<PAGE> 1
FILED PURSUANT RULE 424(B)(5)
REGISTRATION NO. 333-36577
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION AND HAS BEEN DECLARED EFFECTIVE. THIS
PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION JANUARY 16, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 18, 1997)
BRADLEY OPERATING LIMITED PARTNERSHIP
$50,000,000 % NOTES DUE 2003
$100,000,000 % NOTES DUE 2008
------------------------
Bradley Operating Limited Partnership (the "Operating Partnership") will
issue its % Notes due 2003 (the "2003 Notes") and its % Notes due 2008 (the
"2008 Notes" and, together with the 2003 Notes, the "Notes") offered hereby in
aggregate principal amounts of $50,000,000 and $100,000,000, respectively (the
"Offering"). Interest on the Notes is payable semi-annually in arrears on
February 1 and August 1 of each year commencing August 1, 1998. See "Description
of Notes -- Principal and Interest." The 2003 Notes and the 2008 Notes will
mature on February 1, 2003 and February 1, 2008, respectively. The Notes may be
redeemed at any time at the option of the Operating Partnership, in whole or in
part, at a redemption price equal to the sum of (i) the principal amount of the
Notes being redeemed plus accrued interest to the redemption date, and (ii) the
Make-Whole Amount (as defined in "Description of the Notes -- Optional
Redemption"), if any. See "Description of Notes -- Optional Redemption." The
Notes are unsecured obligations of the Operating Partnership and will rank
equally with each other and with all other unsecured and unsubordinated
indebtedness of the Operating Partnership, including the Operating Partnership's
outstanding $100,000,000 of 7% Notes due 2004 (the "2004 Notes"). The Notes are
not subject to any mandatory sinking fund. The Notes contain certain
restrictions on the Operating Partnership's ability to incur additional
indebtedness. See "Description of Notes."
Each series of Notes will be represented by a single fully registered global
note in book-entry form without coupons (each a "Global Note") registered in the
name of The Depository Trust Company ("DTC") or its nominee. Beneficial
interests in the Global Notes will be shown on, and transfers thereof will be
effected only through, records maintained by DTC (with respect to beneficial
interests of participants) or by participants or persons that hold interests
through participants (with respect to beneficial interests of beneficial
owners). Owners of beneficial interests in the Global Notes will be entitled to
physical delivery of Notes in certificated form equal in principal amount to
their respective beneficial interests only under the limited circumstances
described under "Description of Notes -- Book-Entry System." Settlement of the
Notes will be made in immediately available funds. The Notes will trade in DTC's
Same-Day Funds Settlement System until maturity or earlier redemption, as the
case may be, or until the Notes are issued in certificated form, and secondary
market trading activity in the Notes will therefore settle in immediately
available funds. All payments of principal and interest in respect of the Notes
will be made by the Operating Partnership in immediately available funds. See
"Description of Notes -- Same-Day Settlement and Payment."
SEE "RISK FACTORS" ON PAGE S-6 OF THIS PROSPECTUS SUPPLEMENT AND BEGINNING ON
PAGE 3 OF THE ACCOMPANYING PROSPECTUS FOR CERTAIN FACTORS RELATING TO AN
INVESTMENT IN THE NOTES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===========================================================================================================
Underwriting
Price to Discounts and Proceeds to Operating
Public(1) Commissions(2) Partnership(1)(3)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2003 Note......................... % % %
- -----------------------------------------------------------------------------------------------------------
Per 2008 Note......................... % % %
- -----------------------------------------------------------------------------------------------------------
Total................................. $ $ $
===========================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from January , 1998.
(2) The Company and the Operating Partnership have agreed to indemnify the
Underwriters (as defined herein) against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities
Act"). See "Underwriting."
(3) Before deducting expenses payable by the Operating Partnership estimated at
$ .
------------------------
The Notes are offered by the Underwriters subject to prior sale, when, as
and if delivered to and accepted by them, subject to approval of certain legal
matters by counsel for the Underwriters. The Underwriters reserve the right to
withdraw, cancel or modify such offer and to reject orders in whole or in part.
It is expected that delivery of the Notes will be made on or about January ,
1998 through the book-entry facilities of DTC, against payment therefor in
immediately available funds.
------------------------
PAINEWEBBER INCORPORATED IS SOLE BOOKRUNNING MANAGER
PAINEWEBBER INCORPORATED SALOMON SMITH BARNEY
------------------------
BT ALEX. BROWN A.G. EDWARDS & SONS, INC.
------------------------
The date of this Prospectus Supplement is January , 1998.
<PAGE> 2
------------------------
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY ENGAGE IN
TRANSACTIONS WHICH STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
NOTES. SPECIFICALLY, THE UNDERWRITERS MAY STABILIZE OR MAY BID FOR, AND
PURCHASE, THE NOTES IN THE OPEN MARKET. FOR A DISCUSSION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
S-2
<PAGE> 3
===============================================================================
PROSPECTUS SUPPLEMENT SUMMARY
The following information contained in this Prospectus Supplement is
qualified in its entirety by the detailed information appearing elsewhere in
this Prospectus Supplement or the accompanying Prospectus or incorporated
therein by reference. As used herein, the term "Bradley Real Estate, Inc."
refers also to its predecessor Bradley Real Estate Trust, and the term "Company"
or "Bradley" as used herein refers to Bradley Real Estate, Inc. and its
subsidiaries on a consolidated basis (including Bradley Operating Limited
Partnership and its subsidiaries) or, where the context so requires, Bradley
Real Estate, Inc. only. The term "Operating Partnership" as used herein means
Bradley Operating Limited Partnership and its subsidiaries on a consolidated
basis, or, where the context so requires, Bradley Operating Limited Partnership
only.
THE OPERATING PARTNERSHIP
Bradley Operating Limited Partnership is the entity through which Bradley
Real Estate, Inc., a self-administered and self-managed real estate investment
trust ("REIT"), conducts substantially all of its business and owns (either
directly or through subsidiaries) substantially all of its assets. As of
December 31, 1997, the Operating Partnership owned, directly or indirectly, 53
properties (52 shopping centers and one office/retail property) in 11 states,
aggregating approximately 10.1 million square feet of rentable space,
substantially all of which are located in Midwest markets. The portfolio of
properties owned by the Operating Partnership has over 1,000 tenants, with no
single tenant accounting for more than 6.0% of gross revenues. The majority of
the properties have been constructed or renovated within the past five to eight
years. As of December 31, 1997, the Operating Partnership's portfolio was
approximately 95% occupied. (Properties owned by the Operating Partnership from
time to time are hereinafter sometimes referred to individually as a "Property"
and collectively referred to as the "Properties" or the "Portfolio.")
The Operating Partnership owns and operates and seeks to acquire
grocery-anchored, open-air community and neighborhood shopping centers in the
Midwest states of Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan,
Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.
The Operating Partnership currently owns properties in nine states in this
region. Through past experience as well as current research, the Operating
Partnership believes that this region is economically strong and diverse and
provides a favorable environment for the acquisition, ownership and operation of
retail properties. The Operating Partnership evaluates prospects in both
metropolitan statistical areas defined by the U.S. Census Bureau ("MSAs") and
secondary markets within this region that offer opportunities for favorable
investment returns and long-term cash flow growth. The Operating Partnership
favors grocery-anchored centers because, based on its past experience, such
properties offer strong and predictable daily consumer traffic and are less
susceptible to downturns in the general economy than apparel or leisure anchored
shopping center properties.
As part of its ongoing business, the Operating Partnership regularly
evaluates and engages in discussions with public and private entities regarding
possible portfolio or individual asset acquisitions or business combinations.
During 1997, the Operating Partnership acquired 25 shopping centers which meet
its investment criteria for an aggregate acquisition price of $189.7 million,
although there can be no assurance that further acquisitions will be made within
its target markets or that acquisitions that are made will be on as economically
advantageous terms to the Operating Partnership as those made during 1997. In
evaluating potential acquisitions, the Operating Partnership focuses principally
on community and neighborhood shopping centers in its Midwest target market that
are anchored by strong national, regional and independent grocery store chains.
The Operating Partnership seeks to create an income stream diversity across its
Midwest markets to achieve sustainable growth through varied economic
conditions.
The Company currently owns an approximately 95% economic interest in and is
the sole general partner of the Operating Partnership (this structure is
commonly referred to as an umbrella partnership REIT or "UPREIT"). The board of
directors of the Company manages the affairs of the Operating Partnership by
directing the affairs of the Company. Economic interests in the Operating
Partnership are evidenced by units of partnership interest ("Units") with the
interest of the general partner evidenced by general partner units ("GP Units").
The interests of persons who have contributed direct or indirect interests in
certain properties to the Operating Partnership are evidenced by limited partner
units ("LP Units").
================================================================================
S-3
<PAGE> 4
===============================================================================
In August 1997, Standard & Poor's Investment Services ("Standard & Poor's")
assigned a corporate rating of "BBB-" to the Operating Partnership, and on
November 4, 1997 Moody's Investors Service ("Moody's") assigned a prospective
rating of "(P)Baa3" to the unissued shelf registration of debt securities filed
by the Operating Partnership. Moody's subsequently assigned a rating of "Baa3"
to the Operating Partnership's $100 million offering of the 2004 Notes which
was completed in November 1997.
The Operating Partnership is organized under the laws of the State of
Delaware. Its offices are located at 40 Skokie Boulevard, Suite 600, Northbrook,
Illinois 60062-1626. Its telephone number is (847) 272-9800.
THE PROPERTIES
Set forth below are summary descriptions of the Properties owned by the
Operating Partnership as of December 31, 1997 and rental information for leases
in effect as of September 30, 1997 or, for Properties acquired after September
30, 1997, as of the date of acquisition. The Properties listed in italics have
been acquired since September 30, 1997.
<TABLE>
<CAPTION>
GROSS
LEASABLE
YEAR AREA (GLA) PERCENT ANNUALIZED
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1)
-------------------------------------------- -------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C>
ILLINOIS
1. Commons of Chicago Ridge and Annex.......... 1996 309,000 93% $ 2,837,116
2. Commons of Crystal Lake(2).................. 1996 273,000 71 2,261,841
3. Crossroads Center........................... 1992(3) 242,000 97 1,382,014
4. Fairhills Shopping Center................... 1997 106,000 90 594,917
5. Heritage Square............................. 1996 212,000 100 2,609,091
6. High Point Centre........................... 1996 240,000 99 2,151,908
7. Parkway Pointe.............................. 1997 39,000 100 463,101
8. Rivercrest Center........................... 1994(3) 458,000 99 3,585,615
9. Rollins Crossing............................ 1996 66,000(4) 82 489,939
10. Sangamon Center North....................... 1997 140,000 98 1,002,405
11. Sheridan Village............................ 1996 296,000 98 2,246,202
12. Sterling Bazaar............................. 1997 82,000 94 646,884
13. Wardcliffe Center........................... 1997 62,000 100 317,196
14. Westview Center............................. 1993(3) 328,000 72 2,121,997
--------- --- -----------
TOTAL/WEIGHTED AVERAGE ILLINOIS............. 2,853,000 91% $22,710,226
INDIANA
15. Martin's Bittersweet Plaza.................. 1997 78,000 98 553,135
16. County Line Mall............................ 1997 261,000 94 1,598,100
17. Speedway SuperCenter and Outlots............ 1996 541,000 97 3,883,929
18. The Village................................. 1996 356,000 86 1,651,191
19. Washington Lawndale Commons................. 1996 333,000 98 1,642,978
--------- --- -----------
TOTAL/WEIGHTED AVERAGE INDIANA.............. 1,569,000 94% $ 9,329,333
IOWA
20. Burlington Plaza West....................... 1997 88,000 94 573,685
21. Davenport Retail............................ 1997 63,000 100 604,355
22. Holiday Plaza............................... 1997 46,000 87 282,219
23. Parkwood Plaza.............................. 1997 125,000 93 1,019,873
24. Southgate Shopping Center................... 1997 163,000 93 512,520
25. Spring Village.............................. 1997 91,000 100 567,715
26. Warren Plaza................................ 1997(3) 90,000 100 660,828
--------- --- -----------
TOTAL/WEIGHTED AVERAGE IOWA................. 666,000 95% $ 4,221,195
KANSAS
27. Mid State Plaza............................. 1997 287,000 84 767,676
28. Santa Fe Square............................. 1996(3) 134,000 94 1,100,219
29. Westchester Square.......................... 1997 165,000 93 1,231,672
--------- --- -----------
TOTAL/WEIGHTED AVERAGE KANSAS............... 586,000 89% $ 3,099,567
KENTUCKY
30. Stony Brook................................. 1996 136,000 98 1,384,869
--------- --- -----------
TOTAL/WEIGHTED AVERAGE KENTUCKY............. 136,000 98% $ 1,384,869
</TABLE>
===============================================================================
S-4
<PAGE> 5
===============================================================================
<TABLE>
<CAPTION>
GROSS
LEASABLE
YEAR AREA (GLA) PERCENT ANNUALIZED
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1)
-------------------------------------------- -------- ----------- ------ ------------
<S> <C> <C> <C> <C> <C>
MINNESOTA
31. Brookdale Square............................ 1996(3) 185,000 86% $ 1,175,468
32. Burning Tree Plaza.......................... 1993(3) 139,000 93 1,165,599
33. Central Valu................................ 1997 123,000 93 836,208
34. Elk Park.................................... 1997 155,000 99 1,320,432
35. Har Mar Mall................................ 1992(3) 430,000 92 3,797,782
36. Hub West Shopping Center.................... 1991(3) 78,000 100 839,271
37. Richfield Hub Shopping Center............... 1988(3) 138,000 98 1,262,477
38. Roseville Center............................ 1997 75,000 92 624,708
39. Sun Ray Shopping Center..................... 1961(3) 258,000 82 1,615,111
40. Terrace Mall................................ 1993(3) 137,000 94 913,871
41. Westview Valu............................... 1997 163,000 93 1,026,156
42. Westwind Plaza.............................. 1994(3) 88,000 92 891,960
43. White Bear Hills............................ 1993(3) 73,000 100 592,781
--------- --- -----------
TOTAL/WEIGHTED AVERAGE MINNESOTA............ 2,042,000 92% $16,061,824
MISSOURI
44. Grandview Plaza............................. 1971(3) 316,000 78 2,127,323
45. Liberty Corners............................. 1997 121,000 100 720,941
--------- --- -----------
TOTAL/WEIGHTED AVERAGE MISSOURI............. 437,000 84% $ 2,848,264
NEW MEXICO
46. St. Francis Plaza........................... 1995 30,000 100 357,000
--------- --- -----------
TOTAL/WEIGHTED AVERAGE NEW MEXICO........... 30,000 100% $ 357,000
SOUTH DAKOTA
47. Baken Park.................................. 1997 184,000 94 998,208
--------- --- -----------
TOTAL/WEIGHTED AVERAGE SOUTH DAKOTA......... 184,000 94% $ 998,208
TENNESSEE
48. Williamson Square(5)........................ 1996 335,000 90 2,109,757
--------- --- -----------
TOTAL/WEIGHTED AVERAGE TENNESSEE............ 335,000 90% $ 2,109,757
WISCONSIN
49. Madison Plaza............................... 1997 128,000 100 991,131
50. Mequon Pavilions............................ 1996 212,000 98 2,269,611
51. Park Plaza.................................. 1997 108,000 100 599,892
52. Spring Mall................................. 1997 180,000 92 1,014,864
--------- --- -----------
TOTAL/WEIGHTED AVERAGE WISCONSIN............ 628,000 97% $ 4,875,498
--------- --- -----------
TOTAL/WEIGHTED AVERAGE SHOPPING CENTERS..... 9,466,000 92% $67,995,741
RETAIL/OFFICE BUILDING
ILLINOIS
53. One North State(6).......................... 1996 639,000 98 9,849,135
---------- --- -----------
GRAND TOTAL/WEIGHTED AVERAGE................ 10,105,000 93% $77,844,876
========== === ===========
</TABLE>
- ---------------
(1) Annualized base rent is calculated by multiplying monthly base rent for
September 1997 by 12. For Properties acquired after September 1997,
annualized base rent is calculated by multiplying the first month's pro
forma base rent by 12.
(2) The amount of rentable square feet at Commons of Crystal Lake does not
include approximately 81,000 square feet which is owned by Metropolitan Life
and leased to Venture Stores, Inc.
(3) Date represents the year the Property was acquired by the Company. The
Company contributed the Property to the Operating Partnership in August 1997
in order to consolidate the ownership of the Properties in one entity.
(4) The amount of rentable square feet at Rollins Crossing does not include
approximately 190,000 square feet which is owned by Kmart Corporation.
(5) The Operating Partnership is the 60% general partner of a partnership owning
this Property, whose limited partner interests are owned by an unrelated
investor.
(6) This Property is held for sale.
===============================================================================
S-5
<PAGE> 6
===============================================================================
RISK FACTORS
An investment in the Notes involves various risks, and prospective
investors should carefully consider the matters discussed under "Risk Factors"
in the accompanying Prospectus prior to any investment in the Operating
Partnership. The first "Risk Factor" noted on page 3 of the accompanying
Prospectus has been significantly mitigated by the prepayment on November 26,
1997 of the $100 million REMIC Note due September 2000 (the "REMIC Note"). Such
prepayment was accompanied by a prepayment yield maintenance fee of
approximately $4.3 million and was effected primarily with the proceeds of an
offering by the Operating Partnership of the 2004 Notes, with the balance of the
prepayment paid with borrowings under the Company's line of credit then in
effect. The Operating Partnership remains subject to the risk of payment or
refinancing of the 2004 Notes upon their balloon maturity in November 2004.
Except for interest rate and maturity, the 2004 Notes have the same terms and
conditions as, and rank equally with, the Notes offered hereby. See "The
Operating Partnership -- Indebtedness."
RECENT EVENTS
The following is a summary of certain significant events involving the
Operating Partnership and the Company since September 30, 1997:
- In November 1997, the Company prepaid the REMIC Note which resulted in
the discharge from the mortgage securing the REMIC Note of six
Properties, including One North State Street in Chicago, having an
aggregate gross book value of $181.2 million.
- On November 24, 1997, the Operating Partnership completed an offering of
$100 million of 7% Notes due 2004, the proceeds of which were used to
prepay the REMIC Note. Except for interest rate and maturity, the 2004
Notes have the same terms and conditions as, and rank equally with, the
Notes offered hereby. See "Prospectus Supplement Summary -- Risk
Factors" and "The Operating Partnership -- Indebtedness."
- In December 1997, the Operating Partnership entered into a new $200
million unsecured revolving credit facility with a syndicate of banks
(the "Line of Credit"), replacing the previous $150 million unsecured
line of credit. The Line of Credit matures in December 2000 and
outstanding borrowings under the Line of Credit bear interest at a
variable rate, depending upon the rating assigned by recognized rating
agencies, which rate is currently the lowest of (i) the lead bank's base
rate, (ii) 1.00% over the London InterBank Offer Rate ("LIBOR"), or
(iii) for amounts outstanding up to $100 million, a competitive bid rate
solicited from the syndicate of banks. The line is available for the
acquisition, development, renovation and expansion of new and existing
properties, working capital and general business purposes. See "The
Operating Partnership -- Indebtedness."
- On December 1, 1997, the Company completed an offering of 990,000 shares
of its common stock, par value $.01 per share (the "Common Stock"), at a
price to the public of $20.375 per share. The shares were sold under a
Forward Equity Program entered into with PaineWebber Incorporated
("PaineWebber") on October 21, 1997, pursuant to which the Company has
the right, until April 21, 1998, to sell shares of its Common Stock with
an aggregate value up to $60 million to PaineWebber, acting as
underwriter, in amounts ranging from $5 million to $20 million per
transaction. Although no further shares have been sold under the Forward
Equity Program, the Company completed an additional offering of 300,000
shares of its Common Stock on December 10, 1997 at a price to the public
of $20.50 per share.
- Subsequent to September 30, 1997, the Operating Partnership has acquired
11 shopping centers for an aggregate price of $93,734,000, three of
which centers were acquired subject to existing mortgage indebtedness
aggregating $21,503,000. Accordingly, as of December 31, 1997, only
eight of the Company's 53 properties were encumbered by mortgage debt
aggregating approximately $51.2 million. See "The Operating
Partnership -- Properties" and "-- Indebtedness."
===============================================================================
S-6
<PAGE> 7
===============================================================================
- Consistent with its strategy of focusing on shopping centers located in
the Midwestern region of the United States, in October and December
1997, respectively, the last of the Company's New England properties
(Augusta Plaza in Augusta, Maine, and 585 Boylston Street in Boston,
Massachusetts) were sold for an aggregate net sales price of $8.0
million. In January 1998, the Operating Partnership listed for sale its
only remaining non-shopping center asset, One North State Street in
downtown Chicago. See "The Operating Partnership -- Recent Events."
- In November 1997, the Board of Directors of the Company increased the
rate of the Company's quarterly dividend from $.33 per share to $.35 per
share, effective with the dividend paid on December 31, 1997.
THE OFFERING
All capitalized terms used herein and not defined herein have the meaning
provided in the Indenture (as defined herein) or under "Description of Notes."
<TABLE>
<S> <C>
SECURITIES OFFERED......... $50,000,000 aggregate principal amount of 2003
Notes and $100,000,000 aggregate principal amount
of 2008 Notes.
MATURITY................... The 2003 Notes will mature on February 1, 2003 and
the 2008 Notes will mature on February 1, 2008.
INTEREST PAYMENT DATES..... Semi-annually in arrears on February 1 and August 1
commencing August 1, 1998.
RANKING.................... The Notes will be unsecured obligations of the
Operating Partnership and will rank equally with
each other and with all other unsecured and
unsubordinated indebtedness of the Operating
Partnership including the 2004 Notes. The Notes
will be effectively subordinated to mortgages and
other secured indebtedness of the Operating
Partnership and to indebtedness and other
liabilities of the Operating Partnership's
subsidiaries. In addition, the Notes will be repaid
solely from the assets of the Operating
Partnership; the Indenture provides that holders of
the Notes will not have recourse against any
partner of the Operating Partnership for the
repayment of the Notes.
USE OF PROCEEDS............ The net proceeds from the sale of the Notes will be
used to reduce outstanding indebtedness incurred
under the Operating Partnership's Line of Credit,
with the expectation that the Operating Partnership
may reborrow under the line for the acquisition,
development, renovation and expansion of
properties. The outstanding balance of the Line of
Credit as of December 31, 1997 was $151.7 million.
OPTIONAL REDEMPTION........ The Notes are redeemable at any time at the option
of the Operating Partnership, in whole or in part,
at a redemption price equal to the sum of (i) the
principal amount of the Notes being redeemed plus
accrued interest to the redemption date and (ii)
the Make-Whole Amount (as hereinafter defined), if
any. See "Description of Notes -- Optional
Redemption."
