<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
FEBRUARY 13, 1998
BRADLEY OPERATING LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its charter)
DELAWARE 0-23065 04-3306041
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
40 SKOKIE BOULEVARD, NORTHBROOK, ILLINOIS 60062
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(847) 272-9800
<PAGE> 2
Item 5. OTHER EVENTS.
Bradley Operating Limited Partnership (the "Operating Partnership") files
this Form 8-K report that contains financial statements consistent with
Regulation S-X, Rule 3-14, for properties (the "Acquisition Properties")
accounting for over 50% of the aggregate acquisition costs of a series of
properties acquired during the period January 1, 1998 through May 12, 1998 or
which it is probable that the Operating Partnership will acquire. (See Item 7.)
During this period, six shopping centers were acquired for a total
acquisition price of approximately $54.1 million. In addition, as of May 12,
1998, the Operating Partnership has entered into contracts for the purchase of
an additional five shopping centers and two outlots adjacent to one of such
centers for an estimated total acquisition price of approximately $40.5 million.
Although the Company deems such acquisitions as probable, there can be no
assurance that the acquisition of any of such properties will be consummated, or
that the acquisition price will approximate those currently estimated. No one
acquisition or group of related acquisitions was in itself significant, but in
the aggregate such acquisition costs exceeded 10% of the total assets of the
Operating Partnership and its subsidiaries consolidated at December 31, 1997.
The acquisitions completed to date were funded with cash provided by the
Operating Partnership's bank line of credit. Management currently expects to
fund the probable acquisitions with the bank line of credit although there can
be no assurance that it will do so.
The dates, shopping centers acquired of and the approximate acquisition
cost for the respective centers are as follows:
ACQUISITIONS:
<TABLE>
<CAPTION>
DATE PROPERTY APPROXIMATE ACQUISITION COST
<S> <C> <C>
February 13, 1998 Kings Plaza, Richmond, IN $ 3,671,000
March 5, 1998 Sagamore Park, West Lafayette, IN 7,769,000
March 13, 1998 Oak Creek Centre, Oak Creek, WI 4,926,000
March 31, 1998 Midtown Shopping Center, Ashland, KY 7,441,000
March 31, 1998 * Courtyard Shopping Center, Burton, MI 9,710,000
April 10, 1998 * Redford Plaza, Redford, MI 20,614,000
-----------
$54,131,000
===========
</TABLE>
PROBABLE ACQUISITIONS:
PROPERTY ESTIMATED ACQUISITION COST
Butterfield Square, Libertyville, IL $13,358,000
Bartonville, Peoria, IL 1,607,000
Sterling Outlots, Peoria, IL 500,000
* Camelot Shopping Center, Louisville, KY 8,840,000
Dixie Plaza, Louisville, KY 3,744,000
* Plainview Village, Louisville, KY 12,495,000
-----------
$40,544,000
===========
2
<PAGE> 3
Properties designated with an asterisk (*) are properties included within
the Acquisition Properties for which the financial statements accompany this
report. None of such Acquisition Properties was acquired from a related party of
the Operating Partnership or its consolidated subsidiaries. Factors considered
by the Operating Partnership in assessing the acquisition price for each of the
properties included its location and tenant mix, including opportunities for
retenanting and remodeling consistent with the Operating Partnership's
experience as a shopping center operator; its current net operating income and
the prospect for increased income in the short and long range future;
capitalization rates for shopping center properties of the type acquired, in the
Midwest area of the United States generally and in the locality in which the
property is located; current operating costs and the possibility of effecting
property-level operating efficiencies as a result of the Operating Partnership's
ownership of a significant number of shopping centers in the Midwest; and the
differential between the Operating Partnership's cost of capital in acquiring
the property and the property's current and potential net operating income.
After reasonable inquiry, the Operating Partnership is not aware of any material
factors relating to any specific property included within the Acquisition
Properties other than those discussed in the preceding sentence that would cause
the reported financial information not to be necessarily indicative of future
operating results.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The following financial statements and pro forma financial information
accompany this report.
