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## Interest Expense 

The Company’s interest expense is comprised of the following: 

<img src='content_image/51067.jpg'>

The factors affecting each component of interest expense are discussed below. 

## Interest Expense on Mortgages and Credit Facilities – Canada 

Interest expense on mortgages and credit facilities secured by Canadian assets is comprised of the following: 

<img src='content_image/51074.jpg'>

The increase of $6.8 million in interest paid on Canadian mortgages and credit facilities in 2003 over 2002 primarily results from increased borrowing by the Company to fund acquisitions and development activities. The increase in interest expense in 2003 was a result of an increase in the gross debt and was partially offset by a decrease in the weighted average interest rate on the Company’s Canadian fixed rate borrowings, from 7.3% at December 31, 2002 to 7.0% at December 31, 2003, and by an increase in the interest capitalized to properties under development. 

## Interest Expense on Credit Facilities – United States 

Interest expense on mortgages and credit facilities secured by the investment in Equity One is summarized as: 

<img src='content_image/51075.jpg'>

Measured in U.S. currency, the interest expense on the U.S. facilities has increased by 14% in 2003 from 2002 as a result of the higher debt balance. The change in the U.S. exchange rate during 2003, has offset this increase. 

