Boardwalk announces record fourth quarter and full year 2003 financial results; 11% increase in 2003 FFO per share, excluding ga

Boardwalk announces record fourth quarter and full year 2003 financial results;
11% increase in 2003 FFO per share, excluding gains
BOARDWALK PROVIDES UPDATE ON PROPOSED REIT CONVERSION 


CALGARY, Feb. 16  /PRNewswire-FirstCall/ -- Boardwalk Equities Inc. ("BEI" -
TSX, NYSE) today announced record unaudited financial results for the fourth
quarter of 2003 and for fiscal 2003. For the fourth quarter ended December 31,
2003, the Company reported Funds From Operations ("FFO"), a key performance
measurement for real estate companies, of $18.3 million and FFO per share of
$0.36 on a diluted basis, compared to FFO of $13.5 million and FFO per share of
$0.27 for the same period last year. For the year ended December 31, 2003, the
Company reported FFO of $70.6 million and FFO per share of $1.39 on a diluted
basis, compared to FFO of $63.1 million and FFO per share of $1.26.

Funds From Operations ("FFO") is a generally accepted measure of operating
performance of real estate companies, however is a non-GAAP measurement. The
Company calculates FFO by taking Net Earnings and adding non cash items
including Future Income Taxes and Amortization. The determination of this amount
may differ from that of other real estate companies.

  Highlights of the Company's fourth quarter 2003 financial results
  include:

  -  Rental revenues of $69.9 million, an increase of 9.6% compared to
     $63.8 million for the three-month period ended December 31, 2002.

  -  Net operating income of $44.9 million, representing a 12.0% increase
     from $40.1 million in the same period last year.

  -  FFO from rental operations, which excludes any gains on property
     dispositions, of $18.3 million, an increase of 35.6% compared to
     $13.5 million for the three-month period ended December 31, 2002.
     There were no property dispositions in the fourth quarter of 2003 or
     2002.

  -  FFO per share from rental operations, which excludes gains, was
     $0.36 on a diluted basis, up 33.3% compared to $0.27 for the
three-month period ended December 31, 2002.

  Highlights of the Company's financial results for the fiscal 2003
  include:

  -  Rental revenues of $271.0 million, an increase of 12.2% compared to
     $241.6 million for the twelve-month period ended December 31, 2002.

  -  Net operating income of $176.2 million, representing a 8.2% increase
     from $162.9 million in the same period last year.

  -  FFO of $70.6 million, an increase of 11.9% compared to $63.1 million
     for the twelve-monthperiod ended December 31, 2002. FFO from rental
     operations, which excludes gains, of $69.5 million, an increase of
     12.1% compared to $62.0 million for the twelve-month period ended
     December 31, 2002.

  -  FFO per share of $1.39 on a diluted basis, compared to $1.26 for the
     twelve-month period ended December 31, 2002, representing a 10.3%
     increase. FFO per share from rental operations, which excludes gains,
     was $1.37 on a diluted basis, an increase of 10.5% compared to
 $1.24 for the twelve-month period ended December 31, 2002.



Commenting on the Company's fourth quarter and fiscal 2003 results, Sam Kolias,
President and C.E.O., said, "We are pleased to report that in 2003 Boardwalk
achieved another year of record financial results and achieved solid operating
results in the fourth quarter. The Company's portfolio continued to deliver
solid operating results, notwithstanding the ongoing strength and level of
activity in housing markets across the country. This performance was driven in
large part by our focus on operations and on the progress made in improving our
portfolio occupancy levels, particularly in the second half of the year."

Operational Highlights

The average vacancy rate across the Company's portfolio for the fourth quarter
of 2003 was 3.7%, unchanged from the third quarter of 2003, and down from 4.9%
in the fourth quarter of 2002.

The average monthly rent realized in fiscal 2003 was $734 per unit, an increase
of $18, or 2.5%, from $716 per unit for the twelve-months ended December 31,
2002. Management estimates that market rents for its properties at the end of
December, 2003 averaged $788 per unit per month, which compares to an average
in-place monthly rent per occupied unit of $757 forthe twelve- months ended
December 31, 2003. This translates into an estimated "loss-to- lease" of
approximately $11.3 million, maintaining existing occupancy rates.

Same-Property Results

Boardwalk continued to show solid performance in its stabilizedproperties
(defined as properties owned for over 24 months). The "same- property" results
for the Company's stabilized portfolio for the three-month period ended December
31, 2003 showed rental growth of 1.3% and NOI growth of 1.4% compared to the
sameperiod last year. For the twelve-month period ended December 31, 2003, the
stabilized property portfolio had rental growth of 2.1% and a decline in NOI of
0.8% compared to the same period last year. Excluding the impact of a
non-recurring gas rebate in2002, "same-property" NOI for the three and twelve
month periods ended December 31, 2003 increased by 2.3% and 1.5%, respectively.
A total of 25,715 units, representing approximately 82% of Boardwalk's total
portfolio, were classified as stabilized as at December 31, 2003. None of the
Company's Quebec properties are currently classified as stabilized.

  Same-Property Results - Stabilized Portfolio
  Three Months Ended December 31, 2003 vs. Three Months Ended
   December 31, 2002

                   ---------------------------
                            Rental Expenses
                  Rental    ---------------------------           % of Stab
                  Revenues  Utilities    Other    Total      NOI       NOI
  -------------------------------------------------------------------------
  Calgary         0.4%      -13.5%       -10.4%   -8.3%     4.5%       23%
  Edmonton        0.6%       -5.9%        -4.6%   -0.3%     1.1%       42%
  Other Alberta   4.6%       -7.0%        -8.8% -3.8%     8.9%        7%
  Saskatchewan    0.2%       12.6%         0.5%    7.1%    -3.9%       14%
  Ontario         4.5%       20.7%         1.8%   11.5%    -0.7%       13%
  -------------------------------------------------------------------------
Total           1.3%       -1.6%        -3.6%    1.3%     1.4%      100%
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------

  Excluding one
   time non-
   recurring
   rebate in
   2002           1.3%       -5.0%        -3.6%   -0.2%     2.3%
  --------------------------------------------------------------
  --------------------------------------------------------------


  Same-Property Results - Stabilized Portfolio
  Twelve Months Ended December 31, 2003 vs. Twelve Months Ended
   December 31, 2002

                            ---------------------------
                            Rental Expenses
                  Rental    ---------------------------           % of Stab
                  Revenues  Utilities    Other    Total      NOI       NOI
  -------------------------------------------------------------------------
  Calgary         -0.5%     -4.5%         6.6%     2.1%    -1.5%       24%
  Edmonton         2.5%     19.9%        11.0%    14.5%    -2.5%       43%
  Other Alberta    1.0%     26.4%         8.8%    14.8%    -4.4%        7%
  Saskatchewan     2.7%     -2.8%         2.6%     0.9%     3.9%       14%
  Ontario          4.7%  14.7%         6.1%     9.1%     2.9%       13%
  -------------------------------------------------------------------------
  Total            2.1%     10.8%         7.4%     8.6%    -0.8%      100%
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------

  Excluding one
   time non-
   recurring
   rebate in
   2002            2.1%     -3.9%         7.4%     3.2%     1.5%
  --------------------------------------------------------------
  --------------------------------------------------------------


  Acquisition/Disposition Activity



In 2003, Boardwalk acquired a total of 1,953 units for approximately $106
million, increasing its portfolio to over31,200 units at year-end. This
represents a 6.5% increase in the Company's portfolio from the end of 2002. The
Company had one disposition in 2003, a 40-unit apartment complex in Edmonton,
Alberta which was sold for $3.0 million.

  There were no acquisitions or dispositions in the fourth quarter of 2003.

  Subsequent Events



Subsequent to December 31, 2003, the Company closed on the acquisition of a
183-unit property in the Quebec City (Sainte-Foy) area at an acquisition price
of $16.9 million. The acquisition price equates to approximately $92,000 per
unit, and approximately $124.8 per rentable square foot. The property acquired
was:

  -  Complexe Laudance - Quebec City (Sainte-Foy), QC - a luxury apartment
     complex consisting of 183 units in two mid-rise concrete buildings.
     The buildings were constructed and completed in 1989 and 1990. The
     transaction closed on February 11, 2004.



Beginning January 1, 2004, the Corporation will adopt the straight-line method
to compute amortization of its revenue producing buildings. The adoption of the
straight-line method from the sinking-fund method will be applied prospectively
in accordance with the transitional provision of CICA Handbook Section 1100 and
is consistent with the recommendations of the Canadian Institute of Public and
Private Real Estate Companies ("CIPPREC").

