severance Agreement between the Company and Joel Braun, Sr. Vice President, dated April 6, 2001 (13) (20)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.16</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Severance Agreement between the Company and Joseph Hogan, Sr. Vice President, dated April 6, 2001 (13) (20)</font></td>
</tr>
</table>
<p align="center"><font size="2" face="serif">38</font></p>
<hr noshade align="center" width="100%" size="2">
<div align="center"></div>
<div style="page-break-before:always"></div>
<page> <a name="p39"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td width=5% valign="top"><font size=2 face="serif">10.17</font></td>
   <td width=2%>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Severance Agreement between the Company and Joseph Napolitano, Sr. Vice President dated April 6, 2001 (19) (20)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.18</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Severance Agreement between the Company and Robert Masters, Sr. Vice President and General Counsel dated January</font><font size=2 face="serif">2001 (19) (20)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.19</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Severance Agreement between the
       Company and Michael Nelsen, Sr. Vice President and Chief Financial Officer
       dated</font><font size=2 face="serif"> February 19, 2003 (15) (20)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.20</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Secured Promissory Note between RD Absecon Associates, L.P. and Fleet Bank, N.A. dated February 8, 2000 (7)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.21</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Promissory Note between 239 Greenwich Associates, L.P. and Greenwich Capital Financial Products, Inc. dated May 30,</font><font size=2 face="serif">2003 (19)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.22</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Open-End Mortgage, Assignment of Leases and Rents, and Security Agreement between 239 Greenwich Associates, L.P.</font><font size=2 face="serif">and Greenwich Capital Financial Products, Inc. dated May 30, 2003 (19)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.23</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Promissory Note between Merrillville Realty, L.P. and Sun America Life Insurance Company dated July 7, 1999 (7)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.24</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Secured Promissory Note between Acadia Town Line, LLC and Fleet Bank, N.A. dated March 21, 1999 (7)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.25</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Promissory Note between RD Village
       Associates Limited Partnership and Sun America Life Insurance Company
       Dated</font><font size=2 face="serif"> September 21, 1999 (7)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.26</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Amended and Restated Mortgage Note between Port Bay Associates, LLC and Fleet Bank, N.A. dated July 19, 2000 (3)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.27</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Mortgage and Security Agreement between Port Bay Associates, LLC and Fleet Bank, N.A. dated July 19, 2000 (10)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.28</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Mortgage Note between Port Bay Associates, LLC and Fleet Bank, N.A. dated December 1, 2003 (19)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.29</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Mortgage and Security Agreement,
       and Assignment of Leases and Rents between Port Bay Associates, LLC and
       Fleet </font><font size=2 face="serif">Bank, N.A. dated December 1, 2003
       (19)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.30</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Note Modification Agreement between Port Bay Associates, LLC and Fleet Bank, N.A. dated December 1, 2003 (19)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.31</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Amended and Restated Promissory
       Note between Acadia Realty L.P. and Metropolitan Life Insurance Company
       for
    $25.2</font><font size=2 face="serif"> million dated October 13, 2000 (10)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.32</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Amended and Restated Mortgage,
       Security Agreement and Fixture Filing between Acadia Realty L.P. and Metropolitan</font><font size=2 face="serif"> Life
       Insurance Company dated October 13, 2000 (10)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.33</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Term Loan Agreement between Acadia Realty L.P. and The Dime Savings Bank of New York, dated March 30, 2000 (10)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.34</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Mortgage Agreement between Acadia Realty L.P. and The Dime Savings Bank of New York, dated March 30, 2000 (10)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.35</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Promissory Note between RD Whitegate Associates, L.P. and Bank of America, N.A. Dated December 22, 2000 (10)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.36</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Promissory Note between RD Columbia Associates, L.P. and Bank of America, N.A. Dated December 22, 2000 (10)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.37</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Term Loan Agreement dated as of
       December 28, 2001, among Fleet National Bank and RD Branch Associates,
       L.P., et al </font><font size=2 face="serif">(13)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.38</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Term Loan Agreement dated as of
       December 21, 2001, among RD Woonsocket Associates Limited Partnership,
       et al. and</font><font size=2 face="serif"> The Dime Savings Bank of New
       York, FSB (13)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.39</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Option Extension of Term Loan as of December 19, 2003 between RD Woonsocket Associates Limited Partnership, et al.</font><font size=2 face="serif">and Washington Mutual Bank, FA (19)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.40</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Revolving Loan Promissory Note
       dated as of November 22, 2002, among RD Elmwood Associates, L.P. and Washington</font><font size=2 face="serif"> Mutual
       Bank, FA (15)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.41</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Revolving Loan Agreement dated
       as of November 22, 2002, among RD Elmwood Associates, L.P. and Washington</font><font size=2 face="serif"> Mutual
       Bank, FA (15)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.42</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Mortgage Agreement dated as of
       November 22, 2002, among RD Elmwood Associates, L.P. and Washington Mutual</font><font size=2 face="serif"> Bank,
       FA (15)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">10.43</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Note Modification Agreement between
       RD Elmwood Associates, L.P. and Washington Mutual Bank, FA dated December </font><font size=2 face="serif">19,
       2003 (19)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">14</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Code of Ethics of the Company (18)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">21</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">List of Subsidiaries of Acadia Realty Trust (19)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">23</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Consent of Independent Auditors to Form S-3 and Form S-8 (19)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">31.1</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Certification of Chief Executive
       Officer pursuant to rule 13a &#150; 14(a)/15d-14(a) of the Securities
       Exchange Act of 1934, as</font><font size=2 face="serif"> adopted pursuant
       to Section 302 of the Sarbanes-Oxley Act of 2002 (19)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">31.2</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Certification of Chief Financial
       Officer pursuant to rule 13a &#150; 14(a)/15d-14(a) of the Securities
       Exchange Act of 1934, as </font><font size=2 face="serif">adopted pursuant
       to Section 302 of the Sarbanes-Oxley Act of 2002 (19)</font></td>
</tr>
<tr>
   <td valign="top"><font size=2 face="serif">32.1</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Certification of Chief Executive
       Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
       906 of the </font><font size=2 face="serif">Sarbanes-Oxley Act of 2002
       (19)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">32.2</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Certification of Chief Financial
       Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
       906 of the</font><font size=2 face="serif"> Sarbanes-Oxley Act of 2002
       (19)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">99.1</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Amended and Restated Agreement of Limited Partnership of the Operating Partnership (11)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">99.2</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">First and Second Amendments to
       the Amended and Restated Agreement of Limited Partnership of the Operating</font><font size=2 face="serif"> Partnership
       (11)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">99.3</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Third Amendment to Amended and Restated Agreement of Limited Partnership of the Operating Partnership (19)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">99.4</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Fourth Amendment to Amended and Restated Agreement of Limited Partnership of the Operating Partnership (19)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">99.5</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Certificate of Designation of Series
       A Preferred Operating Partnership Units of Limited Partnership Interest
       of Acadia</font><font size=2 face="serif"> Realty Limited Partnership
       (2)</font></td>
  </tr>
<tr>
   <td valign="top"><font size=2 face="serif">99.6</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">Certificate of Designation of Series
       B Preferred Operating Partnership Units of Limited Partnership Interest
       of Acadia</font><font size=2 face="serif"> Realty Limited Partnership
       (19)</font></td>
  </tr>
</table>
<p align="center"><font size=2 face="serif">39</font></p>
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<a name="p40"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
  <td colspan="3" align="left"> <font size=2 face="serif">Notes:</font> </td>
  </tr>
<tr>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr>
  <td width=3% align="left">&nbsp;</td>
   <td width=3% align="left"><font size=2 face="serif">(1)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an exhibit to the Company&#146;s Annual Report on Form 10-K filed
       for the fiscal Year ended December 31, 1994</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(2)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an Exhibit to Company&#146;s Quarterly Report on Form 10-Q filed
       for the quarter ended June 30, 1997</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(3)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an Exhibit to Company&#146;s Quarterly Report on Form 10-Q filed
       for the quarter ended June 30, 1998</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(4)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an Exhibit to Company&#146;s Quarterly Report on Form 10-Q filed
       for the quarter ended September 30, 1998</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(5)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an exhibit to the Company&#146;s Registration Statement on Form
       S-11 (File No.33-60008)</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(6)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an exhibit to the Company&#146;s Annual Report on Form10-K filed
       for the fiscal year ended December 31, 1998</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(7)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an exhibit to the Company&#146;s Annual Report on Form10-K filed
       for the fiscal year ended December 31, 1999</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(8)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an exhibit to the Company&#146;s Registration Statement on Form
       S-8 filed September 28, 1999</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(9)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof filed as an exhibit to the Company&#146;s Form 8-K filed on April 20, 1998</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(10)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an exhibit to the Company&#146;s Form 10-K filed for the fiscal
       year ended December 31, 2000</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(11)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an exhibit to the Company&#146;s Registration Statement on Form
       S-3 filed on March 3, 2000</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(12)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an Exhibit to Company&#146;s Quarterly Report on Form 10-Q filed
       for the quarter ended June 30, 2001</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(13)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an exhibit to the Company&#146;s Annual Report on Form 10-K filed
       for the fiscal year ended December 31, 2001</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(14)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an Exhibit to Yale University&#146;s Schedule 13D filed on September
       25, 2002</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(15)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an exhibit to the Company&#146;s Annual Report on Form 10-K filed
       for the fiscal year ended December 31, 2002</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(16)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an exhibit to the Company&#146;s Definitive Proxy Statement on
       Schedule 14A filed April 29, 2003</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(17)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof
       filed as an exhibit to the Company&#146;s Current Report on Form 8-K filed
       on July 2, 2003</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(18)</font></td>
   <td><font size=2 face="serif">Incorporated by reference to the copy thereof filed as an exhibit to the Company&#146;s website (www.acadiarealty.com)</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(19)</font></td>
   <td><font size=2 face="serif">Filed herewith</font></td>
</tr>
<tr>
  <td align="left">&nbsp;</td>
   <td align="left"><font size=2 face="serif">(20)</font></td>
   <td><font size=2 face="serif">Management contract or compensatory plan or arrangement.</font></td>
</tr>
</table>
<p align="center">
<font size=2 face="serif">40</font></p>

<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div><page>

<a name="p41"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
<b><font size=2 face="serif">SIGNATURES </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">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, thereto duly authorized.</font></p>
<p align="center">
<b><font size=2 face="serif">ACADIA REALTY TRUST </font></b><font size=2 face="serif"> </font>
<br>
<b><font size=2 face="serif">(Registrant) </font>
</b></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="40%">&nbsp;</td>
    <td width="3%" valign="top"><font size=2 face="serif">By:</font></td>
    <td><font size=2 face="serif">/s/ Kenneth F. Bernstein<br>
      Kenneth F. Bernstein<br>
      Chief Executive Officer,<br>
      President and Trustee</font> </td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left" valign="top"><font size=2 face="serif">By:</font></td>
    <td> <font size=2 face="serif">/s/ Michael Nelsen<br>
      Michael Nelsen<br>
      Sr.
    Vice President and<br>
    Chief Financial Officer</font> </td>
  </tr>
</table>
<p align="left"><font size=2 face="serif">Dated: March 12, 2004</font></p>
<p align="left">
<font size=2 face="serif">Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td align="center"><b><font size=1 face="serif">Signature</font></b></td>
   <td align="center">&nbsp;</td>
   <td align="center"><b><font size=1 face="serif">Title</font></b></td>
   <td align="center">&nbsp;</td>
   <td align="center"><b><font size=1 face="serif">Date</font></b></td>
</tr>
<tr>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
</tr>
<tr>
   <td width="32%"><font size=2 face="serif">/s/ Kenneth F. Bernstein</font></td>
   <td width=2%>&nbsp;</td>
   <td width="32%"><font size=2 face="serif">Chief Executive Officer,</font></td>
   <td width=2%>&nbsp;</td>
   <td width="32%" align="left"><font size=2 face="serif">March 12, 2004</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">(Kenneth F. Bernstein)</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">President and Trustee</font></td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">(Principal Executive Officer)</font></td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">/s/ Michael Nelsen</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Senior Vice President</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">March 12, 2004</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">(Michael Nelsen)</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">and Chief Financial Officer</font></td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">(Principal Financial and Accounting Officer)</font></td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">/s/ Douglas Crocker II</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Trustee</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">March 12, 2004</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Douglas Crocker II</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">/s/ Ross Dworman</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Trustee</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">March 12, 2004</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">(Ross Dworman)</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">/s/ Martin L. Edelman</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Trustee</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">March 12, 2004</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">(Martin L. Edelman, Esq.)</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">/s/ Alan S. Forman</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Trustee</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">March 12, 2004</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">(Alan S. Forman)</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">/s/ Lorrence T. Kellar</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Trustee</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">March 12, 2004</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Lorrence T. Kellar</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">/s/ Marvin J. Levine</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Trustee</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">March 12, 2004</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">(Marvin J. Levine, Esq.)</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">/s/ Lawrence J. Longua</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Trustee</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">March 12, 2004</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">(Lawrence J. Longua)</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">/s/ Gregory A. White</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Trustee</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">March 12, 2004</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">(Gregory A. White)</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">/s/ Lee S. Wielansky</font></td>
   <td>&nbsp;</td>
   <td><font size=2 face="serif">Trustee</font></td>
   <td>&nbsp;</td>
   <td align="left"><font size=2 face="serif">March 12, 2004</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">(Lee S. Wielansky)</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
</table>
<p align="center"> <font size=2 face="serif">41</font></p>
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<a name="p42"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
<b><font size=2 face="serif">EXHIBIT INDEX </font></b><font size=2 face="serif"></font></p><p>
<font size=2 face="serif">The following is an index to all exhibits filed with the Annual Report on Form 10-K other than those incorporated by reference herein:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr align="left">
    <td><font size=2 face="serif">Exhibit No. </font></td>
    <td align="center"><font size=2 face="serif">Description</font></td>
  </tr>
  <tr align="left">
    <td> <hr noshade size=1></td>
    <td> <hr noshade size=1></td>
  </tr>
  <tr align="left">
    <td width=10%><font size=2 face="serif">10.4</font></td>
    <td><font size=2 face="serif">Form of Registration Rights Agreement and Lock-Up
      Agreement</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">10.8</font></td>
    <td><font size=2 face="serif">Agreement of Contribution among Acadia Realty
      Limited Partnership, Acadia Realty Trust and Klaff Realty, LP</font></td>
  </tr>
  <tr align="left">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">and Klaff Realty, Limited</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">10.11</font></td>
    <td><font size=2 face="serif">Amendment to employment agreement between the
      Company and Kenneth F. Bernstein</font></td>
  </tr>
    <tr align="left">
    <td><font size=2 face="serif">10.17</font></td>
    <td><font size=2 face="serif">Severance Agreement between the Company and
      Joseph Napolitano, Sr. Vice President dated April 6, 2001</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">10.18</font></td>
    <td><font size=2 face="serif">Severance Agreement between the Company and
      Robert Masters, Sr. Vice President and General Counsel dated</font></td>
  </tr>
  <tr align="left">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">January 2001</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">10.21</font></td>
    <td><font size=2 face="serif">Promissory Note between 239 Greenwich Associates,
      L.P. and Greenwich Capital Financial Products, Inc. dated</font></td>
  </tr>
  <tr align="left">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">May 30, 2003</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">10.22</font></td>
    <td><font size=2 face="serif">Open-End Mortgage, Assignment of Leases and
      Rents, and Security Agreement between 239 Greenwich</font></td>
  </tr>
  <tr align="left">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Associates, L.P. and Greenwich Capital Financial
      Products, Inc. dated May 30, 2003</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">10.28</font></td>
    <td><font size=2 face="serif">Mortgage Note between Port Bay Associates, LLC
      and Fleet Bank, N.A. dated December 1, 2003 (14)</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">10.29</font></td>
    <td><font size=2 face="serif">Mortgage and Security Agreement, and Assignment
      of Leases and Rents between Port Bay Associates, LLC and</font></td>
  </tr>
  <tr align="left">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Fleet Bank, N.A. dated December 1, 2003 (14)</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">10.30</font></td>
    <td><font size=2 face="serif">Note Modification Agreement between Port Bay
      Associates, LLC and Fleet Bank, N.A. dated December 1, 2003</font></td>
  </tr>
  <tr align="left">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">(14)</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">10.39</font></td>
    <td><font size=2 face="serif">Option Extension of Term Loan as of December
      19, 2003 between RD Woonsocket Associates Limited</font></td>
  </tr>
  <tr align="left">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Partnership,et al. and Washington Mutual Bank,
      FA</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">10.43</font></td>
    <td><font size=2 face="serif">Note Modification Agreement between RD Elmwood
      Associates, L.P. and Washington Mutual Bank, FA dated</font></td>
  </tr>
  <tr align="left">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">December 19, 2003</font></td>
  </tr>
</table>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr align="left">
    <td width=10%><font size=2 face="serif">21</font></td>
    <td><font size=2 face="serif">List of Subsidiaries of Acadia Realty Trust</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">23</font></td>
    <td><font size=2 face="serif">Consent of Independent Auditors to Form S-3
      and Form S-8</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">31.1</font></td>
    <td><font size=2 face="serif">Certification of Chief Executive Officer pursuant
      to rule 13a &#150; 14(a)/15d-14(a) of the Securities Exchange Act of</font></td>
  </tr>
  <tr align="left">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">1934, as adopted pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">31.2</font></td>
    <td><font size=2 face="serif">Certification of Chief Financial Officer pursuant
      to rule 13a &#150; 14(a)/15d-14(a) of the Securities Exchange Act of</font></td>
  </tr>
  <tr align="left">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">1934, as adopted pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">32.1</font></td>
    <td><font size=2 face="serif">Certification of Chief Executive Officer pursuant
      to 18 U.S.C. Section 1350, as adopted pursuant to Section 906</font></td>
  </tr>
  <tr align="left">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">of the Sarbanes-Oxley Act of 2002</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">32.2</font></td>
    <td><font size=2 face="serif">Certification of Chief Financial Officer pursuant
      to 18 U.S.C. Section 1350, as adopted pursuant to Section 906</font></td>
  </tr>
  <tr align="left">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">of the Sarbanes-Oxley Act of 2002</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">99.3</font></td>
    <td><font size=2 face="serif">Third Amendment to Amended and Restated Agreement
      of Limited Partnership of the Operating Partnership</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">99.4</font></td>
    <td><font size=2 face="serif">Fourth Amendment to Amended and Restated Agreement
      of Limited Partnership of the Operating Partnership</font></td>
  </tr>
  <tr align="left">
    <td><font size=2 face="serif">99.6</font></td>
    <td><font size=2 face="serif">Certificate of Designation of Series B Preferred
      Operating Partnership Units of Limited Partnership Interest of</font></td>
  </tr>
  <tr align="left">
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Acadia Realty Limited Partnership</font></td>
  </tr>
</table>
<p align="center">
<font size=2 face="serif">42</font></p>

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<div style="page-break-before:always"></div><page>

<a name="pF-1"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center"> <b><font size=2 face="serif">ACADIA REALTY TRUST AND SUBSIDIARIES</font></b><br>
  <b><font size=2 face="serif">INDEX TO FINANCIAL STATEMENTS </font></b><font size=2 face="serif"></font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><a href="#F-2"><font size=2 face="serif">Report of Independent Auditors</font></a></td>
    <td width=10% align="right"><a href="#F-2"><font size=2 face="serif">F-2</font></a></td>
  </tr>
  <tr>
    <td><a href="#F-3"><font size=2 face="serif">Consolidated Balance Sheets as
      of December 31, 2003 and 2002</font></a></td>
    <td align="right"><a href="#F-3"><font size=2 face="serif">F-3</font></a></td>
  </tr>
  <tr>
    <td><a href="#F-4"><font size=2 face="serif">Consolidated Statements of Income
      for the years ended December 31, 2003, 2002 and 2001</font></a></td>
    <td align="right"><a href="#F-4"><font size=2 face="serif">F-4</font></a></td>
  </tr>
  <tr>
    <td><a href="#F-6"><font size=2 face="serif">Consolidated Statements of Shareholders&#146;
      Equity for the years ended December 31, 2003, 2002 and 2001</font></a></td>
    <td align="right"><a href="#F-6"><font size=2 face="serif">F-6</font></a></td>
  </tr>
  <tr>
    <td><a href="#F-7"><font size=2 face="serif">Consolidated Statements of Cash
      Flows for the years ended December 31, 2003, 2002 and 2001</font></a></td>
    <td align="right"><a href="#F-7"><font size=2 face="serif">F-7</font></a></td>
  </tr>
  <tr>
    <td><a href="#F-9"><font size=2 face="serif">Notes to Consolidated Financial
      Statements</font></a></td>
    <td align="right"><a href="#F-9"><font size=2 face="serif">F-9</font></a></td>
  </tr>
  <tr>
    <td><a href="#F-31"><font size=2 face="serif">Schedule III &#150; Real Estate
      and Accumulated Depreciation</font></a></td>
    <td align="right"><a href="#F-31"><font size=2 face="serif">F-31</font></a></td>
  </tr>
</table>
<p align="center">
<font size=2 face="serif">F-1</font></p>

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<a name="pF-2"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
<b><font size=2 face="serif">REPORT OF INDEPENDENT AUDITORS </font></b><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">To the Shareholders and Trustees of Acadia Realty Trust</font></p>
<p align="left">
<font size=2 face="serif">We have audited the accompanying consolidated balance sheets of Acadia Realty Trust and subsidiaries (the &#147;Company&#148;) as of December 31, 2003 and 2002, and the related consolidated statements of income, shareholders&#146; equity and cash flows for each of the three years in the period ended December 31, 2003. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and the schedule are the responsibility of the Company&#146;s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.</font></p>
<p align="left">
<font size=2 face="serif">We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit 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.</font></p>
<p align="left">
<font size=2 face="serif">In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Acadia Realty Trust and subsidiaries at December 31, 2003 and 2002, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.</font></p><p>
<i><font size=2 face="serif">/s/ ERNST &amp; YOUNG LLP</font></i>
</p>
<p>
<font size=2 face="serif">New York, New York<br>
March 12, 2004</font></p>
<p align="center">
<font size=2 face="serif">F-2</font></p>

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<div style="page-break-before:always"></div><page>

<a name="pF-3"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p>
<b><font size=2 face="serif">Part I. Financial Information</font></b>
</p>
<p>
<b><font size=2 face="serif">Item 1. Financial Statements </font></b>
</p>
<p align="center"><b><font size=2 face="serif">ACADIA REALTY TRUST AND SUBSIDIARIES<br>
  CONSOLIDATED
BALANCE SHEETS<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td colspan=4 align="center"><b><font size=1 face="serif">December 31,</font></b></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="center"><b><font size=1 face="serif">2003</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">2002</font></b></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><b><font size=2 face="serif">ASSETS</font></b></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Real estate:</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Land</font></td>
   <td width=1% align="center" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td width=7% align="right" bgcolor="#eeeeee"><font size=2 face="serif">54,890</font></td>
   <td width=2% bgcolor="#eeeeee">&nbsp;</td>
   <td width=1% align="center" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td width=7% align="right" bgcolor="#eeeeee"><font size=2 face="serif">54,890</font></td>
   <td width=2% bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Buildings and improvements</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">366,879</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">352,359</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Construction in progress</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">5,859</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">6,629</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">427,628</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">413,878</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Less: accumulated depreciation</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">101,090</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">85,062</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Net real estate</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">326,538</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">328,816</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Cash and cash equivalents</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">14,663</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">45,168</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Cash in escrow</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,342</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,447</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Investments in unconsolidated partnerships</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">13,630</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">6,164</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Rents receivable, net</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">10,394</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">6,959</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Notes receivable</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">3,586</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">6,795</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Prepaid expenses</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,127</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,042</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Deferred charges, net</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">11,173</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">10,360</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Other assets</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,731</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,184</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="center" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">388,184</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="center" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">410,935</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><b><font size=2 face="serif">LIABILITIES AND SHAREHOLDERS&#146; EQUITY</font></b></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Mortgage notes payable</font></td>
   <td align="center" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">190,444</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="center" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">202,361</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Accounts payable and accrued expenses</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">5,804</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">8,528</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Dividends and distributions payable</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">4,619</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">3,744</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Due to related parties</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">48</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">174</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Deferred gain on sale of properties</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,212</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Derivative instruments</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">4,044</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">5,470</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Other liabilities</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">3,806</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">2,998</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Total liabilities</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">208,765</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">224,487</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Minority interest in Operating Partnership</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">7,875</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">22,745</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Minority interests in majority- owned partnerships</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,810</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">2,380</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Total minority interests</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">9,685</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">25,125</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Shareholders&#146; equity:</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Common shares, $.001 par value, authorized 100,000,000 shares, issued and outstanding 27,409,141 and</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">25,257,178 shares, respectively</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">27</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">25</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Additional paid-in capital</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">177,891</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">170,851</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Accumulated other comprehensive loss</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(5,505</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(6,874</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Deficit</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(2,679</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(2,679</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Total shareholders&#146; equity</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">169,734</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">161,323</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">388,184</font></td>
   <td>&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">410,935</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
</tr>
</table>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p align="center">
<font size=2 face="serif">The accompanying notes are an integral part of these consolidated financial statements</font></p>
<p align="center">
<font size=2 face="serif">F-3</font></p>

<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div><page>

<a name="pF-4"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
<b><font size=2 face="serif">ACADIA REALTY TRUST AND SUBSIDIARIES<br>
CONSOLIDATED STATEMENTS OF INCOME </font></b>
<br>
<font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td colspan=7 align="center"><b><font size=1 face="serif">Years ended December 31,</font></b></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><b><font size=1 face="serif">2003</font></b></td>
   <td align="left"><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="right"><b><font size=1 face="serif">2002</font></b></td>
   <td align="left"><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="right"><b><font size=1 face="serif">2001</font></b></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Revenues</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Minimum rents</font></td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=10% align="right"><font size=2 face="serif">50,168</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=10% align="right"><font size=2 face="serif">48,488</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=10% align="right"><font size=2 face="serif">47,086</font></td>
   <td width=2% align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Percentage rents</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,012</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,079</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,196</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Expense reimbursements</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">13,539</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">11,419</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">10,884</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Lease termination income</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">3,945</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Other property income</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">749</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">536</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">589</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Other</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">3,977</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">3,880</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,527</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Total revenues</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">69,445</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">69,347</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">61,282</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Operating Expenses</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Property operating</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">15,170</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">12,274</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">11,597</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Real estate taxes</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">8,799</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">8,447</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">8,427</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">General and administrative</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">10,734</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">10,173</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">9,025</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Depreciation and amortization</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">17,909</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">14,804</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">13,745</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Abandoned project costs</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">274</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Total operating expenses</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">52,612</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">45,972</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">42,794</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Operating income</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">16,833</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">23,375</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">18,488</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Equity in earnings of unconsolidated partnerships</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">2,411</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">628</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">504</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Interest expense</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(11,231</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(11,017</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(12,370</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Gain on sale of land</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,187</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,530</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Minority interest</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,347</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(2,999</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,466</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Income from continuing operations</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">7,853</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">11,517</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">5,156</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Discontinued operations:</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Operating income from discontinued operations</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,165</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">3,972</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Impairment of real estate</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(197</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(15,886</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Gain on sale of properties</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">8,132</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">17,734</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Minority interest</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,218</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,025</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Income from discontinued operations</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">7,882</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">4,795</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Income before cumulative effect of a change in accounting principle</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">7,853</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">19,399</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">9,951</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Cumulative effect of a change in accounting principle</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(149</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td align="right"><hr noshade size=1>
   </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Net income</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">7,853</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">19,399</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">9,802</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td align="right"><hr noshade size=2>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td align="right"><hr noshade size=2>
   </td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td align="right"><hr noshade size=2>
   </td>
   <td align="left">&nbsp;</td>
</tr>
</table>
<p align="center">&nbsp;
</p>
<p align="center"><font size=2 face="serif">The accompanying notes are an integral part of these consolidated financial statements</font></p>
<p align="center">
<font size=2 face="serif">F-4</font></p>

<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="pF-5"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA REALTY TRUST AND SUBSIDIARIES<br>
CONSOLIDATED STATEMENTS OF INCOME (continued)</font></b>
<br>
<font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td colspan=7 align="center"><b><font size=1 face="serif">Years ended December 31,</font></b></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><b><font size=1 face="serif">2003</font></b></td>
   <td align="left"><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="right"><b><font size=1 face="serif">2002</font></b></td>
   <td align="left"><font size="1">&nbsp;</font></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="right"><b><font size=1 face="serif">2001</font></b></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Basic earnings per share</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Income from continuing operations</font></td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=10% align="right"><font size=2 face="serif">0.30</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=10% align="right"><font size=2 face="serif">0.46</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=10% align="right"><font size=2 face="serif">0.18</font></td>
   <td width=2% align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Income from discontinued operations</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.31</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.18</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Cumulative effect of a change in accounting principle</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(0.01</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Basic earnings per share</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.30</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.77</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.35</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=2>
  </td>
  <td align="right"><hr noshade size=2>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=2>
  </td>
  <td align="right"><hr noshade size=2>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=2>
  </td>
  <td align="right"><hr noshade size=2>
  </td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Diluted earnings per share</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Income from continuing operations</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.29</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.45</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.18</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Income from discontinued operations</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.31</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">0.18</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Cumulative effect of a change in accounting principle</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(0.01</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Diluted earnings per share</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.29</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.76</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.35</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=2>
  </td>
  <td align="right"><hr noshade size=2>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=2>
  </td>
  <td align="right"><hr noshade size=2>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=2>
  </td>
  <td align="right"><hr noshade size=2>
  </td>
   <td align="left">&nbsp;</td>
</tr>
</table>
<p align="center">&nbsp;
</p>
<p align="center"><font size=2 face="serif">The accompanying notes are an integral part of these consolidated financial statements</font></p>
<p align="center">
<font size=2 face="serif">F-5</font></p>

<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div><page>

<a name="pf6"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
<b><font size=2 face="serif">ACADIA REALTY TRUST AND SUBSIDIARIES<br>
</font></b><b><font size=2 face="serif">CONSOLIDATED
STATEMENTS OF SHAREHOLDERS&#146; EQUITY<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr valign="bottom">
  <td>&nbsp;</td>
  <td colspan="4" align="center"><b><font size=1 face="serif">Common Shares</font></b></td>
  <td align="center">&nbsp;</td>
  <td align="center">&nbsp;</td>
  <td align="center">&nbsp;</td>
  <td align="center">&nbsp;</td>
  <td align="center">&nbsp;</td>
  <td rowspan="2" align="center"><b><font size=1 face="serif">Accumulated<br>
Other</font></b><b><font size=1 face="serif">
      Comprehensive</font></b><b><font size=1 face="serif"><br>
   Loss</font></b></td>
  <td align="center">&nbsp;</td>
  <td align="center">&nbsp;</td>
  <td align="center">&nbsp;</td>
  <td align="center">&nbsp;</td>
  <td align="center">&nbsp;</td>
  <td rowspan="2" align="center"><b><font size=1 face="serif">Total</font></b><br>    <font size=1 face="serif"><b>Shareholders&#146;<br>
   </b></font><b><font size=1 face="serif">Equity</font></b></td>
  <td align="center">&nbsp;</td>
</tr>
<tr valign="bottom">
   <td>&nbsp;</td>
   <td align="center"><b><font size=1 face="serif">
   </font></b><b><font size=1 face="serif">Shares</font></b></td>
   <td align="center">&nbsp;</td>
   <td align="center">&nbsp;</td>
   <td align="center"><b><font size=1 face="serif">Amount</font></b></td>
   <td align="center">&nbsp;</td>
   <td align="center"><b></b></td>
   <td align="center"><b><font size=1 face="serif">Additional<br>
 Paid-in</font></b><b><font size=1 face="serif"><br>
    Capital</font></b></td>
   <td align="center">&nbsp;</td>
   <td align="center"><b></b><b></b></td>
   <td align="center">&nbsp;</td>
   <td align="center">&nbsp;</td>
   <td align="center"><b><font size=1 face="serif">Deficit</font></b></td>
   <td align="center">&nbsp;</td>
   <td align="center"><b></b></td>
   <td align="center">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Balance, December 31, 2000</font></td>
   <td width=8% align="right"><font size=2 face="serif">28,150,472</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">28</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">188,392</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">&#151;</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">(9,103</font></td>
   <td width=2% align="left"><font size=2 face="serif">)</font></td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">179,317</font></td>
   <td width=2% align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Conversion of 826,884 OP Units to</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Common Shares by limited</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">partners of the Operating</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Partnership</font></td>
   <td align="right"><font size=2 face="serif">826,884</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">1</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">5,815</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">5,816</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Repurchase of 8,000 OP Units to</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Common Shares by limited</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">partners of the Operating Partnership</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">8</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">8</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Dividends declared ($0.48 per</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Common Share)</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(3,832</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(9,802</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(13,634</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Repurchase of Common Shares</font></td>
   <td align="right"><font size=2 face="serif">(316,800</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,964</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,964</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Reissuance of Common Shares</font></td>
   <td align="right"><font size=2 face="serif">37,110</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">239</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">239</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Purchase of minority interest in</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">majority-owned partnership</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">720</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">720</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Unrealized loss on valuation of</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">swap agreements</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,206</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,206</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Income before minority interest</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">12,023</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">12,023</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Minority interest&#146;s equity</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(2,221</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(2,221</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;   </td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;   </td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;   </td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;   </td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;   </td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;   </td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Balance, December 31, 2001</font></td>
   <td align="right"><font size=2 face="serif">28,697,666</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">29</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">189,378</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,206</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(9,103</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">179,098</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Conversion of 2,086,736 OP Units</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">to Common Shares by limited</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">partners of the Operating Partnership</font></td>
   <td align="right"><font size=2 face="serif">2,086,736</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">2</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">14,901</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">14,903</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Dividends declared ($0.52 per</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Common Share)</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(12,975</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(12,975</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Repurchase of Common Shares</font></td>
   <td align="right"><font size=2 face="serif">(5,523,974</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(6</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(33,414</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(33,420</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Forfeiture of restricted Common</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Shares</font></td>
   <td align="right"><font size=2 face="serif">(3,250</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(14</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(14</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Unrealized loss on valuation of</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">swap agreements</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(5,668</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(5,668</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Income before minority interest</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">22,327</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">22,327</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Minority interest&#146;s equity</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(2,928</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(2,928</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp; </td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp; </td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp; </td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp; </td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp; </td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp; </td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Balance at December 31, 2002</font></td>
   <td align="right"><font size=2 face="serif">25,257,178</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">25</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">170,851</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(6,874</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(2,679</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">161,323</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Conversion of 2,058,804 OP Units</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">to Common Shares by limited</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">partners of the Operating Partnership</font></td>
   <td align="right"><font size=2 face="serif">2,058,804</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">2</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">14,898</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">14,900</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Conversion of 632 Preferred OP</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Units to Common Shares by</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">limited partners of the Operating Partnership</font></td>
   <td align="right"><font size=2 face="serif">84,267</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">632</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">632</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Employee restricted share award</font></td>
   <td align="right"><font size=2 face="serif">7,832</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">410</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">410</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
  <td><font size="2">Settlement of vested options</font></td>
  <td><div align="right"><font size="2">&#151;</font></div></td>
  <td><font size="2">&nbsp;</font></td>
  <td align="right"><font size="2">&nbsp;</font></td>
  <td><div align="right"><font size="2">&#151;</font></div></td>
  <td><font size="2">&nbsp;</font></td>
  <td align="right"><font size="2">&nbsp;</font></td>
  <td><div align="right"><font size="2">(750</font></div></td>
  <td><font size="2">)</font></td>
  <td align="right"><font size="2">&nbsp;</font></td>
<td align="right"><font size=2 face="serif">&#151;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td align="right"><font size="2">&nbsp;</font></td>
<td align="right"><font size=2 face="serif">&#151;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td align="right"><font size="2">&nbsp;</font></td>
  <td><div align="right"><font size="2">(750</font></div></td>
  <td><font size="2">)</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Dividends declared ($0.595 per</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Common Share)</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(8,160</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(7,853</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(16,013</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Employee exercise of 250 options</font></td>
   <td align="right"><font size=2 face="serif">250</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">2</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">2</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Unrealized gain on valuation of</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">swap agreements</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,369</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,369</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Common Shares purchased under</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Employee Stock Purchase Plan</font></td>
   <td align="right"><font size=2 face="serif">810</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">8</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">8</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Income before minority interest</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">8,600</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">8,600</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Minority interest&#146;s equity</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(747</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(747</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp; </td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp; </td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp; </td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp; </td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp; </td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp; </td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Balance at December 31, 2003</font></td>
   <td align="right"><font size=2 face="serif">27,409,141</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">27</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">177,891</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">(5,505</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">(2,679</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">169,734</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td align="right"><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td align="right"><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td align="right"><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td align="right"><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td align="right"><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
</tr>
</table>
<p align="center">
<font size=2 face="serif">The accompanying notes are an integral part of these consolidated financial statements</font></p>
<p align="center"><font size=2 face="serif"> F-6</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="pf7"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA REALTY TRUST
AND SUBSIDIARIES<br>
CONSOLIDATED STATEMENTS OF CASH FLOWS<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td rowspan="3" valign="bottom"><b><font size=2 face="serif">CASH FLOWS FROM OPERATING ACTIVITIES:</font></b></td>
   <td colspan="8" align="center"><b><font size=1 face="serif">Years ended December 31,</font></b></td>
   <td rowspan="3">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td align="center"><b><font size=1 face="serif">2003</font></b></td>
   <td rowspan="2" align="center"><font size="1">&nbsp;</font></td>
   <td align="center"><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">2002</font></b></td>
   <td rowspan="2" align="center"><font size="1">&nbsp;</font></td>
   <td align="center"><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">2001</font></b></td>
  </tr>
<tr>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
  </tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Income from continuing operations after cumulative effect of a change in accounting principle</font></td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">7,853</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">11,517</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif"> $</font></td>
   <td width=8% align="right"><font size=2 face="serif">5,007</font></td>
   <td width=2% align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Adjustments to reconcile income from continuing operations to net cash provided by operating</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">activities:</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Depreciation and amortization</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">17,909</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">14,804</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">13,745</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Gain on sale of land</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,187</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,530</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Minority interests</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,347</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">2,999</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,466</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Abandoned project costs</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">274</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Equity in earnings of unconsolidated partnerships</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(2,411</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(628</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(504</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Provision for bad debts</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">523</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">447</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">741</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Stock-based compensation</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">239</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Cumulative effect of a change in accounting principle</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">149</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Changes in assets and liabilities:</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Funding of escrows, net</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">105</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(850</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">89</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Rents receivable</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(3,958</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,882</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">937</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Prepaid expenses</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,085</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(429</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">251</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Other assets</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(891</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">346</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(273</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Accounts payable and accrued expenses</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">218</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">174</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,739</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Due to/from related parties</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(126</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">67</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(4</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Other liabilities</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">785</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(391</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">417</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Net cash provided by operating activities</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">19,082</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">24,918</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">20,521</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><b><font size=2 face="serif">CASH FLOWS FROM INVESTING ACTIVITIES:</font></b></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Expenditures for real estate and improvements</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(13,531</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(14,134</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(10,685</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Payment of accrued expense related to redevelopment project</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(2,488</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Contributions to unconsolidated partnerships</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(6,032</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(2,956</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(36</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Distributions from unconsolidated partnerships</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,602</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,049</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,252</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Collections on purchase money notes</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">3,232</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">41,042</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Payment of deferred leasing costs</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(2,183</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(355</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,730</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Net cash (used in) provided by investing activities</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(19,400</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">24,646</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(11,199</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
</tr>
</table>
<p align="center">
<font size=2 face="serif">The accompanying notes are an integral part of these consolidated financial statements</font></p>
<p align="center">
<font size=2 face="serif">F-7</font></p>

<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div><page>
<a name="pF-8"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
<b><font size=2 face="serif">ACADIA REALTY TRUST AND SUBSIDIARIES<br>
</font></b><b><font size=2 face="serif">CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td colspan="8" align="center"><b><font size=1 face="serif">Years ended December 31,</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td colspan="2" align="center"><b><font size=1 face="serif">2003</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td colspan="2" align="center"><b><font size=1 face="serif">2002</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td colspan="2" align="center"><b><font size=1 face="serif">2001</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td colspan="2"><hr align="center" size="1"  width= "90%"noshade></td>
  <td>&nbsp;</td>
  <td colspan="2"><hr align="center" size="1"  width= "90%"noshade></td>
  <td>&nbsp;</td>
  <td colspan="2"><hr align="center" size="1"  width= "90%"noshade>
    </td>
  <td>&nbsp;</td>
</tr>
<tr>
   <td><b><font size=2 face="serif">CASH FLOWS FROM FINANCING ACTIVITIES:</font></b></td>
   <td colspan="2"><font size="2">&nbsp;</font><font size="2">&nbsp;</font>

    </td>
   <td><font size="2">&nbsp;</font></td>
   <td colspan="2"><font size="2">&nbsp;</font><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td colspan="2"><font size="2">&nbsp;</font><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Principal payments on mortgage notes payable</font></td>
   <td width=1%><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">(32,917</font></td>
   <td width=2%><font size=2 face="serif">)</font></td>
   <td width=1%><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">(16,841</font></td>
   <td width=2%><font size=2 face="serif">)</font></td>
   <td width=1%><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">(33,599</font></td>
   <td width=2%><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Proceeds received on mortgage notes payable</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">21,000</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">7,758</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">51,350</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Payment of deferred financing and other costs</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(241</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(812</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(847</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Dividends paid</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(14,896</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(13,131</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(13,569</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Distributions to minority interests in Operating Partnership</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(1,207</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(2,023</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(2,985</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Distributions on Preferred Operating Partnership Units</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(199</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(199</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(199</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Distributions to minority interests in majority-owned partnership</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(985</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(139</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(90</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Purchase of minority interest in majority-owned partnerships</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(30</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>



<tr bgcolor="#eeeeee">
  <td><font size="2">Settlement of vested options</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td align="right"><font size="2">(750</font></td>
  <td><font size="2">)&nbsp;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td align="right"><font size="2">&nbsp;&#151;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td align="right"><font size="2">&nbsp;&#151;</font></td>
  <td><font size="2">&nbsp;</font></td>
</tr>
<tr bgcolor="#ffffff">
   <td><font size=2 face="serif">Redemption of Operating Partnership Units</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(5,114</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Repurchase of Common Shares</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(33,420</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(1,964</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr bgcolor="#ffffff">
   <td><font size=2 face="serif">Common Shares issued under Employee Stock Purchase Plan</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">8</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Net cash used in financing activities</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(30,187</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(58,807</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(7,047</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Cash flows from discontinued operations:</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Net cash provided by discontinued operations</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">20,464</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">10,174</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">(Decrease) increase in cash and cash equivalents</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(30,505</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">11,221</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">12,449</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Cash and cash equivalents, beginning of year</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">45,168</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">33,947</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">21,689</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">14,663</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">45,168</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">34,138</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Less: Cash of discontinued operations</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">191</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2"><hr align="center" size="1"  width= "100%"noshade></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2"><hr align="center" size="1"  width= "100%"noshade></font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Cash and cash equivalents, end of year</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">14,663</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">45,168</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">33,947</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=2></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=2></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=2></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Supplemental disclosure of cash flow information:</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Cash paid during the period for interest, net
       of amounts capitalized of $403, $931 and $372, </font><font size="2">&nbsp;<font face="serif">respectively</font></font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">11,242</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">12,346</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">19,047</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td><font size="2">&nbsp;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td><hr noshade size=2>
  </td>
  <td><font size="2">&nbsp;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td><hr noshade size=2>
  </td>
  <td><font size="2">&nbsp;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td><hr noshade size=2>
  </td>
  <td><font size="2">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Notes received in connection with sale of properties</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">22,425</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">34,757</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td><font size="2">&nbsp;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td><hr noshade size=2>
  </td>
  <td><font size="2">&nbsp;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td><hr noshade size=2>
  </td>
  <td><font size="2">&nbsp;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td><hr noshade size=2>
  </td>
  <td><font size="2">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Disposition of real estate through assumption of debt</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">42,438</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td><font size="2">&nbsp;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td><hr noshade size=2>
  </td>
  <td><font size="2">&nbsp;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td><hr noshade size=2>
  </td>
  <td><font size="2">&nbsp;</font></td>
  <td><font size="2">&nbsp;</font></td>
  <td><hr noshade size=2>
  </td>
  <td><font size="2">&nbsp;</font></td>
</tr>
</table>
<p align="center">&nbsp;
</p>
<p align="center"><font size=2 face="serif">The accompanying notes are an integral part of these consolidated financial statements</font></p>
<p align="center">
<font size=2 face="serif">F-8</font></p>

<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page>
<a name="pF-9"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<p align="center">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA REALTY TRUST
AND SUBSIDIARIES<br>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
</font></b><b><font size=2 face="serif">DECEMBER 31, 2003<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p><p>
<b><font size=2 face="serif">1. Organization, Basis of Presentation and Summary of Significant Accounting Policies </font></b></p>
<p><font size="2">
  <font face="serif">Acadia Realty Trust (the &#147;Company&#148;) is a fully integrated and self-managed real estate investment trust (&#147;REIT&#148;)
  which specializes in the acquisition, redevelopment and operation of shopping
  centers which are anchored by grocery and value-oriented retail.</font></font></p><p><font size="2">
  <font face="serif">All of the Company&#146;s assets are held by, and all of its operations are conducted through, Acadia Realty Limited Partnership (the &#147;Operating Partnership&#148;) and its majority owned partnerships. As of December 31, 2003, the Company controlled 96% of the Operating Partnership as the sole general partner. As the general partner, the Company is entitled to share, in proportion to its percentage interest, in the cash distributions and profits and losses of the Operating Partnership. The limited partners represent entities or individuals who contributed their interests in certain properties or partnerships to the Operating Partnership in exchange for common or preferred units of limited partnership interest (&#147;Common or Preferred OP Units&#148;). Limited partners holding Common OP Units are generally entitled to exchange their units on a one-for-one basis for common shares of beneficial interest of the Company (&#147;Common Shares&#148;). This structure is commonly referred to as an umbrella partnership REIT or &#147;UPREIT&#148;.</font></font></p><p><font size="2">
  <font face="serif">On August 12, 1998, the Company completed a major reorganization
  (&#147;RDC Transaction&#148;) in which it acquired twelve shopping centers, five multi-family properties and a 49% interest in one shopping center along with certain third party management contracts and promissory notes from real estate investment partnerships (&#147;RDC Funds&#148;)
  managed by affiliates of RD Capital, Inc. In exchange for these and a cash
  investment of $100,000, the Company issued 11.1 million Common OP Units and
  15.3 million Common Shares to the RDC Funds. After giving effect to the conversion
  of the Common OP Units, the RDC Funds beneficially owned 72% of the Common
  Shares as of the closing of the RDC </font></font><font size="2"><font face="serif">Transaction. During February of 2003, the Company issued OP Units and cash valued at $2,750 to certain limited partners in connection with an obligation from the RDC Transaction. The payment was due upon the commencement of rental payments from a designated tenant at one of the properties acquired in the RDC Transaction.</font></font></p><p><font size="2">
  <font face="serif">As of December 31, 2003, the Company operated 62 properties, which it owned or had an ownership interest in, consisting of 60 neighborhood and community shopping centers and two multi-family properties, located primarily in the Northeast, Mid-Atlantic and Midwest regions of the United States.</font></font></p><p><font size="2">
<i><font face="serif">Principles of Consolidation </font></i></font></p><p><font size="2">
  <font face="serif">The consolidated financial statements include the consolidated accounts of the Company and its majority owned partnerships, including the Operating Partnership. Non-controlling investments in partnerships are accounted for under the equity method of accounting as the Company exercises significant influence.</font></font></p><p><font size="2">
<i><font face="serif">Use of Estimates </font></i></font></p><p><font size="2">
  <font face="serif">The preparation of the financial statements in conformity
  with accounting principles generally accepted in the United States (&#147;GAAP&#148;)
  requires management to make estimates and assumptions that affect the amounts
  reported in the financial statements and accompanying notes. Actual results
  could differ from those estimates.</font></font></p><p><font size="2">
<i><font face="serif">Properties </font></i></font></p><p><font size="2">
  <font face="serif">Real estate assets are stated at cost less accumulated depreciation. Expenditures for acquisition, development, construction and improvement of properties, as well as significant renovations are capitalized. Interest costs are capitalized until construction is substantially complete. </font></font><font size="2"><font face="serif">Construction in progress includes costs for significant shopping center expansion and redevelopment. Depreciation is computed on the straight-line basis over estimated useful lives of 30 to 40 years for buildings and the shorter of the useful life or lease term for improvements, furniture, fixtures and equipment. Expenditures for maintenance and repairs are charged to operations as incurred.</font></font></p><p><font size="2">
  <font face="serif">The Company reviews its long-lived assets used in operations for impairment when there is an event, or change in circumstances that indicates impairment in value. The Company records impairment losses and reduces the carrying value of properties when indicators of impairment are present and the expected undiscounted cash flows related to those properties are less than their carrying amounts. In cases where the Company does not expect to recover its carrying costs on properties held for use, the Company reduces its carrying cost to fair value, and for properties held for sale, the Company reduces its carrying value to the fair value less costs to sell. During the year ended December 31, 2002, an impairment loss of $197 was recognized related to a property that was sold as of December 31, 2002. For the year ended December 31, 2001, an impairment loss of $15,886 was recognized related to properties sold subsequent to December 31, 2001. Management does not believe that the values of its properties within the portfolio are impaired as of December 31, 2003.</font></font></p>
<p align="center">
<font size=2 face="serif">F-9</font></p>

<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div>
<page> <a name="pF-10"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA
      REALTY TRUST AND SUBSIDIARIES<br>
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS </font></b><font size=2 face="serif"> </font> <br>
  <font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<p align="left"> <b><font size=2 face="serif">1.&nbsp;&nbsp;&nbsp;Organization,
      Basis of Presentation and Summary of Significant Accounting Policies, continued </font></b><font size=2 face="serif"></font></p>
<p align="left"> <i><font size=2 face="serif">Deferred Costs </font></i><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">Fees and costs paid in the successful
    negotiation of leases have been deferred and are being amortized on a straight-line
    basis over the terms of the respective leases. Fees and costs incurred in
    connection with obtaining financing have been deferred and are being amortized
    over the term of the related debt obligation.</font></p>
<p align="left"> <i><font size=2 face="serif">Revenue Recognition </font></i><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">Leases with tenants are accounted
    for as operating leases. Minimum rents are recognized on a straight-line
    basis over the term of the respective leases. As of December 31, 2003 and
    2002, unbilled rents receivable relating to straight-lining of rents were
    $5,873 and $5,302, respectively.</font></p>
<p align="left"> <font size=2 face="serif">Percentage rents are recognized in
    the period when the tenant sales breakpoint is met.</font></p>
<p align="left"> <font size=2 face="serif">Reimbursements from tenants for real
    estate taxes, insurance and other property operating expenses are recognized
    as revenue in the period the expenses are incurred.</font></p>
<p align="left"> <font size=2 face="serif">An allowance for doubtful accounts
    has been provided against certain tenant accounts receivable that are estimated
    to be uncollectible. Rents receivable at December 31, 2003 and 2002 are shown
    net of an allowance for doubtful accounts of $2,420 and $2,284, respectively.</font></p>
<p align="left"> <i><font size=2 face="serif">Cash and Cash Equivalents </font></i><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">The Company considers all highly liquid
    investments with an original maturity of three months or less when purchased
    to be cash equivalents.</font></p>
<p align="left"> <i><font size=2 face="serif">Cash in Escrow </font></i><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">Cash in escrow consists principally
    of cash held for real estate taxes, property maintenance, insurance, minimum
    occupancy and property operating income requirements at specific properties
    as required by certain loan agreements.</font></p>
<p align="left"> <i><font size=2 face="serif">Income Taxes </font></i><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">The Company has made an election to
    be taxed, and believes it qualifies as a REIT under Sections 856 through
    860 of the Internal Revenue Code of 1986, as amended (the &#147;Code&#148;).
    To maintain REIT status for federal income tax purposes, the Company is generally
    required to distribute to its stockholders at least 90% of its REIT taxable
    income as well as comply with certain other requirements as defined by the
    Code. The Company is not subject to federal corporate income tax to the extent
    that it distributes 100% of its REIT taxable income each year. </font> <font size=2 face="serif">Accordingly,
    no provision has been made for Federal income taxes for the Company in the
    accompanying consolidated financial statements. The Company is subject to
    state income or franchise taxes in certain states in which some of its properties
    are located. These state taxes, which in total are not significant, are included
    in general and administrative expenses in the accompanying consolidated financial
    statements.</font></p>
<p align="left"> <i><font size=2 face="serif">Stock-based Compensation </font></i> </p>
<p align="left"> <font size=2 face="serif">Prior to 2002, the Company accounted
    for stock options under Accounting Principles Board Opinion No. 25, &#147;Accounting
    for Stock Issued to Employees&#148; and related interpretations. Effective
    January 1, 2002, the Company adopted the fair value method of recording stock-based
    compensation contained
    in SFAS No. 123, &#147;Accounting for Stock-Based Compensation&#148; (&#147;SFAS
    No. 123&#148;). As such, all stock options granted after December 31, 2001
    are reflected as compensation expense in the Company&#146;s consolidated
    financial statements over their vesting period based on the fair value at
    the date the stock-based compensation was granted. As provided for in SFAS
    No. 123, the Company elected the &#147;prospective method&#148; for the adoption
    of the fair value basis method of accounting for employee stock options.
    Under this method, the recognition provisions will be applied to all employee
    awards granted, modified or settled after January 1, 2002.</font></p>
<p align="center"> <font size=2 face="serif">F-10</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="pF-11"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA
      REALTY TRUST AND SUBSIDIARIES<br>
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<p align="left"> <b><font size=2 face="serif">1.&nbsp;&nbsp;&nbsp;Organization,
      Basis of Presentation and Summary of Significant Accounting Policies, continued </font></b> </p>
<p align="left"> <i><font size=2 face="serif">Stock-based Compensation, continued</font></i><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">The following table illustrates the
    effect on net income and earnings per share if the Company had applied the
    fair value based method of accounting for stock-based employee compensation
    for vested stock options granted prior to January 1, 2002. See Note 11 &#150; &#147;Share
    Incentive Plan&#148; for the assumptions utilized in valuing the below vested
    stock options:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td>&nbsp;</td>
    <td colspan="8" align="center"><b><font size=1 face="serif">Years ended December
          31,</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2003</font></b></td>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2001</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="8"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Net income:</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">As reported</font></td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=7% align="right"><font size=2 face="serif">7,853</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=7% align="right"><font size=2 face="serif">19,399</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=7% align="right"><font size=2 face="serif">9,802</font></td>
    <td width=2%>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Pro forma</font></td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">7,829</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">19,363</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">9,699</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Basic earnings per share:</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">As reported</font></td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.30</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.77</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.35</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Pro forma</font></td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.29</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.76</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.34</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Diluted earnings per share:</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">As reported</font></td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.29</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.76</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.34</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Pro forma</font></td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.29</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.76</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.34</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="left"> <i><font size=2 face="serif">Recent Accounting Pronouncements </font></i><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">In December 2003, the Financial Accounting
    Statements Board (&#147;FASB&#148;) issued FASB Interpretation No. 46 (revised
    December 2003), Consolidation of Variable Interest Entities (&#147;FIN 46R&#148;).
    FIN 46R replaces FASB Interpretation No. 46, Consolidation of Variable Interest
    Entities, which was issued in January 2003. In general, a variable interest
    entity (&#147;VIE&#148;) is a corporation, partnership, trust, or any other
    legal structure used for business purposes that either (a) does not have
    equity investors with voting rights or (b) has equity investors that do not
    provide sufficient financial resources for the entity to support its activities.
    A VIE often holds financial assets, including loans or receivables, real
    estate or other property. A VIE may be essentially passive or it may engage
    in activities on behalf of another company. Until now, a company generally
    has included another entity in its consolidated financial statements only
    if it controlled the entity through voting interests. FIN 46 changes that
    by requiring a VIE to be consolidated by a company if that company is subject
    to a majority of the risk of loss from the VIE&#146;s activities or entitled
    to receive a majority of the entity&#146;s residual returns or both. The
    Company will be required to adopt FIN 46R in the first fiscal period beginning
    after March 15, 2004. Upon adoption of FIN 46R, the assets, liabilities and
    non-controlling interests of the VIE initially would be measured at their
    carrying amounts with any difference between the net amount added to the
    balance sheet and any previously recognized interest being recognized as
    the cumulative effect of an accounting change. If determining the carrying
    amounts is not practicable, fair value at the date FIN 46R first applies
    may be used to measure the assets, liabilities and non-controlling interest
    of the VIE. It is not anticipated that the effect on the Company&#8217;s
    Consolidated Financial Statements would be material.</font></p>
<p align="left"> <font size=2 face="serif">In May 2003, the FASB issued SFAS
    No. 150 &#147;Accounting for Certain Financial Instruments with Characteristics
    of Both Liabilities and Equity&#148;. This statement establishes how an issuer
    classifies and measures certain financial instruments that have characteristics
    of both liabilities and equity. It requires that an issuer classify a financial
    instrument that is within the scope of SFAS No. 150 as a liability because
    that financial instrument embodies an obligation of the issuer. For the Company,
    SFAS 150 was effective for instruments entered into or modified after May
    31, 2003 and otherwise will be effective as of January 1, 2004, except for
    mandatorily redeemable financial instruments. For certain mandatorily redeemable
    financial instruments, SFAS 150 will be effective for the Company on January
    1, 2005. The effective date has been deferred indefinitely for certain other
    types of mandatorily redeemable financial instruments. The adoption of SFAS
    No. 150 had no impact on the Company&#146;s consolidated financial statements.
    The Company currently is a majority-owner of a finite life partnership which
    is included in the consolidated accounts of the Company. The application
    of SFAS 150 as it relates to finite life entities has been deferred indefinitely.
    Based on the estimated value of the property owned by the partnership at
    December 31, 2003, the Company estimates that the minority interest in this
    partnership would be entitled to approximately $2,080 upon the dissolution
    of the partnership.</font></p>
<p align="left"> <font size=2 face="serif">In April 2003, the FASB issued Statement
    of Financial Accounting Standards (&#147;SFAS&#148;) No. 149 &#147;Amendment
    of Statement 133 on Derivative Instruments and Hedging Activities&#148;.
    This statement amends and clarifies financial reporting for derivative instruments,
    including certain derivative instruments embedded in other contracts and
    for hedging activities under FASB Statement No. 133, &#147;Accounting for
    Derivative Instruments and Hedging Activities&#148;. SFAS No. 149 is generally
    effective for contracts entered into or modified after June 30, 2003 and
    for hedging relationships designated after June 30, 2003. The adoption of
    SFAS No. 149 had no impact on the Company&#146;s consolidated financial statements.</font></p>
<p align="center"> <font size=2 face="serif">F-11</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="pf12"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA REALTY TRUST AND SUBSIDIARIES<br>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p><p>
<b><font size=2 face="serif">1.&nbsp;&nbsp;&nbsp;Organization, Basis of Presentation and Summary
of Significant Accounting Policies, continued </font></b><font size=2 face="serif"></font></p>
<p>
<i><font size=2 face="serif">Comprehensive income </font></i>
</p>
<p>
<font size=2 face="serif">The following table sets forth comprehensive income for the years ended December 31, 2003, 2002 and 2001:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td width=1%><font size="1">&nbsp;</font></td>
   <td colspan=7 align="center"><b><font size=1 face="serif">Years ended December 31,</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td colspan="2" align="center"><font size="1">&nbsp;</font><b><font size=1 face="serif">2003</font></b></td>
   <td width=2%><font size="1">&nbsp;</font></td>
   <td colspan="2" align="center"><font size="1">&nbsp;</font><b><font size=1 face="serif">2002</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td colspan="2" align="center"><font size="1">&nbsp;</font><b><font size=1 face="serif">2001</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td width="1%"><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td width="2%"><font size="1">&nbsp;</font></td>
   <td width="1%"><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><font size="1">&nbsp;</font></td>
   <td width="1%"><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Net income</font></td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">7,853</font></td>
   <td width=2% align="center">&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">19,399</font></td>
   <td width=2%>&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">9,802</font></td>
   <td width=2%>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Other comprehensive income (loss) (1)</font></td>
   <td width=1%>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,369</font></td>
   <td width=2%>&nbsp;</td>
   <td width=1%>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(5,668</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td width=1%>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,206</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td width="1%"><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td width="2%">&nbsp;</td>
   <td width="1%"><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td width="1%"><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Comprehensive income</font></td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">9,222</font></td>
   <td width=2% align="center">&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">13,731</font></td>
   <td>&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">8,596</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td width="1%"><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td width="2%">&nbsp;</td>
   <td width="1%"><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td width="1%"><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
</tr>
</table>
<p><font size=1  face="serif">Notes:</font></p><p><font size="1"> <font face="serif">(1)&nbsp;&nbsp;&nbsp;Relates to the changes in the
    fair value of derivative instruments accounted for as hedges.</font></font></p><p> <font size=2 face="serif">The following table sets forth the
    change in accumulated other comprehensive loss for the years ended December
    31, 2003, 2002 and 2001:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><font size="1"><b></b></font></td>
    <td width=1%><font size="1">&nbsp;</font></td>
    <td colspan="7" align="center"><b><font size=1 face="serif">Years ended December
    31,</font></b></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td width=1%><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2003</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td width=1%><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td width=1%><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2001</font></b></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td width="1%"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
    <td width="1%"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
    <td width="1%"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Beginning balance</font></td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">6,874</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">1,206</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">&#151;</font></td>
    <td width=2%>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Unrealized (gain) loss on valuation
    of</font>&nbsp;<font size=2 face="serif">derivative instruments</font></td>
    <td width=1%>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,369</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td width=1%>&nbsp;</td>
    <td align="right"><font size=2 face="serif">5,668</font></td>
    <td>&nbsp;</td>
    <td width=1%>&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,206</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td width="1%"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td width="1%"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td width="1%"><hr noshade size=1></td>
    <td align="right"><hr noshade size=1>
</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Ending balance</font></td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">5,505</font></td>
    <td>&nbsp;</td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">6,874</font></td>
    <td>&nbsp;</td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,206</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td width="1%"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td width="1%"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td width="1%"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2>
</td>
    <td>&nbsp;</td>
  </tr>
</table>
<p><font size=2 face="serif">As of December 31, 2003, the balance in accumulated other comprehensive loss was comprised solely of unrealized losses on the valuation of swap agreements.</font></p><p>
<i><font size=2 face="serif">Reclassifications </font></i>
</p>
<p>
<font size=2 face="serif">Certain 2002 and 2001 amounts were reclassified to conform to the 2003 presentation.</font></p><p>
<b><font size=2 face="serif">2.&nbsp;&nbsp;&nbsp;Acquisition and Disposition of Properties </font></b><font size=2 face="serif"></font></p><p>
<font size=2 face="serif">Currently the primary vehicle for the Company&#146;s acquisition activity is its acquisition joint venture, Acadia Strategic Opportunity Fund (Note 4).</font></p><p>
<font size=2 face="serif">A significant component of the Company&#146;s business plan in prior years was also the disposition of non-core real estate assets. Under this initiative, which was completed in 2002, the Company sold a total of two apartment complexes and 23 shopping centers.</font></p><p>
<font size=2 face="serif">Dispositions relate to the sale of shopping centers, multi-family properties and land. Gains from these sales are generally recognized using the full accrual method in accordance with SFAS No. 66, &#147;Accounting for Sales of Real Estate&#148;, providing that certain criteria relating to the terms of sales are met.</font></p><p>
<font size=2 face="serif">The results of operations of sold properties is reported separately as discontinued operations for the years ended December 31, 2002 and 2001. Revenues from discontinued operations for the years ended December 31, 2002 and 2001 totaled $6,295 and $24,178, respectively.</font></p>
<p align="center">&nbsp;
</p>
<p align="center"><font size=2 face="serif">F-12</font></p>
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<div style="page-break-before:always"></div><page>

<a name="pf13"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA REALTY TRUST AND SUBSIDIARIES<br>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p><p>
<b><font size=2 face="serif">2.&nbsp;&nbsp;&nbsp;Acquisition and Disposition of Properties, continued </font></b><font size=2 face="serif"></font></p><p>
<i><font size=2 face="serif">2002 Acquisitions and Dispositions </font></i><font size=2 face="serif"></font></p><p>
<font size=2 face="serif">On November 8, 2002, the Company and an unaffiliated joint venture partner completed the sale of a contract to purchase land in Bethel, Connecticut, to the Target Corporation for $1,540 after closing and other related costs. The joint venture received a $1,632 note receivable for the net purchase price and additional reimbursements due from the buyer and deferred recognition of the gain on sale in accordance with SFAS No. 66. The note was paid in full on January 10, 2003, and as such, the Company&#146;s share of the deferred gain, or $634, was recognized in 2003.</font></p><p>
<font size=2 face="serif">On October 11, 2002, the Company sold the Manahawkin Village Shopping Center and Valmont Plaza for $16,825 to two entities affiliated with each other. The Company received two purchase money notes in connection with the sale. The first for $11,000 was repaid in full on November 8, 2002. The second for $1,600, was repaid in full on April 11, 2003. As part of the transaction, the Company repaid $3,084 of mortgage debt secured by the Valmont Plaza. The $4,049 of mortgage debt secured by the Manahawkin Village Shopping Center was repaid in full on September 27, 2002, prior to the sale. The Company recorded a $166 gain on the sale.</font></p><p>
<font size=2 face="serif">On April 24, 2002, the Company sold a multi-property portfolio for $52,700. The portfolio consists of 17 retail properties, which are cross-collateralized in a securitized loan program and in the aggregate contain approximately 2.3 million square feet. As part of the transaction, the buyer assumed the outstanding mortgage debt of $42,438. The Company retained a senior, preferred interest in the acquiring entity in the amount of $6,262, which earned an initial annual preferred return of 15%. On December 31, 2002, the Company&#146;s interest was purchased at par by an affiliate of the purchaser of the portfolio. The Company recorded an $8,134 gain on the sale.</font></p><p>
<font size=2 face="serif">On January 16, 2002, the Company sold Union Plaza, a 218,000 square foot shopping center located in New Castle, Pennsylvania, for $4,750. The Company received a $3,563 purchase money note. The note, which matures January 15, 2005, requires monthly interest of 7% for year one, increasing at a rate of 1% per annum throughout the term. As part of the transaction, the Company agreed to reimburse the purchaser 50% of a former tenant&#146;s rent, or $22 a month, through July 15, 2003. The Company recorded a loss of $166 on the sale.</font></p><p>
<font size=2 face="serif">On January 10, 2002, the Company and an unaffiliated joint venture partner purchased a three-acre site located in the Bronx, New York, for $3,109. Simultaneously, the joint venture sold approximately 46% of the land to a self-storage facility for $3,300, recognizing a $1,530 gain on the sale of which the Company&#146;s share was $957. The joint venture currently plans to develop the remaining parcel</font></p><p>
<i><font size=2 face="serif">2001 Dispositions </font></i><font size=2 face="serif"></font></p><p>
<font size=2 face="serif">On December 21, 2001, the Company sold the Glen Oaks Apartments, a 463 unit multi-family property located in Greenbelt, Maryland for $35,100, resulting in an $8,546 gain on the sale. As part of the transaction, the Company received a promissory note (which was secured by an irrevocable letter of credit) for $34,757, which was subsequently paid in January 2002.</font></p><p>
<font size=2 face="serif">On October 4, 2001, the Company sold the Tioga West shopping center, a 122,000 square foot shopping center located in Tunkhannock, Pennsylvania, for $3,200 resulting in a $908 gain on the sale.</font></p><p>
<font size=2 face="serif">On August 27, 2001 the Company sold the Wesmark Plaza, a 207,000 square foot shopping center located in Sumter, South Carolina, for $5,750, recognizing a $1,245 gain on the sale.</font></p><p>
<font size=2 face="serif">The Company sold its interest in the Marley Run Apartments for $27,400 on May 15, 2001, recognizing a $7,035 gain on the sale. Net proceeds from the sale were used to redeem 680,667 Common OP Units at $7.00 per unit. The redemption price represented a premium of $0.35 over the market price of the Company&#146;s Common Shares as of the redemption date. These redeemed Common OP Units were held by the original owners of the property who contributed it to the Company in connection with the RDC Transaction. Pursuant to the RDC Transaction, the Company agreed to indemnify the Common OP Unit holders for any income taxes recognized with respect to a disposition of the property within five years following the contribution of the property. As part of the redemption as discussed above, the Common OP Unit holders waived their rights to this tax reimbursement, which the Company estimated to be in excess of $2.00 per Common OP Unit.</font></p>
<p align="center">
<font size=2 face="serif">F-13</font></p>

<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="pF-14"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA
  REALTY TRUST AND SUBSIDIARIES<br>
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
  </font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<p align="left"> <b><font size=2 face="serif">3.&nbsp;&nbsp;&nbsp;Segment Reporting
  </font></b><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">The Company has two reportable segments:
  retail properties and multi-family properties. The accounting policies of the
  segments are the same as those described in the summary of significant accounting
  policies. The Company evaluates property performance primarily based on net
  operating income before depreciation, amortization and certain nonrecurring
  items. The reportable segments are managed separately due to the differing nature
  of the leases and property operations associated with the retail versus residential
  tenants. The following table sets forth certain segment information for the
  Company, reclassified for discontinued operations, as of and for the years ended
  December 31, 2003, 2002, and 2001 (does not include unconsolidated partnerships):</font></p>
<p align="center">
<b><font size=2 face="serif">2003 </font></b>
</p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr align="center">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><b><font size=1 face="serif">Retail</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan=2><b><font size=1 face="serif">Multi-Family</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><b><font size=1 face="serif">All</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
  </tr>
  <tr align="center">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><b><font size=1 face="serif">Properties</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan=2><b><font size=1 face="serif">Properties</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><b><font size=1 face="serif">Other</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><b><font size=1 face="serif">Total</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><hr align="center" size="1"  width= "100%"noshade></td>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><hr align="center" size="1"  width= "100%"noshade></td>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><hr align="center" size="1"  width= "100%"noshade></td>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><hr align="center" size="1"  width= "100%"noshade></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Revenues</font></td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">58,150</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">7,318</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">3,977</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="center"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">69,445</font></td>
    <td width=2%>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Property operating expenses and real estate
      taxes</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">19,782</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">4,187</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">23,969</font></td>
    <td>&nbsp;</td>
  </tr>

  <tr bgcolor="#eeeeee">
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="center"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Net property income before depreciation and
      amortization</font></td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">38,368</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">3,131</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">3,977</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">45,476</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Depreciation and amortization</font></td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">16,252</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,336</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">321</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">17,909</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Interest expense</font></td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">9,701</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,530</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">11,231</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Real estate at cost</font></td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">387,854</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">39,774</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">427,628</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Total assets</font></td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">337,724</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">36,830</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">13,630</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">388,184</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Gross leasable area (multi-family &#150; 1,474
      units)</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">5,153</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,207</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">6,360</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Expenditures for real estate and improvements</font></td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">12,153</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,378</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="center"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">13,531</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Revenues</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Total revenues for reportable
      segments</font></td>
    <td align="center" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">71,085</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Elimination of intersegment management fee income</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,340</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Elimination of intersegment
      asset management fee income</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(300</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Total consolidated revenues</font></td>
    <td align="center" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">69,445</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Property operating expenses and real estate
      taxes</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Total property operating expenses
      and real estate taxes for reportable segments</font></td>
    <td align="center" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">25,126</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Elimination of intersegment management fee expense</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,157</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Total consolidated expense</font></td>
    <td align="center" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">23,969</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Reconciliation to income before cumulative effect
      of a change in accounting</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">principle</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Net property income before
      depreciation and amortization</font></td>
    <td align="center" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">45,476</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Depreciation and amortization</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">(17,909</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">General and administrative</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(10,734</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Equity in earnings of unconsolidated partnerships</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,411</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Interest expense</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(11,231</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Gain on sale of land</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,187</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Minority interest</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(1,347</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Income before cumulative effect
      of a change in accounting principle</font></td>
    <td align="center" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">7,853</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=2></td>
    <td><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="center">
<font size=2 face="serif">F-14</font></p>

<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="pF-15"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA
  REALTY TRUST AND SUBSIDIARIES<br>
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
  </font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p><p> <b><font size=2 face="serif">3.&nbsp;&nbsp;&nbsp;Segment Reporting, continued</font></b>
</p>
<p align="center">
<b><font size=2 face="serif">2002</font></b>
</p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr align="center">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><font size="1" face="serif">&nbsp;</font><b><font size=1 face="serif">Retail</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><font size="1" face="serif">&nbsp;</font><b><font size=1 face="serif">Multi-Family</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><font size="1" face="serif">&nbsp;</font><b><font size=1 face="serif">All</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><font size="1" face="serif">&nbsp;</font><font size="1" face="serif">&nbsp;</font></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
  </tr>
  <tr align="center">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><font size="1" face="serif">&nbsp;</font><b><font size=1 face="serif">Properties</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><font size="1" face="serif">&nbsp;</font><b><font size=1 face="serif">Properties</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><font size="1" face="serif">&nbsp;</font><b><font size=1 face="serif">Other</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2"><font size="1" face="serif">&nbsp;</font><b><font size=1 face="serif">Total</font></b></td>
    <td><font size="1" face="serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2>
    </td>
    <td align="right">
      <hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2>
    </td>
    <td align="right">
      <hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2>
    </td>
    <td align="right">
      <hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Revenues</font></td>
    <td width=1% align="right"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">58,498</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif"> $</font></td>
    <td width=8% align="right"><font size=2 face="serif">6,969</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif">$ </font></td>
    <td width=8% align="right"><font size=2 face="serif">3,880</font></td>
    <td width=2% align="right">&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif">$ </font></td>
    <td width=8% align="right"><font size=2 face="serif">69,347</font></td>
    <td width=2%>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Property operating expenses and real estate
      taxes</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">17,030</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">3,691</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">20,721</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1></td>
    <td align="right"> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1></td>
    <td align="right"> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1></td>
    <td align="right"> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1></td>
    <td align="right"> <hr noshade size=1></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Net property income before depreciation and
      amortization</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">41,468</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">3,278</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">3,880</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">48,626</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Depreciation and amortization</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">13,287</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">1,201</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">316</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">14,804</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Interest expense</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">9,390</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">1,627</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td align="center">&nbsp;</td>
    <td align="right"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">11,017</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Real estate at cost</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">375,482</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">38,396</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td align="center">&nbsp;</td>
    <td align="right"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">413,878</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Total assets</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">368,547</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">36,224</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">6,164</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">410,935</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Gross leasable area (multi-family &#150; 1,474
      units)</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">5,079</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">1,207</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td align="center">&nbsp;</td>
    <td align="right"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">6,286</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Expenditures for real estate and improvements</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">13,134</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">1,000</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td align="center">&nbsp;</td>
    <td align="right"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">14,134</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Revenues</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Total revenues for reportable
      segments</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">70,413</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Elimination of intersegment management fee income</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,066</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1></td>
    <td align="right"> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Total consolidated revenues</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">69,347</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"> <hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Property operating expenses and real estate
      taxes</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Total property operating expenses
      and real estate taxes for reportable segments</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">21,778</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Elimination of intersegment management fee expense</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,057</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1></td>
    <td align="right"> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Total consolidated expense</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">20,721</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Reconciliation to income before cumulative effect
      of a change in accounting</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">principle</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Net property income before
      depreciation and amortization</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">48,626</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Depreciation and amortization</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(14,804</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">General and administrative</font></td>
    <td align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(10,447</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Equity in earnings of unconsolidated partnerships</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">628</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Interest expense</font></td>
    <td align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(11,017</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Gain on sale of land</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,530</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Income from discontinued operations</font></td>
    <td align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">7,882</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Minority interest</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(2,999</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1></td>
    <td align="right"> <hr noshade size=1></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Income before cumulative effect
      of a change in accounting principle</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">19,399</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2></td>
    <td align="right"><hr noshade size=2></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="center">
<font size=2 face="serif">F-15</font></p>

<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div>
<page> <a name="pF-16"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA
      REALTY TRUST AND SUBSIDIARIES<br>
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<p> <b><font size=2 face="serif">3.&nbsp;&nbsp;&nbsp;Segment Reporting, continued</font></b></p>
<p align="center">&nbsp; </p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td colspan="12" align="center"><b><font size=2 face="serif">2001</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td align="left"><font size="1">&nbsp;</font></td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">Retail</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="left"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Multi-Family</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="left"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">All</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="left"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td align="left"><font size="1">&nbsp;</font></td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">Properties</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="left"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Properties</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="left"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Other</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="left"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Total</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#ffffff">
    <td>&nbsp;</td>
    <td align="left"><div align="left">
        <hr noshade size=1>
      </div>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Revenues</font></td>
    <td width=2% align="left"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">52,756</font></td>
    <td width=2%>&nbsp;</td>
    <td width=2% align="left"><font size=2 face="serif"> $</font></td>
    <td width=8% align="right"><font size=2 face="serif">6,870</font></td>
    <td width=2%>&nbsp;</td>
    <td width=2% align="left"><font size=2 face="serif">$ </font></td>
    <td width=8% align="right"><font size=2 face="serif">1,656</font></td>
    <td width=2% align="right">&nbsp;</td>
    <td width=2% align="left"><font size=2 face="serif">$ </font></td>
    <td width=8% align="right"><font size=2 face="serif">61,282</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Property operating expenses and real estate
        taxes</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">16,662</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">3,362</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">20,024</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Net property income before depreciation and
        amortization</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">36,094</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">3,508</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">1,656</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">41,258</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Depreciation and amortization</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">12,294</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">1,097</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">354</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">13,745</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Interest expense</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">10,468</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">1,902</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">12,370</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Real estate at cost</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">361,075</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">37,341</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">398,416</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Total assets</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">453,034</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">35,736</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">5,169</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">493,939</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Gross leasable area (multi-family &#150; 1,474
        units)</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">5,079</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,207</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">6,286</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Expenditures for real estate and improvements</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">9,425</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif"> $</font></td>
    <td align="right"><font size=2 face="serif">1,260</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$ </font></td>
    <td align="right"><font size=2 face="serif">10,685</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Revenues</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Total revenues for reportable segments</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">62,273</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Elimination of intersegment management fee
        income</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(991</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Total consolidated revenues</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">61,282</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Property operating expenses and real estate
        taxes</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Total property operating expenses and real
        estate taxes for reportable segments</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">21,015</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Elimination of intersegment management fee
        expense</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(991</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Total consolidated expense</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">20,024</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Reconciliation to income before cumulative
        effect of a change in accounting principle</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Net property income before depreciation and
        amortization</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">41,258</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Depreciation and amortization</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(13,745</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">General and administrative</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(9,025</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Equity in earnings of unconsolidated partnerships</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">504</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Interest expense</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(12,370</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Income from discontinued operations</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4,795</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Minority interest</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(1,466</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Income before cumulative effect of a change
        in accounting principle</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">9,951</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=2>
    </td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="center"> <font size=2 face="serif">F-16</font></p>
<div style="page-break-before:always"></div>
<page>













 <a name="pF-17"></a>
 <hr noshade align="center" width="100%" size="2">
 <p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA
      REALTY TRUST AND SUBSIDIARIES<br>
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</font></b><br>
  <font size=2 face="serif">In thousands, except per share amounts)</font></p>
<p align="left"> <b><font size=2 face="serif">4.&nbsp;&nbsp;&nbsp;Investments in Partnerships </font></b><font size=2 face="serif"></font></p>
<p align="left"> <i><font size=2 face="serif">Crossroads </font></i><font size=2 face="serif"></font></p>
<p align="left"> <font size=2 face="serif">The Company owns a 49% interest in
    the Crossroads Joint Venture and Crossroads II Joint Venture (collectively, &#147;Crossroads&#148;)
    which collectively own a 311,000 square foot shopping center in White Plains,
    New York. The Company accounts for its investment in Crossroads using the
    equity method. Summary financial information of Crossroads and the Company&#146;s
    investment in and share of income from Crossroads follows:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td colspan="4" align="center"><b><font size=1 face="serif">December 31,</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center"><b><font size=1 face="serif">2003</font></b></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Balance Sheets</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Assets:</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Rental
        property, net</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">7,402</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">7,603</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Other
        assets</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">3,710</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">3,536</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Total assets</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">11,112</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">11,139</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Liabilities and partners&#146; equity</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Mortgage
        note payable</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">32,961</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">33,575</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Other
        liabilities</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4,696</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">5,832</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Partners&#146; equity</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(26,545</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(28,268</font></td>
    <td><font size=2 face="serif">)</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Total liabilities and partners&#146; equity</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">11,112</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">11,139</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Company&#146;s investment</font></td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">3,665</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">3,241</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td colspan="7" align="center"><b><font size=1 face="serif">Years Ended December
          31,</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">2003</font></b></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">2002</font></b></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">2001</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Statements of Operations</font></td>
    <td align="left">&nbsp;</td>
    <td><hr align="center" size="1"  width= "100%"noshade></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr align="center" size="1"  width= "100%"noshade></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr align="center" size="1"  width= "100%"noshade></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Total revenue</font></td>
    <td width=2% align="left"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">8,324</font></td>
    <td width=2% align="right">&nbsp;</td>
    <td width=2% align="left"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">7,091</font></td>
    <td width=2% align="right">&nbsp;</td>
    <td width=2% align="left"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">7,174</font></td>
    <td width=2%>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Operating and other expenses</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,465</font></td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,150</font></td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,159</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Interest expense</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,542</font></td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,722</font></td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,620</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Depreciation and amortization</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">570</font></td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">547</font></td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">538</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Net income</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">2,747</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,672</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,857</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Company&#146;s share of net income</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,377</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">934</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">910</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Amortization of excess investment</font> <font size=2 face="serif">(See
        below)</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">392</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">392</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">392</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Income from partnerships</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">985</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">542</font></td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">518</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="left"> <font size=2 face="serif">The unamortized excess of the Company&#146;s
    investment over its share of the net equity in Crossroads at the date of
    acquisition was $19,580. The portion of this excess attributable to buildings
    and improvements is being amortized over the life of the related property.</font></p>
<p align="center"> <font size=2 face="serif">F-17</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="pF-18"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA REALTY TRUST AND SUBSIDIARIES<br>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS </font></b><font size=2 face="serif"> </font>
<br>
<font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<p align="left">
<b><font size=2 face="serif">4.&nbsp;&nbsp;&nbsp;Investment in Unconsolidated Partnerships, Continued </font></b><font size=2 face="serif"></font></p>
<p align="left">
<i><font size=2 face="serif">Acadia Strategic Opportunity Fund, LP (&#147;ASOF&#148;) </font></i><font size=2 face="serif"></font></p>
<p align="left">
<font size=2 face="serif">In 2001, the Company formed a joint venture, ASOF, with four of its institutional investors for the purpose of acquiring real estate assets. The Company is the sole general partner with a 22% interest in the joint venture and is also entitled to a profit participation in excess of its invested capital based on certain investment return thresholds. The Company also earns market-rate fees for asset management as well as for property management, construction and leasing services. Decisions made by the general partner as it relates to purchasing, financing and disposition of properties are subject to the unanimous disapproval of the Advisory Committee, which is comprised of representatives from each of the four institutional investors.</font></p>
<p align="left">
<font size=2 face="serif">ASOF owns five shopping centers comprising 1.3 million square feet. In addition, ASOF and an unaffiliated joint venture party own a 1.0 million square foot supermarket portfolio consisting of twenty five anchor-only leases with either Kroger or Safeway Supermarkets.</font></p>
<p align="left">
<font size=2 face="serif">Acquisitions completed during 2003 and 2002 were as follows:</font></p>
<p align="left">
<font size=2 face="serif">Kroger/Safeway Portfolio &#8211; In January 2003, ASOF and an unaffiliated joint venture party acquired a one million square foot supermarket portfolio consisting of twenty-five anchor-only leases with either Kroger or Safeway supermarkets. The portfolio was acquired through long-term ground leases with terms, including renewal options, averaging in excess of 80 years, which are master leased to a non-affiliated entity. The purchase price of $48,900 (inclusive of closing and other related acquisition costs) included the assumption of $34,450 of existing fixed-rate debt which bears interest at a weighted-average rate of 6.6%. The mortgage debt fully amortizes over the next seven years, which is coterminous with the primary lease term of the supermarket leases. ASOF invested $11,250 of the equity capitalization of which the Company&#146;s share was $2,500.</font></p>
<p align="left">
<font size=2 face="serif">Brandywine Portfolio &#8211; In January 2003, ASOF acquired a one million square foot portfolio for an initial purchase price of $86,287, inclusive of closing and other related acquisition costs. The portfolio consists of two shopping centers located in Wilmington, Delaware. A portion of one of the properties is currently unoccupied for which ASOF will pay for on an &#147;earn-out&#148; basis only when it is leased. At closing, ASOF assumed $38,082 of fixed-rate debt which bears interest at a weighted average rate of 6.2% as well as obtained an additional fixed-rate loan of $30,000 which bears interest at 4.7%. ASOF invested equity of $19,270 in the acquisition, of which the Company&#146;s share was $4,282. On December 6, 2002, ASOF completed a forward interest rate lock agreement on $30,000 of anticipated mortgage debt in connection with this transaction. This forward interest rate lock agreement was settled at closing in January 2003.</font></p>
<p align="left">
<font size=2 face="serif">On September 19, 2002, ASOF acquired three supermarket&#150;anchored shopping centers located in Ohio for a total purchase price of $26,679. ASOF assumed $12,568 of fixed rate debt on two of the properties at a blended rate of 8.1%. A new $6,000 loan was obtained on the third property at a floating rate of LIBOR plus 200 basis points. The balance of the purchase price was funded by the joint venture, of which the Company&#146;s share was $1</font><b><i><font size=2 face="serif">,</font></i></b><font size=2 face="serif">802.</font></p>
<p align="left">
<font size=2 face="serif">The Company accounts for its investment in ASOF using the equity method. Summary financial information of ASOF and the Company&#146;s investment in and share of income from ASOF follows:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><font size="1">&nbsp;</font> </td>
    <td><font size="1">&nbsp;</font></td>
    <td colspan=4 align="center"><b><font size=1 face="serif">December 31,</font></b></td>
    <td align="left"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font> </td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2003</font></b></td>
    <td align="left"><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td align="left"><font size="1">&nbsp;</font></td>
  </tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td align="left">&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
  <td><font size=2 face="serif">Balance Sheets</font></td>
  <td>&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td>&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Assets: </font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Rental property, net </font></td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=10% align="right"><font size=2 face="serif">173,507</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=10% align="right"><font size=2 face="serif">28,046</font></td>
   <td width=2% align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Other assets </font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">4,763</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">5,977</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Total assets </font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">178,270</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">34,023</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Liabilities and partners&#146; equity </font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Mortgage note payable </font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">120,609</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">18,450</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Other liabilities </font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">11,731</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">2,418</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Partners&#146; equity </font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">45,930</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">13,155</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Total liabilities and partners&#146; equity </font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">178,270</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">34,023</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Company&#146;s investment </font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">9,965</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">2,923</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
   <td align="left">&nbsp;</td>
</tr>
</table>
<p>&nbsp;</p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Period from</font></b></td>
    <td align="left"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">September 28,</font></b></td>
    <td align="left"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Year ended</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Year ended</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2001 (inception)</font></b></td>
    <td align="left"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">December 31,</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">December 31,</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">to December 31,</font></b></td>
    <td align="left"><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2003</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2001</font></b></td>
    <td align="left"><font size="1">&nbsp;</font></td>
  </tr>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td align="left"><font size="1">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td align="left"><font size="1">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td align="left"><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Statements of Operations</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Total revenue</font></td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=10% align="right"><font size=2 face="serif">26,008</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=10% align="right"><font size=2 face="serif">1,224</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=10% align="right"><font size=2 face="serif">&#151;</font></td>
   <td width=2% align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Operating and other expenses</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">5,017</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">342</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Management and other fees</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">2,171</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,391</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">402</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Interest expense</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">6,399</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">350</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Depreciation and amortization</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">8,055</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">145</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Minority interest</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">157</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left">&nbsp;</td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Net income (loss)</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">4,209</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">(1,004</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">(402</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
   <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Company&#146;s share of net income (loss) (1)</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">1,426</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">86</font></td>
   <td align="left">&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">(14</font></td>
   <td align="left"><font size=2 face="serif">)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td align="left">&nbsp;</td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
   <td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><font size=1 face="serif">Notes: </font> </td>
  </tr>
  <tr>
    <td width="3%" valign="top"><font size=1 face="serif">(1)</font></td>
    <td><font size=1 face="serif">Reflects the elimination of the Company&#146;s
        pro-rata share of asset management, property management and leasing fees
        paid by ASOF aggregating $491, $309 and $75 for the years ended December
        31, 2003, 2002 and 2001, respectively, as these fees are paid to the
    Company.</font> </td>
  </tr>
</table>

