<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
SEPTEMBER 30, 1997
BRADLEY OPERATING LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its charter)
DELAWARE 000-23065 04-3306041
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
40 SKOKIE BOULEVARD, NORTHBROOK, ILLINOIS 60062
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(847) 272-9800
<PAGE> 2
Item 5. OTHER EVENTS.
Bradley Operating Limited Partnership (the "Operating Partnership"), of
which Bradley Real Estate, Inc. (the "Company") is sole general partner, files
this Form 8-K report that contains a combined financial statement, consistent
with Regulation S-X, Rule 3.14, for properties (the "Acquisition Properties")
accounting for over 50% of the aggregate acquisition costs of a series of
properties acquired during the period January 1, 1997 through September 30,
1997. (See Item 7.)
During this period, 14 shopping centers were acquired for a total
acquisition price of approximately $95.6 million. No one acquisition or group of
related acquisitions was in itself significant, but in the aggregate such
acquisition costs exceeded 10% of the total assets of the Operating Partnership
and its subsidiaries consolidated at December 31, 1996. Consideration paid for
such acquisitions included cash (provided primarily from the Operating
Partnership's bank line of credit), assumption of mortgage indebtedness and the
issuance of Limited Partner Units in the Operating Partnership. Also, during the
period, two shopping centers were sold.
The dates, shopping centers acquired or disposed of and the approximate
acquisition cost or net sales proceeds for the respective centers are as
follows:
ACQUISITIONS:
<TABLE>
<CAPTION>
DATE PROPERTY APPROXIMATE ACQUISITION COST
<S> <C> <C>
January 1, 1997 Martin's Bittersweet Plaza, Mishawaka, IN $ 4,831,000
January 1, 1997 *Roseville Center, Roseville, MN 5,439,000
January 21, 1997 *Warren Plaza, Dubuque, IA 5,989,000
April 28, 1997 *Spring Village, Davenport, IA 4,561,000
June 19, 1997 Davenport Retail, Davenport, IA 5,625,000
July 1, 1997 *Fairhills Shopping Center, Springfield, IL 6,991,000
July 1, 1997 *Parkway Pointe, Springfield, IL 3,996,000
July 1, 1997 *Sangamon Center North, Springfield, IL 9,761,000
July 1, 1997 *Burlington Plaza West, Burlington, IA 5,296,000
July 1, 1997 *Holiday Plaza, Cedar Falls, IA 2,775,000
July 31, 1997 *County Line Mall, Indianapolis, IN 16,310,000
August 1, 1997 Parkwood Plaza, Urbandale, IA 8,648,000
August 25, 1997 Madison Plaza, Madison, WI 8,306,000
August 29, 1997 Liberty Corners, Liberty, MO 7,107,000
-----------
$95,635,000
===========
<CAPTION>
DISPOSITIONS:
DATE PROPERTY APPROXIMATE SALES PROCEEDS
<S> <C> <C>
March 13, 1997 Hood Commons $11,300,000
August 8, 1997 Meadows Town Mall 5,900,000
-----------
$17,200,000
===========
</TABLE>
Properties designated with an asterisk (*) are properties included within
the Acquisition Properties for which the combined financial statement
accompanies this report. Additionally, Acquisition Properties include Santa Fe
Square in Olathe, Kansas, which was acquired for $9,099,000 on December 27,
1996. None of such Acquisition Properties was acquired from a related party of
the Operating Partnership or the Company or their consolidated subsidiaries.
Factors considered by the Operating Partnership in assessing the acquisition
price for each of the properties included its location and tenant mix, including
opportunities for retenanting and remodeling consistent with the Operating
Partnership's experience as a shopping center operator; its current net
operating income and the prospect for increased income in the short and long
range future; capitalization rates for shopping center properties of the type
acquired, in the Midwest area of the United States generally and in the locality
in which the property is located; current operating costs and the possibility of
effecting property-
2
<PAGE> 3
level operating efficiencies as a result of the Operating Partnership's
ownership of a significant number of shopping centers in the Midwest; and the
differential between the Operating Partnership's cost of capital in acquiring
the property and the property's current and potential net operating income.
After reasonable inquiry, the Operating Partnership is not aware of any material
factors relating to any specific property included within the Acquisition
Properties other than those discussed in the preceding sentence that would cause
the reported financial information not to be necessarily indicative of future
operating results.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The following financial statements and pro forma financial information
accompany this report.