Continued Financial Strength

The Company maintained its solid financial position in the fourth quarter of
2003. Boardwalk's total mortgage debt was $1.39 billion as at December 31, 2003,
up from $1.31 billion at December 31, 2002, reflecting the additional debt on
acquisitions completed during the year. As at December 31, 2003, the Company's
debt had an average maturity of 4.2 years with a weighted average interest rate
of 5.68%, and the Company's debt-to-total-market-capitalization ratio was
60.3%.

The Company's interest coverage ratio, excluding gains, for the twelve- month
period ended December 31, 2003 increased to 2.00 times compared to 1.93 times in
the same period last year.

During 2003, Boardwalk successfully completed approximately $177 million in
mortgage refinancings and renewals.

Update on Proposed REIT Conversion

Commencing in August 2003 through October 2003, Boardwalk management and
Boardwalk Properties Company Limited, with the assistance of professional
advisors, including CIBC World Markets Inc. acting as financial advisor to the
Corporation, explored potential transactions to reorganize the Corporation into
a real estate investment trust ("REIT").

On November 5, 2003, the Board of Directors of Boardwalk considered management's
proposal to reorganize the business of the Corporation into a REIT. The Board of
Directors considered, among others, the following factors in its review and
discussion of the proposal:

  (a)  monthly cash distributions were anticipated to provide an attractive
       return to Unitholders without impairing the Corporation's ability to
       finance capital expenditures and to meet external debt payments;
  (b)  the Corporation has characteristics that are suited to a REIT
       structure, in particular the Corporation's diversified portfolio of
       multi-family residential properties which provide a relatively
       stable cash flow;
  (c)  the new trust structure would result in a higher level of cash
       distributions than would be available under the existing corporate
       structure of the Corporation;
  (d)  a significant portion of Boardwalk REIT's distributions to
       Unitholders would be tax-deferred;
  (e)  the anticipated improved access that Boardwalk REIT would have to
       the public capital markets to fund growth initiatives than is or
       would be available to the Corporation under current market
       conditions and given its existing corporate structure; and
  (f)  Boardwalk REIT would be the largest and most geographically diverse
       publicly traded multi-family residential trust in Canada.



Following their review the Board of Directors resolved to appoint a special
committee of independent directors to consider the proposed REIT transaction.
The Special Committee retained RBC Capital Markets as its financial advisor to
provide its opinion as to the fairness of consideration under the proposed
transaction, from a financial point of view, to the Public Shareholders.

On December 10, 2003, the Special Committee reported to the Board of Directors
that, on the basis of the preliminary views of RBC Capital Markets as to the
fairness of consideration under the proposed transaction, from a financial point
of view, to the Public Shareholders, the Special Committee unanimously concluded
that the proposed transaction is in the best interests of the Corporation and
its Public Shareholders.

The Board of Directors met again on January 8, 2004 to receive the Fairness
Opinion and authorize the filing of the Information Circular with the SEC. The
negotiation of the final terms of the proposed transaction was concluded, and
the Acquisition and Arrangement Agreement was signed effective January 9, 2004.

An information circular has been prepared in connection with the proposed
transaction and filed with the United States Securities and Exchange Commission
via EDGAR. A copy of the information circular has also been made available on
SEDAR although readers are cautioned that information contained therein may
change as a result of SEC review.

We are currently awaiting comments from the SEC at which time it will be
determined if any additional disclosure tothe existing public documents will be
required. Upon successful completion of this process the Company intends to mail
out the completed information circular concerning the proposed transaction and
Special Meeting to all securityholders. At this point,management expects the
proposed conversion to be completed by late March 2004 or early April 2004
timeframe.

Commenting on the proposed conversion, Sam Kolias, President and CEO, said "We
are excited about the prospect of completing Boardwalk's conversion into a REIT.
This conversion is aimed at enhancing shareholder value and providing a stronger
platform to expand the Company's operations in the future. We will rank among
the largest REITs in Canada, with an equity market capitalization of
approximately $1 billion."

Quarterly Dividend Announced

On February 13, 2004 the Board of Directors declared a quarterly cash dividend
in the amount of $0.075 (Canadian) per common share outstanding, which is
payable on March 10, 2004 to all common shareholders of record as of February
27, 2004. The dividend equates to an annual dividend rate of $0.30 per share.

Outlook and 2004 Earnings Guidance

Commenting on the outlook for the Company, Rob Geremia, Senior Vice President,
Finance and CFO, said "We are reaffirming our fiscal 2004 guidance for total FFO
per share of between $1.44 and $1.50 for the Corporation, which does not include
any contribution from property sales, approximately 1.0 to 2.0 percent same
store NOI growth, 1,000 to 2,000 new units, and $1.0 million in large
corporations tax savings. Assuming the REIT conversion takes place, all of
Boardwalk's current 2.4 million stock options would vest bringing the total
outstanding shares up to 53.3 million. This action could result in additional
Large Corporation Tax savings. We will continue to update the market as this
process continues."

Supplementary Information

Boardwalk produces Quarterly Supplemental Information that provides detailed
information regarding the Company's activities during the quarter. The Fourth
Quarter 2003 Supplemental Information is available on the INVESTOR section of
our website (http://www.bwalk.com/).

Teleconference on Fourth Quarter and Year End Financial Results

We invite you to participate in the teleconference that will be held to discuss
these results this same morning at 11:00 am EST. Senior management will speak to
the fourth quarter financial results and provide a corporate update.
Presentation materials will be made available on the INVESTOR section of our
website (http://www.bwalk.com/) prior to the call.

Participation & Registration: Please RSVP to Investor Relations at 403-531-9255
or by email to .

Teleconference: The telephone numbers for the conference are: 416-640-4127
(within Toronto) or toll-free 1-800-814-4861 (outside Toronto).

Webcast: Investors will be able to listen to the call and view our slide
presentation over the Internet by visiting http://investor.bwalk.com/ 15 min.
prior to the start of the call. An information page will be provided for any
software needed and system requirements. The live audiocast will also be
available at

http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)728640

Replay: An audio recording of the teleconference will be available approximately
one hour after the call until 11:59pm EST on February 23rd, 2004. You can access
it by dialing 416-640-1917 and using the passcode 21035473 followed by the
number sign. An audio archive will also be available on our Investor site
(http://investor.bwalk.com/) approximately two hours after the conference call.

Corporate Profile

Boardwalk Equities Inc. is Canada's largest owner/operator of multi- family
rental communities. Boardwalk currently owns and operates in excess of 250
properties with over 31,400 units (inclusive of the 183 units acquired
subsequent to December 31, 2003) totalling approximately 26 million net rentable
square feet. The Company's portfolio is concentrated in the provinces of
Alberta, Saskatchewan, Ontario and Quebec. Boardwalk is headquartered in Calgary
and its shares are listed on both the Toronto Stock Exchange and the New York
Stock Exchange and trade under the symbol BEI. The Company has a total market
capitalization of approximately $2.3 billion.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. The forward-looking statements
are statements that involve risks and uncertainties, including, but not limited
to, changes in the demand for apartment and town home rentals, the effects of
economic conditions, the impact of competition and competitive pricing, the
effects of the Company's accounting policies and other matters detailed in the
Company's filings with Canadian and United States securities regulators
available on SEDAR in Canada and by request through the Securities and Exchange
Commission in the United States, including matters set forth in the Company's
Annual Report to Shareholders under the heading "Management's Discussion and
Analysis". Because of these risks and uncertainties, the results, expectations,
achievements, or performance described in this release may be different from
those currently anticipated by the Company.

  CONSOLIDATED BALANCE SHEETS
  (CDN$ THOUSANDS)

  AS AT                                               December    December
                                                      31, 2003    31, 2002
                                                ---------------------------
                                                    (Unaudited)   (Audited)
  Assets

  Revenue producing properties (NOTE 2)             $1,713,171  $1,604,277
  Properties held for resale                             7,493       7,038
  Mortgages and accounts receivable (NOTE 4)            13,126      14,704
  Other assets (NOTE 5)                                 14,652      13,723
  Deferred financing costs                              38,044      37,521
  Segregated tenants' security deposits                  6,771       7,596
  Cash and cash equivalents                             10,123      23,631
  -------------------------------------------------------------------------
                                                    $1,803,380  $1,708,490
                                                ---------------------------
                                                ---------------------------

  Liabilities

  Mortgages payable (NOTE 7)                        $1,387,067  $1,307,177
  Accounts payable and accrued liabilities              19,801      21,498
  Refundable tenants' security deposits and other        9,730      10,496
  Capital lease obligations (NOTE 6)                     3,515       4,598
  Future income taxes (NOTE 10)                         74,765      62,976
  -------------------------------------------------------------------------
                                                    $1,494,878   1,406,745
                                                ---------------------------

  Shareholders' Equity

  Share capital (NOTE 8)                               275,509     266,516
  Retained earnings                                     32,993      35,229
  -------------------------------------------------------------------------
                                                      $308,502     301,745
  -------------------------------------------------------------------------
                                                    $1,803,380  $1,708,490
   ---------------------------
                                                ---------------------------

  SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



  CONSOLIDATED STATEMENTS OF EARNINGS
  (CDN$ THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                              3 months    3 months        Year        Year
                                 ended       ended       ended       ended
                              December    December   December    December
                              31, 2003    31, 2002    31, 2003    31, 2002
                           ------------------------------------------------
                            (Unaudited) (Unaudited) (Unaudited)   (Audited)

  Revenue

    Rental income           $   69,893  $   63,844  $  270,992  $  241,575

    Sales - properties
     held for resale                 -           -           -       7,498
  -------------------------------------------------------------------------
                                69,893      63,844     270,992     249,073
                           ------------------------------------------------
  Expenses

    Revenue producing properties:

      Operating expenses         8,816       7,54833,819      26,182
      Utilities                  9,591      10,145      34,736      32,489
      Utility rebate
       (NOTE 1 (g) (iii))            -        (390)          -      (3,692)
      Property taxes             6,626       6,427      26,217      23,664

    Cost of sales - properties
     held for resale                 -           -           -       6,531
    Administration               5,755       5,557      23,290      19,921
    Financing costs             19,264      19,109  76,630      74,181
    Deferred financing costs
     amortization                  662         738       3,227       3,239
    Amortization (NOTE 1)       13,176      12,732      50,766      46,691
  -------------------------------------------------------------------------
                                63,890      61,866     248,685     229,206
                           ------------------------------------------------

  Operating earnings before
   the following:                6,003       1,978      22,307      19,867

    Gain on debt settlement          -        (692)          -        (692)
                           ------------------------------------------------

  Earnings from continuing
   operations before
   income taxes         6,003       2,670      22,307      20,559

    Large corporations taxes       878       1,253       3,546       3,600
    Future income taxes
     (recovery) (NOTE 10)        6,592        (797)     11,761       5,406
  -------------------------------------------------------------------------

  (Loss) earnings from
   continuing operations    $   (1,467) $    2,214  $    7,000  $   11,553

  Earnings (loss) from
   discontinued operations,
   net of tax                        -          (1)  751          23
  -------------------------------------------------------------------------

  Net (loss) earnings for
   the period               $   (1,467) $    2,213  $    7,751  $   11,576
                           ------------------------------------------------
                           ------------------------------------------------

  Basic earnings per share
   (NOTE 9)

    - from continuing
      operations                $(0.03)      $0.04       $0.14       $0.23

    - from discontinued
      operations                     -        0.00        0.01        0.00
  -------------------------------------------------------------------------

  Basic earnings per share      $(0.03)      $0.04       $0.15       $0.23
                 ------------------------------------------------
                           ------------------------------------------------

  Diluted (loss) earnings
   per share (NOTE 9)

    - from continuing
      operations                $(0.03)      $0.04       $0.14       $0.23

    - from discontinued
      operations                     -        0.00        0.01        0.00
  -------------------------------------------------------------------------
  Diluted (loss) earnings
   per share          $(0.03)      $0.04       $0.15       $0.23
                           ------------------------------------------------
                           ------------------------------------------------

  SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



  CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
  (CDN$ THOUSANDS)

                              3 months    3 months        Year        Year
                                 ended       ended       ended       ended
              December    December    December    December
                              31, 2003    31, 2002    31, 2003    31, 2002
                           ------------------------------------------------
                            (Unaudited) (Unaudited) (Unaudited)   (Audited)

  Retained earnings,
   beginning of period      $   38,260  $   33,089  $   35,229  $   26,782
    Net (loss) earnings
     for the period             (1,467)      2,213       7,751      11,576
    Dividends paid    (3,800)          -      (9,595)     (2,477)
    Premium on share
     repurchases                     -         (73)       (392)       (652)
  -------------------------------------------------------------------------
  Retained earnings,
   end of period            $   32,993  $   35,229  $   32,993  $   35,229
                           ------------------------------------------------
                           ------------------------------------------------

  SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



  CONSOLIDATED STATEMENT OF CASH FLOWS
  (CDN$ THOUSANDS)

                              3 months    3 months        Year        Year
                                 ended       ended       ended       ended
     December    December    December    December
                              31, 2003    31, 2002    31, 2003    31, 2002
                           ------------------------------------------------
                            (Unaudited) (Unaudited) (Unaudited)   (Audited)

  Operating activities
    Net (loss) earnings
     for the period         $   (1,467) $    2,213  $    7,751  $   11,576
    (Earnings) loss from
     discontinued operations,
     net of tax                -           1        (751)        (23)
    Future income taxes
     (recovery)                  6,592        (797)     11,761       5,406
    Amortization                13,176      12,732      50,766      46,691
    Gain on debt settlement       -        (692)          -        (692)
  -------------------------------------------------------------------------
    Funds from continuing
     operations                 18,301      13,457      69,527      62,958

    Funds from discontinued
     operations                      -          15          33          94

    Net change in operating
     working capital            (1,405)      5,402        (489)      7,434
    Net change in properties
     held for resale              (107)        (39)      1,442       5,702
  -------------------------------------------------------------------------
    Total operating cash flows  16,789      18,835      70,513      76,188
                           ------------------------------------------------
 Financing activities
    Issue of common shares for
     cash (net of issue costs)   4,615       1,313       9,229       8,828
    Stock repurchase program         -        (122)       (628)     (1,167)
    Dividends paid              (3,800)          -      (9,595)     (2,477)
    Financing of revenue
     producing properties       27,390     175,212     177,208     305,841
    Repayment of debt on
     revenue producing
     properties                (22,928)   (126,273)   (138,292)   (238,708)
  Deferred financing costs
     incurred (net of
     deferred financing
     costs amortization)          (597)     (4,377)     (3,342)     (5,544)
  -------------------------------------------------------------------------
                            4,680      45,753      34,580      66,773
                           ------------------------------------------------
  Investing activities
    Purchases of revenue producing
     properties (NOTE 2)             -     (27,484)    (68,831)   (102,926)
    Project improvements to
     revenue producing
     properties                (10,321)    (12,647)    (49,047)    (39,433)
    Net cash proceeds from
     sale of properties              -           -       1,223           -
    Technology for real estate
     operations                 (1,057)       (152)     (1,946)     (2,643)
  -------------------------------------------------------------------------
                               (11,378)    (40,283)   (118,601)   (145,002)
              ------------------------------------------------

  Net (decrease) increase in
   cash and cash equivalents
   balance during period        10,091      24,305     (13,508)     (2,041)

  Cash and cash equivalents,
   beginning of period    32        (674)     23,631      25,672
  -------------------------------------------------------------------------

  Cash and cash equivalents,
   end of period            $   10,123  $   23,631  $   10,123  $   23,631
                       ------------------------------------------------
                           ------------------------------------------------

  Taxes paid                $      833  $    1,344  $    3,399  $    3,691
                           ------------------------------------------------
                           ------------------------------------------------

  Interest paid             $   19,452  $   18,224  $   76,468  $   72,486
                           ------------------------------------------------
                           ------------------------------------------------

  SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



  Notes To Consolidated Financial Statements
  Three months ended December 31, 2003 and 2002 (unaudited)and
  years ended December 31, 2003 (unaudited) and 2002 (audited)

  (TABULAR AMOUNTS IN CDN$ THOUSANDS, EXCEPT NUMBER OF SHARES AND PER SHARE
   AMOUNTS UNLESS OTHERWISE STATED)


  1.  SIGNIFICANT ACCOUNTING POLICIES

      (a) Operations

      Boardwalk Equities Inc. (the "Corporation") is a real estate
      corporation that specializes in multi-family residential housing.

      (b) Basis of presentation and principles of consolidation

      The Corporation's accounting policies and its standards of financial
      disclosure conform with the recommendations of the handbook of
      The Canadian Institute of Chartered Accountants ("CICA Handbook") and
      with the recommendations of the Canadian Institute of Public and
      Private Real Estate Companies ("CIPPREC"). These principles differ in
      certain respects from those generally accepted in the United States
      of America ("U.S. GAAP").

      The preparation of financial statements in accordance with Canadian
      generallyaccepted accounting principles ("Canadian GAAP") requires
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities, and to make disclosure of
      contingent assets and liabilities at the dateof the financial
      statements, and the reported amounts of revenues and expenses during
      the reporting period. Actual results may differ from those estimates.

      The consolidated financial statements include the accounts of the
      Corporation, its wholly-owned subsidiaries, including Suite Systems
      Inc. ("SSI"), and HomeXpress Limited ("HomeXpress"). HomeXpress is a
      public company of which the Corporation owns 63%. That company is no
      longer in operation as of October 11, 2001. All material inter-
      company transactions have been eliminated.

