MI Developments announces 2009 first quarter results



    AURORA, ON, May 8 /CNW/ - MI Developments Inc. (TSX: MIM.A, MIM.B; NYSE:  
MIM) ("MID" or the "Company") today announced its results for the three months
ended March 31, 2009. All figures are in U.S. dollars.

    
    -------------------------------------------------------------------------
    (in thousands, except per share figures)         REAL ESTATE BUSINESS(1)
                                                        Three months ended
                                                             March 31,
                                                    -------------------------
                                                         2009         2008
                                                    ------------ ------------
    Revenues                                        $    53,819  $    54,035
    Net income attributable to MID                  $    25,161  $    30,888
    Funds from operations ("FFO")(2)                $    34,927  $    41,935
    Diluted FFO per share(2)                        $      0.75  $      0.90
    -------------------------------------------------------------------------

    (in thousands, except per share figures)            MID CONSOLIDATED(1)
                                                        Three months ended
                                                             March 31,
                                                    -------------------------
                                                        2009(3)       2008
                                                    ------------ ------------
    Revenues
      Real Estate Business                          $    53,819  $    54,035
      Magna Entertainment Corp. ("MEC")(3),(4)          152,935      229,485
      Eliminations(3)                                    (9,636)      (8,108)
                                                    ------------ ------------
                                                    $   197,118  $   275,412
                                                    ------------ ------------
                                                    ------------ ------------
    Net income (loss) attributable to MID
      Real Estate Business                          $    25,161  $    30,888
      MEC - continuing operations(3)                    (54,763)      (6,995)
      Eliminations(3)                                      (107)         266
                                                    ------------ ------------
      Income from continuing operations                 (29,709)      24,159
      MEC - discontinued operations(3),(5)                  864       (7,280)
                                                    ------------ ------------
                                                    $   (28,845) $     6,879
                                                    ------------ ------------
                                                    ------------ ------------
    Diluted earnings (loss) attributable to
     MID per share from continuing operations       $     (0.64) $      0.52
    Diluted earnings (loss) attributable
     to MID per share                               $     (0.62) $      0.15
    -------------------------------------------------------------------------
    (1) As discussed further below in this press release, the Company adopted
        United States generally accepted accounting principles ("U.S. GAAP")
        as its primary basis of financial reporting commencing January 1,
        2009 on a retrospective basis. In conjunction with the adoption of
        U.S. GAAP, the Company also adopted the definition of FFO prescribed
        in the United States effective January 1, 2009 on a retrospective
        basis. The results of operations for the three months ended March 31,
        2008 have been restated to reflect the adoption of U.S. GAAP and the
        definition of FFO prescribed in the United States.
    (2) FFO and diluted FFO per share are measures widely used by analysts
        and investors in evaluating the operating performance of real estate
        companies. However, FFO does not have a standardized meaning under
        GAAP and therefore may not be comparable to similar measures
        presented by other companies. Please refer to "Reconciliation of
        Non-GAAP to GAAP Financial Measures" below in this press release.
    (3) As discussed further below in this press release, on March 5, 2009,
        MEC and certain of its subsidiaries filed voluntary petitions for
        reorganization under Chapter 11 of the United States Bankruptcy Code.
        As a result of the MEC Chapter 11 filing, the Company has concluded
        that, under generally accepted accounting principles ("GAAP"), it
        ceased to have the ability to exert control over MEC on or about
        March 5, 2009. Accordingly, the Company's investment in MEC has been
        deconsolidated from the Company's results beginning on March 5, 2009.
        Accordingly, the Company's results of operations for the three months
        ended March 31, 2009 include MEC's results of operations for the
        period prior to March 5, 2009. Transactions between the Real Estate
        Business and MEC have not been eliminated in the presentation of each
        segment's results of operations. However, the effects of transactions
        between these two segments prior to March 5, 2009 are eliminated in
        the consolidated results of operations of the Company.
    (4) Excludes revenues from MEC's discontinued operations.
    (5) Discontinued operations represent MEC's discontinued operations, net
        of certain related consolidation adjustments. MEC's discontinued
        operations for the three-month periods ended March 31, 2009 and 2008
        include the operations of Remington Park, Thistledown, Portland
        Meadows and Magna Racino(TM). In addition, MEC's discontinued
        operations for the three months ended March 31, 2008 include the
        operations of Great Lakes Downs, which was sold in July 2008.
    -------------------------------------------------------------------------

    REAL ESTATE BUSINESS FINANCIAL RESULTS
    --------------------------------------
    

    Revenues were $53.8 million in the first quarter of 2009 compared to
$54.0 million in the first quarter of 2008. The $0.2 million reduction in
revenues is due to a $5.5 million reduction in rental revenues, partially
offset by a $5.3 million increase in interest and other income earned from
MEC. The decrease in rental revenues is primarily due to foreign exchange,
which had a $5.6 million negative impact as the U.S. dollar strengthened
against the foreign currencies (primarily the Canadian dollar and the euro) in
which the Real Estate Business operates. Property vacancies and lease
replacements and renewals also had a negative impact, reducing revenue for the
quarter by $0.6 million compared to the prior year period. These negative
contributions to rental revenues were partially offset by contractual rent
adjustments, which increased revenues by $0.7 million, primarily due to
cumulative CPI-based increases (being increases that occur every five years or
once a specified cumulative increase in CPI has occurred) and fixed
contractual rent adjustments implemented since first quarter of fiscal 2008.
The increase in interest and other income earned from MEC is primarily due to
(i) $2.1 million of interest and fees earned under the loan provided in
December 2008 (the "MEC 2008 Loan"), (ii) a $2.1 million increase in interest
and fees earned under the bridge loan provided in September 2007 (the "MEC
Bridge Loan") as a result of the increased level of borrowings and arrangement
fees incurred and (iii) a $1.1 million increase in interest and arrangement
fees recognized under the Gulfstream Park project financing.
    FFO for the first quarter of 2009 was $34.9 million ($0.75 per share)
compared to $41.9 million ($0.90 per share) in the prior year period,
representing a decrease of 17%. This $7.0 million reduction in FFO is due to a
$0.2 million reduction in revenues, increases of $7.4 million in general and
administrative expenses and $0.2 million in net interest expense, the $0.5
million adjustment to the carrying values of the MEC loan facilities on
deconsolidation of MEC (see "MEC CHAPTER 11 FILING AND PROCESS -
Deconsolidation of MEC") and $3.9 million of other gains associated with a
lease termination fee in the prior year period. These reductions to FFO were
partially offset by a $5.2 million reduction in income tax expense.
    General and administrative expenses increased to $11.9 million for the
first quarter of 2009 from $4.6 million in the prior year period. The increase
over the prior year period is primarily due to $7.0 million of advisory and
other costs incurred in the first quarter of 2009 in connection with the
November 2008 Reorganization Proposal (as defined below) and MID's involvement
in MEC's Chapter 11 process (see "MEC CHAPTER 11 FILING AND PROCESS").
    The Real Estate Business' income tax expense for the first quarter of
2009 was $3.3 million, representing an effective tax rate of 11.5%, compared
to an effective tax rate for the first quarter of 2008 of 21.4%. Excluding the
$7.0 million of costs associated with the November 2008 Reorganization
Proposal and MID's involvement in MEC's Chapter 11 process, the $3.9 million
lease termination fee in the first quarter of 2008 and the related tax impact
of both items, the Real Estate Business' effective tax rate was 15.9% in the
first quarter of 2009 compared to 20.1% for the first quarter of 2008. As the
jurisdictions in which the Real Estate Business operates have different rates
of taxation, income tax expense is influenced by the proportion of income
earned in each particular country. This 4.2% reduction in the adjusted
effective tax rate is primarily due to changes in the mix of taxable income
earned in the various countries in which the Real Estate Business operates.
    The Real Estate Business reported net income of $25.2 million for the
first quarter of 2009 compared to $30.9 million in the prior year period. The
$5.7 million decrease in net income is due to the $7.0 million reduction in
FFO discussed above, partially offset by a $1.3 million reduction in
depreciation and amortization (due primarily to the impact of foreign
exchange).
    At March 31, 2009, the Real Estate Business had 27.3 million square feet
of leaseable area, with annualized lease payments of $163.4 million,
representing a return of 10.9% on the gross aggregate carrying value of our
income-producing portfolio.
    Dennis Mills, MID's Vice-Chairman and Chief Executive Officer, stated,
"We are clearly experiencing extremely challenging economic conditions. These
conditions have had a particularly significant impact on the automotive
industry, resulting in one of the most difficult periods in the history of
Magna International, our primary tenant, due to exceptionally low production
volumes for Magna's customers. Nevertheless, MID continues to achieve strong
results and will continue to seek out new relationships in order to diversify
its tenant base. In this regard, I am proud to announce that in April 2009 we
signed a long-term lease with Peer 1 Network Enterprises for an MID facility
that had been vacated by Magna upon expiry of the lease."

    
    MEC CHAPTER 11 FILING AND PROCESS
    ---------------------------------
    

    On March 5, 2009 (the "Petition Date"), MEC and certain of its
subsidiaries (collectively, the "Debtors") filed voluntary petitions for
reorganization under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code") in the United States Bankruptcy Court for the District of
Delaware (the "Court") and were granted recognition of the Chapter 11
proceedings from the Ontario Superior Court of Justice under section 18.6 of
the Companies' Creditors Arrangement Act in Canada.
    MID, through a wholly-owned subsidiary (the "MID Lender"), is the largest
secured creditor of MEC. At the Petition Date, the balance of MID's existing
loans to MEC, including accrued interest, was approximately $372 million,
comprised of $171 million under the Gulfstream Park project financing, $23
million under the Remington Park project financing, $125 million under the
2007 MEC Bridge Loan and $53 million under the 2008 MEC Loan. At March 31,
2009, approximately $375 million (including accrued interest subsequent to the
Petition Date) was outstanding under these loan facilities. All of these loans
are secured. In addition, the Company owned approximately 54% of MEC's total
equity, representing approximately 96% of the total votes attached to MEC's
outstanding stock.

    DIP Loan

    In connection with the Debtors' Chapter 11 filing, MID (through the MID
Lender) originally agreed to provide a six-month secured debtor-in-possession
financing facility (the "DIP Loan") to MEC in the amount of up to $62.5
million. On April 20, 2009, the DIP Loan was amended to, among other things,
(i) extend the maturity from September 6, 2009 to November 6, 2009 in order to
allow for a longer marketing period in connection with MEC's asset sales and
(ii) reduce the principal amount available from $62.5 million to $38.4
million, with the reduction attributable to the fact that interest on the
pre-petition loan facilities between MEC and the MID Lender will accrue during
the Chapter 11 process rather than being paid currently in cash.
    At March 31, 2009, $13.5 million was due under the DIP Loan. Subsequent
to March 31, 2009, an additional $3.1 million has been drawn under the DIP
Loan.
    The DIP Loan is secured by liens on substantially all assets of MEC and
its subsidiaries (subject to prior ranking liens), as well as a pledge of
capital stock of certain guarantors. The terms of the DIP Loan contemplate
that MEC will sell all or substantially all of its assets through an auction
process and use the proceeds from the asset sales to repay its creditors,
including the MID Lender.

    MEC Asset Sales

    MEC's Chapter 11 filing contemplates MEC selling all or substantially all
of its assets through an auction process. On the Petition Date, and subject to
Court approval, MID entered into an agreement with MEC to purchase MEC's
relevant interests associated with certain assets (the "Stalking Horse Bid").
However, on April 20, 2009, in response to objections raised by a number of
parties in the MEC Chapter 11 process and with the intent of expediting that
process, MID and MEC terminated the Stalking Horse Bid.
    Following a hearing on May 4, 2009, the Court approved, subject to entry
of a final order, an order confirming the bid procedures for MEC's interests
associated with the following assets (the "Bid Procedures Assets"): Santa
Anita Park (including MEC's joint venture interest in the Shops at Santa
Anita); Remington Park; Lone Star Park; Thistledown; Portland Meadows;
StreuFex(TM); vacant lands located in Ocala, Florida; and vacant lands located
in Dixon, California. MID has stated that it does not intend to submit a bid
for any of the Bid Procedures Assets; provided, however, that MID intends to
preserve the value of its secured loans to MEC and will take all available
steps to prevent fire sales of the Bid Procedures Assets.
    MEC has advised the Court that it is continuing to explore all
alternatives with respect to its remaining assets, and although the Stalking
Horse Bid has been terminated, MID will continue to evaluate whether to bid on
MEC assets during the course of MEC's Chapter 11 sales process.
    Mr. Mills noted, "Our priority in the MEC Chapter 11 process continues to
be preserving and protecting the value of MID's secured loan investments in
MEC. MID is fully supportive of a fair and transparent process that is
designed to maximize value for all of MEC's constituents."

    Deconsolidation of MEC

    As a result of the MEC Chapter 11 filing, the Company has concluded that,
under GAAP, it ceased to have the ability to exert control over MEC on or
about the Petition Date. Accordingly, the Company's investment in MEC has been
deconsolidated from the Company's results beginning on the Petition Date.
    GAAP requires the carrying values of any investment in, and amounts due
from, a deconsolidated subsidiary to be adjusted to their fair value at the
date of deconsolidation. In light of the significant uncertainty as to whether
MEC shareholders, including MID, will receive any recovery following MEC's
reorganization, the carrying value of MID's equity investment in MEC has been
reduced to zero. Upon deconsolidation of MEC, the Company recorded an
aggregate $46.7 million reduction to the carrying values of its investment in,
and amounts due from, MEC, which is included in the Company's statement of
income (loss) for the three months ended March 31, 2009. Included in this
aggregate amount is a $0.5 million reduction in the carrying values of the MEC
loan facilities with the MID Lender at the Petition Date. Although, subject to
the uncertainties of MEC's Chapter 11 process, MID management believes that
the MID Lender's claims are adequately secured and therefore has no reason to
believe that the amount of the MEC loan facilities with the MID Lender is
impaired, the $0.5 million reduction in the carrying values of the MEC loan
facilities was required under GAAP, reflecting the fact that certain of the
MEC loan facilities bear interest at a fixed rate of 10.5% per annum, which is
not considered to be reflective of the market rate of interest that would have
been used had such facilities been established on the Petition Date.
    The Company's unaudited interim consolidated financial statements
attached below have been arranged so as to provide detailed, discrete
financial information on the Real Estate Business and, for the period prior to
the Petition Date, MEC. The deconsolidation of MEC affects virtually all of
the Company's reported revenue, expense, asset and liability balances, thus
significantly limiting the comparability from period to period of the
Company's consolidated statements of income (loss), consolidated statements of
cash flows and consolidated balance sheets. As a result, the remaining content
of this press release focuses solely on the operating results, financial
condition, cash flows and liquidity of the Real Estate Business.
    For further details of MEC's Chapter 11 filing and the treatment of
stockholders and creditors, the DIP Loan and the deconsolidation of MEC,
please refer to notes 1(a) and 19(a)(iv) to the accompanying unaudited interim
consolidated financial statements below.

    
    TERMINATION OF NOVEMBER 2008 REORGANIZATION PROPOSAL
    ----------------------------------------------------
    

    On November 26, 2008, MID announced that its Special Committee of MID's
Board of Directors (the "Board") had recommended, and the Board had approved,
holding a vote of MID shareholders on a reorganization proposal developed by
MID management (the "November 2008 Reorganization Proposal"). The principal
components of the November 2008 Reorganization Proposal are set out in MID's
press release dated November 26, 2008, which can be found on the Company's
website at www.midevelopments.com and on SEDAR at www.sedar.com.
    As a result of, among other things, current global economic conditions,
the continued disruptions in the financial markets and ongoing uncertainty in
the automotive industry, MID determined that it was unlikely that it would be
able to arrange the new debt financing associated with the November 2008
Reorganization Proposal, nor would it be prudent to raise the new debt until
such time as the ongoing uncertainty in the automotive industry has been
resolved. As a result, on February 18, 2009, MID announced that it was not
proceeding with the November 2008 Reorganization Proposal.

