MI Developments announces fourth quarter and 2009 results

AURORA, ON, March 29 /CNW/ - MI Developments Inc. (TSX: MIM.A, MIM.B; NYSE: MIM) ("MID" or the "Company") today announced its results for the three-month period and year ended December 31, 2009. All figures are in U.S. dollars.

Dennis Mills, Vice Chairman and CEO notes that "During 2009, the global recession severely impacted both the real estate market and automotive manufacturing market, the latter being the business of our main tenant Magna International Inc.

In addition, as a major lender to Magna Entertainment Corp. ("MEC"), the bankruptcy of that company resulted in further challenges to MID, however, the finalization of the MEC Chapter 11 proceedings may result in MID acquiring a number of assets with significant long term real estate value.

With the forthcoming settlement of the MEC Chapter 11 proceedings, we look forward to a return to a more stable environment."

The results for the three-month period and year ended December 31, 2009 are summarized below:

    
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                                       REAL ESTATE BUSINESS(1)
                              Three months ended           Year ended
                                 December 31,              December 31,
    (in thousands, except  ------------------------  ------------------------
     per share figures)       2009         2008         2009         2008
    ---------------------  -----------  -----------  -----------  -----------
    Revenues               $   58,042   $   54,495   $  224,034   $  219,141
    Net income (loss)
     attributable to MID   $  (72,800)  $   32,372   $   11,717   $  132,172
    Funds from operations
     ("FFO")(2)            $  (61,873)  $   42,432   $   52,860   $  175,591
    Diluted FFO per
     share(2)              $    (1.32)  $     0.91   $     1.13   $     3.76

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                                         MID CONSOLIDATED(1)
                              Three months ended           Year ended
                                 December 31,              December 31,
    (in thousands, except  ------------------------  ------------------------
     per share figures)       2009(3)      2008        2009(3)       2008
    ---------------------  -----------  -----------  -----------  -----------
    Revenues
      Real Estate
       Business            $   58,042   $   54,495   $  224,034   $  219,141
      MEC(3),(4)                    -      114,655      152,935      591,998
      Eliminations(3)               -      (13,652)      (9,636)     (40,566)
                           -----------  -----------  -----------  -----------
                           $   58,042   $  155,498   $  367,333   $  770,573
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------
    Net income (loss)
     attributable to MID
      Real Estate
       Business            $  (72,800)  $   32,372   $   11,717   $  132,172
      MEC - continuing
       operations(3)                -      (77,974)     (54,763)    (124,875)
      Eliminations(3)               -         (642)        (107)        (963)
                           -----------  -----------  -----------  -----------
      Income (loss) from
       continuing
       operations             (72,800)     (46,244)     (43,153)       6,334
      MEC - discontinued
       operations(3),(5)            -       (8,219)         864      (18,606)
                           -----------  -----------  -----------  -----------
                           $  (72,800)  $  (54,463)  $  (42,289)  $  (12,272)
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------
    Diluted earnings
     (loss) attributable
     to MID per share from
     continuing operations $    (1.56)  $    (0.99)  $    (0.93)  $     0.14
    Diluted loss
     attributable to MID
     per share             $    (1.56)  $    (1.17)  $    (0.91)  $    (0.26)
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    (1) As discussed further in Management's Discussion and Analysis of
        Results of Operations and Financial Position under "ADOPTION OF
        UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" included 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-month period and year ended December 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
        generally accepted accounting principles ("GAAP") and therefore may
        not be comparable to similar measures presented by other companies.
        Please refer to Management's Discussion and Analysis of Results of
        Operations and Financial Position under "REAL ESTATE BUSINESS -
        Results of Operations - Funds From Operations" included in this press
        release.

    (3) As discussed further in Management's Discussion and Analysis of
        Results of Operations and Financial Position under the section
        "SIGNIFICANT MATTERS - Deconsolidation of MEC" included in this press
        release, 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 the United States
        Bankruptcy 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 (the "CCAA") in Canada. As a result of the
        Debtors' Chapter 11 filing, the Company has concluded that, under
        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. The Company's results of operations for the three-month period
        ended December 31, 2009 do not include the results of MEC and for the
        year ended December 31, 2009 include MEC's results of operations for
        the period up 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 year ended December 31, 2009 and for the three-
        month period ended December 31, 2008 include the operations of
        Remington Park, Thistledown, Portland Meadows and Magna Racino(TM).
        In addition, MEC's discontinued operations for the year ended
        December 31, 2008 also include the operations of Great Lakes Downs,
        which was sold in July 2008.
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REAL ESTATE BUSINESS FINANCIAL RESULTS

Three-Month Period Ended December 31, 2009

Revenues were $58.0 million in the fourth quarter of 2009 compared to $54.5 million in the fourth quarter of 2008. The $3.5 million increase in revenues is due to a $3.9 million increase in rental revenues, partially offset by a $0.4 million reduction in interest and other income earned from MEC.

Rental revenues in the fourth quarter of 2009 increased to $44.8 million from $40.8 million in the prior year period. The additional rent earned from contractual rent increases and completed projects on-stream and the effect of changes in foreign currency exchange rates was partially offset by the negative impact of vacancies, renewals and re-leasing and straight-line rent adjustments.

Interest and other income from MEC in the fourth quarter of 2009 decreased to $13.3 million from $13.7 million in the prior year period. The decrease is primarily due to increased amortization in the prior year period relating to arrangement fees charged in 2008 under the Gulfstream Park project financing and 2007 MEC Bridge Loan, partially offset by interest and fees earned under the DIP Loan, increased interest and fees earned under the MEC 2008 Loan and the accretion of the fair value adjustment recorded upon the deconsolidation of MEC in the current year period.

Net loss attributable to MID for the fourth quarter of 2009 was $72.8 million compared to net income of $32.4 million in the prior year period. The decrease in earnings is primarily due to increases of $14.5 million in general and administrative expenses, $0.8 million in depreciation and amortization and $1.4 million in net interest expense, reduced foreign exchange gains of $1.4 million, the write-down of long-lived assets of $4.5 million, the $90.8 million impairment provision relating to loans receivable from MEC, the $0.1 million loss on disposal of real estate and the $7.8 million currency translation loss included in "other losses" in the current year period. These reductions to net income were partially offset by a $3.5 million increase in revenues and a reduction of $12.4 million in income taxes.

FFO for the fourth quarter of 2009 decreased by $104.3 million ($2.23 per share) as compared to the prior year period primarily due to the reduced net income of $105.2 million as a result of: (i) a $90.8 million impairment provision recorded on the loans receivable from MEC; (ii) a $4.5 million impairment charge on long-lived assets; (iii) a $7.8 million foreign currency translation loss due to the capital investment reduction in a foreign subsidiary; and (iv) $7.8 million of increased costs due to the MEC Chapter 11 proceedings. Partially offsetting the reduction to net income is increased depreciation and amortization of $0.8 million and the loss on disposal of real estate of $0.1 million recorded in the fourth quarter of 2009.

Year Ended December 31, 2009

Revenues were $224.0 million in 2009 compared to $219.1 million in 2008. The $4.9 million increase in revenues is due to a $12.5 million increase in interest and other income earned from MEC, partially offset by a $7.6 million reduction in rental revenues.

Rental revenues in 2009 decreased to $170.9 million from $178.6 million in 2008. The additional rent earned from contractual rent increases and completed projects on-stream was more than offset by the negative impact of vacancies, renewals and re-leasing, the effect of changes in foreign currency exchange rates and straight-line rent and other adjustments.

Interest and other income from MEC in 2009 increased to $53.1 million from $40.6 million in 2008. The increase is primarily due to interest and fees earned under the MEC 2008 Loan, the DIP Loan and the Gulfstream Park project financing, and the accretion of the fair value adjustment recorded upon the deconsolidation of MEC. The increase in interest and other income from MEC was partially offset by a reduction to the carrying value of the MEC loan facilities at the Petition Date and decreased interest and fees earned from the Remington Park project financing and the 2007 MEC Bridge Loan.

Net income attributable to MID in 2009 was $11.7 million compared to $132.2 million in 2008. The decrease is primarily due to increases of $25.9 million in general and administrative expenses and $3.3 million in net interest expense, reduced foreign exchange gains of $1.0 million, the write-down of long-lived assets of $4.5 million in the current year compared to $0.5 million in the prior year, the $7.8 million of other losses recognized in the current year as compared to $3.9 million of other gains recognized in the prior year, the $90.8 million impairment provision relating to loans receivable from MEC and the $0.5 million adjustment to the carrying values of the MEC loan facilities on deconsolidation of MEC in the current year. These reductions to net income were partially offset by a $4.9 million increase in revenues, reductions of $9.7 million in income tax expense and $2.1 million in depreciation and amortization.

FFO for 2009 was $52.9 million ($1.13 per share) compared to $175.6 million ($3.76 per share) in 2008. The decrease in FFO compared to the prior year is due primarily to (i) reduced net income of $120.5 million as a result of $90.8 million impairment provision recorded on the loans receivable from MEC, a $4.5 million impairment charge on long-lived assets, a $7.8 million foreign currency translation loss due to the capital investment reduction in a foreign subsidiary and $15.2 million of increased costs due to the MEC Chapter 11 proceedings, (ii) a reduction in depreciation and amortization of $2.1 million and (iii) the gain on disposal of real estate of $0.2 million recorded in 2009.

A more detailed discussion of MID's consolidated financial results for the fourth quarter and year ended December 31, 2009 is contained in the Management's Discussion and Analysis of Results of Operations and Financial Position, and the unaudited interim consolidated financial statements and notes thereto, which are attached to this press release.

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 fourth quarter ended December 31, 2009. The dividend is payable on or about April 15, 2010 to shareholders of record at the close of business on April 9, 2010.

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 discussed in Management's Discussion and Analysis of Results of Operations and Financial Position under the heading "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset Sales" included in this press release, on the Petition Date, the Debtors filed voluntary petitions for reorganization under the Bankruptcy Code in the Court and were granted recognition of the Chapter 11 proceedings from the Ontario Superior Court of Justice under section 18.6 of the CCAA in Canada.

FORWARD-LOOKING STATEMENTS

This press release may 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 relating to the MEC Chapter 11 proceeding and the Company's participation therein and 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 events, 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 the MEC Chapter 11 proceeding, including the success or timing of the implementation of the Joint Plan of Affiliated Debtors, the Official Committee of Unsecured Creditors, MI Developments Inc. and MI Developments US Financing Inc., the success or timing of the auction of MEC's assets, and the outcome of any proceedings related to the MEC Chapter 11 proceeding or MID's involvement therein (including as a result of any objections raised with the Bankruptcy Court), and the risks set forth in the "Risk Factors" section in the Company's Annual Information Form for 2009, filed on SEDAR at www.sedar.com and attached as Exhibit 1 to the Company's Annual Report on Form 40-F for the year ended December 31, 2009, 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 statements were made and unless otherwise required by applicable securities laws, the Company expressly disclaims any intention and undertakes no obligation to update or revise any forward looking statements contained in this press release to reflect subsequent information, events or circumstances or otherwise.

OTHER INFORMATION

For further information about MID, please see our website at www.midevelopments.com. Copies of financial data and other publicly filed documents are available through the internet on Canadian Securities Administrators' Systems for Electronic Document Analysis and Retrieval (SEDAR) which can be accessed at www.sedar.com and on the United States Securities and Exchange Commission's Electronic Data Gathering, Analysis and Retrieval System (EDGAR) which can be accessed at www.sec.gov.

    
    Management's Discussion and Analysis of Results of Operations and
    Financial Position
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For the three-month period and year ended December 31, 2009

Management's Discussion and Analysis of Results of Operations and Financial Position ("MD&A") of MI Developments Inc. ("MID" or the "Company") summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of MID for the three-month period and year ended December 31, 2009. Unless otherwise noted, all amounts are in United States ("U.S.") dollars and all tabular amounts are in millions of U.S. dollars. This MD&A should be read in conjunction with the accompanying unaudited interim consolidated financial statements for the three-month period and year ended December 31, 2009, which is prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP"). The Company adopted U.S. GAAP as its primary basis of financial reporting commencing January 1, 2009 on a retrospective basis (see "ADOPTION OF UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES"). For a reconciliation of the Company's results of operations and financial position from U.S. GAAP to Canadian generally accepted accounting principles ("Canadian GAAP"), see note 19 to the unaudited interim consolidated financial statements. This MD&A is prepared as at March 29, 2010. Additional information relating to MID, including the Annual Information Form for 2009, can be obtained from the Company's website at www.midevelopments.com and on SEDAR at www.sedar.com.

    
    OVERVIEW
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MID is the successor to Magna International Inc.'s ("Magna") real estate division, which prior to its spin-off from Magna on August 29, 2003 was organized as an autonomous business unit within Magna. MID was formed as a result of four companies that amalgamated on August 29, 2003 under the Business Corporations Act (Ontario): 1305291 Ontario Inc., 1305272 Ontario Inc., 1276073 Ontario Inc. and MID. These companies were wholly-owned subsidiaries of Magna and held Magna's real estate division and the controlling interest in Magna Entertainment Corp. ("MEC"). All of MID's Class A Subordinate Voting Shares and Class B Shares were distributed to the shareholders of Magna of record on August 29, 2003 on the basis of one of MID's Class A Subordinate Voting Shares for every two Class A Subordinate Voting Shares of Magna held, and one Class B Share for every two Class B Shares of Magna held. As a result of this spin-off transaction, MID acquired Magna's controlling interest in MEC.

Real Estate Business

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 and its automotive operating units. Members of the Magna group of companies are MID's primary tenants and provide approximately 98% of the annual real estate revenue generated by MID's income-producing properties (see "REAL ESTATE BUSINESS - Our Relationship with Magna"). In addition, MID owns land for industrial development and owns and acquires land that it intends to develop for mixed-use and residential projects. The Company's primary objective is to increase cash flow from its real estate operations, net income and the value of its assets in order to maximize the return on shareholders' equity over the long term.

Magna Entertainment Corp.

MEC is 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. At December 31, 2009 and 2008, the Company owned approximately 54% of MEC's total equity, representing approximately 96% of the total votes attached to MEC's outstanding stock.

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. On February 18, 2010, MID announced that MEC had filed the Joint Plan of Affiliated Debtors, the Official Committee of Unsecured Creditors (the "Creditors' Committee"), MID and MI Developments US Financing Inc. pursuant to Chapter 11 of the Code (as amended, the "Plan") and related Disclosure Statement (the "Disclosure Statement") in connection with the MEC Chapter 11 proceedings which provides for, among other things, the assets of MEC remaining after certain asset sales to be transferred to MID, including among other assets, Santa Anita Park, Golden Gate Fields, Gulfstream Park (including MEC's interest in the Village at Gulfstream Park, a joint venture between MEC and Forest City Enterprises, Inc.), AmTote International, Inc. ("AmTote") and XpressBet, Inc. ("XpressBet"). On March 23, 2010, the Plan was amended to include the transfer of The Maryland Jockey Club ("MJC") to MID. The Plan is subject to the confirmation of the Court (see "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset Sales - Chapter 11 Filing and Plan of Reorganization").

As a result of the MEC Chapter 11 filing, management estimated and reduced the carrying value of MID's equity investment in MEC to zero. Under the Plan, on the later to occur of the effective date of the Plan and the date the shares of MEC Lone Star, LP ("Lone Star LP") or substantially all the assets of Lone Star LP are sold, all MEC stock will be cancelled and the holders of MEC shares will not be entitled to nor will receive or retain any property or interest in property under the Plan, and the stock of the reorganized MEC will be issued and distributed to the administrator retained by the Debtors as of the effective date to administer the Plan.

In this MD&A, we use the term "Real Estate Business" to refer to the operations over which our Board of Directors (the "Board") and executive management have direct responsibility for the key operating, financing and resource allocation decisions, which excludes the operations of MEC (see "SIGNIFICANT MATTERS - Deconsolidation of MEC").

HIGHLIGHTS - REAL ESTATE BUSINESS

The Company faced several challenges during the fourth quarter and year ended December 31, 2009, including a weakening global economy and the bankruptcy of MEC. Despite the global economic meltdown that began late in 2008 and in particular the significant drop in real estate values around the world, the Company has a stable base of income-producing properties that continues to provide a steady cash flow from Magna who has endured the severe downturn in the automotive industry (see "REAL ESTATE BUSINESS - Automotive Industry Trends and Magna Plant Rationalization Strategy"). The MEC bankruptcy proceedings, which are ongoing, included a legal challenge by the Creditors' Committee with respect to the validity of and security related to the MID loans to MEC. A global settlement and release in connection with the action has been reached and the Plan is subject to confirmation of the Court. The settlement reached subsequent to year end required the Company to recognize a $90.8 million impairment on the value of the loans to MEC in the fourth quarter and year ended December 31, 2009. Under the terms of the settlement, however, certain assets will be transferred to the Company from MEC which have highly desirable underlying real estate located in some of the premier urban locations in United States (see "SIGNIFICANT MATTERS - Participating in MEC's Bankruptcy and Asset Sales").

    
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                                 Three Months Ended          Year Ended
                                     December 31,            December 31,
    (in millions, except per  ----------------------- -----------------------
     share information)         2009    2008  Change    2009    2008  Change
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    Rental Revenues           $ 44.8  $ 40.8     10%  $170.9  $178.6     (4%)
    Interest and other
     income from MEC(1)         13.3    13.7     (3%)   53.1    40.6     31%
    Revenues                    58.0    54.5      7%   224.0   219.1      2%
    Net income (loss)(2)       (72.8)   32.4   (325%)   11.7   132.2    (91%)
    Funds from operations
     ("FFO")(3)                (61.9)   42.4   (246%)   52.9   175.6    (70%)
    Diluted FFO per share(3)  $(1.32) $ 0.91   (246%) $ 1.13  $ 3.76    (70%)
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                                                    As at December 31,
    (in millions, except              ---------------------------------------
     number of properties)                    2009         2008       Change
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    Number of income-producing
     properties                                106          105           1%
    Leaseable area (sq. ft.)                  27.4         27.3            -
    Annualized lease payments
     ("ALP")(4)                        $     178.0  $     167.7           6%
    Income-producing property, gross
     book value ("IPP")                $   1,639.0  $   1,542.3           6%
    ALP as percentage of IPP                 10.9%        10.9%            -
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    (1) Prior to the Petition Date, interest and other income from MEC is
        eliminated from the Company's consolidated results of operations.
        $13.3 million and $43.5 million, respectively of interest and other
        income from MEC subsequent to the Petition Date are included in the
        Company's consolidated results of operations for the three-month
        period and year ended December 31, 2009.
    (2) Refer to footnote 4 under "SELECTED ANNUAL AND QUARTERLY FINANCIAL
        DATA (UNAUDITED)".
    (3) 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
        generally accepted accounting principles ("GAAP") and therefore may
        not be comparable to similar measures presented by other companies.
        In conjunction with the Company's adoption of U.S. GAAP as its
        primary basis of financial reporting (see "ADOPTION OF UNITED STATES
        GENERALLY ACCEPTED ACCOUNTING PRINCIPLES"), 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"). FFO, FFO per share and
        diluted FFO per share for all periods presented in this MD&A have
        been determined in accordance with the definition prescribed by
        NAREIT. For further details of the change in definition of FFO and a
        reconciliation of FFO to net income, see "REAL ESTATE BUSINESS -
        Results of Operations - Funds From Operations".
    (4) Annualized lease payments represent the total annual rent of the Real
        Estate Business assuming the contractual lease payments as at the
        last day of the reporting period were in place for an entire year,
        with rents denominated in foreign currencies being converted to U.S.
        dollars based on exchange rates in effect at the last day of the
        reporting period (see "REAL ESTATE BUSINESS - Foreign Currencies").

    SIGNIFICANT MATTERS
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Participation in MEC's Bankruptcy and Asset Sales

Chapter 11 Filing and Plan of Reorganization

On the Petition Date, the Debtors filed voluntary petitions for reorganization under the Bankruptcy Code in 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.

MEC filed for Chapter 11 protection in order to implement a comprehensive financial restructuring and conduct an orderly sales process for its assets. 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 the Debtors' debt obligations, including those with MID Islandi s.f. (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 the Debtors' 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.

As of March 29, 2010, the Company's equity investment in MEC consisted of 2,923,302 shares of its Class B Stock and 218,116 shares of its Class A Subordinate Voting Stock ("MEC Class A Stock"), representing approximately 96% of the total voting power of its outstanding stock and approximately 54% of the total equity interest in MEC. 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. As a result of the MEC Chapter 11 filing, management estimated and reduced the carrying value of MID's equity investment in MEC to zero. Under the Plan, on the later to occur of the effective date of the Plan and the date the shares of Lone Star LP or substantially all the assets of Lone Star LP are sold, all MEC stock will be cancelled and the holders of MEC shares will not be entitled to nor receive or retain any property or interest in property under the Plan, and the stock of the reorganized MEC will be issued and distributed to the administrator retained by the Debtors as of the effective date to administer the Plan.

On July 21, 2009, the MID Lender was named as a defendant in an action commenced by the Creditors' Committee in connection with the Debtors' Chapter 11 proceedings asserting, among other things, fraudulent transfer and recharacterization or equitable subordination of MID claims. On August 21, 2009, the Creditors' Committee filed an amended complaint to add MID and Mr. Frank Stronach, among others, as defendants, and to include additional claims for relief, specifically a breach of fiduciary duty claim against all defendants, a breach of fiduciary duty claim against MID and the MID Lender, and a claim for aiding and abetting a breach of fiduciary duty claim against all defendants. On August 24, 2009, MID and the MID Lender filed a motion to dismiss the claims against them by the Creditors' Committee. The Court denied the motion on September 22, 2009. On October 16, 2009, MID and the MID Lender filed their answer to the complaint, denying the allegations asserted against them.

On January 11, 2010, the Company announced that MID, the MID Lender, MEC and the Creditor's Committee had agreed in principle to the terms of a global settlement and release in connection with the action. Under the terms of the settlement, as amended, in exchange for the dismissal of the action with prejudice and a full release of MID, the MID Lender, their affiliates, and all current and former officers and directors of MID and MEC and their respective affiliates, the unsecured creditors of MEC will receive $89.0 million in cash plus up to $1.5 million as a reimbursement for certain expenses incurred in connection with the action. Under the terms of the settlement agreement, MID will receive certain assets of MEC, as described below. The settlement and release is intended to be implemented through the Plan.

On February 18, 2010, MID announced that MEC had filed the Plan and Disclosure Statement in connection with the MEC Chapter 11 proceedings which provides for, among other things, the assets of MEC remaining after certain asset sales to be transferred to MID, including among other assets, Santa Anita Park, Golden Gate Fields, Gulfstream Park (including MEC's interest in the Village at Gulfstream Park, a joint venture between MEC and Forest City Enterprises, Inc.), AmTote and XpressBet. On March 23, 2010, the Plan was amended to include the transfer of MJC to MID. The Plan is subject to the confirmation of the Court.

In satisfaction of MID's claims relating to the 2007 MEC Bridge Loan, the 2008 MEC Loan, and the MEC Project Financing Facilities (each discussed further under "LOANS RECEIVABLE FROM MEC"), the Plan provides that MID will receive, in addition to net assets of MEC to be transferred to MID, the following:

    
    (a) upon the sale of Thistledown, MID will receive the first $20.0
        million of the proceeds from such sale and the unsecured creditors of
        MEC will receive any proceeds in excess of such amount; and

    (b) upon the sale of Lone Star LP pursuant to an agreement previously
        filed in the Court, the unsecured creditors of MEC will receive the
        first $20.0 million of the proceeds, if any, from such sale and MID
        will receive any proceeds in excess of such amount.
    

MID will also have the right to receive the net assets or proceeds from the sale of Portland Meadows, any proceeds from the litigation by MEC against PA Meadows, LLC currently pending in the Court and future payments under the Meadows Holdback Note and certain other remaining assets of MEC to be specified in the Plan.

Under the Plan, rights of MID and MEC against MEC's directors' and officers' insurers will be preserved with regard to the settlement in order to seek appropriate compensation for the releases of all current and former officers and directors of MID and MEC and their respective affiliates. MID will be entitled to receive any such compensation from MEC's directors' and officers' insurers.

MID, MEC and the Creditors' Committee, among others, have entered into a Support Agreement dated February 18, 2010 (the "Support Agreement") pursuant to which, among other things, MID and the Creditors' Committee agreed to support the Plan and MEC agreed to use its reasonable best efforts to seek approval of the Disclosure Statement in the Court on or prior to March 31, 2010 and obtain confirmation of the Plan by the Court on or prior to April 30, 2010. The Support Agreement may be terminated if, among other things, the Court denies confirmation of the Plan.

The risks and uncertainties relating to the Plan and its implementation include, among others:

    
    -   there is no certainty whether the Plan and the Disclosure Statement
        will be confirmed by the Court and whether any modifications of the
        Plan will be required, or that such modification would not require
        the resolicitation of votes of claimholders;

    -   there is no certainty with regard to whether the conditions to the
        effective date of the Plan will be satisfied, and how long the
        process contemplated by the Plan and its implementation under the
        Chapter 11 proceedings will take;

    -   there is no certainty with regard to how long the process for the
        marketing and sale of the Debtors' assets that are to be sold to
        third parties pursuant to the Plan will take; and

    -   there is no certainty whether or at what prices such assets will be
        sold or whether any bids by any third party for such assets will
        materialize or be successful.
    

If the conditions precedent to the effective date of the Plan have not occurred or been duly waived, then any approval by the Court of the Plan will be vacated, in which event no distributions would be made under the Plan, the Debtors and all holders of claims and equity interests (including MID) would be restored to the status quo ante as of the day immediately preceding the date that the Court approved the Plan and the Debtors' obligations with respect to claims and equity interests would remain unchanged.

If the Debtors are not able to successfully implement the Plan under Chapter 11, it is possible that they will be required to shut down all or part of their business and liquidate their assets, which is likely to have an adverse impact on MID and MID Lender's interests in MEC.

Although the Company reduced the carrying value of the loans receivable from MEC by $90.8 million (see REAL ESTATE BUSINESS - Results of Operations - Impairment Provision Relating to Loans Receivable from MEC), there can be no assurance that we will not further reduce the carrying value of the MEC loans, either in connection with the implementation of the Plan under Chapter 11 or if the Debtors are not able to successfully implement the Plan.

The acquisition of MJC by MID will be subject to forbearance terms that will require that the MJC racing operations be brought to a break-even status within three years and that accumulated budgeted losses during that period will not exceed $15.0 million without approval from the Special Committee of the Board. In addition, any future gaming operations at MJC will not be developed other than in combination with an experienced and financially secure gaming co-venturer on terms acceptable to the Special Committee. With respect to the other non-real estate related MEC assets that will be transferred to MID as contemplated by the Plan, MID intends to later announce certain forbearance terms or funding limitations or other restrictions to be approved by the Special Committee with respect to any future investments by MID in, or loans to be made by MID in respect of, such assets.

For a more detailed discussion of the Plan and the Disclosure Statement, please refer to the "Amended Joint Plan of the Affiliated Debtors, The Official Committee of Unsecured Creditors, MI Developments Inc. and MI Developments US Financing Inc., pursuant to Chapter 11 of the United States Bankruptcy Code" dated March 22, 2010 and the "Disclosure Statement for the Amended Joint Plan of Affiliated Debtors, the Official Committee of Unsecured Creditors, MI Developments Inc. and MI Developments US Financing Inc. pursuant to Chapter 11 of the United States Bankruptcy Code". The complete Plan and Disclosure Statement are available on SEDAR at www.sedar.com.

In light of the risks and uncertainties relating to the Plan and its implementation and the fact that the Special Committee of the Board has not yet approved forbearance terms or funding limitations or other restrictions in respect of certain non real estate assets of MEC that will be transferred to MID pursuant to the Plan, it is difficult to determine at this time what the expected effect on MID's financial condition, results of operations and cash flows of the acquisition of the MEC assets by MID pursuant to the Plan will be.

In connection with the Debtors' Chapter 11 filing, MID, through the MID Lender is providing MEC a secured non-revolving debtor-in-possession financing facility (the "DIP Loan"). As amended and restated, the DIP Loan matures on April 30, 2010, and the maximum commitment amount thereunder is $71.4 million, of which $3.5 million is available to be borrowed by MEC as at March 29, 2010 (see "LOANS RECEIVABLE FROM MEC - DIP Loan" for further details of the DIP Loan). Under the Plan, a portion of the amounts held in escrow by the Debtors reflecting the net proceeds from the sale of the assets of Remington Park will be used to pay and satisfy in full all outstanding DIP Loan obligations.

MEC Asset Sales

The Debtors' Chapter 11 filing contemplated the Debtors selling all or substantially all their assets through an auction process and using the proceeds to satisfy claims against the Debtors, including indebtedness owed to the MID Lender. On the Petition Date, MID entered into an agreement with certain of the Debtors and certain non-Debtor affiliates of MEC to purchase such Debtors' and non-Debtors' relevant interests associated with certain specified assets (the "MID Stalking Horse Bid"), subject to Court approval. However, on April 20, 2009, in response to objections raised by a number of parties in the Debtors' Chapter 11 process and with the intent of expediting that process, MID and MEC terminated the MID Stalking Horse Bid.

On May 11, 2009, the Court approved the bid procedures for the auction of the Debtors' interests associated with the following assets: Santa Anita Park (including the relevant Debtor's joint venture interest in The Shops at Santa Anita); Remington Park; Lone Star LP; Thistledown; Portland Meadows; assets related to StreuFex(TM) (an environmentally friendly horse bedding product); vacant lands located in Ocala, Florida; and vacant lands located in Dixon, California. On October 28, 2009, the Court approved revised bid procedures for the auction of Santa Anita Park and bid procedures for the auction of the following additional assets: Gulfstream Park (including the adjacent lands and the relevant Debtor's joint venture interest in The Village at Gulfstream Park(TM)); Golden Gate Fields; and MJC (including the Preakness(R)).