      (c) Revenue recognition

          i.   Revenue from a rental property is recognized once the
               Corporation has attained substantially all of the benefits
               and risks of ownership of the rental property. Rental
               revenue includes rents, parking and other sundry revenues.
               All residential leases are for one-year terms or less;
               consequently, the Corporation accounts for leases with its
               tenants as operating leases.

          ii.  Revenue from the sales of property held for resale is
               recognized when all conditions of the purchase and sale
               agreement have been met, a sufficient purchaser deposit
               (usually 15%) has been received and there is reasonable
               assurance on the collectibility of any outstanding amount.

      (d) Real estate properties

          i.   Revenue producing properties

               Revenue producing real estate properties, which are held for
               investment, are stated at the lower of cost less accumulated
               amortization or "net recoverable amount". Cost includes all
               amounts relating to the acquisition and improvement of the
               properties. All costs associated with upgrading the existing
               facilities, other than ordinary repairs and maintenance, are
               capitalized and amortized asproject improvements.

               The net recoverable amount represents the undiscounted
               estimated future net cash flows expected to be received from
               the ongoing use of the property plus its residual value. To
        arrive at this amount, the Corporation projects future net
               cash flows over a maximum of 10 years and includes the
               proceeds from the estimated residual sale value at the end
               of that period. The projections take into account
               management's best estimate of the most probable set of
               economic conditions anticipated to prevail in the market
               area.

          ii.  Properties held for resale

               The Corporation capitalizes all direct costs, net of related
               revenue. Direct costs include property taxes, administration
               costs, finance costs and other costs associated with the
               cost of property held for resale. Realestate properties
               held for resale are recorded at the lower of cost or net
               realizable value.

      (e) Amortization

      Revenue producing real estate properties are amortized over the
      estimated useful lives of the assets. Amortization is computed using
      the sinking-fund method using an interest rate of 4% over a period of
      40 to 50 years for buildings and the declining-balance method at
      rates ranging from 8% to 35% for other non-building assets.

      Under the sinking-fund method used to amortize revenue producing
      buildings, an increasing amount is charged to income consisting of a
      fixed annual sum, together with interest compounded at an interest
      rate of 4%, so as to fullyamortize the buildings over their
      estimated life from date of acquisition.

      At January 1, 2002, the Corporation revised the estimates on the
      economic usefulness of certain non-building assets. This change in
      accounting estimate was treated prospectively.

      Beginning January 1, 2004, the Corporation will adopt the straight-
      line method to compute amortization of its revenue producing
      buildings. The adoption of the straight-line method from the sinking-
      fund method will be applied prospectively in accordance with the
      transitional provision of CICA Handbook Section 1100.

      (f) Deferred financing costs

      Insurance premiums paid to Canada Mortgage and Housing Corporation
      ("CMHC") to obtain insurance through the National Housing Act ("NHA")
      are amortized over 25 years on a straight-line basis. Upon the
      refinancing of a mortgage, any unamortized insurance premium
      associated with the previous mortgage is written off toincome. Costs
      of refinancing are amortized on a straight-line basis over the term
      of the new loan.

      (g) Risk management and fair value

      Risk Management

      The Corporation is exposed to financial risk that arises from the
   fluctuation in interest rates, the credit quality of its tenants, and
      the fluctuation in utility rates. These risks are managed as follows:

          i.   Interest rate risk

               Interest rate risk is minimized through the Corporation's
               current strategy of having the majority of its mortgages
               payable in fixed term arrangements. In addition, management
               is constantly reviewing its operating facility and, if
               market conditions warrant, the Corporation has the ability
               to convert its existing demand debt to fixed rate debt. The
               Corporation had demand debt outstanding of $nil at
               December 31, 2003 (December 31, 2002 - $nil). In addition,
               the Corporation structures its financings so as to stagger
               the maturities of its debt, thereby minimizing the
               Corporation's exposure to interest rate fluctuations.

               The majority of the Corporation's mortgages are insured by
               CMHC under the NHA mortgage program. This added level of
               insurance offered to lenders allow the Corporation to
               receive the best possible financing and interest rates, and
 significantly reduces the potential for a lender to call a
               loan prematurely.

          ii.  Credit risk

               Credit risk arises from the possibility that tenants may
               experience financial difficultyand be unable to fulfill
               their lease term commitments. The Corporation mitigates this
               risk of credit loss through the diversification of its
               existing portfolio and limiting its exposure to any one
          tenant. Thorough credit assessments are conducted in respect
               to all new leasing. In addition, where legislation allows,
               the Corporation obtains a security deposit to assist in a
               potential recovery requirement.

          iii. Utilities

               At December 31, 2003, the Corporation has long-term supply
               arrangements with two electrical utility companies to supply
               the Corporation with its electrical power needs for Alberta
               for the next twenty-four to twenty-five months at a blended
               rate of approximately $0.07/kwh. These agreements provide
               that the Corporation purchase its power for all Alberta
               properties under contract for the upcoming months.

               The Corporation also has two physical settlement fixed-price
               supply contracts for Alberta natural gas requirements. These
               contracts fix the price of natural gas for 75% of the
               Corporation's requirements in Alberta. The two contracts are
               for physical settlement, and each represents approximately
               37.5% of the Corporation's Alberta requirements. The first
               of these contracts runs from January 1, 2003 to
               September 30, 2004 and provides the commodity at a price of
               $5.44/GJ. The second contract runs from October 1, 2003 to
               September 30, 2005 and provides the commodity ata price of
               $6.16/GJ.

               In Saskatchewan, the Corporation has a physical supply
               agreement to supply 100% of the Corporation's natural gas
               requirements for that province. The agreement extends until
               October 31, 2005 at a fixed price of $5.20/GJ.

               While the above utility contracts for both electrical power
               and natural gas reduce the risk of exposure to adverse
               changes in commodity prices, they also reduce the potential
               benefits of favourable changes in commodity prices. For
               accounting purposes, all settlements are recorded as utility
               expense in the period the settlement occurs.

            As of March 2, 2002, ATCO Gas ("ATCO"), the transporter of
               all natural gas in Alberta, distributed a non-recurring
               rebate. The Alberta Energy and Utility Board instructed ATCO
               to rebate a portion of the sale proceeds of the
               Viking-Kinsella producing assets to ATCO North customers in
               the form of a one-time rebate. The rebate was distributed to
               all ATCO North customers, based on historical usage, at a
          rate of $3.325/GJ.

               The Alberta Government introduced two separate rebate
               programs to assist corporations with the increase in energy
               prices in 2001. The natural gas rebate program expired in
           April 2001 (resulting in a disproportionate share of this
               rebate in the first quarter of 2001) and the electrical
               rebate program expired on December 31, 2001. Due to the
               current electricity pricing environment, there was not an
               extension of this program after 2001.

      Fair Value

      In accordance with the disclosure requirements of the CICA Handbook,
      the Corporation is required to disclose certain information
      concerningits "financial instruments", defined as a contractual
      right to receive or deliver cash or another financial asset. The fair
      values of the majority of the Corporation's financial assets and
      liabilities, representing net working capital, approximate their
      recorded values at December 31, 2003 and 2002 due to their short-term
      nature. In these circumstances, the fair value is determined to be
      the market or exchange value of the assets or liabilities.

      Fair value estimates are made at a specific point in time, based on
      relevant market information and information about the financial
      instrument. These estimates are subjective in nature and involve
      uncertainties and matters of significant judgment and therefore
      cannot be determined with precision. Changes in assumptions could
      significantly affect estimates. The significant financial instruments
      of the Corporation and their carrying values as of December 31, 2003
      and 2002 are as follows:


      AS AT                                       December 31, December 31,
                                                         2003         2002
                                                  -------------------------
         (Unaudited)    (Audited)
      Mortgages and accounts receivable
        Carrying value                             $   13,126   $   14,704
        Fair market value                          $   13,126   $   14,704
      ---------------------------------------------------------------------
      Mortgages payable
        Carrying value                             $1,387,067   $1,307,177
        Fair market value                          $1,439,926   $1,349,780


      The fair value of the Corporation's mortgages payable exceeds the
      recorded value by approximately $52.9 million at December 31, 2003
      (December 31, 2002 - $42.6 million) due to changes in interest rates
      since the dates on whichthe individual mortgages were assumed. The
      fair value of the mortgages payable has been estimated based on the
      current market rates for mortgages with similar terms and conditions.
      The fair value of the Corporation's mortgages payableis an amount
      computed based on the interest rate environment prevailing at
      December 31, 2003 and 2002, respectively; the amount is subject to
      change and the future amounts will converge. There are no additional
      costs to the Corporation, assuming no early extinguishment of
      existing debt is delivered upon.

