Cadillac Fairview Reports 27 Percent Increase in First Quarter Cash Flow from Operations.

TORONTO--(BUSINESS WIRE)--March 4, 1999--Cadillac Fairview Co(TSE:CDF.) (NYSE:CDF) Cadillac Fairview Corporation announced today its financial results for the three months ended January 31, 1999 continuing the strong growth trend.

Cash flow from operations for the three months ended January 31, 1999 increased 27 percent to C$70.7 million on revenue of C$235.9 million compared to cash flow from operations of C$55.7 million on revenue of C$191.6 million for the three months ended January 31, 1998. On a per share basis, cash flow from operations for the three months ended January 31, 1999 was C$0.90 (C$0.84 fully diluted) compared to C$0.73 (C$0.70 fully diluted) for the same period in 1998, an increase of 23 percent. Cash flow from operations for the three months ended January 31, 1998 included lease cancellation fees of C$1.7 million, (C$0.02 per share) relating to the former Eaton's head office space at 250 Yonge Street. Net income for the three months ended January 31, 1999 was C$27.8 million or C$0.35 per share (C$0.33 fully diluted) compared to C$16.5 million or C$0.22 per share (basic and fully diluted) for the three months ended January 31, 1998. Net income in the 1998 period was reduced by charges for early extinguishment of long term debt of C$7.6 million (C$0.10 per share) before income taxes.

"A continued focus on adding value to our existing portfolio -- through expansions, redevelopment and innovative marketing and leasing programs -- has contributed significantly to our internal growth and strong financial results this quarter" said Jon Hagan, Executive Vice President and Chief Financial Officer. "And our recent acquisitions are proof positive that growth prospects in real estate are strong and that acquisition opportunities exist for companies with access to capital. We continue to have access to capital as evidenced by our recent finalization of $200 million in property financing", added Hagan. "Going forward, we remain committed to driving shareholder value by enhancing and expanding our franchise of dominant retail and office properties and actively managing our capital structure".

The following table summarizes Cadillac Fairview's results for the
first quarter:

                                                       Increase
                                      1999      1998   (Decrease)
               -------------------------------------------------
              (C$ millions, unless otherwise stated,
                except per share amounts)

Three months ended January 31, 1999:
     Revenue                        $235.9    $191.6  23 percent
     Cash Flow from Operations      $ 70.7    $ 55.7  27 percent
     Net Income                     $ 27.8    $ 16.5  68 percent
     Per Share:
        Cash Flow from Operations
          - basic                    $0.90     $0.73  23 percent
          - fully diluted            $0.84     $0.70  20 percent
        Net Income
          - basic                    $0.35     $0.22  59 percent
          - fully diluted            $0.33     $0.22  50 percent
     Net Operating Income by Segment:
          Canadian Retail            $80.1     $66.3  21 percent
          Canadian Office            $30.2     $24.2  25 percent
          United States Retail (US$) $13.9     $13.1   6 percent

