<PAGE>
As filed with the Securities and Exchange Commission on April 12, 1996
REGISTRATION STATEMENT NO. 33-64811
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
POST-EFFECTIVE
AMENDMENT NO. 1
ON
FORM S-3
TO
REGISTRATION STATEMENT
ON FORM S-4
UNDER
THE SECURITIES ACT OF 1933
_________________________
BRADLEY REAL ESTATE, INC.
(Exact name of Registrant as specified in its charter)
Maryland 04-6034603
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
699 Boylston Street
Boston, MA 02116
(617) 867-4200
(Address, including zip code, and telephone number, including area code of
Registrant's principal executive offices)
_______________________________
Thomas P. D'Arcy
President and Chief Executive Officer
BRADLEY REAL ESTATE, INC.
699 Boylston Street
Boston, MA 02116
(617) 867-4200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
WILLIAM B. KING, P.C.
JOSEPH L. JOHNSON III, ESQ.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
(617) 570-1000
_____________________________
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] ___________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [_] ________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_] _______________
================================================================================
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CROSS REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS OF
INFORMATION REQUIRED BY ITEMS OF PART I OF FORM S-3
<TABLE>
<CAPTION>
LOCATION OR
ITEM NUMBERS AND CAPTIONS HEADING IN PROSPECTUS
------------------------- ---------------------
<S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus........ Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus................................. Inside Front Cover Page; Outside Back Cover Page
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Changes.................. Prospectus Summary; Risk Factors
4. Use of Proceeds............................... Use of Proceeds
5. Determination of Offering Price............... Description of Units and Redemption of Units
-- General
6. Dilution...................................... *
7. Selling Security-Holders...................... *
8. Plan of Distribution.......................... Plan of Distribution
9. Description of Securities to be Registered.... Description of Capital Stock
10. Interests of Named Experts and Counsel........ Experts and Legal Matters
11. Material Changes.............................. The Company; Risk Factors
12. Incorporation of Certain Information
by Reference.................................. Incorporation of Certain Documents by Reference
13. Disclosure of Commission Position on
Indemnification For Securities Act
Liabilities................................... *
</TABLE>
________________________
* Item is omitted because answer is negative or item is inapplicable
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PROSPECTUS
- ----------
314,749 SHARES
BRADLEY REAL ESTATE, INC.
COMMON STOCK
____________
This prospectus (the "Prospectus") relates to the possible issuance from
time to time by Bradley Real Estate, Inc. (the "Company") of up to 314,749
shares (the "Redemption Shares") of common stock, par value $.01 per share
("Common Stock"), of the Company, if and to the extent that holders
("Unitholders") of up to 314,749 units of limited partnership interest ("Units")
in Bradley Operating Limited Partnership, a Delaware limited partnership (the
"Operating Partnership"), of which the Company is the sole general partner,
exchange such Units for Redemption Shares. The Units were issued to the former
equity holders of the various entities which held the properties transferred to
the Operating Partnership in connection with the initial public offering of
Tucker Properties Corporation ("Tucker") in October 1993. On March 15, 1996,
Tucker merged with and into the Company pursuant to the Agreement and Plan of
Merger, dated as of October 30, 1995, by and between Tucker and the Company (the
"Merger"). In connection with the Merger, the Company succeeded to Tucker's
general partnership interest in the Operating Partnership and the Agreement of
Limited Partnership of the Operating Partnership was amended and restated (the
"Amended Operating Partnership Agreement") to, among other things, change the
name of the Operating Partnership. Subsequent to the Merger, the Units may be
tendered by the Unitholders for redemption for either cash or shares of Common
Stock, at the Company's option, pursuant to the terms of the Amended Operating
Partnership Agreement. The Company has registered the Redemption Shares pursuant
to the Company's obligations under a registration rights agreement entered into
with the Unitholders in connection with the consummation of the Merger, but the
registration of the Redemption Shares does not necessarily mean that any of the
Redemption Shares will be issued by the Company hereunder. In the event that the
Company opts to issue shares of Common Stock in exchange for Units, upon the
redemption of such Units, such shares will be issued on the basis of one share
of Common Stock for one Unit pursuant to the Amended Operating Partnership
Agreement.
The Common Stock is traded on the New York Stock Exchange (the "NYSE")
under the symbol "BTR." To ensure that the Company maintains its qualification
as a real estate investment trust, ownership by any person is limited to 9.8% of
the value of the outstanding capital stock of the Company, with certain
exceptions. See "Description of Capital Stock -- Restrictions on Transfers."
SEE "RISK FACTORS" ON PAGE 4 FOR CERTAIN FACTORS RELEVANT TO AN INVESTMENT
IN THE COMMON STOCK.
The Company will not receive any proceeds from the issuance of Redemption
Shares but has agreed to bear certain expenses of registration of such shares
under federal and state securities laws. The Company will acquire additional
Units in the Operating Partnership in exchange for any Redemption Shares that
the Company may issue to a Unitholder pursuant to this Prospectus.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
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 APRIL 12, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and may be available at the following Regional
Offices of the Commission: Chicago Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and New York Regional Office, 7 World Trade
Center, New York, New York 10048. Copies of such materials can be obtained at
prescribed rates from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C., 20549. The Common
Stock is listed on the NYSE and such reports, proxy statements and other
information concerning the Company can also be inspected at the office of the
NYSE, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-4, as amended by this Post-Effective Amendment on Form S-3, (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Redemption Shares. For further information with respect to
the Company and the Redemption Shares reference is made to the Registration
Statement and exhibits thereto. Statements contained herein or incorporated
herein by reference concerning the provisions of documents are summaries of such
documents, and each statement is qualified in its entirety by reference to the
copy of the applicable document if filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the Commission
are incorporated herein by reference:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1995
(filed March 29, 1996);
2. Current Report on Form 8-K dated March 30, 1996 (filed April 1, 1996)
reporting the consummation of the Merger;
3. The description of the Common Stock contained or incorporated by
reference in Bradley's Registration Statement on Form 8-A, dated
August 5, 1994, (filed August 8, 1994) including any amendments
thereto; and
4. Proxy Statement dated April 1, 1996 (filed March 29, 1996) in
connection with Bradley's 1996 Annual Meeting of Stockholders.
In addition, all documents subsequently filed with the Securities and
Exchange Commission by the Company pursuant to Sections 13(a) and 13(c), Section
14 and Section 15(d) of the Exchange Act prior to the filing of a post-effective
amendment hereto that indicates that all securities offered hereunder have been
sold or that deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this registration statement and to be a part
hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (NOT INCLUDING EXHIBITS TO SUCH
DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
SUCH DOCUMENTS) ARE AVAILABLE, WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST OF
ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS
DELIVERED. REQUESTS SHOULD BE DIRECTED TO BRADLEY REAL ESTATE, INC., 699
BOYLSTON STREET, BOSTON, MASSACHUSETTS 02116, ATTENTION: DONNA MACAULEY
(TELEPHONE NO. (617) 867-4200).
(ii)
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________________________________________________________________________________
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information included elsewhere in this Prospectus. Unless the context otherwise
requires, all references in this Prospectus to the "Company" shall mean Bradley
Real Estate, Inc. and its subsidiaries and affiliated partnerships on a
consolidated basis (including Bradley Operating Limited Partnership (the
"Operating Partnership") and its subsidiaries or affiliates) or, where the
context so requires, Bradley Real Estate, Inc. only, and, as the context may
require, its predecessors.
THE COMPANY
The Company is one of the nation's oldest continuously qualified real
estate investment trusts ("REIT") under the Internal Revenue Code of 1986, as
amended (the "Code"). The Company focuses on the ownership and operation of
community shopping centers, primarily in the Midwestern and, to a lesser extent,
the Northeastern regions of the United States. The Company's objective is to
enhance the operating performance and value of its portfolio through renovation,
expansion and leasing strategies designed to meet the needs of an evolving
retail marketplace. The Company also seeks to create value through the
acquisition of properties which can benefit from the Company's expertise in
shopping center management, renovation and expansion. The Company currently owns
31 community shopping centers encompassing approximately 7.4 million square feet
of rentable retail space in eleven states.
Originally organized in 1961 as a Massachusetts business trust under the
name Bradley Real Estate Trust, the Company was reorganized as a Maryland
corporation in October 1994. On March 15, 1996, the Company consummated its
merger (the "Merger") with Tucker Properties Corporation, a Maryland corporation
("Tucker"), pursuant to which the Company was the surviving corporation.
Tucker was formed on May 28, 1993 and elected to qualify as a REIT under
the Code following the initial public offering of its common stock, par value
$.001 per share ("Tucker Common Stock"), in October 1993. Prior to the Merger,
all of Tucker's real estate properties were held by, and all of its operations
were conducted through, the Operating Partnership and its subsidiaries. Tucker
was the sole general partner of the Operating Partnership and owned 95.9% of the
outstanding partnership units of the Operating Partnership ("Units"). The
remaining Units were held by the former equity holders of the various entities
which previously held the properties transferred to the Operating Partnership in
connection with Tucker's initial public offering (the "Unitholders"). The Units
were exchangeable, subject to certain limitations imposed to protect Tucker's
status as a REIT, into shares of Tucker Common Stock on the basis of one Unit
for one share of Tucker Common Stock.
In connection with the Merger, the Company succeeded to Tucker's general
partnership interest in the Operating Partnership and the Agreement of Limited
Partnership of the Operating Partnership was amended and restated (the "Amended
Operating Partnership Agreement") to, among other things, change the name of the
Operating Partnership and to make the Units exchangeable by the Unitholders into
either cash or, at the option of the Company, shares of common stock, par value
$.01 per share, of the Company (the "Common Stock") on the basis of one Unit for
one share of Common Stock. Immediately after the Merger, the Company had the
following subsidiaries or affiliates: the Operating Partnership, Bradley Real
Estate Management, Inc., Bradley Midwest Management, Inc., Bradley Financing
Corp. ("BFC"), Bradley Financing Partnership ("BFP"), Bradley Management Corp.,
Bradley Management Limited Partnership, Williamson Square Associates Limited
Partnership ("WSALP") and Bradley Properties Investments, Inc. The Company holds
17 properties directly, 7 properties through the Operating Partnership, 6
properties through BFP and 1 through WSALP.