      (h) Use of estimates

      The accounting process requires that management make, and
      periodically review, a number of estimates including the following
   material items:

          i.   economic useful life of buildings for purposes of
               calculating amortization as disclosed in Note 1(e);
          ii.  forecast of economic indicators in order to measure fair
               values of buildings for purposes of determining net
               recoverable amount under Canadian generally accepted
               accounting principles as discussed in Note 1(d);
          iii. amount of capitalized on-site wages which relate to project
        improvements, as discussed in Note 2;
          iv.  amount of utility accrual for charges related to the current
               period; and
          v.   amount of provision for write-down of technology
               investments.

      Actualresults may differ from these estimates.

      (i) Cash and cash equivalents

      The Corporation considers highly liquid investments with an original
      maturity of three months or less to be cash equivalents.

      (j) Stock-based compensationplans

      Effective January 1, 2003, the Corporation changed its accounting
      policy for stock options granted on or after that date to reflect the
      adoption of the revised CICA Handbook Section 3870. Under the new
      policy, the Corporation now determines the fair value of stock
      options, using an accepted option-pricing model, on their grant date
      and recognizes this amount as compensation expense over the period
      the stock options vest, with a corresponding increase to contributed
      surplus in shareholders' equity. The new accounting policy has been
      applied prospectively in accordance with the transitional provision
      of Section 3870.

      Previously under the Corporation's intrinsic value method policy, the
      Corporation did not record compensation expense for stock options
      granted to directors, executives and employees in the consolidated
      financial statements because there was no intrinsic value at the date
      of grant. Note 8 discloses the pro forma amounts to the Corporation's
      net earnings and net earnings per share for the three months and
      years ended December 31, 2003 and 2002 had the impact of compensation
      costs using the fair value method been applied effective January 1,
      2002.

      (k) Disposal of long-lived assets

      Effective January 1, 2003, the Corporation adopted the new CICA
      Handbook Section 3475, Disposal of Long-Lived Assets and Discontinued
      Operations, for disposals on or after January 1, 2003. The
      recommendations of this section requires disposal of long-lived
      assets be classified as held for sale, and the results of operations
      and cash flows associated with the assets disposed be reported
      separately as discontinued operations, less applicable income taxes.
      A long-lived asset is classified by the Corporation as an asset held
      for sale at the point in time when it is available for immediate
      sale, management has committed to a plan to sell the asset and is
      actively locating a buyer for the asset at a sales price that is
      reasonable in relation to the current fair value of the asset, and
      the sale is probable and expected to be completed within a one-year
 period. For unsolicited interest in a long-lived asset, the asset is
      classified as held for sale only if all the conditions of the
      purchase and sale agreement have been met, a sufficient purchaser
      deposit has been received and thesale is probable and expected to be
      completed shortly after the end of the current period. The impact of
      adopting the new recommendations for disposals of long-lived assets
      on or after January 1, 2003 is disclosed in Note 3.

      (l) Disclosure of guarantees

      Effective January 1, 2003, the Corporation adopted Accounting
      Guideline 14 (AcG-14), Disclosure of Guarantees. This guideline
      provides assistance regarding the identification of guarantees and
      requiresa guarantor to disclose the significant details of
      guarantees that have been given, regardless of whether it will have
      to make payments under the guarantees. Please refer to Note 13 for
      further disclosure on the Corporation's guarantees.

      (m) Comparative figures

      Certain comparative figures have been reclassified to conform with
      the current period's presentation, or as a result of accounting
      changes.


  2.  REVENUE PRODUCING PROPERTIES


      AS AT         December 31, December 31,
                                                         2003         2002
                                                  -------------------------
                                              (Unaudited)    (Audited)

      Land                                         $  113,568   $   96,749
      Building and non-building assets              1,834,724    1,695,092
      ---------------------------------------------------------------------

      Total revenue producing properties            1,948,292    1,791,841
      Less: accumulated amortization                 (235,121)    (187,564)
      ---------------------------------------------------------------------
                     $1,713,171   $1,604,277
                                                  -------------------------
                                                  -------------------------


      Acquisitions

                         3 months    3 months        Year        Year
                                 ended       ended       ended       ended
                              December    December    December    December
                              31, 2003    31, 2002   31, 2003    31, 2002
                           ------------------------------------------------
                            (Unaudited) (Unaudited) (Unaudited)   (Audited)

      Cash paid             $        -  $   27,484  $   68,831  $  102,926
   Debt assumed                   -           1      38,834     110,829
      ---------------------------------------------------------------------

      Total purchase price           -      27,485     107,665     213,755
      Fair value
       adjustments to debt           -           -       2,137      19,500
      ---------------------------------------------------------------------

      Book value            $        -  $   27,485  $  109,802  $  233,255
                           ------------------------------------------------
                           ------------------------------------------------

      Units acquired                 -         346       1,956       3,558
                           ------------------------------------------------
                           ------------------------------------------------


      Dispositions

                              3 months    3 months        Year        Year
                                 ended       ended       ended     ended
                              December    December    December    December
                              31, 2003    31, 2002    31, 2003    31, 2002
                           ------------------------------------------------
                   (Unaudited) (Unaudited) (Unaudited)   (Audited)

      Cash received         $        -  $        -  $    1,385  $    2,281
      Vendor take back
       mortgage                      -           -           -         500
      Debt assumed    -           -       1,655       4,717
      ---------------------------------------------------------------------

      Total proceeds                 -           -       3,040       7,498
      Net book value                 -          -       1,993       6,531
      ---------------------------------------------------------------------

      Gain on sales         $        -  $        -  $    1,047  $      967
                           ------------------------------------------------
                           ------------------------------------------------

      Units sold                     -           -          40         121
                           ------------------------------------------------
                       ------------------------------------------------


      Included in revenue producing properties is capitalized wages of
      $1.3 million for the three months ended December 31, 2003,
      $1.5 million for the three months ended December 31, 2002,
      $5.1 million for the year ended December 31, 2003 and $4.7 million
      for the year ended December 31, 2002 relating to project
      improvements.  Included in the cost of properties held for resale for
      the year are capitalized financing and property taxes costs of
      $0.1 million for the three months ended December 31, 2003,
      $0.2 million for the three months ended December 31, 2002,
      $0.4 million for the year ended December 31, 2003 and $0.5 million
      for the year ended December 31, 2002 less net operating revenue of
      $nil for each of the respective periods.  Real estate assets are
      pledged as security against mortgages payable.


  3.  DISPOSAL OF LONG-LIVED ASSETS AND DISCONTINUED OPERATIONS

      During the first quarter of 2003, the Corporation received a
      $3.0 million unsolicited offer to purchase a 40-unit property located
      in Edmonton, Alberta. The sale was completed by the end of the first
      quarter of 2003. There were no other dispositions during the current
      year to date. Note 2 discloses the carrying amounts of the major
      assets and liabilities included in the disposition. The following
      table sets forth the results of operations associated with the long-
   lived asset, separately reported as discontinued operations for the
      current and prior periods.


                              3 months    3 months        Year        Year
                                 ended       ended       ended       ended
                              December    December    December    December
                              31, 2003    31, 2002    31, 2003    31, 2002
                           ------------------------------------------------
                        (Unaudited) (Unaudited) (Unaudited)   (Audited)

      Revenue

      Rental income         $        -  $       83   $      86  $      321
                           ------------------------------------------------

      Expenses

      Revenue producing
       properties:
        Operating expenses           -          17           4          47
        Utilities                    -          28          17          58
        Utility rebate
         (NOTE 1 (g) (iii))          -         (12)   -         (13)
        Property taxes               -           6           6          22

      Administration                 -           3           2          10
      Financing costs                -          26          24         103
     Amortization                   -          15           -          57
      ---------------------------------------------------------------------

                                     -          83          53         284
                           ------------------------------------------------

      Operating earnings
       from discontinued
       operations before
       income taxes         $        -  $        -  $       33  $       37

      Future income taxes            -           1      12          14

      Operating earnings
      (loss) from
      discontinued
      operations                     -          (1)         21          23

      Gain on disposition            -           -       1,047           -
      Future income taxes            -           -        (317)          -
      ---------------------------------------------------------------------

      Earnings (loss) from
       discontinued
       operations           $        -  $       (1) $      751  $       23
                           ------------------------------------------------
                           ------------------------------------------------


  4.  MORTGAGES AND ACCOUNTS RECEIVABLE

      The mortgages and accounts receivable comprise an aggregate amount of
      $13.1 million at December 31, 2003 (December 31, 2002 -
      $14.7 million). In this balance, mortgages receivable arising on
      sales of property represents $6.9 million at December 31, 2003
      (December 31, 2002 - $8.5 million) which comes due periodically up to
      May 2007. The Corporation is currently earning a weighted average
      interest rate of 1.9% at December 31, 2003 (December 31, 2002 -
      3.04%) on these amounts. The remaining balance consists of mortgage
      holdbacks and incidental income earned but not yet received.