(a) Financial Statements - Acquisition Properties - Redford Plaza
Independent Auditors' Report
For the Year Ended December 31, 1997
Statement of Revenues and Certain Expenses
Notes to Statement of Revenues and Certain Expenses
(b) Financial Statements - Acquisition Properties - Courtyard Shopping
Center
Independent Auditors' Report
For the Year Ended December 31, 1997
Statement of Revenues and Certain Expenses
Notes to Statement of Revenues and Certain Expenses
(c) Financial Statements - Acquisition Properties - Camelot Shopping Center
and Plainview Village
Independent Auditors' Report
For the Year Ended December 31, 1997
Combined Statement of Revenues and Certain Expenses
Notes to Combined Statement of Revenues and Certain Expenses
3
<PAGE> 4
(d) Pro Forma Financial Information - Bradley Operating Limited Partnership
Pro Forma Condensed Consolidated Balance Sheet
December 31, 1997 (unaudited)
Pro Forma Condensed Consolidated Statement of Income
For the year ended December 31, 1997 (unaudited)
(e) Exhibits
Exhibit 23.1 Consent of KPMG Peat Marwick LLP
4
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BRADLEY OPERATING LIMITED PARTNERSHIP
(Registrant)
By: BRADLEY REAL ESTATE, INC., its general partner
By: /s/ Thomas P. D'Arcy
Date: May 12, 1998 ------------------------------------------
Thomas P. D'Arcy
President and Chief Executive Officer
5
<PAGE> 6
INDEPENDENT AUDITORS' REPORT
The Board of Directors of Bradley Real Estate, Inc.
and Unit Holders of Bradley Operating Limited Partnership:
We have audited the accompanying statement of revenues and certain expenses
(defined as operating revenues less direct operating expenses) of Redford Plaza
for the year ended December 31, 1997. This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenues and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statement of revenues and certain expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission and for inclusion in a Form 8-K of Bradley Operating Limited
Partnership as described in Note 2. The presentation is not intended to be a
complete presentation of Redford Plaza's revenues and expenses.
In our opinion, the statement of revenues and certain expenses referred to above
presents fairly, in all material respects, the revenues and certain expenses
described in Note 2, of Redford Plaza for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
April 9, 1998
F-1
<PAGE> 7
ACQUISITION PROPERTIES - REDFORD PLAZA
Statement of Revenues and Certain Expenses
Year ended December 31, 1997
- ------------------------------------------------------------------------
Revenues:
Base rental income $1,881,979
Operating expense and real estate tax recoveries 621,148
Other income 6,843
- ------------------------------------------------------------------------
Total revenues 2,509,970
- ------------------------------------------------------------------------
Certain expenses:
Real estate taxes 263,919
Operating expenses 240,880
Utilities 50,160
Insurance 72,336
- ------------------------------------------------------------------------
Total expenses 627,295
- ------------------------------------------------------------------------
Excess of revenues over certain expenses $1,882,675
- ------------------------------------------------------------------------
See accompanying notes to statement of revenues and certain expenses.
F-2
<PAGE> 8
ACQUISITION PROPERTIES - REDFORD PLAZA
Notes to Statement of Revenues and Certain Expenses
Year ended December 31, 1997
- --------------------------------------------------------------------------------
(1) BACKGROUND
The Statement of Revenues and Certain Expenses (Statement) has been
included for Redford Plaza (Redford) which was acquired by Bradley
Operating Limited Partnership (the "Operating Partnership") on April 10,
1998.
Redford is located in Redford, Michigan. It consists of approximately
285,000 square feet of gross leasable area and was approximately 92%
occupied at December 31, 1997.
(2) BASIS OF PRESENTATION
The Statement has been prepared for the purpose of complying with Rule
3.14 of Regulation S-X of the Securities and Exchange Commission and for
inclusion in a Form 8-K of Bradley Operating Limited Partnership and is
not intended to be a complete presentation of Redford's revenues and
expenses. The Statement has been prepared on the accrual basis of
accounting and requires management of Redford to make estimates and
assumptions that affect the reported amounts of the revenues and expenses
during the reporting period. Actual results may differ from those
estimates.
Certain expenses which may not be comparable to the expenses expected to
be incurred in the proposed future operations of Redford have been
excluded from the Statement. Expenses excluded consist of interest,
depreciation and amortization, professional fees, and management fees.