    
    ADOPTION OF UNITED STATES STANDARDS
    -----------------------------------
    

    In April 2008, the Canadian Accounting Standards Board confirmed the
transition from Canadian GAAP to International Financial Reporting Standards
("IFRS") for all publicly accountable entities no later than fiscal years
commencing on or after January 1, 2011. As a result, in the second half of
2008, management undertook a detailed review of the implications of MID having
to report under IFRS and also examined the alternative available to MID of
filing its primary financial statements in Canada using U.S. GAAP, as
permitted by the Canadian Securities Administrators' National Instrument
52-107, "Acceptable Accounting Principles, Auditing Standards and Reporting
Currency", given that MID is a Foreign Private Issuer in the United States.
    As a result of this analysis, management recommended and the Board
determined that MID should adopt U.S. GAAP as its primary basis of financial
reporting commencing January 1, 2009 on a retrospective basis. All comparative
financial information contained in this press release and the accompanying
unaudited interim consolidated financial statements below have been revised to
reflect the Company's results as if they had been historically reported in
accordance with U.S. GAAP.
    The adoption of U.S. GAAP did not have a material change on the Company's
accounting policies or current debt covenants, nor did such adoption require
significant changes to the Company's existing internal controls over financial
reporting and disclosure controls and procedures, or information and data
systems. For further details of the differences between U.S. and Canadian GAAP
impacting the Company and a reconciliation of the Company's results of
operations for the three-month periods ended March 31, 2009 and 2008 and
financial position as at March 31, 2009 and December 31, 2008 from U.S. GAAP
to Canadian GAAP, see notes 1(e) and 21 to the accompanying unaudited interim
consolidated financial statements below.
    In conjunction with the Company's adoption of U.S. GAAP as its primary
basis of financial reporting, the Company has adopted the definition of FFO
prescribed in the United States by the National Association of Real Estate
Investment Trusts(R) ("NAREIT") effective January 1, 2009 on a retrospective
basis. The Company previously determined FFO using the definition prescribed
in Canada by the Real Property Association of Canada ("REALpac"). Under the
definition of FFO prescribed by NAREIT, the impact of future income taxes and
asset impairments are included in the calculation of FFO whereas such amounts
are excluded in the definition of FFO prescribed by REALpac.
    The discussion in this press release is based on the Company's results of
operations as reported under U.S. GAAP and FFO, FFO per share and diluted FFO
per share for all periods presented have been determined in accordance with
the definition prescribed by NAREIT.

    
    DIVIDENDS
    ---------
    

    MID's Board of Directors has declared a dividend of $0.15 per share on
MID's Class A Subordinate Voting Shares and Class B Shares for the first
quarter ended March 31, 2009. The dividend is payable on or about June 15,
2009 to shareholders of record at the close of business on May 29, 2009.
    Unless indicated otherwise, MID has designated the entire amount of all
past and future taxable dividends paid since January 1, 2006 to be an
"eligible dividend" for purposes of the Income Tax Act (Canada), as amended
from time to time. Please contact your tax advisor if you have any questions
with regard to the designation of eligible dividends.

    
    ABOUT MID
    ---------
    

    MID is a real estate operating company engaged primarily in the
acquisition, development, construction, leasing, management, and ownership of
a predominantly industrial rental portfolio leased primarily to Magna
International Inc. and its automotive operating units in North America and
Europe. MID also acquires land that it intends to develop for mixed-use and
residential projects. MID holds a majority equity interest in MEC, an owner
and operator of horse racetracks, and a supplier, via simulcasting, of live
horseracing content to the inter-track, off-track and account wagering
markets. As noted in this press release, MEC has filed a voluntary petition
for reorganization under Chapter 11 of the Bankruptcy Code.

    
    RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES
    REAL ESTATE BUSINESS
    RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
    (U.S. dollars in thousands, except per share figures)
    (Unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                    -------------------------
                                                        2009         2008
    -------------------------------------------------------------------------
    Net income                                      $    25,161  $    30,888
    Add back depreciation and amortization                9,766       11,047
    -------------------------------------------------------------------------
    Funds from operations                           $    34,927  $    43,762
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted funds from operations         $      0.75  $      0.90
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted number of shares
     outstanding (thousands)                             46,708       46,708
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    FORWARD-LOOKING STATEMENTS
    --------------------------
    

    The contents of this press release contain statements that, to the extent
they are not recitations of historical fact, constitute "forward-looking
statements" within the meaning of applicable securities legislation, including
the United States Securities Act of 1933 and the United States Securities
Exchange Act of 1934. Forward-looking statements may include, among others,
statements regarding the Company's future plans, goals, strategies,
intentions, beliefs, estimates, costs, objectives, economic performance or
expectations, or the assumptions underlying any of the foregoing. Words such
as "may", "would", "could", "will", "likely", "expect", "anticipate",
"believe", "intend", "plan", "forecast", "project", "estimate" and similar
expressions are used to identify forward-looking statements. Forward-looking
statements should not be read as guarantees of future performance or results
and will not necessarily be accurate indications of whether or the times at or
by which such future performance will be achieved. Undue reliance should not
be placed on such statements. Forward-looking statements are based on
information available at the time and/or management's good faith assumptions
and analyses made in light of our perception of historical trends, current
conditions and expected future developments, as well as other factors we
believe are appropriate in the circumstances, and are subject to known and
unknown risks, uncertainties and other unpredictable factors, many of which
are beyond the Company's control, that could cause actual events or results to
differ materially from such forward-looking statements. Important factors that
could cause such differences include, but are not limited to, the risks and
uncertainties inherent in MEC's Chapter 11 process (see note 1(a) to the
accompanying financial statements below), including in relation to the
treatment of stockholders and creditors and the auction of MEC's assets, and
the risks set forth in the "Risk Factors" section in MID's Annual Information
Form for 2008, filed on SEDAR at www.sedar.com and attached as Exhibit 1 to
MID's Annual Report on Form 40-F for the year ended December 31, 2008, which
investors are strongly advised to review. The "Risk Factors" section also
contains information about the material factors or assumptions underlying such
forward-looking statements. Forward-looking statements speak only as of the
date the statement was made and unless otherwise required by applicable
securities laws, MID expressly disclaims any intention and undertakes no
obligation to update or revise any forward-looking statements contained in
this MD&A to reflect subsequent information, events or circumstances or
otherwise.


    
    MI Developments Inc. ("MID")
    Consolidated Statements of Income (Loss)
    (U.S. dollars in thousands, except per share figures)
    (Unaudited)

                      Consolidated (notes 1, 19(a))     Real Estate Business
                      -----------------------------     --------------------
                                         (restated                 (restated
    Three Months Ended                 - note 1(e))              - note 1(e))
     March 31,                 2009(1)        2008         2009         2008
    -------------------------------------------------------------------------
    Revenues
    Rental revenue        $    40,363  $    45,927  $    40,363  $    45,927
    Interest and other
     income from MEC
     (note 19(a))               3,820            -       13,456        8,108
    Racing and other
     revenue                  152,935      229,485            -            -
    -------------------------------------------------------------------------
                              197,118      275,412       53,819       54,035
    -------------------------------------------------------------------------
    Operating costs
     and expenses
    Purses, awards
     and other                 82,150      121,228            -            -
    Operating costs            55,274       74,461            -            -
    General and
     administrative
     (notes 3, 19)             12,103       18,560       11,936        4,559
    Foreign exchange
     losses                     8,819          325          172          203
    Depreciation and
     amortization              16,751       22,060        9,766       11,047
    Interest expense, net       8,461       10,513        3,011        2,801
    Equity loss (income)          (65)         836            -            -
    Write-down of MEC's
     long-lived assets
     (note 6)                       -        5,000            -            -
    -------------------------------------------------------------------------
    Operating income
     (loss)                    13,625       22,429       28,934       35,425
    Deconsolidation
     adjustment to the
     carrying values of
     MID's investment
     in, and amounts
     due from, MEC
     (note 1(a))              (46,677)           -         (504)           -
    Other gains
     (notes 19, 20)                 -        5,905            -        3,892
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes             (33,052)      28,334       28,430       39,317
    Income tax expense          3,328       10,163        3,269        8,429
    -------------------------------------------------------------------------
    Income (loss) from
     continuing
     operations               (36,380)      18,171       25,161       30,888
    Income (loss) from
     discontinued
     operations (note 4)        1,227      (32,730)           -            -
    -------------------------------------------------------------------------
    Net income (loss)         (35,153)     (14,559)      25,161       30,888
    Add net loss
     attributable to
     the noncontrolling
     interest                   6,308       21,438            -            -
    -------------------------------------------------------------------------
    Net income (loss)
     attributable to MID  $   (28,845) $     6,879  $    25,161  $    30,888
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Income (loss)
     attributable to
     MID from
    - continuing
       operations         $   (29,709) $    24,159  $    25,161  $    30,888
    - discontinued
       operations
       (note 4)                   864      (17,280)           -            -
    -------------------------------------------------------------------------
    Net income (loss)
     attributable to MID  $   (28,845) $     6,879  $    25,161  $    30,888
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     earnings (loss)
     attributable to
     each MID Class A
     Subordinate Voting
     or Class B Share
     (note 7)
    - Continuing
       operations         $     (0.64) $      0.52
    - Discontinued
       operations
       (note 4)                  0.02        (0.37)
    -----------------------------------------------
    Total                 $     (0.62) $      0.15
    -----------------------------------------------
    -----------------------------------------------

    Basic and diluted
     average number of
     Class A Subordinate
     Voting and Class B
     Shares outstanding
     during the period
     (in thousands)
     (note 7)                  46,708       46,708
    -----------------------------------------------
    -----------------------------------------------


                          Magna Entertainment Corp.
                          -------------------------
                                         (restated
    Three Months Ended                 - note 1(e))
     March 31,                 2009(1)        2008
    -----------------------------------------------
    Revenues
    Rental revenue        $         -  $         -
    Interest and other
     income from MEC
     (note 19(a))                   -            -
    Racing and other
     revenue                  152,935      229,485
    -----------------------------------------------
                              152,935      229,485
    -----------------------------------------------
    Operating costs
     and expenses
    Purses, awards
     and other                 82,150      121,228
    Operating costs            55,274       74,461
    General and
     administrative
     (notes 3, 19)                157       14,008
    Foreign exchange
     losses                     8,647          122
    Depreciation and
     amortization               7,014       11,056
    Interest expense, net      14,960       16,036
    Equity loss (income)          (65)         836
    Write-down of MEC's
     long-lived assets
     (note 6)                       -        5,000
    -----------------------------------------------
    Operating income
     (loss)                   (15,202)     (13,262)
    Deconsolidation
     adjustment to the
     carrying values of
     MID's investment
     in, and amounts
     due from, MEC
     (note 1(a))              (46,173)           -
    Other gains
     (notes 19, 20)                 -        2,013
    -----------------------------------------------
    Income (loss) before
     income taxes             (61,375)     (11,249)
    Income tax expense             59        1,734
    -----------------------------------------------
    Income (loss) from
     continuing
     operations               (61,434)     (12,983)
    Income (loss) from
     discontinued
     operations (note 4)          784      (33,493)
    -----------------------------------------------
    Net income (loss)         (60,650)     (46,476)
    Add net loss
     attributable to
     the noncontrolling
     interest                   6,308       21,438
    -----------------------------------------------
    Net income (loss)
     attributable to MID  $   (54,342) $   (25,038)
    -----------------------------------------------
    -----------------------------------------------
    Income (loss)
     attributable to
     MID from
    - continuing
       operations         $   (54,763) $    (6,995)
    - discontinued
       operations
       (note 4)                   421      (18,043)
    -----------------------------------------------
    Net income (loss)
     attributable to MID  $   (54,342) $   (25,038)
    -----------------------------------------------
    -----------------------------------------------

    See accompanying notes

    --------------------------
    (1) The three-month period ended March 31, 2009 includes the results of
        MEC up to March 5, 2009 (note 1(a)).



    MI Developments Inc.
    Consolidated Statements of Comprehensive Income (Loss)
    (U.S. dollars in thousands)
    (Unaudited)

                                                                   (restated
                                                                 - note 1(e))
    Three Months Ended March 31,                           2009         2008
    -------------------------------------------------------------------------

    Net loss                                        $   (35,153) $   (14,559)
    Other comprehensive income (loss):
      Change in fair value of interest rate
       swaps, net of taxes (note 14)                        171         (616)
      Foreign currency translation adjustment
       (note 14)                                        (30,520)      36,355
      Reclassification to income of MEC's
       accumulated other comprehensive income upon
       deconsolidation of MEC (notes 1(a) and 14)       (19,850)           -
    -------------------------------------------------------------------------
    Comprehensive income (loss)                         (85,352)      21,180
    Add comprehensive loss attributable to the
     noncontrolling interest                              6,303       20,573
    -------------------------------------------------------------------------
    Comprehensive income (loss) attributable to MID $   (79,049) $    41,753
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes



    MI Developments Inc.
    Consolidated Statements of Changes in Deficit
    (U.S. dollars in thousands)
    (Unaudited)

                                                                   (restated
                                                                 - note 1(e))
    Three Months Ended March 31,                           2009         2008
    -------------------------------------------------------------------------

    Deficit, beginning of period                    $  (120,855) $   (80,558)
    Net income (loss) attributable to MID               (28,845)       6,879
    Dividends                                            (7,006)      (7,006)
    -------------------------------------------------------------------------
    Deficit, end of period                          $  (156,706) $   (80,685)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes



    MI Developments Inc.
    Consolidated Statements of Cash Flows
    (U.S. dollars in thousands)
    (Unaudited)