Since the Petition Date, the Debtors have entered into and completed various asset sales, including assets sold pursuant to orders obtained by the Debtors from the Court in the Chapter 11 cases. The auction process has been suspended pending the confirmation of the Plan, which addresses the disposition of the Debtors' remaining assets.

On July 31, 2009, the Court approved the Debtors' motion for authorization to sell for 6.5 million euros the assets of one of MEC's non-debtor Austrian subsidiaries, which assets include Magna Racino(TM) and surrounding lands, to an entity affiliated with Fair Enterprise Limited, a company that forms part of an estate planning vehicle for the family of Frank Stronach, certain members of which are trustees of the Stronach Trust, MID's controlling shareholder. The sale transaction was completed on October 1, 2009 and the net proceeds were used to repay existing indebtedness secured by the assets.

On August 26, 2009, the Court approved the sale, by an Austrian non-debtor subsidiary of MEC to a third party, of the company that owns and operates the Austrian plant that manufactures StreuFex(TM), for certain contingent future payments. The sale was completed on September 1, 2009.

On August 26, 2009, the Court approved the Debtors entering into a stalking horse bid to sell Remington Park to Global Gaming RP, LLC for $80.25 million, subject to higher and better offers. Following an auction, no additional offers were received, and on September 15, 2009, the Court approved the sale of Remington Park to Global Gaming RP, LLC. The sale of Remington Park was completed on January 1, 2010. On January 4, 2010, the Debtor paid $27.8 million of the net sale proceeds to the MID Lender as partial repayment of the DIP Loan. The balance of the net sales proceeds of $50.6 million remains restricted in MEC and available for distribution to the MID Lender upon Court approval or confirmation of the Plan.

Following an auction, on September 2, 2009, the Court approved the sale of the Ocala lands to a third party at a price of $8.1 million and the sale closed on September 17, 2009. On October 28, 2009, the Debtors paid the net sales proceeds of $7.6 million to the MID Lender as a partial repayment of the DIP Loan.

Following an auction, on September 15, 2009, the Court approved the sale of Thistledown to a third party for $89.5 million, comprised of $42.0 million of cash to be paid on closing and up to $47.5 million of cash in contingent payments related to video lottery licensing in the State of Ohio. However, on September 21, 2009, the Supreme Court of the State of Ohio ruled that certain legislation relating to video lottery licensing at Ohio racetracks would require a State referendum, which is not expected to occur until November 2010. MEC has indicated that the purchaser has reserved its right to terminate the agreement as a result of the referendum requirement and that MEC and the purchaser are engaged in ongoing discussions about this transaction.

Following an auction, on October 29, 2009, the Court approved the sale of Lone Star LP to a third party for $62.8 million, comprised of $47.7 million of cash and the assumption by the purchaser of the $15.1 million capital lease for the facility. MEC has indicated that it anticipates that the sale of Lone Star LP will be completed during the second quarter of 2010, subject to regulatory approval.

Following an auction, on November 18, 2009, the Court approved the sale of the Dixon lands to Ocala Meadows Lands LLC, a company controlled by Frank Stronach, for approximately $3.1 million and the sale closed on November 30, 2009. On November 30, 2009, the Debtors paid the net sales proceeds of $3.0 million to the MID Lender as a partial repayment of the DIP Loan.

Pursuant to the Plan filed with the Court, the assets of MEC remaining after certain asset sales will be transferred to MID, including among other assets, Santa Anita Park, Golden Gate Fields, Gulfstream Park (including MEC's interest in The Village at Gulfstream Park(TM), a joint venture between MEC and Forest City Enterprises, Inc.), MJC, AmTote and XpressBet. The Plan is subject to the confirmation of the Court.

Deconsolidation of MEC

As a result of the MEC Chapter 11 filing at the Petition Date, 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.

Prior to the Petition Date, MEC's results are consolidated with the Company's results, with outside ownership accounted for as a non-controlling 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 non-controlling 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 included in the Company's consolidated statement of income (loss) for the year ended December 31, 2009.

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. As a result of the significant uncertainty, at the Petition Date, as to whether MEC shareholders, including MID, would receive any recovery at the conclusion of MEC's Chapter 11 process, 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 believed at the Petition Date that the MID Lender's claims were adequately secured and therefore had no reason to believe that the amount of the MEC loan facilities with the MID Lender was impaired upon the deconsolidation of MEC, a reduction in the carrying values of the MEC loan facilities (see "LOANS RECEIVABLE FROM MEC") 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 were accreted up to the face value of the MEC loan facilities over the estimated period of time before the loans were expected to be repaid, with such accretion being recognized in "interest and other income from MEC" on the Company's consolidated statement of income (loss).

Segments

Prior to the deconsolidation of MEC at the Petition Date, the Company's operations were segmented between wholly-owned operations (the "Real Estate Business") and publicly-traded operations ("MEC"). The segregation of operations between wholly-owned and publicly-traded recognized the fact that, in the case of the Real Estate Business, the Company's Board 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.

The Company's consolidated statements of income (loss), consolidated statements of cash flows and consolidated balance sheets 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, except for the remaining content of this section and the sections entitled "ADOPTION OF UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" and "SELECTED ANNUAL AND QUARTERLY FINANCIAL DATA (UNAUDITED)", the remaining content of this MD&A focuses solely on the operating results, financial condition, cash flows and liquidity of the Real Estate Business.

Ontario Securities Commission Hearing

On August 11, 2009, MID announced that, upon the applications of certain MID Class A shareholders, the Ontario Securities Commission (the "OSC") had called a hearing regarding MID's ability to rely on certain exemptions from the requirements to obtain minority shareholder approval and formal valuations under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions in respect of transactions with MEC. The OSC hearing was held on September 9 and 10, 2009 and, on September 14, 2009, the OSC dismissed the applications.

Appointment of New Chief Financial Officer

On September 18, 2009, MID announced that Mr. Rocco Liscio had been appointed by the Board to serve as Executive Vice-President and Chief Financial Officer. Mr. Liscio replaced Mr. Richard Smith, who resigned from his position at MID effective September 18, 2009 in order to pursue other opportunities.

    
    ADOPTION OF UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
    -------------------------------------------------------------------------
    

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.

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 this MD&A and the consolidated financial statements 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 has the following significant effects on the financial reports of MID, the impact of which vary from period to period:

    
    -   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 MEC
        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.

    -   Gains (net of income taxes and the portion attributable to the
        noncontrolling interest) on certain MEC asset sales to related
        parties were included in income under Canadian GAAP but must be
        treated as a contribution of equity under U.S. GAAP, with such amount
        added to contributed surplus.

    -   The assets and liabilities of the Company's self-sustaining
        operations having a functional currency other than the U.S. dollar
        are translated into the Company's U.S. dollar reporting currency
        using the exchange rate in effect at the end of each reporting
        period. Revenues and expenses of such operations are translated at
        the average rate during the period. Unrealized foreign exchange gains
        or losses on translation of the Company's net investment in these
        operations ("Investment Translation Gains or Losses") are recognized
        as a component of "other comprehensive income (loss)" and are
        included in the "accumulated other comprehensive income" component of
        shareholders' equity. Under Canadian GAAP, the appropriate amounts of
        the Investment Translation Gains or Losses are reflected in income
        when there is a reduction as a result of capital transactions in the
        Company's net investment in the operations that gave rise to such
        exchange gains and losses. Under U.S. GAAP, the appropriate amounts
        of Investment Translation Gains or Losses are only reflected in
        income when there is a sale or partial sale of the Company's
        investment in these operations or upon a complete or substantially
        complete liquidation of the investment.

    -   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, U.S. GAAP is more restrictive than
        Canadian GAAP in relation to the necessary criteria required to
        capitalize such costs. As a result, certain carrying costs that may
        be capitalized under Canadian GAAP are not permitted to be
        capitalized under 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. A summary of the impact of adopting U.S. GAAP on the Company's consolidated results of operations for the three-month period and years ended December 31, 2009 and 2008 and financial position as at December 31, 2009 and 2008 is as follows:

    
                                    Three Months Ended        Year Ended
                                        December 31,          December 31,
                                  --------------------- ---------------------
    (in millions, except              U.S.     Canadian     U.S.     Canadian
     per share information)           GAAP       GAAP       GAAP       GAAP
    -------------------------------------------------------------------------
    Consolidated net loss
     attributable to MID
    - 2009(1)                      $  (72.8)  $  (72.8)  $  (42.3)  $  (61.1)
    - 2008                         $  (54.5)  $  (54.6)  $  (12.3)  $   (3.2)

    Consolidated diluted loss per
     share attributable to MID
    - 2009(1)                      $  (1.56)  $  (1.56)  $  (0.91)  $  (1.31)
    - 2008                         $  (1.17)  $  (1.17)  $  (0.26)  $  (0.07)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Net loss attributable to MID for the year ended December 31, 2009
        is $18.8 million ($0.40 per share) less under U.S. GAAP than under
        Canadian GAAP primarily due to net effect of investment translation
        gains and losses resulting from capital transactions that reduced
        MID's net investment in wholly-owned subsidiaries and the reduction
        to the carrying value of MID's investments in MEC upon
        deconsolidation of MEC (see "SIGNIFICANT MATTERS - Deconsolidation of
        MEC") being higher under U.S. GAAP.

                                                           U.S.     Canadian
    (in millions)                                          GAAP       GAAP
    -------------------------------------------------------------------------

    Consolidated equity
    - 2009                                           $  1,589.5   $  1,592.4
    - 2008                                           $  1,646.2   $  1,653.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

The discussion in this MD&A is based on the Company's results of operations as reported under U.S. GAAP for all periods. Other than as discussed above, there were no material differences between the Company's results of operations reported under U.S. GAAP and the results that would have otherwise been reported under Canadian GAAP. For further details of all differences between U.S. and Canadian GAAP impacting the Company and a reconciliation of the Company's results of operations for the three-month period and years ended December 31, 2009 and 2008 and financial position as at December 31, 2009 and 2008 from U.S. GAAP to Canadian GAAP, see note 19 to the unaudited interim consolidated financial statements.

    
    REAL ESTATE BUSINESS
    -------------------------------------------------------------------------
    

Our real estate assets are comprised of income-producing properties, properties under development, properties held for development and properties held for sale (see "REAL ESTATE BUSINESS - Real Estate Assets").

Subject to the significant decline in the level of business received from Magna over the past five years as discussed under "Our Relationship with Magna" below, as well as the recent intensified downturn in the global real estate markets, we intend to continue to use our local market expertise, cost controls and long-established relationships with the Magna group to expand our existing real estate portfolio of industrial and commercial properties both with the Magna group and, potentially, with third parties. In addition, we intend to use our development expertise and financial flexibility to diversify our business by engaging in the development of mixed-use and residential projects on lands we own and may acquire, including lands from MEC.

Our income-producing properties consist of heavy industrial manufacturing facilities, light industrial properties, corporate offices, product development and engineering centres and test facilities. The Real Estate Business holds a global portfolio of 106 income-producing industrial and commercial properties located in nine countries: Canada, the United States, Mexico, Austria, Germany, the Czech Republic, the United Kingdom, Spain and Poland. This portfolio of income-producing properties represents 27.4 million square feet of leaseable area with a net book value of approximately $1.2 billion at December 31, 2009. The lease payments are primarily denominated in three currencies: the euro, the Canadian dollar and the U.S. dollar.

The Real Estate Business also owns approximately 1,400 acres of land held for future development (see "REAL ESTATE BUSINESS - Real Estate Assets - Properties Held for Development").

Business and Operations of Magna, Our Principal Tenant

Magna and certain of its subsidiaries are the tenants of all but 13 of the Real Estate Business' income-producing properties. Magna is the most diversified global automotive supplier. Magna designs, develops and manufactures technologically advanced automotive systems, assemblies, modules and components, and engineers and assembles complete vehicles, primarily for sale to original equipment manufacturers ("OEMs") of cars and light trucks. Magna's product capabilities span a number of major automotive areas, including interior systems, seating systems, closure systems, body and chassis systems, vision systems, electronic systems, exterior systems, powertrain systems, roof systems, hybrid electric vehicles/systems and complete vehicle engineering and assembly.

The terms of the Real Estate Business' lease arrangements with Magna generally provide for the following:

    
    -   leases on a "triple-net" basis, under which tenants are contractually
        obligated to pay directly or reimburse the Real Estate Business for
        virtually all costs of occupancy, including operating costs, property
        taxes and maintenance capital expenditures;

    -   rent escalations based on either fixed-rate steps or inflation;

    -   renewal options tied to market rental rates or inflation;

    -   environmental indemnities from the tenant; and

    -   tenant's right of first refusal on sale of property.
    

Our Relationship with Magna

For the years ended December 31, 2009 and 2008, the Magna group contributed approximately 98% of the rental revenues of our Real Estate Business and Magna continues to be our principal tenant. Our income-producing property portfolio has grown from 75 properties totalling approximately 12.4 million square feet at the end of 1998 to 106 properties totalling approximately 27.4 million square feet of leaseable area at December 31, 2009. Between the end of 1998 and the end of 2009, the total leaseable area of our income-producing property portfolio has increased by approximately 15.0 million square feet (net of dispositions), representing an 11-year compound annual growth rate of approximately 7.4%.

The level of business MID has received from Magna has declined significantly over the past five years. This decline is primarily due to: pressures in the automotive industry (primarily in North America, although now spreading globally) and Magna's plant rationalization strategy, which have resulted in the closing of a number of manufacturing facilities in high cost countries; and uncertainty over MID's ownership structure and strategic direction due largely to the ongoing disputes between the Company and one of its shareholders, Greenlight Capital Inc. ("Greenlight") including the litigation that is described under the section "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset Sales - Chapter 11 Filing and Plan of Reorganization". Although MID continues to explore alternatives to re-establish a strong and active relationship with Magna, and although Greenlight's appeal of the October 2006 decision dismissing Greenlight's oppression application (the "Greenlight Litigation") was dismissed and the OSC has dismissed the applications of Greenlight and certain other holders of MID Class A Shares, these factors may translate into a more permanent reduction in the quantum of business that MID receives from Magna. Our income-producing property portfolio decreased from 109 properties at the end of 2006 to 106 properties at December 31, 2009 and we have incurred a net reduction in total leaseable area of approximately 0.1 million square feet since the end of 2006. Between the end of 2004 and the end of 2009, the total leaseable area of our income-producing property portfolio grew at a compound annual growth rate of approximately 1.4%.

Automotive Industry Trends and Magna Plant Rationalization Strategy

With the apparent stabilization and improvement in the global automotive industry in the second half of 2009, a number of the trends which impacted the industry and Magna's business beginning in the second half of 2008 appear to be diminishing. For example, vehicle production levels, particularly in North America, appear to be improving as compared to the low levels experienced in the second half of 2008 and first half of 2009. However, forecast vehicle production levels in both North America and Europe for 2010 remain significantly below historic averages and remain sensitive to continued improvement in overall economic conditions. Similarly, while the short-term viability of several of our customers has improved due to significant government intervention and restructuring actions, the long-term viability of certain of Magna's customers remains uncertain. Continued improvement in the global automotive industry is heavily dependent on factors such as consumer confidence, employment levels, household debt, real estate values, the continued availability of consumer credit, interest rates, energy prices and other factors. At this time, it is too early to determine whether the apparent stabilization and improvement in the economy and automotive industry in the second half of 2009 will continue.

The impact of other recent trends also remains uncertain. For example, as a result of the restructuring of the global automotive industry in 2008/2009, the financial condition of the automotive supply base deteriorated significantly, with a number of suppliers restructuring while under bankruptcy protection or ceasing operations altogether. In the short-term, Magna has secured a significant amount of takeover business as its customers transferred business from weak suppliers to stronger suppliers. However, the mid to long- term impact of the restructuring of the automotive supply base cannot be determined at this time. Some of Magna's competitors have successfully emerged from bankruptcy restructurings, leaving them with strong balance sheets, reduced cost structures and improved overall competitiveness.

One recent and growing trend in the automotive industry, born out of the need to carefully manage costs, is the growth of cooperative alliances and arrangements among competing automotive OEMs. New and increasing relationships include features such as: shared purchasing of components; joint engine, power train and/or platform development; and engine, power train and platform sharing. Cooperation among competing OEMs is expected to increase, particularly with respect to vehicle hybridization and electrification, in order to lower the entry cost for OEMs to compete in these vehicle segments.

A number of general trends which have been impacting the automotive industry in recent years are expected to continue, including:

    
    -   the exertion of pricing pressure by OEMs;

    -   government incentives and consumer demand for, and industry focus on,
        more fuel-efficient and environmentally-friendly vehicles with
        alternative-energy fuel systems and additional safety features;

    -   government regulation of fuel economy and emissions;

    -   the long-term growth of the automotive industry in China, India,
        Brazil, Russia and other developing markets, including accelerated
        migration of component and vehicle design, development, engineering
        and manufacturing to certain of these markets;

    -   the growth of the A to D vehicle segments (micro to mid-size cars),
        particularly in developing markets; and

    -   the consolidation of vehicle platforms.
    

These trends and the competitive and difficult environment existing in the automotive industry have resulted in Magna seeking to take advantage of lower operating cost countries and consolidating, moving, closing and/or selling operating facilities to align its capacity utilization and manufacturing footprint with vehicle production and consumer demand. Given these trends, there is a risk that Magna may take additional steps to offset the production declines and capacity reductions, which might include closing additional facilities and growing its manufacturing presence in new markets where MID to date has not had a significant presence.

Magna's plant rationalization strategy currently includes 13 facilities under lease from the Company in North America (three in Canada and ten in the United States) with an aggregate net book value of $44.6 million at December 31, 2009. These 13 facilities represent 1.8 million square feet of leaseable area with annualized lease payments of approximately $6.7 million, or 3.8% of MID's annualized lease payments at December 31, 2009. The weighted average lease term to expiry (based on leaseable area) of these properties at December 31, 2009, disregarding renewal options, is approximately 4.9 years. MID management expects that given Magna's publicly disclosed strategy of continuously seeking to optimize its global manufacturing footprint, Magna may further rationalize facilities. Magna continues to be bound by the terms of the lease agreements for these leased properties regardless of its plant rationalization strategy. However, in light of the importance of the relationship with Magna to the success of the Real Estate Business, MID management continues to evaluate alternatives that provide Magna with the flexibility it requires to operate its automotive business, including potentially releasing Magna from its obligation to continue to pay rent under these leases, and any additional leases that may become subject to the Magna plant rationalization strategy in the future, under certain circumstances.

Foreign Currencies

Fluctuations in the U.S. dollar's value relative to other currencies will result in fluctuations in the reported U.S. dollar value of revenues, expenses, income, cash flows, assets and liabilities. At December 31, 2009, approximately 76% of the Real Estate Business' rental revenues are denominated in currencies other than the U.S. dollar (see "REAL ESTATE BUSINESS - Results of Operations - Annualized Lease Payments"). As such, material changes in the value of the U.S. dollar relative to these foreign currencies (primarily the euro and Canadian dollar) may have a significant impact on the Real Estate Business' results.

The following tables reflect the changes in the average exchange rates during the three-month period and years ended December 31, 2009 and 2008, as well as the exchange rates as at December 31, 2009 and 2008, between the most common currencies in which the Company conducts business and MID's U.S. dollar reporting currency.

    
                             Average Exchange Rates   Average Exchange Rates
                               Three Months Ended           Year  Ended
                                  December 31,              December 31,
                              -----------------------------------------------
                               2009    2008   Change   2009    2008   Change
    -------------------------------------------------------------------------
    1 Canadian dollar
     equals U.S. dollars       0.948   0.828     14%   0.881   0.944     (7%)
    1 euro equals U.S.
     dollars                   1.475   1.320     12%   1.393   1.470     (5%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                          Exchange Rates
                                                               As at
                                                            December 31,
                                                      -----------------------
                                                       2009    2008   Change
    -------------------------------------------------------------------------
    1 Canadian dollar equals U.S. dollars              0.955   0.826     16%
    1 euro equals U.S. dollars                         1.433   1.394      3%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

The results of operations and financial position of all Canadian and most European operations are translated into U.S. dollars using the exchange rates shown in the preceding table. The changes in these foreign exchange rates impacted the reported U.S. dollar amounts of the Company's revenues, expenses, income, assets and liabilities. From time to time, the Company may enter into derivative financial arrangements for currency hedging purposes, but the Company's policy is not to utilize such arrangements for speculative purposes. Throughout this MD&A, reference is made, where relevant, to the impact of foreign exchange fluctuations on reported U.S. dollar amounts.

Results of Operations - Three Months Ended December 31, 2009

Rental revenues for the three-month period ended December 31, 2009 increased $3.9 million to $44.8 million from $40.8 million in the prior year period. The additional rent earned from contractual rent increases and completed projects on-stream and the effect of changes in foreign currency exchange rates was partially offset by the negative impact of vacancies, renewals and re-leasing and straight-line rent adjustments.

    
    Rental Revenue

    Rental revenue, three months ended December 31, 2008          $     40.8
    Contractual rent increases                                           0.4
    Completed projects on-stream                                         0.2
    Vacancies of income-producing properties                            (0.3)
    Renewals and re-leasing of income-producing properties              (0.1)
    Effect of changes in foreign currency exchange rates                 3.9
    Straight-line rent adjustment                                       (0.1)
    -------------------------------------------------------------------------

    Rental revenue, three months ended December 31, 2009          $     44.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

The $0.4 million increase in revenue from contractual rent adjustments includes (i) $0.2 million from cumulative CPI-based increases implemented in 2008 and 2009 on properties representing 1.6 million square feet of leaseable area, (ii) $0.1 million from annual CPI-based increases implemented in 2009 on properties representing 6.3 million square feet of leaseable area and (iii) $0.1 million from fixed contractual adjustments on properties representing 0.8 million square feet of leaseable area.

The completion of five Magna-related expansion projects and a third-party expansion project in 2008 added an aggregate of 76 thousand square feet of leaseable area and increased revenue by $0.1 million over the prior year period. The completion of seven minor Magna-related projects and two third-party projects in 2009 increased revenue by $0.1 million over the prior year period. Late in December 2009, the Company acquired a 61 thousand square foot facility located in Shelby Township, Michigan, which has been leased to a subsidiary of Magna for six years, with the option to renew for two additional periods of five years. Rental revenue from the lease was nominal in 2009; however annual rental revenue is expected to be approximately $0.3 million per year over the lease term.

One property became vacant in 2008 and two properties became vacant in 2009 upon the expiry of the lease agreements pertaining to 267 thousand square feet of aggregate leaseable area, resulting in a $0.3 million reduction in revenues.

Renewals and re-leasing had a $0.1 million negative impact on revenues compared to the prior year period. The renewal of two Magna leases in 2008, at lower negotiated market rental rates than the expiring lease rates, relating to an aggregate of 471 thousand square feet of leaseable area, reduced revenues by $0.1 million. The renewal of two Magna leases and a third-party lease in 2009, at lower negotiated market rental rates than the expiring lease rates, relating to an aggregate of 233 thousand square feet of leaseable area, reduced revenues by $0.1 million. The re-lease of a 182 thousand square foot facility in Germany to a third-party tenant in 2009 reduced revenues by $0.1 million.

The decrease was offset by the termination of a lease with Magna in 2008 for 39 thousand square feet of leaseable area as a result of Magna's plant rationalization strategy (see "REAL ESTATE BUSINESS - Our Relationship with Magna - Automotive Industry Trends and Magna Plant Rationalization Strategy"), which was subsequently re-leased to a third-party tenant for ten years resulting in $0.1 million of additional revenue. The decrease in revenue was further offset by $0.1 million of rental revenue related to the lease to a third party of an 84 thousand square foot facility that had been previously classified as held for sale in Canada.

For the fourth quarter of 2009, approximately 76% of the Real Estate Business' rental revenues are denominated in currencies other than the U.S. dollar (primarily the euro and Canadian dollar). Foreign exchange had a $3.9 million positive impact on reported rental revenues, as the foreign currencies (primarily the Canadian dollar and the euro) in which the Real Estate Business operates strengthened against the U.S. dollar.

Interest and Other Income from MEC

Interest and other income from MEC, consisting of interest and fees earned in relation to loan facilities between the MID Lender and MEC and certain of its subsidiaries, decreased by $0.4 million, from $13.7 million in the fourth quarter of 2008 to $13.3 million in the fourth quarter of 2009.

The decrease is primarily due to increased amortization of $3.9 million in the prior year period relating to arrangement fees charged in 2008 under the Gulfstream Park project financing and 2007 MEC Bridge Loan, partially offset by: (i) $1.8 million of interest and fees earned under the DIP Loan, (ii) $1.3 million increase in interest and fees earned under the MEC 2008 Loan and (iii) $0.3 million of accretion of the fair value adjustment recorded upon the deconsolidation of MEC (see "SIGNIFICANT MATTERS - Deconsolidation of MEC") in the current year period. For further details of these loan facilities, see "LOANS RECEIVABLE FROM MEC". The Debtors' Chapter 11 process is anticipated to conclude on or about April 30, 2010, if the Plan is confirmed by the Court. The Plan provides for, among other things, the assets of MEC remaining after certain asset sales to be transferred to MID, including among other assets, Santa Anita Park, Golden Gate Fields, Gulfstream Park (including MEC's interest in the Village at Gulfstream Park, a joint venture between MEC and Forest City Enterprises, Inc.), MJC, AmTote and XpressBet. Once the Debtors' Chapter 11 process concludes, management does not expect the MID Lender to continue to receive interest and other income from MEC.

General and Administrative Expenses

General and administrative expenses increased by $14.5 million to $20.5 million in the fourth quarter of 2009 from $6.0 million in the prior year period. General and administrative expenses for the fourth quarter of 2009 include $8.8 million of advisory and other costs incurred in connection with evaluating MID's relationship with MEC, including MID's involvement in the Debtors' Chapter 11 process (see "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset Sales - Chapter 11 Filing and Plan of Reorganization") and matters heard by the OSC (see "SIGNIFICANT MATTERS - Ontario Securities Commission Hearing"), whereas expenses for the fourth quarter of 2008 include $1.9 million of advisory and other costs related to a reorganization proposal announced in November 2008 and the exploration of alternatives in respect of MID's investments in MEC and a net $0.9 million recovery (primarily under the Company's insurance policy) of costs incurred in connection with the Greenlight litigation. In addition to this increase in advisory and other costs noted above, general and administrative expenses also increased primarily due to:

    
    (i)   increased compensation expense of $0.6 million primarily pertaining
          to the Company's Non-Employee Director Share-Based Compensation
          Plan resulting from a greater change in the Company's share price
          during the fourth quarter of 2009 as compared to 2008;

    (ii)  $2.0 million expense recognized in the fourth quarter of 2009
          relating to services rendered by the Chairman of the Board on
          behalf of the Company;

    (iii) increased stock-based compensation expense of approximately $1.4
          million primarily due to the issuance of 455,000 options to
          purchase the Company's Class A Subordinate Voting Shares during the
          fourth quarter of 2009;

    (iv)  increased insurance expense of approximately $0.3 million primarily
          related to increased premiums experienced in 2009 in connection
          with the Company's Directors' and Officers' liability insurance;
          and

    (v)   increased costs associated with our unsecured senior revolving bank
          facility and contributions to social and charitable causes in the
          fourth quarter of 2009, as well as the impact of foreign exchange.
    

Depreciation and Amortization Expense

Depreciation and amortization expense increased 8% to $10.9 million in the fourth quarter of 2009 from $10.1 million in 2008, primarily due to the impact of foreign exchange (see "REAL ESTATE BUSINESS - Foreign Currencies").

Interest Expense, Net

Net interest expense was $3.7 million in the fourth quarter of 2009 ($3.8 million of interest expense less $0.1 million of interest income) compared to $2.3 million in the prior year period ($3.3 million of interest expense less $1.0 million of interest income). The increased net interest expense is primarily due to a reduction of $0.9 million in interest income from the prior year period as a result of the Real Estate Business having less cash available for short-term investment and a general reduction in the interest rates available on short-term investments and a $0.5 million increase in interest expense due to foreign exchange as the Company's Debentures are denominated in Canadian dollars.

Foreign Exchange Gains and Losses

The Real Estate Business recognized net foreign exchange gains of $0.4 million in the fourth quarter of 2009 compared to $1.8 million in the prior year period. The drivers of such net gains are primarily (i) the re-measurement of certain net current and future tax balances of an MID subsidiary that has a functional currency other than that in which income taxes are required to be paid and (ii) the re-measurement of U.S. dollar denominated net liabilities held within MID's corporate entity, which has a Canadian functional currency.

Write-down of Long-Lived Assets

As a result of further weakening in the commercial office real estate market in Michigan, in the fourth quarter of 2009, the Real Estate Business recorded a $4.5 million write-down of a revenue-producing commercial office building. The write-down represents the excess of the carrying value of the asset over the estimated fair value. Fair value was determined based on the present value of the estimated future cash flows from the leased property.

Impairment Provision Relating to Loans Receivable from MEC

In connection with developing the Plan (see "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset Sales - Chapter 11 Filing and Plan of Reorganization"), the Company estimated the values and resulting recoveries of loans receivable from MEC, net of any related obligations, provided to the Company pursuant to the terms of the Plan. In preparing the estimated resulting recoveries, the Company: (i) reviewed certain historical financial information of MEC for recent years and interim periods; (ii) communicated with certain members of senior management of MEC to discuss the assets and operations; (iii) considered certain economic and industry information relevant to MEC's operating businesses; (iv) considered various indications of interest received by the Debtors in connection with the sales marketing efforts conducted by financial advisors of MEC during the Chapter 11 proceeding for certain of MEC's assets; (v) reviewed the analyses of other financial advisors retained by MEC; (vi) relied on certain real estate appraisals by its real estate advisors; and (vii) conducted it's own analysis as it deemed appropriate. The Company relied on the accuracy and completeness of financial and other information furnished to it by MEC with respect to the Chapter 11 proceedings.