(3) REVENUES
The property leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. Certain of the
leases include provisions under which the property is reimbursed for
certain common area, real estate, and insurance costs. Operating expenses
and real estate tax recoveries reflected on the statement of revenues and
certain expenses include amounts due for 1997 expenses for which the
tenants have not yet been billed. In addition, certain leases provide for
payment of contingent rentals based on a percentage applied to the amount
by which the tenant's sales, as defined, exceed predetermined levels.
Certain leases contain renewal options for various periods at various
rental rates.
Base rentals are reported as income over the lease term as they become
receivable under the provisions of the leases. However, when rentals vary
from a straight-line basis due to short-term rent abatements or escalating
rents during the lease term, the income is recognized based on effective
rental rates. Related adjustments increased base rental income by
approximately $55,000 for the year ended December 31, 1997.
F-3
<PAGE> 9
ACQUISITION PROPERTIES - REDFORD PLAZA
Notes to Statement of Revenues and Certain Expenses
Year ended December 31, 1997
- --------------------------------------------------------------------------------
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are approximately as follows:
- --------------------------------------------------------------------------------
Year Amount
- --------------------------------------------------------------------------------
1998 $2,036,000
1999 1,853,000
2000 1,610,000
2001 1,298,000
2002 1,144,000
Thereafter 5,838,000
- --------------------------------------------------------------------------------
F-4
<PAGE> 10
INDEPENDENT AUDITORS' REPORT
The Board of Directors of Bradley Real Estate, Inc.
and Unit Holders of Bradley Operating Limited Partnership:
We have audited the accompanying statement of revenues and certain expenses
(defined as operating revenues less direct operating expenses) of Courtyard
Shopping Center for the year ended December 31, 1997. This financial statement
is the responsibility of the Company's management. Our responsibility is to
express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenues and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statement of revenues and certain expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission and for inclusion in a Form 8-K of Bradley Operating Limited
Partnership as described in Note 2. The presentation is not intended to be a
complete presentation of Courtyard Shopping Center's revenues and expenses.
In our opinion, the statement of revenues and certain expenses referred to above
presents fairly, in all material respects, the revenues and certain expenses
described in Note 2, of Courtyard Shopping Center for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
May 7, 1998
F-5
<PAGE> 11
ACQUISITION PROPERTIES - COURTYARD SHOPPING CENTER
Statement of Revenues and Certain Expenses
Year ended December 31, 1997
- --------------------------------------------------------------------------------
Revenues:
Base rental income $ 893,232
Operating expense and real estate tax recoveries 313,171
Other income 1,883
- --------------------------------------------------------------------------------
Total revenues 1,208,286
- --------------------------------------------------------------------------------
Certain expenses:
Real estate taxes 143,044
Operating expenses 143,644
Utilities 78,757
Insurance 13,179
- --------------------------------------------------------------------------------
Total expenses 378,624
- --------------------------------------------------------------------------------
Excess of revenues over certain expenses $ 829,662
- --------------------------------------------------------------------------------
See accompanying notes to statement of revenues and certain expenses.
F-6
<PAGE> 12
ACQUISITION PROPERTIES - COURTYARD SHOPPING CENTER
Notes to Statement of Revenues and Certain Expenses
Year ended December 31, 1997
- --------------------------------------------------------------------------------
(1) BACKGROUND
The Statement of Revenues and Certain Expenses (Statement) has been
included for Courtyard Shopping Center (Courtyard) which was acquired by
Bradley Operating Limited Partnership (the "Operating Partnership") on
March 31, 1998.
Courtyard is located in Burton, Michigan. It consists of approximately
148,000 square feet of gross leasable area and was approximately 76%
occupied at December 31, 1997.
(2) BASIS OF PRESENTATION
The Statement has been prepared for the purpose of complying with Rule
3.14 of Regulation S-X of the Securities and Exchange Commission and for
inclusion in a Form 8-K of Bradley Operating Limited Partnership and is
not intended to be a complete presentation of Courtyard's revenues and
expenses. The Statement has been prepared on the accrual basis of
accounting and requires management of Courtyard to make estimates and
assumptions that affect the reported amounts of the revenues and expenses
during the reporting period. Actual results may differ from those
estimates.