     *T MAXIMIZING THE VALUE OF EXISTING ASSETS Property Operations
During the first quarter Cadillac Fairview's rental properties
continued to generate growth in net operating income. The operating
highlights for the first quarter are as follows: Canadian Retail
Properties - Internal growth in the first quarter in Canadian retail
properties increased net operating income by C$5.7 million or 8
percent compared to the same period in 1998. - Occupancy by specialty
store tenants at January 31, 1999 was unchanged during the quarter at
95.3 percent compared to 95.5 percent for the same period in 1998. -
Retail sales from specialty store tenants for the twelve months ended
January 31, 1999 increased by 5.4 percent to C$469 per square foot. -
Rental rates increased by 10 percent on 1999 releasing activity
compared to prior lease rates. - Acquisitions of retail properties
completed in 1998 contributed growth in net operating income in the
first quarter of C$9.0 million. Canadian Office Properties - Internal
growth in the first quarter in Canadian office properties increased
net operating income by C$0.8 million or 4 percent compared to 1998.
This growth was offset by a one-time payment of C$1.7 million received
from Eaton's in 1998. - Occupancy at January 31, 1999 in the Canadian
office properties decreased 0.8 percent during the first quarter to
93.3 percent compared to 94.1 percent for the same period in 1998. -
Leased occupancy was 94.8 percent at January 31, 1999. - Rental rates
increased by 36 percent on 1999 releasing activity compared to prior
lease rates. - Acquisitions of office properties completed in 1998
contributed growth in net operating income in the first quarter of
C$6.1 million. United States Retail Properties - Internal growth in
the first quarter in United States retail properties increased net
operating income by US$0.9 million or 7.0 percent compared to 1998. -
Occupancy by specialty store tenants at January 31, 1999 was 85.2
percent, an increase of .6 percent during the first quarter and
greater by 2.5 percent compared to the same period in 1998. - Leased
occupancy was 86 percent at January 31, 1999. - Retail sales from
specialty store tenants for the twelve months ended December 31, 1998
increased by 2.6 percent to US$334 per square foot. - Rental rates
increased by 12 percent on 1999 re leasing activity compared to prior
lease rates. Expansion and Redevelopment Activity Cadillac Fairview
continuously reviews its portfolio to identify opportunities to add
new retail uses in its highly productive retail properties to improve
cash flow. During the first quarter Cadillac Fairview continued
expansion and redevelopment activities at eight properties. The major
activities underway in the first quarter were: Toronto Eaton Centre, a
dominant 3.5 million square foot retail and office complex in downtown
Toronto with retail sales of C$787 per square foot, saw construction
continue on two initiatives: - Remodeling the exterior facade facing
Yonge Street to create 15,000 square feet of prime retail space. This
project is expected to be completed by June 1999 at a cost of C$15.9
million. The leasing for this phase of the project is substantially
complete. - Expanding the centre court on the western side of the
complex to add 50,000 square feet of prime retail space. This project
is expected to be completed by the fall of 1999 at a cost of C$21
million. The leasing for this phase of the project is 80 percent
complete. Cadillac Fairview has a 75 percent interest in the property
Tillicum Mall, located in Victoria, British Columbia, is undergoing a
renovation to reposition this centre in its market by introducing
larger format retail uses. Phase 1, which is expected to be completed
by July 1999, includes a new 120,000 square foot Zellers store and
four large format stores totalling 136,000 square feet of
complementary retail uses. Phase 2 includes a 10 screen stadium
seating theatre and a 10,000 square foot restaurant. Phase 2 is
scheduled to be completed by November 1999. The total cost of this
project is C$28 million. The leasing for this renovation is
substantially complete. Cadillac Fairview has a 100 percent interest
in the property.

  Cataraqui Town Centre, a dominant 413,000 square foot
regional shopping centre located in Kingston, Ontario and
producing sales per square foot of C$400 is undergoing an
expansion.  Construction is continuing on schedule of a 127,000
square foot Sears department store and the addition of 30
specialty stores comprising approximately 50,000 square feet.  The
expansion is expected to be completed by June 1999 at a cost of
C$30 million.  The leasing for the expansion is 90 percent
complete.  Cadillac Fairview has a 50 percent interest in the
project.

         Masonville Place, a dominant 652,000 square foot
super-regional shopping centre, located in London, Ontario and
producing sales per square foot of C$440, is undergoing an
expansion.  The expansion comprises three projects: the addition
of 25,000 square feet of specialty store space; a renovation of
the food court to increase seating capacity by 40 percent; and the
construction of a 60,000 square foot 12-screen theatre with
stadium style seating.  The specialty store and food court
expansions are expected to be completed by the fall of 1999.
Construction of the theatre is projected to be completed by May
2000.  The total cost of the project is C$25 million.  Cadillac
Fairview has a 100 percent interest in the shopping centre.
Dispositions

     Cadillac Fairview continues to review its portfolio to identify
properties that are not consistent with its core franchise. Since
January 31, 1999 Cadillac Fairview has completed the disposition of
its 50 percent interest in Edmonton Eaton Centre and its 100 percent
interest in North Hill Shopping Centre in Calgary, Alberta. Cash
proceeds from these sales totalled C$61.5 million. The proceeds will
be used to reduce short term indebtedness incurred in connection with
the recent acquisitions.

         UNDERTAKING STRATEGIC ACQUISITIONS AND DEVELOPMENT
Acquisitions
         Cadillac Fairview continues to be very active with
acquisition and development initiatives that add value for
shareholders.  In the first quarter Cadillac Fairview acquired 100
percent interests in two rental properties comprising 1.4 million
square feet for total cash consideration of C$187 million.
         Cadillac Fairview will continue to pursue acquisition
opportunities in North American markets where it has a presence to
further its growth strategy.
Development
         Cadillac Fairview has completed the acquisition of a 50
percent interest in City Centre, a future office site in downtown
Calgary.
         The site is zoned for a multi-phased 1.2 million square
foot mixed-use development. The lands presently generate income to
fund the carrying costs of the site.
         ACTIVELY MANAGING OUR CAPITAL STRUCTURE
         Cadillac Fairview continued to proactively manage its
capital structure during the first quarter as follows:
         - completed financing activity totalling C$50 million at
an average interest rate of 6.3 percent and producing new capital
for investment purposes of C$15 million.
         - subsequent to January 31, 1999 completed financing
activity totalling C$147 million at an average interest rate of
6.6 percent contributing annual savings of C$1.8 million or C$0.02
per share and producing new capital for investment purposes of
C$76 million.
         - purchased for cancellation 475,800 common shares
(average price of C$29.46 per share) and 63,084 warrants for a
total cost of approximately C$14.7 million.  This brings the total
common shares purchased for cancellation under Cadillac Fairview's
normal course issuer bid to 1,394,212 common shares (average price
C$29.15 per share).  In addition, Cadillac Fairview has purchased
for cancellation a total of 1,029,508 warrants leaving 5,457,794
warrants outstanding.
         The financial statements for the three months ended
January 31, 1999 are presented below.