As a result of this analysis, the Company estimated that it would be unable to realize on all amounts due in accordance with the contractual terms of the MEC loans. Accordingly, in the fourth quarter of 2009, the Real Estate Business recorded a $90.8 million impairment provision related to the loans receivable from MEC, which represents the excess of the carrying amounts of the loans receivable and the estimated recoverable value. Estimated recoverable value was determined based on the future cash flows from expected proceeds to be received from Court approved sales of MEC's assets, discounted at the loans' effective interest rate, and the fair value of the collateral based on third party appraisals or other valuation techniques, such as discounted cash flows, for those MEC assets to be transferred to the Company under the Plan or for which the Court has yet to approve for sale under the Plan, net of expected administrative, priority and allowed claims to be paid by the Company under the Plan.

Loss on Disposal of Real Estate

In the third quarter of 2009, the Real Estate Business sold land and a vacant building in the United States for cash consideration of $0.8 million and realized a gain of $0.3 million. However, in the fourth quarter of 2009, the Real Estate Business incurred additional transaction costs relating to the sale of this property of $0.1 million.

Other Losses, Net

The Real Estate Business' "other losses" in the fourth quarter of 2009 represents a $7.8 million foreign currency translation loss realized from a capital transaction that gave rise to a reduction in the net investment in a foreign operation, which is considered a substantially complete liquidation of that foreign operation. The currency translation loss for the fourth quarter of 2009, which was previously included in the "accumulated other comprehensive income" component of shareholders' equity, was recognized in the determination of net income as a result of the Real Estate Business repatriating funds from a foreign operation.

Income Taxes

The Real Estate Business' income tax recovery in the fourth quarter of 2009 was $6.9 million, representing an effective tax rate of 8.7%, compared to an income tax expense of $5.5 million in the prior year period, representing an effective tax rate of 14.5%.

The income tax expense in the prior year period included a $0.9 million recovery recognized as a result of revisions to estimates of certain tax exposures and the ability to benefit from certain income tax loss carry forwards previously not recognized, both driven by the results of tax audits in certain tax jurisdictions. Excluding the $4.5 million write-down of long-lived assets, the $90.8 million impairment provision relating to loans receivable from MEC, the $7.8 million currency translation loss included in "other losses" and the $8.8 million of advisory and other costs incurred in the fourth quarter of 2009 in connection with evaluating MID's relationship with MEC, including MID's involvement in the Debtors' Chapter 11 process and matters heard by the OSC, and the related tax impact of these items, the Real Estate Business' effective tax rate was 8.4% in the fourth quarter of 2009. This compares to the Real Estate Business' effective tax rate of 13.3% in the fourth quarter of 2008 when adjusted for the $1.9 million of advisory and other costs incurred in the prior year period in connection with a reorganization proposal announced in November 2008 and exploration of alternatives in respect of MID's investments in MEC and the net $0.9 million recovery of costs incurred in connection with the Greenlight litigation, and the related tax impact of these items, as well as the $0.9 million income tax recovery recorded in the fourth quarter of 2008 as noted above. 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 4.9% 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, as well as interest and other income from MEC, which is taxed in jurisdictions that have lower rates of taxation than the Real Estate Business' overall effective tax rate, as compared to the prior year.

Net Income (Loss)

Net loss in the fourth quarter of 2009 was $72.8 million compared to net income of $32.4 million in the prior year period. The decrease is primarily due to increases of $14.5 million in general and administrative expenses, $0.8 million in depreciation and amortization and $1.4 million in net interest expense, reduced foreign exchange gains of $1.4 million, the write-down of long-lived assets of $4.5 million, the $90.8 million impairment provision relating to loans receivable from MEC, the $0.1 million loss on disposal of real estate and the $7.8 million currency translation loss included in "other losses" in the current year period. These reductions to net income were partially offset by $3.5 million increase in revenues and a reduction of $12.4 million in income taxes.

    
    Funds From Operations

                                                 Three Months Ended
                                                    December 31,
    (in thousands, except               -------------------------------------
     per share information)                   2009         2008       Change
    -------------------------------------------------------------------------

    Net income (loss)                   $  (72,800)  $   32,372        (325%)
    Add back depreciation and
     amortization                           10,870       10,060           8%
    Add back loss on disposal
     of real estate                             57            -         100%
    -------------------------------------------------------------------------

    Funds from operations               $  (61,873)  $   42,432        (246%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted funds from
     operations per share               $    (1.32)  $     0.91        (246%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted number of
     shares outstanding (thousands)         46,708       46,708
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

In conjunction with the Company's adoption of U.S. GAAP as its primary basis of financial reporting (see "ADOPTION OF UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES"), the Company has adopted the definition of FFO prescribed in the United States by the NAREIT effective January 1, 2009 on a retrospective basis. The Company previously determined FFO using the definition prescribed in Canada by 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 $104.3 million decrease in FFO compared to the prior year period is due primarily to the reduced net income of $105.2 million as a result of: (i) a $90.8 million impairment provision recorded on the loans receivable from MEC; (ii) a $4.5 million impairment charge on long-lived assets; (iii) a $7.8 million foreign currency translation loss due to the capital investment reduction in a foreign subsidiary; and (iv) $7.8 million of increased costs due to the MEC Chapter 11 proceedings. Partially offsetting the reduction to net income is increased depreciation and amortization of $0.8 million and the loss on disposal of real estate of $0.1 million recorded in the fourth quarter of 2009.

Results of Operations - Year Ended December 31, 2009

Rental revenues for the year ended December 31, 2009 decreased $7.6 million to $170.9 million from $178.6 million in the prior year. The additional rent earned from contractual rent increases and completed projects on-stream was more than offset by the negative impact of vacancies, renewals and re-leasing, the effect of changes in foreign currency exchange rates and straight-line rent and other adjustments.

    
    Rental Revenue

    Rental revenue, year ended December 31, 2008                  $    178.6
    Contractual rent increases                                           2.0
    Completed projects on-stream                                         1.0
    Vacancies of income-producing properties                            (1.2)
    Renewals and re-leasing of income-producing properties              (0.5)
    Effect of changes in foreign currency exchange rates                (8.2)
    Straight-line rent adjustment                                       (0.6)
    Other                                                               (0.2)
    -------------------------------------------------------------------------
    Rental revenue, year ended December 31, 2009                  $    170.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

The $2.0 million increase in revenue from contractual rent adjustments includes (i) $0.8 million from cumulative CPI-based increases implemented in 2008 and 2009 on properties representing 4.2 million square feet of leaseable area, (ii) $0.3 million from annual CPI-based increases implemented in 2009 on properties representing 6.3 million square feet of leaseable area and (iii) $0.9 million from fixed contractual adjustments on properties representing 3.7 million square feet of leaseable area.

The completion of seven Magna-related expansion projects and a third-party expansion project in 2008 added an aggregate of 154 thousand square feet of leaseable area and increased revenue by $0.7 million over the prior year. The completion of seven minor Magna-related projects and two third-party projects in 2009 increased revenue by $0.3 million over the prior year period. Late in December 2009, the Company acquired a 61 thousand square foot facility located in Shelby Township, Michigan, which has been leased to a subsidiary of Magna for six years, with the option to renew for two additional periods of five years. Rental revenue from the lease was nominal in 2009; however annual rental revenue is expected to be approximately $0.3 million per year over the lease term.

Four properties became vacant or partially vacant in 2008 and two properties became vacant in 2009 upon the expiry of the lease agreements pertaining to 697 thousand square feet of aggregate leaseable area, resulting in a $1.2 million reduction in revenues.

Renewals and re-leasing had a $0.5 million negative impact on revenues compared to the prior year. The renewal of six Magna leases in 2008, at lower negotiated market rental rates than the expiring lease rates, relating to an aggregate of 900 thousand square feet of leaseable area, reduced revenues by $0.9 million. The renewal of two Magna leases and a third-party lease in 2009, at lower negotiated market rental rates than the expiring lease rates, relating to an aggregate of 233 thousand square feet of leaseable area, reduced revenues by $0.1 million. The re-lease of a 182 thousand square foot facility in Germany to a third-party tenant in 2009 reduced revenues by $0.1 million.

The decrease was offset by the termination of a lease with Magna in 2008 for 39 thousand square feet of leaseable area as a result of Magna's plant rationalization strategy (see "REAL ESTATE BUSINESS - Our Relationship with Magna - Automotive Industry Trends and Magna Plant Rationalization Strategy"), which was subsequently re-leased to a third-party tenant for ten years resulting in $0.2 million of additional revenue. The decrease in revenue was further offset by $0.4 million of rental revenue related to the lease to a third party of an 84 thousand square foot facility that had been previously classified as held for sale in Canada.

For the year ended December 31, 2009, approximately 75% of the Real Estate Business' rental revenues are denominated in currencies other than the U.S. dollar (primarily the euro and Canadian dollar). Foreign exchange had a $8.2 million negative impact on reported rental revenues, as the U.S. dollar strengthened compared to the prior year against the foreign currencies (primarily the Canadian dollar and the euro) in which the Real Estate Business operates.

Interest and Other Income from MEC

Interest and other income from MEC, consisting of interest and fees earned in relation to loan facilities between the MID Lender and MEC and certain of its subsidiaries, increased by $12.5 million, from $40.6 million in 2008 to $53.1 million in 2009.

The increase is primarily due to (i) $7.6 million of interest and fees earned under the MEC 2008 Loan, (ii) $4.4 million of interest and fees earned under the DIP Loan, (iii) $2.4 million of accretion of the fair value adjustment recorded upon the deconsolidation of MEC (see "SIGNIFICANT MATTERS - Deconsolidation of MEC") and (iv) a $0.4 million increase in interest and arrangement fees recognized under the Gulfstream Park project financing. The increase in interest and other income from MEC was partially offset by (i) a $1.9 million reduction to the carrying value of the MEC loan facilities at the Petition Date, 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, (ii) a $0.3 million decrease in interest and fees earned from the Remington Park project financing and (iii) a $0.1 million decrease in interest and fees earned from the 2007 MEC Bridge Loan as a result of arrangement fees charged in the prior year. For further details of these loan facilities, see "LOANS RECEIVABLE FROM MEC". The Debtors' Chapter 11 process is anticipated to conclude on or about April 30, 2010, if the Plan is confirmed by the Court. The Plan provides for, among other things, the assets of MEC remaining after certain asset sales to be transferred to MID, including among other assets, Santa Anita Park, Golden Gate Fields, Gulfstream Park (including MEC's interest in the Village at Gulfstream Park, a joint venture between MEC and Forest City Enterprises, Inc.), MJC, AmTote and XpressBet. Once the Debtors' Chapter 11 process concludes, management does not expect the MID Lender to continue to receive interest and other income from MEC.

General and Administrative Expenses

General and administrative expenses increased by $25.9 million to $52.9 million in 2009 from $27.0 million in 2008. General and administrative expenses for 2009 include $22.6 million of advisory and other costs incurred in connection with a reorganization proposal announced in November 2008, which did not proceed, and evaluating MID's relationship with MEC, including MID's involvement in the Debtors' Chapter 11 process, including the Stalking Horse Bid and the DIP Loan (see "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset Sales - Chapter 11 Filing and Plan of Reorganization") and matters heard by the OSC (see "SIGNIFICANT MATTERS - Ontario Securities Commission Hearing"), whereas expenses for 2008 include $7.4 million of advisory and other costs related to the March 2008 reorganization proposal and the exploration of alternatives in respect of MID's investments in MEC and a net $1.2 million recovery (primarily under the Company's insurance policy) of costs incurred in connection with the Greenlight litigation. In addition to this increase in advisory and other costs noted above, general and administrative expenses also increased primarily due to:

    
    (i)   increased compensation expense of $2.1 million primarily pertaining
          to the Company's Non-Employee Director Share-Based Compensation
          Plan resulting from a greater change in the Company's share price
          during 2009 as compared to 2008;

    (ii)  $2.0 million expense recognized in the current year relating to
          services rendered by the Chairman of the Board on behalf of the
          Company;

    (iii) increased stock-based compensation expense of approximately $0.9
          million primarily due to the issuance of 455,000 options to
          purchase the Company's Class A Subordinate Voting Shares during the
          fourth quarter of 2009;

    (iv)  increased insurance expense of approximately $0.8 million primarily
          related to increased premiums experienced in 2009 in connection
          with the Company's Directors' and Officers' liability insurance;
          and

    (v)   increased costs associated with our unsecured senior revolving bank
          facility and contributions to social and charitable causes in 2009;
          partially offset by

    (vi)  reduced termination costs related to executive management changes.
    

The Company expects to increase its commitment to supporting social and charitable causes. In this regard, the Board has set an annual target for such contributions of approximately 2% of the rolling five-year average of the Company's pre-tax income.

Depreciation and Amortization Expense

Depreciation and amortization expense decreased 5% to $41.3 million in 2009 from $43.4 million in 2008, primarily due to the impact of foreign exchange (see "REAL ESTATE BUSINESS - Foreign Currencies").

Interest Expense, Net

Net interest expense was $13.5 million in 2009 ($13.9 million of interest expense less $0.4 million of interest income) compared to $10.2 million in 2008 ($15.2 million of interest expense less $5.0 million of interest income). The increased net interest expense is primarily due to a reduction of $4.6 million in interest income from the prior year as a result of the Real Estate Business having less cash available for short-term investment and a general reduction in the interest rates available on short-term investments, partially offset by a $1.2 million reduction in interest expense due to foreign exchange as the Company's Debentures are denominated in Canadian dollars.

Foreign Exchange Gains and Losses

The Real Estate Business recognized net foreign exchange gains of $0.5 million and $1.6 million in 2009 and 2008, respectively. The drivers of such net gains are primarily (i) the re-measurement of certain net current and future tax balances of an MID subsidiary that has a functional currency other than that in which income taxes are required to be paid and (ii) the re-measurement of U.S. dollar denominated net liabilities held within MID's corporate entity, which has a Canadian functional currency.

Write-down of Long-Lived Assets and Gain on Disposal of Real Estate

As a result of further weakening in the commercial office real estate market in Michigan, in the fourth quarter of 2009, the Real Estate Business recorded a $4.5 million write-down of a revenue-producing commercial office building. The write-down represents the excess of the carrying value of the asset over the estimated fair value. Fair value was determined based on the present value of the estimated future cash flows from the leased property.

The Real Estate Business recorded a $0.5 million write-down of long-lived assets in 2008 in conjunction with the reclassification of an income-producing property into "properties held for sale" in the second quarter of 2008. The estimated net realizable value of the property was $0.5 million. In 2009, the Company completed the sale of this land and vacant building in the United States for cash consideration of $0.8 million and realized a gain of $0.2 million.

Impairment Provision Relating to Loans Receivable from MEC

In connection with developing the Plan (see "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset Sales - Chapter 11 Filing and Plan of Reorganization"), the Company estimated the values and resulting recoveries of loans receivable from MEC, net of any related obligations, provided to the Company pursuant to the terms of the Plan. In preparing the estimated resulting recoveries, the Company: (i) reviewed certain historical financial information of MEC for recent years and interim periods; (ii) communicated with certain members of senior management of MEC to discuss the assets and operations; (iii) considered certain economic and industry information relevant to MEC's operating businesses; (iv) considered various indications of interest received by the Debtors in connection with the sales marketing efforts conducted by financial advisor's of MEC during the Chapter 11 proceeding for certain of MEC's assets; (v) reviewed the analyses of other financial advisors retained by MEC; (vi) relied on certain real estate appraisals prepared by its real estate advisors; and (vii) conducted its own analysis as it deemed appropriate. The Company relied on the accuracy and completeness of financial and other information furnished to it by MEC with respect to the Chapter 11 proceedings.

As a result of this analysis, the Company estimated that it would be unable to realize on all amounts due in accordance with the contractual terms of the MEC loans. Accordingly, for the year ended December 31, 2009, the Real Estate Business recorded a $90.8 million impairment provision related to the loans receivable from MEC, which represents the excess of the carrying amounts of the loans receivable and the estimated recoverable value. Estimated recoverable value was determined based on the future cash flows from expected proceeds to be received from Court approved sales of MEC's assets, discounted at the loans' effective interest rate, and the fair value of the collateral based on third party appraisals or other valuation techniques, such as discounted cash flows, for those MEC assets to be transferred to the Company under the Plan or for which the Court has yet to approve for sale under the Plan, net of expected administrative, priority and allowed claims to be paid by the Company under the Plan.

Other Gains (Losses), Net

The Real Estate Business' "other gains (losses), net" in 2009 represents a $7.8 million foreign currency translation loss realized from a capital transaction that gave rise to a reduction in the net investment in a foreign operation, which is considered a substantially complete liquidation of that foreign operation. The currency translation loss for 2009, which was previously included in the "accumulated other comprehensive income" component of shareholders' equity, was recognized in the determination of net income as a result of the Real Estate Business repatriating funds from a foreign operation.

The Real Estate Business' "other gains, net" in 2008 of $3.9 million represents a gain recognized in the first quarter of 2008 resulting from a payment received from Magna as a result of the early termination of a lease.

Income Taxes

The Real Estate Business' income tax expense in 2009 was $1.7 million, representing an effective tax rate of 12.5%, compared to an income tax expense of $11.4 million in 2008, representing an effective tax rate of 7.9%.

The income tax expense in 2008 included a $13.4 million recovery recognized as a result of revisions to estimates of certain tax exposures and the ability to benefit from certain income tax loss carry forwards previously not recognized, both driven by the results of tax audits in certain tax jurisdictions. Excluding the $90.8 million impairment provision relating to loans receivable from MEC, the $7.8 million currency translation loss included in "other gains (losses), net" and the $22.6 million of advisory and other costs incurred in 2009 in connection with a reorganization proposal announced in November 2008 and evaluating MID's relationship with MEC, including MID's involvement in the Debtors' Chapter 11 process and matters heard by the OSC, and the related tax impact of these items, the Real Estate Business' effective tax rate was 10.5% in 2009. This compares to the Real Estate Business' effective tax rate of 17.5% in 2008 when adjusted for the $7.4 million of advisory and other costs incurred in 2008 in connection with the March 2008 reorganization proposal and exploration of alternatives in respect of MID's investments in MEC and the net $1.2 million recovery of costs incurred in connection with the Greenlight litigation, and the related tax impact of these items, as well as the $13.4 million income tax recovery recorded in 2008 as noted above. 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 7.0% 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, as well as increased interest and other income from MEC, which is taxed in jurisdictions that have lower rates of taxation than the Real Estate Business' overall effective tax rate, as compared to the prior year.

Net Income

Net income decreased to $11.7 million in 2009 from $132.2 million in 2008. The decrease is primarily due to increases of $25.9 million in general and administrative expenses and $3.3 million in net interest expense, reduced foreign exchange gains of $1.0 million, the write-down of long-lived assets of $4.5 million in the current year compared to $0.5 million in the prior year, the $7.8 million of other losses recognized in the current year as compared to $3.9 million of other gains recognized in the prior year, the $90.8 million impairment provision relating to loans receivable from MEC and the $0.5 million adjustment to the carrying values of the MEC loan facilities on deconsolidation of MEC (see "SIGNIFICANT MATTERS - Deconsolidation of MEC") in the current year. These reductions to net income were partially offset by a $4.9 million increase in revenues, reductions of $9.7 million in income tax expense and $2.1 million in depreciation and amortization.

    
    Funds From Operations

                                                Years Ended December 31,
    (in thousands, except per           -------------------------------------
     share information)                       2009         2008       Change
    -------------------------------------------------------------------------
    Net income                          $   11,717   $  132,172         (91%)
    Add back depreciation and
     amortization                           41,349       43,419          (5%)
    Deduct gain on disposal of real
     estate                                   (206)           -         100%
    -------------------------------------------------------------------------
    Funds from operations               $   52,860   $  175,591         (70%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted funds from
     operations per share               $     1.13   $     3.76         (70%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted number of shares
     outstanding (thousands)                46,708       46,708
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

In conjunction with the Company's adoption of U.S. GAAP as its primary basis of financial reporting (see "ADOPTION OF UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES"), the Company has adopted the definition of FFO prescribed in the United States by the NAREIT effective January 1, 2009 on a retrospective basis. The Company previously determined FFO using the definition prescribed in Canada by 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 $122.7 million decrease in FFO compared to the prior year is due primarily to the reduced net income of $120.5 million as a result of : (i) $90.8 million impairment provision recorded on the loans receivable from MEC; (ii) a $4.5 million impairment charge on long-lived assets; (iii) a $7.8 million foreign currency translation loss due to the capital investment reduction in a foreign subsidiary; and (iv) $15.2 million of increased costs due to the MEC Chapter 11 proceedings offset by a reduction in depreciation and amortization of $2.1 million and the gain on disposal of real estate of $0.2 million recorded in 2009.

    
    Annualized Lease Payments

    Annualized lease payments, as at December 31, 2008            $    167.7
    Contractual rent adjustments                                         1.1
    Completed projects on-stream                                         0.9
    Vacancies of income-producing properties                            (1.2)
    Renewals and re-leasing of income-producing properties              (0.5)
    Effect of changes in foreign currency exchange rates                10.1
    Other                                                               (0.1)
    -------------------------------------------------------------------------
    Annualized lease payments, as at December 31, 2009            $    178.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Annualized lease payments represent the total annual rent of the Real Estate Business assuming the contractual lease payments as at the last day of the reporting period were in place for an entire year, with rents denominated in foreign currencies being converted to U.S. dollars based on exchange rates in effect at the last day of the reporting period (see "REAL ESTATE BUSINESS - Foreign Currencies").

During 2009, annualized lease payments increased by $10.3 million, or 6%, from $167.7 million at December 31, 2008 to $178.0 million at December 31, 2009. The strengthening of the foreign currencies (primarily the euro and the Canadian dollar) against the U.S. dollar led to a $10.1 million increase in annualized lease payments.

In addition, contractual rent adjustments increased annualized lease payments by $1.1 million, including $1.0 million from CPI-based increases on properties representing 7.9 million square feet of leaseable area, and $0.1 million from fixed contractual adjustments on a property representing 519 thousand square feet of leaseable area.

Completed projects, which came on-stream during 2009, also increased annualized lease payments by $0.9 million. Roof and asphalt replacements and leasehold improvements contributed $0.6 million to annualized lease payments. Late in December 2009, the Company acquired a 61 thousand square foot facility located in Shelby Township, Michigan, which has been leased to a subsidiary of Magna for six years, with the option to renew for two additional periods of five years. The lease of the new property added $0.3 million to annualized lease payments.

Partially offsetting the positive contributions noted above was a $1.2 million reduction in annualized lease payments resulting from the vacancy of a 58 thousand square foot facility by a third party tenant at the end of the first quarter of 2009 and the vacancy of a 169 thousand square foot facility by a Magna tenant at the end of the second quarter of 2009, and a $0.5 million reduction in annualized lease payments resulting from the renewal at lower rental rates of two leases in 2009 related to third-party tenants, representing an aggregate of 267 thousand square feet of leaseable area, and three leases with Magna tenants, representing 262 thousand square feet of leaseable area.

The annualized lease payments by currency at December 31, 2009 and 2008 were as follows:

    
                                  December 31,              December 31,
                                     2009                      2008
    -------------------------------------------------------------------------

    euro                   $     75.8           43%  $     73.4           44%
    Canadian dollar              57.3           32         49.8           30
    U.S. dollar                  43.2           24         42.9           25
    Other                         1.7            1          1.6            1
    -------------------------------------------------------------------------
                           $    178.0         100%   $    167.7         100%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Cash Flows

The Real Estate Business' cash and cash equivalents balance increased by $12.8 million in 2009 compared to 2008 as outlined below.

Operating Activities

The Real Estate Business generated cash flow from operations before changes in non-cash working capital balances of $105.2 million in 2009 compared to $168.9 million in 2008. The reduction is due to a $120.5 million decrease in net income and a $56.7 million increase in the net loss from non-cash items (see note 16 to the unaudited interim consolidated financial statements), primarily related to the impairment provision relating to loans receivable from MEC, currency translation loss included in other gains (losses), net and the write-down of long-lived assets, partially offset by the accrual of interest on the MID Lender's pre-petition loans to MEC during the Debtors' Chapter 11 process.

Changes in non-cash balances generated $11.7 million of cash in 2009 compared to $1.9 million in 2008 (see note 16 to the unaudited interim consolidated financial statements).

Investing Activities

During 2009, the Real Estate Business, through the MID Lender, advanced $110.1 million to MEC and certain of its subsidiaries under the 2008 MEC Loan and the DIP Loan (see "LOANS RECEIVABLE FROM MEC"). The Real Estate Business also spent $9.6 million on real estate property and fixed asset expenditures and $0.8 million on other asset additions. These cash outflows were partially offset by $41.5 million of repayments under the 2008 MEC Loan, the MEC Project Financing Facilities and the DIP Loan and $0.7 million of net proceeds on the sale of a real estate property in the third quarter of 2009.

Financing Activities

During 2009, the Real Estate Business paid dividends of $28.0 million (see "DIVIDENDS") and repaid $3.3 million of long-term debt, primarily representing the full repayment at maturity of one of the two mortgages on the Real Estate Business' income-producing properties.

Effect of Exchange Rate Changes

During 2009, the strengthening of the foreign currencies in which the Real Estate Business operates (mainly the euro and Canadian dollar) against the U.S. dollar resulted in a positive impact of $5.5 million to cash flows.

Real Estate Assets

The Real Estate Business' real estate assets are comprised of income-producing properties, properties under development, properties held for development and properties held for sale.

The net book values of the Real Estate Business' real estate assets are as follows:

    
                                                    December 31, December 31,
                                                        2009         2008
    -------------------------------------------------------------------------
    Income-producing real estate properties          $  1,220.0   $  1,186.9
    Properties held for development                       169.8        209.2
    Properties under development                              -          1.2
    Properties held for sale                                  -          0.5
    -------------------------------------------------------------------------
    Real estate properties, net                      $  1,389.8   $  1,397.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Income-Producing Properties

At December 31, 2009, the Real Estate Business had 106 income-producing properties, representing 27.4 million square feet of rentable space. The income-producing properties are comprised predominantly of industrial plants strategically located and used by Magna primarily to provide automotive parts and modules to the world's manufacturers of cars and light trucks for their assembly plants throughout North America and Europe. The portfolio also includes several office buildings that comprise 3% of the total square footage of income-producing properties, including the head offices of Magna in Canada and Austria.

The book value of the income-producing portfolio by country as at December 31, 2009 was as follows:

    
                                                         Book       Percent
                                                        Value      of Total
    -------------------------------------------------------------------------
    Canada                                           $    413.1          34%
    Austria                                               356.3          29
    U.S.                                                  226.3          19
    Germany                                               122.7          10
    Mexico                                                 69.2           6
    Other countries                                        32.4           2
    -------------------------------------------------------------------------
                                                     $  1,220.0         100%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Properties Held for Development

Properties held for development consist of (i) lands held for future industrial expansion, (ii) lands that were originally banked for industrial use but for which the current industrial use is not the highest and best use and (iii) development lands acquired previously from MEC in 2007 and for which the Real Estate Business is seeking planning and zoning changes in order to develop mixed-use and residential projects. The Real Estate Business has approximately 1,400 acres of land held for development at December 31, 2009 and 2008, including approximately 900 acres in the U.S., 300 acres in Canada, 100 acres in Mexico and 100 acres in Europe. Properties held for development are intended to be rezoned, developed and/or redeveloped over the medium- or long-term for the Company's account or with joint venture partners.

During 2007, MID acquired all of MEC's interests and rights in four real estate properties to be held for future development: a 34-acre parcel in Aurora, Ontario; a 64-acre parcel of excess land adjacent to MEC's racetrack at Laurel Park in Howard County, Maryland; a 157-acre parcel (together with certain development rights) in Palm Beach County, Florida adjacent to MEC's Palm Meadows Training Center; and a 205-acre parcel of land located in Bonsall, California. Prior to the Petition Date (see "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset Sales - Chapter 11 Filing and Plan of Reorganization"), the Real Estate Business had recorded the cost of the lands acquired from MEC 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.

MID currently intends to develop the Aurora, Palm Beach County and Bonsall properties for residential and commercial uses and the Howard County property for mixed-use, including office, retail and residential. Approvals are well-advanced for a 288 unit residential development in Palm Beach County, Florida. Significant progress has also been made in the mixed use land entitlement approval process relating to the Howard County lands in Maryland and MID has applied for preliminary site plan approval in early 2010. The property in Bonsall, California currently houses the San Luis Rey Downs Thoroughbred Training Facility operated by MEC. MID has agreed to lease the property to MEC on a triple-net basis for nominal rent while MID pursues the necessary development entitlements and other approvals. The lease was scheduled to terminate on June 6, 2010, however on November 11, 2009, MEC elected to exercise its option to terminate the agreement by providing MID four months written notice, as stipulated in the agreement. Accordingly, the lease with MEC was scheduled to terminate on April 11, 2010; however, on March 16, 2010, the facility was re-leased to San Luis Rey Racing, Inc. on a triple-net basis for nominal rent. The San Diego County general plan covering the Bonsall lands is expected to accommodate MID's residential development plans.

Properties Under Development

At December 31, 2009, the Real Estate Business had no projects under development. Subsequent to year-end, the Real Estate Business commenced a development project in Mexico relating to 117 thousand square foot expansion of a facility leased to Magna. The total anticipated cost of this project is approximately $4.0 million.

Properties Held For Sale

At December 31, 2008, the Real Estate Business had one property held for sale, which consisted of land and a vacant building with a carrying value of $0.5 million. In the third quarter of 2009, the Company completed the sale of this property for cash consideration of $0.8 million and realized a gain on disposal of $0.2 million.

    
    LOANS RECEIVABLE FROM MEC
    -------------------------------------------------------------------------
    

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 was intended to provide short-term funding to MEC as it sought to implement a debt elimination plan (the "MEC Debt Elimination Plan").