CERTAIN COVENANTS.......... The Notes contain various covenants including the
following:
- Neither the Operating Partnership nor any
Subsidiary (as hereinafter defined) may incur any
Indebtedness (as hereinafter defined) if, after
giving effect thereto, the aggregate principal
amount of all outstanding Indebtedness of the
Operating Partnership and its Subsidiaries on a
consolidated basis is greater than 60% of the sum
of (i) the Total
</TABLE>
===============================================================================
S-7
<PAGE> 8
===============================================================================
Assets (as hereinafter defined) of the Operating
Partnership and its Subsidiaries as of the end of
the most recent calendar quarter prior to the
incurrence of such additional Indebtedness, (ii)
the purchase price of any real estate assets or
mortgages receivable acquired by the Operating
Partnership and its Subsidiaries since the end of
such calendar quarter, and (iii) the amount of
any securities offering proceeds received (to the
extent that such proceeds were not used to
acquire real estate assets or mortgages
receivable or used to reduce Indebtedness), by
the Operating Partnership or any Subsidiary since
the end of such calendar quarter, including those
proceeds obtained in connection with the
incurrence of such additional Indebtedness, less
(iv) the decrease, if any, in the Total Assets of
the Operating Partnership and its Subsidiaries
since the end of such quarter.
- Neither the Operating Partnership nor any
Subsidiary may incur any Indebtedness secured by
any mortgage or other lien upon any of the
property of the Operating Partnership or any
Subsidiary if, after giving effect thereto, the
aggregate principal amount of all outstanding
Indebtedness of the Operating Partnership and its
Subsidiaries on a consolidated basis which is
secured by any mortgage or other lien on the
property of the Operating Partnership or any
Subsidiary is greater than 40% of the sum of (i)
the Total Assets of the Operating Partnership and
its Subsidiaries as of the end of the most recent
calendar quarter prior to the incurrence of such
additional Indebtedness and (ii) the purchase
price of any real estate assets or mortgages
receivable acquired by the Operating Partnership
and its Subsidiaries since the end of such
calendar quarter, and (iii) the amount of any
securities offering proceeds received (to the
extent that such proceeds were not used to
acquire real estate assets or mortgages
receivable or used to reduce Indebtedness), by
the Operating Partnership or any Subsidiary since
the end of such calendar quarter, including those
proceeds obtained in connection with the
incurrence of such additional Indebtedness, less
(iv) the decrease, if any, in the Total Assets of
the Operating Partnership and its Subsidiaries
since the end of such quarter.
- The Operating Partnership and its Subsidiaries
will maintain Total Unencumbered Assets (as
hereinafter defined) of not less than 150% of the
aggregate outstanding principal amount of the
Unsecured Indebtedness (as hereinafter defined)
of the Operating Partnership and its Subsidiaries
on a consolidated basis.
- Neither the Operating Partnership nor any
Subsidiary may incur any Indebtedness if, after
giving effect thereto, the ratio of Consolidated
Income Available for Debt Service (as hereinafter
defined) to the Annual Service Charge (as
hereinafter defined) for the four consecutive
fiscal quarters most recently ended prior to the
date on which such additional Indebtedness is to
be incurred shall have been less than 1.5:1 on a
pro forma basis after giving effect to certain
assumptions.
The foregoing covenants do not restrict the
Operating Partnership from refinancing existing
Indebtedness, provided that the outstanding
principal amount of such Indebtedness is not
increased. For a more complete description of the
terms and definitions used in the foregoing
limitations, see "Description of Notes -- Certain
Covenants."
===============================================================================
S-8
<PAGE> 9
THE OPERATING PARTNERSHIP
GENERAL
Bradley Operating Limited Partnership is the entity through which Bradley
Real Estate, Inc., a self-administered and self-managed REIT, conducts
substantially all of its business and owns (either directly or through
subsidiaries) substantially all of its assets. Bradley Real Estate, Inc., has
elected to qualify as a REIT for federal income tax purposes since its
organization in 1961. The Company is the nation's oldest continuously qualified
real estate investment trust. The Operating Partnership owns and operates and
seeks to acquire grocery-anchored, open-air neighborhood and community shopping
centers in the Midwestern region of the United States and is engaged in the
business of acquiring and actively managing and leasing such properties. As of
December 31, 1997, the Operating Partnership owned 53 Properties in 11 states,
aggregating approximately 10.1 million square feet of gross leasable area.
In March 1996, the Company completed the acquisition (the "Tucker
Acquisition") of Tucker Properties Corporation ("Tucker"). The Tucker
Acquisition was consummated through the issuance by the Company of approximately
7.4 million shares of its 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 to the
Operating Partnership its economic interests in 18 properties that it had
previously held directly in order to consolidate the ownership of the Properties
in one entity. The Operating Partnership therefore succeeded Bradley as the
entity through which the Company expects to expand its ownership and operation
of properties primarily located in the Midwestern region of the country. In
addition, in August 1997, Standard & Poor's assigned a corporate rating of
"BBB-" to the Operating Partnership, and on November 4, 1997 Moody's assigned a
prospective rating of "(P)Baa3" to the unissued shelf registration of debt
securities filed by the Operating Partnership. Moody's subsequently assigned a
rating of "Baa3" to the Operating Partnership's offering of the 2004 Notes which
was completed in November 1997.
Of the 53 Properties owned by the Operating Partnership at December 31,
1997, 39 were grocery-anchored, open-air shopping centers located in the
Midwestern region of the United States. The Portfolio owned by the Operating
Partnership has over 1,000 tenants, with no single tenant accounting for more
than 6.0% of gross revenues. The majority of the Properties have been
constructed or renovated within the past five to eight years. As of December 31,
1997, the Operating Partnership's Portfolio was approximately 95% occupied.
As part of its ongoing business, the Operating Partnership regularly
evaluates, and engages in discussions with public and private real estate
entities regarding possible portfolio or individual asset acquisitions or
business combinations. The Operating Partnership is in the process of actively
evaluating several properties and, accordingly, expects to complete additional
acquisitions of retail properties during 1998, although no assurance can be
given that any acquisitions will be consummated. However, the Operating
Partnership does not currently have any properties under agreement which
individually or in the aggregate would have a material affect on the financial
condition of the Operating Partnership. In evaluating potential acquisitions,
the Operating Partnership focuses principally on community and neighborhood
shopping centers in the Midwest states of Illinois, Indiana, Iowa, Kansas,
Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South
Dakota and Wisconsin that are anchored by strong national, regional and
independent grocery store chains. The Operating Partnership favors
grocery-anchored shopping centers because, based on its experience and current
research, such properties offer better prospects for sustainable cash flow
growth over time due to their strong and predictable daily consumer traffic and
are less susceptible to downturns in the general economy than apparel or leisure
anchored shopping center properties.
S-9
<PAGE> 10
The Company currently owns an approximately 95% economic interest in and is
the sole general partner of the Operating Partnership. The board of directors of
the Company manages the affairs of the Operating Partnership by directing the
affairs of the Company. Economic interests in the Operating Partnership are
evidenced by Units with the interest of the general partner evidenced by GP
Units.
The Operating Partnership is a Delaware limited partnership and the Company
is a Maryland corporation. The executive offices of both the Operating
Partnership and the Company are located at 40 Skokie Boulevard, Suite 600,
Northbrook, Illinois 60062-1626 and their telephone number is (847) 272-9800.
RECENT EVENTS
On November 26, 1997 the Company prepaid the REMIC Note. Such prepayment
was accompanied by a prepayment yield maintenance fee of approximately $4.3
million and was effected primarily with the proceeds of the offering by the
Operating Partnership of the 2004 Notes in November 1997, with the balance of
the prepayment paid with borrowings under the Company's line of credit then in
effect. The prepayment of the REMIC Note resulted in the discharge from the
mortgage securing the REMIC Note of six properties, including One North State
Street in Chicago, having an aggregate gross book value of $181.2 million.
In December 1997, the Operating Partnership entered into the Line of
Credit, replacing the previous $150 million unsecured line of credit. The Line
of Credit bears interest at a rate equal to the lowest of (i) the lead bank's
base rate, (ii) a spread over LIBOR ranging from 0.70% to 1.25% depending on the
credit rating assigned by national credit rating agencies, or (iii) for amounts
outstanding up to $100 million, a competitive bid rate solicited from the
syndicate of banks. Based on the Operating Partnership's current credit rating
assigned by Standard & Poor's and Moody's, the spread over LIBOR is 1.00%.
Additionally, there is a facility fee currently equal to $300,000 per annum. In
the event the current credit rating were downgraded by either Standard & Poor's
or Moody's, the facility fee would increase to $500,000 per annum, and the
spread over the base rate would increase by 0.25% and the spread over LIBOR
would increase to 1.25%. The Line of Credit is guaranteed by the Company and
matures in December 2000. The Line of Credit is available for the acquisition,
development, renovation and expansion of new and existing properties, working
capital and general business purposes.
On December 1, 1997, the Company completed an offering of 990,000 shares of
its Common Stock. Such shares were sold to the public at $20.375 per share with
net proceeds to the Company of $19,342,600 after deducting the underwriting
discount and expenses. The shares were sold under a Forward Equity Program
previously entered into with PaineWebber on October 21, 1997, pursuant to which
the Company, at its option, has the right, until April 21, 1998, to sell shares
of its Common Stock with an aggregate value of up to $60 million to PaineWebber,
acting as underwriter, in amounts ranging from $5 million to $20 million per
transaction. Although no further shares have been sold under the Forward Equity
Program, the Company completed an additional offering of 300,000 shares of its
Common Stock on December 10, 1997. These additional shares were sold to the
public at $20.50 per share with net proceeds to the Company of approximately
$5.9 million after deducting the underwriting discount and expenses.
Subsequent to September 30, 1997, the Operating Partnership has acquired 11
shopping centers for an aggregate price of $93,734,000, three of which centers
were acquired subject to existing mortgage indebtedness aggregating $21,503,000.
Accordingly, as of December 31, 1997, only eight of the Company's 53 properties
were encumbered by mortgage debt aggregating approximately $51.2 million.
Consistent with its strategy of focusing on shopping centers located in the
Midwestern region of the United States, in October and December 1997,
respectively, the last of the Company's New England properties (Augusta Plaza in
Augusta, Maine, and 585 Boylston Street in Boston, Massachusetts) were sold for
an aggregate net sales price of $8.0 million. In January 1998, the Operating
Partnership listed for sale its only remaining non-shopping center asset, One
North State Street in downtown Chicago. One North Street was the only Property
in the Portfolio at December 31, 1996 that represented 10% or more of the
historic book value of the Portfolio at December 31, 1996, or accounted for 10%
or more of the Portfolio's gross revenues in 1996. One North State aggregates
approximately 639,000 square feet of gross leasable area of which only
S-10
<PAGE> 11
approximately 159,000 square feet is retail space and the remainder is office
space. The aggregate cost basis of the Property for reporting purposes as of
December 31, 1996 was $54,692,000, and the aggregate cost for federal income tax
purposes was $73,611,000.
In November 1997, the Board of Directors of the Company increased the rate
of the Company's quarterly dividend from $.33 per share to $.35 per share,
effective with the dividend paid on December 31, 1997.
BUSINESS OBJECTIVES AND STRATEGIES
Philosophy:
The Operating Partnership believes grocery-anchored, open-air properties
offer risk-adjusted returns that are superior to alternative retail formats.
Grocery-anchored centers generally perform better than alternative retail
formats through varied economic conditions because they are usually located
close to residential areas, are convenience driven, promote repeat customer
traffic and cross-shopping and tend to be less affected by changing
demographics. The Operating Partnership intends to grow by improving cash flows
from existing Properties through innovative, proactive management and leasing
that focuses on tenant satisfaction and retention, increases in rents and
occupancy levels and the control of operating expenses. The Operating
Partnership also intends to grow through the acquisition of additional
grocery-anchored shopping centers located throughout its Midwest target market.
The Operating Partnership believes it is well positioned to achieve these
objectives given Bradley's 37-year operating history in the Midwest region of
the country, its existing management infrastructure in several key Midwestern
markets and its depth of management and management information systems.
Management Structure:
The Operating Partnership provides a full range of fully integrated real
estate services with over 90 professionals involved in management, leasing,
acquisition and financing of the Operating Partnership's Properties. Senior
management consists of seven individuals with an average of 19 years of real
estate experience, ranging from 13 to 31 years in the business. The Operating
Partnership maintains regional offices in Chicago, Minneapolis, St. Louis,
Indianapolis, Milwaukee and Cincinnati, in order that as many Properties as
practicable have a manager located within a one to two hour drive. The Operating
Partnership believes that operational success is driven by its employees and
seeks to provide a challenging and congenial work environment which offers
personal and career growth to all employees. The finance, accounting and
administrative functions for the Operating Partnership are handled by a central
office staff located in the Northbrook, Illinois headquarters.
Property Operations:
The Asset Management Department operates the Portfolio with the objective
of maximizing current cash flows while at the same time enhancing long-term
value. The Properties are operated by 14 professional property managers, all of
whom have or are working toward professional designations. Each property manager
currently manages an average of 600,000 square feet in slightly over three
Properties. Property managers all have comprehensive written goals focusing on
the following objectives:
Tenant Coverage and Retention: The Operating Partnership believes
that the maintenance of good relationships and communications is imperative
to tenant retention. Managers meet with tenants on a regular basis, with
such communication considered essential not only in the lease renewal
process but also in identifying mutual needs and expectations while
clarifying and resolving issues. In general, leases are renewed at market
rates with standard escalation clauses. The property manager negotiates the
renewal terms with tenants, in conjunction with the leasing agent assigned
to the Property.
Property Maintenance and Expense Control: Maintenance of the
Portfolio is performed by both internal and third-party contract personnel.
The Operating Partnership's construction and property management personnel
ensure each Property is maintained in optimal condition while ensuring all
opportunities to minimize operating costs are considered. These
opportunities include property tax
S-11
<PAGE> 12
protestation, competitive bidding for third party services, conducting
routine preventative maintenance and enforcing strict accounting and
collection controls.
Financial Performance: Revenues from the Portfolio are maximized by
providing property managers and leasing agents with significant input in
the setting of financial goals for each Property and enabling property
managers and leasing agents to make decisions with respect to new and
renewal leases. Property managers are also required to follow strict
policies with respect to competitive bidding of contracts and the
collection procedures to be followed at each Property, as well as
aggressively to seek property tax reductions.
Leasing:
The Leasing Department is focused on attracting and retaining quality
tenants on economically favorable terms, leveraging off established tenant
relationships and capitalizing on the Operating Partnership's ability to offer
multiple locations. Each leasing representative is responsible for, on average,
1.7 million square feet of retail space or approximately five to nine shopping
centers. Leasing representatives are assigned specific Properties and are
responsible for the following objectives:
Creating an annual leasing plan including an analysis of the competition
for each center which is an integral part of the annual budget.
Managing all leasing activities including sourcing new tenants,
negotiating lease parameters, lease analysis and closing lease
transactions.
Working with property managers on lease renewals.
Monitoring and working with the construction department on tenant
improvements in order to insure that all lease occupancy requirements
are met.
Establishing tenant and industry relationships.
The Operating Partnership commits significant resources to market research
efforts. Leasing representatives have access to demographic programs detailing
existing and projected population, income and retail sales growth within a trade
area, as well as the macro and micro economic data provided by the Research
Department. In addition to this internal market data, leasing representatives
are required to prepare a site specific market analysis for each Property,
taking into consideration competitive centers, market rental rates, local tenant
concentration, traffic patterns and vacancies within competing centers.
Acquisitions:
The Operating Partnership focuses its efforts on the acquisition of
grocery-anchored, open-air neighborhood and community shopping centers in its
Midwest target area. Acquisition efforts are focused on both MSAs and secondary
markets in this area. The Operating Partnership seeks acquisitions in MSAs and
secondary markets where it can establish a strong market presence by owning
multiple properties. The Operating Partnership primarily seeks grocery-anchored,
open-air neighborhood and community shopping centers containing 60,000 to
200,000 square feet of rentable area and that have the following additional
characteristics:
Anchored by grocery stores that are operated by national or regional
Midwest chains or by top-tier independent operators with leading
positions in their trade areas.
Contain service retailer tenants, such as banks, related financial
service, brokerage, medical offices, auto service, restaurants, drug
stores, video stores and florists.
Have an appropriate balance of "small shop" space to the amount of
anchor square footage.
Have been sufficiently well-maintained so as not to have significant
deferred maintenance costs.
The Operating Partnership seeks to acquire properties that management
believes are priced below replacement cost, are located in strong Midwestern
MSAs or secondary markets, and that are capable of
S-12
<PAGE> 13
producing minimum acceptable threshold yields which management believes can be
increased through the Operating Partnership's operating and leasing experience
and in certain instances through strategic capital improvements. In conjunction
with extensive internal research and product sourcing efforts, the Operating
Partnership has established relationships with external brokers in a number of
its markets, enabling it to diversify its search throughout its Midwestern
target area. Such relationships give the Operating Partnership broad geographic
coverage while minimizing fixed general and administrative expenses.
Research:
The Research Department supports the overall strategic planning process as
well as the Acquisition, Leasing and Asset Management Departments. The Operating
Partnership maintains its own internal demographic, retailer and shopping center
databases with the assistance and support of outside consultants. Research
efforts are ongoing and focus on analyzing selected counties and MSAs throughout
the Operating Partnership's target markets in the Midwest. The research process
focuses on four major elements:
Demographic and economic trends in the Operating Partnership's trade
areas.
Detailed databases on shopping center inventory and owners.
Credit and operating information on the region's grocery operators, as
well as other national, regional and local tenants.
Supply and demand balances for retail space in the targeted markets'
trade areas.
Management Information Systems:
The Operating Partnership has integrated property management information
systems which include distributive processing features that make available next
day information to field and corporate office personnel of data and transactions
entered at each location. The system also includes a comprehensive lease
database containing all relevant economic and compliance provisions contained in
each lease. The system is designed with significant security, control and
efficiency features and includes automated billings, daily updates of
receivables and open payables and operational reports for both leasing and
property management personnel. Management of the Operating Partnership is
committed to continued investment in information technology so that information
systems will continue to be adequate to support the growth of the Operating
Partnership.
CAPITAL STRUCTURE
Management intends to finance the Operating Partnership's future growth
through the maintenance of a flexible capital structure that management believes
will allow the Operating Partnership to take advantage of acquisition and
development opportunities while providing access to the public debt and equity
capital markets on favorable terms. The Operating Partnership intends to
maintain a strong financial position by: (i) maintaining a low level of leverage
(i.e., a ratio of debt and preferred stock to Real Estate Value of 50% or less,
with "Real Estate Value" defined as annualized net operating income of the most
recent fiscal quarter divided by 10.25%), (ii) maintaining a large pool of
unencumbered properties, (iii) managing its exposure to variable interest rates,
and (iv) extending and staggering its debt maturities. Management currently
expects that all future indebtedness will be issued by the Operating
Partnership.
S-13
<PAGE> 14
PROPERTIES
The following table and notes describe the Properties owned by the Operating
Partnership as of December 31, 1997 and rental information for leases in effect
as of September 30, 1997 or, for Properties acquired after September 30, 1997,
as of the date of acquisition. All Properties are wholly owned by the Operating
Partnership in fee simple unless otherwise indicated. The Operating Partnership
currently has no major proposed program for the renovation, improvement or
development of any of its Properties and, unless otherwise indicated, the
Operating Partnership is holding the Properties for investment purposes. All of
the Properties are located in developed areas and, accordingly, must compete
with other similar properties for tenants and consumers. The Properties listed
in italics have been acquired since September 30, 1997.