<p align="center">
<font size=2 face="serif">F-18</font></p>

<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div><page>

<a name="pF-19"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><b><font size=2 face="serif">ACADIA REALTY TRUST AND SUBSIDIARIES<br>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<p align="left"><b><font size=2 face="serif">5.&nbsp;&nbsp;&nbsp;Deferred Charges</font></b></p>
<p align="left"><font size=2 face="serif">Deferred charges consist of the following
as of December 31, 2003 and 2002:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td>&nbsp;</td>
   <td colspan="2" align="center"><b><font size=1 face="serif">2003</font></b></td>
   <td align="center">&nbsp;</td>
   <td colspan="2" align="center"><b><font size=1 face="serif">2002</font></b></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#ffffff">
  <td>&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right"><hr align="center" size="1"  width= "100%"noshade></td>
  <td>&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right"><hr align="center" size="1"  width= "100%"noshade></td>
  <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Deferred financing costs</font></td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">6,392</font></td>
   <td width=2%>&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif"> $</font></td>
   <td width=8% align="right"><font size=2 face="serif">6,150</font></td>
   <td width=2%>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Deferred leasing and other costs</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">15,485</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">13,302</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">21,877</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">19,452</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Accumulated amortization</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(10,704</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(9,092</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">11,173</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif"> $</font></td>
   <td align="right"><font size=2 face="serif">10,360</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
</tr>
</table>
<p align="left"><b><font size=2 face="serif">6.&nbsp;&nbsp;&nbsp;Mortgage Loans</font></b></p>
<p align="left"><font size=2 face="serif">At December 31, 2003, mortgage notes payable aggregated $190,444 and were collateralized by 22 properties and related tenant leases. Interest rates ranged from 2.6% to 8.1%. Mortgage payments are due in monthly installments of principal and/or interest and mature on various dates through 2013. Certain loans are cross-collateralized and cross-defaulted as part of a group of properties. The loan agreements contain customary representations, covenants and events of default. Certain loan agreements require the Company to comply with certain affirmative and negative covenants, including the maintenance of certain debt service coverage and leverage ratios.</font></p>
<p align="left">
<font size=2 face="serif">Effective December 1, 2003, the Company amended an $8,599 loan with a bank. An additional $5,000 has been made available under the loan as well as extending the maturity of the loan until December 1, 2008 with two one-year extension options. In addition, the interest rate has been reduced to LIBOR plus 140 basis points. The loan, which is secured by one of the Company&#146;s properties, requires the monthly payment of interest and fixed principal commencing January 1, 2004.</font></p>
<p align="left">
<font size=2 face="serif">On October 27, 2003, the Company paid off maturing loans totaling $7,418, which were secured by two of the Company&#146;s properties.</font></p>
<p align="left">
<font size=2 face="serif">On May 30, 2003, the Company refinanced a $13,337 loan with a bank, increasing the outstanding principal to $16,000. The loan, which is secured by one of the Company&#146;s properties, requires monthly payment of interest at the fixed-rate of 5.2%. Payments of principal amortized over 30 years commences June 2005 with the loan maturing in May 2013.</font></p>
<p align="left">
<font size=2 face="serif">In April 2003, the Company extended an existing $7,400 revolving facility with a bank through March 1, 2008. As of December 31, 2003, there were no outstanding amounts under this loan.</font></p>
<p align="left">
<font size=2 face="serif">In March 2003, the Company repaid a $3,551 loan with a life insurance company.</font></p>
<p align="left">
<font size=2 face="serif">In January 2003, the Company drew down $5,000 of an available $10,000 facility with a bank and used the proceeds to partially pay down the outstanding principal on another loan with the same lender.</font></p>
<p align="center">
<font size=2 face="serif">F-19</font></p>

<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div><page>

<a name="pF-20"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA REALTY TRUST
AND SUBSIDIARIES<br>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</font></b>
<br>
<font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<p align="left"><b><font size=2 face="serif">6.&nbsp;&nbsp;&nbsp;Mortgage Loans,
Continued</font></b></p>
<p align="left"><font size=2 face="serif">The following table summarizes the
Company&#146;s mortgage indebtedness as of December 31, 2003 and 2002:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td colspan="2" align="center"><b><font size=1 face="serif">December 31,</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td colspan="2" align="center"><b><font size=1 face="serif">December 31,</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Interest Rate at</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Maturity</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Properties</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Payment</font></b></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td colspan="2" align="center"><font size="1"><b><font face="serif">2003</font></b></font></td>
    <td><font size="1">&nbsp;</font></td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">December 31, 2003</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Encumbered</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Terms</font></b></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td>&nbsp;</td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td>&nbsp;</td>
  <td><hr noshade size=1></td>
  <td>&nbsp;</td>
  <td><hr noshade size=1></td>
  <td>&nbsp;</td>
  <td><hr noshade size=1></td>
  <td>&nbsp;</td>
  <td><hr noshade size=1></td>
  <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Mortgage notes payable &#150; variable rate</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">First Union National Bank</font></td>
   <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151; </font></td>
   <td width=2% bgcolor="#eeeeee">&nbsp;</td>
   <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">13,388</font></td>
   <td width=2% bgcolor="#eeeeee">&nbsp;</td>
   <td width=16% align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td width=2% bgcolor="#eeeeee">&nbsp;</td>
   <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td width=2% bgcolor="#eeeeee">&nbsp;</td>
   <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td width=2% bgcolor="#eeeeee">&nbsp;</td>
   <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td width=2% bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Metropolitan Life Insurance Company</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">7,577</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Washington Mutual Bank, FA</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">50,686</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">56,950 </font></td>
   <td align="right" bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2.94% (LIBOR + 1.75%)</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">04/01/05</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(1</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(15</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Sun America Life Insurance Company</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">9,191</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">9,446 </font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">2.89% (LIBOR + 1.73%)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">10/01/05</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(2</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right"><font size=2 face="serif">(15</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Fleet National Bank</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">12,009</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">12,187 </font></td>
   <td align="right" bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2.92% (LIBOR + 1.75%)</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">01/01/07</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(3</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(15</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Washington Mutual Bank, FA</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">20,083</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">15,637 </font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">3.04% (LIBOR + 1.85%)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">01/01/07</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(4</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right"><font size=2 face="serif">(15</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Fleet National Bank</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">4,865</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">4,942 </font></td>
   <td align="right" bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2.91% (LIBOR + 1.75%)</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">03/15/07</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(5</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(15</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Fleet National Bank</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">6,256</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">6,300 </font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">2.91% (LIBOR + 1.75%)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">05/01/07</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(6</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right"><font size=2 face="serif">(15</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Fleet National Bank</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">8,992</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">9,108 </font></td>
   <td align="right" bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2.91% (LIBOR + 1.75%)</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">06/01/07</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(7</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(15</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Washington Mutual Bank, FA</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif"> &#151;&nbsp;&nbsp;&nbsp;&nbsp;(LIBOR + 1.70%)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">11/22/07</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(8</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right"><font size=2 face="serif">(15</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Fleet National Bank</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td align="right" bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&nbsp;&nbsp;&nbsp;&#151;&nbsp;&nbsp;&nbsp;&nbsp;(LIBOR + 1.50%)</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">03/01/08</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(9</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(15</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Fleet National Bank</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">8,598</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">8,731 </font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">2.57%(LIBOR + 1.40%)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">12/01/08</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(10</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right"><font size=2 face="serif">(15</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Total variable-rate debt</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">120,680</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">144,266</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Mortgage notes payable &#150; fixed rate</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Anchor National Life Insurance Company</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,570</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">SunAmerica Life Insurance Company</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">13,425</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">13,648</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">6.46%</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">07/01/07</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(11</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right"><font size=2 face="serif">(15</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Metropolitan Life Insurance Company</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">24,113</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">24,495</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">8.13%</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">11/01/10</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(12</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(15</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">Bank of America, N.A.</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">16,226</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">16,382</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">7.55%</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">01/01/11</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(13</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right"><font size=2 face="serif">(15</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">RBS Greenwich Capital</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">16,000</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">5.19%</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">06/01/13</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(14</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(16</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Total fixed-rate debt</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">69,764</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">58,095</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">190,444</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif"> $</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">202,361</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
</table>
<p>&nbsp;</p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr valign="top">
    <td colspan="2"><font size="2" face="serif">Notes:</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="3%"><font size=2 face="serif">(1)</font></td>
    <td width="30%"><font size=2 face="serif">New Loudon Center</font></td>
    <td width=3%><font size=2 face="serif">(5)</font></td>
    <td width=30%><font size=2 face="serif">Town Line Plaza</font></td>
    <td width=3%><font size=2 face="serif">(10)</font></td>
    <td><font size=2 face="serif">Soundview Marketplace</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Ledgewood Mall</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Route 6 Plaza</font></td>
    <td><font size=2 face="serif">(6)</font></td>
    <td><font size=2 face="serif">Gateway Shopping Center</font></td>
    <td><font size=2 face="serif">(11)</font></td>
    <td><font size=2 face="serif">Merrillville Plaza</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Bradford Towne Centre</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Berlin Shopping Center</font></td>
    <td><font size=2 face="serif">(7)</font></td>
    <td><font size=2 face="serif">Smithtown Shopping Center</font></td>
    <td><font size=2 face="serif">(12)</font></td>
    <td><font size=2 face="serif">Crescent Plaza</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">East End Centre</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">(2)</font></td>
    <td><font size=2 face="serif">Village Apartments</font></td>
    <td><font size=2 face="serif">(8)</font></td>
    <td><font size=2 face="serif">Elmwood Park Shopping</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Center; no amounts are out-</font></td>
    <td><font size=2 face="serif">(13)</font></td>
    <td><font size=2 face="serif">GHT Apartments/Colony Apartments</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">(3)</font></td>
    <td><font size=2 face="serif">Branch Shopping Center</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">standing under this $20,000</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Abington Towne Center</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">revolving facility</font></td>
    <td><font size=2 face="serif">(14)</font></td>
    <td><font size=2 face="serif">239 Greenwich Avenue</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Methuen Shopping Center</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">(9)</font></td>
    <td><font size=2 face="serif">Marketplace of Absecon;</font></td>
    <td><font size=2 face="serif">(15)</font></td>
    <td><font size=2 face="serif">Monthly principal and interest</font></td>
  </tr>
  <tr valign="top">
    <td><font size=2 face="serif">(4)</font></td>
    <td><font size=2 face="serif">Walnut Hill Plaza</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">no amounts are outstanding</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">under this $7,400 revolving</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">Bloomfield Town Square</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">facility</font></td>
    <td><font size=2 face="serif">(16)</font></td>
    <td><font size=2 face="serif">Interest only until 5/05; monthly principal
        and interest</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size="2" face="serif">&nbsp;</font></td>
    <td><font size=2 face="serif">thereafter</font></td>
  </tr>
</table>
<p align="center"> <font size=2 face="serif">F-20</font></p>
<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div><page>

<a name="pf21"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
<b><font size=2 face="serif">ACADIA REALTY TRUST
AND SUBSIDIARIES<br>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="left" valign="top"><b><font size=2 face="serif">6.&nbsp;&nbsp;&nbsp;</font></b><b><font size=2 face="serif">Mortgage Loans, continued </font></b></td>
  </tr>
</table>
<p>
<font size=2 face="serif">The scheduled principal repayments of all mortgage indebtedness as of December 31, 2003 are as follows:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">2004</font></td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">3,580</font></td>
   <td width=2% align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">2005</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">60,544</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">2006</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">2,445</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">2007</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">62,646</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">2008</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">9,144</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Thereafter</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">52,085</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">190,444</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="left" valign="top"><b><font size=2 face="serif">7.&nbsp;&nbsp;&nbsp;</font></b><b><font size=2 face="serif">Shareholders&#146; Equity and Minority Interests </font></b></td>
  </tr>
</table>
<p>
<i><font size=2 face="serif">Common Shares </font></i><font size=2 face="serif"></font></p><p>
<font size=2 face="serif">During 2003, the Board of Trustees approved a resolution permitting one of its institutional shareholders, which currently owns 6% of the Company&#146;s outstanding Common Shares, to acquire additional shares through open market purchases. This waiver of the Company&#146;s Common Shares ownership limitation, which was approved in response to a request from this institutional investor, will permit this shareholder to acquire up to an additional 3.7% of the Company&#146;s Common Shares through March 31, 2004, or an aggregate of up to 9.7% of the Company&#146;s Common Shares.</font></p><p>
<font size=2 face="serif">Through December 31, 2003, the Company had repurchased 1,922,788 Common Shares (net of 131,817 Common Shares reissued) at a total cost of $10,381 under the expanded share repurchase program that allows for the repurchase of up to $20,000 of the Company&#146;s outstanding Common Shares. The repurchased shares are reflected as a reduction of par value and additional paid-in capital.</font></p><p>
<font size=2 face="serif">In February 2002, the Company completed a &#147;modified Dutch Auction&#148; tender offer (the &#147;Tender Offer&#148;) whereby the Company purchased 5,523,974 Common Shares, comprised of 4,136,321 Common Shares and 1,387,653 Common OP Units converted to Common Shares, at a purchase price of $6.05. The aggregate purchase price paid was $33,400.</font></p><p>
<font size=2 face="serif">Also in February 2002, the Board of Trustees voted to permit Yale University (&#147;Yale&#148;) to acquire 2,266,667 additional Common Shares from another shareholder by granting a conditional waiver of the provision in the Company&#146;s Declaration of Trust that prohibits ownership positions in excess of 4% of the Company. The waiver was limited to this particular transaction. Following this, Yale owned 8,421,759 Common Shares, or 34% of the Company&#146;s outstanding Common Shares. Additionally, as a condition to approving the waiver, Yale agreed to establish a voting trust whereby all shares owned by Yale University in excess of 30% of the Company&#146;s outstanding Common Shares, will be voted in the same proportion as all other shares voted, excluding Yale.</font></p><p>
<i><font size=2 face="serif">Minority Interests </font></i><font size=2 face="serif"></font></p><p>
<font size=2 face="serif">Minority interest in Operating Partnership represents
the limited partners&#146; interest of 1,139,017 and 3,162,980 units in the Operating </font>
<font size=2 face="serif">Partnership (&#147;Common OP Units&#148;) at December
31, 2003 and 2002, respectively. During 2003 and 2002, various limited partners
converted a total of 2,058,804 and 2,086,736 Common OP Units into Common Shares
on a one-for-one basis, respectively. Ross Dworman, a trustee of the Company,
received 34,841 of Common OP Units through various affiliated entities during
2003 (Note 8).</font></p><p>
<font size=2 face="serif">Minority interest in Operating Partnership also includes 1,580 and 2,212 units of preferred limited partnership interests designated as Series A Preferred Units at December 31, 2003 and 2002, respectively (&#147;Preferred OP Units&#148;). The Preferred OP Units were issued in connection with the acquisition of all the partnership interests of the limited partnership which owns the Pacesetter Park Shopping Center on November 16, 1999. Certain Preferred OP Unit holders converted 632 Preferred OP Units into 84,267 Common OP Units and then into Common Shares during 2003.</font></p><p>
<font size=2 face="serif">The Preferred OP Units, which have a stated value of $1,000 each, are entitled to a quarterly preferred distribution of the greater of (i) $22.50 (9% annually) per Preferred OP Unit or (ii) the quarterly distribution attributable to a Preferred OP Unit if such unit were converted into a Common OP Unit. The Preferred OP Units are currently convertible into Common OP Units based on the stated value divided by $7.50. After the seventh anniversary following their issuance, either the Company or the holders can call for the conversion of the Preferred OP Units at the lesser of $7.50 or the market price of the Common Shares as of the conversion date.</font></p><p>
<font size=2 face="serif">Minority interests in majority-owned partnerships represent third party interests in four properties in which the Company has a majority ownership position.</font></p>
<p align="center">
<font size=2 face="serif">F-21</font></p>

<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="pf22"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
<b><font size=2 face="serif">ACADIA REALTY TRUST
AND SUBSIDIARIES<br>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="left" valign="top"><b><font size=2 face="serif">8.</font></b><b><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Related Party Transactions </font></b></td>
  </tr>
</table>
<p>
<font size=2 face="serif">The Company currently manages one property in which
a shareholder of the Company has an ownership interest for which the Company
earns a management fee of 3% of tenant collections. In 2001, the Company terminated
a contract to manage a property owned by a related party that earned a fee of
3.25% of tenant collections. Management fees earned by the Company under these
contracts aggregated $212, $229 and $391 for the years ended December 31, 2003,
2002 and
2001 respectively, and are included in other revenues in the accompanying consolidated
statements of income.</font></p>
<p>
<font size=2 face="serif">The Company also earns certain management and service fees in connection with its investment in ASOF (Note 4). Such fees earned by the Company (after adjusting for intercompany fees) aggregated $1,689, $1,082 and $338 for the years ended December 31, 2003, 2002 and 2001 respectively, and are included in other revenues in the accompanying consolidated statements of income.</font></p><p>
<font size=2 face="serif">As of December 31, 2002, the Company was obligated to issue Common OP Units and cash valued at $2,750 to certain limited partners in connection with the RDC Transaction, The payment was due upon the commencement of rental payments from a designated tenant at one of the properties acquired in the RDC Transaction. In February 2003, Mr. Dworman received 34,841 of these Common OP Units through various affiliated entities.</font></p><p>
<font size=2 face="serif">Included in the Common OP Units converted to Common Shares during 2003 and 2002, were 2,300 and 5,000 Common OP Units converted by Mr. Dworman who then transferred them to a charitable foundation in accordance with a pre-existing arrangement. In connection with the Company&#146;s Tender Offer, Mr. Dworman tendered and sold 492,271 Common OP Units (after converting these to Common Shares on a one-for-one basis) and 107,729 Common Shares (Note 7).</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="left" valign="top"><b><font size=2 face="serif">9.</font></b><b><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Tenant Leases </font></b></td>
  </tr>
</table>
<p>
<font size=2 face="serif">Space in the shopping centers and other retail properties is leased to various tenants under operating leases that usually grant tenants renewal options and generally provide for additional rents based on certain operating expenses as well as tenants&#146; sales volume.</font></p><p>
<font size=2 face="serif">Minimum future rentals to be received under non-cancelable leases for shopping centers and other retail properties as of December 31, 2003 are summarized as follows:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td bgcolor="#eeeeee"><font size=2 face="serif">2004</font></td>
   <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">42,329</font></td>
   <td width=2% align="left" bgcolor="#eeeeee">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">2005</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">38,272</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">2006</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">35,675</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">2007</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">32,505</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">2008</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">27,625</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Thereafter</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">182,243</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td align="right"><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">358,649</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
</tr>
</table>
<p>
<font size=2 face="serif">Minimum future rentals above include a total of $6,169 for two tenants (with six leases), which have filed for bankruptcy protection. None of these leases have been rejected nor affirmed. During the years ended December 31, 2003, 2002 and 2001, no single tenant collectively accounted for more than 10% of the Company&#146;s total revenues.</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="left" valign="top"><b><font size=2 face="serif">10.</font></b><b><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Lease Obligations </font></b></td>
  </tr>
</table>
<p>
<font size=2 face="serif">The Company leases land at three of its shopping centers, which are accounted for as operating leases and generally provide the Company with renewal options. The leases terminate during the years 2020 to 2066. One of these leases provides the Company with options to renew for additional terms aggregating from 20 to 44 years. The Company leases space for its White Plains corporate office for a term expiring in 2010. Future minimum rental payments required for leases having remaining non-cancelable lease terms are as follows:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">2004</font></td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">954</font></td>
   <td width=2% align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">2005</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">973</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">2006</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">981</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">2007</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">995</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">2008</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,055</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Thereafter</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">18,106</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">23,064</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
</tr>
</table>
<p align="center">
<font size=2 face="serif">F-22</font></p>
<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div>
<page> <a name="pF-23"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA
      REALTY TRUST AND SUBSIDIARIES<br>
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</font></b><br>
  <font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<p align="left"> <b><font size=2 face="serif">11.&nbsp;&nbsp;&nbsp;Share Incentive
      Plan </font></b></p>
<p align="left"> <font size=2 face="serif">During 1999, the Company adopted the
    1999 Share Incentive Plan (the &#147;1999 Plan&#148;), which replaced both
    the 1994 Share Option Plan and the 1994 Non-Employee Trustees&#146; Share
    Option Plan. The 1999 Plan authorizes the issuance of options equal to up
    to 8% of the total Common Shares outstanding from time to time on a fully
    diluted basis. However, not more than 4,000,000 of the Common Shares in the
    aggregate may be issued pursuant to the exercise of options and no participant
    may receive more than 5,000,000 Common Shares during the term of the 1999
    Plan. Options are granted by the Share Option Plan Committee (the &#147;Committee&#148;),
    which currently consists of two non-employee Trustees, and will not have
    an exercise price less than 100% of the fair market value of the Common Shares
    and a term of greater than ten years at the grant date. Vesting of options
    is at the discretion of the Committee with the exception of options granted
    to non-employee Trustees, which vest in five equal annual installments beginning
    on the date of grant. Pursuant to the 1999 Plan, non-employee Trustees receive
    an automatic grant of 1,000 options following each Annual Meeting of Shareholders.</font></p>
<p align="left"> <font size=2 face="serif">The 1999 Plan also provides for the
    granting of share appreciation rights, restricted shares and performance
    units/shares. Share appreciation rights provide for the participant to receive,
    upon exercise, cash and/or Common Shares, at the discretion of the committee,
    equal to the excess of the
    market value of the Common Shares at the exercise date over the market value
    of the Common Shares at the Grant Date. The Committee will determine the
    award and restrictions placed on restricted shares, including
    the dividends thereon and the term of such restrictions. The Committee also
    determines the award and vesting of performance units and performance shares
    based on the attainment of specified performance objectives of the Company
    within a specified performance period. Through December 31, 2003, no share
    appreciation rights or performance units/shares have been awarded.</font></p>
<p align="left"> <font size=2 face="serif">During 2003, the Company adopted the
    2003 Share Incentive Plan (the &#147;2003 Plan&#148;) because no Common Shares
    remained available for future grants under the 1999 Plan. The 2003 Plan provides
    for the granting of options, share appreciation rights, restricted shares
    and performance units (collectively, &#147;Awards&#148;) to officers, employees
    and trustees of the Company and consultants to the Company. The 2003 Plan
    is generally identical to the 1999 Plan, except that the maximum number of
    Common Shares that the Company may issue pursuant to the 2003 Plan is four
    percent of the Common Shares outstanding from time to time on a fully diluted
    basis. However, no participant may receive more than 1,000,000 Common Shares
    during the term of the 2003 Plan with respect to Awards.</font></p>
<p align="left"> <font size=2 face="serif">As of December 31, 2003, the Company
    has 2,068,150 options outstanding to officers and employees. These fully
    vested options are for ten-year terms from the grant date and, except for
    30,000 options which vested fully as of the grant date, vested in three equal
    annual installments which began on the grant date. In addition, 27,000 options
    have been issued to non-employee Trustees of which 14,600 options were vested as of December 31, 2003.</font></p>
<p align="left"> <font size=2 face="serif">For the year ended December 31, 2003,
    the Committee granted a total of 107,834 restricted shares pursuant to the
    2003 Plan to certain officers of the Company (the &#147;Recipients&#148;).
    In general, the restricted shares carry all the rights of Common Shares including
    voting and dividend rights, but may not be transferred, assigned or pledged
    until the Recipients have a vested non-forfeitable right to such shares.
    Vesting with respect to these restricted shares, which is subject to the
    Recipients&#146; continued employment with the Company through the applicable
    vesting dates, is as follows:</font></p>
<p align="left"> <font size=2 face="serif">i.&nbsp;&nbsp;&nbsp;39,168 restricted
    shares, which were granted in lieu of a portion of the Recipients&#146; 2002
    cash bonus, vested 20% on January 2, 2003 and vest 20% thereafter on each
    of the next four anniversaries of such date,</font></p>
<p align="left"> <font size=2 face="serif"> ii.&nbsp;&nbsp;&nbsp;34,333 restricted
    shares vest 20% on January 2, 2004 and on each of the next four anniversaries
    of such date,</font></p>
<p align="left"> <font size=2 face="serif"> iii.&nbsp;&nbsp;&nbsp;and 34,333
    restricted shares vest 20% on January 2, 2004 and on each of the next four
    anniversaries of such date, provided that in addition to the Recipients&#146; continued
    employment through the vesting date, the Company&#146;s total shareholder
    return, as determined by the Committee in its discretion, is 12% or more
    either for such fiscal year or, on average, for such fiscal year and each
    other fiscal year occurring after January 2, 2003 &#150; in which case vesting
    shall occur for any restricted shares that did not vest in a prior fiscal
    year based on this 12% condition.</font></p>
<p align="left"> <font size=2 face="serif">The total value of the above restricted
    share awards on the date of grant was $987 which will be recognized in expense
    over the vesting period. During 2003, $410 was recognized in compensation
    expense. Unearned compensation of $577 as of December 31, 2003 will be recognized
    in expense as such shares vest.</font></p>
<p align="left"> <font size=2 face="serif">For the year ended December 31, 2001,
    the Company issued 37,110 restricted shares to employees, which vest equally
    over three years. No awards of restricted shares were granted for the year
    ended December 31, 2002. During the years ended December 31, 2003, 2002 and
    2001, the Company recognized compensation expenses of $516, $121 and $121,
    respectively, in connection with restricted share grants. No awards of share
    appreciation rights or performance units/shares were granted for the years
    ended December 31, 2003, 2002 and 2001.</font></p>
<p align="center"> <font size=2 face="serif">F-23</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="pF-24"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA
      REALTY TRUST AND SUBSIDIARIES<br>
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</font></b><br>
  <font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<p align="left"> <b><font size=2 face="serif">11.&nbsp;&nbsp;&nbsp;Share Incentive Plan, continued </font></b></p>
<p align="left"> <font size=2 face="serif">Effective January 1, 2002, the Company
    adopted the fair value method of recording stock-based compensation contained
    in SFAS No. 123, &#147;Accounting for Stock-Based Compensation&#148;. As
    such, stock based compensation awards granted after December 31, 2001 will
     be expensed over
    the vesting period based on the fair value at the date the stock-based compensation
    was granted. Prior to January 1, 2002, the Company had applied the intrinsic
    value method permitted under SFAS No. 123, as defined in Accounting Principles
    Board Opinion No. 25, &#147;Accounting for Stock Issued to Employees&#148; and
    related Interpretations, in accounting for stock-based compensation plans.
    Accordingly, no compensation expense has been recognized in the accompanying
    consolidated financial statements for the year ended December 31, 2001 related
    to the issuance of stock options because the exercise price of the Company&#146;s
    employee stock options equaled or exceeded the market price of the underlying
    stock on the date of grant.  The
    Company elected the prospective method whereby compensation expense is recognized
    only for those options granted, modified or settled on or after January 1,
    2002.</font></p>
<p align="left"> <font size=2 face="serif">The Company has used the Black-Scholes
    option-pricing model for purposes of estimating the fair value in determining
    compensation expense for options granted for the years ended December 31,
    2003 and 2002. The Company has also used this model for the pro forma information
    regarding net income and earnings per share as required by SFAS No. 123 for
    options issued for the year ended December 31, 2001 as if the Company had
    also accounted for these employee stock options under the fair value method.
    The fair value for the options issued by the Company was estimated at the
    date of the grant using the following weighted-average assumptions resulting
    in:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan=7 align="center"><b><font size=1 face="serif">Years ended December
          31,</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2003</font></b></td>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><b><font size=1 face="serif">2001</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><hr size="1" noshade>
    </td>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><hr size="1" noshade>
    </td>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><hr size="1" noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Risk-free interest rate</font></td>
    <td width=1%>&nbsp;</td>
    <td width=7% align="right" bgcolor="#eeeeee"><font size=2 face="serif">4.4</font></td>
    <td width=2%><font size=2 face="serif">%</font></td>
    <td width=1%>&nbsp;</td>
    <td width=7% align="right" bgcolor="#eeeeee"><font size=2 face="serif">3.3</font></td>
    <td width=2%><font size=2 face="serif">%</font></td>
    <td width=1%>&nbsp;</td>
    <td width=7% align="right" bgcolor="#eeeeee"><font size=2 face="serif">5.4</font></td>
    <td width=2%><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Dividend yield</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">5.8</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">7.0</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">8.4</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Expected life</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">10.0 years</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">7.0 years</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">7.0 years</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Expected volatility</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">18.0</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">19.1</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">17.7</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Fair value at date of grant (per option)</font></td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.82</font></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.44</font></td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.27</font></td>
    <td>&nbsp;</td>
  </tr>
</table>
<p> <font size=2 face="serif">Changes in the number of shares under all option
    arrangements are summarized as follows:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td>&nbsp;</td>
    <td colspan="8" align="center"><b><font size=1 face="serif">Years
          ended December 31,</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="center"><b><font size=1 face="serif">2003</font></b></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td>&nbsp;</td>
    <td width="2%" align="center">&nbsp;</td>
    <td align="center"><b><font size=1 face="serif">2001</font></b></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td colspan="2"><hr size="1" noshade>
    </td>
    <td>&nbsp;</td>
    <td colspan="2"><hr size="1" noshade>
    </td>
    <td>&nbsp;</td>
    <td colspan="2" align="center"><hr size="1" noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Outstanding at beginning
        of year</font></td>
    <td width=1% bgcolor="#eeeeee">&nbsp;</td>
    <td width=9% align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,472,400</font></td>
    <td width=2% bgcolor="#eeeeee">&nbsp;</td>
    <td width=1% bgcolor="#eeeeee">&nbsp;</td>
    <td width=9% align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,593,400</font></td>
    <td width=2% bgcolor="#eeeeee">&nbsp;</td>
    <td width=1% align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td width=9% align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,124,600</font></td>
    <td width=2% align="right" bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Granted</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">8,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">5,000</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">475,000</font></td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Option price per share granted</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$ </font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">9.11-11.66</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">7.10</font></td>
    <td align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">6.00-$7.00</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#ffffff"><font size=2 face="serif">Cancelled</font></td>
    <td bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#ffffff">&nbsp;</td>
    <td bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff"><font size=2 face="serif">&#151;</font></td>
    <td align="right" bgcolor="#ffffff">&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Exercisable at end of year</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,082,750</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,313,436</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,418,137</font></td>
    <td align="right" bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr>
     <td bgcolor="#ffffff"><font size=2 face="serif">Settled (1)</font></td>
   <td bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff"><font size=2 face="serif">385,250</font></td>
   <td bgcolor="#ffffff">&nbsp;</td>
   <td bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff"><font size=2 face="serif">126,000</font></td>
    <td bgcolor="#ffffff">&nbsp;</td>
     <td bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff"><font size=2 face="serif">6,200</font></td>
     <td bgcolor="#ffffff">&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Expired</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#ffffff"><font size=2 face="serif">Outstanding at end of year</font></td>
    <td align="right" bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff"><font size=2 face="serif">2,095,150</font></td>
    <td align="right" bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff"><font size=2 face="serif">2,472,400</font></td>
    <td align="right" bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff"><font size=2 face="serif">2,593,400</font></td>
    <td align="right" bgcolor="#ffffff">&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Option prices per share outstanding</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$ </font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">4.89-$11.66</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">4.89-$7.50</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&nbsp;</font></td>
    <td align="right" bgcolor="#eeeeee"><font size="2">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">4.89-$7.50</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
  </tr>
</table>
<p align="left"> <font size=2 face="serif">(1)&nbsp;&nbsp;&nbsp;Pursuant to the
    1999 Plan (except for 250 options exercised during 2003) these options were settled and did
    not result in the issuance of any additional Common Shares.</font></p>
<p align="left"> <font size=2 face="serif">As of December 31, 2003 the outstanding
    options had a weighted average exercise price of $7.04 and a weighted average
    remaining contractual life of approximately 5.1 years.</font></p>
<p align="center"> <font size=2 face="serif">F-24</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="pf25"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA
      REALTY TRUST AND SUBSIDIARIES<br>
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</font></b><br>
  <font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<p> <b><font size=2 face="serif">12.&nbsp;&nbsp;&nbsp;Employee Stock Purchase
      Plan </font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">During 2003, the Company adopted the Acadia Realty
    Trust Employee Stock Purchase Plan (the &#147;Purchase Plan&#148;), which
    allows eligible employees of the Company to purchase Common Shares through
    payroll deductions. The Purchase Plan provides for employees to purchase
    Common Shares on a quarterly basis at a 15% discount to the closing price
    of the Company&#146;s Common Shares on either the first day or the last day
    of the quarter, whichever is lower. The amount of the payroll deductions
    will not exceed a percentage of the participant&#146;s annual compensation
    that the Committee establishes from time to time, and a participant may not
    purchase more than 1,000 Common Shares per quarter. Compensation expense
    will be recognized by the Company to the extent of the above discount to
    the average closing price of the Common Shares with respect to the applicable
    quarter. During 2003, 810 Common Shares were purchased by Employees under
    the Purchase Plan.</font></p>
<p> <b><font size=2 face="serif">13.&nbsp;&nbsp;&nbsp;Employee 401(k) Plan </font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">The Company maintains a 401(k) plan for employees
    under which the Company currently matches 50% of a plan participant&#146;s
    contribution up to 6% of the employee&#146;s annual salary. A plan participant
    may contribute up to a maximum of 15% of their compensation but not in excess
    of $12 for the year ended December 31, 2003. The Company contributed $110,
    $115, and $135 for the years ended December 31, 2003, 2002 and 2001, respectively.</font></p>
<p> <b><font size=2 face="serif">14.&nbsp;&nbsp;&nbsp;Dividends and Distributions
      Payable </font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">On December 9, 2003, the Company declared a cash
    dividend for the quarter ended December 31, 2003 of $0.16 per Common Share.
    The dividend was paid on January 15, 2004 to shareholders of record as of
    December 31, 2003.</font></p>
<p> <font size=2 face="serif">The Company has determined that the cash distributed
    to the shareholders is characterized as follows for Federal income tax purposes:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td colspan=5 align="center"><b><font size=1 face="serif">For the years ended
          December 31,</font></b></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td colspan="5" align="center"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2003</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2001</font></b></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Ordinary income</font></td>
    <td width=8% align="right"><font size=2 face="serif">100</font></td>
    <td width=2%><font size=2 face="serif">%</font></td>
    <td width=8% align="right"><font size=2 face="serif">44</font></td>
    <td width=2%><font size=2 face="serif">%</font></td>
    <td width=8% align="right"><font size=2 face="serif">79</font></td>
    <td width=2%><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Long-term capital gain</font></td>
    <td align="right"><font size=2 face="serif">0</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">56</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">21</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">100</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">100</font></td>
    <td><font size=2 face="serif">%</font></td>
    <td align="right"><font size=2 face="serif">100</font></td>
    <td><font size=2 face="serif">%</font></td>
  </tr>
</table>
<p> <b><font size=2 face="serif">15.&nbsp;&nbsp;&nbsp;Income Taxes </font></b><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">The Company believes it qualifies as a REIT and
    therefore is not liable for income taxes at the federal level or in most
    states for the current year as well as for future years. Accordingly, for
    the years ended December 31, 2003, 2002 and 2001, no provision was recorded
    for federal or substantially all state income taxes.</font></p>
<p> <font size=2 face="serif">The following unaudited table reconciles the Company&#146;s
    book net income to REIT taxable income before dividends paid deduction:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><font size="1"><b></b></font></td>
    <td colspan="8" align="center"><font size="1"><b><font face="serif">For the
            years ended December 31,</font></b></font></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="center"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="center"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="center"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2003</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2002</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">2001</font></b></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Estimate</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Actual</font></b></td>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><font size="1">&nbsp;</font></td>
    <td align="center"><b><font size=1 face="serif">Actual</font></b></td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><font size="1">&nbsp;</font></td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Book net income</font></td>
    <td width=1% align="right"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">7,853</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">19,399</font></td>
    <td width=2%>&nbsp;</td>
    <td width=1% align="right"><font size=2 face="serif">$</font></td>
    <td width=8% align="right"><font size=2 face="serif">9,802</font></td>
    <td width=2%>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Book/tax difference in depreciation and amortization</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">3,828</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(6,802</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,091</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Book/tax difference on gains/losses from capital
        transactions</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&#8211;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">904</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">2,595</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Other book/tax differences, net</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">(326</font></td>
    <td><font size="2">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">1,380</font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">815</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">REIT taxable income before dividends paid deduction</font></td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">11,355</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">14,881</font></td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">15,303</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
    <td align="right"><hr noshade size=2>
    </td>
    <td align="right"><hr noshade size=2>
    </td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="center"><font size=2 face="serif">F-25</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="pf26"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA
      REALTY TRUST AND SUBSIDIARIES<br>
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<p> <b><font size=2 face="serif">16.&nbsp;&nbsp;&nbsp;Financial Instruments </font></b><font size=2 face="serif"></font></p>
<p> <i><font size=2 face="serif">Fair Value of Financial Instruments </font></i><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">SFAS No. 107, &#147;Disclosures About Fair Value
    of Financial Instruments&#148; requires disclosure on the fair value of financial
    instruments. Certain of the Company&#146;s assets and liabilities are considered
    financial instruments. Fair value estimates, methods and assumptions are
    set forth below.</font></p>
<p> <i><font size=2 face="serif">Fair Value of Financial Instruments, continued </font></i><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">Cash and Cash Equivalents, Cash in Escrow, Rents
    Receivable, Notes Receivable, Prepaid Expenses, Other Assets, Accounts Payable
    and Accrued Expenses, Dividends and Distributions Payable, Due to Related
    Parties and Other Liabilities &#150; The carrying amount of these assets
    and liabilities approximates fair value due to the short-term nature of such
    accounts.</font></p>
<p> <font size=2 face="serif">Derivative Instruments &#150; The fair value of
    these instruments is based upon the estimated amounts the Company would receive
    or pay to terminate the contracts as of December 31, 2003 and 2002 and is
    determined using interest rate market pricing models.</font></p>
<p> <font size=2 face="serif">Mortgage Notes Payable &#150; As of December 31,
    2003 and 2002, the Company has determined the estimated fair value of its
    mortgage notes payable are approximately $193,619 and $208,083, respectively,
    by discounting future cash payments utilizing a discount rate equivalent
    to the rate at which similar mortgage notes payable would be originated under
    conditions then existing.</font></p>
<p> <i><font size=2 face="serif">Interest Rate Hedges </font></i><font size=2 face="serif"></font></p>
<p> <font size=2 face="serif">On January 1, 2001, the Company adopted SFAS No.
    133, &#147;Accounting for Derivative Instruments and Hedging Activities&#148;,
    as amended by SFAS No. 138, &#147;Accounting for Certain Derivative Instruments
    and Certain Hedging Activities&#148;. In connection with the adoption of
    SFAS No. 133, the Company recorded a transition adjustment of $149 related
    to the January 1, 2001 valuation of two LIBOR interest rate caps that hedged
    $23,203 of variable-rate mortgage debt. This adjustment is reflected as a
    cumulative effect of a change in accounting principle in the accompanying
    consolidated statements of income.</font></p>
<p> <font size=2 face="serif">In June of 2002, the Company completed two interest
    rate swap transactions to hedge the Company&#146;s exposure to changes in
    interest rates with respect to $25,047 of LIBOR based variable rate debt.
    These agreements, which are for $15,885 and $9,162 of notional principal,
    mature on January 1, 2007 and June 1, 2007, respectively and are at a weighted
    average fixed interest rate of 6.2%.</font></p>
<p> <font size=2 face="serif">On July 10, 2002, the Company entered into an interest
    rate swap agreement to hedge its exposure to changes in interest rates with
    respect to $12,288 of LIBOR based variable-rate debt. The swap agreement,
    which matures on January 1, 2007, provides for a fixed all-in interest rate
    of 4.1%.</font></p>
<p> <font size=2 face="serif">During 2001, the Company completed two interest
    rate swap transactions to hedge the Company&#146;s exposure to changes to
    interest rates with respect to $50,000 of LIBOR based variable rate debt.
    The first swap agreement, which extends through April 1, 2005, provides for
    a fixed all-in rate of 6.55% on $30,000 of notional principal. The second
    swap agreement, which extends through October 1, 2006, provides for a fixed
    all-in rate of 6.28% on $20,000 of notional principal.</font></p>
<p> <font size=2 face="serif">The Company is also a party to two swap agreements
    with a bank through its 49% interest in Crossroads (Note 4). These swap agreements
    effectively fix the interest rate on the Company&#146;s pro rata share of
    the Crossroads mortgage debt.</font></p>
<p align="center"> <font size=2 face="serif">F-26</font></p>
<hr noshade align="center" width="100%" size="2">

<div style="page-break-before:always"></div><page>

<a name="pf27"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
<b><font size=2 face="serif">ACADIA REALTY TRUST
AND SUBSIDIARIES<br>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="left" valign="top"><b><font size=2 face="serif">16.&nbsp;&nbsp;&nbsp;</font></b><b><font size=2 face="serif">Financial Instruments, continued</font></b></td>
  </tr>
</table>
<p>
<i><font size=2 face="serif">Interest Rate Hedges, continued </font></i><font size=2 face="serif"></font></p><p>

<font size=2 face="serif">The following table summarizes the notional values and fair values of the Company&#146;s derivative financial instruments as of December 31, 2003. The notional value does not represent exposure to credit, interest rate or market risks:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td rowspan="2" align="left" valign="top"><b><font size=1 face="serif">Hedge Type</font></b></td>
   <td>&nbsp;</td>
   <td align="center"><b><font size=1 face="serif">Notional Value</font></b></td>
   <td rowspan="2" align="center">&nbsp;</td>
   <td align="center"><b><font size=1 face="serif">Rate</font></b></td>
   <td rowspan="2" align="center">&nbsp;</td>
   <td align="center"><b><font size=1 face="serif">Interest Maturity</font></b></td>
   <td align="center">&nbsp;</td>
   <td align="center">&nbsp;</td>
   <td align="center"><b><font size=1 face="serif">Fair Value</font></b></td>
   <td rowspan="2" align="center">&nbsp;</td>
</tr>
<tr>
  <td align="right"><hr size="1" noshade></td>
  <td align="right"><hr size="1" noshade></td>
  <td align="right"><hr size="1" noshade></td>
  <td align="right"><hr size="1" noshade></td>
  <td align="right">&nbsp;</td>
  <td align="right"><hr size="1" noshade></td>
  <td align="right"><hr size="1" noshade></td>
  </tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">LIBOR Swap (1)</font></td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">11,974</font></td>
   <td width=1% align="right">&nbsp;</td>
   <td width=8% align="right"><font size=2 face="serif">5.94</font></td>
   <td width=2% align="left"><font size=2 face="serif">%</font></td>
   <td width=8% align="right"><font size=2 face="serif">6/16/07</font></td>
   <td width=1% align="right">&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif"> (1,217)</font></td>
   <td width=2% align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">LIBOR Swap (1)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">5,000</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">6.48</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">6/16/07</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(599</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,816</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">LIBOR Swap</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">30,000</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">4.80</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">4/1/05</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,227</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">LIBOR Swap</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">20,000</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">4.53</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">10/1/06</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(1,091</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">LIBOR Swap</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">8,992</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">4.47</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">6/1/07</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(472</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td><font size=2 face="serif">LIBOR Swap</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">15,605</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">4.32</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1/1/07</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(748</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">LIBOR Swap</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">12,072</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">4.11</font></td>
   <td><font size=2 face="serif">%</font></td>
   <td align="right"><font size=2 face="serif">1/1/07</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(506</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(4,044</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">(5,860</font></td>
   <td><font size=2 face="serif">)</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td>&nbsp;</td>
</tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%" align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" align="left" valign="top"><font size=1 face="serif">Notes:</font></td>
  </tr>
  <tr>
    <td width="3%" align="left" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" align="left" valign="top"><font size=1 face="serif">(1)</font></td>
    <td><font size=1 face="serif">Relates to the Company&#146;s investments in
        Crossroads. These swaps effectively fix the interest rate on the Company&#146;s
        pro rata share of mortgage debt. The fair values of these instruments
        are reflected as components of the Company&#146;s investment in Crossroads
    in the accompanying consolidated financial statements.</font></td>
  </tr>
</table>
<p>

<font size=2 face="serif">As of December 31, 2003, the derivative instruments were reported at their fair value as derivative instruments of $4,044 and as a reduction of investments in unconsolidated partnerships of $1,816. As of December 31, 2003, unrealized losses totaling $5,734 represented the fair value of the aforementioned derivatives, of which $5,505 was reflected in accumulated other comprehensive loss and $229 as a reduction of minority interest in Operating Partnership. For the years ended December 31, 2003 and 2002, the Company recorded in interest expense an unrealized gain (loss) of $51 and ($122), respectively, due to partial ineffectiveness on one of the swaps. The ineffectiveness resulted from differences between the derivative notional and the principal amount of the hedged variable rate debt.</font></p><p>
<font size=2 face="serif">The Company&#146;s interest rate hedges are designated as cash flow hedges and hedge the future cash outflows on mortgage debt. Interest rate swaps that convert variable payments to fixed payments, such as those held by the Company, as well as interest rate caps, floors, collars, and forwards are cash flow hedges. The unrealized gains and losses in the fair value of these hedges are reported on the balance sheet with a corresponding adjustment to either accumulated other comprehensive income or earnings depending on the type of
 hedging relationship. For cash flow hedges, offsetting gains and losses are reported in accumulated other comprehensive income. Over time, the unrealized gains and losses held in accumulated other comprehensive income will be reclassified to earnings. This reclassification occurs over the same time period in which the hedged items affect earnings. Within the next twelve months, the Company expects to reclassify to earnings as interest expense approximately $3,462 of the current balance held in accumulated other comprehensive loss.</font></p>
<p align="center">
<font size=2 face="serif">F-27</font></p>

<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="pf28"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center"><b><font size=2 face="serif">ACADIA REALTY TRUST AND SUBSIDIARIES<br>
  NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS<br>
</font></b><font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="left" valign="top"><b><font size=2 face="serif">17.</font></b><b><font size=2 face="serif">&nbsp;&nbsp;&nbsp;Earnings Per Common Share </font></b><font size=2 face="serif">&nbsp; </font> </td>
  </tr>
</table>
<p>
<font size=2 face="serif">Basic earnings per share was determined by dividing the applicable net income to common shareholders for the year by the weighted average number of Common Shares outstanding during each year consistent with SFAS No. 128. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue Common Shares were exercised or converted into Common Shares or resulted in the issuance of Common Shares that then shared in the earnings of the Company. The following table sets forth the computation of basic and diluted earnings per share from continuing operations for the periods indicated. For the year ended December 31, 2001 no additional shares were reflected as the impact would be anti- dilutive in such years.</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td rowspan="3">&nbsp;</td>
   <td rowspan="2">&nbsp;</td>
   <td colspan=7 align="center"><b><font size=1 face="serif">Years ended December 31,</font></b></td>
   <td rowspan="3">&nbsp;</td>
</tr>
<tr>
   <td align="center"><b><font size=1 face="serif">2003</font></b></td>
   <td rowspan="2" align="center">&nbsp;</td>
   <td align="center">&nbsp;</td>
   <td align="center"><b><font size=1 face="serif">2002</font></b></td>
   <td rowspan="2" align="center">&nbsp;</td>
   <td align="center">&nbsp;</td>
   <td align="center"><b><font size=1 face="serif">2001</font></b></td>
  </tr>
<tr>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  <td><hr noshade size=1></td>
  </tr>
<tr>
   <td><font size=2 face="serif">Numerator:</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Income from continuing operations &#150; basic earnings per share</font></td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">7,853</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">11,517</font></td>
   <td width=2% align="left">&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">5,156</font></td>
   <td width=2% align="left">&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Effect of dilutive securities:</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Preferred OP Unit distributions</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">185</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">199</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Numerator for diluted earnings per share</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">8,038</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">11,716</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">5,156</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Denominator:</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Weighted average shares &#150; basic earnings per share</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">26,589</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">25,321</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">28,313</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Effect of dilutive securities:</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Employee stock options</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">615</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">190</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Convertible Preferred OP Units</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">292</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">295</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Dilutive potential Common Shares</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">907</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">485</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=1>
   </td>
   <td><hr noshade size=1>
   </td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Denominator for diluted earnings per share</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">27,496</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">25,806</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">28,313</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Basic earnings per share from continuing operations</font></td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.30</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.46</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.18</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Diluted earnings per share from continuing operations</font></td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.29</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.45</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">0.18</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
   <td><hr noshade size=2>
   </td>
   <td><hr noshade size=2>
   </td>
   <td>&nbsp;</td>
</tr>
</table>
<p>
<font size=2 face="serif">The effect of the conversion of Common OP Units is not reflected in the above table as they are exchangeable for Common Shares on a one-for-one basis. The income allocable to such units is allocated on this same basis and reflected as minority interest in the accompanying consolidated financial statements. As such, the assumed conversion of these units would have no net impact on the determination of diluted earnings per share.</font></p>
<p align="center">
<font size=2 face="serif">F-28</font></p>

<hr noshade align="center" width="100%" size="2"><div style="page-break-before:always"></div>
<page> <a name="pF-29"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA
      REALTY TRUST AND SUBSIDIARIES <br>
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS </font></b><font size=2 face="serif"> </font> <br>
  <font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<p> <b><font size=2 face="serif">18. Summary of Quarterly Financial Information
      (unaudited) </font></b></p>
<p> <font size=2 face="serif">The quarterly results of operations of the Company
    for the years ended December 31, 2003 and 2002 are as follows:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td>&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">March 31,</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">June 30,</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">September
          30,</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">December
          31,</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">Total for</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">2003</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">2003</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">2003</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">2003</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">Year</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Revenue</font></td>
    <td width=2% align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">18,125</font></td>
    <td width=2% bgcolor="#eeeeee">&nbsp;</td>
    <td width=2% align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">16,465</font></td>
    <td width=2% bgcolor="#eeeeee">&nbsp;</td>
    <td width=2% align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">16,704</font></td>
    <td width=2% bgcolor="#eeeeee">&nbsp;</td>
    <td width=2% align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">18,151</font></td>
    <td width=2% bgcolor="#eeeeee">&nbsp;</td>
    <td width=2% align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td width=8% align="right" bgcolor="#eeeeee"><font size=2 face="serif">69,445</font></td>
    <td width=2% bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Income from continuing operations</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">3,463</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">2,443</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">2,424</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(477</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">7,853</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Income from discontinued
        operations</font></td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Net income</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">3,463</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">2,443</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">2,424</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(477</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">7,853</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Net income per Common Share &#150; basic:</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Income
        from continuing operations</font></td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.14</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.09</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.09</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(0.02</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.30</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Income from discontinued
        operations</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Net income</font></td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.14</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.09</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.09</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(0.02</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.30</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Net income per Common Share &#150;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">diluted:</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Income
        from continuing operations</font></td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.14</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.09</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.09</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(0.02</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.29</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Income from discontinued
        operations</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Net income</font></td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.14</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.09</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.09</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(0.02</font></td>
    <td bgcolor="#eeeeee"><font size=2 face="serif">)</font></td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.29</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Cash dividends declared per Common</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee"><font size=2 face="serif">Share</font></td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.145</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.145</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.145</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.160</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">0.595</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Weighted average Common Shares</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">outstanding:</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td bgcolor="#eeeeee">&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Basic</font></td>
    <td align="left" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">25,377,095</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">26,387,010</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">27,235,707</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">27,334,649</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
    <td align="left" bgcolor="#eeeeee">&nbsp;</td>
    <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">26,589,432</font></td>
    <td bgcolor="#eeeeee">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Diluted</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">25,933,960</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">27,175,713</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">28,300,443</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">28,551,778</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">27,496,267</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">March 31,</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">June 30,</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">September
          30,</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">December
          31,</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">Total for</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">2002</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">2002</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">2002</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">2002</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom"><b><font size=1 face="serif">Year</font></b></td>
    <td align="center" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td align="left"><hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Revenue</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">19,526</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">16,023</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">16,208</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">17,590</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">69,347</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Income from continuing operations</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">6,286</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,770</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,990</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,471</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">11,517</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Income from discontinued operations</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">180</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">2,052</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">(108</font></td>
    <td><font size=2 face="serif">)</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">5,758</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">7,882</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Net income</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">6,466</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">3,822</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">1,882</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">7,229</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">19,399</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Net income per Common Share &#150; basic</font></td>
    <td align="left" bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff">&nbsp;</td>
    <td bgcolor="#ffffff">&nbsp;</td>
    <td align="left" bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff">&nbsp;</td>
    <td bgcolor="#ffffff">&nbsp;</td>
    <td align="left" bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff">&nbsp;</td>
    <td bgcolor="#ffffff">&nbsp;</td>
    <td align="left" bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff">&nbsp;</td>
    <td bgcolor="#ffffff">&nbsp;</td>
    <td align="left" bgcolor="#ffffff">&nbsp;</td>
    <td align="right" bgcolor="#ffffff">&nbsp;</td>
    <td bgcolor="#ffffff">&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Income from continuing operations</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.24</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.07</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.08</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.06</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.46</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Income from discontinued
        operations</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.01</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.08</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.23</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.31</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Net income</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.25</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.15</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.08</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.29</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.77</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Net income per Common Share &#150;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">diluted:</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Income from continuing operations</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.24</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.07</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.08</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.06</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.45</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Income from discontinued
        operations</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.01</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.08</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">&#151;</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.22</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.31</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td><font size=2 face="serif">Net income</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.25</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.15</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.08</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.28</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.76</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Cash dividends declared per Common</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Share</font></td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.13</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.13</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.13</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.13</font></td>
    <td>&nbsp;</td>
    <td align="left"><font size=2 face="serif">$</font></td>
    <td align="right"><font size=2 face="serif">0.52</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Weighted average Common Shares</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">outstanding:</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr bgcolor="#eeeeee">
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Basic</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">26,376,443</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">24,775,053</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">24,974,176</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">25,173,874</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">25,320,631</font></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;&nbsp;&nbsp;<font size=2 face="serif">Diluted</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">26,786,454</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">25,252,842</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">24,974,176</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">25,684,405</font></td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size=2 face="serif">25,806,035</font></td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="center"><font size=2 face="serif">F-29</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="pF-30"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><font size=2 face="serif">ACADIA
      REALTY TRUST AND SUBSIDIARIES<br>
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</font></b><br>
  <font size=2 face="serif">(In thousands, except per share amounts)</font></p>
<p align="left"> <b><font size=2 face="serif">19. Commitments and Contingencies </font></b></p>
<p align="left"> <font size=2 face="serif">Under various Federal, state and local
    laws, ordinances and regulations relating to the protection of the environment,
    a current or previous owner or operator of real estate may be liable for
    the cost of removal or remediation of certain hazardous or toxic substances
    disposed, stored, generated, released, manufactured or discharged from, on,
    at, under, or in a property. As such, the Company may be potentially liable
    for costs associated with any potential environmental remediation at any
    of its formerly or currently owned properties.</font></p>
<p align="left"> <font size=2 face="serif">The Company conducts Phase I environmental
    reviews with respect to properties it acquires. These reviews include an
    investigation for the presence of asbestos, underground storage tanks and
    polychlorinated biphenyls (PCBs). Although such reviews are intended to evaluate
    the environmental condition of the subject property as well as surrounding
    properties, there can be no assurance that the review conducted by the Company
    will be adequate to identify environmental or other problems that may exist.
    Where a Phase I assessment so recommended, a Phase II assessment was conducted
    to further determine the extent of possible environmental contamination.
    In all instances where a Phase I or II assessment has resulted in specific
    recommendations for remedial actions, the Company has either taken or scheduled
    the recommended remedial action. To mitigate unknown risks, the Company has
    obtained environmental insurance for most of its properties, which covers
    only unknown environmental risks.</font></p>
<p align="left"> <font size=2 face="serif">The Company believes that it is in
    compliance in all material respects with all Federal, state and local ordinances
    and regulations regarding hazardous or toxic substances. Management is not
    aware of any environmental liability that they believe would have a material
    adverse impact on the Company&#146;s financial position or results of operations.
    Management is unaware of any instances in which it would incur significant
    environmental costs if any or all properties were sold, disposed of or abandoned.
    However, there can be no assurance that any such non-compliance, liability,
    claim or expenditure will not arise in the future.</font></p>
<p align="left"> <font size=2 face="serif">The Company is involved in various
    matters of litigation arising in the normal course of business. While the
    Company is unable to predict with certainty the amounts involved, the Company&#146;s
    management and counsel are of the opinion that, when such litigation is resolved,
    the Company&#146;s resulting liability, if any, will not have a significant
    effect on the Company&#146;s consolidated financial position or results of
    operations.</font></p>
<p align="left"> <b><font size=2 face="serif">20. Subsequent Events</font></b></p>
<p align="left"> <font size=2 face="serif">In January 2004, the Company formed
    a joint venture with Klaff Realty, LP (&#147;Klaff&#148;) and Lubert Adler
    Management, Inc. for the purpose of making investments in surplus or underutilized
    properties owned or controlled by distressed retailers. The Company has also
    acquired Klaff&#146;s rights to provide asset management, leasing, disposition,
    development and construction services for an existing portfolio of retail
    properties and/or leasehold interests comprised of approximately 10 million
    square feet of retail space. The rights were acquired with the issuance of
    $4.0 million in preferred Operating Partnership units.</font></p>
<p align="left"> <font size=2 face="serif">In January 2004, the Company entered
    into a forward starting swap agreement which commences April 1, 2005. The
    swap agreement, which extends through January 1, 2011, provides for a fixed
    rate of 4.345% on $37,667 of notional principal.</font></p>
<p align="left"> <font size=2 face="serif">In February 2004, the Company entered
    into three forward starting swap agreements as follows:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td><font size=2 face="serif"><u>Commencement Date</u> </font></td>
    <td align="center"><u><font size=2 face="serif">Maturity Date</font></u></td>
    <td align="center">&nbsp;</td>
    <td align="center"><u><font size=2 face="serif">Notional Principal</font></u></td>
    <td align="center">&nbsp;</td>
    <td align="center"><font size=2 face="serif"><u>Rate</u></font></td>
  </tr>
  <tr>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1>
    </td>
  </tr>
  <tr>
    <td><font size=2 face="serif">10/2/2006</font></td>
    <td width=11% align="right"><font size=2 face="serif">10/1/2011&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td width=2% align="right">&nbsp;</td>
    <td width=11% align="right"><font size=2 face="serif">$11,410&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td width=2% align="right">&nbsp;</td>
    <td width=11% align="right"><font size=2 face="serif">4.895</font><font size=2 face="serif">%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr>
    <td><hr noshade size=1>
    </td>
    <td align="right">
      <hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1></td>
    <td align="right">
      <hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1></td>
    <td align="right">
      <hr noshade size=1>
    </td>
  </tr>
  <tr>
    <td><font size=2 face="serif">10/2/2006</font></td>
    <td align="right"><font size=2 face="serif">&nbsp; </font><font size=2 face="serif">1/1/2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4,640&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">4.710</font><font size=2 face="serif">%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr>
    <td><hr noshade size=1>
    </td>
    <td align="right">
      <hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1></td>
    <td align="right">
      <hr noshade size=1>
    </td>
    <td align="right"><hr noshade size=1></td>
    <td align="right">
      <hr noshade size=1>
    </td>
  </tr>
  <tr>
    <td><font size=2 face="serif">&nbsp;&nbsp;6/1/2007 </font></td>
    <td align="right"><font size=2 face="serif">3/1/2012&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">8,434&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size=2 face="serif">5.140</font><font size=2 face="serif">%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1>
</td>
    <td><hr noshade size=1></td>
    <td><hr noshade size=1>
    </td>
    <td><hr noshade size=1></td>
    <td>
      <hr noshade size=1>
    </td>
  </tr>
</table>
<p align="left"> <font size=2 face="serif">These swap agreements have been executed
    in contemplation of the finalization of the extension and modification of
    certain mortgage loans currently being negotiated.</font></p>
<p> <font size=2 face="serif">On March 11, 2004, the Company invested
    approximately $4.1 million in a mortgage loan secured by a shopping center
    property.</font></p>

<p align="center"> <font size=2 face="serif">F-30</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="pf31"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
<b><font size=2 face="serif">ACADIA REALTY TRUST<br>
</font></b><b><font size=2 face="serif">SCHEDULE III-REAL ESTATE AND ACCUMULATED
DEPRECIATION<br>
December 31, 2003</font></b></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
  <td width="1%" rowspan="3">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b><font size=1 face="serif">Description</font></b></td>
   <td rowspan="3">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b><font size=1 face="serif">Encumbrances</font></b></td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b><font size=1 face="serif">Land</font></b></td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b><font size=1 face="serif">Buildings &amp;<br>
   </font></b><b><font size=1 face="serif">Improvements</font></b></td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td align="center"><b></b></td>
   <td rowspan="3" align="center" valign="bottom"><b><font size=1 face="serif">Costs capitalized</font></b><b><font size=1 face="serif"><br>
    Subsequent</font></b><b><font size=1 face="serif"><br>
    to Acquisition</font></b></td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b><font size=1 face="serif">Land</font></b></td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b><font size=1 face="serif">Buildings &amp;<br>
   </font></b><b><font size=1 face="serif">Improvements</font></b></td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b><font size=1 face="serif">Total</font></b></td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b><font size=1 face="serif">Accumulated</font></b><b><font size=1 face="serif"><br>
    Depreciation</font></b></td>
   <td rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b><font size=1 face="serif">Date of</font></b><b><font size=1 face="serif"><br>
    Acquisition (a)<br>
   </font></b><b><font size=1 face="serif">Construction(c)</font></b></td>
   <td rowspan="3" align="center">&nbsp;</td>
</tr>
<tr>
  <td align="center"><b></b></td>
  </tr>
<tr>
  <td align="center"><b></b></td>
  </tr>
<tr>
  <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td colspan=2><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
</tr>
<tr>
  <td colspan="2"><b><i><font size=2 face="serif">Shopping Centers</font></i></b></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" align="left" bgcolor="#eeeeee"><font size=2 face="serif">Crescent Plaza</font></td>
   <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td width=6% align="right" bgcolor="#eeeeee"><font size=2 face="serif">8,516</font></td>
   <td width=2% align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif"> $</font></td>
   <td width=6% align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,147</font></td>
   <td width=2% align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif">$ </font></td>
   <td width=6% align="right" bgcolor="#eeeeee"><font size=2 face="serif">7,425</font></td>
   <td width=2% align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td width=6% align="right" bgcolor="#eeeeee"><font size=2 face="serif">543</font></td>
   <td width=2% align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif">$ </font></td>
   <td width=6% align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,147</font></td>
   <td width=2% align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif">$ </font></td>
   <td width=6% align="right" bgcolor="#eeeeee"><font size=2 face="serif">7,968</font></td>
   <td width=2% align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif">$ </font></td>
   <td width=6% align="right" bgcolor="#eeeeee"><font size=2 face="serif">9,115</font></td>
   <td width=2% align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width=1% align="right" bgcolor="#eeeeee"><font size=2 face="serif">$ </font></td>
   <td width=6% align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,890</font></td>
   <td width=2% align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width=6% align="right" bgcolor="#eeeeee"><font size=2 face="serif">1984</font></td>
   <td width=2% align="left" bgcolor="#eeeeee"><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Brockton, MA</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">New Loudon Centre</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(1</font></td>
   <td align="left"><font size=2 face="serif">)</font><font size="2">&nbsp;</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">505</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">4,161</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">10,565</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">505</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">14,726</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">15,231</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">6,865</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1982</font></td>
   <td><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Latham, NY</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Ledgewood Mall</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(1</font></td>
   <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">)</font><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">619</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">5,434</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">32,755</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">619</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">38,189</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">38,808</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">22,218</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1983</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Ledgewood, NJ</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Mark Plaza</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">4,268</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">4,509</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">8,777</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">8,777</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">5,059</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1968</font></td>
   <td><font size=2 face="serif">(c)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Edwardsville, PA</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Luzerne Street Plaza</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">35</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">315</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,208</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">35</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,523</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,558</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,028</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1983</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Scranton, PA</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Blackman Plaza</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">120</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,599</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">120</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,599</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,719</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">441</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1968</font></td>
   <td><font size=2 face="serif">(c)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Wilkes-Barre, PA</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">East End Centre</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">15,597</font></td>
   <td align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,086</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">8,661</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,742</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,086</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">12,403</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">13,489</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">7,420</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1986</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">(c)</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Wilkes-Barre, PA</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Greenridge Plaza</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,335</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">6,314</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,009</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,335</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">7,323</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">8,658</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">4,003</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1986</font></td>
   <td><font size=2 face="serif">(c)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Scranton, PA</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Plaza 422</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">190</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,004</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">719</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">190</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,723</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,913</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,489</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1972</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">(c)</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Lebanon, PA</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Route 6 Mall</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(1</font></td>
   <td align="left"><font size=2 face="serif">)</font><font size="2">&nbsp;</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">12,696</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,664</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">11,032</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">12,696</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">3,523</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1995</font></td>
   <td><font size=2 face="serif">(c)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Honesdale, PA</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Pittston Mall</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,500</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">5,956</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,521</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">5,935</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">7,456</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,741</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1995</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">(c)</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Pittston, PA</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Berlin Shopping Centre</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">(1</font></td>
   <td align="left"><font size=2 face="serif">)</font><font size="2">&nbsp;</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">1,331</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">5,351</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">219</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,331</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">5,570</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">6,901</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,893</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1994</font></td>
   <td><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Berlin, NJ</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Bradford Towne Centre</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">(1</font></td>
   <td align="left" bgcolor="#eeeeee"><font size=2 face="serif">)</font><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee">&nbsp;</td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">16,100</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">817</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">15,283</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">16,100</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">5,105</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1994</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">(c)</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Towanda, PA</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Abington Towne Center</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">799</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">3,197</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,858</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">799</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">5,056</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">5,855</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">715</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1998</font></td>
   <td><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Abington, PA</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Bloomfield Town Square</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">13,308</font></td>
   <td align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,443</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">13,774</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,479</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,443</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">15,253</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">18,696</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,197</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1998</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Bloomfield Hills, MI</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Walnut Hill Plaza</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">6,775</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">3,122</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">12,488</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">749</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">3,122</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">13,237</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">16,359</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,167</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1998</font></td>
   <td><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Woonsocket, RI</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
  <td colspan="2"><font size=2 face="serif">Elmwood Park Plaza</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">3,248</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">12,992</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">14,671</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">3,800</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">27,111</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">30,911</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,789</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1998</font></td>
   <td><font size=2 face="serif">(a)</font></td>
</tr>
<tr bgcolor="#eeeeee">
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Elmwood Park, NJ</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Merrillville Plaza</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">13,425</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">4,288</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">17,152</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,023</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">4,288</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">18,175</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">22,463</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,726</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1998</font></td>
   <td><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Hobart, IN</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
  <td colspan="2"><font size=2 face="serif">Soundview Marketplace</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">8,598</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,428</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">9,711</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,399</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,428</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">11,110</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">13,538</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,764</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1998</font></td>
   <td><font size=2 face="serif">(a)</font></td>
</tr>
<tr bgcolor="#eeeeee">
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Port Washington, NY</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Marketplace of Absecon</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,573</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">10,294</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,467</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,573</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">12,758</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">15,331</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,778</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1998</font></td>
   <td><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Absecon, NJ</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="left"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
</table>
<p align="center"><font size=2 face="serif">F-31</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div><page>

<a name="pf32"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
<b><font size=2 face="serif">ACADIA REALTY TRUST<br>
</font></b><b><font size=2 face="serif">SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION<br>
December 31, 2003</font></b></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
  <td width="1%" rowspan="3" align="center">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b></b><b><font size=1 face="serif">Description</font></b></td>
   <td><b></b></td>
   <td rowspan="3" align="center" valign="bottom"><b></b><b><font size=1 face="serif">Encumbrances</font></b></td>
   <td rowspan="3" align="center" valign="bottom">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b></b><b><font size=1 face="serif">Land</font></b></td>
   <td rowspan="3" align="center" valign="bottom">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b></b><b></b></td>
   <td rowspan="3" align="center" valign="bottom"><b></b><b><font size=1 face="serif">Buildings &amp;<br>
   </font></b><b><font size=1 face="serif">Improvements</font></b></td>
   <td rowspan="3" align="center" valign="bottom">&nbsp;</td>
   <td align="center" valign="bottom"><b></b></td>
   <td rowspan="3" align="center" valign="bottom"><b><font size=1 face="serif">Costs capitalized</font></b><b><font size=1 face="serif"><br>
     Subsequent
    to<br>
   </font></b><b><font size=1 face="serif">Acquisition</font></b></td>
   <td rowspan="3" align="center" valign="bottom">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b></b><b><font size=1 face="serif">Land</font></b></td>
   <td rowspan="3" align="center" valign="bottom">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b></b><b></b></td>
   <td rowspan="3" align="center" valign="bottom"><b></b><b><font size=1 face="serif">Buildings &amp;<br>
   </font></b><b><font size=1 face="serif">Improvements</font></b></td>
   <td rowspan="3" align="center" valign="bottom">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b></b><b><font size=1 face="serif">Total</font></b></td>
   <td rowspan="3" align="center" valign="bottom">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b></b><b></b></td>
   <td rowspan="3" align="center" valign="bottom"><b></b><b><font size=1 face="serif">Accumulated</font></b><b><font size=1 face="serif"><br>
    Depreciation</font></b></td>
   <td rowspan="3" align="center" valign="bottom">&nbsp;</td>
   <td rowspan="3" align="center" valign="bottom"><b><font size=1 face="serif">Date of<br>
   </font></b><b><font size=1 face="serif">Acquisition (a)<br>
   </font></b><b><font size=1 face="serif">Construction(c)</font></b></td>
   <td rowspan="3" align="center" valign="bottom">&nbsp;</td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td align="center" valign="bottom"><b></b></td>
  </tr>
<tr>
  <td>&nbsp;</td>
   <td align="center" valign="bottom"><b></b></td>
  </tr>
<tr>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td colspan=2><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
  <td><hr noshade size=1>
  </td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Hobson West</font></td>
   <td width="1%" align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="6%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td width="2%" align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="1%" align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="6%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,793</font></td>
   <td width="2%" align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="1%" align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="6%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">7,172</font></td>
   <td width="2%" align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="1%" align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="6%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">661</font></td>
   <td width="2%" align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="1%" align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="6%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,793</font></td>
   <td width="2%" align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="1%" align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="6%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">7,833</font></td>
   <td width="2%" align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="1%" align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="6%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">9,626</font></td>
   <td width="2%" align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="1%" align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="6%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,224</font></td>
   <td width="2%" align="left" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td width="6%" align="right" bgcolor="#eeeeee"><font size=2 face="serif">1998</font></td>
   <td width="2%" align="left" bgcolor="#eeeeee"><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Plaza</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Naperville, IL</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Smithtown</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">8,993</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">3,229</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">12,917</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,027</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">3,229</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">13,944</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">17,173</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,377</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1998</font></td>
   <td><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Shopping Center</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Smithtown, NY</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Town Line Plaza</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">4,865</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">878</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,510</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">6,838</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">909</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">10,318</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">11,227</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">5,477</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1998</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Rocky Hill, CT</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Branch Shopping</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">12,009</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">3,156</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">12,545</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">491</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">3,156</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">13,036</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">16,192</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,779</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1998</font></td>
   <td><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Center</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Village of the</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">Branch, NY</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">The Caldor</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">956</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,826</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">956</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">3,826</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">4,782</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">514</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1998</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Shopping Center</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Methuen, MA</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Gateway Mall</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">6,256</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,273</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">5,091</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">11,073</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,273</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">16,164</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">17,437</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">660</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1999</font></td>
   <td><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Burlington, VT</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Mad River Station</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,350</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">9,404</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">253</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,350</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">9,657</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">12,007</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,221</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1999</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Dayton, OH</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Pacesetter Park</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,475</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">5,899</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">476</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1,475</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">6,375</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">7,850</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">767</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1999</font></td>
   <td><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Shopping Center</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Ramapo, NY</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">239 Greenwich</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">16,000</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,817</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">15,846</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">213</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,817</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">16,059</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">17,876</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,768</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1999</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">(c)</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Greenwich, CT</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><b><i><font size=2 face="serif">Residential</font></i></b></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><b><i><font size=2 face="serif">Properties</font></i></b></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Gate House,</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">10,817</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,312</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">9,247</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,036</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">2,312</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">11,284</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">13,596</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,984</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1998</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Holiday House,</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Tiger Village</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Columbia, MO</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Village</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">9,191</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">3,429</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">13,716</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,299</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">3,429</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">16,015</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">19,444</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">2,571</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">1998</font></td>
   <td><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Apartments</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2"><font face="serif">Winston Salem,</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;<font face="serif">NC</font></font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Colony</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">5,409</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,118</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">4,470</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,147</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1,118</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">5,617</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">6,735</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">937</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">1998</font></td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">(a)</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">Apartments</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2"><font face="serif">Columbia, MO</font></font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2"><font size=2 face="serif">Undeveloped land</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">250</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">250</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">250</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size=2 face="serif">Properties under</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td colspan="2" bgcolor="#eeeeee"><font size=2 face="serif">development</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">5,859</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">5,859</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">5,859</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">&#151;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=1></td>
   <td><hr noshade size=1></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td bgcolor="#eeeeee">&nbsp;</td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">190,444</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">51,555</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">228,184</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">147,889</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">54,890</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">372,738</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">427,628</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">$</font></td>
   <td align="right" bgcolor="#eeeeee"><font size=2 face="serif">101,090</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
   <td bgcolor="#eeeeee"><font size="2">&nbsp;</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=2></td>
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   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td><font size="2">&nbsp;</font></td>
   <td><hr noshade size=2></td>
   <td><hr noshade size=2></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
   <td><font size="2">&nbsp;</font></td>
</tr>
</table>
<p align="center"><font size=2 face="serif">F-32</font></p>
<hr noshade align="center" width="100%" size="2">


<div style="page-break-before:always"></div><page>

<a name="pf33"></a><p><a href="#contents"><font size="2">Back to Contents</font></a></p>


<p align="center">
<b><font face="serif">Acadia Realty Trust</font></b><br>
<b><font size=2 face="serif">Notes To Schedule III<br>
</font></b><b><font size=2 face="serif">December 31, 2003 </font></b><font size=2 face="serif"></font></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="3%" valign="top"><font size="2" face="serif">1.</font></td>
    <td valign="top"><font size=2 face="serif">This property serves as collateral
        for the financing with Washington Mutual Bank, FA in the amount of $50,685
    (note 6)</font></td>
  </tr>
  <tr>
    <td valign="top"><font size="2" face="serif">2.</font></td>
    <td valign="top"><font size=2 face="serif">Depreciation and investments in
        buildings and improvements reflected in the statements of income is calculated
    over the estimated useful life of the assets as follows:</font></td>
  </tr>
</table>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="15%">&nbsp;</td>
    <td width="15%"><font size=2 face="serif">Buildings</font></td>
    <td><font size=2 face="serif">30 to 40 years</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size=2 face="serif">Improvements</font></td>
    <td><font size=2 face="serif">Shorter of lease
term or useful life</font></td>
  </tr>
</table>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="top"><font size="2" face="serif">3.</font></td>
    <td valign="top"><font size=2 face="serif"> The aggregate gross cost of property
        included above for Federal income tax purposes was $376,456 as of December
    31, 2003. </font></td>
  </tr>
  <tr>
    <td valign="top"><font size="2" face="serif">4.</font></td>
    <td valign="top"><font size=2 face="serif">(a) Reconciliation of Real Estate
    Properties:</font></td>
  </tr>
</table>
<p><font size=2 face="serif">The following table reconciles the real estate properties
from January 1, 2001 to December 31, 2003:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td><font size="1"><b></b></font></td>
   <td colspan="8" align="center"><b><font size=1 face="serif">for the year ended December 31,</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td colspan="2" align="center"><b><font size=1 face="serif">2003</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td colspan="2" align="center"><b><font size=1 face="serif">2002</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td colspan="2" align="center"><b><font size=1 face="serif">2001</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
  <td><font size="1">&nbsp;</font></td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td><font size="1">&nbsp;</font></td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td><font size="1">&nbsp;</font></td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td><font size="1">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Balance at beginning of year</font></td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">413,878</font></td>
   <td width=2%>&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">398,416</font></td>
   <td width=2%>&nbsp;</td>
   <td width=1% align="center"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">387,729</font></td>
   <td width=2%>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Other improvements</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">13,750</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">15,794</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">10,687</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Sale of property</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Fully depreciated assets written off</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">(332</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td>&nbsp;</td>
   <td><hr noshade size=1></td>
   <td align="right"><hr noshade size=1></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Balance at end of year</font></td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">427,628</font></td>
   <td>&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">413,878</font></td>
   <td>&nbsp;</td>
   <td align="center"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">398,416</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td align="right"><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td align="right"><hr noshade size=2></td>
   <td>&nbsp;</td>
   <td><hr noshade size=2></td>
   <td align="right"><hr noshade size=2></td>
   <td>&nbsp;</td>
</tr>
</table>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%">&nbsp;</td>
    <td><font size=2 face="serif">(b) Reconciliation of Accumulated Depreciation:</font> </td>
  </tr>
</table>
<p><font size=2 face="serif">The following table reconciles accumulated depreciation from January 1, 2001 to December 31, 2003:</font></p>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
<tr>
   <td width="67%"><font size="1"><b></b></font></td>
   <td colspan="8" align="center"><b><font size=1 face="serif">for the year ended
    December 31,</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
   <td><font size="1">&nbsp;</font></td>
   <td align="right"><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">2003</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="right"><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">2002</font></b></td>
   <td><font size="1">&nbsp;</font></td>
   <td align="right"><font size="1">&nbsp;</font></td>
   <td align="center"><b><font size=1 face="serif">2001</font></b></td>
   <td><font size="1">&nbsp;</font></td>
</tr>
<tr>
  <td><font size="1">&nbsp;</font></td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td><font size="1">&nbsp;</font></td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td><font size="1">&nbsp;</font></td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td><font size="1">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Balance at beginning of year</font></td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">85,062</font></td>
   <td width=2%>&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">72,805</font></td>
   <td width=2%>&nbsp;</td>
   <td width=1% align="right"><font size=2 face="serif">$</font></td>
   <td width=8% align="right"><font size=2 face="serif">60,947</font></td>
   <td width=2%>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Sale of property</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">&nbsp;</font></td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Fully depreciated assets written off</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">(332</font></td>
   <td><font size=2 face="serif">)</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">&#151;</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
   <td><font size=2 face="serif">Depreciation related to real estate</font></td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">16,028</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">12,589</font></td>
   <td>&nbsp;</td>
   <td align="right">&nbsp;</td>
   <td align="right"><font size=2 face="serif">11,858</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
  <td><font size="1">&nbsp;</font></td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td><font size="1">&nbsp;</font></td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td><font size="1">&nbsp;</font></td>
  <td><hr noshade size=1>
  </td>
  <td align="right"><hr noshade size=1>
  </td>
  <td><font size="1">&nbsp;</font></td>
</tr>
<tr bgcolor="#eeeeee">
   <td><font size=2 face="serif">Balance at end of year</font></td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">101,090</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">85,062</font></td>
   <td>&nbsp;</td>
   <td align="right"><font size=2 face="serif">$</font></td>
   <td align="right"><font size=2 face="serif">72,805</font></td>
   <td>&nbsp;</td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td><hr noshade size=2>
  </td>
  <td align="right"><hr noshade size=2>
  </td>
  <td>&nbsp;</td>
  <td><hr noshade size=2>
  </td>
  <td align="right"><hr noshade size=2>
  </td>
  <td>&nbsp;</td>
  <td><hr noshade size=2>
  </td>
  <td align="right"><hr noshade size=2>
  </td>
  <td>&nbsp;</td>
</tr>
</table>
<p align="center">
<font size=2 face="serif">F-33</font></p>

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<DESCRIPTION>EXHIBIT 10.4
<TEXT>
<PAGE>

                                    Exhibit A

                      Form of Registration Rights Agreement




<PAGE>

                    REGISTRATION RIGHTS AND LOCK-UP AGREEMENT


                  THIS REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this
"Agreement"), is made and entered into as of January __, 2004, by and among
Acadia Realty Trust, a Maryland real estate investment trust (the "REIT"),
Acadia Realty Limited Partnership, a Delaware limited partnership (the
"Partnership"), and the undersigned Klaff Realty, LP, a Delaware limited
Partnership ("Klaff"), which, at the Closing (the "Closing Date") of the
transactions contemplated by the Agreement of Contribution by and among Klaff
and Klaff Realty, Limited, the REIT, and the Partnership (the "Contribution
Agreement"), are receiving preferred units of limited partnership interests in
the Partnership ("Preferred Units") which are convertible into common units of
limited partnership interest in the Partnership ("OP Units"), which in turn, are
exchangeable for Conversion Shares (as defined below).