(a) Financial Statements - Acquisition Properties
Independent Auditors' Report
For the Period January 1, 1997 through June 30, 1997 (unaudited)
and for the Year Ended December 31, 1996
Combined Statement of Revenues and Certain Expenses
Notes to Combined Statement of Revenues and Certain
Expenses
(b) Pro Forma Financial Information - Bradley Operating Limited
Partnership and Predecessor Business and Subsidiaries
(collectively the "Operating Partnership")
Pro Forma Condensed Balance Sheet
June 30, 1997 (unaudited)
Pro Forma Condensed Consolidated Statements of Income
For the six months ended June 30, 1997 (unaudited)
For the year ended December 31, 1996 (unaudited)
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BRADLEY OPERATING LIMITED PARTNERSHIP
(Registrant)
By: /s/ Irving E. Lingo, Jr.
----------------------------------
Date: September 30, 1997 Irving E. Lingo, Jr.
Chief Financial Officer
4
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
The Board of Directors of Bradley Real Estate, Inc.
and Unit Holders of Bradley Operating Limited Partnership:
We have audited the accompanying combined statement of revenues and
certain expenses (defined as operating revenues less direct operating expenses)
of the Acquisition Properties for the year ended December 31, 1996. This
combined financial statement is the responsibility of the Company's management.
Our responsibility is to express an opinion on this combined financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined statement of revenues and
certain expenses is free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the combined
statement of revenues and certain expenses. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the combined statement of revenues and
certain expenses. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying combined statement of revenues and certain expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission in current reports on Form 8-K of Bradley
Real Estate, Inc. and Bradley Operating Limited Partnership as described in note
2. The presentation is not intended to be a complete presentation of the
Acquisition Properties' revenues and expenses.
In our opinion, the combined statement of revenues and certain expenses
presents fairly, in all material respects, the combined revenues and certain
expenses, described in note 2, of the Acquisition Properties for the year ended
December 31, 1996, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
September 19, 1997
F-1
<PAGE> 6
ACQUISITION PROPERTIES
Combined Statement of Revenues and Certain Expenses
Year ended December 31, 1996 and the
Six Months ended June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 1997 Year Ended
(unaudited) December 31, 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Base rental income $3,881,633 $7,694,172
Operating expense and real estate tax recoveries 1,079,606 2,258,160
Other income 9,552 20,541
---------- ----------
Total revenues 4,970,791 9,972,873
---------- ----------
Certain expenses:
Real estate taxes 801,779 1,571,346
Operating expenses 479,387 959,237
Utilities 107,764 233,835
Insurance 54,341 128,442
---------- ----------
Total expenses 1,443,271 2,892,860
---------- ----------
Excess of revenues over certain expenses $3,527,520 $7,080,013
========== ==========
</TABLE>
See accompanying notes to combined statement of revenues and certain expenses.
F-2
<PAGE> 7
ACQUISITION PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUES AND CERTAIN EXPENSES
Year ended December 31, 1996 and the
Six Months ended June 30, 1997 (unaudited)
(1) BACKGROUND
The Combined Statement of Revenues and Certain Expenses (Combined
Statement) has been included for certain properties (Acquisition Properties)
which were acquired by Bradley Real Estate, Inc. (the "Company") or Bradley
Operating Limited Partnership (the "Operating Partnership"). The Acquisition
Properties are as follows:
Property Date Acquired
-------- -------------
Santa Fe Square December 27, 1996
Roseville Center January 1, 1997
Warren Plaza January 21, 1997
Spring Village April 28, 1997
Sangamon Center North July 1, 1997
Fairhills Shopping Center July 1, 1997
Parkway Pointe July 1, 1997
Holiday Plaza July 1, 1997
Burlington Plaza July 1, 1997
County Line Mall July 31, 1997
Santa Fe Square is located in Olathe, Kansas. It consists of
approximately 133,000 square feet of gross leasable area and was approximately
95% occupied at December 31, 1996.
Roseville Center is located in Roseville, Minnesota. It consists of
approximately 77,000 square feet of gross leasable area and was approximately
80% occupied at December 31, 1996.
Warren Plaza is located in Dubuque, Iowa. It consists of approximately
90,000 square feet of gross leasable area and was 100% occupied at December 31,
1996.