The 2007 MEC Bridge Loan is secured by certain assets of MEC, including first ranking security over the Thistledown land, 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 12.2% at December 31, 2009 and at 12.5% at 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 previously 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 a reorganization proposal announced in November 2008 not proceeding, such maturity date was accelerated to March 20, 2009. As a result of MEC's Chapter 11 filing on March 5, 2009 (see "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset Sales - Chapter 11 Filing and Plan of Reorganization"), the 2007 MEC Bridge Loan was not repaid when due. On the Petition Date, the balance outstanding under the 2007 MEC Bridge Loan was $125.6 million. Interest on the 2007 MEC Bridge Loan accrues during the Debtors' 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 December 31, 2009, $139.2 million was outstanding under the fully drawn 2007 MEC Bridge Loan.

Under the Plan, the MID Lender will receive, in addition to certain assets of MEC to be transferred to MID, a portion of the proceeds from the sale of Thistledown and Lone Star LP in satisfaction of the MID Lender's liens and claims relating to the 2007 MEC Bridge Loan, and upon the effective date under the Plan, all liens and security under the 2007 MEC Bridge Loan will be released.

MEC Project Financings

The MID Lender has made available separate project financing facilities to 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. Prior to the completion of the sale of Remington Park on January 1, 2010 (see "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset Sales - MEC Asset Sales"), the Remington Park project financing was 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 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 is secured principally by security over the lands forming part of the operations at Gulfstream Park and the Palm Meadows Training Center and over all other assets of Gulfstream Park and the Palm Meadows Training Center, excluding licences and permits (which cannot be subject to security under applicable legislation). Prior to the completion of the sale of Remington Park on January 1, 2010 (see "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset Sales - MEC Asset Sales"), the Gulfstream Park project financing was also guaranteed by MEC's subsidiary that owned and operated Remington Park and was also secured by security over the leasehold interest forming part of the operations at Remington Park and over all other assets of Remington Park, excluding licenses and permits (which could not 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 year ended December 31, 2009, $2.0 million (2008 - $3.4 million) of such payments were made. During the year ended December 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 year ended December 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, 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 a reorganization proposal announced in November 2008 not proceeding, 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 the Debtors' Chapter 11 filing on March 5, 2009 (see "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset Sales - Chapter 11 Filing and Plan of Reorganization"), the repayment of at least $100.0 million under the Gulfstream Park project financing facility was not made when due.

On the Petition Date, the balances outstanding under the Gulfstream Park project financing facility and the Remington Park project financing facility were $170.8 million and $22.8 million, respectively. During the Debtors' Chapter 11 process, monthly principal and interest payments, as well as the quarterly excess cash flow sweeps, under the MEC Project Financing Facilities are stayed and interest accrues rather than being paid currently in cash.

At December 31, 2009, there were balances of $185.8 million and $24.8 million due under the Gulfstream Park project financing facility and the Remington Park project financing facility, respectively.

Under the Plan, the MID Lender will receive, in addition to certain assets of MEC to be transferred to MID, a portion of the proceeds from the sale of Thistledown and Lone Star LP in satisfaction of the MID Lender's liens and claims relating to the MEC Project Financing Facilities, and upon the effective date under the Plan, all liens and security under the MEC Project Financing Facilities will be released.

2008 MEC Loan

On November 26, 2008, concurrent with the announcement of a reorganization proposal, 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 was 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 reorganization proposal announced in November 2008 not
        proceeding, such maturity date was accelerated to March 20, 2009. As
        a result of the Debtors' Chapter 11 filing on March 5, 2009 (see
        "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset
        Sales - Chapter 11 Filing and Plan of Reorganization"), 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 was 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 the Debtors' Chapter 11 filing
        on March 5, 2009 (see "SIGNIFICANT MATTERS - Participation in MEC's
        Bankruptcy and Asset Sales - MEC Chapter 11 Filing and Plan of
        Reorganization"), there is an automatic stay of any action to
        collect, assert, or recover on the 2008 MEC Loan.
    

On the Petition Date, the balance outstanding under the 2008 MEC Loan was $52.5 million. Interest and fees on the 2008 MEC Loan accrue during the Debtors' Chapter 11 process rather than being paid currently in cash.

At December 31, 2009, $58.4 million was due under the 2008 MEC Loan.

Under the Plan, the MID Lender will receive, in addition to certain assets of MEC to be transferred to MID, a portion of the proceeds from the sale of Thistledown and Lone Star LP in satisfaction of the MID Lender's liens and claims relating to the 2008 MEC Loan, and upon the effective date under the Plan, all liens and security under the 2008 MEC Loan will be released.

DIP Loan

In connection with the Debtors' Chapter 11 filing (see "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy and Asset Sales - MEC Chapter 11 Filing and Plan of Reorganization"), the MID Lender originally agreed to provide a six-month secured non-revolving 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% (set at 12.2% at December 31, 2009). 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 of third parties), 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 its assets through an auction process and use the proceeds from the asset sales to repay its creditors, including the MID Lender.

At December 31, 2009, $45.0 million (net of $1.3 million of unamortized deferred arrangement fees) was due under the DIP Loan.

On October 28, 2009, the Court entered a final order authorizing amendments to the DIP Loan, which among other things, increased the principal amount available thereunder by $26.0 million to up to $64.4 million and extended the maturity date to April 30, 2010. Under the amended DIP Loan, MEC must use its best efforts to market and sell all its assets, including seeking stalking horse bidders, conducting auctions and obtaining sales orders from the Court. If certain assets sale milestones are not satisfied, there will be an event of default and/or additional arrangement fees will be payable by MEC. The other fees and the interest rate payable by MEC to the MID Lender under the amended DIP Loan were unchanged. All advances under the amended DIP Loan must be made in accordance with an approved budget.

Subsequent to the consolidated balance sheet date, an additional $11.0 million was drawn and $27.8 million was repaid under the DIP Loan. On March 3, 2010, the DIP Loan was further amended and restated, such that an additional $7.0 million was approved by the Court and made available to MEC under the DIP Loan. Accordingly, the maximum commitment thereunder is $71.4 million, of which $3.5 million is available to be borrowed by MEC as at March 29, 2010.

The provision of the MEC Project Financing Facilities, 2007 MEC Bridge Loan, 2008 MEC Loan and DIP Loan, as well as all changes thereto, were reviewed and considered by a Special Committee comprised of independent directors of MID. After considering the recommendations of the Special Committee and its own review and consideration of the MEC Project Financing Facilities, 2007 MEC Bridge Loan, 2008 MEC Loan and DIP Loan, as well as all changes thereto, the Board (excluding Messrs. Frank Stronach and Dennis Mills, who (at the applicable times) did not vote because of their relationships with MEC) unanimously approved the transactions.

    
    LIQUIDITY AND CAPITAL RESOURCES
    -------------------------------------------------------------------------
    

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"). During the year ended December 31, 2009, the maturity date of the MID Credit Facility was extended from January 21, 2009 to January 21, 2010. Subsequent to year end, the maturity date was further extended to December 21, 2010, 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 3.50%, or the U.S. base or Canadian prime rate, in each case plus 2.5%. The MID Credit Facility contains negative and affirmative financial and operating covenants. At December 31, 2009 and 2008, the Company had no borrowings under the MID Credit Facility, but had issued letters of credit totalling $0.2 million (December 31, 2008 - $0.2 million).

In December 2004, MID issued Cdn. $265.0 million of 6.05% senior unsecured debentures (the "Debentures") due December 22, 2016, at a price of Cdn. $995.70 per Cdn. $1,000.00 of principal amount. The Debentures rank equally with all of MID's existing and future senior unsecured indebtedness. At December 31, 2009, all of the Debentures remained outstanding.

The Company's outstanding long-term debt at December 31, 2009 was $253.2 million, which consists of $250.8 million of the Debentures and a mortgage payable in the amount of $2.4 million (due in January 2011).

At December 31, 2009, the Company's debt to total capitalization ratio was 14%. Management believes that the Company's cash resources, cash flow from operations and available third-party borrowings will be sufficient to finance its operations and capital expenditures program during the next year. Additional acquisition and development activity will depend on the availability of suitable investment opportunities and related financing.

The Real Estate Business generated cash flows from operations of $116.9 million in 2009 and at December 31, 2009 had cash and cash equivalents of $135.2 million and shareholders' equity of $1.6 billion. At December 31, 2009, the Real Estate Business was in compliance with all of its debt agreements and related covenants.

    
    CONTROLS AND PROCEDURES
    -------------------------------------------------------------------------
    

Disclosure Controls and Procedures

The Chief Executive Officer and the Executive Vice-President and Chief Financial Officer of MID have evaluated the effectiveness of MID's disclosure controls and procedures, as defined in National Instrument 52-109 - Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109"), as of the end of the period covered by the annual filings (as defined in NI 52-109) (the "Evaluation Date"). They have concluded that, as of the Evaluation Date, MID's disclosure controls and procedures were effective to ensure that material information relating to MID and its consolidated subsidiaries would be made known to them by others within those entities and would be disclosed on a timely basis. However, as recommended by Canadian and United States securities regulators, MID will continue to periodically evaluate its disclosure controls and procedures and will make modifications from time to time as deemed necessary to ensure that information is recorded, processed, summarized and reported within the time periods specified in the applicable rules.

Report on Internal Control Over Financial Reporting

MID's management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in NI 52-109 and Rules 13a-15(f) and 15d-15(f) under the United States Securities Exchange Act of 1934) for MID. Under the supervision and with the participation of MID's Chief Executive Officer and Executive Vice-President and Chief Financial Officer, management conducted an evaluation of the effectiveness of MID's internal control over financial reporting, as of the Evaluation Date, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation under this framework, management concluded that MID's internal control over financial reporting was effective as of the Evaluation Date.

Ernst & Young LLP, an independent licensed public accounting firm, who audited and reported on MID's consolidated financial statements for the year ended December 31, 2009 included in MID's annual report for fiscal 2009, has also issued an attestation report under standards of the Public Company Accounting Oversight Board (United States) on MID's internal control over financial reporting as of the Evaluation Date. The attestation report is at the front of the financial statements included in MID's annual report for fiscal 2009.

Limitation of Scope of Design of Disclosure Controls and Procedures and Internal Control Over Financial Reporting

The Chief Executive Officer and the Executive Vice-President and Chief Financial Officer of MID have limited the scope of their design of MID's disclosure controls and procedures and internal control over financial reporting to exclude controls, policies and procedures of joint venture entities in which MEC holds an interest. For further details relating to such joint venture entities, please refer to note 7(b) to the consolidated financial statements included in MID's annual report for fiscal 2009.

Changes in Internal Control Over Financial Reporting

As of the Evaluation Date, there were no changes in MID's internal control over financial reporting that occurred during the period beginning on the date immediately following the end of the period in respect of which MID made its most recent previous interim filing and ended on December 31, 2009 that have materially affected, or are reasonably likely to materially affect, MID's internal control over financial reporting.

Limitation on the Effectiveness of Controls and Procedures

MID's management, including the Chief Executive Officer and the Executive Vice-President and Chief Financial Officer, does not expect that MID's controls and procedures will prevent all potential error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

    
    COMMITMENTS, CONTRACTUAL OBLIGATIONS AND CONTINGENCIES
    -------------------------------------------------------------------------
    

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.

The Company has made commitments for future payment of long-term debt and construction commitments. At December 31, 2009, future payments, including interest payments, under these contractual obligations were as follows:

    
    (in thousands)               2010         2011         2012         2013
    -------------------------------------------------------------------------
    Mortgage obligations   $      400   $    2,156   $        -   $        -
    Debentures                 15,319       15,319       15,319       15,319
    Construction and
     development project
     commitments                1,149            -            -            -
    -------------------------------------------------------------------------
    Total                  $   16,868   $   17,475   $   15,319   $   15,319
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    (in thousands)               2014   Thereafter        Total
    ------------------------------------------------------------
    Mortgage obligations   $        -   $        -   $    2,556
    Debentures                 15,319      283,838      360,433
    Construction and
     development project
     commitments                    -            -        1,149
    ------------------------------------------------------------
    Total                  $   15,319   $  283,838   $  364,138
    ------------------------------------------------------------
    ------------------------------------------------------------
    

In addition to the letters of credit issued under the MID Credit Facility, the Company had $2.2 million of letters of credit issued with various financial institutions at December 31, 2009 to guarantee various of its construction projects. These letters of credit are secured by cash deposits of the Company.

The Company has not guaranteed any of MEC's debt obligations or other commitments.

For further discussion of commitments, contractual obligations and contingencies, refer to notes 2, 3, 7, and 18 to the unaudited interim consolidated financial statements and "LIQUIDITY AND CAPITAL RESOURCES".

    
    OFF-BALANCE SHEET ARRANGEMENTS
    -------------------------------------------------------------------------
    

Off-balance sheet arrangements consist of letters of credit, construction and development project commitments and certain operating agreements. For a further understanding of these arrangements, refer to note 18 to the unaudited interim consolidated financial statements. There were no material changes in the Company's Real Estate business off-balance sheet arrangements during 2009.

    
    RELATED PARTY TRANSACTIONS
    -------------------------------------------------------------------------
    

For a discussion of the Company's transactions with related parties, please refer to notes 1, 2 and 3 to the unaudited interim consolidated financial statements and the sections in this MD&A entitled "SIGNIFICANT MATTERS", "REAL ESTATE BUSINESS" and "LOANS RECEIVABLE FROM MEC".

    
    FOURTH QUARTER
    -------------------------------------------------------------------------
    

See the section entitled "SELECTED ANNUAL AND QUARTERLY FINANCIAL DATA (UNAUDITED)" for details of items occurring in the fourth quarter that had a significant impact on the consolidated results of the Company.

    
    OUTSTANDING SHARES
    -------------------------------------------------------------------------
    

As at the date of this MD&A, the Company had 46,160,564 Class A Subordinate Voting Shares and 547,413 Class B Shares outstanding.

    
    DIVIDENDS
    -------------------------------------------------------------------------
    

In 2009, the Company declared a quarterly dividend with respect to each of the three-month periods ended December 31, 2008, March 31, 2009, June 30, 2009 and September 30, 2009 in the amount of $0.15 per Class A Subordinate Voting Share and Class B Share. Subsequent to December 31, 2009, the Board declared a dividend of $0.15 per Class A Subordinate Voting Share and Class B Share in respect of the three-month period ended December 31, 2009, which will be paid on or about April 15, 2010 to shareholders of record at the close of business on April 9, 2010.

    
    RISKS AND UNCERTAINTIES
    -------------------------------------------------------------------------
    

The following are some of the more significant risks that could affect our ability to achieve our desired results:

Real Estate Business

At December 31, 2009, all but 13 of our income-producing properties are leased to the Magna group. The tenants for the majority of the properties are non-public subsidiaries within the Magna group and Magna typically does not guarantee the obligations of its subsidiaries under their leases with us. As a result, our operating and net income and the value of our property portfolio would be materially adversely affected if the members of the Magna group became unable to meet their respective financial obligations under their leases.

Since the Magna group operates in the automotive parts industry, our business is, and for the foreseeable future will be, subject to conditions affecting the automotive industry generally. A decrease in the long-term profitability or viability of the automotive parts sector would have a material adverse impact on the financial condition of our tenants and could therefore adversely impact the value of our properties and our operating results. The industry in which Magna competes and the business it conducts are subject to a number of risks and uncertainties, including the following factors that may adversely affect the Magna group's operations in the automotive parts sector:

    
    -   the continuation or worsening of current recessionary economic
        conditions could have a material adverse effect on Magna's
        profitability and financial condition;

    -   the continuation of current levels of, or further declines in,
        automobile sales and production could have a material adverse effect
        on Magna's profitability;

    -   the bankruptcy of any of Magna's major customers could have a
        material adverse effect on Magna's profitability and financial
        condition;

    -   the financial distress of some of Magna's suppliers as a result of
        current economic conditions and other factors could lead to
        significant supply chain disruptions and supplier bankruptcies or
        financial restructurings, which could have a material adverse effect
        on Magna's profitability;

    -   Magna's short-term profitability could be adversely affected by the
        costs associated with rationalization and downsizing of some of its
        operations;

    -   Magna recorded significant impairment charges in recent years and
        could record additional impairment charges in the future, which could
        have a material adverse effect on its profitability;

    -   Magna's failure to identify and develop new technologies and to
        successfully apply such technologies to create new products could
        have a material adverse effect on its profitability and financial
        condition;

    -   Magna's inability to diversify its sales could have a material
        adverse effect on its profitability; and

    -   the consequences of shifting market shares among vehicles could have
        a material adverse effect on Magna's profitability.
    

Although we intend to lease additional properties to tenants other than the Magna group, it is unlikely that our dependence on the Magna group, and therefore the automotive industry, will be reduced significantly in the foreseeable future.

Virtually all the growth of our rental portfolio has been dependent on our relationship with the members of the Magna group as the tenants of our income-producing properties, as the customers for our development projects and as the source of our acquired properties. Although we have acted as the developer, real estate advisor, property manager and owner of a significant number of the industrial facilities of the Magna group since our inception, we have no assurance that we will continue to do so, and the level of business we have received from the Magna group has declined significantly over the past five years. We will be required to compete for any future business with the Magna group without any contractual preferential treatment.

Members of the Magna group have determined on occasion in the past and may increasingly in the future determine not to lease certain properties from us and not to renew certain leases on terms comparable to (or more favourable to us than) our existing arrangements with them, or at all. Moreover, particularly in light of the pressures in the automotive industry and Magna's current plant rationalization plan and the dispute with one of MID's shareholders, the level of business that we have received from Magna has significantly declined over the past five years and we may not continue to be able to acquire new properties from the Magna group as we have done in the past.

Any adverse change in our business relationship with the Magna group could have an adverse effect on the growth and profitability of our business.

Virtually all of the growth of the Real Estate Business has resulted from the growth of the automotive parts business operated by the Magna group, including growth as a result of acquisitions. We expect to derive a portion of our future growth from continuing to build on our relationship with the Magna group so as to benefit from the Magna group's future growth. However, the Magna group may not be successful in maintaining its historical growth rate and may not undertake acquisitions of new facilities at the same rate as in the past. The Magna group's inability to maintain its historical level of growth would likely adversely affect our growth and the level of annualized lease payments that we receive.

MID management expects that given Magna's publicly disclosed strategy of continuously seeking to optimize its global manufacturing footprint, Magna may continue to rationalize facilities. Magna continues to be bound by the terms of the lease agreements for leased properties regardless of its plant rationalization strategy. However, in light of the importance of the relationship with Magna to the success of the Real Estate Business, MID management continues to evaluate alternatives that provide Magna with the flexibility it requires to operate its automotive business, including potentially releasing Magna from its obligation to continue to pay rent under these leases, and any additional leases that are or may become subject to the Magna plant rationalization strategy in the future, under certain circumstances.

If the scope of Magna's rationalization of plants owned by MID expands, MID is at risk of having the credit rating of its debt downgraded. Should this occur, our ability to access the capital markets would be adversely affected and our borrowing costs would significantly increase.

We face a variety of risks in relation to the land held by our Real Estate Business for purposes other than industrial development. While Magna-related industrial developments have a certain degree of predictability associated with them in that we generally have a predefined use and tenant for a given property, general development projects are more speculative and there can be no assurance that we will be able to successfully and profitably develop such properties if we undertake to do so. In that respect, we are exposed to the standard real estate development industry risks including the inability to obtain approvals from the requisite authorities on a timely basis or at all, development costs exceeding the economic value of the land, cost overruns and development and construction delays due to unforeseen factors such as the lack of municipal services or traffic capacity. In addition, the general real estate industry is subject to economic cycles that can result in fluctuating land and property values that have an effect on development projects.

From time to time, we may attempt to minimize or hedge our exposure to the impact that changes in foreign currency rates or interest rates may have on the Real Estate Business' revenue and debt liabilities through the use of derivative financial instruments. The use of derivative financial instruments, including forwards, futures, swaps and options, in our risk management strategy carries certain risks, including the risk that losses on a hedge position will reduce our profits and the cash available for development projects or dividends. A hedge may not be effective in eliminating all the risks inherent in any particular position. Our profitability may be adversely affected during any period as a result of the use of derivatives.

A substantial majority of our current property portfolio is located outside of the United States and generates lease payments that are not denominated in U.S. dollars. Since we report our financial results in U.S. dollars and do not currently hedge our non-U.S. dollar rental revenues, we are subject to foreign currency fluctuations that could, from time to time, have an adverse impact on our financial position or operating results.

Leases representing the majority of our total leaseable area expire in 2013 or later. Our leases generally provide for periodic rent escalations based on specified percentage increases or a consumer price index adjustment, subject in some cases to a cap. As a result, the long-term nature of these leases limits our ability to increase rents contemporaneously with increases in market rates and may therefore limit our revenue growth and the market value of our income-producing property portfolio.

The rights of first refusal that we have granted to our tenants in most of our significant leases may deter third parties from incurring the time and expense that would be necessary for them to bid on our properties in the event that we desire to sell those properties. Accordingly, these rights of first refusal may adversely affect our ability to sell our properties or the prices that we receive for them upon any sale. In addition, the rights of first refusal may adversely affect the market value of our income-producing property portfolio.

We compete for suitable real estate investments with many other parties, including real estate investment trusts, insurance companies and other investors (both Canadian and foreign), which are currently seeking, or which may seek in the future, real estate investments similar to those desired by us. Some of our competitors may have greater financial and operational resources, or lower required return thresholds, than we do. Accordingly, we may not be able to compete successfully for these investments. Increased competition for real estate investments resulting, for example, from increases in the availability of investment funds or reductions in financing costs would tend to increase purchase prices and reduce the yields from the investments.

Real Estate Industry

Because we own, lease and develop real property, we are subject to the risks generally incident to investments in real property. The investment returns available from investments in real estate depend in large part on the amount of income earned and capital appreciation generated by the properties, as well as the expenses incurred. We may experience delays and incur substantial costs in enforcing our rights as lessor under defaulted leases, including costs associated with being unable to rent unleased properties to new tenants on a timely basis or with making improvements or repairs required by a new tenant. In addition, a variety of other factors outside of our control affect income from properties and real estate values, including environmental laws and other governmental regulations, real estate, zoning, tax and eminent domain laws, interest rate levels and the availability of financing. For example, new or existing environmental, real estate, zoning or tax laws can make it more expensive or time consuming to develop real property or expand, modify or renovate existing structures. When interest rates increase, the cost of acquiring, developing, expanding or renovating real property increases and real property values may decrease as the number of potential buyers decreases. In addition, real estate investments are often difficult to sell quickly. Similarly, if financing becomes less available, it becomes more difficult both to acquire and to sell real property. Moreover, governments can, under eminent domain laws, take real property. Sometimes this taking is for less compensation than the owner believes the property is worth. Although we are geographically diversified, any of these factors could have a material adverse impact on our results of operations or financial condition in a particular market.

We intend to develop properties as suitable opportunities arise, taking into consideration the general economic climate. Real estate development has a number of risks, including risks associated with:

    
    -   construction delays or cost overruns that may increase project costs;

    -   receipt of zoning, occupancy and other required governmental permits
        and authorizations;

    -   development costs incurred for projects that are not pursued to
        completion;

    -   natural disasters, such as earthquakes, hurricanes, floods or fires
        that could adversely impact a project;

    -   ability to raise capital; and

    -   governmental restrictions on the nature or size of a project.
    

Our development projects may not be completed on time or within budget, and there may be no market for the new use after we have completed development, either of which could adversely affect our operating results.

We may be unable to lease a vacant property in our portfolio (including those vacated as part of Magna's plant rationalization strategy) on economically favourable terms, particularly properties that were designed and built with unique features or are located in secondary or rural markets. In addition, we may not be able to renew an expiring lease or to find a new tenant for the property for which the lease has expired, in each case on terms at least as favourable as the expired lease. Renewal options are generally based on changes in the consumer price index or prevailing market rates. Market rates may be lower at the time of the renewal options, and accordingly, leases may be renewed at lower levels of rent than are currently in place. Our tenants may fail to renew their leases if they need to relocate their operations as a result of changes in location of their customers' operations or if they choose to discontinue operations as a result of the loss of business.

Many factors will affect our ability to lease vacant properties, and we may incur significant costs in making property modifications, improvements or repairs required by a new tenant. In addition, we may incur substantial costs in protecting our investments in leased properties, particularly if we experience delays and limitations in enforcing our rights against defaulting tenants. Furthermore, if one of our tenants rejects or terminates a lease under the protection of bankruptcy, insolvency or similar laws, our cash flow could be materially adversely affected. The failure to maintain a significant number of our income-producing properties under lease would have a material adverse effect on our financial condition and operating results.

Under various federal, state, provincial and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under or in an affected property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. In addition, the presence of hazardous or toxic substances, or the failure to remediate properly, may materially impair the value of our real property assets or adversely affect our ability to borrow by using such real property as collateral. Certain environmental laws and common law principles could be used to impose liability for releases of hazardous materials, including asbestos-containing materials, into the environment, and third parties may seek recovery from owners or operators of real properties for personal injury associated with exposure to released asbestos-containing materials or other hazardous materials. As an owner of properties, we are subject to these potential liabilities.

Capital and operating expenditures necessary to comply with environmental laws and regulations, to defend against claims of liability or to remediate contaminated property may have a material adverse effect on our results of operations and financial condition. We may also become subject to more stringent environmental standards as a result of changes to environmental laws and regulations, compliance with which may have a material adverse effect on our results of operations and financial condition. Moreover, environmental laws may impose restrictions on the manner in which a property may be used or transferred or in which businesses may be operated, limiting development or expansion of our property portfolio or requiring significant expenditures.

Magna Entertainment Corp.

The risks and uncertainties relating to MEC's Plan and its implementation include, among others:

    
    -   there is no certainty whether the Plan and the Disclosure Statement
        will be confirmed by the Court and whether any modifications of the
        Plan will be required, or that such modification would not require
        the resolicitation of votes of claimholders;

    -   there is no certainty with regard to whether the conditions to the
        effective date of the Plan will be satisfied, and how long the
        process contemplated by the Plan and its implementation under the
        Chapter 11 proceedings will take;

    -   there is no certainty with regard to how long the process for the
        marketing and sale of the Debtors' assets that are to be sold to
        third parties pursuant to the Plan will take; and

    -   there is no certainty whether or at what prices such assets will be
        sold or whether any bids by any third party for such assets will
        materialize or be successful.
    

If the conditions precedent to the effective date of the Plan have not occurred or have been duly waived, then any approval by the Court of the Plan will be vacated, in which event no distributions would be made under the Plan, the Debtors and all holders of claims and equity interests (including MID) would be restored to the status quo ante as of the day immediately preceding the date that the Court approved the Plan and the Debtors' obligations with respect to claims and equity interests would remain unchanged.

If the Debtors are not able to successfully implement the Plan under Chapter 11, it is possible that they will be required to shut down all or part of their business and liquidate their assets, which is likely to have an adverse impact on MID and MID Lender's interests in MEC.

Although we have already reduced the carrying value of the MEC loans by $90.8 million, there can be no assurance that we will not further reduce the carrying value of the MEC loans, either in connection with the implementation of the Plan under Chapter 11 or if the Debtors are not able to successfully implement the Plan.

If any assets of MEC are transferred to MID pursuant to the Plan, there can be no assurance that such assets will be profitable for MID, that the costs associated with operating such assets will not exceed our estimations or that the value of the assets will fully reflect the applicable carrying value of the MEC loan facilities.

The Plan and the classification of claims and equity interests in the Plan embodies a negotiated compromise between the Creditors' Committee, MID, MEC and the MID Lender. Although the Creditors' Committee is the statutory representative for all general unsecured creditors, certain parties in interest may not embrace the settlement terms and may object to the Plan.

If the sale of Lone Star LP or Thistledown are not completed as of the effective date of the Plan, the Plan provides that the assets and shares of such entities will be transferred to certain operating trusts through which one or more operating trustees will oversee the ongoing operations of such entities until the sales are completed. Any failure or additional delays in completing assets sales, whether under the Plan or otherwise, or in the operating trustees' ability to negotiate and close, on acceptable terms, one or more sales may adversely affect their ability to satisfy operational requirements or continue Lone Star LP or Thistledown as a going concern.

The transfers of Gulfstream Park, Santa Anita Park, Golden Gate Fields, Portland Meadows and XpressBet to MID is contingent upon regulatory approval of MID, and MID could be subjected at any time to additional or more restrictive regulation. MID may be unable to obtain all governmental licenses, registrations, permits and approvals necessary for the operation of their pari-mutuel wagering and other gaming facilities related to such assets. Licenses to conduct live horse racing and wagering, simulcast wagering and alternative gaming at racetracks must be obtained from each jurisdiction's regulatory authority, in many cases annually. In addition, licenses or approvals to conduct account wagering must be obtained in certain jurisdictions in which their account wagering customers reside. The denial of any of licenses, registrations, permits or approvals will affect the occurrence of the effective date under the Plan.

As a result of MEC's Chapter 11 filing, MID is at risk of having the credit rating of our debt downgraded further. Should this occur, our ability to access the capital markets on favourable terms would be adversely affected and our borrowing costs could significantly increase.

    
    CRITICAL ACCOUNTING ESTIMATES
    -------------------------------------------------------------------------
    

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates that affect the amounts reported and disclosed in the consolidated financial statements. Management bases estimates on historical experience and various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. On an ongoing basis, management evaluates its estimates. However, actual results could differ from those estimates under different assumptions or conditions.

The Company's significant accounting policies are included in note 1 to the consolidated financial statements included in MID's annual report for fiscal 2009. Management believes the following critical accounting policies involve the most significant judgments and estimates used in the preparation of the Company's consolidated financial statements.

Loans Receivable from MEC

Loans receivable from MEC are stated at cost net of any deferred arrangement fees and valuation allowance. Deferred arrangement fees are amortized over the term of the related loans.