                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, and intending to be legally bound hereby, the
REIT, the Partnership and Klaff hereby agree as follows:

                  1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:

                           (a) "Commission" means the Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.

                           (b) "Conversion Shares" means the Shares issuable
upon exchange of the OP Units from time to time.

                           (c) "Exchange Act" means the Securities Exchange Act
of 1934, as amended, or any successor federal statute, and the rules and
regulations of the Commission issued under such Exchange Act, as they each may,
from time to time, be in effect.

                           (d) "Holder(s)" means a holder of Registrable Shares
entitled to the rights arising hereunder.

                           (e) "Participating Holder" means a Holder whose
Registrable Shares are included in a Registration Statement.

                                       1
<PAGE>

                           (f) "Registration Expenses" means the expenses
described in Section 4 hereof.

                           (g) "Registration Statement" means a registration
statement filed by the REIT with the Commission for a public offering and sale
of equity securities of the REIT (other than a registration statement on Form
S-8 or Form S-4, or their successors, or any registration statement covering
only securities proposed to be issued in exchange for securities or assets of
another corporation).

                           (h) "Registrable Shares" means (i) the Conversion
Shares, (ii) any other Shares issued in respect of Conversion Shares, and (iii)
any other Shares issued with respect to the Shares issued in clauses (i) and
(ii) (because of share splits, share dividends, reclassifications,
recapitalizations, or similar events); provided, however, that Shares which are
Registrable Shares shall cease to be Registrable Shares (x) upon any sale
pursuant to a Registration Statement, or any other sale or transfer of the
Registrable Shares in any manner to any person or entity other than a Permitted
Transferee (as defined) or as otherwise expressly provided herein, or (y) in the
event that Registrable Shares may be freely sold and/or transferred pursuant to
Rule 144(k) under the Securities Act.

                           (i) "Securities Act" means the Securities Act of
1933, as amended, or any successor federal statute, and the rules and
regulations of the Commission issued under such Securities Act, as they each
may, from time to time, be in effect.

                           (j) "Shares" means Common Shares of Beneficial
Interest of the REIT, par value $.001 per share.

                  2. Certain Shelf Registration. Within ninety (90) days from
the date of this Agreement, the REIT shall, at its expense, file a shelf
Registration Statement pursuant to Rule 415 under the Securities Act to register
the Registrable Shares for resale, including for issuance upon conversion or
exchange of OP Units. The REIT shall, at its expense, use commercially
reasonable efforts to maintain the effectiveness of such shelf Registration
Statement until the earlier of (i) such time as when all of the Registrable
Shares have been disposed of or (ii) three years after the conversion or
exchange into Shares of all of the OP Units issued upon conversion of the
Preferred Units issued under the Contribution Agreement.

                                       2
<PAGE>

                  3. Registration Procedures. If and whenever the REIT is
required by the provisions of this Agreement to effect the registration of any
of the Registrable Shares under the Securities Act, the REIT shall, at its
expense:

                           (a) prepare and file with the Commission a
Registration Statement with respect to such Registrable Shares and use best
efforts to cause that Registration Statement to become effective;

                           (b) use commercially reasonable efforts to cause the
Registration Statement to remain effective;

                           (c) subject to the provision of Section 2, promptly
prepare and file with the Commission any amendments and supplements to the
Registration Statement and the prospectus included in the Registration Statement
as may be necessary to keep the Registration Statement effective for the period
of time required by the Commission;

                           (d) promptly furnish to each Participating Holder
such reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as the Participating Holders may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares owned
by such Participating Holders and included in the Registration Statement; and

                           (e) promptly use commercially reasonable efforts to
register or qualify the Registrable Shares covered by the Registration Statement
under the securities or Blue Sky laws of states within the United States as the
Participating Holders shall reasonably request; provided, however, that the REIT
shall not be required in connection with this subsection 3(e) to: (i) qualify as
a foreign corporation in any jurisdiction where, but for the requirements of
this subsection 3(e), it would not be obligated to be so qualified; (ii) execute
a general consent to service of process in any jurisdiction; (iii) subject
itself to taxation in any such jurisdiction; or (iv) register in any state
requiring, as a condition to registration, escrow or surrender of any REIT
securities held by any security holder other than the Participating Holders.

                                       3
<PAGE>

                  If the REIT has delivered a preliminary or final prospectus to
a Participating Holder and, after having done so, the prospectus is amended to
comply with the requirements of the Securities Act, the REIT shall promptly
notify such Participating Holder and, if requested, such Participating Holder
shall immediately cease making offers of Registrable Shares and return all
prospectuses to the REIT. The REIT shall promptly provide Participating Holders
with revised prospectuses and, following receipt of the revised prospectuses,
Participating Holders shall be free to resume making offers of the Registrable
Shares.

                  Notwithstanding any other provisions of this Agreement to the
contrary, upon receipt by a Participating Holder of a written notice signed by
the Chief Executive Officer, General Counsel or Chief Financial Officer of the
REIT, to the effect set forth below, the REIT shall not be obligated during a
reasonable period of time thereafter to effect any registrations pursuant to
this Agreement, and each such Participating Holder agrees that it will
immediately suspend sales of Shares under any effective Registration Statement
for a reasonable period of time, in either case not to exceed 90 days, at any
time during which, in the REIT's reasonable judgment, (i) there is a development
involving the REIT or any of its affiliates which is material but which has not
yet been publicly disclosed or (ii) sales pursuant to the Registration Statement
would materially and adversely affect an underwritten public offering for the
account of the REIT or any other material financing project or where a proposed
or pending material merger or other material acquisition or material business
combination or material disposition of the REIT's assets, to which the REIT or
any of its affiliates is, or is expected to be, a party. In the event a
registration is postponed or sales by a Participating Holder pursuant to an
effective Registration Statement are suspended in accordance with this
paragraph, there shall be added to the period during which the REIT is obligated
to keep a Registration Statement effective the number of days for which the
Registration Statement was postponed or sales were suspended.

                  4. Expenses of Registration. The REIT will pay all
Registration Expenses of all registrations under this Agreement. For purposes of
this Agreement, the term "Registration Expenses" shall mean all expenses
incurred by the REIT in complying with this Agreement, including without
limitation, all registration and filing fees, exchange listing fees, printing
expenses, the fees and disbursements of counsel for the REIT and the reasonable
fees and disbursements of one counsel selected by the Participating Holders, the
fees and disbursements of the REIT's accountants, state Blue Sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration, but excluding underwriting discounts and selling commissions.

                                       4
<PAGE>

                  5. Indemnification.

                           (a) Indemnification of Participating Holders. In the
event of any registration of any of the Registrable Shares under the Securities
Act pursuant to this Agreement, the REIT will indemnify and hold harmless each
Participating Holder, each of its directors and officers and each other person,
if any, who controls such Participating Holder within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities to which such Participating Holder or controlling person may become
subject under the Securities Act, the Exchange Act, Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement under
which such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading;
and the REIT will reimburse such Participating Holder and each such controlling
person for any legal or any other expenses reasonably incurred by such
Participating Holder or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the REIT will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or omission made in such Registration Statement, preliminary
prospectus or prospectus, or any such amendment or supplement, in reliance upon
and in conformity with information furnished to the REIT, in writing, by or on
behalf of any Participating Holder or controlling person specifically for use in
the preparation thereof; and provided further, however, that any indemnification
contained in this paragraph with respect to any preliminary prospectus shall not
inure to the benefit of any person who otherwise is entitled to indemnification
hereunder on account of any loss, liability, claim, damage or expense if a copy
of an amended or supplemental preliminary prospectus, or the final prospectus,
shall have been delivered or sent to such person within the time required by the
Securities Act, and the untrue statement or omission of a material fact was
corrected in such amended or supplemental preliminary prospectus or final
prospectus and provided that such person did not deliver such amended or
supplemental preliminary prospectus or final prospectus on a timely basis.



                                       5
<PAGE>

                           (b) Indemnification of the REIT. In the event of any
registration of any of the Registrable Shares under the Securities Act pursuant
to this Agreement, each Participating Holder will indemnify and hold harmless
the REIT, each of its directors and officers and each person, if any, who
controls the REIT within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities, joint or several, to which
the REIT, such directors and officers or controlling persons may become subject
under the Securities Act, Exchange Act, Blue Sky laws or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to the Registration Statement, or arise out of or are
based upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case only if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the REIT by or on behalf of such
Participating Holder or controlling person, specifically for use in connection
with the preparation of such Registration Statement, prospectus, amendment or
supplement. No Participating Holder shall be liable pursuant to this Section
5(b) for any amount in excess of the proceeds of the offering received by such
Participating Holder.



                                       6
<PAGE>

                           (c) Notice of Claim. Each party entitled to
indemnification under this Section 5 (the "Indemnified Party") shall give notice
to the party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom; provided
that counsel for the Indemnifying Party, who shall conduct the defense of such
claim or litigation, shall be approved by the Indemnified Party (whose approval
shall not be unreasonably withheld); and, provided, further, that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 5 unless the failure to
provide such notice materially prejudices the defense by the Indemnifying Party
against such claim. The Indemnified Party may participate in such defense at
such party's expense (provided that the counsel of the Indemnifying Party shall
control the defense of such claim or proceeding); provided, however, that the
Indemnifying Party shall pay such expense if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would, in the opinion of
counsel of the Indemnified Party, be inappropriate due to actual or potential
differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding, it being understood, however,
that in such event, the Indemnifying Party shall be liable for the reasonable
fees and expenses of only one counsel for the Indemnified Parties. No
Indemnifying Party, in the defense of any such claim or litigation shall as to
an Indemnified Party, except with the consent of such Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation, and no Indemnified Party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
Indemnifying Party.

                  6. Rule 144. The REIT covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder (or, if the REIT is
not required to file such reports, it will, upon the request of the holders of
the Registrable Securities, make publicly available such information as
necessary to permit sales pursuant to Rule 144 under the Securities Act) and it
will do all such other acts and things from time to time as reasonably requested
by the holders of the Registrable Securities to the extent required from time to
time to enable the holders of the Registrable Shares to sell Registrable Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereunder adopted
by the Commission.



                                       7
<PAGE>

                  7. Cooperation. The Holders shall furnish to the REIT such
information regarding the Holders and the distribution proposed by Participating
Holders as the REIT may from time to time reasonably request in writing, and
shall do such reasonable acts and things as the REIT may from time to time
request, with respect to any registration, qualification or compliance referred
to in this Agreement and in order to permit the REIT to comply with the
requirements of law. Any failure by a Holder to make available such information
or to do such acts and things shall constitute a waiver by such Holder of its
rights to include such Holder's Registrable Shares in any such registration.

                  8. Restriction on Resale. Unless otherwise agreed by the REIT,
until the date on which there are no Registrable Shares, each Holder agrees that
it will not resell such Registrable Shares without registration under the
Securities Act, compliance with Rule 144 under the Securities Act or an opinion
of counsel for such Holder reasonably acceptable to the REIT, addressed to the
REIT, to the effect that no such registration is required. All reasonable costs,
fees and expenses of counsel in connection with such opinion shall be borne by
the REIT.

                  9. Lock-Up Agreement. In consideration of the REIT's agreement
to provide the Holders with the registration rights as set forth in this
Agreement, Klaff agrees with the REIT and the Partnership that it will not for a
period of three years commencing on the Closing Date or such lesser period if
permitted pursuant to the Certificate of Designation of Series B Units of even
date herewith (the "Lock-Up Period") (i) sell, assign, or otherwise transfer the
Preferred Units to be issued at the Closing (or the OP Units issuable upon
conversion of the Preferred Units) or (ii) convert any OP Units into Conversion
Shares. Notwithstanding the foregoing, the aforementioned prohibition shall not
apply to (x) conversion to OP Units; (y) a transfer of OP Units (which shall
nonetheless comply with any requirements or conditions to transfer in the
Partnership Agreement of the Partnership) to a Permitted Transferee; or (z) bona
fide pledge of OP Units (provided that the pledgee agrees to be bound by the
terms of this Agreement as if an original signatory thereto). For purposes of
this Section 10, the term "Permitted Transferees" means (i) any partner or other
equity owner of the Partnership or Klaff; (ii) any equity owner of any partner
or other equity owner of the Partnership or Klaff; (iii) members of the
Immediate Family (as defined below) of any person described in (i) or (ii); and
(iv) trusts for the benefit of, or entities controlled by, one or more of the
persons described in (i), (ii) or (iii); and/or (v) any public charity, public
foundation or charitable institution as defined in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended. For purposes of this Section 10, the
term "Immediate Family" means, with respect to any natural person, such natural
person's spouse, parents, parents-in-law, descendants, nephews, nieces,
brothers, sisters, brothers-in-law, sisters-in-law and children-in-law
(including adopted persons). A transfer to any Permitted Transferee shall not be
deemed effective, and the REIT may issue stop transfer instructions to its
transfer agent of the Shares in connection with a purported transfer, unless and
until the transferor shall give the REIT written notice stating the name and
address of the Permitted Transferee and identifying the securities which are
being transferred and the REIT shall have received the written agreement of the
Permitted Transferee to be bound by the terms of this Agreement as if an
original signatory hereto.

                                       8
<PAGE>

                  10. Miscellaneous.

                           (a) Controlling Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York.

                           (b) Notices. All notices and other communications
hereunder shall be in writing and shall be sent by certified mail, postage
prepaid, return receipt requested; by an overnight express courier service that
provides written confirmation of delivery; or by facsimile with written
confirmation by the sending machine or with telephone confirmation of receipt,
addressed as follows:

                                    (i) If to REIT or Partnership:

                                            Acadia Realty Trust
                                            1311 Mamaroneck Avenue, Suite 260
                                            White Plains, NY  10605
                                            Attention: Robert Masters, Esq.
                                            Telephone: 914-288-8139
                                            Facsimile: 914-428-3646
                                            Email: rmasters@acadiarealty.com



                                       9
<PAGE>

                                    (ii) If to Klaff:

                                            Klaff Realty, LP
                                            122 South Michigan Avenue
                                            Chicago, IL  60603
                                            Attention: Hersch M. Klaff
                                            Telephone: 312-360-3102
                                            Facsimile: 312-360-0606
                                            Email: hklaff@klaff.com

                                            With a copy to:

                                            Allan J. Reich, Esq.
                                            Seyfarth Shaw LLP
                                            55 E. Monroe Street, Suite 4200
                                            Chicago, IL  60603
                                            Telephone: 312-781-8650
                                            Facsimile: 312-269-8869
                                            Email: areich@seyfarth.com

                  Any party may alter the address to which communications or
copies are to be sent by giving notice of such change of address in conformity
with the provisions of this paragraph for the giving of notice. Notices given
hereunder shall be deemed received upon actual receipt thereof or, in the case
of notice by mail, upon two days from the date notice is first deposited in the
mail in the manner provided above

                           (a) Binding Nature of Agreement. This Agreement shall
be binding upon and inure to the benefit of (i) the REIT and its successors and
assigns and (ii) each Holder and its heirs, successors and assigns.

                           (b) Transfer or Assignment of Registration Rights.
Subject to Section 10 hereof, the rights with respect to any Registrable Shares
to cause the REIT to register such securities granted to a Holder by the REIT
under this Agreement may be transferred or assigned by a Holder, in whole or in
part, to a transferee or assignee of any Registrable Shares (or any OP Units
which are convertible, exercisable or redeemable, directly or indirectly, for
Registrable Shares); provided that, in such case, the REIT shall be given
written notice stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being transferred or assigned and the REIT shall have received the written
agreement of such transferee or assignee to be bound by the terms of this
Agreement.

                                       10
<PAGE>

                           (c) Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.

                           (d) Provisions Separable. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.

                           (e) Entire Agreement. This Agreement contains the
entire understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. This Agreement may not be modified or amended other
than by an agreement in writing.

                           (f) Paragraph Headings. The paragraph headings in
this Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.




                                       11
<PAGE>



                  IN WITNESS WHEREOF, the parties executed and delivered this
Agreement on the date first above written.


                                            ACADIA REALTY TRUST

                                            By:______________________________
                                            Name:  Kenneth F. Bernstein
                                            Title: President


                                            ACADIA REALTY LIMITED PARTNERSHIP

                                            By: Acadia Realty Trust,
                                                its General Partner


                                                By:__________________________
                                                Name: Kenneth F. Bernstein
                                                Title: President


                                            KLAFF REALTY, LP

                                            By: Klaff Realty, Limited


                                                By:__________________________
                                                        Name:
                                                        Title:

                            _________________________




                                       12







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>ex10-8.txt
<DESCRIPTION>EXHIBIT 10.8
<TEXT>
<PAGE>
                                Table of Contents
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>              <C>                                                                                          <C>
ARTICLE I         CONTRIBUTION OF PROPERTY........................................................................1

         I.1.     Contribution and Acquisition of Contributed Property............................................1
         I.2.     Closing.........................................................................................1
         I.3.     Contributor Representative......................................................................1

ARTICLE II        EXCHANGE AMOUNT.................................................................................2

         II.1.    Exchange Amount.................................................................................2

ARTICLE III       REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS..............................................2

         III.1.   Organization and Standing.......................................................................2
         III.2.   Authorization; No Conflicts.....................................................................2
         III.3.   Binding Obligations.............................................................................3
         III.4.   No Litigation...................................................................................3
         III.5.   Contributed Property............................................................................3
         III.6.   Securities Law Matters..........................................................................4

ARTICLE IV        REPRESENTATIONS AND WARRANTIES OF ACADIA AND THE REIT...........................................5

         IV.1.    Organization and Standing.......................................................................5
         IV.2.    Authorization; No Conflicts.....................................................................6
         IV.3.    Binding Obligations.............................................................................6
         IV.4.    No Litigation...................................................................................6
         IV.5.    Series B Units..................................................................................6
         IV.6.    No Tax Audits...................................................................................6
         IV.7.    Tax Reporting...................................................................................6
         IV.8.    Capitalization..................................................................................7
         IV.9.    Common OP Units.................................................................................7
         IV.10.   Governmental Consents and Approvals.............................................................7
         IV.11.   Absence of Certain Changes or Events; Undisclosed Liabilities and Agreements....................7

ARTICLE V         CONTRIBUTORS COVENANTS..........................................................................9

         V.1      Current Operating Covenants.....................................................................9
         V.2      Long-term Covenants............................................................................10
         V.3      Survival.......................................................................................11

ARTICLE VI        CONDITIONS PRECEDENT TO THE CLOSING............................................................11

         VI.1.    Conditions to Obligations of Contributors......................................................11
         VI.2.    Conditions to Obligations of Acadia............................................................12
</TABLE>
                                       i

<PAGE>
                                Table of Contents
                                  (continued)
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>              <C>                                                                                          <C>
ARTICLE VII       DELIVERIES.....................................................................................12


ARTICLE VIII      SURVIVAL; INDEMNIFICATION......................................................................14

         VIII.1.  Survival.......................................................................................14
         VIII.2.  Agreement of Contributors to Indemnify.........................................................14
         VIII.3.  Agreement of Acadia to Indemnify...............................................................14
         VIII.4.  Limitation of Liability........................................................................15
         VIII.5   Conditions of Indemnification..................................................................15

ARTICLE IX        TRANSITION.....................................................................................16


ARTICLE X         CONFIDENTIALITY; TAX MATTERS...................................................................16

         X.1.     Confidentiality................................................................................16
         X.2.     No Representation with Regard to Tax Treatment.................................................17

ARTICLE XI        MISCELLANEOUS..................................................................................17

         XI.1.    Additional Actions and Documents...............................................................17
         XI.2.    Expenses.......................................................................................17
         XI.3.    Assignment.....................................................................................18
         XI.4.    Entire Agreement; Amendment....................................................................18
         XI.5.    Waiver   ......................................................................................18
         XI.6.    Severability...................................................................................18
         XI.7.    Governing Law..................................................................................18
         XI.8.    Notices........................................................................................19
         XI.9.    Headings.......................................................................................20
         XI.10.   Execution in Counterparts......................................................................20
         XI.11.   Attorneys' Fees................................................................................20
         XI.12.   Waiver of Jury Trial...........................................................................21
</TABLE>

EXHIBITS

Exhibit A - Form of Registration Rights Agreement
Exhibit B - Form of Investor Questionnaire
Exhibit C - Form of Certificate of Series B Units
Exhibit D - Acadia Partnership Agreement
Exhibit E - Certificate of Designation
Exhibit F - Form of Consent of Property Co-Managers
Exhibit G - Form of Assignment of Contributed Property
Exhibit H - Form of Acadia's Opinion of Counsel
Exhibit I - Form of Contributors' Opinion of Counsel
Exhibit J - Sub-Management Agreement
Exhibit K - Co-Investment Agreement

                                       ii
<PAGE>
                                Table of Contents
                                  (continued)

                                                                       Page
                                                                       ----
SCHEDULES

Schedule 1 - List of Owner Entities
Schedule 2 - List of Properties
Schedule 3 - List of Documents comprising the Owner Entities
             and the Contributed Property
Schedule 4 - Schedule of Fees
Schedule 5 - Allocation of Units
Schedule 6 - List of Partners/Members of Contributors
Schedule 7 - Prepaid Fees


                                      iii
<PAGE>





                            AGREEMENT OF CONTRIBUTION

                                  by and among

                       ACADIA REALTY LIMITED PARTNERSHIP,
                               ACADIA REALTY TRUST

                                       and

                                KLAFF REALTY, LP
                              KLAFF REALTY, LIMITED






                                January ___, 2004



<PAGE>
                            AGREEMENT OF CONTRIBUTION


                  THIS AGREEMENT OF CONTRIBUTION (the "Agreement") is entered
into as of January __, 2004 by and among Acadia Realty Limited Partnership, a
Delaware limited partnership ("Acadia"), Acadia Realty Trust, a Maryland real
estate investment trust (the "REIT") and Klaff Realty, LP, a Delaware limited
partnership, and Klaff Realty, Limited, an Illinois corporation (each a
"Contributor," and collectively, the "Contributors").

                                    RECITALS:

                  A. The Contributors are engaged in the retail management
services business (the "Retail Services Business") and desire to become limited
partners in Acadia by contributing to Acadia assets, including goodwill, related
to the Retail Services Business, as a going concern (the "Contributed
Property"), and Acadia has agreed to admit the Contributors as limited partners.

                  B. Acadia and Contributors desire to enter into the Agreement
to set forth certain additional terms and conditions upon which Contributors
will transfer the Contributed Property to Acadia.

                                   ARTICLE I

                            CONTRIBUTION OF PROPERTY

                  I.1. Contribution and Acquisition of Contributed Property

                  Subject to the terms and conditions hereof, Contributors agree
to contribute to Acadia, and Acadia agrees to acquire and accept from
Contributors, all of Contributors' right, title and interest in and to the
Contributed Property in exchange for Preferred Series B units of limited
partnership interest in Acadia with rights, preferences and privileges as set
forth in the Certificate of Designation attached as Exhibit E (the "Series B
Units") (the foregoing, together with all other transactions contemplated by
this Agreement being referred to herein as the "Contribution"). The Contribution
shall be consummated, as set forth in Article II hereof, in a transaction
intended to qualify for nonrecognition of gain to Contributors pursuant to
Section 721 of the Internal Revenue Code of 1986, as amended (the "Code").

                  I.2. Closing

                  The closing of the transactions contemplated by this Agreement
(the "Closing") shall occur on a date (the "Closing Date") and at a time (the
"Closing Time") and a place (the "Closing Place") to be mutually agreed to by
the parties hereto, upon satisfaction or waiver of the conditions set forth in
Article VI hereof.

                  I.3. Contributor Representative

                  The Contributors hereby appoint Hersch M. Klaff as their
representative in connection with this Agreement (the "Contributor
Representative")and with respect to any decisions to be made by Contributors
under this Agreement, Acadia and the REIT may rely exclusively on instructions
from the Contributor Representative.

                                      -1-
<PAGE>

                                   ARTICLE II

                                 EXCHANGE AMOUNT

                  II.1. Exchange Amount

                  (a) Units Delivered at Closing. In exchange for the
contribution of the Contributed Property, the Contributors shall receive in the
aggregate, at the Closing, a number of Series B Units (rounded to the nearest
whole number) equal to $4,000,000 divided by $1,000.00. Each Contributor shall
be entitled to receive the number of Series B Units set forth in Schedule 5
hereto.

                  (b) Distribution of Units. At the Closing, Acadia shall issue
the Series B Units to the Contributors in accordance with written instructions
provided to Acadia by the Contributor Representative at least two business days
prior to the Closing.

                                  ARTICLE III

               REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS

                  Contributors jointly and severally represent and warrant to
Acadia as follows:

                  III.1. Organization and Standing

                  Each Contributor is a limited partnership, corporation or a
limited liability company, duly formed, validly existing and in good standing
under the laws of its jurisdiction of organization and is duly qualified to do
business in each jurisdiction where the conduct of its business requires
qualification. Each Contributor has the full and unrestricted power and
authority to own, operate and lease its assets, to carry on its business as
currently conducted, to execute and deliver this Agreement, and each other
agreement, instrument or document relating hereto or contemplated hereby or
thereby (the "Other Agreements") to which it is a party and to carry out the
transactions contemplated hereby or thereby.

                  III.2. Authorization; No Conflicts

                  The execution and delivery of this Agreement and the Other
Agreements by each Contributor and the performance by each Contributor of its
covenants and agreements under this Agreement and the Other Agreements have
been, or at Closing will have been, duly authorized by all necessary action on
the part of such Contributor. Prior to the Closing, the Contributor shall have
used commercially reasonable efforts to obtain, with respect to this
transaction, the consents of the general partners or managers (such general
partners and managers being hereafter referred to as the "Property Co-Managers")
of the owning entities (the "Owner Entities") for which the Contributors' Retail
Services Business is providing services (the "Consents"). The execution,
delivery and performance by each Contributor of this Agreement and each Other
Agreement to which such Contributor is a party, the fulfillment of and
compliance with the respective terms and provisions hereof and thereof, and the
consummation by such Contributor of the transactions contemplated hereby and
thereby, do not and will not: (a) conflict with, or violate any provision of the
organization documents of any Contributor; (b) conflict with, or violate any
provision of, any statute, law, ordinance, regulation, rule, order, writ or
injunction having applicability to any Contributor, any of its assets or the
Contributed Property; (c) subject to obtaining the Consents, conflict with,
result in any breach of, or constitute a default under the Contributed Property
or any agreement to which any Contributor or any Contributor's equity owners is
a party or by which it or they or any of its or their assets are bound; (d)
subject to obtaining the Consents, result in or require the creation or
imposition of or result in the acceleration of any indebtedness or of any
encumbrance of any nature upon, or with respect to, the Contributed Property,
Contributor or any Contributor's equity owners or any of the assets now owned or
hereafter acquired by any Contributor; except (in the case of clauses (b), (c)
and (d) above) for such conflicts, violations, breaches or defaults as will not
have a material adverse effect on the Contributed Property or the business or
financial condition of any Contributor or the consummation of this transaction.

                                      -2-
<PAGE>

                  III.3. Binding Obligations

                  This Agreement and each Other Agreement executed and delivered
by each Contributor on or prior to the date hereof constitutes a valid and
binding obligation of such Contributor, enforceable in accordance with its
terms; and each Other Agreement to be executed by each Contributor pursuant
hereto or thereto, when executed and delivered in accordance with the provisions
hereof or thereof, shall be a valid and binding obligation of such Contributor,
enforceable in accordance with its terms.

                  III.4. No Litigation

                  There are no actions, suits, claims, arbitrations, proceedings
or investigations pending or, to the knowledge of any Contributor, threatened
against, affecting or involving the Contributed Property, any Contributor or its
businesses or assets, or the transactions contemplated by this Agreement, at law
or in equity, or before or by any court, arbitrator or governmental authority,
domestic or foreign, that could reasonably be expected to have a material
adverse effect on the Contributed Property or the business or financial
condition of any Contributor or to challenge or impair the ability of any
Contributor to consummate the Contribution.

                  III.5. Contributed Property

                  (a) Attached hereto as Schedules 1 and 2 are a true, correct
and complete lists respectively of the Owner Entities and the properties (the
"Properties") for which the Contributors' Retail Services Business is providing
services.

                  (b) Attached hereto as Schedule 3 is a true, correct and
complete schedule of all documents comprising the Owner Entities and Contributed
Property and the Contributors have delivered to Acadia true, correct and
complete copies of all documents comprising the Owner Entities and the
Contributed Property and a complete accounting of all Fees billed and received
with respect to the Contributed Property for the last 12 months through November
30, 2003.

                                      -3-
<PAGE>

                  (c) To the Contributors' knowledge, the organization documents
of the Owner Entities are in full force and effect.

                  (d) Attached hereto as Schedule 4 is a true, correct and
complete schedule of all Fees to which the Contributors are entitled in
connection with the performance of the Retail Services Business.

                  (e) Attached hereto as Schedule 6 is a true, correct and
complete schedule of all partners and members of the Contributors.

                  (f) Upon receipt of the Consents, the Contributors have the
right to transfer the Contributed Property in accordance with the terms of this
Agreement.

                  (g) The Contributed Property is wholly owned by the
Contributors, free and clear of all liens and encumbrances.

                  (h) The Contributed Property is in full force and effect and
is the legal, valid and binding obligation of each of the parties thereto,
enforceable against such parties in accordance with its terms. None of the
Contributors is in default, and there exists no condition or act which with the
giving of notice or passage of time or otherwise will cause a default with
respect to the Contributed Property. Except as otherwise listed on Schedule 7,
no Fees under the Contributed Property for any period after the Closing Date
shall have been paid. In no event, however, do the Contributors represent,
warrant, covenant or guaranty the payment of any Fees to Acadia or the amount of
any Fees that Acadia may receive in the future.

                  III.6. Securities Law Matters

                  (a) Each Contributor acknowledges that Acadia intends the
offer and issuance of the Series B Units to be exempt from registration under
the Securities Act and applicable state securities laws by virtue of (i) the
status of each Contributor and each equity owner of such Contributor as an
Accredited Investor (as defined below), and (ii) Section 4(2) of the Securities
Act of 1933, as amended (the "Securities Act") and/or Regulation D promulgated
under Section 4(2) of the Securities Act ("Regulation D"), and that Acadia will
rely in part upon the representations and warranties made by each Contributor in
this Agreement in making the determination that the offer and issuance of the
Units qualify for exemption under Rule 506 of Regulation D as an offer and sale
only to Accredited Investors (as defined below).

                  (b) Each Contributor, each of such Contributor's equity owners
and each other person or entity who has a right to vote upon or approve the
transactions contemplated hereby or who will receive a distribution of Series B
Units pursuant to Section II.1(b) are "accredited investors" as defined in
Regulation 501(a) under Regulation D ("Accredited Investors"). Each Contributor
has provided to Acadia a true, correct and complete copy of such Contributor's
organizational documents.

                  (c) Each Contributor and each other person or entity who will
receive a distribution of Series B Units pursuant to Section II.1(b) will
acquire the Units for their own account and not with a view to or for sale in
connection with any "distribution" thereof within the meaning of the Securities
Act.

                                      -4-
<PAGE>

                  (d) Each Contributor and its equity owners have sufficient
knowledge and experience in financial, tax and business matters to enable them
to evaluate the merits and risks of investment in the Series B Units. Each
Contributor and its equity owners have the ability to bear the economic risk of
acquiring the Series B Units. Each Contributor acknowledges that (i) the
transactions contemplated by this Agreement and the Other Agreements involve
complex tax consequences for each Contributor and its equity owners, and each
Contributor and its equity owners are relying solely on the advice of their own
tax advisors in evaluating such consequences, (ii) neither Acadia nor the REIT
has made (or shall be deemed to have made) any representations or warranties as
to the tax consequences of such transaction to any Contributor or any of its
equity owners, and (iii) references in this Agreement to the intended tax effect
of the Contribution and the other matters described herein shall not be deemed
to imply any representation by Acadia or the REIT as to a particular tax effect
that may be obtained by any Contributor or its equity owners. Each Contributor
and its equity owners remain solely responsible for all tax matters relating to
each Contributor and its equity owners.

                  (e) Each Contributor and each other person or entity who will
receive a distribution of Series B Units pursuant to Section II.1(b) has been
supplied with, or had access to, information to which a reasonable investor
would attach significance in making an investment decision to acquire the Series
B. Units and any other information they have requested. Each Contributor and
each other person or entity who will receive a distribution of Series B Units
pursuant to Section II.1(b) has had an opportunity to ask questions of and
receive information and answers from Acadia and the REIT concerning Acadia, the
REIT, the Series B Units, the Common OP Units (defined below) into which the
Series B Units may be exchanged, and the common shares of beneficial interest
("Common Shares") into which the Common OP Units may be exchanged, and to assess
and evaluate any information supplied to them by Acadia or the REIT, and all
such questions have been answered and all such information has been provided to
their full satisfaction.

                  (f) Each Contributor and each other person or entity who will
receive a distribution of Series B Units pursuant to Section II.1(b)
acknowledges that the Series B Units are not registered under the Securities Act
or any state securities laws and cannot be resold without registration
thereunder or exemption therefrom.

                                   ARTICLE IV

              REPRESENTATIONS AND WARRANTIES OF ACADIA AND THE REIT

                  A. Acadia Representations. Acadia represents and warrants to
Contributors as follows:

                  IV.1. Organization and Standing

                  Acadia is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the full and unrestricted partnership power and authority to own, operate and
lease its assets and to carry on its business as currently conducted. Acadia is
duly qualified to conduct business as a foreign limited partnership and is in
good standing in each jurisdiction where the nature of the business conducted by
Acadia or the character of the assets owned, leased or otherwise held by it
makes any such qualification necessary, except where the failure to be so
qualified would not have a material adverse effect upon the business of Acadia
as currently conducted.

                                      -5-
<PAGE>

                  IV.2. Authorization; No Conflicts

                  The execution, delivery and performance by Acadia of this
Agreement and each Other Agreement to which Acadia is a party, the fulfillment
of and compliance with the respective terms and provisions hereof and thereof,
and the consummation by Acadia of the transactions contemplated hereby and
thereby, do not and will not: (a) conflict with, or violate any provisions of,
the certificate of limited partnership or agreement of limited partnership of
Acadia; (b) conflict with, or violate any provision of, any statute, law,
ordinance, regulation, rule, order, writ or injunction having applicability to
Acadia or any of its assets; or (c) conflict with, result in any breach of, or
constitute a default under any agreement to which Acadia is a party or by which
it or any of its assets are bound; except (in the case of clauses (b) and (c)
above) for such conflicts, violations, breaches or defaults as will not have a
material adverse effect on the business or financial condition of Acadia or the
consummation of the Acquisition.

                  IV.3. Binding Obligations

                  This Agreement and each Other Agreement executed and delivered
by Acadia constitutes a valid and binding obligation of Acadia, enforceable in
accordance with its terms; and each Other Agreement to be executed by Acadia
pursuant hereto or thereto, when executed and delivered in accordance with the
provisions hereof or thereof, shall be a valid and binding obligation of Acadia,
enforceable in accordance with its terms.

                  IV.4. No Litigation

                  There are no actions, suits, claims, arbitrations, proceedings
or investigations pending or, to the knowledge of Acadia, threatened against,
affecting or involving Acadia or its business or assets or the transactions
contemplated by this Agreement, at law or in equity, or before or by any court,
arbitrator or governmental authority, domestic or foreign, that could reasonably
be expected to have a material adverse effect on the business or financial
condition of Acadia or challenge or impair the ability of Acadia to consummate
the Contribution.

                  IV.5. Series B Units

                  At the Closing, the Series B Units to be issued to
Contributors pursuant to Article II hereof will be duly authorized for issuance
by Acadia to Contributors and upon issuance in accordance with this Agreement
will be validly issued, fully paid and non-assessable

                  IV.6. No Tax Audits

                  Acadia is not a party to any pending action, audit or
proceeding by any taxing authority for any assessment or collection of any
federal, state or local taxes.

                  IV.7. Tax Reporting

                  Acadia will treat the transfer of the Contributed Property to
Acadia for federal income tax purposes as a contribution that qualifies for
nonrecognition of gain pursuant to Section 721 of the Code. Acadia, however,
makes no representation or warranty that these positions will be respected.

                                      -6-
<PAGE>

                  IV.8. Capitalization

                  As of September 30, 2003, 28,463,083 common units of limited
partnership ("Common OP Units") were issued and outstanding, of which 27,321,766
Common OP Units are held by the REIT and 1,141,317 Common OP Units are held by
the limited partners of Acadia. In addition, 2,212 Series A Preferred Units are
issued and outstanding with an aggregate liquidation preference of $2,212,000
and will rank pari passu with the Series B Preferred Units.

                  IV.9. Common OP Units

                  As of the Closing, the Common OP Units issuable upon
conversion of the Series B Units will have been duly and validly authorized by
Acadia and the REIT as General Partner and will have been duly reserved for
issuance upon such conversion.

                  IV.10. Governmental Consents and Approvals

                  Acadia has obtained each and every consent, approval, permit
or order of, and has made each and every filing with, any individual,
partnership, corporation, trust or other entity, government agency or political
subdivision required to be obtained or made in connection with: (A) its
execution, delivery and performance of this Agreement and (B) its consummation
of the transactions contemplated hereby.

                  IV.11. Absence of Certain Changes or Events; Undisclosed
                         Liabilities and Agreements

                  Since September 30, 2003:

                  (a) there has not been any material adverse change in the
financial position or results of operations of Acadia from that reflected in the
consolidated financial statements of the REIT as of September 30, 2003, or any
material adverse change in the business, assets or prospects of Acadia
(including the imposition of any material adverse regulatory requirements or the
loss of any material permits, licenses or franchises).

                  (b) there has not been any material damage, destruction or
other casualty loss with respect to property owned or leased by Acadia not
covered by insurance.

                  (c) Acadia has not conducted its business otherwise than in
the ordinary course.

                  B. REIT Representations. The REIT hereby represents and
warrants to the Contributors as follows:

                        (i) Organization, Good Standing, Corporate Power and
         Authorization. The REIT is a real estate investment trust duly
         organized, validly existing and in good standing under the laws of the
         State of Maryland and has full right, power and authority to enter into
         this Agreement and to assume and perform all of its obligations. The
         REIT is duly qualified to conduct business as a foreign real estate
         investment trust and is in good standing in each jurisdiction where the
         nature of the business conducted by the REIT or the character of the
         assets owned, leased or otherwise held by it makes any such
         qualification necessary, except where the failure to be so qualified
         would not have a material adverse effect upon the business of the REIT
         as currently conducted. The execution and delivery of this Agreement
         and the performance by the REIT of its obligations under this Agreement
         will require no further action, consent or approval of the REIT's
         shareholders or trustees, or of any other individuals or entities in
         order to constitute this Agreement as a binding and enforceable
         obligation of the REIT.

                                      -7-
<PAGE>

                        (ii) Non-contravention. The entry into, performance of,
         or compliance with this Agreement by the REIT has not resulted, and
         will not result, in any violation of, default under, or acceleration of
         any provision of the bylaws or declaration of trust of the REIT or any
         provision of, or result in the acceleration of or entitle any party to
         accelerate (whether after the filing of notice or lapse of time or
         both) any obligation under, or result in the creation or imposition of
         any lien, charge, pledge, security interest or other encumbrance upon
         any of the property of the REIT pursuant to any provision of any
         mortgage, lien, lease, agreement, license or instrument, or violate any
         law, regulation, order, arbitration award, judgment or decree to which
         the REIT is a party or by which it or its property is bound or violate
         or conflict with any other material restriction of any kind or
         character to which the REIT is subject.

                        (iii) Capitalization and Due Authorization. As of
         September 30, 2003, the authorized shares of beneficial interest of all
         classes of the REIT consisted of 100,000,000 shares of beneficial
         interest, par value $.001 per share, all of such shares are initially
         classified as "Common Shares" and the issued and outstanding Common
         Shares of the REIT consisted of Common Shares.

                        (iv) Common Shares. As of the Closing, the Common Shares
         issuable upon conversion of the Common OP Units (which are issuable
         upon exchange of the Series B Units) will have been duly and validly
         authorized by the REIT and will have been duly reserved for issuance
         upon such conversion. The Common Shares issuable upon conversion of
         such Common OP Units, when issued upon such conversion in accordance
         with their terms, will be validly issued, fully paid and nonassessable.

                        (v) Governmental Consents and Approvals. The REIT has
         obtained each and every consent, approval, permit or order of, and has
         made each and every filing with, any individual, partnership,
         corporation, trust or other entity, government agency or political
         subdivision required to be obtained or made in connection with: (A) its
         execution, delivery and performance of this Agreement and (B) its
         consummation of the transactions contemplated hereby.

                        (vi) Binding Obligations. This Agreement and each Other
         Agreement executed and delivered by the REIT constitutes a valid and
         binding obligation of the REIT, enforceable in accordance with its
         terms; and each Other Agreement to be executed by the REIT pursuant
         hereto or thereto, when executed and delivered in accordance with the
         provisions hereof or thereof, shall be a valid and binding obligation
         of the REIT, enforceable in accordance with its terms.

                                      -8-
<PAGE>

                        (vii) SEC Filings. The REIT has filed all forms,
         reports, schedules, proxy materials, registration statements and
         related prospectuses and supplements and other documents required to be
         filed by the REIT with the SEC pursuant to the Securities Act or the
         Securities Exchange Act of 1934, as amended (the "Exchange Act")
         through the date hereof (collectively, the "REIT SEC Documents") and
         will cause to be delivered to Sellers copies of such additional
         documents as may be filed with the SEC by the REIT between the date
         hereof and the Closing Date. The REIT SEC Documents were, and those
         additional documents filed between the date hereof and the Closing will
         be, prepared and filed in all material respects in compliance with the
         rules and regulations promulgated by the SEC, and do not and will not
         contain any untrue statement of a material fact or omit to state any
         material fact required to be stated therein in order to make the
         statements contained therein, in light of the circumstances under which
         they were made, not misleading.

                        (viii) Financial Statements. The consolidated financial
         statements included in the SEC Documents have been prepared in
         accordance with generally accepted accounting principles applied on a
         consistent basis during the period involved (except as may be indicated
         in the notes thereto or, in the case of the unaudited statements, as
         permitted by Form 10-Q and present fairly (subject in the case of the
         unaudited statements, to normal, recurring year-end audit adjustments)
         the consolidated financial position of Acadia or the REIT, as
         applicable, at the dates thereof and the consolidated results of
         operations and cash flows for the periods then ended.

                        (ix) Absence of Certain Changes or Events. Since
         September 30, 2003 there has not been:

                           (a) any material adverse change in the financial
                  condition or results of operations of the REIT from that
                  reflected in the financial statements as of September 30, 2003
                  included in the REIT SEC Documents or any material adverse
                  change in the business, assets or prospects of the REIT
                  (including the imposition of any material adverse regulatory
                  requirements or the loss of any material permits, licenses or
                  franchises);

                           (b) there has not been any material damage,
                  destruction or other casualty loss with respect to property
                  owned or leased by the REIT not covered by insurance; and

                           (c) the REIT has not conducted its business otherwise
                  than in the ordinary course.

                                   ARTICLE V

                             CONTRIBUTORS COVENANTS

                  V.1. Current Operating Covenants

                  The Contributors shall, from the date of this Agreement until
the Closing Date:

                                      -9-
<PAGE>

                  (a) Perform their obligations with respect to the Contributed
Property in accordance with past practice;

                  (b) Promptly deliver to Acadia copies of all written notices,
and orally advise if notice is oral, from the Entities regarding defaults by the
Contributors regarding their management services responsibilities with respect
to the Contributed Property;

                  (c) Promptly deliver to Acadia, notice of any claims, actions,
suits and the like, of which the Contributors have been notified in writing,
pending or threatened with respect to the Contributed Property and the
Properties or the management thereof;

                  (d) Maintain all permits or other legal authorizations in
connection with the Contributed Property;

                  (e) Cooperate fully in providing any documentation or
information reasonably requested by Acadia in connection with this transaction;

                  (f) Use commercially reasonable efforts to obtain the Consents
of the Property Co-Managers of the Owner Entities with respect to consummation
of the Contribution.

                  V.2. Long-term Covenants

                  The Contributors and Hersch M. Klaff, personally, shall:

                  (a) During the next three years, to the extent it is within
their power, use reasonable efforts to refer to Acadia and its affiliates, for a
right of first refusal, all future management services opportunities with
respect to retail properties as to which any of the Contributors or their
affiliates are acquiring or otherwise actively involved in any material respect
therein, other than as a passive investor.

                  (b) Not modify, amend, alter or terminate the Contributed
Property, including, without limitation, any management contracts or their
rights to manage under the Entities' organizational documents; provided,
however, that the foregoing shall not restrict (i) any of the Contributors', or
any affiliates', right to sell or otherwise dispose of, refinance, transfer or
assign any of the Properties, or (ii) any action with respect to any Contributed
Property properly initiated by a Property Co-Manager, notwithstanding any effect
that such action may have on any Contributed Property.

                  (c) Subject to the subsequent provisions of this subsection
(c), not initiate or resume any retail management, leasing and development
services business in the United States for three years from the Closing Date.
This prohibition shall not include any right of the Contributors (i) to
participate in the Co-Investment Agreement with Acadia, as defined in Section
VII.B(g), (ii) to provide retail management, leasing and development services in
accordance with the terms of the Sub-Management Agreement, as defined in Section
VII.B(d), or (iii) to provide retail management, leasing and development
services for any retail property that Acadia has elected not to manage. This
prohibition shall include referring the retail management services associated
with the Contributed Property to third parties or consenting to an assignment(s)
of such management services to a third party. In no event shall the Contributors
have any future economic interest in the Contributed Property, other than the
rights contained in the Sub-Management Agreement.

                                      -10-
<PAGE>

                  (d) Not convert any Common OP Units, issuable upon exchange of
the Series B Units into Common Shares for a period of the lesser of (i) three
(3) years after the Closing Date, or (ii) until such time as the Contributors
may first exercise their redemption rights under Section 5(a) of the Certificate
of Designation of Series B Preferred Operating Partnership Units of Limited
Partnership Interest in Acadia.

                  (e) Not transfer the ownership of any of the Series B Units
held by a Contributor to another person or entity for a period of the lesser of
(i) one (1) year after the Closing, or (ii) until such time as the Contributors
may first exercise their redemption rights under Section 5(a) of the Certificate
of Designation of Series B Preferred Operating Partnership Units of Limited
Partnership Interest in Acadia.

                  V.3. Survival.

                  The covenants set forth in Article V.2 shall survive the
Closing in accordance with their terms.

                                   ARTICLE VI

                       CONDITIONS PRECEDENT TO THE CLOSING

                  VI.1. Conditions to Obligations of Contributors

                  The obligation of Contributors to consummate the Contribution
is subject to the fulfillment, at or prior to the Closing, of each of the
following conditions, and failure to satisfy any such condition shall excuse and
discharge all obligations of Contributors to carry out the provisions of this
Agreement unless such failure is waived in writing by Contributors:

                  (a) Representations and Warranties. The representations and
warranties made by Acadia and the REIT in Article IV hereof and the statements
contained in any document furnished by Acadia or the REIT in connection with the
Closing pursuant to this Agreement shall be true in all material respects when
made and on and as of the Closing Date as though such representations and
warranties were made on and as of such date, except for any changes therein
contemplated by this Agreement or any Other Agreement.

                  (b) Legal Proceedings. No action or proceeding by or before
any governmental authority shall have been instituted or threatened (and not
subsequently dismissed, settled or otherwise terminated) which is reasonably
expected to restrain, prohibit or invalidate the transactions contemplated by
this Agreement, other than an action or proceeding instituted or threatened by
any Contributor.

                  (c) Documents at Closing. All documents required to be
furnished to Contributors hereunder prior to or at the Closing shall have been
so furnished.

                                      -11-
<PAGE>

                  VI.2. Conditions to Obligations of Acadia

                  The obligation of Acadia to consummate the Contribution is
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions, and failure to satisfy any such condition shall excuse and discharge
all obligations of Acadia to carry out the provisions of this Agreement unless
such failure is waived in writing by Acadia:

                  (a) Representations and Warranties. The representations and
warranties made by Contributors in Article III of this Agreement and the
statements contained in any document furnished by Contributors or its equity
owners in connection with the Closing pursuant to this Agreement shall be true
in all material respects when made and on and as of the Closing Date as though
such representations and warranties were made on and as of such date, except for
any changes therein contemplated by this Agreement or any Other Agreement.

                  (b) Legal Proceedings. No action or proceeding by or before
any governmental authority shall have been instituted or threatened (and not
subsequently dismissed, settled or otherwise terminated) which is reasonably
expected to restrain, prohibit or invalidate the transactions contemplated by
this Agreement other than an action or proceeding instituted or threatened by
Acadia.

                  (c) Documents at Closing. All documents required to be
furnished to Acadia hereunder prior to or at the Closing shall have been so
furnished.

                                  ARTICLE VII

                                   DELIVERIES

                  The Closing shall occur simultaneously with the delivery of
the following documents:

                  A. The Contributors shall deliver:

                  (a) Authority Documents. Evidence satisfactory to Acadia that
the persons executing the closing documents on behalf of the Contributors have
full right, power and authority to do so, and the following documentation: (i)
Certified copies of Klaff Realty, LP and Klaff Realty, Limited organizational
documents which are true and correct, unamended, and continuing, and of the
incumbency of its officers, (ii) Certificates of Existence and Good Standing
from the Secretary of State of Delaware and the Secretary of State of Illinois
and (iii) Opinion letter of counsel to Klaff Realty, LP and Klaff Realty,
Limited substantially in the form attached hereto as Exhibit I as to the
following: due authorization and authority of Klaff Realty, LP and Klaff Realty,
Limited to enter into this Agreement and perform their obligations hereunder;
and noncontravention of the transactions contemplated by this Agreement with
Contributors' organizational documents.

                  (b) Series B Units Documents. The documents required in
connection with the issuance of the Series B Units, including signature pages to
the Partnership Agreement and the Registration Rights Agreement executed by each
Contributor. Each Contributor shall execute and deliver any other documents as
may be required under applicable federal or state securities laws, including a
reiteration of the representations and covenants set forth in Article III
hereof.

                                      -12-
<PAGE>

                  (c) Investor Questionnaires. Investor Questionnaires in the
form attached hereto as Exhibit B.

                  (d) Consents. Consents from each Property Co-Manager of each
Owner Entity approving the assignment of the Contributed Property to Acadia and
the further assignment to a subsidiary of the REIT, in the form of Exhibit F.

                  (e) Assignments. Executed Assignments of Contributed Property
in the form of Exhibit G.

                  (f) Certifications. Certificates from each of the Contributors
certifying as to the continuing accuracy of the representations and warranties
made by such party.

                  (g) Miscellaneous. Such other instruments as are reasonably
requested by Acadia.

                  B. Acadia's Deliveries. At the Closing, Acadia shall deliver:

                  (a) Registration Rights Agreement. The Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A, executed by
Acadia and Contributors;

                  (b) Certifications. Certificates of Acadia and the REIT
certifying as to continued accuracy of the representations and warranties made
by such party herein, executed by an officer or other authorized signatory of
such party;

                  (c) Series B Units. Certificates representing the Series B
Units in the form of Exhibit C;

                  (d) Sub-Management Agreement. A sub-management agreement
substantially in the form of Exhibit K (the "Sub-Management Agreement");

                  (e) Authority Documents. Evidence reasonably satisfactory to
the Contributors that the person or persons executing the closing documents on
behalf of Acadia and the REIT has full right, power and authority to do so;

                  (f) Legal Opinion. An Opinion of Acadia and REIT's general
counsel, substantially in the form attached hereto as Exhibit H;

                  (g) Co-Investment Agreement. A co-investment agreement
substantially in the form of Exhibit L (the "Co-Investment Agreement"); and

                  (h) Miscellaneous. Such other documents as reasonably
requested by the Contributors.

                                      -13-
<PAGE>

                                  ARTICLE VIII

                            SURVIVAL; INDEMNIFICATION

                  VIII.1. Survival

                  All representations, warranties, covenants, indemnities and
other agreements of the parties hereto made in this Agreement or in any document
furnished pursuant hereto shall not be extinguished by the Closing, but shall
survive the Closing, as specified in this Section VIII.1. All representations
and warranties of the parties hereto made in this Agreement or in any document
furnished pursuant hereto shall survive for a one (1) year period following the
Closing and shall be extinguished from and after the first anniversary date of
the Closing. Other than the covenants in Section V.1, which shall expire at the
Closing, all covenants of the parties hereto made in this Agreement shall
survive for the three (3) year period following the Closing and shall be
extinguished from and after the third anniversary date of the Closing. No
investigation, audit or inspection made by or on behalf of any party hereto
shall affect the survival of the representations, warranties, covenants,
indemnities and other agreements of the parties hereto. All representations and
warranties of the parties hereto made in this Agreement or in any document
delivered pursuant hereto shall also be deemed made on and as of the Closing
Date.

                  VIII.2. Agreement of Contributors to Indemnify

                  Subject to the conditions and provisions of this Article VIII,
Contributors hereby jointly and severally agree to indemnify, defend and hold
harmless Acadia and its subsidiaries and affiliates (including, without
limitation, the REIT) and each of their respective officers, directors,
trustees, partners, members, employees, successors and assigns (collectively,
the "Acadia Indemnified Persons") from and against and in respect of all
demands, claims, actions or causes of action, assessments, losses, damages
(including, without limitation, diminution in value), liabilities, costs and
expenses, including, without limitation, interest, penalties and reasonable
attorneys' fees and disbursements (the "Claims"), asserted against, resulting
to, imposed upon or incurred by the Acadia Indemnified Persons, directly or
indirectly, by reason of or resulting from (i) any breach of any representation
or warranty in any material respect made by Contributors in this Agreement or in
any document furnished by or on behalf of Contributors pursuant to this
Agreement or (ii) the Contributed Property which accrued prior to the Closing
Date.

                  VIII.3. Agreement of Acadia to Indemnify

                  Subject to the conditions and provisions of this Article VIII,
Acadia hereby agrees to indemnify, defend and hold harmless each Contributor and
its subsidiaries and affiliates and each of their respective officers,
directors, trustees, partners, members, employees, successors and assigns
(collectively, the "Contributor Indemnified Persons"), from and against and in
respect of all Claims asserted against, resulting to, imposed upon or incurred
by the Contributor Indemnified Persons, directly or indirectly, by reason of or
resulting from (i) any breach of any representation or warranty in any material
respect made by Acadia in this Agreement or in any document furnished by or on
behalf of Acadia pursuant to this Agreement, or (ii) the Contributed Property
which accrued on or after the Closing Date, except to the extent that such
claims directly arise from actions of the Contributors prior to the closing date
or the Contributors' actions under the Sub-Management Agreement as to which they
are not entitled to indemnity thereunder.

                                      -14-
<PAGE>

                  VIII.4. Limitation of Liability.

                  Notwithstanding the foregoing or anything else to the contrary
contained herein, subject to the provisions set forth in this Section VIII.4.,
in no event shall Hersch M. Klaff, individually, have any liability to Acadia
Indemnified Persons in excess of $1,000,000, or for any provision of this
Agreement except for Section V.2. herein. Notwithstanding the foregoing or
anything else to the contrary contained herein, in no event shall Hersch M.
Klaff, individually, have any monetary liability to Acadia Indemnified Persons
at any time while a Contributor is the record owner of either the Series B Units
or the Common OP Units into which the Series B Units were converted. In
addition, notwithstanding anything else to the contrary contained herein, in no
event shall either (a) the Contributors, or (b) the Contributors and Hersch M.
Klaff, collectively, have any liability to Acadia Indemnified Persons in excess
of $4,000,000, including Acadia's costs and expenses, in the aggregate.
Furthermore, in no event shall any party hereto be liable for any Claims for any
special, indirect, incidental, exemplary, consequential or punitive damages.

                  VIII.5. Conditions of Indemnification

                  The obligations and liabilities of Contributors and Acadia
hereunder with respect to their respective indemnities pursuant to this Article
VIII resulting from any Claim shall be subject to the following terms and
conditions:

                  (a) The indemnified party shall give prompt written notice to
the indemnifying party of any Claim which is asserted against, resulting to,
imposed upon or incurred by such indemnified party and which may give rise to
liability of the indemnifying party pursuant to this Article VIII, stating (to
the extent known or reasonably anticipated) the nature and basis of such Claim
and the amount thereof.

                  (b) If the facts pertaining to a Claim arise out of the Claim
of any third party, or if there is any Claim against a third party available by
virtue of the circumstances of the Claim, the indemnifying party may assume the
defense of such action or proceeding at such indemnifying party's own expense
with counsel chosen by the indemnifying party and approved by the indemnified
party, which approval shall not be unreasonably withheld; provided, however,
that the indemnifying party shall not agree to settlement of any such action or
proceeding which provides for any relief other than the payment of monetary
damages or which could have a material precedential impact or effect on the
business or financial condition of the indemnified party without the prior
written consent of the indemnified party; and provided, further, that if the
indemnified party reasonably determines that a conflict of interest exists where
it is advisable for the indemnified party to be represented by separate counsel
or that, upon advice of counsel, there may be legal defenses available to it
which are different from or in addition to those available to the indemnifying
party, then the indemnifying party shall not be entitled to assume such defense
and the indemnified party shall be entitled to separate counsel at the
indemnifying party's expense. If the indemnifying party is not entitled to
assume the defense of such action or proceeding as a result of the proviso to
the preceding sentence, the indemnifying party's counsel shall be entitled to
conduct the indemnifying party's defense and the indemnified party's counsel
shall be entitled to conduct the indemnified party's defense, it being
understood that both such counsel will cooperate with each other to conduct the


                                      -15-
<PAGE>

defense of such action or proceeding as efficiently as possible. If the
indemnifying party is not so entitled to assume the defense of such action or
does not assume such defense, after having received the notice referred to in
subparagraph (a) above, the indemnifying party will pay the reasonable fees and
expenses of counsel for the indemnified party. In such event, however, the
indemnifying party will not be liable for any settlement effected without the
written consent of the indemnifying party. If an indemnifying party is entitled
to assume, and assumes, the defense of such action or proceeding in accordance
with this paragraph, the indemnifying party shall not be liable for any fees and
expenses of counsel for the indemnified party incurred thereafter in connection
with such action or proceeding. Whether or not the indemnifying party chooses to
so defend or prosecute such Claim, all the parties hereto shall cooperate in the
defense or prosecution thereof and shall furnish such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested in connection therewith. The
indemnifying party shall be subrogated to all rights and remedies of the
indemnified party.

                                   ARTICLE IX

                                   TRANSITION

                  The parties hereto agree to cooperate and to transition
operational responsibility for the management of the Properties over a two-year
period. The division of responsibilities and fees shall be set forth in the
Sub-Management Agreement substantially in the form of Exhibit K.

                                   ARTICLE X

                          CONFIDENTIALITY; TAX MATTERS

                  X.1. Confidentiality

                  (a) Information. Before the Closing or if the Closing does not
occur, all information provided by a party hereto (the "Disclosing Party") to
another party hereto (the "Receiving Party") in connection with the transactions
contemplated by this Agreement shall be kept strictly confidential by such
Receiving Party and shall not, without the prior consent of the Disclosing
Party, be disclosed by the Receiving Party or used for any purpose other than
evaluating such transactions. The Receiving Party agrees that such information
shall only be transmitted to such Receiving Party's partners, officers,
directors, trustees, employees, attorneys, accountants, contractors,
consultants, advisors and agents who need to know such information for purposes
of evaluating such transactions and who agree to be bound by these
confidentiality provisions, and each Receiving Party agrees that in the event
the Closing does not take place for any reason, the Receiving Party shall return
all such information to the Disclosing Party. The provisions of this section
shall not apply to any information which is a matter of public record or
lawfully obtainable from other sources and shall not prevent either party from
complying with applicable laws, rules, regulations and court orders, including,
without limitation, governmental regulatory, disclosure, tax and reporting
requirements. Notwithstanding the foregoing, the parties may disclose the tax
treatment and tax structure of the transactions contemplated by this Agreement
and all materials of any kind related to such tax treatment and tax structure.

                                      -16-
<PAGE>

                  (b) Public Notices. Between the date hereof and for a period
ending one (1) year after the Closing Date, no party hereto shall release or
cause or permit to be released any press notices or advertising promotion or
other publicity relating to this transaction without first giving reasonable
notice to, and consulting with, each other party and, as required herein,
obtaining the written consent of each other party. No provisions in this Section
XI.1(b) shall preclude a party from discussing the substance or any relevant
details of such transactions with any of its attorneys, accountants,
professional consultants, lenders, partners, affiliates, investors, or any
prospective lender, partner or investor, as the case may be, or prevent a party
hereto, from complying with laws, rules, regulations and court orders, including
without limitation, governmental regulatory, stock exchange, disclosure, tax and
reporting requirements (including, in the case of Acadia and the REIT,
disclosure by the REIT of information that it determines is necessary or
appropriate in accordance with its obligations as a public company under rules
of the New York Stock Exchange, the Securities and Exchange Commission or other
regulatory body) or making an announcement or making any communication to its
shareholders in accordance with its corporate policy.

                  X.2. No Representation with Regard to Tax Treatment

                  Notwithstanding any provision of this Agreement, no party
hereto makes any representation regarding (and shall have no liability with
respect to) the tax consequences to any other party hereto or to any of its
direct or indirect partners of the transactions contemplated herein or in any
Other Agreements.

                                   ARTICLE XI

                                  MISCELLANEOUS

                  XI.1. Additional Actions and Documents

                  Each of the parties hereto hereby agrees to take or cause to
be taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents, and will obtain such
consents, as may be necessary or as may be reasonably requested in order to
fully effectuate the purposes, terms and conditions of this Agreement; provided,
however, that in no event shall Contributors be required to obtain consents or
approvals from any partners, members or other owners of the Owner Entities other
than the Property Co-Managers.

                  XI.2. Expenses

                  Each party hereto shall pay its own expenses incident to this
Agreement and the transactions contemplated hereunder, including all legal and
accounting fees and disbursements. The provisions of this Section XII.2 shall
survive any termination of this Agreement.

                                      -17-
<PAGE>

                  XI.3. Assignment

                  No party hereto shall assign its rights and/or obligations
under this Agreement, in whole or in part, whether by operation of law or
otherwise, without the prior written consent of the other parties hereto.
Notwithstanding anything to the contrary in the preceding sentence, at any time
after the Closing Date, Acadia may assign its rights and/or obligations under
this Agreement to an affiliate, or any other person or entity in connection with
a merger, consolidation, sale or contribution of all or substantially all of its
or the REIT's assets, or other similar corporate transaction; provided, that no
assignment pursuant to the preceding clause shall release the assigning party
from its respective liabilities and obligations hereunder.

                  XI.4. Entire Agreement; Amendment

                  This Agreement, including the Exhibits and other documents
referred to herein or furnished pursuant hereto, constitute the entire agreement
among the parties hereto with respect to the transactions contemplated herein,
and supersede all prior oral or written agreements, commitments or
understandings with respect to the matters provided for herein; provided, that
nothing in this Section XI.4 shall have any effect on the Other Agreements. No
amendment, modification or discharge of this Agreement shall be valid or binding
unless set forth in writing and duly executed and delivered by the party against
whom enforcement of the amendment, modification, or discharge is sought.

                  XI.5. Waiver

                  No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
documents furnished in connection with or pursuant to this Agreement shall
impair any such right, power or privilege or be construed as a waiver of any
default or any acquiescence therein. No single or partial exercise of any such
right, power or privilege shall preclude the further exercise of such right,
power or privilege, or the exercise of any other right, power or privilege. No
waiver shall be valid against any party hereto unless made in writing and signed
by the party against whom enforcement of such waiver is sought and then only to
the extent expressly specified therein.

                  XI.6. Severability

                  If any part of any provision of this Agreement or any other
agreement or document given pursuant to or in connection with this Agreement
shall be invalid or unenforceable in any respect, such part shall be ineffective
to the extent of such invalidity or unenforceability only, without in any way
affecting the remaining parts of such provision or the remaining provisions of
this Agreement.

                  XI.7. Governing Law

                  This Agreement, the rights and obligations of the parties
hereto, and any claim or disputes relating thereto, shall be governed by and
construed in accordance with the laws of the State of New York (excluding the
choice of law rules thereof).

                                      -18-
<PAGE>

                  XI.8. Notices

                  All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
facsimile, telegram, telecopy or telex, addressed as follows:

         (1) If to any Contributor:

                           Klaff Realty, LP
                           Klaff Realty, Limited
                           122 South Michigan Avenue
                           Chicago, IL  60603
                           Attention: Hersch M. Klaff
                           Telephone: 312-360-3102
                           Facsimile: 312-360-0606
                           Email: hklaff@klaff.com


                           With copies to:

                           Klaff Realty, LP
                           Klaff Realty, Limited
                           122 South Michigan Avenue
                           Chicago, IL  60603
                           Attention: Martha Amesbury
                           Telephone: 312-360-3116
                           Facsimile: 312-360-0606
                           Email: mamesbury@klaff.com


                           Allan J. Reich, Esq.
                           Seyfarth Shaw LLP
                           55 E. Monroe Street, Suite 4200
                           Chicago, IL  60603
                           Telephone: 312-781-8650
                           Facsimile: 312-269-8869
                           Email: areich@seyfarth.com

         (2) If to Acadia:

                           Acadia Realty Trust
                           1311 Mamaroneck Avenue, Suite 260
                           White Plains, NY  10605
                           Attention: Joel Braun
                           Telephone: 914-288-8146
                           Facsimile: 914-428-3922
                           Email: jbraun@acadiarealty.com

                                      -19-
<PAGE>

                           With a copy to:

                           Robert Masters, Esq.
                           1311 Mamaroneck Avenue, Suite 260
                           White Plains, NY  10605
                           Telephone: 914-288-8139
                           Facsimile: 914-428-3646
                           Email: rmasters@acadiarealty.com

                  Each party may designate by notice in writing a new address to
which any notice, demand, request or communication may thereafter be so given,
served or sent. Each notice, demand, request, or communication which shall be
hand delivered, sent, mailed, faxed, telecopied or telexed in the manner
described above, or which shall be delivered to a telegraph company, shall be
deemed sufficiently given, served, sent, received or delivered for all purposes
at such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, the confirmation receipt (with respect to a facsimile), or
(with respect to a telecopy or telex) the answerback being deemed conclusive,
but not exclusive, evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.

                  XI.9. Headings

                  Section headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.

                  XI.10. Execution in Counterparts

                  To facilitate execution, this Agreement may be executed in as
many counterparts as may be required. It shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.

                  XI.11. Attorneys' Fees

                  Should either party employ attorneys to enforce any of the
provisions hereof, the party against whom any final judgment is entered agrees
to pay the prevailing party all reasonable costs, charges and expenses,
including reasonable attorneys' fees, expended or incurred by the prevailing
party in connection therewith.

                                      -20-
<PAGE>

                  XI.12. Waiver of Jury Trial

                  TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE ACQUISITION AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE PROVISIONS OF THIS SECTION
XI.12 SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Contribution Agreement to be duly executed on their behalf as of the date first
above written.

                                    CONTRIBUTORS:

                                    KLAFF REALTY, LP, a Delaware
                                    limited partnership

                                    By: Klaff Realty, Limited, General Partner


                                        By: ____________________________
                                            Name: Hersch M. Klaff
                                            Title: President


                                    KLAFF REALTY, LIMITED, an Illinois
                                    corporation


                                        By: ____________________________
                                            Name: Hersch M. Klaff
                                            Title: President


                                    ACADIA:

                                    ACADIA REALTY LIMITED PARTNERSHIP

                                    By: Acadia Realty Trust, General
                                        Partner


                                        By: ____________________________
                                            Name: Kenneth F. Bernstein
                                            Title: President



                                      -21-
<PAGE>

                                    REIT:

                                    ACADIA REALTY TRUST


                                        By: ____________________________
                                            Name: Kenneth F. Bernstein
                                            Title: President



                  The undersigned hereby joins in the execution of this
Agreement to confirm his agreement with the covenants of Article V.2; which
shall survive the Closing.

                                     ______________________________________
                                     Hersch M. Klaff





                                      -22-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>7
<FILENAME>ex10-11.txt
<DESCRIPTION>EXHIBIT 10.11
<TEXT>
<PAGE>

                     FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
                     ---------------------------------------


         This First Amendment to Employment Agreement is made as of January 1,
2001 but executed as of May __, 2001 by and between Acadia Realty Trust, a
Maryland real estate investment trust with offices at 20 Soundview Marketplace,
Port Washington, New York 11050 (the "Trust") and Kenneth Bernstein (the
"Executive").

         WHEREAS, the Trust and Executive have heretofore entered into that
certain Employment Agreement dated as of October 28, 1998 pursuant to which the
Executive is employed as President of the Trust (the "Employment Agreement");

         WHEREAS, Executive has been appointed to the additional position of
Chief Executive Officer, effective January 1, 2001 (the "Appointment");

         WHEREAS, in connection with the Appointment, the Trust and the
Executive desire to implement certain amendments to the Employment Agreement as
hereinafter set forth;

         NOW, THEREFORE, it is hereby agreed that the Employment Agreement be,
and hereby is, amended as follows:

         1. Paragraph 3(a) of the Employment Agreement is hereby amended and
restated to read in its entirety as follows:

         "3. Services/Place of Employment.

         (a) Services. From January 1, 2001 and thereafter during the Employment
Period, Executive shall hold the positions of President and Chief Executive
Officer of the Trust and also serve as a member of the Board. Executive shall
devote his best efforts and such business time, skill and attention to the
business of the Trust (other than absences due to vacation, illness, disability
or approved leave of absence) as in the reasonable business judgment of
Executive is necessary to perform such duties as are customarily performed by
similar executive officers and as may be more specifically enumerated from time
to time by the Board or Executive Committee of the Board; provided, however,
that the foregoing is not intended to (x) preclude Executive from (i) owning and
managing personal investments, including real estate investments, subject to the
restrictions set forth in Paragraph 13 hereof or (ii) engaging in charitable
activities and community affairs, or (y) restrict or otherwise limit Executive
from conducting real estate development, acquisition or management activities
with respect to those properties described in Schedule A, attached hereto (the
"Excluded Properties"), provided that the performance of the activities referred
to in the preceding clauses (x) and (y) does not, in the reasonable business
judgment of Executive, prevent Executive from devoting sufficient business time
to the Trust to carry out Executive's duties as President, Chief Executive
Officer and member of the Board."

         2. Paragraph 4(a) of the Employment Agreement is hereby deleted in its
entirety and replaced with the following:

         "4. Compensation and Benefits.


                                       1
<PAGE>


         (a) Salary. From January 1, 2001 and thereafter during the Employment
Period, the Trust shall pay Executive a minimum annual base salary in the amount
of $300,000 (the "Annual Base Salary") payable in accordance with the Trust's
regular payroll practices. Executive's Annual Base Salary shall be reviewed
annually in accordance with the policy of the Trust from time to time and may be
subject to upward adjustment based upon, among other things, Executive's
performance, as determined in the sole discretion of the Compensation Committee
of the Board (the "Compensation Committee"). In no event shall Executive's
Annual Base Salary in effect at a particular time be reduced without his prior
written consent."

         3. Subparagraphs 7 (ii) and (iv) of the Employment Agreement are hereby
deleted in its entirety and replaced with the following:

         "7. Compensation Upon Termination of Employment Upon Death or
Disability.

                                      * * *

         (ii) an amount computed at an annualized rate equal to the Executive's
Annual Base Salary at the rate then in effect pro-rated for the period
commencing on the day following the date of termination and ending on the later
of (A) 18 months from the date of termination or (B) the final day of the
Unexpired Employment Period (the "Severance Salary"); plus

                                      * * *

         (iv) a further amount computed at an annualized rate equal to the
average of the Cash Incentive Bonuses awarded to the Executive for each of the
last two (2) calendar years immediately preceding the year in which the
Executive's employment is terminated, pro-rated for the period commencing on the
day following the date of termination and ending on the later of (A) eighteen
months from the date of termination of (B) the final day of the Unexpired
Employment Period ("Severance Bonus"; plus"....

         4. Except as amended by this First Amendment to Employment Agreement,
the Employment Agreement shall remain unchanged and in full force and effect.

         IN WITNESS WHEREOF, Executive has hereunto set his hand and, pursuant
to the authorization of its Board of Trustees, the Company has caused this First
Amendment to Employment Agreement to be executed in its name on its behalf, all
as of the day and year first above written.

                                       EXECUTIVE

                                       --------------------------------
                                       Kenneth Bernstein


                                       ACADIA REALTY TRUST

                                       By:
                                          ----------------------------
                                          Robert Masters
                                          Senior Vice President


                                       2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>8
<FILENAME>ex10-17.txt
<DESCRIPTION>EXHIBIT 10.17
<TEXT>
<PAGE>

                               SEVERANCE AGREEMENT
                               -------------------


         THIS SEVERANCE AGREEMENT (the "Agreement") is entered into as of April
6, 2001, by and between Joseph M. Napolitano, an individual residing in the
State of New York ("Senior Officer") and Acadia Realty Trust, a Maryland real
estate investment trust with offices at 20 Soundview Marketplace, Port
Washington, New York 11050 (the "Trust").


                                    RECITALS

         WHEREAS, The Trust desires to continue the employment of Senior Officer
as Senior Vice President, Director of Retail Property Management, and Senior
Officer desires to be employed by the Trust as Senior Vice President, Director
of Retail Property Management; and

         WHEREAS, Senior Officer has requested the Trust to enter into a
severance agreement and the Trust is willing to do so.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreement set forth herein, the parties hereby agree as follows:

         1.     Termination of Employment and Change in Control.

                (a) Senior Officer's employment hereunder may be terminated at
any time under the following circumstances:

                    (i)    Cause. The Trust shall have the right to terminate
                           Senior Officer's employment for Cause upon Senior
                           Officer's: (A) willful and continued failure
                           substantially to perform his duties hereunder (other
                           than any such failure resulting from Senior Officer's
                           incapacity due to physical or mental illness) which
                           failure continues for a period of ten (10) days after
                           written demand for substantial performance is
                           delivered by the Trust specifically identifying the
                           manner in which the Trust believes the Senior Officer
                           has not substantially performed his duties; (B)
                           willful misconduct or (C) conviction of, or plea of
                           guilty to a felony. For purposes of this
                           subparagraph, no act, or failure to act, on Senior
                           Officer's part shall be considered "willful" unless
                           done, or omitted to be done, by him (i) not in good
                           faith and (ii) without reasonable belief that his
                           action or omission was in furtherance of the
                           interests of the Trust.

                    (ii)   Death. Senior Officer's employment hereunder shall
                           terminate upon his death.
<PAGE>

                    (iii)  Disability. The Trust shall have the right to
                           terminate Senior Officer's employment due to
                           "Disability" in the event that there is a
                           determination by the Trust that the Senior Officer
                           has become physically or mentally incapable of
                           performing his duties under this Agreement and such
                           disability has disabled the Senior Officer for a
                           cumulative period of one hundred eighty (180) days
                           within a twelve (12) month period.

                    (iv)   Good Reason. The Senior Officer shall have the right
                           to terminate his employment for "Good Reason": (A)
                           upon the occurrence of any material breach of this
                           Agreement by the Trust which shall include but not be
                           limited to: a material, adverse alteration in the
                           nature of Senior Officer's duties, responsibilities,
                           or authority; (B) upon a reduction in Senior
                           Officer's Annual Base Salary or a material reduction
                           in other benefits (except for bonuses or similar
                           discretionary payments) as in effect at the time in
                           question, or a failure to pay such amounts when due
                           which is not cured by the Trust within ten (10) days
                           after written notice of such default by the Senior
                           Officer, (C) if the Trust relocates Senior Officer's
                           office requiring the Senior Officer to increase his
                           commuting time by more than one hour, then the Senior
                           Officer shall have the right to terminate his
                           employment, which termination shall be deemed for
                           Good Reason.

                    (v)    Without Cause. The Trust shall have the right to
                           terminate the Senior Officer's employment hereunder
                           Without Cause subject to the terms and conditions of
                           this Agreement.

                    (vi)   Change in Control. The Senior Officer shall have the
                           right to terminate his employment hereunder on or
                           within three (3) months following a Change in
                           Control. Such termination shall be deemed a
                           termination for Good Reason hereunder. For purposes
                           of this Agreement "Change in Control" shall mean that
                           any of the following events has occurred: (A) any
                           "person" or "group" of persons, as such terms are
                           used in Sections 13 and 14 of the Securities Exchange
                           Act of 1934, as amended (the "Exchange Act"), other
                           than any employee benefit plan sponsored by the
                           Trust, becomes the "beneficial owner", as such term
                           is used in Section 13 of the Exchange Act
                           (irrespective of any vesting or waiting periods) of
                           (i) Common Shares or any class of stock convertible
                           into Common Shares and/or (ii) Common OP Units or
                           preferred units or any other class of units
                           convertible into Common OP Units, in an amount equal
                           to thirty (30%) percent or more of the sum total of
                           the Common Shares and the Common OP Units (treating
                           all classes of outstanding Common Shares, units or
                           other securities convertible into Common Shares as if
                           they were converted into Common Shares or Common OP
                           Units, as the case may be, and then treating Common
                           Shares and Common OP Units as if they were a single
                           class) issued and outstanding immediately prior to
                           such acquisition as if they were a single class and
                           disregarding any equity raise in connection with the
                           financing of such transaction; or (B) the dissolution
                           or liquidation of the Trust or the consummation of
                           any merger or consolidation of the Trust if the

                                       2
<PAGE>

                           shareholders of the Trust and unit holders of the
                           Partnership taken as a whole and considered as one
                           class immediately before such transaction own,
                           immediately after consummation of such transaction,
                           equity securities and partnership units possessing
                           less than fifty (50%) percent of the surviving or
                           acquiring Trust and partnership taken as a whole; or
                           (C) or any sale or other disposition of all or
                           substantially all of its assets, or a sale or other
                           disposition of at least 51% (based upon gross asset
                           value) of the core assets (defined as those
                           properties formerly marketed by Credit Suisse First
                           Boston as the core portfolio of the Company) or
                           (D) a turnover, during any two (2) year period, of
                           the majority of the members of the Board, without the
                           consent of the remaining members of the Board as to
                           the appointment of the new Board members.

         (b) Notice of Termination Any termination of Senior Officer's
employment by the Trust or any such termination by the Senior Officer (other
than on account of death) shall be communicated by written Notice of Termination
to the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of Senior
Officer's employment under the provision so indicated. In the event of the
termination of Senior Officer's employment on account of death, written Notice
of Termination shall be deemed to have been provided on the date of death.

         2.     Compensation Upon Termination of Employment By the Trust for
                Cause or Voluntarily By The Senior Officer.

         In the event the Trust terminates Senior Officer's employment for
Cause, or the Senior Officer voluntarily terminates his employment, the Trust
shall pay the Senior Officer any unpaid Annual Base Salary at the rate then in
effect accrued through and including the date of termination and any accrued
vacation pay ("Unpaid Accrued Salary"). In addition, in such event, the Senior
Officer shall be entitled to exercise any options which, as of the date of
termination, have vested and are exercisable in accordance with the terms of the
applicable option grant agreement or plan. All options and all restricted stock
granted to the Senior Officer which have not vested on the date of termination
shall automatically terminate.

         Except for any rights which the Senior Officer may have to Unpaid
Accrued Salary through and including the date of termination, and vested options
and stock, the Trust shall have no further obligations hereunder following such
termination. The aforesaid amounts shall be payable in full immediately upon
such termination.

         3.     Compensation  Upon Termination of Employment Upon Disability,
                Without Cause or By Senior Officer for Good Reason.

         In the event of termination of Senior Officer's employment as a result
of Senior Officer's Disability, Without Cause or by Senior Officer for Good
Reason, the Trust shall pay to the Senior Officer, the following:


                                       3
<PAGE>


                    (i)    any Unpaid Accrued Salary through and including the
                           date of termination; plus

                    (ii)   an amount equal to one year's salary at the then
                           current annual base salary (before any reductions)
                           (the "Severance Salary"); plus

                    (iii)  reimbursement of expenses incurred prior to date of
                           termination ("Expense Reimbursement"); plus

                    (iv)   the Senior Officer's car allowance, if any, for one
                           year (the "Car Allowance"); plus

                    (v)    a pro rata portion of Senior Officer's bonus (based
                           upon the average of the last two years' bonuses);
                           plus

         In the event of termination of or resignation by Senior Officer because
of a Change in Control, in addition to the above amounts,

                    (vi)   the Trust shall pay to the Senior Officer an amount
                           equal to six months' base salary (the "Change of
                           Control Retention Payment"); and

                    (vii)  the Trust shall continue Senior Officer's base salary
                           and medical benefits for a period not to exceed the
                           earlier of (a) six months from the date of such
                           termination or (b) the date when Senior Officer
                           becomes reemployed.

         Notwithstanding anything to the contrary contained herein, if the
Senior Officer's employment is terminated Without Cause, or the Senior Officer
terminates his employment for Good Reason prior to a Change of Control and
subsequently an event is announced within six months of his termination which,
when consummated, would constitute a Change of Control, then the Senior Officer
shall be entitled to the payment described in Section 3(vi) upon consummation.

         In addition, all (A) incentive compensation payments or programs of any
nature whether stock based or otherwise that are subject to a vesting schedule,
including without limitation restricted stock, phantom stock, units and any loan
forgiveness arrangements granted to the Senior Officer ("Incentive
Compensation") shall immediately vest as of the date of such termination
("Vested Incentive Compensation") and (B) options granted to the Senior Officer
shall immediately vest as of the date of such termination (the "Vested Options")
and the Senior Officer shall be entitled at the option of the Senior Officer,
his estate or his personal representative, within three years of the date of
such termination, to exercise any options which have vested (including, without
limitation, by acceleration in accordance with the terms of the Agreement, the
applicable option grant agreement or the current Acadia stock option plan (the
"Plan")) and are exercisable in accordance with the terms of the applicable
option grant agreement or plan and/or any other methods or procedures for
exercise applicable to optionees.



                                       4
<PAGE>

         Except for any rights which the Senior Officer may have to all of the
above including unpaid Accrued Salary, Severance Salary, Vested Incentive
Compensation, Vested Options, Expense Reimbursement, the Car Allowance and the
Bonus, the Trust shall have no further obligations hereunder following such
termination.

        The parties both agree that the agreement to make these payments was
consideration and an inducement to obtain Senior Officer's consent to enter into
this Agreement. The payments are not a penalty and neither party will claim them
to be a penalty. Rather, the payments represent a fair approximation of
reasonable amounts due to the Senior Officer.

         4.     Change in Control.

                (a) Options. Any options granted to the Senior Officer that
have not vested as of the date of a Change in Control shall immediately vest
upon the date of the Change in Control. Neither the occurrence of a Change in
Control, nor the vesting in any options as a result thereof shall require the
Senior Officer to exercise any options.

                (b) Restricted Stock. Any restricted stock granted to the
Senior Officer that have not vested as of the date of a Change in Control shall
immediately vest upon the date of the Change in Control. In the event of a
conflict between any restricted stock agreement or the Plan and this Agreement,
the terms of this Agreement shall control.

                (c) Upon Termination. If the surviving entity terminates
Senior's Officer's employment Without Cause, the Trust shall pay to the Senior
Officer, and the Senior Officer shall be entitled to, all the payments and
rights the Senior Officer would have had if the Senior Officer had terminated
his employment with Good Reason as set forth in Paragraph 3, including the
payments due under Paragraph 3.(vi) and (vii), but less the value of any
severance payments Senior Officer receives from the surviving entity after the
date of the Change of Control. The rights described herein are subject to the
provisions of Section 6(b).