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
- -------------------------------------------- -------- -------------- ------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ILLINOIS
Commons of Chicago Ridge and Annex 1996 309,000 93% $ 2,837,116 $ 9.85
Chicago Ridge, IL
Commons of Crystal Lake(4) 1996 273,000 71 2,261,841 11.61
Crystal Lake, IL
Crossroads Center 1992(5) 242,000 97 1,382,014 5.85
Fairview Heights, IL
Fairhills Shopping Center 1997 106,000 90 594,917 6.21
Springfield, IL
Heritage Square 1996 212,000 100 2,609,091 12.29
Naperville, IL
High Point Centre 1996 240,000 99 2,151,908 9.03
Lombard, IL
Parkway Pointe 1997 39,000 100 463,101 12.00
Springfield, IL
</TABLE>
<TABLE>
<CAPTION>
MAJOR TENANTS AND CERTAIN SQUARE BASE LEASE
SHOPPING CENTERS OTHER TENANTS(3) FEET EXPIRATION DATE
- -------------------------------------------- -------------------------- ------- ---------------
<S> <C> <C> <C>
ILLINOIS
Commons of Chicago Ridge and Annex T.J. Maxx* 25,082 1998
Chicago Ridge, IL Marshalls* 27,000 1999
Office Depot* 27,680 2002
Cineplex Odeon* 25,000 2008
Michaels Stores* 17,550 1999
Pep Boys* 22,354 2015
JC Penney Home Store* 55,000 2007
For Eyes Optical 2,188 2000
Dollar Bills 5,396 1999
Factory Card Outlet 11,085 2000
Commons of Crystal Lake(4) Jewel/Osco* 59,804 2007
Crystal Lake, IL Venture Stores (not
owned)* 81,338 2006
Jewelry 3 4,200 2005
Old Country Buffet 9,750 1998
Ulta 3 10,446 2000
Crossroads Center Kmart (ground lease)* 96,268 2001
Fairview Heights, IL T.J. Maxx* 32,200 2006
Sally Beauty 2,000 1999
Old Country Buffet 9,550 2003
Dress Barn 12,642 2002
Fairhills Shopping Center Jewel/Osco* 49,330 1998
Springfield, IL Baskin Robbins 1,170 1999
Heritage Square Montgomery Ward(6)* 111,016 2013
Naperville, IL Circuit City* 28,351 2009
Stroud's* 26,703 2003
Walter E. Smithe 5,000 2002
Coconuts 6,000 2003
Super Crown Books 10,497 2002
High Point Centre Cub Foods* 62,000 2008
Lombard, IL T.J. Maxx* 25,200 1998
Office Depot* 36,416 2003
MacFrugal's* 17,040 2006
Payless Shoesource 3,000 1998
Hollywood Video 8,100 2006
David's Bridal 13,205 2005
Parkway Pointe Shoe Carnival* 10,186 2004
Springfield, IL Dress Barn* 8,200 2002
Liberty Mutual 1,350 2001
Hollywood Video 6,000 2007
</TABLE>
S-14
<PAGE> 15
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
- -------------------------------------------- -------- ----------- ------ --------- ------------
<S> <C> <C> <C> <C> <C>
Rivercrest Center 1994(5) 458,000 99% $ 3,585,615 $ 7.87
Crestwood, IL
Rollins Crossing 1996 66,000(7) 82 489,939 9.08
Round Lake Beach, IL
Sangamon Center North 1997 140,000 98 1,002,405 7.31
Springfield, IL
Sheridan Village 1996 296,000 98 2,246,202 7.75
Peoria, IL
Sterling Bazaar 1997 82,000 94 646,884 8.40
Peoria, IL
Wardcliffe Center 1997 62,000 100 317,196 5.11
Peoria, IL
Westview Center 1993(5) 328,000 72 2,121,997 9.01
Hanover Park, IL
--------- --- ----------- -------
TOTAL/WEIGHTED AVERAGE ILLINOIS 2,853,000 91% $22,710,226 $ 8.69
INDIANA
Martin's Bittersweet Plaza(8) 1997 78,000 98 553,135 7.24
Mishawaka, IN
County Line Mall 1997 261,000 94 1,598,100 6.49
Indianapolis, IN
</TABLE>
<TABLE>
<CAPTION>
MAJOR TENANTS AND CERTAIN SQUARE BASE LEASE
SHOPPING CENTERS OTHER TENANTS(3) FEET EXPIRATION DATE
- -------------------------------------------- ------------------------- ------ ---------------
<S> <C> <C> <C>
Rivercrest Center Omni Foods* 87,937 2011
Crestwood, IL Venture Stores* 79,903 2011
Sears Roebuck and Co.* 55,000 2001
T.J. Maxx* 34,425 2004
PETsMART* 31,639 2010
Best Buy* 25,000 2008
OfficeMax* 24,000 2007
Hollywood Park* 15,000 2000
Funcoland 1,925 1998
Famous Footwear 6,000 2001
Lone Star Steakhouse 12,315 2001
Rollins Crossing Super Kmart (not owned)* 190,000 2033
Round Lake Beach, IL Sears Hardware* 21,083 2005
Pet Care Superstore 6,600 2000
Super Trak 10,000 2005
MC Sports 13,800 2005
Sangamon Center North Schnucks* 63,257 2016
Springfield, IL U.S. Post Office* 16,000 2005
Subway 1,400 1999
The Book Emporium 5,522 2001
Revco 12,468 2000
Sheridan Village Bergner's Dept. Store* 162,852 2006
Peoria, IL Cohen's Furniture* 16,600 2006
Radio Shack 3,510 2001
First of America 5,697 2001
Fashion Bug 11,020 2002
Sterling Bazaar Kroger* 52,337 2011
Peoria, IL Garner's Pizza & Wings 2,100 1999
Wardcliffe Center Big Lots* 26,741 2001
Peoria, IL Little Caesar's 2,617 1998
Golf Discount 5,175 1998
Westview Center Cub Foods* 67,163 2009
Hanover Park, IL Marshalls* 34,302 2004
H&R Block 1,200 1998
Bakers Square 5,510 2005
Giant Auto 12,000 1999
TOTAL/WEIGHTED AVERAGE ILLINOIS
INDIANA
Martin's Bittersweet Plaza(8) Martin's Supermarket* 45,079 2012
Mishawaka, IN Osco Drug* 16,000 2012
Mail Boxes, Etc. 1,000 1999
County Line Mall Kroger* 52,337 2011
Indianapolis, IN Target* 99,321 2002
Office Max/Furniture Max* 32,208 2004
The Book Rack 1,495 1998
Joann Fabrics 13,506 2001
</TABLE>
S-15
<PAGE> 16
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
- -------------------------------------------- -------- ----------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Speedway SuperCenter and Outlots 1996 541,000 97% $ 3,883,929 $ 7.43
Speedway, IN
The Village 1996 356,000 86 1,651,191 5.38
Gary, IN
Washington Lawndale Commons 1996 333,000 98 1,642,978 5.05
Evansville, IN
--------- --- ----------- -------
TOTAL/WEIGHTED AVERAGE INDIANA 1,569,000 94% $ 9,329,333 $ 6.32
IOWA
Burlington Plaza West 1997 88,000 94 573,685 6.94
Burlington, IA
Davenport Retail 1997 63,000 100 604,355 9.66
Davenport, IA
Holiday Plaza 1997 46,000 87 282,219 6.98
Cedar Falls, IA
Parkwood Plaza 1997 125,000 93 1,019,873 8.77
Urbandale, IA
Southgate Shopping Center(9) 1997 163,000 93 512,520 3.37
Des Moines, IA
</TABLE>
<TABLE>
<CAPTION>
MAJOR TENANTS AND CERTAIN SQUARE BASE LEASE
SHOPPING CENTERS OTHER TENANTS(3) FEET EXPIRATION DATE
- -------------------------------------------- ------------------------- ------- ---------------
<S> <C> <C> <C>
Speedway SuperCenter and Outlots Kohl's* 90,072 2004
Speedway, IN Kroger* 59,515 2013
Sears Roebuck and Co.* 30,825 2004
Old Navy* 15,000 2005
Kittles* 25,320 2000
PETsMART* 21,781 2002
Factory Card Outlet* 16,675 2003
Lindo Super Spa* 16,589 2000
Indy PC 1,445 1999
Applebees 5,400 2010
CVS Pharmacy 10,700 2006
The Village JC Penney* 60,600 1999
Gary, IN Goldblatt's* 55,000 2000
Post-Tribune Publishing* 19,246 1999
Indiana Employment* 18,050 2000
Kids Foot Locker 3,750 2005
Fagen Pharmacy 5,760 1998
Aldi's 13,099 2001
Washington Lawndale Commons Target* 83,110 2005
Evansville, IN Sears Homelife* 34,527 2003
Allied Sporting Goods* 20,285 1997
Jo-Ann Fabrics* 15,262 2003
Books-A-Million* 20,515 2002
Mazzio's Pizza 4,000 1999
U.S. Postal Service 9,400 2000
Revco Drugstore 10,500 2008
TOTAL/WEIGHTED AVERAGE INDIANA
IOWA
Burlington Plaza West Festival Foods* 52,468 2009
Burlington, IA The Book Emporium 4,000 2002
Circus Video 8,000 1999
Davenport Retail Staples* 24,153 2011
Davenport, IA PETsMART* 26,280 2011
Factory Card Outlet 12,155 2006
Holiday Plaza West Music* 8,450 2002
Cedar Falls, IA Little Caesar's 1,480 1999
Tan Down Under 6,000 2001
Parkwood Plaza FoodSaver* 63,075 2008
Urbandale, IA We Care Hair 1,350 2002
Hollywood Video 6,000 2007
Southgate Shopping Center(9) Hy Vee* 78,388 2014
Des Moines, IA Walgreens* 22,000 2012
Big Lots* 23,677 2001
Community State Bank 10,000 2002
Arona Corporation 8,500 2002
Clariborne Brothers 2,609 2007
</TABLE>
S-16
<PAGE> 17
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
- -------------------------------------------- -------- ----------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Spring Village 1997 91,000 100% $ 567,715 $ 6.22
Davenport, IA
Warren Plaza 1997(5) 90,000 100 660,828 7.33
Dubuque, IA
------- --- ---------- ------
TOTAL/WEIGHTED AVERAGE IOWA 666,000 95% $4,221,195 $ 6.65
KANSAS
Mid State Plaza 1997 287,000 84 767,676 3.17
Salina, KS
Santa Fe Square 1996(5) 134,000 94 1,100,219 8.75
Olathe, KS
Westchester Square 1997 165,000 93 1,231,672 8.03
Lenexa, KS
------- --- ---------- ------
TOTAL/WEIGHTED AVERAGE KANSAS 586,000 89% $3,099,567 $ 5.96
KENTUCKY
Stony Brook 1996 136,000 98 1,384,869 10.35
Louisville, KY
------- --- ---------- ------
TOTAL/WEIGHTED AVERAGE KENTUCKY 136,000 98% $1,384,869 $10.35
------- --- ---------- ------
MINNESOTA
Brookdale Square 1996(5) 185,000 86 1,175,468 7.34
Brooklyn, MN
Burning Tree Plaza 1993(5) 139,000 93 1,165,599 9.03
Duluth, MN
Central Valu 1997 123,000 93 836,208 7.28
Elk River, MN
</TABLE>
<TABLE>
<CAPTION>
MAJOR TENANTS AND CERTAIN SQUARE BASE LEASE
SHOPPING CENTERS OTHER TENANTS(3) FEET EXPIRATION DATE
- -------------------------------------------- ------------------------- ------ ---------------
<S> <C> <C> <C>
Spring Village Eagle Foods* 45,763 2005
Davenport, IA Cost Cutters 1,200 2000
Movie Gallery 5,400 2000
Walgreens 10,800 2000
Warren Plaza Hy-Vee Supermarket* 51,492 2013
Dubuque, IA Subway 1,300 2002
Perkins Restaurant 5,000 2000
Renier Company 7,200 2001
TOTAL/WEIGHTED AVERAGE IOWA
KANSAS
Mid State Plaza Food 4 Less* 32,579 2004
Salina, KS Sutherlands* 80,155 2002
Dollar General 10,700 2002
Mid States Cinema 7,449 2002
Cellular One 1,000 1998
Santa Fe Square Hy-Vee Supermarket* 55,820 2007
Olathe, KS Papa John's Pizza 1,250 2002
Paper Warehouse 9,490 2005
Fashion Bug 11,500 2004
Westchester Square Hy-Vee Supermarket* 63,000 2006
Lenexa, KS Pizza Hut 2,775 2002
Treasury Drug 8,468 2001
TOTAL/WEIGHTED AVERAGE KANSAS
KENTUCKY
Stony Brook Kroger* 79,625 2021
Louisville, KY Fantastic Sams 1,260 1999
Shogun Japanese 6,170 2000
Gatti's Pizza 10,258 2000
TOTAL/WEIGHTED AVERAGE KENTUCKY
MINNESOTA
Brookdale Square Circuit City* 36,391 2014
Brooklyn, MN Office Depot* 30,395 2004
Drug Emporium* 25,782 2000
United Artists* 24,534 2002
USA Karate 2,317 1998
Blockbuster Video 6,008 2004
Burning Tree Plaza T.J. Maxx* 30,000 2004
Duluth, MN Best Buy* 28,000 1999
Piece Goods Shops* 17,682 1999
Disc Go Round 1,200 2000
Memorial Blood 5,400 1997
Only Deals 10,000 2002
Central Valu Rainbow Foods* 66,314 1999
Elk River, MN Slumberland Clearance* 24,632 1999
Walgreens 12,000 2015
Top Valu Liquor 11,838 1999
</TABLE>
S-17
<PAGE> 18
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
- -------------------------------------------- -------- ----------- ------- --------- ------------
<S> <C> <C> <C> <C> <C>
Elk Park(10) 1997 155,000 99% $1,320,432 $ 8.59
Elk River, MN
Har Mar Mall 1992(5) 430,000 92 3,797,782 9.61
Roseville, MN
Hub West Shopping Center(11)(12) 1991(5) 78,000 100 839,271 10.72
Richfield, MN
Richfield Hub Shopping Center(11)(13) 1988(5) 138,000 98 1,262,477 9.35
Richfield, MN
Roseville Center 1997 75,000 92 624,708 9.14
Roseville, MN
Sun Ray Shopping Center 1961(5) 258,000 82 1,615,111 7.67
St. Paul, MN
Terrace Mall 1993(5) 137,000 94 913,871 7.09
Robbinsdale, MN
Westview Valu 1997 163,000 93 1,026,156 6.75
West St. Paul, MN
Westwind Plaza 1994(5) 88,000 92 891,960 11.07
Minnetonka, MN
</TABLE>
<TABLE>
<CAPTION>
MAJOR TENANTS AND CERTAIN SQUARE BASE LEASE
SHOPPING CENTERS OTHER TENANTS(3) FEET EXPIRATION DATE
- -------------------------------------------- ------------------------- ------- ---------------
<S> <C> <C> <C>
Elk Park(10) Cub Foods* 60,066 2016
Elk River, MN Fashion Bug 12,053 2006
Only Deals 6,020 2003
Vision World 1,406 2000
Har Mar Mall HomePlace* 54,489 2010
Roseville, MN Barnes & Noble* 44,856 2010
Marshalls* 34,858 1998
T.J. Maxx* 25,025 1998
General Cinema* 22,252 2001
General Cinema* 19,950 2000
Michaels Stores* 17,907 2003
Binding Memories 1,970 2002
The Ground Round 5,796 2002
Petters Warehouse* 17,386 2006
Hub West Shopping Center(11)(12) Rainbow Foods* 50,817 2012
Richfield, MN U.S. Swim & Fitness* 26,185 2001
Great Clips 1,300 1999
Richfield Hub Shopping Center(11)(13) Marshalls* 26,785 2003
Richfield, MN Michaels Stores* 24,235 1999
Burger King 4,401 2016
Famous Footwear 6,000 1998
Walgreens 12,000 2000
Roseville Center Minnesota Fabrics* 12,000 2004
Roseville, MN Snyder Drugs* 8,250 1998
Snuffy's Malt Shoppe 2,750 2001
Big Wheel Auto 5,800 2003
Blockbuster Video 8,162 2003
Sun Ray Shopping Center JC Penney* 40,451 1999
St. Paul, MN Marshalls* 26,256 2005
T.J. Maxx* 23,955 2000
Petter's* 20,000 2007
Michaels Stores* 18,127 2004
Bruegger's Bagels 2,400 2006
Petland 5,141 2000
Snyder's Drugstore 13,800 2002
Terrace Mall Rainbow Foods* 59,232 2013
Robbinsdale, MN North Memorial* 32,000 1999
Mail Boxes, Etc. 1,358 1999
Blockbuster Video 7,826 1999
Westview Valu Burlington Coat Factory* 41,248 2004
West St. Paul, MN Cub Foods* 92,646 1999
Mill End Textiles 7,826 2000
David V. Sass, D.D.S. 1,900 2005
Westwind Plaza Northern Hydraulics* 18,165 2002
Minnetonka, MN Caribou Coffee 2,880 2007
Big Wheel Auto 6,200 2000
Walgreens 11,009 2024
</TABLE>
S-18
<PAGE> 19
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
- -------------------------------------------- -------- ----------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C>
White Bear Hills 1993(5) 73,000 100% $ 592,781 $ 8.11
White Bear Lake, MN
--------- --- ----------- ------
TOTAL/WEIGHTED AVERAGE MINNESOTA 2,042,000 92% $16,061,824 $ 8.54
MISSOURI
Grandview Plaza 1971(5) 316,000 78 2,127,323 8.61
Florissant, MO
Liberty Corners 1997 121,000 100 720,941 5.94
Liberty, MO
--------- --- ----------- ------
TOTAL/WEIGHTED AVERAGE MISSOURI 437,000 84% $ 2,848,264 $ 7.73
NEW MEXICO
St. Francis Plaza(11)(15) 1995 30,000 100 357,000 11.90
Santa Fe, NM
--------- --- ----------- ------
TOTAL/WEIGHTED AVERAGE NEW MEXICO 30,000 100% $ 357,000 $11.90
SOUTH DAKOTA
Baken Park 1997 184,000 94 998,208 5.76
Rapid City, SD
--------- --- ----------- ------
TOTAL/WEIGHTED AVERAGE SOUTH DAKOTA 184,000 94% $ 998,208 $ 5.76
TENNESSEE
Williamson Square(16)(17) 1996 335,000 90 2,109,757 6.99
Franklin, TN
--------- --- ----------- ------
TOTAL/WEIGHTED AVERAGE TENNESSEE 335,000 90% $ 2,109,757 $ 6.99
WISCONSIN
Madison Plaza 1997 128,000 100 991,131 7.77
Madison, WI
Mequon Pavilions 1996 212,000 98 2,269,611 10.90
Mequon, WI
</TABLE>
<TABLE>
<CAPTION>
MAJOR TENANTS AND CERTAIN SQUARE BASE LEASE
SHOPPING CENTERS OTHER TENANTS(3) FEET EXPIRATION DATE
- -------------------------------------------- ------------------------- ------- ---------------
<S> <C> <C> <C>
White Bear Hills Festival Foods* 45,679 2011
White Bear Lake, MN Cost Cutters 1,200 2002
Video Update 6,000 2006
Walgreens 11,890 2030
TOTAL/WEIGHTED AVERAGE MINNESOTA
MISSOURI
Grandview Plaza Home Quarters(14)* 84,611 2013
Florissant, MO Schnucks* 68,025 2011
Walgreens* 15,984 2008
Custom Cellular 2,400 2004
Thoughtful Cards 6,121 2000
Liberty Corners Price Chopper* 56,000 2007
Liberty, MO Famous Footwear 4,500 1998
Bette's Hallmark 8,450 1999
Fashion Bug 10,770 2000
TOTAL/WEIGHTED AVERAGE MISSOURI
NEW MEXICO
St. Francis Plaza(11)(15) Walgreens* 14,950 2013
Santa Fe, NM Wild Oats* 14,850 2006
TOTAL/WEIGHTED AVERAGE NEW MEXICO
SOUTH DAKOTA
Baken Park Nash Finch* 44,337 2017
Rapid City, SD Ben Franklin* 27,155 2003
Boyd's Drugs* 19,200 2004
Hardware Hank 11,000 1999
Crown Gallery 6,147 2000
Baken Park Barber Shop 700 2002
TOTAL/WEIGHTED AVERAGE SOUTH DAKOTA
TENNESSEE
Williamson Square(16)(17) Wal-Mart* 117,493 2008
Franklin, TN Kroger* 63,986 2008
Carmike Cinemas* 29,000 2008
Pearle Vision Center 3,180 2000
Comfort Source 7,743 2003
YMCA 14,450 2002
TOTAL/WEIGHTED AVERAGE TENNESSEE
WISCONSIN
Madison Plaza Supersaver* 73,309 2008
Madison, WI Subway 1,200 1999
Planet Video 6,000 2004
Walgreens 13,500 2045
Mequon Pavilions Kohl's Food Emporium* 45,697 2010
Mequon, WI Furniture Clearance* 19,900 1997
The Men's Warehouse 4,738 2000
Mequon Pharmacy 6,500 1998
Bedtime 11,512 2001
</TABLE>
S-19
<PAGE> 20
<TABLE>
<CAPTION>
GROSS
LEASABLE ANNUALIZED
YEAR AREA (GLA) PERCENT ANNUALIZED BASE RENT PER
SHOPPING CENTERS ACQUIRED SQUARE FEET LEASED BASE RENT(1) LEASED SF(2)
- -------------------------------------------- -------- -------------- ------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Park Plaza 1997 108,000 100% $ 599,892 $ 5.55
Manitiwoc, WI
Spring Mall(18) 1997 180,000 92 1,014,864 6.12
Greenfield, WI
---------- --- ----------- ------
TOTAL/WEIGHTED AVERAGE WISCONSIN 628,000 97% $ 4,875,498 $ 8.00
---------- --- ----------- ------
TOTAL/WEIGHTED AVERAGE SHOPPING CENTERS 9,466,000 92% $67,995,741 $ 7.78
RETAIL/OFFICE BUILDING
ILLINOIS
One North State(19) 1996 639,000 98 9,849,135 15.72
Chicago, IL
GRAND TOTAL/WEIGHTED AVERAGE 10,105,000 93% $77,844,876 $ 8.31
========== === =========== ======
</TABLE>
<TABLE>
<CAPTION>
MAJOR TENANTS AND CERTAIN SQUARE BASE LEASE
SHOPPING CENTERS OTHER TENANTS(3) FEET EXPIRATION DATE
- -------------------------------------------- -------------------------- ------- ---------------
<S> <C> <C> <C>
Park Plaza Sentry Foods* 45,000 2006
Manitiwoc, WI Big Lots* 29,063 1998
Associated Bank 7,837 2003
Rent A Center 3,093 1998
Spring Mall(18) Pick N Save 77,150 2004
Greenfield, WI Walgreens 17,600 2007
TJ Maxx 32,658 2003
Spring Mall Theatre 16,000 2004
Fashion Bug 16,000 2004
Sally Beauty 2,146 1998
TOTAL/WEIGHTED AVERAGE WISCONSIN
TOTAL/WEIGHTED AVERAGE SHOPPING CENTERS
RETAIL/OFFICE BUILDING
ILLINOIS
One North State(19) First Chicago* 296,782 2003
Chicago, IL Arthur Andersen(20)* 126,533 1998
T.J. Maxx* 77,675 2001
Filene's Basement* 50,000 2002
Int'l Academy of Design* 44,000 2003
Bruegger's Bagels 2,845 2002
Group USA 6,200 2004
GRAND TOTAL/WEIGHTED AVERAGE
</TABLE>
- ---------------
(1) Annualized base rent is calculated by multiplying monthly base rent for
September 1997 by 12. For Properties acquired after September 1997,
annualized base rent is calculated by multiplying the first month's pro
forma base rent by 12.
(2) Calculated by dividing annualized base rent (calculated as described in
note (1) above) by the square footage that the Operating Partnership had
leased at September 30, 1997 or at the date of acquisition for Properties
acquired thereafter.
(3) This column lists each of the "Major Tenants" at the Properties (indicated
with an asterisk) and certain other tenants to provide a representative
sample of the Operating Partnership's tenant base. Major Tenants are
defined as tenants leasing 15,000 square feet or more of the rentable
square footage, with the exception of Parkway Pointe, Holiday Plaza,
Roseville Center and St. Francis Plaza. In some cases, the named tenant
occupies the premises as a sublessee.
(4) The amount of rentable square feet at Commons of Crystal Lake does not
include approximately 81,000 square feet which is owned by Metropolitan
Life and leased to Venture Stores, Inc.
(5) Date represents the year the Property was acquired by the Company. The
Company contributed the Property to the Operating Partnership in August
1997 in order to consolidate the ownership of the Properties in one entity.
(6) Montgomery Ward, which has sought protection under Chapter 11 of the United
States Bankruptcy Code, notified the Operating Partnership that it intended
to close this store on or about December 31, 1997. As of the date of this
Prospectus Supplement, this store was still open.
(7) The amount of rentable square feet at Rollins Crossing does not include
approximately 190,000 square feet which is owned by Kmart Corporation.
(8) This Property secures certain indebtedness due June 2003 which bears
interest at an effective rate of 8.875% per annum. As of December 31, 1997,
such indebtedness had an outstanding balance of $3,679,000.
(9) This Property secures certain indebtedness due October 2007 which bears
interest at an effective rate of 7.25% per annum. As of December 31, 1997,
such indebtedness had an outstanding balance of $3,159,000.
(10) This Property secures certain indebtedness due August 2016 which bears
interest at an effective rate of 7.64% per annum. As of December 31, 1997,
such indebtedness had an outstanding balance of $9,796,000.
(11) Title to this Property is held by the Company for the benefit of the
Operating Partnership.
S-20
<PAGE> 21
(12) This Property secures certain indebtedness due September 1998 which bears
interest at an effective rate of 9.875% per annum. As of December 31, 1997,
such indebtedness had an outstanding balance of $4,865,000.
(13) This Property secures certain indebtedness due September 1998 which bears
interest at an effective rate of 9.875% per annum. As of December 31, 1997,
such indebtedness had an outstanding balance of $5,270,000.
(14) Home Quarters, which has sought protection under Chapter 11 of the United
States Bankruptcy Code, has notified the Operating Partnership that it
intends to close this store on or about January 19, 1998.
(15) This Property secures certain indebtedness due December 2008 which bears
interest at an effective rate of 8.125% per annum. As of December 31, 1997,
such indebtedness had an outstanding balance of $1,845,000.
(16) The Operating Partnership is the 60% general partner of a partnership
owning this property, whose limited partner interests are owned by an
unrelated investor.