Loans receivable from MEC are considered impaired when, based on current information and events, it is possible that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreements. If the Company determines that the loans are impaired, a valuation allowance is established equal to the difference between the carrying amounts of the loans receivable and estimated recoverable value. Estimated recoverable value is based on the present value of the expected future cash flows discounted at the loans' effective interest rate or the fair value of the collateral. The present value of the expected future cash flows is accreted to its recoverable value, with the passage of time, and recognized as interest income from MEC in the consolidated statements of income (loss). Changes in the fair value of the collateral, if any, will be reported as either an increase or decrease to the impairment provision relating to loans receivable from MEC on the consolidated statements of income (loss).

The valuation allowance is maintained at a level believed adequate by management to absorb estimated probable credit losses. Management's periodic evaluation of the adequacy of the valuation allowance is based on MEC's ability to pay, the estimated value of the underlying collateral and other relevant factors. Accounting estimates related to impairment provision related to loans receivable from MEC are subject to significant measurement uncertainty and are susceptible to change as such estimates require management to make forward-looking assumptions regarding the timing and amount of future cash flows expected to be received or the fair value of the collateral related to the loans receivable from MEC.

The Company does not accrue interest income on the loans receivable from MEC once it has been determined that the loans are impaired.

Long-lived Assets

The Company's most significant asset is its net investment in real estate properties. Properties are stated at cost less accumulated depreciation, reduced for impairment losses where appropriate. Cost represents acquisition and development costs, including direct construction costs, capitalized interest and indirect costs wholly attributable to development. The carrying values of the Company's long-lived assets (including real estate properties and fixed assets) not held for sale are evaluated whenever events or changes in circumstances present indicators of impairment. If such indicators are present, the Company completes a net recoverable amount analysis for the long-lived assets by determining whether the carrying value of such assets can be recovered through projected undiscounted cash flows. If the sum of expected future cash flows, undiscounted and without interest charges, is less than net book value, the excess of the net book value over the estimated fair value, based on discounted future cash flows and, if appropriate, appraisals, is charged to operations in the period in which such impairment is determined by management.

When properties are classified by the Company as available for sale or discontinued operations, the carrying value is reduced, if necessary, to the estimated net realizable value. "Net realizable" value is determined based on discounted net cash flows of the assets and, if appropriate, appraisals and/or estimated net sales proceeds from pending offers.

For real estate properties, depreciation is provided on a straight-line basis over the estimated useful lives of buildings, which typically range from 20 to 40 years.

Accounting estimates related to long-lived assets and the impairment assessments thereof, are subject to significant measurement uncertainty and are susceptible to change as such estimates require management to make forward-looking assumptions regarding cash flows and business operations. Any resulting impairment charge could have a material impact on the Company's results of operations and financial position.

Stock-Based Compensation

Compensation expense for stock options is based on the fair value of the options at the grant date and is recognized over the period from the grant date to the date the award is vested and its exercisability does not depend on continued service by the option holder. Compensation expense is recognized as general and administrative expenses, with a corresponding amount included in equity as contributed surplus for MID and in noncontrolling interest for MEC. The contributed surplus balance is reduced as MID options are exercised and the amount initially recorded for the options in contributed surplus is credited to Class A Subordinate Voting Shares, along with the proceeds received on exercise. In the event that options are forfeited or cancelled prior to having vested, any previously recognized expense is reversed in the period of forfeiture or cancellation.

The fair value of stock options is estimated 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 models do not necessarily provide the only measure of the fair value of the Company's stock options. For further details, refer to note 13 to the unaudited interim consolidated financial statements.

Lease Accounting and Revenue Recognition

Where the Company has retained substantially all the benefits and risks of ownership of its rental properties, leases with its tenants are accounted for as operating leases. Where substantially all the benefits and risks of ownership of the Company's rental properties have been transferred to its tenants, the Company's leases are accounted for as direct financing leases. For leases involving land and buildings, if the fair value of the land exceeds 25% of the consolidated fair value of the land and building at the inception of the lease, the Company evaluates the land and building separately in determining the appropriate lease treatment. In such circumstances, the land lease is typically accounted for as an operating lease, and the building is accounted for as either an operating lease or a direct financing lease, as appropriate.

The Real Estate Business' leases, both with Magna and third-party tenants (the "Leases"), are triple-net leases under which the lessee is responsible for the direct payment of all operating costs related to the properties, including property taxes, insurance, utilities and routine repairs and maintenance. Revenues and operating expenses do not include any amounts related to operating costs paid directly by the lessees.

The Leases may provide for either scheduled fixed rent increases or periodic rent increases based on increases in a local price index. Where periodic rent increases depend on increases in a local price index, such rent increases are accounted for as contingent rentals and recognized in income in applicable future years. Where scheduled fixed rent increases exist in operating leases, the total scheduled fixed lease payments of the lease are recognized in income evenly on a straight-line basis over the term of the lease. The amount by which the straight-line rental revenue differs from the rents collected in accordance with the lease agreements is recognized in deferred rent receivable.

The Real Estate Business' classification of its leases as operating leases or direct financing leases, and the resulting revenue recognition treatment, depends on estimates made by management. If these estimates are inaccurate, there is risk that revenues and income for a period may otherwise differ from reported amounts.

Income Taxes

The Company uses the liability method of tax allocation for accounting for income taxes. Under the liability method of tax allocation, future tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided to the extent that it is more likely than not that future tax assets will not be realized.

The Real Estate Business conducts operations in a number of countries with varying statutory rates of taxation. Judgement is required in the estimation of income taxes, and future income tax assets and liabilities, in each of the Real Estate Business' operating jurisdictions. This process involves estimating actual current tax exposure, assessing temporary differences that result from the different treatments of items for tax and accounting purposes, assessing whether it is more likely than not that future income tax assets will be realized and, based on all the available evidence, determining if a valuation allowance is required on all or a portion of such future income tax assets. The Real Estate Business' effective tax rate can vary significantly quarter to quarter due to changes in (i) the proportion of income earned in each tax jurisdiction, (ii) current and future statutory rates of taxation, (iii) estimates of tax exposures, (iv) the assessment of whether it is more likely than not that future income tax assets will be realized and (v) the valuation allowances recorded on future tax assets. Management's estimates used in establishing the Company's tax provision are subject to uncertainty. Actual results may be materially different from such estimates.

    
    NEW ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS
    -------------------------------------------------------------------------
    

In addition to the Company's adoption of U.S. GAAP on January 1, 2009 (see "ADOPTION OF UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES"), the Company adopted a number of new accounting standards under U.S. GAAP. For details of accounting standards adopted by the Company that did not impact the Company's financial statements, refer to note 1 to the unaudited interim consolidated financial statements. The accounting standards adopted that impacted the Company's financial statements are as follows:

Noncontrolling Interests

In December 2007, the Financial Accounting Standards Board ("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 consolidated statements of income (loss). Under the Codification of U.S. GAAP, SFAS 160 is now codified under Topic 810, "Consolidation".

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 December 31, 2009, except for the disclosures required by SFAS 161 in note 17 to the 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. Under the Codification of U.S. GAAP, SFAS 161 is now codified under Topic 815, "Derivatives and Hedging".

Subsequent Events

In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, "Subsequent Events" ("SFAS 165"), which establishes general accounting standards of accounting for and disclosure of subsequent events that occur after the balance sheet date but before the financial statements are issued or available to be issued. SFAS 165 is effective for annual and interim periods ending after June 15, 2009 and is to be applied prospectively. The Company has evaluated subsequent events through the issuance of the consolidated financial statements on March 29, 2010. Under the Codification of U.S. GAAP, SFAS 165 is now codified under Topic 855, "Subsequent Events".

    
    SELECTED ANNUAL AND QUARTERLY FINANCIAL DATA (UNAUDITED)
    -------------------------------------------------------------------------
    (in thousands, except per share information)


    Years Ended and As at December 31,      2009         2008         2007
    -------------------------------------------------------------------------

    Revenue:
    Real Estate Business                $  224,034   $  219,141   $  189,547
    MEC(2),(3)                             152,935      591,998      617,484
    Eliminations(1)                         (9,636)     (40,566)     (22,539)
    -------------------------------------------------------------------------
                                        $  367,333   $  770,573   $  784,492
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Income (loss) from continuing
     operations attributable to MID:
    Real Estate Business(4)             $   11,717   $  132,172   $  101,863
    MEC(3),(5),(6)                         (54,763)    (124,875)     (58,419)
    Eliminations(1)                           (107)        (963)      (5,162)
    -------------------------------------------------------------------------
                                        $  (43,153)  $    6,334   $   38,282
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income (loss) attributable
     to MID:
    Real Estate Business(4)             $   11,717   $  132,172   $  101,863
    MEC(3),(5),(6),(7)                     (54,342)    (146,395)     (67,902)
    Eliminations(1)                            336        1,951       (1,933)
    -------------------------------------------------------------------------
                                        $  (42,289)  $  (12,272)  $   32,028
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash dividends declared per share   $     0.60   $     0.60   $     0.60
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted earnings (loss)
     per share from continuing
     operations                         $    (0.93)  $     0.14   $     0.80
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted earnings (loss)
     per share                          $    (0.91)  $    (0.26)  $     0.67
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total Assets:
    Real Estate Business                $1,918,151   $1,887,135   $1,943,779
    MEC(3)                                       -    1,054,271    1,251,188
    Eliminations(1)                              -     (397,297)    (297,048)
    -------------------------------------------------------------------------
                                        $1,918,151   $2,544,109   $2,897,919
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total Debt:
    Real Estate Business                $  253,204   $  221,922   $  274,712
    MEC(3)                                       -      702,711      608,458
    Eliminations(1)                              -     (336,818)    (230,649)
    -------------------------------------------------------------------------
                                        $  253,204   $  587,815   $  652,521
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Year Ended
     December 31, 2009    Mar 31     Jun 30     Sep 30     Dec 31      Total
    -------------------------------------------------------------------------

    Revenue:
    Real Estate
     Business          $  53,819  $  55,161  $  57,012  $  58,042  $ 224,034
    MEC(2),(3)           152,935          -          -          -    152,935
    Eliminations(1)       (9,636)         -          -          -     (9,636)
    -------------------------------------------------------------------------
                       $ 197,118  $  55,161  $  57,012  $  58,042  $ 367,333
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Income (loss) from
     continuing
     operations
     attributable to
     MID:
    Real Estate
     Business(4)       $  25,161  $  31,329  $  28,027  $ (72,800) $  11,717
    MEC(3),(5),(6)       (54,763)         -          -          -    (54,763)
    Eliminations(1)         (107)         -          -          -       (107)
    -------------------------------------------------------------------------
                       $ (29,709) $  31,329  $  28,027  $ (72,800) $ (43,153)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income (loss)
     attributable to
     MID:
    Real Estate
     Business(4)       $  25,161  $  31,329  $  28,027  $ (72,800) $  11,717
    MEC(3),(5),(6),(7)   (54,342)         -          -          -    (54,342)
    Eliminations(1)          336          -          -          -        336
    -------------------------------------------------------------------------
                       $ (28,845) $  31,329  $  28,027  $ (72,800) $ (42,289)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     earnings (loss) per
     share from
     continuing
     operations        $   (0.64) $    0.67  $    0.60  $   (1.56) $   (0.93)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     earnings (loss)
     per share         $   (0.62) $    0.67  $    0.60  $   (1.56) $   (0.91)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    FFO:
    Real Estate
     Business(4)       $  34,927  $  41,459  $  38,347  $ (61,873) $  52,860
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    FFO per share:
    Real Estate
     Business(4)       $    0.75  $    0.89  $    0.82  $   (1.32) $    1.13
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Diluted shares
     outstanding          46,708     46,708     46,708     46,708     46,708
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Year Ended
     December 31, 2008    Mar 31     Jun 30     Sep 30     Dec 31      Total
    -------------------------------------------------------------------------

    Revenue:
    Real Estate
     Business          $  54,035  $  55,299  $  55,312  $  54,495  $ 219,141
    MEC(2),(3)           229,485    166,281     81,577    114,655    591,998
    Eliminations(1)       (8,108)    (8,643)   (10,163)   (13,652)   (40,566)
    -------------------------------------------------------------------------
                       $ 275,412  $ 212,937  $ 126,726  $ 155,498  $ 770,573
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Income (loss) from
     continuing
     operations
     attributable to MID:
    Real Estate
     Business(4)       $  30,888  $  26,250  $  42,662  $  32,372  $ 132,172
    MEC(3),(5),(6)        (6,995)   (12,794)   (27,112)   (77,974)  (124,875)
    Eliminations(1)          266         54       (641)      (642)      (963)
    -------------------------------------------------------------------------
                       $  24,159  $  13,510  $  14,909  $ (46,244) $   6,334
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income (loss)
     attributable to MID:
    Real Estate
     Business(4)       $  30,888  $  26,250  $  42,662  $  32,372  $ 132,172
    MEC(3),(5),(6),(7)   (25,038)    (8,567)   (25,919)   (86,871)  (146,395)
    Eliminations(1)        1,029        800         86         36      1,951
    -------------------------------------------------------------------------
                       $   6,879  $  18,483  $  16,829  $ (54,463) $ (12,272)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted
     earnings (loss)
     per share from
     continuing
     operations        $    0.52  $    0.29  $    0.32  $   (0.99) $    0.14
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted
     earnings (loss) per
     share             $    0.15  $    0.40  $    0.36  $   (1.17) $   (0.26)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    FFO:
    Real Estate
     Business(4)       $  41,935  $  37,606  $  53,618  $  42,432  $ 175,591
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    FFO per share:
    Real Estate
     Business(4)       $    0.90  $    0.81  $    1.15  $    0.91  $    3.76
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Diluted shares
     outstanding          46,708     46,708     46,708     46,708     46,708
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) MEC's results of operations are included in the Company's
        consolidated results of operations up to the Petition Date (see
        "SIGNIFICANT MATTERS - Deconsolidation of MEC"). Transactions and
        balances between the Real Estate Business and MEC have not been
        eliminated in the presentation of each segment's financial data and
        related measurements. However, the effects of transactions and
        balances between these two segments, which are further described in
        note 3(a) to the unaudited interim consolidated financial statements,
        are eliminated in the consolidated results of operations and
        financial position of the Company for periods prior to the Petition
        Date.

    (2) Excludes MEC's discontinued operations.

    (3) Most of MEC's racetracks operate for prescribed periods each year. As
        a result, MEC's racing business is seasonal in nature and racing
        revenues and operating results for any quarter will not be indicative
        of the racing revenues and operating results for any other quarter or
        for the year as a whole. 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 (see "SIGNIFICANT
        MATTERS - Deconsolidation of MEC").

    (4) The Real Estate Business' results for 2009 include (i) $7.0 million
        ($4.6 million net of income taxes) of advisory and other costs
        incurred in the first quarter in connection with a reorganization
        proposal announced in November 2008 and evaluating MID's relationship
        with MEC, including MID's involvement in the Debtors' Chapter 11
        process (including the Stalking Horse Bid and the DIP Loan - see
        "SIGNIFICANT MATTERS - MEC Chapter 11 Filing and Plan of
        Reorganization"), (ii) a $0.5 million adjustment to the carrying
        values of the MEC loan facilities on deconsolidation of MEC (see
        "SIGNIFICANT MATTERS - Deconsolidation of MEC") in the first quarter,
        (iii) $1.4 million, $5.3 million and $8.8 million, respectively
        ($1.0 million, $3.6 million and $5.9 million, respectively, net of
        income taxes) of advisory and other costs incurred in the second,
        third and fourth quarters in connection with evaluating MID's
        relationship with MEC, including MID's involvement in the Debtors'
        Chapter 11 process and matters heard by the OSC, and (iv) a
        $0.3 million gain on disposal of real estate previously classified as
        "properties held for sale" in the third quarter, (v) a $4.5 million
        ($2.7 million net of income taxes) write-down of long-lived assets in
        the fourth quarter of 2009, (vi) a $90.8 million ($85.2 million net
        of income taxes) impairment provision relating to loans receivable
        from MEC and (vii) $7.8 million currency translation loss realized
        from a capital transaction that gave rise to a reduction in the net
        investment in a foreign operation in the fourth quarter. The Real
        Estate Business' results for 2008 include (i) a $3.9 million
        ($2.6 million net of income taxes) gain in the first quarter in
        relation to the termination of a lease agreement with Magna, (ii) net
        recoveries of $0.3 million ($0.2 million net of income taxes) and
        $0.9 million ($0.6 million net of income taxes) in the first and
        fourth quarters, respectively, of costs incurred in connection with
        the Greenlight Litigation (see "REAL ESTATE BUSINESS - Our
        Relationship with Magna"), (iii) $4.3 million ($3.2 million net of
        income taxes), $1.2 million ($0.9 million net of income taxes) and
        $1.9 million ($1.4 million net of income taxes) of costs incurred in
        the second, third and fourth quarters, respectively, in connection
        with the exploration of alternatives in respect of MID's investments
        in MEC, (iv) a $0.5 million ($0.3 million net of income taxes)
        non-cash write-down of long-lived assets in the second quarter, (v) a
        $1.0 million bonus payment to MID's departing CEO in the third
        quarter, (vi) income tax recoveries of $12.5 million and $1.4 million
        in the third and fourth quarters, respectively, due to revisions to
        estimates of certain tax exposures and the ability to benefit from
        certain income tax loss carry forwards and (vii) a $1.8 million
        foreign exchange gain driven primarily by the impact of the
        strengthening of the U.S. dollar against various currencies in the
        fourth quarter of 2008. The Real Estate Business' results for 2007
        include (i) $0.1 million in each of the first three quarters of costs
        associated with the Company's defence against the Greenlight
        Litigation, (ii) $2.0 million ($1.2 million net of $0.2 million of
        current income taxes and $0.6 million of future income taxes) of
        costs recognized in the second quarter associated with the Company's
        Hurricane Katrina donation, (iii) a $2.1 million expense
        ($1.5 million net of current income taxes) and $0.1 million expense
        in the second and fourth quarters, respectively, in connection with
        the exploration of alternatives in respect of MID's investments in
        MEC, (iv) a $1.4 million gain in the second quarter ($1.0 million net
        of income taxes) on the disposal of an income-producing property in
        Europe, (v) a $1.1 million current tax recovery due primarily to a
        favourable tax reassessment received in the third quarter of 2007 in
        relation to an asset sale in a prior year and (vi) future tax
        recoveries of $1.6 million and $3.8 million realized in the third and
        fourth quarters, respectively, from the reduction in the future tax
        rates and changes in tax legislation in certain countries in which
        the Real Estate Business operates.

    (5) MEC's loss from continuing operations attributable to MID and net
        loss attributable to MID are net of noncontrolling interest and
        dilution gains (losses) arising from MEC's issuance of shares of MEC
        Class A Stock from time to time.

    (6) The MEC segment's loss from continuing operations attributable to MID
        and net loss attributable to MID for the first quarter of 2009
        include a $46.2 million reduction to MID's carrying value in its
        investment in MEC upon the Company's deconsolidation of MEC (see
        "SIGNIFICANT MATTERS - Deconsolidation of MEC"). MEC's loss from
        continuing operations attributable to MID and net loss attributable
        to MID for 2008 include (i) a $2.0 million gain ($1.1 million net of
        related minority interest impact) recognized in the first quarter
        related to a racing services agreement at The Meadows, (ii) non-cash
        write-downs of $5.0 million and $5.1 million ($2.7 million and
        $2.7 million net of related minority interest impact) in the first
        and fourth quarters, respectively, of a property held for sale, (iii)
        a $0.4 million dilution loss in the second quarter in relation to
        MEC's issuance of shares of MEC Class A Stock pursuant to stock-based
        compensation arrangements and (iv) $115.7 million ($44.2 million net
        of related income tax and minority interest impact) of non-cash
        write-downs of long-lived and intangible assets. MEC's loss from
        continuing operations attributable to MID and net loss attributable
        to MID for 2007 include (i) a $1.4 million ($0.8 million after the
        related minority interest recovery) non-cash write-down of MEC's
        long-lived assets in the third quarter and (ii) a $3.5 million
        dilution loss in relation to the FEL Equity Investment in the fourth
        quarter.

    (7) MEC's net loss attributable to MID for 2008 includes (i) non-cash
        write-downs, included in discontinued operations, of $32.3 million
        and $16.0 million ($17.4 million and $8.6 million net of related
        minority interest impact) in the first and fourth quarters,
        respectively, related to long-lived assets at Magna Racino(TM) and
        Portland Meadows, (ii) a $6.1 million ($3.3 million net of related
        minority interest impact) income tax recovery, included in
        discontinued operations, as a result of being able to utilize losses
        of discontinued operations to offset taxable income generated by the
        sale of excess real estate to a subsidiary of Magna, (iii) a
        $0.5 million gain ($0.3 million net of related minority interest
        impact) in the third quarter, included in discontinued operations,
        from the disposition of Great Lakes Downs and (iv) a $3.1 million tax
        recovery ($1.7 million net of related minority interest), included in
        discontinued operations, in the third quarter from revisions to
        estimates of certain tax exposures as a result of tax audits in
        certain tax jurisdictions.


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

This MD&A contains 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 relating to the MEC Chapter 11 proceeding and the Company's participation therein and 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 events, 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 the MEC Chapter 11 proceeding, including the success or timing of the implementation of the Joint Plan of Affiliated Debtors, the Official Committee of Unsecured Creditors, MI Developments Inc. and MI Developments US Financing Inc., the success or timing of the auction of MEC's assets, and the outcome of any proceedings related to the MEC Chapter 11 proceeding or MID's involvement therein (including as a result of any objections raised with the Bankruptcy Court), and the risks set forth in the "Risk Factors" section in the Company's Annual Information Form for 2009, filed on SEDAR at www.sedar.com and attached as Exhibit 1 to the Company's Annual Report on Form 40-F for the year ended December 31, 2009, 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 statements were made and unless otherwise required by applicable securities laws, the Company 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.
    Consolidated Balance Sheets
    (Refer to note 1 - Basis of Presentation)
    (U.S. dollars in thousands)
    (Unaudited)

                          Consolidated Consolidated     Real        Magna
                            (notes 1,    (notes 1,     Estate   Entertainment
                              3(a))        3(a))      Business     Corp.(1)
                          ------------ ------------ ------------ ------------
                          December 31,           December 31, 2008
    As at                     2009             (restated - note 1(f))
    -------------------------------------------------------------------------
    ASSETS
    Current assets:
      Cash and cash
       equivalents         $  135,163   $  144,764   $  122,411   $   22,353
      Restricted cash             458       20,255          946       19,309
      Accounts receivable       1,796       33,915        2,256       31,659
      Loans receivable
       from MEC, net
       (note 3)                     -            -      247,075            -
      Due from MID
       (note 3)                     -            -            -          946
      Income taxes
       receivable               1,723        1,887        1,887            -
      Prepaid expenses
       and other                1,007       20,724          930       19,837
      Assets held for
       sale (note 4)                -       21,732            -       21,732
      Assets held for
       sale from
       discontinued
       operations (note 4)          -       94,461            -       94,533
    -------------------------------------------------------------------------
                              140,147      337,738      375,505      210,369

    Real estate properties,
     net (note 5)           1,389,845    2,024,183    1,397,819      681,701
    Fixed assets, net             233       71,206          244       70,962
    Other assets (note 6)       2,065       35,200        1,110       34,090
    Loans receivable from
     MEC (note 3)             362,404            -       93,824            -
    Deferred rent
     receivable                13,607       13,001       13,001            -
    Future tax assets           9,850       62,781        5,632       57,149
    -------------------------------------------------------------------------
    Total assets           $1,918,151   $2,544,109   $1,887,135   $1,054,271
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES AND
     SHAREHOLDERS' EQUITY
    Current liabilities:
      Bank indebtedness
       (note 7)            $        -   $   39,460   $        -   $   39,460
      Accounts payable and
       accrued liabilities
       (note 8)                21,176      121,471       12,411      109,060
      Income taxes
       payable                 10,704       10,363        7,638        2,725
      Loans payable to
       MID, net (note 3)            -            -            -      246,428
      Due to MEC (note 3)         458            -          946            -
      Long-term debt due
       within one year            220       82,649        3,309       79,340
      Note obligation
       due within one
       year, net                    -       74,601            -       74,601
      Deferred revenue          5,243        9,368        3,254        6,114
      Liabilities related
       to assets held for
       sale (note 4)                -          876            -          876
      Liabilities related
       to discontinued
       operations (note 4)          -       51,943            -       75,960
    -------------------------------------------------------------------------
                               37,801      390,731       27,558      634,564

    Long-term debt              2,143       17,173        2,063       15,110
    Senior unsecured
     debentures, net          250,841      216,550      216,550            -
    Note obligation, net            -      149,015            -      149,015
    Loans payable to MID,
     net (note 3)                   -            -            -       66,373
    Other long-term
     liabilities (note 9)           -       18,973            -       18,973
    Future tax liabilities     37,824      105,497       40,933       63,233
    -------------------------------------------------------------------------
    Total liabilities         328,609      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)
       (Convertible to
       Class A Subordinate
       Voting Shares)          17,866       17,866
      Contributed surplus
       (note 10)               58,575       57,062
      Deficit                (191,169)    (120,855)
      Accumulated other
       comprehensive income
      (note 11)               198,182      161,827
    -------------------------------------------------------------------------
    Total MID
     shareholders' equity   1,589,542    1,621,988    1,600,031       82,821
    Noncontrolling
     interest (note 12)             -       24,182            -       24,182
    -------------------------------------------------------------------------
    Total equity            1,589,542    1,646,170    1,600,031      107,003
    -------------------------------------------------------------------------
    Total liabilities
     and shareholders'
     equity                $1,918,151   $2,544,109   $1,887,135   $1,054,271
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Commitments and contingencies (note 18)
    See accompanying notes

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



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

                          Consolidated  Consolidated    Real        Magna
                            (notes 1,     (notes 1,    Estate   Entertainment
                              3(a))         3(a))     Business      Corp.
    Three Months Ended    ------------ --------------------------------------
     December 31,            2009(1)         2008 (restated - note 1(f))
    -------------------------------------------------------------------------

    Revenues
    Rental revenue         $   44,778   $   40,843   $   40,843   $        -
    Interest and other
     income from MEC
     (note 3)                  13,264            -       13,652            -
    Racing and other
     revenue                        -      114,655            -      114,655
    -------------------------------------------------------------------------
                               58,042      155,498       54,495      114,655
    -------------------------------------------------------------------------
    Operating costs and
     expenses
    Purses, awards and
     other                          -       54,082            -       54,082
    Operating costs                 -       67,893            -       67,893
    General and
     administrative (note 3)   20,450       21,620        5,980       15,392
    Depreciation and
     amortization              10,870       22,051       10,060       12,034
    Interest expense, net       3,695       11,121        2,343       21,993
    Foreign exchange
     losses (gains)              (408)      (1,168)      (1,788)         620
    Equity loss                     -          433            -          433
    Write-down of long-
     lived and intangible
     assets (notes 5, 14)       4,498      120,778            -      120,778
    Impairment provision
     relating to loans
     receivable from MEC
     (note 3)                  90,800            -            -            -
    -------------------------------------------------------------------------
    Operating income (loss)   (71,863)    (141,312)      37,900     (178,570)
    Loss on disposal of
     real estate (note 5)         (57)           -            -            -
    Other losses (note 11)     (7,798)           -            -            -
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes             (79,718)    (141,312)      37,900     (178,570)
    Income tax expense
     (recovery)                (6,918)     (27,764)       5,528      (33,292)
    -------------------------------------------------------------------------
    Income (loss) from
     continuing operations    (72,800)    (113,548)      32,372     (145,278)
    Loss from discontinued
     operations (note 4)            -      (15,896)           -      (16,574)
    -------------------------------------------------------------------------
    Net income (loss)         (72,800)    (129,444)      32,372     (161,852)
    Add net loss
     attributable to the
     noncontrolling
     interest                       -       74,981            -       74,981
    -------------------------------------------------------------------------
    Net income (loss)
     attributable to MID   $  (72,800)  $  (54,463)  $   32,372   $  (86,871)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Income (loss)
     attributable to
     MID from
     - continuing
       operations          $  (72,800)  $  (46,244)  $   32,372   $  (77,974)
     - discontinued
       operations (note 4)          -       (8,219)           -       (8,897)
    -------------------------------------------------------------------------
    Net income (loss)
     attributable to MID    $ (72,800)  $  (54,463)  $   32,372   $  (86,871)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted loss
     attributable to each
     MID Class A
     Subordinate Voting
     or Class B Share
     (note 15)
      - Continuing
        operations         $    (1.56)  $    (0.99)
      - Discontinued
        operations (note 4)         -        (0.18)
    ------------------------------------------------
    Total                  $    (1.56)  $    (1.17)
    ------------------------------------------------
    ------------------------------------------------

    Average number of
     Class A Subordinate
     Voting and Class B
     Shares outstanding
     during the period
     (in thousands)
     (note 15)
      - Basic and diluted      46,708       46,708
    ------------------------------------------------
    ------------------------------------------------
    See accompanying notes

    ------------------------------
    (1) The results for the three-month period ended December 31, 2009 do not
        include the results of MEC up to the Petition Date of March 5, 2009
        (note 1).