BFP was originally formed as an affiliate of Tucker and the Operating
Partnership to facilitate the refinancing of indebtedness encumbering certain
properties, then held by Tucker, through a loan to BFP from a trust qualifying
as a real estate mortgage investment conduit (the "REMIC") for federal income
tax purposes. The six properties owned by BFP collateralize a $100 million
mortgage note (the "REMIC Note") held by the REMIC and issued pursuant to that
certain indenture dated as of June 1, 1994 by and among BFP, Bankers Trust
Company of California, N.A. and Bankers Trust Company (the "REMIC Indenture").
The Operating Partnership is the 99% general partner of BFP, and BFC, a wholly-
owned subsidiary of the Company, is the 1% general partner of BFP.
The Company's principal executive office is located at 699 Boylston Street,
Boston, Massachusetts 02116 and its telephone number is (617) 867-4200.
________________________________________________________________________________
1
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RISK FACTORS
In considering whether to redeem their Units, the Unitholders should
consider, in addition to the other information in this Prospectus, the matters
discussed under "Risk Factors." Such matters include:
. Possible tax liability to Unitholders as a result of the redemption or
in the event that the Company exercises its right to acquire Units
tendered for redemption in exchange for cash or Redemption Shares (as
such term is hereinafter defined). See "Risk Factors--Tax Consequences
of Exchange to Holders of Original Units."
. Possible adverse consequences as a result of (i) the Company's total
debt payable of approximately $226.3 million; (ii) the Company's ratio
of debt to Total Market Capitalization of approximately 44% and (iii)
the Company's adjustable interest rate debt of approximately $95.5
million.
. Risks associated with the Company's potential inability to refinance
indebtedness when due on reasonable terms and conditions, including
approximately $100 million of indebtedness relating to the REMIC Note
which matures in September 2000.
. Restrictions on the ability of the Company to dispose of properties
collateralizing the REMIC Note or to prepay the REMIC Note. Pursuant
to the terms of the REMIC Indenture, prior to October 1997, the
principal amount of the REMIC Note cannot be prepaid and the
properties securing the REMIC Note cannot be sold. If the Company
wishes either to prepay principal amounts of the REMIC Note or to sell
any of the properties collateralizing the REMIC Note after such date,
it will incur significant prepayment penalties. The Amended Operating
Partnership Agreement also contains certain restrictions on the sale
of properties held by the Operating Partnership. See "Risk Factors--
Restrictions on Ability of the Company to Dispose of Properties."
TAX STATUS OF THE COMPANY
The Company has filed an election to be taxed as a REIT under Sections 856
through 860 of the Code and believes it has qualified as a REIT since its
organization in 1961. If and as long as the Company qualifies for taxation as a
REIT, the Company generally will not be subject to federal income tax on that
portion of its ordinary income and capital gains that is currently distributed
to its stockholders. REITs are subject to a number of highly technical and
complex organizational and operational requirements. Although the Company
believes it has operated, and intends to continue to operate, in such a manner
as to qualify as a REIT under the Code, no assurance can be given that the
Company has qualified and will at all times so qualify. If the Company fails to
qualify as a REIT in any taxable year, the Company will be subject to federal
income tax (including any applicable alternative minimum tax) on its taxable
income at regular corporate rates. Even if the Company qualifies for taxation as
a REIT, the Company may be subject to certain state and local taxes on its
income and property and to federal income and excise taxes on its undistributed
income. See "Federal Income Tax Considerations."
SECURITIES TO BE OFFERED
This prospectus (the "Prospectus") relates to the possible issuance by the
Company of up to 314,749 shares (the "Redemption Shares") of Common Stock if,
and to the extent that, holders of up to 314,749 Units tender such Units to the
Operating Partnership for redemption and the Company exercises its contractual
right to acquire such tendered Units for Redemption Shares. The Company has
registered the Redemption Shares pursuant to its obligations under a
registration rights agreement entered into with the Unitholders in connection
with the consummation of the Merger. See "Registration Rights."
Pursuant to the Amended Operating Partnership Agreement, each Unit may be
tendered by its holder to the Operating Partnership for redemption for the cash
equivalent of an equivalent number of shares of Common Stock (subject to certain
adjustments to prevent dilution), provided that, at the option of the Company,
the Company, as general partner, may acquire any Units so tendered for an
equivalent number of shares of Common Stock (subject to certain adjustments to
prevent dilution).
________________________________________________________________________________
2
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________________________________________________________________________________
The Company anticipates that it generally will elect to acquire directly
Units tendered for redemption and to issue shares of Common Stock pursuant to
this Prospectus in exchange therefor rather than paying cash. As a result, the
Company may from time to time issue up to 314,749 Redemption Shares upon the
acquisition of Units tendered to the Operating Partnership for redemption. With
each such acquisition, the Company's interest in the Operating Partnership will
increase.
The Company will not receive any proceeds from the issuance of any
Redemption Shares, but will acquire Units tendered to the Operating Partnership
for redemption for which it elects to issue Redemption Shares.
________________________________________________________________________________
3
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RISK FACTORS
In considering whether to redeem their Units, Unitholders should consider,
in addition to the other information in this Prospectus, the material discussed
in this section.
TAX CONSEQUENCES OF EXCHANGE TO HOLDERS OF ORIGINAL UNITS
Tax Consequences of Exchange of Units. In the event that the Company
exercises its right to acquire Units tendered for redemption in exchange for
cash or Redemption Shares, the Company's acquisition of such Units from the
holder of such Units will be treated for tax purposes as a sale of the Units by
the Unitholder. Such a sale will be fully taxable to the Unitholder and such
Unitholder will be treated as realizing for tax purposes an amount equal to the
sum of the cash received or the value of the Redemption Shares received in the
exchange plus the amount of any Operating Partnership liabilities allocable to
the exchanged Units at the time of the redemption or exchange. It is possible
that the amount of gain recognized or even the tax liability resulting from such
gain could exceed the amount of cash and the value of other property (e.g.,
Redemption Shares) received upon such disposition. See "Description of Units and
Redemption of Units -- Tax Consequences of Redemption." In addition, the ability
of a Unitholder to sell a substantial number of Redemption Shares in order to
raise cash to pay tax liabilities associated with the redemption of Units may be
limited as a result of fluctuations in the market price of the Common Stock, and
the price the Unitholder receives for such shares may not equal the value of his
or her Units at the time of redemption or exchange.
In the event that the Company does not exercise its right to acquire Units
tendered for redemption in exchange for Redemption Shares, and such Units are
redeemed by the Operating Partnership for cash, the tax consequences may differ.
See "Description of Units and Redemption of Units."
Potential Change in Investment Upon Redemption of Units. If a Unitholder
exercises the right to require the redemption of all or a portion of his Units,
such Unitholder may receive cash or, at the option of the Company, Redemption
Shares in exchange for his or her Units. If the Unitholder receives cash, the
Unitholder will no longer have any interest in the Company (except to the extent
that he or she retains Units) and will not benefit from any subsequent increases
in share price and will not receive any future distributions from the Company
(unless the Unitholder retains or acquires in the future additional shares of
Common Stock or Units). If the Unitholder receives Common Stock, the Unitholder
will become a stockholder of the Company rather than a holder of Units in the
Operating Partnership. See "Description of Units and Redemption of Units --
Comparison of Ownership of Units and Common Stock."
SUBSTANTIAL DEBT OBLIGATIONS AND TERMS OF DEBT
Following the consummation of the Merger, the Company's pro forma
obligations for borrowed money increased to approximately $226.3 million as
compared to $39.4 million at December 31, 1995. The ratio of debt to Total
Market Capitalization of the Company following the Merger increased to
approximately 44% as compared to 20% at December 31, 1995. This increase in the
Company's leverage and its ratio of debt to Total Market Capitalization could
increase the risk of default under its indebtedness. Failure to pay the debt
obligations when due could result in the Company losing its interest in the
properties collateralizing such obligations.
The Company believes that the ratio of debt to Total Market Capitalization
is an important factor to consider in evaluating a REIT's debt level because
this ratio is one indicator of a company's ability to borrow funds. The Company
believes that using the ratio of debt to book value of assets is not as reliable
an indicator of a REIT's debt level because the book value of a REIT's assets
indicates only the depreciated value of the REIT's property without
consideration of the market value of such assets at a particular point in time.
The use of the ratio of debt to Total Market Capitalization of a company is more
variable than the book value because it is dependent on the current stock price
of a company. Accordingly, there can be no assurance that the use of the ratio
of debt to Total Market Capitalization in evaluating the Company's debt level
will adequately protect it from being too highly leveraged.
In particular, the maturity in September 2000 of the $100 million REMIC
Note collateralized by various of the properties acquired by Tucker may increase
the Company's risk of default on its indebtedness. Prior to the date hereof, the
Company has been able to refinance debt when it has become due on terms which it
believes to be commercially reasonable. There can be no assurance that the
Company will continue to be able to repay or to
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refinance its indebtedness relating to the REMIC Note or any of its other
indebtedness on commercially reasonable or any other terms.
The Company's debt obligations subject to floating interest rates
immediately after the Merger aggregate approximately $95.5 million at a weighted
average interest rate of approximately 7.2% per annum as compared to $14.6
million at a weighted average interest rate of approximately 7.6% per annum for
the Company at December 31, 1995. To the extent the Company's exposure to
increases in interest rates is not eliminated through interest rate protection
or cap agreements, such increases will adversely affect the Company's net
income, funds from operations ("FFO") and cash available for distribution and
may affect the amount of distributions it can make to its stockholders.
The Company's line of credit requires the Company to maintain interest rate
protection, at a rate satisfactory to the lead lender, with respect to $100
million of indebtedness and the Company has entered into such agreements with
The First National Bank of Boston (the "Bank"). There can be no assurance that
these interest rate protection provisions will be effective. See "The Company."