Spring Village is located in Davenport, Iowa. It consists of
approximately 90,000 square feet of gross leasable area and was 100% occupied at
December 31, 1996. A tenant which occupies approximately 12% of the gross
leasable area of Spring Village vacated its premises during November 1996. The
tenant has continued paying rent pursuant to the terms of its lease, which runs
through November 2010.
Sangamon Center North is located in Springfield, Illinois. It consists of
approximately 140,000 square feet of gross leasable area and was approximately
98% occupied at December 31, 1996.
Fairhills Shopping Center is located in Springfield, Illinois. It
consists of approximately 106,000 square feet of gross leasable area and was
approximately 98% occupied at December 31, 1996.
Parkway Pointe is located in Springfield, Illinois. It consists of
approximately 39,000 square feet of gross leasable area and was approximately
79% occupied at December 31, 1996.
Holiday Plaza is located in Cedar Falls, Iowa. It consists of
approximately 46,000 square feet of gross leasable area and was approximately
74% occupied at December 31, 1996.
F-3
<PAGE> 8
Burlington Plaza is located in Burlington, Iowa. It consists of
approximately 89,000 square feet of gross leasable area and was approximately
91% occupied at December 31, 1996.
County Line Mall is located in Indianapolis, Indiana. It consists of
approximately 260,000 square feet of gross leasable area and was approximately
95% occupied at December 31, 1996.
(2) BASIS OF PRESENTATION
The Combined Statement has been prepared for the purpose of complying
with Rule 3.14 of the Securities and Exchange Commission Regulation S-X in
current reports on Form 8-K of the Company and the Operating Partnership and is
not intended to be a complete presentation of the Acquisition Properties'
revenues and expenses. The Combined Statement has been prepared on the accrual
basis of accounting and requires management of the Acquisition Properties to
make estimates and assumptions that affect the reported amounts of the revenues
and expenses during the reporting period. Actual results may differ from those
estimates.
Certain expenses which may not be comparable to the expenses expected to
be incurred in the proposed future operations of the Acquisition Properties have
been excluded. Expenses excluded consist of interest, depreciation and
amortization, professional fees, and management fees.
UNAUDITED INTERIM PERIOD
The accompanying interim statement of revenues and certain expenses has
been prepared without audit and in the opinion of management reflects all normal
recurring adjustments necessary for a fair presentation of results for the
unaudited interim period presented. Certain information in footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles has been condensed or omitted.
(3) REVENUES
Each property leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. Certain of the leases
include provisions under which the property is reimbursed for certain common
area, real estate, and insurance costs. In addition, certain leases provide for
payment of contingent rentals based on a percentage applied to the amount by
which the tenant's sales, as defined, exceed predetermined levels. Certain
leases contain renewal options for various periods at various rental rates.
Base rentals are reported as income over the lease term as they become
receivable under the provisions of the leases. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents during
the lease term, the income is recognized based on effective rental rates.
Related adjustments increased base rental income by approximately $54,000 for
the year ended December 31, 1996.
Minimum rents to be received from tenants under operating leases in
effect at December 31, 1996 are approximately as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1997 $ 6,888,000
1998 6,103,000
1999 5,473,000
2000 4,560,000
2001 3,811,000
Thereafter 21,328,000
</TABLE>
F-4
<PAGE> 9
BRADLEY OPERATING LIMITED PARTNERSHIP AND
PREDECESSOR BUSINESS AND SUBSIDIARIES
(COLLECTIVELY, THE "OPERATING PARTNERSHIP")
PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 1997
(UNAUDITED)
Subsequent to June 30, 1997, the Operating Partnership sold a shopping
center, utilizing the proceeds to pay-down the line of credit, and acquired nine
shopping centers, including a portfolio of five shopping centers from one seller
for approximately $28,800,000 with cash provided by the line of credit. Three of
the remaining four shopping centers were also funded with cash provided by the
line of credit, for an aggregate purchase price of approximately $24,000,000.
The final property was purchased for approximately $16,300,000 through the
issuance of 478,619 limited partner units ("LP Units") and the assumption of a
$6,900,000 non-recourse mortgage note which was paid-off in full at closing with
cash drawn from the line of credit.