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

                                  Consolidated
                                 (notes 1, 3(a))        Real Estate Business
                          ------------------------- -------------------------
                                       (restated -               (restated -
    Year Ended                          note 1(f))                note 1(f))
     December 31,            2009(1)       2008         2009         2008
    -------------------------------------------------------------------------
    Revenues
    Rental revenue         $  170,929   $  178,575   $  170,929   $  178,575
    Interest and other
     income from MEC
     (note 3(a))               43,469            -       53,105       40,566
    Racing and other
     revenue                  152,935      591,998            -            -
    -------------------------------------------------------------------------
                              367,333      770,573      224,034      219,141
    -------------------------------------------------------------------------
    Operating costs
     and expenses
    Purses, awards
     and other                 82,150      280,900            -            -
    Operating costs            55,274      269,358            -            -
    General and
     administrative
     (note 3)                  53,071       85,512       52,904       26,988
    Depreciation and
     amortization              48,334       88,915       41,349       43,419
    Interest expense, net      18,985       42,832       13,535       10,195
    Foreign exchange
     losses (gains)             8,104         (799)        (543)      (1,557)
    Equity loss (income)          (65)       3,042            -            -
    Write-down of long-lived
     and intangible assets
     (notes 5, 14)              4,498      126,228        4,498          450
    Impairment provision
     relating to loans
     receivable from MEC
     (note 3)                  90,800            -       90,800            -
    -------------------------------------------------------------------------
    Operating income
     (loss)                     6,182     (125,415)      21,491      139,646
    Deconsolidation
     adjustment to the
     carrying values of
     MID's investment
     in, and amounts due
     from, MEC (note 1(c))    (46,677)           -         (504)           -
    Gain on disposal of
     real estate (note 5)         206            -          206            -
    Other gains (losses),
     net (notes 3, 11,
     13(b), 18)                (7,798)       5,481       (7,798)       3,892
    -------------------------------------------------------------------------

    Income (loss) before
     income taxes             (48,087)    (119,934)      13,395      143,538
    Income tax expense
     (recovery)                 1,737      (18,915)       1,678       11,366
    -------------------------------------------------------------------------
    Income (loss) from
     continuing operations    (49,824)    (101,019)      11,717      132,172
    Income (loss) from
    discontinued operations
     (note 4)                   1,227      (37,081)           -            -
    -------------------------------------------------------------------------
    Net income (loss)         (48,597)    (138,100)      11,717      132,172
    Add net loss
     attributable to the
     noncontrolling interest    6,308      125,828            -            -
    -------------------------------------------------------------------------
    Net income (loss)
     attributable to MID   $  (42,289)  $  (12,272)  $   11,717   $  132,172
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Income (loss)
     attributable to
     MID from
     - continuing
       operations          $  (43,153)  $    6,334   $   11,717   $  132,172
     - discontinued
       operations (note 4)        864      (18,606)           -            -
    -------------------------------------------------------------------------
    Net income (loss)
     attributable to MID   $  (42,289)  $  (12,272)  $   11,717   $  132,172
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     earnings (loss)
     attributable to each
     MID Class A
     Subordinate Voting or
     Class B Share
     (note 15)
      - Continuing
        operations         $    (0.93)  $     0.14
      - Discontinued
        operations
        (note 4)                 0.02        (0.40)
    ------------------------------------------------
    Total                  $    (0.91)  $    (0.26)
    ------------------------------------------------
    ------------------------------------------------

    Average number of
     Class A Subordinate
     Voting and Class B
     Shares outstanding
     during the period
     (in thousands)
     (note 15)
      - Basic and
        diluted                46,708       46,708
    -----------------------------------------------
    -----------------------------------------------


                          Magna Entertainment Corp.
                          -------------------------
                                       (restated -
    Year Ended                          note 1(f))
     December 31,            2009(1)       2008
    -----------------------------------------------

    Revenues
    Rental revenue         $        -   $        -
    Interest and other
     income from MEC
     (note 3(a))                    -            -
    Racing and other
     revenue                  152,935      591,998
    -----------------------------------------------
                              152,935      591,998
    -----------------------------------------------
    Operating costs
     and expenses
    Purses, awards
     and other                 82,150      280,900
    Operating costs            55,274      269,358
    General and
     administrative
     (note 3)                     157       57,992
    Depreciation and
     amortization               7,014       45,668
    Interest expense, net      14,960       72,600
    Foreign exchange
     losses (gains)             8,647          758
    Equity loss (income)          (65)       3,042
    Write-down of long-lived
     and intangible assets
     (notes 5, 14)                  -      125,778
    Impairment provision
     relating to loans
     receivable from MEC
     (note 3)                       -            -
    -----------------------------------------------
    Operating income
     (loss)                   (15,202)    (264,098)
    Deconsolidation
     adjustment to the
     carrying values of
     MID's investment
     in, and amounts due
     from, MEC (note 1(c))    (46,173)           -
    Gain on disposal of
     real estate (note 5)           -            -
    Other gains (losses),
     net (notes 3, 11,
     13(b), 18)                     -        1,589
    -----------------------------------------------

    Income (loss) before
     income taxes             (61,375)    (262,509)
    Income tax expense
     (recovery)                    59      (30,281)
    -----------------------------------------------
    Income (loss) from
     continuing operations    (61,434)    (232,228)
    Income (loss) from
    discontinued operations
     (note 4)                     784      (39,995)
    -----------------------------------------------
    Net income (loss)         (60,650)    (272,223)
    Add net loss
     attributable to the
     noncontrolling interest    6,308      125,828
    -----------------------------------------------
    Net income (loss)
     attributable to MID   $  (54,342)  $ (146,395)
    -----------------------------------------------
    -----------------------------------------------
    Income (loss)
     attributable to
     MID from
     - continuing
       operations          $  (54,763)  $ (124,875)
     - discontinued
       operations (note 4)        421      (21,520)
    -----------------------------------------------
    Net income (loss)
     attributable to MID   $  (54,342)  $ (146,395)
    -----------------------------------------------
    -----------------------------------------------
    See accompanying notes

    ------------------------------
    (1) The results for the year ended December 31, 2009 include the results
        of MEC up to the Petition Date of March 5, 2009 (note 1).



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

                              Three Months Ended             Year Ended
                                  December 31,              December 31,
                          ------------------------- -------------------------
                                       (restated -               (restated -
                                        note 1(f))                note 1(f))
                              2009         2008         2009         2008
    -------------------------------------------------------------------------
    Net loss               $  (72,800)  $ (129,444)  $  (48,597)  $ (138,100)
    Other comprehensive
     income (loss):
      Change in fair
       value of interest
       rate swaps, net of
       taxes (notes 11, 12)         -       (1,094)         171       (1,082)
      Foreign currency
       translation
       adjustment
       (notes 11, 12)          (1,308)     (69,278)      48,241      (88,403)
      Recognition of
       foreign currency
       translation loss
       in net income
       (loss) (note 11)         7,798            -        7,798            -
      Change in net
       unrecognized
       actuarial pension
       loss (notes 11, 12)          -       (1,134)           -       (1,134)
      Reclassification
       to income of MEC's
       accumulated other
       comprehensive
       income upon
       deconsolidation of
       MEC (notes 1(c), 11)         -            -      (19,850)           -
    -------------------------------------------------------------------------
    Comprehensive loss        (66,310)    (200,950)     (12,237)    (228,719)
    Add comprehensive
     loss attributable
     to the noncontrolling
     interest                       -       76,785        6,303      127,007
    -------------------------------------------------------------------------
    Comprehensive loss
     attributable to MID   $  (66,310)  $ (124,165)  $   (5,934)  $ (101,712)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes



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

                              Three Months Ended             Year Ended
                                  December 31,              December 31,
                          ------------------------- -------------------------
                                       (restated -               (restated -
                                        note 1(f))                note 1(f))
                              2009         2008         2009         2008
    -------------------------------------------------------------------------
    Deficit, beginning
     of period             $ (111,363)  $  (59,386)  $ (120,855)  $  (80,558)
    Net loss attributable
     to MID                   (72,800)     (54,463)     (42,289)     (12,272)
    Dividends                  (7,006)      (7,006)     (28,025)     (28,025)
    -------------------------------------------------------------------------
    Deficit, end of period $ (191,169)  $ (120,855)  $ (191,169)  $ (120,855)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes



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

                          Consolidated  Consolidated    Real        Magna
                            (notes 1,     (notes 1,    Estate   Entertainment
                              3(a))         3(a))     Business      Corp.
    Three Months Ended    ------------ --------------------------------------
     December 31,            2009(1)         2008 (restated - note 1(f))
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Income (loss) from
     continuing operations $  (72,800)  $ (113,548)  $   32,372   $ (145,278)
    Items not involving
     current cash flows
     (note 16(a))              93,242      110,153        5,303      105,178
    Changes in non-cash
     balances (note 16(b))      9,443        9,782        1,176        8,737
    -------------------------------------------------------------------------
    Cash provided by
     (used in) operating
     activities                29,885        6,387       38,851      (31,363)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Real estate and fixed
     asset additions           (3,801)      (9,365)      (4,491)      (4,874)
    Costs related to
     disposal of real
     estate and fixed
     assets, net                  (57)           -            -            -
    Decrease (increase)
     in other assets               37       (6,229)        (191)      (6,038)
    Loan repayments
     from MEC                  10,606            -        2,249            -
    Loan advances to
     MEC, net                 (22,602)           -      (52,771)           -
    -------------------------------------------------------------------------
    Cash used in
     investing
     activities               (15,817)     (15,594)     (55,204)     (10,912)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Proceeds from bank
     indebtedness                   -       12,347            -       12,347
    Repayment of bank
     indebtedness                   -      (16,136)           -      (16,136)
    Issuance of long-term
     debt, net                      -        2,461            -        2,461
    Repayment of
     long-term debt               (20)      (2,280)        (101)      (2,179)
    Loan advances from
     MID, net                       -            -            -       52,329
    Loan repayments to MID          -            -            -         (490)
    Dividends paid             (7,006)      (7,006)      (7,006)           -
    -------------------------------------------------------------------------
    Cash provided by
     (used in) financing
     activities                (7,026)     (10,614)      (7,107)      48,332
    -------------------------------------------------------------------------

    Effect of exchange rate
     changes on cash and
     cash equivalents             416      (11,258)     (10,461)        (797)
    -------------------------------------------------------------------------
    Net cash flows
     provided by (used in)
     continuing operations      7,458      (31,079)     (33,921)       5,260
    -------------------------------------------------------------------------

    DISCONTINUED OPERATIONS
    Cash provided by
     operating activities           -        1,469            -          810
    Cash used in investing
     activities                     -         (476)           -         (476)
    Cash used in financing
     activities                     -       (2,089)           -       (3,848)
    -------------------------------------------------------------------------
    Net cash flows used
     in discontinued
     operations                     -       (1,096)           -       (3,514)
    -------------------------------------------------------------------------

    Net increase
     (decrease) in cash
     and cash equivalents
     during the period          7,458      (32,175)     (33,921)       1,746
    Cash and cash
     equivalents,
     beginning of
     period                   127,705      187,049      156,332       30,717
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end
     of period                135,163      154,874      122,411       32,463
    Less: cash and cash
     equivalents of
     discontinued
     operations, end of
     period                         -      (10,110)           -      (10,110)
    -------------------------------------------------------------------------
    Cash and cash
     equivalents of
     continuing
     operations, end
     of period             $  135,163   $  144,764   $  122,411   $   22,353
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes

    ------------------------------
    (1) The results for the three-month period ended December 31, 2009 do not
        include the results of MEC up to the Petition Date of March 5, 2009
        (note 1).



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

                                  Consolidated
                                 (notes 1, 3(a))        Real Estate Business
                          ------------------------- -------------------------
                                       (restated -               (restated -
    Year Ended                          note 1(f))                note 1(f))
     December 31,            2009(1)       2008         2009         2008
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Income (loss) from
     continuing operations $  (49,824)  $ (101,019)  $   11,717   $  132,172
    Items not involving
     current cash flows
     (note 16(a))             149,655      189,165       93,483       36,770
    Changes in non-cash
     balances (note 16(b))      3,363        2,628       11,710        1,924
    -------------------------------------------------------------------------
    Cash provided by (used
     in) operating
     activities               103,194       90,774      116,910      170,866
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Real estate and fixed
     asset additions          (12,075)     (48,867)      (9,614)     (19,945)
    Proceeds on disposal
     of real estate and
     fixed assets, net            692       34,123          692            -
    Increase in other
     assets                    (9,955)     (14,346)        (824)        (435)
    Loan repayments from
     MEC                       10,632            -       41,524       31,535
    Loan advances to MEC,
     net                      (54,072)           -     (110,143)    (126,660)
    Reduction in cash
     from deconsolidation
     of MEC                   (31,693)           -            -            -
    -------------------------------------------------------------------------
    Cash used in investing
     activities               (96,471)     (29,090)     (78,365)    (115,505)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Proceeds from bank
     indebtedness              18,048       61,052            -            -
    Repayment of bank
     indebtedness             (18,597)     (60,806)           -            -
    Issuance of long-term
     debt, net                      -        6,802            -            -
    Repayment of long-
     term debt                 (5,073)     (13,331)      (3,309)        (449)
    Loan advances from MID,
     net                            -            -            -            -
    Loan repayments to MID          -            -            -            -
    Shares purchased for
     cancellation                   -          (10)           -            -
    Disgorgement payment
     received from
     noncontrolling
     interest (note 12)           420            -            -            -
    Dividends paid            (28,025)     (28,025)     (28,025)     (28,025)
    -------------------------------------------------------------------------
    Cash provided by (used
     in) financing
     activities               (33,227)     (34,318)     (31,334)     (28,474)
    -------------------------------------------------------------------------
    Effect of exchange rate
     changes on cash and
     cash equivalents           5,235      (16,357)       5,541      (15,421)
    -------------------------------------------------------------------------
    Net cash flows provided
     by (used in)
     continuing operations    (21,269)      11,009       12,752       11,466
    -------------------------------------------------------------------------
    DISCONTINUED OPERATIONS
    Cash provided by
     operating activities       1,788        6,104            -            -
    Cash used in investing
     activities                  (230)      (2,760)           -            -
    Cash used in financing
     activities                     -      (13,817)           -            -
    -------------------------------------------------------------------------
    Net cash flows provided
     by (used in)
     discontinued
     operations                 1,558      (10,473)           -            -
    -------------------------------------------------------------------------
    Net increase (decrease)
     in cash and cash
     equivalents during the
     year                     (19,711)         536       12,752       11,466

    Cash and cash
     equivalents, beginning
     of year                  154,874      154,338      122,411      110,945
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     year                     135,163      154,874      135,163      122,411

    Less: cash and cash
     equivalents of
     discontinued
     operations, end of
     year                           -      (10,110)           -            -
    -------------------------------------------------------------------------
    Cash and cash
     equivalents of
     continuing operations,
     end of year           $  135,163   $  144,764   $  135,163   $  122,411
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                          Magna Entertainment Corp.
                          -------------------------
                                       (restated -
    Year Ended                          note 1(f))
     December 31,            2009(1)       2008
    -----------------------------------------------
    OPERATING ACTIVITIES
    Income (loss) from
     continuing operations $  (61,434)  $ (232,228)
    Items not involving
     current cash flows
     (note 16(a))              56,511      155,258
    Changes in non-cash
     balances (note 16(b))     (8,304)         454
    -----------------------------------------------
    Cash provided by (used
     in) operating
     activities               (13,227)     (76,516)
    -----------------------------------------------
    INVESTING ACTIVITIES
    Real estate and fixed
     asset additions           (2,461)     (29,044)
    Proceeds on disposal
     of real estate and
     fixed assets, net              -       34,245
    Increase in other
     assets                    (9,131)     (13,911)
    Loan repayments from
     MEC                            -            -
    Loan advances to MEC,
     net                            -            -
    Reduction in cash
     from deconsolidation
     of MEC                   (31,693)           -
    -----------------------------------------------
    Cash used in investing
     activities               (43,285)      (8,710)
    -----------------------------------------------
    FINANCING ACTIVITIES
    Proceeds from bank
     indebtedness              18,048       61,052
    Repayment of bank
     indebtedness             (18,597)     (60,806)
    Issuance of long-term
     debt, net                      -        6,802
    Repayment of long-
     term debt                 (1,764)     (12,882)
    Loan advances from MID,
     net                       56,000      124,889
    Loan repayments to MID    (28,834)     (27,903)
    Shares purchased for
     cancellation                   -          (10)
    Disgorgement payment
     received from
     noncontrolling
     interest (note 12)           420            -
    Dividends paid                  -            -
    -----------------------------------------------
    Cash provided by (used
     in) financing
     activities                25,273       91,142
    -----------------------------------------------
    Effect of exchange rate
     changes on cash and
     cash equivalents            (306)        (936)
    -----------------------------------------------
    Net cash flows provided
     by (used in)
     continuing operations    (31,545)       4,980
    -----------------------------------------------
    DISCONTINUED OPERATIONS
    Cash provided by
     operating activities       1,370        3,339
    Cash used in investing
     activities                  (230)      (2,760)
    Cash used in financing
     activities                (2,058)     (16,489)
    -----------------------------------------------
    Net cash flows provided
     by (used in)
     discontinued
     operations                  (918)     (15,910)
    -----------------------------------------------
    Net increase (decrease)
     in cash and cash
     equivalents during the
     year                     (32,463)     (10,930)

    Cash and cash
     equivalents, beginning
     of year                   32,463       43,393
    -----------------------------------------------
    Cash and cash
     equivalents, end of
     year                           -       32,463

    Less: cash and cash
     equivalents of
     discontinued
     operations, end of
     year                           -      (10,110)
    -----------------------------------------------
    Cash and cash
     equivalents of
     continuing operations,
     end of year           $        -   $   22,353
    -----------------------------------------------
    -----------------------------------------------
    See accompanying notes

    ------------------------------
    (1) The results for the year ended December 31, 2009 include the results
        of MEC up to the Petition Date of March 5, 2009 (note 1).



    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 December 31, 2009 and 2008 and for the three-month
    period and year ended December 31, 2009 and 2008 are unaudited)

    1.  SIGNIFICANT ACCOUNTING POLICIES
    -------------------------------------------------------------------------

    (a) Organization and Basis of Presentation

        Organization

        MI Developments Inc. ("MID") is the successor to Magna International
        Inc.'s ("Magna") real estate division, which prior to its spin-off
        from Magna on August 29, 2003 was organized as an autonomous business
        unit within Magna. MID was formed as a result of four companies that
        amalgamated on August 29, 2003 under the Business Corporations Act
        (Ontario): 1305291 Ontario Inc., 1305272 Ontario Inc., 1276073
        Ontario Inc. and MID. These companies were wholly-owned subsidiaries
        of Magna and held Magna's real estate division and the controlling
        interest in Magna Entertainment Corp. ("MEC"). All of MID's Class A
        Subordinate Voting Shares and Class B Shares were distributed to the
        shareholders of Magna of record on August 29, 2003 on the basis of
        one of MID's Class A Subordinate Voting Shares for every two Class A
        Subordinate Voting Shares of Magna held, and one Class B Share for
        every two Class B Shares of Magna held. As a result of this spin-off
        transaction, MID acquired Magna's controlling interest in MEC.

        Real Estate Business

        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 and its automotive operating units. In addition,
        MID owns land for industrial development and owns and acquires land
        that it intends to develop for mixed-use and residential projects.

        Magna Entertainment Corp.

        MEC is 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. At December 31, 2009 and 2008,
        the Company owned approximately 54% of MEC's total equity,
        representing approximately 96% of the total votes attached to MEC's
        outstanding stock.

        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. On February 18, 2010, MID announced that
        MEC had filed the Joint Plan of Affiliated Debtors, the Official
        Committee of Unsecured Creditors (the "Creditors' Committee"), MID
        and MI Developments US Financing Inc. pursuant to Chapter 11 of the
        Code (as amended, the "Plan") and related Disclosure Statement (the
        "Disclosure Statement") in connection with the MEC Chapter 11
        proceedings which provides for, among other things, the assets of MEC
        remaining after certain asset sales to be transferred to MID,
        including among other assets, Santa Anita Park, Golden Gate Fields,
        Gulfstream Park (including MEC's interest in the Village at
        Gulfstream Park, a joint venture between MEC and Forest City
        Enterprises, Inc.), AmTote International, Inc. ("AmTote") and
        XpressBet, Inc. ("XpressBet"). On March 23, 2010, the Plan was
        amended to include the transfer of The Maryland Jockey Club ("MJC")
        to MID. The Plan is subject to the confirmation of the Court (note
        2).

        As a result of the MEC Chapter 11 filing, management estimated and
        reduced the carrying value of MID's equity investment in MEC to zero.
        Under the Plan, on the later to occur of the effective date of the
        Plan and the date the shares of MEC Lone Star, LP ("Lone Star LP") or
        substantially all the assets of Lone Star LP are sold, all MEC stock
        will be cancelled and the holders of MEC shares will not be entitled
        to nor will receive or retain any property or interest in property
        under the Plan, and the stock of the reorganized MEC will be issued
        and distributed to the administrator retained by the Debtors as of
        the effective date to administer the Plan.

        Basis of Presentation

        The unaudited interim consolidated financial statements include the
        accounts of MI Developments Inc. and its subsidiaries (collectively,
        "MID" or the "Company").

    (b) Consolidated Financial Statements

        The unaudited interim consolidated financial statements have been
        prepared in U.S. dollars following United States generally accepted
        accounting principles ("U.S. GAAP") as further discussed in note 1(f)
        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(c), necessary to
        present fairly the financial position at December 31, 2009 and 2008,
        and the results of operations and cash flows for the three-month
        period and year ended December 31, 2009 and 2008.

    (c) Deconsolidation of MEC

        As a result of the MEC Chapter 11 filing at the Petition Date as
        described in note 2 to the unaudited interim consolidated financial
        statements, 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.

        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 11)                               19,850
        Reclassification to income of the noncontrolling interest
         in MEC (note 12)                                             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)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        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, at the Petition Date, as to whether MEC shareholders,
        including MID, would receive any recovery at the conclusion of MEC's
        Chapter 11 process, 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 believed at the Petition
        Date that the claims of MID Islandi s.f. (the "MID Lender") were
        adequately secured and therefore had no reason to believe that the
        amount of the MEC loan facilities with the MID Lender was impaired
        upon deconsolidation of MEC, a reduction in the carrying values of
        the MEC loan facilities (note 3(a)) 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
        to MEC on the secured non-revolving debtor-in-possession financing
        facility (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 values 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 were accreted up to the
        face value of the MEC loan facilities over the estimated period of
        time before the loans were expected to be repaid, with such accretion
        being recognized in "interest and other income from MEC" on the
        Company's unaudited interim consolidated statement of income (loss).

    (d) 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 recognized the fact that, in the case of
        the Real Estate Business, the Company's Board of Directors (the
        "Board") 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 December 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 unaudited interim 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 3(a), are eliminated in
        the consolidated results of operations and financial position of the
        Company for periods prior to the Petition Date.

    (e) Seasonality

        MEC's racing business is seasonal in nature and racing revenues and
        operating results for any period are not 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)).

    (f) Accounting Changes

        Adoption of United States Generally Accepted Accounting Principles

        In April 2008, the Canadian Accounting Standards Board confirmed the
        transition from generally accepted accounting standards 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, 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.

        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 19 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 unaudited interim
        consolidated financial position at December 31, 2009 and 2008 and on
        the Company's unaudited interim consolidated statements of income
        (loss) for the three-month period and year ended December 31, 2009
        and 2008, refer to note 19 to these unaudited interim consolidated
        financial statements.

        Codification and Hierarchy of U.S. GAAP

        In June 2009, the Financial Accounting Standards Board (the "FASB")
        issued Accounting Standards Update No. 2009-01, "Generally Accepted
        Accounting Principles" ("ASU 2009-01"), which establishes the FASB
        Accounting Standards Codification (the "Codification") as the source
        of authoritative U.S. GAAP recognized by the FASB to be applied by
        non-governmental entities. ASU 2009-01 is effective for financial
        statements issued for interim and annual periods ending after
        September 15, 2009. The adoption of ASU 2009-01 did not have any
        impact on the Company's unaudited interim consolidated financial
        statements.

        Business Combinations

        In December 2007, the 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. Under the Codification, SFAS
        141 (R) is now codified under Topic 805, "Business Combinations".

        Noncontrolling Interests

        In December 2007, the 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 unaudited interim consolidated
        balance sheets and the net income (loss) attributable to the
        noncontrolling interest in MEC has been separately identified in the
        unaudited interim consolidated statements of income (loss). Under the
        Codification, SFAS 160 is now codified under Topic 810,
        "Consolidation".

        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
        December 31, 2009, except for the disclosures required by SFAS 161 in
        note 17 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. Under the Codification, SFAS 161
        is now codified under Topic 815, "Derivatives and Hedging".

        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 materially 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. Under
        the Codification, FSP FAS 142-3 is now codified under Topic 350,
        "Intangibles - Goodwill and Other".

        Subsequent Events

        In May 2009, the FASB issued Statement of Financial Accounting
        Standards No. 165, "Subsequent Events" ("SFAS 165"), which
        establishes general accounting standards of accounting for and
        disclosure of subsequent events that occur after the balance sheet
        date but before the financial statements are issued or available to
        be issued. SFAS 165 is effective for annual and interim periods
        ending after June 15, 2009 and is to be applied prospectively. The
        Company has evaluated subsequent events through the issuance of the
        unaudited interim consolidated financial statements on March 29,
        2010. Under the Codification, SFAS 165 is now codified under Topic
        855, "Subsequent Events".

        Fair Value of Liabilities

        In August 2009, the FASB issued Accounting Standards Update No. 2009-
        05, "Measuring Liabilities at Fair Value" ("ASU 2009-05"), which
        clarifies how to measure the fair value of liabilities in
        circumstances when a quoted price in active markets for the identical
        liability is not available. ASU 2009-05 is effective for the first
        reporting period (including interim periods) beginning after the
        issuance of this standard. The adoption by the Company of ASU 2009-05
        effective October 1, 2009 did not have any impact on the Company's
        unaudited interim consolidated financial statements.

    2.  PARTICIPATION IN MEC'S BANKRUPTCY AND ASSET SALES
    -------------------------------------------------------------------------

    (a) Chapter 11 Filing and Plan of Reorganization

        On the Petition Date, the Debtors filed voluntary petitions for
        reorganization under the Bankruptcy Code in 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.

        MEC filed for Chapter 11 protection in order to implement a
        comprehensive financial restructuring and conduct an orderly sales
        process for its assets. 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 the
        Debtors' 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 the Debtors' 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.

        As of March 29, 2010, the Company's equity investment in MEC
        consisted of 2,923,302 shares of its Class B Stock and 218,116 shares
        of its Class A Subordinate Voting Stock ("MEC Class A Stock"),
        representing approximately 96% of the total voting power of its
        outstanding stock and approximately 54% of the total equity interest
        in MEC. 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. As a result of the MEC Chapter 11 filing, the carrying value
        of MID's equity investment in MEC has been reduced to zero. Under the
        Plan, on the later to occur of the effective date of the Plan and the
        date the shares of Lone Star LP or substantially all the assets of
        Lone Star LP are sold, all MEC stock will be cancelled and the
        holders of MEC shares will not be entitled to nor receive or retain
        any property or interest in property under the Plan, and the stock of
        the reorganized MEC will be issued and distributed to the
        administrator retained by the Debtors as of the effective date to
        administer the Plan.

        On July 21, 2009, the MID Lender was named as a defendant in an
        action commenced by the Creditors' Committee in connection with the
        Debtors' Chapter 11 proceedings asserting, among other things,
        fraudulent transfer and recharacterization or equitable subordination
        of MID claims. On August 21, 2009, the Creditors' Committee filed an
        amended complaint to add MID and Mr. Frank Stronach, among others, as
        defendants, and to include additional claims for relief, specifically
        a breach of fiduciary duty claim against all defendants, a breach of
        fiduciary duty claim against MID and the MID Lender, and a claim for
        aiding and abetting a breach of fiduciary duty claim against all
        defendants. On August 24, 2009, MID and the MID Lender filed a motion
        to dismiss the claims against them by the Creditors' Committee. The
        Court denied the motion on September 22, 2009. On October 16, 2009,
        MID and the MID Lender filed their answer to the complaint, denying
        the allegations asserted against them.

        On January 11, 2010, the Company announced that MID, the MID Lender,
        MEC and the Creditor's Committee had agreed in principle to the terms
        of a global settlement and release in connection with the action.
        Under the terms of the settlement, as amended, in exchange
        for the dismissal of the action with prejudice and a full release of
        MID, the MID Lender, their affiliates, and all current and former
        officers and directors of MID and MEC and their respective
        affiliates, the unsecured creditors of MEC will receive $89.0 million
        in cash plus up to $1.5 million as a reimbursement for certain
        expenses incurred in connection with the action. Under the terms of
        the settlement, MID will receive certain assets of MEC, as described
        below. The settlement and release is intended to be implemented
        through the Plan.

        On February 18, 2010, MID announced that MEC had filed the Plan and
        Disclosure Statement in connection with the MEC Chapter 11
        proceedings which provides for, among other things, the assets of MEC
        remaining after certain asset sales to be transferred to MID,
        including among other assets, Santa Anita Park, Golden Gate Fields,
        Gulfstream Park (including MEC's interest in the Village at
        Gulfstream Park, a joint venture between MEC and Forest City
        Enterprises, Inc.), AmTote and XpressBet. On March 23, 2010, the Plan
        was amended to include the transfer of MJC to MID. The Plan is
        subject to confirmation of the Court.

        In satisfaction of MID's claims relating to the 2007 MEC Bridge Loan,
        the 2008 MEC Loan, and the MEC Project Financing Facilities (each
        discussed further in note 3(a)), the Plan provides that MID will
        receive, in addition to net assets of MEC to be transferred to MID,
        the following:

        (a)   upon the sale of Thistledown, MID will receive the first $20.0
              million of the proceeds from such sale and the unsecured
              creditors of MEC will receive any proceeds in excess of such
              amount; and

        (b)   upon the sale of Lone Star LP pursuant to an agreement
              previously filed in the Court, the unsecured creditors of MEC
              will receive the first $20.0 million of the proceeds, if any,
              from such sale and MID will receive any proceeds in excess of
              such amount.

        MID will also have the right to receive the net assets or proceeds
        from the sale of Portland Meadows, any proceeds from the litigation
        by MEC against PA Meadows, LLC currently pending in the Court and
        future payments under the Meadows Holdback Note and certain other
        remaining assets of MEC to be specified in the Plan.

        Under the Plan, rights of MID and MEC against MEC's directors' and
        officers' insurers will be preserved with regard to the settlement in
        order to seek appropriate compensation for the releases of all
        current and former officers and directors of MID and MEC and their
        respective affiliates. MID will be entitled to receive any such
        compensation from MEC's directors' and officers' insurers.