(17) This Property secures certain indebtedness due August 2005 which bears
interest at an effective rate of 8.0% per annum. As of December 31, 1997,
such indebtedness had an outstanding balance of $12,709,000.
(18) This Property secures certain indebtedness due August 2006 which bears
interest at an effective rate of 7.25% per annum. As of December 31, 1997,
such indebtedness had an outstanding balance of $9,904,000.
(19) This Property is held for sale.
(20) This tenant exercised its option on April 1, 1996, to terminate its lease,
effective as of April 1, 1998, and has paid a $1.8 million cancellation
fee.
S-21
<PAGE> 22
INDEBTEDNESS
The Operating Partnership is a party to the $200 million Line of Credit
with a syndicate of banks led by The First National Bank of Chicago and
BankBoston, N.A. The Line of Credit, which matures in December 2000, is
available for the acquisition, development, renovation and expansion of existing
and new properties and for working capital purposes. As of December 31, 1997,
the outstanding balance of the Line of Credit was $151.7 million. The line bears
interest at a rate equal to the lowest of (i) the lead bank's base rate, (ii) a
spread over LIBOR ranging from 0.70% to 1.25% depending on the credit rating
assigned by national credit rating agencies, or (iii) for amounts outstanding up
to $100 million, a competitive bid rate solicited from the syndicate of banks.
As a result of the investment grade corporate rating of "BBB-" assigned to the
Operating Partnership by Standard & Poor's in August 1997 and the investment
grade rating of "Baa3" assigned by Moody's to the offering of the 2004 Notes
which was completed in November 1997, the spread over LIBOR is 1.00%.
Additionally, there is a facility fee currently equal to $300,000 per annum. In
the event the current credit ratings were downgraded by either Standard & Poor's
or Moody's, the facility fee would increase to $500,000 per annum, and the
spread over the base rate would increase by 0.25% and the spread over LIBOR
would increase to 1.25%. The Line of Credit contains certain financial and
operational covenants that, among other provisions, limit the amount of secured
and unsecured indebtedness the Company and the Operating Partnership may have
outstanding at any time, and provide for the maintenance of certain financial
tests including minimum net worth and debt service coverage requirements.
Management believes that such covenants will not adversely affect the business
or the operation of its Properties. In addition, the lenders may accelerate the
maturity of the Line of Credit in the event that the Operating Partnership fails
to pay at maturity or the Operating Partnership or the Company fails to perform
any other material obligation under any other indebtedness, singly or in the
aggregate, in excess of (i) $5 million with respect to all indebtedness other
than non-recourse indebtedness or (ii) $20 million with respect to indebtedness
which is non-recourse.
On November 24, 1997, the Operating Partnership completed the offering of
the 2004 Notes. The price to the public was 99.78% of the principal amount of
the 2004 Notes. The Operating Partnership used the net proceeds to prepay a
portion of the REMIC Note, accrued interest thereon and a related prepayment
yield maintenance fee of approximately $4.3 million. Except for interest rate
and maturity, the 2004 Notes have the same terms and conditions as, and rank
equally with, the Notes offered hereby.
Eight Properties owned by the Operating Partnership as of December 31, 1997
secure an aggregate of approximately $51.2 million of mortgage debt, with
balloon maturities of approximately $10.0 million in September 1998, $2.9
million in 2003, $10.7 million in 2005, $7.9 million in 2006, $2.1 million in
2007 and $9.8 million in 2016. As of December 31, 1997, total debt outstanding
amounted to $302,710,000, and approximately 88.4% of the Operating Partnership's
Total Assets were unencumbered by any mortgage indebtedness.
USE OF INTEREST RATE AND EXCHANGE RATE HEDGING INSTRUMENTS AND RELATED RISKS
The Operating Partnership may enter into derivative financial instrument
transactions in order to mitigate its interest rate risk on a related financial
instrument. The Operating Partnership has designated these derivative financial
instruments as hedges and applies deferral accounting, as the instrument to be
hedged exposes the Operating Partnership to interest rate risk and the
derivative financial instrument reduces that exposure. Gains and losses related
to the derivative financial instrument are deferred and amortized over the terms
of the hedged instrument. If a derivative terminates or is sold, the gain or
loss is deferred and amortized over the remaining life of the derivative.
Derivatives that do not satisfy the criteria above are carried at market value,
and any changes in market value are recognized in other income. As of December
31, 1997, the Operating Partnership has only entered into derivative
transactions that satisfy the aforementioned criteria. By entering into such
hedging transactions, the Operating Partnership may be prevented from taking
advantage of lower interest rates if interest rates decline. The holders of the
Notes will be affected by any resulting impact on the general creditworthiness
of the Operating Partnership. In addition, in the event that debt securities are
not issued for the purpose of repaying unsecured indebtedness in the future, the
Operating Partnership will either settle or mark to market the forward Treasury
Note purchase agreements and any gain or loss on the difference between the
market value and the cost basis of the agreements will be recognized into
earnings.
S-22
<PAGE> 23
Subsequently, the forward Treasury Note purchase agreements will be carried at
market and any changes in market value will be recognized into earnings. In the
event that the Operating Partnership settles the forward Treasury Note purchase
agreements at a time when interest rates have decreased, the Operating
Partnership will be required to pay the counterparty to such agreement an amount
which could adversely affect the Operating Partnership's net income and cash
available for distribution and may affect the amount of distributions it can
make to the holders of Units, including the Company.
S-23
<PAGE> 24
USE OF PROCEEDS
The net proceeds to the Operating Partnership from the sale of the Notes
offered hereby, after deducting the underwriting discount and expenses are
estimated to be approximately $148,275,000. The Operating Partnership intends to
use the net proceeds to reduce the outstanding indebtedness incurred under the
Operating Partnership's Line of Credit, with the expectation that the Operating
Partnership may reborrow under the line for the acquisition, development,
renovation and expansion of properties. Following this Offering, the Operating
Partnership will have approximately $197.4 million of potential availability
under the Line of Credit. The Line of Credit matures on December 22, 2000 and
outstanding borrowings under the Line of Credit bear interest at a variable
rate, depending upon the rating assigned by recognized rating agencies, which
rate is currently 1.0% over LIBOR.
CAPITALIZATION
The following table sets forth the capitalization of the Operating
Partnership as of September 30, 1997 on an historical basis, on a pro forma
basis to give effect to certain events that occurred subsequent to September 30,
1997 and on an as adjusted basis to give effect to the issuance and sale of the
Notes and application of the net proceeds therefrom. See "Use of Proceeds." The
information set forth in the table should be read in conjunction with the
selected financial information presented elsewhere in this Prospectus Supplement
and the Consolidated Financial Statements and notes thereto incorporated by
reference into the accompanying Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-------------------------------------------
PRO
HISTORICAL FORMA(1) AS ADJUSTED
---------- --------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
DEBT:
Line of Credit(2)..................................... $121,800 $151,700 $ 2,638
Mortgage Notes Payable................................ 128,711 51,371 51,371
Notes due 2004........................................ -- 100,000 100,000
Notes due 2003........................................ -- -- 50,000
Notes due 2008........................................ -- -- 100,000
------- ------- --------
Total Debt.................................... 250,511 303,071 304,009
------- ------- --------
PARTNERS' CAPITAL:
Operating Partnership Units -- 22,752,076 issued and
outstanding as of September 30, 1997 and 24,521,513
issued and outstanding as of December 31, 1997.....
GP Units -- 21,681,156 outstanding as of September 30,
1997 and 22,999,120 outstanding as of December 31,
1997............................................... 291,981 315,327 315,327
LP Units -- 1,070,920 outstanding as of September 30,
1997 and 1,522,393 outstanding as of December 31,
1997............................................... 14,422 25,123 25,123
------- ------- --------
Total partners' capital............................ 306,403 340,450 340,450
------- ------- --------
Total capitalization.......................... $556,914 $643,521 $644,459
======== ======== ========
</TABLE>
- ---------------
(1) Reflects changes to the Operating Partnership's capitalization resulting
from the public offering of the 2004 Notes, the proceeds of which were used
substantially to repay the REMIC Note, the issuance of an aggregate of
1,317,964 GP Units to correspond to the issuance of a like number of shares
of Common Stock by the Company, the issuance of 452,710 LP Units valued at
approximately $9,155,000, the assumption of $22,860,000 of mortgage debt
associated with acquisitions and draws of approximately $29.9 million under
the Line of Credit, all of which were consummated subsequent to September
30, 1997.
(2) The outstanding balance of the Line of Credit as of December 31, 1997 was
$151.7 million.
S-24
<PAGE> 25
SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial data for the
Operating Partnership and is qualified by, and should be read in conjunction
with, the information included under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the "Consolidated Financial
Statements" included in the Operating Partnership's Form 10, as amended, and in
the Operating Partnership's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997 incorporated herein by reference. In the opinion of
management, the consolidated historical financial information of the Operating
Partnership for the nine months ended September 30, 1997 and 1996 includes all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the information set forth herein. See "Available Information" and
"Incorporation of Certain Documents by Reference" in the accompanying
Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
(UNAUDITED) YEARS ENDED DECEMBER 31,
------------------------- ---------------------------------------------------------------
HISTORICAL HISTORICAL
------------------------- ---------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ---------- ---------- ---------- ----------
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Rental income..................... $ 69,922 $ 54,643 $ 77,512 $ 36,405 $ 32,875 $ 22,875 $ 11,839
Other income...................... 1,093 996 1,327 167 112 594 308
Expenses.......................... 51,109 43,318 60,184 27,711 24,877 17,550 11,175
----------- ----------- ----------- ---------- ---------- ---------- ----------
Income before gain on sale and
provision for loss on real
estate investments.............. 19,906 12,321 18,655 8,861 8,110 5,919 972
Gain on sale of property.......... 3,073 9,379 9,379 -- 983 -- --
Provision for loss on real estate
investment...................... (1,300) -- -- -- -- -- --
----------- ----------- ----------- ---------- ---------- ---------- ----------
Income before allocation to
minority interest............... 21,679 21,700 28,034 8,861 9,093 5,919 $ 972
Income allocated to minority
interest........................ (70) (54) (78) -- -- -- --
----------- ----------- ----------- ---------- ---------- ---------- ----------
Net income........................ $ 21,609 $ 21,646 $ 27,956 $ 8,861 $ 9,093 $ 5,919 $ 972
=========== =========== =========== ========== ========== ========== ==========
Total assets at end of period..... $ 577,870 $ 485,961 $ 502,284 $ 180,545 $ 166,579 $ 127,931 $ 93,326
=========== =========== =========== ========== ========== ========== ==========
Mortgage and bank loans payable at
end of period................... $ 250,511 $ 220,017 $ 188,894 $ 39,394 $ 66,748 $ 29,317 $ 44,085
=========== =========== =========== ========== ========== ========== ==========
Per Unit:
Net income...................... $ 0.97 $ 1.28 $ 1.56 $ 0.90 $ 1.11 $ 0.88 $ 0.49
Distributions................... $ 1.01 $ 0.99 $ 1.34 $ 1.37 $ 1.35 $ 1.29 $ 1.24
Weighted average units
outstanding..................... 22,372,142 16,859,016 17,932,769 9,863,767 8,191,831 6,715,813 1,972,054
</TABLE>
S-25
<PAGE> 26
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements the description of the general terms and provisions of the
"Senior Securities" set forth in the accompanying Prospectus under "Description
of Debt Securities," to which reference is hereby made. Unless otherwise defined
in this Prospectus Supplement, capitalized terms used under "Description of
Notes" have the meaning set forth in the Indenture.
GENERAL
The 2003 Notes and the 2008 Notes constitute separate series of Senior
Securities (which are more fully described in the accompanying Prospectus) to be
issued under an indenture, dated as of November 24, 1997 (the "Indenture") and
separate supplemental indentures relating to each of the 2003 Notes and the 2008
Notes (collectively the "Supplemental Indentures") between the Operating
Partnership and LaSalle National Bank (the "Trustee"). The form of the Indenture
has been filed as an exhibit to the Registration Statement of which this
Prospectus Supplement is a part and it and the Supplemental Indentures are
available for inspection at the offices of the Operating Partnership. The
Indenture and the Supplemental Indentures are subject to, and governed by, the
Trust Indenture Act of 1939, as amended (the "TIA"). The statements made
hereunder relating to the Indenture, the Supplemental Indentures and the Notes
to be issued thereunder are descriptions of the material provisions thereof. All
section references appearing herein are to sections of the Indenture and
capitalized terms used but not defined herein shall have the respective meanings
set forth in the Indenture.
The 2003 Notes will be limited to an aggregate principal amount of
$50,000,000, and the 2008 Notes will be limited to an aggregate principal amount
of $100,000,000. The Notes will be direct, unsecured obligations of the
Operating Partnership and will rank equally with each other and with all other
unsecured and unsubordinated indebtedness (as defined below) of the Operating
Partnership from time to time outstanding, including the 2004 Notes. The Notes
will be effectively subordinated to mortgages and other secured indebtedness of
the Operating Partnership and to Indebtedness and other liabilities of any
Subsidiaries (as defined below) which may be formed by the Operating Partnership
in the future. Accordingly, such prior indebtedness will have to be satisfied in
full before holders of the Notes will be able to realize any value from
encumbered or indirectly-held Properties. In addition, the Notes will be repaid
solely from the assets of the Operating Partnership; holders of the Notes will
not have recourse against any limited partner of the Operating Partnership for
the repayment of the Notes.
As of September 30, 1997, on a pro forma basis after giving effect to the
matters described in footnote (1) under "Capitalization" above, and as further
adjusted to give effect to the offering of the Notes hereby and the application
of the net proceeds therefrom, the Operating Partnership would have had
approximately $304 million of total indebtedness, of which approximately $252.6
million would have been unsecured indebtedness and approximately $51.4 million
would have been indebtedness secured by certain of the Properties. The Operating
Partnership may incur additional indebtedness, including secured indebtedness,
subject to the provisions described below under "-- Certain
Covenants -- Limitations on Incurrence of Indebtedness."
The Notes will only be issued in fully registered form in denominations of
$1,000 and integral multiples thereof.
PRINCIPAL AND INTEREST
The 2003 Notes will bear interest at % per annum and will mature on
February 1, 2003, and the 2008 Notes will bear interest at % per annum and
will mature on February 1, 2008. The Notes will bear interest from January ,
1998 or from the immediately preceding Interest Payment Date (as defined below)
to which interest has been paid, payable semi-annually in arrears on February 1
and August 1 of each year, commencing August 1, 1998 (each, an "Interest Payment
Date") and on the applicable Maturity Date, to the Persons in whose name the
Notes are registered in the Security Register on the preceding January 15 or
July 15 (whether or not a Business Day, as defined below), as the case may be
(each, a "Regular Record Date"). Interest on the Notes will be computed on the
basis of a 360-day year of twelve 30-day months.
S-26
<PAGE> 27
If any Interest Payment Date or the Stated Maturity Date falls on a day
that is not a Business Day, the required payment shall be made on the next
Business Day as if it were made on the date such payment was due and no interest
shall accrue on the amount so payable for the period from and after such
Interest Payment Date or the Maturity Date, as the case may be. "Business Day"
means any day, other than a Saturday or Sunday, on which banks in the City of
New York or in the City of Chicago are not required or authorized by law,
regulation or executive order to close.
The principal of and interest on the Notes will be payable at the corporate
trust office of LaSalle National Bank (the "Paying Agent") in the City of
Chicago, Illinois, initially located at 135 South LaSalle Street, Chicago,
Illinois 60603, provided that at the option of the Operating Partnership,
payment of interest may be made by check mailed to the address of the Person
entitled thereto as it appears in the Security Register or by wire transfer of
funds to such Person at an account maintained within the United States.
OPTIONAL REDEMPTION
Each series of the Notes may be redeemed at any time at the option and in
the sole discretion of the Operating Partnership, in whole or from time to time
in part, at a redemption price equal to the sum of (i) the principal amount of
such Notes being redeemed plus accrued interest thereon to the redemption date,
and (ii) the Make-Whole Amount (as defined below), if any, with respect to such
Notes (the "Redemption Price").
If notice has been given as provided in the Indenture and funds for the
redemption of any Notes called for redemption shall have been made available on
the redemption date referred to in such notice, such Notes will cease to bear
interest on the date fixed for such redemption specified in such notice and the
only right of the Holders of the Note will be to receive payment of the
Redemption Price. The Operating Partnership would not have to repay any other
liabilities or obtain any consents or waivers before the redemption of the
Notes. In the event, however, that the Operating Partnership fails to redeem any
Notes submitted for redemption in an aggregate amount of $20 million or greater,
the lenders under the Operating Partnership's Line of Credit may accelerate such
Line of Credit. The terms of the Operating Partnership's other indebtedness do
not contain limits on the Operating Partnership's ability to repay any Notes
which have been submitted for redemption so long as the Operating Partnership
does not fail to repay such Notes in an aggregate amount of $20 million or
greater. In the event of such failure to repay the Notes, the lenders under the
Operating Partnership's Line of Credit may accelerate such Line of Credit.
Notice of any optional redemption of any Notes will be given to Holders at
their addresses, as shown in the Security Register for the Notes, not more than
60 nor less than 30 days prior to the date fixed for redemption. The notice of
redemption will specify, among other items, the Redemption Price and the
principal amount of the Notes held by each Holder to be redeemed.
If less than all of the Notes of a series are to be redeemed at the option
and in the sole discretion of the Operating Partnership, the Operating
Partnership will notify the Trustee at least 45 days prior to the giving of the
redemption notice (or such shorter period as is satisfactory to the Trustee) of
the aggregate principal amount of Notes to be redeemed and their redemption
date. The Trustee shall select not more than 60 days prior to the redemption
date, in such manner as it shall deem fair and appropriate, Notes to be redeemed
in whole or in part. Notes may be redeemed in part in the minimum authorized
denomination for Notes or in any integral multiple thereof.
As used herein:
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any Note the excess, if any, of (i) the aggregate present
value as of the date of such redemption or accelerated payment of each dollar of
principal being redeemed or paid and the amount of interest (exclusive of
interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of each such dollar if such redemption or
accelerated payment had not been made, determined by discounting, on a
semi-annual basis, such principal and interest at the Reinvestment Rate
(determined on the third Business Day preceding the date such notice of
redemption is given or declaration of acceleration is made) from the
S-27
<PAGE> 28
respective dates on which such principal and interest would have been payable if
such redemption or accelerated payment had not been made to the date of
redemption or accelerated payment, over (ii) the aggregate principal amount of
the respective Notes being redeemed or paid. For purposes of the Indenture, all
references to any "premium" on the Notes shall be deemed to refer to any
Make-Whole Amount, unless the context otherwise requires.
"Reinvestment Rate" means 0.25% (twenty-five one hundredths of one percent)
plus the arithmetic mean of the yields under the respective headings "This Week"
and "Last Week" published in the Statistical Release (as defined below) under
the caption "Treasury Constant Maturities" for the maturity (rounded to the
nearest month) corresponding to the remaining life to maturity, as of the
payment date of the principal being redeemed or paid. If no maturity exactly
corresponds to such maturity, yields for the two published maturities most
closely corresponding to such maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. For the purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
"Statistical Release" means the statistical release designated "H.15(519)"
or any successor publication which is published weekly by the Board of Governors
of the Federal Reserve System and which reports yields on actively traded United
States government securities adjusted to constant maturities or, if such
Statistical Release is not published at the time of any determination of the
Make-Whole Amount, then such other reasonably comparable index which shall be
designated by the Operating Partnership.
CERTAIN COVENANTS
For so long as any of the Notes are outstanding, the Operating Partnership
will comply with the following Covenants:
Limitations on Incurrence of Indebtedness. The Operating Partnership will
not, and will not permit any Subsidiary to, incur any Indebtedness (as defined
below) if, immediately after giving effect to the incurrence of such additional
Indebtedness and the application of the proceeds thereof, the aggregate
principal amount of all outstanding Indebtedness of the Operating Partnership
and its Subsidiaries on a consolidated basis determined in accordance with GAAP
is greater than 60% of the sum of (without duplication) (i) the Total Assets (as
defined below) of the Operating Partnership and its Subsidiaries as of the end
of the calendar quarter covered in the Operating Partnership's Annual Report on
Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently
filed with the Securities and Exchange Commission (the "Commission") (or, if
such filing is not permitted under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), with the Trustee) prior to the incurrence of such
additional Indebtedness, and (ii) the purchase price of any real estate assets
or mortgages receivable acquired since the end of the most recent calendar
quarter, and (iii) the amount of any securities offering proceeds received (to
the extent that such proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Indebtedness), by the Operating
Partnership or any Subsidiary since the end of such calendar quarter, including
those proceeds obtained in connection with the incurrence of such additional
Indebtedness, less (iv) the decrease, if any, in the Total Assets of the
Operating Partnership and its Subsidiaries since the end of such quarter.
In addition to the foregoing limitation on the incurrence of Indebtedness,
the Operating Partnership will not, and will not permit any Subsidiary to, incur
any Indebtedness secured by any Encumbrance (as defined below) upon any of the
Property of the Operating Partnership or any Subsidiary if, immediately after
giving effect to the incurrence of such additional Indebtedness and the
application of the proceeds thereof, the aggregate principal amount of all
outstanding Indebtedness of the Operating Partnership and its Subsidiaries on a
consolidated basis which is secured by any Encumbrance on property of the
Operating Partnership or any Subsidiary is greater than 40% of the sum of
(without duplication) (i) the Total Assets of the Operating Partnership and its
Subsidiaries as of the end of the calendar quarter covered in the Operating
Partnership's Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as
the case may be, most recently filed with the Commission (or, if such filing is
not permitted under the Exchange Act, with the Trustee) prior to the
S-28
<PAGE> 29
incurrence of such additional Indebtedness and (ii) the purchase price of any
real estate assets or mortgages receivable acquired since the end of such
calendar quarter, and (iii) the amount of any securities offering proceeds
received (to the extent that such proceeds were not used to acquire real estate
assets or mortgages receivable or used to reduce Indebtedness), by the Operating
Partnership or any Subsidiary since the end of such calendar quarter, including
those proceeds obtained in connection with the incurrence of such additional
Indebtedness, less (iv) the decrease, if any, in the Total Assets of the
Operating Partnership and its Subsidiaries since the end of such quarter.
The Operating Partnership and its Subsidiaries may not at any time own
Total Unencumbered Assets (as defined below) equal to less than 150% of the
aggregate outstanding principal amount of the Unsecured Indebtedness (as defined
below) of the Operating Partnership and its Subsidiaries on a consolidated
basis.