         5.     Indemnification/Legal Fees.

                (a) Indemnification. In the event the Senior Officer is made
party or threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of Senior Officer's employment with or serving as an officer of the
Trust, whether or not the basis of such Proceeding is alleged action in an
official capacity, the Trust shall indemnify, hold harmless and defend Senior
Officer to the fullest extent authorized by Maryland law, as the same exists and
may hereafter be amended, against any and all claims, demands, suits, judgments,
assessments and settlements including all expenses incurred or suffered by
Senior Officer in connection therewith (including, without limitation, all legal
fees incurred using counsel reasonably acceptable to Senior Officer) and such
indemnification shall continue as to Senior Officer even after Senior Officer is
no longer employed by the Trust and shall inure to the benefit of his heirs,
executors, and administrators. Expenses incurred by Senior Officer in connection
with any Proceeding shall be paid by the Trust in advance upon request of Senior
Officer that the Trust pay such expenses; but only in the event that Senior
Officer shall have delivered in writing to the Trust an undertaking to reimburse
the Trust for expenses with respect to which Senior Officer is not entitled to
indemnification. The provisions of this Paragraph shall remain in effect after
this Agreement is terminated irrespective of the reasons for termination. The
indemnification provisions of this Paragraph shall not supersede or reduce any
indemnification provided to Senior Officer under any separate agreement, or the
by-laws of the Trust since it is intended that this Agreement shall expand and
extend the Senior Officer's rights to receive indemnity.



                                       5
<PAGE>

                (b) Legal Fees. If any contest or dispute shall arise between
the Trust and Senior Officer regarding or as a result of any provision of this
Agreement, the Trust shall reimburse Senior Officer for all legal fees and
expenses reasonably incurred by Senior Officer in connection with such contest
or dispute, but only if Senior Officer is successful in respect of substantially
all of Senior Officer's claims pursued or defended in connection with such
contest or dispute. Such reimbursement shall be made as soon as practicable
following the resolution of such contest or dispute (whether or not appealed).

         6.     Successors and Assigns, Term.

         (a) The Trust shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Trust, by agreement in form and substance
satisfactory to Senior Officer, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Trust would be
required to perform it if no such succession had taken place. Failure of the
Trust to obtain any such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Senior Officer
to compensation from the Trust in the same amount and on the same terms as he
would be entitled to hereunder if Senior Officer terminated his employment for
Good Reason hereunder in accordance with the terms as set forth in Paragraph
1.(a)(iv), except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date of
termination. In the event of such a breach of this Agreement, the Notice of
Termination shall specify such date as the date of termination. As used in this
Agreement, "Trust" shall mean the Trust as hereinbefore defined and any
successor to all or substantially all of its business and/or its assets as
aforesaid which executes and delivers the Agreement provided for in this
Paragraph 6 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law. Any cash payments owed to Senior Officer
pursuant to this Paragraph 6 shall be paid to Senior Officer in a single sum
without discount for early payment immediately prior to the consummation of the
transaction with such successor. Nothing in this Paragraph 6(a) shall be
construed to interfere with the Trust's right to implement or pursue such
succession.

         (b) Notwithstanding anything to the contrary contained herein, this
Agreement, including the obligations described in Section 4.(c), shall terminate
and be of no further force and effect 18 months from the date of a Change of
Control.

         7.     Timing of and No Duplication of Payments.

         All payments payable to Senior Officer pursuant to this Agreement shall
be paid as soon as practicable after such amounts have become fully vested and
determinable. In addition, Senior Officer shall not be entitled to receive
duplicate payments under any of the provisions of this Agreement.



                                       6
<PAGE>

         8.     Modification or Waiver.

         No amendment, modification, waiver, termination or cancellation of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such amendment,
modification, waiver, termination or cancellation is sought. No course of
dealing between or among the parties to this Agreement shall be deemed to affect
or to modify, amend or discharge any provision or term of this Agreement. No
delay on the part of the Trust or Senior Officer in the exercise of any of their
respective rights or remedies shall operate as a waiver thereof, and no single
or partial exercise by the Trust or Senior Officer of any such right or remedy
shall preclude other or further exercise thereof. A waiver of right to remedy on
any one occasion shall not be construed as a bar to or waiver of any such right
or remedy on any other occasion.

         The respective rights and obligations of the parties hereunder shall
survive the Senior Officer's termination of employment and termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations.

         9.     Notices.

         All notices or other communications required or permitted hereunder
shall be made in writing and shall be deemed to have been duly given if
delivered by hand or delivered by a recognized delivery service or mailed,
postage prepaid, by express, certified or registered mail, return receipt
requested, and addressed to the Trust at the address set forth above or Senior
Officer at his address as set forth in the Trust records (or to such other
address as shall have been previously provided in accordance with this Paragraph
10).

         10.    Governing Law.

         This Agreement will be governed by and construed in accordance with the
laws of the State of New York.

         11.    Severability.

         Whenever possible, each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited by
or invalid under such applicable law, then, such provision or term shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provisions or term or the remaining provisions or terms of this Agreement.



                                       7
<PAGE>


         12.    Legal Representation.

         Each of the Trust and Senior Officer has had an opportunity to discuss
this Agreement with counsel.

         13.    Counterparts.

         This Agreement may be executed in separate counterparts, each of which
is deemed to be an original and both of which taken together shall constitute
one and the same Agreement.

         14.    Headings.

         The headings of the Paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part hereof and shall
not affect the construction or interpretation of this Agreement.

         15.    Entire Agreement.

         This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and undertakings, both written and oral, among the parties with respect to the
subject matter hereof.

         16.    Survival of Agreements.

         The covenants made in Paragraphs 1 through 5 each shall survive the
termination of this Agreement.

         17.    Binding Effect.

         This Agreement shall be binding on the Trust, its successors and
assigns, including any surviving entity resulting from a merger, consolidation
or other corporate reorganization.

         18.    Senior Officer's Covenants.

         Senior Officer covenants and agrees that in the event he receives any
compensation (other than compensation upon termination of employment by the
Trust for Cause or voluntarily by the Senior Officer) pursuant to this
Agreement, he shall not solicit for employment any personnel employed by the
Trust at the time of his termination for a period of two years from his Date of
Termination as long as such personnel is still employed by the Trust. Nothing
contained herein to the contrary, however, shall prevent Senior Officer from
providing a reference for any such personnel.



                                       8
<PAGE>

         19.    Confidentiality.

         Senior Officer and the Trust agree to keep this Agreement confidential
to the extent permitted by law. Senior Officer agrees to keep confidential all
information in his possession regarding the Company, its properties and its
plans, which is not generally known to the public.

         20.    Excess Parachute Payments

         Any provision of this Agreement to the contrary notwithstanding, if any
of the payments or benefits provided for in this Agreement, together with any
other payments which Employee has a right to receive from the Company or any of
its affiliates, constitute a "parachute payment", as defined in Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code"),
payments pursuant to this Agreement shall be reduced, if necessary to the
largest amount as will result in no portion of such payments being subject to
the excise tax imposed by Section 4999 of the Code, all as determined by the
Company's regularly engaged independent public accountants.

         21.    Prior Understandings.

         This Agreement embodies the entire contract between the parties hereto
with respect to employment and severance and supersedes any and all prior
agreements and understandings, written or oral, formal or informal by and
between the Trust and the Senior Officer.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.

                                             ACADIA REALTY TRUST


                                             By:___________________________
                                                      Kenneth F. Bernstein
                                                      President


                                             ______________________________
                                             Name:    Joseph M. Napolitano
                                             Title:   Senior Vice President




                                       9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>9
<FILENAME>ex10-18.txt
<DESCRIPTION>EXHIBIT 10.18
<TEXT>
<PAGE>

                               SEVERANCE AGREEMENT
                               -------------------


         THIS SEVERANCE AGREEMENT (the "Agreement") is entered into as of April
6, 2001, by and between Robert Masters, an individual residing in the State of
New York ("Senior Officer") and Acadia Realty Trust, a Maryland real estate
investment trust with offices at 20 Soundview Marketplace, Port Washington, New
York 11050 (the "Trust").


                                    RECITALS

         WHEREAS, The Trust desires to continue the employment of Senior Officer
as Senior Vice President, General Counsel and Corporate Secretary, and Senior
Officer desires to be employed by the Trust as Senior Vice President, General
Counsel and Corporate Secretary; and

         WHEREAS, Senior Officer has requested the Trust to enter into a
severance agreement and the Trust is willing to do so.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreement set forth herein, the parties hereby agree as follows:

         1.     Termination of Employment and Change in Control.

                (a) Senior Officer's employment hereunder may be terminated at
any time under the following circumstances:

                    (i)    Cause. The Trust shall have the right to terminate
                           Senior Officer's employment for Cause upon Senior
                           Officer's: (A) willful and continued failure
                           substantially to perform his duties hereunder (other
                           than any such failure resulting from Senior Officer's
                           incapacity due to physical or mental illness) which
                           failure continues for a period of ten (10) days after
                           written demand for substantial performance is
                           delivered by the Trust specifically identifying the
                           manner in which the Trust believes the Senior Officer
                           has not substantially performed his duties; (B)
                           willful misconduct or (C) conviction of, or plea of
                           guilty to a felony. For purposes of this
                           subparagraph, no act, or failure to act, on Senior
                           Officer's part shall be considered "willful" unless
                           done, or omitted to be done, by him (i) not in good
                           faith and (ii) without reasonable belief that his
                           action or omission was in furtherance of the
                           interests of the Trust.

                    (ii)   Death. Senior Officer's employment hereunder shall
                           terminate upon his death.

                    (iii)  Disability. The Trust shall have the right to
                           terminate Senior Officer's employment due to
                           "Disability" in the event that there is a
                           determination by the Trust that the Senior Officer
                           has become physically or mentally incapable of
                           performing his duties under this Agreement and such
                           disability has disabled the Senior Officer for a
                           cumulative period of one hundred eighty (180) days
                           within a twelve (12) month period.

<PAGE>

                    (iv)   Good Reason. The Senior Officer shall have the right
                           to terminate his employment for "Good Reason": (A)
                           upon the occurrence of any material breach of this
                           Agreement by the Trust which shall include but not be
                           limited to: a material, adverse alteration in the
                           nature of Senior Officer's duties, responsibilities,
                           or authority; (B) upon a reduction in Senior
                           Officer's Annual Base Salary or a material reduction
                           in other benefits (except for bonuses or similar
                           discretionary payments) as in effect at the time in
                           question, or a failure to pay such amounts when due
                           which is not cured by the Trust within ten (10) days
                           after written notice of such default by the Senior
                           Officer, (C) if the Trust relocates Senior Officer's
                           office requiring the Senior Officer to increase his
                           commuting time by more than one hour, then the Senior
                           Officer shall have the right to terminate his
                           employment, which termination shall be deemed for
                           Good Reason.

                    (v)    Without Cause. The Trust shall have the right to
                           terminate the Senior Officer's employment hereunder
                           Without Cause subject to the terms and conditions of
                           this Agreement.

                    (vi)   Change in Control. The Senior Officer shall have the
                           right to terminate his employment hereunder on or
                           within three (3) months following a Change in
                           Control. Such termination shall be deemed a
                           termination for Good Reason hereunder. For purposes
                           of this Agreement "Change in Control" shall mean that
                           any of the following events has occurred: (A) any
                           "person" or "group" of persons, as such terms are
                           used in Sections 13 and 14 of the Securities Exchange
                           Act of 1934, as amended (the "Exchange Act"), other
                           than any employee benefit plan sponsored by the
                           Trust, becomes the "beneficial owner", as such term
                           is used in Section 13 of the Exchange Act
                           (irrespective of any vesting or waiting periods) of
                           (i) Common Shares or any class of stock convertible
                           into Common Shares and/or (ii) Common OP Units or
                           preferred units or any other class of units
                           convertible into Common OP Units, in an amount equal
                           to thirty (30%) percent or more of the sum total of
                           the Common Shares and the Common OP Units (treating
                           all classes of outstanding Common Shares, units or
                           other securities convertible into Common Shares as if
                           they were converted into Common Shares or Common OP
                           Units, as the case may be, and then treating Common
                           Shares and Common OP Units as if they were a single
                           class) issued and outstanding immediately prior to
                           such acquisition as if they were a single class and
                           disregarding any equity raise in connection with the
                           financing of such transaction; or (B) the dissolution
                           or liquidation of the Trust or the consummation of
                           any merger or consolidation of the Trust if the
                           shareholders of the Trust and unit holders of the
                           Partnership taken as a whole and considered as one
                           class immediately before such transaction own,

                                       2
<PAGE>

                           immediately after consummation of such transaction,
                           equity securities and partnership units possessing
                           less than fifty (50%) percent of the surviving or
                           acquiring Trust and partnership taken as a whole; or
                           (C) or any sale or other disposition of all or
                           substantially all of its assets, or a sale or other
                           disposition of at least 51% (based upon gross asset
                           value) of the core assets (defined as those
                           properties formerly marketed by Credit Suisse First
                           Boston as the core portfolio of the Company) or
                           (D) a turnover, during any two (2) year period, of
                           the majority of the members of the Board, without the
                           consent of the remaining members of the Board as to
                           the appointment of the new Board members.

                (b) Notice of Termination Any termination of Senior Officer's
employment by the Trust or any such termination by the Senior Officer (other
than on account of death) shall be communicated by written Notice of Termination
to the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of Senior
Officer's employment under the provision so indicated. In the event of the
termination of Senior Officer's employment on account of death, written Notice
of Termination shall be deemed to have been provided on the date of death.

         2.     Compensation Upon Termination of Employment By the Trust for
                Cause or Voluntarily By The Senior Officer.

         In the event the Trust terminates Senior Officer's employment for
Cause, or the Senior Officer voluntarily terminates his employment, the Trust
shall pay the Senior Officer any unpaid Annual Base Salary at the rate then in
effect accrued through and including the date of termination and any accrued
vacation pay ("Unpaid Accrued Salary"). In addition, in such event, the Senior
Officer shall be entitled to exercise any options which, as of the date of
termination, have vested and are exercisable in accordance with the terms of the
applicable option grant agreement or plan. All options and all restricted stock
granted to the Senior Officer which have not vested on the date of termination
shall automatically terminate.

         Except for any rights which the Senior Officer may have to Unpaid
Accrued Salary through and including the date of termination, and vested options
and stock, the Trust shall have no further obligations hereunder following such
termination. The aforesaid amounts shall be payable in full immediately upon
such termination.

         3.     Compensation  Upon Termination of Employment Upon Disability,
                Without Cause or By Senior Officer for Good Reason.

         In the event of termination of Senior Officer's employment as a result
of Senior Officer's Disability, Without Cause or by Senior Officer for Good
Reason, the Trust shall pay to the Senior Officer, the following:


                                       3
<PAGE>

                    (i)    any Unpaid Accrued Salary through and including the
                           date of termination; plus

                    (ii)   an amount equal to one year's salary at the then
                           current annual base salary (before any reductions)
                           (the "Severance Salary"); plus

                    (iii)  reimbursement of expenses incurred prior to date of
                           termination ("Expense Reimbursement"); plus

                    (iv)   the Senior Officer's car allowance, if any, for one
                           year (the "Car Allowance"); plus

                    (v)    a pro rata portion of Senior Officer's bonus (based
                           upon the average of the last two years' bonuses);
                           plus

         In the event of termination of or resignation by Senior Officer because
of a Change in Control, in addition to the above amounts,

                    (vi)   the Trust shall pay to the Senior Officer an amount
                           equal to six months' base salary (the "Change of
                           Control Retention Payment"); and

                    (vii)  the Trust shall continue Senior Officer's base salary
                           and medical benefits for a period not to exceed the
                           earlier of (a) six months from the date of such
                           termination or (b) the date when Senior Officer
                           becomes reemployed.

         Notwithstanding anything to the contrary contained herein, if the
Senior Officer's employment is terminated Without Cause, or the Senior Officer
terminates his employment for Good Reason prior to a Change of Control and
subsequently an event is announced within six months of his termination which,
when consummated, would constitute a Change of Control, then the Senior Officer
shall be entitled to the payment described in Section 3(vi) upon consummation.

         In addition, all (A) incentive compensation payments or programs of any
nature whether stock based or otherwise that are subject to a vesting schedule,
including without limitation restricted stock, phantom stock, units and any loan
forgiveness arrangements granted to the Senior Officer ("Incentive
Compensation") shall immediately vest as of the date of such termination
("Vested Incentive Compensation") and (B) options granted to the Senior Officer
shall immediately vest as of the date of such termination (the "Vested Options")
and the Senior Officer shall be entitled at the option of the Senior Officer,
his estate or his personal representative, within three years of the date of
such termination, to exercise any options which have vested (including, without
limitation, by acceleration in accordance with the terms of the Agreement, the
applicable option grant agreement or the current Acadia stock option plan (the
"Plan")) and are exercisable in accordance with the terms of the applicable
option grant agreement or plan and/or any other methods or procedures for
exercise applicable to optionees.


                                       4
<PAGE>

         Except for any rights which the Senior Officer may have to all of the
above including unpaid Accrued Salary, Severance Salary, Vested Incentive
Compensation, Vested Options, Expense Reimbursement, the Car Allowance and the
Bonus, the Trust shall have no further obligations hereunder following such
termination.

        The parties both agree that the agreement to make these payments was
consideration and an inducement to obtain Senior Officer's consent to enter into
this Agreement. The payments are not a penalty and neither party will claim them
to be a penalty. Rather, the payments represent a fair approximation of
reasonable amounts due to the Senior Officer.

         4.     Change in Control.

                (a) Options. Any options granted to the Senior Officer that have
not vested as of the date of a Change in Control shall immediately vest upon the
date of the Change in Control. Neither the occurrence of a Change in Control,
nor the vesting in any options as a result thereof shall require the Senior
Officer to exercise any options.

                (b) Restricted Stock. Any restricted stock granted to the Senior
Officer that have not vested as of the date of a Change in Control shall
immediately vest upon the date of the Change in Control. In the event of a
conflict between any restricted stock agreement or the Plan and this Agreement,
the terms of this Agreement shall control.

                (c) Upon Termination. If the surviving entity terminates
Senior's Officer's employment Without Cause, the Trust shall pay to the Senior
Officer, and the Senior Officer shall be entitled to, all the payments and
rights the Senior Officer would have had if the Senior Officer had terminated
his employment with Good Reason as set forth in Paragraph 3, including the
payments due under Paragraph 3.(vi) and (vii), but less the value of any
severance payments Senior Officer receives from the surviving entity after the
date of the Change of Control. The rights described herein are subject to the
provisions of Section 6(b).

         5.     Indemnification/Legal Fees.

                (a) Indemnification. In the event the Senior Officer is made
party or threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of Senior Officer's employment with or serving as an officer of the
Trust, whether or not the basis of such Proceeding is alleged action in an
official capacity, the Trust shall indemnify, hold harmless and defend Senior
Officer to the fullest extent authorized by Maryland law, as the same exists and
may hereafter be amended, against any and all claims, demands, suits, judgments,
assessments and settlements including all expenses incurred or suffered by
Senior Officer in connection therewith (including, without limitation, all legal
fees incurred using counsel reasonably acceptable to Senior Officer) and such
indemnification shall continue as to Senior Officer even after Senior Officer is
no longer employed by the Trust and shall inure to the benefit of his heirs,
executors, and administrators. Expenses incurred by Senior Officer in connection
with any Proceeding shall be paid by the Trust in advance upon request of Senior
Officer that the Trust pay such expenses; but only in the event that Senior
Officer shall have delivered in writing to the Trust an undertaking to reimburse
the Trust for expenses with respect to which Senior Officer is not entitled to
indemnification. The provisions of this Paragraph shall remain in effect after
this Agreement is terminated irrespective of the reasons for termination. The
indemnification provisions of this Paragraph shall not supersede or reduce any
indemnification provided to Senior Officer under any separate agreement, or the
by-laws of the Trust since it is intended that this Agreement shall expand and
extend the Senior Officer's rights to receive indemnity.



                                       5
<PAGE>

                (b) Legal Fees. If any contest or dispute shall arise between
the Trust and Senior Officer regarding or as a result of any provision of this
Agreement, the Trust shall reimburse Senior Officer for all legal fees and
expenses reasonably incurred by Senior Officer in connection with such contest
or dispute, but only if Senior Officer is successful in respect of substantially
all of Senior Officer's claims pursued or defended in connection with such
contest or dispute. Such reimbursement shall be made as soon as practicable
following the resolution of such contest or dispute (whether or not appealed).

         6.     Successors and Assigns, Term.

                (a) The Trust shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Trust, by agreement in
form and substance satisfactory to Senior Officer, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Trust would be required to perform it if no such succession had taken place.
Failure of the Trust to obtain any such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle Senior
Officer to compensation from the Trust in the same amount and on the same terms
as he would be entitled to hereunder if Senior Officer terminated his employment
for Good Reason hereunder in accordance with the terms as set forth in Paragraph
1.(a)(iv), except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date of
termination. In the event of such a breach of this Agreement, the Notice of
Termination shall specify such date as the date of termination. As used in this
Agreement, "Trust" shall mean the Trust as hereinbefore defined and any
successor to all or substantially all of its business and/or its assets as
aforesaid which executes and delivers the Agreement provided for in this
Paragraph 6 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law. Any cash payments owed to Senior Officer
pursuant to this Paragraph 6 shall be paid to Senior Officer in a single sum
without discount for early payment immediately prior to the consummation of the
transaction with such successor. Nothing in this Paragraph 6(a) shall be
construed to interfere with the Trust's right to implement or pursue such
succession.

                (b) Notwithstanding anything to the contrary contained herein,
this Agreement, including the obligations described in Section 4.(c), shall
terminate and be of no further force and effect 18 months from the date of a
Change of Control.

         7.     Timing of and No Duplication of Payments.

         All payments payable to Senior Officer pursuant to this Agreement shall
be paid as soon as practicable after such amounts have become fully vested and
determinable. In addition, Senior Officer shall not be entitled to receive
duplicate payments under any of the provisions of this Agreement.



                                       6
<PAGE>

         8.     Modification or Waiver.

         No amendment, modification, waiver, termination or cancellation of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such amendment,
modification, waiver, termination or cancellation is sought. No course of
dealing between or among the parties to this Agreement shall be deemed to affect
or to modify, amend or discharge any provision or term of this Agreement. No
delay on the part of the Trust or Senior Officer in the exercise of any of their
respective rights or remedies shall operate as a waiver thereof, and no single
or partial exercise by the Trust or Senior Officer of any such right or remedy
shall preclude other or further exercise thereof. A waiver of right to remedy on
any one occasion shall not be construed as a bar to or waiver of any such right
or remedy on any other occasion.

         The respective rights and obligations of the parties hereunder shall
survive the Senior Officer's termination of employment and termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations.

         9.     Notices.

         All notices or other communications required or permitted hereunder
shall be made in writing and shall be deemed to have been duly given if
delivered by hand or delivered by a recognized delivery service or mailed,
postage prepaid, by express, certified or registered mail, return receipt
requested, and addressed to the Trust at the address set forth above or Senior
Officer at his address as set forth in the Trust records (or to such other
address as shall have been previously provided in accordance with this Paragraph
10).

         10.    Governing Law.

         This Agreement will be governed by and construed in accordance with the
laws of the State of New York.

         11.    Severability.

         Whenever possible, each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited by
or invalid under such applicable law, then, such provision or term shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provisions or term or the remaining provisions or terms of this Agreement.


                                       7
<PAGE>

         12.    Legal Representation.

         Each of the Trust and Senior Officer has had an opportunity to discuss
this Agreement with counsel.

         13.    Counterparts.

         This Agreement may be executed in separate counterparts, each of which
is deemed to be an original and both of which taken together shall constitute
one and the same Agreement.

         14.    Headings.

         The headings of the Paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part hereof and shall
not affect the construction or interpretation of this Agreement.

         15.    Entire Agreement.

         This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and undertakings, both written and oral, among the parties with respect to the
subject matter hereof.

         16.    Survival of Agreements.

         The covenants made in Paragraphs 1 through 5 each shall survive the
termination of this Agreement.

         17.    Binding Effect.

         This Agreement shall be binding on the Trust, its successors and
assigns, including any surviving entity resulting from a merger, consolidation
or other corporate reorganization.

         18.    Senior Officer's Covenants.

         Senior Officer covenants and agrees that in the event he receives any
compensation (other than compensation upon termination of employment by the
Trust for Cause or voluntarily by the Senior Officer) pursuant to this
Agreement, he shall not solicit for employment any personnel employed by the
Trust at the time of his termination for a period of two years from his Date of
Termination as long as such personnel is still employed by the Trust. Nothing
contained herein to the contrary, however, shall prevent Senior Officer from
providing a reference for any such personnel.


                                       8
<PAGE>


         19.    Confidentiality.

         Senior Officer and the Trust agree to keep this Agreement confidential
to the extent permitted by law. Senior Officer agrees to keep confidential all
information in his possession regarding the Company, its properties and its
plans, which is not generally known to the public.

         20.    Excess Parachute Payments

         Any provision of this Agreement to the contrary notwithstanding, if any
of the payments or benefits provided for in this Agreement, together with any
other payments which Employee has a right to receive from the Company or any of
its affiliates, constitute a "parachute payment", as defined in Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code"),
payments pursuant to this Agreement shall be reduced, if necessary to the
largest amount as will result in no portion of such payments being subject to
the excise tax imposed by Section 4999 of the Code, all as determined by the
Company's regularly engaged independent public accountants.

         21.    Prior Understandings.

         This Agreement embodies the entire contract between the parties hereto
with respect to employment and severance and supersedes any and all prior
agreements and understandings, written or oral, formal or informal by and
between the Trust and the Senior Officer.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.

                                                 ACADIA REALTY TRUST


                                                 By:___________________________
                                                          Kenneth F. Bernstein
                                                          President


                                                 ______________________________
                                                 Name:    Robert Masters
                                                 Title:   Senior Vice President



                                       9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>10
<FILENAME>ex10-21.txt
<DESCRIPTION>EXHIBIT 10.21
<TEXT>
<PAGE>

                                 PROMISSORY NOTE


US $16,000,000.00                                                   May 30, 2003


         FOR VALUE RECEIVED, the undersigned, 239 GREENWICH ASSOCIATES LIMITED
PARTNERSHIP, a Connecticut limited partnership ("Borrower") having an address at
c/o Acadia Realty Trust, 1311 Mamaroneck Avenue, White Plains, New York 10605,
promises to pay GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware
corporation ("Lender"), or order, at 600 Steamboat Road, Greenwich, Connecticut
06830, or such other place as the holder hereof may designate in writing, the
principal sum of SIXTEEN MILLION AND NO/100 DOLLARS (US$16,000,000.00) (the
"Principal"), with interest on the unpaid principal balance from the date of
this Note, until paid, at the rate of five and nineteen one-hundredths percent
(5.19%) per annum (the "Interest Rate"). This Promissory Note may be referred to
herein as the "Note," and the loan evidenced hereby may be referred to herein as
the "Loan."

         PAYMENTS OF PRINCIPAL AND INTEREST. On July 1, 2003 and on each Payment
Date (as defined herein) thereafter through and including June 1, 2005, Borrower
shall pay to Lender interest on the unpaid Principal at the Interest Rate which
has accrued from the first day through the last day of the calendar month
immediately preceding such Payment Date. The Principal and the interest thereon
at the Interest Rate shall be due and payable by Borrower to Lender in
consecutive monthly installments, each in the amount of $87,758.93 (the "Monthly
Debt Service Payment Amount") beginning on July 1, 2005 (herein "amortization
commencement date") and on each Payment Date thereafter until the entire
indebtedness evidenced hereby is fully paid, except that any remaining
indebtedness, if not sooner paid, shall be due and payable on June 1, 2013 (the
"Maturity Date").

         Interest on the principal sum of this Note shall be calculated on the
basis of a 360 day year, and shall be charged based on the actual number of days
during each month or other applicable accrual period. Interest on this Note
shall be paid in arrears.

         The undersigned shall pay the holder hereof, in advance, on the date
hereof, interest only on the outstanding principal balance of this Note, at the
interest rate first mentioned above, from the date hereof through and including
the last day of the calendar month in which this Note is executed.

         The Monthly Debt Service Payment Amount due on any Payment Date shall
first be applied to the payment of interest accrued during the preceding accrual
period and the remainder of such Monthly Debt Service Payment Amount shall be
applied to the reduction of the unpaid Principal. All accrued and unpaid
interest shall be due and payable on the Maturity Date. If the Loan is repaid on
any date other than on a Payment Date (whether prior to or after the Maturity
Date), Borrower shall also pay interest that would have accrued on such repaid
Principal to but not including the next Payment Date.

<PAGE>


         Borrower shall repay the entire outstanding principal balance of this
Note in full on the Maturity Date, together with interest thereon to (but
excluding) the date of repayment and any other amounts due and owing under the
Loan Documents (as defined herein).

         As used herein, the term "Payment Date" shall mean the first (1st) day
of each calendar month or, upon Lender's exercise of its right to change the
Payment Date in accordance with this paragraph, the New Payment Date (in either
case, if such day is not a Business Day, the Payment Date shall be the first
Business Day thereafter). The first Payment Date hereunder shall be July 1,
2003. Notwithstanding the foregoing, Lender shall have the right, to be
exercised not more than once during the term of the Loan, to change the Payment
Date to a date other than the first day of each month (a "New Payment Date"), on
30 days' written notice to Borrower; provided, however, that any such change in
the Payment Date: (i) shall not modify the amount of regularly scheduled monthly
principal and interest payments, except that the first payment of principal and
interest payable on the New Payment Date shall be accompanied by interest at the
interest rate herein provided for the period from the Payment Date in the month
in which the New Payment Date first occurs to the New Payment Date, and (ii)
shall extend the Maturity Date to the New Payment Date occurring in the month
set forth in the definition of Maturity Date.

         SECURITY; LOAN DOCUMENTS. The indebtedness evidenced by this Note is
secured by, among other things, that certain Open-End Mortgage, Assignment of
Rents and Security Agreement of even date herewith (the "Instrument"), executed
by Borrower, encumbering real property more particularly described therein (the
"Property"), and reference is made thereto for rights as to acceleration of the
indebtedness evidenced by this Note. This Note, the Instrument, and all other
documents or instruments given by Borrower or any guarantor and accepted by
Lender for purposes of evidencing, securing, perfecting, or guaranteeing the
indebtedness evidenced by this Note may be referred to as the "Loan Documents."
Any capitalized term used but not otherwise defined herein shall have the
meaning ascribed thereto in the Instrument.

         DEFEASANCE.
         -----------

         A. Notwithstanding anything to the contrary contained in this Note, the
Instrument or the Loan Documents, at any time (x) after the earlier of the 42nd
month after the date hereof or the second (2nd) anniversary of the date that is
the "startup day," within the meaning of Section 860G of the Internal Revenue
Code of 1986, as amended from time to time or any successor statute (the "Code")
of a "real estate mortgage investment conduit," within the meaning of Section
860D of the Code, that holds this Note and (y) before the date which is ninety
(90) days prior to the Maturity Date (the "Permitted Prepayment Date"); and
provided (unless Lender shall otherwise consent, in its sole discretion) no
event of default has occurred and is continuing, Borrower shall have the right
to obtain the release of the Property from the lien of the Instrument and the
other Loan Documents (such release, the "Defeasance") upon the satisfaction of
the following conditions precedent (all of which conditions shall become
covenants upon occurrence of the Defeasance):

         (i) Borrower shall provide to Lender not less than 30 days' prior
written notice specifying a Payment Date on which the Defeasance Deposit
(hereinafter defined) is to be made (the date so specified may be referred to as
the "Defeasance Election Date").



                                       2
<PAGE>


         (ii) Borrower shall pay to Lender on the Defeasance Election Date all
interest accrued and unpaid on the outstanding principal amount of this Note to
the Defeasance Election Date and the scheduled principal amortization payment
due on such Defeasance Election Date, together with all other amounts then due
and payable under this Note, the Instrument and the other Loan Documents.

         (iii) Borrower shall irrevocably deposit with Lender an amount of U.S.
Government Securities (hereinafter defined) which through the scheduled payment
of principal and interest in respect thereof in accordance with their terms will
provide, not later than the due dates of the payments owing hereunder, cash in
an amount sufficient, without reinvestment, in the opinion of a nationally
recognized firm of independent certified public accountants expressed in a
written certification thereof delivered to Lender (the "CPA Certificate"), to
pay and discharge the Scheduled Defeasance Payments (hereinafter defined). The
securities so deposited, together with any interest or other increase from the
issuer of the securities earned thereon and any replacements thereof, shall be
referred to herein as the "Defeasance Deposit."

         (iv) Borrower shall cause the following to be delivered to Lender on or
prior to the Defeasance Election Date, all in form and substance satisfactory to
Lender in its reasonable discretion:

                  (a) a security agreement, in form and substance satisfactory
to Lender, creating a first priority lien on the Defeasance Deposit (the
"Defeasance Security Agreement");

                  (b) the CPA Certificate;

                  (c) a certificate of Borrower certifying that all requirements
for the Defeasance set forth herein have been satisfied;

                  (d) an opinion of counsel for Borrower in form and substance
satisfactory to Lender to the effect that (i) Lender has a perfected first
priority security interest in the Defeasance Deposit, and (ii) the holder of
this Note will not recognize income, gain or loss for United States federal
income tax purposes as a result of the defeasance and will be subject to United
States federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if the Defeasance had not occurred, and
(iii) any holder, trustee or custodian of this Note which is a "real estate
mortgage investment conduit" within the meaning of Section 860D of the Code will
not fail to maintain its status as such as a result of the Defeasance;

                  (e) evidence in writing from the applicable rating agencies
for any securitization transaction of which this Note is a part, to the effect
that the Defeasance will not result in a downgrading, withdrawal, or
qualification of the ratings in effect immediately prior to such Defeasance for
the then-outstanding securities issued in connection with such securitization;

                  (f) evidence satisfactory to Lender that suitable arrangements
have been made to maintain the existence of Borrower during the time thereafter
when the Note shall be outstanding; and




                                       3
<PAGE>

                  (g) such other certificates, documents or instruments as
Lender may reasonably request or as may be required by the rating agencies
referred to above.

         (v) Either (i) Borrower shall deliver to Lender a certificate stating
that at all times following the Defeasance, Borrower shall have no interest in
any assets other than the Defeasance Deposit, or (ii) Borrower shall satisfy all
of the requirements of Section C below.

         (vi) Borrower shall pay to Lender all reasonable out-of-pocket costs
and expenses (including, without limitation, attorneys' fees and disbursements)
incurred or anticipated to be incurred by Lender in connection with the
Defeasance.

         B. Upon compliance with the requirements of Section A above, Lender
shall cause the Property to be released from the lien of the Instrument, the
obligations hereunder and under the other Loan Documents with respect to the
Property shall no longer be applicable, the balance of each Subaccount shall be
disbursed to Borrower and the Defeasance Deposit shall be the sole source of
collateral securing this Note. Lender shall apply the Defeasance Deposit and the
payments received therefrom to the payment of all scheduled principal and
interest payments due on all successive payment dates under this Note after the
Defeasance Election Date and the payment due on the maturity date specified in
this Note (the "Scheduled Defeasance Payments"). Borrower, pursuant to the
Defeasance Security Agreement or other appropriate document, shall direct that
the payments received from the Defeasance Deposit shall be made directly to
Lender and applied to satisfy the obligations of Borrower under this Note.

         C. If, after the Defeasance, Borrower will own any assets other than
the Defeasance Deposit, Borrower shall establish or designate a single-purpose,
bankruptcy-remote successor entity acceptable to Lender (the "Successor
Borrower"), with respect to which a non-consolidation opinion satisfactory in
form and substance to Lender and any applicable rating agencies shall be
delivered to Lender and such rating agencies (if such a non-consolidation
opinion was required of Borrower in connection with the origination of the
indebtedness secured hereby) in which case Borrower shall transfer and assign to
the Successor Borrower all obligations, rights and duties under this Note and
the Defeasance Security Agreement, together with the pledged Defeasance Deposit.
The Successor Borrower shall assume the obligations of Borrower under this Note
and the Defeasance Security Agreement, and Borrower shall be relieved of its
obligations hereunder and thereunder. Borrower shall pay not less than $1,000 to
the Successor Borrower as consideration for assuming such Borrower obligations.

         D. As used herein, the term "U.S. Government Securities" shall mean
securities that are (i) direct obligations of the United States of America for
the full and timely payment of which its full faith and credit is pledged or (ii
) obligations of an entity controlled or supervised by and acting as an agency
or instrumentality and guaranteed as a full faith and credit obligation which
shall be fully and timely paid by the United States of America, which in either
case are not callable or redeemable at the option of the issuer thereof
(including a depository receipt issued by a bank (as defined in Section 3(a)(2)
of the United States Securities Act)) as custodian with respect to any such U.S.
Government Securities or a specific payment of principal of or interest on any
such U.S. Government Securities held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the securities or the specific payment of principal of
or interest on the securities evidenced by such depository receipt.



                                       4
<PAGE>


         E. If, after payment in full of all obligations evidenced by this Note
or any other of the Loan Documents, any of the Defeasance Deposit remains, then
on request by Borrower such remaining balance of the Defeasance Deposit shall be
returned to Borrower (or to the Successor Borrower, as the case may be).

         PREPAYMENT; PREPAYMENT CONSIDERATION. If any prepayment of all or any
portion of the principal balance hereunder occurs, whether in connection with
Lender's acceleration of the unpaid principal balance of this Note or in any
other circumstances whatsoever, or if the Instrument is satisfied or released by
foreclosure (whether by power of sale or judicial proceeding), deed in lieu of
foreclosure or by any other means, then Borrower shall therewith pay the
Prepayment Consideration. The foregoing shall not create any right of
prepayment. Borrower shall have no right whatsoever to prepay all or any portion
of the principal balance of this Note, except only as follows:

         (i) Borrower shall have the right to prepay and shall not be required
to pay any Prepayment Consideration with respect to prepayment required by
Lender pursuant to the Instrument as a result of the application of insurance
proceeds or condemnation awards under the Instrument or as a result of
prepayment of the entire principal balance of this Note remaining due after the
application of insurance proceeds or condemnation awards under the Instrument,
provided that such prepayment of the entire principal balance of this Note
remaining due is made within one hundred eighty (180) days following the date of
such application; and

(ii) Further, provided Borrower is not in default hereunder or under any of the
Loan Documents and provides not less than 30 days' prior written notice,
Borrower shall have the right to pay all (but not less than all) obligations
then outstanding under the Loan Documents, including the prepayment of all
principal, from and after the Permitted Prepayment Date. In such case, there
shall be no Prepayment Consideration due, except that if any such prepayment
occurs on any day other than a Payment Date, then in addition to the prepayment
amount Borrower also shall pay to Lender the amount of interest that would have
accrued under the Note on the amount being prepaid from and including the
prepayment date to the next Payment Date.

         The "Prepayment Consideration" shall be the amount equal to the greater
of (i) two percent of the Loan balance at the time of prepayment, or (ii) the
sum of one percent of the Loan balance at the time of prepayment, plus the
excess, if any, of (A) the amount of the monthly interest which would otherwise
be payable on the principal balance being prepaid from the date of the first day
of the calendar month immediately following the date of prepayment (unless
prepayment is tendered on the first day of any calendar month during the term of
this Note, in which case from the date of prepayment) to and including the
Maturity Date; over (B) the amount of the monthly interest the Lender would earn
if the principal balance being prepaid were reinvested for the period from the
first day of the calendar month immediately following the date of prepayment
(unless prepayment is tendered on the first day of any calendar month during the
term of this Note, in which case from the date of prepayment) to and including
the Maturity Date at the Treasury Rate (as hereinafter defined), such difference
to be discounted to present value at the Treasury Rate.



                                       5
<PAGE>


         The "Treasury Rate" shall be the annualized yield on securities issued
by the United States Treasury having a maturity corresponding to the remaining
term to the originally scheduled Maturity Date of this Note, as quoted in
Federal Reserve Statistical Release [H. 15(519)] under the heading "U.S.
Government Securities - Treasury Constant Maturities" for the Treasury Rate
Determination Date (as defined below), converted to a monthly equivalent yield.
If yields for such securities of such maturity are not shown in such
publication, then the Treasury Rate shall be determined by Lender by linear
interpolation between the yields of securities of the next longer and next
shorter maturities. If said Federal Reserve Statistical Release or any other
information necessary for determination of the Treasury Rate in accordance with
the foregoing is no longer published or is otherwise unavailable, then the
Treasury Rate shall be reasonably determined by Lender based on comparable data.

         The term "Treasury Rate Determination Date" shall mean the date which
is five banking days prior to the scheduled prepayment date. Lender shall notify
Borrower of the amount and the basis of determination of the required Prepayment
Consideration.

         [NO FURTHER TEXT ON THIS PAGE; DOCUMENT CONTINUES ON NEXT PAGE]





                                      6
<PAGE>


         BORROWER HEREBY EXPRESSLY WAIVES THE RIGHT TO PREPAY THE INDEBTEDNESS
EVIDENCED HEREBY IN WHOLE OR PART WITHOUT PENALTY, AND EXPRESSLY AGREES TO PAY
THE AMOUNTS REQUIRED HEREIN IN THE EVENT OF AN ACCELERATION. BORROWER AGREES
THAT THE PREPAYMENT CONSIDERATION REQUIRED HEREIN IS REASONABLE. BORROWER HAS
GIVEN INDIVIDUAL WEIGHT TO THE CONSIDERATION IN THIS TRANSACTION FOR THIS WAIVER
AND AGREEMENT. BORROWER HEREBY EXPRESSLY WAIVES THE BENEFIT OF ANY APPLICABLE
LAW TO THE CONTRARY.

                                  239 GREENWICH ASSOCIATES LIMITED
                                  PARTNERSHIP, a Connecticut limited
                                  partnership

                                  By: Acadia 239 Greenwich Avenue, LLC, a
                                      Delaware limited liability company, its
                                      general partner

                                      By: Acadia Realty Limited Partnership, a
                                          Delaware limited partnership, its sole
                                          member

                                          By: Acadia Realty Trust, a
                                              Maryland real estate
                                              investment trust, its
                                              general partner


                                              By:
                                                  ---------------------
                                                  Name:
                                                  Title:


                  [DOCUMENT CONTINUES FOLLOWING SIGNATURE]

         EVENTS OF DEFAULT; ACCELERATION. The following shall constitute an
"Event of Default" hereunder: (i) if any installment under this Note is not paid
when due, or (ii) if any condition or event occurs as a consequence of which the
holder hereof then has the right to accelerate the indebtedness hereunder
pursuant to any of the other Loan Documents.

         Upon and at any time following the occurrence of any Event of Default,
then at the option of the holder hereof and without notice, the entire principal
amount and all interest accrued and outstanding hereunder and all other amounts
outstanding under any of the Loan Documents shall at once become due and
payable, and the holder hereof may exercise any and all of its rights and
remedies under any of the Loan Documents or pursuant to applicable law. The
holder hereof may so accelerate such obligations and exercise such remedies at
any time after the occurrence of any Event of Default, regardless of any prior
forbearance.


                                       7

<PAGE>


         LATE CHARGES; ADDITIONAL INTEREST ON DEFAULT. If any installment under
this Note or any other amount owing hereunder or under any of the other Loan
Documents is not received by the holder hereof within five days after the same
is due, then the undersigned shall pay to the holder hereof a late charge of the
lesser of (a) five percent of such installment and (b) the maximum amount
permitted by applicable law, such late charge to be immediately due and payable
without demand by the holder hereof.

         In addition, after the occurrence and during the continuance of an
Event of Default, the outstanding principal balance of this Note shall bear
interest at the rate of five percent per annum in excess of the rate provided in
the first paragraph of this Note, or, if such increased rate of interest may not
be collected from the undersigned under applicable law, then at the maximum
increased rate of interest which may be collected from the undersigned under
applicable law (the "Default Rate").

         Borrower agrees that such late charge and increased interest are
reasonable and do not constitute a penalty.

         LAWFUL INTEREST. The parties hereto intend to conform strictly to the
applicable usury laws. In no event, whether by reason of demand for payment,
prepayment, acceleration of the maturity hereof or otherwise, shall the interest
contracted for, charged or received by the holder hereof hereunder or otherwise
exceed the maximum amount permissible under applicable law. If from any
circumstance whatsoever interest would otherwise be payable to the holder hereof
in excess of the maximum lawful amount, the interest payable to the holder
hereof shall be reduced automatically to the maximum amount permitted by
applicable law. If the holder hereof shall ever receive anything of value deemed
interest under applicable law which would apart from this provision be in excess
of the maximum lawful amount, an amount equal to any amount which would have
been excessive interest shall be applied to the reduction of the principal
amount owing hereunder in the inverse order of its maturity and not to the
payment of interest, or if such amount which would have been excessive interest
exceeds the unpaid balance of principal hereof, such excess shall be refunded to
the undersigned. All interest paid or agreed to be paid to the holder hereof
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term (including any renewal or
extension) of such indebtedness so that the amount of interest on account of
such indebtedness does not exceed the maximum permitted by applicable law. The
provisions of this paragraph shall control all existing and future agreements
between the undersigned and the holder hereof.

         CERTAIN RIGHTS AND WAIVERS. From time to time, without affecting the
obligation of the undersigned or the successors or assigns of the undersigned to
pay the outstanding principal balance of this Note and observe the covenants of
the undersigned contained herein, in the Instrument or in any other Loan
Document without affecting the guaranty of any person or entity for payment of
the outstanding principal balance of this Note, without giving notice to or
obtaining the consent of the undersigned, the successors or assigns of the
undersigned or guarantors, and without liability on the part of the holder
hereof, the holder hereof may, at the option of the holder hereof, extend the
time for payment of said outstanding principal balance or any part thereof,
reduce the payments thereon, release anyone liable on any of said outstanding
principal balance, accept a renewal of this Note, modify the terms and time of
payment of said outstanding principal balance, join in any extension or
subordination agreement, release any security given herefor, take or release
other or additional security, and agree in writing with the undersigned to
modify the rate of interest or period of amortization of this Note or change the
amount of the monthly installments payable hereunder.



                                       8
<PAGE>



         Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof. This Note shall be the joint
and several obligation of all makers, sureties, guarantors, and endorsers, and
shall be binding upon them and their successors and assigns.

         THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHT THE UNDERSIGNED MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THIS
NOTE, THE INSTRUMENT, ANY OTHER LOAN DOCUMENT, ANY OTHER AGREEMENT CONTEMPLATED
TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY.

         The holder hereof shall have the right to assign or transfer, in whole
or in part (including the right to grant participation interests in) any or all
of its obligations under this Note, the Instrument and any or all of the other
Loan Documents. Lender shall be released of any obligations to the extent that
the same are so assigned or transferred, and the rights and obligations of
"Lender" hereunder shall become the rights and obligations of the transferee
holder.

         LIMITATION ON RECOURSE. Lender's rights of recourse for the obligations
of Borrower hereunder are limited in accordance with the Instrument. This
provision shall not limit any rights of Lender under any guaranty.

         ATTORNEYS' FEES, COSTS OF COLLECTION. Borrower shall pay to Lender on
demand all costs and expenses, including reasonable attorneys' fees and
expenses, incurred by Lender in collecting the indebtedness arising hereunder or
under any other Loan Documents or secured thereby, or in determining the rights
and obligations of any parties hereto or thereto, or as a consequence of any
breach or default by Borrower or any guarantor hereunder or thereunder, or
otherwise as a consequence of any right evidenced or secured by this Note or the
Loan Documents. Without limitation, such costs and expenses to be reimbursed by
Borrower shall include attorneys' fees and expenses incurred in any Bankruptcy
case or proceeding and in any appeal.

         APPLICABLE LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS) AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

                         [NO FURTHER TEXT ON THIS PAGE]




                                       9
<PAGE>


                  IN WITNESS WHEREOF, the undersigned has executed this
Promissory Note as of the date first written above.

                                    BORROWER:

                                 239 GREENWICH ASSOCIATES LIMITED
                                 PARTNERSHIP, a Connecticut limited
                                 partnership

                                 By: Acadia 239 Greenwich Avenue, LLC, a
                                     Delaware limited liability company, its
                                     general partner

                                     By: Acadia Realty Limited Partnership, a
                                         Delaware limited partnership, its sole
                                         member

                                         By: Acadia Realty Trust, a
                                             Maryland real estate
                                             investment trust, its
                                             general partner


                                             By:
                                                 ----------------------
                                                 Name:
                                                 Title:



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>11
<FILENAME>ex10-22.txt
<DESCRIPTION>EXHIBIT 10.22
<TEXT>
<PAGE>
================================================================================

                  239 GREENWICH ASSOCIATES LIMITED PARTNERSHIP,


                                  as mortgagor
                                                                      (Borrower)


                                       to


                   GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.,


                                  as mortgagee
                                                                        (Lender)

               ___________________________________________________


                        OPEN-END MORTGAGE, ASSIGNMENT OF
                         LEASES AND RENTS AND SECURITY
                                    AGREEMENT

               ___________________________________________________

                      Dated:    As of May 30, 2003

                      Location: 239 Greenwich Avenue, Greenwich, Connecticut

                      County:   Fairfield


                                PREPARED BY AND UPON
                                RECORDATION RETURN TO:

                                Kaye Scholer LLP
                                425 Park Avenue,
                                New York, New York 10022
                                Attention: Stephen Gliatta, Esq.




================================================================================


<PAGE>

    OPEN-END MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT


         THIS OPEN-END MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY
AGREEMENT (herein "Instrument") is made as of May 30, 2003, and is given by the
Mortgagor, 239 GREENWICH ASSOCIATES LIMITED PARTNERSHIP, a Connecticut limited
partnership whose address is c/o Acadia Realty Trust, 1311 Mamaroneck Avenue,
White Plains, New York 10605 (herein "Borrower"), to the Mortgagee, GREENWICH
CAPITAL FINANCIAL PRODUCTS, INC., a corporation organized and existing under the
laws of the state of Delaware, whose address is 600 Steamboat Road, Greenwich,
Connecticut 06830, together with its successors, assigns and transferees (herein
"Lender").

         BORROWER, in consideration of the indebtedness herein recited,
irrevocably grants, conveys, mortgages and assigns to Lender, WITH POWER OF SALE
AND RIGHTS OF ENTRY AND POSSESSION, the following described property located in
the County of Fairfield, State of Connecticut, and more particularly described
on Exhibit "A" attached hereto and incorporated herein by reference for all
purposes.

         TOGETHER with all buildings, improvements and tenements now or
hereafter erected on the property, and all heretofore or hereafter vacated
alleys and streets abutting the property, and all easements, rights,
appurtenances, rents (subject however to the assignment of rents to Lender
herein), royalties, mineral, oil and gas rights and profits, water, water
rights, and water stock appurtenant to the property, and all fixtures,
machinery, equipment, engines, boilers, incinerators, building materials,
appliances and goods of every nature whatsoever now or hereafter located in, or
on, or used, or intended to be used in connection with the property, including,
but not limited to, those for the purposes of supplying or distributing heating,
cooling, electricity, gas, water, air and light; and all elevators, and related
machinery and equipment, fire prevention and extinguishing apparatus, security
and access control apparatus, plumbing, bath tubs, water heaters, water closets,
sinks, ranges, stoves, refrigerators, dishwashers, disposals, washers, dryers,
awnings, storm windows, storm doors, screens, blinds, shades, curtains and
curtain rods, mirrors, cabinets, paneling, rugs, attached floor coverings,
furniture, pictures, antennas, trees and plants, tax refunds, trade names,
licenses, permits, Borrower's rights to insurance proceeds, unearned insurance
premiums and chooses in action; all of which, including replacements and
additions thereto and substitutions therefor, shall be deemed to be and remain a
part of the real property covered by this Instrument; and all of the foregoing,
together with said property are herein referred to as the "Property";

         TOGETHER with all right, title and interest in, to and under any and
all leases now or hereinafter in existence (as amended or supplemented from time
to time) and covering space in or applicable to the Property (hereinafter
referred to collectively as the "Leases" and singularly as a "Lease"), together
with all rents, earnings, income, profits, benefits and advantages arising from
the Property and from said Leases and all other sums due or to become due under
and pursuant thereto, and together with any and all guarantees of or under any
of said Leases, and together with all rights, powers, privileges, options and
other benefits of Borrower as lessor under the Leases, including, without
limitation, the immediate and continuing right to receive and collect all rents,
income, revenues, issues, profits, condemnation awards, insurance proceeds,



<PAGE>


moneys and security payable or receivable under the Leases or pursuant to any of
the provisions thereof, whether as rent or otherwise, the right to accept or
reject any offer made by any tenant pursuant to its Lease to purchase the
Property and any other property subject to the Lease as therein provided and to
perform all other necessary or appropriate acts with respect to such Leases as
agent and attorney-in-fact for Borrower, and the right to make all waivers and
agreements, to give and receive all notices, consents and releases, to take such
action upon the happening of a default under any Lease, including the
commencement, conduct and consummation of proceedings at law or in equity as
shall be permitted under any provision of any Lease or by any law, and to do any
and all other things whatsoever which the Borrower is or may become entitled to
do under any such Lease together with all accounts receivable, contract rights,
franchises, interests, estates or other claims, both at law and in equity,
relating to the Property, to the extent not included in rent earnings and income
under any of the Leases;

         TOGETHER with all right, title and interest in, to and under any and
all reserve, deposit or escrow accounts (the "Accounts") made pursuant to any
loan document made between Borrower and Lender with respect to the Property,
together with all income, profits, benefits and advantages arising therefrom,
and together with all rights, powers, privileges, options and other benefits of
Borrower under the Accounts, and together with the right to do any and all other
things whatsoever which the Borrower is or may become entitled to do under the
Accounts;

         TOGETHER with all agreements, contracts, certificates, guaranties,
warranties, instruments, franchises, permits, licenses, plans, specifications
and other documents, now or hereafter entered into, and all rights therein and
thereto, pertaining to the use, occupancy, construction, management or operation
of the Property and any part thereof and any improvements or respecting any
business or activity conducted on the Property and any part thereof and all
right, title and interest of Borrower therein, including the right to receive
and collect any sums payable to Borrower thereunder and all deposits or other
security or advance payments made by Borrower with respect to any of the
services related to the Property or the operation thereof;

         TOGETHER with all tradenames, trademarks, servicemarks, logos,
copyrights, goodwill, books and records and all other general intangibles
relating to or used in connection with the operation of the Property; and

         TOGETHER with any and all proceeds resulting or arising from any of the
foregoing (the Property, the Leases, the Accounts, and all other property,
whether real, personal, tangible, or intangible, described above, and all
proceeds thereof, may be referred to collectively as the "Collateral").

         THIS INSTRUMENT SECURES TO LENDER (a) the repayment of the indebtedness
evidenced by Borrower's note dated of even date herewith ("Note") in the
principal sum of SIXTEEN MILLION AND NO/100 DOLLARS ($16,000,000) (the
"Principal"), with interest thereon, with the balance of the indebtedness, if
not sooner paid, due and payable on June 1, 2013 (the "Maturity Date"), and all
renewals, extensions and modifications thereof; (b) the performance of the
covenants and agreements of Borrower contained in an Environmental Indemnity
Agreement (herein so-called) between Lender and Borrower dated of even date
herewith; (c) the payment of all other sums, with interest thereon, advanced by



                                       3
<PAGE>


Lender in accordance herewith to protect the security of this Instrument; and
(d) the performance of the covenants and agreements of Borrower herein
contained, or contained in any other Loan Document, INCLUDING BORROWER'S
COVENANT TO REPAY ALL FUTURE ADVANCES (the Note, this Instrument, and all other
documents or instruments given by Borrower or others and accepted by Lender for
purposes of evidencing, securing, perfecting, or guaranteeing the indebtedness
evidenced by the Note may be referred to as the "Loan Documents"). Without
limitation of the foregoing, the following documents and instruments of even
date herewith are also Loan Documents: (i) Assignment of Leases and Rents from
Borrower to Lender, (ii) Assignment of Agreements, Licenses, Permits and
Contracts from Borrower to Lender, (iii) the Clearing Account Agreement (the
"Clearing Account Agreement") among Borrower, Lender, Aberdeen Properties, Inc.
("Manager") and Wachovia Bank, National Association, (iv) the Deposit Account
Agreement (the "Deposit Account Agreement") among Borrower, Lender, Manager and
Deposit Bank, (v) the Guaranty of Recourse Obligations (the "Guaranty") made by
Acadia Realty Limited Partnership, a Delaware limited partnership ("Guarantor"),
(vi) the Certificate of Borrower and (vii) Environmental Indemnity Agreement
made by Borrower for the benefit of Lender (the "Environmental Indemnity
Agreement"), as each of the foregoing may be (and each of the foregoing defined
terms shall refer to such documents as they may be) amended, restated, replaced,
supplemented or otherwise modified from time to time.

         Borrower covenants that Borrower is lawfully seized of the estate
hereby conveyed and has the right to mortgage, grant, convey and assign the
Property, that the Property is unencumbered, and that Borrower will warrant and
defend generally the title to the Property against all claims and demands,
subject to any easements and restrictions listed in a schedule of exceptions to
coverage in any title insurance policy insuring Lender's interest in the
Property.

         Borrower represents, warrants, covenants and agrees in favor of Lender
as follows:

         SECTION 1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly
pay when due the principal of and interest on the indebtedness evidenced by the
Note, any prepayment and late charges provided in the Note and all other sums
secured by this Instrument.

         SECTION 2. INTENTIONALLY DELETED.

         SECTION 3. APPLICATION OF PAYMENTS. Lender may apply any payments
received from or on behalf of Borrower to any of the obligations of Borrower
then due under the Loan Documents, in any order determined by Lender.

         SECTION 4. CHARGES; LIENS. Borrower shall pay all rents, taxes, charges
assessments and impositions attributable to the Property (collectively "Taxes")
when due. Unless Lender is paying such Taxes in accordance with Section 25,
Borrower shall promptly furnish to Lender all notices of amounts due under this
Section, and in the event Borrower shall make payment directly, Borrower shall
promptly furnish to Lender receipts evidencing such payments. Except only for
the liens and security interests in favor of Lender under this Instrument and
the other Loan Documents, which Borrower shall pay and discharge in accordance
with the Loan Documents, Borrower shall promptly discharge any lien encumbering




                                       4
<PAGE>


all or any portion of or interest in the Property (unless such lien is bonded
within 30 days after Borrower first receives notice of such lien), irrespective
of the priority of the same. Borrower shall pay, when due, the claims of all
persons supplying labor or materials to or in connection with the Property
(unless such claims are the subject of a bona fide dispute in which Borrower is
contesting the amount or validity thereof).

         SECTION 5. HAZARD INSURANCE. Borrower shall at all times keep the
improvements now existing or hereafter erected on the Property insured against
all losses, hazards, casualties, liabilities and contingencies as Lender shall
reasonably require and in such amounts and for such periods as Lender shall
reasonably require. Borrower shall purchase and maintain policies of insurance
with respect to the Property in such amounts and covering such risks as shall be
satisfactory to Lender, including, but not limited to, the following:

                  (a) Property damage insurance covering loss or damage to the
Property caused by fire, lightning, hail, windstorm, explosion, hurricane (to
the extent available), vandalism, malicious mischief, and, if available and
subject to subsection (i) below, coverage for damage or destruction caused by
the acts of "Terrorists" (or such policies shall have no exclusion from coverage
with respect thereto) and such other losses, hazards, casualties, liabilities
and contingencies as are normally and usually covered by fire policies in effect
where the Property is located endorsed to include all of the extended coverage
perils and other broad form perils, including the standard "all risks" clauses.
Such policy shall be in an amount not less than that necessary to comply with
any coinsurance percentage stipulated in the policy, but not less than the
greater of 100% of the full replacement cost of the improvements on the Property
(without any deduction for depreciation) or the unpaid principal amount of the
loan evidenced by the Note, and shall contain a replacement cost endorsement.
The deductible under such policy, if any, shall not exceed the lesser of five
percent (5%) of Net Operating Income or $50,000. Further, if any of the
improvements or the use of the Property shall at any time constitute legal
nonconforming structures or uses under current zoning ordinances, such policy
shall contain an "Ordinance or Law Coverage" or "Enforcement" endorsement
providing coverage for demolition, increased cost of construction and inability
to rebuild.

                  (b) Broad form boiler and machinery insurance in an amount
equal to the lesser of 100% of the full replacement cost of the building
(without any deduction for depreciation) in which the boiler or similar vessel
is located, or $2,000,000. In addition, Lender may require a rider to such
policy to extend such coverage to electrical machinery and equipment, air
conditioning, refrigeration, and mechanical objects.

                  (c) If the Property is in an area prone to geological
phenomena, including, but not limited to, sinkholes, mine subsidence or
earthquakes, insurance covering such risks in an amount equal to 100% of the
full replacement cost of the improvements on the Property (without any deduction
for depreciation), and with a maximum permissible deductible equal to the lesser
of $25,000 or 10% of the face value of the policy.

                  (d) Flood insurance if the Property is in an area now or
hereafter designated by the Federal Emergency Management Agency as a Zone "A" &
"V" Special Hazard Area, or such other Special Hazard Area if Lender so requires
in its sole discretion. Such policy shall be in an amount equal to 100% of the
full replacement cost of the improvements on the Property (without any deduction
for depreciation), and shall have a maximum permissible deductible of $3,000.



                                       5
<PAGE>



                  (e) Business interruption or rent loss insurance in an amount
equal to the gross income or rentals from the Property for an indemnity period
of eighteen months, such amount being adjusted annually.

                  (f) During any period of reconstruction, renovation or
alteration of the Property in excess of 10% of the Note, a completed value, "All
Risks" Builders Risk form or "Course of Construction" insurance policy in
non-reporting form and in an amount satisfactory to Lender in Lender's sole
discretion.

                  (g) Commercial General Liability insurance covering bodily
injury and death in an amount not less than $1,000,000 per occurrence and
$2,000,000 in the aggregate with no deductible. If Lender permits such liability
coverage to be written on a blanket basis, then such policy shall provide that
the aggregate limit of insurance applies separately to the Property.

                  (h) If required by applicable state laws, worker's
compensation or employer's liability insurance in accordance with such laws.

                  (i) Notwithstanding anything in subsection (a) above to the
contrary, Borrower shall be required to obtain and maintain coverage in its
property insurance policy (or by a separate policy) against loss or damage by
terrorist acts provided that such coverage is available. Borrower shall obtain
such coverage from a carrier which otherwise satisfies the rating criteria
specified in this Section 5 (a "Qualified Carrier") or in the event that such
coverage is not available from a Qualified Carrier, Borrower shall obtain such
coverage from the highest rated insurance company providing such coverage. If
such coverage with respect to terrorist acts is available as aforesaid, Borrower
shall obtain and maintain such coverage in an amount equal to 100% of the "Full
Replacement Cost" of the Property.

                  (j) Such other insurance and endorsements, if any, as Lender
may reasonably require from time to time, or which are required by the Loan
Documents.

         Each carrier providing any insurance, or portion thereof, required by
this Section shall be issued by companies approved by Lender and licensed to do
business in the State, with a claims paying ability rating of "AA" or better by
S&P (and the equivalent by any other Rating Agency) and a rating of A:X or
better in the current Best's Insurance Reports; provided, that, the liability
insurance required under paragraph (g) of this Section shall be issued by
companies approved by Lender and licensed to do business in the State, with a
claims paying ability rating of "A+" or better by S&P (and the equivalent by any
other Rating Agency) and a rating of A:X or better in the current Best's
Insurance Reports. Borrower shall cause all insurance (except general public
liability insurance) carried in accordance with this Section to be payable to
Lender as a mortgagee and not as a coinsured, and, in the case of all policies
of insurance carried by each lessee for the benefit of Borrower, if any, to
cause all such policies to be payable to Lender as Lender's interest may appear.
All premiums on insurance policies shall be paid, in the manner provided under
Section 2 hereof, or in such other manner as Lender may designate in writing.



                                       6
<PAGE>


         All insurance policies and renewals thereof (i) shall be in a form
acceptable to Lender, (ii) shall provide for a term of not less than one year,
(iii) shall provide by way of endorsement, rider or otherwise that such
insurance policy shall not be canceled, endorsed, altered, or reissued to effect
a change in coverage unless such insurer shall have first given Lender 30 days
prior written notice thereof, (iv) shall include a standard mortgagee clause in
favor of and in form acceptable to Lender, (v) shall provide for claims to be
made on an occurrence basis, except that boiler and machinery coverage may be
made on an accident basis, and (vi) shall contain an agreed value clause updated
annually (if the amount of coverage under such policy is based upon the
replacement cost of the Property). All property damage insurance policies
(except for flood and earthquake policies) must automatically reinstate after
each loss.

         Any blanket insurance policy shall specifically allocate to the
Property the amount of coverage from time to time required hereunder and shall
otherwise provide the same protection as would a separate "stand-alone" policy
insuring only the Property in compliance with the provisions of this Section 5.

         Lender shall have the right to hold the policies, and Borrower shall
promptly furnish to Lender all renewal notices and all receipts of paid
premiums. Not less than five (5) days prior to the expiration date of any
insurance policy required hereunder, a certificate of insurance evidencing the
renewal of such policy, together with evidence satisfactory to Lender of payment
in full of the annual premium therefor, shall be delivered by Borrower to
Lender. Not more than forty-five (45) days after to the expiration date of any
insurance policy required hereunder, Borrower shall deliver to Lender a renewal
insurance policy in form satisfactory to Lender.

         If the Property is damaged or destroyed, in whole or in part, by fire
or other casualty (a "Casualty"), Borrower shall give immediate written notice
thereof to Lender and to the insurance carrier. If a Casualty covered by any of
the policies of insurance (an "Insured Casualty") occurs where the loss does not
exceed $1,000,000, provided no Event of Default has occurred and is continuing,
Borrower may settle and adjust any claim without the prior consent of Lender;
provided such adjustment is carried out in a competent and timely manner, and
Borrower is hereby authorized to collect and receipt for the insurance proceeds.
In the event of an Insured Casualty where the loss equals or exceeds $1,000,000
(a "Significant Casualty"), Borrower may settle and adjust any claim with the
prior consent of Lender (which consent shall not be unreasonably withheld or
delayed) unless an Event of Default has occurred and is continuing in which case
Lender may settle and adjust any claim without the consent of Borrower and agree
with the insurer(s) on the amount to be paid on the loss, which settlement and
adjustment shall be in Lender's sole and absolute discretion. The proceeds with
respect to any Significant Casualty shall be due and payable solely to Lender
and held by Lender in the Casualty/Condemnation Subaccount and disbursed in
accordance herewith. If Borrower or any party other than Lender is a payee on
any check representing insurance proceeds with respect to a Significant
Casualty, Borrower shall immediately endorse, and cause all such third parties
to endorse, such check payable to the order of Lender. Borrower hereby
irrevocably appoints Lender as its attorney-in-fact, coupled with an interest,
to endorse such check payable to the order of Lender. Borrower further
authorizes Lender, at Lender's option, (a) to hold the balance of such proceeds
with respect to any Significant Casualty to be used to reimburse Borrower for
the cost of reconstruction or repair of the Property or (b) subject to the
immediately following paragraph, to apply such proceeds to the payment of the
sums secured by this Instrument whether or not then due, in any order. The



                                       7
<PAGE>


expenses incurred by Lender in the settlement, adjustment and collection of any
insurance proceeds shall become part of the Debt and shall be reimbursed by
Borrower to Lender upon demand.

         Lender shall not exercise Lender's option to apply insurance proceeds
to the payment of the sums secured by this Instrument if all of the following
conditions are met: (i) no Event of Default has occurred which is then
continuing; (ii) Lender determines that there will be sufficient funds to
restore and repair the Property to the Pre-existing Condition (as hereinafter
defined); (iii) Lender agrees in writing that the rental income of the Property,
after restoration and repair of the Property to the Pre-existing Condition, will
be sufficient to meet all operating costs and other expenses, payments for
reserves and loan repayment obligations (including any obligations under any
permitted subordinate financing) relating to the Property and maintain a Debt
Service Coverage Ratio of at least 1.25 to 1.0; (iv) Lender determines that
restoration and repair of the Property to the Pre-existing Condition will be
completed within one year of the date of the loss or casualty to the Property,
but in no event later than six months prior to the Maturity Date; (v) less than
30 percent of the total floor area of the improvements has been damaged,
destroyed or rendered unusable as a result of such fire or other casualty; (vi)
tenant leases for commercial or retail space at the Property in effect as of the
date of the occurrence of such fire or other casualty remain in full force and
effect during and after the completion of the restoration and repair of the
Property, and Borrower furnishes to Lender evidence satisfactory to Lender that
all commercial tenants at the Property shall continue to operate their
respective businesses at the Property after completion of such restoration or
repair, notwithstanding the occurrence of any such fire or other casualty; and
(vii) Lender is reasonably satisfied that the Property can be restored and
repaired as nearly as possible to the condition it was in immediately prior to
such casualty and in compliance with all applicable zoning, building and other
laws and codes (the "Pre-existing Condition"). If Lender elects to make the
insurance proceeds available for the restoration and repair of the Property,
Borrower agrees that, if at any time during the restoration and repair, the cost
of completing such restoration and repair, as determined by Lender, exceeds the
undisbursed insurance proceeds, Borrower shall, immediately upon demand by
Lender, deposit the amount of such excess with Lender, and Lender shall first
disburse such deposit to pay for the costs of such restoration and repair on the
same terms and conditions as the insurance proceeds are disbursed.

         If the insurance proceeds are held by Lender to reimburse Borrower for
the cost of restoration and repair of the Property, then Borrower shall restore
the Property to the equivalent of its original condition or such other condition
as Lender may approve in writing, and Borrower shall promptly begin such
restoration and at all times thereafter diligently prosecute such restoration to
completion. Lender may, at Lender's option, condition disbursement of said
proceeds on Lender's approval of such plans and specifications of an architect
satisfactory to Lender, contractor's cost estimates, architect's certificates,
waivers of liens, sworn statements of mechanics and materialmen and such other
evidence of costs, percentage completion of construction, application of
payments; and satisfaction of liens as Lender may reasonably require. If the
insurance proceeds are applied to the payment of the sums secured by this
Instrument, any such application of proceeds to principal shall not extend or
postpone the due dates of the monthly installments due under the Note, under
Section 2 hereof, or otherwise under the Loan Documents, or change the amounts
of such installments. If the Property is sold at foreclosure or pursuant to
power of sale or if Lender acquires title to the Property, Lender shall have all
of the right, title and interest of Borrower in and to any insurance policies
and unearned premiums thereon and in and to the proceeds resulting from any
damage to the Property prior to such sale or acquisition.


                                       8
<PAGE>


         SECTION 6. PRESERVATION AND MAINTENANCE OF PROPERTY. Borrower (a) shall
not commit waste or permit impairment or deterioration of the Property, (b)
shall not abandon the Property, (c) shall restore or repair promptly and in a
good and workmanlike manner all or any part of the Property to the equivalent of
its original condition, or such other condition as Lender may approve in
writing, in the event of any damage, injury or loss thereto, whether or not
insurance proceeds are available to cover in whole or in part the costs of such
restoration or repair, (d) shall keep the Property, including improvements,
fixtures, equipment, machinery and appliances thereon in good repair and shall
replace fixtures, equipment, machinery and appliances on the Property when
necessary to keep such items in good repair, (e) shall comply with all laws,
ordinances, regulations and requirements of any governmental body applicable to
the Property, (f) shall provide for management of the Property by Acadia Realty
Limited Partnership or Aberdeen Properties, Inc., or otherwise provide for
professional third-party management of the Property by a commercial property
manager with substantial experience in managing properties of the applicable
kind, and otherwise satisfactory to Lender, pursuant to a contract approved by
Lender in writing, unless such requirement shall be waived by Lender in writing,
(g) shall generally operate and maintain the Property in a manner to ensure
maximum rentals, and (h) shall give notice in writing to Lender of and, unless
otherwise directed in writing by Lender, appear in and defend any action or
proceeding purporting to affect the Property, the security of this Instrument or
the rights or powers of Lender. Neither Borrower nor any tenant or other person
shall remove, demolish or alter any improvement now existing or hereafter
erected on the Property or any fixture, equipment, machinery or appliance in or
on the Property except when incident to the replacement of fixtures, equipment,
machinery and appliances with items of like kind.

         SECTION 7. USE OF PROPERTY. Unless required by applicable law or unless
Lender has otherwise agreed in writing, Borrower shall not allow changes in the
use for which all or any part of the Property was intended at the time this
Instrument was executed. Borrower shall not subdivide the Property or initiate
or acquiesce in a change in the zoning classification of the Property without
Lender's prior written consent.

         SECTION 8. PROTECTION OF LENDER'S SECURITY. If Borrower fails to
perform the covenants and agreements contained in this Instrument, or if any
action or proceeding is commenced which affects the Property or title thereto or
the interest of Lender therein, including, but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, Lender, at Lender's option, may make such appearances,
disburse such sums and take such action as Lender deems necessary, in its sole
discretion, to protect Lender's interest, including, but not limited to, (i)
disbursement of attorney's fees, (ii) entry upon the Property to make repairs,
(iii) procurement of satisfactory insurance as provided herein, (iv) the payment
of any Taxes then due and payable, and (v) payment of any other amounts
contemplated in any of the Loan Documents. Any amounts disbursed by Lender
pursuant to this Section, with interest thereon, shall become additional
indebtedness of Borrower secured by this Instrument. Unless Borrower and Lender
agree to other terms of payment, such amounts shall be immediately due and
payable upon demand and shall bear interest from the date of disbursement at the
rate then applicable to principal under the Note unless collection from Borrower


                                       9
<PAGE>

of interest at such rate would be contrary to applicable law, in which event
such amounts shall bear interest at the highest rate which may be collected from
Borrower under applicable law. Nothing contained in this Section or elsewhere in
any of the Loan Documents shall require Lender to incur any expense or take any
action hereunder.

         SECTION 9. INSPECTION. Lender may make or cause to be made reasonable
entries upon and inspections of the Property including, but not limited to,
Phase I and/or Phase II environmental audits and inspections.

         SECTION 10. BOOKS AND RECORDS. Borrower shall keep and maintain at all
times at Borrower's address stated herein, or such other place as Lender may
approve in writing, complete and accurate books of accounts and records adequate
to reflect correctly the results of the operation of the Property and copies of
all written contracts, leases and other instruments which affect the Property.
Such books, records, contracts, leases and other instruments shall be subject to
examination and inspection at any reasonable time by Lender.

         Borrower shall furnish to Lender annually, within 120 days after each
calendar year, a complete copy of Borrower's annual financial statements
prepared as a compilation (with a review) by a "big four" accounting firm or
another independent certified public accountant (accompanied by an unqualified
opinion from such accounting firm or other independent certified public
accountant) reasonably acceptable to Lender, each in accordance with GAAP or a
federal income tax basis of accounting, in either case, consistently applied,
and containing balance sheets and statements of profit and loss for Borrower and
the Property in such detail as Lender may reasonably request. Notwithstanding
the foregoing, Lender hereby approves of Berdon LLP as the aforementioned
independent certified public accountant, provided, however, that Lender reserves
the right to disapprove of Berdon LLP as the aforementioned independent
certified public accountant (and to require a "big four" accounting firm or
another independent certified public accountant reasonably acceptable to Lender)
if in Lender's reasonable opinion, Berdon LLP is not preparing the requisite
financial statements substantially in accordance with the provisions contained
herein. Each such statement (x) shall be in form and substance satisfactory to
Lender, (y) shall set forth the financial condition and the income and expenses
for the Property for the immediately preceding calendar year, including
statements of annual Net Operating Income as well as (1) a list of commercial
tenants, if any, occupying more than twenty percent of the rentable space of the
Property, (2) a breakdown showing (a) the year in which each commercial Lease
then in effect expires, and (b) the percentage of rentable space covered by such
commercial Lease as stated in such Lease, and (z) shall be accompanied by an
Officer's Certificate (as defined in Section 25 hereof) certifying (1) that such
statement is true, correct, complete and accurate and presents fairly the
financial condition of the Property and has been prepared in accordance with
GAAP or a federal income tax basis of accounting, in either case, consistently
applied, and (2) whether there exists an Event of Default, and if so, the nature
thereof, the period of time it has existed and the action then being taken to
remedy it.

         On or before the 30th day after the end of each three-month fiscal
quarter of Borrower (which may include months for which reports shall have been
submitted under the prior sentence), Borrower shall deliver to Lender management
prepared financial statements for such quarter. Each set of such financial
statements (i) shall consist of an operating statement of income and expenses of
the Property, (ii) shall be in form and detail reasonably satisfactory to Lender




                                       10
<PAGE>


and (iii) shall be accompanied by an Officer's Certificate certifying that the
applicable statements are true, complete, and accurate and do not omit to state
any material information. All of such financial statements shall provide
information for the applicable month or quarter and on a year-to-date basis (and
at the end of the fourth quarter, for the year).

         Borrower shall furnish, together with the foregoing financial
statements and at any other time upon Lender's request, a rent schedule for the
Property, certified by Borrower, showing the name of each tenant, and for each
tenant, the space occupied, the lease expiration date, the rent payable and the
rent paid.

         In addition to the above delivery of financial statements and rent
schedule, Borrower shall deliver to Lender updated versions of such financial
statements at any other time upon Lender's request, including operating
statements of income and expenses of the Property. Borrower shall also furnish
to Lender, during any Cash Management Period, the Annual Budget in accordance
with Section 28(h) of this Instrument. Further, Borrower shall provide to
Lender, as soon as the same are available to Borrower, all financial statements
and sales reports received from any tenant at the Property.

         SECTION 11. CONDEMNATION. Borrower shall promptly give Lender notice of
the actual or threatened commencement of any condemnation or eminent domain
proceeding affecting the Property (a "Condemnation") and shall deliver to Lender
copies of any and all papers served in connection with such Condemnation.
Following the occurrence of a Condemnation, Borrower, regardless of whether an
Award is available, shall promptly proceed to restore, repair, replace or
rebuild the Property in accordance with Legal Requirements to the extent
practicable to be of at least equal value and of substantially the same
character (and to have the same utility) as prior to such Condemnation. If a
Condemnation occurs where the award or payment in respect thereof (an "Award")
does not exceed $250,000 or which results in the taking of 5% or less of the
Property, provided no Event of Default has occurred and is continuing, Borrower
may make any compromise, adjustment or settlement in connection with such
Condemnation with the prior consent of Lender, not to be unreasonably withheld
or delayed; provided such adjustment is carried out in a competent and timely
manner, and Borrower is hereby authorized to collect and receipt for the Award.
In the event of a Condemnation where the Award is in excess of $250,000 or which
results in the taking of more than 5% of the Property, Lender is hereby
irrevocably appointed as Borrower's attorney-in-fact, coupled with an interest,
with exclusive power to collect, receive and retain any Award and, so long as no
Event of Default is continuing, with Borrower's consent (which consent shall not
be unreasonably withheld or delayed) to make any compromise, adjustment or
settlement in connection with such Condemnation. Borrower shall cause any Award
that is payable to Borrower to be paid directly to Lender. Lender shall hold
such Award in the Casualty/Condemnation Subaccount and disburse such Award in
accordance with the terms hereof.

         Borrower authorizes Lender to apply such Award, after the deduction of
Lender's expenses incurred in the collection of such amounts, at Lender's
option, to restoration or repair of the Property or to payment of the sums
secured by this Instrument, whether or not then due, in the order determined by
Lender, with the balance, if any, to Borrower. Unless Borrower and Lender
otherwise agree in writing, any application of proceeds to principal shall not




                                       11
<PAGE>



extend or postpone the due date of the monthly installments due hereunder or
under any of the Loan Documents or change the amount of such installments.
Borrower agrees to execute such further evidence of assignment of any awards,
proceeds, damages or claims arising in connection with such condemnation or
taking as Lender may require.

         SECTION 12. BORROWER AND LIEN NOT RELEASED. From time to time, Lender
may, at Lender's option, without giving notice to or obtaining the consent of
Borrower, Borrower's successors or assigns or of any junior lienholder or
guarantors, without liability on Lender's part and notwithstanding Borrower's
breach of any covenant or agreement of Borrower in this Instrument, extend the
time for payment of said indebtedness or any part thereof, reduce the payments
thereon, release anyone liable on any of said indebtedness, accept a renewal
note or notes therefor, modify the terms and time of payment of said
indebtedness, release from the lien of this Instrument any part of the Property,
take or release other or additional security, reconvey any part of the Property,
consent to any map or plan of the Property, consent to the granting of any
easement, join in any extension or subordination agreement, and agree in writing
with Borrower to modify the rate of interest or period of amortization of the
Note or change the amount of the monthly installments payable thereunder. Any
actions taken by Lender pursuant to the terms of this Section shall not affect
the obligation of Borrower or Borrower's successors or assigns to pay the sums
secured by this Instrument and to observe the covenants of Borrower contained
herein, shall not affect the guaranty of any person, corporation, partnership or
other entity for payment of the indebtedness secured hereby, and shall not
affect the lien or priority of lien hereof on the Property. Borrower shall pay
Lender a reasonable service charge, together with such title insurance premiums
and attorney's fees as may be incurred at Lender's option, for any such action
if taken at Borrower's request.

         SECTION 13. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument
is intended to be a security agreement pursuant to the Uniform Commercial Code
for any of the items specified above as part of the Collateral which, under
applicable law, may be subject to a security interest pursuant to the Uniform
Commercial Code, and Borrower hereby grants Lender a security interest in said
items. Borrower agrees that Lender may file this Instrument, or a reproduction
thereof, in the real estate records or other appropriate index, as a financing
statement for any of the items specified above as part of the Collateral. Any
reproduction of this Instrument or of any other security agreement or financing
statement shall be sufficient as a financing statement. In addition, Borrower
agrees to execute and deliver to Lender, upon Lender's request, any financing
statements, as well as extensions, renewals and amendments thereof, and
reproductions of this Instrument in such form as Lender may require to perfect a
security interest with respect to said items. Borrower shall pay all costs of
filing such financing statements and any extensions, renewals, amendments and
releases thereof, and shall pay all reasonable costs and expenses of any record
searches for financing statements Lender may reasonably require. Without the
prior written consent of Lender, Borrower shall not create or suffer to be
created pursuant to the Uniform Commercial Code any other security interest in
said items, including replacements and additions thereto. Upon Borrower's breach
of any covenant or agreement of Borrower contained in this Instrument, including
the covenants to pay when due all sums secured by this Instrument, Lender shall
have the remedies of a secured party under the Uniform Commercial Code and, at
Lender's option, may also invoke the remedies provided herein or in any of the
Loan Documents, or pursuant to any applicable law as to such items. In
exercising any of said remedies, Lender may proceed against the items of real


                                       12
<PAGE>

property and any items of personal property specified above as part of the
Collateral separately or together and in any order whatsoever, without in any
way affecting the availability of Lender's remedies under the Uniform Commercial
Code or of the remedies provided herein or in any of the Loan Documents. For
purposes of the Security Agreement and the fixture filing, the Borrower shall
constitute the "Debtor" and shall have the address specified in the first
paragraph of this Instrument and the Lender shall constitute the "Security
Party" and shall have the address specified in the first paragraph of this
Instrument.

         SECTION 14. LEASES OF THE PROPERTY. Borrower shall comply with and
observe Borrower's obligations as landlord under all leases of the Property or
any part thereof. Borrower will not lease any portion of the Property for any
use contrary to the existing character of the Property except with the prior
written approval of Lender. Borrower may execute or modify, without Lender's
prior written consent, any lease of space at the Property now existing or
hereafter made which affects (A) residential space at the Property or (B) less
than 4,000 square feet of space at the Property and provided the term of such
lease is less than five years (an "Exempt Lease") provided such lease:

                  (i) is on a standard lease form pre-approved by Lender;

                  (ii) is at a net effective rent (after taking into account any
free rent, construction allowances or other concessions granted by landlord) no
less than the current actual rent or fair market rent then prevailing for
similar properties and leases in the market area;

                  (iii) contains rent or other concessions which are legally
required or are otherwise customary and reasonable for similar properties and
leases in the market area;

                  (iv) represents a bona fide arm's length transaction;

                  (v) does not permit any use which would violate any provision
of any existing lease or is otherwise inconsistent with the uses and quality of
existing tenants;

                  (vi) is provided to Lender within ten days after execution;

                  (vii) as modified or amended does not become a lease which
fails to satisfy the criteria for an Exempt Lease pursuant to this Section;

                  (viii) as modified or amended does not materially modify the
financial terms of Borrower's standard form of lease or materially reduce the
rights and remedies of the Borrower or Lender under said standard lease;

                  (ix) is subordinate by its terms to this Instrument provided
that for commercial and retail tenants at the Property, Lender shall have agreed
to provide such tenant with a non-disturbance agreement in form and substance
reasonably acceptable to Lender; provides that the tenant thereunder is required
to attorn to Lender, such attornment to be effective upon Lender's acquisition
of title to the Property; that the tenant agrees to execute such further
evidences of attornment as Lender may from time to time request; that the
attornment of the tenant shall not be terminated by foreclosure; that in no
event shall Lender, as holder of this Instrument or as successor landlord, be
liable to the tenant for any act or omission of any prior landlord or for any



                                       13
<PAGE>

liability or obligation of any prior landlord occurring prior to the date that
Lender or any subsequent owner acquire title to the Property; and that Lender
may, at Lender's option, accept or reject such attornment.