        MID, MEC and the Creditors' Committee, among others, have entered
        into a Support Agreement dated February 18, 2010 (the "Support
        Agreement") pursuant to which, among other things, MID and the
        Creditors' Committee agreed to support the Plan and MEC agreed to use
        its reasonable best efforts to seek approval of the Disclosure
        Statement in the Court on or prior to March 31, 2010 and obtain
        confirmation of the Plan by the Court on or prior to April 30, 2010.
        The Support Agreement may be terminated if, among other things, the
        Court denies confirmation of the Plan.

        The risks and uncertainties relating to the Plan and its
        implementation include, among others:

        -  there is no certainty whether the Plan and the Disclosure
           Statement will be confirmed by the Court and whether any
           modifications of the Plan will be required, or that such
           modification would not require the resolicitation of votes of
           claimholders;

        -  there is no certainty with regard to whether the conditions to the
           effective date of the Plan will be satisfied, and how long the
           process contemplated by the Plan and its implementation under the
           Chapter 11 proceedings will take;

        -  there is no certainty with regard to how long the process for the
           marketing and sale of the Debtors' assets that are to be sold to
           third parties pursuant to the Plan will take; and

        -  there is no certainty whether or at what prices such assets will
           be sold or whether any bids by any third party for such assets
           will materialize or be successful.

        If the conditions precedent to the effective date of the Plan have
        not occurred or been duly waived, then any approval by the Court of
        the Plan will be vacated, in which event no distributions would be
        made under the Plan, the Debtors and all holders of claims and equity
        interests (including MID) would be restored to the status quo ante as
        of the day immediately preceding the date that the Court approved the
        Plan and the Debtors' obligations with respect to claims and equity
        interests would remain unchanged.

        If the Debtors are not able to successfully implement the Plan under
        Chapter 11, it is possible that they will be required to shut down
        all or part of their business and liquidate their assets, which is
        likely to have an adverse impact on the MID Lender's interests in
        MEC.

        Although the Company has reduced the carrying value of the loans
        receivable from MEC by $90.8 million (note 3(a)), there can be no
        assurance that the Company will not further reduce the carrying value
        of loans receivable from MEC, either in connection with the
        implementation of the Plan under Chapter 11 or if the Debtors are not
        able to successfully implement the Plan.

        The acquisition of MJC by MID will be subject to forbearance terms
        that will require that the MJC racing operations be brought to a
        break-even status within three years and that the accumulated
        budgeted losses during that period will not exceed $15.0 million
        without approval from the Special Committee of the Board. In
        addition, any future gaming operations at MJC will not be developed
        other than in combination with an experienced and financially secure
        gaming co-venturer on terms acceptable to the Special Committee. With
        respect to the other non-real estate related MEC assets that will be
        transferred to MID as contemplated by the Plan, MID intends to later
        announce certain forbearance terms or funding limitations or other
        restrictions to be approved by the Special Committee with respect to
        any future investments by MID in, or loans to be made by MID in
        respect of, such assets.

        For a more detailed discussion of the Plan and the Disclosure
        Statement, please refer to the "Amended Joint Plan of the Affiliated
        Debtors, The Official Committee of Unsecured Creditors, MI
        Developments Inc. and MI Developments US Financing Inc., pursuant to
        Chapter 11 of the United States Bankruptcy Code" dated February 18,
        2010 and the "Disclosure Statement for the Amended Joint Plan of
        Affiliated Debtors, the Official Committee of Unsecured Creditors, MI
        Developments Inc. and MI Developments US Financing Inc. pursuant to
        Chapter 11 of the United States Bankruptcy Code". The complete Plan
        and Disclosure Statement are available on SEDAR at www.sedar.com.

        In connection with the Debtors' Chapter 11 filing, MID, through the
        MID Lender is providing MEC the DIP Loan. As amended and restated,
        the DIP Loan matures on April 30, 2010, and the maximum commitment
        amount thereunder is $71.4 million, of which $3.5 million is
        available to be borrowed by MEC as at March 29, 2010. Under the Plan,
        the amounts held in escrow by the Debtors reflecting the net proceeds
        from the sale of the assets of Remington Park will be used to pay and
        satisfy in full all outstanding DIP Loan obligations.

    (b) MEC Asset Sales

        The Debtors' Chapter 11 filing contemplated the Debtors selling all
        or substantially all their assets through an auction process and
        using the proceeds to satisfy claims against the Debtors, including
        indebtedness owed to the MID Lender. On the Petition Date, MID
        entered into an agreement with certain of the Debtors and certain
        non-Debtor affiliates of MEC to purchase such Debtors' and non-
        Debtors' relevant interests associated with certain specified assets
        (the "MID Stalking Horse Bid"), subject to Court approval. However,
        on April 20, 2009, in response to objections raised by a number of
        parties in the Debtors' Chapter 11 process and with the intent of
        expediting that process, MID and MEC terminated the MID Stalking
        Horse Bid.

        On May 11, 2009, the Court approved the bid procedures for the
        auction of the Debtors' interests associated with the following
        assets: Santa Anita Park (including the relevant Debtor's joint
        venture interest in The Shops at Santa Anita); Remington Park; Lone
        Star LP; Thistledown; Portland Meadows; assets related to
        StreuFex(TM) (an environmentally friendly horse bedding product);
        vacant lands located in Ocala, Florida; and vacant lands located in
        Dixon, California. On October 28, 2009, the Court approved revised
        bid procedures for the auction of Santa Anita Park and bid procedures
        for the auction of the following additional assets: Gulfstream Park
        (including the adjacent lands and the relevant Debtor's joint venture
        interest in The Village at Gulfstream Park(TM)); Golden Gate Fields;
        and MJC (including the Preakness(R)).

        Since the Petition Date, the Debtors have entered into and completed
        various asset sales, including assets sold pursuant to orders
        obtained by the Debtors from the Court in the Chapter 11 cases. The
        auction process has been suspended pending the confirmation of the
        Plan, which addresses the disposition of the Debtors' remaining
        assets.

        On July 31, 2009, the Court approved the Debtors' motion for
        authorization to sell for 6.5 million euros the assets of one of
        MEC's non-debtor Austrian subsidiaries, which assets include Magna
        Racino(TM) and surrounding lands, to an entity affiliated with Fair
        Enterprise Limited, a company that forms part of an estate planning
        vehicle for the family of Frank Stronach, certain members of which
        are trustees of the Stronach Trust, MID's controlling shareholder.
        The sale transaction was completed on October 1, 2009 and the net
        proceeds were used to repay existing indebtedness secured by the
        assets.

        On August 26, 2009, the Court approved the sale, by an Austrian non-
        debtor subsidiary of MEC to a third party, of the company that owns
        and operates the Austrian plant that manufactures StreuFex(TM), for
        certain contingent future payments. The sale was completed on
        September 1, 2009.

        On August 26, 2009, the Court approved the Debtors entering into a
        stalking horse bid to sell Remington Park to Global Gaming RP, LLC
        for $80.25 million, subject to higher and better offers. Following an
        auction, no additional offers were received, and on September 15,
        2009, the Court approved the sale of Remington Park to Global Gaming
        RP, LLC. The sale of Remington Park was completed on January 1, 2010.
        On January 4, 2010, the Debtor paid $27.8 million of the net sale
        proceeds to the MID Lender as partial repayment of the DIP Loan. The
        balance of the net sales proceeds of $50.6 million remain restricted
        in MEC and available for distribution to the MID Lender upon Court
        approval or confirmation of the Plan.

        Following an auction, on September 2, 2009, the Court approved the
        sale of the Ocala lands to a third party at a price of $8.1 million
        and the sale closed on September 17, 2009. On October 28, 2009, the
        Debtors paid the net sales proceeds of $7.6 million to the MID Lender
        as a partial repayment of the DIP Loan.

        Following an auction, on September 15, 2009, the Court approved the
        sale of Thistledown to a third party for $89.5 million, comprised of
        $42.0 million of cash to be paid on closing and up to $47.5 million
        of cash in contingent payments related to video lottery licensing in
        the State of Ohio. However, on September 21, 2009, the Supreme Court
        of the State of Ohio ruled that certain legislation relating to video
        lottery licensing at Ohio racetracks would require a State
        referendum, which is not expected to occur until November 2010. MEC
        has indicated that the purchaser has reserved its right to terminate
        the agreement as a result of the referendum requirement and that MEC
        and the purchaser are engaged in ongoing discussions about this
        transaction.

        Following an auction, on October 29, 2009, the Court approved the
        sale of Lone Star LP to a third party for $62.8 million, comprised of
        $47.7 million of cash and the assumption by the purchaser of the
        $15.1 million capital lease for the facility. MEC has indicated that
        it anticipates that the sale of Lone Star LP will be completed during
        the second quarter of 2010, subject to regulatory approval.

        Following an auction, on November 18, 2009, the Court approved the
        sale of the Dixon lands to Ocala Meadows Lands LLC, a company
        controlled by Frank Stronach, for approximately $3.1 million and the
        sale closed on November 30, 2009. On November 30, 2009, the Debtors
        paid the net sales proceeds of $3.0 million to the MID Lender as a
        partial repayment of the DIP Loan.

        Pursuant to the Plan filed with the Court, the assets of MEC
        remaining after certain asset sales will be transferred to MID,
        including among other assets, Santa Anita Park, Golden Gate Fields,
        Gulfstream Park (including MEC's interest in the Village at
        Gulfstream Park, a joint venture between MEC and Forest City
        Enterprises, Inc.), MJC, AmTote and XpressBet. The Plan is subject to
        the confirmation of the Court.


    3.  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)   The Real Estate Business' loans receivable from MEC, net
              consists of the following:

              As at December 31,                       2009(1)       2008
              ---------------------------------------------------------------

              Real Estate Business

              2007 MEC Bridge Loan                   $  139,166   $  125,346
              Gulfstream Park Project Financing         185,811      170,955
              Remington Park Project Financing           24,789       25,041
              2008 MEC Loan                              58,394       23,675
              DIP Loan                                   46,378            -
              ---------------------------------------------------------------
              Total loans outstanding from MEC          454,538      345,017
              Less: unamortized deferred arrangement
               fees                                      (1,334)      (4,118)
              ---------------------------------------------------------------
              Net investment in loans outstanding
               from MEC                                 453,204      340,899
              Less: valuation allowance                 (90,800)           -
              ---------------------------------------------------------------
              Loans receivable from MEC, net            362,404      340,899
              ---------------------------------------------------------------
              Eliminations                                    -     (340,899)
              ---------------------------------------------------------------
              Consolidated loans receivable from MEC,
               net                                   $  362,404   $        -
              ---------------------------------------------------------------
              ---------------------------------------------------------------
              (1) MEC's net assets were deconsolidated from the Company's
                  consolidated balance sheet as of the Petition Date of March
                  5, 2009 (note 1).

              A summary of the changes in the valuation allowance related to
              the loans receivable from MEC is as follows:

                              Three Months Ended             Year Ended
                                  December 31,              December 31,
                          ------------------------- -------------------------
                              2009         2008         2009         2008
              ---------------------------------------------------------------
              Balance,
               beginning
               of period   $        -   $        -   $        -   $        -
              Impairment
               provision       90,800            -       90,800            -
              ---------------------------------------------------------------
              Balance, end
               of period   $   90,800   $        -   $   90,800   $        -
              ---------------------------------------------------------------
              ---------------------------------------------------------------

              In connection with developing the Plan (note 2), the Company
              estimated the values and resulting recoveries of loans
              receivable from MEC, net of any related obligations, provided
              to the Company pursuant to the terms of the Plan. In preparing
              the estimated resulting recoveries, the Company: (i) reviewed
              certain historical financial information of MEC for recent
              years and interim periods; (ii) communicated with certain
              members of senior management of MEC to discuss the assets and
              operations; (iii) considered certain economic and industry
              information relevant to MEC's operating businesses; (iv)
              considered various indications of interest received by the
              Debtors in connection with the sales marketing efforts
              conducted by financial advisors of MEC during the Chapter 11
              proceeding for certain of MEC's assets; (v) reviewed the
              analyses of other financial advisors retained by MEC; (vi)
              relied on certain real estate appraisals prepared by its real
              estate advisors; and (vii) conducted it's own analysis as it
              deemed appropriate. The Company relied on the accuracy and
              completeness of financial and other information furnished to it
              by MEC with respect to the Chapter 11 proceedings.

              As a result of this analysis, the Company estimated that it
              would be unable to realize on all amounts due in accordance
              with the contractual terms of the MEC loans. Accordingly, for
              the three-month period and year ended December 31, 2009, the
              Real Estate Business recorded a $90.8 million impairment
              provision related to the loans receivable from MEC, which
              represents the excess of the carrying amounts of the loans
              receivable and the estimated recoverable value. Estimated
              recoverable value was determined based on the future cash flows
              from expected proceeds to be received from Court approved sales
              of MEC's assets, discounted at the loans' effective interest
              rate, and the fair value of the collateral based on third party
              appraisals or other valuation techniques, such as discounted
              cash flows, for those MEC assets to be transferred to the
              Company under the Plan or for which the Court has yet to
              approve for sale under the Plan, net of expected
              administrative, priority and allowed claims to be paid by the
              Company under the Plan.

              The estimates of values and recoveries involve complex
              considerations and judgement concerning various factors that
              could affect the value of MEC's assets. Moreover, the value of
              MEC's assets is subject to measurement uncertainty and
              contingencies that are difficult to predict and will fluctuate
              with changes in factors affecting the financial conditions and
              prospects of such assets. Because valuation recoveries and
              estimates are made at a specific point in time and are
              inherently subject to measurement uncertainty, such estimates
              could differ from actual results.

        (ii)  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 Thistledown land,
              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
              12.2% at December 31, 2009 and at 12.5% at 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 a reorganization
              proposal announced in November 2008 not proceeding, 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. On the Petition Date,
              the balance outstanding under the 2007 MEC Bridge Loan was
              $125.6 million. Interest on the 2007 MEC Bridge Loan accrues
              during the Debtors' 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 December 31, 2009, $139.2 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 $123.3 million, net of $2.0
              million of unamortized deferred financing costs.

              Under the Plan, the MID Lender will receive, in addition to
              certain assets of MEC to be transferred to MID, a portion of
              the proceeds from the sale of Thistledown and Lone Star LP in
              satisfaction of the MID Lender's liens and claims relating to
              the 2007 MEC Bridge Loan, and upon the effective date under
              the Plan, all liens and security under the 2007 MEC Bridge Loan
              will be released.

        (iii) MEC Project Financings

              The MID Lender has made available separate project financing
              facilities to 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. Prior to the completion of
              the sale of Remington Park on January 1, 2010 (note 2), the
              Remington Park project financing was 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 is secured
              principally by security over the lands forming part of the
              operations at Gulfstream Park and the Palm Meadows Training
              Center and over all other assets of Gulfstream Park and the
              Palm Meadows Training Center, excluding licences and permits
              (which cannot be subject to security under applicable
              legislation). Prior to the completion of the sale of Remington
              Park on January 1, 2010 (note 2), the Gulfstream Park project
              financing was also guaranteed by MEC's subsidiary that owned
              and operated Remington Park and was also secured by security
              over the leasehold interest forming part of the operations at
              Remington Park and over all other assets of Remington Park,
              excluding licenses and permits (which could not be subjected 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-month period
              ended December 31, 2009, no such payments were made (2008 -
              $1.7 million) given the MEC Chapter 11 proceedings and for the
              year ended December 31, 2009, $2.0 million (2008 - $3.4
              million) of such payments were made. During the year ended
              December 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 year ended December 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 a reorganization
              proposal announced in November 2008 not proceeding, 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 the Debtors' 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.

              On the Petition Date, the balances outstanding under the
              Gulfstream Park project financing facility and the Remington
              Park project financing facility were $170.8 million and $22.8
              million, respectively. During the Debtors' Chapter 11 process,
              monthly principal and interest payments, as well as the
              quarterly excess cash flow sweeps, under the MEC Project
              Financing Facilities are stayed and interest accrues rather
              than being paid currently in cash.

              At December 31, 2009, there were balances of $185.8 million and
              $24.8 million 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)).

              Under the Plan, the MID Lender will receive, in addition to
              certain assets of MEC to be transferred to MID, a portion of
              the proceeds from the sale of Thistledown and Lone Star LP in
              satisfaction of the MID Lender's liens and claims relating to
              the MEC Project Financing Facilities, and upon the effective
              date under the Plan, all liens and security under the MEC
              Project Financing Facilities will be released.

              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 December 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.

        (iv)  2008 MEC Loan

              On November 26, 2008, concurrent with the announcement of a
              reorganization proposal, 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 reorganization proposal announced in
                 November 2008 not proceeding, such maturity date was
                 accelerated to March 20, 2009. As a result of the Debtors'
                 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 was 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
                 the Debtors' 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.

              On the Petition Date, the balance outstanding under the 2008
              MEC Loan was $52.5 million. Interest and fees on the 2008 MEC
              Loan accrue during the Debtors' Chapter 11 process rather than
              being paid currently in cash. At December 31, 2009, $58.4
              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.

              Under the Plan, the MID Lender will receive, in addition to
              certain assets of MEC to be transferred to MID, a portion of
              the proceeds from the sale of Thistledown and Lone Star LP in
              satisfaction of the MID Lender's liens and claims relating to
              the 2008 MEC Loan, and upon the effective date under the Plan,
              all liens and security under the 2008 MEC Loan will be
              released.

        (v)   DIP Loan

              In connection with the Debtors' Chapter 11 filing (note 1(a)),
              the MID Lender originally agreed to provide a six-month secured
              non-revolving 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% (set at 12.2% at December 31,
              2009). 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 of
              third parties), 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 its
              assets through an auction process and use the proceeds from the
              asset sales to repay its creditors, including the MID Lender.

              At December 31, 2009, $45.0 million (net of $1.3 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.

              On October 28, 2009, the Court entered a final order
              authorizing amendments to the DIP Loan, which, among other
              things, increased the principal amount available thereunder by
              $26.0 million to up to $64.4 million and extends the maturity
              date to April 30, 2010. Under the amended DIP Loan, MEC must
              use its best efforts to market and sell all its assets,
              including seeking stalking horse bidders, conducting auctions
              and obtaining sales orders from the Court. If certain assets
              sale milestones are not satisfied, there will be an event of
              default and/or additional arrangement fees will be payable by
              MEC. The other fees and the interest rate payable by MEC to the
              MID Lender under the amended DIP Loan were unchanged. All
              advances under the amended DIP Loan must be made in accordance
              with an approved budget.

              Subsequent to the consolidated balance sheet date, an
              additional $11.0 million was drawn and $27.8 million was repaid
              under the DIP Loan. On March 3, 2010, the DIP loan was further
              amended and restated, such that an additional $7.0 million was
              approved by the Court and made available to MEC under the DIP
              Loan. Accordingly, the maximum commitment thereunder is $71.4
              million, of which $3.5 million is available to be borrowed by
              MEC as at March 29, 2010.

              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 December 31, 2009 and 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 consolidated statement of income (loss) for the year ended
        December 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
        Oberwaltersdorf, Austria (note 4(b)) for a purchase price of
        approximately 4.6 million euros ($6.0 million). The transaction was
        completed on April 28, 2009.

        In April 2008, MEC completed the sale to a subsidiary of Magna of 225
        acres of excess real estate located in Ebreichsdorf, Austria for
        proceeds of 20.0 million euros ($31.5 million), net of transaction
        costs. MEC recognized a gain in the year ended December 31, 2008 of
        11.6 million euros ($18.2 million), net of tax, which was recorded as
        a contribution of equity in contributed surplus.

    (d) Sale of MEC Real Estate to Joint Venture

        On April 2, 2008, one of MEC's European wholly-owned subsidiaries,
        Fontana Beteiligungs GmbH ("Fontana"), entered into an agreement to
        sell real estate with a carrying value of 0.2 million euros ($0.3
        million) located in Oberwaltersdorf, Austria to Fontana Immobilien
        GmbH, an entity in which Fontana had a 50% joint venture equity
        interest, for 0.8 million euros ($1.2 million). The purchase price
        was originally payable in instalments according to the sale of
        apartment units by the joint venture and, in any event, was due no
        later than April 2, 2009. On August 1, 2008, Fontana sold its 50%
        joint venture equity interest in Fontana Immobilien GmbH to a related
        party. The sale price included nominal cash consideration equal to
        Fontana's initial capital contribution and a future profit
        participation in Fontana Immobilien GmbH. Fontana and Fontana
        Immobilien GmbH also agreed to amend the real estate sale agreement
        such that payment of the purchase price to Fontana was accelerated
        to, and paid on, August 7, 2008, resulting in a gain in the year
        ended December 31, 2008 of 0.6 million euros ($0.9 million), which is
        included in MEC's "other gains (losses), net" in the Company's
        consolidated statement of income (loss).

    4.  DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE OF MEC
    -------------------------------------------------------------------------

    (a) 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. For
        additional details on the sales process for Thistledown under the
        Plan, and the sale of Remington Park, refer to note 2.

        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. For additional details on the sales process for Magna
        Racino(TM), refer to note 2.

        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 related to discontinued operations for
        the three-month period and year ended December 31, 2009 and 2008, and
        MEC's assets and liabilities related to discontinued operations as at
        December 31, 2009 and 2008, are shown in the following tables:

                             Three Months Ended            Year Ended
                                December 31,              December 31,
                          ------------------------- -------------------------
                              2009(1)       2008        2009(1)       2008
        ---------------------------------------------------------------------
        Revenues           $        -   $   35,057   $   21,226   $  134,085
        Costs and expenses          -       34,336       19,937      131,464
        ---------------------------------------------------------------------
                                    -          721        1,289        2,621
        Depreciation and
         amortization               -            -            -          605
        Interest expense,
         net                        -          833          505        3,463
        Write-down of
         long-lived assets
         (note 14)                  -       16,001            -       48,295
        ---------------------------------------------------------------------
        Income (loss)
         before undernoted          -      (16,113)         784      (49,742)
        Gain on disposition         -            -            -          536
        ---------------------------------------------------------------------
        Income (loss) before
         income taxes               -      (16,113)         784      (49,206)
        Income tax recovery         -          461            -       (9,211)
        ---------------------------------------------------------------------
        MEC's income (loss)
         from discontinued
         operations                 -      (16,574)         784      (39,995)
        Eliminations
         (note 3(a))                -          678          443        2,914
        ---------------------------------------------------------------------
        Consolidated income
         (loss) from MEC's
         discontinued
         operations                 -      (15,896)       1,227      (37,081)
        Add (deduct) loss
         (income)
         attributable
         to noncontrolling
         interest                   -        7,677         (363)      18,475
        ---------------------------------------------------------------------
        Consolidated income
         (loss) from MEC's
         discontinued
         operations
         attributable to
         MID               $        -   $   (8,219)  $      864   $  (18,606)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        (1) The results for the three-month period ended December 31, 2009
            do not include the results of MEC's discontinued operations,
            while the results for the year ended December 31, 2009 include
            the results of MEC's discontinued operations up to the Petition
            Date of March 5, 2009 (note 1).


                                                                  (restated -
                                                                   note 1(f))
        As at December 31,                             2009(1)       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 3(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 3(a))                              -      (24,017)
        ---------------------------------------------------------------------
        Consolidated liabilities related to
         discontinued operations                     $        -   $   51,943
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
       (1) MEC's net assets were deconsolidated from the Company's
           consolidated balance sheet as of the Petition Date of March 5,
           2009 (note 1).

    (b) Assets Held for Sale

        (i)   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. For additional details on the sales process for the
              Dixon and Ocala properties, refer to note 2.

        (ii)  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.

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

                                                                  (restated -
                                                                   note 1(f))
              As at December 31,                       2009(1)       2008
              ---------------------------------------------------------------
              ASSETS

              Current assets:
                Real estate properties, net
                  Dixon, California (note 14)        $        -   $    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 of
                  March 5, 2009 (note 1).

    5.  REAL ESTATE PROPERTIES
    -------------------------------------------------------------------------

    (a) Real estate properties consist of:

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

        Revenue-producing properties
          Land                                       $  219,962   $  207,454
          Buildings, parking lots and roadways
           - cost                                     1,418,989    1,334,858
          Buildings, parking lots and roadways
           - accumulated depreciation                  (418,922)    (355,360)
        ---------------------------------------------------------------------
                                                      1,220,029    1,186,952
        ---------------------------------------------------------------------
        Development properties
          Land and improvements                         169,816      209,218
          Properties under development                        -        1,163
        ---------------------------------------------------------------------
                                                        169,816      210,381
        ---------------------------------------------------------------------
        Properties held for sale                              -          486
        ---------------------------------------------------------------------
                                                      1,389,845    1,397,819
        ---------------------------------------------------------------------
        MEC(1)

        Revenue-producing racetrack and gaming
         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 3(a))                              -      (55,337)
        ---------------------------------------------------------------------
        Consolidated                                 $1,389,845   $2,024,183
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        (1) MEC's net assets were deconsolidated from the Company's
            consolidated balance sheet as of the Petition Date of March 5,
            2009 (note 1).

    (b) 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 3(a)) that had been capitalized to MEC's real estate
        properties.

    (c) As a result of further weakening in the commercial office real estate
        market in Michigan, in the fourth quarter of 2009, the Real Estate
        Business recorded a $4.5 million write-down of a revenue-producing
        commercial office building. The write-down represents the excess of
        the carrying value of the asset over the estimated fair value. Fair
        value was determined based on the present value of the estimated
        future cash flows from the leased property. The write-down reduced
        the cost of the building and was included in "write-down of long-
        lived and intangible assets" on the consolidated statements of income
        (loss) for the three-month period and year ended December 31, 2009.

    (d) During the year ended December 31, 2008, one of the Real Estate
        Business' properties consisting of land and a vacant building was
        written down by $0.5 million, from $1.0 million to $0.5 million, to
        reflect its expected net realizable value as a result of the Real
        Estate Business reclassifying the property from "revenue-producing
        properties" to "properties held for sale". On August 14, 2009, the
        Company completed the sale of this property for cash consideration of
        $0.8 million and realized a gain on disposal of $0.2 million for the
        year ended December 31, 2009.


    6.  OTHER ASSETS
    -------------------------------------------------------------------------

    Other assets consist of:
                                                                  (restated -
                                                                   note 1(f))
    As at December 31,                                  2009         2008
    -------------------------------------------------------------------------
    Real Estate Business

    Long-term receivables                            $      554   $      558
    Deferred leasing costs                                1,511          540
    Other                                                     -           12
    -------------------------------------------------------------------------
                                                          2,065        1,110
    -------------------------------------------------------------------------
    MEC(1)

    Equity investments                                        -       28,717
    Deposits                                                  -        2,500
    Deferred development costs                                -        1,970
    Goodwill                                                  -          487
    Other                                                     -          416
    -------------------------------------------------------------------------
                                                              -       34,090
    -------------------------------------------------------------------------
    Consolidated                                     $    2,065   $   35,200
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    7. BANK INDEBTEDNESS
    -------------------------------------------------------------------------

    Real Estate Business

    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"). During the year ended December 31, 2009, the maturity date of
    the MID Credit Facility was extended from January 21, 2009 to January 21,
    2010. Subsequent to year end, the maturity date was further extended to
    December 21, 2010, 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 3.50%, or the U.S.
    base or Canadian prime rate, in each case plus 2.5%. At December 31, 2009
    and 2008, the Company had no borrowings under the MID Credit Facility,
    but had issued letters of credit totalling $0.2 million (December 31,
    2008 - $0.2 million).

    MEC(1)

    MEC's bank indebtedness consists of the following short-term bank loans:

    As at December 31,                                  2009         2008
    -------------------------------------------------------------------------
    MEC Credit Facility (a)                          $        -   $   36,491
    SAC Credit Facility (b)                                   -        2,969
    -------------------------------------------------------------------------
                                                     $        -   $   39,460
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) MEC's net assets were deconsolidated from the Company's consolidated
        balance sheet as of the Petition Date of March 5, 2009 (note 1).

    (a) During the year ended December 31, 2008, the maturity date of the MEC
        Credit Facility was extended from March 31, 2008 to March 16, 2009.
        However, as a result of a reorganization proposal announced in
        November 2008 not proceeding, such maturity date was accelerated to
        the Petition Date. Borrowings under the MEC Credit Facility were
        available by way of U.S. dollar loans and letters of credit, each
        bearing interest at the U.S. base rate plus 5.0% or LIBOR plus 6.0%.
        Loans under the MEC Credit Facility are collateralized by a first
        charge on the assets of Golden Gate Fields and a second charge on the
        assets of Santa Anita Park, and are guaranteed by certain of MEC's
        subsidiaries. At December 31, 2008, MEC had borrowed $36.5 million
        under the MEC Credit Facility and had issued letters of credit
        totalling $3.4 million, such that $0.1 million was unused and
        available. The weighted average interest rate on the borrowings
        outstanding under the MEC Credit Facility at December 31, 2008 was
        7.2%. At December 31, 2008, MEC was not in compliance with a
        financial covenant contained in the MEC Credit Facility agreement. As
        a result of MEC's Chapter 11 filing on March 5, 2009 (note 1(a)), no
        waiver was obtained for this violation nor was the MEC Credit
        Facility repaid when due.

    (b) MEC's wholly-owned subsidiary, The Santa Anita Companies, Inc.
        ("SAC"), which owns and operates Santa Anita Park, has a $7.5 million
        revolving loan under its existing credit facility with a U.S.
        financial institution, which is scheduled to mature on October 31,
        2012 (the "SAC Credit Facility"). The SAC Credit Facility must be
        fully repaid for a period of 60 consecutive days during each year.
        The SAC Credit Facility is guaranteed by MEC's wholly-owned
        subsidiary, LATC, and is collateralized by a first deed of trust on
        Santa Anita Park and the surrounding real property, an assignment of
        the lease between LATC and SAC, and a pledge of all of the
        outstanding capital stock of LATC and SAC. Borrowings under the SAC
        Credit Facility bear interest at the U.S. prime rate. The weighted
        average interest rate on the borrowings outstanding under the SAC
        Credit Facility at December 31, 2008 was 3.3%. At December 31, 2008,
        MEC was not in compliance with a financial covenant contained in the
        SAC Credit Facility agreement. As a result of MEC's Chapter 11 filing
        on March 5, 2009 (note 1(a)), no waiver was obtained for this
        violation.