CADILLAC FAIRVIEW CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands of dollars)

(unaudited)

Note January 31, January 31,

1999 1998

---- ----

Assets Real estate assets 1 $4,524,391 $3,788,458 Amounts receivable 66,763 83,759 Other assets

98,067 180,503

---------- ----------

$4,689,221 $4,052,720

---------- ----------

---------- ----------

Liabilities Long-term debt 2 $2,845,244 $2,384,003 Accounts payable and

other liabilities 143,160 130,687 Deferred income taxes 52,395 26,500

---------- ----------

3,040,799 2,541,190

Shareholders' Equity 3 1,648,422 1,511,530

---------- ----------

$4,689,221 $4,052,720

---------- ----------

---------- ----------

See accompanying notes to consolidated financial statements.

CADILLAC FAIRVIEW CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

(in thousands of dollars except per share and share amounts)

(unaudited)

Three months ended January 31,

------------------------------

Note 1999 1998

---- ---- Revenue

Rental $ 230,623 $ 185,338

Management and development

fees 3,950 3,316

Interest and other 1,348 2,966

-------- --------

235,921 191,620

-------- -------- Expenses

Property operating 98,912 75,918

Interest 53,379 47,903

General and administrative 8,632 7,976

Capital taxes 2,400 2,000

Depreciation and amortization 26,449 21,649

-------- --------

189,772 155,446

-------- -------- Operating income 46,149 36,174

Loss on early extinguishment of

long-term debt - 7,593

-------- --------

46,149 28,581

Income taxes 4 18,300 12,100

-------- -------- Net income 27,849 16,481

Retained earnings, beginning of period 112,281 75,359

Premium on purchase and cancellation of

Common shares and warrants (5,932) - Provision for settlement of convertible

debentures (243) -

Retained earnings, end of period $133,955 $ 91,840

-------- --------

-------- --------

Net income per share - basic $0.35 $0.22

- fully diluted $0.33 $0.22

Weighted average number of shares

- basic 77,833,227 75,898,737

- fully

diluted 89,551,623 85,395,737 See accompanying notes to

consolidated financial statements.

CADILLAC FAIRVIEW CORPORATION

CONSOLIDATED CASH FLOW STATEMENTS

(in thousands of dollars, except per share amounts)

(unaudited)

Three months ended January 31,

------------------------------

1999 1998

---- ---- Operating activities --------------------

Net income $ 27,849 $ 16,481

Items not affecting cash from

operations:

Depreciation and amortization 26,449 21,649

Deferred income taxes 16,400 10,000

Loss on early extinguishment of

long-term debt - 7,593

-------- --------

Cash flow from operations 70,698 55,723

Net changes in other operating items 2,413 7,584

-------- --------

Cash provided by operating activities 73,111 63,307

-------- -------- Financing activities --------------------

Long-term debt:

Refinancing 64,996 213,500

Repayments (65,842) (431,286)

Issue of common shares 64 329,739

Purchase and cancellation of shares

and warrants (14,706) -

Restricted cash (955) 6,569

-------- --------

Cash provided (used) by financing

activities (16,443) 118,522

-------- -------- Investing activities --------------------

Rental properties:

Acquisitions (34,751) (63,597)

Development expenditures (15,037) (4,156)

Capital expenditures (6,093) (11,615)

Land under development (7,941) (917)

Properties held for sale 237 4,768

Amounts receivable and other assets (1,976) (25,542)

-------- --------

Cash used by investing activities (65,561) (101,059)

-------- -------- Net increase (decrease) in unrestricted

cash and short-term investments (8,893) 80,770

Unrestricted cash and short-term

investments, beginning of period 26,038 33,581

-------- -------- Unrestricted cash and short-term

investments, end of period $ 17,145 $ 114,351

-------- --------

-------- --------

Cash flow from operations per share

- basic $0.90 $0.73

- fully

diluted $0.84 $0.70

See accompanying notes to

consolidated financial statements.

CADILLAC FAIRVIEW CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands of Canadian dollars unless otherwise

stated, except per share and share amounts)

(unaudited)

Cadillac Fairview Corporation (the "Corporation") is a fully integrated commercial real estate operating company. Its assets comprise prominent super-regional and regional shopping centres in key markets in Canada and the United States, and Class A office buildings in major Canadian cities.