The foregoing risks associated with the debt obligations of the Company may
adversely affect the market price of the Common Stock and may inhibit the
Company's ability to raise capital and issue equity in both the public and
private markets.
RESTRICTIONS ON ABILITY OF THE COMPANY TO DISPOSE OF PROPERTIES
Pursuant to the terms of the REMIC Indenture, prior to October 1997
principal payments on the REMIC Note cannot be made and the properties
collateralizing the REMIC Note cannot be sold. If the Company wishes either to
repay all or part of the $100 million principal of the REMIC Note or to sell any
of the properties collateralizing the REMIC Note after such date, it will incur
significant prepayment penalties. The prepayment of principal of the REMIC Note
requires an additional payment of the greater of either (i) 1% of the amount of
principal being prepaid or (ii) the product of (A) the difference between the
outstanding principal balance of the REMIC Note before prepayment and the
present value of all remaining interest and principal payments thereon and (B)
the amount of principal being prepaid divided by the outstanding principal
balance of the REMIC Note. After October 1997, in order to release any of the
properties collateralizing the REMIC Note from the lien so that such properties
may be sold, the REMIC Indenture requires that certain additional conditions be
met, including that (i) the aggregate amount of principal repaid on the REMIC
Note equal at least 125% of the amount of principal allocated to the property to
be released and (ii) certain debt service coverage ratios continue to be
satisfied.
Pursuant to the terms of the Amended Operating Partnership Agreement, for a
period of 24 months after the Merger, the general partner of the Operating
Partnership may not elect to dissolve the Operating Partnership or sell all or
substantially all of the assets of the Operating Partnership without the consent
of a majority in interest of the limited partners, except in connection with a
merger or other business combination of the Company. Thus, the Company is
restricted from disposing of all or substantially all of the properties held by
the Operating Partnership.
Certain of the REIT provisions of the Code and the rules governing the
qualification of the Merger as a tax-free reorganization under the Code also may
limit the Company's ability to dispose of properties.
POTENTIAL ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS
Certain provisions contained in the Company's Articles of Amendment and
Restatement (the "Charter") and Bylaws (the "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.
These 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
of time. The staggered Board provision and the provision in the Bylaws requiring
holders of at least 25% of the outstanding shares of Common Stock to call a
special meeting
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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. For a discussion of the potential effect of the ownership limit
described above, see "--Ownership Limits" below.
REAL ESTATE INVESTMENT CONSIDERATIONS
Dependence on Midwestern Region and Retail Industry
The substantial majority of the Company's properties are located in the
Midwestern region of the United States and such properties consist predominantly
of community shopping centers. The Company'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 net income, FFO and cash available
for distribution and thus affect the amount of distributions the Company can
make to its stockholders.
In addition, the Company predominantly owns and operates retail shopping
centers catering to retail tenants. To the extent that the investing public has
a negative perception of the retail sector, the value of the Common Stock may be
negatively impacted, thereby resulting in such shares trading at a discount
below the inherent value of the assets of the Company as a whole.
Financial Condition and Bankruptcy of Tenants
Since substantially all of the Company's and Tucker's income has been, and
substantially all of the Company's income will continue to be, derived from
rental income from retail shopping centers, the Company's net income, FFO and
cash available for distribution would be adversely affected if a significant
number of the tenants were unable to meet their obligations to the Company or if
the Company 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 Company may experience delays and incur substantial costs in
enforcing its rights as landlord.
At any time, a tenant of the Company'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 net income, FFO and
cash available for distribution and thus affect the amount of distributions the
Company can make to its stockholders. 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 Company, the Company may
experience delays in enforcing its rights 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.
Potential Negative Effect of One North State Property
On a pro forma combined basis, for the year ended December 31, 1995, more
than 10% of the total revenue of the Company and Tucker was derived from rents
and expense reimbursements from tenants of Tucker's One North State property,
which is a "mixed use" property located in downtown Chicago. The total charges
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, however, had the option exercisable on or before April 1, 1996 to
terminate its lease, effective as of April 1, 1998, upon payment of a $1.8
million cancellation fee. This tenant exercised its early termination option on
April 1, 1996 and has paid the Company the required $1.8 million cancellation
fee. Pursuant to the terms of the REMIC Indenture, 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
Company 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 Company.
6
<PAGE>
VACANCIES AND LEASE RENEWALS
A number of the leases on the properties owned by the Company at December
31, 1995 expire during 1996. Some of these lease expirations provide the Company
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 Company may be subject to competitive
and economic conditions over which it has no control. The Company's underwriting
and negotiation of the terms of the Tucker acquisition took into consideration
anticipated lease expirations and possible resulting vacancies at One North
State and the other Tucker properties. There is, however, no assurance that the
effects of possible vacancies or lease renewals at such properties, or at the
Company's previously owned properties, may not reduce the rental income, net
income, FFO and funds available for distribution below levels anticipated by the
Company.
POSSIBLE ENVIRONMENTAL LIABILITIES
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
properties of the Company, including those acquired from Tucker, have been
subjected to Phase I or similar environmental audits (which involve inspection
without soil sampling or groundwater 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 management believes would have a material adverse effect on the Company'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 the Company.
Phase II site assessments of the Commons of Chicago Ridge property acquired
from 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 the 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 a landfill. A regular maintenance program
was implemented by Tucker and is being continued by the Company 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 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 Company 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 does not believe that the
cost of responding to such contamination would be material to the Company.
In connection with the execution of the merger agreement relating to the
acquisition of Tucker (the "Merger Agreement"), the Company and certain
individuals who had previously provided a limited indemnity to Tucker for
environmental liabilities at Commons of Chicago Ridge (the "Individuals") have
agreed to share the cost of having an outside consultant conduct a new Phase II
investigation of the soil and groundwater of the property and to prepare a
report recommending what action the Company should take with respect to such
matters. In the event that the Company decides to implement any of the
recommendations of such consultant (the "Recommended Work"), the Individuals
have agreed to pay fifty percent of the costs of the Recommended Work, with
their aggregate liability for the cost of the Recommended Work limited to a
maximum of $200,000.
The Individuals have also agreed to indemnify the Company and its
subsidiaries and 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 action
regarding such substances,
7
<PAGE>
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 Company has agreed to keep the Individuals reasonably informed of various
activities relating to the properties 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 is no assurance that
the Individuals will be in a position to honor their indemnity obligations or
that the liabilities will not exceed the limit of their indemnity obligations.
Regardless of such indemnification, based on the information currently
available, the management of the Company 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 Company.
INSURANCE
The Company carries comprehensive general liability coverage and umbrella
liability coverage on all of its properties with limits of liability which the
Company deems adequate to insure against liability claims and provide for the
costs of defense. Similarly, the Company is insured against the risk of direct
physical damage in amounts the Company estimates to be adequate to reimburse the
Company 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 Company 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, the Company 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 availability and
pricing of this coverage become more cost advantageous, management would re-
evaluate its position.
COMPETITION
All of the properties owned by the Company 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 Company for tenants and
development and acquisition opportunities. The number of competitive real
properties and real estate companies in such areas could have a material effect
on (i) the Company's ability to rent space at the properties and the amount of
rents currently charged and (ii) development and acquisition opportunities. The
Company competes for tenants and acquisitions with others who have greater
resources than the Company.
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT; OTHER TAX LIABILITIES
The Company believes that it (including its predecessor, Bradley Real
Estate Trust) has operated in a manner that permits it to qualify as a REIT
under the Code for each taxable year since its formation in 1961. Although
management of the Company believes that it is organized and is operating in such
a manner, no assurance can be given that the Company will be able to continue to
operate in a manner so as to qualify or remain so qualified. Qualification as a
REIT involves the application of highly technical and complex Code provisions
for which there are only limited judicial or administrative interpretations and
the determination of various factual matters and circumstances not entirely
within the Company's control. For example, in order to qualify as a REIT, at
least 95% of the Company's gross income in any year must be derived from
qualifying sources and the Company must make distributions to stockholders
aggregating annually at least 95% of its REIT taxable income (excluding net
capital gains). In addition, no assurance can be given that new legislation, new
regulations, administrative interpretations or court decisions will not change
the tax laws with respect to qualification as a REIT or the federal income tax
consequences of such qualification. The Company, however, is not aware of any
currently pending tax legislation that would adversely affect its ability to
continue to operate as a REIT.
If the Company fails to qualify as a REIT, it will be subject to federal
income tax (including any applicable alternative minimum tax) on its taxable
income at corporate rates. In addition, unless entitled to relief under certain
statutory provisions, the Company will also be disqualified from treatment as a
REIT for the four taxable years following the year during which qualification is
lost. This treatment would reduce the net earnings of the Company available for
investment or distribution to stockholders because of the additional tax
liability for the year or years involved. In addition, distributions would no
longer be required to be made. To the extent that distributions to stockholders
would have been made in anticipation of the Company's qualifying as a REIT, the
Company might be required to borrow funds or to liquidate certain of its
investments to pay the applicable tax. The failure to qualify as a REIT would
also constitute a default under certain debt obligations of the Company.
8
<PAGE>
In connection with the Merger, Tucker represented to the Company that,
since Tucker's formation, Tucker also operated so as to qualify as a REIT under
the Code up to the time of the Merger. If Tucker failed to qualify as a REIT in
any year in which it elected so to qualify and consequently becomes liable to
pay taxes as a regular non-REIT corporation, the liabilities of Tucker that the
Company assumed upon effectiveness of the Merger include such tax liability.
Moreover, Tucker's failure to qualify as a REIT could disqualify the Company as
a REIT for the periods following the Merger.
The Company's acquisition of Tucker's general partner interest in the
Operating Partnership and Tucker's indirect interests in certain subsidiary
partnerships of the Operating Partnership involve special tax considerations,
including the qualification of each such partnership as a "partnership" for
federal income tax purposes, which also could impact the Company's ability to
qualify as a REIT following the Merger.