         Borrower shall be required to obtain Lender's consent, which shall not
be unreasonably withheld, for the creation of any lease and subleases at the
Property other than an Exempt Lease. The request for approval of each such
proposed lease shall be made to Lender in writing and Borrower shall furnish to
Lender (and any loan servicer specified from time to time by Lender): (i) such
biographical and financial information about the proposed tenant as Lender may
reasonably require in conjunction with its review, (ii) a copy of the proposed
form of lease, and (iii) a summary of the material terms of such proposed lease
(including, without limitation, rental terms and the term of the proposed lease
and any options). Lender's failure to approve or disapprove any such lease or
sublease within ten (10) Business Days after Lender's receipt of such request
shall be deemed to constitute Lender's approval thereof.

         As to all leases other than Exempt Leases, Borrower shall not, without
the prior written consent of Lender (which shall not be unreasonably withheld),
(i) cancel, amend or modify any such lease, (ii) approve any assignment,
sublease or underlease of any such lease, or (iii) cancel or modify any
guaranty, or release any security deposit or letter of credit constituting
security pertaining to any such lease. Lender's failure to approve or disapprove
any of the matters described in the preceding sentence within ten (10) Business
Days after Lender's receipt of such request shall be deemed to constitute
Lender's approval thereof.

         Borrower shall promptly send Lender copies of any notices of default
received from the tenant under any lease; and will enforce (short of terminating
such lease) the performance by the tenant of the tenant's obligations under any
lease.

         Except for security deposits, no lease, whether an Exempt Lease or
otherwise, shall provide for payment of rent more than one month in advance, and
Borrower shall not under any circumstances collect any such rent more than one
month in advance.

         Borrower, at Lender's request, shall furnish Lender with executed
copies of all leases hereafter made of all or any part of the Property, and all
leases hereafter entered into (other than Exempt Leases) will be in form and
substance subject to the approval of Lender. All leases of the Property or a
separate agreement in recordable form and substance satisfactory to Lender shall
specifically provide that such leases are subordinate to this Instrument; that
the tenant attorns to Lender, such attornment to be effective upon Lender's
acquisition of title to the Property; that the tenant agrees to execute such
further evidences of attornment as Lender may from time to time request; that
the attornment of the tenant shall not be terminated by foreclosure; that in no
event shall Lender, as holder of this Instrument or as successor landlord, be
liable to the tenant for any act or omission of any prior landlord or for any
liability or obligation of any prior landlord occurring prior to the date that
Lender or any subsequent owner acquire title to the Property; and that Lender
may, at Lender's option, accept or reject such attornment. Notwithstanding the
foregoing, Lender agrees to enter into a non-disturbance agreement with any
tenant of commercial or retail space at the Property, which agreement shall be
in form and substance and on terms and conditions reasonably acceptable to
Lender. Except as otherwise provided in this Section, Borrower shall not,
without Lender's written consent, (1) execute, modify, surrender or terminate,



                                       14
<PAGE>



either orally or in writing, any lease of commercial or retail space at the
Property now existing or hereafter made of all or any part of the Property, (2)
surrender or terminate, either orally or in writing, any lease of residential
space at the Property (except in the exercise of Borrower's commercially
reasonable judgment in connection with a tenant default under such lease of
residential space), (3) permit an assignment or sublease of a lease, or (4)
request or consent to the subordination of any lease of all or any part of the
Property to any lien subordinate to this Instrument. If Borrower becomes aware
that any tenant proposes to do, or is doing, any act or thing which may give
rise to any right of set-off against rent, Borrower shall (i) take such steps as
shall be reasonably calculated to prevent the accrual of any right to a set-off
against rent, (ii) notify Lender thereof and of the amount of said set-offs, and
(iii) within ten days after such accrual, reimburse the tenant who shall have
acquired such right to set-off or take such other steps as shall effectively
discharge such set-off and as shall assure that rents thereafter due shall
continue to be payable without set-off or deduction.

Upon Lender's request, Borrower shall absolutely assign to Lender, by written
instrument satisfactory to Lender, all leases now existing or hereafter made of
all or any part of the Property and all security deposits made by tenants in
connection with such leases of the Property. Upon assignment by Borrower to
Lender of any leases of the Property, Lender shall have all of the rights and
powers possessed by Borrower prior to such assignment and Lender shall have the
right to modify, extend or terminate such existing leases and to execute new
leases, in Lender's sole discretion.

         SECTION 15. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN
BORROWER.

         (a) As used in this Section 15 and elsewhere in this Instrument, the
following capitalized terms shall have the respective meanings set forth below:

                  (i) "Approved Control Party": James Cummings; provided,
however, at the time in question (i) such Approved Control Party shall (1) be
solvent, (2) have never been convicted of a felony, (3) have never been the
subject of a voluntary or involuntary (to the extent the same has not been
discharged) bankruptcy proceeding, (4) have no outstanding judgments against
him, and (ii) Lender shall have received a credit check and background
investigation against such Approved Control Party reasonably acceptable to
Lender.

                  (ii) "Control": with respect to any Person, either (i)
ownership directly or indirectly of 49% or more of all equity interests in such
Person or (ii) the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, through the
ownership of voting securities, by contract or otherwise.

                  (iii) "Key Principals": Acadia Realty Limited Partnership, a
Delaware limited partnership, and Acadia Realty Trust, a Maryland real estate
investment trust.

                  (iv) "Permitted Encumbrances": (i) the liens created by the
Loan Documents, (ii) all liens and other matters disclosed in Lender's title
insurance policy, (iii) liens, if any, for Taxes not yet due and payable and not
delinquent and (iv) any workers', mechanics' or other similar liens on the
Property provided that any such Lien is bonded or discharged within 30 days


                                       15
<PAGE>


after Borrower first receives notice of such lien and (v) such other title and
survey exceptions as Lender approves in writing in Lender's discretion.

                  (v) "Permitted Transfers": (i) a Lease entered into in
accordance with the Loan Documents, (ii) a Permitted Encumbrance, (iii) a
Transfer and Assumption, (iv) provided that no Event of Default shall then
exist, (1) a Transfer of an interest in Borrower other than the general
partnership interest held by the Managing Entity (as defined in Section 29
hereof), or (2) a Transfer of an interest in the Managing Entity to any Person,
in either case, provided that (A) such Transfer shall not (x) cause the
transferee (other than any Key Principal, Approved Control Party or any Person
Controlled by Approved Control Party), together with its Affiliates, to acquire
Control of Borrower or the Managing Entity or to increase its direct or indirect
interest in Borrower or in the Managing Entity to an amount which equals or
exceeds 49% or (y) result in Borrower or the Managing Entity no longer being
Controlled by any Key Principal, Approved Control Party or any Person Controlled
by Approved Control Party, (B) after giving effect to such Transfer, Key
Principals (in the aggregate), Approved Control Party or any Person Controlled
by Approved Control Party shall continue to own at least 51% of all equity
interests (direct or indirect) in Borrower, (C) Borrower shall give Lender
notice of such Transfer together with copies of all instruments effecting such
Transfer not less than 10 days prior to the date of such Transfer, (D) the legal
and financial structure of Borrower and its members and the single purpose
nature and bankruptcy remoteness of Borrower and its members after such
Transfer, shall satisfy Lender's then current applicable underwriting criteria
and requirements and (E) in the event that the transferee is Approved Control
Party or any Person Controlled by Approved Control Party, Approved Control
Party, as replacement guarantor, shall execute and deliver to Lender a
replacement guaranty of recourse obligations in favor of Lender on the same form
as the Guaranty, provided that such replacement guaranty shall require Approved
Control Party to maintain a minimum Net Worth (as such term is defined in the
Guaranty) in excess of $5,000,000 until all of the Guaranteed Obligations (as
such term is defined in the Guaranty) have been paid in full, after the
execution and delivery of which replacement guaranty, the then current Guarantor
shall be released from all liabilities and obligations under the Guaranty, (v)
provided that no Event of Default shall then exist, a Transfer of a direct or
indirect interest in Borrower or Managing Entity that occurs by devise or
bequest or by operation of law upon the death of a natural person that was the
holder of such interest to a member of the immediate family of such interest
holder or a trust established for the benefit of such immediate family member,
provided that (A) no such Transfer shall result in a change of the day to day
operations of the Property, (B) Borrower shall give Lender notice of such
Transfer together with copies of all instruments effecting such Transfer not
less than 20 days after the date of such Transfer, (C) the legal and financial
structure of Borrower and Managing Entity, and the single purpose nature and
bankruptcy remoteness of Borrower and Managing Entity after such Transfer, shall
satisfy Lender's then current applicable underwriting criteria and requirements,
(D) if any such Transfer would result in a change of Control of Borrower or
Managing Entity and occurs prior to the occurrence of a Secondary Market
Transaction, such Transfer is approved by Lender in writing within 30 Business
Days after any such Transfer, and (E) if any such Transfer would result in a
change of Control of Borrower or Managing Entity and occurs after the occurrence
of a Secondary Market Transaction, Borrower, at Borrower's sole cost and
expense, shall, within 30 Business Days after any such Transfer, (a) deliver (or
cause to be delivered) if required by Lender or any Rating Agency (x) a Rating
Comfort Letter to Lender, and (y) a substantive non-consolidation opinion to
Lender and the Rating Agencies with respect to Borrower and such transferee in





                                       16
<PAGE>


form and substance satisfactory to Lender and the Rating Agencies, (b) obtain
the prior written consent of Lender which shall not be unreasonably withheld and
(c) reimburse Lender for all reasonable expenses incurred by Lender in
connection with such Transfer, or (vi) provided that no Event of Default shall
then exist, a Transfer of a direct or indirect interest in Borrower or Managing
Entity to any Person (other than any Key Principal, Approved Control Party or
any Person Controlled by Approved Control Party) (the "New Sponsor"), pursuant
to which, after giving effect to such Transfer, the New Sponsor, together with
its Affiliates, acquires Control of Borrower or the Managing Entity or holds a
direct or indirect interest in Borrower or in Managing Entity in an amount
equaling or exceeding 49% provided that (A) Lender consents to such Transfer,
which consent shall not be unreasonably withheld, (B) Borrower delivers to
Lender evidence reasonably satisfactory to Lender showing that, after giving
effect to such Transfer, Borrower and Managing Entity remain in full compliance
with Section 29 hereof, as the provisions thereof may be modified by Lender
taking into account the ownership structure of New Sponsor and its Affiliates,
(C) if the Loan (as defined in Section 32(e) hereof), by itself or together with
other loans, has been the subject of a Secondary Market Transaction, then Lender
shall have received a Rating Comfort Letter from the applicable Rating Agencies,
(D) if the Loan has not been the subject of a Secondary Market Transaction, then
Lender shall have determined in its reasonable discretion (taking into
consideration such factors as Lender may determine, including the attributes of
the loan pool in which the Loan might reasonably be expected to be securitized)
that no rating for any securities that would be issued in connection with such
securitization will be diminished, qualified, or withheld by reason of such
Transfer to New Sponsor, (E) the identity, experience, and financial condition
of the New Sponsor shall be satisfactory to Lender in its reasonable discretion,
(F) a replacement guarantor(s) (the identity, experience and financial condition
of which shall be satisfactory to Lender in its reasonable discretion) shall
execute and deliver to Lender any and all documents reasonably required by
Lender, in form and substance reasonably required by Lender, in Lender's sole
discretion, after which Guarantor shall be released from all liabilities and
obligations under the Guaranty, and (G) counsel to New Sponsor and replacement
guarantor(s) shall deliver to Lender opinions in form and substance satisfactory
to Lender as to such matters as Lender shall reasonably require, which may
include opinions as to substantially the same matters as were required in
connection with the origination of the Loan.

                  (vi) "Person": any individual, corporation, partnership,
limited liability company, joint venture, estate, trust, unincorporated
association, any other person or entity, and any federal, state, county or
municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.

                  (vii) "Rating Agency": each of Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. ("S&P"), Moody's
Investors Service, Inc. ("Moody's"), and Fitch IBCA Duff & Phelps ("Fitch") or
any other nationally-recognized statistical rating organization to the extent
any of the foregoing have been engaged by Lender or its designee in connection
with or in anticipation of any Secondary Market Transaction.

                  (viii) "Rating Comfort Letter": a letter issued by each of the
applicable Rating Agencies which confirms that the taking of the action
referenced to therein will not result in any qualification, withdrawal or
downgrading of any existing ratings of Securities created in a Secondary Market
Transaction.




                                       17
<PAGE>


                  (ix) "Secondary Market Transaction": any of (i) the sale,
assignment, or other transfer of all or any portion of the loan evidenced by the
Note and this Instrument or the Loan Documents or any interest therein to one or
more investors, (ii) the sale, assignment, or other transfer of one or more
participation interests in the loan evidenced by the Note and this Instrument or
Loan Documents to one or more investors, or (iii) the transfer or deposit of all
or any portion of the loan evidenced by the Note and this Instrument or Loan
Documents to or with one or more trusts or other entities which may sell
certificates or other instruments to investors evidencing an ownership interest
in the assets of such trust or the right to receive income or proceeds
therefrom.

                  (x) "Transfer": any sale, conveyance, transfer, lease or
assignment, or the entry into any agreement to sell, convey, transfer, lease or
assign, whether by law or otherwise, of, on, in or affecting (i) all or part of
the Property (including any legal or beneficial direct or indirect interest
therein), (ii) any direct or indirect interest in Borrower (including any profit
interest), or (iii) any direct or indirect interest in the Managing Entity.

                  (xi) "Transfer and Assumption": is defined in paragraph (c) of
this Section 15.

         (b) Borrower shall not directly or indirectly make, suffer or permit
the occurrence of any Transfer other than a Permitted Transfer.

         (c) Notwithstanding the foregoing, Borrower shall have a one-time right
to Transfer the Property to another party (the "Transferee Borrower") and have
the Transferee Borrower assume all of Borrower's obligations under the Loan
Documents, and have replacement guarantors and indemnitors assume all of the
obligations of the indemnitors and guarantors of the Loan Documents
(collectively, a "Transfer and Assumption"). Borrower may make a written
application to Lender for Lender's consent to the Transfer and Assumption,
subject to the conditions set forth in subparagraphs (i) and (ii) of this
paragraph (c). Together with such written application, Borrower will pay to
Lender the reasonable review fee then required by Lender. Borrower also shall
pay on demand all of the reasonable costs and expenses incurred by Lender,
including reasonable attorneys' fees and expenses, and including the fees and
expenses of Rating Agencies and other outside entities, in connection with
considering any proposed Transfer and Assumption, whether or not the same is
permitted or occurs.

                  (i) Lender's consent, which may be withheld in Lender's
reasonable discretion, to a Transfer and Assumption shall be subject to the
following conditions:

                           (1) No Event of Default has occurred and is
         continuing;

                           (2) Borrower has submitted to Lender true, correct
         and complete copies of any and all information and documents of any
         kind reasonably requested by Lender concerning the Property, Transferee
         Borrower, replacement guarantors and indemnitors and Borrower;

                           (3) Evidence reasonably satisfactory to Lender has
         been provided showing that the Transferee Borrower and such of its
         Affiliates as shall be designated by Lender comply and will comply with
         Section 29 hereof, as those provisions may be modified by Lender taking
         into account the ownership structure of Transferee Borrower and its
         Affiliates;



                                       18
<PAGE>


                           (4) If the Loan (as defined in Section 32(e) hereof),
         by itself or together with other loans, has been the subject of a
         Secondary Market Transaction, then Lender shall have received a Rating
         Comfort Letter from the applicable Rating Agencies;

                           (5) If the Loan has not been the subject of a
         Secondary Market Transaction, then Lender shall have determined in its
         reasonable discretion (taking into consideration such factors as Lender
         may determine, including the attributes of the loan pool in which the
         Loan might reasonably be expected to be securitized) that no rating for
         any securities that would be issued in connection with such
         securitization will be diminished, qualified, or withheld by reason of
         the Transfer and Assumption;

                           (6) Borrower shall have paid all of Lender's
         reasonable costs and expenses in connection with considering the
         Transfer and Assumption, and shall have paid the amount reasonably
         requested by Lender as a deposit against Lender's costs and expenses in
         connection with effecting the Transfer and Assumption;

                           (7) Borrower, the Transferee Borrower, and the
         replacement guarantors and indemnitors shall have indicated in writing
         in form and substance reasonably satisfactory to Lender their readiness
         and ability to satisfy the conditions set forth in subsection (ii)
         below; and

                           (8) The identity, experience, and financial condition
         of the Transferee Borrower and the replacement guarantors and
         indemnitors shall be satisfactory to Lender in its reasonable
         discretion.

                  (ii) If Lender consents to the Transfer and Assumption, the
Transferee Borrower and/or Borrower as the case may be, shall immediately
deliver the following to Lender:

                           (1) Borrower shall deliver to Lender an assumption
         fee in the amount of 1.00% of the then unpaid Principal;

                           (2) Borrower, Transferee Borrower and the original
         and replacement guarantors and indemnitors shall execute and deliver to
         Lender any and all documents reasonably required by Lender, in form and
         substance reasonably required by Lender, in Lender's sole discretion;

                           (3) Counsel to the Transferee Borrower and
         replacement guarantors and indemnitors shall deliver to Lender opinions
         in form and substance satisfactory to Lender as to such matters as
         Lender shall reasonably require, which may include opinions as to
         substantially the same matters as were required in connection with the
         origination of the Loan;




                                       19
<PAGE>


                           (4) Borrower shall cause to be delivered to Lender,
         an endorsement (relating to the change in the identity of the vestee
         and execution and delivery of the Transfer and Assumption documents) to
         Lender's title insurance policy in form and substance acceptable to
         Lender, in Lender's reasonable discretion (the "Endorsement"); and

                           (5) Borrower shall deliver to Lender a payment in the
         amount of all remaining unpaid costs incurred by Lender in connection
         with the Transfer and Assumption, including but not limited to,
         Lender's reasonable attorneys fees and expenses, all recording fees,
         and all fees payable to the title company for the delivery to Lender of
         the Endorsement.

         SECTION 16. FURTHER ENCUMBRANCES. Except only for the liens and
security interests in favor of Lender under this Instrument and the other Loan
Documents, without Lender's prior written consent, which Lender may withhold in
its sole discretion, Borrower shall not execute, cause, allow or suffer any
mortgage, deed of trust, deed to secure debt, assignment of leases or rents,
statutory lien, mechanic's lien or other similar involuntary lien (with respect
to any such statutory lien, mechanic's lien or other similar involuntary lien,
unless such lien is bonded or discharged within 30 days after Borrower first
receives notice of such lien), irrespective of its priority, to encumber all or
any portion of the Property or the leases, rents or profits thereof, or any
interest in any of the foregoing.

         SECTION 17. GENERAL INDEMNITY. In addition to any other indemnification
obligation set forth elsewhere in the Loan Documents, Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold harmless the
Lender and its shareholders, directors, officers, agents, employees,
contractors, attorneys, servicers, and successors and assigns (the "Indemnified
Parties") from and against any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement, or
punitive damages, of whatever kind or nature (including, but not limited to
attorneys' fees and other costs of defense) (the "Losses") imposed upon or
incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any one or more of the
following (but excluding Losses arising out of Lender's gross negligence or
willful misconduct): (a) ownership of this Instrument or any of the Loan
Documents, or ownership of the Property or any interest therein, or demand for
or receipt of any Rents; (b) any amendment to, or restructuring of, any of the
Loan Documents or the obligations evidenced or secured thereby; (c) any and all
lawful action that may be taken by Lender in connection with the enforcement of
the provisions of any of the Loan Documents, whether or not suit is filed in
connection with same, or in connection with Borrower, any guarantor or
indemnitor and/or any member, partner, joint venturer or shareholder thereof
becoming a party to a voluntary or involuntary federal or state bankruptcy,
insolvency or similar proceeding; (d) any accident, injury to or death of
persons or loss of or damage to property occurring in, on or about the Property
or any part thereof or on the adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (e) any use, nonuse or condition in, on
or about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (f) any failure on
the part of Borrower to perform or be in compliance with any of the terms of any
of the Loan Documents; (g) performance of any labor or services or the


                                       20
<PAGE>



furnishing of any materials or other property in respect of the Property or any
part thereof; (h) the failure of any person to file timely with the Internal
Revenue Service an accurate Form 1099-B, Statement for Recipients of Proceeds
from Real Estate, Broker and Barter Exchange Transactions, which may be required
in connection with this Instrument, or to supply a copy thereof in a timely
fashion to the recipient of the proceeds of the transaction in connection with
which this Instrument is made; (i) any failure of the Property to be in
compliance with any applicable laws; (j) the enforcement by any Indemnified
Party of the provisions of this Section; (k) any and all claims and demands
whatsoever which may be asserted against Lender by reason of any alleged
obligations or undertakings on its part to perform or discharge any of the
terms, covenants, or agreements contained in any Lease; (l) the payment of any
commission, charge or brokerage fee to anyone which may be payable in connection
with the funding of the loan evidenced by the Note; or (m) any misrepresentation
made by Borrower in any of the Loan Documents. Any amounts payable to any
Indemnified Party by reason of the application of this Section shall become
immediately due and payable upon demand and shall bear interest at rate then
applicable to principal outstanding under the Note.

         SECTION 18. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN
POSSESSION. As part of the consideration for the indebtedness evidenced by the
Note, Borrower hereby absolutely and unconditionally assigns and transfers to
Lender all the rents and revenues of the Property, including those now due, past
due, or to become due by virtue of any lease or other agreement for the
occupancy or use of all or any part of the Property, regardless of to whom the
rents and revenues of the Property are payable. Borrower hereby authorizes
Lender or Lender's agents to collect the aforesaid rents and revenues and hereby
directs each tenant of the Property to pay such rents to Lender or Lender's
agents; provided, however, that prior to written notice given by Lender to
Borrower of an Event of Default, Borrower shall collect and receive all rents
and revenues of the Property as trustee for the benefit of Lender and Borrower,
to apply the rents and revenues so collected to the sums secured by this
Instrument in any order determined by Lender, so long as no such Event of
Default has occurred, to the account of Borrower, it being intended by Borrower
and Lender that this assignment of rents constitutes an absolute assignment and
not an assignment for additional security only. Upon delivery of written notice
by Lender to Borrower of an Event of Default, and without the necessity of
Lender entering upon and taking and maintaining full control of the Property in
person, by agent or by a court-appointed receiver, Lender shall immediately be
entitled to possession of all rents and revenues of the Property as specified in
this Section as the same become due and payable, including, but not limited to,
rents then due and unpaid, and all such rents shall immediately upon delivery of
such notice and during the continuance of such Event(s) of Default be held by
Borrower as trustee for the benefit of Lender only; provided, however, that the
written notice by Lender to Borrower of such Event(s) of Default shall contain a
statement that Lender exercises its rights to such rents. Borrower agrees that
commencing upon delivery of such written notice of Borrower's breach by Lender
to Borrower, each tenant of the Property shall make such rents payable to and
pay such rents to Lender or Lender's agents on Lender's written demand to any
tenant therefor, delivered to such tenant personally, by mail or by delivering
such demand to the tenant at its location in the Property, without any liability
on the part of said tenant to inquire further as to the existence of a default
by Borrower. Borrower hereby covenants that Borrower has not executed any prior
assignment of said rents, that Borrower has not performed, and will not perform,
any acts or has not executed, and will not execute, any instrument which would


                                       21
<PAGE>

prevent Lender from exercising its rights under this Section, and that at the
time of execution of this Instrument there has been no anticipation or
prepayment of any of the rents of the Property for more than one month prior to
the due dates of such rents. Borrower covenants that Borrower will not hereafter
collect or accept payment of any rents of the Property more than one month prior
to the due dates of such rents. Borrower further covenants that Borrower will
execute and deliver to Lender such further assignments of rents and revenues of
the Property as Lender may from time to time request.

         Upon an Event of Default, or upon Borrower's breach of any material
covenant of Borrower as landlord or lessor under any lease beyond applicable
notice and cure periods, Lender shall be entitled to the appointment of a
receiver for the Property, without notice to Borrower or any other person or
entity and Lender may in person, by agent or by a court-appointed receiver,
regardless of the adequacy of Lender's security, enter upon and take and
maintain full control of the Property in order to perform all acts necessary and
appropriate for the operation and maintenance thereof including, but not limited
to, the execution, cancellation or modification of leases, the collection of all
rents and revenues of the Property, the enforcement or fulfillment of any terms,
condition or provision of any lease, the making of repairs to the Property and
the execution or termination of contracts providing for the management or
maintenance of the Property, all on such terms as are deemed best to protect the
security of this Instrument. In the event Lender elects to seek the appointment
of a receiver for the Property upon Borrower's breach of any covenant or
agreement of Borrower in this Instrument, Borrower hereby expressly consents to
the appointment of such receiver. Lender or the receiver shall be entitled to
receive a reasonable fee for so managing the Property.

         All rents and revenues collected subsequent to delivery of written
notice by Lender to Borrower that an Event of Default has occurred and during
the continuance of such Event of Default shall be applied first to the costs, if
any, of taking control of and managing the Property and collecting the rents,
including, but not limited to, attorney's fees, receiver's fees, premiums on
receiver's bonds, costs of repairs to the Property, premiums on insurance
policies, Taxes, and the costs of discharging any obligation or liability of
Borrower as lessor or landlord of the Property and then to the sums secured by
this Instrument. Lender or the receiver shall have access to the books and
records used in the operation and maintenance of the Property and shall be
liable to account only for those rents actually received. Other than for
Lender's gross negligence or willful misconduct under this Section, Lender shall
not be liable to Borrower, anyone claiming under or through Borrower or anyone
having an interest in the Property by reason of anything done or left undone by
Lender under this Section.

         If the rents of the Property are not sufficient to meet the costs, if
any, of taking control of and managing the Property and collecting the rents,
any funds expended by Lender for such purposes shall become indebtedness of
Borrower to Lender secured by this Instrument pursuant to Section 8 hereof.
Unless Lender and Borrower agree in writing to other terms of payment, such
amounts shall be payable upon notice from Lender to Borrower requesting payment
thereof and shall bear interest from the date of disbursement at the rate stated
in the Note unless payment of interest at such rate would be contrary to
applicable law, in which event such amounts shall bear interest at the highest
rate which may be collected from Borrower under applicable law.


                                       22
<PAGE>



         Any entering upon and taking and maintaining of control of the Property
by Lender or the receiver and any application of rents as provided herein shall
not cure or waive any default hereunder or invalidate any other right or remedy
of Lender under applicable law or provided herein. This assignment of rents of
the Property shall terminate at such time as this Instrument ceases to secure
indebtedness held by Lender.

         SECTION 19. DEFAULTS; ACCELERATION; REMEDIES.

         Each of the following shall constitute an "Event of Default" under this
Instrument:

                  (a) Any failure of Borrower to pay any money as and when due
under the Note or under any of the other Loan Documents;

                  (b) Any breach of Sections 5, 15, 16, or 29 of this
Instrument, or the Environmental Indemnity Agreement;

                  (c) Other than as specified in items (a) or (b) above, any
breach of any covenant, representation, warranty, or other obligation of
Borrower or any guarantor or indemnitor under the Note, this Instrument, or any
of the other Loan Documents, which breach is not completely cured on or before
the 30th day after notice of the same from Lender to Borrower; provided however
that if the default is capable of cure but with diligence cannot be cured within
such period of 30 days, and if Borrower shall have given Lender evidence
satisfactory to Lender that Borrower has commenced the cure within 10 days after
the first notice of default and at all times after such commencement has pursued
such cure diligently, then such period shall be extended for so long as is
reasonably necessary, but in no event beyond the 60th day after the original
notice of default.

         If Lender shall have the right to exercise any of its remedies by
reason of any default as to which there is no grace period or by reason of
expiration of any grace period without cure of any applicable default, then
there shall be no requirement of notice and time to cure for any other or
subsequent default.

         Upon the occurrence and during the continuance of any Event of Default,
Lender may, at Lender's option, declare all of the sums secured by this
Instrument to be immediately due and payable without further demand, and may
exercise any and all remedies permitted hereunder, under any of the Loan
Documents, or pursuant to applicable law. Without limitation of the foregoing,
Lender may invoke the power of sale granted herein. Borrower acknowledges that
the power of sale herein granted may be exercised by Lender without prior
judicial hearing. Borrower has the right to bring an action to assert the
non-existence of a breach or any other defense of Borrower to acceleration and
sale. Lender shall be entitled to collect from Borrower all costs and expenses
incurred in pursuing such remedies, including, but not limited to, reasonable
attorney's fees and costs of environmental reports, appraisals, documentary
evidence, abstracts, and title reports.

         Any deed delivered to the purchaser at any sale pursuant hereto may be
without any covenant or warranty, expressed or implied. The recitals in the deed
shall be prima facie evidence of the truth of the statements made therein. The
proceeds of the sale shall be applied in the following order: (a) to all costs


                                       23
<PAGE>



and expenses of the sale, including, but not limited to, fees for any
foreclosure services, attorney's fees and costs of title evidence; (b) to all
sums secured by this Instrument in such order as Lender, in Lender's sole
discretion, directs; and (c) the excess, if any, to the person or persons
legally entitled thereto.

         SECTION 20. ACCELERATION IN CASE OF BORROWER'S INSOLVENCY.

         If Borrower shall voluntarily file a petition under Title 11 of the
U.S. Code (the "Act"), as such Act may from time to time be amended, or under
any similar or successor Federal statute relating to bankruptcy, insolvency,
arrangements or reorganizations, or under any state bankruptcy or insolvency
act, or file an answer in any involuntary proceeding admitting insolvency or
inability to pay debts, or if Borrower shall fail to obtain a vacation of
involuntary proceedings brought for the reorganization, dissolution or
liquidation of Borrower, within 120 days of the filing of such involuntary
proceeding, or if Borrower shall be adjudged a bankrupt, or if a trustee or
receiver shall be appointed for Borrower or Borrower's property, or if the
Property shall become subject to the jurisdiction of a Federal bankruptcy court
or similar state court, or if Borrower shall make an assignment for the benefit
of Borrower's creditors, or if there is an attachment, execution or other
judicial seizure of any portion of Borrower's assets and such seizure is not
discharged within 10 days, then Lender may, at Lender's option, declare all of
the sums secured by this Instrument to be immediately due and payable without
prior notice to Borrower, and Lender may invoke any remedies permitted or
provided for herein or in any of the Loan Documents or pursuant to applicable
law. Any attorney's fees and other expenses incurred by Lender in connection
with Borrower's bankruptcy or any of the other aforesaid events shall be
additional indebtedness of Borrower secured by this Instrument pursuant to
Section 8 hereof.

         SECTION 21. REMEDIES CUMULATIVE. Each remedy provided in this
Instrument is distinct and cumulative to all other rights or remedies under this
Instrument or afforded by law or equity, and may be exercised concurrently,
independently, or successively, in any order whatsoever.

         SECTION 22. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives
the right to assert any statute of limitations as a bar to the enforcement of
the lien of this Instrument or to any action brought to enforce the Note or any
other obligation secured by this Instrument.

         SECTION 23. WAIVER OF MARSHALLING. Notwithstanding the existence of any
other security interest in the Property held by Lender or by any other party,
Lender shall have the right to determine the order in which any or all of the
Property shall be subjected to the remedies provided herein. Lender shall have
the right to determine the order in which any or all portions of the
indebtedness secured hereby are satisfied from the proceeds realized upon the
exercise of the remedies provided herein. Borrower, any party who consents to
this Instrument and any party who now or hereafter acquires a security interest
in the Property and who has actual or constructive notice hereof hereby waives
any and all right to require the marshalling of assets in connection with the
exercise of any of the remedies permitted by applicable law or provided herein.




                                       24
<PAGE>



         SECTION 24. RELEASE. Upon payment of all sums secured by this
Instrument, Lender shall release this Instrument. Borrower shall pay Lender $100
for the release of this Instrument.

         SECTION 25. CASH MANAGEMENT ARRANGEMENTS.

                  (a) As used in this Section 25 and elsewhere in this
Instrument and the other Loan Documents, the following capitalized terms shall
have the respective meanings set forth below:

                  Alternative Escrow Amount: on the date hereof, an amount equal
to $6,500, which represents an amount estimated by Lender as being necessary for
at least one quarterly payment of insurance premiums that Lender estimates will
be payable for the purchase of a separate "stand-alone" policy providing the
coverage afforded by the insurance policies required under this Instrument upon
the expiration thereof. The Alternative Escrow Amount is subject to change from
time to time based upon any actual increases, as determined by Lender in its
reasonable discretion, after the date hereof in the amount of such insurance
premiums.

                  "Approved Capital Expenses": Capital Expenses incurred by
Borrower; provided, that, during a Cash Management Period, such Capital Expenses
shall either be (i) included in the Approved Capital Budget (as defined in
Section 28(h) hereof) for the current calendar month or (ii) approved by Lender.

                  "Approved Leasing Expenses": actual out-of-pocket expenses
incurred by Borrower and payable to third parties (including Affiliates of
Borrower or Guarantor, provided that, such expenses payable to Affiliates of
Borrower or Guarantor shall satisfy the conditions set forth below) in leasing
space at the Property pursuant to Leases entered into in accordance with the
Loan Documents, including brokerage commissions and tenant improvements, which
expenses (i) are (A) specifically approved by Lender in connection with
approving the applicable Lease, (B) incurred in the ordinary course of business
and on market terms and conditions in connection with Leases which do not
require Lender's approval under the Loan Documents, or (C) otherwise approved by
Lender, which approval shall not be unreasonably withheld or delayed, and (ii)
are substantiated by executed Lease documents and brokerage agreements.

                  "Approved Operating Expenses": during a Cash Management
Period, operating expenses incurred by Borrower which (i) are included in the
Approved Operating Budget (as defined in Section 28(h) hereof) for the current
calendar month, (ii) are for real estate taxes, insurance premiums, electric,
gas, oil, water, sewer or other utility service to the Property or (iii) have
been approved by Lender.

                  "Available Cash": as of each Payment Date during the
continuance of Cash Management Period, the amount of Rents, if any, remaining in
the Deposit Account after the application of all of the payments required under
clauses (i) through (v) of paragraph (l) of this Section 25.

                  "Business Day": any day other than a Saturday, Sunday or any
day on which commercial banks in New York, New York are authorized or required
to close.


                                       25

<PAGE>

                  "Calculation Date":  the last day of each calendar quarter.

                  "Cash Management Period": shall commence upon Lender giving
notice to the Clearing Bank of the occurrence of any of the following: (i) the
Maturity Date, (ii) an Event of Default, (iii) if, as of any Calculation Date,
the Debt Service Coverage Ratio is less than 1.00:1, or (iv) the commencement of
a Rollover Sweep Period; and shall end upon Lender giving notice to the Clearing
Bank that the sweeping of funds into the Deposit Account may cease, which notice
Lender shall only be required to give if (1) the Loan and all other obligations
under the Loan Documents have been repaid in full or (2) the Maturity Date has
not occurred and (A) with respect for the matters described in clause (ii)
above, such Event of Default has been cured and no other Event of Default has
occurred and is continuing or (B) with respect to the matter described in clause
(iii) above, Lender has determined that the Property has achieved a Debt Service
Coverage Ratio of at least 1.00:1 for two consecutive Calculation Dates or (C)
with respect to the matter described in clause (iv) above, the subject Rollover
Sweep Period has ended.

                  "Clearing Account": the account maintained by Borrower at the
Clearing Bank as more fully described in the Clearing Account Agreement.

                  "Debt": the unpaid Principal, all interest accrued and unpaid
thereon, any Prepayment Consideration (as defined in the Note) and all other
sums due to Lender in respect of the loan evidenced by the Note and this
Instrument or under any Loan Document.

                  "Debt Service": with respect to any particular period, the
scheduled principal and interest payments due under the Note in such period.

                  "Debt Service Coverage Ratio": as of any date, the ratio
calculated by Lender of (i) the Net Operating Income for the 12-month period
ending with the most recently completed calendar month to (ii) the Debt Service
with respect to such period.

                  "Default Rate": the rate of five percent per annum in excess
of the rate provided in the first paragraph of the Note, or, if such increased
rate of interest may not be collected from Borrower under applicable law, then
at the maximum increased rate of interest which may be collected from Borrower
under applicable law, if either (a) any installment under the Note or any other
amount owing thereunder or under any of the other Loan Documents is not received
by the holder hereof within five calendar days after the same is due, or (b) any
other Event of Default occurs, in each case, only while such installment remains
past due or such other Event of Default remains uncured.

                  "Deposit Account": an Eligible Account at the Deposit Bank
controlled by Lender.

                  "Deposit Bank": Wachovia Bank, National Association, or such
other bank or depository selected by Lender in its discretion.

                  "Eligible Institution": a depository institution insured by
the Federal Deposit Insurance Corporation the short term unsecured debt
obligations or commercial paper of which are rated at least A-1 by S&P, P-1 by
Moody's and F-1+ by Fitch. in the case of accounts in which funds are held for


                                       26
<PAGE>


thirty (30) days or less or, in the case of letters of credit or accounts in
which funds are held for more than thirty (30) days, the long term unsecured
debt obligations of which are rated at least "AA" by Fitch and S&P and "Aa2" by
Moody's.

                  "Interest Period": (i) the period from the date hereof through
the first day thereafter that is the last day of a calendar month and (ii) each
period thereafter from the 1st day of each calendar month through the last day
of each such calendar month; except that the Interest Period, if any, that would
otherwise commence before and end after the Maturity Date shall end on the
Maturity Date.

                  "Governmental Authority": any court, board, agency,
commission, office or authority of any nature whatsoever for any governmental
unit (federal, state, county, district, municipal, city or otherwise) now or
hereafter in existence.

                  "Legal Requirements": statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting Borrower, any Loan Document or all or part of the Property
or the construction, ownership, use, alteration or operation thereof, whether
now or hereafter enacted and in force, and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instrument, either of record or
known to Borrower, at any time in force affecting all or part of the Property.

                  "Net Operating Income": for any period, the underwritten net
cash flow of the Property determined by Lender in its sole and absolute
discretion in accordance with Lender's then current underwriting standards for
loans of this type and the then current underwriting standards of the Rating
Agencies (including adjustments for market vacancy, bankrupt tenants, leasing
costs and capital items).

                  "Officer's Certificate": a certificate delivered to Lender by
Borrower which is signed by a senior executive officer of the Managing Entity.

                  "Payment Date": the 1st day of each calendar month or, upon
Lender's exercise of its right to change the Payment Date in accordance with the
terms and conditions of the Note, the New Payment Date (as defined in the Note)
(in either case, if such day is not a Business Day, the Payment Date shall be
the first Business Day thereafter). The first Payment Date hereunder shall be
July 1, 2003.

                  "Permitted Investments": any investment suitable for the
investment of escrows and reserves established under mortgage loans included in
a Securitization in which some or all of the certificates issued are rated "AAA"
(or the equivalent rating) by the Rating Agencies, as the standards therefor are
established from time to time, or such investments which are otherwise
reasonably acceptable to Lender. If the Loan is subject to a Securitization,
then the Rating Agencies referred to immediately above shall be the Rating
Agencies that have rated the securities issued in such Securitization.

                  "Rents": all rents, rent equivalents, moneys payable as
damages (including payments by reason of the rejection of a lease in a
bankruptcy proceeding) or in lieu of rent or rent equivalents, royalties
(including all oil and gas or other mineral royalties and bonuses), income,



                                       27
<PAGE>



fees, receivables, receipts, revenues, deposits (including security, utility and
other deposits), accounts, cash, issues, profits, charges for services rendered,
and other payment and consideration of whatever form or nature received by or
paid to or for the account of or benefit of Borrower, Manager or any of their
agents or employees from any and all sources arising from or attributable to the
Property, including all receivables, customer obligations, installment payment
obligations and other obligations now existing or hereafter arising or created
out of the sale, lease, sublease, license, concession or other grant of the
right of the use and occupancy of the Property or rendering of services by
Borrower, Manager or any of their agents or employees and proceeds, if any, from
business interruption or other loss of income insurance.

                  "Rollover Sweep Event": if any commercial tenant at the
Property (A) shall discontinue its business at its premises (i.e., "goes dark")
or give notice that it intends to discontinue its business or (B) is the subject
of a bankruptcy or insolvency proceeding (and the subject lease has not been
affirmed or assumed and assigned).

                  "Rollover Sweep Period": shall commence upon the occurrence of
a Rollover Sweep Event, and shall end upon the earlier to occur of (A) such time
as the aggregate amount deposited into the Rollover Reserve Subaccount pursuant
to paragraph (f) of this Section 25 equals or exceeds an amount equal to $25.00
multiplied by the aggregate square feet of space demised under the Lease which
was the subject of the Rollover Sweep Event or (B) if the portion of the
Property which was the subject of the Rollover Sweep Event has been leased to a
new tenant pursuant to a Lease entered into in accordance with the provisions of
this Instrument (1) the receipt by Lender of evidence reasonably satisfactory to
Lender that all Approved Leasing Expenses in connection therewith have been paid
in full and (2) the receipt by Lender of an estoppel certificate from such new
tenant in which such new tenant certifies that the Lease is in full force and
effect, all conditions precedent to the commencement of rent under such Lease
have been satisfied, such new tenant has accepted delivery of the demised
premises and the payment of rent under such Lease has commenced. Notwithstanding
the foregoing, if any Rollover Sweep Period is triggered by the occurrence of an
event described in clause (B) of the definition of Rollover Sweep Event, such
Rollover Sweep Period shall also end upon the assumption of the applicable lease
by the tenant thereunder pursuant to Section 365 of the Bankruptcy Code.

                  (b) Cash Management Arrangements. Borrower shall cause all
Rents to be transmitted directly by non-residential tenants of the Property into
a trust account (the "Clearing Account") maintained by Borrower at a local bank
selected by Borrower, which shall at all times be an Eligible Institution (the
"Clearing Bank") as more fully described in the Clearing Account Agreement.
Without in any way limiting the foregoing, all Rents received by Borrower or
Manager shall be deposited into the Clearing Account within one Business Day of
receipt. Funds deposited into the Clearing Account shall be swept by the
Clearing Bank on a daily basis into Borrower's operating account at the Clearing
Bank, unless a Cash Management Period is continuing, in which event such funds
shall be swept on a daily basis into an Eligible Account (as defined in the
Deposit Account Agreement) at the Deposit Bank controlled by Lender (the
"Deposit Account") and applied and disbursed in accordance with this Instrument.
Funds in the Deposit Account shall be invested at Lender's discretion only in
Permitted Investments. Lender will also establish subaccounts of the Deposit
Account which shall at all times be Eligible Accounts (and may be ledger or book
entry accounts and not actual accounts) (such subaccounts are referred to herein


                                       28
<PAGE>

as "Subaccounts"). The Deposit Account and any Subaccount will be under the sole
control and dominion of Lender, and Borrower shall have no right of withdrawal
therefrom. Borrower shall pay for all expenses of opening and maintaining all of
the above accounts.

                  (c) Intentionally Deleted.

                  (d) Taxes and Insurance.

                           (i) Borrower shall pay to Lender on each Payment Date
(1) one-twelfth of the yearly Taxes that Lender estimates will be payable during
the next 12 months in order to accumulate with Lender sufficient funds to pay
all such Taxes at least 30 days prior to their respective due dates and (2)
one-twelfth of the insurance premiums that Lender estimates will be payable for
the renewal of a separate "stand-alone" policy providing the coverage afforded
by the insurance policies required under this Instrument upon the expiration
thereof in order to accumulate with Lender sufficient funds to pay all such
insurance premiums at least 30 days prior to the expiration of the insurance
policies. Such amounts will be transferred by Lender to a Subaccount (the "Tax
and Insurance Subaccount"). Provided that no Event of Default has occurred and
is continuing, Lender will (a) apply funds in the Tax and Insurance Subaccount
to payments of Taxes required to be made by Borrower pursuant to this
Instrument, provided that Borrower has promptly supplied Lender with notices of
all Taxes due, or (b) reimburse Borrower for payments of (x) Taxes and (y)
insurance premiums paid in connection with the purchase of a separate
"stand-alone" policy providing the coverage afforded by the insurance policies
required under this Instrument upon the expiration thereof, in each case, due
upon presentation of evidence acceptable to Lender of such payment by Borrower;
subject, however, to Borrower's right to contest Taxes in accordance with this
Instrument. In making any payment or reimbursement relating to Taxes and
insurance premiums, Lender may do so according to any bill, statement or
estimate procured from the appropriate public office (with respect to taxes) or
insurer or agent (with respect to insurance premiums), without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax,
assessment, sale, forfeiture, tax lien or title or claim thereof. If Lender
determines in its reasonable judgment that the funds in the Tax and Insurance
Subaccount will be insufficient to pay (or in excess of) the Taxes or insurance
premiums next coming due, Lender may increase (or decrease) the monthly
contribution required to be made by Borrower to the Tax and Insurance
Subaccount.

                           (ii) Alternative Escrow.

                                    (1) Notwithstanding anything to the contrary
                  contained in paragraph (i) above, in lieu of the requirements
                  set forth therein with respect to Borrower's obligations to
                  make monthly deposits on account of insurance premiums into
                  the Tax and Insurance Escrow Fund, Borrower has deposited with
                  Lender on the date hereof an amount equal to the Alternative
                  Escrow Amount, which amount has been transferred by Lender
                  into a Subaccount (the"Alternative Escrow Subaccount"). From
                  time to time, upon Lender's request, Borrower shall deposit
                  such additional funds into the Alternative Escrow Subaccount
                  to reflect any actual increases, as determined by Lender in
                  its reasonable discretion, after the date hereof in the amount
                  of such insurance premiums.


                                       29
<PAGE>


                                    (2) At all times that the Alternative Escrow
                  Subaccount is being held by Lender, then, notwithstanding
                  anything to the contrary contained elsewhere in this
                  Instrument, Borrower shall pay (or cause to be paid) such
                  insurance premiums as the same become due and payable, and
                  (ii) upon reasonable request, promptly furnish to Lender
                  receipts for the payment of all such amounts or other evidence
                  of such payment reasonably satisfactory to Lender.

                                    (3) Upon any non-payment of such insurance
                  premiums, Lender shall have the right to withdraw funds from
                  the Alternative Escrow Subaccount for the purpose of making
                  such required payments on behalf of Borrower.

                                    (4) Notwithstanding the above, Borrower's
                  obligations to make the payments required under Section
                  25(d)(i)(2) shall immediately resume and shall continue until
                  the end of the Term in the event that (i) all or any portion
                  of the Alternative Escrow Subaccount is applied in accordance
                  with subparagraph (3) above, (ii) Borrower fails to deposit
                  additional funds into the Alternative Escrow Subaccount in
                  accordance with the last sentence of subparagraph (1) above
                  within 5 days of demand or (iii) Borrower purchases a separate
                  "stand-alone" policy providing the coverage afforded by the
                  insurance policies required under this Instrument upon the
                  expiration thereof.

                  (e) Capital Expense Reserves. Borrower shall pay to Lender on
each Payment Date an amount initially equal to the sum of (i) one-twelfth of the
product obtained by multiplying $250 by the number of residential units at the
Property and (ii) one-twelfth of the product obtained by multiplying $0.15 by
the aggregate number of rentable square feet of commercial space in the
Property. Lender will transfer such amounts into a Subaccount (the "Capital
Reserve Subaccount"). Provided that no Event of Default has occurred and is
continuing, Lender shall disburse funds held in the Capital Reserve Subaccount
to Borrower, within 15 days after the delivery by Borrower to Lender of a
request therefor (but not more often than once per month), in increments of at
least $5,000 provided that (i) such disbursement is for an Approved Capital
Expense; (ii) Lender shall have (if it desires) verified (by an inspection
conducted at Borrower's expense) performance of the work associated with such
Approved Capital Expense; and (iii) the request for disbursement is accompanied
by (A) an Officer's Certificate certifying (1) that such funds will be used to
pay or reimburse Borrower for Approved Capital Expenses and a description
thereof, (2) that all outstanding trade payables (other than those to be paid
from the requested disbursement or those constituting Permitted Indebtedness)
have been paid in full, (3) that the same has not been the subject of a previous
disbursement, and (4) that all previous disbursements have been used to pay the
previously identified Approved Capital Expenses, and (B) for any such
disbursement of more than $25,000, at Lender's option (which option shall be
exercised in Lender's reasonable judgment), a title search for the Property
indicating that the Property is free from all Liens, claims and other
encumbrances not previously approved by Lender and (C) such other evidence as
Lender shall reasonably request that the Approved Capital Expenditures at the
Property to be funded by the requested disbursement have been completed and are
paid for or will be paid upon such disbursement to Borrower.


                                       30
<PAGE>


                  (f) Rollover Reserves. If a Rollover Sweep Period has
commenced, and no other Cash Management Period is then continuing, then on the
immediately succeeding Payment Date and on each Payment Date thereafter during
the continuance of such Rollover Sweep Period, all Available Cash shall be paid
to Lender. Lender will transfer such amounts into a Subaccount (the "Rollover
Reserve Subaccount"). Borrower shall also pay to Lender for transfer into the
Rollover Reserve Subaccount all payments received from tenants in connection
with the early termination or cancellation of any Leases, including fees,
penalties and commissions. Provided that no Event of Default has occurred and is
continuing, Lender shall disburse funds held in the Rollover Reserve Subaccount
to Borrower, within 15 days after the delivery by Borrower to Lender of a
request therefor (but not more often than once per month), in increments of at
least $5,000, provided (i) such disbursement is for an Approved Leasing Expense;
(ii) Lender shall have (if it desires) verified (by an inspection conducted at
Borrower's expense) performance of any construction work associated with such
Approved Leasing Expense; and (iii) the request for disbursement is accompanied
by (A) an Officer's Certificate certifying (1) that such funds will be used only
to pay (or reimburse Borrower for) Approved Leasing Expenses and a description
thereof, (2) that all outstanding trade payables (other than those to be paid
from the requested disbursement or those constituting Permitted Indebtedness)
have been paid in full, (3) that the same has not been the subject of a previous
disbursement, and (4) that all previous disbursements have been used only to pay
(or reimburse Borrower for) the previously identified Approved Leasing Expenses,
and (B) reasonably detailed supporting documentation as to the amount, necessity
and purpose therefor. Provided that no Event of Default has occurred and is
continuing, the remaining funds in the Rollover Reserve Subaccount (to the
extent not drawn upon pursuant to this Section 25(f)) allocable to any specific
portion of the commercial space at the Property which is the subject of the
Rollover Sweep Event will be disbursed to Borrower within 10 days after written
request therefor, provided that Borrower has delivered (i) evidence reasonably
satisfactory to Lender that (y) such commercial space has been re-let pursuant
to Leases entered into in accordance with this Instrument and (z) all Approved
Leasing Expenses which have been incurred or which Lender anticipates will be
incurred with respect to such space have been paid in full and (ii) an estoppel
certificate from the applicable tenant occupying such portion of the commercial
space at the Property in a form reasonably satisfactory to Lender pursuant to
which such tenant certifies to Lender that (1) such tenant has taken occupancy
of its demised premises, (2) all of the conditions precedent to such tenant's
obligation to commence the payment of rent under its Lease have been satisfied
(including Borrower's contribution to the cost of any tenant improvement work)
and (3) such tenant has commenced the payment of rent under its Lease.

                  (g) Operating Expense Subaccount. During a Cash Management
Period, Borrower shall pay to Lender on or before each Payment Date the monthly
amount set forth in the Approved Operating Budget for the following month as
being necessary for payment of Approved Operating Expenses at the Property for
such month, which amounts shall be transferred into a Subaccount for the payment
of Approved Operating Expenses (the "Operating Expense Subaccount"). Provided no
Event of Default has occurred and is continuing, Lender shall disburse funds
held in the Operating Expense Subaccount to Borrower, within 15 days after
delivery by Borrower to Lender of a request therefor (but not more often than
once per month), in increments of at least $1,000, provided (i) such
disbursement is for an Approved Operating Expense; and (ii) such disbursement is
accompanied by (A) an Officer's Certificate certifying (1) that such funds will
be used to pay Approved Operating Expenses and a description thereof, (2) that


                                       31
<PAGE>


all outstanding trade payables (other than those to be paid from the requested
disbursement or those constituting Permitted Indebtedness) have been paid in
full, (3) that the same has not been the subject of a previous disbursement, and
(4) that all previous disbursements have been or will be used to pay the
previously identified Approved Operating Expenses, and (B) reasonably detailed
documentation satisfactory to Lender as to the amount, necessity and purpose
therefor.

                  (h) Casualty/Condemnation Subaccount. Borrower shall pay, or
cause to be paid, to Lender all insurance proceeds or Awards due to any Casualty
or Condemnation which Borrower is required to deposit with Lender to be
transferred to a Subaccount (the "Casualty/Condemnation Subaccount") in
accordance with the provisions of Sections 5 and 11. All amounts in the
Casualty/Condemnation Subaccount shall be disbursed in accordance with the
provisions of Sections 5 and 11.

                  (i) Security Deposits. Borrower shall keep all security
deposits under Leases at a separately designated account under Borrower's
control at the Clearing Bank (and in the case of a letter of credit, assigned
with full power of attorney and executed sight drafts to Lender) so that the
security deposits shall not be commingled with any other funds of Borrower (such
account, the "Security Deposit Account"). Upon the occurrence and during the
continuance of an Event of Default, Borrower shall, upon Lender's request, if
permitted by applicable Legal Requirements, turn over to Lender the security
deposits (and any interest theretofore earned thereon) under Leases, to be held
by Lender in a Subaccount (the "Security Deposit Subaccount") subject to the
terms of the Leases. Security deposits held in the Security Deposit Subaccount
will be released by Lender upon notice from Borrower together with such evidence
as Lender may reasonably request that such security deposit is required to be
returned to a tenant pursuant to the terms of a Lease or may be applied as Rent
pursuant to the rights of Borrower under the applicable Lease. Any letter of
credit or other instrument that Borrower receives in lieu of a cash security
deposit under any Lease entered into after the date hereof shall (i) be
maintained in full force and effect in the full amount unless replaced by a cash
deposit as hereinabove described and (ii) if permitted pursuant to any Legal
Requirements, name Lender as payee or mortgagee thereunder (or at Lender's
option, be fully assignable to Lender).

                  (j) Cash Collateral Subaccount. If a Cash Management Period
shall have commenced, then on the immediately succeeding Payment Date and on
each Payment Date thereafter during the continuance of such Cash Management
Period, all Available Cash shall be paid to Lender, which amounts shall be
transferred by Lender into a Subaccount (the "Cash Collateral Subaccount") as
cash collateral for Borrower's obligations under the Loan Documents. At Lender's
option, any funds that have been deposited into the Cash Collateral Subaccount
may be transferred by Lender into the Rollover Reserve Subaccount, to be applied
and disbursed in accordance with the provisions of Section 25(f) hereof. Any
funds in the Cash Collateral Subaccount Account and not previously disbursed or
applied shall be disbursed to Borrower upon the termination of such Cash
Management Period. Lender shall have the right, but not the obligation, at any
time whether or not an Event of Default has occurred and is continuing, in its
sole and absolute discretion to apply all sums then on deposit in the Cash
Collateral Subaccount to Borrower's obligations under the Loan Documents, in
such order and in such manner as Lender shall elect in its sole and absolute
discretion, including to make a prepayment of Principal (together with
Prepayment Consideration (as defined in the Note) applicable thereto).



                                       32
<PAGE>


                  (k) Grant of Security Interest; Application of Funds. As
security for payment of the Loan and the performance by Borrower of all other
terms, conditions and provisions of the Loan Documents, Borrower hereby pledges
and assigns to Lender, and grants to Lender a security interest in, all
Borrower's right, title and interest in and to all Rents and in and to all
payments to or monies held in the Clearing Account, the Deposit Account, all
Subaccounts created pursuant to this Instrument (collectively, the "Cash
Management Accounts"). Borrower hereby grants to Lender a continuing security
interest in, and agrees to hold in trust for the benefit of Lender, all Rents in
its possession prior to the (i) payment of such Rents to Lender or (ii) deposit
of such Rents into the Clearing Account. Borrower shall not, without obtaining
the prior written consent of Lender, further pledge, assign or grant any
security interest in any Cash Management Account, or permit any lien to attach
thereto, or any levy to be made thereon, or any UCC Financing Statements, except
those naming Lender as the secured party, to be filed with respect thereto. This
Instrument is, among other things, intended by the parties to be a security
agreement for purposes of the UCC. Upon the occurrence and during the
continuance of an Event of Default, Lender may apply any sums in any Cash
Management Account in any order and in any manner as Lender shall elect in
Lender's discretion without seeking the appointment of a receiver and without
adversely affecting the rights of Lender to foreclose the Lien of the Instrument
or exercise its other rights under the Loan Documents. Cash Management Accounts
shall not constitute trust funds and may be commingled with other monies held by
Lender. All interest which accrues on the funds in any Cash Management Account
(other than the Tax and Insurance Subaccount) shall accrue for the benefit of
Borrower and shall be taxable to Borrower and shall be added to and disbursed in
the same manner and under the same conditions as the principal sum on which said
interest accrued. Upon repayment in full of Borrower's obligations under the
Loan Documents, all remaining funds in the Subaccounts, if any, shall be
promptly disbursed to Borrower.

                  (l) Property Cash Flow Allocation.

                           (i) During any Cash Management Period, all Rents
deposited into the Deposit Account during the immediately preceding Interest
Period shall be applied on each Payment Date as follows in the following order
of priority: (i) First, to make payments into the Tax and Insurance Subaccount
as required under paragraph (d) of this Section 25; (ii) Second, to pay the
monthly portion of the fees charged by the Deposit Bank in accordance with the
Deposit Account Agreement; (iii) Third, to Lender to pay the principal and
interest due under the Note on such Payment Date (plus, if applicable, interest
at the Default Rate and all other amounts, other than those described under
other clauses of this paragraph (l) of this Section 25, then due to Lender under
the Loan Documents); (iv) Fourth, to make payments into the Capital Reserve
Subaccount as required under paragraph (e) of this Section 25; (v) Fifth, to
make payments for Approved Operating Expenses as required under paragraph (g) of
this Section 25; (vi) Sixth, during the continuance of a Rollover Sweep Period
(and if no other Cash Management Period is then continuing) to make payments in
an amount equal to all remaining Available Cash on such Payment Date into the
Rollover Reserve Subaccount as required under paragraph (f) of this Section 25;
and (vii) Lastly, during the continuance of a Cash Management Period described
in clauses (i), (ii) or (iii) of the defined term "Cash Management Period", to
make payments in an amount equal to all remaining Available Cash on such Payment
Date into the Cash Collateral Subaccount in accordance with paragraph (j) of
this Section 25. Upon the termination of any Cash Management Period, provided no
Event of Default is then continuing, any funds in the Operating Expense
Subaccount and not previously disbursed or applied shall be fully disbursed to
Borrower.


                                       33
<PAGE>


                           (ii) The failure of Borrower to make all of the
payments required under clauses (i) through (vii) of paragraph (i) above in full
on each Payment Date shall constitute an Event of Default under this Instrument;
provided, however, if adequate funds are available in the Deposit Account for
such payments, the failure by the Deposit Bank to allocate such funds into the
appropriate Subaccounts shall not constitute an Event of Default.

Notwithstanding anything to the contrary contained in this Section 25, after the
occurrence and during the continuance of an Event of Default, Lender may apply
all Rents deposited into the Deposit Account and other proceeds of repayment in
such order and in such manner as Lender shall elect.

         SECTION 26. NONRECOURSE LOAN. Subject to the provisions of this
Section, and notwithstanding any provision of the Loan Documents other than this
Section, the personal liability of Borrower, and of any general partner of
Borrower, to pay the principal of and interest on the debt evidenced by the Note
and any other agreement evidencing Borrower's obligations under the Note shall
be limited to (a) the Collateral, (b) the personal property described in and
pledged under any Loan Document other than this Instrument, and (c) the rents,
profits, issues, products and income of the Property, including any received or
collected by or on behalf of Borrower after an Event of Default.

         Except as provided in this Section, Lender shall not seek (a) any
judgment for a deficiency against Borrower, any general partner or member of
Borrower, or Borrower's successors or assigns, in any action to enforce any
right or remedy under the Note, this Instrument or the other Loan Documents, or
(b) any judgment on the Note except as may be necessary in any action brought
under the Instrument to enforce the lien against the Property or any other
Collateral.

         Notwithstanding the foregoing, Borrower and any general partner of
Borrower shall be fully and personally liable for payment and performance of all
obligations set forth in the Loan Documents, including the payment of all
principal, interest, and other amounts under the Note, in the event of (i) the
occurrence of an uncured default under Sections 15, 16 or 29 of this Instrument,
or (ii) the occurrence of any condition or event described in Section 20 (except
that in the event of involuntary proceedings described therein, neither Borrower
nor any general partner of Borrower shall be fully and personally liable under
this Section 26 unless either Borrower or any general partner of Borrower or any
Person owning an interest (directly or indirectly) in Borrower or any general
partner of Borrower consents to, aids, solicits, supports, or otherwise
cooperates or colludes to cause such event or fails to contest such event).

         Further, Borrower and any general partner of Borrower shall be
personally liable in the amount of any loss, damage or cost resulting from (a)
fraud or intentional misrepresentation by Borrower in connection with obtaining
the loan evidenced by the Note, (b) insurance proceeds, condemnation awards, or
other sums or payments attributable to the Property not applied in accordance
with the provisions of the Loan Documents (except to the extent that Borrower
did not have the legal right, because of a bankruptcy, receivership or similar
judicial proceeding, to direct disbursement of such sums or payments), (c) all


                                       34
<PAGE>

rents, profits, issues, products and income of the Property received or
collected by or on behalf of Borrower after and during an Event of Default and
not applied to payment of principal and interest due under the Note, and to the
payment of actual and reasonable operating expenses of the Property, as they
become due or payable (except to the extent that such application of such funds
is prevented by bankruptcy, receivership, or similar judicial proceeding in
which Borrower is legally prevented from directing the disbursement of such
sums), (d) misappropriation (including failure to turn over to Lender on demand
following an Event of Default) of tenant security deposits and rents collected
in advance, or of funds held by Borrower for the benefit of another party, or
(e) Borrower's failure to pay transfer fees and charges due Lender under the
Loan Documents in connection with any subordinate financing or any transfer of
all or any part of the Property, or any interest therein, from Borrower to
Borrower's transferee, or transfer of any beneficial interest in Borrower (if
Borrower is not a natural person or persons but is a corporation, partnership,
limited liability company, trust or other legal entity) other than a Permitted
Transfer, or (f) failure by Borrower, any general partner of Borrower, or any
indemnitor or guarantor to comply with the covenants, obligations, liabilities,
warranties and representations contained in the Environmental Indemnity
Agreement or otherwise pertaining to environmental matters, or (g) in the event
Lender has waived (or Borrower has failed to pay) the monthly collection for
real and personal property taxes, assessments, insurance premiums, or ground
rents, then failure by Borrower to pay any or all such taxes, assessments,
premiums and rents, or (h) in the event that Lender has waived (or Borrower has
not complied with) the requirement for third party property management, then any
management fee taken by Borrower or any principal or affiliate of Borrower after
an Event of Default, or (i) breach of any of Sections 15, 16 or 29 of this
Instrument, or (j) the occurrence of any condition or event described in Section
20 (except that in the event of involuntary proceedings described therein,
neither Borrower nor any general partner of Borrower shall be fully and
personally liable under this Section 26 unless either Borrower or any general
partner of Borrower or any Person owning an interest (directly or indirectly) in
Borrower or any general partner of Borrower consents to, aids, solicits,
supports, or otherwise cooperates or colludes to cause such event or fails to
contest such event).

         No provision of this Section shall (i) affect the enforcement of the
Environmental Indemnity Agreement or any guaranty or similar agreement executed
in connection with the debt evidenced by the Note, (ii) release or reduce the
debt evidenced by the Note, (iii) impair the lien of this Instrument, (iv)
impair the rights of Lender to enforce any provisions of this Instrument, (v)
limit Lender's ability to obtain a deficiency judgment or judgment on the Note
or otherwise against Borrower to the extent necessary to obtain any amount for
which Borrower may be liable in accordance with this Section.

         SECTION 27. REPRESENTATIONS OF BORROWER. The Borrower hereby represents
and warrants to Lender the following:

                  (a) Organization. Borrower is a limited partnership duly
organized, validly existing and in good standing under the laws of Connecticut.
There are no proceedings or actions pending, threatened or contemplated for the
liquidation, termination or dissolution of Borrower.

                                       35
<PAGE>

                  (b) Rent Roll. Borrower has delivered to Lender a certified
rent roll (the "Rent Roll"), a copy of which is attached hereto as Schedule 1,
which constitutes a true, correct, and complete list of each and every lease
affecting the Property (for each commercial tenant, together with all extensions
and amendments thereof) (the "Existing Leases"); Borrower has delivered to
Lender a true, correct, and complete copy of each of the Existing Leases which
are entered into by commercial or retail tenants; and there are no other leases,
assignments, modifications, extensions, renewals, or other agreements of any
kind whatsoever (written or oral) outstanding with respect to the leases or the
Property.

                  (c) Leases. Unless otherwise specified in the Rent Roll:

                           (i) the Existing Leases are in full force and effect;

                           (ii) Borrower has not given any notice of default to
any tenant under an Existing Lease (an "Existing Tenant") which remains uncured;

                           (iii) no Existing Tenant has any set off, claim or
defense to the enforcement of any Existing Lease;

                           (iv) no Existing Tenant is in arrears in the payment
of rent for more than 30 days, additional rent or any other charges whatsoever
due under any Existing Lease; or, to the knowledge of Borrower, is materially in
default in the performance of any other obligations of such Existing Tenant
under the applicable Existing Lease; and

                           (v) Borrower has completed all work or alterations
required of the landlord or lessor under each Existing Lease; and all of the
other obligations of landlord or lessor under the Existing Leases have been
performed.

                  (d) Rents. The Rent Roll truly and completely discloses all
annual and monthly rents payable by all Existing Tenants, including all
percentage rents, if any, expiration dates of the Existing Leases, and the
amount of security deposit being held by Borrower under each Existing Lease, if
any; and Borrower has not granted any Existing Tenant any rent concessions
(whether in form of cash contributions, work agreements, assumption of an
Existing Tenant's other obligations, or otherwise) or extensions of time
whatsoever not reflected in such Rent Roll.

                  (e) Lease Issues. There are no legal proceedings commenced
(or, to the best of the knowledge of the Borrower, threatened) against Borrower
by any Existing Tenant; no rental in excess of one month's rent has been prepaid
under any of the Existing Leases; each of the Leases is valid and binding on the
parties thereto in accordance with its terms; and the execution of this
Instrument and the other Loan Documents will not constitute an event of default
under any of the Existing Leases.

                  (f) Security Deposits. Borrower currently holds the security
deposits (if any) specified in the Existing Leases and has not given any credit,
refund, or set off against such security deposits to any person.

                  (g) Intentionally Deleted.


                                       36
<PAGE>


                  (h) No Undisclosed Tenants. Except for Borrower, there are no
persons or entities occupying space in the Property as tenants other than the
persons or entities specifically named in the Existing Leases.

                  (i) Title. Except as specifically listed in the schedule of
exceptions to coverage in the title policy insuring Lender's interest in the
Property, Borrower is now in possession of the Property; Borrower's possession
of the Property is peaceable and undisturbed; Borrower does not know any facts
by reason of which any claim to the Property, or any part thereof, might arise
or be set up adverse to Borrower; and the Property is free and clear of (i) any
lien for Taxes (except real property taxes not yet due and payable for the
calendar year in which this Instrument is being executed), and (ii) any
easements, rights-of-way, restrictions, encumbrances, liens or other exceptions
to title by mortgage, decree, judgment, agreement, instrument, or, to the
knowledge of Borrower, proceeding in any court. The Permitted Encumbrances (as
defined in Section 15 hereof) do not materially and adversely affect the value,
operation or use of the Property, or Borrower's ability to repay the Loan. This
Instrument when properly recorded in the appropriate records, together with any
UCC Financing Statements required to be filed in connection therewith, will
create (i) a valid, perfected first priority lien on the Borrower's interest in
the Property and (ii) valid and perfected first priority security interests in
and to, and perfected collateral assignments of, all personalty (including the
Leases), all in accordance with the terms thereof, in each case subject only to
any applicable Permitted Encumbrances. There are no pending or proposed special
or other assessments for public improvements or otherwise affecting the
Property, or any contemplated improvements to the Property that may result in
such special or other assessments.

                  (j) Liens. All charges for labor, materials or other work of
any kind furnished in connection with the construction, improvement, renovation
or rehabilitation of the Property or any portion thereof have been paid in full,
and no unreleased affidavit claiming a lien against the Property, or any portion
thereof, for the supplying of labor, materials or services for the construction
of improvements on the Property has been executed or recorded in the mechanic's
lien or other appropriate records in the county in which the Property is
located.

                  (k) Compliance with Law. The Property and the current and
contemplated uses of the Property are in compliance with all applicable federal,
state and municipal laws, rules, regulations and ordinances, applicable
restrictions, zoning ordinances, building codes and regulations, building lines
and easements, including, without limitation, federal and state environmental
protection law and the Americans with Disabilities Act of 1990, the Fair Housing
Amendments Act of 1988, all state and local laws or ordinances related to
handicapped access, and any statute, rule, regulation, ordinance, or order of
governmental bodies or regulatory agencies, or any order or decree of any court
adopted or enacted with respect thereto; no governmental authority having
jurisdiction over any aspect of the Property has made a claim or determination
that there is any such violation; the Property is not included in any area
identified by the Secretary of Housing and Urban Development pursuant to the
Flood Disaster Protection Act of 1973, as amended, as an area having special
flood hazards; and all permits, licenses and the like which are necessary for
the operation of the Property have been issued and are in full force and effect.



                                       37
<PAGE>


                  (l) Adverse Changes; Full and Accurate Disclosure. There have
been no material adverse changes, financial or otherwise, in the condition of
Borrower from that disclosed to Lender in the loan application submitted to
Lender by Borrower, or in any supporting data submitted in connection with the
Loan, and all of the information contained therein was true and correct when
submitted and is now substantially and materially true and correct on the date
hereof. No statement of fact made by Borrower in any Loan Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained therein not misleading. There is no
material fact presently known to Borrower that has not been disclosed to Lender
which adversely affects, or, as far as Borrower can foresee, might adversely
affect, the Property or the business, operations or condition (financial or
otherwise) of Borrower. All financial data, including the statements of cash
flow and income and operating expense, that have been delivered to Lender in
respect of Borrower and the Property (i) are true, complete and correct in all
material respects, (ii) accurately represent the financial condition of Borrower
and the Property as of the date of such reports, and (iii) to the extent
prepared by an independent certified public accounting firm, have been prepared
in accordance with GAAP or federal income tax basis of accounting, in either
case, consistently applied throughout the periods covered, except as disclosed
therein. Borrower has no contingent liabilities, liabilities for taxes, unusual
forward or long-term commitments, unrealized or anticipated losses from any
unfavorable commitments or any liabilities or obligations not expressly
permitted by this Instrument. Since the date of such financial statements, there
has been no materially adverse change in the financial condition, operations or
business of Borrower or the Property from that set forth in said financial
statements.

                  (m) Claims, Litigation. There is no claim, litigation or
condemnation proceeding pending, or, to the knowledge of the Borrower,
threatened, against the Property or Borrower, which would be likely to have a
material adverse affect on the Property or Borrower's ability to perform its
obligations in the connection with the Loan.

                  (n) Single Purpose. Borrower does not own any real property or
assets other than the Property and does not operate any business other than the
management and operation of the Property.

                  (o) Bankruptcy. No proceedings in bankruptcy or insolvency has
ever been instituted by or against Borrower or any affiliate thereof, and no
such proceeding is now pending or contemplated.

                  (p) Solvency. Borrower is, and if there are any general
partners or members of Borrower, such partners or members are, solvent pursuant
to the laws of the United States, as reflected by the entries in Borrower's
books and records and as reflected by the actual facts.

                  (q) Enforceability of Loan Documents. The Loan Documents have
been duly authorized, executed and delivered by Borrower and constitute valid
and binding obligations of Borrower, enforceable against Borrower in accordance
with their respective terms. No approval, consent, order or authorization of any
governmental authority and no designation, registration, declaration or filing
with any governmental authority is required in connection with the execution and
delivery of the Note, this Instrument or any other Loan Document. Neither
Borrower nor any guarantor or indemnitor has any defense or offset to the



                                       38
<PAGE>


enforcement of any Loan Document, or any claim against Lender. Neither Borrower
nor any guarantor or indemnitor has any right whatsoever against Lender other
than the express contractual obligations of Lender set forth in the Loan
Documents. Any rights or claims contrary to this provision, whether known or
unknown, are hereby expressly waived.

                  (r) Non-contravention. The execution and delivery of the Loan
Documents will not violate or contravene in any way the articles of
incorporation or bylaws or partnership agreement, articles of organization or
operating agreement as the case may be, of Borrower or any indenture, agreement
or instrument to which Borrower is a party or by which it or its property may be
bound, or be in conflict with, result in a breach of or constitute a default
under any such indenture, agreement or other instrument, result in the creation
or imposition of any lien, charge or encumbrance of any nature whatsoever upon
any of the property or assets of Borrower, except as contemplated by the
provisions of such Loan Documents, and no action or approval with respect
thereto by any third person is required.

                  (s) Homestead. No part of the Property is all or a part of
Borrower's homestead or the homestead of anyone.

                  (t) Utilities. The Property is served by all utilities
required for the current or contemplated use thereof. All utility service is
provided by public utilities and the Property has accepted or is equipped to
accept such utility service.

                  (u) Public Roads. All public roads and streets necessary for
service of and access to the Property for the current or contemplated use
thereof have been completed, are serviceable and all-weather and are physically
and legally open for use by the public.

                  (v) Water and Sewers. The Property is serviced by public water
and sewer systems.

                  (w) Damage. The Property is free from damage caused by fire or
other casualty.

                  (x) Waste Disposal. All liquid and solid waste disposal,
septic and sewer systems located on the Property are in a good and safe
condition and repair and in compliance with all applicable laws.

                  (y) Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction which might adversely affect Borrower
or the Property, or Borrower's business, properties, operations or condition,
financial or otherwise. Borrower is not in default in any material respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any Permitted Encumbrance or any other agreement or
instrument to which it is a party or by which it or the Property is bound.

                  (z) No Plan Assets. As of the date hereof and throughout the
entire term of the loan evidenced by the Note and this Instrument (the "Term")
(i) Borrower is not and will not be an "employee benefit plan," as defined in
Section 3(3) of ERISA, subject to Title I of ERISA, (ii) none of the assets of
Borrower constitutes or will constitute "plan assets" of one or more such plans
within the meaning of 29 C.F.R. Section 2510.3-101, (iii) Borrower is not and



                                       39
<PAGE>


will not be a "governmental plan" within the meaning of Section 3(32) of ERISA,
and (iv) transactions by or with Borrower are not and will not be subject to
state statutes regulating investment of, and fiduciary obligations with respect
to, governmental plans.

                  (aa) Federal Reserve Regulations; Investment Company Act. No
part of the proceeds of the loan evidenced by the Note, this Instrument and the
other Loan Documents will be used for the purpose of purchasing or acquiring any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System or for any other purpose that would be inconsistent
with such Regulation U or any other regulation of such Board of Governors, or
for any purpose prohibited by Legal Requirements (as defined in Section 25
hereof) or any Loan Document. Borrower is not (i) an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended; (ii) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of either a
"holding company" or a "subsidiary company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended; or (iii) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.

                  (bb) Fraudulent Transfer. Borrower has not entered into the
loan evidenced by the Note, this Instrument and the other Loan Documents, or any
Loan Document with the actual intent to hinder, delay, or defraud any creditor,
and Borrower has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of Borrower's assets
exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower's total liabilities, including subordinated,
unliquidated, disputed or contingent liabilities, including the maximum amount
of its contingent liabilities or its debts as such debts become absolute and
matured. Borrower's assets do not and, immediately following the execution and
delivery of the Loan Documents will not, constitute unreasonably small capital
to carry out its business as conducted or as proposed to be conducted. Borrower
does not intend to, and does not believe that it will, incur debts and
liabilities (including contingent liabilities and other commitments) beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts to be payable on or in respect of obligations of Borrower).

                  (cc) No Other Debt. There is no indebtedness with respect to
the Property or any excess cash flow or any residual interest therein, whether
secured or unsecured, other than Permitted Encumbrances and Permitted
Indebtedness (as defined in Section 28(i) hereof).

                  (dd) Flood Zone. No portion of the Property is located in an
area as identified by the Federal Emergency Management Agency as an area having
special flood hazards.

         SECTION 28. BORROWER'S ADDITIONAL COVENANTS. Borrower hereby covenants,
agrees and undertakes as follows:

                  (a) Alterations of Property. Borrower shall not undertake or
commence any alterations of any improvements on the Property the cost of which
is in excess of five percent of the then original principal amount of the Note,
without the prior written consent of Lender, not to be unreasonably withheld;
provided, however, that Lender may, in its sole and absolute discretion,
withhold consent to any alteration the cost of which is reasonably estimated to
exceed $2,000,000.

                                       40
<PAGE>

                  (b) Further Assurances. Borrower shall from time to time, at
the request of Lender, (i) promptly correct any defect, error or omission which
may be discovered in the contents of this Instrument or in any other Loan
Document or in the execution or acknowledgment thereof; (ii) execute,
acknowledge, deliver and record and/or file such further documents or
instruments (including, without limitation, further mortgages, security
agreements, financing statements, continuation statements, assignments of rents
or leases and environmental indemnity agreements) and perform such further acts
and provide such further assurances as may be necessary, desirable or proper, in
Lender's opinion, to carry out more effectively the purposes of this Instrument
and such other instruments and to subject to the liens and security interests
hereof and thereof any property intended by the terms hereof or thereof to be
covered hereby or thereby, including specifically, but without limitation, any
renewals, additions, substitutions, replacements, or appurtenances to the
Property; provided that such documents or instruments do not materially increase
Borrower's liability under the Loan Documents; and (iii) execute, acknowledge,
deliver, procure, and file and/or record any document or instrument (including
specifically, but without limitation, any financing statement) deemed advisable
by Lender to protect the liens and the security interests herein granted against
the rights or interests of third persons; provided that such documents or
instruments do not materially increase Borrower's liability under the Loan
Documents. Borrower will pay all reasonable costs connected with any of the
foregoing in this paragraph.

                  (c) Mortgage Taxes. Borrower shall at any time any law shall
be enacted imposing or authorizing the imposition of any tax upon this
Instrument, or upon any rights, titles, liens or security interests created
hereby, or upon the obligations secured hereby or any part thereof, immediately
pay all such taxes; provided that, if such law as enacted makes it unlawful for
Borrower to pay such tax, Borrower shall not pay nor be obligated to pay such
tax, and in the alternative, Borrower may, in the event of the enactment of such
a law, and must, if it is unlawful for Borrower to pay such taxes, prepay the
obligations secured hereby in full within 60 days after demand therefor by
Lender.

                  (d) Minerals. Borrower shall not permit any drilling or
exploration for or extraction, removal or production of any mineral, natural
element, compound or substance from the surface or subsurface of the Property
regardless of the depth thereof or the method of mining or extraction thereof.

                  (e) Maintenance of Borrower and Managing Entity Names.
Borrower shall not change, or permit Managing Entity to change, its name,
identity (including its trade name or names) or employer identification number,
in any such case, without notifying Lender of such change in writing at least
thirty (30) days prior to the effective date of such change. Borrower shall
deliver, or cause Managing Entity to deliver, to Lender, prior to or
contemporaneously with the effective date of any such change, any financing
statement or financing statement change reasonably required by Lender, if any,
to establish or maintain the validity, perfection and priority of the security
interests granted herein.


                                       41
<PAGE>


                  (f) Costs and Expenses. Borrower shall pay on demand all
reasonable and bona fide out-of-pocket costs, fees and expenses and other
expenditures, including, but not limited to, reasonable attorneys' fees and
expenses, paid or incurred by Lender to third parties incident to this
Instrument or any other Loan Document (including, but not limited to, reasonable
attorneys' fees and expenses in connection with the negotiation, preparation and
execution hereof and of any other Loan Document and any amendment hereto or
thereto, any release hereof, any consent, approval or waiver hereunder or under
any other Loan Document, the making of any advance under the Note, and any suit
to which Lender is a party involving this Instrument or the Property) or
incident to the enforcement of the obligations secured hereby or the exercise of
any right or remedy of Lender under any Loan Document.

                  (g) Compliance with Laws. Borrower shall maintain and keep the
Property in compliance with all applicable laws.

                  (h) Annual Budget. Borrower shall prepare and submit (or shall
cause Manager to prepare and submit) to Lender within thirty (30) days after a
Cash Management Period and by November 30th of each year thereafter during the
Term until such Cash Management Period has ended, for approval by Lender, which
approval shall not be unreasonably withheld or delayed, a proposed pro forma
budget for the Property for the succeeding calendar year (the "Annual Budget",
and each Annual Budget approved (or deemed approved pursuant to the terms of
this Section 28(h)) by Lender is referred to herein as the "Approved Annual
Budget"), and, promptly after preparation thereof, any revisions to such Annual
Budget. Lender's failure to approve or disapprove any Annual Budget or revision
within 30 days after Lender's receipt thereof shall be deemed to constitute
Lender's approval thereof. The Annual Budget shall consist of (i) an operating
expense budget showing, on a month-by-month basis, in reasonable detail, each
line item of the Borrower's anticipated operating income and operating expenses
(on a cash and accrual basis), including amounts required to establish, maintain
and/or increase any monthly payments required hereunder (and once such Annual
Budget has been approved (or deemed approved pursuant to the terms of this
Section 28(h)) by Lender, such operating expense budget shall be referred to
herein as the "Approved Operating Budget"), and (ii) a Capital Expense budget
showing, on a month-by-month basis, in reasonable detail, each line item of
anticipated Capital Expenses (and once such Annual Budget has been approved (or
deemed approved pursuant to the terms of this Section 28(h)) by Lender, such
Capital Expense budget shall be referred to herein as the "Approved Capital
Budget"). Until such time that any Annual Budget has been approved (or deemed to
have been approved pursuant to the terms of this Section 28(h)) by Lender, the
prior Approved Annual Budget shall apply for all purposes hereunder (with such
adjustments as reasonably determined by Lender (including increases for any
non-discretionary expenses).

                  (i) Indebtedness. Borrower shall not directly or indirectly
create, incur or assume any indebtedness other than the indebtedness evidenced
by the Loan Documents and unsecured trade payables incurred in the ordinary
course of business relating to the ownership and operation of the Property which
do not exceed, at any time, a maximum amount of 1% of the original amount of the
Loan and are paid within sixty (60) days of the date incurred (collectively,
"Permitted Indebtedness").


                                       42
<PAGE>



         SECTION 29. COVENANTS WITH RESPECT TO SINGLE PURPOSE, INDEBTEDNESS,
OPERATIONS, FUNDAMENTAL CHANGES OF BORROWER.