  5.  OTHER ASSETS


      AS AT                                       December 31, December 31,
                                                         2003         2002
     -------------------------
                                                   (Unaudited)    (Audited)

      Corporate technology assets
       (net of amortization)                       $    3,746   $    4,658
      Head office building (net of amortization)        2,546        3,261
      Deposits on properties                            1,200          950
      Inventory                                         1,524        1,606
      Re-organization and restructuring                 2,124            -
      Prepaid and other                                 3,512        3,248
      ---------------------------------------------------------------------

                                                  $   14,652   $   13,723
                                                  -------------------------
                                                  -------------------------


      Re-organization and restructuring costs included in other assets of
$2.1 million at December 31, 2003 (December 31, 2002 - $nil) is
      related to the Corporation's proposed re-organization into a real
      estate investment trust as described in Note 15 "Subsequent Events".


  6.  TECHNOLOGY INVESTMENTS

    There was no provision for loss of technology investments made for
      the years ended December 31, 2003 and 2002.

      The Corporation still has capital leases totalling $3.5 million at
      December 31, 2003 (December 31, 2002 - $4.6 million) with a weighted
      average interest rate of 9.7% (December 31, 2002 - 9.7%) relating to
      a telecommunication initiative that was terminated on October 18,
      2001. Future minimum payments under capital leases together with the
      balance ofthe obligation due under capital leases are as follows for
      the year ending:


                                                  December 31, December 31,
                                                         2003         2002
                 -------------------------
                                                   (Unaudited)    (Audited)

      2003                                         $        -   $    1,481
      2004                                1,481        1,481
      2005                                              1,330        1,330
      2006                                              1,222        1,222
      2007                                                  -         -
      ---------------------------------------------------------------------
      Total                                             4,033        5,514
      Less amount representing interest                   518          916
      ---------------------------------------------------------------------
      Total net obligation                         $    3,515    $   4,598
                                                  -------------------------
                                                -------------------------

  7.  MORTGAGES PAYABLE


      AS AT                                       December 31, December 31,
                                                         2003         2002
                                               -------------------------
                                                   (Unaudited)    (Audited)


      (a) Revenue producing properties

      Mortgages payable bearing interest at a
      weighted average of 5.68% at December 31,
      2003 (December 31, 2002 - 5.87%) per annum,
      payable in monthly principal and interest
      instalments totalling $9.3 million for the
      year ended December 31, 2003 (December 31,
      2002 - $8.9 million), mature from 2004 to
      2020 and are secured by specific charges
      against specific properties.                 $1,385,268   $1,305,349

      (b) Other assets

      Mortgages payable bearing interest at a
      weighted average of 7.92% at December 31,
      2003 and 2002 per annum, payable in monthly
      principal and interest instalments totalling
      $15 thousand for the years ended December 31,
      2003 and 2002, mature in September 2010 and
      are secured by specific charges against
      specific properties.           1,799        1,828
      ---------------------------------------------------------------------
                                                   $1,387,067   $1,307,177
                                                  -------------------------
                                                  -------------------------


      Estimated principal payments required to meet mortgage obligations as
      at December 31, 2003 (unaudited) are as follows:

                   Revenue Producing Properties   Other Assets       Total
                   --------------------------------------------------------
      2004                             $194,309            $36    $194,345
      2005                              153,260           39     153,299
      2006                              190,258             42     190,300
      2007                              242,752             45     242,797
      2008                              240,723             48     240,771
      Subsequent                        363,966          1,589     365,555
      ---------------------------------------------------------------------
                                     $1,385,268         $1,799  $1,387,067
                   --------------------------------------------------------
                   --------------------------------------------------------


      Estimated principal payments required to meet mortgage obligations as
      at December 31, 2002 (audited) are as follows:

       Revenue Producing Properties   Other Assets       Total
                   --------------------------------------------------------
      2003                             $213,220            $36    $213,256
      2004                        119,340             39     119,379
      2005                               92,241             42      92,283
      2006                              108,709             45     108,754
      2007                              223,616             49223,665
      Subsequent                        548,223          1,617     549,840
      ---------------------------------------------------------------------
                                     $1,305,349         $1,828  $1,307,177
              --------------------------------------------------------
                   --------------------------------------------------------


      CMHC provides mortgage loan insurance in connection with mortgages
      made to the Corporation. On September 13, 2002, the Corporation and
      CMHC entered into an agreement (the "Agreement") whereby the
      Corporation will provide certain financial information and be subject
      to certain restrictive covenants, including limitation on additional
 debt, distribution of dividends in respect of capital stock in the
      event of default, and maintenance of certain financial ratios. In the
      event of default, the Corporation's total financial liability under
      this Agreement is limitedto a one-time penalty payment of
      $250 thousand under a Letter of Credit issued in favour of CMHC.

      (c) Demand facilities

      The Corporation has a demand facility in the form of an acquisition
      and operating line. This demand facility is secured by a first or
      second mortgage charge of specific assets. The maximum amount
      available varies with the value of pledged assets to a maximum not to
      exceed $100.0 million. Approximately $34.8 million was available from
     this facility on December 31, 2003 (December 31, 2002 -
      $34.0 million). An amount of $nil was outstanding at December 31,
      2003 and 2002. This facility carries an interest rate ranging from
      prime plus 0.5% to prime plus 1.5% per annum,and has no fixed terms
      of repayment. The facility is reviewable annually by the Bank.


  8.  SHARE CAPITAL

      (a) Authorized:

      Unlimited number of common shares
      Unlimited number of preferred shares, issuable in series

      Issued:

      Preferred shares

      The Corporation did not issue any preferred shares for the years
      ended December 31, 2003 and 2002. There was a total of 8,945,155
      preferred shares outstanding at December 31, 2003 and 2002. These
      preferred shares are offset by non-interest bearing notes receivable
      from the holders of the preferred shares for the equivalent amount.
      Both the preferred shares and the notes receivable are retractable at
      either party's option and may legally be offset against each other.
      Accordingly, these have been offset for consolidated financial
      statement presentation.


      Common shares                                    Shares       Amount
                                         ----------------------------

      December 31, 2003 (unaudited)                50,868,119     $275,509
      December 31, 2002 (audited)                  50,109,314     $266,516

      Details of shares issued are as follows:

      December 31,2001 (audited)                  49,404,281     $258,202
        On exercise of stock options                  801,633        8,828
        Share buy-back, recorded at book
         value of shares                              (96,600)        (514)
    ---------------------------------------------------------------------
      December 31, 2002 (audited)                  50,109,314      266,516
        On exercise of stock options                  802,805        9,229
        Share buy-back, recorded at
         book value of shares                         (44,000)        (236)
      ---------------------------------------------------------------------
      December 31, 2003 (unaudited)                50,868,119     $275,509
                     ----------------------------
                                               ----------------------------


      The Corporation commenced a normal course issuer bid on March 3, 2000
      allowing it to purchase up to 2,236,400 common shares for
      cancellation until its termination on March 2, 2001 or such earlier
      time as the bid is complete. This bid was extended with a termination
      date to March 22, 2002 or such earlier time as the bid is complete.
      On August 6, 2002, the Corporation commenced a normal course issuer
      bid allowing it to purchase up to 3,267,840 common shares for
      cancellation until its termination on August 5, 2003 or such earlier
      time as the bid is complete. On August 25, 2003, the Corporation
      commenced a normal course issuer bid allowing it to purchase up to
      2,770,228 common shares for cancellation until its termination on
      August 24, 2004 or such earlier time as the bid is complete. The
      Corporation acquired and cancelled 44,000 common shares at
      December 31, 2003 (December 31, 2002 - 96,600) at a cost of
      $0.6 million (December 31, 2002 - $1.2 million). The excess of the
      cost over stated value of the shares acquired of $0.4 million at
      December 31, 2003 (December 31, 2002 - $0.7 million) has been charged
      to retained earnings.

      (b) Stock options

      Under the stock option plan, the Company grants options to directors,
      executives and employees. The stock option plan provides for the
      granting of options to purchase up to 10,643,636 common shares at
      December 31, 2003 (December 31, 2002 - 10,643,636). The exercise
      price is equal to the market value of the common shares at the date
 of grant. Vesting periods range from immediate vesting for certain
      executives to five year vesting for remaining employees and
      directors. Options are granted at management's discretion with Board
      of Directors' approval being required. No option may be exercisable
      more than 10 years from the date of grant. There was a total of
      2,398,828 options outstanding at December 31, 2003 (December 31, 2002
      - 3,480,072) to directors, officers and employees. The exercise
   prices range from $9.11 to $16.73 at December 31, 2003 (December 31,
      2002 - $9.11 to $22.92). These options expire up to August 28, 2012.
      All options were issued at market price.