The failure to qualify as a REIT would have a material adverse effect on an
investment in the Company as the taxable income of the Company would be subject
to federal income taxation at corporate rates, and, therefore, the amount of
cash available for distribution to its stockholders would be reduced or
eliminated.
OWNERSHIP LIMITS
In order to maintain its qualification as a REIT, not more than 50% in
value of the outstanding shares of the Company may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Code). To minimize
the possibility that the Company will fail to qualify as a REIT under this test,
the Charter authorizes the directors to take such action as may be required to
preserve its qualification as a REIT and generally limits the ownership of
Common Stock by any particular stockholder to 9.8% of the value of the
outstanding shares of Common Stock.
The ownership limits in the Charter, as well as the Company's authority to
issue preferred stock and other provisions in the Charter and the Bylaws, may
delay, defer or prevent a change in control of the Company and 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.
9
<PAGE>
THE COMPANY
The Company is one of the nation's oldest continuously qualified REITs
under the Code. The Company focuses on the ownership and operation of community
shopping centers, primarily in the Midwestern and, to a lesser extent, the
Northeastern regions of the United States. The Company's objective is to enhance
the operating performance and value of its portfolio through renovation,
expansion and leasing strategies designed to meet the needs of an evolving
retail marketplace. The Company also seeks to create value through the
acquisition of properties which can benefit from the Company's expertise in
shopping center management, renovation and expansion. The Company currently owns
31 community shopping centers encompassing approximately 7.4 million square feet
of rentable retail space in eleven states.
Originally organized in 1961 as a Massachusetts business trust under the
name Bradley Real Estate Trust, the Company was reorganized as a Maryland
corporation in October 1994. On March 15, 1996, the Company consummated the
Merger with Tucker, pursuant to which the Company was the surviving corporation.
Tucker was formed on May 28, 1993 and elected to qualify as a REIT under
the Code following the public offering of Tucker Common Stock, in October 1993.
Prior to the Merger, all of Tucker's real estate properties were held by, and
all of its operations were conducted through, the Operating Limited Partnership
and its subsidiaries. Tucker was the sole general partner of the Operating
Partnership and owned 95.9% of the outstanding Units. The remaining Units were
held by the former equity holders of the various entities which previously held
the properties transferred to the Operating Partnership in connection with
Tucker's initial public offering in October 1993. The Units were exchangeable,
subject to certain limitations imposed to protect Tucker's status as a REIT,
into shares of Tucker Common Stock on the basis of one Unit for one share of
Tucker Common Stock.
In connection with the Merger, the Company succeeded to Tucker's general
partnership interest in the Operating Partnership and the Amended Operating
Partnership Agreement was amended and restated to, among other things, change
the name of the Operating Partnership and to make the Units exchangeable into
either cash or shares of Common Stock on the basis of one Unit for one share of
Common Stock, at the Company's option. Immediately after the Merger, the Company
had the following subsidiaries or affiliates: the Operating Partnership, Bradley
Real Estate Management, Inc., Bradley Midwest Management, Inc., BFC, BFP,
Bradley Management Corp., Bradley Management Limited Partnership, WSALP and
Bradley Properties Investments, Inc.
As a result of the Merger, the Company believes that it became one of the
largest owners and operators of community shopping centers in the Midwestern
region of the United States. The Company owns 31 community shopping centers
encompassing approximately 7.4 million square feet of rentable retail space in
eleven states. The Company holds 17 properties directly, 7 properties through
the Operating Partnership, 6 properties through BFP and 1 through WSALP.
BFP, which owns six of the Company's properties, was created prior to the
Merger as an affiliate of Tucker to facilitate the refinancing of indebtedness
encumbering certain properties through a loan to BFP from a trust qualifying as
a REMIC for federal income tax purposes. The Operating Partnership is the 99%
general partner of BFP, and BFC, a wholly-owned subsidiary of the Company, is
the 1% general partner of BFP. Upon completion of Tucker's initial public
offering, BFP issued mortgage notes in an aggregate principal amount of $100
million (the "Original Mortgage Notes") to finance these six properties. Net
proceeds to Tucker from this issuance were approximately $97,400,000. In June
1994, BFP exchanged the Original Mortgage Notes for the REMIC Note which was
issued pursuant to the REMIC Indenture. At the same time Kidder, Peabody
Acceptance Corporation I sold six classes of pass-through certificates
evidencing the entire beneficial ownership of interest of the REMIC, a trust
consisting solely of the REMIC Note and related instruments evidencing the
REMIC's security interest in the related collateral. The REMIC Note matures in
one balloon payment in September 2000 and bears interest at a fixed-rate of 7.3%
per annum, with monthly interest-only payments required. The REMIC Note is
recourse only to the assets of BFP and is collateralized by first mortgage liens
on each of the properties owned by BFP (Commons of Crystal Lake, Heritage
Square, Sheridan Village, Speedway SuperCenter, Washington Lawndale Commons and
One North State) and by an assignment of all of the BFP's interest in the rents
and the leases at each of these properties.
Concurrently with the Merger, on March 15, 1996, the Company entered into a
$150 million unsecured revolving credit facility with the Bank. The line bears
interest at the Bank's base rate or 1.75% over LIBOR. The LIBOR rate available
under the line becomes more favorable in the event the Company meets certain
loan to value tests or receives an investment grade unsecured debt rating. In
addition to replacing outstanding borrowings under
10
<PAGE>
the Company's and Tucker's previously outstanding secured lines of credit, the
facility is available for the acquisition, development, renovation and expansion
of new and existing properties (including but not limited to capital
improvements, tenant improvements and leasing commissions), and for other
working capital purposes. The new line of credit contains certain financial and
operational covenants that, among other provisions, limit the amount of secured
and unsecured indebtedness the Company may have outstanding at any time and
provides for the maintenance of certain financial tests including minimum net
worth and debt service coverage requirements. The Company believes that such
covenants will not adversely affect the Company's business or the operation of
its properties. The Company's line of credit requires the Company to maintain
interest rate protection, at a rate satisfactory to the lead lender, with
respect to $100 million of indebtedness, and the Company has entered into such
agreements with the Bank.
ONE NORTH STATE
One North State is the only property of the Company that accounts for 10%
or more of the post-Merger book value of the Company or of the Company's pro
forma gross income. One North State is a mixed-use property located in the
"Loop" area of downtown Chicago, Illinois. The property aggregates 639,164
square feet of gross leasable area ("GLA"), including approximately 159,000
square feet of retail space. The retail portion of the property is currently 99%
leased and is anchored by T.J. Maxx and Filene's Basement. The office portion of
this property is currently 94% leased primarily to First Chicago Corp. and
Arthur Andersen & Co. First Chicago Corp. and Arthur Andersen & Co. both lease
more than 10% of the building's square footage. The lease with First Chicago
Corp. requires First Chicago Corp. to pay base rent equal to $13.25 per square
foot per annum until November 1998 and $15.75 per square foot per annum from
December 1998 through November 2003. The lease does not contain renewal options.
The lease with Arthur Andersen & Co. expires March 31, 2003 and requires Arthur
Andersen & Co. to pay base rent equal to $12.00 per square foot per annum though
March 31,1998 and $13.00 per square foot per annum from April 1,1998 through
March 31, 2003. The lease does not contain renewal options and Arthur Andersen &
Co. has the right to cancel its lease as of April 1, 1998, provided that it
gives the Company notice by April 1, 1996 and pays the Company a $1.8 million
cancellation fee. Arthur Andersen & Co. exercised its early termination option
on April 1, 1996 and has paid the Company the required $1.8 million cancellation
fee. Pursuant to the terms of the REMIC Indenture, 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 leasing expenses 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. See "Risk Factors--Real
Estate Investment Considerations." The table below sets forth certain
information with respect to the occupancy rate of One North State expressed as a
percent of total GLA for each of the last five years and the average annual base
rent per square foot for each of the last five years.
<TABLE>
<CAPTION>
AVERAGE
EFFECTIVE
YEAR ENDING OCCUPANCY ANNUAL RENT
DECEMBER 31, RATE PER SQ. FT.
------------ --------- -----------
<S> <C> <C>
1995...................................... 95.32% $15.80
1994...................................... 95.20 15.98
1993...................................... 91.90 14.69
1992...................................... 89.42 14.12
1991...................................... 83.59 13.20
</TABLE>
11
<PAGE>
At December 31, 1995, One North State had a total of 17 tenants. The
following table sets forth certain information with respect to the expiration of
leases at this mixed-use property.
<TABLE>
<CAPTION>
PERCENT OF
1996 ANNUAL
GLA OF ANNUALIZED BASE RENT
NUMBER OF EXPIRING BASE RENT REPRESENTED
YEAR ENDING LEASES LEASES OF EXPIRING BY EXPIRING
DECEMBER 31, EXPIRING (SQ. FT.) LEASES LEASES
------------ --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
1996........................... 2 2,477 $ 179,260 1.90%
1997........................... 0 0 0 0.00
1998........................... 1 126,533 1,518,396 16.11
1999........................... 0 0 0 0.00
2000........................... 1 1,807 182,507 1.94
2001........................... 5 89,091 2,022,968 21.46
2002........................... 2 51,451 1,101,566 11.68
2003........................... 4 327,702 4,289,619 45.50
2004........................... 0 0 0 0.00
2005........................... 2 2,035 132,846 1.41
</TABLE>
For federal income tax purposes, as of December 31, 1995, the basis of1 BFP
in One North State was approximately $73.6 million. Property taxes paid in 1995
for the tax year ended 1994 (the most recent tax year for which information is
available) aggregated $3,424,957.