                  (a) PERTAINING TO BORROWER PARTIES. Borrower represents,
warrants and covenants as of the date of hereof and until such time as the
indebtedness secured hereby is paid in full, that each of Borrower and Acadia
239 Greenwich Avenue, LLC (the latter, or any permitted successor and assignee
thereto in accordance with the terms of this Instrument, may be referred to as
"Managing Entity," and both Borrower and Managing Entity may be referred to as
"Borrower Parties"):

                           (i) does not own and will not own any assets other
than the Property (including incidental personal property necessary for the
operation thereof and proceeds therefrom) or direct or indirect ownership
interests in Borrower (the "Ownership Interests");

                           (ii) is not engaged and will not engage in any
business, directly or indirectly, other than the ownership, management and
operation of the Property or the Ownership Interests;

                           (iii) will not enter into any contract or agreement
with any partner, member, shareholder, trustee, beneficiary, principal or
affiliate of any Borrower Party except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arms-length basis with third parties other than such affiliate;

                           (iv) has not incurred and will not incur any debt,
secured or unsecured, direct or contingent (including guaranteeing any
obligation), other than (i) the obligations secured by this Instrument, and (ii)
trade payables or accrued expenses incurred in the ordinary course of business
of operating the Property which (1) do not exceed, at any time, (a) with respect
to Borrower, a maximum amount of 1% of the original amount of the Principal, and
(b) with respect to Managing Entity, $10,000 and (2) are paid within sixty (60)
days of the date incurred;

                           (v) has not made and will not make any loan or
advances to any person or entity;

                           (vi) is and reasonably expects to remain solvent and
pay its own liabilities, indebtedness, and obligations of any kind from its own
separate assets as the same shall become due;

                           (vii) has done or caused to be done and will do all
things necessary to preserve its existence, and will not, nor will any partner,
member, shareholder, trustee, beneficiary, or principal amend, modify or
otherwise change its partnership certificate, partnership agreement, articles of
incorporation, by-laws, articles of organization, operating agreement, or other
organizational documents in any manner except as necessary to reflect Permitted
Transfers;

                           (viii) shall continuously maintain its existence and
be qualified to do business in all states necessary to carry on its business,
specifically including in the case of Borrower, the state where the Property is
located;


                                       43
<PAGE>


                           (ix) will conduct and operate its business as
presently conducted and operated;

                           (x) will maintain books and records and bank accounts
separate from those of its partners, members, shareholders, trustees,
beneficiaries, principals, affiliates, and any other person or entity;

                           (xi) will be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other (including
any of its partners, members, shareholders, trustees, beneficiaries, principals
and affiliates), and not as a department or division of any entity;

                           (xii) will file its own tax returns;

                           (xiii) has and reasonably expects to maintain
adequate capital for the normal obligations reasonably foreseeable in a business
of its size and character and in light of its contemplated business operations;

                           (xiv) will not seek, acquiesce in, or suffer or
permit its liquidation, dissolution or winding up, in whole or in part;

                           (xv) will not enter into any transaction of merger or
consolidation, or acquire by purchase or otherwise all or substantially all of
the business or assets of, or any stock of beneficial ownership of, any person
or entity;

                           (xvi) will not commingle or permit to be commingled
its funds or other assets with those of any other person or entity;

                           (xvii) has and will maintain its assets in such a
manner that it is not costly or difficult to segregate, ascertain or identify
its individual assets from those of any other person or entity;

                           (xviii) except as expressly provided for in the Loan
Documents, does not and will not hold itself out to be responsible for the debts
or obligations of any other person or entity;

                           (xix) except as expressly provided for in the Loan
Documents, has not and will not guarantee or otherwise become liable on or in
connection with any obligation of any other person or entity;

                           (xx) shall not do any act which would make it
impossible to carry on its ordinary business;

                           (xxi) will not possess or assign the Property for
other than a business or company purpose;

                           (xxii) shall not hold title to its assets other than
in its name;



                                       44
<PAGE>


                           (xxiii) shall not institute proceedings to be
adjudicated bankrupt or insolvent; consent to the institution of bankruptcy or
insolvency proceedings against it; file a petition seeking, or consent to,
reorganization or relief under any applicable federal or state law relating to
bankruptcy; consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of it or a substantial part of
its property; or make any assignment for the benefit of creditors; or admit in
writing its inability to pay its debts generally as they become due; and

                           (xxiv) shall comply with all (and shall not suffer to
be inaccurate any) of the assumptions, statements, certifications,
representations, warranties and covenants regarding or made by Borrower
contained in or appended to any opinion of Borrower's legal counsel delivered in
connection with the transaction in which the Loan Documents are executed.

                  (b) PERTAINING TO MANAGING ENTITY. Borrower also represents,
warrants and covenants as of the date of hereof and until such time as the
indebtedness secured hereby is paid in full, that Managing Entity:

                           (i) shall at all times act as the sole general
partner with all of the rights, powers, obligations and liabilities thereof
under the partnership agreement of Borrower and shall take any and all actions
and do any and all things necessary or appropriate to the accomplishment of the
same and will engage in no other business;

                           (ii) shall not, without the unanimous consent of its
members, institute proceedings for itself or Borrower to be adjudicated bankrupt
or insolvent; consent to the institution of a bankruptcy or insolvency
proceedings against it or Borrower; file a petition seeking, or consent to,
reorganization or relief under any applicable federal or state law relating to
bankruptcy; consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) for itself or Borrower or a
substantial part of its or Borrower's property; make any assignment for the
benefit of creditors; or admit in writing its inability to pay its debts
generally as they become due; and

                           (iii) shall not, without the unanimous consent of its
members, for itself or for Borrower (i) liquidate or dissolve, in whole or in
part; (ii) consolidate, merge or enter into any form of consolidation with or
into any other person or entity, nor convey, transfer or lease its or Borrower's
assets substantially as an entirety to any person or entity nor permit any
person or entity to consolidate, merge or enter into any form of consolidation
with or into itself or Borrower; or (iii) amend any provisions of its or
Borrower's organizational documents containing provisions similar to those
contained in this Section 29, except as necessary to reflect Permitted
Transfers.

         SECTION 30. NOTICE. All notices given under this Instrument shall be in
writing, and sent to the other party at its address set forth below or at such
other address as such party may designate by notice to the other party and shall
be deemed given on the earliest of (i) actual receipt, duly evidenced by any
commercially reasonable means, (ii) three Business Days after mailing, by
certified or registered U.S. Mail, return receipt requested, postage prepaid,
(iii) one Business Day after timely delivery, fee prepaid, to a national
overnight delivery service (such as FedEx, Purolater Courier, U.P.S. Next Day
Air), (iv) the date of transmission of notice sent by telecopier or facsimile



                                       45
<PAGE>


machine (with a copy thereof sent in accordance with clause (ii) above) provided
notice was transmitted on a Business Day, otherwise notice shall be deemed given
on the next Business Day.

         The applicable addresses are as follows:

         To Borrower:
         ------------

         c/o Acadia Realty Trust
         1311 Mamaroneck Avenue
         White Plains, New York  10605
         Attention:  Robert Masters, Esq.
         Telephone No.: (914) 288-8139
         Facsimile No.: (914) 248-3646

         With a Copy to:

         Aberdeen Properties, Inc.
         41 West Putnam Avenue
         Greenwich, Connecticut  06830
         Attention:  James B. Cummings
         Facsimile No.: (203) 629-8316

         With a Copy to:

         Esanu Katsky Korins & Siger, LLP
         605 Third Avenue
         New York, New York 10158
         Attention:  Randolph Amengual, Esq.
         Telephone No.: (212) 716-3243
         Facsimile No.: (212) 953-6899

         To Lender:

         Greenwich Capital Financial Products, Inc.
         600 Steamboat Road
         Greenwich, Connecticut  06830
         Attention:  Commercial Mortgage Loan Department
         Telephone No.: (203) 618-2373
         Facsimile No.: (203) 629-8363

         With a Copy to:

         Kaye Scholer LLP
         425 Park Avenue
         New York, New York 10022
         Attention: Stephen Gliatta, Esq.
         Telephone No.: (212) 836-8618
         Facsimile No.: (212) 836-8689


                                       46
<PAGE>

         Borrower hereby requests that any notice of default or notice of sale
in any judicial or nonjudicial foreclosure proceeding be mailed to Borrower at
its address as specified herein.

         SECTION 31. UNIFORM INSTRUMENT; GOVERNING LAW; SEVERABILITY. This form
of instrument combines uniform covenants for national use and non-uniform
covenants with limited variations by jurisdiction to constitute a uniform
security instrument covering real property and related fixtures and personal
property. THIS INSTRUMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY
BORROWER AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS INSTRUMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO
PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION,
AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT HERETO AND
PURSUANT TO THE OTHER LOAN DOCUMENTS WITH RESPECT TO THE PROPERTY SHALL BE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE
PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED
BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE
CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE
OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY
LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT
THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS INSTRUMENT OR THE OTHER LOAN
DOCUMENTS, AND THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. In the event that any
provision of this Instrument or the Note conflicts with applicable law, such
conflict shall not affect other provisions of this Instrument or the Note which
can be given effect without the conflicting provisions, and to this end the
provisions of this Instrument and the Note are declared to be severable. In the
event that any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower is interpreted so that any charge
provided for in this Instrument or in the Note, whether considered separately or
together with other charges levied in connection with this Instrument and the
Note, violates such law, and Borrower is entitled to the benefit of such law,
such charge is hereby reduced to the extent necessary to eliminate such
violation. The amounts, if any, previously paid to Lender in excess of the



                                       47
<PAGE>


amounts payable to Lender pursuant to such charges as reduced shall be applied
by Lender to reduce the principal of the indebtedness evidenced by the Note. For
the purposes of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower has been
violated, all indebtedness which is secured by this Instrument or evidenced by
the Note and which constitutes interest, as well as all other charges levied in
connection with such indebtedness which constitute interest, shall be deemed to
be allocated and spread over the stated term of the Note. Unless otherwise
required by applicable law, such allocation and spreading shall be effected in
such a manner that the rate of interest computed thereby is uniform throughout
the stated term of the Note.

         SECTION 32. RESTRUCTURING LOAN, SECONDARY MARKET TRANSACTIONS.

                  (a) SECONDARY MARKET TRANSACTIONS GENERALLY. Lender shall have
the right to engage in one or more Secondary Market Transactions (as defined in
Section 15 hereof), and to structure and restructure all or any part of the
Loan, including without limitation in multiple tranches, as a wraparound loan,
or for inclusion in a REMIC or other Securitization (as defined in Section 15
hereof). Without limitation, Lender shall have the right to cause the Note and
this Instrument to be split into a first and a second mortgage loan in whatever
proportion Lender determines, and thereafter to engage in Secondary Market
Transactions with respect to all or any part of the indebtedness and loan
documentation. Borrower acknowledges that it is the intention of the parties
that all or a portion of the Loan will be securitized and that all or a portion
of the Loan (either itself, or in combination with other loans) will be rated by
one or more Rating Agencies (as defined in Section 15 hereof). Borrower further
acknowledges that additional structural modifications may be required to satisfy
issues raised by any Rating Agencies.

                  (b) COOPERATION; LIMITATIONS. Borrower shall use all
reasonable efforts and cooperate reasonably and in good faith with Lender in
effecting any such restructuring or Secondary Market Transaction. Such
cooperation shall include without limitation, executing and delivering such
reasonable amendments to the Loan Documents as Lender may request, provided
however that no such amendment shall on an over-all basis modify (i) the
interest rate payable under the Note; (ii) the stated maturity date of the Note,
(iii) the amortization of the principal amount of the Note, (iv) any other
economic terms of the Loan, or (v) the non-recourse provisions of the Loan. Such
cooperation also shall include using best efforts to obtain such certificates
and assurances from governmental entities and others as Lender may request.
Borrower shall not be required to incur any cost in connection with such
restructure or Secondary Market Transaction or to provide additional collateral
that was not initially contemplated by the parties to effect any such
restructuring or Secondary Market Transaction.

                  (c) INFORMATION. Borrower shall provide such information and
documents relating to the Borrower and its principals, the manager of the
Property, the Property and the business and operations of all of the foregoing
as Lender may reasonably request in connection with any such Secondary Market
Transaction. Lender shall be permitted to share all such information with the
investment banking firms, Rating Agencies, accounting firms, law firms, other
third party advisory firms, potential investors, and other parties involved in



                                       48
<PAGE>


any proposed Secondary Market Transaction. Any such information may be
incorporated into offering documents for the Secondary Market Transactions.
Lender and all of the aforesaid third-party advisors and professional firms and
investors shall be entitled to rely upon such information, and Borrower shall
indemnify, defend, and hold harmless Lender from and against any losses, claims,
damages and liabilities that arise out of or are based upon any actual or
alleged untrue or misleading statement of material fact contained in such
information or the actual or alleged omission of any material fact without which
such information is materially misleading. Lender may publicize the existence of
the Loan in connection with Lender's Secondary Market Transaction activities or
otherwise.

                  (d) ADDITIONAL PROVISIONS. In any Secondary Market
Transaction, Lender may transfer its obligations under the Loan Documents (or
may transfer the portion thereof corresponding to the transferred portion of the
obligations of Borrower), and thereafter Lender shall be relieved of any
obligations under the Loan Documents arising after the date of said transfer
with respect to the transferred interest. Each transferee investor shall be
deemed to be a "Lender" under the applicable Loan Documents.

                  (e) CERTAIN DEFINITIONS. As used herein, the following terms
have the meanings indicated:

                  "Loan": all obligations of Borrower under the Loan Documents.

                  "Securitization": mean a rated offering of securities
representing direct or indirect interests in one or more mortgage loans or the
right to receive income therefrom.

         SECTION 33. SUCCESSORS AND ASSIGNS BOUND. This Instrument and the other
Loan Documents shall be binding upon and inure to the benefit of Borrower and
Lender and their respective successors and assigns forever, subject to Section
15 hereof. Notwithstanding the foregoing, Lender shall have no liability under
any of the Loan Documents for any matter arising after Lender transfers its
interest in the Note to any successor. However, Lender shall continue to have
the benefit of all rights having accrued under the Loan Documents theretofore,
and all rights under all obligations of indemnification set forth in the Loan
Documents for matters arising theretofore, then, and thereafter.

         SECTION 34. FORBEARANCE BY LENDER NOT A WAIVER. Any forbearance by
Lender in exercising any right or remedy hereunder, or otherwise afforded by
applicable law, shall not be a waiver of or preclude the exercise of any right
or remedy. The acceptance by Lender of payment of any sum secured by this
Instrument after the due date of such payment shall not be a waiver of Lender's
right to either require prompt payment when due of all other sums so secured or
to declare a default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by Lender shall not
be a waiver of Lender's right to accelerate the maturity of the indebtedness
secured by this Instrument, nor shall Lender's receipt of any awards, proceeds
or damages, whether as proceeds of insurance or condemnation awards or
otherwise, operate to cure or waive Borrower's default in payment of sums
secured by this Instrument.


                                       49
<PAGE>

         SECTION 35. ESTOPPEL CERTIFICATE. Borrower shall within ten days of a
written request from Lender furnish Lender with a written statement, duly
acknowledged, setting forth the sums secured by this Instrument and any right of
set-off, counterclaim or other defense which exists against such sums and the
obligations of this Instrument and attaching true, correct and complete copies
of the Note, this Instrument and any other Loan Documents and any and all
modifications, amendments and substitutions thereof.

         SECTION 36. WAIVER OF JURY TRIAL. BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THE BORROWER MAY HAVE TO A TRIAL
BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR
IN CONJUNCTION WITH THE NOTE, THIS INSTRUMENT, ANY OTHER LOAN DOCUMENT, ANY
OTHER AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF EITHER PARTY.

         SECTION 37. MISCELLANEOUS.

                  (a) No Oral Change. No provision of this Instrument or any of
the other Loan Documents may be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Borrower or Lender, except only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.

                  (b) Liability. If Borrower consists of more than one person,
the obligations and liabilities of each such person hereunder and under the
other Loan Documents shall be joint and several.

                  (c) Captions. The captions and headings of the Sections,
paragraphs, and other provisions of this Instrument are for convenience only and
are not to be used to interpret or define the provisions hereof.

                  (d) Duplicate Originals; Counterparts. This Instrument and any
of the Loan Documents may be executed in any number of duplicate originals and
each duplicate original shall be deemed to be an original. This Instrument and
any of the Loan Documents may be executed in multiple counterparts.

                  (e) Number and Gender. Whenever the context may require, any
pronouns used herein or in any of the Loan Documents shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.

                  (f) Subrogation. If any or all of the proceeds of the Note
have been used to extinguish, extend or renew any indebtedness heretofore
existing against the Property, then, to the extent of the funds so used, Lender
shall be subrogated to all of the rights, claims, liens, titles, and interests
existing against the Property heretofore held by, or in favor of, the holder of
such indebtedness and such former rights, claims, liens, titles, and interests,
if any, are not waived but rather are continued in full force and effect in
favor of Lender and are merged with the lien and security interest created
herein as cumulative security for the performance and repayment of the
obligations secured hereby.


                                       50
<PAGE>


                  (g) Entire Agreement. The Note, this Instrument and the other
Loan Documents constitute the entire understanding and agreement between
Borrower and Lender pertaining to the subject matter hereof and thereof, and
supersede all prior written or oral understandings and agreements between
Borrower and Lender with respect thereto, including the prior agreements
evidenced by any application or commitment issued in connection with this
transaction. Borrower hereby acknowledges that, except as incorporated in
writing in the Loan Documents, there are not, and were not, and no persons are
or were authorized by Lender to make, any representations, understandings,
stipulations, agreements or promises, oral or written, with respect to the
transaction which is the subject of the Loan Documents, except only to the
extent expressly set forth in the Loan Documents.

                  (h) Action through Agents. In exercising any rights hereunder
or under any of the Loan Documents or taking any actions provided for herein or
therein, Lender may act through its employees, agents or independent contractors
as authorized by Lender.

         SECTION 38. STATE OF CONNECTICUT PROVISIONS.

                  (a) Principles of Construction. In the event of any
inconsistencies between the terms and conditions of this Section 38 and the
other terms and conditions of this Instrument, the terms and conditions of this
Section 38 shall control and be binding.

                  (b) Pre-Judgment Remedy Waiver. BORROWER ACKNOWLEDGES THAT IT
HAS THE RIGHT UNDER SECTION 52-278a ET SEQ. OF THE CONNECTICUT GENERAL STATUTES,
SUBJECT TO CERTAIN LIMITATIONS, TO NOTICE OF AND HEARING ON THE RIGHT OF THE
LENDER TO OBTAIN A PREJUDGMENT REMEDY, SUCH AS ATTACHMENT, GARNISHMENT OR
REPLEVIN, UPON COMMENCING ANY LITIGATION AGAINST BORROWER, NOTWITHSTANDING SUCH
RIGHT, BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE, JUDICIAL HEARING, OR PRIOR
COURT ORDER TO WHICH IT MIGHT OTHERWISE HAVE THE RIGHT UNDER SAID STATUTE OR
UNDER ANY OTHER STATE OR FEDERAL STATUTE OR CONSTITUTION IN CONNECTION WITH THE
OBTAINING BY LENDER OF ANY PREJUDGMENT REMEDY IN CONNECTION WITH THIS
INSTRUMENT. BORROWER FURTHER CONSENTS TO THE ISSUANCE OF ANY PREJUDGMENT
REMEDIES WITHOUT A BOND AND AGREES NOT TO REQUEST OR FILE MOTIONS SEEKING TO
REQUIRE THE POSTING OF A BOND UNDER PUBLIC ACT 93-431 IN CONNECTION WITH
LENDER'S EXERCISE OF ANY PREJUDGMENT REMEDY, BORROWER ALSO WAIVES ANY AND ALL
OBJECTION WHICH IT MIGHT OTHERWISE ASSERT, NOW OR IN THE FUTURE, TO THE EXERCISE
OR USE BY LENDER OF ANY RIGHT OF SETOFF, REPOSSESSION OR SELF HELP AS MAY
PRESENTLY EXIST UNDER STATUTE OR COMMON LAW.

                  (c) Loan for Commercial Purposes. Borrower is organized for a
profit and is engaged primarily in commercial, manufacturing, industrial or
other nonconsumer pursuits (within the meaning of Section 37-9 of the
Connecticut General Statutes). Without limiting the generality of the foregoing,



                                       51
<PAGE>


the proceeds of the Loan will be utilized in Borrower's business or investment
activities, and no portion of such proceeds will be utilized for any personal,
family or household purchases, acquisitions or uses or for any other consumer
purposes. Borrower represents, warrants and acknowledges that the transaction of
which this Instrument is a part is a commercial transaction and not a consumer
transaction. Monies now or in the future to be advanced to or on behalf of
Borrower are not and will not be used for personal family or household purposes.

                  (d) No Merger of Property. If Lender shall acquire title to
the Property by conveyance from Borrower or as a result of the foreclosure of
any other mortgage which Lender at any time holds with respect to the Property,
this Instrument shall not merge in the fee of the Property but shall remain and
continue as an existing and enforceable lien for the Loan secured hereby until
the same shall be released of record by Lender in writing.

                  (e) Waiver of Termination Rights. Borrower hereby waives, for
itself or any of its assigns who assume this Instrument, any right it may have
under Section 49-2(c)(7) of the Connecticut General Statutes, as amended, or
otherwise, to terminate the right of Lender to make "optional future advances"
as defined under said statute.

                  (f) Open-End Mortgage. This is an "open-end mortgage" as
provided for by Connecticut General Statutes Section 49-2(c), and Lender shall
have all the rights, powers, privileges and protections afforded to the holder
of an open-end mortgage by such statute or any other applicable law. For
purposes of such statute, the full amount of the loan authorized is $16,000,000.
It is understood and agreed that Lender may, but shall not be obligated to, at
any time and from time to time, make future advances secured by this Instrument.
Whether or not any such future advances are to be made shall be determined by
Lender in its sole and absolute discretion. Except for advances for the payment
of taxes, assessments, insurance premiums, repairs, alterations, improvements or
costs incurred for the protection of the Premises or otherwise permitted
elsewhere by this Instrument or under applicable law, all future advances shall
be evidenced by a note or notes executed by Borrower, which provide that such
advances are secured by this Instrument. Nothing set forth in this Section shall
affect the validity or enforceability of any obligation of Borrower to Lender
under this secured by this Instrument. Nothing set forth in this Section shall
affect the validity or enforceability of any obligation of Borrower to Lender
under this Instrument or any other agreement between Lender and Borrower that
would be valid and enforceable without the provisions of this Section.

                  [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

<PAGE>


         IN WITNESS WHEREOF, Borrower has executed this Instrument or has caused
the same to be executed by its representatives thereunto duly authorized.

                                 BORROWER:

                                 239 GREENWICH ASSOCIATES LIMITED
                                 PARTNERSHIP, a Connecticut limited
                                 partnership

                                 By:  Acadia 239 Greenwich Avenue, LLC, a
                                      Delaware limited liability company, its
                                      general partner

                                      By: Acadia Realty Limited Partnership, a
                                          Delaware limited partnership, its sole
                                          member

                                          By: Acadia Realty Trust, a Maryland
                                              real estate investment trust, its
                                              general partner

                                              By:
                                                  -----------------------
                                                  Name:
                                                  Title:




SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF:


Witness:
          ------------------------------
              Name:


Witness:
          ------------------------------
              Name:

<PAGE>


                                 ACKNOWLEDGMENT


STATE OF ______________             )
                                    :ss.
COUNTY OF ____________              )


         On the ___ day of May in the year 2003, before me, the undersigned
officer, personally appeared __________________, who acknowledged himself to be
the ________________ of Acadia Realty Trust, a Maryland real estate investment
trust, the general partner of Acadia Realty Limited Partnership, a Delaware
limited partnership, the sole member of Acadia 239 Greenwich Avenue, LLC, a
Delaware limited liability company, the general partner of 239 Greenwich
Associates Limited Partnership, a limited partnership organized under the laws
of the State of Connecticut, and that in the capacity aforesaid he, being
authorized to do so, executed, the foregoing instrument for the purposes therein
contained by signing the name of the ____________ as such ______________ and the
free act and deed of said limited partnership.

         IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                  _______________________________
                                  Notary Public
(NOTARIAL SEAL)
                                  My Commission Expires:





<PAGE>


                                    EXHIBIT A
                                    ---------

                        Legal Description of Real Estate
                        --------------------------------


                                 (See Attached)




<PAGE>


                                   SCHEDULE 1
                                   ----------

                                    Rent Roll
                                    ---------


                                  See Attached.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>12
<FILENAME>ex10-28.txt
<DESCRIPTION>EXHIBIT 10.28
<TEXT>
<PAGE>

                                  MORTGAGE NOTE


                                                  Date of Note: December 1, 2003

                  FOR VALUE RECEIVED, Port Bay Associates, LLC, a New York
limited liability company ("Maker"), does hereby covenant and promise to pay to
the order of FLEET NATIONAL BANK, a national banking association ("Payee"), at
1185 Avenue of the Americas, New York, New York 10036, or at such other place as
Payee may designate to Maker in writing from time to time, in lawful money of
the United States of America and in immediately available funds, the lesser of
the principal sum of THREE MILLION NINE HUNDRED NINETY THOUSAND ONE HUNDRED
THIRTY-FIVE AND 17/100THS DOLLARS ($3,990,135.17) (the "Principal Amount") or
the Principal Amount from time to time outstanding hereunder and to pay interest
on the Principal Amount from time to time outstanding hereunder and such other
charges, costs and fees set forth under the Loan Documents in like money and
funds as hereinafter provided.

         1. Definitions. The following terms, as used in this Note, shall have
the meanings indicated opposite them and terms capitalized herein and not
otherwise defined herein but defined in the Mortgage shall have the meaning set
forth in the Mortgage:

                  "Acadia" shall mean Acadia Realty Trust, a Maryland real
estate investment trust with offices at 1311 Mamaroneck Avenue, Suite 260, White
Plains, New York 10605, and its successors and/or assigns.

                  "Accounting Principles" shall mean the accounting principles
utilized in the preparation of the operating statements for the Mortgaged
Premises heretofore delivered to Payee.

                  "Advance" or "Earn-Out" shall have the meaning assigned to
such term in PARAGRAPH 5 of this Note.

                  "Applicable Rate" either the Floating Rate Option or the LIBOR
Option in effect at any given time.

                  "Appraised Value" shall mean the appraised value of the
Mortgaged Premises, as determined by an independent appraiser selected by Payee
and reasonably acceptable to Maker. Payee may require that such an appraisal be
performed at any time. Appraised Value shall be determined utilizing an
appraisal method consistent with that used in determining the Appraised Value
for Payee in connection with this Loan. Maker shall solely be responsible for
the cost of up to one appraisal per annum if requested by Payee.
<PAGE>

                  "Authorized Representative" - shall mean Michael Nelsen,
Maggie Hui, Jon Grisham, Robert Masters or any other person or persons
designated by Maker, in a writing delivered to Payee, as an Authorized
Representative.

                  "Business Day" - As used herein the "Modified Following
Business Day Convention" shall mean the convention for adjusting any relevant
date if it would otherwise fall on a day that is not a Business Day. The
following terms, when used in conjunction with the term "Modified Following
Business Day Convention", and a date, shall mean that an adjustment will be made
if that date would otherwise fall on a day that is not a Business Day so that
date will be the first following day that is a Business Day. A "Business Day"
means, in respect of any date that is specified in this Note to be subject to
adjustment in accordance with applicable Business Day Convention, a day on which
commercial banks settle payments in (i) London if the payment obligation is
calculated by reference to any LIBOR rate, or (ii) New York, if the payment
obligation is calculated by reference to any prime rate.

                  "Change in Control" shall mean and include any of the
following:

                           (i) the full time active employment of Kenneth F.
                  Bernstein, as President and Chief Executive Officer of Acadia,
                  shall be voluntarily terminated by Acadia or shall otherwise
                  cease, unless a successor acceptable to Payee shall have been
                  appointed or elected and actually taken office within three
                  months following any such termination or cessation, in which
                  case the name of such successor shall be substituted for the
                  name of the person he or she replaces for purposes of this
                  clause (i);

                           (ii) the shareholders of Acadia approve a plan of
                  complete liquidation of Acadia or an agreement or agreements
                  for the sale or disposition by Acadia of all or substantially
                  all of Acadia's assets; and/or

                           (iii) any "change in control" or any similar term as
                  defined in any of the indentures, credit agreements or other
                  instruments governing any indebtedness of Acadia or any of its
                  affiliates.

                  "Default" - shall mean any act or condition which with the
giving of notice or the lapse of time, or both, could become an Event of
Default.

                  "Extended Maturity Date" shall mean the then applicable
extended maturity date pursuant to PARAGRAPH 3 of this Note.

                  "Event of Default" shall have the meaning assigned to such
term in SECTION 6.1 of the Mortgage and PARAGRAPH 33 of this Note.

                  "Floating Rate Option" shall mean the Prime Rate, floating
plus fifty basis points (.50%).


                                       2
<PAGE>

                  "Full Force and Effect" shall mean, as to any lease, that such
lease shall be in full force and effect, there shall be no material default by
the tenant thereunder or default by the landlord thereunder or other act or
condition or circumstance giving or which may give, without the giving of any
further notice, the tenant or the landlord the right to terminate any lease and,
if requested by Payee and required by its lease, the tenant shall have delivered
to Payee an estoppel certificate in form and substance reasonably satisfactory
to Payee.

                  "Guarantor" shall mean, individually, jointly, severally and
collectively, the Maker and Managing Member.

                  "Guaranty" or "Indemnity" means, individually, jointly,
severally and collectively, (i) that certain indemnity agreement dated of even
date hereof by the Indemnitor in favor of Payee, as the same may be extended and
or otherwise modified from time to time, (ii) that certain hazardous material
guaranty and indemnity agreement dated of even date hereof by the Indemnitor in
favor of Payee, as the same may be extended and or otherwise modified from time
to time, (iii) that certain ADA guaranty and indemnity agreement dated of even
date hereof by the Indemnitor in favor of Payee, as the same may be extended and
or otherwise modified from time to time.

                  "Interest Period" with respect to LIBOR Advances, a period of
30, 60, 90, 120 or 180 days (or such other periods as Payee may elect to make
available); provided, however, that no such period shall extend beyond the
Maturity Date. Any Interest Period which terminates on a non-Business Day shall
be deemed, for purposes hereof, to terminate on the next succeeding Business
Day.

                  "LIBOR Advance" an advance with respect to which the Principal
Amount bears interest at the LIBOR Option.

                  "LIBOR Option" shall mean a rate per annum equal to the sum of
the "LIBOR Spread", as defined herein, plus the LIBOR Rate with respect to the
applicable Interest Period. The term "LIBOR" shall mean, as applicable to any
LIBOR Advance, the rate per annum (rounded upward, if necessary, to the nearest
1/32 of one percent) as determined on the basis of the offered rates for
deposits in U.S. dollars, for a period of time comparable to such LIBOR Advance
which appears on Dow Jones page 3750 as of 11:00 a.m. London time on the day
that is two (2) London Banking Days preceding the first day of such LIBOR
Advance; provided, however, if the rate described above does not appear on Dow
Jones page 3750 on any applicable interest determination date, the LIBOR rate
shall be the rate (rounded upwards as described above, if necessary) for
deposits in dollars for a period substantially equal to the interest period on
the Reuters Page "LIBO" (or such other page as may replace the LIBO Page on that
service for the purpose of displaying such rates) as of 11:00 a.m. (London Time)
on the day that is two (2) London Banking Days prior to the beginning of such
interest period. "Banking Day" shall mean, in respect of any city, any date on
which commercial banks are open for business in that city.

                  "LIBOR Spread" shall mean, at any given time, (i) one hundred
forty basis points (1.40%) if both the Loan to Value (as defined herein) is 55%
or less and the Debt Service Coverage Ratio (as defined herein) is 1.50 to 1 or
better and (ii) one hundred sixty basis points (1.60%) if either the Loan to
Value is greater than 55% or the Debt Service Coverage Ratio is less than 1.50
to 1.

                                       3
<PAGE>

                  If both the Dow Jones and Reuters system are unavailable, then
the rate for that date will be determined on the basis of the offered rates for
deposits in U.S. dollars for a period of time comparable to such LIBOR advance
which are offered by four major banks in the London interbank market at
approximately 11:00 a.m. London time, on the day that is two (2) London Banking
Days preceding the first day of such LIBOR Advance as selected by the
calculation agent. The principal London office of each of the four major London
banks will be requested to provide a quotation of its U.S. dollar deposit
offered rate. If at least two such quotations are provided, the rate for that
date will be the arithmetic mean of the quotations. If fewer than two quotations
are provided as requested, the rate for that date will be determined on the
basis of the rated quoted for loans in U.S. dollars to leading European banks
for a period of time comparable to such LIBOR Advance offered by major banks in
New York City at approximately 11:00 a.m. New York City time, on the day that is
two (2) London Banking Days preceding the first day of such LIBOR Advance. In
the event that Payee is unable to obtain any such quotations as provided above,
it will be deemed that LIBOR pursuant to a LIBOR Advance cannot be determined.
In the event that the Board of Governors of the Federal Reserve System shall
impose a Reserve Percentage with respect to LIBOR deposits of Bank then for any
period during which such Reserve Percentage shall apply, LIBOR shall be equal to
the amount determined above divided by an amount equal to 1 minus the Reserve
Percentage. "Reserve Percentage" shall mean the maximum aggregate reserve
requirement (including all basic, supplemental, marginal and other reserves)
which is imposed on member banks of the Federal Reserve System against
"Euro-currency Liabilities as defined in Regulation D.

                  "LIBOR Acceptance Notice" shall have the meaning assigned to
such term in PARAGRAPH 4(b) hereof.

                  "LIBOR Notice" Maker's telephonic notice immediately confirmed
in writing, which writing may be delivered by telecopier, stating that Maker,
subject to delivery by it of a LIBOR Acceptance Notice, elects to pay interest
on the whole or a portion of the Principal Amount at the LIBOR Rate, as
specified in such Notice, and specifying the applicable Interest Period for the
LIBOR Advance and the Business Day on which such Interest Period is to begin.

                  "Loan" loans of up to the Principal Amount made and/or to be
made to Maker by Payee and evidenced hereby.

                  "Loan Documents" means the Amended and Restated $10,000,000
Note dated July 19, 2000, as modified by Note Modification Agreement dated the
date hereof (the "Original Note"), this Note, the $3,990,135.17 Mortgage
securing this Note, the Agreement of Consolidation of Notes and Mortgages and
Modification of the Consolidated Mortgage securing the Original Note dated July
19, 2000, the Guaranty, the Assignment of Leases and Rents and all other
documents, including, without limitation, collateral documents, security
agreements, UCC financing statements, assignments of leases and rents,
guaranties, indemnities and any other document, mortgage, agreement, assignment
or other instrument executed by Maker and/or Indemnitor, as the case may be, or
any other third party pursuant hereto or thereto or in connection herewith or in
connection with the loan evidenced by this Note and secured by this Mortgage, as
the same may be extended and or otherwise modified from time to time.

                                       4
<PAGE>

                  "Loan to Value" shall mean the outstanding principal balance
of this Note and the Original Note divided by the Appraised Value.

                  "Managing Member" shall mean Acadia Realty Limited
Partnership, a Delaware limited partnership having an office at 1311 Mamaroneck
Avenue, Suite 260, White Plains, New York 10605, and its successors and/or
assigns.

                  "Maturity Date" shall mean the then applicable maturity date
pursuant to PARAGRAPH 3 of this Note.

                  "Mortgage" shall mean that certain Mortgage and Security
Agreement and Assignment of Leases and Rents dated as of even date hereof,
including all exhibits thereto, by and between Maker and Payee in the principal
sum of this Note, as the same may be amended or modified from time to time.

                  "Mortgaged Premises" or "Mortgaged Property" shall have the
meaning assigned to such term in the Mortgage.

                  "Net Operating Income" shall mean, with respect to the
applicable period, the aggregate rental and other receipts (unless excluded
pursuant hereto) of the Mortgaged Premises (actual results with respect to the
preceding six-months and pro forma with respect to the following six-months)
during such period less the aggregate amount of all operating expenses of the
Mortgaged Premises during such period, in each case determined in accordance
with the Accounting Principles. For purposes of the determination of Net
Operating Income, operating expenses shall include, without limitation, all real
estate taxes (but not in excess of the pro rata portion of such real estate
taxes applicable to the applicable period covered by the statement), water and
sewer charges, utility charges, insurance premiums (but not in excess of the
amounts applicable to the applicable period covered by the statement), salaries
and benefits of all employees engaged in the operation, maintenance or
management of Mortgaged Premises, all costs of ordinary and necessary
maintenance, cleaning and repair, costs of snow and rubbish removal and security
services. Net Operating Income shall, however, (a) exclude from receipts all
amounts paid to the Maker for tenant alterations in connection with the leasing
of space at the Mortgaged Premises, all amounts payable to the Maker under
leases with Affiliates of the Maker, as tenant, or with Maker, as tenant (unless
the Payee otherwise agrees) and, with respect to any lease providing for a
reduction in the rentals payable under such lease at any time during the term
thereof, base rentals in excess of the lowest base rentals payable under such
lease (other than during any period of rent concessions made with respect to
consecutive monthly periods commencing with the first month of the term of such
lease), and (b) exclude from expenses payments of principal and interest on this
Note, capital expenditures, leasing commissions, and other expenses payable to
the Payee pursuant to this Note or any of the other Loan Documents. Net
Operating Income shall be determined without regard to extraordinary items of
income and of expense. Each lease, the rental or other income from which was
included in the calculations of Net Operating Income, must be in Full Force and
Effect as of the date Net Operating Income is being determined.

                                       5
<PAGE>

                  "Note" shall mean this Note, as the same may be amended or
otherwise modified from time to time.

                  "Person" shall mean and include any individual corporation,
partnership unincorporated association, trust, governmental agency or authority
or other entity.

                  "Prime Rate" shall mean the variable rate per annum so
designated from time to time by the Payee as its Prime Rate. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate being
charged to any customer. Changes in the rate of interest resulting from changes
in the Prime Rate shall take place immediately without notice or demand of any
kind.

                  "Prime Rate Advance" an advance with respect to which the
Principal Amount or a portion thereof bears interest at the Floating Rate
Option.

                  "Regulation D" - Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect, including any successor or
other regulation or official interpretation of said Board of Governors relating
to reserve requirements applicable to member banks of the Federal Reserve
System.

         2. Amortization and Interest; Facility Fee.

         (a) The Principal Amount of this Note shall be payable in accordance
with the following provisions: Commencing on the first day of the first month
after an Advance and on the first day of each calendar month thereafter, Maker
will pay, on account of the Principal Amount, a sum (the "Fixed Principal
Payment") calculated on the basis of the Principal Amount outstanding at the
time, a loan maturity of twenty-five years less the number of months which have
elapsed since the date of this Note and an assumed interest rate of 8% per annum
and such Fixed Principal Payment shall be revised on the foregoing basis each
time an Advance is made with each revised Fixed Principal Payment being
applicable to the payment due on the first day of the month immediately
following the making of the additional Advance and each month thereafter, unless
and until another Advance is made and the Fixed Principal Payment is further
revised in accordance herewith. The prepayment premium provided for in PARAGRAPH
10 hereof shall not be applicable to any such scheduled monthly payments. Any
voluntary prepayments applied to principal shall be applied in the inverse order
of maturity.

         (b) Interest on the outstanding Principal Amount shall accrue from and
including the date of the advance to but excluding the date of any repayment or
prepayment thereof and shall be payable in arrears (i) on the first day of each
calendar month, commencing on the first day of the first full month after the
date hereof, (ii) on the date of any prepayment (on the amount prepaid), (iii)
on the Maturity Date, or the Extended Maturity Date, as the case may be or (iv)
after maturity (whether by acceleration or otherwise) on demand. Interest shall
be calculated on the basis of 1/360 of the annual interest at the applicable
rate on the outstanding principal balance for each date such balance is
outstanding and shall be paid for the actual number of days elapsed, which will
result in a higher effective annual rate.

                                       6
<PAGE>

         (c) Concurrently with the execution and delivery of this Note, Maker
shall pay Payee a non-refundable facility fee of $102,000.

         3. Maturity Date; Extended Maturity Date.

         (a) The outstanding Principal Amount and all accrued and unpaid
interest thereon shall be due and payable on December 1, 2008 (the "Maturity
Date").

         (b) Maker shall have the option, provided that the Maker shall have
notified the Payee sixty (60) days prior to the Maturity Date (as defined in the
Note) or the "Extended Maturity Date" (as hereinafter defined), as the case may
be, that the Maker wishes to extend the term of the Note and Mortgage for up to
two (2) consecutive one (1) year periods, the first of which extension periods,
if exercised in accordance herewith, shall end on December 1, 2009 (the "First
Extended Term") and the second of which, if exercised in accordance with this
Note, will end on December 1, 2010 (the "Second Extended Term"; the last day of
the First Extended Term or, if applicable, the Second Extended Term, the
"Extended Maturity Date"), and provided that the Maker shall have paid to the
Payee thirty (30) days prior to the Maturity Date or the end of the First
Extended Term, as the case may be, the Extension Fee equal to .125% of the
outstanding balance of the Note due on the Maturity Date or the end of the First
Extended Term, as the case may be, and provided further that the Maker shall
have complied with all of the conditions precedent as hereinafter set forth in
the next paragraphs with respect to each extension. In the event this Note shall
be extended as provided herein, the Principal Amount and interest at the
applicable Interest Rate accrued and unpaid herein shall be due and payable on
the Extended Maturity Date. During the First Extended Term and the Second
Extended Term, if applicable, the Fixed Monthly Payment and interest shall
continue to be due and payable as set forth in this Note.

         Notwithstanding anything to the contrary contained herein, the Payee's
obligation to extend the term of the Note and Mortgage to the Extended Maturity
Date is conditioned upon the following conditions having been satisfied for each
extension:

                  (i) The Payee shall have received a recently dated appraisal
         of the Mortgaged Property by an independent appraiser selected by the
         Payee and paid for by the Maker, in form and substance satisfactory to
         the Payee, which appraisal must indicate a loan to value ratio of not
         greater than sixty-five (65%) percent based upon the then combined
         principal balance of this Note and the Original Note.



                                       7
<PAGE>

                  (ii) No default shall have occurred and be continuing under
         the Loan Documents evidencing, securing, or guaranteeing payment of,
         the Note or the Original Note.

                  (iii) The "Debt Service Coverage Ratio" must be at least 1.30
         to 1. For purposes herein, Debt Service Coverage Ratio shall mean the
         ratio, as of any date of calculation, for the immediately preceding six
         (6) month period and the immediately succeeding six (6) month period,
         calculated by dividing: (a) the Net Operating Income for the preceding
         six (6) month period and the immediately six (6) month period; by (b)
         principal and interest payments based on a 25 year self liquidating
         mortgage amortization schedule, and the 10-year treasury rate plus
         2.00% with a floor rate of 8.00%.

                  (iv) All representations and warranties contained herein, or
         otherwise made in writing in connection herewith or in any of the Loan
         Documents, by or on behalf of Maker or any other Person to Payee, shall
         be true and correct, in all material respects, with the same force and
         effect as if made on and as of the date of the initial date of the
         Extended Term.

                  (v) The extension of the Original Note.

         4. Selection of Rate.

         (a) Except as provided in PARAGRAPHS 4(b), the outstanding Principal
Amount shall bear interest at a rate per annum equal to the Prime Rate Option.

         (b) Provided there is no Default and/or Event of Default under this
Note, the Loan Document(s) or any other document or instrument delivered as
additional security for this Note, Maker may elect to pay interest on the entire
or any portion of the outstanding Principal Amount (subject to the minimum
amount limitations set forth herein and the requirements set forth below) at a
rate per annum equal to the LIBOR Option for the Interest Period elected by
Maker from (and including) the first day of each Interest Period to (but not
including) the last day of such Interest Period. Maker shall, subject to
delivery by it of a LIBOR Acceptance Notice, elect that the entire or any
portion of the outstanding Principal
 receive such LIBOR Notice prior to 11:00
A.M., New York City time, on a Business Day at least three (3) Business Days
prior to:

                  (1) the last day of an Interest Period (in the case of an
         outstanding LIBOR Advance);

                  or

                  (2) any Business Day elected by Maker in its LIBOR Notice (in
         the case of a conversion of a Prime Rate Advance to a LIBOR Advance)
         for the commencement of the applicable Interest Period.

                                       8
<PAGE>

If Maker fails to give a LIBOR Notice at least three (3) Business Days prior to
the end of an Interest Period, then, on the last day of the Interest Period, the
outstanding LIBOR Advance shall convert to a Prime Rate Advance. On the date
specified in the LIBOR Notice as the date on which the applicable Interest
Period is to begin, Payee shall notify Maker's Authorized Representative by
telephone (such notice to be promptly confirmed in writing) or by telex, which
notice shall specify the date, the proposed LIBOR Rate and the period of time on
such date during which such rate is to be available. If Payee fails to specify
the period for which such quoted rate is available, then such rate shall be
deemed to be available only for thirty minutes from the time Payee, orally or in
writing, notifies Maker's Authorized Representative of such rate. If Maker then
wishes to obtain such Loan at such LIBOR Rate, it shall promptly give notice to
Payee to such effect (the LIBOR Acceptance Notice"), which notice shall be
irrevocable and may be by telephone, promptly confirmed in writing.

         (c) Without in any way limiting Maker's obligation to confirm in
writing any telephonic LIBOR Notice or LIBOR Acceptance Notice, Payee may, prior
to receipt of written confirmation, act without liability on the basis of
telephonic notice which it believes in good faith to be from Maker and, in any
event, Payee may act without liability on the basis of telephonic or written
notice which it believes in good faith to be from Maker.

         5. Conditions to Advance. At such time as the Original Note has been
fully advanced, Maker shall have the option, subject to the terms and conditions
of this Note, of requesting from Payee advances hereunder in minimum increments
of $1,000,000 each (unless the amount remaining to be advanced is less than said
amount), with the aggregate amount of all such advances not to exceed
$3,990,135.17 (each, every and any one of such additional advances shall be
referred to herein as the "Advance"). The obligation of Payee to make the
Advance hereunder is subject to the satisfaction of each of the following
conditions precedent:

                  (a) An Authorized Representative shall give Payee at least ten
         (10) Business Days prior written notice, specifying the date of the
         proposed borrowing. Any such notice which is oral shall promptly be
         confirmed in a writing signed by an Authorized Representative and
         delivered to Payee. Payee may rely on any oral or written request for a
         Loan which Payee believes to be genuine and shall be fully protected in
         doing so without any requirement to make further inquiry.

                  (b) After giving effect to the Additional Advance, there shall
         exist no Default and/or Event of Default, including, without
         limitation, default of the provisions set forth in SUBPARAGRAPH 9(a) or
         9(b) of this Note, and, for this purpose, compliance with such
         covenants shall, prior to the making of the proposed Additional
         Advance, be recalculated (using the most recently available Appraised
         Value and Net Operating Income) as if the Additional Advance has been
         made.

                                       9
<PAGE>

                  (c) All representations and warranties contained herein, or
         otherwise made in writing in connection herewith or in any of the Loan
         Documents, by or on behalf of Maker or any other Person to Payee, shall
         be true and correct, in all respects, with the same force and effect as
         if made on and as of the date of the Additional Advance.

                  (d) The Payee shall have received a recently dated appraisal
         of the Mortgaged Property (less than one year old, or if older,
         accompanied by an updated limited appraisal report) by an independent
         appraiser selected by the Payee and paid for by the Maker, in form and
         substance satisfactory to the Payee, which appraisal and results
         thereof must indicate a Loan to Value of not greater than sixty-five
         (65%) percent.

                  (e) The "Debt Service Coverage Ratio" must be at least 1.30 to
         1. For purposes herein, Debt Service Coverage Ratio shall mean the
         ratio, as of any date of calculation, for the immediately preceding six
         (6) month period and the immediately succeeding six (6) month period,
         calculated by dividing: (a) the Net Operating Income for the preceding
         six (6) month period and the immediately six (6) month period; by (b)
         principal and interest payments based on a 25 year self liquidating
         mortgage amortization schedule, and the 10-year treasury rate plus
         2.00% with a floor rate of 8.0% assuming a loan in the aggregate amount
         of the outstanding principal balance under this Note and the Original
         Note.

                  (f) At the time of the payment of the Earn-out or a part
         thereof, a continuation of title shall demonstrate that there are no
         encumbrances, unpaid Impositions or liens assessed against the
         Mortgaged Premises except for Permitted Encumbrances (such title
         continuations shall be at Maker's sole cost and expense).

                  (g) No Event of Default under the Original Mortgage.

         6. Payment of Interest on and Number of LIBOR Advances. If a LIBOR
Advance is outstanding, then in addition to the monthly payments of interest
required under PARAGRAPH 2(b) hereof, all accrued and unpaid interest, if any,
on such LIBOR Advance shall be due and payable on the last day of the Interest
Period. In no event may there be more than three (3) Interest Periods in effect
at any one time, and the entire Principal Amount outstanding need not bear
interest at the same Applicable Rate.

         7. Suspension of the LIBOR. If Payee determines that Payee's making or
maintaining LIBOR Advances is unlawful for any reason, then Payee may suspend
the availability of the LIBOR Rate and immediately convert any outstanding LIBOR
Advance to a Prime Rate Advance. Payee shall immediately notify Maker of any
such conversion and Maker shall pay to Payee, on demand, (i) all accrued and
unpaid interest on the LIBOR Advance to the date of such conversion, plus (ii)
such amounts as Payee shall require to compensate it for the costs of converting
any such LIBOR Advance to a Prime Rate Advance. The certificate of Payee as to
any amounts payable pursuant to this PARAGRAPH shall, absent manifest error, be
final, conclusive and binding on Maker. No LIBOR Notices electing the LIBOR Rate
shall be given by Maker thereafter until Payee determines that LIBOR Advances
would be lawful.

                                       10
<PAGE>

         8. Increases in Cost. In the event that at any time or from time to
time any domestic or foreign requirement of law, regulation, order or decree or
any change therein or in the interpretation or application thereof or compliance
by Payee with any request or directive (whether or not having the force of law)
from any governmental, fiscal, monetary or other authority (i) does or shall
subject Payee to any tax, duty, charge or withholding on or from payments due
from Maker (excluding taxation of the income of Payee); or (ii) does or shall
impose, modify or hold applicable or change any reserve (including, without
limitation, basic, supplemental, marginal, special or emergency reserves but not
including reserve requirements already taken into account in calculating the
LIBOR Rate), special deposit, compulsory deposit or similar requirement with
respect to assets of, deposits with or for the account of, advances or loans by,
or other credit extended by, or any other acquisition of funds by Payee; or
(iii) does or shall impose on Payee any other condition or change therein and
the result of any of the foregoing is to increase the cost to Payee of making
available to Maker, converting from or to, or maintaining LIBOR Advances, then,
and in any such event, Payee shall notify Maker in writing of such occurrence
setting forth in reasonable detail the basis for and amounts of such increased
costs, and Maker shall pay to Payee, on demand, such amounts as will compensate
Payee for such increased costs. The certificate of Payee as to any amounts
payable pursuant to this PARAGRAPH shall, absent manifest error, be final,
conclusive and binding on Maker.

         9. Loan Covenants.

         (a) At all times while the indebtedness remains outstanding, the Loan
to Value shall not exceed 65%, based upon the then most recent Appraised Value
of the Mortgaged Property reviewed and found acceptable by the Maker.

         (b) At all times while the indebtedness remains outstanding, the Maker
shall maintain a "Debt Service Coverage Ratio" (as hereinafter defined) of not
less than 1.30 to 1, to be tested semi-annually, as of June 30, 2004 and each
subsequent December 31 and June 30 (the "Accounting Date"). Debt Service
Coverage Ratio shall mean, for purposes herein, the ratio, as of any date of
calculation, for the immediately preceding six (6) month period and the
immediately succeeding six (6) month period, calculated by dividing: (a) the Net
Operating Income for the preceding six (6) month period and the immediately
succeeding six (6) month period; by (b) principal and interest payments based on
a 25 year self liquidating mortgage amortization schedule, and the 10-year
treasury rate plus 2.00% with a floor rate of 8.00% assuming a loan in the
aggregate outstanding amount of the principal balance of this Note and the
Original Note.

         (c) At all times while the Indebtedness remains outstanding, Acadia
shall maintain a minimum "Net Worth" of at least $50,000,000.00, to be
determined by Maker based upon the financial statements required to be submitted
to Maker pursuant to SECTION 2.10.6 hereof.


                                       11
<PAGE>

         (d) At all times while the Indebtedness remains outstanding, Acadia
shall maintain minimum liquidity of at least $7,000,000.00, to be determined by
Maker based upon the financial statements required to be submitted to Maker
pursuant to SECTION 2.10.6 hereof.

         (e) In the event of the Maker's failure to comply with SUBPARAGRAPHS
(a),(b) (c) or (d) directly hereinabove, the Maker shall have the following
options prior to the Maker's non-compliance resulting in an Event of Default
under the Mortgage:

                  (i) Within 45 days of notice by the Maker to the Maker that
         the Maker has breached the applicable covenant(s), the Maker shall
         provide additional collateral in the form of cash collateral,
         marketable securities, real estate, and/or letter(s) of credit,
         acceptable in form, quality, value and amounts to the Maker in its sole
         discretion so that after the delivery of such collateral, the
         applicable covenant violation shall have been cured, to the
         satisfaction of Lender, in its sole discretion, or

                  (ii) Within 45 days of notice by the Maker to the Maker that
         the Maker has breached the applicable covenant(s), the Maker shall
         reduce the Principal Amount so that after such prepayment, the
         applicable covenant violation shall have been cured, to the
         satisfaction of the Maker, in its sole discretion.

         (f) Within ninety (90) days after the Accounting Date, Maker shall
furnish to Payee detailed calculations of Net Operating Income and Debt Service
Coverage Ratio for the current accounting period and upon which satisfaction of
the provisions of PARAGRAPH 9(b) are to be determined, and certified as true and
accurate, in a manner acceptable to Payee, by the chief financial officer of the
Guarantor as having been prepared under his supervision in accordance with the
Accounting Principles consistently applied and with the definitions of Net
Operating Income and Debt Service Coverage Ratio and that he knows of no facts
inconsistent with such calculations.

         10. Prepayment.

         (a) On any Business Day during the term hereof that the Applicable Rate
is based upon the Prime Rate or on a date which is the last day of an Interest
Period, upon not less than three Business Days written notice to Payee
specifying the date on which prepayment is to be made, Maker shall have the
privilege of prepaying, without payment of a premium or penalty, that portion of
the unpaid balance of the Principal Amount, in whole or in part, as to which the
Applicable Rate is based upon the Prime Rate or as to which an Interest Period
is ending, which parts shall be in integral multiplies of $50,000 together with
all accrued and unpaid interest on the Principal Amount so prepaid to the date
of prepayment, and together also with accrued and unpaid interest or other sums
or charges, if any, then due and owing hereunder or under the Loan Document(s),
provided that any such prepayment shall be in a minimum amount of not less than
$250,000.

                                       12
<PAGE>

         (b) At any time during the term hereof that the Applicable Rate is
based upon LIBOR upon not less than three Business Days prior written notice to
Payee (which notice shall be irrevocable), Maker shall have the privilege of
prepaying the unpaid balance of the Principal Amount, in whole or in part, which
parts shall be in integral multiples of $50,000, prior to the last day of an
Interest Period upon the required notice as aforesaid; provided that any such
prepayment shall be in a minimum amount of not less than $250,000 and provided
further that in addition to the payment of the whole or portion of the Principal
Amount so to be prepaid, all accrued and unpaid interest thereon and all other
sums due hereunder or under the Loan Document(s), Maker shall pay Payee such
amount or amounts as shall be sufficient (in the reasonable opinion of Payee) to
compensate Payee for any loss, costs or expenses Payee incurs with respect to
the termination of any LIBOR contract and/or Hedge Agreement (as such term is
defined in the Mortgage) that Payee or its designee has entered into to borrow
funds in order to fund the Loan plus the following yield maintenance premium:
Maker shall pay to Payee, upon request of Payee, such amount or amounts as shall
be sufficient (in the reasonable opinion of Payee) to compensate it for any
loss, cost or expense incurred as a result of: (i) any payment of a LIBOR Loan
on a date other than the last day of the Interest Period for such Loan; (ii) any
failure by Maker to borrow a LIBOR Loan on the date specified by Maker's written
notice; (iii) any failure by Maker to pay a LIBOR Loan on the date for payment
specified in Maker's written notice. Without limiting the foregoing, Maker shall
pay to Payee a "yield maintenance fee" in an amount computed as follows: The
current rate for United States Treasury securities (bills on a discounted basis
shall be converted to a bond equivalent) with a maturity date closest to the
term chosen pursuant to the Fixed Rate Election as to which the prepayment is
made, shall be subtracted from the LIBOR in effect at the time of prepayment. If
the result is zero or a negative number, there shall be no yield maintenance
fee. If the result is a positive number, then the resulting percentage shall be
multiplied by the amount of the principal balance being prepaid. The resulting
amount shall be divided by 360 and multiplied by the number of days remaining in
the term chosen pursuant to the Fixed Rate Elections as to which the prepayment
is made. Said amount shall be reduced to present value calculated by using the
above referenced United States Treasury securities rate and the number of days
remaining in the term chosen pursuant to the Fixed Rate Election as to which
prepayment is made. The resulting amount shall be the yield maintenance fee due
to Payee upon the payment of a LIBOR Loan. Each reference in this paragraph to
"Fixed Rate Election" shall mean the election by Maker of the LIBOR Rate. If by
reason of an Event of Default Payee elects to declare the Note to be immediately
due and payable, then any yield maintenance fee with respect to a LIBOR Loan
shall become due and payable in the same manner as though the Maker had
exercised such right of prepayment.

         (c) Any payment required of Maker of the Principal Amount or any
portion thereof after acceleration of the Maturity Date pursuant to any
provisions hereof or of the Loan Document(s) shall be deemed a voluntary
prepayment for the purposes hereof, and if a LIBOR Advance is then outstanding,
Maker shall be required, on demand, to pay the prepayment premium, if any,
calculated as aforesaid.

         (d) Any payments of the Principal Amount received by Payee pursuant to
the terms of this PARAGRAPH 10 shall be applied in the following order of
priority: (i) first, to any accrued interest which is due and unpaid as of the
date of such payment; and (ii) second, to the outstanding Principal Amount in
the inverse order of maturity.


                                       13
<PAGE>

         11. Involuntary Rate. Upon a default or after maturity or after
judgment has been rendered on this Note, Maker's right to select pricing options
shall cease. Overdue principal and, to the extent permitted by law, overdue
interest and all other overdue amounts owing hereunder, whether at maturity,
upon a Default, upon acceleration or otherwise, shall bear interest for each day
that such amounts are overdue (whether or not any required notice of default
shall have been given) at a rate per annum equal to four percent (4%) per annum
in excess of the Prime Rate in effect from time to time; provided, however, that
no overdue principal shall bear interest at a rate per annum less than four
percent (4%) in excess of the rate of interest applicable thereto immediately
prior to maturity (such rate, the "Involuntary Rate"). Interest shall continue
to accrue at the Involuntary Rate upon a default or upon maturity of this Note,
whether by expiration of its term, acceleration or otherwise, until this Note is
paid in full, including the period following entry of any judgment on or
relating to this Note or the Loan Documents. Interest on any such judgment shall
accrue and be payable at the Involuntary Rate, and not at the statutory rate of
interest, after judgment, any execution thereon, and until actual receipt by
Payee of payment in full of this Note and said judgment. Interest at the
Involuntary Rate shall be collectible as part of any judgment hereunder and
shall be secured by the Mortgage and the other Loan Documents. Payee's right to
receive interest at the Involuntary Rate shall be in addition to all other
rights and remedies provided herein or by law for the benefit of the holder
hereof upon a default; and the acceptance of the same by the holder hereof shall
not restrict such holder in any respect in the exercise of any other or further
right or remedy, nor shall the same be deemed to be, as to the holder hereof, a
waiver or release of Maker from any of its obligations herein contained or
constitute an extension of the time for payments due hereunder.

         12. Late Fee. If the entire amount of any required principal and/or
interest under this Note is not paid in full within ten (10) days after the same
is due, Maker shall pay to the Payee a late fee equal to five (5%) percent of
the required payment, and such charge shall be deemed to be part of the
indebtedness evidence herein.

         13. Security. This Note is secured by the Mortgage and all of the Loan
Documents (including any amendment, modification, extension or renewal thereof
now or hereafter executed in connection therewith or herewith) "Document(s)".
This Note is entitled to the benefits of the Loan Documents.

         14. Acceleration. It is hereby expressly agreed that the entire unpaid
balance of the Principal Amount shall, at the option of the holder hereof and
upon such notice as may be required by this Note or by the Mortgage, become
immediately due and payable without necessity for presentment and demand, notice
of protest, demand and dishonor or nonpayment of this Note, all of which are
hereby expressly waived, upon the happening of any Event of Default or any event
by which, under the terms of the Loan Document(s), said unpaid balance may or
shall become due and payable. Failure to exercise any such option at any time
shall not constitute a waiver of the right of the holder hereof to exercise the
same in the event of any subsequent default or acceleration event.

                                       14
<PAGE>

         15. Notices. Except as otherwise provided herein, any notice to be
given hereunder shall be in writing and shall be either delivered or sent by
first-class registered or certified mail, return receipt requested postage
prepaid, addressed (a) if to Maker, to Maker's address set forth on the
signature page or (b) if to Payee, at Payee's address set forth above,
Attention: Denise M. Smyth, Vice President or, as to any party, at such other
address as shall be designated by such party by notice to the other party given
in the manner set forth in this PARAGRAPH and each such notice shall be
effective (i) if delivered by hand, at the time of delivery to the address
specified in this PARAGRAPH, or (ii) if given by mail, on the fourth Business
Day following the time of mailing in the manner aforesaid, or (iii) on the
Business Day immediately following the delivery of such notice to an overnight
delivery service.

         16. Funding Sources. Nothing contained herein shall be deemed to
obligate Payee to fund advances hereunder in any particular place or manner; and
nothing contained herein shall be deemed to constitute a representation by Payee
that it has funded or will fund advances in any particular place or manner.

         17. Taxes and Attorneys' Fees. Maker shall pay to Payee, immediately
upon demand, any and all taxes assessed against Payee by reason of its holding
of this Note and the receipt by it of interest payments hereunder (other than
income, franchise and other similar taxes assessed by the United States
Government, any state or any political subdivision of either thereof on such
interest payments), and any and all other sums and charges that may at any time
become due and payable under the Loan Document(s). Maker also promises to pay,
on demand, all costs, title insurance premiums, mortgage recording taxes,
disbursements and reasonable attorneys' fees (including allocated costs of
internal counsel of Payee) and disbursements incurred in connection with the
negotiation, preparation, and execution of this Note and/or the Loan Documents
and any other documents and instruments prepared in connection herewith or
therewith and the consummation of the transactions contemplated hereby or
thereby and the administration of this Loan and in the preservation of rights
under, enforcement of, this Note and the Loan Document(s), any modification,
amendment, or consent related thereto and in any suit, action or proceeding to
protect or sustain the security interest of the holder of the Loan Document(s)
and any refinancing or renegotiation of this Note and the Loan Document(s).

         18. No Partnership or Joint Venture. Nothing contained in this Note or
elsewhere shall be deemed or construed as creating a partnership or joint
venture between Payee and Maker or between Payee and any other person, or cause
the holder hereof to be responsible in any way for the debts or obligations of
Maker or any other person.

         19. Waiver. Maker hereby waives diligence, presentment, protest and
demand, notice of protest, dishonor and nonpayment of this Note, and expressly
agrees that, without in any way affecting the liability of Maker hereunder,
Payee may extend the Maturity Date or the time for payment of any amount due
hereunder, accept additional security, release any party liable hereunder and
release any security now or hereafter securing this Note without in any other
way affecting the liability and obligation of Maker or any other Person. Maker
further waives, to the full extent permitted by law, the right to plead any and
all statutes of limitations as a defense to any demand on this Note, under the
Loan Document(s), or on any guaranty or other agreement now or hereafter
securing this Note.



                                       15
<PAGE>

         20. Interest Rate Limitation. Notwithstanding anything contained herein
to the contrary, the holder hereof shall never be entitled to receive, collect
or apply as interest on the obligation evidenced hereby any amount in excess of
the maximum rate of interest permitted to be charged by applicable law; and in
the event the holder hereof ever receives, collects or applies as interest any
such excess, such amount which would be excessive interest shall be applied to
the reduction of the Principal Amount; and if the Principal Amount is paid in
full, any remaining excess shall forthwith be paid to Maker. In determining
whether the interest paid or payable in any specific case exceeds the highest
lawful rate, the holder hereof and Maker shall to the maximum extent permitted
under applicable law (i) characterize any non-principal payment as an expense,
fee or premium rather than as interest; (ii) exclude voluntary prepayments and
the effects thereof; and (iii) "spread" the total amount of interest throughout
the entire contemplated term of the obligation so that the interest rate is
uniform throughout said entire term.

         21. Severability. Every provision of this Note is intended to be
severable. In the event any term or provision hereof is declared by a court of
competent jurisdiction to be illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the balance of the terms and provision
hereof, which terms and provisions shall remain binding and enforceable.

         22. Number and Gender. In this Note the singular shall include the
plural and the masculine shall include the feminine and neuter gender, and vice
versa, if the context so requires.

         23. Headings. Headings at the beginning of each numbered paragraph of
this Note are intended solely for convenience of reference and are not to be
deemed or construed to be a part of this Note.

         24. Governing Law; Submission to Jurisdiction; Waivers, Etc.

         (a) This Note, which, together with the Loan Documents, sets forth the
entire understanding of Maker and Payee with respect to the subject matter
hereof, shall be governed by and construed and enforced in accordance with the
laws (without giving effect to the conflict of law principles thereof) of the
State of New York.

         (b) Any legal action or proceeding with respect to this Note or any of
the Loan Documents may be brought in the courts of the State of New York or, if
the requisites of jurisdiction obtain, of the United States of America for the
Southern or Eastern District of New York, and, by execution and delivery hereof,
Maker hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Nothing herein,
however, shall affect the right of Payee to commence legal proceedings or
otherwise proceed against Maker in any other jurisdiction. MAKER KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR
ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT
FOR PAYEE TO ACCEPT THIS NOTE AND MAKE THE LOAN. ACCEPTANCE OF THIS NOTE BY
PAYEE BY THE PAYEE SHALL BE DEEMED TO CONSTITUTE A WAIVER BY THE PAYEE OF THE
RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY LITIGATION IN RESPECT OF WHICH THE
MAKER HAS WAIVED THE RIGHT TO TRIAL BY JURY HEREUNDER.

                                       16
<PAGE>

         (c) No delay on the part of Payee in exercising any of its options,
powers or rights, or partial or single exercise thereof, whether arising
hereunder, under the Loan Documents or otherwise, shall constitute a waiver
thereof or affect any right hereunder or thereunder. No waiver of any of such
rights and no modification, amendment or discharge of this Note shall be deemed
to be made unless the same shall be in writing, duly signed by Payee and Maker.
Each such waiver (if any) shall apply only with respect to the specific instance
involved and shall in no way impair the rights of Payee or the obligations of
Maker hereunder in any other respect at any other time.

         25. Brokerage. Payee and Maker each hereby represents to the other that
it did not deal with any broker or similar person in connection with this
financing.

         26. Set-off. Maker hereby grants to Payee, a lien, security interest
and right of setoff as security for all liabilities and obligations to Payee,
whether now existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Payee or any entity under the control of FleetBoston
Financial Corporation, or in transit to any of them. At any time after an Event
of Default, without demand or notice, Payee may set off the same or any part
thereof and apply the same to any liability or obligation of Maker regardless of
the adequacy of any other collateral securing the Loan. ANY AND ALL RIGHTS TO
REQUIRE PAYEE TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHTS OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF MAKER ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

         27. Miscellaneous.

         (a) This Note may not be changed orally but only by an agreement in
writing signed by Maker and Payee.



                                       17
<PAGE>

         (b) Should the indebtedness represented by this Note or any part
thereof be collected at law or in equity, or in bankruptcy, receivership or any
other court proceeding (whether at the trial or appellate level), or should this
Note be placed in the hands of attorneys for collection upon default, Maker
agrees to pay, in addition to the principal, interest and others sums due and
payable hereon, all costs of collecting or attempting to collect this Note,
including reasonable attorneys' fees and expenses.

         (c) This Note may be signed in counterparts.

         28. Replacement Documents. Upon receipt of an affidavit of an officer
of Payee as to the loss, theft, destruction or mutilation of this Note or any
other Loan Document which is not of public record, and, in the case of any such
loss, theft, destruction or mutilation, upon cancellation of this Note or such
other Loan Document, Maker will issue, in lieu thereof, a replacement Note or
such other Loan Document in the same principal amount thereof and otherwise of
like tenor.

         29. Sell a Loan to a Third Party Provider. Payee shall have the
unrestricted right at any time or from time to time, and without Maker's or
Guarantor's consent, to assign all or any portion of its rights and obligations
hereunder to one or more banks or other financial institutions (each, an
"Assignee"), and a Maker (and each guarantor, as applicable) agrees that it
shall execute, or cause to be executed, such documents, including, without
limitation, amendments to this Agreement and to any other documents, instruments
and agreements instituted in connection herewith as Payee shall deem necessary
to effect the foregoing. In addition, at the request of Payee and any such
Assignee, Maker shall issue one or more new promissory notes, as applicable, to
any such Assignee and, if Payee has retained any of its rights and obligations
hereunder following such assignment to Payee, which new promissory notes shall
be issued in replacement of, but not in discharge of, the liability evidenced by
the promissory note held by Payee prior to such assignment and shall reflect the
amount of the respective commitments and loans held by such appropriate
assignment documentation, amendments and any other documentation required by
Payee in connection with such assignment, and the payment by Assignee of the
purchase price agreed to by Payee and such Assignee, such Assignee shall be a
party to this Agreement and shall have all of the rights and obligations of
Payee hereunder (and under any and all other guaranties, documents, instruments
and agreements executed in connection herewith) to the extent that such rights
and obligations have been assigned by Payee pursuant to the assignment
documentation between Payee and such Assignee and Payee shall be released from
its obligations hereunder and thereunder to a corresponding extent.

         30. Sell a Loan to a Prospective Participant. Payee shall have the
unrestricted right at any time and from time to time and without the consent of
or notice to Maker (or any guarantor, if any) to grant to one or more banks or
other financial institutions (each, a "Participant") participating interests in
Payee's obligation to lend hereunder and/or any or all of the loans held by
Payee hereunder. In the event of any such grant by Payee of a participating
interest to a Participant, whether or not upon notice to Maker, Payee shall
remain responsible for the performance of its obligations hereunder and Maker
shall continue to deal solely and directly with Payee in connection with Payee's
rights and obligations hereunder.

                                       18
<PAGE>

         31. Furnishing of Information to Prospective Participants and
Assignees. Payee may furnish any information concerning Maker in its possession
from time to time to prospective Assignees and Participants provided that Payee
shall require any such prospective Assignee or Participant to agree in writing
to maintain the confidentiality of such information.

         32. Limited Recourse. Payee expressly agrees that the extent of
liability of the Maker for any sums due or obligations to perform under this
Note (except for the indemnities and/or guarantees delivered to Payee by the
Maker and/or the other Indemnitor dated as of this date in connection with the
loan evidenced by this Note, and secured, in part, by the Mortgage) is limited
to the Maker's estate, right, title and interest in, to and under the Mortgaged
Property, the Maker's right, title and interest to the leases and all interest
of undersigned thereto (the "Leases"), as described in the Mortgage and/or any
other document evidencing or securing this Note, as the same may be amended from
time to time (individually, herein referred to as the "Instrument" and
collectively, as "Instruments" or "Loan Documents") and the assignment of leases
in rents dated of even date hereof by the Maker in favor of Payee, as the same
may be amended from time to time (the "Assignment"), Payee agreeing not to look
personally to the Maker or to the other Indemnitor or to any principals,
trustees members, partners, shareholders, officers, directors, employees or
agents of the Maker (collectively, the "Affiliates") but to look solely to the
Mortgaged Property, the Leases and the Collateral and no other assets of the
Maker, Indemnitor or the Affiliates for payment of any of such sums; provided
that the foregoing shall not (i) constitute a waiver of any obligation evidenced
by the Note, this Mortgage, the Assignment and/or any other Instrument, (ii)
limit the right of the holder of the Note, this Mortgage, the Assignment, and/or
any other Instrument to name the Maker as a party defendant in any action or
suit for judicial or nonjudicial foreclosure and sale under the Note, the
Mortgage, the Assignment and/or any other Instrument in any action or proceeding
hereunder so long as no judgment in the nature of a deficiency judgment or any
other personal or money judgment shall be asked for or taken against the Maker
or the Affiliates, (iii) affect in any way the validity of any guaranty or
indemnity from the Maker, the other Indemnitors and/or any other person of all
or any of the obligations evidenced and secured by the Note and/or the any of
the other Instruments, or the rights of the Payee in connection with such
guaranties and/or indemnities to look to the property and assets of the Maker,
the other Indemnitor, any guarantor, and/or any Affiliates, but only to the
extent provided in such guaranty and/or indemnity, as the case may be (iv)
release or impair this Note or the lien of the Mortgage, the Assignment, and/or
other Instrument, (v) prevent or in any way hinder the Payee from exercising or
constitute a defense, an affirmative defense, a counterclaim or other basis for
relief in respect of the exercise of, any other remedy against the Mortgaged
Property, the Leases and/or the Collateral and/or the Mortgage, Assignment,
Instrument and/or any other instrument securing the Note including the other
Loan Documents executed and delivered to the Payee in connection with the
transactions contemplated herein or as prescribed by law or in equity in case of
default, except that Payee shall in no event seek any deficiency or other
personal or money judgment against the Maker or any Affiliates except to the
extent provided for in such guarantees and/or indemnities, (vi) prevent or in
any way hinder the Payee from exercising, or constitute a defense, an
affirmative defense, a counterclaim or other basis for relief in respect of the
exercise of, its remedies in respect of any deposits, insurance proceeds,
condemnation awards or other monies or other collateral or letters of credit
securing this Note, or (vii) be applicable to the responsible Person in the
event of and to the extent of fraud, misappropriation of funds or other
property, or intentional damage to any of the Mortgaged Premises or any other
collateral securing this Note or any part thereof intentionally inflicted in bad
faith by Maker or any partner, principal, shareholder, officer, director, agent
or employee of Maker or any partner or principal of any of the foregoing or
(viii) be applicable to the liability arising in respect of hazardous materials
or ADA compliance.

                                       19
<PAGE>

         Nothing herein shall be deemed to be a waiver of any right which the
Payee may have under Section 506(a), 506(b), 1111(b) or any other provision of
the Bankruptcy Reform Act of 1978 or any successor thereto or similar provisions
under applicable state law to file a claim for the full amount of the debt owing
to the Payee by the Maker or to require that all of the Mortgaged Property shall
continue to secure all of the indebtedness owing to the Payee in accordance with
this Note, this Mortgage, and the other Loan Documents.

         33. Events of Default. The occurrence of any one or more of the
following events shall constitute an event of default (an "Event of Default")
hereunder and under the Loan Documents:

         (a) failure of Maker (x) to comply with any of the provisions of
PARAGRAPH 9 herein; or

         (b) except as otherwise provided in SUBPARAGRAPH (a) directly
hereinabove, if Maker shall fail to perform or observe, or cause to be performed
or observed, any other term, obligation, covenant, condition or agreement
contained in this Note on its part to be performed and such failure shall have
continued for a period of thirty (30) days after notice thereof; provided,
however, if such default shall not have been occasioned by any willful act of
Maker, and if such default cannot with due diligence be cured within such thirty
(30) days period, the time within which to cure the same shall be extended for
such period as may be necessary to cure the same with due diligence if Maker
commences within such thirty (30) days and proceeds diligently to cure the same;
or

         (c) if the Managing Member ceases (x) to own at least 49.9% of the
issued and outstanding equity interests in Maker or (y) to control (i.e., power
to direct or cause the direction of the management and policies of a person,
corporation, partnership or other entity) Guarantor or (ii) if there is a Change
in Control.

         34. Distributions. During the continuance of an Event of Default, the
Maker shall be prohibited from making distributions to its members, and if no
Events of Default shall exist, the Maker may make distributions to its members.



                                       20
<PAGE>

                  IN WITNESS WHEREOF, Maker and Payee have executed and
delivered this Note on the day and year first above written.

Witness:                               PORT BAY ASSOCIATES, LLC

                                       By:   Acadia Realty Limited Partnership,
                                             its Managing Member
______________________________

                                             By:   Acadia Realty Trust, its
                                                   General Partner


                                                   By
                                                      --------------------------
                                                        Robert Masters
                                                        Senior Vice President

                                              Address of Maker:

                                              1311 Mamaroneck Avenue
                                              Suite 260
                                              White Plains, New York 10605

Agreed and Accepted:

FLEET NATIONAL BANK


By
   ----------------------------------------
     Name:    Denise M. Smyth
     Title:   Vice President



<PAGE>


STATE OF NEW YORK                       )
                                        ) ss.:
COUNTY OF ____________                  )


                  On the _____ day of January, 2004, before me, the undersigned,
a Notary Public in and for said State, personally appeared Robert Masters,
personally known to me or proved to me on the basis of satisfactory evidence to
be the person whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his capacity and that by his signature on the
instrument, the person or the entity upon behalf of which the person acted
executed the instrument.




                                  Notary Public

My Commission Expires:


______________________




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>13
<FILENAME>ex10-29.txt
<DESCRIPTION>EXHIBIT 10.29
<TEXT>
<PAGE>
================================================================================


                            PORT BAY ASSOCIATES, LLC,
                      a New York limited liability company,

                  having an office at c/o Acadia Realty Trust,
         1311 Mamaroneck Avenue, Suite 260, White Plains, New York 10605

                                       AND

                              FLEET NATIONAL BANK,
                         a national banking association,

                having an office at 1185 Avenue of the Americas,
                            New York, New York 10036

                         ______________________________

                       MORTGAGE AND SECURITY AGREEMENT AND
                         ASSIGNMENT OF LEASES AND RENTS
                         ______________________________

Soundview Marketplace, Port Washington, New York 11050, in the County of Nassau,
State of New York, as more particularly described in the Mortgage

                               Tax Map Designation
             Soundview Marketplace, Port Washington, New York 11050
<TABLE>
<CAPTION>
                                Parcel One                   Parcel Two                   Parcel Three
<S>                               <C>                           <C>                          <C>
State:                          New York                     New York                     New York
County:                         Nassau                       Nassau                       Nassau
Town:                           North Hempstead              North Hempstead              North Hempstead
District:                       N/A                          N/A                          N/A
Section:                        4                            4                            4
Block:                          129                          129                          129
Lots:                           10, 14B, 14C                 12                           1, 15A, 15C
</TABLE>

Leasehold Mortgage as to Parcel One and Parcel Two and a Mortgage on the Fee as
to Parcel Three


================================================================================

                       After recording, please return to:
                              DEWEY BALLANTINE LLP
                          1301 Avenue of the Americas
                            New York, New York 10019
                           Attn: Val A. Soupios, Esq.


<PAGE>


                       MORTGAGE AND SECURITY AGREEMENT AND
                         ASSIGNMENT OF LEASES AND RENTS


         THIS AGREEMENT made as of the 1st day of December, 2003, by and between
Port Bay Associates, LLC, a New York limited liability company, having an office
at c/o Acadia Realty Trust, 1311 Mamaroneck Avenue, Suite 260, White Plains, New
York 10605 (hereinafter referred to as the "Mortgagor") and FLEET NATIONAL BANK,
a national banking association, having an office at 1185 Avenue of the Americas,
New York, New York 10036 (hereinafter referred to as the "Mortgagee"),

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS, the Mortgagor is the owner of a fee interest in Parcel Three
and is owner of the leasehold interest in Parcel One and Parcel Two, all as
described in Exhibit A attached hereto (hereinafter referred to as the
"Premises");

         WHEREAS, Mortgagor has executed and delivered its note (the "Note") to
Mortgagee in the principal amount of $3,990,135.17 or so much thereof as may be
advanced thereunder (said principal sum, interest and all other sums which may
or shall become due under the Note and/or this Mortgage pursuant to the
provisions hereof, being hereinafter collectively referred to as the "Debt" or
"Indebtedness") and in order to secure the payment of the Debt, Mortgagor has
executed and delivered this mortgage (the "Mortgage"); and

         NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Mortgagor hereby represents and warrants to and covenants and agrees with
Mortgagee as follows:

         As security for payment of the Debt pursuant to the Note, the Mortgagor
hereby gives, grants, bargains, sells, warrants, aliens, remises, releases,
conveys, assigns, transfers, mortgages, hypothecates, deposits, pledges, sets
over and confirms unto the Mortgagee all of its estate, the right, title and
interest of the Mortgagor, now owned or hereafter acquired, in and to the
following property, rights and interests (such property, rights and interests
being hereinbefore and hereinafter collectively referred to as the "Mortgaged
Property"):

         (a) the Premises;

         (b) The estate, right, title and interest of the Mortgagor, as Tenant,
     in and to the Ground Lease, as defined in Exhibit C hereto (including the
     leasehold interest created and granted thereby), the Premises, and all of
     the right, title and interest of Mortgagor in and to the building and
     equipment on the Premises, including without limitation (a) all rights of
     the Mortgagor to exercise any election or option to make any decision or
     determination or to give any notice, consent, waiver or approval, or to
     take any other action under or in respect of the Ground Lease and (b) all
     modifications, extensions, and renewals of the Ground Lease, and all
     credits, deposits of the Mortgagor as tenant thereunder, including but not
     limited to, the options and rights of the Mortgagor to renew the Ground
     Lease for any succeeding term or terms thereof, and (c) and credits,



<PAGE>

     deposits, options, purchase options, privileges and rights of the Mortgagor
     under the Ground Lease, including but not limited to the right, if any, to
     renew or extend the Ground Lease for succeeding term or terms or to acquire
     fee title to or other interest in all or any portion of the Premises or the
     Improvements, and (d) all of the Mortgagor's rights and remedies at any
     time arising under or pursuant to Section 365(h) of the Bankruptcy Code, 11
     U.S.C.ss.101 et seq. (the "Bankruptcy Code"), including, without
     limitation, all of the Mortgagor's right thereunder to remain in possession
     of the Premises and the Improvements;

         (c) all buildings and improvements now or hereafter located on the
     Premises (hereinafter referred to as the Improvements);

         (d) all easements, rights-of-way, gores of land, streets, ways, alleys,
     passages, sewer rights, waters, water courses, water rights and powers, and
     all estates, rights, titles, interests, privileges, liberties, tenements,
     hereditaments, and appurtenances of any nature whatsoever, in any way
     belonging, relating or pertaining to the Mortgaged Property and all land
     lying in the bed of any street, road or avenue, opened or proposed, in
     front of or adjoining the Premises to the center line thereof;

         (e) all machinery, apparatus, equipment, fittings, fixtures and other
     property of every kind and nature whatsoever owned by the Mortgagor, or in
     which the Mortgagor has or shall have an interest, now or hereafter located
     upon the Mortgaged Property, or appurtenances hereto, and usable in
     connection with the present or future operation and occupancy of the
     Mortgaged Property and all building equipment, materials and supplies of
     any nature whatsoever owned by the Mortgagor, or in which the Mortgagor has
     or shall have an interest, now or hereafter located upon the Mortgaged
     Property (hereinafter collectively referred to as the Equipment), and the
     right, title and interest of the Mortgagor in and to any of the Equipment
     which may be subject to any security agreements (as defined in the Uniform
     Commercial Code of the State in which the Mortgaged Property is located),
     superior in lien to the lien of the Mortgages;

         (f) all awards or payments, including interest thereon, and the right
     to receive the same, which may be made with respect to the Mortgaged
     Property, whether from the exercise of the right of eminent domain
     (including any transfer made in lieu of the exercise of said right), or for
     any other injury to or decrease in the value of the Mortgaged Property;

         (g) other than the Ground Lease, all leases and other agreements
     affecting the use or occupancy of the Mortgaged Property now or hereafter
     entered into (hereinafter referred to as the "Leases") and the right to
     receive and apply the rents, issues and profits of the Mortgaged Property
     (hereinafter referred to as the "Rents") to the payment of the Debt, after
     the occurrence of an Event of Default;

         (h) all proceeds of and any unearned premiums on any insurance policies
     covering the Mortgaged Property, including, without limitation, the right
     to receive and apply the proceeds of any insurance, judgments, or
     settlements made in lieu thereof, for damage to the Mortgaged Property;

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<PAGE>



         (i) the right, in the name and on behalf of the Mortgagor, to appear in
     and defend any action or proceeding brought with respect to the Mortgaged
     Property, and to commence any action or proceeding to protect the interest
     of the Mortgagee in the Mortgaged Property;

         (j) all rents, royalties, issues, profits, revenue, income, recoveries,
     reimbursements and other benefits of the Mortgaged Property (hereinafter,
     the "Rents") and all leases of the Mortgaged Property or portions thereof
     now or hereafter entered into and all right, title and interest of
     Mortgagor thereunder, including, without limitation, cash, letters of
     credit or securities deposited thereunder to secure performance by the
     lessees of their obligations thereunder, whether such cash, letters of
     credit or securities are to be held until the expiration of the terms of
     such leases or applied to one or more of the installments of rent coming
     due immediately prior to the expiration of such terms, and including any
     guaranties of such leases and any lease cancellation, surrender or
     termination fees in respect thereof, all subject, however, to the
     provisions of Section 4.1;

         (k) all (a) development work product prepared in connection with the
     Premises, including, but not limited to, engineering, drainage, traffic,
     soil and other studies and tests; water, sewer, gas, electrical and
     telephone approvals, taps and connections; surveys, drawings, plans and
     specifications; and subdivision, zoning and platting materials; (b)
     building and other permits, rights, licenses and approvals relating to the
     Premises; (c) contracts and agreements (including, without limitation,
     contracts with architects and engineers, construction contracts and
     contracts for the maintenance, management or leasing of the Premises),
     contract rights, logos, trademarks, trade names, copyrights and other
     general intangibles used or useful in connection with the ownership,
     operation or occupancy of the Premises or any part thereof; (d) financing
     commitments (debt or equity) issued to Mortgagor in respect of the Premises
     and all amounts payable to Mortgagor thereunder; (e) contracts for the sale
     of all or any portion of the Premises, the Improvements or the Chattels,
     and all amounts payable by the purchasers thereunder; (f) operating and
     other bank accounts, and monies therein, of Mortgagor relating to the
     Premises, including, without limitation, any accounts relating to real
     estate taxes or assessments; (g) interest rate protection agreements
     entered into by Mortgagor in respect of the Loan; and (h) commercial tort
     claims related to the Premises, the Improvements or the Chattels;

         (l) all rights of Mortgagor under promissory notes, letters of credit,
     electronic chattel paper, proceeds from accounts, payment intangibles, and
     general intangibles related to the Premises, as the terms "accounts",
     "general intangibles", and "payment intangibles" are defined in the
     applicable Uniform Commercial Code Article 9, as the same may be modified
     or amended from time to time;

         (m) all other assets of Mortgagor related in any way to the Premises,
     subject to certain limitations that may be set forth herein; and

         (n) all proceeds of the conversion, voluntary or involuntary, of any of
     the foregoing into cash or liquidated claims, including, without
     limitation, proceeds of insurance and condemnation awards, and all rights
     of Mortgagor to refunds of real estate taxes and assessments.