    8.  ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
    -------------------------------------------------------------------------

    Accounts payable and accrued liabilities consist of:

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

    Accounts payable                                 $    1,263   $    3,094
    Accrued salaries and wages                            2,565          902
    Accrued interest payable                                371          356
    Other accrued liabilities                            16,977        8,059
    -------------------------------------------------------------------------
                                                         21,176       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                                     $   21,176   $  121,471
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    9.  OTHER LONG-TERM LIABILITIES
    -------------------------------------------------------------------------

    Other long-term liabilities consist of:

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

    Finance obligation                               $        -   $    9,039
    Fair value of interest rate swaps                         -        3,162
    Deferred revenue                                          -        2,772
    Postretirement and pension liabilities                    -        3,302
    Other                                                     -          698
    -------------------------------------------------------------------------
                                                     $        -   $   18,973
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) MEC's net assets were deconsolidated from the Company's consolidated
        balance sheet as of the Petition Date of March 5, 2009 (note 1).


    10. CONTRIBUTED SURPLUS
    -------------------------------------------------------------------------

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

                             Three Months Ended            Year Ended
                                December 31,              December 31,
                          ------------------------- -------------------------
                                        (restated -               (restated -
                                         note 1(f))                note 1(f))
                               2009         2008         2009         2008
    -------------------------------------------------------------------------
    Contributed surplus,
     beginning of period   $   57,128   $   56,974   $   57,062   $   46,608
    Stock-based
     compensation               1,447           88        1,513          662
    Gain on related party
     asset sale                     -            -            -        9,792
    -------------------------------------------------------------------------
    Contributed surplus,
     end of period         $   58,575   $   57,062   $   58,575   $   57,062
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    11. ACCUMULATED OTHER COMPREHENSIVE INCOME
    -------------------------------------------------------------------------

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

                             Three Months Ended            Year Ended
                                December 31,              December 31,
                          ------------------------- -------------------------
                                        (restated -               (restated -
                                         note 1(f))                note 1(f))
                               2009         2008         2009         2008
    -------------------------------------------------------------------------
    Accumulated other
     comprehensive income,
     beginning of period   $  191,692   $  231,529   $  161,827   $  251,267
    Change in fair value
     of interest rate swaps,
     net of taxes and
     noncontrolling interest        -         (587)          92         (582)
    Foreign currency
     translation adjustment,
     net of noncontrolling
     interest(i)               (1,308)     (68,514)      48,315      (88,257)
    Recognition of foreign
     currency translation
     loss in net income
     (loss)(ii)                 7,798            -        7,798            -
    Change in net
     unrecognized pension
     losses, net of
     noncontrolling
     interest                       -         (601)           -         (601)
    Reclassification to
     income upon
     deconsolidation of
     MEC (note 1(c))                -            -      (19,850)           -
    -------------------------------------------------------------------------
    Accumulated other
     comprehensive income,
     end of period(iii)    $  198,182   $  161,827   $  198,182   $  161,827
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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-month period ended December 31, 2009, the Company reported
          currency translation losses due to the weakening of the euro
          against the U.S. dollar and during the year ended December 31,
          2009, the Company reported currency translation gains due to the
          strengthening of the euro and Canadian dollar against the U.S.
          dollar. During the three-month period and year ended December 31,
          2008, the Company reported currency translation losses due to a
          weakening of the euro and Canadian dollar against the U.S. dollar.

    (ii)  Included in the Real Estate Business' "other gains (losses), net"
          for the three-month period and year ended December 31, 2009 is a
          $7.8 million foreign currency translation loss realized from a
          capital transaction that gave rise to a reduction in the net
          investment in a foreign operation, which is considered a
          substantially complete liquidation of that foreign operation.

    (iii) Accumulated other comprehensive income consists of:

                                                                  (restated -
                                                                   note 1(f))
          As at December 31,                            2009         2008
          -------------------------------------------------------------------
          Foreign currency translation adjustment,
           net of noncontrolling interest            $  198,182   $  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)
          -------------------------------------------------------------------
                                                     $  198,182   $  161,827
          -------------------------------------------------------------------
          -------------------------------------------------------------------


    12. NONCONTROLLING INTEREST
    -------------------------------------------------------------------------

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

                             Three Months Ended            Year Ended
                                December 31,              December 31,
                          ------------------------- -------------------------
                                        (restated -               (restated -
                                         note 1(f))                note 1(f))
                               2009         2008         2009         2008
    -------------------------------------------------------------------------
    Noncontrolling interest,
     beginning of period   $        -   $  100,930   $   24,182   $  142,037
    MEC's stock-based
     compensation                   -           36           23          151
    Disgorgement payment
     received from
     noncontrolling
     interest(i)                    -            -          420            -
    Comprehensive income
     (loss):
      Net loss attributable
       to the noncontrolling
       interest                     -      (74,981)      (6,308)    (125,828)
      Other comprehensive
       income (loss)
       attributable to the
       noncontrolling interest
        Change in fair value
         of interest rate
         swaps, net of taxes        -         (507)          79         (500)
        Foreign currency
         translation
         adjustment                 -         (763)         (74)        (146)
        Change in net
         unrecognized
         actuarial pension
         losses                     -         (533)           -         (533)
    Gain on related party
     asset sale                     -            -            -        8,435
    MEC's issuance of shares        -            -            -          595
    MEC's stock consolidation       -            -            -          (29)
    Reclassification to
     income upon
     deconsolidation of MEC
     (note 1(c))                    -            -      (18,322)           -
    -------------------------------------------------------------------------
    Noncontrolling interest,
     end of period         $        -   $   24,182   $        -   $   24,182
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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.


    13. STOCK-BASED COMPENSATION
    -------------------------------------------------------------------------

    (a) 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 December 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. Except for the
        options granted on November 10, 2009, as described below, 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. On November 12, 2009, MID granted to the outside directors and
        to management an aggregate of 455,000 stock options to acquire MID's
        Class A Subordinate Voting Shares. The options granted vest 50% on
        the date of grant, 25% on the first anniversary of the date of grant
        and 25% on the second 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
        Expired                     -            -      (10,000)       41.17
        ---------------------------------------------------------------------
        Stock options
         outstanding,
         June 30              486,544        34.76      506,544        34.97
        Cancelled or
         forfeited            (60,000)       32.15       (6,000)       41.17
        ---------------------------------------------------------------------
        Stock options
         outstanding,
         September 30         426,544        35.12      500,544        34.89
        Granted               455,000        14.54            -            -
        Cancelled or
         forfeited                  -            -       (6,000)       40.49
        ---------------------------------------------------------------------
        Stock options
         outstanding,
         December 31          881,544        24.50      494,544        34.83
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Stock options
         exercisable,
         December 31          624,044        27.47      407,544        34.47
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        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.

        The weighted average assumptions used in determining the fair value
        of the MID stock options granted are shown in the table below:

                             Three Months Ended            Year Ended
                                December 31,              December 31,
                          ------------------------- -------------------------
                               2009         2008         2009         2008
        ---------------------------------------------------------------------
        Risk-free interest
         rate                    1.4%            -         1.4%            -
        Expected dividend
         yield                   4.3%            -         4.3%            -
        Expected volatility
         of MID's Class A
         Subordinate Voting
         Shares                 56.2%            -        56.2%            -
        Weighted average
         expected life (years)    4.0            -          4.0            -
        Weighted average
         fair value per
         option granted         $3.65            -        $3.65            -
        ---------------------------------------------------------------------

        At December 31, 2009, the total unrecognized compensation expense
        related to the outstanding options is $0.3 million, which is expected
        to be recognized as an expense over a period of 1.9 years.

        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
        Granted                                          21,540        5,579
        Redeemed                                        (25,536)           -
        ---------------------------------------------------------------------
        DSUs outstanding, June 30                        98,522       53,043
        Granted                                          15,118        8,194
        ---------------------------------------------------------------------
        DSUs outstanding, September 30                  113,640       61,237
        Granted                                          10,999       19,711
        Redeemed                                         (8,700)           -
        ---------------------------------------------------------------------
        DSUs outstanding, December 31                   115,939       80,948
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        During the three-month period and year ended December 31, 2009, the
        Real Estate Business recognized stock-based compensation expense of
        $1.4 million (2008 - $0.5 million recovery) and $2.7 million (2008 -
        $0.1 million), respectively, which includes an expense of
        $22 thousand (2008 - $0.6 million recovery) and $1.2 million (2008 -
        $0.6 million recovery), respectively, pertaining to DSUs.

    (b) During the year ended December 31, 2008, MEC issued 21,687 shares of
        MEC Class A Stock to MEC's directors in payment of services rendered.
        As a result, the Company recognized a dilution loss of $0.4 million
        in the year ended December 31, 2008, which is included in MEC's
        "other gains (losses), net".


    14. WRITE-DOWN OF MEC'S LONG-LIVED AND INTANGIBLE 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            Year Ended
                                December 31,              December 31,
                          ------------------------- -------------------------
                               2009         2008         2009         2008
    -------------------------------------------------------------------------
    Continuing Operations
     and Assets Held For
     Sale (note 4)
      The Maryland Jockey
       Club(i)             $        -   $   49,795   $        -   $   49,795
      Lone Star Park(i)             -       34,357            -       34,357
      Golden Gate Fields(i)         -       30,475            -       30,475
      The Meadows(i)                -        1,059            -        1,059
      Dixon, California(ii)         -        5,092            -       10,092
    -------------------------------------------------------------------------
                                    -      120,778            -      125,778
    -------------------------------------------------------------------------
    Discontinued Operations
     (note 4)
      Magna Racino(TM)(iii)         -       11,868            -       41,063
      Portland Meadows(iv)          -        4,133            -        7,232
    -------------------------------------------------------------------------
                                    -       16,001            -       48,295
    -------------------------------------------------------------------------
                           $        -   $  136,779   $        -   $  174,073
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (i)   During the year ended December 31, 2008, MJC, Lone Star Park,
          Golden Gate Fields and The Meadows experienced lower average daily
          attendance and decreased wagering activity compared to previous
          years. In addition, the 2009 business plans for these operations
          reflected reductions in estimated future cash flows based on lower
          expectations for growth and profitability resulting primarily from
          the significant downturn in the economy. Based on these impairment
          indicators, the long-lived and intangible assets of MJC, Lone Star
          Park, Golden Gate Fields and The Meadows were tested for
          recoverability. An expected present value approach of estimated
          future cash flows was used to determine the fair value of the
          long-lived and intangible assets. Based on this analysis,
          impairment charges were required in the three-month period and year
          ended December 31, 2008 relating to (a) the entire amount of
          $47.8 million of MJC's racing licence, (b) the entire amount of
          $34.4 million of Lone Star Park's racing licence, (c) the entire
          amount of $27.7 million of Golden Gate Fields' racing licence and
          (d) $1.1 million of fixed assets used in the operation of The
          Meadows. In addition, impairment charges of $2.0 million at MJC and
          $2.8 million at Golden Gate Fields were required during the
          three-month period and year ended December 31, 2008, relating to
          development projects that were determined unlikely to have any
          future benefit.

    (ii)  As a result of significant weakness in the Northern California real
          estate market and the U.S. financial market, MEC recorded
          impairment charges of $5.1 million and $10.1 million in the
          three-month period and year ended December 31, 2008, respectively,
          related to the Dixon, California real estate property, which
          represented the excess of the carrying value of the asset over the
          estimated net realizable value.

    (iii) As a result of the classification of Magna Racino(TM) as
          discontinued operations in the year ended December 31, 2008, an
          evaluation of whether the carrying value of the assets exceeds
          their estimated value is made at each reporting period. As a
          result, MEC recorded impairment charges, included in discontinued
          operations, of $11.9 million and $41.1 million in the three-month
          period and year ended December 31, 2008, respectively, which
          represented the excess of the carrying value of the assets over the
          estimated net realizable value.

    (iv)  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
          in the year ended December 31, 2008 related to the instant racing
          terminals and build-out of the instant racing facility. In
          addition, as a result of the classification of Portland Meadows as
          discontinued operations (note 4(a)), an evaluation of whether the
          carrying value of the assets exceeds their estimated net realizable
          value is made at each reporting period. As a result, MEC recorded a
          further impairment charge of $4.1 million during the three-month
          period and year ended December 31, 2008 to reflect a decline in the
          estimated net realizable value of the assets. These aggregate
          impairment charges of $7.2 million are included in discontinued
          operations.


    15. EARNINGS (LOSS) PER SHARE
    -------------------------------------------------------------------------

    Diluted earnings (loss) per share for the three-month period and year
    ended December 31, 2009 and 2008 are computed as follows:

                             Three Months Ended            Year Ended
                                December 31,              December 31,
                          ------------------------- -------------------------
                                        (restated -               (restated -
                                         note 1(f))                note 1(f))
                               2009         2008         2009         2008
    -------------------------------------------------------------------------
    Income (loss) from
     continuing operations $  (72,800)  $  (46,244)  $  (43,153)  $    6,334
    Income (loss) from
     discontinued operations        -       (8,219)         864      (18,606)
    -------------------------------------------------------------------------
    Net income (loss)
     attributable to MID   $  (72,800)  $  (54,463)  $  (42,289)  $  (12,272)
    -------------------------------------------------------------------------
    Weighted average number
     of Class A Subordinate
     Voting and Class B
     Shares outstanding
     during the period
     (in thousands)            46,708       46,708       46,708       46,708
    -------------------------------------------------------------------------
    Diluted earnings (loss)
     per Class A Subordinate
     Voting or Class B Share
      - from continuing
         operations        $    (1.56)  $    (0.99)  $    (0.93)  $     0.14
      - from discontinued
         operations                 -        (0.18)        0.02        (0.40)
    -------------------------------------------------------------------------
                           $    (1.56)  $    (1.17)  $    (0.91)  $    (0.26)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The computation of diluted earnings (loss) per share for the three-month
    period and year ended December 31, 2009 excludes the effect of the
    potential exercise of 426,544 (2008 - 500,544) and 494,544
    (2008 - 516,544) options, respectively, to acquire Class A Subordinate
    Voting Shares of the Company because the effect would be anti-dilutive.


    16. DETAILS OF CASH FROM OPERATING ACTIVITIES
    -------------------------------------------------------------------------

    (a) Items not involving current cash flows are shown in the following
        table:

                             Three Months Ended            Year Ended
                                December 31,              December 31,
                          ------------------------- -------------------------
                                        (restated -               (restated -
                                         note 1(f))                note 1(f))
                               2009         2008         2009         2008
        ---------------------------------------------------------------------
        Real Estate Business
        Straight-line rent
         adjustment        $      207   $      113   $      760   $       75
        Interest and other
         income from MEC      (12,172)      (4,211)     (43,419)      (9,034)
        Stock-based
         compensation
         expense                1,469         (489)       2,734          112
        Depreciation and
         amortization          10,870       10,060       41,349       43,419
        Write-down of
         long-lived assets      4,498            -        4,498          450
        Impairment provision
         relating to loans
         receivable from MEC   90,800            -       90,800            -
        Deconsolidation
         adjustment to the
         carrying values of
         amounts due from MEC       -            -          504            -
        Loss (gain) on
         disposal of real
         estate                    57            -         (206)           -
        Other losses (gains),
         net                    7,798            -        7,798            -
        Future income taxes   (10,369)        (242)     (11,645)       1,375
        Other                      84           72          310          373
        ---------------------------------------------------------------------
                               93,242        5,303       93,483       36,770
        ---------------------------------------------------------------------
        MEC(1)
        Stock-based
         compensation
         expense                    -           36           23          303
        Depreciation and
         amortization               -       12,034        7,014       45,668
        Amortization of debt
         issuance costs             -        4,767        3,346       12,813
        Equity loss (income)        -          433          (65)       3,042
        Write-down of
         long-lived and
         intangible assets          -      120,778            -      125,778
        Deconsolidation
         adjustment to the
         carrying value of
         the investment in MEC      -            -       46,173            -
        Other losses (gains),
         net                        -            -            -       (1,589)
        Future income taxes         -      (34,719)           -      (33,198)
        Other                       -        1,849           20        2,441
        ---------------------------------------------------------------------
                                    -      105,178       56,511      155,258
        ---------------------------------------------------------------------
        Eliminations
         (note 3(a))                -         (328)        (339)      (2,863)
        ---------------------------------------------------------------------
        Consolidated       $   93,242   $  110,153   $  149,655   $  189,165
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    (b) Changes in non-cash balances are shown in the following table:

                             Three Months Ended            Year Ended
                                December 31,              December 31,
                          ------------------------- -------------------------
                                        (restated -               (restated -
                                         note 1(f))                note 1(f))
                               2009         2008         2009         2008
        ---------------------------------------------------------------------
        Real Estate Business
        Accounts
         receivable        $    1,817   $      785   $      571   $    4,954
        Loans receivable
         from MEC, net            (51)         671         (771)          17
        Prepaid expenses
         and other              1,137           43           (5)         172
        Accounts payable and
         accrued liabilities    2,128       (5,289)       7,392          988
        Income taxes            2,305        2,788        2,981       (5,870)
        Deferred revenue        2,107        2,178        1,542        1,663
        ---------------------------------------------------------------------
                                9,443        1,176       11,710        1,924
        ---------------------------------------------------------------------
        MEC(1)
        Restricted cash             -       (5,951)         189        8,955
        Accounts receivable         -       (4,660)     (18,624)       4,275
        Prepaid expenses
         and other                  -          951       (2,076)      (3,734)
        Accounts payable and
         accrued liabilities        -       16,102       11,289      (12,940)
        Income taxes                -         (265)          48        2,140
        Loans payable to MID,
         net                        -         (671)         653          (17)
        Deferred revenue            -        3,231          217        1,775
        ---------------------------------------------------------------------
                                    -        8,737       (8,304)         454
        ---------------------------------------------------------------------
        Eliminations
         (note 3(a))                -         (131)         (43)         250
        ---------------------------------------------------------------------
        Consolidated       $    9,443   $    9,782   $    3,363   $    2,628
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
       (1) The results for the three-month period ended December 31, 2009
           do not include the results of MEC, while the results for the year
           ended December 31, 2009 include the results of MEC up to the
           Petition Date of March 5, 2009 (note 1).


    17. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE INFORMATION
    -------------------------------------------------------------------------

    (a) Derivative Financial Instruments

        The Company periodically purchases foreign exchange forward contracts
        to hedge specific anticipated foreign currency transactions. At
        December 31, 2009, the Company held foreign exchange forward
        contracts to purchase Cdn. $0.6 million and sell $0.5 million. These
        contracts matured on January 4, 2010 and 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 to a Canadian dollar denominated payable to the Real Estate
        Business' corporate operations having the Canadian dollar as its
        functional currency. Based on foreign exchange rates at December 31,
        2009, the fair value of these foreign exchange forward contracts at
        December 31, 2009 was a liability of approximately $10 thousand,
        which is included in the Real Estate Business' "accounts payable and
        accrued liabilities" on the Company's consolidated balance sheet.

        At December 31, 2008, the Company had one foreign exchange forward
        contract to purchase 4.2 million euros and sell $5.6 million. The
        contract matured on March 16, 2009 and was 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. Based on foreign exchange rates at
        December 31, 2008, the fair value of the foreign exchange forward
        contract at December 31, 2008 was an asset of approximately
        $0.3 million, which is included in the Real Estate Business' "prepaid
        expenses and other" on the Company's consolidated balance sheet.

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

        As at December 2009
        ---------------------------------------------------------------------
        Derivatives not designated as hedging
         instruments
        Foreign exchange forward contracts
         (included in "accounts payable and
         accrued liabilities")                                    $       10
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------


                                                     Location       Amount
                                                     of Loss       of Loss
                                                    Recognized    Recognized
                                                   in Income on  in Income on
        Three Months Ended December 31, 2009        Derivatives   Derivative
        ---------------------------------------------------------------------
        Derivatives not designated as hedging
         instruments
        Foreign exchange forward contracts     Foreign Exchange   $      (10)
                                                Gains (Losses)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------


                                                     Location       Amount
                                                     of Loss       of Loss
                                                    Recognized    Recognized
                                                   in Income on  in Income on
        Year Ended December 31, 2009                Derivatives   Derivative
        ---------------------------------------------------------------------
        Derivatives not designated as hedging
         instruments
        Foreign exchange forward contracts     Foreign Exchange   $     (526)
                                                Gains (Losses)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    (b) Fair Value Measurements

        Fair value measurements are based on inputs of observable and
        unobservable market data that a market participant would use in
        pricing an asset or liability. Codification Topic 820, "Fair Value
        Measurements and Disclosures" establishes a fair value hierarchy
        which is summarized below:

        Level 1: Fair value determined based on quoted prices in active
                 markets for identical assets or liabilities.

        Level 2: Fair value determined using significant observable inputs,
                 generally either quoted prices in active markets for similar
                 assets or liabilities or quoted prices in markets that are
                 not active.

        Level 3: Fair value determined using significant unobservable inputs,
                 such as pricing models, discounted cash flows, or similar
                 techniques.

        The following table represents information related to the Company's
        assets and liabilities measured at fair value on a recurring and
        non-recurring basis and the level within the fair value hierarchy in
        which the fair value measurements fall:

                                      Quoted Prices
                                        in Active
                                         Markets    Significant
                                      for Identical    Other     Significant
                                        Assets or    Observable  Unobservable
                                       Liabilities     Inputs       Inputs
        As at December 31, 2009         (Level 1)    (Level 2)    (Level 3)
        ---------------------------------------------------------------------
        ASSETS AND LIABILITIES CARRIED
         AT FAIR VALUE ON ON A
         RECURRING BASIS
          Assets carried at fair value
            Cash and cash equivalents   $  135,163   $        -   $        -
            Restricted cash                    458            -            -
          Liabilities carried at fair
           value
            Foreign exchange forward
             contract                            -           10            -
        ---------------------------------------------------------------------

        ASSETS CARRIED AT FAIR VALUE
         ON A NON-RECURRING BASIS
            Loans receivable from MEC,
             net (note 3(a))            $        -   $        -   $  362,404
            Real estate property (note 5)        -            -       10,000
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Certain assets are measured at fair value on a non-recurring basis.
        During the three-month period and year ended December 31, 2009, loans
        receivable with an aggregate cost of $453.2 million was written down
        to fair value of $362.4 million. The impairment provision of
        $90.8 million was included in "impairment provision related to loans
        receivable from MEC" on the consolidated statements of income (loss)
        for the three-month period and year ended December 31, 2009. Loans
        receivable from MEC, net are a Level 3 fair value measurement as
        estimated recoverability was partially determined based on the value
        of the collateral based on third party appraisals or other valuation
        techniques, such as discounted cash flows, for those MEC assets to be
        transferred to the Company under the Plan or for which the Court has
        yet to approve for sale under the Plan, net of expected
        administrative, priority and allowed claims to be paid by the Company
        under the Plan (note 3).

        During the three-month period and year ended December 31, 2009, a
        real estate property with a cost of $14.5 million was written down to
        fair value of $10.0 million. The write-down of $4.5 million was
        included in "write-down of long-lived and intangible assets" on the
        consolidated statements of income (loss) for the three-month period
        and year ended December 31, 2009. This is a Level 3 fair value
        measurement as the fair value of the real estate property was
        determined based on the present value of the estimated future cash
        flows from the leased property.


    18. 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 Company's
        credit facilities (note 7), the Company had $2.2 million of letters
        of credit issued with various financial institutions at December 31,
        2009 to guarantee various construction projects. These letters of
        credit are secured by cash deposits of the Company.

    (c) At December 31, 2009, the Company's contractual commitments related
        to construction and development projects outstanding amounted to
        approximately $1.1 million.

    (d) On November 14, 2006, MEC completed the sale of all of the
        outstanding shares of Washington Trotting Association, Inc., Mountain
        Laurel Racing, Inc. and MEC Pennsylvania Racing, Inc., each an MEC
        wholly-owned subsidiary through which MEC owned and operated
        The Meadows, MEC's 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 (together,
        "Millennium-Oaktree"). On closing, MEC received cash consideration of
        $171.8 million, net of transaction costs of $3.2 million, and the
        Meadows Holdback Note in the amount of $25.0 million payable to MEC
        over a five-year period, subject to offset for certain
        indemnification obligations (the "Meadows Holdback Note"). Under the
        terms of the Meadows Holdback Note, MEC agreed to release the
        security requirement for the holdback amount, defer subordinate
        payments under the Meadows Holdback Note, defer receipt of holdback
        payments until the opening of the permanent casino at The Meadows and
        defer receipt of holdback payments to the extent of available cash
        flows (as defined in the terms of the Meadows Holdback Note), in
        exchange for Millennium-Oaktree providing an additional $25.0 million
        of equity support for PA Meadows, LLC.

        The parties also entered into a racing services agreement whereby MEC
        agreed to pay $50 thousand per annum and continue to operate, for its
        own account, the racing operations at The Meadows until at least
        July 2011. However, as a result of MEC's Chapter 11 filing on the
        Petition Date (note 1(a)), on August 31, 2009, MEC was authorized by
        the Court to terminate the racing services agreement. $5.6 million of
        the proceeds 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 was being
        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
        expired on December 31, 2009, whereby the horsemen made 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 (losses), net" for the year ended
        December 31, 2008.


    19. 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 Codification Topic 810,
             "Consolidation" (note 1(f)), 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 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            Year Ended
                                December 31,              December 31,
                          ------------------------- -------------------------
                               2009         2008         2009         2008
        ---------------------------------------------------------------------
        Net loss attributable
         to MID under U.S.
         GAAP              $  (72,800)  $  (54,463)  $  (42,289)  $  (12,272)
          Interest expense
           on subordinated
           notes(i)                 -         (321)     6,570*      (1,265)
          Depreciation and
           amortization(ii)         -           41      (340)*          54
          Development
           property carrying
           costs(iii)               -          202            -          580
          Stock-based
           compensation(iv)         -            -      3,204*           -
          Net gain on related
           party asset sale(v)      -            -            -        9,914
          Foreign currency
           translation gains
           (losses)(vi)             -            -      (28,241)        (105)
          Other                     -          (18)           -         (122)
        ---------------------------------------------------------------------
        Net loss attributable
         to MID under
         Canadian GAAP     $  (72,800)  $  (54,559)  $  (61,096)  $   (3,216)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Basic and diluted
         earnings (loss)
         attributable to
         each MID Class A
         Subordinate Voting
         or Class B Share
          - continuing
             operations    $    (1.56)  $    (0.99)  $    (1.33)  $     0.40
          - discontinued
             operations             -        (0.18)        0.02        (0.47)
        ---------------------------------------------------------------------
                           $    (1.56)  $    (1.17)  $    (1.31)  $    (0.07)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Comprehensive loss
         attributable to MID
         under U.S. GAAP   $  (66,310)  $ (124,165)  $   (5,934)  $ (101,712)
          Net adjustments
           to U.S. GAAP net
           loss per above
           table                    -          (96)     (18,807)       9,056
          Translation of
           development
           property
           carrying
           costs(iii)             111         (179)         210         (226)
          Foreign currency
           translation gains
           (losses)(vi)             -            -       28,241          105
          Employee defined
           benefit and
           postretirement
           plans(vii)               -          601      (728)*         601
        ---------------------------------------------------------------------
        Comprehensive income
         (loss) attributable
         to MID under
         Canadian GAAP     $  (66,199)  $ (123,839)  $    2,982   $  (92,176)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        * 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(c)).

        (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 MEC 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, Codification Subtopic 970-360, "Real Estate -
               Property, Plant and Equipment", is more restrictive than CICA
               Handbook Section 3061, "Property, Plant and Equipment", in
               relation 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(c)), $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)    MEC Sales to Magna

               Under Canadian GAAP, a gain on the sale of real estate to a
               related party that owns less than 80% of the vendor's share
               capital, where the exchange amount is supported by independent
               evidence, is considered an income item rather than a
               contribution to equity as required under U.S. GAAP. However,
               under U.S. GAAP, where the related tax effect of the gain on
               the related party transaction is offset by the utilization of
               losses from activities other than the related party
               transaction, the benefit from such losses is recognized as an
               income item rather than as a contribution of equity.

        (vi)   Investment Translation Gains or Losses

               Under Canadian GAAP, investment translation gains or losses
               are accumulated in the "accumulated other comprehensive
               income" component of shareholders' equity, and the appropriate
               amounts of the investment translation gains or losses are
               reflected in income when there is a reduction resulting from
               capital transactions in the Company's net investment in the
               operations that gave rise to such exchange gains and losses.
               Under U.S. GAAP, the appropriate amounts of the investment
               translation gains or losses are only reflected in income when
               there is a sale or partial sale of the Company's investment in
               these operations or upon a complete or substantially complete
               liquidation of the investment.

        (vii)  Employee Defined Benefit and Postretirement Plans

               Codification Topic 715, "Compensation - Retirement Benefits"
               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 noncontrolling interest impact. No such adjustment is
               required under Canadian GAAP.

        (viii) 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 December 31, 2009
                                                      Property
                                            U.S.      Carrying     Canadian
                                            GAAP        Costs         GAAP
    -------------------------------------------------------------------------
    Real estate properties, net         $1,389,845   $    4,325   $1,394,170
    Future tax assets                        9,850         (218)       9,632
    Future tax liabilities                  37,824        1,258       39,082
    MID shareholders' equity             1,589,542        2,849    1,592,391
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    As at December 31, 2008
    -------------------------------------------------------------------------
                               U.S.      Long-term     Benefit   Sale 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
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                            Property
                            Carrying   Stock-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 4) 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: Rocco Liscio, Executive Vice-President and Chief Financial Officer, at (905) 726-7507

Organization Profile

MI DEVELOPMENTS INC.

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