One North State was originally constructed in 1904. In connection with the
construction, the City of Chicago granted the original developer permission and
authority (the "Authority") to construct the center portion of the building over
a portion of a public alley commonly known as Holden Court, to use and occupy
certain subsurface vaults and a subway connection and to construct and maintain
a loading dock encroaching onto a portion of Holden Court (together, except for
the subsurface vaults and the subway connection, the "Permitted Improvement
Property"). The Authority has been continually renewed by the City of Chicago
under permits issued pursuant to ordinances passed by the City of Chicago but is
subject to amendment, modification or repeal. The Company has no reason to
believe that the City of Chicago will exercise their right to amend, modify,
repeal or revoke the current ordinance but there can be no assurance that such
actions will not be taken. On March 6, 1996, BFP acquired fee ownership of a
portion of the Permitted Improvement Property consisting of the air rights (the
"Air Rights") over Holden Court for approximately $480,000 plus costs and
expenses of approximately $42,000, with funds from a special interest-bearing
escrow account set up in connection with Tucker's initial public offering to
purchase and maintain the Permitted Improvement Property (the "Holden Court
Escrow"). After the acquisition of the Air Rights, the balance of the Holden
Court Escrow, approximately $358,000, remains available for, among other
approved costs (as described in the Escrow and Indemnity Agreement discussed
below), the acquisition of the remaining Permitted Improvement Property and the
continuation of the Authority (the "Approved Costs"). The Holden Court Escrow
and the disbursement of funds to pay costs related to the purchase and
maintenance of the Permitted Improvement Property are governed by that certain
Escrow and Indemnity Agreement dated as of October 1, 1993 by and among BFP,
Tucker, Kenneth Tucker, the former Chairman of the Board and President of
Tucker, Richard Tucker, the former Executive Vice President and Chief Operating
Officer of Tucker, and Commonwealth Land Title Insurance Company. Until October
1, 2004 (the "Escrow Period"), Kenneth Tucker and Richard Tucker are responsible
for, and have agreed to indemnify BFP and the Company against, the amount, if
any, that the Approved Costs exceed the funds available in the Holden Court
Escrow. These obligations currently are secured by 70,183 shares of Bradley
Common Stock and 265,471 Units. Subject to compliance with applicable securities
laws, these shares and the shares to be received upon exchange of Units may,
however, be transferred at any time. Accordingly, there can be no assurance that
Kenneth Tucker and Richard Tucker will hold any share of Common Stock or Units
at the time, if ever, when the Company attempts to realize this security
interest. If the Permitted Improvement Property is acquired prior to the
expiration of the Escrow Period, any remaining balance will be distributed to
Kenneth Tucker and Richard Tucker in the form of cash or through the issuance of
Units equal to the remaining balance valued at the initial public offering
price. If the Permitted Improvement Property is not acquired on or before the
expiration of the Escrow Period, any remaining balance will be distributed
equally to BFP, on the one hand, and Kenneth Tucker and Richard Tucker, on the
other hand. After the acquisition of the Air Rights, the existing five-year
permit, which is subject to renewal in
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<PAGE>
September 1997, continues to relate to the subsurface vaults and the subway
connection, although there can be no assurance that the City of Chicago will
renew the permit upon its expiration.
DESCRIPTION OF CAPITAL STOCK
The description of the Company's capital stock set forth below does not
purport to be complete and is qualified in its entirety by reference to the
Company's Charter and Bylaws, copies of which are exhibits to the registration
statement of which this Prospectus is a part.
GENERAL
Under its Charter, the Company has authority to issue up to 150 million
shares of stock, consisting of 80 million shares of Common Stock, 50 million
shares of "Excess Stock" (as described below), par value $.01 per share, and 20
million shares of preferred stock, par value $.01 per share (the "Preferred
Stock"). Under Maryland law, stockholders generally are not responsible for a
corporation's debts or obligations. At March 15, 1996, there were approximately
18,658,515 shares of Common Stock issued and outstanding and no Preferred Stock
issued or outstanding. In addition, there are approximately 314,749 Units of the
Operating Partnership outstanding (other than those held directly by the
Company); such Units may be exchanged for shares of Common Stock at the option
of the Company when such Units are tendered to the Operating Partnership for
redemption.
COMMON STOCK
Upon the issuance of the Redemption Shares in accordance with the
provisions of the Amended Operating Partnership Agreement, all shares of Common
Stock offered hereby will be duly authorized, validly issued, fully paid and
nonassessable. Subject to the preferential rights of any other shares or series
of stock and to the provisions of the Company's Charter regarding Excess Stock,
holders of shares of Common Stock are entitled to receive dividends on Common
Stock if and when authorized and declared by the Board of Directors of the
Company out of assets legally available therefor and to share ratably with each
other holder of shares of Common Stock or Excess Stock in the assets of the
Company legally available for distribution to its stockholders in the event of
its liquidation, dissolution or winding-up after payment of, or adequate
provision for, all known debts and liabilities of the Company.
Subject to the provisions of the Company's Charter regarding Excess Stock,
each outstanding share of Common Stock entitles the holder to one vote on all
matters submitted to a vote of stockholders, including the election of
directors, and except as provided with respect to any other class or series of
stock, the holders of Common Stock will possess exclusive voting power. There is
no cumulative voting in the election of directors, which means that the holders
of a majority of the outstanding shares of Common Stock can elect all of the
directors then standing for election, and the holders of the remaining shares of
Common Stock will not be able to elect any directors.
Subject to the Company's Charter regarding Excess Stock, all shares of
Common Stock have equal dividend, distribution, liquidation and other rights,
and have no preferences, appraisal or exchange rights. Holders of Common Stock
have no conversion, sinking fund or redemption rights, or preemptive rights to
subscribe for any securities of the Company.
The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements and an opinion thereon
expressed by an independent public accounting firm and quarterly reports for the
first three quarters of each fiscal year containing unaudited financial
information.
Pursuant to the Maryland General Corporation Law ("MGCL") and the Company's
Charter, the Company generally cannot dissolve, amend its Charter, merge, sell
all or substantially all of its assets, engage in a share exchange or engage in
similar transactions outside the ordinary course of business unless approved by
the affirmative vote of holders of shares entitled to cast a majority of all the
votes entitled to be cast.
The transfer agent and registrar for the Common Stock is The First National
Bank of Boston.
13
<PAGE>
PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time, in one or more
series, as authorized by the Board of Directors of the Company. Prior to
issuance of shares of each series, the Board of Directors is required by the
MGCL and the Company's Charter to fix for each series, subject to the provisions
of the Company's Charter regarding Excess Stock, the terms, preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications and/or terms or conditions of
redemption, as are permitted by the MGCL. The Preferred Stock will, when issued,
be fully paid and nonassessable by the Company and will have no preemptive
rights, other than as determined by the Board of Directors. The Board of
Directors could authorize the issuance of shares of Preferred Stock with terms
and conditions that could have the effect of discouraging a takeover or other
transaction that holders of Common Stock might believe to be in their best
interests or in which holders of some, or a majority, of Common Stock might
receive a premium for their shares over the then-current market price of such
shares of Common Stock. As of the date hereof, no shares of Preferred Stock are
outstanding.
RESTRICTIONS ON TRANSFERS
For the Company to qualify as a REIT under the Code, among other things,
not more than 50% in value of its outstanding shares of beneficial interest may
be owned, directly or indirectly, by five or fewer individuals (defined in the
Code to include certain entities) during the last half of a taxable year (other
than the first year), and such shares of beneficial interest must be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year of 12 months (other than the first year) or during a proportionate part of
a shorter taxable year. The Charter of the Company contains provisions, designed
to ensure that the Company remains a qualified REIT, that limit any holder from
owning, or being deemed to own by virtue of the attribution provisions of the
Code, shares of capital stock having a value that is more than 9.8% (the
"Ownership Limit") of the value of all outstanding capital stock of the Company.
The Charter provides that each person (which includes natural persons,
corporations, trusts, partnerships and other entities) shall be deemed to own
stock that such person (i) actually owns, (ii) constructively owns after
applying attribution rules specified in the Code, and (iii) has the right to
acquire upon exercise of any rights, options or warrants or conversion of any
convertible securities held by such persons. The fact that certain affiliated
entities, such as separate mutual funds advised by the same investment adviser,
may own more than 9.8% of the value of all outstanding capital stock in the
aggregate will not of itself result in the Ownership Limit being exceeded,
merely because a single person may be considered to be the "beneficial owner" of
such stock for purposes of Section 13(g) of the Exchange Act. The Board of
Directors may waive the Ownership Limit if evidence satisfactory to the Board of
Directors and the Company's tax counsel is presented that the changes in
ownership will not then or in the future jeopardize the Company's status as a
REIT.
Any transfer of capital stock or any security convertible into capital
stock that would create direct or indirect ownership of capital stock in excess
of the Ownership Limit or that would result in the disqualification of the
Company as a REIT, including any transfer that results in the Company being
"closely held" within the meaning of Section 856(h) of the Code, shall be null
and void, and the intended transferee will acquire no rights to the capital
stock. Shares of capital stock owned, or deemed to be owned, or transferred to a
stockholder in excess of the Ownership Limit will automatically be exchanged for
shares of Excess Stock that will be transferred, by operation of law, to a
trustee (to be named by the Board of Directors of the Company, but unaffiliated
with the Company) as trustee for the exclusive benefit (except to the extent
described below) of one or more charitable beneficiaries designated from time to
time by the Company. The Excess Stock held in trust will be considered as issued
and outstanding shares of stock of the Company, will be entitled to receive
distributions declared by the Company and may be voted by the trustee for the
exclusive benefit of the charitable beneficiary. Any dividend or distribution
paid to a purported transferee of Excess Stock prior to the discovery by the
Company that capital stock has been transferred in violation of the provisions
of the Company's Charter (a "prohibited transfer") shall be repaid to the
Company upon demand and thereupon paid over by the Company to the trustee. Any
votes of holders of shares of capital stock purported to have been cast by a
purported transferee prior to such discovery of a prohibited transfer will be
retroactively deemed to have been cast, but said retroactive nullification of
the vote of the relevant shares of capital stock shall not adversely affect the
rights of any person (other than the purported transferee) who has relied in
good faith upon the effectiveness of the matter that was the subject of the
stockholder action as to which such votes were cast.