This unaudited Pro Forma Condensed Balance Sheet is presented as if the
acquisitions and the disposition occurring subsequent to June 30, 1997, had been
completed on June 30, 1997. In the opinion of management, all adjustments
necessary to reflect the effects of these transactions have been made.
This unaudited Pro Forma Condensed Balance Sheet is prepared for
comparative purposes only and is not necessarily indicative of what the actual
financial position of the Operating Partnership would have been at June 30,
1997, nor does it purport to represent the future financial position of the
Operating Partnership. This unaudited Pro Forma Condensed Balance Sheet should
be read in conjunction with, and is qualified in its entirety by, the respective
historical financial statements and notes thereto of the Operating Partnership.
F-5
<PAGE> 10
BRADLEY OPERATING LIMITED PARTNERSHIP AND
PREDECESSOR BUSINESS AND SUBSIDIARIES
(COLLECTIVELY, THE "OPERATING PARTNERSHIP")
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Property Adjustments
---------------------------
Acquisition Disposition
Historical Adjustments(A) Adjustments(A) Pro Forma
---------- -------------- -------------- ---------
<S> <C> <C> <C> <C>
ASSETS
Real Estate investments-- at cost................... $510,558 $69,016 $(5,896) $573,678
Accumulated depreciation and amortization........... (36,708) -- 207 (36,501)
-------- ------- ------- --------
Net real estate investments......................... 473,850 69,016 (5,689) 537,177
Real estate investments held for sale............... 10,000 -- -- 10,000
Other assets:
Cash and cash equivalents........................ 3,579 -- -- 3,579
Rents and other receivables, net of allowance
for doubtful accounts of $2,309............... 10,587 -- (272) 10,315
Deferred charges, net and other assets........... 14,964 -- (170) 4,794
-------- ------- ------- --------
Total assets............................... 512,980 69,016 (6,131) 575,865
======== ======= ======= ========
LIABILITIES AND PARTNERS' CAPITAL
Mortgage loans...................................... 128,868 -- -- 128,868
Line of credit...................................... 64,400 59,986 (5,900) 118,486
Accounts payable, accrued expenses and other
liabilities...................................... 20,875 -- (1,484) 19,391
-------- ------- ------- --------
Total liabilities.......................... 214,143 59,986 (7,384) 266,745
-------- ------- ------- --------
Minority interest................................... 867 -- -- 867
-------- ------- ------- --------
Partners' capital................................... 297,970 9,030 1,253 308,253
-------- ------- ------- --------
Total liabilities and partners' capital.... $512,980 $69,016 $(6,131) $575,865
======== ======= ======= ========
</TABLE>
EXPLANATORY NOTES
(A) Adjustments represent acquisition and dispositions of properties
subsequent to June 30, 1997 that have been completed.
F-6
<PAGE> 11
BRADLEY OPERATING LIMITED PARTNERSHIP AND PREDECESSOR BUSINESSES
AND SUBSIDIARIES (COLLECTIVELY, THE "OPERATING PARTNERSHIP")
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30,1997
(UNAUDITED)
During the period from January 1, 1997 to June 30, 1997, the Operating
Partnership acquired five shopping centers. Three of the five shopping centers
were acquired for cash with financing provided by the bank line of credit. One
shopping center was acquired with cash provided by the line of credit and the
assumption of a $3,800,000 non-recourse mortgage note, and one shopping center
was acquired via the issuance of 281,300 limited partnership units ("LP Units")
in the Operating Partnership. Additionally, during such period, the Operating
Partnership sold a shopping center, utilizing the proceeds to pay-down the line
of credit.
Subsequent to June 30, 1997, the Operating Partnership sold an additional
shopping center, utilizing the proceeds to pay-down the line of credit, and
acquired nine shopping centers, including a portfolio of five shopping centers
from one seller for approximately $28,800,000 with cash provided by the line of
credit. Three of the shopping centers were also funded with cash provided by the
line of credit, for an aggregate purchase price of approximately $24,000,000.
The final property was purchased for approximately $16,300,000 through the
issuance of 478,619 LP Units and the assumption of a $6,900,000 non-recourse
mortgage note which was paid-off in full at close with cash drawn from the line
of credit.