      Changes in options outstanding during year

      The following table depicts the changes in options in the years
      presented:

                                December 31, 2003       December 31, 2002
                                   (Unaudited)              (Audited)
                             ---------------------------------------------
                                          Weighted                Weighted
                                           average                 average
                                          exercise      exercise
                               Options       price     Options       price
                              ---------------------------------------------
      Outstanding at
       beginning of year      3,480,072     $12.46    3,647,834     $12.60
      Granted                         -          -      930,722     $12.16
      Exercised                (802,805)    $11.50     (801,633)    $11.02
      Forfeited                (278,439)    $18.01     (296,851)    $17.14
      ---------------------------------------------------------------------
      Outstanding at
       end of year            2,398,828     $12.20    3,480,072     $12.46
                              ---------------------------------------------
                    ---------------------------------------------


      Options exercisable at year end

      The following table summarized information about the options
      outstanding and exercisable at December 31, 2003 (unaudited):


                   Options outstanding        Options exercisable
  -------------------------------------------------------------------------
                             Weighted                    Weighted
                              average                     average
                            remaining                   remaining
                             contrac-  Weighted          contrac-  Weighted
          Range of    Number    tual    average   Number    tual    average
          exercise      out-life   exercise    exer-    life   exercise
            prices  standing  (years)    price   cisable  (years)    price
  -------------------------------------------------------------------------

   $9.01 to $11.00   283,300     6.4     $9.74   263,900     6.4     $9.75
  $11.01 to $13.00 1,694,792     5.6    $11.94 1,013,934     6.0    $11.85
  $13.01 to $15.00   242,636     5.7    $13.85   178,640     5.5    $13.66
  $15.01 to $17.00   178,100     5.3    $16.26   140,700     5.2    $16.46
  -------------------------------------------------------------------------
                   2,398,828     5.7    $12.20 1,597,174     5.9    $12.11
                  ---------------------------------------------------------
                  ---------------------------------------------------------


      The following table summarized information about the options
      outstanding and exercisable at December 31, 2002 (audited):


                        Options outstanding        Options exercisable
 -------------------------------------------------------------------------
                             Weighted                    Weighted
                              average                     average
                            remaining         remaining
                             contrac-  Weighted          contrac-  Weighted
          Range of    Number    tual    average   Number    tual    average
          exercise      out-    life   exercise    exer-    life   exercise
     prices  standing  (years)    price   cisable  (years)    price
  -------------------------------------------------------------------------

   $9.01 to $11.00   647,800     7.1     $9.41   605,000     7.1     $9.40
  $11.01 to $13.00 1,979,222   6.6    $11.95   910,698     7.4    $11.76
  $13.01 to $15.00   401,450     6.1    $14.03   275,812     5.5    $13.88
  $15.01 to $17.00   279,900     6.4    $16.17   178,520     6.3    $16.34
  $17.01 to $19.00    79,700     0.2    $17.94    79,700   0.2    $17.94
  $19.01 to $21.00    23,000     0.2    $19.73    23,000     0.2    $19.73
  $21.01 to $23.00    69,000     0.3    $22.55    69,000     0.2    $22.55
  -------------------------------------------------------------------------
           3,480,072     6.3    $12.46 2,141,730     6.4    $12.41
                  ---------------------------------------------------------
                  ---------------------------------------------------------


      The Corporation did not record compensation expense for stock options
      granted prior to January 1, 2003 to directors, executives and
      employees in the financial statements because there was no intrinsic
      value, as defined by CICA Handbook, Section 3870, at the date of
      grant. As required by Canadian GAAP, the impact on compensation costs
      of using a fair value based method, as if the compensation costs had
      been recorded in net earnings, must be disclosed. If the fair value
      basic method had been used for stock options granted for the year
      ended December 31, 2002, the Company's net earnings and net earnings
      per share would approximate the following pro forma amounts for the
      three months and years ended December 31, 2003 and 2002:


                              3 months    3 months
                                 ended       ended  Year ended  Year ended
                              December    December    December    December
                              31, 2003    31,2002    31, 2003    31, 2002
                           ------------------------------------------------
                            (Unaudited) (Unaudited) (Unaudited)   (Audited)

      Compensation costs        $(509)      $(550)    $(2,064)     $(1,931)
      Net (loss) earnings
        As reported           $(1,467)     $2,213      $7,751      $11,576
        Pro forma             $(1,976)     $1,663      $5,687       $9,645
      Net (loss) earnings
       per common share
        Basic
       As reported          $(0.03)      $0.04       $0.15        $0.23
          Pro forma            $(0.04)      $0.03       $0.11        $0.19
       Diluted
         As reported           $(0.03)      $0.04       $0.15        $0.23
         Pro forma  $(0.04)      $0.03       $0.11        $0.19


      The fair value of each option granted was estimated to be $6.74 on
      the date of grant using the Black-Scholes option-pricing model with
      weighted average assumptions for grants as follows:


      Risk free interest rate                                        5.33%
      Expected lives (years)                                  7 - 10 years
      Expected volatility                                           42.56%
      Dividend per share                                             $0.05


      The Corporation did not grant any stock options subsequent to
      December 31, 2002.


  9.  PER SHARE CALCULATIONS

      The following table sets forth the computation of basic and diluted
      earnings per share with respect to earnings from continuing
      operations and earnings from discontinued operations.


                              3 months    3 months
                                 ended       ended  Year ended  Yearended
                              December    December    December    December
                              31, 2003    31, 2002    31, 2003    31, 2002
                           ------------------------------------------------
                    (Unaudited) (Unaudited) (Unaudited)   (Audited)
      Numerator
        (Loss) earnings
         from continuing
         operations           $(1,467)     $2,214      $7,000      $11,553
        Earnings (loss)
         from discontinued
      operations                 -         $(1)       $751          $23
      ---------------------------------------------------------------------
      Denominator
        Denominator for
         basic earnings
         per share -
         weighted average
         shares (THOUSANDS)    50,603      50,067      50,380       49,717
      ---------------------------------------------------------------------
        Effect of dilutive
         securities
         Stock options
         (THOUSANDS)       660         637         511          525
        Denominator for
         diluted earnings per
         share adjusted for
         weighted average
         shares and assumed
         conversion
         (THOUSANDS)           51,263      50,70450,891       50,242
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      (Loss) earnings per
       share from continuing
       operations
  Basic                  $(0.03)      $0.04       $0.14        $0.23
        Diluted                $(0.03)      $0.04       $0.14        $0.23
      ---------------------------------------------------------------------
      Earnings per share
    from discontinued
       operations
         Basic                  $0.00       $0.00       $0.01        $0.00
         Diluted                $0.00       $0.00       $0.01        $0.00
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------


  10. INCOME TAXES

      The Corporation has tax losses at December 31, 2003 (unaudited) of
      approximately $209 million available to reduce future taxable income,
      the benefit of which has been accounted for in computing future
      income taxes. These losses begin to materially expire in 2005,
      subject to the ability of the Corporation to re-file and further
      amend its income tax returns. The adjustment for changes in the
      effective tax rate reflects the benefit of the reduction of the
      current combined federal and provincial substantially enacted rates
      from 37% reducing to 35% for the year ended December 31, 2003
      (December 31, 2002 - 39% reducing to 34%).

      The Corporation's provision for future income taxes is comprised as
      follows:


                              3 months    3 months
                                 ended       ended  Year ended  Year ended
                              December    December    December    December
                              31, 2003    31, 2002    31, 2003    31, 2002
                           ------------------------------------------------
                     (Unaudited) (Unaudited) (Unaudited)   (Audited)

      Continuing
       operations              $6,592       $(797)    $11,761       $5,406
      Discontinued
       operations                   -           1         329           14
      ---------------------------------------------------------------------
      Total future
       income taxes            $6,592       $(796)    $12,090       $5,420
                           ------------------------------------------------
                  ------------------------------------------------


      The future income tax expense is computed as follows:


                              3 months    3 months
                                 ended       ended  Year ended  Year ended
     December    December    December    December
                              31, 2003    31, 2002    31, 2003    31, 2002
                           ------------------------------------------------
                            (Unaudited) (Unaudited) (Unaudited)   (Audited)

      Tax expense based on
       expected rate           $2,265      $1,714      $8,716       $8,129
      Non-taxable portion
       of capital gains             -           9        (223)        (190)
    Adjustment to future
       income tax liabilities     843       1,685       1,615        1,685
      Adjustment for change
       in effective tax rate    3,484      (4,204)      1,982       (4,204)
      ---------------------------------------------------------------------
      Future income
       tax expense
       (recovery)              $6,592       $(796)    $12,090       $5,420
                           ------------------------------------------------
                           ------------------------------------------------


      The future income tax liability is calculated as follows:


      AS AT                                       December 31, December 31,
                                                         2003         2002
                                                  -------------------------
                                                   (Unaudited)    (Audited)

      Tax assets related to operating losses          $77,354      $63,254
      Tax liabilitiesrelated to differences
       in tax and book basis                         (152,119)    (126,230)
      ---------------------------------------------------------------------
      Future income tax liability                    $(74,765)    $(62,976)
 -------------------------
                                                  -------------------------


  11. RELATED PARTY TRANSACTIONS

      There were no related party transactions for the years ended
      December 31, 2003 and 2002.