Excess Stock is not transferable. Subject to the redemption rights of the
Company discussed below, the trustee of the trust may, however, sell and
transfer the interest in the trust to a transferee in whose hands the interest
in the trust representing Excess Stock would not be an interest in Excess Stock,
and upon such sale the shares of Excess Stock represented by the sold interest
shall be automatically exchanged for shares of capital stock of the class that
was
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originally exchanged into such Excess Stock. Upon such sale, the trustee shall
distribute to the purported transferee only so much of the sales proceeds as is
not more than the price paid by the purported transferee in the prohibited
transfer that resulted in the exchange of Excess Stock for the capital stock
purported to have been transferred (or, if the purported transferee received
such capital stock by gift, devise or otherwise without giving value for such
stock, only an amount that does not exceed the market price for such stock, as
determined in the manner set forth in the Charter, at the time of the prohibited
transfer), and the trustee shall distribute all remaining proceeds from such
sale to the charitable beneficiary.
In addition to the foregoing transfer restrictions, the Company will have
the right, for a period of 90 days during the time any Excess Stock is held by
the trustee, to purchase all or any portion of the Excess Stock from the trustee
for the lesser of the price paid for the capital stock by the original purported
transferee (or, if the purported transferee received such capital stock by gift,
devise or otherwise without giving value for such stock, the market price of the
capital stock on the date the Company exercises its options to purchase. Upon
any such purchase by the Company, the trustee shall distribute the purchase
price to the original purported transferee. The 90-day period begins on the date
on which the Company receives written notice of the prohibited transfer or other
event resulting in the exchange of capital stock for Excess Stock.
If the foregoing transfer restrictions are determined to be void or invalid
by virtue of any legal decision, statute, rule or regulation, then the intended
transferee of any Excess Stock may be deemed, at the option of the Company, to
have acted as an agent on behalf of the Company in acquiring the Excess Stock
and to hold the Excess Stock on behalf of the Company.
These restrictions will not preclude settlement of transactions on the NYSE
or any other stock exchange on which capital stock of the Company is listed. The
foregoing restrictions on transferability and ownership also will not apply if
the Board of Directors determines that it is no longer in the best interest of
the Company to continue to qualify as a REIT.
The Company's Charter requires that, upon demand by the Company, each
stockholder and each proposed transferee of capital stock will disclose to the
Company in writing any information with respect to the direct, indirect and
constructive ownership of shares of stock as the Board of Directors deems
necessary to comply with the provisions of the Code applicable to REITs, to
comply with the requirements of any taxing authority or governmental agency or
to determine any such compliance.
The Ownership Limitation provided by the Company's Charter may have the
effect of delaying, deferring or preventing the acquisition of control of the
Company. However, the Charter provides that the Ownership Limit shall not apply
to shares of capital stock acquired pursuant to an all cash tender offer for all
outstanding shares of capital stock in conformity with applicable laws where not
less than two-thirds of the outstanding shares of capital stock (not including
securities held by the tender offerer and/or its affiliates and associate) are
tendered and accepted pursuant to such tender offer and where the tender offeror
commits in such tender offer, if the offer is accepted by the holders of two-
thirds of the outstanding stock, promptly after the tender offeror's purchaser
of the tendered stock to give any non-tendering stockholders a reasonable
opportunity to put their capital stock to the tender offeror at a price not less
than that paid pursuant to the tender offer.
DESCRIPTION OF UNITS AND REDEMPTION OF UNITS
GENERAL
Each Unitholder may, subject to certain limitations, require that the
Operating Partnership redeem all or a portion of such holder's Units (the
"Redemption Right"). This Redemption Right shall be exercised pursuant to a
notice of redemption delivered to the Operating Partnership, with a copy
delivered to the Company, by the Unitholder exercising the Redemption Right.
Upon redemption, a Unitholder will receive for each Unit redeemed cash in an
amount equal to the market value of a share of Common Stock (subject to certain
adjustments to prevent dilution) plus any distribution amount owed but not yet
paid to the Unitholder, provided that the Company may, in its sole discretion,
by notice to the redeeming Unitholder within five business days after receipt of
the notice of redemption, elect to acquire any Unit presented to the Operating
Partnership for redemption by paying to the Unitholder cash in the amount
described above or one share of Common Stock (subject to the same adjustments).
When determining the amount of a cash redemption, the market value of Common
Stock will be equal to the average of the closing trading price of the Common
Stock on the NYSE (or substitute information, if no such closing price is
available) for the ten
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trading days before the day on which the redemption notice was received by the
Operating Partnership. An acquisition by the Company pursuant to this Redemption
Right will be treated as a sale of the Units to the Company for federal income
tax purposes. See "-- Tax Consequences of Redemption" below. Upon any redemption
such Unitholder's right to receive distributions with respect to the Units
redeemed will cease. If the Company elects to redeem the Units for Redemption
Shares, a Unitholder will have all rights as a stockholder of the Company,
including the right to receive dividends, from the time of its acquisition of
the Redemption Shares.
The Company anticipates that it generally will elect to acquire any Units
presented to the Operating Partnership for redemption by the issuance of the
Redemption Shares pursuant to this Prospectus. However, under the terms of the
Amended Operating Partnership Agreement, no redemption can occur if the delivery
of Redemption Shares would be prohibited under the provisions of the Company's
Charter that protect the Company's qualification as a REIT. In this circumstance
Bradley has agreed to elect to acquire any Units presented for redemption for
cash, not Redemption Shares.
TAX CONSEQUENCES OF REDEMPTION
The following discussion summarizes certain federal income tax
considerations that may be relevant to a Unitholder who exercises his right to
require the redemption of his Units.
Tax Treatment of Exchange or Redemption of Units. If the Company elects to
purchase Units tendered for redemption, the Amended Operating Partnership
Agreement provides that each of the redeeming Unitholders, the Operating
Partnership and the Company, as the case may be, shall treat the transaction
between the redeeming Unitholder and the Company as a sale of Units by the
Unitholder at the time of such redemption. Such sale will be fully taxable to
the redeeming Unitholder and such redeeming Unitholder will be treated as
realizing for tax purposes an amount equal to the sum of the cash value or the
value of the Redemption Shares plus the amount of any Operating Partnership
liabilities allocable to the redeemed Units at the time of the redemption. The
determination of the amount of gain or loss is discussed more fully below. If
the Company does not elect to purchase a Unitholder's Units tendered for
redemption and the Operating Partnership redeems such Units for cash that the
Company contributes to the Operating Partnership to effect such redemption, the
redemption likely would be treated for tax purposes as a sale of such Units to
the Company in a fully taxable transaction, although the matter is not free from
doubt. In that event, the redeeming partner would be treated as realizing an
amount equal to the sum of the cash received in the exchange plus the amount of
any Operating Partnership liabilities allocable to the redeemed Units at the
time of the redemption. The determination of the amount and character of gain or
loss in the event of such a sale is discussed more fully below. See "--Tax
Treatment of Disposition of Units by a Unitholder Generally" below.
If the Company does not elect to purchase Units tendered for redemption and
the Operating Partnership redeems a Unitholder's Units for cash that is not
contributed by the Company to effect the redemption, the tax consequences would
be the same as described in the previous paragraph, except that if the Operating
Partnership redeems less than all of a Unitholder's Units, the Unitholder would
not be permitted to recognize any loss occurring on the transaction and would
recognize taxable gain only to the extent that the cash, plus the amount of any
Operating Partnership liabilities allocable to the redeemed Units, exceeded the
Unitholder's adjusted basis in all of such Unitholder's Units immediately before
the redemption.
If the Company contributes cash to the Operating Partnership to effect a
redemption, and the form of the transaction is respected for tax purposes so
that the redemption transaction is treated as the redemption of the Unitholder's
Units by the Operating Partnership rather than a sale of Units to the Company,
the income tax consequences to a Unitholder would be as described in the
preceding paragraph.
Tax Treatment of Disposition of Units by a Unitholder Generally. If a Unit
is disposed of in a manner that is treated as a sale of the Unit, or a
Unitholder otherwise disposes of a Unit, the determination of gain or loss from
the sale or other disposition will be based on the difference between the amount
considered realized for tax purposes and the tax basis in such Unit. See "--
Basis of Units" below. Upon the sale of a Unit, the "amount realized" will be
measured by the sum of the cash and fair market value of other property (e.g.,
Redemption Shares) received plus the amount of any Operating Partnership
liabilities allocable to the Units sold. To the extent that the amount of cash
or property received plus the allocable share of any Operating Partnership
liabilities exceeds the Unitholder's basis for the Units disposed of, such
Unitholder will recognize gain. It is possible that the amount of gain
recognized or even the tax liability resulting from such gain could exceed the
amount of cash and/or the value of any other property (e.g., Redemption Shares)
received upon such disposition.
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Except as described below, any gain recognized upon a sale or other
disposition of Units will be treated as gain attributable to the sale or
disposition of a capital asset. To the extent, however, that the amount realized
upon the sale of a Unit attributable to a Unitholder's share of "unrealized
receivables" of the Operating Partnership (as defined in Section 751 of the
Code) exceeds the basis attributed to those assets, such excess will be treated
as ordinary income. Unrealized receivables include, to the extent not previously
included in Operating Partnership income, any rights to payment for services
rendered or to be rendered. Unrealized receivables also include amounts that
would be subject to recapture as ordinary income if the Operating Partnership
had sold its assets at their fair market value at the time of the transfer of a
Unit.