Certain expenses which may not be comparable to the expenses expected to
be incurred in the proposed future operations of Courtyard have been
excluded from the Statement. Expenses excluded consist of interest,
depreciation and amortization, professional fees, and management fees.
(3) REVENUES
The property leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. Certain of the
leases include provisions under which the property is reimbursed for
certain common area, real estate, and insurance costs. Operating expenses
and real estate tax recoveries reflected on the statement of revenues and
certain expenses include amounts due for 1997 expenses for which the
tenants have not yet been billed. In addition, certain leases provide for
payment of contingent rentals based on a percentage applied to the amount
by which the tenant's sales, as defined, exceed predetermined levels.
Certain leases contain renewal options for various periods at various
rental rates.
Base rentals are reported as income over the lease term as they become
receivable under the provisions of the leases. However, when rentals vary
from a straight-line basis due to short-term rent abatements or escalating
rents during the lease term, the income is recognized based on effective
rental rates. Related adjustments increased base rental income by
approximately $15,000 for the year ended December 31, 1997.
F-7
<PAGE> 13
ACQUISITION PROPERTIES - COURTYARD SHOPPING CENTER
Notes to Statement of Revenues and Certain Expenses
Year ended December 31, 1997
- --------------------------------------------------------------------------------
Minimum rents to be received from tenants under operating leases in
effect at December 31, 1997 are approximately as follows:
- --------------------------------------------------------------------------------
Year Amount
- --------------------------------------------------------------------------------
1998 $ 785,000
1999 764,000
2000 774,000
2001 722,000
2002 609,000
Thereafter 3,172,000
- --------------------------------------------------------------------------------
F-8
<PAGE> 14
INDEPENDENT AUDITORS' REPORT
The Board of Directors of Bradley Real Estate, Inc.
and Unit Holders of Bradley Operating Limited Partnership:
We have audited the accompanying combined statement of revenues and certain
expenses (defined as operating revenues less direct operating expenses) of
Camelot Shopping Center and Plainview Village for the year ended December 31,
1997. This combined financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this combined
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined statement of revenues and certain expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the combined statement of
revenues and certain expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the combined statement of revenues and
certain expenses. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying combined statement of revenues and certain expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission and for inclusion in a Form 8-K of Bradley
Operating Limited Partnership as described in Note 2. The presentation is not
intended to be a complete presentation of Camelot Shopping Center's and
Plainview Village's revenues and expenses.
In our opinion, the combined statement of revenues and certain expenses referred
to above presents fairly, in all material respects, the combined revenues and
certain expenses described in Note 2, of Camelot Shopping Center and Plainview
Village for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
May 7, 1998
F-9
<PAGE> 15
ACQUISITION PROPERTIES - CAMELOT SHOPPING CENTER AND PLAINVIEW VILLAGE
Combined Statement of Revenues and Certain Expenses
Year ended December 31, 1997
- --------------------------------------------------------------------------------
Revenues:
Base rental income $2,026,919
Operating expense and real estate tax recoveries 264,026
Other income 8,709
- --------------------------------------------------------------------------------
Total revenues 2,299,654
- --------------------------------------------------------------------------------
Certain expenses:
Real estate taxes 160,047
Operating expenses 169,589
Utilities 67,614
Insurance 28,981
- --------------------------------------------------------------------------------
Total expenses 426,231
- --------------------------------------------------------------------------------
Excess of revenues over certain expenses $1,873,423
- --------------------------------------------------------------------------------
See accompanying notes to combined statement of revenues and certain expenses.
F-10
<PAGE> 16
ACQUISITION PROPERTIES - CAMELOT SHOPPING CENTER AND PLAINVIEW VILLAGE
Combined Statement of Revenues and Certain Expenses
Year ended December 31, 1997
- --------------------------------------------------------------------------------
(1) BACKGROUND
The Combined Statement of Revenues and Certain Expenses (Combined
Statement) has been included for certain properties which Bradley
Operating Limited Partnership (the "Operating Partnership") proposes to
acquire from the same seller. The properties are as follows:
Camelot Shopping Center
Plainview Village
Camelot Shopping Center is located in Louisville, Kentucky. It consists of
approximately 151,000 square feet of gross leasable area and was
approximately 96% occupied at December 31, 1997.