1. Real estate assets

1999 1998

---- ---- Rental properties $4,695,618 $3,884,165 Land under development 57,936 50,084 Properties held for sale 41,307 30,889

---------- ----------

4,794,861 3,965,138 Less accumulated depreciation and

amortization 270,470 176,680

---------- ----------

$4,524,391 $3,788,458

---------- ----------

---------- ---------- The Corporation has capitalized the

following costs:

1999 1998

---- ---- Operating expenses and realty taxes, net

of rental revenue $898 $ 218 Interest

1,313 530

------ ------

$2,211 $ 748

------ ------

------ ------

2. Long-term debt

Weighted average interest

rate as at January 31

1999 1998 1999 1998

---- ---- ---- ---- Mortgages

At fixed rates 7.7 percent 8.8 percent $2,252,684 $1,917,639

At variable

rates 6.0 percent 5.4 percent 479,882 300,640

Credit facilities 6.3 percent 5.6 percent 74,031 64,724

Convertible

debentures 5.7 percent - 38,647 -

Participating loan - (see (b) below) - 101,000

---------- ----------

$2,845,244 $2,384,003

---------- ----------

---------- ----------

a) Credit facilities

The Corporation has operating and acquisition facilities of $372,500 with terms of up to two years. At January 31, 1999, the Corporation had availability under these facilities of $298,400.

b) Participating loan

The Corporation had a loan with a major shareholder, which bore interest at the lesser of the cash flow amount attributable to a specific property, as defined in the loan agreement, and 10 percent per annum. The loan was also subject to additional interest based upon the value of the property, as defined in the agreement. In June 1998 the loan was repaid by the Corporation.

c) Interest rate hedges At January 31, 1999, the Corporation had interest rate hedge agreements with a notional principal amount of $307,000 to hedge the Corporation's exposure to increases in interest rates for periods of one to three years at rates which limit the underlying three-month Canadian bankers' acceptance rate ranging from 4.80 percent to 7.00 percent. In addition, the Corporation had a forward-rate agreement to hedge interest rates on anticipated financings of $150,000 at 5.115 percent which expires on April 1, 1999.

d) Principal repayments As at January 31, 1999, principal repayments of long-term debt are due in each of the next five years approximately as follows:

Years ending October 31, 1999 $ 18,432

2000 150,599

2001 510,649

2002 87,493

2003 256,701

3. Shareholders' equity a) Changes in share capital On June 8, 1998, the Corporation announced its intention to purchase for cancellation, under a normal course issuer bid, up to 3,938,132 common shares, during the period ending June 7, 1999. During the three months ended January 31, 1999, the Corporation purchased 475,800 common shares at an average price of $29.46 per share, and recorded $8,774 as a reduction of share capital and $5,245 as a reduction of retained earnings. As at January 31, 1999, there were 77,371,893 common shares outstanding.

b) Warrants The Corporation has warrants outstanding which, until July 31, 2000, entitle the holder to acquire one common share at an exercise price of $18.40 per share, subject to adjustment if certain common share transactions occur. During the three months ended January 31, 1999, there were 3,465 warrants exercised, and 63,094 warrants purchased and cancelled by the Corporation at an average price of $10.89 per warrant. The purchase cost of $687 was recorded as a reduction of retained earnings. As at January 31, 1999, there were 5,457,794 warrants outstanding.

c) Options During the three months ended January 31, 1999, the Corporation awarded 285,000 options at a price of $26.75, and cancelled 2,000 options at a price of $32.00. As at January 31, 1999, there were 3,838,000 options outstanding.

4. Income taxes

1999 1998

---- ---- Current $ 100 $ 600 Deferred 16,400 10,000 Large corporation tax 1,800 1,500

------ ------

$18,300 $12,100

------ ------

------ ------

5. Comparative figures Certain comparative figures have been reclassified to conform to the current year presentation.

Cadillac Fairview is one of the largest owners, managers and developers of commercial real estate in North America, focusing on high quality retail centres in Canada and the U.S., and office properties in major Canadian cities. It owns interests in or manages 105 properties amounting to approximately 51 million square feet in Canada and the United States, including some of Canada's landmark properties such as Toronto Eaton Centre and Toronto-Dominion Centre in Toronto, Pacific Centre in Vancouver and Montreal Eaton Centre in Montreal.

This press release contains forward looking statements that involve inherent risks and uncertainties. We have identified certain important factors that may cause actual results to differ materially from those contained such looking forward statements. These factors are described in the risk management section of Management's Discussion and Analysis of Financial Condition and Results of Operations found in the Corporation's Form 20-F currently filed with the SEC and subsequent public disclosure documents filed with the SEC.