                      Consolidated (notes 1, 19(a))     Real Estate Business
                      -----------------------------     --------------------
                                         (restated                 (restated
    Three Months Ended                 - note 1(e))              - note 1(e))
     March 31,                 2009(1)        2008         2009         2008
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Income (loss) from
     continuing
     operations           $   (36,380) $    18,171  $    25,161  $    30,888
    Items not involving
     current cash flows
     (note 17)                 59,245       30,045        3,073       12,097
    Changes in non-cash
     balances (note 17)        (5,495)      (2,803)       2,852        4,672
    -------------------------------------------------------------------------
    Cash provided by
     (used in) operating
     activities                17,370       45,413       31,086       47,657
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Real estate and fixed
     asset additions           (4,786)     (14,870)      (2,325)      (4,382)
    Proceeds on disposal
     of real estate and
     fixed assets, net              -        1,492            -            -
    Decrease (increase)
     in other assets           (9,708)      (1,333)        (577)          43
    Loan advances to
     MEC, net                 (12,998)           -      (69,069)     (20,034)
    Loan repayments
     from MEC                      26            -       30,918        2,478
    Reduction in cash from
     deconsolidation
     of MEC                   (31,693)           -            -            -
    -------------------------------------------------------------------------
    Cash used in
     investing activities     (59,159)     (14,711)     (41,053)     (21,895)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Proceeds from bank
     indebtedness              18,048       23,127            -            -
    Repayment of bank
     indebtedness             (18,597)     (22,594)           -            -
    Issuance of
     long-term debt, net            -        2,731            -            -
    Repayment of
     long-term debt            (4,959)      (3,301)      (3,195)        (115)
    Loan advances from
     MID, net                       -            -            -            -
    Loan repayments to MID          -            -            -            -
    Disgorgement payment
     received from
     noncontrolling
     interest (note 15)           420            -            -            -
    -------------------------------------------------------------------------
    Cash provided by
     (used in) financing
     activities                (5,088)         (37)      (3,195)        (115)
    -------------------------------------------------------------------------
    Effect of exchange
     rate changes on cash
     and cash equivalents      (2,848)       3,365       (2,542)       3,308
    -------------------------------------------------------------------------
    Net cash flows
     provided by (used in)
     continuing
     operations               (49,725)      34,030      (15,704)      28,955
    -------------------------------------------------------------------------
    DISCONTINUED
     OPERATIONS
    Cash provided by
     (used in) operating
     activities                 1,788         (442)           -            -
    Cash used in
     investing activities        (230)        (908)           -            -
    Cash provided by
     (used in) financing
     activities                     -          (29)           -            -
    -------------------------------------------------------------------------
    Net cash flows
     provided by (used in)
     discontinued
     operations                 1,558       (1,379)           -            -
    -------------------------------------------------------------------------
    Net increase
     (decrease) in cash
     and cash equivalents
     during the period        (48,167)      32,651      (15,704)      28,955
    Cash and cash
     equivalents,
     beginning of period      154,874      154,338      122,411      110,945
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end
     of period                106,707      186,989      106,707      139,900
    Less: cash and cash
     equivalents of
     discontinued
     operations, end
     of period                      -       (9,631)           -            -
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, of
     continuing
     operations end
     of period            $   106,707  $   177,358  $   106,707  $   139,900
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                          Magna Entertainment Corp.
                          -------------------------
                                         (restated
    Three Months Ended                 - note 1(e))
     March 31,                 2009(1)        2008
    -----------------------------------------------
    OPERATING ACTIVITIES
    Income (loss) from
     continuing
     operations           $   (61,434) $   (12,983)
    Items not involving
     current cash flows
     (note 17)                 56,511       19,145
    Changes in non-cash
     balances (note 17)        (8,304)      (7,686)
    -----------------------------------------------
    Cash provided by
     (used in) operating
     activities               (13,227)      (1,524)
    -----------------------------------------------
    INVESTING ACTIVITIES
    Real estate and fixed
     asset additions           (2,461)     (10,488)
    Proceeds on disposal
     of real estate and
     fixed assets, net              -        1,492
    Decrease (increase)
     in other assets           (9,131)      (1,376)
    Loan advances to
     MEC, net                       -            -
    Loan repayments
     from MEC                       -            -
    Reduction in cash from
     deconsolidation
     of MEC                   (31,693)           -
    -----------------------------------------------
    Cash used in
     investing activities     (43,285)     (10,372)
    -----------------------------------------------
    FINANCING ACTIVITIES
    Proceeds from bank
     indebtedness              18,048       23,127
    Repayment of bank
     indebtedness             (18,597)     (22,594)
    Issuance of
     long-term debt, net            -        2,731
    Repayment of
     long-term debt            (1,764)      (3,186)
    Loan advances from
     MID, net                  56,000       19,074
    Loan repayments to MID    (28,834)      (2,215)
    Disgorgement payment
     received from
     noncontrolling
     interest (note 15)           420            -
    -----------------------------------------------
    Cash provided by
     (used in) financing
     activities                25,273       16,937
    -----------------------------------------------
    Effect of exchange
     rate changes on cash
     and cash equivalents        (306)          57
    -----------------------------------------------
    Net cash flows
     provided by (used in)
     continuing
     operations               (31,545)       5,098
    -----------------------------------------------
    DISCONTINUED
     OPERATIONS
    Cash provided by
     (used in) operating
     activities                 1,370       (1,162)
    Cash used in
     investing activities        (230)        (908)
    Cash provided by
     (used in) financing
     activities                (2,058)         668
    -----------------------------------------------
    Net cash flows
     provided by (used in)
     discontinued
     operations                  (918)      (1,402)
    -----------------------------------------------
    Net increase
     (decrease) in cash
     and cash equivalents
     during the period        (32,463)       3,696
    Cash and cash
     equivalents,
     beginning of period       32,463       43,393
    -----------------------------------------------
    Cash and cash
     equivalents, end
     of period                      -       47,089
    Less: cash and cash
     equivalents of
     discontinued
     operations, end
     of period                      -       (9,631)
    -----------------------------------------------
    Cash and cash
     equivalents, of
     continuing
     operations end
     of period            $         -  $    37,458
    -----------------------------------------------
    -----------------------------------------------

    See accompanying notes

    --------------------------
    (1) The three-month period ended March 31, 2009 includes the results of
        MEC up to March 5, 2009 (note 1(a)).



    MI Developments Inc.
    Consolidated Balance Sheets
    (Refer to note 1 - Basis of Presentation)
    (U.S. dollars in thousands)
    (Unaudited)

                                          Consol-                   Magna
                             Consol-      idated        Real        Enter-
                             idated      (notes 1,     Estate      tainment
                            (notes 1,      19(a))     Business      Corp(1)
                              19(a))   --------------------------------------
                            March 31,            December 31, 2008
    As at                     2009             (restated - note 1(e))
    -------------------------------------------------------------------------
    ASSETS
    Current assets:
      Cash and cash
       equivalents        $   106,707  $   144,764  $   122,411  $    22,353
      Restricted cash             458       20,255          946       19,309
      Accounts receivable       2,844       33,915        2,256       31,659
      Loans receivable
       from MEC, net
       (note 19)              385,676            -      247,075            -
      Due from MID
       (note 19)                    -            -            -          946
      Income taxes
       receivable               1,049        1,887        1,887            -
      Prepaid expenses
       and other                1,602       20,724          930       19,837
      Assets held for
       sale (note 5)                -       21,732            -       21,732
      Assets held for sale
       from discontinued
       operations (note 4)          -       94,461            -       94,533
    -------------------------------------------------------------------------
                              498,336      337,738      375,505      210,369
    Real estate
     properties, net
     (note 8)               1,304,913    2,024,183    1,397,819      681,701
    Fixed assets, net             210       71,206          244       70,962
    Other assets (note 9)       1,659       35,200        1,110       34,090
    Loans receivable
     from MEC (note 19)             -            -       93,824            -
    Deferred rent
     receivable                12,690       13,001       13,001            -
    Future tax assets           5,359       62,781        5,632       57,149
    -------------------------------------------------------------------------
    Total assets          $ 1,823,167  $ 2,544,109  $ 1,887,135  $ 1,054,271
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES AND EQUITY

    Current liabilities:
      Bank indebtedness
       (note 10)          $         -  $    39,460  $         -  $    39,460
      Accounts payable
       and accrued
       liabilities
       (note 11)               17,541      121,471       12,411      109,060
      Dividends payable         7,006            -            -            -
      Income taxes payable      8,034       10,363        7,638        2,725
      Loans payable to MID,
       net (note 19)                -            -            -      246,428
      Due to MEC (note 19)        458            -          946            -
      Long-term debt due
       within one year            175       82,649        3,309       79,340
      Note obligation due
       within one year, net         -       74,601            -       74,601
      Deferred revenue            630        9,368        3,254        6,114
      Liabilities related
       to assets held
       for sale (note 5)            -          876            -          876
      Liabilities related
       to discontinued
       operations
       (note 4)                     -       51,943            -       75,960
    -------------------------------------------------------------------------
                               33,844      390,731       27,558      634,564
    Long-term debt              1,951       17,173        2,063       15,110
    Senior unsecured
     debentures, net          211,641      216,550      216,550            -
    Note obligation, net            -      149,015            -      149,015
    Loans payable to MID,
     net (note 19)                  -            -            -       66,373
    Other long-term
     liabilities (note 12)          -       18,973            -       18,973
    Future tax liabilities     39,771      105,497       40,933       63,233
    -------------------------------------------------------------------------
    Total liabilities         287,207      897,939      287,104      947,268
    -------------------------------------------------------------------------
    Equity:
    MID shareholders'
     equity
      Class A Subordinate
       Voting Shares
       (shares issued -
       46,160,564)          1,506,088    1,506,088
      Class B Shares
       (shares issued -
       547,413)                17,866       17,866
      Contributed surplus
       (note 13)               57,089       57,062
      Deficit                (156,706)    (120,855)
      Accumulated other
       comprehensive
       income (note 14)       111,623      161,827
    -------------------------------------------------------------------------
    Total MID
     shareholders' equity   1,535,960    1,621,988    1,600,031       82,821
    Noncontrolling
     interest (note 15)             -       24,182            -       24,182
    -------------------------------------------------------------------------
    Total equity            1,535,960    1,646,170    1,600,031      107,003
    -------------------------------------------------------------------------
    Total liabilities
     and equity           $ 1,823,167  $ 2,544,109  $ 1,887,135  $ 1,054,271
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Commitments and contingencies (note 20)

    See accompanying notes

    -------------------------
    (1) MEC's net assets were deconsolidated from the Company's balance sheet
        as of March 5, 2009 (note 1(a)).



    MI Developments Inc.
    Notes to Interim Consolidated Financial Statements
    (All amounts in U.S. dollars and all tabular amounts in thousands unless
    otherwise noted)
    (All amounts as at March 31, 2009 and December 31, 2008 and for the
    three-month periods ended March 31, 2009 and 2008 are unaudited)

    1.  SIGNIFICANT ACCOUNTING POLICIES

    Basis of Presentation

    The unaudited interim consolidated financial statements include the
    accounts of MI Developments Inc. and its subsidiaries (collectively,
    "MID" or the "Company"). MID is a real estate operating company engaged
    primarily in the acquisition, development, construction, leasing,
    management and ownership of a predominantly industrial rental portfolio
    leased primarily to Magna International Inc. and its automotive operating
    units ("Magna") in North America and Europe. MID also acquires land that
    it intends to develop for mixed-use and residential projects.

    (a) Magna Entertainment Corp.

        The Company also holds a majority equity interest in Magna
        Entertainment Corp. ("MEC"), an owner and operator of horse
        racetracks and a supplier of live horseracing content to the inter-
        track, off-track and account wagering markets. At March 31, 2009 and
        December 31, 2008, the Company owned approximately 54% of MEC's total
        equity, representing approximately 96% of the total votes attached to
        MEC's outstanding stock.

        Chapter 11 Filing and Process

        On March 5, 2009 (the "Petition Date"), MEC and certain of its
        subsidiaries (collectively, the "Debtors") filed voluntary petitions
        for reorganization under Chapter 11 of Title 11 of the United States
        Code (the "Bankruptcy Code") in the United States Bankruptcy Court
        for the District of Delaware (the "Court") and were granted
        recognition of the Chapter 11 proceedings from the Ontario Superior
        Court of Justice under section 18.6 of the Companies' Creditors
        Arrangement Act in Canada. At the Petition Date, MEC owed
        $371.7 million to a wholly-owned subsidiary of MID (the "MID Lender")
        under various loan facilities (note 19(a)).

        MEC filed for Chapter 11 protection in order to implement a
        comprehensive financial restructuring and conduct an orderly sales
        process for its assets (see note 2 for further details of the MEC
        asset sales process). Under Chapter 11, the Debtors are operating as
        "debtors-in-possession" under the jurisdiction of the Court and in
        accordance with the applicable provisions of the Bankruptcy Code and
        orders of the Court. In general, the Debtors are authorized under
        Chapter 11 to continue to operate as an ongoing business, but may not
        engage in transactions outside the ordinary course of business
        without the prior approval of the Court.

        The filing of the Chapter 11 petitions constituted an event of
        default under certain of MEC's debt obligations, including those with
        the MID Lender, and those debt obligations became automatically and
        immediately due and payable. However, subject to certain exceptions
        under the Bankruptcy Code, the Debtors' Chapter 11 filing
        automatically enjoined, or stayed, the continuation of any judicial
        or administrative proceedings or other actions against the Debtors or
        their property to recover on, collect or secure a claim arising prior
        to the Petition Date. The Company has not guaranteed any of MEC's
        debt obligations or other commitments.

        Under the priority scheme established by the Bankruptcy Code, unless
        creditors agree to different treatment, allowed pre-petition claims
        and allowed post-petition expenses must be satisfied in full before
        stockholders are entitled to receive any distribution or retain any
        property in a Chapter 11 proceeding. MEC's Class A Subordinate Voting
        Stock ("MEC Class A Stock") was delisted from the Toronto Stock
        Exchange effective at the close of market on April 1, 2009 and from
        the Nasdaq Stock Market effective at the opening of business on
        April 6, 2009. The ultimate recovery to MID, as a stockholder of MEC,
        if any, in the Debtors' Chapter 11 proceedings will likely not be
        determined until confirmation of a plan of reorganization for MEC. In
        this regard, however, such a plan is likely to result in MID not
        receiving any value for its existing MEC stock and in the
        cancellation of such stock.

        Furthermore, no assurance can be given as to the treatment the MID
        Lender's claims will receive in the Debtors' Chapter 11 proceedings,
        although, as a general matter, secured creditors are entitled to
        priority over unsecured creditors to the extent of the value of the
        collateral securing such claims. Subject to the uncertainties of
        MEC's Chapter 11 process, MID management believes that the MID
        Lender's claims are adequately secured and therefore has no reason to
        believe that the amount of the MEC loan facilities with the MID
        Lender is impaired.

        DIP Loan

        In connection with the Debtors' Chapter 11 filing, MID (through the
        MID Lender) is providing to MEC a secured debtor-in-possession
        financing facility (the "DIP Loan") of up to $38.4 million (see note
        19(a)(iv) for further details of the DIP Loan).

        Deconsolidation of MEC

        As a result of the MEC Chapter 11 filing, the Company has concluded
        that, under generally accepted accounting principles ("GAAP"), it
        ceased to have the ability to exert control over MEC on or about the
        Petition Date. Accordingly, the Company's investment in MEC has been
        deconsolidated from the Company's results beginning on the Petition
        Date.

        GAAP requires the carrying values of any investment in, and amounts
        due from, a deconsolidated subsidiary to be adjusted to their fair
        value at the date of deconsolidation. In light of the significant
        uncertainty as to whether MEC shareholders, including MID, will
        receive any recovery following MEC's reorganization, the carrying
        value of MID's equity investment in MEC has been reduced to zero.
        Although, subject to the uncertainties of MEC's Chapter 11 process,
        MID management believes that the MID Lender's claims are adequately
        secured and therefore has no reason to believe that the amount of the
        MEC loan facilities with the MID Lender is impaired, a reduction in
        the carrying values of the MEC loan facilities (note 19(a)) at the
        Petition Date was required under GAAP, reflecting the fact that
        certain of the MEC loan facilities bear interest at a fixed rate of
        10.5% per annum, which is not considered to be reflective of the
        market rate of interest that would have been used had such facilities
        been established on the Petition Date. The fair value of the loans
        receivable from MEC was determined at the Petition Date based on the
        estimated future cash flows of the loans receivable from MEC being
        discounted to the Petition Date using a discount rate equal to the
        London Interbank Offered Rate ("LIBOR") plus 12.0%. The discount rate
        is equal to the interest rate charged on the DIP Loan that was
        implemented as of the Petition Date, and therefore is considered to
        approximate a reasonable market interest rate for the MEC loan
        facilities for this purpose. Accordingly, upon deconsolidation of
        MEC, the Real Estate Business reduced its carrying values of the MEC
        loan facilities by $0.5 million (net of derecognizing $1.9 million of
        unamortized deferred arrangement fees at the Petition Date). As a
        result, the adjusted aggregate carrying value of the MEC loan
        facilities at the Petition Date was $2.4 million less than the
        aggregate face value of the MEC loan facilities. The adjusted
        carrying values will accrete up to the face value of the MEC loan
        facilities over the estimated period of time before the loans will be
        repaid, with such accretion being recognized in "interest and other
        income from MEC" on the Company's consolidated statement of income
        (loss).

        Prior to the Petition Date, MEC's results are consolidated with the
        Company's results, with outside ownership accounted for as a
        noncontrolling interest. As of the Petition Date, the Company's
        consolidated balance sheet included MEC's net assets of
        $84.3 million. As of the Petition Date, the Company's total equity
        also included accumulated other comprehensive income of $19.8 million
        and a noncontrolling interest of $18.3 million related to MEC.

        Upon deconsolidation of MEC, the Company recorded a $46.7 million
        reduction to the carrying values of its investment in, and amounts
        due from, MEC, which is computed as follows:

        ---------------------------------------------------------------------
        Reversal of MEC's net assets                             $   (84,345)
        Reclassification to income of MEC's accumulated
         other comprehensive income (note 14)                         19,850
        Reclassification to income of the noncontrolling
         interest in MEC (note 15)                                    18,322
        ---------------------------------------------------------------------
                                                                     (46,173)
        Fair value adjustment to loans receivable from MEC              (504)
        ---------------------------------------------------------------------
        Deconsolidation adjustment to the carrying values
         of MID's investment in, and amounts due from, MEC       $   (46,677)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    (b) Consolidated Financial Statements

        The unaudited interim consolidated financial statements have been
        prepared in U.S. dollars following GAAP in the United States ("U.S.
        GAAP") as further discussed in note 1(e) and the accounting policies
        as set out in notes 1 and 25 to the annual consolidated financial
        statements for the year ended December 31, 2008.

        The unaudited interim consolidated financial statements do not
        conform in all respects to the requirements of GAAP for annual
        financial statements. Accordingly, these unaudited interim
        consolidated financial statements should be read in conjunction with
        the annual consolidated financial statements for the year ended
        December 31, 2008.