Plainview Village is located in Louisville, Kentucky. It consists of
approximately 144,000 square feet of gross leasable area and was
approximately 99% occupied at December 31, 1997.
(2) BASIS OF PRESENTATION
The Combined Statement has been prepared for the purpose of complying with
Rule 3.14 of Regulation S-X of the Securities and Exchange Commission and
for inclusion in a Form 8-K of Bradley Operating Limited Partnership and
is not intended to be a complete presentation of the properties' revenues
and expenses. The Combined Statement has been prepared on the accrual
basis of accounting and requires management of the properties to make
estimates and assumptions that affect the reported amounts of the revenues
and expenses during the reporting period. Actual results may differ from
those estimates.
Certain expenses which may not be comparable to the expenses expected to
be incurred in the proposed future operations of the properties have been
excluded from the Combined Statement. Expenses excluded consist of
interest, depreciation and amortization, professional fees, and management
fees.
(3) REVENUES
The properties lease retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. Certain of the
leases include provisions under which the properties are reimbursed for
certain common area, real estate, and insurance costs. Operating expenses
and real estate tax recoveries reflected on the combined statement of
revenues and certain expenses include amounts due for 1997 expenses for
which the tenants have not yet been billed. In addition, certain leases
provide for payment of contingent rentals based on a percentage applied to
the amount by which the tenant's sales, as defined, exceed predetermined
levels. Certain leases contain renewal options for various periods at
various rental rates.
Base rentals are reported as income over the lease term as they become
receivable under the provisions of the leases. However, when rentals vary
from a straight-line basis due to short-term rent abatements or escalating
rents during the lease term, the income is recognized based on effective
rental rates. Related adjustments increased base rental income by
approximately $63,000 for the year ended December 31, 1997.
F-11
<PAGE> 17
ACQUISITION PROPERTIES - CAMELOT SHOPPING CENTER AND PLAINVIEW VILLAGE
Combined Statement of Revenues and Certain Expenses
Year ended December 31, 1997
- --------------------------------------------------------------------------------
Minimum rents to be received from tenants under operating leases in
effect at December 31, 1997 are approximately as follows:
- --------------------------------------------------------------------------------
Year Amount
- --------------------------------------------------------------------------------
1998 $1,884,000
1999 1,662,000
2000 1,332,000
2001 1,101,000
2002 812,000
Thereafter 1,531,000
- --------------------------------------------------------------------------------
F-12
<PAGE> 18
BRADLEY OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(UNAUDITED)
Subsequent to December 31, 1997, the Operating Partnership acquired six
shopping centers, for a total purchase price of approximately $54.1 million with
cash provided by the line of credit. In addition, as of May 13, 1998, the
Operating Partnership has entered into contracts for the purchase of an
additional five shopping centers which management believes will close for an
estimated total acquisition price of approximately $40.5 million. The shopping
centers are expected to be purchased with cash provided by the line of credit.
Although the Company deems such acquisitions as probable, there can be no
assurance that the acquisition of any of such properties will be consummated, or
that the acquisition price will approximate those currently estimated. Further,
there can be no assurance that the method of financing such acquisitions will be
as currently estimated.
On January 28, 1998, the Operating Partnership issued $100 million,
7.2% ten-year unsecured Notes maturing January 15, 2008 (the "January 1998 Debt
Issuance"). The effective interest rate on the unsecured Notes is approximately
7.611%. Proceeds from the offering were used to reduce the outstanding
borrowings under the line of credit.
On February 18, 1998, Bradley Real Estate, Inc., the general partner
and owner of 94% of the Operating Partnership (the "Company"), issued 392,638
shares of common stock to a unit investment trust at a price based upon the then
market value of $20.375 per share (the "February 1998 Stock Offering"). Net
proceeds from the offering of approximately $7.6 million were contributed to the
Operating Partnership and were used to reduce outstanding borrowings under the
line of credit.
This unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented as if the acquisitions, including the probable acquisitions, the
January 1998 Debt Issuance and the February 1998 Stock Offering occurring
subsequent to December 31, 1997, had been completed on December 31, 1997. In the
opinion of management, all adjustments necessary to reflect the effects of these
transactions have been made.
This unaudited Pro Forma Condensed Consolidated Balance Sheet is
prepared for comparative purposes only and is not necessarily indicative of what
the actual financial position of the Operating Partnership would have been at
December 31, 1997, nor does it purport to represent the future financial
position of the Operating Partnership. This unaudited Pro Forma Condensed
Consolidated Balance Sheet should be read in conjunction with, and is qualified
in its entirety by, the respective historical financial statements and notes
thereto of the Operating Partnership.
F-13
<PAGE> 19
BRADLEY OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Acquisition Other
Historical Adjustments(A) Adjustments(B) Pro Forma
--------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Real estate investments-- at cost .............. $626,247 $94,675 $ -- $720,922
Accumulated depreciation and amortization ...... (40,574) -- -- (40,574)
-------- ------- --------- --------
Net real estate investments .................... 585,673 94,675 -- 680,348
Real estate investments held for sale .......... 52,692 -- -- 52,692
Other assets:
Cash and cash equivalents ................... 4,747 -- -- 4,747
Rents and other receivables, net of allowance
for doubtful accounts of $2,438 for 1997 .. 13,038 -- -- 13,038
Deferred charges, net and other assets ...... 12,641 -- -- 12,641
-------- ------- --------- --------
Total assets .............................. 668,791 94,675 -- 763,466
======== ======= ========= ========
LIABILITIES AND PARTNERS' CAPITAL
Mortgage loans ................................. 51,227 -- -- 51,227
Unsecured notes payable ........................ 99,783 -- 99,713 199,496
Line of credit ................................. 151,700 94,675 (107,313) 139,062
Accounts payable, accrued expenses
and other liabilities ........................ 25,361 -- -- 25,361
-------- ------- --------- --------
Total liabilities ......................... 328,071 94,675 (7,600) 415,146
-------- ------- --------- --------
Minority interest .............................. 770 -- -- 770
-------- ------- --------- --------
Partners' capital
General partner ............................. 318,845 -- 7,600 326,445
Limited partners ............................ 21,105 -- -- 21,105
-------- ------- --------- --------
339,950 -- 7,600 347,550
Total liabilities and partners' capital ... $668,791 $94,675 $ -- $763,466
======== ======= ========= ========
</TABLE>
EXPLANATORY NOTES
(A) Adjustments represent acquisitions of properties subsequent to
December 31, 1997 that have been completed, or that are probable of
completion.
(B) Adjustments represent the issuance of 392,638 shares of common stock by
the Company and the issuance of $100 million, 7.2% ten-year unsecured
Notes by the Operating Partnership subsequent to December 31, 1997, and
the application of the net proceeds to reduce outstanding borrowings on
the line of credit.
F-14
<PAGE> 20
BRADLEY OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
During the period from January 1, 1997 through May 13, 1998, the
Operating Partnership sold four shopping centers for net proceeds of
approximately $19.4 million utilizing the net proceeds to pay-down the line of
credit, and acquired 31 shopping centers at an aggregate cost of approximately
$243.4 million. Consideration paid for such acquisitions included cash (provided
primarily from the bank line of credit), assumption of mortgage indebtedness and
the issuance of LP Units to contributors of properties acquired. In addition, as
of May 13, 1998, the Operating Partnership has entered into contracts for the
purchase of an additional five shopping centers which management believes will
close for an estimated total acquisition price of approximately $40.5 million.
Management currently expects to fund the probable acquisitions with the bank
line of credit. Although management deems such acquisitions as probable, there
can be no assurance that the acquisition of any of such properties will be
consummated, or that the acquisition price will approximate those currently
estimated. Further, there can be no assurance that the method of financing such
acquisitions will be as currently estimated.
In December 1997, the Operating Partnership entered into a new
$200 million unsecured line of credit facility with a syndicate of banks,
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 current credit rating assigned by Standard &
Poor's Investment Services ("Standard & Poor's") and Moody's Investors Service
("Moody's"), the spread over LIBOR is 1.00%, which represents a reduction in the
spread over LIBOR from the previous $150 million line of credit by 0.50%.