The unaudited Pro Forma Condensed Consolidated Statement of Income is
presented as if the acquisitions and the dispositions described above had been
consummated on January 1, 1996, and with the Operating Partnership qualifying as
a partnership and, therefore, incurring no federal income tax expense during the
period January 1, 1997 through June 30, 1997. In the opinion of management, all
adjustments necessary to reflect the effects of these transactions have been
made.
For purposes of this unaudited Pro Forma Condensed Consolidated Statement
of Income, "Acquisition Properties" represents those properties for which the
Operating Partnership has furnished a Combined Statement of Revenues and Certain
Expenses in accordance with Rule 3.14 of the Securities and Exchange Commission
Regulation S-X.
This unaudited Pro Forma Condensed Consolidated Statement of Income is
presented for comparative purposes only and is not necessarily indicative of
what the actual results of operations of the Operating Partnership would have
been for the period presented, nor does it purport to represent the results to
be achieved in future periods. This unaudited Pro Forma Condensed Consolidated
Statement of Income should be read in conjunction with, and is qualified in its
entirety by, the respective historical financial statements and notes thereto of
the Operating Partnership.
F-7
<PAGE> 12
BRADLEY OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
(Dollars in thousands, except per unit data)
<TABLE>
<CAPTION>
Acquisition Other Acquired Disposition Other
Historical Properties(A) Properties(A) Properties(B) Adjustments Pro Forma
---------- ------------- ------------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 45,889 $3,180 $2,085 $(1,469) $ -- $49,685
Other income 642 4 9 (8) -- 647
--------- ------ ------ ------- ------- ----------
Total revenue 46,531 3,184 2,094 (1,477) -- 50,332
--------- ------ ------ ------- ------- ----------
Expenses:
Operations, maintenance and
management 6,999 444 277 (324) -- 7,396
Real estate taxes 9,627 426 320 (404) -- 9,969
Mortgage and other interest 7,231 -- -- -- 2,033(C) 9,264
Administrative and general 1,977 -- -- -- -- 1,977
Depreciation and amortization 7,855 -- -- -- 702(D) 8,557
-------- ------ ------ ------- ------- ----------
Total expenses 33,689 870 597 (728) 2,735 37,163
--------- ------ ------ ------- ------- ----------
Income before gain on sale
and provision for loss on
real estate investments 12,842 2,314 1,497 (749) (2,735) 13,169
Gain on sale of property 3,073 -- -- (3,073) -- --
Provision for loss on real
estate investment (1,300) -- -- 1,300 -- --
-------- ------ ------ ------- ------- ----------
Income before allocation to
minority interest 14,615 2,314 1,497 (2,522) (2,735) 13,169
Income allocated to minority
interest (46) -- -- -- -- (46)
---------- ------ ------ ------- ------- ----------
Net income 14,569 2,314 1,497 (2,522) (2,735) 13,123
========== ====== ====== ======= ======= ==========
Net income per weighted
average unit outstanding $ 0.65 $ 0.58
========== ==========
Weighted average units
outstanding 22,260,759 22,739,378
</TABLE>
EXPLANATORY NOTES
(A) Increase represents historical operating revenues and expenses for the
six months ended June 30, 1997 for the properties acquired during 1997
for the period during which the Operating Partnership did not own such
properties.
(B) Decrease represents the elimination of historical operating revenues and
expenses, gains and provision for loss for the six months ended June 30,
1997 for the properties disposed during 1997 for the period during which
the Operating Partnership owned such properties.
(C) Mortgage and other interest has been increased to reflect the borrowings
estimated for property acquisitions for the period during which the
Operating Partnership did not own such properties, net of the reduction
for the application of net proceeds from property dispositions to pay
down the line of credit for the period during which the Operating
Partnership owned such properties, at an interest rate of 7.000%, which
was the Operating Partnership's borrowing rate at August 31, 1997. A
0.125% change in the variable rate would result in a change in the pro
forma interest adjustment of approximately $36,000.