        In the opinion of management, the unaudited interim consolidated
        financial statements reflect all adjustments, which are of a normal
        recurring nature except as disclosed in note 1(a), necessary to
        present fairly the financial position at March 31, 2009 and
        December 31, 2008, and the results of operations and cash flows for
        the three-month periods ended March 31, 2009 and 2008.

    (c) Segmented Information

        The Company's reportable segments reflect how the Company is
        organized and managed by senior management. Prior to the Petition
        Date (note 1(a)), the Company's operations have been segmented in the
        Company's internal financial reports between wholly-owned operations
        ("Real Estate Business") and publicly-traded operations ("Magna
        Entertainment Corp."). This segregation of operations between wholly-
        owned and publicly-traded operations recognized the fact that, in the
        case of the Real Estate Business, the Company's Board of Directors
        and executive management have direct responsibility for the key
        operating, financing and resource allocation decisions, whereas, in
        the case of MEC, such responsibility resides with MEC's separate
        Board of Directors and executive management.

        Subsequent to the Petition Date, the Company manages and evaluates
        its operations as a single "Real Estate Business" reporting segment,
        rather than multiple reporting segments, for internal purposes and
        for internal decision making.

        At March 31, 2009, the Real Estate Business owns income-producing
        real estate assets in Canada, the United States, Mexico, Austria,
        Germany, the Czech Republic, the United Kingdom, Spain and Poland.
        Substantially all of these real estate assets are leased to Magna's
        automotive operating units. The Real Estate Business also owns
        certain properties that are being held for future development or
        sale.

        Financial data and related measurements for the periods prior to the
        Petition Date are presented on the consolidated statements of income
        (loss), consolidated statements of cash flows, and consolidated
        balance sheets in two categories, "Real Estate Business" and "Magna
        Entertainment Corp.", which correspond to the Company's reporting
        segments prior to the Petition Date. Transactions and balances
        between the "Real Estate Business" and "Magna Entertainment Corp."
        segments have not been eliminated in the presentation of each
        segment's financial data and related measurements. However, the
        effects of transactions between these two segments, which are further
        described in note 19(a), are eliminated in the consolidated results
        of operations and financial position of the Company for periods prior
        to the Petition Date.

    (d) Seasonality

        MEC's racing business is seasonal in nature and racing revenues and
        operating results for any period will not be indicative of the racing
        revenues and operating results for any year. MEC's racing operations
        have historically operated at a loss in the second half of the year,
        with the third quarter typically generating the largest operating
        loss. This seasonality has resulted in large quarterly fluctuations
        in MEC's revenues and operating results included in the Company's
        consolidated financial statements prior to the Petition Date
        (note 1(a)).

    (e) Accounting Changes

        Adoption of United States Generally Accepted Accounting Principles

        In April 2008, the Canadian Accounting Standards Board confirmed the
        transition from GAAP in Canada ("Canadian GAAP") to International
        Financial Reporting Standards ("IFRS") for all publicly accountable
        entities no later than fiscal years commencing on or after January 1,
        2011. As a result, during the third and fourth quarters of 2008,
        management undertook a detailed review of the implications of MID
        having to report under IFRS and also examined the alternative
        available to MID of filing its primary financial statements in Canada
        using U.S. GAAP, as permitted by the Canadian Securities
        Administrators' National Instrument 52-107, "Acceptable Accounting
        Principles, Auditing Standards and Reporting Currency", given that
        MID is a Foreign Private Issuer in the United States.

        In carrying out this evaluation, management considered many factors,
        including, but not limited to, (i) the changes in accounting policies
        that would be required and the resulting impact on the Company's
        reported results and key performance indicators, (ii) the reporting
        standards expected to be used by many of the Company's industry
        comparables, (iii) the financial reporting needs of the Company's
        market participants, including shareholders, lenders, rating agencies
        and market analysts, and (iv) the current reporting standards in use
        by, and local reporting needs of, MID's material foreign
        subsidiaries.

        As a result of this analysis, management recommended and the Board
        determined that MID should adopt U.S. GAAP as its primary basis of
        financial reporting commencing January 1, 2009 on a retrospective
        basis. All comparative financial information contained in the
        unaudited interim consolidated financial statements has been revised
        to reflect the Company's results as if they had been historically
        reported in accordance with U.S. GAAP (see note 21 for a
        reconciliation to Canadian GAAP).

        For details of the cumulative impact of adopting U.S. GAAP on the
        Company's consolidated financial position at January 1, 2008, refer
        to note 25 to the Company's annual consolidated financial statements
        for the year ended December 31, 2008. For details of the cumulative
        impact of adopting U.S. GAAP on the Company's consolidated financial
        position at March 31, 2009 and December 31, 2008 and on the Company's
        consolidated statements of income (loss) for the three-month periods
        ended March 31, 2009 and 2008, refer to note 21 to these unaudited
        interim consolidated financial statements.

        Business Combinations

        In December 2007, the Financial Accounting Standards Board ("FASB")
        issued Statement of Financial Accounting Standards No. 141(R),
        "Applying the Acquisition Method" ("SFAS 141(R)"), which modifies the
        accounting for business combinations occurring in fiscal years
        commencing after December 15, 2008. The most significant changes
        under SFAS 141(R) are as follows:

        -   Upon initially obtaining control, an acquirer will recognize 100%
            of the fair values of acquired assets, including goodwill, and
            assumed liabilities, with only limited exceptions, even if the
            acquirer has not acquired 100% of its target.

        -   Contingent consideration arrangements will be fair valued at the
            acquisition date and included on that basis in the purchase price
            consideration.

        -   Transaction costs are not an element of fair value of the target,
            so they are not considered part of the fair value of an
            acquirer's interest. Instead, transaction costs will be expensed
            as incurred.

        -   Pre-acquisition contingencies, such as environmental or legal
            issues, meeting a "more likely than not" threshold will have to
            be accounted for in purchase accounting at fair value.

        -   In order to accrue for a restructuring plan in purchase
            accounting, the requirements in FASB Statement of Financial
            Accounting Standards No. 146, "Accounting for Costs Associated
            with Exit or Disposal Activities", would have to be met at the
            acquisition date.

        -   Acquired research and development value will be capitalized as an
            indefinite-lived intangible asset, subjected to impairment
            accounting throughout the associated development stage and then
            subject to amortization and impairment accounting after
            development is completed. Costs incurred to continue these
            research and development efforts after acquisition will be
            expensed.

        The adoption by the Company of SFAS 141(R) effective January 1, 2009
        did not have any impact on the Company's unaudited interim
        consolidated financial statements.

        Noncontrolling Interests

        In December 2007, FASB issued Statement of Financial Accounting
        Standards No. 160, "Noncontrolling Interests" ("SFAS 160"), which is
        effective for fiscal years commencing after December 15, 2008 and
        clarifies the classification of noncontrolling interests (previously
        referred to as "minority interests") in consolidated balance sheets
        and the accounting for and reporting of transactions between the
        reporting entity and holders of such noncontrolling interests. The
        most significant changes under the new rules are as follows:

        -   Noncontrolling interests are to be reported as an element of
            consolidated equity.

        -   Net income and comprehensive income will encompass the total of
            such amounts of all consolidated subsidiaries and there will be
            separate disclosure on the face of the consolidated statements of
            income (loss) and statements of comprehensive income (loss) of
            the attribution of such amounts between the controlling and
            noncontrolling interests.

        -   Increases and decreases in the noncontrolling ownership interest
            amount will be accounted for as equity transactions rather than
            those differences being accounted for using step acquisition and
            sale accounting, respectively. If an issuance of noncontrolling
            interests causes the controlling interest to lose control and
            deconsolidate a subsidiary, that transaction will be accounted
            for using full gain or loss recognition.

        In accordance with the transition rules of SFAS 160, the Company has
        adopted SFAS 160 effective January 1, 2009 on a prospective basis,
        except that the presentation and disclosure requirements are to be
        applied retrospectively for all periods presented. As a result of the
        adoption, the Company has reported its noncontrolling interest in MEC
        as a component of equity in the consolidated balance sheets and the
        net income (loss) attributable to the noncontrolling interest in MEC
        has been separately identified in the statements of income (loss).

        Derivative Instruments and Hedging Activities

        In March 2008, the FASB issued Statement of Financial Accounting
        Standards No. 161, "Disclosures about Derivative Instruments and
        Hedging Activities - an amendment of FASB Statement No. 133" ("SFAS
        161"). SFAS 161 requires enhanced disclosures about (a) how and why
        an entity uses derivative instruments, (b) how derivative instruments
        and related hedged items are accounted for and (c) how derivative
        instruments and related hedged items affect an entity's financial
        position, financial performance and cash flows. SFAS 161 is effective
        for financial statements issued for fiscal years and interim periods
        beginning after November 15, 2008. SFAS 161 does not require
        comparative disclosures for earlier periods at initial adoption.

        The Company has adopted SFAS 161 effective January 1, 2009 on a
        prospective basis. Disclosures regarding the Company's use of, and
        accounting for, derivative financial instruments were previously made
        in notes 1, and 21 to the annual consolidated financial statements
        for the year ended December 31, 2008 and do not differ materially at
        March 31, 2009, except for the disclosures required by SFAS 161 in
        note 18 to these unaudited interim consolidated financial statements.
        Other than these incremental disclosures, the adoption of SFAS 161
        did not have any impact on the Company's unaudited interim
        consolidated financial statements.

        Useful Life of Intangible Assets

        In April 2008, the FASB issued Staff Position FAS 142-3,
        "Determination of the Useful Life of Intangible Assets" ("FSP FAS
        142-3"), which amends the factors that must be considered in
        developing renewal or extension assumptions used to determine the
        useful life over which to amortize the cost of a recognized
        intangible asset under Statement of Financial Accounting Standards
        No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). FSP FAS
        142-3 requires an entity to consider its own assumptions about
        renewal or extension of the term of the arrangement, consistent with
        its expected use of the asset, in an attempt to improve the
        consistency between the useful life of a recognized intangible asset
        under SFAS 142 and the period of expected cash flows used to measure
        the asset's fair value under Statement of Financial Accounting
        Standards No. 141, "Business Combinations" ("SFAS 141"). In current
        practice, the useful life is often shorter under SFAS 142 than under
        SFAS 141, as SFAS 142 previously specified that renewals should be
        considered only if they can be achieved without incurring substantial
        cost or materiality modifying the arrangement. FSP FAS 142-3 also
        requires several incremental disclosures for renewable intangible
        assets.

        FSP FAS 142-3 is effective for financial statements for fiscal years
        beginning after December 15, 2008. The guidance for determining the
        useful life of a recognized intangible asset must be applied
        prospectively to intangible assets acquired after the effective date.
        Accordingly, adoption of FSP FAS 142-3 did not have any impact on the
        Company's unaudited interim consolidated financial statements.

    2.  MEC ASSET SALES

    MEC's Chapter 11 filing (note 1(a)) contemplates MEC selling all or
    substantially all of its assets through an auction process. On the
    Petition Date, MID entered into an agreement with MEC, subject to Court
    approval, to purchase MEC's relevant interests associated with the
    following assets (the "Stalking Horse Bid"): Golden Gate Fields;
    Gulfstream Park, including MEC's joint venture interest in The Village at
    Gulfstream Park(TM); Palm Meadows Training Center and related excess
    lands; Lone Star Park; AmTote International, Inc.; XpressBet(R); and a
    holdback note associated with MEC's sale of The Meadows in 2006. MID's
    aggregate offer price for these assets was approximately $195.0 million,
    with $136.0 million to be satisfied through a credit bid of the MID
    Lender's existing loans to MEC (note 19(a)), $44.0 million in cash and
    $15.0 million through the assumption of a capital lease. However, on
    April 20, 2009, MID and MEC terminated the Stalking Horse Bid.

    Following a hearing on May 4, 2009, the Court approved, subject to entry
    of a final order, an order confirming the bid procedures
    for MEC's interests associated with the following assets (the "Bid
    Procedures Assets"): Santa Anita Park (including MEC's joint venture
    interest in the Shops at Santa Anita); Remington Park; Lone Star Park;
    Thistledown; Portland Meadows; StreuFex(TM); vacant lands located in
    Ocala, Florida; and vacant lands located in Dixon, California. MID has
    stated that it does not intend to submit a bid for any of the Bid
    Procedures Assets; provided, however, that MID intends to preserve the
    value of its secured loans to MEC and will take all available steps to
    prevent fire sales of the Bid Procedures Assets.

    MEC has advised the Court that it is continuing to explore all
    alternatives with respect to its remaining assets, and although the
    Stalking Horse Bid has been terminated, MID will continue to evaluate
    whether to bid on MEC assets during the course of MEC's Chapter 11 sales
    process.

    Post-Chapter 11 Operations; Forbearance Agreement

    In conjunction with MEC's Chapter 11 filing, MID announced the following
    on March 5, 2009:

    (i)   If MID acquires any non-racing real estate assets from MEC in the
          Chapter 11 auction process, MID would retain and develop these
          assets. Any horseracing or gaming assets acquired by MID would be
          segregated from MID's real estate business and held in one or more
          new wholly-owned subsidiaries of MID ("RaceCo"). Any racing real
          estate assets acquired by MID would be leased to RaceCo under
          commercial terms on a triple-net basis.

    (ii)  On closing of any asset purchases, MID would execute a forbearance
          agreement providing that, without the prior approval of a majority
          of the votes of minority holders of MID Class A Shares, MID would
          not (a) make any further debt or equity investment in, or otherwise
          give financial assistance to, RaceCo or (b) enter into any
          transactions with, or provide any services or personnel to, RaceCo,
          except for (i) the triple-net leases referred to above and (ii)
          limited administrative and office services. MID would also agree
          not to enter into any transactions in the horseracing or gaming
          business except through RaceCo.

    (iii) By December 31, 2011, MID would either (a) if RaceCo were pro forma
          profitable and self-sustaining, sell it or spin it off to its
          shareholders, or (b) otherwise, cease racing and gaming operations
          at RaceCo and either sell or develop all of RaceCo's remaining
          assets.

    3.  TERMINATION OF NOVEMBER 2008 REORGANIZATION PROPOSAL

    On November 26, 2008, MID announced that its special committee of
    independent directors had recommended, and MID's Board of Directors (the
    "Board") had approved, holding a vote of MID shareholders on a
    reorganization proposal developed by MID management (the "November 2008
    Reorganization Proposal"). The principal components of the November 2008
    Reorganization Proposal are set out in MID's press release dated
    November 26, 2008, which can be found on the Company's website at
    www.midevelopments.com and on SEDAR at www.sedar.com.

    As a result of, among other things, current global economic conditions,
    the continued disruptions in the financial markets and ongoing
    uncertainty in the automotive industry, MID determined that it was
    unlikely that it would be able to arrange the new debt financing
    associated with the November 2008 Reorganization Proposal, nor would it
    be prudent to raise the new debt until such time as the ongoing
    uncertainty in the automotive industry has been resolved. As a result, on
    February 18, 2009, MID announced that it was not proceeding with the
    November 2008 Reorganization Proposal.

    During the three months ended March 31, 2009, MID incurred $7.0 million
    of advisory and other costs in connection with the November 2008
    Reorganization Proposal and MID's involvement in MEC's Chapter 11 process
    (including the Stalking Horse Bid (note 2) and the DIP Loan (note
    19(a)), which costs are included in the Real Estate Business' "general
    and administrative" expenses on the Company's unaudited interim
    consolidated statement of income (loss).

    4.  DISCONTINUED OPERATIONS

    On September 12, 2007, MEC's Board of Directors approved a debt
    elimination plan (the "MEC Debt Elimination Plan") to generate funds
    from, among other things, the sale of Great Lakes Downs in Michigan,
    Thistledown in Ohio, Remington Park in Oklahoma City and MEC's interest
    in Portland Meadows in Oregon. In September 2007, MEC engaged a U.S.
    investment bank to assist in soliciting potential purchasers and managing
    the sale process for certain of these assets. In October 2007, the U.S.
    investment bank began marketing Thistledown and Remington Park for sale
    and initiated an active program to locate potential buyers. However, MEC
    subsequently took over the sales process from the U.S. investment bank
    and was in discussions with potential buyers of these assets prior to the
    Petition Date.

    In November 2007, MEC initiated a program to locate a buyer for Portland
    Meadows and was marketing for sale its interest in this property prior to
    the Petition Date.