On November 26, 1997, the Operating Partnership prepaid a REMIC mortgage
note (the "REMIC Prepayment") primarily with the proceeds of the offering by the
Operating Partnership of $100 million of 7% unsecured Notes due November 15,
2004 (the "November 1997 Debt Issuance"). The effective interest rate on the
unsecured Notes is approximately 7.19%. The issue was rated "BBB-" by Standard &
Poor's and "Baa3" by Moody's.
In December 1997, the Company issued 1,290,000 shares of common stock
pursuant to two separate public offerings (the "December 1997 Stock Offerings").
Net proceeds from the offerings, approximately $24.9 million, were contributed
to the Operating Partnership and were used to reduce outstanding borrowings
under the line of credit.
On January 28, 1998, the Operating Partnership issued $100 million, 7.2%
ten-year unsecured Notes maturing January 15, 2008 (the "January 1998 Debt
Issuance"). The effective interest rate on the unsecured Notes is approximately
7.61%. The issue was rated "BBB-" by Standard & Poor's and "Baa3" by Moody's.
Proceeds from the offering were used to reduce the outstanding borrowings under
the line of credit.
On February 18, 1998, the Company issued 392,638 shares of common stock
to a unit investment trust at a price based upon the then market value of
$20.375 per share (the "February 1998 Stock Offering"). Net proceeds from the
offering of approximately $7.6 million were contributed to the Operating
Partnership and were used to reduce outstanding borrowings under the line of
credit.
The unaudited Pro Forma Condensed Consolidated Statement of Income is
presented as if the acquisitions (including the probable acquisitions), the
dispositions, the replacement of the previous line of credit with the new line
of credit, the REMIC Prepayment, the November 1997 Debt Issuance, the December
1997 Stock Offerings, the January 1998 Debt Issuance, and the February 1998
Stock Offering, described above, had been consummated
F-15
<PAGE> 21
on January 1, 1997, and with the Operating Partnership qualifying as a limited
partnership and, therefore, incurring no federal income tax expense during the
period January 1, 1997 through December 31, 1997.
For purposes of this unaudited Pro Forma Condensed Consolidated
Statement of Income, "Acquisition Properties" represents those properties for
which the Company has furnished Statements of Revenues and Certain Expenses in
accordance with Rule 3.14 of the Securities and Exchange Commission Regulation
S-X, reported in this Form 8-K.
This unaudited Pro Forma Condensed Consolidated Statement of Income is
presented for comparative purposes only and is not necessarily indicative of
what the actual results of operations of the Operating Partnership would have
been for the period presented, nor does it purport to represent the results to
be achieved in future periods. This unaudited Pro Forma Condensed Consolidated
Statement of Income should be read in conjunction with, and is qualified in its
entirety by, the respective historical financial statements and notes thereto of
the Operating Partnership.
F-16
<PAGE> 22
BRADLEY OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(Dollars in thousands, except per unit data)
<TABLE>
<CAPTION>
Acquisition Other Acquisition Disposition Other
Historical Properties(A) Properties(B) Properties(C) Adjustments Pro Forma
----------- ---------- ----------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 96,115 $6,000 $22,903 $(2,880) $ - $ 122,138
Other income 1,437 17 142 (11) - 1,585
----------- ------ ------- ------- -------- -----------
Total revenue 97,552 6,017 23,045 (2,891) - 123,723
----------- ------ ------- ------- -------- -----------
Expenses:
Operations, maintenance and
management 14,012 865 3,316 (624) - 17,569
Real estate taxes 18,398 567 3,746 (668) - 22,043
Mortgage and other interest 16,562 - - - 10,838(D) 27,400
General and administrative 4,538 - - - - 4,538
Non-recurring stock based
compensation 3,415 - - - - 3,415
Depreciation and amortization 16,606 - - - 4,057(E) 20,663
----------- ------ ------- ------- -------- -----------
Total expenses 73,531 1,432 7,062 (1,292) 14,895 95,628
----------- ------ ------- ------- -------- -----------
Income before net gain on sale
of properties and
extraordinary item 24,021 4,585 15,983 (1,599) (14,895) 28,095
Net gain on sale of properties 7,438 - - (7,438) - -
----------- ------ ------- ------- -------- -----------
Income before extraordinary
item and allocation to
minority interest 31,459 4,585 15,983 (9,037) (14,895) 28,095
Income allocated to minority
interest (100) - - - - (100)
----------- ------ ------- ------- -------- -----------
Income before
extraordinary item $ 31,359 4,585 15,983 (9,037) (14,895) $ 27,995
=========== ====== ======= ======= ======== ===========
Weighted average units
outstanding 22,576,084 24,487,589
Basic and Diluted Earnings
per Unit:
Income before extraordinary
item $ 1.39 $ 1.14
=========== ===========
</TABLE>
F-17
<PAGE> 23
EXPLANATORY NOTES
(A) Increase represents historical operating revenues and expenses on properties
acquired in 1998, or probable of acquisition subsequent to December 31,
1997, reported in this Form 8-K for the period from January 1, 1997 to
December 31, 1997.