In addition to the foregoing limitations on the incurrence of Indebtedness,
the Operating Partnership will not, and will not permit any Subsidiary to, incur
any Indebtedness if the ratio of Consolidated Income Available for Debt Service
(as defined below) to the Annual Service Charge (as defined below) for the four
consecutive fiscal quarters most recently ended prior to the date on which such
additional Indebtedness is to be incurred shall have been less than 1.5:1 on a
pro forma basis after giving effect thereto and to the application of the
proceeds therefrom, and calculated on the assumption that (i) such Indebtedness
and any other Indebtedness incurred by the Operating Partnership and its
Subsidiaries since the first day of such four-quarter period and the application
of the proceeds therefrom, including to refinance other Indebtedness, had
occurred at the beginning of such period; (ii) the repayment or retirement of
any other Indebtedness by the Operating Partnership and its Subsidiaries since
the first day of such four-quarter period had been repaid or retired at the
beginning of such period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed based upon
the average daily balance of such Indebtedness during such period); (iii) in the
case of Acquired Indebtedness (as defined below) or Indebtedness incurred in
connection with any acquisition since the first day of such four-quarter period,
the related acquisition had occurred as of the first day of such period with the
appropriate adjustments with respect to such acquisition being included in such
pro forma calculation; and (iv) in the case of any acquisition or disposition by
the Operating Partnership or its Subsidiaries of any asset or group of assets
since the first day of such four-quarter period, whether by merger, stock
purchase or sale, or asset purchase or sale, such acquisition or disposition or
any related repayment of Indebtedness had occurred as of the first day of such
period with the appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation.
The foregoing covenants do not restrict the Operating Partnership from
refinancing existing Indebtedness, provided that the outstanding principal
amount of such Indebtedness is not increased.
Provision of Financial Information. Whether or not the Operating
Partnership is subject to Section 13 or 15(d) of the Exchange Act, the Operating
Partnership will, to the extent permitted under the Exchange Act, file with the
Commission the annual reports, quarterly reports and other documents which the
Operating Partnership would have been required to file with the Commission
pursuant to such Section 13 or 15(d) if the Operating Partnership were so
subject, such documents to be filed with the Commission on or prior to the
respective dates (the "Required Filing Dates") by which the Operating
Partnership would have been required to file such documents if the Operating
Partnership were so subject. The Operating Partnership will also in any event
(x) within 15 days of each Required Filing Date (i) if the Operating Partnership
is not then subject to such Section 13 or 15(d), transmit by mail to all Holders
of Notes, as their names and addresses appear in the Security Register, without
cost to such Holders, copies of the annual reports and quarterly reports that
the Operating Partnership would have been required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act if the Operating Partnership
were subject to such Sections, (ii) file with the Trustee copies of the annual
reports, quarterly reports and other documents that the Operating Partnership
would have been required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act if the Operating Partnership were subject to such
Sections and (y) if filing such documents by the Operating Partnership with the
Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective Holder.
S-29
<PAGE> 30
Waiver of Certain Covenants. The Operating Partnership may omit to comply
with any term, provision or condition of the foregoing covenants, and with any
other term, provision or condition with respect to the Notes, (except any such
term, provision or condition which could not be amended without the consent of
all Holders of the Notes or such series thereof, as applicable), if before or
after the time for such compliance the Holders of at least a majority in
principal amount of all of the outstanding Notes, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
covenant or condition. Except to the extent so expressly waived, and until such
waiver shall become effective, the obligations of the Operating Partnership and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
As used herein, and in the Indenture:
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or the
date the acquired Person becomes a Subsidiary.
"Annual Service Charge" for any period means the aggregate interest expense
for such period in respect of, and the amortization during such period of any
original issue discount of, Indebtedness of the Operating Partnership and its
Subsidiaries and the amount of dividends which are payable during such period in
respect of any Disqualified Stock.
"Capital Stock" means, with respect to any Person, any capital stock
(including preferred stock), shares, interests, participations or other
ownership interests (however designated) of such Person and any rights (other
than debt securities convertible into or exchangeable for corporate stock),
warrants or options to purchase any thereof.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations (as defined below) of the Operating Partnership and its
Subsidiaries plus amounts which have been deducted, and minus amounts which have
been added, for the following (without duplication): (i) interest on
Indebtedness of the Operating Partnership and its Subsidiaries, (ii) provision
for taxes of the Operating Partnership and its Subsidiaries based on income,
(iii) amortization of debt discount, (iv) provisions for gains and losses on
properties and property depreciation and amortization, (v) the effect of any
noncash charge resulting from a change in accounting principles in determining
Earnings from Operations (as defined below) for such period and (vi)
amortization of deferred charges.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
of such Person which by the terms of such Capital Stock (or by the terms of any
security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for common
stock), (ii) is convertible into or exchangeable or exercisable for Indebtedness
or Disqualified Stock or (iii) is redeemable at the option of the holder
thereof, in whole or in part (other than Capital Stock which is redeemable
solely in exchange for Capital Stock which is not Disqualified Stock or the
redemption price of which may, at the option of such Person, be paid in Capital
Stock which is not Disqualified Stock), in each case on or prior to the Stated
Maturity of the Notes.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, extraordinary items and property
valuation losses, as reflected in the financial statements of the Operating
Partnership and its Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP.
"Encumbrance" means any mortgage, lien, charge, pledge or security interest
of any kind.
"Indebtedness" of the Operating Partnership or any Subsidiary means any
indebtedness of the Operating Partnership or any Subsidiary, whether or not
contingent, in respect of (i) borrowed money or evidenced by bonds, notes,
debentures or similar instruments whether or not such indebtedness is secured by
any Encumbrance existing on property owned by the Operating Partnership or any
Subsidiary, (ii) indebtedness for borrowed money of a Person other than the
Operating Partnership or a Subsidiary which is secured by any
S-30
<PAGE> 31
Encumbrance existing on property owned by the Operating Partnership or any
Subsidiary, to the extent of the lesser of (x) the amount of indebtedness so
secured and (y) the fair market value of the property subject to such
Encumbrance, (iii) the reimbursement obligations, contingent or otherwise, in
connection with any letters of credit actually issued or amounts representing
the balance deferred and unpaid of the purchase price of any property or
services except any such balance that constitutes an accrued expense or trade
payable, or all conditional sale obligations or obligations under any title
retention agreement, (iv) the principal amount of all obligations of the
Operating Partnership or any Subsidiary with respect to redemption, repayment or
other repurchase of any Disqualified Stock, (v) any lease of property by the
Operating Partnership or any Subsidiary as lessee which is reflected on the
Operating Partnership's consolidated balance sheet as a capitalized lease in
accordance with GAAP, or (vi) interest rate swaps, caps or similar agreements
and foreign exchange contracts, currency swaps or similar agreements, to the
extent, in the case of items of indebtedness under (i) through (iii) above, that
any such items (other than letters of credit) would appear as a liability on the
Operating Partnership's consolidated balance sheet in accordance with GAAP, and
also includes, to the extent not otherwise included, any obligation by the
Operating Partnership or any Subsidiary to be liable for, or to pay, as obligor,
guarantor or otherwise (other than for purposes of collection in the ordinary
course of business), Indebtedness of another Person (other than the Operating
Partnership or any Subsidiary) (it being understood that Indebtedness shall be
deemed to be incurred by the Operating Partnership or any Subsidiary whenever
the Operating Partnership or such Subsidiary shall create, assume, guarantee or
otherwise become liable in respect thereof).
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests of which are owned, directly
or indirectly, by such Person. For the purposes of this definition, "voting
equity securities" means equity securities having voting power for the election
of directors, whether at all times or only so long as no senior class of
security has such voting power by reason of any contingency.
"Total Assets" as of any date means the sum of (i) the Undepreciated Real
Estate Assets and (ii) all other assets of the Operating Partnership and its
Subsidiaries determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated Real
Estate Assets not subject to an Encumbrance for borrowed money and (ii) all
other assets of the Operating Partnership and its Subsidiaries not subject to an
Encumbrance for borrowed money, determined in accordance with GAAP (but
excluding accounts receivable and intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost (original
cost plus capital improvements) of real estate assets of the Operating
Partnership and its Subsidiaries on such date, before depreciation and
amortization, determined on a consolidated basis in accordance with GAAP.
"Unsecured Indebtedness" means Indebtedness which is not secured by any
Encumbrance upon any of the properties of the Operating Partnership or any
Subsidiary.
See "Description of Notes -- Certain Covenants" in the accompanying
Prospectus for a description of additional covenants applicable to the Operating
Partnership.
MERGER, CONSOLIDATION OR SALE
The Indenture provides that the Operating Partnership may, without the
consent of the holders of the Notes, consolidate with, or sell, lease or convey
all or substantially all of its assets to, or merge with or into, any other
entity, provided that (a) either the Operating Partnership shall be the
continuing entity, or the successor entity shall be an entity organized and
existing under the laws of the United States or a State thereof and such
successor entity (if other than the Operating Partnership) formed by or
resulting from any such consolidation or merger or which shall have received the
transfer of such assets, shall expressly assume all of the Operating
Partnership's obligations under the Indenture; (b) immediately after giving
effect to such transaction and treating any indebtedness which becomes an
obligation of the Operating Partnership or any Subsidiary as a result thereof as
having been incurred by the Operating Partnership or such Subsidiary at the time
of such transaction, no Event of Default under the Indenture, and no event
which, after notice or the lapse of time, or both, would become such an Event of
Default, shall have occurred and be continuing and (c) an officer's
S-31
<PAGE> 32
certificate and legal opinion covering such conditions shall be delivered to the
Trustee. Accordingly, while the Operating Partnership may transfer all or
substantially all of its assets, without the consent of the holders of the
Notes, any transaction that would result in the Operating Partnership, or any
successor entity, breaching the limitations on the incurrence of indebtedness
contained in the covenants would result in an Event of Default under the
Indenture. Thus, the holders of the Notes are afforded some protection in the
event of a highly leveraged transaction, merger or similar transaction, which
may adversely affect the creditworthiness of the Notes and/or the Operating
Partnership.
The applicability of the covenants containing debt incurrence limitations
and the provisions regarding merger, consolidation or sale may be waived by the
holders of at least a majority in principal amount of each series of Notes but
not by the Trustee or by the Company, in its capacity as general partner. In
addition, the applicability of the Indenture provisions relating to mergers,
consolidations or sales are not limited in the event of a leveraged buyout
initiated or supported by the Operating Partnership, the management of the
Operating Partnership or any affiliate thereof.
EVENTS OF DEFAULT
The Indenture provides that the following events are "Events of Default"
with respect to each series of Notes: (a) default in the payment of any interest
on any such series of Notes when such interest becomes due and payable that
continues for a period of 30 days; (b) default in the payment of the principal
of (or Make-Whole Amount, if any, on) any series of Notes when due and payable;
(c) default in the performance, or breach, of any other covenant or warranty of
the Operating Partnership in the Indenture with respect to such series of Notes
and continuance of such default or breach for a period of 60 days after written
notice as provided in the Indenture; (d) default under any bond, debenture,
note, mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any indebtedness for money borrowed by
the Operating Partnership (or by any Subsidiary, the repayment of which the
Operating Partnership has guaranteed or for which the Operating Partnership is
directly responsible or liable as obligor or guarantor), having an aggregate
principal amount outstanding of at least $10 million, whether such indebtedness
now exists or shall hereafter be created, which default shall have resulted in
such indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable or such obligations
being accelerated, without such acceleration having been rescinded or annulled,
within a period of 10 days after written notice to the Operating Partnership as
provided in the Indenture; (e) the entry by a court of competent jurisdiction of
one or more judgments, orders or decrees against the Operating Partnership or
any Subsidiary in an aggregate amount (excluding amounts covered by insurance)
in excess of $10 million and such judgments, orders or decrees remain
undischarged, unstayed and unsatisfied in an aggregate amount (excluding amounts
covered by insurance) in excess $10 million for a period of 30 consecutive days;
and (f) certain events of bankruptcy, insolvency or reorganization, on court
appointment of a receiver, liquidator or trustee of the Operating Partnership or
any Significant Subsidiary. The Term "Significant Subsidiary" has the meaning
ascribed to such term in Regulation S-X promulgated under the Securities Act. If
an Event of Default specified in clause (f) above, relating to the Operating
Partnership or any Significant Subsidiary occurs, the principal amount of and
the Make-Whole Amount on, all outstanding Notes shall become due and payable
without any declaration or other act on the part of the Trustee or of the
Holders. In the event that the Operating Partnership's obligations under the
Notes are accelerated in an amount of $10 million or greater the lenders under
the Operating Partnership's line of credit may accelerate the obligations under
such line of credit.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The provisions of Article 14 of the Indenture relating to defeasance and
covenant defeasance, which are described under "Description of
Notes -- Discharge, Defeasance and Covenant Defeasance" in the accompanying
Prospectus, will apply to the Notes. Each of the covenants described under
"-- Certain Covenants" herein and "Description of Notes -- Certain Covenants" in
the accompanying Prospectus will be subject to covenant defeasance.
S-32
<PAGE> 33
BOOK-ENTRY SYSTEM
The provisions described under "Description of Debt Securities -- Global
Securities" in the accompanying Prospectus will apply to the Notes.
Each series of Notes will be issued in the form of one or more fully
registered global notes (each a "Global Note") which will be deposited with, or
on behalf of DTC, and registered in the name of DTC's nominee, Cede & Co. Except
under the circumstance described below, the Notes will not be issuable in
definitive form. Unless and until it is exchanged in whole or in part for the
individual Notes represented thereby, a Global Note may not be transferred
except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC or by DTC or any nominee of DTC to a successor depository
or any nominee of such successor.
Upon the issuance of a Global Note, DTC or its nominee will credit on its
book-entry registration and transfer system the respective principal amounts of
the individual Notes represented by such Global Note to the accounts of persons
that have accounts with DTC ("Participants"). Such accounts shall be designated
by the underwriters, dealers or agents with respect to the Notes. Ownership of
beneficial interests in a Global Note will be limited to Participants or persons
that may hold interests through Participants. Ownership of beneficial interests
in such Global Note will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC or its nominee (with respect to
beneficial interests of Participants) and records of Participants (with respect
to beneficial interests of persons who hold through Participants). The laws of
some states require that certain purchasers of securities take physical delivery
of such securities in definitive form. Such limits and laws may impair the
ability to own, pledge or transfer any beneficial interest in a Global Note.
So long as DTC or its nominee is the registered owner of such Global Note,
DTC or its nominee, as the case may be, will be considered the sole owner or
holder of the Notes represented by such Global Note for all purposes under the
Indenture and the beneficial owners of the Notes will be entitled only to those
rights and benefits afforded to them in accordance with DTC's regular operating
procedures. Except as provided below, owners of beneficial interest in a Global
Note will not be entitled to have any of the individual Notes registered in
their names, will not receive or be entitled to receive physical delivery of any
such notes in definitive form and will not be considered the owners or holders
thereof under the Indenture.
Payments of principal of and any interest on, individual Notes represented
by a Global Note registered in the name of DTC or its nominee will be made to
DTC or its nominee, as the case may be, as the registered owner of the Global
Note representing such Notes. None of the Operating Partnership, the Trustee,
any Paying Agent or the Security Registrar will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global Note for such Notes or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Operating Partnership expects that DTC or its nominee, upon receipt of
any payment of principal or interest in respect of a permanent Global Note
representing any Notes, immediately will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Note as shown on the records of DTC or its
nominee. The Operating Partnership also expects that payments by Participants to
owners of beneficial interests in such Global Note held through such
Participants will be governed by standing instructions and customary practices,
as is the case with securities held for the account of customers in bearer form
or registered in "street name." Such payments will be the responsibility of such
Participants.
If DTC is at any time unwilling, unable or ineligible to continue as
depository and a successor depository is not appointed by the Operating
Partnership within 90 days, the Operating Partnership will issue individual
Notes in exchange for the Global Note or Notes representing the Notes. In
addition, the Operating Partnership may, at any time and in its sole discretion,
determine not to have any Notes represented by one or more Global Notes and, in
such event, will issue individual Notes in exchange for the Global Note or Notes
representing the Notes. Individual Notes so issued will be issued in
denominations unless otherwise specified by the Operating Partnership, of $1,000
and integral multiples thereof.
DTC has advised the Operating Partnership of the following information
regarding DTC: DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within
S-33
<PAGE> 34
the meaning of the New York Banking Law, a member of the Federal Reserve System,
a "clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its Participants deposit with
DTC. DTC also facilities the settlement among its Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry charges in its Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct Participants of DTC include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a direct
Participant of DTC, either directly or indirectly. The rules applicable to DTC
and its participants are on file with the Commission.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest in respect of the Notes
will be made by the Operating Partnership in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Notes
will trade in DTC's Same-Day Funds Settlement System until maturity or until the
Notes are issued in certificated form, and secondary market trading activity in
the Notes will therefore be required by DTC to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Notes.
GOVERNING LAW
The Indenture will be governed by and shall be construed in accordance with
the laws of the State of New York.
NO PERSONAL LIABILITY OR RECOURSE
The Indenture provides that no recourse under or upon any obligation,
covenant or agreement contained in the Indenture or the Notes, or because of any
indebtedness evidenced thereby, or for any claim based thereon or otherwise in
respect thereof, shall be had (i) against any other past, present or future
partner in the Operating Partnership, (ii) against any other person or entity
which owns an interest, directly or indirectly, in any limited partner of the
Operating Partnership, or (iii) against any past, present or future stockholder,
employee, officer or director, as such, of the Company or any successor, either
directly or through the Operating Partnership or the Company or any successor,
under any rule of law, statute or constitutional provision or by the enforcement
of any assessment or by any legal or equitable proceeding or otherwise. Each
Holder of Notes waives and releases all such liability by accepting such Notes.
The waiver and release are part of the consideration for the issue of the Notes.
S-34
<PAGE> 35
UNDERWRITING
Subject to the terms and the conditions in the underwriting agreement dated
as of January , 1998 (the "Underwriting Agreement") by and among the Operating
Partnership and the underwriters named below (the "Underwriters"), the Operating
Partnership has agreed to sell to each of the Underwriters named below, and each
of such Underwriters has agreed severally to purchase from the Operating
Partnership the respective principal amount of each series of Notes set forth
opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITER OF 2003 NOTES OF 2008 NOTES
- ----------- ---------------- ----------------
<S> <C> <C>
PaineWebber Incorporated....................................... $ $
Salomon Brothers Inc ..........................................
BT Alex. Brown Incorporated....................................
A.G. Edwards & Sons, Inc. .....................................
----------- ------------
Total................................................ $50,000,000 $100,000,000
=========== ============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, and that the
Underwriters will purchase all Notes offered hereby if any of such Notes are
purchased.
The Underwriters have advised the Operating Partnership that they propose
initially to offer each series of Notes directly to the public at the public
offering prices set forth on the cover page of this Prospectus Supplement, and
to certain dealers at such prices less a concession not in excess of % of
the principal amount of the 2003 Notes and % of the principal amount of the
2008 Notes. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of % of the principal amount of the Notes, to
certain other dealers. After the initial offering of the Notes, the public
offering prices and other selling terms may from time to time be changed.
Each series of Notes is a new issue of securities with no established
trading market. The Operating Partnership has been advised by the Underwriters
that they intend to make a market in the Notes but are not obligated to do so
and may discontinue market making at any time without notice. No assurance can
be given as to the liquidity of the trading market for the Notes.
The Company and the Operating Partnership have agreed to indemnify the
Underwriters against certain civil liabilities, including liabilities under the
Securities Act, or to contribute to payments the Underwriters may be required to
make in respect thereof.
Until the distribution of the Notes is completed, the rules of the
Securities and Exchange Commission may limit the ability of the Underwriters to
bid for and purchase the Notes. As an exception to these rules, the Underwriters
are permitted to engage in certain transactions that stabilize the price of the
Notes. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Notes. In addition, if the
Underwriters create a short position in the Notes in connection with this
offering (i.e., they sell more Notes than are set forth on the cover page of
this Prospectus Supplement), the Underwriters may reduce the short position by
purchasing Notes in the open market. In general, purchases of a security for the
purpose of stabilization or to reduce a short position could cause the price of
the security to be higher than it might be in the absence of such purchases.
Neither the Operating Partnership nor the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above might have on the price of the Notes. In
addition, neither the Operating Partnership nor the Underwriters makes any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
In the ordinary course of their businesses, certain of the Underwriters and
their affiliates have engaged and may in the future engage in investment
banking, financial advisory and other commercial services and transactions with
the Company and the Operating Partnership for which customary compensation has
been, and will be, received. In November 1997, three of the Underwriters
participated in the public offering of the Operating Partnership's 2004 Notes.
In addition, on October 21, 1997, the Company entered into a Forward Equity
Program with PaineWebber, pursuant to which the Company, at its option, has the
right, until
S-35
<PAGE> 36
April 21, 1998, to sell shares of its Common Stock with an aggregate value up to
$60 million to PaineWebber, acting as underwriter, in amounts ranging from $5
million to $20 million per transaction. On December 1, 1997, the Company
completed an offering of 990,000 shares of its Common Stock under this program.
Such shares were sold to the public at $20.375 per share with net proceeds to
the Company of $19,342,600 after deducting the underwriting discount and
expenses.
LEGAL MATTERS
Certain legal matters, including the legality of the Notes, will be passed
upon for the Operating Partnership by Goodwin, Procter & Hoar LLP, Boston,
Massachusetts. William B. King, whose professional corporation is a partner in
Goodwin, Procter & Hoar LLP, is Secretary of the Company, the general partner of
the Operating Partnership, and is the beneficial owner of approximately 9,000
shares of Common Stock of the Company. Certain legal matters for the
Underwriters will be passed upon by Rogers & Wells, New York, New York.
S-36
<PAGE> 37
PROSPECTUS
$300,000,000
BRADLEY OPERATING LIMITED PARTNERSHIP
DEBT SECURITIES
---------------------
Bradley Operating Limited Partnership (the "Operating Partnership") is the
entity though which Bradley Real Estate, Inc. ("Bradley" or the "Company"), a
self-administered and self-managed real estate investment trust ("REIT"),
conducts substantially all of its business and owns substantially all of its
assets. Bradley, the country's oldest continuously qualified REIT, is the sole
general partner of and owns a substantial majority of the economic interests in
the equity of the Operating Partnership.
The Operating Partnership may offer from time to time in one or more series
unsecured, non-convertible investment grade debt securities (the "Debt
Securities" or the "Securities"). The aggregate public offering price of the
Debt Securities shall be up to $300,000,000 (or its equivalent in another
currency based on the exchange rate at the time of sale) in amounts, at prices
and on terms to be determined at the time of offering. The Debt Securities may
be offered separately or together, in separate series, in amounts, at prices and
on terms to be set forth in one or more supplements to this Prospectus (each a
"Prospectus Supplement").
The specific terms of the Securities for which this Prospectus is being
delivered will be set forth in this Prospectus and in the applicable Prospectus
Supplement and will include, where applicable, the specific title, aggregate
principal amount, ranking, currency, form (which may be registered or bearer, or
certificated or global), authorized denominations, maturity, rate (or manner of
calculation thereof) and time of payment of interest, terms for redemption at
the option of the Operating Partnership or repayment at the option of the
holder, terms for sinking fund payments, covenants and any initial public
offering price.
The applicable Prospectus Supplement will also contain information, where
appropriate, about material United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities covered
by such Prospectus Supplement.
The Securities may be offered directly by the Operating Partnership,
through agents designated from time to time by the Operating Partnership or to
or through underwriters or dealers. If any agents or underwriters are involved
in the sale of any of the Securities, their names, and any applicable purchase
price, fee, commission or discount arrangement between or among them, will be
set forth, or will be calculable from the information set forth, in an
accompanying Prospectus Supplement. See "Plan of Distribution." No Securities
may be sold without delivery of a Prospectus Supplement describing the method
and terms of the offering of such Securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is November 18, 1997.