  12. COMMITMENTS AND CONTINGENCIES

      The Corporation has long-term supply arrangements with two electrical
      utility companies and commitments for fixed-price natural gas supply
      contracts as describedin Note 1(g)(iii).

      The Corporation, in the normal course of operations, will become
      subject to a variety of legal and other claims against the
      Corporation. Management and the Corporation's legal counsel evaluate
      all claims on their apparent merits, and accrue Management's best
      estimate of the estimated costs to satisfy such claims. Management
      believes that the outcome of legal and other claims filed against the
      Corporation will not be material to the Corporation.

      The Corporation has established a group registered retirement savings
      plan for its employees whereby the Corporation will match the
      contributions of the employees to a maximum of 3% of regular earnings
      earned in a calendaryear or one-half the contribution limit set for
      registered retirement savings plans, whichever is less. The
      Corporation's costs totalled approximately $338 thousand for the year
      ended December 31, 2003 (December 31, 2002 - $127 thousand). There
      was no requirement for future contributions in respect of past
      service.


  13. GUARANTEES

      In the normal course of business, the Corporation enters into various
      agreements that may contain features that meet the AcG-14 definition
      of a guarantee. AcG-14 defines a guarantee to be a contract
      (including an indemnity) that contingently requires the Corporation
      to make payments to the guaranteed party based on (i) changes in an
      underlying interest rate, foreign exchange rate, equity or commodity
      instrument, index or other variable, that is related to an asset, a
      liability or an equity security of the counterparty, (ii) failure of
      another party to perform under an obligating agreement or (iii)
      failure of a third party to pay its indebtedness when due.

      In connection with the sales of properties by the Corporation, a
      mortgage assumed by the purchaser will have an indirect guarantee
      provided by Boardwalk to the lender until the mortgage is refinanced
      by the purchaser. In the event of default by the purchaser, Boardwalk
      would be liable for the outstanding mortgage balance. The
      Corporation's maximum exposure at December 31, 2003 is approximately
      $6.2 million. In the event of default, the Corporation's recourse for
      recovery includes the sale of the respective building asset. The
      Corporation expects that the proceeds from the sale of the building
      asset will cover, and in most likelihood exceed, the maximum
      potential liability associated with the amount being guaranteed.
      Therefore, at December 31, 2003, no amounts have been recorded in the
      consolidated financial statements with respect to the above noted
      indirect guarantees.


  14. SEGMENTED INFORMATION

      The Corporation specializes in multi-family residential housing and
      operates primarily within one business segment in four provinces
      located in Canada. The following summary presents segmented financial
      information for the Corporation's business by geographic location:


                              3 months    3 months
                                 ended       ended  Year ended  Year ended
                 December    December    December    December
                              31, 2003    31, 2002    31, 2003    31, 2002
                           ------------------------------------------------
  Alberta                   (Unaudited) (Unaudited) (Unaudited)   (Audited)

    Revenue                 $   38,550  $   37,896  $  152,583  $  151,076
                           ------------------------------------------------
    Expenses
      Operating                  4,862       4,190      19,013      15,455
      Utilities                  5,458       6,673      19,208      20,978
      Utility rebate                 -         (94)          -      (3,386)
      Property taxes             2,715       2,938      11,016      11,358
  -------------------------------------------------------------------------
                                13,035      13,707      49,237      44,405
                           ------------------------------------------------
    Net operating income    $   25,515  $   24,189  $  103,346  $  106,671
                           ------------------------------------------------

  Saskatchewan
    Revenue                 $    8,685  $    8,516  $   34,038  $   32,893
                           ------------------------------------------------
    Expenses
      Operating                  1,258       1,152       4,585       4,163
      Utilities                  1,212       1,040       3,928       3,979
      Property taxes             1,107       1,121       4,723       4,778
  -------------------------------------------------------------------------
                                 3,577       3,313      13,236      12,920
                           ------------------------------------------------
    Net operating income    $    5,108  $    5,203  $   20,802  $   19,973
                           ------------------------------------------------

  Ontario
    Revenue                 $    8,931  $    8,476  $   34,850  $   33,327
                          ------------------------------------------------
    Expenses
      Operating                  1,256       1,133       4,838       4,473
      Utilities                  1,425       1,455       5,846       5,369
      Utility rebate                 -  (295)          -        (295)
      Property taxes             1,505       1,357       5,679       5,364
  -------------------------------------------------------------------------
                                 4,186       3,650      16,363    14,911
                           ------------------------------------------------
    Net operating income    $    4,745  $    4,826  $   18,487  $   18,416
                           ------------------------------------------------

  Quebec (operations
   commenced May 2002)
    Revenue                 $   13,505  $    8,646  $   48,276  $   21,962
                           ------------------------------------------------
    Expenses
      Operating                  1,377       1,070       5,189       2,147
      Utilities                  1,514         908       5,650       1,906
      Property taxes             1,300         988       4,725       2,074
  -------------------------------------------------------------------------
             4,191       2,966      15,564       6,127
                           ------------------------------------------------
    Net operating income    $    9,314  $    5,680  $   32,712  $   15,835
                           ------------------------------------------------


  Total
    Net operating income    $   44,682  $   39,898  $  175,347  $  160,895
    Unallocated revenue(x)         221         393       4,370      10,136
    Unallocated expenses(xx)   (46,370)    (38,078)   (171,966)   (159,455)
  -------------------------------------------------------------------------
    Net (loss) income       $   (1,467) $    2,213  $    7,751  $   11,576
                           ------------------------------------------------
       ------------------------------------------------


  AS AT                                               December    December
                                                      31, 2003    31, 2002
                                -------------------------
                                                    (Unaudited)   (Audited)
  Alberta
    Identifiable assets
      Revenue producing properties                  $  969,196  $  971,598
      Mortgages and accounts receivable                  8,338       8,550
      Deferred financing costs                          26,621      25,464
      Tenants' security deposit                          5,674       6,559
                                                  -------------------------
                                                    $1,009,829  $1,012,171
                                                  -------------------------
  Saskatchewan
    Identifiable assets
      Revenue producing properties     $  178,867  $  180,792
      Mortgages and accounts receivable                     11          22
      Deferred financing costs                           4,585       4,714
      Tenants' security deposits                         1,096     1,037
                                                  -------------------------
                                                    $  184,559  $  186,565
                                                  -------------------------
  Ontario
    Identifiable assets
      Revenue producing properties                  $  215,428  $  215,175
      Mortgages and accounts receivable                    250       1,166
      Deferred financing costs                           2,709       2,954
            -------------------------
                                                    $  218,387  $  219,295
                                                  -------------------------
  Quebec
    Identifiable assets
     Revenue producing properties                  $  342,364  $  229,272
      Mortgages and accounts receivable                  4,425       4,709
      Deferred financing costs                           4,102       4,357
                                 -------------------------
                                                    $  350,891  $  238,338
                                                  -------------------------
  Total assets
      Identifiable assets                   $1,763,666  $1,656,369
      Unallocated assets(xxx)                           39,714      52,121
                                                  -------------------------
                                                    $1,803,380  $1,708,490
                                                  -------------------------
                                                  -------------------------

  (x)   Unallocated revenue includes property sales, interest income,
        revenue from discontinued operations and other non-rental income.
  (xx)  Unallocated expenses include cost of property sales, operating
        expenses from discontinued operations, non-rental operating
        expenses, administration, financing costs, amortization, income
        taxes and other provisions.
  (xxx) Unallocated assets include properties held for development, cash,
        short-term investments and other assets.


  15. SUBSEQUENT EVENTS

      On January 13, 2004, the Corporation filed a ManagementInformation
      Circular with respect to a proposed re-organization of the
      Corporation into a real estate investment trust and a secondary
      offering of the Corporation's shares. In addition, the Corporation
      also executed the Acquisition and Arrangement Agreement in connection
      with the proposed reorganization.

      Subsequent to December 31, 2003, the Corporation contracted to
      acquire 183 residential units from an unrelated third party for a
      purchase price of $16.9 million. The acquisition will be financed
      through cash of $8.7 million and the assumption of existing
      mortgages.


DATASOURCE: Boardwalk Equities Inc.



CONTACT: Boardwalk Equities Inc. - Sam Kolias, President and CEO,

[phone]; Roberto Geremia, Senior Vice-President, Finance and Chief

Financial Officer, [phone]; Mike Hough, Senior Vice-President,

[phone]; Paul Moon, Director of Corporate Communications,

[phone]

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