F-8
<PAGE> 13
Increase in interest expense attributable
to acquisition activities $2,394
Decrease in interest expense attributable
to disposition activities (361)
------
Pro forma adjustment $2,033
======
(D) Depreciation and amortization has been increased to give effect to
recording the property acquisitions over a depreciable life of 39 years,
for the period which the Operating Partnership did not own such
properties, net of the reduction for properties disposed for the period
which the Operating Partnership owned such properties, as follows:
Increase in depreciation and amortization
attributable to acquisition activities $ 800
Decrease in depreciation and amortization
attributable to disposition activities (98)
------
Pro forma adjustment $ 702
======
F-9
<PAGE> 14
BRADLEY OPERATING LIMITED PARTNERSHIP AND PREDECESSOR BUSINESSES
AND SUBSIDIARIES (COLLECTIVELY, THE "OPERATING PARTNERSHIP")
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
During the period from January 1, 1996 to June 30, 1997, the Operating
Partnership acquired seven shopping centers and sold one shopping center and a
ground lease. Four of the seven shopping centers were acquired for cash with
financing provided by the bank line of credit. One shopping center was acquired
with cash provided by the line of credit and the assumption of a $3,800,000
non-recourse mortgage note, and one shopping center was acquired via the
issuance of 281,300 LP Units. The sale of its interest in a ground lease was
structured as a "like-kind" exchange for federal income tax purposes, acquiring
a shopping center as a replacement property in the exchange. Since the net
proceeds from the sale were greater than the net purchase price of the property
acquired, the excess proceeds were used to pay down the line of credit.
On March 15, 1996, the Company completed the acquisition of Tucker
Properties Corporation (the "Tucker Acquisition"). The acquisition was
consummated through the issuance of approximately 7.4 million shares of Common
Stock valued at $13.96 per share, and was accounted for using the purchase
method of accounting. Tucker held title to all of its properties through two
partnerships; eight properties through Tucker Operating Limited Partnership
("TOP"), in which Tucker had a 95.9% general partnership interest, and six
properties through Tucker Financing Partnership ("TFP'), a general partnership
of which TOP owned 99% and a wholly-owned Tucker corporate subsidiary owned the
remaining 1%. Upon the acquisition of Tucker, the Company succeeded to Tucker's
interest in TOP, TFP and the wholly-owned Tucker corporate subsidiary, and the
name "Bradley" was substituted for "Tucker" in each subsidiary and partnership.
In August 1997, the Company contributed its interests in the 18 properties it
held directly to the Operating Partnership; the Operating Partnership therefore
is the vehicle through which the Company will expand its ownership and operation
of properties.
In November 1996, the Company completed a public offering of 2,875,000
shares of Common Stock (including shares issued pursuant to the exercise of the
underwriter overallotment option) at a price of $16.50 per share (the "November
1996 Offering"). Net proceeds from the November 1996 Offering, approximately
$44,851,000 (net of offering costs of $2,618,000), were contributed to the
Operating Partnership and used to reduce outstanding borrowings under the line
of credit.
Subsequent to June 30, 1997, the Operating Partnership sold one shopping
center, utilizing the proceeds to pay-down the line of credit, and acquired nine
shopping centers, including a portfolio of five shopping centers from one seller
for approximately $28,800,000 with cash provided by the line of credit. Three of
the remaining four shopping centers were also funded with cash provided by the
line of credit, for an aggregate purchase price of approximately $24,000,000.
The final property was purchased for approximately $16,300,000 through the
issuance of 478,619 LP Units and the assumption of a $6,900,000 non-recourse
mortgage note which was paid-off in full at close with cash drawn from the line
of credit.
The unaudited Pro Forma Condensed Consolidated Statement of Income is
presented as if the November 1996 Offering, the acquisitions, the dispositions,
and the "like-kind" exchange described above had been consummated on January 1,
1996, and as if the Tucker Acquisition had occurred on January 1, 1996, and with
the Operating Partnership qualifying as a partnership and, therefore, incurring
no federal income tax expense during the period January 1, 1996 through June 30,
1997. In the opinion of management, all adjustments necessary to reflect the
effects of these transactions have been made.
For purposes of this unaudited Pro Forma Condensed Consolidated Statement
of Income, "Acquisition Properties" represents those properties for which the
Operating Partnership has furnished a Combined Statement of Revenues and Certain
Expenses in accordance with Rule 3.14 of the Securities and Exchange Commission
Regulation S-X.
F-10
<PAGE> 15
This unaudited Pro Forma Condensed Consolidated Statement of Income is
presented for comparative purposes only and is not necessarily indicative of
what the actual results of operations of the Operating Partnership would have
been for the period presented, nor does it purport to represent the results to
be achieved in future periods. This unaudited Pro Forma Consolidated Condensed
Statement of Income should be read in conjunction with, and is qualified in its
entirety by, the respective historical financial statements and notes thereto of
the Operating Partnership.