<PAGE> 38
AVAILABLE INFORMATION
No person has been authorized to give any information or to make any
representation not contained or incorporated by reference in this Prospectus or
the accompanying Prospectus Supplement and, if given or made, such information
or representation must not be relied upon as having been authorized by the
Operating Partnership, the Company or any underwriter, dealer or agent. Neither
the delivery of this Prospectus or the accompanying Prospectus Supplement nor
any sale made hereunder of thereunder shall, under any circumstances, create an
implication that the information contained herein or in the accompanying
Prospectus Supplement is correct as of any date subsequent to the date hereof or
thereof or that there has been no change in the affairs of the Operating
Partnership or the Company since the date hereof or hereof. Neither this
Prospectus nor the accompanying Prospectus Supplement constitutes an offer to
sell or a solicitation of an offer to buy Securities in any jurisdiction in
which such offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to any person to whom it
is unlawful to make such offer or solicitation.
The Operating Partnership and the Company are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith file reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC" or the
"Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York,
New York 10048, and Northwest Atrium Center, 500 W. Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials can be obtained upon written
request from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. The Commission
also maintains a Web site at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants, including
the Company and the Operating Partnership, that file electronically with the
Commission. Information concerning the Company's common stock, which is listed
on the New York Stock Exchange (the "NYSE") under the symbol "BTR," can be
inspected and copied at the NYSE, 20 Broad Street, New York, New York 10005.
The Operating Partnership has filed with the Commission a Registration
Statement on Form S-3 (No. 333-36577) under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the Debt Securities. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. The Registration Statement, including exhibits thereto, may be
inspected and copied at public reference facilities of the Commission described
above. Statements contained in this Prospectus or any Prospectus Supplement as
to the contents of any document referred to are not necessarily complete, and in
each instance reference is made to the copy of such document filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission pursuant to
the Exchange Act are incorporated in this Prospectus by reference: (A), with
respect to the Operating Partnership (Commission File No. 000-23065), (i) the
Operating Partnership's Registration Statement on Form 10 filed on September 11,
1997, as amended; (ii) the Operating Partnership's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997; and (iii) the Operating Partnership's
current report on Form 8-K filed on October 6, 1997 (B), with respect to the
Company (Commission File No. 001-10328), (i) the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996; (ii) the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997; (iii) the Company's Proxy Statement dated March 31, 1997
with respect to its Annual Meeting of Stockholders on May 14, 1997; (iv) the
Company's current report on Form 8-K filed on September 12, 1997; (v) the
Company's current report on Form 8-K filed on October 6, 1997; (vi) the
Company's current report on Form 8-K filed on October 17, 1997 and (vii) the
Company's current report on Form 8-K filed on October 22, 1997.
2
<PAGE> 39
All other documents filed with the Commission by the Operating Partnership
amending or supplementing its Form 10 Registration Statement and all documents
filed with the Commission by the Operating Partnership or the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering of all
Securities are to be incorporated herein by reference and shall be deemed to be
a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in an applicable Prospectus Supplement) or in any subsequently filed
document that is incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Prospectus or any Prospectus Supplement, except as so
modified or superseded.
The Operating Partnership will provide, without charge, to each person,
including any beneficial owner, to whom a copy of this Prospectus is delivered,
at the request of such person, a copy of any or all of the documents
incorporated herein by reference (other than exhibits thereto, unless such
exhibits are specifically incorporated by reference into such documents).
Written requests for such copies should be directed to Ms. Marianne Dunn, Senior
Vice President, Bradley Real Estate, Inc., 40 Skokie Boulevard, Suite 600,
Northbrook, Illinois 60062-1626, telephone (847) 272-9800.
RISK FACTORS
General
As in every business, there are risk factors that affect the Operating
Partnership and its operations. Set forth below are some of the factors that
could cause the actual results of the Operating Partnership's operations or
plans to differ materially from expectations set forth elsewhere in this
Registration Statement.
Risk that Existing Indebtedness Will be Refinanced on Unfavorable Terms; Risk
that Increases in Interest Rates Will Adversely Affect Net Income and Cash
Available for Distribution; Management Could Cause the Operating Partnership to
Become Highly Leveraged Because Organizational Documents Contain No Limitation
on Debt
The Operating Partnership is obligated under a $100 million mortgage note
maturing in September 2000 secured by six properties that was issued to a trust
qualifying as a real estate mortgage investment conduit for federal income tax
purposes (the "REMIC Note"). Although the investment grade corporate ratings
recently assigned to the Operating Partnership by Standard & Poor's Investment
Services ("Standard & Poor's") and Moody's Investors Service ("Moody's") is
expected to assist the Operating Partnership in refinancing such indebtedness at
maturity or sooner, there can be no assurance that the cost of replacement
indebtedness (including any penalty that may be payable upon the prepayment of
the REMIC Note) may not be greater than the cost of the existing indebtedness.
The fact that the Operating Company will continue to be obligated on a
substantial amount of debt, even if only a relatively small portion of such debt
is secured, subjects the Operating Partnership to risks of default if it is
unable to pay such debt at maturity, and may require the sale or mortgaging of
properties of the Operating Partnership at an inconvenient time or on terms that
are adverse to the Operating Partnership.
To the extent that the Operating Partnership is responsible for floating
rate debt (such as that incurred under the revolving line of credit) and to the
extent that its exposure to increases in interest rates is not eliminated
through interest rate protection or cap agreements, such increases will
adversely affect the Operating Partnership's net income and cash available for
distribution and may affect the amount of distributions it can make to the
holders of Units, including the Company.
The Amended and Restated Articles of Incorporation of the Company (the
"Charter") and the Bylaws of the Company (the "Bylaws") and the Second Restated
Agreement of Limited Partnership of the Operating Partnership (the "Operating
Partnership Agreement") do not contain any limitation on the amount of
indebtedness the Company or the Operating Partnership may incur. Although
management attempts to maintain a balance
3
<PAGE> 40
between total outstanding indebtedness and the value of the portfolio of the
Operating Partnership, (i.e., a ratio of debt and preferred stock to Real Estate
Value of 50% or less, with "Real Estate Value" defined as net operating income
dividend by 10.25%) there can be no assurance that management will not alter
this balance at any time. Accordingly, the Operating Partnership could become
more highly leveraged, resulting in an increase in debt service that could
adversely affect the Operating Partnership's ability to make expected
distributions to holders of its partnership Units and in an increased risk of
default on its obligations under any outstanding indebtedness. Failure to pay
its debt obligations when due could also result in the Operating Partnership
losing its interest in any properties that secure indebtedness included within
such obligations.
Adverse Effects on Creditworthiness of Debt Securities May Result From a
Highly Leveraged Transaction or Change in Control
Unless otherwise provided in a supplemental indenture, the indentures under
which Debt Securities will be issued do not contain any provisions that would
limit the ability of the Operating Partnership to incur indebtedness or protect
holders of Debt Securities against adverse effects on the creditworthiness of
the Debt Securities in the event of a highly leveraged transaction or change in
control (through the acquisition of securities, the election of directors or
otherwise) involving the Operating Partnership or the Company. Accordingly,
there can be no assurance that the Operating Partnership will not enter into
such a transaction and thereby adversely affect the Operating Partnership's
ability to meet its obligations under the Debt Securities.
Adverse Effect on the Business May Result if Operating Partnership Becomes
Liable for the Cost of Remediation on Any of its Properties; Risk that Operating
Partnership Would be Required to Take Further Actions at Commons of Chicago
Ridge
Under various federal, state and local laws, ordinances and regulations, an
owner of real estate is liable for the costs of removal or remediation of
certain hazardous or toxic substances on or in such property. Such laws often
impose such liability without regard to whether the owner knew of, or was
responsible for, the presence of such hazardous or toxic substances. The
presence of such substances, or the failure to properly remediate such
substances, may adversely affect the owner's ability to sell or rent such
property or to use such property as collateral in its borrowings. All of the
Operating Partnership's properties, including those acquired in the Tucker
Acquisition (as hereinafter defined), have been subjected to Phase I or similar
environmental audits (which involve inspection without soil sampling or ground
water analysis) by independent environmental consultants. Except as described
below, these environmental audit reports have not revealed any potential
significant environmental liability, nor is management aware of any
environmental liability with respect to the properties that it believes would
have a material adverse effect on the Operating Partnership's business, assets
or results of operations. No assurance can be given that existing environmental
studies with respect to the properties reveal all environmental liabilities or
that any prior owner of any such property did not create any material
environmental condition not known to management.
Phase II site assessments of the Commons of Chicago Ridge property acquired
from Tucker Properties Corporation ("Tucker") have disclosed the presence of
contaminants in fill material and soil at the property that could be associated
with the property's former use as a landfill and as the former site of an
asphalt plant and storage tanks for petroleum products (which storage tanks have
been removed from the property), but not at such levels as would require
reporting to environmental agencies. These Phase II site assessments also
disclosed the presence in groundwater of contaminants similar to those detected
in the soil samples. Environmental assessments of the property have also
detected methane gas, probably associated with the former use of the property as
landfill. A regular maintenance program was implemented by Tucker and is being
continued by the Operating Partnership to control the migration and effect of
the methane gas. There can be no assurance that an environmental regulatory
agency such as the Illinois Environmental Protection Agency will not in the
future require further investigation to determine the source and vertical and
horizontal extent of the contamination. If any such investigation is required
and confirms the existence of contaminants at the levels disclosed in the Phase
II site assessments, it is possible that the relevant agency could require the
Operating Partnership to take action to address the contamination, which action
could range from ongoing monitoring to remediation of the contamination. Based
on the information currently available, management
4
<PAGE> 41
does not believe that the cost of responding to such contamination would be
material to the Operating Partnership.
In connection with the execution of the merger agreement relating to the
Tucker Acquisition, the Operating Partnership and certain individuals who had
previously provided a limited indemnity to Tucker for environmental liabilities
at Commons of Chicago Ridge (the "Individuals") agreed to indemnify the Company,
Operating Partnership and its affiliates against all claims, losses, costs and
expenses incurred by such parties arising out of any administrative, regulatory
or judicial action, suit, investigation or proceeding in connection with any
applicable environmental health or safety law regarding hazardous substances,
materials, wastes or petroleum products, or any common law right of action
regarding such substances, materials, wastes or products, whether brought by a
governmental or regulatory authority or by a third party, that is initiated on
or before October 4, 2003, with respect to conditions or acts at the Commons of
Chicago Ridge which existed prior to October 4, 1993. In connection with this
indemnification obligation, the Operating Partnership has agreed to keep the
Individuals reasonably informed of various activities relating to the property
and to consult with the Individuals with respect to any potential claims,
settlements and remediation which could trigger the indemnification obligations
of the Individuals. There can be no assurance that the Individuals will be in a
position to honor their indemnity obligations. Regardless of such
indemnification, based on the information currently available, management does
not believe that the environmental liabilities and expenses relating to the
Commons of Chicago Ridge property would have a material effect on the liquidity,
financial condition or operating results of the Operating Partnership.
Risk that Adverse Economic Trends in the Midwestern Region or the Retail
Industry Will Adversely Affect the Operating Partnership's Cash Available for
Distribution
Substantially all of the Operating Partnership's properties are located in
the Midwestern region of the United States and such properties consist
predominantly of community and neighborhood shopping centers. The Operating
Partnership's performance therefore is linked to economic conditions in the
Midwest and in the market for retail space generally. The market for retail
space has been adversely affected by the ongoing consolidation in the retail
sector, the adverse financial condition of certain large companies in this
sector and the excess amount of retail space in certain markets. To the extent
that these conditions impact the market rents for retail space, they could
result in a reduction of cash receipts and cash available for distribution and
thus affect the amount of distributions the Operating Partnership can make to
the holders of its outstanding units of partnership interests, including the
Company.
If a Significant Number of Tenants Were Unable to Meet Their Obligations to
the Operating Partnership, then Cash Available for Distribution Would Be
Adversely Affected; Tenants Which File for Bankruptcy Protection May Not Make
Rental Payments in a Timely Manner
Since substantially all of the Operating Partnership's income has been, and
will continue to be, derived from rental income from retail shopping centers,
the amount of cash receipts and cash available for distribution to the holders
of its Units, including the Company, would be adversely affected if a
significant number of tenants were unable to meet their obligations to the
Operating Partnership or if the Operating Partnership were unable to lease, on
economically favorable terms, a significant amount of space in its shopping
centers. In addition, in the event of default by a tenant, the Operating
Partnership may experience delays and incur substantial costs in enforcing its
rights as landlord.
At any time, a tenant of the Operating Partnership's properties may seek
the protection of the bankruptcy laws, which could result in the rejection and
termination of the tenant lease. Such an event could cause a reduction of cash
receipts and cash available for distribution and thus affect the amount of
distributions the Operating Partnership can make to the holders of its Units,
including the Company. No assurance can be given that any present tenant which
has filed for bankruptcy protection will continue making payments under its
lease or that any tenants will not file for bankruptcy protection in the future
or, if any tenants file, that they will continue to make rental payments in a
timely manner. In addition, a tenant may, from time to time, experience a
downturn in its business, which may weaken its financial condition and result in
a reduction or failure to make rental payments when due. If a lessee or
sublessee defaults in its obligations to the Operating
5
<PAGE> 42
Partnership, the Operating Partnership may experience delays in enforcing its
right as lessor or sublessor and may incur substantial costs and experience
significant delays associated with protecting its investment, including costs
incurred in renovating and releasing the property.
Adverse Impact on Operating Results Could Occur if the Operating Partnership
is Not Able to Lease Space at One North State for Which Existing Lease Has Been
Terminated
During the year ended December 31, 1996, more than 10% of the total revenue
of the Operating Partnership was derived from rents and expense reimbursements
from tenants of the One North State property, which is a "mixed use" property
located in downtown Chicago. The total rents currently being paid by certain of
this property's tenants may be in excess of current market rates. The leases of
these tenants begin to expire in 2001. One office tenant, Arthur Andersen,
however, has exercised an option to terminate its lease, effective as of April
1, 1998, and paid the Operating Partnership a $1.8 million cancellation fee.
Pursuant to the terms of the indenture governing the REMIC Note, this
termination fee was paid into a reserve account which is required to be used,
among other things, to pay for tenant alterations, leasing commissions and other
lease inducements directly related to this space. Any unused amount of this
reserve account must be used to repay the principal amounts owed under the REMIC
Note. The inability of the Operating Partnership to lease such property, or a
significant reduction in the amount of rent and expense reimbursements paid by
the tenants of such property, could have an adverse impact on the operating
results of the Operating Partnership.
Risks of Reduced Rental Income and Cash Available for Distribution from
Vacancies and Lease Renewals
The Operating Partnership is continually faced with expiring tenant leases
at its properties. Some lease expirations provide the Operating Partnership with
the opportunity to increase rentals or to hold the space available for a
stronger long-term tenancy. In other cases, there may be no immediately
foreseeable strong tenancy for space, and the space may remain vacant for a
longer period than anticipated or may be able to be re-leased only at less
favorable rents. In such situations, the Operating Partnership may be subject to
competitive and economic conditions over which it has no control. Accordingly,
there is no assurance that the effects of possible vacancies or lease renewals
at such properties may not reduce the rental income and cash available for
distribution below levels anticipated by the Operating Partnership.
Risk that Competition in the Properties' Market Areas Could Adversely Affect
Ability to Rent Space, Amount of Rents Charged or Development and Acquisition
Opportunities
All of the Operating Partnership's properties are located in developed
areas. There are numerous other retail properties and real estate companies
within the market area of each such property which compete with the Operating
Partnership for tenants and development and acquisition opportunities. The
number of competitive retail properties and real estate companies in such areas
could have a material effect on (i) the Operating Partnership's ability to rent
space at the properties and the amount of rents charged and (ii) development and
acquisition opportunities. The Operating Partnership competes for tenants and
acquisitions with others who have greater resources than it does.
Possible Adverse Consequences of Limitations on Insurance
The Operating Partnership carries comprehensive general liability coverage
and umbrella liability coverage on all of its properties with limits of
liability which the management deems adequate to insure against liability claims
and provide for cost of defense. Similarly, the Operating Partnership is insured
against the risk of direct physical damage in amounts that management estimates
to be adequate to reimburse the Operating Partnership on a replacement cost
basis for costs incurred to repair or rebuild each property, including loss of
rental income during the reconstruction period. Currently, the Operating
Partnership also insures the properties for loss caused by earthquake or flood
in the aggregate amount of $10 million per occurrence. Because of the high cost
of this type of insurance coverage and the wide fluctuations in price and
availability, management has made the determination that the risk of loss due to
earthquake and flood does not justify the cost to increase coverage limits any
further under current market conditions. Should the
6
<PAGE> 43
availability and pricing of this coverage become more cost advantageous,
management would re-evaluate its position.
Uncertainty of Meeting Acquisition Objectives; Acquired Properties May Not
Meet Management's Expectation
The Operating Partnership continually seeks prospective acquisitions of
additional shopping centers and portfolios of shopping centers which management
believes can be purchased at attractive initial yields and/or which demonstrate
the potential for revenue and cash flow growth through implementation of
renovation, expansion, re-tenanting and re-leasing programs similar to those
undertaken with respect to properties in the existing portfolio. There can be no
assurance that the Operating Partnership will effect any potential acquisition
that it may evaluate. The evaluation process involves costs which are
non-recoverable in the case of acquisitions which are not consummated. In
addition, notwithstanding management's adherence to its criteria for evaluating
and due diligence regarding potential acquisitions, there can be no assurance
that any acquisition that is consummated will meet management's expectations.
Risk that Company's Control of the Operating Partnership May Allow the Company
to Take Actions Adverse to the Best Interests of the Limited Partners
The Operating Partnership Agreement gives the Company as general partner
broad control over the operations and business activities of the Operating
Partnership. In exercising its authority as general partner, the Company is
subject to the provisions of the Delaware Revised Uniform Limited Partnership
Act and to general fiduciary principles of fair dealing to the limited partners
as well as to any specific limitations or restrictions on its authority
contained in the Operating Partnership Agreement or in any individually
negotiated agreement with a particular limited partner.
Risk from Reliance Upon the Company to Manage the Operating Partnership;
Adverse Consequences of the Company's Failure to Qualify as a REIT; Risk of
Adverse Tax Consequences to Holders of Units
Although the fact that substantially all of the assets of the Company are
represented by its interest in the Operating Partnership, the Operating
Partnership in general, and the holders of the LP Units in particular, must rely
upon the Company as general partner to manage the affairs and business of the
Operating Partnership. In addition to the risks described above that relate to
the Operating Partnership, the Company is subject to certain other risks that
may affect its financial and other condition, including particularly adverse
consequences if the Company fails to qualify as a REIT for federal income tax
purposes. The description of certain risk factors applicable to the Company
contained under the caption "Business -- Risk Factors" in Item 1 of the
Company's 10-K report for the year ended December 31, 1996 is hereby
incorporated by reference.
Among the powers that the Company has as general partner of the Operating
Partnership are the powers to determine whether and when to sell any particular
property or properties owned by the Operating Partnership, subject to any
specific agreements limiting the power of sale that the Operating Partnership
may have entered into with the contributor or contributors of any specific
properties at the time that such contributor or contributors contributed their
interest in the property to the Operating Partnership in exchange for LP Units.
After the expiration of any such limiting agreement on the Company's authority
as general partner to sell a property, the property may be sold and such sale
may result in the recognition of capital gains or other tax consequences to the
holder or holders of LP Units that were deferred at the time of the original
contribution of the properties to the Operating Partnership.
Risk that Ability to Transfer General Partnership Interest in Sole Discretion
of the Company Will Result in a General Partner Not in the Best Interest of the
Limited Partners
Pursuant to the Operating Partnership Agreement, the Company, as general
partner, may, in its sole and absolute discretion, transfer its interest in the
Operating Partnership at any time; provided, however, that until March 16, 1998,
the general partnership may not without the consent of the majority of certain
of the limited partners, transfer its general partnership interest to any of its
affiliates other than an affiliate whose securities
7
<PAGE> 44
will become issuable upon redemption of the Units. The Partnership Agreement
does not provide the LP Unit holders any voting or consent rights with respect
to a transfer of the general partnership interest. Accordingly, the Company
could, without the consent of the LP Unit holders, transfer its general
partnership interest to another entity which could use the broad powers of the
general partner in a manner not in the best interests of the LP Unit holders or
in a manner which would have an adverse effect on the business or financial
condition of the Operating Partnership. Although the Company has no present
intention of transferring its general partnership interest, there can be no
assurance that it will not do so at some point in the future.
Limits on Changes in Control in Organizational Documents May Discourage a
Third Party From Making an Acquisition Proposal
Certain provisions contained in the Company's Charter and Bylaws may have
the effect of discouraging a third party from making an acquisition proposal for
the Company and may thereby inhibit a change in control of the Company. These
provisions include the following: (i) the Company's Charter provides for three
classes of Directors, with the term of office of one class expiring each year,
(ii) the Company's Bylaws provide that the holders of not less than 25% of the
outstanding shares of Common Stock may call a special meeting of the Company's
stockholders, and (iii) the Charter generally limits any holder from acquiring
more than 9.8% of the value of all outstanding capital stock of the Company.
With respect to clause (ii) in the proceeding sentence, Maryland General
Corporation Law ("MGCL") authorizes the Directors of the Company to amend the
Bylaws to increase the number of outstanding shares of Common Stock required to
call a special meeting from 25% to a majority.
The provisions described above could have a potential anti-takeover effect
on the Company. The staggered Board provision in the Charter prevents
stockholders from voting on the election of more than one class of directors at
each annual meeting of stockholders and thus may have the effect of keeping the
members of the Board of Directors of the Company in control for a longer period
to time. The staggered board provision and the provision in the Bylaws requiring
holders of at least 25% of the outstanding shares of Common Stock (as
hereinafter defined) to call a special meeting of stockholders may have the
effect of making it more difficult for a third party to acquire control of the
Company without the consent of its Board of Directors, including certain
acquisitions which stockholders deem to be in their best interest. In addition,
the Ownership limits in the Charter may also (i) deter certain tender offers for
the shares of Common Stock which might be attractive to certain stockholders, or
(ii) limit the opportunity for stockholders to receive a premium for their
shares of Common Stock that might otherwise exist if an investor were attempting
to assemble a block of shares in excess of 9.8% of the value of the outstanding
shares of Common Stock, or otherwise effect a change in control.