    In March 2008, MEC committed to a plan to sell Magna Racino(TM). MEC had
    initiated a program to locate potential buyers and, prior to the Petition
    Date, was marketing the assets for sale through a real estate agent.

    On July 16, 2008, MEC completed the sale of Great Lakes Downs in Michigan
    for cash consideration of $5.0 million.

    MEC's results of operations, assets and liabilities related to
    discontinued operations are shown in the following tables:

    Three Months Ended March 31,                       2009(1)       2008
    -------------------------------------------------------------------------
    Revenues                                        $    21,226  $    29,755
    Costs and expenses                                   19,937       29,269
    -------------------------------------------------------------------------
                                                          1,289          486
    Depreciation and amortization                             -          605
    Interest expense, net                                   505        1,080
    Write-down of long-lived assets (note 6)                  -       32,294
    -------------------------------------------------------------------------
    MEC's income (loss) from discontinued operations        784      (33,493)
    -------------------------------------------------------------------------
    Eliminations (note 19(a))                               443          763
    -------------------------------------------------------------------------
    Consolidated income (loss) from MEC's
     discontinued operations                              1,227      (32,730)
    Add (deduct) loss (income) attributable to
     noncontrolling interest                               (363)      15,450
    -------------------------------------------------------------------------
    Consolidated income (loss) from MEC's
     discontinued operations attributable to MID    $       864  $   (17,280)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The three-month period ended March 31, 2009 includes the results of
        MEC's discontinued operations up to the Petition Date (note 1(a)).

                                                      March 31,  December 31,
    As at                                              2009(2)       2008
    -------------------------------------------------------------------------
    ASSETS
    Current assets:
      Cash and cash equivalents                     $         -  $    10,110
      Restricted cash                                         -        7,043
      Accounts receivable                                     -        5,306
      Prepaid expenses and other                              -        2,048
      Real estate properties, net                             -       39,052
      Fixed assets, net                                       -       12,989
      Other assets                                            -          105
      Future tax assets                                       -       17,880
    -------------------------------------------------------------------------
    Assets held for sale from MEC's
     discontinued operations                                  -       94,533
    -------------------------------------------------------------------------
    Eliminations (note 19(a))                                 -          (72)
    -------------------------------------------------------------------------
    Consolidated assets held for sale from MEC's
     discontinued operations                        $         -  $    94,461
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES
    Current liabilities:
      Accounts payable and accrued liabilities      $         -  $    23,318
      Income taxes payable                                    -          597
      Long-term debt due within one year                      -        8,367
      Loan payable to MID due within one year                 -          403
      Deferred revenue                                        -          746
      Loan payable to MID, net                                -       23,614
      Other long-term liabilities                             -        1,035
      Future tax liabilities                                  -       17,880
    -------------------------------------------------------------------------
    MEC's liabilities related to discontinued
     operations                                               -       75,960
    -------------------------------------------------------------------------
    Eliminations (note 19(a))                                 -      (24,017)
    -------------------------------------------------------------------------
    Consolidated liabilities related to
     discontinued operations                        $         -  $    51,943
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    --------------------------
    (2) MEC's net assets were deconsolidated from the Company's consolidated
        balance sheet as of the Petition Date (note 1(a)).

    5.  ASSETS HELD FOR SALE

    (a) On August 9, 2007, MEC announced its intention to sell real estate
        properties located in Dixon, California and Ocala, Florida. Prior to
        the Petition Date, MEC was marketing these properties for sale and
        had listed them with real estate brokers.

    (b) In March 2008, MEC committed to a plan to sell excess real estate in
        Oberwaltersdorf, Austria. On March 5, 2009, MEC announced that one of
        its subsidiaries in Austria had entered into an agreement to sell to
        a subsidiary of Magna approximately 100 acres of real estate,
        including the excess real estate in Oberwaltersdorf, Austria, for a
        purchase price of approximately 4.6 million euros ($6.0 million). The
        transaction was completed on April 28, 2009.


    MEC's assets classified as held for sale and corresponding liabilities
    are shown in the table below.

                                                      March 31,  December 31,
    As at                                              2009(1)       2008
    -------------------------------------------------------------------------
    ASSETS
    Current assets:
      Real estate properties, net
        Dixon, California (note 6)                  $         -  $     9,077
        Ocala, Florida                                        -        8,407
        Oberwaltersdorf, Austria                              -        4,248
    -------------------------------------------------------------------------
                                                    $         -  $    21,732
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES
    Current liabilities:
      Future tax liabilities                        $         -  $       876
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) MEC's net assets were deconsolidated from the Company's consolidated
        balance sheet as of the Petition Date (note 1(a)).

    6.  WRITE-DOWN OF MEC'S LONG-LIVED ASSETS

    When long-lived assets are identified as held for sale, the carrying
    value is reduced, if necessary, to the estimated net realizable value.
    Net realizable value is evaluated at each interim reporting period based
    on discounted net future cash flows of the assets and, if appropriate,
    appraisals and/or estimated net sales proceeds from pending offers.

    Write-downs relating to MEC's long-lived assets have been recognized as
    follows:

    Three Months Ended March 31,                        2009         2008
    -------------------------------------------------------------------------
    Assets Held For Sale (note 5)
      Dixon, California(i)                          $         -  $     5,000
    -------------------------------------------------------------------------
    Discontinued Operations (note 4)
      Magna Racino(TM)(ii)                                    -       29,195
      Portland Meadows(iii)                                   -        3,099
    -------------------------------------------------------------------------
                                                              -       32,294
    -------------------------------------------------------------------------
                                                    $         -  $    37,294
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (i)   As a result of significant weakness in the Northern California real
          estate market and the U.S. financial market, MEC recorded an
          impairment charge of $5.0 million related to the Dixon, California
          real estate property in the three months ended March 31, 2008,
          which represented the excess of the carrying value of the asset
          over the estimated net realizable value at such time.

    (ii)  As a result of the classification of Magna Racino(TM) as
          discontinued operations in the three months ended March 31, 2008,
          MEC recorded an impairment charge, included in discontinued
          operations, of $29.2 million, which represented the excess of the
          carrying value of the assets over the estimated net realizable
          value at such time.

    (iii) In June 2003, the Oregon Racing Commission (the "ORC") adopted
          regulations that permitted wagering through instant racing
          terminals as a form of pari-mutuel wagering at Portland Meadows
          (the "Instant Racing Rules"). In September 2006, the ORC granted a
          request by Portland Meadows to offer instant racing under its
          2006-2007 race meet licence. In June 2007, the ORC, acting under
          the advice of the Oregon Attorney General, temporarily suspended
          and began proceedings to repeal the Instant Racing Rules. In
          September 2007, the ORC denied a request by Portland Meadows to
          offer instant racing under its 2007-2008 race meet licence. In
          response to this denial, MEC requested the holding of a contested
          case hearing, which took place in January 2008. On February 27,
          2008, the Office of Administrative Hearings released a proposed
          order in MEC's favour, approving instant racing as a legal form of
          wager at Portland Meadows. However, on April 25, 2008, the ORC
          issued an order rejecting that recommendation. Based primarily on
          the ORC's order to reject the Office of Administrative Hearings'
          recommendation, MEC recorded an impairment charge of $3.1 million,
          included in discontinued operations, in the three months ended
          March 31, 2008 related to the instant racing terminals and build-
          out of the instant racing facility.

    7.  EARNINGS (LOSS) PER SHARE

    The computation of diluted earnings (loss) per share for the three-month
    periods ended March 31, 2009 and 2008 excludes the effect of the
    potential exercise of 494,544 and 516,544 options, respectively, to
    acquire Class A Subordinate Voting Shares of the Company because the
    effect would be anti-dilutive.

    8.  REAL ESTATE PROPERTIES

                                                                 (restated -
                                                                  note 1(e))
                                                      March 31,  December 31,
    As at                                               2009         2008
    -------------------------------------------------------------------------
    Real Estate Business

    Revenue-producing properties
      Land                                          $   200,696  $   207,454
      Buildings, parking lots and roadways - cost     1,300,851    1,334,858
      Buildings, parking lots and roadways
       - accumulated depreciation                      (355,035)    (355,360)
    -------------------------------------------------------------------------
                                                      1,146,512    1,186,952
    -------------------------------------------------------------------------
    Development properties
      Land and improvements(i)                          157,009      209,218
      Properties under development                          906        1,163
    -------------------------------------------------------------------------
                                                        157,915      210,381
    -------------------------------------------------------------------------
    Properties held for sale                                486          486
    -------------------------------------------------------------------------
                                                      1,304,913    1,397,819
    -------------------------------------------------------------------------
    MEC(1)

    Revenue-producing racetrack properties
      Land and improvements                                   -      171,467
      Buildings - cost                                        -      517,012
      Assets under capital lease - cost                       -       45,648
      Buildings - accumulated depreciation                    -     (124,748)
      Assets under capital lease - accumulated
       depreciation                                           -      (13,196)
      Construction in progress                                -        7,271
    -------------------------------------------------------------------------
                                                              -      603,454
    -------------------------------------------------------------------------
    Under-utilized racetrack real estate                      -       76,130
    -------------------------------------------------------------------------
    Revenue-producing non-racetrack properties
      Land and improvements                                   -          153
      Buildings - cost                                        -        1,972
      Buildings - accumulated depreciation                    -           (8)
    -------------------------------------------------------------------------
                                                              -        2,117
    -------------------------------------------------------------------------
                                                              -      681,701
    -------------------------------------------------------------------------
    Eliminations (note 19(a))(i)                              -      (55,337)
    -------------------------------------------------------------------------
    Consolidated                                    $ 1,304,913  $ 2,024,183
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (i) During the year ended December 31, 2007, the Real Estate Business
        acquired certain lands included in "development properties" from MEC.
        Prior to the Petition Date (note (1(a)), the Real Estate Business had
        recorded the cost of these lands at the exchange amount of the
        consideration paid (including transaction costs) and the excess of
        such exchange amount over MEC's carrying values of such properties
        was eliminated in determining the consolidated carrying values of
        such properties. Subsequent to the Petition Date, such excess amount
        of $50.5 million has been netted against the Real Estate Business'
        carrying values of such properties. The remaining portion of the
        amount eliminated at December 31, 2008 related to interest incurred
        by MEC on project financing facilities with the MID Lender (note
        19(a)) that had been capitalized to MEC's real estate properties.

    -------------------------
    (1) MEC's net assets were deconsolidated from the Company's consolidated
        balance sheet as of the Petition Date (note 1(a)).


    9.  OTHER ASSETS

    Other assets consist of:

                                                                 (restated -
                                                                  note 1(e))
                                                      March 31,  December 31,
    As at                                               2009         2008
    -------------------------------------------------------------------------
    Real Estate Business

    Deferred lease acquisition costs                $     1,137  $       540
    Long-term receivables                                   514          558
    Other                                                     8           12
    -------------------------------------------------------------------------
                                                          1,659        1,110
    -------------------------------------------------------------------------
    MEC(1)

    Equity investments                                        -       28,717
    Deposits                                                  -        2,500
    Deferred development costs                                -        1,970
    Goodwill                                                  -          487
    Other                                                     -          416
    -------------------------------------------------------------------------
                                                              -       34,090
    -------------------------------------------------------------------------
    Consolidated                                    $     1,659  $    35,200
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------
    (1) MEC's net assets were deconsolidated from the Company's consolidated
        balance sheet as of the Petition Date (note 1(a)).


    10. BANK INDEBTEDNESS

    The Real Estate Business has an unsecured senior revolving credit
    facility in the amount of $50.0 million that is available by way of U.S.
    or Canadian dollar loans or letters of credit (the "MID Credit
    Facility"). In January 2009, the maturity date of the MID Credit Facility
    was extended from January 21, 2009 to December 18, 2009, unless further
    extended with the consent of both parties. Interest on drawn amounts is
    calculated based on an applicable margin determined by the Real Estate
    Business' ratio of funded debt to earnings before interest, income tax
    expense, depreciation and amortization. The Real Estate Business is
    subject to the lowest applicable margin available, with drawn amounts
    incurring interest at LIBOR or bankers' acceptance rates, in each case
    plus 2.75%, or the U.S. base or Canadian prime rate, in each case plus
    1.75%. At March 31, 2009 and December 31, 2008, the Real Estate Business
    had no borrowings under the MID Credit Facility, but had issued letters
    of credit totalling $0.2 million.

    11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

    Accounts payable and accrued liabilities consist of:

                                                                 (restated -
                                                                  note 1(e))
                                                      March 31,  December 31,
    As at                                               2009         2008
    -------------------------------------------------------------------------
    Real Estate Business

    Accounts payable                                $     2,112  $     3,094
    Accrued salaries and wages                              935          902
    Accrued interest payable                              3,562          356
    Other accrued liabilities                            10,932        8,059
    -------------------------------------------------------------------------
                                                         17,541       12,411
    -------------------------------------------------------------------------
    MEC(1)

    Accounts payable                                          -       53,180
    Accrued salaries and wages                                -        8,576
    Customer deposits                                         -        2,617
    Joint venture funding obligation                          -        9,092
    Other accrued liabilities                                 -       35,595
    -------------------------------------------------------------------------
                                                              -      109,060
    -------------------------------------------------------------------------
    Consolidated                                    $    17,541  $   121,471
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) MEC's net assets were deconsolidated from the Company's consolidated
        balance sheet as of the Petition Date (note 1(a)).


    12. OTHER LONG-TERM LIABILITIES

    Other long-term liabilities consist of:

                                                                 (restated -
                                                                  note 1(e))
                                                      March 31,  December 31,
    As at                                               2009         2008
    -------------------------------------------------------------------------
    MEC(1)

    Finance obligation                              $         -  $     9,039
    Deferred revenue                                          -        2,772
    Postretirement and pension liabilities                    -        3,302
    Fair value of interest rate swaps (note 18)               -        3,162
    Other                                                     -          698
    -------------------------------------------------------------------------
                                                    $         -  $    18,973
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------
    (1) MEC's net assets were deconsolidated from the Company's balance sheet
        as of the Petition Date (note 1(a)).


    13. CONTRIBUTED SURPLUS

    Changes in the Company's contributed surplus are shown in the following
    table:

                                                                 (restated -
                                                                  note 1(e))
    Three Months Ended March 31,                        2009         2008
    -------------------------------------------------------------------------
    Contributed surplus, beginning of period        $    57,062  $    46,608
    Stock-based compensation                                 27          131
    -------------------------------------------------------------------------
    Contributed surplus, end of period              $    57,089  $    46,739
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    14. ACCUMULATED OTHER COMPREHENSIVE INCOME

    Changes in the Company's accumulated other comprehensive income are shown
    in the following table:

                                                                 (restated -
                                                                  note 1(e))
    Three Months Ended March 31,                        2009         2008
    -------------------------------------------------------------------------
    Accumulated other comprehensive income,
     beginning of period                            $   161,827  $   251,267
    Change in fair value of interest rate swaps,
     net of taxes and noncontrolling interest                92         (332)
    Foreign currency translation adjustment,
     net of noncontrolling interest(i)                  (30,446)      35,206
    Reclassification to income upon
     deconsolidation of MEC (note 1(a))                 (19,850)           -
    -------------------------------------------------------------------------
    Accumulated other comprehensive income,
     end of period(ii)                              $   111,623  $   286,141
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (i)  The Company incurs unrealized foreign currency translation gains and
         losses related to its self-sustaining operations having functional
         currencies other than the U.S. dollar. During the three months ended
         March 31, 2009, the Company reported currency translation losses due
         to a strengthening of the U.S. dollar against the currencies
         (primarily the Canadian dollar and the euro) in which the Company
         operates. During the three months ended March 31, 2008, the Company
         reported net currency translation gains due primarily to gains from
         the appreciation of the euro against the U.S. dollar, partially
         offset by losses due to the weakening of the Canadian dollar against
         the U.S. dollar.