Basis of Units. In general, a Unitholder who acquired his Units by
contribution of property and/or money to the Operating Partnership had an
initial tax basis in his Units ("Initial Basis") equal to the sum of (i) the
amount of money contributed (or deemed contributed as described below) and (ii)
his adjusted tax basis in any other property contributed in exchange for such
Units, and less the amount of any money distributed (or deemed distributed, as
described below) in connection with the acquisition of Units. The Initial Basis
of Units acquired by other means would have been determined under the general
rules of the Code, including the partnership provisions, governing the
determination of tax basis. Other rules, including the "disguised sale" rules
discussed below, also may affect Initial Basis, and Unitholders are urged to
consult their own tax advisors regarding their initial basis. A Unitholder's
Initial Basis in his Units generally is increased by (i) such Unitholder's share
of Operating Partnership taxable and tax-exempt income and (ii) increases in
such Unitholder's allocable share of liabilities of the Operating Partnership
(including any increase in his share of liabilities occurring in connection with
the acquisition of his Units). Generally, such Unitholder's basis in his Units
is decreased (but not below zero) by (i) such Unitholder's share of Operating
Partnership distributions, (ii) decreases in such Unitholder's allocable share
of liabilities of the Operating Partnership (including any decrease in his share
of liabilities of the Operating Partnership occurring in connection with the
acquisition of his Units), (iii) such Unitholder's share of losses of the
Operating Partnership and (iv) such Unitholder's share of nondeductible
expenditures of the Operating Partnership that are not chargeable to his capital
account.
Potential Application of the Disguised Sale Regulations to a Redemption of
Units. There is a risk that a redemption by the Operating Partnership of Units
issued in exchange for a contribution of property to the Operating Partnership
may cause the original transfer of property to the Operating Partnership in
exchange for Units to be treated as a "disguised sale" of property. Section 707
of the Code and the Treasury Regulations thereunder (the "Disguised Sale
Regulations") generally provide that, unless one of the prescribed exceptions is
applicable, a partner's contribution of property to a partnership and a
simultaneous or subsequent transfer of money or other consideration (which may
include the assumption of or taking subject to a liability) from the partnership
to the partner will be presumed to be a sale, in whole or in part, of such
property by the partner to the partnership. Further, the Disguised Sale
Regulations provide generally that, in the absence of an applicable exception,
if money or other consideration is transferred by a partnership to a partner
within two years of the partner's contribution of property, the transactions are
presumed to be a sale of the contributed property unless the facts and
circumstances clearly establish that the transfers do not constitute a sale. The
Disguised Sale Regulations also provide that if two years have passed between
the transfer of money or other consideration and the contribution of property,
the transactions will be presumed not to be a sale unless the facts and
circumstances clearly establish that the transfers constitute a sale.
Accordingly, if a Unit is redeemed by the Operating Partnership from a
Unitholder who holds Units that were issued in exchange for a contribution of
property to the Operating Partnership, the Internal Revenue Service (the "IRS")
could contend that the Disguised Sale Regulations apply because the Unitholder
will thus receive cash subsequent to a previous contribution of property to the
Operating Partnership. In that event, the IRS could contend that the
contribution was taxable as a disguised sale under the Disguised Sale
Regulations. Any gain recognized thereby may be eligible for installment
reporting under Section 453 of the Code, subject to certain limitations. In
addition, in such event, the Disguised Sale Regulations might apply to cause a
portion of the proceeds received by a redeeming Unitholder to be characterized
as original issue discount on a deferred obligation which would be taxable as
interest income in accordance with the provisions of Section 1272 of the Code.
Each Unitholder is advised to consult its own tax advisors to determine whether
redemption of its Units could be subject to the Disguised Sale Regulations.
COMPARISON OF OWNERSHIP OF UNITS AND COMMON STOCK
The nature of any investment in Common Stock of the Company is generally
economically equivalent to an investment in Units in the Operating Partnership.
There are, however, some differences between ownership of Units and ownership of
Common Stock, some of which may be material to investors. The information below
highlights a number of significant differences between the Operating Partnership
and the Company relating to, among other things, form of organization, permitted
investments, policies and restrictions, management structure, compensation
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and fees, investor rights and federal income taxation and compares certain legal
rights associated with the ownership of Units and Common Stock, respectively.
These comparisons are intended to assist Unitholders in understanding how their
investment will be changed if their Units are acquired for Common Stock. This
discussion is summary in nature and does not constitute a complete discussion of
these matters, and holders of Units should carefully review the balance of this
Prospectus and the registration statement of which this Prospectus is a part for
additional important information about the Company.
Form of Organization and Assets Owned. The Operating Partnership is
organized as a Delaware limited partnership and owns 7 properties directly. The
Operating Partnership also is a general partner in BFP, which owns 6 properties,
and the sole general partner in WSALP, which owns 1 property.
The Company is a Maryland corporation which has elected to be taxed as a
REIT under the Code and intends to maintain its qualifications as a REIT. The
Company maintains a general partner interest in the Operating Partnership, which
gives the Company an indirect investment in those properties and other assets
owned by the Operating Partnership. The Company also owns 17 properties
directly. The Company currently has a 95.9% economic interest in the Operating
Partnership, and such interest will increase as Units are redeemed for cash or
acquired by the Company.
Length of Investment. The Operating Partnership has a stated termination
date of December 31, 2050, although it may be terminated earlier under certain
circumstances. The Company has a perpetual term and intends to continue its
operations for an indefinite time period.
Nature of Investment and Distribution Rights. The Units constitute equity
interests entitling each Unitholder to his pro rata share of cash distributions
made to the Unitholders of the Operating Partnership. In general, the Amended
Operating Partnership Agreement provides for operating distributions to be made
first to the Unitholders in an amount equal to the lesser of (i) 99% of the cash
available for distribution from the Operating Partnership and (ii) an amount
calculated in a manner intended to provide the Unitholders with distributions on
each of their Units equal to the dividend yield for the same period on a share
of Common Stock. Any remaining cash from operations available for distributions
will be distributed to the Company as general partner. The Amended Operating
Partnership Agreement generally provides for liquidating distributions to the
Unitholders equal to either (i) an amount per Unit intended to equal the amount
distributed with respect to each share of Common Stock upon the liquidation of
the Company or (ii) in the event that the Operating Partnership is liquidated
other than in connection with the liquidation of the Company, an amount per Unit
equal to the then market price of a share of Common Stock; provided, however,
that the Unitholders will not receive more than 99% of any proceeds available
for distribution from the liquidation of the Operating Partnership. Any
remaining liquidation proceeds will be distributed to the Company as the general
partner.
The Common Stock constitutes an equity interest in the Company. The Company
is entitled to receive any operating cash flow and capital cash flow remaining
after a distribution to the Unitholders has been effected, and each stockholder
will be entitled to his pro rata share of any dividends or distributions paid
with respect to Common Stock. The dividends payable to the stockholders are not
fixed in amount and are only paid if, when and as declared by the Board of
Directors. In order to qualify as a REIT, the Company must distribute at least
95% of its taxable income (excluding capital gains), and any taxable income
(including capital gains) not distributed will be subject to corporate income
tax.
As a partnership, the Operating Partnership is not subject to federal
income taxation. In determining their federal income tax, partners of the
Operating Partnership, including Unitholders, must take into account their
allocable share of partnership income, gain, deduction and loss (regardless of
whether distributed), and otherwise are subject to the rules governing the
taxation of partnerships and partners. By contrast, Unitholders who receive
Redemption Shares upon exercise of their redemption rights will be taxed on such
investment in accordance with the rules governing REITs. See "Federal Income Tax
Considerations."
Issuance of Additional Units. The issuance of additional Units, and the
relative rights, powers and duties of such Units, will be at the discretion of
the Company, as the sole general partner of the Operating Partnership.
Notwithstanding the foregoing, for a period of 24 months after the consummation
of the Merger, the general partner shall not cause the Operating Partnership to
issue additional Units with rights, powers and duties senior to the Units
currently held by the Unitholders. In addition, the general partner shall not
permit the Operating Partnership to issue additional Units for a period of 24
months after the consummation of the Merger if the issuance of such Units would
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cause a material adverse tax consequence to the Unitholders (determined in the
manner described in the Amended Operating Partnership Agreement), other than in
connection with the merger, consolidation or combination of the general partner
or its affiliates.
Liquidity. Subject to certain exceptions, a Unitholder may transfer all or
any portion of his Units with or without the consent of the general partner.
However, the general partner, in its sole and absolute discretion, may or may
not consent to the admission as a Unitholder of any transferee of such Units. If
the general partner does not consent to the admission of a permitted transferee,
the transferee shall be considered an assignee of an economic interest in the
Operating Partnership but will not be a holder of Units for any other purpose;
as such the assignee will not be permitted to vote on any affairs or issues on
which a Unitholder may vote.
The Units are freely transferable (i) either by will, the laws of intestacy
or otherwise to the legal representative or successor of the transferring
Unitholder who shall be bound in all respects by the terms of the Amended
Operating Partnership Agreement; (ii) for inter vivos transfers for estate
planning purposes; or (iii) for pledges to secure the repayment of a loan. Other
transfers are subject to the consent and approval of the general partner.
Pursuant to the Amended Operating Partnership Agreement, the general partner
may, in its sole and absolute discretion, transfer its interest in the Operating
Partnership; provided, however, that for a period of 24 months after the
consummation of the Merger, the general partner shall not without the consent of
the majority of the limited partners, transfer its interest to any of its
affiliates other than an affiliate whose securities will become issuable upon
redemption of the Units.
The Redemption Shares will be transferable subject to the requirements of
the Securities Act. The Common Stock is listed on the NYSE. The breadth and
strength of this market will depend, among other things, upon the number of
shares outstanding, the Company's financial results and prospects, the general
interest in the Company's and other real estate investments and the Company's
dividend yield compared to that of other debt and equity securities.
Purchase and Permitted Investments. The purpose of the Operating
Partnership includes the conduct of any business that relates to the properties
of the Operating Partnership or that relates to the properties of BFP, except
that the Amended Operating Partnership Agreement requires the business of the
Operating Partnership to be conducted in such a manner that will permit the
Company to be classified as a REIT for Federal income tax purposes. The
Operating Partnership may, subject to the foregoing limitation, invest or enter
into partnerships, joint ventures or similar arrangements and may own interests
in any other entity, such as its general partnership interest in BFP. Under its
Charter, the Company may engage in any lawful activity permitted under Maryland
law.