Maryland Business Combination Statute. Under the MGCL, certain "business
combinations" (including mergers, consolidations, share exchanges, certain asset
transfers and certain issuances of equity securities) between a Maryland
corporation and any persons who own 10% or more of the voting power of the
corporation's shares (an "Interested Stockholder") are prohibited for five years
after the most recent date on which the Interested Stockholder became an
Interested Stockholder. Thereafter, any such business combination must be
approved by the affirmative vote of at least 80% of the votes entitled to be
cast by holders of outstanding voting shares of the corporation other than
shares held by the Interested Stockholder with whom the business combination is
to be effected, unless, among other things, the holders of the corporation's
shares receive a minimum price (as defined in the MGCL) for their shares and the
consideration is received in cash or in the same form as previously paid by the
Interested Stockholder for the shares that it owns. However, these provisions of
Maryland law do not apply to "business combinations" with an Interested
Stockholder that are approved or exempted by the board of directors of the
corporation before that Interested Stockholder becomes an Interested
Stockholder.
Maryland Control Share Acquisition Statute. Maryland law provides that
"control shares" of a Maryland corporation acquired in a "control share
acquisition" have no voting rights except to the extent approved by a vote of
two-thirds of the votes eligible under the statute to be cast on that matter.
"Control Shares" are voting shares that, if aggregated with all other such
shares of stock previously acquired by the acquiror, would entitle the acquiror
to exercise voting power in electing directors within one of the following
8
<PAGE> 45
ranges of voting power: (i) one-fifth or more but less than one-third, (ii)
one-third or more but less than a majority, or (iii) a majority of all voting
power. Control Shares do not include shares the acquiring person is then
entitled to vote as a result of having previously obtained stockholder approval.
A "control share acquisition" means the acquisition of Control Shares, subject
to certain expenses.
If voting rights are not approved at a meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then,
subject to certain conditions and limitations, the corporation may redeem any or
all of the Control Shares (except those for which voting rights have previously
been approved) for fair value. If voting rights for Control Shares are approved
at a stockholder meeting and the acquiror becomes entitled to vote a majority of
the shares entitled to vote, all other stockholders may exercise appraisal
rights.
THE OPERATING PARTNERSHIP
Bradley Operating Limited Partnership (the "Operating Partnership") is the
entity through which Bradley Real Estate, Inc. (the "Company"), a
self-administered and self-managed real estate investment trust ("REIT"),
conducts substantially all of its business and owns (either directly or through
subsidiaries) substantially all of its assets. The Operating Partnership is an
owner of grocery-anchored, open-air neighborhood and community shopping centers
in the Midwestern region of the United States and is engaged in the business of
acquiring, and actively managing and leasing such properties. As used herein,
the term "Bradley Real Estate, Inc." refers also to its predecessor Bradley Real
Estate Trust, and the term "Company" or "Bradley" as used herein refers to
Bradley Real Estate, Inc. and its subsidiaries on a consolidated basis
(including Bradley Operating Limited Partnership and its subsidiaries) or, where
the context so requires, Bradley Real Estate, Inc. only. The term "Operating
Partnership" as used herein means Bradley Operating Limited Partnership and its
subsidiaries on a consolidated basis, or, where the context so requires, Bradley
Operating Limited Partnership only.
The Company has elected to qualify as a REIT for federal income tax
purposes since its organization in 1961. The Company believes it is the nation's
oldest continually qualified REIT. In March 1996, the Company completed the
acquisition of Tucker (the "Tucker Acquisition"). The Tucker acquisition was
consummated through the issuance by the Company of approximately 7.4 million
shares of its common stock, par value $.01 per share, ("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 to the Operating Partnership its interests in the 18
properties that it had theretofore held directly. The Operating Partnership
therefore succeeds Bradley as the entity through which the Company expects to
expand its ownership and operation of properties primarily located in the
Midwestern region of the country.
The Company currently owns an approximately 95% economic interest in and is
the sole general partner of the Operating Partnership (this structure is
commonly referred to as an umbrella partnership REIT or "UPREIT"). The board of
directors of the Company manages the affairs of the Operating Partnership by
directing the affairs of the Company. Economic interests in the equity of the
Operating Partnership are evidenced by units of partnership interest ("Units")
with the interest of the general partner evidenced by general partner units ("GP
Units").
The limited partners of the Operating Partnership are persons who received
limited partner interests evidenced by LP Units in connection with their
contributions of direct or indirect interests in certain properties to the
Operating Partnership. The Operating Partnership is obligated to redeem each LP
Unit at the request of the holder thereof for cash equal to the fair market
value of a share of the Company's Common Stock at the time of such redemption,
provided that the Company, at its option, may elect to acquire any such LP Unit
9
<PAGE> 46
presented for redemption for either one share of Common Stock or cash. The
Company presently anticipates that it will elect to issue Common Stock to
acquire LP Units for redemption, rather than paying cash. With each such
redemption, the Company's percentage ownership interest in the equity of the
Operating Partnership will increase. In addition, whenever the Company issues
Common Stock, it is anticipated that the Company will contribute any net
proceeds therefrom to the Operating Partnership and the Operating Partnership
will issue an equivalent number of GP Units to the Company. The Operating
Partnership has authority to issue preferred units that may have distribution
and other rights senior to the rights of holders of Units, but the Operating
Partnership may issue preferred units to the Company only in exchange for the
contribution by the Company to the Operating Partnership of the net proceeds
from the Company's issuance of an equivalent number of shares of preferred stock
that have equivalent seniority rights over the rights of holders of shares of
Common Stock of the Company.
The Operating Partnership may issue additional Units to purchase additional
properties or to purchase land parcels for the development of properties in
transactions that defer some or all of the seller's tax consequences. The
Operating Partnership believes that many potential sellers of properties have a
low tax basis in their properties and would be more willing to sell the
properties in transactions that defer the federal income tax consequences of the
sale. Offering Units representing an equity interest in the Operating
Partnership instead of cash for properties may provide potential sellers with
partial federal income tax deferral.
As part of its ongoing business, the Operating Partnership regularly
evaluates, and engages in discussions with public and private real estate
entities regarding possible portfolio or individual asset acquisitions or
business combinations. In evaluating potential acquisitions, the Operating
Partnership focuses principally on community and neighborhood shopping centers
in the upper Midwest -- generally consisting of the states of Illinois, Indiana,
Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South
Dakota and Wisconsin -- that are anchored by strong national, regional and
independent grocery store chains. The Operating Partnership favors
grocery-anchored shopping centers because, based on its experience and current
research, such properties offer better prospects for sustainable cash flow
growth over time due to their strong and predictable daily consumer traffic and
are less susceptible to downturns in the general economy than apparel- or
leisure-anchored shopping center properties.
The Operating Partnership is a Delaware limited partnership, and its
general partner, the Company, is a Maryland corporation. The executive offices
of both the Operating Partnership and the Company are located at 40 Skokie
Boulevard, Suite 600, Northbrook, Illinois 60062-1626 and their telephone number
is (847) 272-9800.
Reference is made to the applicable Prospectus Supplement accompanying this
Prospectus for additional information concerning the Operating Partnership as of
the date of such Prospectus Supplement.
10
<PAGE> 47
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Operating Partnership intends to use the net proceeds from the sale of Debt
Securities primarily to repay indebtedness of the Operating Partnership, which
may include indebtedness incurred in connection with the acquisition,
development or improvement of shopping centers, to acquire or develop additional
shopping centers and to fund expansions and/or improvements to such shopping
centers or to certain shopping centers already owned by the Operating
Partnership.
Pending their use as described above, the net proceeds from the sale of any
Debt Securities may be used for other general purposes of the Operating
Partnership or invested in short-term securities.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed
charges of the Operating Partnership for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------ -------------------------------
1992 1993 1994 1995 1996 1997
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
1.21:1 2.84:1 2.79:1 2.63:1 2.95:1 2.79:1
</TABLE>
For purposes of computing these ratios, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income before income
taxes and extraordinary items. Fixed charges consist of interest costs, whether
expensed or capitalized, the interest component of rental expense, if any, and
amortization of debt discounts and issue costs, whether expensed or capitalized.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Debt Securities will be issued under one or more indentures, each dated
as of a date prior to the issuance of the Debt Securities to which it relates
and containing such terms as either the chief executive officer or the chief
financial officer of the general partner shall determine. All of the Debt
Securities issued hereby will be investment grade. Senior Securities and
Subordinated Securities may be issued pursuant to separate indentures
(respectively, a "Senior Indenture" and a "Subordinated Indenture"), in each
case between the Operating Partnership and a trustee (a "Trustee"), which may be
the same Trustee, and in the form that has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part, subject to such
amendments or supplements as may be adopted from time to time. The Senior
Indenture and the Subordinated Indenture, as amended or supplemented from time
to time, are sometimes hereinafter referred to collectively as the "Indentures."
The Indentures will be subject to and governed by the Trust Indenture Act of
1939, as amended (the "TIA"). The statements made under this heading and in the
applicable Prospectus Supplement relating to the Debt Securities and the
Indentures are descriptions of the material provisions thereof.
Capitalized terms used herein and not defined shall have the meanings
assigned to them in the applicable Indenture.
TERMS
The indebtedness represented by the Senior Securities will rank equally
with all other unsecured and unsubordinated indebtedness of the Operating
Partnership. The indebtedness represented by Subordinated Securities will be
subordinated in right of payment to the prior payment in full of the Senior Debt
of the Operating Partnership as described under "Subordination." The material
terms of the Debt Securities offered by a Prospectus Supplement will be
described in the applicable Prospectus Supplement, along with any applicable
additions to the general terms of the Debt Securities as described herein and
any applicable federal income tax considerations. Accordingly, for a description
of the material terms of any series of Debt
11
<PAGE> 48
Securities, reference must be made to both the Prospectus Supplement relating
thereto and the description of the Debt Securities set forth in this Prospectus.
Except as set forth in any Prospectus Supplement, the Debt Securities may
be issued without limit as to aggregate principal amount, in one or more series,
in each case as established from time to time by the Operating Partnership or as
set forth in the applicable Indenture or in one or more indentures supplemental
to such Indenture. All Debt Securities of one series need not be issued at the
same time and, unless otherwise provided, a series may be reopened, without the
consent of the holders of the Debt Securities of such series, for issuance of
additional Debt Securities of such series.
Each Indenture will provide that the Operating Partnership may, but need
not, designate more than one Trustee thereunder, each with respect to one or
more series of Debt Securities. Any Trustee under an Indenture may resign or be
removed with respect to one or more series of Debt Securities and a successor
Trustee may be appointed to act with respect to such series. In the event that
two or more persons are acting as Trustee with respect to different series of
Debt Securities, each such Trustee shall be a Trustee of a trust under the
applicable Indenture separate and apart from the trust administered by any other
Trustee, and, except as otherwise indicated herein, any action described herein
to be taken by each Trustee may be taken by each such Trustee with respect to,
and only with respect to, the one or more series of Debt Securities for which it
is Trustee under the applicable Indenture.
The following summaries set forth certain general terms and provisions of
the Indentures and the Debt Securities. The Prospectus Supplement relating to
the series of Debt Securities being offered will contain further terms of such
Debt Securities, including the following specific terms:
(1) The title of such Debt Securities and whether such Debt Securities
are Senior Securities or Subordinated Securities;
(2) The aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) The price (expressed as a percentage of the principal amount
thereof) at which such Debt Securities will be issued and, if other than
the principal amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity thereof;
(4) The date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be payable;
(5) The rate or rates (which may be fixed or variable), or the method
by which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
(6) The date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the dates on which any
such interest will be payable, the record dates for such interest payment
dates, or the method by which such dates shall be determined, the persons
to whom such interest shall be payable, and the basis upon which interest
shall be calculated if other than that of a 360-day year of twelve 30-day
months;
(7) The place or places where the principal of (and premium, if any)
and interest, if any, on such Debt Securities will be payable, where such
Debt Securities may be surrendered for registration of transfer or exchange
and where notices or demands to or upon the Operating Partnership in
respect of such Debt Securities and the applicable Indenture may be served;
(8) The period or periods, if any, within which, the price or prices
at which and the other terms and conditions upon which such Debt Securities
may, pursuant to any optional or mandatory redemption provisions, be
redeemed, as a whole or in part, at the option of the Operating
Partnership;
(9) The obligation, if any, of the Operating Partnership to redeem,
repay or purchase such Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a holder thereof, and the period or
periods within which, the price or prices at which and the other terms and
conditions upon
12
<PAGE> 49
which such Debt Securities will be redeemed, repaid or purchased, as a
whole or in part, pursuant to such obligation;
(10) If other than U.S. dollars, the currency or currencies in which
such Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite currency
or currencies, and the terms and conditions relating thereto;
(11) Whether the amount of payments of principal of (and premium, if
any) or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula or
method may, but need not be, based on a currency, currencies, currency unit
or units, or composite currency or currencies) and the manner in which such
amounts shall be determined;
(12) Whether such Debt Securities will be issued in certificated or
book-entry form and, if in book entry form, the identity of the depository
for such Debt Securities;
(13) Whether such Debt Securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the denominations
thereof and terms and conditions relating thereto;
(14) The applicability, if any, of the defeasance and covenant
defeasance provisions described herein or set forth in the applicable
Indenture, or any modification thereof,
(15) Whether and under what circumstances the Operating Partnership
will pay any additional amounts on such Debt Securities in respect of any
tax, assessment or governmental charge and, if so, whether the Company will
have the option to redeem such Debt Securities in lieu of making such
payment;
(16) Any additions to the events of default or covenants of the
Operating Partnership with respect to such Debt Securities, and any
additions to the right of any Trustee or any of the holders to declare the
principal amount of any of such Debt Securities due and payable;
(17) With respect to any Debt Securities that provide for optional
redemption or prepayment upon the occurrence of certain events (such as a
change of control of the Operating Partnership), (i) the possible effects
of such provisions on the market price of the Operating Partnership's or
the Company's securities or in deterring certain mergers, tender offers or
other takeover attempts, and the intention of the Operating Partnership to
comply with the requirements of Rule 14e-1 under the Exchange Act and any
other applicable securities laws in connection with such provisions; (ii)
whether the occurrence of the specified events may give rise to
cross-defaults on other indebtedness such that payment on such Debt
Securities may be effectively subordinated; and, (iii) the existence of any
limitation on the Operating Partnership's financial or legal ability to
repurchase such Debt Securities upon the occurrence of such an event
(including, if true, the lack of assurance that such a repurchase can be
effected) and the impact, if any, under the Indenture of such a failure,
including whether and under what circumstances such a failure may
constitute an Event of Default; and
(18) Any other terms of such Debt Securities not inconsistent with the
provisions of the applicable Indenture.
If so provided in the applicable Prospectus Supplement, the Debt Securities
may be issued at a discount below their principal amount and provide for less
than the entire principal amount thereof to be payable upon declaration of
acceleration of the maturity thereof ("Original Issue Discount Securities"). In
such cases, any special U.S. federal income tax, accounting and other
considerations applicable to Original Issue Discount Securities will be
described in the applicable Prospectus Supplement.
Except as described under "-- Merger, Consolidation or Sale of Assets" or
as may be set forth in any Prospectus Supplement, the Debt Securities will not
contain any provisions that would limit the ability of the Operating Partnership
to incur indebtedness or that would afford holders of Debt Securities protection
in the event of (i) a highly leveraged or similar transaction involving the
Operating Partnership, the management of the Operating Partnership or the
Company, or any affiliate of any such party, (ii) a change of control, or
13
<PAGE> 50
(iii) a reorganization, restructuring, merger or similar transaction involving
the Operating Partnership that may adversely affect the holders of the Debt
Securities. In addition, subject to the limitations set forth under "-- Merger,
Consolidation or Sale of Assets," the Operating Partnership may, in the future,
enter into certain transactions, such as the sale of all or substantially all of
its assets or the merger or consolidation of the Operating Partnership, that
would increase the amount of the Operating Partnership's indebtedness or
substantially reduce or eliminate the Operating Partnership's indebtedness or
substantially reduce or eliminate the Operating Partnership's assets, which may
have an adverse effect on the Operating Partnership's ability to service its
indebtedness, including the Debt Securities. Reference is made to the applicable
Prospectus Supplement for information with respect to any additions to the
events of default or covenants that are described below, including any addition
of a covenant or other provision providing event risk or similar protection.
Any Prospectus Supplement relating to a series of Debt Securities that is
subject to the optional redemption of such series of Debt Securities will
describe, to the extent applicable, the obligation of the Operating Partnership
to comply with the requirements of Rule 14(e)-1 under the Exchange Act and any
other applicable securities laws.
DENOMINATION, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for any
authorized denomination of other Debt Securities of the same series and of a
like aggregate principal amount and tenor upon surrender of such Debt Securities
at the corporate trust office of the applicable Trustee or at the office of any
transfer agent designated by the Operating Partnership for such purpose. In
addition, subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series may be surrendered for
registration of transfer or exchange thereof at the corporate trust office of
the applicable Trustee or at the office of any transfer agent designated by the
Operating Partnership for such purpose. Every Debt Security surrendered for
registration of transfer or exchange must be duly endorsed or accompanied by a
written instrument of transfer, and the person requesting such action must
provide evidence of title and identity satisfactory to the applicable Trustee or
transfer agent. No service charge will be made for any registration of transfer
or exchange of any Debt Securities, but the Trustee or the Operating Partnership
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. If the applicable Prospectus Supplement
refers to any transfer agent (in addition to the applicable Trustee) initially
designated by the Operating Partnership with respect to any series of Debt
Securities, the Operating Partnership may at any time rescind the designation of
any such transfer agent or approve a change in the location through which any
such transfer agent acts, except that the Operating Partnership will be required
to maintain a transfer agent in each place of payment for such series. The
Operating Partnership may at any time designate additional transfer agents with
respect to any series of Debt Securities.
Neither the Operating Partnership nor any Trustee shall be required (i) to
issue, register the transfer of or exchange Debt Securities of any series during
a period beginning at the opening of business 15 days before the day of mailing
of a notice of redemption of any Debt Securities that may be selected for
redemption and ending at the close of business on the day of such mailing; (ii)
to register the transfer of or exchange any Debt Security, or portion thereof,
so selected for redemption, in whole or in part, except the unredeemed portion
of any Debt Security being redeemed in part; or (iii) to issue, register the
transfer of or exchange any Debt Security that has been surrendered for
repayment at the option of the holder, except the portion, if any, of such Debt
Security not to be so repaid.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indentures will provide that the Operating Partnership may, without the
consent of the holders of any outstanding Debt Securities, consolidate with, or
sell, lease or convey all or substantially all of its assets to, or merge with
or into, any other entity provided that (i) either the Operating Partnership
shall be the continuing entity, or the successor entity (if other than the
Operating Partnership) formed by or resulting
14
<PAGE> 51
from any such consolidation or merger or which shall have received the transfer
of such assets, shall expressly assume (A) the Operating Partnership's
obligations to pay principal of (and premium, if any) and interest on all of the
Debt Securities and (B) the due and punctual performance and observance of all
of the covenants and conditions contained in each Indenture; (ii) immediately
after giving effect to such transaction and treating any indebtedness that
becomes an obligation of the Operating Partnership or any subsidiary as a result
thereof as having been incurred by the Operating Partnership or such subsidiary
at the time of such transaction, no event of default under the Indentures, and
no event which, after notice or the lapse of time, or both, would become such an
event of default, shall have occurred and be continuing; and (iii) an officers'
certificate and legal opinion covering such conditions shall be delivered to
each Trustee.
CERTAIN COVENANTS
Existence. Except as permitted under "-- Merger, Consolidation or Sale of
Assets," the Indentures will require the Operating Partnership to do or cause to
be done all things necessary to preserve and keep in full force and effect its
existence, rights and franchises; provided, however, that the Operating
Partnership shall not be required to preserve any right or franchise if it
determines that the preservation thereof is no longer desirable in the conduct
of its business.
Maintenance of Properties. The Indentures will require the Operating
Partnership to cause all of its material properties used or useful in the
conduct of its business or the business of any subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Operating Partnership may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that the Operating Partnership and its subsidiaries shall not
be prevented from selling or otherwise disposing of their properties for value
in the ordinary course of business.
Insurance. The Indentures will require the Operating Partnership to cause
each of its and its subsidiaries' insurable properties to be insured against
loss or damage at least equal to their then full insurable value with insurers
of recognized responsibility and, if described in the applicable Prospectus
Supplement, having a specified rating from a recognized insurance rating
service.
Payment of Taxes and Other Claims. The Indentures will require the
Operating Partnership to pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges levied or imposed upon it or any subsidiary or upon the
income, profits or property of the Operating Partnership or any subsidiary and
(ii) all lawful claims for labor, materials and supplies which, if unpaid, might
by law become a lien upon the property of the Operating Partnership or any
subsidiary; provided, however, that the Operating Partnership shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith.
Additional Covenants. Any additional covenants of the Operating
Partnership with respect to any series of Debt Securities will be set forth in
the Prospectus Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Unless otherwise provided in the applicable Prospectus Supplement, each
Indenture will provide that the following events are "Events of Default" with
respect to any series of Debt Securities issued thereunder: (i) default for 30
days in the payment of any installment of interest on any Debt Security of such
series; (ii) default in the payment of principal of (or premium, if any, on) any
Debt Security of such series at its maturity; (iii) default in making any
sinking fund payment as required for any Debt Security of such series; (iv)
default in the performance or breach of any other covenant or warranty of the
Operating Partnership contained in the Indenture (other than a covenant added to
the Indenture solely for the benefit of a series of Debt Securities issued
thereunder other than such series), continued for 60 days after written notice
as provided in the applicable Indenture; (v) default under any bond, debenture,
note or other evidence of indebtedness for money borrowed (except mortgage
indebtedness) by the Operating Partnership or any of its subsidiaries in an
aggregate principal amount in excess of $25,000,000 or under any indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money
15
<PAGE> 52
borrowed (except mortgage indebtedness) by the Operating Partnership or any of
its subsidiaries in an aggregate principal amount in excess of $25,000,000,
whether such indebtedness exists on the date of such Indenture or shall
thereafter be created, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable or such obligations being accelerated,
without such acceleration having been rescinded or annulled; (vi) certain events
of bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Operating Partnership or any Significant Subsidiary
of the Operating Partnership; and (vii) any other event of default provided with
respect to a particular series of Debt Securities. The term "Significant
Subsidiary" has the meaning ascribed to such term in Regulation S-X promulgated
under the Securities Act.
If an Event of Default under any Indenture with respect to Debt Securities
of any series at the time outstanding occurs and is continuing, then in every
such case the applicable Trustee or the holders of not less than 25% in
principal amount of the Debt Securities of that series will have the right to
declare the principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities or indexed securities, such portion of the
principal amount as may be specified in the terms thereof) of all the Debt
Securities of that series to be due and payable immediately by written notice
thereof to the Operating Partnership (and to the applicable Trustee if given by
the holders). However, at any time after such a declaration of acceleration with
respect to Debt Securities of such series (or of all Debt Securities then
outstanding under any Indenture, as the case may be) has been made, but before a
judgment or decree for payment of the money due has been obtained by the
applicable Trustee, the holders of not less than a majority in principal amount
of outstanding Debt Securities of such series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) may rescind and
annul such declaration and its consequences if (i) the Operating Partnership
shall have deposited with the applicable Trustee all required payments of the
principal of (and premium, if any) and interest on the Debt Securities of such
series (or of all Debt Securities then outstanding under the applicable
Indenture, as the case may be), plus certain fees, expenses, disbursements and
advances of the applicable Trustee; and (ii) all events of default, other than
the non-payment of accelerated principal (or specified portion thereof), with
respect to Debt Securities of such series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) have been cured
or waived as provided in such Indenture. The Indentures will also provide that
the holders of not less than a majority in principal amount of the outstanding
Debt Securities of any series (or of all Debt Securities then outstanding under
the applicable Indenture, as the case may be) may waive any past default with
respect to such series and its consequences, except a default (i) in the payment
of the principal of (or premium, if any) or interest on any Debt Security of
such series; or (ii) in respect of a covenant or provision contained in the
applicable Indenture that cannot be modified or amended without the consent of
the holder of each outstanding Debt Security affected thereby.