(B) Increase represents historical operating revenues and expenses on properties
acquired in 1997 and 1998, or probable of acquisition subsequent to
December 31, 1997, updated for the period from January 1, 1997 to the
earlier of the respective dates of acquisition or December 31, 1997.
(C) Decrease represents the elimination of historical operating revenues and
expenses, and net gain on sale of properties disposed of during 1997 for the
period during which the Company owned such properties.
(D) Mortgage and other interest has been increased to reflect the pro forma
borrowings for property acquisitions for the period during which the Company
did not own such properties, net of the reduction for the application of net
proceeds from the property dispositions and the December, 1997 and February,
1998 stock offerings to pay down the line of credit for the period during
which the Company owned such properties, and for the period preceding the
stock offerings, at an interest rate of 6.93%, which was the Company's
approximate borrowing rate at May 12, 1998. Mortgage and other interest has
been increased for the November, 1997 and January, 1998 unsecured Note
offerings, net of the reduction for the application of net proceeds of such
unsecured Note offerings to pay down the $100 million REMIC Note and the
line of credit, respectively, at the applicable effective interest rates.
Mortgage and other interest has been decreased by the net reduction in
interest expense resulting from the December, 1997 paydown of the existing
line of credit facility with proceeds from the new line of credit facility.
A 0.125% change in the variable rate would result in a change in the pro
forma interest adjustment of approximately $52,000.
Increase in interest expense attributable to
acquisition activities $13,648
Decrease in interest expense attributable to
disposition activities (912)
Decrease in interest expense attributable to
the stock offerings (2,118)
Net increase in interest expense attributable to
the unsecured Note offerings 664
Net decrease in interest expense attributable to
the paydown of the existing line of credit
facility with proceeds from the new line of
credit facility (444)
-------
Pro forma adjustment $10,838
=======
(E) Depreciation and amortization has been increased to give effect to recording
the property acquisitions (including probable acquisitions) over a
depreciable life of 39 years, for the period which the Company did not own
such properties, net of the reduction for properties disposed for the period
which the Company owned such properties, as follows:
Increase in depreciation and amortization
attributable to acquisition activities $ 4,198
Decrease in depreciation and amortization
attributable to disposition activities (141)
-------
Pro forma adjustment $ 4,057
=======
F-18
<PAGE> 1
Exhibit 23.1
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors of Bradley Real Estate, Inc. and
Unit Holders of Bradley Operating Limited Partnership:
We consent to the use of our report dated April 9, 1998 related to the statement
of revenues and certain expenses of Redford Plaza for the year ended
December 31, 1997, our report dated May 7, 1998 related to the statement of
revenues and certain expenses of Courtyard Shopping Center for the year ended
December 31, 1997 and our report dated May 7, 1998 related to the combined
statement of revenues and certain expenses of Camelot Shopping Center and
Plainview Village for the year ended December 31, 1997, incorporated by
reference in the registration statement (No. 333-51675) on Form S-3 filed by
Bradley Operating Limited Partnership.
Chicago, Illinois KPMG Peat Marwick LLP
May 12, 1998