    (ii) Accumulated other comprehensive income consists of:

                                                                 (restated -
                                                                  note 1(e))
                                                      March 31,  December 31,
    As at                                               2009         2008
    -------------------------------------------------------------------------
    Foreign currency translation adjustment,
     net of noncontrolling interest                 $   111,623  $   163,567
    Fair value of interest rate swaps, net of
     taxes and noncontrolling interest                        -       (1,012)
    Unrecognized pension actuarial losses,
     net of noncontrolling interest                           -         (728)
    -------------------------------------------------------------------------
                                                    $   111,623  $   161,827
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    15. NONCONTROLLING INTEREST

    Changes in the noncontrolling interest of MEC are shown in the following
    table:

                                                                 (restated -
                                                                  notes 1(e))
    Three Months Ended March 31,                        2009         2008
    -------------------------------------------------------------------------
    Noncontrolling interest, beginning of period    $    24,182  $   142,037
    MEC's stock-based compensation                           23           44
    Disgorgement payment received from
     noncontrolling interest(i)                             420            -
    Comprehensive income (loss):
      Net loss attributable to the
       noncontrolling interest                           (6,308)     (21,438)
      Other comprehensive income (loss)
       attributable to the noncontrolling interest
        Change in fair value of interest rate
         swaps, net of taxes                                 79         (284)
        Foreign currency translation adjustment             (74)       1,148
    Reclassification to income upon deconsolidation
     of MEC (note 1(a))                                 (18,322)           -
    -------------------------------------------------------------------------
    Noncontrolling interest, end of period          $         -  $   121,507
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (i) In January 2009, MEC received notice from an institutional
        shareholder holding more than 10% of MEC's outstanding shares that
        such institution had completed various transactions involving MEC
        Class A Stock which were determined to be in violation of Section 16
        of the Securities Exchange Act of 1934 (the "Act"). In efforts to
        regain compliance with Section 16 of the Act, the institution was
        required to file reports with the Securities and Exchange Commission
        of the institution's holdings in, and transactions involving, MEC
        Class A Stock and determined that, based on transactions completed in
        2003 and 2004, a disgorgement payment of $0.4 million, representing
        "short-swing profits" realized by the institution, was required to be
        made to MEC. The Company accounted for the cash receipt as an
        increase to the noncontrolling interest in MEC.

    16. STOCK-BASED COMPENSATION

    On August 29, 2003, the Board approved the Incentive Stock Option Plan
    (the "MID Plan"), which allows for the grant of stock options or stock
    appreciation rights to directors, officers, employees and consultants.
    Amendments to the MID Plan were approved by the Company's shareholders at
    the May 11, 2007 Annual and Special Meeting, and became effective on
    June 6, 2007. At March 31, 2009, a maximum of 2.61 million MID Class A
    Subordinate Voting Shares are available to be issued under the MID Plan.

    MID has granted stock options to certain directors and officers to
    purchase MID Class A Subordinate Voting Shares. Such options have
    generally been granted with 1/5th of the options vesting on the date of
    grant and the remaining options vesting over a period of four years at a
    rate of 1/5th on each anniversary of the date of grant. Options expire on
    the tenth anniversary of the date of grant, subject to earlier
    cancellation in the events specified in the stock option agreement
    entered into by MID with each recipient of options.

    A reconciliation of the changes in stock options outstanding is presented
    below:

                                     2009                      2008
                          ------------------------- -------------------------
                                          Weighted                  Weighted
                                           Average                   Average
                                          Exercise                  Exercise
                                             Price                     Price
                               Number      (Cdn. $)      Number      (Cdn. $)
    -------------------------------------------------------------------------
    Stock options
     outstanding, January 1   494,544        34.83      516,544        35.09
    Cancelled or forfeited     (8,000)       39.12            -            -
    -------------------------------------------------------------------------
    Stock options
     outstanding, March 31    486,544        34.76      516,544        35.09
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Stock options
     exercisable, March 31    401,544        34.40      326,544        34.66
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Company estimates the fair value of stock options granted at the date
    of grant using the Black-Scholes option valuation model. The Black-
    Scholes option valuation model was developed for use in estimating the
    fair value of freely traded options, which are fully transferable and
    have no vesting restrictions. In addition, this model requires the input
    of subjective assumptions, including expected dividend yields, future
    stock price volatility and expected time until exercise. Although the
    assumptions used reflect management's best estimates, they involve
    inherent uncertainties based on market conditions outside of the
    Company's control. Because the Company's outstanding stock options have
    characteristics that are significantly different from those of traded
    options, and because changes in any of the assumptions can materially
    affect the fair value estimate, in management's opinion, the existing
    model does not necessarily provide the only measure of the fair value of
    the Company's stock options.

    Effective November 3, 2003, MID established a Non-Employee Director
    Share-Based Compensation Plan (the "DSP"), which provides for a deferral
    of up to 100% of each outside director's total annual remuneration from
    the Company, at specified levels elected by each director, until such
    director ceases to be a director of the Company. The amounts deferred are
    reflected by notional deferred share units ("DSUs") whose value reflects
    the market price of the Company's Class A Subordinate Voting Shares at
    the time that the particular payment(s) to the director is determined.
    The value of a DSU will appreciate or depreciate with changes in the
    market price of the Class A Subordinate Voting Shares. The DSP also takes
    into account any dividends paid on the Class A Subordinate Voting Shares.
    Effective January 1, 2005, all directors were required to receive at
    least 50% of their Board and Committee compensation fees (excluding
    Special Committee fees, effective January 1, 2006) in DSUs. On January 1,
    2008, the DSP was amended such that this 50% minimum requirement is only
    applicable to Board retainer fees. Under the DSP, when a director leaves
    the Board, the director receives a cash payment at an elected date equal
    to the value of the accrued DSUs at such date. There is no option under
    the DSP for directors to receive Class A Subordinate Voting Shares in
    exchange for DSUs.

    A reconciliation of the changes in DSUs outstanding is presented below:

                                                           2009         2008
    -------------------------------------------------------------------------
    DSUs outstanding, January 1                          80,948       41,452
    Granted                                              32,815        6,012
    Redeemed                                            (11,245)           -
    -------------------------------------------------------------------------
    DSUs outstanding, March 31                          102,518       47,464
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    During the three months ended March 31, 2009, 11,245 DSUs were redeemed
    by two directors who left the Board in 2008, for aggregate cash proceeds
    of $83 thousand.

    During the three months ended March 31, 2009, the Real Estate Business
    recognized stock-based compensation expense of $122 thousand (2008 -
    $164 thousand), which includes $95 thousand (2008 - $33 thousand)
    pertaining to DSUs.

    17. DETAILS OF CASH FROM OPERATING ACTIVITIES

    (a) Items not involving current cash flows:

                                                                  (restated
                                                                 - note 1(e))
        Three Months Ended March 31,                    2009         2008
        ---------------------------------------------------------------------
        Real Estate Business

        Straight-line rent adjustment               $       137  $        57
        Interest and other income from MEC               (6,382)      (1,086)
        Stock-based compensation expense                    122          164
        Depreciation and amortization                     9,766       11,047
        Future income taxes                              (1,145)       1,827
        Deconsolidation adjustment to the carrying
         values of amounts due from MEC                     504            -
        Other                                                71           88
        ---------------------------------------------------------------------
                                                          3,073       12,097
        ---------------------------------------------------------------------
        MEC(1)

        Stock-based compensation expense                     23           44
        Depreciation and amortization                     7,014       11,056
        Amortization of debt issuance costs               3,346        2,512
        Write-down of MEC's long-lived assets                 -        5,000
        Deconsolidation adjustment to the carrying
         value of the investment in MEC                  46,173            -
        Other gains                                           -       (2,013)
        Future income taxes                                   -        1,521
        Equity loss (income)                                (65)         836
        Other                                                20          189
        ---------------------------------------------------------------------
                                                         56,511       19,145
        ---------------------------------------------------------------------
        Eliminations (note 19(a))                          (339)      (1,197)
        ---------------------------------------------------------------------
        Consolidated                                $    59,245  $    30,045
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    (b) Changes in non-cash balances:

                                                                  (restated
                                                                 - note 1(e))
        Three Months Ended March 31,                    2009         2008
        ---------------------------------------------------------------------
        Real Estate Business

        Accounts receivable                         $      (671) $    (1,823)
        Loans receivable from MEC, net                     (748)         (59)
        Prepaid expenses and other                         (681)         527
        Accounts payable and accrued liabilities          6,142        3,837
        Income taxes                                      1,342        2,912
        Deferred revenue                                 (2,532)        (722)
        ---------------------------------------------------------------------
                                                          2,852        4,672
        ---------------------------------------------------------------------
        MEC(1)

        Restricted cash                                     189        2,607
        Accounts receivable                             (18,624)     (20,920)
        Prepaid expenses and other                       (2,076)      (4,088)
        Accounts payable and accrued liabilities         11,289       10,859
        Income taxes                                         48        1,453
        Loans payable to MID, net                           653           59
        Deferred revenue                                    217        2,344
        ---------------------------------------------------------------------
                                                         (8,304)      (7,686)
        ---------------------------------------------------------------------
        Eliminations (note 19(a))                           (43)         211
        ---------------------------------------------------------------------
        Consolidated                                $    (5,495) $    (2,803)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    --------------------------
    (1) The three-month period ended March 31, 2009 includes the results of
        MEC up to the Petition Date (note 1(a)).


    18. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE INFORMATION

    The Company periodically purchases foreign exchange forward contracts to
    hedge specific anticipated foreign currency transactions. At March 31,
    2009, the Company held foreign exchange forward contracts to purchase
    15.0 million euros (December 31, 2008 - 4.2 million euros) and sell
    $19.6 million (December 31, 2008 - $5.6 million). These contracts were
    entered into by a wholly-owned subsidiary of the Real Estate Business
    with a U.S. dollar functional currency to mitigate its foreign exchange
    exposure under a euro denominated short-term loan payable to another
    wholly-owned subsidiary of the Real Estate Business having the euro as
    its functional currency.

    At March 31, 2009, the Company also held a foreign exchange forward
    contract to purchase $6.7 million and sell Cdn.$8.3 million. This
    contract was entered into by the Company, having a Canadian dollar
    functional currency, to mitigate its foreign exchange exposure on its
    dividends declared on March 26, 2009 and payable on April 15, 2009.

    The following tables summarize the impact of these derivative financial
    instruments on the Company's unaudited interim consolidated financial
    statements as at March 31, 2009 and for the three months then ended:

                                                                   March 31,
    As at                                                            2009
    -------------------------------------------------------------------------
    Derivatives not designated as hedging instruments
    Foreign exchange forward contracts
     (included in "prepaid expenses and other")                  $       386
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                                  Amount
                                                                  of Gain
                                        Location of Gain         Recognized
    Three Months Ended                Recognized in Income      in Income on
     March 31, 2009                     on Derivatives           Derivative
    -------------------------------------------------------------------------
    Derivatives not designated
     as hedging instruments
    Foreign exchange forward
     contracts                      Foreign Exchange Losses      $       104
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The following table represents information related to the Company's
    financial instruments measured at fair value on a recurring basis and the
    level within the fair value hierarchy, as prescribed by FASB Statement of
    Financial Accounting Standards No. 157, "Fair Value Measurements", in
    which the fair value measurements fall:

                                      Quoted Prices
                                        in Active
                                       Markets for  Significant
                                        Identical      Other     Significant
                                        Assets or    Observable  Unobservable
                                       Liabilities     Inputs       Inputs
    As at March 31, 2009                (Level 1)    (Level 2)    (Level 3)
    -------------------------------------------------------------------------
    Assets carried at fair value
    Cash and cash equivalents          $   106,707  $         -  $         -
    Restricted cash                            458            -            -
    Foreign exchange forward contracts           -          386            -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    19. TRANSACTIONS WITH RELATED PARTIES

    Mr. Frank Stronach, who serves as the Chairman of the Company, Magna and
    MEC, and three other members of his family are trustees of the Stronach
    Trust. The Stronach Trust controls the Company through the right to
    direct the votes attaching to 66% of the Company's Class B Shares. Magna
    is controlled by M Unicar Inc. ("M Unicar"), a Canadian holding company
    whose shareholders consist of the Stronach Trust and certain members of
    Magna's management. M Unicar indirectly owns Magna Class A Subordinate
    Voting Shares and Class B Shares representing in aggregate approximately
    65% of the total voting power attaching to all Magna's shares. The
    Stronach Trust indirectly owns the shares carrying the substantial
    majority of the votes of M Unicar. As the Company and Magna may be
    considered to be under the common control of the Stronach Trust, they are
    considered to be related parties for accounting purposes.

    (a) Loans to MEC

        (i)   2007 MEC Bridge Loan

              On September 13, 2007, MID announced that the MID Lender had
              agreed to provide MEC with a bridge loan of up to $80.0 million
              (subsequently increased to $125.0 million as discussed below)
              through a non-revolving facility (the "2007 MEC Bridge Loan").

              The 2007 MEC Bridge Loan is secured by certain assets of MEC,
              including first ranking security over the Dixon, Ocala and
              Thistledown lands, second ranking security over Golden Gate
              Fields and third ranking security over Santa Anita Park. In
              addition, the 2007 MEC Bridge Loan is guaranteed by certain MEC
              subsidiaries and MEC has pledged the shares and all other
              interests MEC has in each of the guarantor subsidiaries (or
              provided negative pledges where a pledge was not possible due
              to regulatory constraints or due to a pledge to an existing
              third-party lender).

              The 2007 MEC Bridge Loan initially had a maturity date of
              May 31, 2008 and bore interest at a rate per annum equal to
              LIBOR plus 10.0% prior to December 31, 2007, at which time the
              interest rate on outstanding and subsequent advances was
              increased to LIBOR plus 11.0%. On February 29, 2008, the
              interest rate on outstanding and subsequent advances under the
              2007 MEC Bridge Loan was increased by a further 1.0% (set at
              12.5% at March 31, 2009 and December 31, 2008).

              During the year ended December 31, 2008, the maximum commitment
              under the 2007 MEC Bridge Loan was increased from $80.0 million
              to $125.0 million, MEC was given the ability to re-borrow
              $26.0 million that had been repaid during the year ended
              December 31, 2008 from proceeds of asset sales and MEC was
              permitted to use up to $3.0 million to fund costs associated
              with the November 2008 gaming referendum in Maryland. In
              addition, the maturity date of the 2007 MEC Bridge Loan was
              extended from May 31, 2008 to March 31, 2009. However, as a
              result of the November 2008 Reorganization Proposal not
              proceeding (note 3), such maturity date was accelerated to
              March 20, 2009. As a result of MEC's Chapter 11 filing on
              March 5, 2009 (note 1(a)), the 2007 MEC Bridge Loan was not
              repaid when due. Interest on the 2007 MEC Bridge Loan accrues
              during MEC's Chapter 11 process rather than being paid
              currently in cash.

              The MID Lender received an arrangement fee of $2.4 million (3%
              of the commitment) at closing in 2007 and received an
              additional arrangement fee of $0.8 million on February 29, 2008
              (1% of the then current commitment). In connection with the
              amendments and maturity extensions during the year ended
              December 31, 2008, the MID Lender received aggregate fees of
              $7.0 million. The MID Lender also received a commitment fee
              equal to 1% per annum of the undrawn facility. All fees,
              expenses and closing costs incurred by the MID Lender in
              connection with the 2007 MEC Bridge Loan and the changes
              thereto were paid by MEC.

              At March 31, 2009, $126.6 million (December 31, 2008 -
              $123.5 million, net of $1.8 million of unamortized deferred
              arrangement fees) due under the fully drawn 2007 MEC Bridge
              Loan was included in the Real Estate Business' current portion
              of "loans receivable from MEC, net" on the Company's
              consolidated balance sheet. MEC's current portion of "loans
              payable to MID, net" on the Company's consolidated balance
              sheet at December 31, 2008 includes an aggregate amount of
              borrowings and interest payable of $123.4 million, net of
              $2.0 million of unamortized deferred financing costs.

        (ii)  MEC Project Financings

              The MID Lender has made available separate project financing
              facilities to Gulfstream Park Racing Association, Inc. ("GPRA")
              and Remington Park, Inc., the wholly-owned subsidiaries of MEC
              that own and/or operate Gulfstream Park and Remington Park,
              respectively, in the amounts of $162.3 million and
              $34.2 million, respectively, plus costs and capitalized
              interest in each case as discussed below (together, the "MEC
              Project Financing Facilities"). The MEC Project Financing
              Facilities were established with a term of 10 years (except as
              described below for the two slot machine tranches of the
              Gulfstream Park project financing facility) from the relevant
              completion dates for the construction projects at Gulfstream
              Park and Remington Park, which occurred in February 2006 and
              November 2005, respectively.