                                       3
<PAGE>
                                   ARTICLE I

                               Certain Definitions

         The Mortgagor and the Mortgagee agree that, unless the context
otherwise specifies or requires, the following terms shall have the meanings
herein specified, such definitions to be applicable equally to the singular and
to the plural forms of such terms.

         "Acadia" shall mean Acadia Realty Trust, a Maryland real estate
investment trust with offices at 1311 Mamaroneck Avenue, Suite 260, White
Plains, New York 10605, and its successors and/or assigns.

         "Accounting Principles" shall mean the accounting principles utilized
in the preparation of the operating statements for the Mortgaged Premises
heretofore delivered to the Mortgagee or income tax basis of accounting.

         "Affiliate" shall mean (a) if with respect to a corporation, (i) any
officer or director thereof and any person or entity who or which is, directly
or indirectly, the legal or beneficial owner of more than ten (10%)percent of
any class of shares or other equity security of such corporation, or (ii) any
person or entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such corporation; (b) if with respect to a
partnership or venture, any (i) general partner, (ii) general partner of a
general partner, (iii) partnership with a common general partner, (iv)
coventurer thereof, or (v) any person, trust, corporation, partnership, venture
or other entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such partnership; and if any general partner
or general partner of a general partner or coventurer is a corporation, any
person or entity which is an Affiliate as defined in clause (a) above of such
corporation; and (c) if with respect to a limited liability company, (i) any
manager thereof and any person or entity who or which is, directly or
indirectly, the legal or beneficial owner of more than ten (10%) percent of any
class of the membership interests of such limited liability company, or (ii) any
person or entity who or which, directly or indirectly, controls or is controlled
by or is under common control with such limited liability company and if any
member which is the legal or beneficial owner of more than 10% of any class of
membership interests is a corporation, any person or entity which is an
Affiliate (as defined in clause (a) above) of such corporation. "Controls"
(including the correlative meanings of "controlled by" and "under common control
with") means effective power, directly or indirectly, to direct or cause the
direction of the management and policies of such person or entity.

         "Appraised Value" shall mean the appraised value of the Mortgaged
Premises, as determined by an independent appraiser selected by the Mortgagee
and reasonably acceptable to the Mortgagor. The Mortgagee may require that such
an appraisal be performed at any time. Appraised Value shall be determined
utilizing an appraisal method consistent with that used in determining the
Appraised Value in connection with entering into the Note and Mortgage. The
Mortgagors shall be responsible for the cost of up to one appraisal per annum if
requested by Mortgagee.


                                       4
<PAGE>

         "Authorized Representative" shall mean Michael Nelsen, Robert Masters,
Maggie Hui, Jon Grisham or any other person or persons designated by Mortgagor,
in a writing delivered to Mortgagee, as an Authorized Representative.

         "Default Rate" shall mean the Involuntary Rate (as such term is defined
in the Note).

         "Due and payable" when used with reference to the principal of, or
premium or interest on, or when referring to any and all other sums secured by
this Mortgage or any other of the Loan Documents shall mean due and payable,
whether at the monthly or other date of payment or at the date of maturity
specified in the Note, this Mortgage or the other Loan Documents; or by
acceleration or call for payment as provided in the Note, hereunder or in the
other Loan Documents, or, in the case of Impositions, the last day upon which
any charge may be paid without penalty and/or interest.

         "Events of Default" shall have the meaning assigned to such term in
Section 6.1 of this Mortgage.

         "Full Force and Effect" shall mean, as to any lease, that such lease
shall be in full force and effect, there shall be no material default by the
tenant thereunder or default by the landlord thereunder or other act or
condition or circumstance giving or which may give, without the giving of any
further notice, the tenant or the landlord the right to terminate any lease and,
if requested by the Mortgagor and required by its lease, the tenant shall have
delivered to the Mortgagor an estoppel certificate in form and substance
reasonably satisfactory to the Mortgagee.

         "GAAP" shall mean Generally Accepted Accounting Principles set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable in the circumstances as of the
date in question, consistently applied within a period and from period to
period, provided, however, that if employment of more than one principle shall
be permissible at such time in respect to a particular accounting matter, "GAAP"
shall refer to the principle which is then employed by Acadia, the Managing
Member or Mortgagor, as the case may be, with the concurrence of the independent
certified public accountants of Debtor.

         "Governmental Authorities" shall mean all federal, state,
county, municipal and local governments and all departments, commissions,
boards, bureaus and offices thereof, having or claiming jurisdiction over the
Mortgaged Premises or any part thereof.

         "Ground Lease" or "Lease" means that certain agreement of lease by and
between Soundview Shopping Center, a general partnership having an office at
Soundview Shopping Center, c/o Mr. B.V. Brooks, 542 Westport Avenue, Norwalk,
Connecticut 06851 ("Landlord"), Port Bay Associates, as tenant, dated as of
December 19, 1985, a Memorandum of Lease with respect thereto was recorded in


                                       5
<PAGE>


the Office of the Clerk of County of Nassau February 3, 1986 in Liber 9702 at
Page 404, as amended by that certain First Amendment to Agreement of Lease,
dated as of January 1999 by and between Landlord and Mortgagor (the "First
Amendment").

         "Guaranty" or "Indemnity" means, individually, jointly, severally and
collectively, (i) that certain loan guaranty dated of even date hereof by the
Indemnitor in favor of Mortgagee, as the same may be extended and or otherwise
modified from time to time (the "Loan Guaranty"), (ii) that certain
Reaffirmation Agreement with respect to the hazardous material guaranty and
indemnity agreement dated of even date hereof by the Indemnitor in favor of
Mortgagee, as the same may be extended and or otherwise modified from time to
time (the "Hazardous Material Guaranty"), (iii) that certain ADA guaranty and
indemnity agreement dated of even date hereof by the Indemnitor in favor of
Mortgagee, as the same may be extended and or otherwise modified from time to
time (the "ADA Guaranty").

         "Impositions" shall mean all duties, taxes (other than income taxes),
water and sewer rents, rates and charges, assessments (including, but not
limited to, all assessments for public improvements or benefit), charges for
public utilities, excises, levies, license and permit fees and other charges,
ordinary or extraordinary, whether foreseen or unforeseen, of any kind and
nature whatsoever, which prior to or during the term of this Mortgage will have
been or may be laid, levied, assessed or imposed upon or become due and payable
out of or in respect of, and become a lien on the Premises, the Improvements,
Building Service Equipment, Furnishings or any other property or rights included
in the Mortgaged Premises, or any part thereof or appurtenances thereto, or
which are levied or assessed against the rent and income received by the
Mortgagor from the Space Leases (as defined in Section 1.15) by virtue of any
present or future law, order or ordinance of the United States of America or of
any state, county or local government or of any department, office or bureau
thereof or of any other Governmental Authority.

         "Indemnitor", "Guarantor", "Guarantors" or "Indemnitors" means
individually, jointly, severally and collectively, the Mortgagor and the
Managing Member.

         "Legal Requirements" shall mean all present and future laws,
ordinances, rules, regulations and requirements of all Governmental Authorities,
and all orders, rules and regulations of any national or local board of fire
underwriters or other body exercising similar functions, foreseen or unforeseen,
ordinary or extraordinary, which may be applicable to the Mortgaged Premises or
any part thereof, or to the sidewalks, alleyways, passageways, curbs and vaults
adjoining the same, or to the use or manner of use of any of the foregoing, or
to the owners, tenants, or occupants thereof, whether or not any such law,
ordinance, order, rule, regulation or requirement shall necessitate structural
changes or improvements or shall interfere with the use or enjoyment of any of
the foregoing, and shall also mean and include all requirements of the policies
of public liability, fire and all other insurance at any time in force with
respect to any of the foregoing.

         "Loan Documents" means the Note, this Mortgage, the Guaranty and all
other documents, including, without limitation, collateral documents, security
agreements, UCC financing statements, assignments of leases and rents,
guaranties, indemnities, title insurance, assignments, subordination agreements,
non-disturbance agreements, leases affecting the property encumbered by the



                                       6
<PAGE>

Mortgage, and any other document, mortgage, agreement, assignment or other
instrument executed by Mortgagor and/or Indemnitor, as the case may be, or any
other third party pursuant hereto or thereto or in connection herewith or in
connection with the loan evidenced by the Note and secured by this Mortgage, as
the same may be extended and or otherwise modified from time to time.

         "Managing Member" shall mean Acadia Realty Limited Partnership, a
Delaware limited partnership having an office at 1311 Mamaroneck Avenue, Suite
260, White Plains, New York 10605, and its successors and/or assigns.

         "Mortgagor" shall mean the Mortgagor herein named, any subsequent owner
or owners of the Mortgaged Premises, and its or their respective successors and
assigns; provided, however, that this definition shall not be construed to limit
the provisions of Section 2.8.1 hereof.

         "Net Operating Income" shall mean, with respect to the applicable
period, the aggregate rental and other receipts (unless excluded pursuant
hereto) of the Mortgaged Premises (actual results with respect to the preceding
six-months and pro forma with respect to the following six-months during such
period less the aggregate amount of all operating expenses of the Mortgaged
Premises during such period, in each case determined in accordance with the
Accounting Principles. For purposes of the determination of Net Operating
Income, operating expenses shall include, without limitation, all real estate
taxes (but not in excess of the pro rata portion of such real estate taxes
applicable to the applicable period covered by the statement), water and sewer
charges, utility charges, insurance premiums (but not in excess of the amounts
applicable to the applicable period covered by the statement), salaries and
benefits of all employees engaged in the operation, maintenance or management of
Mortgaged Premises, all costs of ordinary and necessary maintenance, cleaning
and repair, costs of snow and rubbish removal and security services. Net
Operating Income shall, however, (a) exclude from receipts all amounts paid to
the Mortgagor for tenant alterations in connection with the leasing of space at
the Mortgaged Premises, all amounts payable to the Mortgagor under leases with
Affiliates of the Mortgagor, as tenant, or with Mortgagor, as tenant (unless the
Mortgagee otherwise agrees) and, with respect to any lease providing for a
reduction in the rentals payable under such lease at any time during the term
thereof, base rentals in excess of the lowest base rentals payable under such
lease (other than during any period of rent concessions made with respect to
consecutive monthly periods commencing with the first month of the term of such
lease), and (b) exclude from expenses payments of principal and interest on the
Note, capital expenditures, leasing commissions, and other expenses payable to
the Mortgagee pursuant to the Note or any of the other Loan Documents. Net
Operating Income shall be determined without regard to extraordinary items of
income and of expense. Each lease, the rental or other income from which was
included in the calculations of Net Operating income, must in Full Force and
Effect as of the date Net Operating Income is being determined.

         "Net Worth" shall mean the net worth of Acadia as shown on its
financial statements, and as subsequently determined in accordance with GAAP,
used in Acadia's most recent statements.

         "Obligations" or "Indebtedness" shall mean (a) the aggregate unpaid
principal amount of, and accrued and unpaid interest on, the Note, plus (b) any
and all indebtedness, obligations and other liabilities of the Mortgagor to the


                                       7
<PAGE>


Mortgagee arising out of or in connection with or otherwise relating to the Note
or any of the Loan Documents, and/or any agreement(s) of the Mortgagor with the
Mortgagee pertaining thereto, including, without limitation, any Hedge
Agreement; in each case whether now or hereafter existing, direct or indirect,
absolute or contingent, joint, several or independent, due or to become due,
liquidated or unliquidated, held or to be held by the Mortgagee and whether
created directly or acquired by assignment or otherwise.

         "Permitted Encumbrances" shall mean each of the exceptions to coverage
set forth in SCHEDULE B, PART I (other than the so-called standard exceptions
set forth therein as items 1-7, inclusive) of the title policy insuring the lien
of this Mortgage issued by Commonwealth Land Title Insurance Company of New York
and accepted by the Mortgagee with respect to the Premises, and such other items
as the Mortgagee, in its sole discretion, may approve in writing.

         "Person" shall mean and include any individual, corporation,
partnership, unincorporated association, trust, governmental agency or authority
or other entity.

         "Prime Rate" shall have the meaning assigned to such term in the Note.

         "Space Lease" shall mean any and all leases, subleases, licenses,
concession agreements or any other form of agreement, however denominated
(written or verbal, now or hereafter in effect), in which the Mortgagor (or its
predecessor in interest as owner of the Mortgaged Premises in the case of
existing Space Leases) now or hereafter grants a possessory interest in and to,
or the right to use and occupy the Mortgaged Premises, or any portion thereof,
and all renewals, extensions, modifications, amendments and other agreements
affecting the same.

         "Space Tenant" shall mean the tenant or other user or occupant of part
or all of the Mortgaged Premises under any Space Lease.

         "State" or "New York" shall mean the State of New York.

                                   ARTICLE II

                      Particular Covenants of the Mortgagor
                      -------------------------------------

         The Mortgagor covenants and agrees as follows:

         2.1. Payment of Obligations. The Mortgagor shall duly and punctually
pay to the Mortgagee, as and when due and payable, the Obligations; provided,
however, that the maximum principal amount which is, or under any contingency
may be, secured hereby is $3,990,135.17 plus protective advances under Section
7.3 and any amounts due under any Hedge Agreement.


                                       8
<PAGE>


         2.2. General Representations, Covenants and Warranties.
              --------------------------------------------------

       2.2.1. The Mortgagor represents and warrants that: (a) it has a good and
marketable title to an indefeasible fee estate in Parcel Three and it has a good
and marketable title to a leasehold estate in Parcel One and Parcel Two, subject
to no lien, charge or encumbrance, except for Permitted Encumbrances; (b) it
owns the Building Service Equipment and Furnishings free and clear of all liens
and claims other than in favor of the Mortgagee; (c) this Mortgage is and will
remain a valid and enforceable first lien on the Mortgaged Property subject only
to the exceptions referred to above; (d) the execution and delivery of this
Mortgage and the Note has been duly authorized by the Mortgagor, the Managing
Member and Acadia, the Managing Member's general partner, and that there is no
provision in any document that evidences or establishes the existence of the
Mortgagor, Managing Member or Acadia requiring further consent for such action
by any other entity or person; (e) Mortgagor is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of New
York; Managing Member is a limited partnership duly formed, validly existing and
in good standing under the laws of the State of Delaware, and is in good
standing in the State of New York, and is authorized to conduct business in the
State of New York; and the General Partner is a trust duly formed, validly
existing and in good standing under the laws of the State of Maryland, and is in
good standing in the State of New York, and is authorized to conduct business in
the State of New York; (f) Mortgagor and Indemnitor each has (i) all necessary
licenses, authorizations, registrations, permits and/or approvals and (ii) full
power and authority to own its properties and carry on its business as presently
conducted and the execution and delivery by it of and performance of its
obligations under, this Mortgage, the Note and the other Loan Documents to which
it is a party will not result in the Mortgagor and/or Indemnitor being in
default under any provisions of any document which evidences or establishes the
existence of the Mortgagor and/or the Indemnitor or of any mortgage, credit or
other agreement to which Mortgagor and/or Indemnitor is a party or which affects
the Mortgagor and/or Indemnitor or the Premises, or any part thereof; (g) it
will preserve such title, and forever warrant and defend the same and the Ground
Lease to the Mortgagee, and will forever warrant and defend the validity and
priority of the lien hereof against the claims of all persons and parties
whomsoever; (h) the Mortgagor and Indemnitor each is now able to meet their
respective debts as they mature, the fair market value of their respective
assets exceeds their respective liabilities, and no bankruptcy or insolvency
proceedings are pending or contemplated by or against the Mortgagor and/or
Indemnitor; (i) all reports, statements and other data furnished by the
Mortgagor and/or Indemnitor in connection with the loan evidenced by the Note
are true and correct and complete in all material respects and do not omit to
state any fact or circumstance necessary to make the statements contained
therein not materially misleading; and (j) to the knowledge of Mortgagor, there
are no actions, suits, or proceedings pending against or affecting the Mortgagor
or the Mortgaged Property.

         2.3. To Maintain Priority of Lien and Preserve Existence.
              ----------------------------------------------------

       2.3.1. This Mortgage is and will be maintained as a valid first mortgage
lien on the Mortgaged Premises, and the Mortgagor will not, directly or
indirectly, create or suffer or permit to be created, or to stand against the
Mortgaged Premises or any portion thereof, or against the rents, issues and
profits therefrom, and will promptly discharge, any lien or charge prior to or
upon a parity with or junior to the lien of this Mortgage other than the



                                       9
<PAGE>


Permitted Encumbrances; provided, however, that the Mortgagor shall not be
required to pay any Imposition prior to the time it shall become due and payable
subject to the provisions of Section 2.4.1 hereof, and nothing herein contained
shall prevent the Mortgagor from contesting the validity of any such Imposition
in accordance with the provisions of Section 2.4.4. The Mortgagor will keep and
maintain the Mortgaged Premises, and every part thereof, free from all liens or
lien notices, of Persons supplying labor and/or materials in connection with any
construction, alteration, repair, improvement or replacement of the Improvements
or of the Building Service Equipment and Furnishings. If any such lien shall be
filed against the Mortgaged Premises, or any part thereof, the Mortgagor
promptly (but in any event within thirty (30) days of receiving notice of such
lien) shall discharge the lien of record, by bonding or otherwise. The Mortgagor
shall exhibit to the Mortgagee, upon request, appropriate receipts or other
satisfactory evidence of the payment of the Impositions or any other item which
may, if not paid, give rise to a lien against the Mortgaged Premises.

       2.3.2. The Mortgagor will, so long as it is owner of the Mortgaged
Property or any part thereof, do all things necessary to preserve and keep in
full force and effect its existence, rights and privileges as a limited
liability company under the laws of the state of New York and will comply with
all regulations, rules, ordinances, statutes, orders and decrees of any
governmental authority or court applicable to the Mortgagor or to the Mortgaged
Property or any part thereof.

         2.4. To Pay Impositions.

       2.4.1. The Mortgagor will pay or cause to be paid, as and when due and
payable, all Impositions levied upon the Mortgaged Premises or any part thereof.
However, if by law, any Imposition may at the option of the taxpayer be paid in
installments (whether or not interest shall accrue on the unpaid balance
thereof), the Mortgagor shall have the right to exercise such option and to pay
such Imposition, or cause it to be paid (together with any accrued interest on
the unpaid balance) in installments as they fall due and before any fine,
penalty, further interest or cost may be added thereto.

       2.4.2. Upon demand of the Mortgagee in the case of Impositions and, if an
Event of Default shall exists, upon demand of the Mortgagee in the case of
insurance premiums, the Mortgagor shall deposit with the Mortgagee a sum which
bears the same relation to the annual insurance premiums for all insurance
required by the terms hereof and real estate taxes and assessments assessed
against the Mortgaged Premises for the insurance period or tax year then in
effect, as the case may be, as the number of months elapsed as of the date of
such demand since the last preceding installment of said premiums or taxes or
assessments shall have become due and payable bears to twelve (12). For the
purpose of this computation, the month in which such last preceding installment
of premiums or real estate taxes or assessments became due and payable and the
month in which such demand is given shall be included and deemed to have
elapsed. On the first day of the month next succeeding the month in which such
demand is given, and thereafter on the first day of each and every month during
the term of this Mortgage, the Mortgagor shall deposit with the Mortgagee a sum
equal to one-twelfth of such insurance premiums and such taxes and assessments
for the then-current insurance period and tax year, so that as each installment
of such premiums and taxes and assessments shall become due and payable, the
Mortgagor shall have deposited with the Mortgagee a sum sufficient to pay the



                                       10
<PAGE>

same. All such deposits shall be received and held as part of such deposit by
the Mortgagee (all such deposits to be held in an account without interest
thereon) and shall be applied to the payment of each installment of such
premiums and taxes and assessments as they shall become due and payable. The
Mortgagee shall, upon demand, furnish evidence to the Mortgagor of the making of
each such payment. If the amount of such premiums and taxes and assessments has
not been definitely ascertained at the time when any such monthly deposits are
required to be made, the Mortgagor shall make such deposits based upon the
amount of such premiums and taxes and assessments for the preceding year,
subject to adjustment as and when the amount of such premiums and taxes and
assessments are ascertained. If at any time when any installment of such
premiums and such taxes and assessments becomes due and payable the Mortgagor
shall not have deposited a sum sufficient to pay the same, the Mortgagor shall,
within five (5) days after demand, deposit any deficiency with the Mortgagee.
Upon payment in full of the Obligations, any remaining amount on deposit with
the Mortgagee shall be repaid to the Mortgagor or Person lawfully entitled
thereto. If an Event of Default shall occur and be continuing, the Mortgagee
may, at its option, apply all or any portion of the amounts then on deposit with
the Mortgagee pursuant to this Section 2.4.2 to payment of the Obligations. The
Mortgagor shall deliver to the Mortgagee all insurance and tax bills promptly
following receipt during any period when such monthly deposits are to be made
with the Mortgagee.

       2.4.3. The Mortgagor will pay all taxes and other governmental charges
(including, without limitation, stamp taxes), except income or franchise taxes
or similar taxes based upon or measured by income, assessed by the United States
government or any state or local governmental authority and imposed on the
Mortgagee by reason of the ownership of this Mortgage or the Note, or the
receipt of the interest or other sums payable thereunder or payable by the
Mortgagor or the Mortgagee upon any increase in the Obligations secured hereby,
or any modification, amendment, extension or consolidation of this Mortgage.
Without limiting the foregoing and subject to the limitations set forth above,
the Mortgagor will also pay the whole of any tax imposed, directly or
indirectly, on this Mortgage or the Note or the receipt of any portion of the
Obligations in lieu of a tax on the Mortgaged Premises or the Improvements and
Building Service Equipment, whether by reason of (a) the passage after the date
of this Mortgage of any law of the State deducting from the value of real
property for the purposes of taxation any lien thereon; (b) any change in the
laws for the taxation of mortgages or debts secured by mortgages for state or
local purposes; (c) a change in the means of collection of any such tax or
otherwise; or (d) any tax, whether or not now existing, assessed against, or
withheld from, interest or other payments made by the Mortgagor or assessed
against the Mortgagee and which are assessed or levied by the government of any
foreign nation or political subdivision thereof, provided such tax liability
shall not result from the ownership of this Mortgage by a Person not a citizen
of, or an entity not formed under the laws of, the United States or any state.
Within a reasonable time after payment of any such tax or governmental charge,
the Mortgagor will deliver to the Mortgagee satisfactory proof of payment
thereof, subject, however, to the right of the Mortgagor to contest Impositions
as hereinafter set forth. If the Mortgagor shall fail to pay such tax or charge
within fifteen (15) days after notice, or if under applicable law the
Mortgagor's payment or agreement to pay the same shall be unenforceable, the
Mortgagee shall have the right to declare all of the unpaid Obligations and all
accrued and unpaid interest thereon due and payable on a date specified by the
Mortgagee, but, in any event, not less than thirty (30) days after notice to the
Mortgagor.

                                       11
<PAGE>

       2.4.4. The Mortgagor shall have the right to contest the amount or
validity, in whole or in part, of any Imposition, or to seek a reduction in the
valuation of the Mortgaged Premises, or any part thereof, as assessed for real
estate or personal property tax purposes by appropriate proceedings diligently
conducted in good faith, but only after payment of such Imposition, unless such
payment would operate as a bar to such contest or materially adversely interfere
with the prosecution thereof, in which event the Mortgagor may postpone or defer
payment of such Imposition (but not the payment of any monthly deposits pursuant
to Section 2.4.2 hereof); and upon request by the Mortgagor, the Mortgagee shall
postpone or defer payment of such Imposition; provided, however, that if at any
time the Mortgaged Premises, the Building Service Equipment, the Furnishings, or
any part thereof would, in the Mortgagee's reasonable judgment, by reason of
such postponement or deferment be in imminent danger of being forfeited or lost,
or if the Mortgagee might be subjected to any civil or criminal liability or
other sanction, then the Mortgagor, on demand, shall immediately pay or cause to
be paid the amount so contested and unpaid, together with all interest and
penalties in connection therewith.

       2.4.5. The certificate, advice or bill of the appropriate official
designated by law to make or issue the same or to receive payment of any
Imposition indicating the nonpayment of such Imposition shall be prima facie
evidence that such Imposition is due and payable but unpaid at the time of the
making or issuance thereof.

         2.5. Insurance; Restoration Following Casualty.

       2.5.1. Until the Obligations are paid in full, the Mortgagor shall at its
own expense at all times maintain or cause to be maintained on all of the
Mortgaged Premises (a) comprehensive general liability insurance, including
umbrella liability insurance, covering all claims for bodily injury, including
death, and property damage occurring on, in or about the Mortgaged Premises in
an amount not less than $13,600,000 combined single limit per person and per
occurrence for personal injury, bodily injury and property damage; the policy
limits of such insurance, if requested by the Mortgagee, shall be increased from
time to time to reflect what a reasonably prudent owner or lessee of buildings
or improvements similar in type and locality to the Mortgaged Premises would
carry; during any period of substantial alterations or improvements in, on or to
the Mortgaged Premises, the Mortgagor will cause the comprehensive general
liability insurance, including umbrella liability insurance, endorsed to provide
owners' and contractors' protective liability coverage, including completed
operations liability coverage; (b) physical damage insurance covering the
Mortgaged Premises for loss or damages resulting from the perils of fire,
lightning and such other risks and hazards as are provided under the current
standard "Extended Coverage Endorsement" and vandalism and malicious mischief
coverage, for the full replacement value of the Mortgaged Premises on a
stipulated and agreed-amount basis; (c) if the Mortgaged Premises is in an area
identified as a flood hazard area by the Secretary of Housing and Urban
Development, flood insurance, to the extent obtainable, in an amount equal to
the lesser of the full replacement value of the Mortgaged Premises or the
maximum amount available under the Federal flood insurance program; (d) boiler
and machinery insurance covering all boilers, machinery, air conditioning,
pressure vessels, and similar type equipment commonly covered under a broad-form
boiler and machinery policy, in an amount satisfactory to the Mortgagee; (e)
insurance against such other risks of damage, hazards, casualties and
contingencies in such amounts as the Mortgagee shall from time to time
reasonably require, provided that insurance against such other risks, hazards,


                                       12
<PAGE>

casualties or contingencies shall then be commonly carried by prudent owners or
lessees of building or improvements in the locality similar in character,
construction, use and occupancy to the Improvements, Building Service Equipment
and Furnishings on, or constituting a part of, the Mortgaged Premises; and (f)
loss of rents/business interruption coverage in an amount sufficient to pay all
Impositions, insurance premiums, interest and principal installments and all
other amounts due under the Obligations and the normal operating expenses of the
Mortgaged Premises, all for a period of one (1) year. Furthermore, the Mortgagee
reserves the right to require additional insurance and/or higher policy limits
than heretofore specified if such additional insurance and/or higher policy
limits are commercially reasonable for similar properties, which right may be
exercised by written notice to the Mortgagor, and, as soon thereafter as
practicable, but in any event within thirty (30) days of the receipt thereof,
the Mortgagor agrees to obtain insurance coverage complying with such notice.
The proceeds of all such insurance (except the insurance specified in Section
2.5.1(a)) shall be paid solely to the Mortgagee and be held, applied or
disbursed by the Mortgagee as provided in Sections 2.5.7 and 2.5.8.

       2.5.2. All insurance required in Section 2.5.1 shall be evidenced by
valid and enforceable policies, in form and substance, and issued by and
distributed among insurers of recognized responsibility having a Best's rating
of A or better and a financial size category of Class IX or above, as shall be
required by the Mortgagee from time to time. Such insurers shall be authorized
to do business in the State and in all other respects shall be reasonably
satisfactory to the Mortgagee. The originals of all such policies, or duplicate
copies or certificates thereof, shall be delivered to the Mortgagee concurrently
with the execution and delivery of this Mortgage. Thereafter, all renewal or
replacement policies, or duplicate copies or certificates thereof, shall be
delivered to the Mortgagee not less than thirty (30) days prior to the
expiration date of the policy or policies to be renewed or replaced, in each
case accompanied by evidence reasonably satisfactory to the Mortgagee that all
premiums currently payable with respect to such policies have been paid in full
by or at the direction of the Mortgagor.

       2.5.3. All such insurance policies shall (a) except for any liability
policy required hereunder, contain a standard noncontributory form of mortgagee
clause (in favor of and entitling the Mortgagee to collect any and all proceeds
payable under such insurance), as well as a standard waiver of subrogation
endorsement, all to be in form and substance reasonably satisfactory to the
Mortgagee; (b) provide that such policies may not be cancelled or amended
without at least thirty (30) days', prior written notice to the Mortgagee; and
(c) provide that no act, omission or negligence of the Mortgagor, or its agents,
servants or employees, or of any Space Tenant under any Space Lease, which might
otherwise result in a forfeiture of such insurance or any part thereof, shall in
any way affect the validity or enforceability of such insurance insofar as the
Mortgagee is concerned. The Mortgagor shall not carry separate insurance,
concurrent in kind or form or contributing in the event of loss with any
insurance required under this Section 2.5. All losses under such insurance
policies shall be adjusted by the Mortgagor in the case of any single instance
of such damage or destruction not exceeding $1,000,000, by Mortgagor and
Mortgagee in the case of any such single instance of damage or destruction
exceeding such amount, provided that in no event shall the Mortgagor approve or
consent to any final adjustment in any amount exceeding the amount specified
above in this sentence without obtaining the Mortgagee's prior approval (which
approval shall not be unreasonably withheld) of the amount of such adjustment,
and solely by the Mortgagee in the case when an Event of Default exists and is
continuing.


                                       13
<PAGE>

       2.5.4. Intentionally Deleted.

       2.5.5. If the Mortgagee shall, by any means, acquire the title or estate
of the Mortgagor in or to any portion of the Mortgaged Premises, it shall
thereupon become the sole and absolute owner of all insurance policies to the
extent affecting such portion of the Mortgaged Premises held by, or required
hereunder to be delivered to, the Mortgagee, with the sole right to collect and
retain all unearned premiums thereon; and the Mortgagor shall be entitled only
to a credit in reduction of the then outstanding Obligations in the amount of
the short rate cancellation refund, when and if received by Mortgagee. The
Mortgagor agrees, immediately upon demand, to execute and deliver such
assignments or other authorizations or instruments as may, in the opinion of the
Mortgagee, be necessary or desirable to effectuate any of the provisions of this
Section 2.5.5.

       2.5.6. If any of the Improvements, Building Service Equipment or
Furnishings shall be damaged or destroyed, in whole or in part, by fire or other
casualty, the Mortgagor shall give prompt notice thereof to the Mortgagee, and,
without regard to the availability or adequacy of insurance proceeds, shall
promptly following receipt of any insurance proceeds or the date when any such
proceeds are made available to the Mortgagor in accordance with the terms
hereof, commence to restore, replace, rebuild or alter the same as nearly as
possible to the condition, character and value thereof existing immediately
prior to such damage or destruction. Any insurance proceeds in respect of such
damage or destruction, or any Award (as defined in Section 3.2) for a partial
taking which is not a substantial or total taking, as such terms are referred to
in Article III hereof, at the option of the Mortgagee, may either (i) be applied
as a prepayment of the Obligations, or (ii) be made available to pay or
reimburse costs incurred for restoration, replacement or rebuilding necessitated
as a result of such damage or destruction, or as a result of such taking, as the
case may be, or (iii) be used for any other purpose or object deemed appropriate
by the Mortgagee in connection with the Mortgaged Premises, provided, however,
that the Mortgagee shall not elect either option (i) or (iii) above if, and for
so long as, (a) no Default and/or Event of Default has occurred and is
continuing or would occur as a result of such casualty or taking; (b) the
balance of the insurance proceeds or such Award either initially paid to the
Mortgagee or deposited with the Depository (as hereinafter defined) or remaining
from time to time, shall be sufficient, in the Mortgagee's reasonable judgment,
to complete the restoration, replacement or rebuilding, or the Mortgagor shall
have deposited such sufficient funds with the Mortgagee or the Depository; (c)
the cost of such restoration, replacement or rebuilding is equal to or less than
25% of the then aggregate outstanding principal balance remaining under the
Note; and (d) in the Mortgagee's reasonable judgment, six months after
completion of the restoration, there will be no Default.

       2.5.7. Any such insurance proceeds (other than the proceeds of the rent
insurance policy, which shall be paid as provided in Section 2.5.8 below) or
Award which are to be applied to restoration, replacement or rebuilding of the
Mortgaged Premises shall, after payment or reimbursement to the Mortgagee of all
reasonable costs and expenses of the Mortgagee in collecting such proceeds or
Award, be applied upon satisfaction of the following provisions and conditions:


                                       14
<PAGE>


         (a) If the damage be of such nature as to require the Mortgagor to
     construct a replacement for, or to alter in any material or substantial
     way, the damaged or destroyed items, the Mortgagor shall, before commencing
     any such work, submit copies of the plans and specifications therefor to
     the Mortgagee for the Mortgagee's approval, such approval to not be
     unreasonably withheld or delayed.

         (b) If after payment or reimbursement to the Mortgagee of all costs and
     expenses of the Mortgagee in collecting such insurance proceeds or Award,
     the aggregate insurance proceeds or Award received by reason of any single
     instance of such damage or destruction or condemnation, as the case may be,
     shall be $1,000,000 or less such insurance proceeds or Award shall be paid
     to the Mortgagor, which shall hold all amounts so received in trust for
     application first to pay the entire cost of restoring, repairing,
     rebuilding or replacing the damaged or destroyed items, before any portion
     of such proceeds may be used or applied for any other purpose. If the
     aggregate net insurance proceeds or Award by reason of any single instance
     of such damage or destruction or condemnation, as the case may be, shall be
     more than $1,000,000 such sums shall be held and disbursed by Fleet
     National Bank or, if this Mortgage is held by a financial institution, by
     such financial institution or, if this Mortgage is not held by a financial
     institution, by a financial institution selected by the then Mortgagee (the
     holder of such monies, the "Depository") in accordance with the following
     provisions of this Section 2.5.7.

         (c) The Mortgagee shall have received as to each such disbursement a
     certificate of the Mortgagor (i) requesting the payment of a specified
     amount of such insurance or condemnation proceeds; (ii) describing in
     reasonable detail the work and materials applied to the restoration,
     replacement or rebuilding of the damaged, destroyed or taken Improvement,
     or Building Service Equipment and/or Furnishings located therein, since the
     date of the last such certificate; (iii) stating that the requested amount
     does not exceed the cost of such work and materials; and (iv) stating that
     a request for payment for such work and materials has not previously been
     made; accompanied by

         (d) a certificate of an independent engineer or architect designated by
     the Mortgagor, who shall have been approved in writing by the Mortgagee,
     stating (i) that the work and materials described in the accompanying
     certificate of the Mortgagor were satisfactorily performed and furnished
     and were necessary, appropriate or desirable to the restoration,
     replacement or rebuilding of the damaged, destroyed or taken Improvement,
     or Building Service Equipment and/or Furnishings; (ii) that the amount
     specified in such certificate of the Mortgagor does not exceed the
     reasonable cost of such work and materials; and (iii) the additional
     amount, if any, required to complete the restoration, replacement or
     rebuilding of the damaged, destroyed or taken Improvement, Building Service
     Equipment and/or Furnishings; accompanied by

         (e) evidence reasonably satisfactory to the Mortgagee (i) that there
     exists no filed or recorded lien, or lien notice, or encumbrance or charge
     in respect of all or any part of the Mortgaged Premises that is prior to or
     on a parity with the lien of this Mortgage, except as may be permitted in
     the Permitted Encumbrances; (ii) that neither the Mortgaged Premises nor
     any part thereof is subject to any recorded or filed mechanic's, laborer's,




                                       15
<PAGE>


     materialman's or any similar lien, encumbrance or charge; and (iii) that
     none of the Building Service Equipment and Furnishings provided in
     connection with such restoration, replacement or rebuilding is subject to
     any security interest other than in favor of the Mortgagee; then, the
     Mortgagee shall pay to the Mortgagor the amount of such insurance or
     condemnation proceeds requested in such certificate of the Mortgagor or
     consent to the Depository's payment thereof, as the case may be; provided,
     however, that in no event shall the balance of insurance or condemnation
     proceeds held by the Mortgagee and the Depository be reduced below the
     amount specified in such certificate of the independent engineer or
     architect as the amount required to complete the restoration, replacement
     or rebuilding of the damaged, destroyed or taken Improvement, Building
     Service Equipment and/or Furnishings. Each such payment, whether made by
     the Mortgagee or the Depository, shall be held by the Mortgagor in trust
     and shall be used solely for the payment of the cost of the work and
     materials described in the certificate of the Mortgagor, or if such cost or
     any part thereof has theretofore been paid by the Mortgagor out of its own
     funds, then for the reimbursement to the Mortgagor of any such cost or part
     thereof paid by it. Any balance of insurance or condemnation proceeds held
     by the Mortgagee after the completion of the restoration, replacement or
     rebuilding and payment of all costs incurred in connection therewith, to be
     evidenced by a certificate to such effect of such independent engineer or
     architect delivered to the Mortgagee, shall, if no Event of Default shall
     have occurred and be continuing, be released to the Mortgagor or any other
     party entitled thereto. Notwithstanding the foregoing, if the Mortgagor
     needs to make deposits with or payments to contractors prior to the work
     being performed, if the Mortgagee is otherwise obligated to allow funds to
     be used to rebuild or restore, the Mortgagee agrees that it will not
     unreasonably withhold or delay the Mortgagor's request that such deposits
     or advances payments be allowed.

       2.5.8. All proceeds of rent insurance payable as a result of the
occurrence of any fire or other casualty which affects the Mortgaged Premises,
or any part thereof, shall be paid to the Mortgagee or, if the Mortgagee is not
a financial institution, the Depository. The Mortgagee or the Depository, as the
case may be, if it shall receive such proceeds, shall hold such proceeds in
trust if permitted under law, and in an account bearing interest (payable to or
for account of the Mortgagor), and shall apply or cause such proceeds (including
any net interest thereon) to be applied to the payment of those items referred
to in Section 2.5.1(f) which become, and as they become, due and payable from
and after the date of the occurrence of such damage or loss, until the
completion of the necessary restoration or replacement by the Mortgagor or until
the exhaustion of such proceeds (including any interest thereon), whichever
first occurs. Upon completion of such restoration or replacement, any balance of
such rent insurance proceeds, together with the interest thereon, if any, not
theretofore applied as provided herein, in the hands of the Mortgagee or the
Depository, as the case may be, shall, provided that no Event of Default shall
have occurred and be continuing, be paid to the Mortgagor or any other party
entitled thereto.

       2.5.9. Nothing in this Section 2.5 contained shall (i) relieve the
Mortgagor of its duty to repair, restore, rebuild or replace the Improvements,
Building Service Equipment and/or Furnishings following damage or destruction by
fire or other casualty or taking in the event that no Award or an inadequate
Award or that no or inadequate proceeds of insurance are available to defray the
cost of such repairing, restoring, rebuilding or replacement, or (ii) relieve


                                       16
<PAGE>


the Mortgagor of its obligation to pay principal and interest and to make all
other required payments in respect of the Obligations and this Mortgage
subsequent to the occurrence of any fire or other casualty, or taking, except
if, and to the extent that, any proceeds of rent insurance are applied by the
Mortgagee in accordance with Section 2.5.8 to such required payments.

       2.5.10. If, while any insurance proceeds or Award is being held by the
Mortgagee or the Depository, an Event of Default shall occur and be continuing,
the Mortgagee shall be entitled to receive and apply all such insurance proceeds
or Award in reduction of the Obligations, in such order and respective amounts,
as the Mortgagee in its sole discretion shall determine.

         2.6. To Comply with Laws.

       2.6.1. The Mortgagor, at its own expense, will promptly cure all
violations of law affecting the Mortgaged Premises, or any part thereof, and/or
the use and operation thereof and will promptly comply, or cause to be complied
with, all present and future Legal Requirements. However, the Mortgagor shall
have the right, after prior notice to the Mortgagee, to contest by appropriate
legal proceedings, diligently conducted in good faith, the validity or
application of any Legal Requirement if and so long as the Mortgagor shall
promptly furnish to the Mortgagee a certificate to such effect showing the steps
taken to comply with such provisions, provided that:

         (a) if by the terms of any such Legal Requirement, compliance therewith
     pending the prosecution of any such proceeding may be delayed legally
     without incurring any lien, charge or liability of any kind against the
     Mortgaged Premises, or any part thereof, and without subjecting the
     Mortgagor or the Mortgagee to any liability, civil or criminal, for failure
     so to comply therewith, the Mortgagor may delay compliance therewith until
     the final determination of any such proceeding; and

         (b) if any lien, charge or civil liability would be incurred by reason
     of any such delay, the Mortgagor nevertheless, on the prior written consent
     of the Mortgagee, such consent not to be unreasonably withheld, may contest
     and delay compliance with the Legal Requirement, provided that such delay
     would not subject the Mortgagee to criminal liability and the Mortgagor (i)
     furnishes to the Mortgagee security reasonably satisfactory to the
     Mortgagee against loss or injury by reason of such contest or delay and
     (ii) prosecutes the contest with due diligence.

       2.6.2. Notwithstanding the provisions of Section 2.6.1, if any delay in
compliance with any Legal Requirement shall, in the reasonable judgment of the
Mortgagee, place all or any part of the Mortgaged Premises in imminent danger of
being forfeited or lost, the Mortgagor shall, upon notice from the Mortgagee,
immediately comply with such Legal Requirement.

       2.6.3. The Mortgagor will use and permit the use of the Mortgaged
Premises only in accordance with the material requirements of any applicable
licenses and permits issued by Governmental Authorities.


                                       17
<PAGE>


       2.6.4. The Mortgagor will procure, pay for and maintain (or cause to be
procured, paid and maintained) all permits, licenses and other authorizations
required to be procured and maintained by the owners and operators of the
Mortgaged Premises for any then use of all or any part of the Mortgaged Premises
then being made and for the lawful and proper operation and maintenance thereof.

       2.6.5. If the Mortgagor receives notice from any Governmental Authority
that it is not in compliance with any Legal Requirement, the Mortgagor will
provide the Mortgagee with a copy of such notice promptly.

       2.6.6. Without limiting the provisions of this Article II, Mortgagor
agrees to the indemnification and guaranty provisions set forth in the ADA
Guaranty, the provisions of which are incorporated herein by this reference. The
indemnification and guaranty provisions set forth in the ADA Guaranty shall be a
debt secured by the lien of this Mortgage.

       2.6.7. Without limiting the provisions of this Article II, Mortgagor
agrees to the indemnification and guaranty provisions set forth in the Hazardous
Material Guaranty, the provisions of which are incorporated herein by this
reference. The indemnification and guaranty provisions set forth in the
Hazardous Material Guaranty shall be an obligation secured by the lien of this
Mortgage.

         2.7. Limitation on Alterations and Demolition.

       2.7.1. The Mortgagor shall not voluntarily demolish, replace or alter the
Mortgaged Premises, or any part thereof, or voluntarily make any addition
thereto, or voluntarily construct any additional improvements thereon, or suffer
any of the same to occur, whether structural or otherwise (collectively,
"change"), without the prior written consent of the Mortgagee; provided,
however, that if no Event of Default is continuing and such change involves an
estimated cost of less than $1,000,000 and is non-structural or if no Event of
Default is continuing and such change is non-structural and is being made to
prepare space for a Space Tenant pursuant to a Space Lease entered into in
accordance with the Note, then, in either of such events, the Mortgagee's
consent shall not be required; provided, further, however, that if any such
change is required by law, the Mortgagor may make such change with the prior
written consent of the Mortgagee, which consent the Mortgagee will not
unreasonably withhold or delay. As a condition to any consent under this Section
2.7.1, the Mortgagee may require (a) that plans and specifications for the
proposed work, prepared by a reputable architect reasonably satisfactory to the
Mortgagee, be submitted to the Mortgagee for approval, (b) that the Mortgagor
obtain a payment and performance bond or other security reasonably satisfactory
to the Mortgagee in form and amount reasonably satisfactory to the Mortgagee
from the contractor or subcontractor performing the work unless such work
amounts to less than $1,000,000 in aggregate total cost and (c) that the
contractor(s) deliver and file, prior to commencing any work, a waiver of
mechanics lien. All work performed by or on behalf of the Mortgagor shall be
completed with all reasonable diligence and continuity, in a good and
workmanlike manner, and in compliance with all applicable Legal Requirements.
Unless, and to the extent that, the provisions of Section 2.7.2 be applicable,
no Building Service Equipment or Furnishings shall be removed from the Mortgaged
Premises during the course of any such work without prior notification to the
Mortgagee and unless provision is made for return or replacement on or prior to



                                       18
<PAGE>



the completion of the work. The provisions of this Section 2.7.1. shall apply to
any change made or required to be made by the Mortgagor in the course of
complying with any other of the provisions of this Mortgage. A duplicate set of
all plans and specifications required to be filed with any Governmental
Authority prior to, or at any time in connection with, any such alteration,
demolition or new construction shall be furnished to the Mortgagee. The
Mortgagor will pay on demand the reasonable expenses incurred by the Mortgagee
in the review of plans and specifications provided for in this Mortgage.

       2.7.2. The Mortgagor shall have the right, at any time and from time to
time, to remove and dispose of any item of Building Service Equipment or
Furnishings which may have become obsolete or unfit for use or which is no
longer useful in the operation of the Improvements, provided that the Mortgagor
promptly replaces such item with other Building Service Equipment or
Furnishings, free of superior title, liens or claims (other than in favor of the
Mortgagee) unless consent of the Mortgagee is first obtained, not necessarily of
the same character but of at least equal quality, value and usefulness in
connection with the operation and maintenance of the Mortgaged Premises,
provided, further, however, no removal of any item of Building Service Equipment
or Furnishings then having a fair market value of $50,000 or more shall be made
without the prior written consent of the Mortgagee, which consent will not be
unreasonably withheld. However, if by reason of technological or other
developments in the operation and maintenance of buildings and other
improvements of the general character of the Improvements or a change in the use
of the Mortgaged Premises or any part thereof, no replacement of the Building
Service Equipment or Furnishings so removed would be necessary or desirable for
the proper operation or maintenance of the Improvements, the Mortgagor shall not
be required to replace the item so removed.

         2.8. Limitation on Disposition of the Mortgaged Premises.

       2.8.1. Any sale, assignment, mortgage, pledge or other transfer or
encumbrance of the Mortgaged Premises or any part thereof or any interest
therein or in any of the rents, profits or income generated thereby (in any
case, either beneficially or of record) is herein a "Transfer"; any lease
entered into by the Mortgagor in compliance with PARAGRAPH 11 of the Note is not
a Transfer. Any Transfer is an Event of Default.

       2.8.2. If there shall be a violation of the terms and provisions of
Section 2.8.1, whether by the Mortgagor or any other Person, in addition to all
other rights and remedies available to the Mortgagee under this Mortgage, the
Mortgagee shall have the option, by the giving of notice to the Mortgagor, of
declaring the entire unpaid principal balance of the Note, together with all
accrued and unpaid interest and all other sums and charges evidenced thereby,
immediately due and payable.

         2.9. Maintenance of Mortgaged Premises; Covenant Against Waste;
Inspection by the Mortgagee. The Mortgagor will not commit or permit waste on
the Mortgaged Premises and, at its expense, will keep and maintain the
Improvements, the Building Service Equipment and Furnishings in its (or their)
present state of repair and condition and, if improved, in such improved state
of repair and condition; provided, that this shall not limit the Mortgagor's
other obligations hereunder, such as compliance with laws. The Mortgagor shall
do or cause to be done all maintenance and make or cause to be made all repairs


                                       19
<PAGE>


as may be required by the landlord under any Space Lease. The Mortgagor will
neither do nor permit to be done anything to the Mortgaged Premises that may
materially impair the value thereof or which may violate any covenant, condition
or restriction affecting the Mortgaged Premises, or any part thereof, or which
would effect any material change therein or in the condition thereof that would
increase the danger of fire or other hazard arising out of the operation of the
Mortgaged Premises. Subject to the rights of Space Tenants, the Mortgagee, and
its representatives and agents, may enter and inspect the Mortgaged Premises at
any time after reasonable notice (which may be oral) during usual business
hours, and the Mortgagor shall, within thirty (30) days after demand by the
Mortgagee (or immediately upon demand in case of emergency), make such repairs,
replacements, renewals or additions, or perform such items of maintenance, to
the Mortgaged Premises as the Mortgagee may reasonably require in order to cause
the Mortgaged Premises to comply with the standards established in this Section
2.9.

         2.10. To Furnish Certificates; Other Reporting Requirements.

       2.10.1. The Mortgagor will, at its own expense, deliver to the Mortgagee,
within fifteen (15) days after request, a written statement executed by the
Mortgagor, in recordable form, setting forth the amount then unpaid upon the
Obligations and secured by this Mortgage and stating whether any offsets or
defenses exist against the Obligations; and, if any such offsets or defenses are
alleged to exist, then the factual basis and amount of such claimed offsets or
defenses.

       2.10.2. The Mortgagor will, if requested by the Mortgagee, deliver to the
Mortgagee a certificate of an officer of the member of the Mortgagor or of such
member's general partner, to the effect that he is familiar with this Mortgage
and the other Loan Documents, has reviewed the affairs of the Mortgagor, and to
the best of his knowledge and belief there exists no Event of Default and no act
or event has occurred or exists which with notice or lapse of time or both could
become such an Event of Default, or if any such incipient default or Event of
Default exists, specifying it and what action the Mortgagor is taking to cause
it to be remedied.

       2.10.3. The Mortgagor further covenants and agrees that it will, at its
own expense, deliver to the Mortgagee as soon as available, and in any event
within ninety (90) days after the end of each fiscal year of the Mortgagor, an
annual balance sheet, a statement of profit and loss, one-year projections, and
a cash-flow statement, prepared in accordance with Accounting Principles
acceptable to the Mortgagee, consistently applied, together with a schedule of
Space Leases. Such statements shall show the income and expenses of the
Mortgagor for such fiscal year, all in reasonable detail, shall be prepared in
accordance with such accounting principles, consistently applied, and shall
state in comparative form the figures at the end of such fiscal year and for the
preceding fiscal year. Such statements shall be certified to be true and correct
by the chief financial officer of the Mortgagor.

       2.10.4. The Mortgagor further covenants and agrees that it will, at its
own expense, deliver to the Mortgagee semi-annually, as soon as available, and
in any event within ninety (90) days after the end of each second quarter end of
the Mortgagor, copies of Mortgagor's financial statements (inclusive of a
detailed balance sheet, income statement and cash flow statement) prepared
internally, in accordance with Accounting Principles, in its reasonable
discretion, and certified to be true and correct by the chief financial officer
of the Mortgagor.


                                       20
<PAGE>



       2.10.5. In addition, the Mortgagor shall furnish to the Mortgagee: (a)
within ninety (90) days after the end of the Mortgagor's fiscal year, and within
forty-five (45) days after the end of each six-month period, commencing with the
period ended June 30, 2000, a statement of income and expenses with respect to
the Mortgaged Premises, in such form as may be required by the Mortgagee; (b)
within ninety (90) days after the end of the Mortgagor's fiscal year, statements
of financial condition of the Mortgagor in such form as may be required by the
Mortgagee; (c) within one hundred and fifty (150) days after the end of the
Mortgagor's fiscal year, the Mortgagor's federal and state tax filings; and (d)
such interim unaudited financial statements and other information as the
Mortgagee may reasonably require.

       2.10.6. The Mortgagor shall furnish to the Mortgagee, within ten (10)
days after the same are filed, copies of each Form 10-K of Acadia and Form 10-Q
of Acadia filed with the Securities and Exchange Commission;

       2.10.7. The Mortgagor shall furnish to Mortgagee, upon request by
Mortgagee, but in any event not more frequently than quarterly, a complete rent
roll listing tenants, unit numbers, square feet occupied and leased, rents,
delinquencies, vacancies, other income received and expenses.

       2.10.8. The Mortgagor further covenants and agrees that it will, at its
own expense, promptly upon receipt by Mortgagor, deliver to Mortgagee copies of
all reports of the Key Tenants' gross revenue from sales merchandise during the
preceding fiscal-year which are delivered by the applicable Key Tenant in
accordance with the provisions of the applicable Key Tenant's lease. "Key
Tenants" shall mean all tenants whose leases cover 10,000 square feet or more of
the Improvements; with "Key Tenant" meaning each, every and any one of the Key
Tenants.

         2.11. After-Acquired Property. All right, title and interest of the
Mortgagor in and to all improvements, betterments, renewals, substitutes and
replacements of, and all additions and appurtenances to, the Mortgaged Premises
hereafter acquired, constructed, assembled or placed by the Mortgagor on the
Mortgaged Premises, immediately upon such acquisition, construction, assembly or
placement, as the case may be, and in each such case without any further
mortgage, conveyance or assignment or other act of the Mortgagor, shall become
subject to the lien of this Mortgage as fully and completely, and with the same
effect, as though now owned by the Mortgagor and specifically described in the
granting clauses of this Mortgage; and at any time and from time to time the
Mortgagor, on demand, will execute, acknowledge and deliver to the Mortgagee any
and all such further assurances, mortgages, conveyances or assignments as the
Mortgagee may reasonably require to further evidence, confirm and perfect the
provisions of this Section 2.11.

         2.12. Further Assurances. The Mortgagor shall, at its sole cost and
without expense to the Mortgagee, on demand, do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, mortgages,
assignments, notices of assignment, transfers and assurances as the Mortgagee
shall from time to time reasonably require for better assuring, conveying,



                                       21
<PAGE>


assigning, transferring and confirming unto the Mortgagee the property and
rights hereby mortgaged or assigned or intended now or hereafter so to be, or
which the Mortgagor may be or may hereafter become bound to convey, mortgage or
assign to the Mortgagee, or for carrying out the intention or facilitating the
performance of the terms of this Mortgage, or for filing, registering or
recording this Mortgage.

         2.13. Recorded Instruments. The Mortgagor will promptly perform and
observe, or cause to be performed and observed, all of the terms, covenants and
conditions of all instruments of record affecting the Mortgaged Premises (other
than non-consensual encumbrances hereafter affecting the Mortgaged Premises, the
validity or enforceability of which the Mortgagor is contesting in accordance
with this Mortgage) where non-compliance therewith affects the security of this
Mortgage or imposes any duty or obligation upon the Mortgagor or any Space
Tenant. The Mortgagor shall do or cause to be done all things reasonably
required to preserve intact and unimpaired and to renew any and all
rights-of-way, easements, grants, appurtenances, privileges, licenses,
franchises and other interests and rights in favor of or constituting any
portion of the Mortgaged Premises. The Mortgagor will not, without the prior
written consent of the Mortgagee, initiate, join in or consent to any private
restrictive covenant or other public or private restriction as to the use of all
or any portion of the Mortgaged Premises. The Mortgagor will, however, comply
with all lawful restrictive covenants and zoning ordinances and other public or
private restrictions affecting all or any portion of the Mortgaged Premises.

         2.14. Leasing Standards. Notwithstanding anything to the contrary
contained herein or in the other Loan Documents, the Mortgagor covenants and
agrees that no Space Lease will be consummated without the prior written
approval thereof by the Mortgagee unless such Space Lease (i) is prepared and
executed on Mortgagor's standard lease form submitted to and approved, in
writing, by the Mortgagee, with such approval not to be unreasonably withheld or
delayed, and the Mortgagee's approval of immaterial changes to the form approved
by the Mortgagee shall not be required; and (ii) (x) provides for terms and
conditions, including as to rentals and other economic terms and the
creditworthiness of the tenant, which are approved by Mortgagee, with such
approval not to be unreasonably withheld or delayed, or (y) is of less than
10,000 leasable square feet and is on commercially reasonable terms and
conditions, including as to rentals and other economic terms and
creditworthiness of the tenant. Notwithstanding the foregoing, if a Default
and/or Event of Default shall be continuing, the Mortgagor will not enter into
Space Leases without the Mortgagee's prior written approval thereof, which
approval the Mortgagee may withhold in its sole discretion.

         2.15. Intentionally Deleted Prior to Execution.

         2.16. Late Charges. If the entire amount of any required principal
and/or interest under the Note is not paid in full within ten (10) days after
the same is due, Mortgagor shall pay to the Mortgagee a late fee equal to five
(5%) percent of the required payment, and such charge shall be deemed to be part
of the Indebtedness and therefore secured by the lien of this Mortgage.

         2.17. Trust Funds. The Mortgagor, in compliance with Section 13 of the
Lien Law, will receive the advances secured by this Mortgage and will hold the
right to receive such advances as a trust fund to be applied first for the


                                       22
<PAGE>

purpose of paying the cost of improvement and will apply the same first to the
payment of the cost of improvement before using any part of the total of the
same for any other purposes. The Mortgagor agrees that it shall indemnify and
hold the Mortgagee harmless against any loss or liability, cost or expense,
including, without limitation, any judgments, attorneys' fees, costs of appeal
bonds and printing costs arising out of or relating to any proceeding instituted
by any claimant alleging priority over the lien of this Mortgage, and/or by any
claimant alleging a violation by the Mortgagor or the Mortgagee of any section
of Article 3-A of the Lien Law of the State of New York.

         2.18. The Ground Lease.

       2.18.1. The Mortgagor shall: (i) pay all rents, additional rents and
other sums required to be paid by the Mortgagor as lessee under and pursuant to
the provisions of the Ground Lease, (ii) diligently perform and observe all of
the terms, covenants and conditions of the Ground Lease on the part of the
Mortgagor, as lessee thereunder, to be performed and observed, unless such
performance or observance shall be waived or not required in writing by the
lessor under the Ground Lease, to the end that all things shall be done which
are necessary to keep unimpaired the rights of the Mortgagor, as lessee, under
the Ground Lease, (iii) promptly notify the Mortgagee in writing of any default
by the Mortgagor under the Ground Lease in the performance or observance of any
of the terms, covenants or conditions on the part of, respectively, the
Mortgagor to be performed or observed under the Ground Lease, (iv) promptly
notify the Mortgagee of the giving of any notice by the lessor under the Ground
Lease to the Mortgagor (other than notices customarily sent on a regular basis)
and of any notice noting or claiming any default by the Mortgagor in the
performance or observance of any of the terms, covenants or conditions of the
Ground Lease on the part of the Mortgagor, as lessee thereunder, to be performed
or observed and deliver to the Mortgagee a true copy of each such notice (v)
promptly notify the Mortgagee in writing of any request made by either party to
the Ground Lease, as the case may be, for arbitration proceedings pursuant to
the Ground Lease and of the institution of any arbitration proceedings, as well
as of all proceedings thereunder, and promptly deliver to the Mortgagee a copy
of the determination of the arbitrators in each such arbitration proceeding, it
being acknowledged and agreed that the Mortgagee shall have the right to
participate in such arbitration proceedings in association with the Mortgagor or
on its own behalf as an interested party, and (vi) furnish to the Mortgagee,
within ten (10) days after demand, proof of payment of all items which are
required to be paid by the Mortgagor pursuant to the Ground Lease.

       2.18.2. The Mortgagor, shall not without the prior written consent of the
Mortgagee, surrender the leasehold estate created by the Ground Lease or
terminate or cancel the Ground Lease or modify, change, supplement, alter or
amend the Ground Lease, or consent to a modification change, supplement
alteration or amendment to the Ground Lease, in any material respect, either
orally or in writing, and the Mortgagor hereby assigns to the Mortgagee, as
further security for the payment of the Indebtedness and for the performance and
observance of the terms, covenants and conditions of this Mortgage, all of the
rights, privileges and prerogatives of the Mortgagor, as lessee under the Ground
Lease, to surrender the leasehold estate created by the Ground Lease or to
terminate, cancel, modify, change, supplement, alter or amend the Ground Lease,
and any such surrender of the leasehold estate created by the Ground Lease or
termination, cancellation, modification, change, supplement, alteration or



                                       23
<PAGE>


amendment of the Ground Lease without the prior written consent of the Mortgagee
shall be void and of no force and effect. The Mortgagee will not unreasonably
withhold or delay its consent to a modification, change, supplement, alteration
or amendment to the same.

       2.18.3. Supplementing the provisions of subparagraph (b) above, it is
understood and agreed that the Mortgagor shall not, without the Mortgagee's
prior written consent, elect to treat the Ground Lease as terminated under
Section 365(h)(1)(A)(i) of the Bankruptcy Code. Any such election made without
the Mortgagee's prior written consent shall be void. The Mortgagor hereby
unconditionally assigns, transfers and set over to the Mortgagee all of the
Mortgagor's claims and rights to the payment of damages arising under the
Bankruptcy Code from any rejection by the lessor under the Ground Lease. The
Mortgagee shall have the right to proceed in its own name on behalf of the
Mortgagor in respect of any claim, suit, action or proceeding relating to the
rejection of the Ground Lease, including, without limitation, the right to file
and prosecute, to the exclusion of the Mortgagor, any proofs of claim,
complaints, motions, applications, notices and other documents, in any case in
respect of such lessor under the Bankruptcy Code. This assignment constitutes a
present, irrevocable and unconditional assignment of the foregoing claims,
rights and remedies, and shall continue in effect until all of the Indebtedness
secured by the Mortgage shall have been satisfied and discharged in full. Any
amounts received by the Mortgagee as damages arising out of the rejection of the
Ground Lease as aforesaid shall be applied first to all costs and expenses of
the Mortgagee (including, without limitation, attorneys' fees) incurred in
connection with the exercise of any of its rights or remedies under this
Paragraph and then shall be applied against the Indebtedness in such order,
priority and proportion as the Mortgagee shall determine. If any action, motion
or notice shall be commenced or filed in respect of the Mortgagor, as lessee
under the Ground Lease, or all or any portion of the Mortgaged Property in
connection with any case under the Bankruptcy Code, the Mortgagor shall give the
Mortgagee prompt written notice thereof. Other than during the existence of an
Event of Default, the Mortgagor may commence any action, suit, proceeding or
case, or file any application or make any motion, in respect of the Ground Lease
in any such case under the Bankruptcy Code without the prior written consent of
the Mortgagor but will not settle or compromise any of the foregoing without the
consent of the Mortgagee, which consent will not be unreasonably withheld or
delayed by Mortgagee. During the existence of an Event of Default, the Mortgagor
shall not commence any action, suit, proceeding or case, or file any application
or make any motion, in respect of the Ground Lease in any such case under the
Bankruptcy Code without the prior written consent of the Mortgagee, and the
Mortgagee, during the existence of an Event of Default, may proceed in its own
name, in connection with any such litigation. The Mortgagor shall, immediately
after obtaining knowledge thereof, notify the Mortgagee and its counsel, by
telecopy or by hand of any filing by or against the lessor under the Ground
Lease of a petition under the Bankruptcy Code. The Mortgagor shall thereafter
forthwith give written notice of such filing to the Mortgagee, setting forth the
date of such filing, the court in which the petition was filed and the relief
sought therein. The Mortgagor shall promptly deliver to the Mortgagee, following
receipt, any and all notices, summonses, pleadings, applications and other
written documents received by the Mortgagor in connection with any such petition
and any proceedings relating thereto.

       2.18.4. If the Mortgagor shall default in the performance or observance
of any term, covenant or condition of the Ground Lease on the part of the
Mortgagor, as lessee thereunder, to be performed or observed, then, without
limiting the generality of the other provisions of this Mortgage, and without


                                       24
<PAGE>

waiving or releasing the Mortgagor from any of its obligations hereunder, the
Mortgagee shall have the right, but shall be under no obligation, to pay any
sums and to perform any act or take any action as may be appropriate to cause
all of the terms, covenants and conditions of the Ground Lease on the part of
the Mortgagor, as lessee thereunder, to be performed or observed to be promptly
performed or observed on behalf of the Mortgagor, to the end that the rights of
the Mortgagor in, to and under the Ground Lease shall be kept unimpaired and
free from default. If the Mortgagee shall make any payment or perform any act or
take action in accordance with the preceding sentence, the Mortgagee will notify
the Mortgagor of the making of any such payment, the performance of any such
act, or the taking of any such action. All sums so paid by the Mortgagee and all
costs and expenses incurred by the Mortgagee in connection with the performance
of any such act shall be paid by the Mortgagor to the Mortgagee upon demand with
interest, from the date so advanced by Mortgagee until thirty (30) days after
demand by the Mortgagee to the Mortgagor, at the Interest Rate set forth in the
Note and thereafter at the Involuntary Rate, and the same shall be deemed to be
secured by this Mortgage and shall be a lien on the Mortgaged Property prior to
any right, title to, interest in or claim upon the Mortgaged Property attaching
subsequent to the lien of this Mortgage. In any such event, subject to the
rights, if any, of lessees and other occupants under the Ground Lease, the
Mortgagee and any person designated by the Mortgagee shall have, and are hereby
granted, the right to enter upon the Mortgaged Property at any time and from
time to time for the purpose of taking any such action. If the lessor under the
Ground Lease shall deliver to the Mortgagee a copy of any notice of default sent
by said lessor to the Mortgagor, as lessee under the Ground Lease, such notice
shall constitute full protection to the Mortgagee for any action taken or
omitted to be taken by the Mortgagee, in good faith, in reliance thereon.

       2.18.5. Mortgagor hereby delegates irrevocably, coupled with an interest,
to Mortgagee the authority to exercise any and all of Mortgagor's rights under
the Ground Lease, including, but not limited to, the right of the Mortgagee to
participate (to the exclusion of Mortgagor) in any proceeding, arbitration or
settlement involving condemnation or eminent domain affecting Mortgagor's
leasehold interest in the Mortgaged Property. However, Mortgagee agrees not to
exercise such power, except during the existence of an Event of Default and/or
upon acceleration of the Indebtedness pursuant to the terms of this Mortgage.

       2.18.6. The generality of the provisions of this Paragraph relating to
the Ground Lease shall not be limited by other provisions of this Mortgage or
any other agreement between the Mortgagee and the Mortgagor, setting forth
particular obligations of the Mortgagor which are also required of the Mortgagor
as tenant under the Ground Lease.

       2.18.7. Should there be a conflict between the terms of the Mortgage or
any other Loan Document on the one hand, and the terms of the Ground Lease, on
the other, the terms of the Mortgage shall prevail and control.

       2.18.8. In accordance with the provisions of Section 10.02 of the Ground
Lease, the Mortgagee and Mortgagor agree to be bound by the following
provisions:

         (a) This Mortgage is executed upon the condition that no purchaser at
     any foreclosure sale shall acquire any right, title or interest in or to
     the Lease hereby mortgaged, unless the said purchaser, or the person, firm
     or corporation to whom or to which such purchaser's right has been


                                       25
<PAGE>

     assigned, shall, in the instrument transferring to such purchaser or
     assignee the Tenant's interest under the said Lease, assume and agree to
     perform all of the terms, covenants and conditions of said Lease to be
     observed or performed on the part of the Tenant subsequent to the date of
     the assumption agreement, and moreover, that no further or additional
     mortgage or assignment or said Lease shall be made, except subject to the
     provisions contained in Articles 9 and 10 of said Lease, and that a
     duplicate original of said assumption agreement, in form reasonably
     satisfactory to Landlord's counsel and duly executed and acknowledged by
     such purchaser or such assignee, is delivered to Landlord immediately after
     the consummation of such sale, or, in any event, prior to taking possession
     of the premises.

         (b) This Mortgage and all rights of the Mortgagee hereunder are,
     without the necessity for the execution of any further documents, subject
     and subordinate to any Fee Mortgages now or hereafter made, as said terms
     are defined in the Lease hereby mortgaged, provided that Tenant and
     leasehold Mortgagee shall receive a non-disturbance agreement from the Fee
     Mortgagee in recordable form and reasonably satisfactory to the Leasehold
     Mortgagee. Subject to the receipt of such a non-disturbance agreement, the
     holder of this mortgage agrees from time to time upon request and without
     charge, to execute, acknowledge and deliver any instruments requested by
     the Landlord under the Lease hereby mortgaged to evidence the foregoing
     subordination.

         2.19. Intentionally Deleted Prior to Execution.

         2.20. Earn-Out Provision. Upon compliance by Mortgagor of the
conditions precedent set forth in PARAGRAPH 5 of the Note, the Mortgagor shall
advance the aggregate principal sum of up to $3,990,135.17 in one or more
advances (herein called the "Earn-Out"), payable in accordance with the terms of
the Note.

                                  ARTICLE III

                                  Condemnation

         3.1. Notice of Taking. The Mortgagor shall promptly notify the
Mortgagee if the Mortgagor receives notice of the institution of any proceeding
or negotiations for the taking of the Mortgaged Premises, or any part thereof,
whether for permanent or temporary use and occupancy in condemnation or by the
exercise of the power of eminent domain or by agreement of interested parties in
lieu of such condemnation (all the foregoing called a "taking"); shall keep the
Mortgagee currently advised, in detail, as to the status of such proceedings or
negotiations and will promptly give to the Mortgagee copies of all notices,
pleadings, judgments, determinations and other papers received or delivered by
the Mortgagor in connection with any such proceedings. The Mortgagee shall have
the right to appear and participate in such proceedings and may be represented
by counsel. The Mortgagor will not, without the Mortgagee's consent, enter into
any agreement for the taking of the Mortgaged Premises, or any part thereof,
with anyone authorized to acquire the Mortgaged Premises by eminent domain or in
condemnation.


                                       26
<PAGE>


         3.2. Condemnation Award. If the Mortgaged Premises shall be the subject
of a taking the Mortgagee shall be entitled to and shall receive the total of
such portion of all awards made that shall be allowed to the Mortgagor with
respect to all the right, title and interest of the Mortgagor in and to the
Mortgaged Premises (the award made in any total, partial or temporary taking is
herein called the "Award"), provided that the obligations of the Mortgagor to
perform the terms, covenants and conditions of this Mortgage, if any, affected
by such taking shall continue unimpaired until the actual vesting of title in
such proceeding and the actual receipt by the Mortgagee of Mortgagor's share of
the entire Award resulting from such taking.

         3.3. Application of Award. The Mortgagee shall have the option of
treating a total taking or a substantial taking (as hereinafter defined) as an
Event of Default and of accelerating the entire Obligations, in which event it
shall apply the Mortgagor's entire Award in reduction of such Obligations
(including principal, interest and other sums secured hereby, in such order as
the Mortgagee may determine) and shall turn over any balance remaining, if any,
to the Mortgagor; or if the Mortgagee shall not so elect to accelerate the
Obligations and apply the Award thereto, then the total Award shall, regardless
of amount, be deposited with the Mortgagee or with the Depository, the Mortgagor
hereby agreeing to elect that such proceeds be held and disbursed by the
Depository in accordance with Sections 2.5.6, 2.5.7, 2.5.8, 2.5.9 and 2.5.10
hereof for restoration required to be made by the Mortgagor. If there be a
partial taking, the net proceeds of the Award shall be deposited with the
Mortgagee and applied by the Mortgagee in accordance with the provisions of
Sections 2.5.6, 2.5.7, 2.5.9 and 2.5.10. Any Award remaining after the
completion of such restoration, replacement or rebuilding shall be applied in
reduction of the Obligations (including principal, interest and other sums
secured hereby) in such order as the Mortgagee shall determine. A partial taking
is substantial only if it materially decreases the fair market value of the
Mortgaged Premises and the remainder of the Mortgaged Premises cannot be
restored to an economically viable whole.

         3.4. Temporary Taking. If any Award payable to the Mortgagor on account
of a taking for temporary use or occupancy is made in a lump sum or is payable
other than in equal monthly installments, the Mortgagor shall pay over such
Award to the Depository and such Award shall be applied to installments of
Impositions and of principal and interest and all other charges secured by this
Mortgage or due in respect of the Obligations or the other Loan Documents as and
when the same become due and payable. Any unapplied portion of such Award held
by the Depository when such taking ceases or expires (if no Event of Default has
then occurred and is continuing), or after the Obligations shall have been paid
in full, shall be paid to the Mortgagor or to any other party entitled thereto.

         3.5. The Mortgagor's Obligation to Restore. If proceeds of the Award
are made available to the Mortgagor for restoration, replacement or rebuilding
pursuant hereto, the Mortgagor shall be obligated promptly to restore, replace,
rebuild or alter any Improvements or Building Service Equipment affected by a
taking so as to restore the Mortgaged Premises to an economically viable whole,
all without regard to the adequacy of the proceeds of an Award, if any, made
available to the Mortgagor.


                                       27
<PAGE>


                                   ARTICLE IV

                       Assignment of Space Leases, Profits
                   and Other Income as Further Security, Etc.
                   ------------------------------------------

         4.1. Assignment of Space Leases, Rents, Issues and Profits. The
Mortgagor hereby absolutely assigns and sets over unto the Mortgagee all Space
Leases, if any, now or hereafter entered into with respect to all or any part of
the Mortgaged Premises, and all renewals, extensions, subleases or assignments
thereof, and all other occupancy agreements (written or oral), by concession,
license or otherwise, together with all of the rents, income, receipts,
revenues, issues and profits arising therefrom (the "Collateral"). This
assignment is intended by the Mortgagor and the Mortgagee to create, and shall
be construed to create, an absolute assignment of all Space Leases, rents,
issues and profits, subject only to the terms and conditions of this Mortgage.

         4.2. The Mortgagor's Covenants Regarding Space Leases.

       4.2.1. Without the prior consent and approval of the Mortgagee in each
instance, the Mortgagor will not (a) assign, pledge, hypothecate or otherwise
encumber any of the Space Leases or the rents, income, issue and profits of the
Mortgaged Premises; or (b) enter into any Space Leases affecting the Mortgaged
Premises or any part thereof, unless such Space Lease is expressly subordinate
to the lien of this Mortgage and to any consolidation, extension, renewal,
recasting or refinancing hereof and the Space Lease provides, in substance, that
in the event of enforcement by the Mortgagee of the remedies provided for by law
or by this Mortgage, each Space Tenant shall, at the option of the Mortgagee,
attorn to any person succeeding to the interest of the Mortgagor as a result of
such enforcement and shall recognize such successor in interest as landlord (or
sublandlord, as the case may be) under such Space Lease without change in the
terms or other provisions thereof, provided, however, that such successor shall
not be bound by any payment of rent or additional rent for more than one (1)
month in advance or any amendment or modification of any such Space Lease made
without the Mortgagee's written consent; or (c) enter into any Space Leases
except in accordance with the provisions of the Note.

       4.2.2. The Mortgagor further represents, warrants, covenants and agrees
that:

         (a) To the best of its knowledge, each Space Lease is (or, when
     executed, will be) a valid and legally enforceable obligation of the
     parties thereto, in full force and effect.

         (b) With respect to each Space Lease and the Space Tenant security
     deposits thereunder, any and/or all of such security deposits shall be held
     as required by the Space Lease but in no event in a manner other than that
     required by law.

         (c) The Mortgagor shall, at its sole cost and expense, keep, observe,
     perform and discharge, duly and punctually, all and singular the material
     obligations, terms, covenants, conditions, representations and warranties
     of each Space Lease on the part of the Mortgagor to be kept, observed,
     performed and discharged.


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<PAGE>


         (d) (i) Except as herein in this clause (i) expressly provided, the
     Mortgagor shall, at its sole cost and expense, maintain the Space Leases in
     full force and effect; the Mortgagor will not waive its rights under or
     materially modify, change, supplement, alter or amend ("Change"), nor shall
     the Mortgagor surrender (whether partial or total), terminate, cancel or
     subordinate, any of the Space Leases, and any such attempted Change,
     surrender, termination, cancellation or subordination shall be void,
     unless, in each case, the prior written consent thereto of the Mortgagee
     shall have been obtained. Notwithstanding the foregoing, the Mortgagor may
     terminate or cancel any Space Lease as a result of a material default by
     the tenant under such Space Lease if (w) such termination is being effected
     in the ordinary course of the Mortgagor's business, (x) no Event of Default
     then exists and (y) such termination or cancellation would not materially
     and adversely affect the value of the Space Leases as collateral security
     for the Obligations. A material Change shall include but not be limited to
     any material Change in the amount or time of payment of the rent or
     additional rent, the length of term or square footage of the premises under
     any Space Lease or any other Change which would materially adversely affect
     the Mortgagor's rights under the Space Lease, or would affect the
     Mortgagee's rights under the Space Lease or the value of the Space Lease as
     collateral security for the Obligations.

         (ii) The Mortgagor shall, at its sole cost and expense, enforce the
     Space Leases in accordance with their terms; and shall appear in and defend
     any action or proceeding arising to which it is a party under or in any
     manner connected with any of the Space Leases.

         (e) The Mortgagor shall deliver to the Mortgagee a copy of each notice
     of default sent or received by it relating in any way to any Space Lease
     promptly upon, but in any event within five (5) business days after, its
     sending or receipt thereof.

         4.3. The Mortgagor's Rights, and Powers.

       4.3.1. The Mortgagor hereby irrevocably, in the name of the Mortgagor or
otherwise, authorizes and empowers the Mortgagee, and absolutely assigns and
transfers unto the Mortgagee, and constitutes and appoints the Mortgagee its
true and lawful attorney-in-fact, coupled with an interest and as its agent,
irrevocably, with full power of substitution for it and in its name, but solely
for the following purposes: (i) to exercise and enforce every right, power,
remedy, authority, option and privilege of the Mortgagor under the Space Leases,
and as such attorney-in-fact, the Mortgagee may subordinate, terminate, cancel
or modify the Space Leases, accept the surrender of the Space Leases, give any
notice, take any action resulting in such subordination, termination,
cancellation, modification or surrender, give any authorization, furnish any
information, make any demands, execute any instruments and take any and all
other action on behalf of and in the name of the Mortgagor which in the opinion
of the Mortgagee may be necessary or appropriate to be given, furnished, made,
exercised or taken by the Mortgagor under the Space Leases in order to comply
therewith, to perform the conditions thereof or to prevent or remedy any default
by the Mortgagor thereunder or to enforce any of the Mortgagor's rights and
remedies thereunder, and (ii) to ask, require, demand, receive and collect and
give acquittances for the Income (as hereinafter defined), and on nonpayment
thereof to sue for, recover and receive the same, and on payment thereof to give
sufficient releases, receipts, discharges and acquittances thereof; to endorse

                                       29
<PAGE>


any checks or other instruments or orders in connection therewith and to file
any claims or take any action or institute any proceedings which the Mortgagee
may deem to be necessary or advisable; provided, however, that the power
provided for in this sentence may not be exercised by the Mortgagee unless an
Event of Default shall have occurred and be continuing. "Income" shall mean all
deposits, rents, issues, profits, revenues, royalties, and other revenue
producing arrangements, whether written or oral, and all monetary benefits of,
and/or derived from, and/or sums payable under and by virtue of the Space Leases
and/or the Premises.

       4.3.2. So long as there shall not have occurred and then be continuing
any Event of Default and until such right of Mortgagor is terminated by the
Mortgagee as in Section 4.3.3 provided, the Mortgagee will not exercise its
rights pursuant to Section 4.3.1, and the Mortgagor shall have the right (but
limited as hereinafter provided) to exercise all of its rights under the Space
Leases, provided that the Mortgagor shall at all times comply with, observe and
perform, in the exercise of such right, all of the provisions of this Mortgage
and the other Loan Documents applicable to the Space Leases; provided, further,
that no action shall be taken or failed to be taken by the Mortgagor which would
impair the Collateral or any other collateral security for the Obligations
provided for in the Loan Documents.

       4.3.3. The Mortgagee, upon the occurrence and during the continuance of
an Event of Default, at its option and upon written notice to the Mortgagor,
shall have the right to terminate the right of the Mortgagor to exercise its
rights under the Space Leases, and, thereupon, in addition, the Mortgagee, at
any time thereafter, at its option, shall have the complete right, power and
authority hereunder to exercise and enforce all rights, powers, remedies,
authority, options and privileges of the Mortgagor under the Space Leases in the
name of the Mortgagor or the Mortgagee, to enforce all obligations of the other
parties to the Space Leases and to exercise and enforce all of its rights and
remedies hereunder and under law not exercisable prior to an Event of Default.

       4.3.4. The Mortgagor does hereby direct each and all of the Space Tenants
under the Space Leases and all contractual obligors of the Mortgagor to pay any
Income to the Mortgagee upon demand for payment thereof by the Mortgagee without
further inquiry. It is understood and agreed, however, that no such demand shall
be made unless an Event of Default shall have occurred and be continuing. No
such Space Tenant or obligor shall be obliged to account to the Mortgagor for
any amounts paid to the Mortgagee by reason of any payment made to the Mortgagee
pursuant to such demand and, upon any such payment to the Mortgagee, shall be
pro tanto released from their obligations to the Mortgagor. Each Space Tenant
shall be permitted to rely on any communication from the Mortgagee pursuant
hereto, and under no circumstances shall such Space Tenant be obligated to the
Mortgagor for any payments made to the Mortgagee hereunder. Until such demand is
made, the Mortgagor is authorized to collect or enforce or continue collecting
or enforcing such Income in accordance with the provisions of this Mortgage.

       4.3.5. The Mortgagee shall not have any duty as to the collection or
protection of the Collateral or any income thereon or payments with respect
thereto, or as to the preservation of any rights pertaining thereto beyond the
safe custody of any thereof actually in its possession. In no instance shall the
Mortgagee be responsible to lessees for payment of interest upon, or return of,



                                       30
<PAGE>

any lease security deposits, except as provided by law or as provided in the
leases and then only if and to the extent that such deposits are received by the
Mortgagee. The Mortgagor hereby waives notice of acceptance hereof and, except
as otherwise specifically provided herein or required by provision of law which
may not be waived, hereby waives any and all notices or demands with respect to
any exercise by the Mortgagee of any rights or powers which it may have or to
which it may be entitled with respect to the Collateral.

       4.3.6. The Mortgagor hereby irrevocably constitutes and appoints the
Mortgagee as the true and lawful attorney-in-fact of the Mortgagor, which
appointment is coupled with an interest, with full power of substitution, to
proceed from time to time in the Mortgagor's name in any statutory or
non-statutory proceeding affecting the Mortgagor or any Collateral, and the
Mortgagee or its nominee may (i) execute and file proof claim for the full
amount of any Collateral and vote such claims for the full amount thereof (A)
for or against any proposal or resolution, (B) for a trustee or trustees or for
a receiver or receivers or for a committee of creditors and/or (C) for the
acceptance or rejection of any proposed arrangement, plan of reorganization,
composition or extension, and the Mortgagee or its nominee may receive any
payment or distribution and give acquittance therefor and may exchange or
release Collateral; (ii) endorse any draft or other instrument for the payment
of money, execute releases and negotiate and enter into settlements; and (iii)
execute all such other documents or instruments as may be necessary or expedient
to be executed by the Mortgagor for any of the purposes of this Mortgage;
provided, however, that the power provided for in this sentence may be exercised
by the Mortgagee only while an Event of Default is continuing. The Mortgagee
shall have no duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do so or delay in so
doing.

         4.4. Remedies and Entry Upon Default.

       4.4.1. So long as no Event of Default shall have occurred and be
continuing, the Mortgagor shall have the right to collect (but not more than one
(1) month in advance) and retain all of the rents, gross receipts and other
payments, if any, from the Space Leases and from the Mortgaged Premises
generally, and the Mortgagee agrees that customary initial rent payments,
security deposits and reimbursements by a Space Tenant to the Mortgagor on
account of alterations made by the Mortgagor for the benefit of the Space Tenant
are permissible advance payments by the Space Tenant.

