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Year Ended December 31, 

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(1) Funds From Operations (“FFO”) does not represent cash generated from operating activities in accordance with accounting princi- ples generally accepted in the United States of America and is not necessarily indicative of cash available to fund cash needs which is disclosed in the Consolidated Statements of Cash Flows for the applicable periods. FFO should not be considered as an alterna- tive to net income as an indicator of the Company’ operating performance or as an alternative to cash flows as a measure of liquidity. Management considers FFO a relevant supplemental measure of operating performance because it provides a basis for comparison among REITs. FFO is computed in accordance with NAREIT’ definition, which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with NAREIT’s definition. 

(2) Operating results for the year ended December 31, 2002, reflect the Company’s Januar y 1, 2002 acquisition of the remaining 66% of Charles E. Smith Commercial Realty L.P (“CESCR”) and the resulting consolidation of CESCR’s operations. 