              The Remington Park project financing and the Gulfstream Park
              project financing contain cross-guarantee, cross-default and
              cross-collateralization provisions. The Remington Park project
              financing is secured by all assets of the borrower (including
              first ranking security over the Remington Park leasehold
              interest), excluding licences and permits, and is guaranteed by
              the MEC subsidiaries that own Gulfstream Park and the Palm
              Meadows Training Center. The security package also includes
              second ranking security over the lands owned by Gulfstream Park
              and second ranking security over the Palm Meadows Training
              Center and the shares of the owner of the Palm Meadows Training
              Center (in each case, behind security granted for the
              Gulfstream Park project financing). In addition, the borrower
              has agreed not to pledge any licences or permits held by it and
              MEC has agreed not to pledge the shares of the borrower or the
              owner of Gulfstream Park. The Gulfstream Park project financing
              is guaranteed by MEC's subsidiaries that own and operate the
              Palm Meadows Training Center and Remington Park and is secured
              principally by security over the lands (or, in the case of
              Remington Park, over the leasehold interest) forming part of
              the operations at Gulfstream Park, the Palm Meadows Training
              Center and Remington Park and over all other assets of
              Gulfstream Park, the Palm Meadows Training Center and Remington
              Park, excluding licences and permits (which cannot be subject
              to security under applicable legislation).

              In July 2006 and December 2006, the Gulfstream Park project
              financing facility was amended to increase the amount available
              from $115.0 million (plus costs and capitalized interest) by
              adding new tranches of up to $25.8 million (plus costs and
              capitalized interest) and $21.5 million (plus costs and
              capitalized interest), respectively. Both tranches were
              established to fund MEC's design and construction of slot
              machine facilities located in the existing Gulfstream Park
              clubhouse building, as well as related capital expenditures and
              start-up costs, including the acquisition and installation of
              slot machines. The new tranches of the Gulfstream Park project
              financing facility both were established with a maturity date
              of December 31, 2011. Interest under the December 2006 tranche
              was capitalized until May 1, 2007, at which time monthly
              blended payments of principal and interest became payable to
              the MID Lender based on a 25-year amortization period
              commencing on such date. The July 2006 and December 2006
              amendments did not affect the fact that the Gulfstream Park
              project financing facility continues to be cross-guaranteed,
              cross-defaulted and cross-collateralized with the Remington
              Park project financing facility.

              Amounts outstanding under each of the MEC Project Financing
              Facilities bear interest at a fixed rate of 10.5% per annum,
              compounded semi-annually and require repayment in monthly
              blended payments of principal and interest based on a 25-year
              amortization period under each of the MEC Project Financing
              Facilities. Since the completion date for Remington Park, there
              has also been in place a mandatory annual cash flow sweep of
              not less than 75% of Remington Park's total excess cash flow,
              after permitted capital expenditures and debt service, which is
              used to pay capitalized interest on the Remington Park project
              financing facility plus a portion of the principal under the
              facility equal to the capitalized interest on the Gulfstream
              Park project financing facility. For the three months ended
              March 31, 2009, $2.0 million (2008 - $0.2 million) of such
              payments were made. During the three months ended March 31,
              2008, Remington Park agreed to purchase 80 Class III slot
              machines from GPRA with funding from the Remington Park project
              financing facility. Accordingly, $1.0 million was advanced
              under the existing Remington Park project financing facility
              during the three months ended March 31, 2008.

              In September 2007, the terms of the Gulfstream Park project
              financing facility were amended such that: (i) MEC was added as
              a guarantor under that facility; (ii) the borrower and all of
              the guarantors agreed to use commercially reasonable efforts to
              implement the MEC Debt Elimination Plan (note 4), including the
              sale of specific assets by the time periods listed in the MEC
              Debt Elimination Plan; and (iii) the borrower became obligated
              to repay at least $100.0 million under the Gulfstream Park
              project financing facility on or prior to May 31, 2008.

              During the year ended December 31, 2008, the deadline for
              repayment of at least $100.0 million under the Gulfstream Park
              project financing facility was extended from May 31, 2008 to
              March 31, 2009. However, as a result of the November 2008
              Reorganization Proposal not proceeding (note 3), such maturity
              date was accelerated to March 20, 2009. In connection with the
              amendments and maturity extensions during the year ended
              December 31, 2008, the MID Lender received aggregate fees of
              $3.0 million. As a result of MEC's Chapter 11 filing on
              March 5, 2009 (note 1(a)), the repayment of at least
              $100.0 million under the Gulfstream Park project financing
              facility was not made when due.

              During MEC's Chapter 11 process, monthly principal and interest
              payments under the MEC Project Financing Facilities are stayed
              and interest accrues rather than being paid currently in cash.

              At March 31, 2009, there were balances of $170.3 million and
              $22.7 million (net of $1.8 million and $0.2 million,
              respectively, of carrying value adjustments upon the
              deconsolidation of MEC - note 1(a)) due under the Gulfstream
              Park project financing facility and the Remington Park project
              financing facility, respectively. At December 31, 2008, there
              were balances of $169.5 million (net of $1.5 million of
              unamortized deferred arrangement fees) and $25.0 million due
              under the Gulfstream Park project financing facility and the
              Remington Park project financing facility, respectively. The
              current portion of the MEC Project Financing Facilities
              included in the Real Estate Business' "loans receivable from
              MEC, net" at December 31, 2008 was $100.7 million (net of
              $1.5 million of unamortized deferred arrangement fees),
              including the required $100.0 million repayment discussed
              above. The current portion of the MEC Project Financing
              Facilities, as reflected in MEC's "loans payable to MID, net"
              on the Company's consolidated balance sheet at December 31,
              2008, is $100.7 million (including $0.4 million in MEC's
              "discontinued operations" (note 4)), net of unamortized
              deferred financing costs of $1.5 million. The non-current
              portion of the MEC Project Financing Facilities, as reflected
              in MEC's "loans payable to MID, net" on the Company's
              consolidated balance sheet at December 31, 2008, is
              $90.0 million, net of unamortized deferred financing costs of
              $3.8 million (including $23.6 million, net of $1.0 million of
              unamortized deferred financing costs, in MEC's "discontinued
              operations" (note 4)).

              In connection with the Gulfstream Park project financing
              facility, MEC has placed into escrow (the "Gulfstream Escrow")
              with the MID Lender proceeds from an asset sale which occurred
              in fiscal 2005 and certain additional amounts necessary to
              ensure that any remaining Gulfstream Park construction costs
              (including the settlement of liens on the property) can be
              funded, which escrowed amount has been and will be applied
              against any such construction costs. At March 31, 2009, the
              amount held under the Gulfstream Escrow was $0.5 million
              (December 31, 2008 - $0.9 million). All funds in the Gulfstream
              Escrow are reflected as the Real Estate Business' "restricted
              cash" and "due to MEC" on the Company's consolidated balance
              sheets.

        (iii) 2008 MEC Loan

              On November 26, 2008, concurrent with the announcement of the
              November 2008 Reorganization Proposal (note 3), MID announced
              that the MID Lender had agreed to provide MEC with the 2008 MEC
              Loan of up to a maximum commitment, subject to certain
              conditions being met, of $125.0 million (plus costs and fees).
              The 2008 MEC Loan bears interest at the rate of LIBOR plus
              12.0%, is guaranteed by certain subsidiaries of MEC and is
              secured by substantially all the assets of MEC (subject to
              prior encumbrances). The 2008 MEC Loan has been made available
              through two tranches of a non-revolving facility.

              -  Tranche 1

                 Tranche 1 in the amount of up to $50.0 million (plus costs
                 and fees) was made available to MEC solely to fund (i)
                 operations, (ii) payments of principal or interest and other
                 costs under the 2008 MEC Loan and under other loans provided
                 by the MID Lender to MEC, (iii) mandatory payments of
                 interest in connection with other of MEC's existing debt,
                 (iv) maintenance capital expenditures and (v) capital
                 expenditures required pursuant to the terms of certain of
                 MEC's joint venture arrangements with third parties.

                 In connection with Tranche 1 of the 2008 MEC Loan, the MID
                 Lender charged an arrangement fee of $1.0 million (2% of the
                 commitment), such amount being capitalized to the
                 outstanding balance of Tranche 1 of the 2008 MEC Loan. The
                 MID Lender was also entitled to a commitment fee equal to 1%
                 per annum of the undrawn facility. All fees, expenses and
                 closing costs incurred by the MID Lender in connection with
                 the 2008 MEC Loan are capitalized to the outstanding balance
                 of Tranche 1 of the 2008 MEC Loan.

                 Tranche 1 had an initial maturity date of March 31, 2009 but
                 as a result of the November 2008 Reorganization Proposal not
                 proceeding (note 3), such maturity date was accelerated to
                 March 20, 2009. As a result of MEC's Chapter 11 filing on
                 March 5, 2009 (note 1(a)), Tranche 1 of the 2008 MEC Loan
                 was not repaid when due.

              -  Tranche 2

                 Tranche 2 in the amount of up to $75.0 million (plus costs
                 and fees) was to be used by MEC solely to fund (i) up to
                 $45.0 million (plus costs and fees) in connection with the
                 application by MEC's subsidiary Laurel Park for a Maryland
                 slots licence and related matters and (ii) up to
                 $30.0 million (plus costs and fees) in connection with the
                 construction of the temporary slots facility at Laurel Park,
                 following receipt of the Maryland slots licence. In addition
                 to being secured by substantially all the assets of MEC,
                 Tranche 2 of the 2008 MEC Loan was also to be guaranteed by
                 the MJC group of companies and secured by all of such
                 companies' assets.

                 In February 2009, MEC's subsidiary, Laurel Park, submitted
                 an application for a Maryland video lottery terminal licence
                 (the "MEC VLT Application") and drew $28.5 million under
                 Tranche 2 of the 2008 MEC Loan in order to place the initial
                 licence fee in escrow pending resolution of certain issues
                 associated with the application. Subsequently, MEC was
                 informed by the Maryland VLT Facility Location Commission
                 that the MEC VLT Application was not accepted for
                 consideration as it had been submitted without payment of
                 the initial licence fee of $28.5 million. Accordingly, MEC
                 repaid $28.5 million to the MID Lender under Tranche 2 of
                 the 2008 MEC Loan.

                 In connection with the February 2009 advance under Tranche 2
                 of the 2008 MEC Loan, the MID Lender charged an arrangement
                 fee of $0.6 million, such amount being capitalized to the
                 outstanding balance of Tranche 2 of the 2008 MEC Loan. The
                 MID Lender is also entitled to a commitment fee equal to 1%
                 per annum of the undrawn amount made available under Tranche
                 2 of the 2008 MEC Loan. All fees, expenses and closing costs
                 incurred by the MID Lender in connection with Tranche 2 are
                 capitalized to the outstanding balance of Tranche 2 under
                 the 2008 MEC Loan.

                 The initial maturity date of Tranche 2 was December 31, 2011
                 which, as a result of the MEC VLT Application not being
                 accepted for consideration, was accelerated in accordance
                 with the terms of the loan to May 13, 2009. As a result of
                 MEC's Chapter 11 filing on March 5, 2009 (note 1(a)), there
                 is an automatic stay of any action to collect, assert, or
                 recover on the 2008 MEC Loan.

              Interest and fees on the 2008 MEC Loan accrue during MEC's
              Chapter 11 process rather than being paid currently in cash. At
              March 31, 2009, $53.0 million (December 31, 2008 -
              $22.9 million, net of $0.8 million of unamortized deferred
              arrangement fees) due under the 2008 MEC Loan was included in
              the Real Estate Business' current portion of "loans receivable
              from MEC, net" on the Company's consolidated balance sheet.
              MEC's current portion of "loans payable to MID, net" on the
              Company's consolidated balance sheet at December 31, 2008
              includes borrowings of $22.8 million, net of $0.9 million of
              unamortized deferred financing costs.

        (iv)  DIP Loan

              In connection with the Debtors' Chapter 11 filing (note 1(a)),
              MID (through the MID Lender) originally agreed to provide a
              six-month secured DIP Loan to MEC in the amount of up to
              $62.5 million. The DIP Loan initial tranche of up to
              $13.4 million was made available to MEC on March 6, 2009
              pursuant to approval of the Court and an interim order was
              subsequently entered by the Court on March 13, 2009.

              On April 3, 2009, MEC requested an adjournment until April 20,
              2009 for the Court to consider the motion for a final order
              relating to the DIP Loan. The Court granted the request and
              authorized an additional $2.5 million being made available to
              MEC under the DIP Loan pending the April 20, 2009 hearing.

              On April 20, 2009, the DIP Loan was amended to, among other
              things, (i) extend the maturity from September 6, 2009 to
              November 6, 2009 in order to allow for a longer marketing
              period in connection with MEC's asset sales and (ii) reduce the
              principal amount available from $62.5 million to $38.4 million,
              with the reduction attributable to the fact that interest on
              the pre-petition loan facilities between MEC and the MID Lender
              will accrue during the Chapter 11 process rather than being
              paid currently in cash. The final terms of the DIP Loan were
              presented to the Court on April 20, 2009 and the Court entered
              a final order authorizing the DIP Loan on the amended terms on
              April 22, 2009.

              Under the terms of the DIP Loan, MEC is required to pay an
              arrangement fee of 3% under the DIP Loan (on each tranche as it
              is made available) and advances bear interest at a rate per
              annum equal to LIBOR plus 12.0%. MEC is also required to pay a
              commitment fee equal to 1% per annum on all undrawn amounts.

              The DIP Loan is secured by liens on substantially all assets of
              MEC and its subsidiaries (subject to prior ranking liens), as
              well as a pledge of capital stock of certain guarantors. Under
              the DIP Loan, MEC may request funds to be advanced on a monthly
              basis and such funds must be used in accordance with an
              approved budget. The terms of the DIP Loan contemplate that MEC
              will sell all or substantially all of its assets through an
              auction process and use the proceeds from the asset sales to
              repay its creditors, including the MID Lender.

              At March 31, 2009, $13.1 million (net of $0.4 million of
              unamortized deferred arrangement fees) due under the DIP Loan
              was included in the current portion of "loans receivable from
              MEC, net" on the Company's consolidated balance sheet.
              Subsequent to quarter-end, an additional $3.1 million has been
              drawn under the DIP Loan.

        To the Petition Date (note 1(a)), approximately $9.4 million of
        external third-party costs were incurred in association with these
        loan facilities between MEC and the MID Lender. Prior to the Petition
        Date, these costs are recognized as deferred financing costs at the
        MEC segment level and have been amortized into interest expense (of
        which a portion has been capitalized in the case of the MEC Project
        Financing Facilities) over the respective term of each of the loan
        facilities. Prior to the Petition Date, such costs were charged to
        "general and administrative" expenses at a consolidated level in the
        periods in which they were incurred.

        All interest and fees charged by the Real Estate Business prior to
        the Petition Date relating to the loan facilities, including any
        capitalization and subsequent amortization thereof by MEC, and any
        adjustments to MEC's related deferred financing costs, have been
        eliminated from the Company's consolidated results of operations and
        financial position.

    (b) Magna Lease Terminations

        During the three months ended March 31, 2008, the Real Estate
        Business and Magna completed a lease termination agreement on a
        property in the United Kingdom that the Real Estate Business is
        seeking to redevelop for residential purposes. The Real Estate
        Business paid Magna $2.0 million to terminate the lease and the
        termination payment has been included in "real estate properties,
        net" at March 31, 2009 and December 31, 2008 on the Company's
        consolidated balance sheets.

        During the three months ended March 31, 2008, the Real Estate
        Business and Magna also agreed to terminate the lease on a property
        in Canada. In conjunction with the lease termination, Magna agreed to
        pay the Company a fee of $3.9 million, which amount has been
        recognized by the Real Estate Business in "other gains, net" in the
        Company's unaudited interim statement of income (loss) for the
        three months ended March 31, 2008.

    (c) MEC's Real Estate Sales to Magna

        On March 5, 2009, MEC announced that one of its subsidiaries in
        Austria had entered into an agreement to sell to a subsidiary of
        Magna approximately 100 acres of real estate located in Austria (note
        5(b)) for a purchase price of approximately 4.6 million euros
        ($6.0 million). The transaction was completed on April 28, 2009.