The Indentures will require each Trustee to give notice to the holders of
Debt Securities within 90 days of a default under the applicable Indenture
unless such default shall have been cured or waived; provided, however, that
such Trustee may withhold notice to the holders of any series of Debt Securities
of any default with respect to such series (except a default in the payment of
the principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any Debt
Security of such series) if specified responsible officers of such Trustee
consider such withholding to be in the interest of such holders.
The Indentures will provide that no holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to
such Indenture or for any remedy thereunder, except in the case of failure of
the applicable Trustee, for 60 days, to act after it has received a written
request to institute proceedings in respect of an event of default from the
holders of not less than 25% in principal amount of the outstanding Debt
Securities of such series, as well as an offer of indemnity reasonably
satisfactory to it. This provision will not prevent, however, any holder of Debt
Securities from instituting suit for the enforcement of payment of the principal
of (and premium, if any) and interest on such Debt Securities at the respective
due dates thereof.
The Indentures will provide that, subject to provisions in each Indenture
relating to its duties in case of default, a Trustee will be under no obligation
to exercise any of its rights or powers under an Indenture at the
16
<PAGE> 53
request or direction of any holders of any series of Debt Securities then
outstanding under such Indenture, unless such holders shall have offered to the
Trustee thereunder reasonable security or indemnity. The holders of not less
than a majority in principal amount of the outstanding Debt Securities of any
series (or of all Debt Securities then outstanding under an Indenture, as the
case may be) shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Trustee, or
of exercising any trust or power conferred upon such Trustee. However, a Trustee
may refuse to follow any direction which is in conflict with any law or the
applicable Indenture, which may involve such Trustee in personal liability or
which may be unduly prejudicial to the holders of Debt Securities of such series
not joining therein.
Within 120 days after the close of each fiscal year, the Operating
Partnership will be required to deliver to each Trustee a certificate, signed by
one of several specified officers of the Operating Partnership, stating whether
or not such officer has knowledge of any default under the applicable Indenture
and, if so, specifying each such default and the nature and status thereof.
MODIFICATION OF THE INDENTURES
Except as set forth in the second following paragraph, modifications and
amendments of an Indenture will be permitted to be made only with the consent of
the holders of not less than a majority in principal amount of all outstanding
Debt Securities issued under such Indenture affected by such modification or
amendment; provided, however, that no such modification or amendment may,
without the consent of the holder of each such Debt Security affected thereby,
(i) change the stated maturity of the principal of, or any installment of
interest (or premium, if any) on, any such Debt Security; (ii) reduce the
principal amount of, or the rate or amount of interest on, or any premium
payable on redemption of, any such Debt Security, or reduce the amount of
principal of an Original Issue Discount Security that would be due and payable
upon declaration of acceleration of the maturity thereof or would be provable in
bankruptcy, or adversely affect any right of repayment of the holder of any such
Debt Security; (iii) change the place of payment, or the coin or currency, for
payment of principal of, premium, if any, or interest on any such Debt Security;
(iv) impair the right to institute suit for the enforcement of any payment on or
with respect to any such Debt Security; (v) reduce the above-stated percentage
of any outstanding Debt Securities necessary to modify or amend the applicable
Indenture with respect to such Debt Securities, to waive compliance with certain
provisions thereof or certain defaults and consequences thereunder or to reduce
the quorum or voting requirements set forth in the applicable Indenture; or (vi)
modify any of the foregoing provisions or any of the provisions relating to the
waiver of certain past defaults or certain covenants, except to increase the
required percentage to effect such action or to provide that certain other
provisions may not be modified or waived without the consent of the holder of
such Debt Security.
The holders of a majority in aggregate principal amount of the outstanding
Debt Securities of each series may, on behalf of all holders of Debt Securities
of that series, waive, insofar as that series is concerned, compliance by the
Operating Partnership with certain restrictive covenants of the applicable
Indenture.
Modifications and amendments of an Indenture will be permitted to be made
by the Operating Partnership and the respective Trustee thereunder without the
consent of any holder of Debt Securities for any of the following purposes: (i)
to evidence the succession of another person to the Operating Partnership as
obligor under such Indenture; (ii) to add to the covenants of the Operating
Partnership for the benefit of the holders of all or any series of Debt
Securities or to surrender any right or power conferred upon the Operating
Partnership in such Indenture; (iii) to add events of default for the benefit of
the holders of all or any series of Debt Securities; (iv) to add or change any
provisions of an Indenture to facilitate the issuance of, or to liberalize
certain terms of, Debt Securities in bearer form, or to permit or facilitate the
issuance of Debt Securities in uncertificated form, provided that such action
shall not adversely affect the interests of the holders of the Debt Securities
of any series in any material respect; (v) to change or eliminate any provisions
of an Indenture, provided that any such change or elimination shall become
effective only when there are no Debt Securities outstanding of any series
created prior thereto which are entitled to the benefit of such provision; (vi)
to secure the Debt Securities; (vii) to establish the form or terms of Debt
Securities of any series; (viii) to provide for the acceptance of appointment by
a successor Trustee or facilitate the
17
<PAGE> 54
administration of the trusts under an Indenture by more than one Trustee; (ix)
to cure any ambiguity, defect or inconsistency in an Indenture, provided that
such action shall not adversely affect the interests of holders of Debt
Securities of any series issued under such Indenture; or (x) to supplement any
of the provisions of an Indenture to the extent necessary to permit or
facilitate defeasance and discharge of any series of such Debt Securities,
provided that such action shall not adversely affect the interests of the
holders of the outstanding Debt Securities of any series.
The Indentures will provide that in determining whether the holders of the
requisite principal amount of outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of any Debt Security denominated in a foreign currency that shall be deemed
outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above); (iii) the
principal amount of an indexed security that shall be deemed outstanding shall
be the principal face amount of such indexed security at original issuance,
unless otherwise provided with respect to such indexed security pursuant to such
Indenture; and (iv) Debt Securities owned by the Operating Partnership or any
other obligor upon the Debt Securities, or any affiliate of the Operating
Partnership or of such other obligor shall be disregarded.
The Indentures will contain provisions for convening meetings of the
holders of Debt Securities of a series. A meeting will be permitted to be called
at any time by the applicable Trustee, and also, upon request, by the Operating
Partnership or the holders of at least 10% in principal amount of the
outstanding Debt Securities of such series, in any such case upon notice given
as provided in such Indenture. Except for any consent that must be given by the
holder of each Debt Security affected by certain modifications and amendments of
an Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the holders of a majority in principal amount of the outstanding Debt
Securities of that series; provided, however, that, except as referred to above,
any resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by the
holders of a specified percentage, which is less than a majority, in principal
amount of the outstanding Debt Securities of a series may be adopted at a
meeting or adjourned meeting duly reconvened at which a quorum is present by the
affirmative vote of the holders of such specified percentage in principal amount
of the outstanding Debt Securities of that series. Any resolution passed or
decision taken at any meeting of holders of Debt Securities of any series duly
held in accordance with an Indenture will be binding on all holders of Debt
Securities of that series. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the outstanding Debt Securities
of a series; provided, however, that if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by the holders of
not less than a specified percentage in principal amount of the outstanding Debt
Securities of a series, the persons holding or representing such specified
percentage in principal amount of the outstanding Debt Securities of such series
will constitute a quorum.
Notwithstanding the foregoing provisions, the Indentures will provide that
if any action is to be taken at a meeting of holders of Debt Securities of any
series with respect to any request, demand, authorization, direction, notice,
consent, waiver and other action that such Indenture expressly provides may be
made, given or taken by the holders of a specified percentage in principal
amount of all outstanding Debt Securities affected thereby, or of the holders of
such series and one or more additional series: (i) there shall be no minimum
quorum requirement for such meeting; and (ii) the principal amount of the
outstanding Debt Securities of such series that vote in favor of such request,
demand, authorization, direction, notice, consent, waiver or other action shall
be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been made,
given or taken under such Indenture.
18
<PAGE> 55
SUBORDINATION
Unless otherwise provided in the applicable Prospectus Supplement,
Subordinated Securities will be subject to the following subordination
provisions.
Upon any distribution to creditors of the Operating Partnership in a
liquidation, dissolution or reorganization, the payment of the principal of and
interest on any Subordinated Securities will be subordinated to the extent
provided in the applicable Indenture in right of payment to the prior payment in
full of all Senior Debt (as defined below), but the obligation of the Operating
Partnership to make payments of the principal of and interest on such
Subordinated Securities will not otherwise be affected. No payment of principal
or interest will be permitted to be made on Subordinated Securities at any time
if a default on Senior Debt exists that permits the holders of such Senior Debt
to accelerate its maturity and the default is the subject of judicial
proceedings or the Operating Partnership receives notice of the default. After
all Senior Debt is paid in full and until the Subordinated Securities are paid
in full, holders will be subrogated to the rights of holders of Senior Debt to
the extent that distributions otherwise payable to holders have been applied to
the payment of Senior Debt. The Subordinated Indenture will not restrict the
amount of Senior Debt or other indebtedness of the Operating Partnership and its
subsidiaries. As a result of these subordination provisions, in the event of a
distribution of assets upon insolvency, holders of Subordinated Indebtedness may
recover less, ratably, than general creditors of the Operating Partnership.
Senior Debt will be defined in the applicable Indenture as the principal of
and interest on, or substantially similar payments to be made by the Operating
Partnership in respect of, the following, whether outstanding at the date of
execution of the applicable Indenture or thereafter incurred, created or
assumed: (i) indebtedness of the Operating Partnership for money borrowed or
represented by purchase-money obligations; (ii) indebtedness of the Operating
Partnership evidenced by notes, debentures, or bonds, or other securities issued
under the provisions of an indenture, fiscal agency agreement or other
agreement; (iii) obligations of the Operating Partnership as lessee under leases
of property either made as part of any sale and leaseback transaction to which
the Operating Partnership is a party or otherwise; (iv) indebtedness,
obligations and liabilities of others in respect of which the Operating
Partnership is liable contingently or otherwise to pay or advance money or
property or as guarantor, endorser or otherwise or which the Operating
Partnership has agreed to purchase or otherwise acquire; and (v) any binding
commitment of the Operating Partnership to fund any real estate investment or to
fund any investment in any entity making such real estate investment, in each
case other than (A) any such indebtedness, obligation or liability referred to
in clauses (i) through (iv) above as to which, in the instrument creating or
evidencing the same pursuant to which the same is outstanding, it is provided
that such indebtedness, obligation or liability is not superior in right of
payment to the Subordinated Securities or ranks without preference to the
Subordinated Securities; (B) any such indebtedness, obligation or liability
which is subordinated to indebtedness of the Operating Partnership to
substantially the same extent as or to a greater extent than the Subordinated
Securities are subordinated; and (C) the Subordinated Securities. There will not
be any restrictions in any Indenture relating to Subordinated Securities upon
the creation of additional Senior Debt.
If this Prospectus is being delivered in connection with a series of
Subordinated Securities, the accompanying Prospectus Supplement or the
information incorporated herein by reference will set forth the approximate
amount of Senior Debt outstanding as of the end of the Operating Partnership's
most recent fiscal quarter.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Operating Partnership will be permitted, at its option, to discharge
certain obligations to holders of any series of Debt Securities issued under any
Indenture that have not already been delivered to the applicable Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the applicable Trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt
19
<PAGE> 56
Securities in respect of principal (and premium, if any) and interest to the
date of such deposit (if such Debt Securities have become due and payable) or to
the stated maturity or redemption date, as the case may be.
The Indentures will provide that, unless otherwise indicated in the
applicable Prospectus Supplement, the Operating Partnership may elect either (i)
to defease and be discharged from any and all obligations with respect to such
Debt Securities (except for the obligation to pay additional amounts, if any,
upon the occurrence of certain events of tax, assessment or governmental charge
with respect to payments on such Debt Securities and the obligations to register
the transfer or exchange of such Debt Securities, to replace temporary or
mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or
agency in respect of such Debt Securities and to hold moneys for payment in
trust) ("defeasance"); or (ii) to be released from its obligations with respect
to such Debt Securities under the applicable Indenture (being the restrictions
described under "-- Certain Covenants") or, if provided in the applicable
Prospectus Supplement, its obligations with respect to any other covenant, and
any omission to comply with such obligations shall not constitute an event of
default with respect to such Debt Securities ("covenant defeasance"), in either
case upon the irrevocable deposit by the Operating Partnership with the
applicable Trustee, in trust, of an amount, in such currency or currencies,
currency unit or units or composite currency or currencies in which such Debt
Securities are payable at stated maturity, or Government Obligations (as defined
below), or both, applicable to such Debt Securities, which through the scheduled
payment of principal and interest in accordance with their terms will provide
money in an amount sufficient to pay the principal of (and premium, if any) and
interest on such Debt Securities, and any mandatory sinking fund or analogous
payments thereon, on the scheduled due dates therefor.
Such a trust will only be permitted to be established if, among other
things, the Operating Partnership has delivered to the applicable Trustee an
opinion of counsel (as specified in the applicable Indenture) to the effect that
the holders of such Debt Securities will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to U.S. federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred, and such opinion of counsel,
in the case of defeasance, will be required to refer to and be based upon a
ruling received from or published by the Internal Revenue Service or a change in
applicable U.S. federal income tax law occurring after the date of the
Indenture. In the event of such defeasance, the holders of such Debt Securities
would thereafter be able to look only to such trust fund for payment of
principal (and premium, if any) and interest.
"Government Obligations" means securities that are (i) direct obligations
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged; or (ii) obligations
of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which issued
the foreign currency in which the Debt Securities of such series are payable,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or such other government, which, in
either case, are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of any such Government Obligation held by such
custodian for the account of the holder of a depository receipt; provided,
however, that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of the Government
Obligation evidenced by such depository receipt.
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Operating Partnership has deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance with respect to Debt Securities of any
series, (i) the holder of a Debt Security of such series is entitled to, and
does, elect pursuant to the applicable Indenture or the terms of such Debt
Security to receive payment in a currency, currency unit or composite currency
other than that in which such deposit has been made in respect of such Debt
Security; or (ii) a Conversion Event (as defined below) occurs in respect of the
currency, currency unit or composite currency in which such deposit has been
made, the indebtedness represented by such Debt Security will be deemed to have
been, and will be, fully discharged and satisfied through the payment of the
20
<PAGE> 57
principal of (and premium, if any) and interest on such Debt Security as they
become due out of the proceeds yielded by converting the amount so deposited in
respect of such Debt Security into the currency, currency unit or composite
currency in which such Debt Security becomes payable as a result of such
election or such cessation of usage based on the applicable market exchange
rate. "Conversion Event" means the cessation of use of (i) a currency, currency
unit or composite currency both by the government of the country which issued
such currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community; (ii) the
European Currency Unit ("ECU") both within the European Monetary System and for
the settlement of transactions by public institutions of or within the European
Communities; or (iii) any currency unit or composite currency other than the ECU
for the purposes for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium, if
any) and interest on any Debt Security that is payable in a foreign currency
that ceases to be used by its government of issuance shall be made in U.S.
dollars.
In the event the Operating Partnership effects covenant defeasance with
respect to any Debt Securities and such Debt Securities are declared due and
payable because of the occurrence of any event of default other than the event
of default described in clause (iv) under "-- Events of Default, Notice and
Waiver" with respect to specified sections of an Indenture (which sections would
no longer be applicable to such Debt Securities) or described in clause (vii)
under "-- Events of Default, Notice and Waiver" with respect to any other
covenant as to which there has been covenant defeasance, the amount in such
currency, currency unit or composite currency in which such Debt Securities are
payable, and Government Obligations on deposit with the applicable Trustee, will
be sufficient to pay amounts due on such Debt Securities at the time of their
stated maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such event of default.
However, the Operating Partnership would remain liable to make payment of such
amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
NO CONVERSION RIGHTS
The Debt Securities will not be convertible into or exchangeable for any
equity interest in the Operating Partnership or any capital stock or debt
securities of the Company.
PAYMENT
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the Trustee, the
address of which will be stated in the applicable Prospectus Supplement;
provided, however, that, at the option of the Operating Partnership, payment of
interest may be made by check mailed to the address of the person entitled
thereto as it appears in the applicable register for such Debt Securities or by
wire transfer of funds to such person at an account maintained within the United
States.
All moneys paid by the Operating Partnership to a paying agent or a Trustee
for the payment of the principal of or any premium or interest on any Debt
Security which remain unclaimed at the end of two years after such principal,
premium or interest has become due and payable will be repaid to the Operating
Partnership, and the holder of such Debt Security thereafter may look only to
the Operating Partnership for payment thereof.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities which evidence the aggregate amount of a
particular series of the debt (the "Global Securities") that will be deposited
with, or on behalf of, a depositary identified in the applicable Prospectus
Supplement relating to such series. Global Securities may be issued in either
registered or bearer form and in either temporary or permanent form. The
specific terms of the depositary arrangement with respect to a series of Debt
Securities will be described in the applicable Prospectus Supplement relating to
such series.
21
<PAGE> 58
PLAN OF DISTRIBUTION
The Operating Partnership may sell Debt Securities through underwriters or
dealers, directly to one or more purchasers, or through agents.
The distribution of the Debt Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale or at prices related to such
prevailing market prices, or at negotiated prices.
In connection with the sale of Debt Securities, underwriters or agents may
receive compensation from the Operating Partnership or from purchasers of Debt
Securities, for whom they may act as agents, in the form of discounts,
concessions, or commissions. Underwriters may sell Debt Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions, or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agents. Underwriters, dealers, and agents
that participate in the distribution of Debt Securities may be deemed to be
underwriters, and any discounts or commissions they receive from the Operating
Partnership, and any profit on the resale of Debt Securities they realize may be
deemed to be underwriting discounts and commissions, under the Securities Act.
Any such underwriter or agent will be identified, and any such compensation
received from the Operating Partnership will be described, in the applicable
Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, each
series of Debt Securities will be a new issue with no established trading
market. The Operating Partnership may elect to list any series of Debt
Securities on an exchange, but is not obligated to do so. It is possible that
one or more underwriters may make a market in a series of Debt Securities, but
will not be obligated to do so and may discontinue any market making at any time
without notice. Therefore, no assurance can be given as to the liquidity of, or
the trading market for, Debt Securities.
Under agreements into which the Operating Partnership may enter,
underwriters will be, and dealers and agents who participate in the distribution
of Debt Securities may be, entitled to indemnification by the Operating
Partnership against certain liabilities, including liabilities under the
Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, the Operating Partnership or the
Company in the ordinary course of business.
If so indicated in the applicable Prospectus Supplement, the Operating
Partnership may itself, or may authorize underwriters or other persons acting as
the Operating Partnership's agents to solicit offers by certain institutions to
purchase Debt Securities from the Operating Partnership pursuant to contracts
providing for payment and delivery on a future date. Institutions with which
such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Operating Partnership. The obligations of any purchaser under any such
contract will be subject to the condition that the purchase of the Debt
Securities shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such other
agents will not have any responsibility in respect of the validity or
performance of such contracts.
In order to comply with the securities laws of certain states, if
applicable, the Debt Securities offered hereby will be sold in such
jurisdictions only through registered or licensed brokers or dealers.
LEGAL MATTERS
Certain legal matters, including the legality of the Debt Securities, will
be passed upon for the Operating Partnership by Goodwin, Procter & Hoar LLP,
Boston, Massachusetts. William B. King, whose professional corporation is a
partner in Goodwin, Procter & Hoar LLP, is Secretary of the Company, the general
partner of the Operating Partnership, and is the beneficial owner of
approximately 9,000 shares of Common Stock of the Company. In case of an
underwritten public offering, certain legal matters will be passed upon for the
underwriters by legal counsel named in the applicable Prospectus Supplement.
22
<PAGE> 59
EXPERTS
The consolidated financial statements and schedule of Bradley Operating
Limited Partnership and Predecessor Business and Subsidiaries as of December 31,
1996 and 1995 and for each of the years in the three-year period ended December
31, 1996 contained in the Operating Partnership's Form 10 Registration
Statement, the consolidated financial statements and schedule of Bradley Real
Estate, Inc. as of December 31, 1996 and 1995 and for each of the years in the
three-year period ended December 31, 1996 contained in the Company's Annual
Report on Form 10-K, and the combined statement of revenues and certain expenses
of the Acquisition Properties (as defined) for the year ended December 31, 1996
contained in the Operating Partnership's Form 10/A-3 Registration Statement have
been incorporated by reference herein and in the Registration Statement of which
this Prospectus is a part in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accounts, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. To the
extent that KPMG Peat Marwick LLP audits and reports on financial statements of
the Operating Partnership or the Company issued at future dates, and consents to
the use of their reports thereon, such financial statements also will be
incorporated by reference in the Registration Statement in reliance upon their
reports and said authority.
The consolidated balance sheets of Tucker Properties Corporation as of
December 31, 1995 and 1994 and the related consolidated statements of
operations, stockholders' equity and cash flows for the years then ended
contained in said Form 10/A-3 Registration Statement have been likewise
incorporated in reliance upon the report of Coopers & Lybrand L.L.P.,
independent accountants, also incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
23
<PAGE> 60
===============================================================================
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS (COLLECTIVELY, THE "PROSPECTUS") AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE OPERATING PARTNERSHIP OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary............. S-3
The Operating Partnership................. S-9
Use of Proceeds........................... S-24
Capitalization............................ S-24
Selected Financial Data................... S-25
Description of Notes...................... S-26
Underwriting.............................. S-35
Legal Matters............................. S-36
PROSPECTUS
Available Information..................... 2
Incorporation of Certain Documents by
Reference............................... 2
Risk Factors.............................. 3
The Operating Partnership................. 9
Use of Proceeds........................... 11
Ratios of Earnings to Fixed Charges....... 11
Description of Debt Securities............ 11
Plan of Distribution...................... 22
Legal Matters............................. 22
Experts................................... 23
</TABLE>
- -------------------------------------------------------------------------------
===============================================================================
===============================================================================
- -------------------------------------------------------------------------------
BRADLEY OPERATING
LIMITED PARTNERSHIP
$50,000,000
% NOTES DUE 2003
$100,000,000
% NOTES DUE 2008
--------------------------------
PROSPECTUS SUPPLEMENT
--------------------------------
PAINEWEBBER INCORPORATED
SALOMON SMITH BARNEY
BT ALEX. BROWN
A.G. EDWARDS & SONS, INC.
------------------------
JANUARY , 1998
- -------------------------------------------------------------------------------
===============================================================================