       4.4.2. Upon any Event of Default, the Mortgagee may, but shall not be
obligated to:

         (a) terminate the rights of the Mortgagor referred to in Section 4.3
     hereof and exercise all of the powers, rights and remedies provided for in
     Section 4.3 hereof, including those to be exercised only from and after an
     Event of Default;

         (b) at any time and from time to time, without notice to, or assent by,
     the Mortgagor or any other Person, but without affecting any of the
     Obligations, in the name of the Mortgagor or in the name of the Mortgagee,
     notify the account debtors and obligors on any or all of the Space Leases
     to make payment and performance directly to the Mortgagee, and demand,
     collect, receive, compound and give acquittance for the Space Leases or any



                                       31
<PAGE>


     part thereof; extend the time of payment and performance of, compromise or
     settle for cash, credit or otherwise, upon any terms and conditions, any of
     the Space Leases; endorse to the order of the Mortgagee checks, drafts or
     other orders or instruments for the payment of moneys payable to the
     Mortgagor which shall be issued in respect of any of the Space Leases; file
     any claims, commence, maintain or discontinue any actions, suits or other
     proceedings deemed by the Mortgagee necessary or advisable for the purpose
     of collecting upon or enforcing any of the Space Leases; and execute any
     instrument and do all other things deemed necessary and proper by the
     Mortgagee to protect and preserve and realize upon the Space Leases and/or
     the other rights contemplated hereby and the Mortgagor hereby irrevocably
     constitutes and appoints the Mortgagee as such Mortgagor's lawful
     attorney-in-fact, coupled with an interest, and its agent for the foregoing
     purposes;

         (c) demand, collect, sue for, attach, levy, recover, receive,
     compromise and adjust, and make, execute and deliver receipts and releases
     for all Income that may then be or may thereafter become due, owing or
     payable with respect to the Premises or any part or parts thereof from any
     present or future lessees, tenants, subtenants or occupants thereof or from
     any present or future contract obligors; and/or

         (d) pay, in such order as the Mortgagee in its sole discretion shall
     determine, from and out of the Income collected in connection with the
     Premises and/or the Collateral or any part or parts thereof or from or out
     of any other funds (less the expense of collection, including attorneys'
     fees and disbursements), any taxes, assessments, water rates, sewer rates,
     or other government or other charges levied, assessed or imposed against
     the Premises or any part or part thereof, and also any and all other
     charges, costs and expenses which the Mortgagee deems necessary or
     advisable to pay in respect of the management or operation of the Premises,
     including, without limitation, the costs of insurance policies, repairs and
     alterations, commissions for renting the Premises or any part or parts
     thereof, legal expenses in enforcing claims, preparing papers or procuring
     any other services that may be required and any amounts payable under or
     pursuant to any Lease. All amounts so paid and expended shall be payable on
     demand, together with interest at the Default Rate from the date incurred
     until paid, and be deemed to be included within the Obligations and secured
     by this Mortgage. The provisions of Section 4.2.2 and the rights given to
     the Mortgagee hereby shall inure to the benefit of the Mortgagee even
     though the Mortgagee does not enter and take possession of the Premises.
     Any balance remaining after the Obligations shall have been paid in full
     shall be turned over to the Mortgagor or such other Person as may lawfully
     be entitled thereto. Neither the entry upon and taking possession of the
     Mortgaged Premises, nor the collection and application of the rents, gross
     receipts or other charges thereof, nor any other action taken by the
     Mortgagee in connection therewith, shall cure or waive any default
     hereunder or waive or modify any notice thereof or notice of acceleration
     of the Obligations theretofore given by the Mortgagee.

       4.4.3. If an Event of Default shall have occurred and be continuing and
the Mortgagee shall have entered upon the Mortgaged Premises as provided in
Section 6.2.2 hereof, a notice in writing by the Mortgagee to the Space Tenants
under the Space Leases advising them that the Mortgagor has defaulted hereunder
and requesting that all future payments of rent, additional rent or other


                                       32
<PAGE>

charges under the Space Leases be made to the Mortgagee (or its agent) shall be
construed as conclusive authority to such Space Tenants that such payments are
to be made to the Mortgagee (or its agent). Each Space Tenant shall be fully
protected in making such payments to the Mortgagee (or its agent) and be given
full credit against its obligations under the applicable Space Lease to the
extent of payments made to the Mortgagee (or its agent) pursuant to any such
notice; and the Mortgagor hereby irrevocably constitutes and appoints the
Mortgagee the attorney-in-fact and agent of the Mortgagor, coupled with an
interest, for the purpose of endorsing the consent of the Mortgagor on any such
notice.

         4.5. No Obligation of Mortgagee.

       4.5.1. The Mortgagee shall not be obligated to perform or discharge any
obligation of the Mortgagor as a result of the collateral assignment hereby
effected, and the Mortgagor hereby agrees to indemnify and hold the Mortgagee
harmless from and against any and all liability, loss or damage which the
Mortgagee may incur by reason of any act of the Mortgagee under this Mortgage,
other than as a result of the Mortgagee's willful misconduct or gross
negligence. Should the Mortgagee incur any such liability, loss or damage by
reason of this Mortgage and which is covered by the foregoing indemnity, or in
defense against any such claims or demands, or perform any acts or covenants on
the part of Mortgagor to be performed under the Space Leases, or pay for the
account of the Mortgagor any and all sums, costs and expenses for the discharge
of taxes, assessments, water rents or other liens against the Collateral (as
hereinafter defined) or any part thereof, or on account of insurance premiums or
repairs, and also any amounts and expenses necessary to perform any covenants
and conditions to be performed on the part of the Mortgagor under the Space
Leases, the amount thereof, including costs, expenses and attorneys' fees,
together with interest thereon at the Default Rate from the date such expenses
were paid by the Mortgagee to the date of payment to the Mortgagee by the
Mortgagor, shall be included in the Obligations secured by this Mortgage, and
the Mortgagor shall reimburse the Mortgagee therefor upon demand.

       4.5.2. The acceptance by the Mortgagee of this Mortgage, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Mortgagee to appear in or defend any action or proceeding
relating to the Collateral, or to take any action hereunder or thereunder, or to
expend any money or incur any expenses or perform or discharge any obligation,
duty or liability under the Collateral.

                                   ARTICLE V

                Security Agreement Under Uniform Commercial Code
                ------------------------------------------------

         5.1. The Mortgagor intends that this Mortgage shall constitute a
security agreement within the meaning of the Uniform Commercial Code of the
State (the "Code") with respect to all of the Mortgagor's right, title and
interest in and to the Building Service Equipment and Furnishings as are
considered or as shall be determined to be personal property or "fixtures" (as
defined in the Code) and all books, records, licenses and certificates of the
Mortgagor or relating to the Mortgaged Premises, together with all replacements
thereof, substitutions therefor or additions thereto (said property being
sometimes hereinafter in this Article V referred to as the "Personal Property



                                       33
<PAGE>

Collateral"), and that a security interest shall attach thereto for the benefit
of the Mortgagee to secure the Obligations and all other sums and charges which
may become due hereunder, thereunder or under any of the other Loan Documents.
The Mortgagor hereby authorizes the Mortgagee to file financing and continuation
statements with respect to the Personal Property Collateral without the
signature of the Mortgagor, if permitted by the Code as adopted by the State. In
any event the Mortgagor covenants to execute such financing and continuation
statements as the Mortgagee may reasonably request. If an Event of Default shall
occur and be continuing, the Mortgagee, pursuant to the appropriate provisions
of the Code, shall have the option of proceeding as to both real and personal
property in accordance with its rights and remedies in respect of real property
under this Mortgage and the law of the State, in which event the default
provisions of the Code shall not apply. The Mortgagor agrees that, in the event
the Mortgagee shall elect to proceed with respect to the Personal Property
Collateral separately from the real property, unless a greater period shall then
be mandated by the Code, five (5) days notice of the sale of the Personal
Property Collateral shall be reasonable notice. The expenses of retaking,
holding, preparing for sale and selling incurred by the Mortgagee shall be
assessed against the Mortgagor and shall include, but not be limited to, the
reasonable legal expenses incurred by Mortgagee. The Mortgagor agrees that it
will not remove or permit to be removed from the Mortgaged Premises any of the
Personal Property Collateral without the prior written consent of the Mortgagee
except as set forth in Section 2.7.2. All replacements, renewals and additions
to the Personal Property Collateral shall be and become immediately subject to
the security interest of this Mortgage and the provisions of this Article V. The
Mortgagor warrants and represents that all Personal Property Collateral now is
free and clear of all liens, encumbrances or security interests other than the
Permitted Encumbrances, and that all replacements of the Personal Property
Collateral, substitutions therefor or additions thereto, unless the Mortgagee
otherwise consents, will be, free and clear of liens, encumbrances or security
interests of others.

                                   ARTICLE VI

                         Events of Default and Remedies
                         ------------------------------

         6.1. Events of Default. Mortgagee shall be entitled to exercise any and
all of the remedies provided in Section 6.2 and in the other Loan Documents upon
the happening of an Event of Default. The term "Event of Default", wherever used
in the Mortgage, shall mean any one or more of the following events:

         (a) failure of Mortgagor (x) to pay, for a period of ten (10) days
     after the same becomes due (i) any installment of interest and/or principal
     under this Note, or (ii) any other payment required hereunder or under any
     of the other Loan Documents or under any supplement, modification or
     extension hereof or thereof, or (y) to pay the final principal balance of
     the Note when due, whether upon the stated maturity date set forth therein,
     upon acceleration of such principal sum or otherwise, together with accrued
     and unpaid interest thereon; or

         (b) if any of Mortgagor's representations or warranties contained
     herein or in any of the Loan Documents shall be untrue or incorrect in any
     material respect at the time made, or if any such warranty or


                                       34
<PAGE>

     representation intended to be a continuing one shall become untrue or
     incorrect in any material respect and Mortgagor shall fail to remedy such
     situation within thirty (30) days after notice from Mortgagee, unless such
     situation cannot be remedied in such period and provided further that the
     Mortgagor shall commence compliance with such situation and shall continue
     to diligently prosecute such compliance, then such cure period shall be
     extended for an additional sixty (60) day period, or such other period of
     time as the Mortgagee may agree in writing (or immediately upon notice in
     case of emergency); or

         (c) if Mortgagor shall commence a voluntary case concerning itself
     under Title 11 of the United States Code entitled "Bankruptcy" as now or
     hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or
     an involuntary case is commenced against Mortgagor and the petition is not
     controverted within thirty (30) days, or is not dismissed within ninety
     (90) days, after commencement of the case; or a custodian (as defined in
     the Bankruptcy Code) is appointed for, or takes charge of, all or any
     substantial part of the property of Mortgagor; or Mortgagor commences any
     other proceeding under any reorganization, arrangement, adjustment of debt,
     relief of debtors, dissolution, insolvency or liquidation or similar law of
     any jurisdiction whether now or hereafter in effect relating to Mortgagor
     or there is commenced against Mortgagor any such proceeding which remains
     undismissed for a period of ninety (90) days; or Mortgagor is adjudicated
     insolvent or bankrupt; or any order of relief of other order approving any
     such case or proceeding is entered; or Mortgagor suffers any appointment of
     any custodian or the like for it or any substantial part of its property to
     continue undischarged or unstayed for a period of ninety (90) days; or
     Mortgagor makes a general assignment for the benefit of creditors; or
     Mortgagor shall fail to pay, or shall state that it is unable to pay, or
     shall be unable to pay, its debts generally as they become due; or
     Mortgagor shall call a meeting of its creditors with a view to arranging a
     composition or adjustment of its debts; or

         (d) if any of the events enumerated in clause (c) of this Section shall
     happen to Acadia; or

         (e) if any execution, warrant, attachment, garnishment or other similar
     processes shall be levied or filed against the Mortgaged Premises or any
     part thereof, or against Mortgagor which involve claims aggregating more
     than $100,000 and such processes shall not be stayed, vacated or
     discharged, such as by bonding, within ninety (90) days after the same
     shall have been levied or filed; or

         (f) if Mortgagor shall fail to perform or observe, or cause to be
     performed or observed the provisions contained in Section 2.18. herein,
     within the time periods set forth therein, with time being of the essence;
     or

         (g) except as otherwise provided in PARAGRAPH (f) directly hereinabove,
     if Mortgagor shall fail to perform or observe, or cause to be performed or
     observed, any other term, obligation, covenant, condition or agreement
     contained in the Note, this Mortgage or in any of the other Loan Documents,
     or in any assignment of leases and rents or in any other instrument
     executed concurrently herewith by Mortgagor and/or Guarantor or



                                       35
<PAGE>

     supplemental hereto, pertaining to the debt evidenced by this Note or the
     security therefor, or under any supplement, modification or extension of
     any of the foregoing, on its part to be performed and such failure shall
     have continued for a period of thirty (30) days after notice thereof;
     provided, however, if such default shall not have been occasioned by any
     willful act of Mortgagor, and if such default cannot with due diligence be
     cured within such thirty (30) days period, the time within which to cure
     the same shall be extended for such period as may be necessary to cure the
     same with due diligence if Mortgagor commences within such thirty (30) days
     and proceeds diligently to cure the same; or

         (h) if there should occur a default which is not cured within the
     applicable grace or cure period, if any, under any mortgage or deed of
     trust of all or part of the Mortgaged Premises (as such term is defined in
     the Mortgage), including a mortgage or deed of trust held by Mortgagee,
     regardless of whether any such other mortgage or deed of trust is superior,
     subordinate, or collateral to the Mortgage; it being further agreed by
     Mortgagor that an Event of Default shall constitute an "Event of Default"
     under any such other mortgage or deed of trust held by Mortgagee; provided,
     however, that this provision shall not be construed as Mortgagee's consent
     to any such mortgage or deed of trust; or

         (i) if any "Event of Default" (as such term is defined in any Loan
     Document) shall occur; or

         (j) if there shall be an acceleration upon default of any other loan
     made by or held by Mortgagee to a borrower controlled by Acadia; or

         (k) if any Guarantor defaults under or attempts to withdraw, cancel or
     disclaim liability under any Indemnity pursuant to the terms therein; or

         (l) if the Mortgagor shall default in the observance or performance of
     any term, covenant or condition of the Ground Lease on the part of the
     Mortgagor, as lessee thereunder, to be observed or performed beyond any
     applicable notice and cure periods under the Ground Lease; or

         (m) if the leasehold estate created by the Ground Lease shall be
     surrendered, in whole or in material part, or if the Lease shall be
     terminated or canceled for any reason or under any circumstance whatsoever,
     or if any of the terms, covenants or conditions of the Ground Lease shall
     in any manner be materially modified, changed, supplemented, altered or
     amended without the consent of the Mortgagee, which consent shall not be
     unreasonably withheld.

         6.2. Remedies. If an Event of Default shall occur and be continuing,
the Mortgagee, at its option, may:

       6.2.1. by notice to the Mortgagor, declare the entire principal amount of
the Note then outstanding and all accrued and unpaid interest thereon and all
other Obligations of the Mortgagor to the Mortgagee to be immediately due and
payable, and upon such declaration such principal and interest and all other
Obligations of the Mortgagor to the Mortgagee shall become and be immediately



                                       36
<PAGE>



due and payable, anything in the Note or in this Mortgage or in any of the other
Loan Documents to the contrary notwithstanding.

       6.2.2. after commencement of such proceedings as may be required by any
applicable law, either in person, or by its agents or attorneys, or by a
court-appointed receiver, enter into and upon all or any part of the Mortgaged
Premises and exclude the Mortgagor, its agents and employees from possession;
and while in possession, use, operate, manage, control, and conduct the business
of, the Mortgaged Premises in such manner and to such extent as the Mortgagee
shall, in its reasonable discretion, determine to be appropriate, either itself
or by its employees, agents, attorneys or the receiver; and maintain and restore
the Mortgaged Premises and make all necessary or proper repairs, replacements,
alterations, and improvements as the Mortgagee, in its reasonable discretion,
determines to be advisable; and, without limiting the Mortgagee's rights under
Section 4.4.2, the Mortgagee (whether or not it shall have taken possession of
the Premises or obtained a receiver for the Mortgaged Premises) shall be
entitled to collect and receive all earnings, revenues, rents, issues, profits
and income of the Mortgaged Premises. After first deducting the amount of
expenses incurred in connection with the operation of the Mortgaged Premises,
including advances for maintenance, repairs, alterations, improvements, taxes,
assessments, insurance and other prior or current charges in respect of the
Mortgaged Premises or any part thereof, as well as compensation for the services
of the Mortgagee and for all attorneys, agents, consultants and other persons
engaged by it to render services in connection with the Mortgaged Premises, the
Mortgagee shall apply the balance of said moneys to the payment of the
Obligations. Any remaining moneys shall be remitted to the Mortgagor or to such
other person as lawfully may be entitled thereto. Any and all amounts advanced
by the Mortgagee as authorized, or contemplated, by this Section 6.2.2 shall
bear interest from the date advanced at the Default Rate and, together with such
interest, shall be added to the Obligations secured by this Mortgage, and shall
be payable by Mortgagor on demand.

       6.2.3. with or without entry, either itself or by its agents or
attorneys:

         (a) foreclose this Mortgage in accordance with the laws of the State
     and the provisions hereof, for all of the Obligations or for any portion
     thereof or any other sums secured hereby which are then due and payable,
     subject to the continuing lien of this Mortgage for the balance of the
     Obligations not then due; or

         (b) take such steps to protect and enforce its rights whether by
     action, suit or proceeding in equity or at law for the specific performance
     of any covenant, condition or agreement in the Note or in this Mortgage, or
     in aid of the execution of any power herein granted, or for any foreclosure
     hereunder, or for the enforcement of any other appropriate legal or
     equitable remedy or otherwise as the Mortgagee shall elect, including
     bringing any appropriate action or proceeding to foreclose this Mortgage
     and any other documents securing the Note and to sell, as an entirety or in
     separate lots or parcels, the Mortgaged Property under the power of sale
     hereinafter provided or the judgment or decree of a court or courts of
     competent jurisdiction; and (c) to pursue any other remedy available to it.
     The Mortgagee shall take action either by such proceedings or by the
     exercise of its power with respect to entry and/or taking possession, or
     both, as the Mortgagee may determine; and


                                       37
<PAGE>

       6.2.4. exercise any or all of its rights and remedies under the Loan
Documents in such order of priority as the Mortgagee shall determine in its sole
discretion. The Mortgagee may proceed in any such action to final judgment and
execution thereon for all sums due under Section 6.2.1, together with interest
on such sums at the Default Rate. Interest at the Default Rate shall be due on
any judgment obtained by the Mortgagee from the date of judgment until actual
payment is made of the full amount of the judgment by the Sheriff or otherwise.

         6.3. Foreclosure; No Marshalling of Assets; Appointment of Receiver.

       6.3.1. In case of a foreclosure sale, all of the Mortgaged Premises, at
the option of Mortgagee, in its sole discretion, may be sold in one or more
parcels even though the proceeds of such sale exceed or may exceed the
Obligations. The Mortgagee shall not be required to exercise any rights under
this Mortgage before proceeding against any other security, shall not be
required to proceed against other security before proceeding under this
Mortgage, and shall not be precluded from proceeding against any or all of any
security held by the Mortgagee for any or all of the Obligations in any order or
at the same time.

       6.3.2. The Mortgagee, in any action to foreclose this Mortgage, shall be
entitled, without notice and without regard to the adequacy of any security for
the Obligations or the solvency of any Person liable for the payment thereof, to
the appointment of a receiver of the rents and profits of the Mortgaged
Premises.

       6.3.3. The Mortgagor agrees, to the full extent that it may lawfully do
so, that in any foreclosure or other action brought by the Mortgagee to enforce
this Mortgage, it will not at any time insist upon or plead or in any way take
advantage of any appraisement, valuation, stay, marshalling of assets,
extension, redemption or moratorium law now or hereafter in force and effect so
as to prevent, hinder, delay or otherwise affect the enforcement of the
provisions of this Mortgage or any rights or remedies the Mortgagee may have
hereunder or by law.

       6.3.4. If the Mortgagee shall elect to accelerate the Obligations
following the occurrence of an Event of Default, the Mortgagor, within five (5)
days after demand, will pay to the Mortgagee, or any receiver appointed in
connection with the foreclosure of this Mortgage, any and all amounts then held
as security deposits under all Space Leases; and the Mortgagee or such receiver
shall be deemed to indemnify the Mortgagor against all claims of tenants in
respect of the security deposits so paid following such demand.

       6.3.5. If an Event of Default shall occur and be continuing, in addition
to all other rights of the Mortgagee provided in this Mortgage or by law, the
Mortgagor shall, on demand, surrender possession of the Mortgaged Premises to
the Mortgagee; the Mortgagor consents that the Mortgagee may exercise any or all
of the rights specified in Section 6.2.2; and the Mortgagor irrevocably appoints
the Mortgagee its attorney-in-fact, coupled with an interest, for such purposes.
If the Mortgagor is then an occupant of all or any portion of the Mortgaged
Premises, it agrees to surrender possession of that part of the Mortgaged
Premises which it occupies to the Mortgagee immediately upon demand if an Event
of Default shall have occurred and be continuing. If the Mortgagor remains in
possession despite such demand, such possession shall, at the Mortgagee's
election, be as tenant of the Mortgagee; and the Mortgagor agrees to pay monthly
in advance to the Mortgagee such rent for the premises so occupied as the


                                       38
<PAGE>


Mortgagee may demand, and in default of so doing, the Mortgagor may also be
dispossessed by summary proceedings or otherwise. If a receiver of the rents and
profits of the Mortgaged Premises shall be appointed, the covenants of this
Section 6.3.5 may be enforced by the receiver.

         6.4. Legal Expenses of Mortgagee.

       6.4.1. The Mortgagor will pay to the Mortgagee, on demand, all costs,
charges and expenses (including, without limitation, reasonable attorneys' fees
and disbursements) incurred or paid at any time by the Mortgagee (i) in
connection with any action or proceeding to foreclose this Mortgage or to
recover or collect all, or any portion of the Obligations; and (ii) in
connection with any modification or amendment or assignment of this Mortgage or
the other Loan Documents, together with interest on each such payment made by
the Mortgagee at the Default Rate from the date of the Mortgagee's demand for
such payment to the date of reimbursement by Mortgagor.

       6.4.2. If any action or proceeding be commenced in which the Mortgagee is
made a party, or in which it becomes necessary to defend or uphold the lien of
this Mortgage, all reasonable sums paid by the Mortgagee for the expense of any
litigation to prosecute or defend the title, rights and lien created by this
Mortgage (including, without limitation, reasonable attorneys' fees) shall be
paid by the Mortgagor, together with interest thereon at the Default Rate from
the date of the Mortgagee's demand for such payment to the date of reimbursement
by Mortgagor.

         6.5. Remedies Cumulative; No Waiver; Etc.

       6.5.1. No remedy in this Mortgage conferred upon or reserved to the
Mortgagee is intended to be exclusive of any other remedy or remedies, and each
and every such remedy shall be cumulative, and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity.
No delay or omission by the Mortgagee in exercising any right or power arising
upon any Event of Default shall impair any such right or power, or shall be
construed to be a waiver of or acquiescence in any such Event of Default; and
every power and remedy given by this Mortgage to the Mortgagee may be exercised
from time to time as often as the Mortgagee may determine it is appropriate to
do so.

       6.5.2. A waiver in one or more instances of compliance with any of the
terms, covenants, conditions or provisions of this Mortgage or of the other Loan
Documents shall apply to the particular instance or instances and at the
particular time or times only, and no such waiver shall be deemed a continuing
waiver. In any event, no waiver shall be effective, or be asserted by the
Mortgagor as having been made, unless set forth in a writing signed by the
Mortgagee.

       6.5.3. The Mortgagor waives and renounces all homestead and similar
exemption rights with respect to the Mortgaged Premises provided for by the
Constitution and laws of the United States and of the State as against the
collection of the Loan Documents, or any part thereof.

         6.6. No Merger. It is the intention of the parties to this Mortgage
that if the Mortgagee shall at any time hereafter acquire title to all or any
portion of the Mortgaged Premises, then, and until the Obligations have been
paid in full, the interest of the Mortgagee hereunder and the lien of this


                                       39
<PAGE>


Mortgage shall not merge or become merged in or with the estate and interest of
the Mortgagee as the holder and owner of title to all or any portion of the
Mortgaged Premises and that, until such payment, the estate of the Mortgagee in
the Mortgaged Premises and the lien of this Mortgage and the interest of the
Mortgagee hereunder shall continue in full force and effect to the same extent
as if the Mortgagee had not acquired title to all or any portion of the
Mortgaged Premises.

         6.7. Foreclosure of Mortgage by Power of Sale. Mortgagee may, either
with or without entry of taking possession of the Mortgaged Property as provided
in this Mortgage or otherwise, personally or by its agents or attorneys, and
without prejudice to the right to bring an action for foreclosure of this
Mortgage, sell the Mortgaged Property or any part thereof pursuant to any
procedures provide by applicable law, including, without limitation, the
procedures set forth in Article 14 of the New York Real Property Actions and
Proceedings Law (and any amendments or substitute statutes in regard thereto),
and all estate, right, title, interest, claim and demand therein, and right of
redemption thereof, at one or more sales as an entity or in parcels, and at such
time and place upon such terms and after such notice thereof as may be required
or permitted by applicable law.

         All Notices hereunder or under any applicable law pertaining hereto
(including, without limitation, Article 14 of the New York Real Property Actions
and Proceeding Law) shall be in writing and shall be deemed sufficiently given
or served for all purposes when delivered (i) by personal service or courier
service, and shall be deemed given on the date when signed for or, if refused,
when refused by the person designated as an agent for receipt of service, (ii)
by facsimile transmission, and shall be deemed given when printed confirmation
of completion of transmission is generated by the sender's facsimile
transmission instrument, or (iii) by United States certified mail, return
receipt requested, postage prepaid, and shall be deemed given two (2) days after
being sent, to any party hereto at the following address: 20 Soundview
Marketplace, Port Washington, New York 11050 or such other address of which a
party shall have notified the party giving such notice in writing as aforesaid.
For purposes hereof, notices may be given by the parties hereto or by their
attorneys identified herein.

         6.8. Purchase by Mortgagee. Without limiting any other provision
contained herein, upon any such foreclosure sale, the Mortgagee may bid for and
purchase the Mortgaged Property and, upon compliance with the terms of sale, may
hold, retain and possess and dispose of such property in its own absolute right
without further accountability.

         6.9. Application of Indebtedness Toward Purchase Price. Without
limiting any other provision contained herein, upon any such foreclosure sale,
the Mortgagee may, if permitted by law, and after allowing for costs and
expenses of the sale, compensation and other charges, in paying the purchase
price, apply any portion or all of the indebtedness and other sums due to the
Mortgagee under the Note, this Mortgage or any other instrument securing the
Note, in lieu of cash, to the amount which shall, upon distribution of the net
proceeds of such sale, be payable thereon.

         6.10. Waiver of Appraisement, Valuation, Stay, Execution and Redemption
Laws. Without limiting any other provision contained herein, the Mortgagor
agrees, to the full extent permitted by law that in case of a default on its
part hereunder, neither the Mortgagor nor anyone claiming through or under it

                                       40
<PAGE>


shall or will set up, claim or seek to take advantage of any appraisement,
valuation, stay, extension or redemption laws now or hereafter in force, in
order to prevent or hinder the enforcement or foreclosure of this Mortgage or
the absolute sale of the Mortgaged Property or the final and absolute putting
into possession thereof, immediately after such sale, of the purchasers thereat,
and the Mortgagor for itself and all who may at any time claim through or under
it, hereby waives, to the full extent that may be lawfully so do, the benefit of
all such laws, and any and all right to have the assets comprising the Mortgaged
Property marshaled upon any foreclosure of the lien hereof and agrees that the
Mortgagee or any court having jurisdiction to foreclose such lien may sell the
Mortgaged Property in part or as an entirety. Mortgagor agrees that neither it
nor any guarantor will assert a defense in any action to recover a deficiency
judgment following a foreclosure that the sales price realized at the sale was
less than the fair market value.

         6.11. Receiver. Without limiting any other provision contained herein,
if an Event of Default shall have occurred, the Mortgagee, to the extent
permitted by law and without regard to the value, adequacy or sufficiency of the
security for the indebtedness and other sums secured hereby, shall be entitled
as a matter of right if it so elects to the appointment of a receiver to enter
upon and take possession of the Mortgaged Property and to collect all rents,
income and other benefits thereof and apply the same as the court may direct.
The expenses, including receiver's fees, reasonable attorneys' fees, costs and
reasonable agent's compensation, incurred pursuant to the powers herein
contained shall be secured by this Mortgage. The right to enter and take
possession of and to manage and operate the Mortgaged Property and to collect
all rents, income and other benefits thereof, whether by a receiver or
otherwise, shall be cumulative to any other right or remedy hereunder of
afforded by law or in equity and may be exercised concurrently therewith or
independently therewith or independently thereof. The Mortgagee shall be liable
to account only for such rents, income and other benefits actually received by
the Mortgagee, whether received pursuant to this paragraph or paragraph 3.03.
Notwithstanding the appointment of any receiver or other custodian, the
Mortgagee shall be entitled as pledged to the possession and control of any
cash, deposits, or instruments at the time held by, or payable or deliverable
under the terms of this Mortgage to, the Mortgagee.

         6.12. Suits to Protect the Mortgaged Property. Without limiting any
other provision contained herein, the Mortgagee shall have the power and
authority to institute and maintain any suits and proceedings as the Mortgagee
may deem advisable in its judgment (a) to prevent any impairment of the
Mortgaged Property by any acts which may be unlawful or any violation of this
Mortgage, (b) to preserve or protect its interest in the Mortgaged Property, and
(c) to restrain the enforcement of or compliance with any legislation or other
governmental enactment, rule or order might impair the security hereunder or be
prejudicial to the Mortgagee's interest.

         6.13. Proofs of Claim. Without limiting any other provision contained
herein, in case of any receivership, insolvency, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceedings affecting the
Mortgagor or any guarantor, co-maker or endorser of any of the Mortgagor's
obligations, its creditors or its property, the Mortgagee, to the extent
permitted by law, shall be entitled to file such proofs of claim and other
documents as may be necessary or advisable in order to have its claims allowed
in such proceedings for the entire amount due and payable by the Mortgagor under
the Note, this Mortgage and any other instrument securing the Note, at the date


                                       41
<PAGE>

of the institution of such proceedings, and for any additional amounts which may
become due and payable by the Mortgagor after such date.

         6.14. Delay or Omission; No Waiver. No delay or omission of Mortgagee
or of any holder of the Note to exercise any right, power or remedy accruing
upon any Event of Default shall exhaust or impair any such right, power or
remedy or shall be construed to waive any such Event of Default or to constitute
acquiescence therein. Every right, power and remedy given to the Mortgagee may
be exercised from time to time and as often as may be deemed expedient by the
Mortgagee.

         6.15. No Waiver of One Default to Affect Another. No waiver of any
Event of Default hereunder shall extend to or affect any subsequent or any other
Event of Default then existing, or impair any rights, powers or remedies
consequent thereon. If the Mortgagee (a) grants forbearance or an extension of
time for the payment of any sums secured hereby; (b) takes other or additional
security for the payment thereof; (c) waives or does not exercise any right
granted in the Note, this Mortgage or any instrument securing the Note; (d)
releases any part of the Mortgaged Property from the lien of this Mortgage or
any other instrument securing the Note; (e) consents to the filing of any map,
plat or replat of the Land; (f) consents to the granting of any easement on the
Land; or (g) makes or consents to any agreement changing the terms of this
Mortgage or subordinating the lien or any charge hereof, then, except as
otherwise provided by an instrument executed by the Mortgagee, no such act or
omission shall release, discharge, modify, change or affect the original
liability under the Note, this Mortgage or otherwise of the Mortgagor or any
subsequent purchaser of the Mortgaged Property or any part thereof or any maker,
co-signer, endorser, surety or guarantor. No such act or omission shall preclude
the Mortgagee from exercising any right, power or privilege herein granted or
intended to be granted in case of any Event of Default then existing or of any
subsequent Event of Default nor, except as otherwise expressly provided in an
instrument executed by the Mortgagee, shall the lien of this Mortgage be altered
thereby, except to the extent of releases as described in subparagraph (d) above
of this paragraph 3.12. In the event of the sale or transfer by operation of law
or otherwise of all or any part of the Mortgaged Property, the Mortgagee,
without notice to any person, firm or corporation, is hereby authorized and
empowered to deal with any such vendee or transferee with reference to the
Mortgaged Property or the indebtedness secured hereby, or with reference to any
of the terms or conditions hereof, as fully and to the same extent as it might
deal with the original parties hereto and without in any way releasing or
discharging any of the liabilities or undertakings hereunder.

         6.16. Discontinuance of Proceedings; Position of Parties Restored. If
the Mortgagee shall have proceeded to enforce any right or remedy under the
Mortgage by foreclosure, entry or otherwise and such proceedings shall have
resulted in a final determination adverse to the Mortgagee, then and in every
such case the Mortgagor and the Mortgagee shall be restored to their former
positions and rights hereunder, and all rights, powers and remedies of the
Mortgagee shall continue as if no such proceedings had occurred or had been
taken.

         6.17. Remedies Cumulative. No right, power or remedy conferred upon or
reserved to the Mortgagee by the Note, this Mortgage or any other instrument
securing the Note is exclusive of any other right, power or remedy, but each
such right, power and remedy shall be cumulative and concurrent and shall be in
addition to any other right, power and remedy given hereunder or under the Note
or any other instrument securing the Note, or now or hereafter existing as law,
in equity or by statute.


                                       42
<PAGE>


         6.18. Defeasance. If Mortgagor shall pay or cause to be paid the
principal of and premium, if any, and interest on the Note, in accordance with
the terms thereof, and if the Mortgagor shall pay or cause to be paid all sums
payable hereunder by the Mortgagor and shall comply with all terms, conditions
and requirements hereof, then this Mortgage shall be null and void and of no
further force and effect and shall be released by the Mortgagee upon the written
request and at the expense of the Mortgagor.

         6.19. Interest After Default. Upon default or after maturity or after
judgment has been rendered on the Note, Mortgagor's right to select pricing
options shall cease and the unpaid principal of all advances shall, at the
option of the Mortgagee, bear interest at the Involuntary Rate.

         6.20. Construction of Mortgagee Rights. All covenants hereof shall be
construed as affording to the Mortgagee rights additional to and not exclusive
of the rights conferred under the provisions of Section 254 and 273 of the Real
Property Law of the State of New York.

                                  ARTICLE VII

                        Provisions of General Application

         7.1. Modifications. No change, amendment, termination, modification or
cancellation of this Mortgage, or of any part hereof, shall be valid unless set
forth in a writing signed by the Mortgagor and the Mortgagee, except that only
the Mortgagee need sign any satisfaction of this Mortgage.

         7.2. Notices. All notices, demands, requests, consents, approvals or
other communications (each, a "Notice") given or required to be given hereunder
shall be deemed given or furnished hereunder when addressed to the party
intended to receive the same, at the address of such party set forth below:

                  If to Mortgagee:

                           Fleet National Bank
                           1185 Avenue of the Americas
                           New York, New York  10036
                           Attention: Denise M. Smyth, Vice President

                                       43
<PAGE>



                  If to Mortgagor:

                           Port Bay Associates, LLC
                           c/o Acadia Realty Trust
                           1311 Mamaroneck Avenue
                           Suite 260
                           White Plains, New York  10605
                           Attention: Robert Masters, Esq.

                           with a copy to Michael Nelsen at the same address

Each such Notice shall be effective (i) if delivered by hand, at the time of
delivery to the address specified herein below or (ii) if given by first-class
certified or first-class registered mail, return receipt requested postage
prepaid, on the fourth Business Day (as "Business Day" is defined in the Note)
following the time of mailing in the manner aforesaid, or (iii) on the Business
Day immediately following the delivery of such notice to an overnight delivery
service.

         Any party may change the address to which any such notice, report,
demand or other instrument is to be delivered or mailed, by furnishing written
notice of such change to the other parties, but no such notice of change shall
be effective unless and until received by such other parties.

         7.3. The Mortgagee's Rights to Perform the Mortgagor's Covenants. If
the Mortgagor shall fail to pay or cause payment to be paid to the Mortgagee in
accordance with the terms of the Loan Documents, or to perform or observe any
other term, covenant, condition or obligation required to be performed or
observed by the Mortgagor under this Mortgage or the other Loan Documents,
without limiting any other provision of this Mortgage, and without waiving or
releasing the Mortgagor from any obligation or default hereunder, after giving
any notice to the Mortgagor required hereunder and after the passage of any
applicable cure periods (or without such notice in the event of an emergency),
the Mortgagee (or any receiver of the Mortgaged Premises) shall have the right,
but not the obligation, to make any such payment, or to perform any other act or
take any appropriate action, including, without limitation, entry on the
Mortgaged Premises and performance of work thereat, as it, in its sole
discretion, may deem necessary to cause such other term, covenant, condition or
obligation to be promptly performed or observed on behalf of the Mortgagor or to
protect the security of this Mortgage. All amounts advanced by, or on behalf of,
the Mortgagee in exercising its rights under this Section 7.3 (including, but
not limited to, legal expenses and disbursements incurred in connection
therewith), together with interest thereon at the Default Rate from the date of
the Mortgagee's demand upon the Mortgagor for reimbursement of such sums until
reimbursement by the Mortgagor, shall be payable by the Mortgagor to the
Mortgagee upon demand and shall be secured by this Mortgage.

         7.4. Additional Sums Payable by the Mortgagor. All sums which, by the
terms of this Mortgage or any of the other Loan Documents are payable by the
Mortgagor to the Mortgagee shall, together with the interest thereon provided
for herein or in the Note or such other Loan Documents, be added to and deemed
part of the Obligations secured by the lien of this Mortgage whether or not the
provision which obligates the Mortgagor to make any such payment to the
Mortgagee specifically so states.


                                       44
<PAGE>

         7.5. Captions. The captions used in this Mortgage are inserted only as
a matter of convenience and for reference, and in no way define, limit, enlarge
or describe the scope or intent of this Mortgage or in any other way affect this
Mortgage or the construction of any provision hereof.

         7.6. Successors and Assigns. The covenants and agreements contained in
this Mortgage shall run with the land and bind the Mortgagor, the heirs,
legatees, legal representatives, successors and assigns of the Mortgagor and of
each Person constituting the Mortgagor and all subsequent owners, encumbrances
and Space Tenants of the Mortgaged Premises, or any part thereof; and shall
inure to the benefit of the Mortgagee, its successors and assigns and all
subsequent beneficial owners of this Mortgage.

         7.7. Gender and Number. Wherever the context of this Mortgage so
requires, the neuter gender includes the masculine and/or feminine gender and
the singular number includes the plural.

         7.8. Severability. If any one or more of the provisions contained in
this Mortgage shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Mortgage; and this Mortgage shall,
in such event, be construed as if such invalid, illegal or unenforceable
provision had never been included.

         7.9. Usury. Anything in this Mortgage or the other Loan Documents to
the contrary notwithstanding, the Mortgagee shall never be entitled to receive,
collect or apply as interest on the principal amount of the Obligations secured
hereby any amount in excess of the maximum rate of interest permitted to be
charged by applicable law. In the event the Mortgagee ever receives, collects or
applies as interest any such excess, the amount which would be excessive
interest shall be applied to the reduction of the principal amount of said
Obligations; and if said principal amount shall have been paid in full, shall be
remitted to the Mortgagor. In determining whether or not the interest paid or
payable in any specific instance shall exceed the highest lawful rate, the
Mortgagor and the Mortgagee shall to the maximum extent permitted by applicable
law (i) characterize any non-principal payment as an expense, fee or premium
rather than as interest, (ii) exclude voluntary prepayments and the effects
thereof and (iii) "spread" the total amount of interest throughout the entire
contemplated terms of the obligations so that the interest rate is uniform
throughout the entire said term.

         7.10. Subrogation. Should the proceeds of the loan made by the
Mortgagee to the Mortgagor and evidenced by the Note be used directly or
indirectly to discharge, or satisfy, in whole or in part, any prior lien or
encumbrance upon the Mortgaged Premises or any part thereof, then the Mortgagee
shall be subrogated to such other lien or encumbrance and to any additional
security held by the holder thereof and shall have the benefit of the priority
thereof.

         7.11. Controlling Law. This Mortgage shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York.



                                       45
<PAGE>

         7.12. Entire Agreement. This Mortgage, together with the other Loan and
Loan Documents, embodies the entire agreement and understanding between the
parties relating to the subject matter hereof.

         7.13. Jurisdiction. Any legal action or proceeding with respect to the
Note or any of the Loan Documents may be brought in the courts of the States of
New York or if the requisites of jurisdiction obtain, of the United States of
America for the Southern or Eastern District of New York and, by execution and
delivery hereof, the Mortgagor hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Nothing herein, however, shall affect the right of the Mortgagee to
commence legal proceedings or otherwise proceed against the Mortgagor in any
other jurisdiction. The Mortgagor hereby waives any claim that New York or any
such District is an inconvenient forum and any claim against the Mortgagee for
consequential, special or punitive damages respecting the Loan Documents.

         7.14. Reappraisal or Subsequent Environmental Reports of Mortgaged
Premises. At intervals in Mortgagee's sole discretion, the Mortgagee may order a
reappraisal or an environmental assessment of the Mortgaged Property by an
independent appraiser or environmental firm, as applicable, of its selection, or
by an employee of the Mortgagee, and Mortgagor agrees to allow access to the
Mortgaged Property to such independent appraiser, environmental firm, or
employee of the Mortgagee, and in the case of an independent appraiser or
environmental firm, to pay to the Mortgagee, within thirty (30) days of billing,
such appraiser's or environmental firm's, as applicable, reasonable fee and
expenses. However, notwithstanding the above, Mortgagor shall be responsible for
paying the cost of up to one appraisal per annum if more than one appraisal per
annum is required by the Mortgagee

         7.15. Agent for Service of Process. The Mortgagor agrees to submit to
personal jurisdiction in the State of New York in any action or proceeding
arising out of this Mortgage and in furtherance of such agreement designates CT
Corporation System, 111 8th Avenue, 13th Floor, New York, New York 10011 as the
agent for service of process in any such action or proceeding.

         7.16. Consent of Mortgagee. Except as may be specifically provided for
herein, whenever the consent or approval of the Mortgagee is required, the
decision whether to consent or approve shall be in the sole and absolute
discretion of the Mortgagee.

         7.17. Construction of Loan Document. This Mortgage, the Note and all
other documents executed and delivered in connection herewith or therewith shall
be given a fair and reasonable construction in accordance with the intention of
the parties as expressed herein and therein and without regard for any rule of
law requiring construction against the party who prepares such instruments.


                                       46
<PAGE>


                                  ARTICLE VIII

                             Intentionally Deleted.

                                   ARTICLE IX

                              Particular Provisions
                              ---------------------

         The foregoing Articles of this Mortgage are subject to the following
further provisions, if any, set forth in this Article IX.

         9.1. The phrase "if an Event of Default has occurred and is continuing"
or the like contained herein, in the Note or in any other Security Document is
not intended to mean, and shall not be construed, by implication or otherwise,
to mean that Mortgagor or any other Person shall have a right to cure an Event
of Default following acceleration by Mortgagee, and the only right Mortgagor or
any other Person shall have upon the occurrence of any Event of Default and
Mortgagee's election to accelerate repayment of the Obligations is to tender
payment in full of the Obligations unless Mortgagee, in its sole discretion,
agrees in writing to waive such Event of Default.

         9.2. Interest Rate Protection Agreement. This Mortgage shall secure the
payment of all amounts that may be due and payable pursuant to the terms of any
interest rate swap, cap or other interest rate protection agreement
(collectively, the "Hedge Agreement") now or hereafter entered into between the
Mortgagor and the Mortgagee or their respective designees, including, without
limitation, the obligation of the Mortgagor to make payments thereunder and to
pay any amounts of which may become due upon a termination thereof. All such
payments with respect to such Hedge Agreement shall be deemed to be additional
interest under the Note. The additional interest shall be secured by this
Mortgage (even if the principal balance has been paid in full) and the Mortgagor
shall not be entitled to a satisfaction, termination or release of this
Mortgage, and the lien and conveyance created by this Mortgage shall continue,
if and so long as any additional interest under the Note payable by the
Mortgagor remains outstanding and unpaid. A copy of the Hedge Agreement, if any,
is on file with the Mortgagor.

         9.3. Mortgagor Acknowledgment. The Mortgagor hereby acknowledges that
it has received a complete copy of this Mortgage without charge.

         9.4. Set-Off. Mortgagor represents, warrants and covenants that there
are no offsets, counterclaims or defenses against the Indebtedness, the Mortgage
or the Note and that Mortgagor and the undersigned has full power, authority and
legal right to execute this Mortgage and to keep and observe all of the terms of
this Mortgage on Mortgagor's part to be observed or performed.

         Mortgagor hereby grants to Mortgagee a lien, security interest and
right of setoff as security for all liabilities and obligations to Mortgagee,
whether now existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Mortgagee or any entity under the control of Fleet



                                       47
<PAGE>

Boston Financial Corporation or in transit to any of them. At any time after an
Event of Default, without demand or notice, Mortgagee may set off the same or
any part thereof and apply the same to any liability or obligation of Mortgagor
regardless of the adequacy of any other collateral securing the Loan. ANY AND
ALL RIGHTS TO REQUIRE MORTGAGEE TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT
TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE MORTGAGOR
ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

         9.5. Re-execution of Documents. Upon receipt of an affidavit of an
officer of the Mortgagee as to the loss, theft, destruction or mutilation of the
Note or any other security document which is not of public record, and, in the
case of any such loss, theft, destruction or mutilation, upon surrender of such
Note or other security document, Mortgagor will issue, in lieu thereof, a
replacement Note or other security document in the same principal amount thereof
and otherwise of like tenor.

         9.6. Right to Prepay. Provided that the Mortgagor is not in default of
any of the covenants, conditions, or agreements contained in this Mortgage, the
Note or any other loan document delivered in connection thereto, the Mortgagor
may prepay the Loan, in whole or in part, in accordance with, and subject to,
the prepayment provisions set forth in Paragraph 10 of the Note, which Paragraph
10 includes provisions for payment of a yield maintenance premium under certain
circumstances. The provisions of Paragraph 10 of the Note is incorporated herein
by this reference, and shall be deemed an obligation secured by the lien of this
Mortgage.

         9.7. WAIVER OF JURY TRIAL. MORTGAGOR AND MORTGAGEE MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS MORTGAGE OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR MORTGAGEE TO ACCEPT THIS MORTGAGE AND MAKE THE LOAN.
ACCEPTANCE OF THIS MORTGAGE BY THE MORTGAGEE SHALL BE DEEMED TO CONSTITUTE A
WAIVER BY THE MORTGAGEE OF THE RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY
LITIGATION IN RESPECT OF WHICH THE MORTGAGOR HAS WAIVED THE RIGHT TO TRIAL BY
JURY HEREUNDER.

         9.8. Multiple Security. If (a) the Premises shall consist of one or
more parcels, whether or not contiguous and whether or not located in the same
county, or (b) in addition to this Mortgage, the Mortgagee shall now or
hereafter hold one or more additional mortgages, liens or other security
(directly or indirectly) for the Indebtedness upon other property in the State
in which the Premises are located, then to the fullest extent permitted by law,
the Mortgagee may, at its election, commence or consolidate in a single
foreclosure action all foreclosure proceedings against all such collateral
securing the Indebtedness (including the Mortgaged Property), which action may
be brought or consolidated in the courts of any county in which any of such



                                       48
<PAGE>


collateral is located. The Mortgagor acknowledges that the right to maintain a
consolidated foreclosure action is a specific inducement to the. Mortgagee to
extend the Indebtedness, and the Mortgagor expressly and irrevocably waives any
objections to the commencement or consolidation of the foreclosure proceedings
in a single action and any objections to the laying of venue or based on the
grounds of forum non conveniens which it may now or hereafter have.

         9.9. Non-Residential Property. This Mortgage does not cover real
property principally improved by one or more structures containing in the
aggregate six (6) or less residential dwelling units having their own separate
cooking facilities.

         9.10. Limited Recourse. Mortgagee expressly agrees that the extent of
liability of the Mortgagor for any sums due or obligations to perform under the
Note (except for the indemnities and/or guarantees delivered to Mortgagee by the
Mortgagor and/or the other Indemnitor dated as of this date in connection with
the loan evidenced by the Note, and secured, in part, by this Mortgage) is
limited to the Mortgagor's estate, right, title and interest in, to and under
the Mortgaged Property, the Mortgagor's right, title and interest to the leases
and all interest of undersigned thereto (the "Leases"), as described in this
Mortgage and/or any other document evidencing or securing the Note, as the same
may be amended from time to time (individually, herein referred to as the
"Instrument" or "Loan Document" and collectively, either as "Instruments" or
"Loan Documents") and the assignment of leases in rents dated of even date
hereof by the Mortgagor in favor of Mortgagee, as the same may be amended from
time to time (the "Assignment"), Mortgagee agreeing not to look personally to
the Mortgagor or to the other Indemnitor or to any principals, trustees members,
partners, shareholders, officers, directors, employees or agents of the
Mortgagor (collectively, the "Affiliates") but to look solely to the Mortgaged
Property, the Leases and the Collateral and no other assets of the Mortgagor,
Indemnitor or the Affiliates for payment of any of such sums; provided that the
foregoing shall not (i) constitute a waiver of any obligation evidenced by the
Note, this Mortgage, the Assignment and/or any other Instrument, (ii) limit the
right of the holder of the Note, this Mortgage, the Assignment, and/or any other
Instrument to name the Mortgagor as a party defendant in any action or suit for
judicial or nonjudicial foreclosure and sale under the Note, the Mortgage, the
Assignment and/or any other Instrument in any action or proceeding hereunder so
long as no judgment in the nature of a deficiency judgment or any other personal
or money judgment shall be asked for or taken against the Mortgagor or the
Affiliates, (iii) affect in any way the validity of any guaranty or indemnity
from the Mortgagor, the other Indemnitors and/or any other person of all or any
of the obligations evidenced and secured by the Note and/or the any of the other
Instruments, or the rights of the Mortgagee in connection with such guaranties
and/or indemnities to look to the property and assets of the Mortgagor, the
other Indemnitor, any guarantor, and/or any Affiliates, but only to the extent
provided in such guaranty and/or indemnity, as the case may be (iv) release or
impair the Note or the lien of the Mortgage, the Assignment, and/or other
Instrument, (v) prevent or in any way hinder the Mortgagee from exercising or
constitute a defense, an affirmative defense, a counterclaim or other basis for
relief in respect of the exercise of, any other remedy against the Mortgaged
Property, the Leases and/or the Collateral and/or the Mortgage, Assignment,
Instrument and/or any other instrument securing the Note including the other
loan documents executed and delivered to the Mortgagee in connection with the
transactions contemplated herein or as prescribed by law or in equity in case of
default, except that Mortgagee shall in no event seek any deficiency or other



                                       49
<PAGE>

personal or money judgment against the Mortgagor or any Affiliates except to the
extent provided for in such guarantees and/or indemnities, (vi) prevent or in
any way hinder the Mortgagee from exercising, or constitute a defense, an
affirmative defense, a counterclaim or other basis for relief in respect of the
exercise of, its remedies in respect of any deposits, insurance proceeds,
condemnation awards or other monies or other collateral or letters of credit
securing the Note, or (vii) be applicable to the responsible Person in the event
of and to the extent of fraud, misappropriation of funds or other property, or
intentional damage to any of the Mortgaged Premises or any other collateral
securing this Note or any part thereof intentionally inflicted in bad faith by
Mortgagor or any partner, principal, shareholder, officer, director, agent or
employee of Maker or any partner or principal of any of the foregoing or (viii)
be applicable to the liability arising in respect of hazardous materials or ADA
compliance.

         Nothing herein shall be deemed to be a waiver of any right which the
Mortgagee may have under Section 506(a), 506(b), 1111(b) or any other provision
of the Bankruptcy Reform Act of 1978 or any successor thereto or similar
provisions under applicable state law to file a claim for the full amount of the
debt owing to the Mortgagee by the Mortgagor or to require that all of the
Mortgaged Property shall continue to secure all of the indebtedness owing to the
Mortgagee in accordance with the Note, this Mortgage, and the other Loan
Documents.

         9.11. Obligations Unconditional. The Mortgagor's obligations under the
Note, the Mortgage and other Loan Documents are absolute and unconditional and
are valid irrespective of any other agreement or circumstance which might
otherwise constitute a defense to the obligations under the Note, the Mortgage
or the other Loan Documents or to the obligations of others related to it.

         9.12. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.

         9.13. Waiver of Jury Trial. The Mortgagor and the Mortgagee hereby
irrevocably and unconditionally waive any and all rights to trial by jury in any
action, suit or counterclaim arising in connection with, out of or otherwise
related to the Note, the Mortgage and all other Loan Documents, the Debt and all
other obligations of the Mortgagor related thereto.

         THIS MORTGAGE IS GIVEN ON THE CONDITION that if the Mortgagor, its
successors or assigns, shall well and truly pay the Note according to its tenor
and shall pay all other sums due under the Loan Documents and any Hedge
Agreement, and shall duly perform every covenant, term, condition and agreement
of the Mortgagor in this Mortgage and in the Note and other Loan Documents
contained and pay all of the other Obligations, then this Mortgage shall be
void; otherwise it shall remain in full force and effect.



                  [Remainder of page intentionally left blank.]



                                       50
<PAGE>



                  IN WITNESS WHEREOF, the Mortgagor and the Mortgagee have duly
executed this Agreement the day and year first above written.

                                     PORT BAY ASSOCIATES, LLC

                                     By: Acadia Realty Limited Partnership, its
                                         Managing Member

                                         By: Acadia Realty Trust, its General
                                             Partner

                                             By
                                               -------------------------------
                                                Robert Masters
                                                Senior Vice President


                                     FLEET NATIONAL BANK


                                     By
                                        --------------------------------------
                                          Denise M. Smyth
                                          Vice President


<PAGE>

STATE OF NEW YORK                       )
                                        ) ss.:
COUNTY OF ____________                  )


         On the _____ day of January, 2004, before me, the undersigned, a Notary
Public in and for said State, personally appeared Robert Masters, personally
known to me or proved to me on the basis of satisfactory evidence to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he executed the same in his capacity and that by his signature on the
instrument, the person or the entity upon behalf of which the person acted
executed the instrument.



                                  --------------------------------------------
                                  Notary Public

My Commission Expires:


------------------------



<PAGE>


STATE OF NEW YORK                       )
                                        ) ss.:
COUNTY OF ____________                  )


                  On the _____ day of January, 2004, before me, the undersigned,
a Notary Public in and for said State, personally appeared Denise M. Smyth,
personally known to me or proved to me on the basis of satisfactory evidence to
be the person whose name is subscribed to the within instrument and acknowledged
to me that she executed the same in her capacity and that by her signature on
the instrument, the person or the entity upon behalf of which the person acted
executed the instrument.


                                  --------------------------------------------
                                  Notary Public

My Commission Expires:


------------------------



<PAGE>


                                    EXHIBIT A
                                   DESCRIPTION
                                   -----------

The Leasehold Interest in property described below as Parcels One and Two,
pursuant to Lease evidenced by a Memorandum thereof dated December 19, 1985
recorded on February 3, 1986 in Liber 9702 page 404 from Soundview Shopping
Center, Landlord, to Port Bay Associates (Now by Conversion: Port Bay
Associates, LLC), Tenant:

Parcel One:
-----------

ALL that certain plot, piece or parcel of land, situate, lying and being in the
Incorporated Village of Port Washington North and partly in the Incorporated
Village of Manorhaven, Town of North Hempstead, County of Nassau and State of
New York, bounded and described as follows:

BEGINNING at a point on the southwesterly side of Waterview Drive (Harborview
Drive) distant 457.57 feet northwesterly from the extreme northwesterly end of
the arc of a curve connecting the southwesterly side of Waterview Drive with the
northwesterly side of Seaview Lane (Shoreview Lane):

RUNNING THENCE south 57 degrees 00 minutes 00 seconds west, 161 feet;

THENCE south 33 degrees 00 minutes 00 seconds east, 240 feet;

THENCE south 57 degrees 00 minutes 00 seconds west, 217 feet;

THENCE south 33 degrees 00 minutes 00 seconds east, 4.75 feet;

THENCE south 57 degrees 00 minutes 00 seconds west, 150 feet to the
northeasterly side of New Shore Road;

THENCE north 33 degrees 00 minutes 00 seconds west along the northeasterly side
of New Shore Road, 753.11 feet to the southeasterly side of Soundview Drive;

THENCE northeasterly along the southeasterly side of Soundview Drive along the
arc of a circle bearing to the left having a radius of 754.41 feet, a distance
along said curve of 282.65 feet;

THENCE north 35 degrees 32 minutes 01 seconds east, still along the
southeasterly side of Soundview Drive, 17.45 feet to the westerly end of the arc
of a curve connecting the southeasterly side of Soundview Drive with the
southerly side of Fishermans Drive;

THENCE northeasterly along the arc of said curve bearing to the right having a
radius of 20 feet, a distance along said arc of 27.15 feet to a point on the
southerly side of Fishermans Drive;

THENCE easterly along the southerly side of Fishermans Drive and along the arc
of a curve bearing to the left having a radius of 500 feet, a distance along
said arc of 324.09 feet to the extreme westerly end of the arc of a curve
connecting the southerly side of Fishermans Drive with the southwesterly side of
Waterview Drive;


<PAGE>


THENCE southeasterly along said arc of a curve bearing to the right having a
radius of 10 feet, a distance along said arc of 14.98 feet to a point on the
southwesterly side of Waterview Drive (as widened);

THENCE along the southwesterly side of Waterview Drive, the following three
courses and distances:

1.   South 18 degrees 00 minutes 00 seconds east, 120.26 feet;

2.   Southeasterly along the arc of a curve bearing to the left having a radius
     of 452 feet, a distance along said curve of 118.33 feet;

3.   South 33 degrees 00 minutes 00 seconds east, 119.51 feet to the point or
     place of BEGINNING.

Parcel Two:
-----------

ALL that certain plot, piece or parcel of land, situate, lying and being in the
Incorporated Village of Port Washington North, Town of North Hempstead, County
of Nassau and State of New York, bounded and described as follows:

BEGINNING at a point on the southwesterly side of Waterview Drive, distant
217.57 feet northwesterly from the extreme northwesterly end of the arc of a
curve connecting the southwesterly side of Waterview Drive with the
northwesterly side of East Soundview Drive;

RUNNING THENCE south 57 degrees 00 minutes 00 seconds west, 181 feet;

THENCE north 33 degrees 00 minutes 00 seconds west, 255.37 feet;

THENCE north 57 degrees 00 minutes 00 seconds east, 139.23 feet;

THENCE north 33 degrees 00 minutes 00 seconds west, 0.41 feet along the face of
the building on the premises adjoining on the north;

THENCE north 57 degrees 00 minutes 00 seconds east, 45.77 feet to the
southwesterly side of Waterview Drive;

THENCE south 33 degrees 00 minutes 00 seconds east along the southerly side of
Waterview Drive, 255.78 feet to the point or place of BEGINNING.

The Fee Interest in property described below as Parcel Three:

Parcel Three:
-------------

ALL that certain plot, piece or parcel of land, situate, lying and being in the
Incorporated Village of Port Washington North, Town of North Hempstead, County
of Nassau and State of New York, more particularly bounded and described as
follows:


                                       2
<PAGE>

BEGINNING at a point on the northerly line of East Soundview Drive, formerly
Shoreview Lane, formerly Seaview Lane, said point of beginning being 140.24 feet
easterly from the terminus of an arc connecting the easterly line of New Shore
Road with the northerly line of East Soundview Drive, said arc having a radius
of 10.00 feet and a length of 15.71 feet

RUNNING THENCE from said point of beginning, north 33 degrees 00 minutes 00
seconds west, 159.51 feet;

THENCE north 57 degrees 00 minutes 00 seconds east, 378 feet;

THENCE south 33 degrees 00 minutes 00 seconds east, 217.57 feet;

THENCE along a curve to the right having a radius of 16.83 feet and a length of
27.62 feet;

THENCE westerly along the northerly line of East Soundview Drive, the following
four courses and distances:

1.   South 61 degrees 00 minutes 00 seconds west, 33.14 feet;
2.   On a curve to the right having a radius of 870.00 feet and a length of
     204.99 feet;
3.   South 74 degrees 30 minutes 00 seconds west, 64.98 feet; and
4.   Along a curve to the left having a radius of 423.70 feet and a length of
     65.81 feet, to the point or place of BEGINNING.

                                END OF EXHIBIT A


                                       3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>14
<FILENAME>ex10-30.txt
<DESCRIPTION>EXHIBIT 10.30
<TEXT>
<PAGE>

                           NOTE MODIFICATION AGREEMENT


         THIS AGREEMENT dated as of December 1, 2003 between PORT BAY
ASSOCIATES, LLC ("Maker"), having an office c/o Acadia Realty Trust, 1311
Mamaroneck Avenue, Suite 260, White Plains, New York 10605, and FLEET NATIONAL
BANK ("Payee"), having an office at 1185 Avenue of the Americas, New York, New
York 10036.


                              W I T N E S S E T H:

         WHEREAS, Payee is the owner and holder of the Amended and Restated
Mortgage Note (the "Note") from Maker dated July 19, 2000 in the original
principal amount of $10,000,000; and

         WHEREAS, Maker and Payee desire to extend and modify the Note;

         NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, Maker and Payee hereby agree as follows (capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Note):

         1. The Maturity Date of the Note is hereby extended to August 1, 2008.

         2. References in the Note to Extended Term shall mean two (2) one-year
extensions, the first of which, if exercised in accordance with the Note, will
end on August 1, 2009 (the "First Extension") and the second of which, if
exercised in accordance with the Note, will end on August 1, 2010 (the "Second
Extension").

         3. References in the Note to "Extension Fee" shall mean 0.125% of the
principal balance of the Note at the Maturity Date with respect to the First
Extension and 0.125% of the principal balance of the Note on the Extended
Maturity Date with respect to the Second Extension.



<PAGE>

         4. Subparagraph 3(b)(iii) is modified by reducing the "floor rate" to
8.0% from 8.50% and in addition to the conditions in 3(b) of the Note which must
be satisfied for the First Extension and the Second Extension, the Second
Extension shall be conditioned upon the renewal of the lease with CSC Soundview
Cinema or a substitute lease with a tenant approved by Payee, in either case, on
terms and conditions reasonably acceptable to Payee.

         5. The definition of "LIBOR Option" is amended by the addition of the
following at the end of the first sentence thereof:

                  "provided, however, that during an applicable Interest Period
                  where the Debt Service Coverage Ratio is 1.50 to 1 or greater
                  and the outstanding principal balance of the Loan is not more
                  than 55% of the appraised value of the Mortgaged Property,
                  LIBOR Option shall mean a rate per annum equal to one hundred
                  forty basis points (1.40%) plus the LIBOR Rate."

         6. The definition of "Change in Control" is amended by deleting the
words "of Ross Dworman as Chief Executive Officer of Acadia and of".

         7. The first two sentences of subparagraph 2(a) of the Note are deleted
and the following is substituted therefor:

                  "(a) The Principal Amount of this Note shall be payable in
         accordance with the following provisions: Commencing on January 1, 2004
         and on the first day of each month thereafter, Maker will pay, on
         account of the Principal Amount, the fixed sum of $10,350.50 (the
         "Fixed Principal Payment") until the making of an Additional Advance.
         Upon the making of an Additional Advance, the Fixed Principal Payment
         shall be recalculated based upon the new Principal Amount, including
         the Additional Advance, a twenty-five year loan maturity, less the
         number of months which have elapsed since December 1, 2003 and an
         assumed interest rate of 8% per annum and such recalculated Fixed
         Principal Payment shall be applicable to the payment due on the first
         day of the month following the making of the Additional Advance and
         each month thereafter unless and until another Additional Advance is
         made at which time the Fixed Principal Payment shall be further revised
         in accordance herewith."

                                       2
<PAGE>

         8. Subparagraph 5(f) of the Note is modified by deleting references to
the capped 18 month funding period for the Earn-Out and subparagraph 5(e) of the
Note is modified by reducing the "floor rate" to 8.0% from 8.50%.

         9. Paragraph 9 of the Note is hereby modified as follows:

                  (i) the "Debt Service Coverage Ratio" referred to in (b) shall
         be 1.30 to 1 and the "floor rate" is reduced to 8.0% from 8.50%;

                  (ii) the "Net Worth" of Acadia in (c) shall be $100,000,000;
         and

                  (iii) the minimum liquidity required in (d) shall be
         $7,000,000.

         10. Except as modified hereby, the Note remains unmodified and in full
force and effect and Payee hereby covenants, represents and warrants that the
principal amount of $8,609,864.83 is outstanding as of the date hereof with
$1,000,000 remaining to be advanced under the Note and there exist no causes of
action, offsets, counterclaims or defenses with respect to Payee's obligation
under the Note, as modified hereby.


                  [Remainder of page intentionally left blank.]



                                       3
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.

                                 PORT BAY ASSOCIATES, LLC

                                 By:  Acadia Realty Limited Partnership,
                                      its managing member

                                 By:  Acadia Realty Trust, its general partner


                                 By
                                       ---------------------------------------
                                       Robert Masters
                                       Senior Vice President

                                 FLEET NATIONAL BANK


                                 By
                                       ---------------------------------------
                                       Denise M. Smyth
                                       Vice President


                                       4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>15
<FILENAME>ex10-39.txt
<DESCRIPTION>EXHIBIT 10.39
<TEXT>
<PAGE>


                           WASHINGTON MUTUAL BANK, FA
                      National Commercial Operations Center
                          555 Dividend Drive, Suite 150
                                Mailstop 3545PMTX
                              Coppell, Texas 75019


                                                     As of December 19, 2003



RD Woonsocket Associates Limited Partnership
RD Bloomfield Associates Limited Partnership
c/o Acadia Realty Trust
20 Soundview Marketplace
Port Washington, New York 11050

Attention:        Robert Masters, Esq.

                             Re: $26,000,000.00 loan (the "Loan") to RD
                                 Woonsocket Associates Limited Partnership and
                                 RD Bloomfield Associates Limited Partnership

Dear Sir/Madam:

                  Washington Mutual Bank, FA, as successor by merger to The Dime
Savings Bank of New York, FSB ("Administrative Agent") is Administrative Agent
under that certain Term Loan Agreement dated as of December 21, 2001 (the "Term
Loan Agreement") between you, Washington Mutual Bank, FA (successor by merger to
The Dime Savings Bank of New York, FSB) ("WaMu"), and Administrative Agent.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Term Loan Agreement.

                  Subject to the satisfaction of the conditions hereinafter set
forth, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, (i) the fifth sentence of Section 2.04 of the Term Loan
Agreement is hereby amended in its entirety to read "Each Advance made pursuant
to this Agreement shall be in an amount at least equal to $4,400,000 unless the
'Remediation Evidence' referred to in the immediately succeeding paragraph has
been received prior to the making of the Advance in which case the Advance shall
be $5,000,000; in the event the Advance is $4,400,000 and thereafter on or
before June 30, 2004, the Remediation Evidence is received, Borrower shall be
entitled to an additional Advance of $600,000 on or before December 21, 2004",
(ii) the sixth sentence of Section 2.04 of the Term Loan Agreement is hereby
amended in its entirety to read "All Advances made pursuant to this Agreement
must be made after the date hereof and prior to December 21, 2004" and (iii) the
second sentence of the second paragraph of Section 2.04 is hereby amended by
deleting the phrase "the first anniversary hereof" and inserting "June 30,
2004".

                  The foregoing is subject to Administrative Agent's receipt of
an extension fee of $7,500 (the "Extension Fee").

                  The terms and provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their heirs, representatives,
successors and assigns.

                  Except as modified as set forth above, the Loan Documents
shall remain unchanged and in full force and effect.

                  If the foregoing is acceptable to you, please so indicate by
signing the enclosed copy of this letter and returning same to Administrative
Agent, together with the Extension Fee, whereupon the date upon which Advances
must be made shall be extended as provided herein. Your execution of the
enclosed letter shall constitute your representation, covenant and warranty that
(i) the outstanding principal balance of the Loan as of the date hereof is
$20,082,673.89, (ii) there exist no offsets, counterclaims, defenses or causes
of action with respect to your obligations for the payment of the Notes as
extended in accordance herein, and (iii) except as set forth herein, the Term
Loan Agreement remains unmodified and in full force and effect.

                  This letter agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this letter agreement by signing
any such counterpart.


                  [Remainder of page intentionally left blank]



<PAGE>


                                 Very truly yours,

                                 WASHINGTON MUTUAL BANK, F.A. (successor by
                                 merger to The Dime Savings Bank of New York,
                                 FSB), as Administrative Agent


                                 By
                                     -------------------------------------
                                     Name:  Carmela Paulich
                                     Title:    Vice President

Accepted and agreed to as of the
_____ day of December, 2003.

RD WOONSOCKET ASSOCIATES LIMITED
PARTNERSHIP, a Delaware limited
partnership

By:  Acadia Property Holdings, LLC, its general partner

     By:  Acadia Realty Limited Partnership, its sole member

          By:  Acadia Realty Trust, a Maryland real
               estate investment trust, its general
               partner


               By
                    -------------------------------------
                    Name:
                    Title:


RD BLOOMFIELD ASSOCIATES LIMITED
PARTNERSHIP, a Delaware limited partnership

By:  Acadia Property Holdings, LLC, its general partner

     By:  Acadia Realty Limited Partnership, its sole member

          By:  Acadia Realty Trust, a Maryland real
               estate investment trust, its general
               partner


               By
                    -------------------------------------
                    Name:
                    Title:







<PAGE>


                  The undersigned joins in the execution hereof for the purpose
of (i) consenting to the extension of the date by which all Advances must be
made to December 21, 2004 and (ii) reaffirming its obligations under the Loan
Agreement.






                                ACADIA REALTY LIMITED PARTNERSHIP

                                By:  Acadia Realty Trust, a Maryland real estate
                                     investment trust, its general partner


                                     By
                                         ---------------------------------------
                                          Name:
                                          Title:




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>16
<FILENAME>ex10-43.txt
<DESCRIPTION>EXHIBIT 10.43
<TEXT>
<PAGE>


                           NOTE MODIFICATION AGREEMENT
                           ---------------------------


         This NOTE MODIFICATION AGREEMENT (this "Agreement") made as of this
19th day of December, 2003 between WASHINGTON MUTUAL BANK, FA ("Payee"), and RD
ELMWOOD ASSOCIATES, L.P. ("Maker").

                                    Recitals

         WHEREAS, Payee is the lender under that certain Revolving Loan
Agreement, dated as of November 22, 2002 (the "Loan Agreement") between Maker
and Payee;

         WHEREAS, Payee is the holder of that certain Promissory Note dated as
of November 22, 2002 (the "Note"); and

         WHEREAS, Maker is the obligor under the Note which, as of the date
hereof, evidences an aggregate outstanding principal indebtedness of $0 (the
"Indebtedness"), plus interest thereon; and

         WHEREAS, the Note is secured by, among other things, that certain
Guaranty Agreement from Acadia Realty Limited Partnership to Payee dated as of
November 22, 2002; and

         WHEREAS, Payee and Maker desire to change the "LIBOR Based Rate" (as
defined in the Note) set forth in the Note as hereinafter provided.

         NOW, THEREFORE, in consideration of the mutual agreements herein
expressed, the parties hereto agree as follows:

         1. Maker represents and warrants that the outstanding principal balance
of the Note on the date hereof is $0.

         2. Maker hereby acknowledges that it is justly indebted to Payee under
the Note, and has covenanted and promised to pay the Indebtedness, together with
interest and other charges thereon, in accordance with the terms, covenants,
conditions and provisions set forth in the Note, as modified hereby.

         3. The definition of "LIBOR Based Rate" is hereby amended in its
entirety to read "which shall be the rate per annum (expressed as a percentage)
determined by Payee to be equal to the sum of (i) the LIBOR Rate (as hereinafter
defined), plus (ii) (a) with respect to amounts outstanding hereunder from time
to time up to $15,800,000, one hundred fifty (150) basis points and (b) with
respect to amounts outstanding hereunder from time to time in excess of
$15,800,000, one hundred sixty-five (165) basis points";

         4. Maker represents and warrants that there exist no defenses, offsets
or counterclaims with respect to its obligations under the Note, as modified
hereby.


<PAGE>

         5. The terms and provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their heirs, representatives, successors
and assigns.

         6. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original. Said counterparts shall constitute but one
and the same instrument and shall be binding upon each of the undersigned
parties as fully and completely as if all had signed but one instrument so that
the liability of each of the undersigned hereunder shall be unaffected by the
failure of any of the other parties to execute any or all of said counterparts.
Furthermore, the signature page(s) of this Agreement may be signed by one or
more of the signatories hereto and the foregoing fact shall not affect the
effectiveness or validity of any signatures hereon and this Agreement shall be
binding upon each of the parties as if all had signed the same signature
page(s).


                  [remainder of page intentionally left blank]



















                                       2
<PAGE>

                  IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by each of the parties hereto as of the day and year first above
written.

                                         WASHINGTON MUTUAL BANK, FA


                                         By
                                            -----------------------------------
                                            Name:  Carmela Paulich
                                            Title: Vice President


                                         RD ELMWOOD ASSOCIATES, L.P.,
                                         a Delaware limited partnership

                                         By: Acadia Property Holdings, LLC,
                                             its general partner

                                             By: Acadia Realty Limited
                                                 Partnership, its sole member

                                                 By: Acadia Realty Trust,
                                                     a Maryland real estate
                                                     investment trust, its
                                                     general partner


                                                     By
                                                        -----------------------
                                                        Name:
                                                        Title:



<PAGE>


STATE OF NEW YORK   )
                    :    ss.:
COUNTY OF NASSAU    )


         On the _____ day of December in the year 2003, before me, the
undersigned, a notary public in and for said state, personally appeared Carmela
Paulich, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.


                                  ______________________________________________
                                  Notary Public

My Commission Expires:


______________________



<PAGE>



STATE OF _____________     )
                           )  ss.:
COUNTY OF ____________     )


         On the _____ day of December in the year 2003, before me, the
undersigned, a notary public in and for said state, personally appeared
_________________________, personally known to me or proved to me on the basis
of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.



                                  ______________________________________________
                                  Notary Public

My Commission Expires:


______________________




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>17
<FILENAME>ex21.txt
<DESCRIPTION>EXHIBIT 21
<TEXT>
<PAGE>

                            LIST OF SUBSIDIARIES OF
                              ACADIA REALTY TRUST
                            -----------------------

Acadia Realty Trust
Acadia Realty Limited Partnership

ACRS, Inc.
Acadia Realty Management Services, Corp.
Sound View Management LLC

Acadia Bartow Avenue, LLC
Acadia Mad River Property LLC
Acadia Merrillville Realty, L.P.
Acadia Town Line, LLC
Acadia Crescent Land, LLC
Acadia Rocky Hill Market, LLC
Blackman Fifty L.P.
Heathcote Associates, L.P.
Mark Plaza Fifty L.P.
Mark Twelve Associates, L.P.
Pacesetter/Ramapo Associates
RD Abington Associates Limited Partnership
RD Absecon Associates, L.P.
RD Bloomfield Associates Limited Partnership
RD Branch Associates L.P.
RD Columbia Associates, L.P.
RD Elmwood Associates, L.P.
RD Hobson Associates, L.P.
RD Methuen Associates Limited Partnership
RD Smithtown, LLC
RD Village Associates Limited Partnership
RD Whitegate Associates, L.P.
RD Woonsocket Associates Limited Partnership

Acadia 239 Greenwich Avenue, LLC
Acadia Heathcote, LLC
Acadia Merrillville Realty, Inc.
Acadia Pacesetter LLC
Acadia Property Holdings, LLC
Blackman Fifty Realty Corp.
Mark Plaza Fifty Realty Corp.
New Castle Fifty Realty Corp.
RD Absecon, Inc.

239 Greenwich Associates Limited Partnership
Crossroads II
Crossroads Joint Venture
Port Bay Associates, LLC

Acadia Realty Acquisition I, LLC
Acadia Strategic Opportunity Fund, L.P.

<PAGE>

Acadia Amherst, LLC
Acadia Granville, LLC
Acadia Sheffield Crossing, LLC

Acadia Brandywine Condominium, LLC
Acadia Brandywine Holdings Special Member, LLC
Acadia Brandywine Holdings, Inc.
Acadia Brandywine Holdings, LLC
Acadia Brandywine Subsidiary, Inc.
Acadia Brandywine Subsidiary, LLC
Acadia Brandywine Town Center Special Member, LLC
Acadia Brandywine Town Center, Inc.
Acadia Brandywine Town Center, LLC
Acadia Market Square Special Member, LLC
Acadia Market Square, Inc.
Acadia Market Square, LLC

Acadia K-H, LLC
AmCap Acadia 8th Addition, LLC
AmCap Acadia 9th Addition, LLC
AmCap Acadia Agent, LLC
AmCap Acadia Atlanta LP
AmCap Acadia Batesville, LLC
AmCap Acadia Benton, LLC
AmCap Acadia Carthage LP
AmCap Acadia Cary, LLC
AmCap Acadia Cincinnati, LLC
AmCap Acadia Conroe LP
AmCap Acadia Great Bend, LLC
AmCap Acadia Hanrahan, LLC
AmCap Acadia Indianapolis, LLC
AmCap Acadia Irving LP
AmCap Acadia K-H Holding, LLC
AmCap Acadia K-H, LLC
AmCap Acadia Little Rock, LLC
AmCap Acadia Longview, LLC
AmCap Acadia Mustang, LLC
AmCap Acadia Pratt, LLC
AmCap Acadia Roanoke, LLC
AmCap Acadia Roswell, LLC
AmCap Acadia Ruidoso, LLC
AmCap Acadia San Ramon, LLC
AmCap Acadia Shreveport, LLC
AmCap Acadia Springerville, LLC
AmCap Acadia Tucson, LLC
AmCap Acadia Tulsa, LLC

Acadia Tarrytown, LLC
Acadia-Noddle Tarrytown Development Co., LLC

Acadia D.R. Management, Inc.
Acadia Hendon Hitchcock Plaza, LLC

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>18
<FILENAME>ex23.txt
<DESCRIPTION>EX-23
<TEXT>
<PAGE>

                         Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-95966 and 333-87993) pertaining to the 1999 Share Incentive
Plan of Acadia Realty Trust; in the Registration Statement (Form S-3 No.
33-31630) of Acadia Realty Trust; in the Registration Statement (Form S-3 No.
333-104727) of Acadia Realty Trust; and in the Registration Statement (Form S-8
No. 333-106758) pertaining to the 2003 Employee Share Incentive Plan of Acadia
Realty Trust of our report dated March 12, 2004, with respect to the
consolidated financial statements and schedule of Acadia Realty Trust included
in this Annual Report on Form 10-K for the year ended December 31, 2003.



                 ........................               /s/ ERNST & YOUNG LLP

New York, New York
March 12, 2004


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>19
<FILENAME>ex31-1.txt
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<PAGE>


EXHIBIT 31.1

                                  CERTIFICATION

I, Kenneth F. Bernstein, certify that:

1. I have reviewed this annual report on Form 10-K of Acadia Realty Trust;

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

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

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

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

(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

(c) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal year that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and

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

(a) all significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls over
financial reporting.


/s/ Kenneth F. Bernstein
------------------------
Kenneth F. Bernstein
President and Chief Executive Officer
March 12, 2004







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>20
<FILENAME>ex31-2.txt
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<PAGE>



EXHIBIT 31.2

                                  CERTIFICATION

I, Michael Nelsen, certify that:

1. I have reviewed this annual report on Form 10-K of Acadia Realty Trust;

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

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

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

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

(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

(c) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal year that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and

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

(a) all significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls over
financial reporting.

/s/ Michael Nelsen
------------------
Michael Nelsen
Senior Vice President and Chief Financial Officer
March 12, 2004









</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>21
<FILENAME>ex32-1.txt
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<PAGE>

EXHIBIT 32.1


    CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 In connection with the Annual Report of Acadia Realty Trust (the "Company") on
Form 10-K for the year ended December 31, 2003, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Kenneth F. Bernstein,
President and Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

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

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

/s/ Kenneth F. Bernstein
------------------------
Kenneth F. Bernstein
President and Chief Executive Officer
March 12, 2004


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>22
<FILENAME>ex32-2.txt
<DESCRIPTION>EXHIBIT 32.2
<TEXT>
<PAGE>


EXHIBIT 32.2


    CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 In connection with the Annual Report of Acadia Realty Trust (the "Company") on
Form 10-K for the year ended December 31, 2003, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Michael Nelsen, Sr.
Vice President and Chief Financial Officer of the Company, certify, pursuant to
18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

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

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



/s/ Michael Nelsen
------------------
Michael Nelsen
Senior Vice President and Chief Financial Officer
March 12, 2004







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>23
<FILENAME>ex99-4.txt
<DESCRIPTION>EXHIBIT 99.4
<TEXT>
<PAGE>

                               FOURTH AMENDMENT TO
                    AMENDED & RESTATED PARTNERSHIP AGREEMENT

         THIS FOURTH AMENDMENT (the "Fourth Amendment"), dated as of January 1,
2004, to the Amended and Restated Partnership Agreement, dated as of March 22,
1999, as amended by the First Amendment dated as of November 15, 1999, the
Second Amendment dated as of November 18, 1999 and the Third Amendment dated as
of May 1, 2003 (collectively, the "Partnership Agreement"), of ACADIA REALTY
LIMITED PARTNERSHIP, a Delaware limited partnership (the "Partnership").
Capitalized terms used herein but not defined herein shall have the meanings
given such terms in the Partnership Agreement.

                                   BACKGROUND

         The Partnership is a party to a certain Agreement of Contribution dated
as of January 1, 2004 (the "Contribution Agreement") pursuant to which, among
other things, the Partnership has agreed to acquire the Retail Services Business
of Klaff Realty, LP and Klaff Realty, Limited, in consideration for, among other
things, Preferred Units in the Partnership. Pursuant to Section 3.2(B) of the
Partnership Agreement, the General Partner of the Partnership has the power and
authority to issue additional Partnership Interests to Persons in exchange for
additional Capital Contributions.

         The General Partner, pursuant to the exercise of such authority and in
accordance with Section 12(C) of the Partnership Agreement, has determined to
execute this Fourth Amendment to the Partnership Agreement to evidence the
issuance of additional Partnership Interests and the admission of the other
signatory hereto (the "Contributor") as a Limited Partner of the Partnership.

          NOW, THEREFORE, the parties hereto, for good and sufficient
consideration and intending to be legally bound, hereby amend the Partnership
Agreement as follows:

         1. Annex "A" of the Partnership Agreement is hereby deemed amended and
restated to reflect the admission as a Limited Partner on the date hereof of the
Contributor whose authorized signature appears on the signature page hereto and
which shall have 4,000 Preferred Units. Annex "B" of the Partnership Agreement
is hereby deemed amended and restated to reflect the Capital Contributions made
by the Contributor.

         2. The Preferred Units issued hereby shall have the rights,
preferences, privileges and designations set forth in the Certificate of
Designation of Series B Preferred Operating Partnership Units which is hereby
incorporated into the Partnership Agreement.

         3. By execution of this Fourth Amendment to the Partnership Agreement,
the Contributor agrees to be bound by each and every term of the Partnership
Agreement as amended hereby from and after the date hereof.

         4. This Fourth Amendment may be executed in counterparts, each of which
shall constitute an original, but all together shall constitute one and the same
document.


<PAGE>

         5. Except as expressly set forth in this Fourth Amendment, the
Partnership Agreement is hereby ratified and confirmed in each and every
respect.

         IN WITNESS WHEREOF, this Fourth Amendment to the Partnership Agreement
is executed and delivered as of the date first written above.

                                   ACADIA REALTY TRUST


                                   By: _________________________________________
                                       Name:  Kenneth F. Bernstein
                                       Title: President

                                   ACADIA REALTY LIMITED PARTNERSHIP

                                   By: Acadia Realty Trust, its General Partner


                                       By:______________________________________
                                          Name:  Kenneth F. Bernstein
                                          Title: President

                                   CONTRIBUTOR:

                                   KLAFF REALTY, LP

                                   By: Klaff Realty Limited, its general partner


                                       By:______________________________________
                                          Name:  Hersch M. Klaff
                                          Title: President





</TEXT>
</DOCUMENT>
</SUBMISSION>