    20 COMMITMENTS AND CONTINGENCIES

    (a) In the ordinary course of business activities, the Company may be
        contingently liable for litigation and claims with, among others,
        customers, suppliers and former employees. Management believes that
        adequate provisions have been recorded in the accounts where
        required. Although it is not possible to accurately estimate the
        extent of potential costs and losses, if any, management believes,
        but can provide no assurance, that the ultimate resolution of such
        contingencies would not have a material adverse effect on the
        financial position of the Company.

    (b) In addition to the letters of credit issued under the MID Credit
        Facility (note 10), the Company had $2.5 million of letters of credit
        issued with various financial institutions at March 31, 2009 to
        guarantee various development projects. These letters of credit are
        secured by cash deposits of the Company.

    (c) At March 31, 2009, the Company's contractual commitments related to
        construction and development projects outstanding amounted to
        approximately $1.9 million.

    (d) In November 2006, MEC sold its wholly-owned interest in The Meadows,
        a standardbred racetrack in Pennsylvania, to PA Meadows, LLC, a
        company jointly owned by William Paulos and William Wortman,
        controlling shareholders of Millennium Gaming, Inc., and a fund
        managed by Oaktree Capital Management, LLC. The parties also entered
        into a racing services agreement whereby MEC pays $50 thousand per
        annum and continues to operate, for its own account, the racing
        operations at The Meadows until at least July 2011. $5.6 million of
        the gain from the sale of The Meadows was initially deferred and
        included in MEC's "other long-term liabilities" representing the
        estimated net present value of the future operating losses expected
        over the term of the racing services agreement. Such amount has been
        recognized as a reduction of "general and administrative" expenses in
        MEC's results of operations over the term of the racing services
        agreement. Effective January 1, 2008, The Meadows entered into an
        agreement with the Meadows Standardbred Owners Association, which
        expires on December 31, 2009, whereby the horsemen make contributions
        to subsidize backside maintenance and marketing expenses at The
        Meadows. As a result, the estimated operating losses expected over
        the remaining term of the racing services agreement were revised,
        resulting in $2.0 million of previously deferred gains being
        recognized in MEC's "other gains" in the three months ended
        March 31, 2008.

    21. CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

    (a) Recently Adopted Canadian GAAP Accounting Standards

        (i)   Goodwill and Intangible Assets

              In February 2008, the Canadian Institute of Chartered
              Accountants (the "CICA") issued Handbook Section 3064,
              "Goodwill and Intangible Assets", amended Handbook Section
              1000, "Financial Statement Concepts", and Accounting Guideline
              11, "Enterprises in the Development Stage", and withdrew
              Handbook Section 3062, "Goodwill and Other Intangible Assets",
              and Handbook Section 3450, "Research and Development Costs".
              Handbook Section 3064 clarifies that costs may only be deferred
              when they relate to an item that meets the definition of an
              asset. The concept of matching revenues and expenses remains
              appropriate only for allocating the cost of an asset that is
              consumed in generating revenue over multiple reporting periods.
              Handbook Section 3064 also provides extensive guidance on when
              expenditures qualify for recognition as intangible assets.
              These changes are effective for fiscal years beginning on or
              after October 1, 2008. The Company's adoption of these
              accounting standards for Canadian GAAP purposes on January 1,
              2009 did not have any impact on the Company's unaudited interim
              consolidated financial statements, nor did it create any
              reconciling differences between Canadian and U.S. GAAP in the
              Company's consolidated balance sheets, statements of income
              (loss) or statements of comprehensive income (loss).

        (ii)  Business Combinations and Noncontrolling Interests

              In January 2009, the CICA issued Handbook Section 1582,
              "Business Combinations", Handbook Section 1601, "Consolidated
              Financial Statements", and Handbook Section 1602, "Non-
              controlling Interests" and withdrew Handbook Section 1581,
              "Business Combinations", and Handbook Section 1600,
              "Consolidated Financial Statements".

              Handbook Section 1582 applies to a transaction in which the
              acquirer obtains control of one or more businesses. The term
              "business" is more broadly defined than in the existing
              standard. Most assets acquired and liabilities assumed,
              including contingent liabilities that are considered to be
              improbable, will be measured at fair value. Any interest in the
              acquiree owned prior to obtaining control will be re-measured
              at fair value at the acquisition date, eliminating the need for
              guidance on step acquisitions. Contingent consideration
              arrangements will be fair valued at the acquisition date and
              included on that basis in the purchase price consideration. A
              bargain purchase will result in recognition of a gain.
              Acquisition costs must be expensed.

              Similar to the requirements of SFAS 160 (note 1(e)), under
              Handbook Section 1602, any noncontrolling interest is
              recognized as a separate component of shareholder's equity. Net
              income (loss) is calculated without deduction for the
              noncontrolling interest. Rather, net income (loss) is allocated
              between the controlling and noncontrolling interests.

              Handbook Section 1601 carries forward the requirements of
              Handbook Section 1600, other than those relating to
              noncontrolling interests.

              These changes are effective for fiscal years beginning on or
              after January 1, 2011 but may be adopted early at the beginning
              of a fiscal year. The Company's adoption of these accounting
              standards for Canadian GAAP purposes on January 1, 2009 did not
              have any impact on the Company's unaudited interim consolidated
              financial statements, nor did it create any reconciling
              differences between Canadian and U.S. GAAP in the Company's
              consolidated balance sheets, statements of income (loss) or
              statements of comprehensive income (loss).

    (b) Reconciliation to Canadian GAAP

        The Company's accounting policies as reflected in these unaudited
        interim consolidated financial statements do not materially differ
        from Canadian GAAP except as described in the following tables
        presenting net income (loss) attributable to MID, earnings (loss)
        attributable to each MID Class A Subordinate Voting or Class B Share
        and comprehensive income (loss) attributable to MID under
        Canadian GAAP:

        Three Months Ended March 31,                       2009         2008
        ---------------------------------------------------------------------
        Net income (loss) attributable to MID under
         U.S. GAAP                                  $   (28,845) $     6,879
          Interest expense on subordinated notes (i)    6,570(*)        (310)
          Depreciation and amortization (ii)            (340)(*)         (67)
          Development property carrying costs (iii)           -           95
          Stock-based compensation (iv)                 3,204(*)           -
        ---------------------------------------------------------------------
        Net income (loss) attributable to MID under
         Canadian GAAP                              $   (19,411) $     6,597
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        (*) Reflects cumulative impact of Canadian GAAP accounting to MID's
            investment in MEC being adjusted to nil upon deconsolidation of
            MEC at the Petition Date (note 1(a)).

        Three Months Ended March 31,                       2009         2008
        ---------------------------------------------------------------------
        Basic and diluted earnings (loss)
         attributable to each MID Class A Subordinate
         Voting or Class B Share
          - continuing operations                   $     (0.43) $      0.51
          - discontinued operations                        0.02        (0.37)
        ---------------------------------------------------------------------
          `                                         $     (0.41) $      0.14
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Three Months Ended March 31,                       2009         2008
        ---------------------------------------------------------------------
        Comprehensive income (loss) attributable to
         MID under U.S. GAAP                        $   (79,049) $    41,753
          Net adjustments to U.S. GAAP net income
           (loss) per above table                         9,434         (282)
          Translation of development property
           carrying costs (iii)                             (24)         (35)
          Employee defined benefit and postretirement
           plans (v)                                    (728)(*)           -
        ---------------------------------------------------------------------
        Comprehensive income (loss) attributable to
         MID under Canadian GAAP                    $   (70,367) $    41,436
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        (*) Reflects cumulative impact of Canadian GAAP accounting to MID's
            investment in MEC being adjusted to nil upon deconsolidation of
            MEC at the Petition Date (note 1(a)).

        (i)   Financial Instruments and Long-term Debt

              Under Canadian GAAP, a portion of the face value of MEC's
              convertible subordinated notes (the "MEC Notes") attributable
              to the value of the conversion feature at inception is recorded
              as part of the noncontrolling interest in MEC, rather than as a
              liability. The remaining value of the MEC Notes at inception
              is accreted up to their face value on an effective yield basis
              over the term of the Notes, with the accretion amount being
              included in MEC's net interest expense. Under U.S. GAAP, the
              MEC Notes are recorded entirely as debt, resulting in lower net
              interest expense than under Canadian GAAP.

        (ii)  Depreciation and Amortization

              Based on the terms of MEC's sale of The Meadows in 2006, the
              sale of The Meadows' real estate properties and fixed assets is
              not accounted for as a sale and leaseback, but rather using the
              financing method of accounting under U.S. GAAP as MEC is deemed
              to have a continuing interest in the transaction. Accordingly,
              under U.S. GAAP, such real estate properties and fixed assets
              were required to remain on the balance sheet and continue to
              depreciate and $7.2 million of the sale proceeds were required
              to be deferred at inception and were included in MEC's "other
              long-term liabilities" on the Company's consolidated balance
              sheets at December 31, 2008 and 2007. Under U.S. GAAP, these
              sale proceeds are to be recognized at the point when the
              transaction subsequently qualifies for sale recognition. Under
              Canadian GAAP, the disposal of such real estate properties and
              fixed assets was recognized as a sale transaction.

        (iii) Capitalization of Development Property Carrying Costs

              Under both Canadian and U.S. GAAP, certain carrying costs
              incurred in relation to real estate property held for
              development are permitted to be capitalized as part of the cost
              of such property while being held for development. However,
              FASB Statement of Financial Accounting Standards No. 67,
              "Accounting for Costs and Initial Rental Operations of Real
              Estate Projects", is more restrictive than CICA Handbook
              Section 3061, "Property, Plant and Equipment", in regards to
              the necessary criteria required to capitalize such costs. As a
              result, certain carrying costs have been capitalized from time
              to time under Canadian GAAP that are not permitted under U.S.
              GAAP.

        (iv)  Stock-based Compensation

              Canadian GAAP requires the expensing of all stock-based
              compensation awards for fiscal years beginning on or after
              January 1, 2004. The Company also adopted this policy under
              U.S. GAAP effective January 1, 2004. However, under U.S. GAAP,
              the cumulative impact on adoption of stock-based compensation
              is not recognized in the consolidated financial statements as
              an adjustment to opening deficit. As a result, prior to the
              deconsolidation of MEC (note 1(a)), $3.2 million of MEC's
              stock-based compensation expense related to periods prior to
              January 1, 2004 are excluded from MID shareholders' equity
              under U.S. GAAP but not under Canadian GAAP.

        (v)   Employee Defined Benefit and Postretirement Plans

              In September 2006, the FASB issued Statement of Financial
              Accounting Standards No. 158, "Employers' Accounting for
              Defined Benefit Pension and Other Postretirement Plans" ("SFAS
              158"). SFAS 158 requires employers to recognize the funded
              status (the difference between the fair value of plan assets
              and the projected benefit obligations) of a defined benefit
              postretirement plan as an asset or liability on the
              consolidated balance sheets with a corresponding adjustment to
              "accumulated other comprehensive income", net of related tax
              and minority interest impact. No such adjustment is required
              under Canadian GAAP.

        (vi)  Joint Ventures

              Under U.S. GAAP, MEC's investments in joint ventures are
              accounted for using the equity method of accounting, resulting
              in MEC's proportionate share of the net income or loss of the
              joint ventures in which it has an interest being recorded in a
              single line, "equity loss (income)" on the Company's
              consolidated statements of income (loss). Similarly, MEC's
              investment in joint ventures is included in a single line
              "other assets" on the Company's consolidated balance sheets.
              Only cash invested by MEC into its interests in joint ventures
              are reflected in the Company's consolidated statements of cash
              flows. Under Canadian GAAP, MEC's investments in joint ventures
              are accounted for using the proportionate consolidation method.
              MEC's proportionate share of the joint ventures in which it has
              an interest is added to the consolidated balance sheets,
              consolidated statements of income (loss) and consolidated
              statements of cash flows on a line-by-line basis.

    The following tables indicate the items in the consolidated balance
    sheets that would have been affected had the consolidated financial
    statements been prepared under Canadian GAAP:

                             As at March 31, 2009
    -------------------------------------------------------------------------
                                                       Property
                                              U.S.     Carrying     Canadian
                                              GAAP        Costs         GAAP
    -------------------------------------------------------------------------
    Real estate properties, net        $ 1,304,913  $     3,995  $ 1,308,908
    Future tax assets                        5,359         (218)       5,141
    Future tax liabilities                  39,771        1,162       40,933
    MID shareholders' equity             1,535,960        2,615    1,538,575
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                            As at December 31, 2008
    -------------------------------------------------------------------------

                                             Long-                      Sale
                                 U.S.         term      Benefit       of The
                                 GAAP         Debt        Plans      Meadows
    -------------------------------------------------------------------------
    Cash and cash
     equivalents          $   144,764  $         -  $         -  $         -
    Accounts receivable        33,915            -            -            -
    Prepaid expenses and
     other                     20,724            -            -            -
    Non-current restricted
     cash                           -            -            -            -
    Real estate
     properties, net        2,024,183            -            -       (6,035)
    Fixed assets, net          71,206            -            -         (181)
    Other assets               35,200            -            -            -
    Future tax assets          62,781            -            -         (400)
    Accounts payable and
     accrued liabilities      121,471          (96)           -            -
    Income taxes payable       10,363            -            -            -
    Long-term debt due
     within one year           82,649            -            -            -
    Note obligation due
     within one year, net      74,601         (875)           -            -
    Note obligation, net      149,015       (2,723)           -            -
    Other long-term
     liabilities               18,973            -       (1,357)      (7,216)
    Future tax liabilities    105,497          544            -            -
    MID shareholders'
     equity                 1,621,988       (6,570)         728          340
    Noncontrolling
     interest                  24,182        9,720          629          260
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                        As at December 31, 2008
    -------------------------------------------------------------------------
                             Property       Stock-
                             Carrying        based        Joint     Canadian
                                Costs        Comp.     Ventures         GAAP
    -------------------------------------------------------------------------
    Cash and cash
     equivalents          $         -  $         -  $     1,012  $   145,776
    Accounts receivable             -            -          363       34,278
    Prepaid expenses and
     other                          -            -          463       21,187
    Non-current restricted
     cash                           -            -        9,651        9,651
    Real estate
     properties, net            4,029            -       52,845    2,075,022
    Fixed assets, net               -            -           62       71,087
    Other assets                    -            -      (25,151)      10,049
    Future tax assets            (218)           -            -       62,163
    Accounts payable and
     accrued liabilities            -            -        9,615      130,990
    Income taxes payable            -            -            5       10,368
    Long-term debt due
     within one year                -            -       22,125      104,774
    Note obligation due
     within one year, net           -            -            -       73,726
    Note obligation, net            -            -            -      146,292
    Other long-term
     liabilities                    -            -        7,500       17,900
    Future tax liabilities      1,172            -            -      107,213
    MID shareholders'
     equity                     2,639       (3,204)           -    1,615,921
    Noncontrolling
     interest                       -        3,204            -       37,995
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    U.S. GAAP permits assets held for sale and assets of discontinued
    operations, as well as liabilities related to such assets, to be
    classified as current items on the balance sheet. Canadian GAAP only
    permits such items to be classified as current items if the sale of such
    items has occurred prior to the date of completion of the financial
    statements.

    The following table indicates the impact this difference between U.S and
    Canadian GAAP had on the Company's consolidated balance sheet at
    December 31, 2008 with respect to the classification of MEC's assets held
    for sale (note 5) and assets held for sale from discontinued operations
    (note 4), and liabilities related to such assets:

                                                           U.S.     Canadian
    As at December 31, 2008                                GAAP         GAAP
    -------------------------------------------------------------------------
    ASSETS

    Current assets:
      Assets held for sale                          $    21,732  $         -
      Assets held for sale from discontinued
       operations                                        94,461       24,507
    Assets held for sale                                      -       21,732
    Assets held for sale from discontinued operations         -       69,954
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES

    Current liabilities:
      Liabilities related to assets held for sale   $       876  $         -
      Liabilities related to discontinued operations     51,943       33,028
    Liabilities related to assets held for sale               -          876
    Liabilities related to discontinued operations            -       18,915
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Richard J. Smith, Executive Vice-President and
Chief Financial Officer, at (905) 726-7507

Organization Profile

MI DEVELOPMENTS INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890