F-11
<PAGE> 16
BRADLEY OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(Dollars in thousands, except per unit data)
<TABLE>
<CAPTION>
Other
Tucker Acquisition Acquired Disposition Other
Historical Acquisition(A) Properties(B) Properties(B) Properties(C) Adjustments Pro Forma
---------- ------------- ------------ ------------ ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income $77,512 $8,075 $9,952 $4,566 $ (4,637) $ -- $95,468
Other income 1,327 146 21 5 (66) -- 1,433
------- ------ ------ ------ -------- ------- -------
Total revenue 78,839 8,221 9,973 4,571 (4,703) -- 96,901
------- ------ ------ ------ -------- ------- -------
Expenses:
Operations, maintenance and
management 12,949 1,491 1,322 492 (883) -- 15,371
Real estate taxes 16,787 1,993 1,571 842 (1,057) -- 20,136
Mortgage and other interest 13,404 2,574 -- -- -- 2,370(D) 18,348
Administrative and general 3,005 -- -- -- -- -- 3,005
Corporate office relocation 409 -- -- -- -- -- 409
Write-off of deferred financing
and acquisition costs 344 -- -- -- -- -- 344
Depreciation and amortization 13,286 1,336 -- -- -- 1,914(E) 16,536
------- ------ ------ ------ --------- ------- -------
Total expenses 60,184 7,394 2,893 1,334 (1,940) 4,284 74,149
------- ------ ------ ------ -------- ------- -------
Income before gain on sale of
property 18,655 827 7,080 3,237 (2,763) (4,284) 22,752
Gain on sale of property 9,379 -- -- -- (9,379) -- --
------- ------ ------ ------ -------- ------- -------
Income before allocation to
minority interest 28,034 827 7,080 3,237 (12,142) (4,284) 22,752
Income allocated to minority
interest (78) -- -- -- -- -- (78)
------- ------ ------ ------ -------- ------- -------
Net income $27,956 $ 827 $7,080 $3,237 $(12,142) $(4,284) $22,674
======= ====== ====== ====== ======== ======= =======
Net income per weighted average
unit outstanding $ 1.56 $ 1.00
======= =======
Weighted average units
outstanding 17,932,769 22,638,660
</TABLE>
EXPLANATORY NOTES
(A) Increase represents historical operating revenues and expenses for the
year ended December 31, 1996 for Tucker for the period preceding the
Tucker Acquisition.
(B) Increase represents historical operating revenues and expenses for the
year ended December 31, 1996 for the properties acquired during 1996 and
1997 for the period during which the Operating Partnership did not own
such properties.
(C) Decrease represents the elimination of historical operating revenues and
expenses for the year ended December 31, 1996 for the properties disposed
during 1996 and 1997 for the period during which the Operating
Partnership owned such properties.
(D) Mortgage and other interest has been increased to reflect the borrowings
estimated for property acquisitions during 1997 and 1996 for the period
which the Operating Partnership did not own such properties, net of the
reduction for the application of net proceeds from property dispositions
during 1997 and 1996 and the November 1996 Offering to pay down the line
of credit, for the period during which the Operating Partnership owned
such properties, and for the period preceding the November 1996 Offering
at an interest rate of 7.000%, which was the Operating Partnership's
borrowing rate at August 31, 1997. A 0.125% change in the variable rate
would result in a change in the pro forma interest adjustment of
approximately $44,000.
F-12
<PAGE> 17
Increase in interest expense attributable
to acquisition activities $ 6,279
Decrease in interest expense attributable
to disposition activities (1,269)
Decrease in interest expense attributable
to the November 1996 Offering (2,640)
Pro forma adjustment $ 2,370
=======
(E) Depreciation and amortization has been increased to give effect to
recording the property acquisitions during 1997 and 1996 using a
depreciable life of 39 years for the period which the Operating
Partnership did not own such properties, net of the reduction for
properties disposed during 1997 and 1996 for the period which the
Operating Partnership owned such properties as follows:
Increase in depreciation and amortization
attributable to acquisition activities $2,170
Decrease in depreciation and amortization
attributable to disposition activities (256)
Pro forma adjustment $1,914
======
F-13