The Board of Directors of the Company may issue, in its discretion,
additional equity securities consisting of shares of Common Stock or Preferred
Stock; provided, that the total number of shares issued does not exceed the
authorized number of shares of capital stock set forth in the Company's Charter.
Borrowing Policies. The Operating Partnership has no restrictions on
borrowings, and the general partner, which is controlled by the Company, has
full power and authority to borrow money on behalf of the Operating Partnership.
The Company is not restricted under its governing instruments from
incurring borrowings.
Other Investment Restrictions. Other than restrictions precluding
investments by the Operating Partnership that would adversely affect the
qualification of the Company as a REIT, there are no restrictions upon the
Operating Partnership's authority to enter into certain transactions, including,
among others, making investments, lending Operating Partnership funds, or
reinvesting the Operating Partnership's cash flow and net sale or refinancing
proceeds.
Neither the Company's Charter nor its Bylaws impose any restrictions upon
the types of investments made by the Company.
Management Control. All management powers over the business and affairs of
the Operating Partnership are vested in the Company and no Unitholder of the
Operating Partnership has any right to participate in or exercise control or
management power over the business and affairs of the Operating Partnership. The
Amended Operating Partnership Agreement provides that the Company shall be
reimbursed for all expenses incurred by it relating to the management and
business of the Operating Partnership.
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The Board of Directors has exclusive control over the Company's business
and affairs subject only to the restrictions in the Charter and the Bylaws. The
Board of Directors is classified into three classes. At each annual meeting of
the stockholders, the successors of the class of Directors whose terms expire at
that meeting will be elected. The policies adopted by the Board of Directors may
be altered or eliminated without advice of the stockholders. Accordingly, except
for their vote in the elections of Directors, stockholders have no control over
the ordinary business policies of the Company.
Management Liability and Indemnification. The Amended Operating Partnership
Agreement generally provides that the general partner and any person acting on
its behalf will incur no liability to the Operating Partnership or any
Unitholder for any act or omission within the scope of the general partner's
authorities, provided the general partner's or such other person's action or
omission to act was taken in good faith and in the belief that such action or
omission was in the best interests of the Company and its affiliates, and
provided further, that the general partner's or such other person's actions or
omissions shall not constitute actual fraud or gross negligence or deliberately
dishonest conduct.
The Amended Operating Partnership Agreement also provides for the
indemnification of the general partner and its affiliates and any individual
acting on their behalf from any loss, damage, claim or liability, including, but
not limited to, reasonable attorneys' fees and expenses, incurred by them by
reason of any act performed by them in accordance with the standards set forth
above or in enforcing the provisions of this indemnity.
The Company's Charter eliminates, to the fullest extent permitted under the
MGCL, the personal liability of a director to the Company or its stockholders
for monetary damages for breaches of such director's duty of care or other
duties as a director. The effect of this provision in the Charter is generally
to eliminate the rights of the Company and its stockholders (through
stockholders' derivative suits on behalf of the Company) to recover monetary
damages against a director for breach of the fiduciary duty of care as a
director (including breaches resulting from negligent or grossly negligent
behavior). This provision does not limit or eliminate the rights of the Company
or any stockholder to seek non-monetary relief such as an injunction or
recession in the event of a breach of a director's duty of care. These
provisions will not alter the liability of a director under federal securities
laws.
Anti-takeover Provisions. Except in limited circumstances, the general
partner has exclusive management power over the business and affairs of the
Operating Partnership. The general partner may not be removed by the Unitholders
with or without cause.
The Charter and Bylaws of the Company and Maryland law contain a number of
provisions that may have the effect of delaying or discouraging an unsolicited
proposal for the acquisition of the Company or the removal of incumbent
management. See "Risk Factors -- Potential Anti-Takeover Effect of Certain
Provisions."
Voting Rights. Under the Amended Operating Partnership Agreement, the
Company as general partner may take any action in a manner which it reasonably
believes is in the best interests of the Company stockholders or complies with
the REIT requirements for the Company. Holders of Units may not elect directors,
or elect or remove the Company as the general partner of the Operating
Partnership. For a period of 24 months after the consummation of the Merger, the
general partner may not elect to dissolve the partnership or sell all or
substantially all of the assets of the partnership without the consent of a
majority in interest of the limited partners, except in connection with a merger
or other business combination of the general partner or its affiliates. The
Amended Operating Partnership Agreement provides for no other voting rights for
the Unitholders.
Stockholders of the Company have the right to vote, among other things, on
a merger or sale of substantially all of the assets of the Company, certain
amendments to the Charter and dissolution of the Company. Under MGCL and the
Charter, the sale of all or substantially all of the assets of the Company or
any merger or consolidation of the Company requires the approval of the Board of
Directors and holders of a majority of the outstanding shares of Common Stock.
No approval of the stockholders is required for the sale of less than all or
substantially all of the Company's assets. Under Maryland law and the Charter
and Bylaws, the Board of Directors must obtain approval of holders of not less
than a majority of all outstanding shares of capital stock of the Company in
order to dissolve the Company.
The Company is managed and controlled by a Board of Directors consisting of
three classes having staggered terms of office. Each class is to be elected by
the stockholders at annual meetings of the Company. All shares of
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Common Stock have one vote, and the Charter permits the Board of Directors to
classify and issue Preferred Stock in one or more series having voting power
which may differ from that of the Common Stock.
Amendment of the Partnership Agreement or the Company's Charter. Generally,
the Amended Operating Partnership Agreement may be amended by the general
partner without the consent of the Unitholders, except that certain amendments
which alter or change the distribution rights or redemption rights of a
Unitholder shall require the consent of the Unitholders holding a majority in
interest of Units.
Amendments to the Charter must be approved by the Board of Directors and
generally by the vote of a majority of the votes entitled to be cast at a
meeting of stockholders except as otherwise provided by law. The Board of
Directors may, however, amend the Charter without any action of the stockholders
in certain respects to preserve the Company's REIT qualification.
Compensation, Fees and Distributions. The general partner is not entitled
to receive any compensation for its services as general partner of the Operating
Partnership. As a partner in the Operating Partnership, however, the general
partner has the same right to allocations and distributions as other partners of
the Operating Partnership. In addition, the Operating Partnership will reimburse
the general partner for administrative expenses incurred relating to the ongoing
operation of the Company and certain other expenses arising in connection with
its role as general partner.
The Directors and officers of the Company receive compensation for their
services.
Liability of Investors. Under the Amended Operating Partnership Agreement
and applicable Delaware law, the liability of the limited partners for the
Operating Partnership's debts and obligations is generally limited to the amount
of their investment in the Operating Partnership.
Under the MGCL, stockholders generally are not personally liable for the
debts or obligations of the Company. See "Description of Capital Stock--
General."
REGISTRATION RIGHTS
The registration of the Redemption Shares pursuant to the registration
statement of which this Prospectus is a part will discharge the Company's
obligations under the terms of a Registration Rights Agreement dated as of March
15, 1996 (the "Registration Rights Agreement"), which the Company entered into
in connection with the consummation of the Merger. The following summary does
not purport to be complete and is qualified in its entirety by reference to the
Registration Rights Agreement.
Under the Registration Rights Agreement, the Company is obligated to
include any Redemption Shares that the Company issues or may issue when Units
are presented for redemption by holders on the registration statement of which
this Prospectus is a part. The Company also is required to use reasonable
efforts to keep the shelf registration effective until such time as all of the
Units have been redeemed for cash, or at the option of the Company, for the
number of Redemption Shares issuable pursuant to the Amended Operating
Partnership Agreement. As a result of the filing and effectiveness of the
registration statement of which this Prospectus is a part, the Redemption
Shares, when issued by the Company pursuant to this Prospectus, will no longer
be entitled to the benefits of the Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, the Company has agreed to
pay all expenses of effecting the registration of the Redemption Shares (other
than brokerage and underwriting commissions and taxes of any kind and other than
for any legal, accounting and other expenses incurred by a Unitholder
thereunder). The Company also has agreed to indemnify each Unitholder under the
Registration Rights Agreements and its officers, directors and other affiliated
persons and any person who controls any holder against certain losses, claims,
damages and expenses arising under the securities laws in connection with the
registration statement or this Prospectus, subject to certain limitations. In
addition, each Unitholder under the Registration Rights Agreement severally
agreed to indemnify the Company and its respective directors, officers and any
person who controls the Company against all losses, claims, damages and expenses
arising under the securities laws insofar as such loss, claim, damage or expense
relates to written information furnished to the Company by such Unitholder for
use in the registration statement or Prospectus or an amendment or supplement
thereto or the failure by such Unitholder to deliver or cause to be delivered
this Prospectus or any
21
<PAGE>
amendment or supplement thereto to any purchaser of shares covered by the
registration statement from such holder through no fault of the Company.
FEDERAL INCOME TAX CONSIDERATIONS
The Company believes it has operated, and the Company intends to continue
to operate, in such manner as to qualify as a REIT under the Code, but no
assurance can be given that it will at all times so qualify.
The provisions of the Code pertaining to REITs are highly technical and
complex. The following is a brief and general summary of certain provisions that
currently govern the federal income tax treatment of the Company and its
stockholders. For the particular provisions that govern the federal income tax
treatment of the Company and its stockholders, reference is made to Sections 856
through 860 of the Code and the regulations thereunder. The following summary is
qualified in its entirety by such reference.
TAXATION OF THE COMPANY
Under the Code, if certain requirements are met in a taxable year, a REIT
generally will not be subject to federal income tax with respect to income that
it distributes to its stockholders. If the Company fails to qualify during any
taxable year as a REIT, unless certain relief provisions are available, it will
be subject to tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates, which could have a material adverse
effect upon its stockholders. See "Risk Factors--Adverse Consequences of Failure
to Qualify as a REIT; Other Tax Liabilities."
TAXATION OF TAXABLE U.S. STOCKHOLDERS
As long as the Company qualifies as a REIT, distributions made to the
Company's taxable U.S. stockholders out of current or accumulated earnings and
profits (and not designated as capital gain dividends) will be taken into
account by such U.S. stockholders as ordinary income and will not be eligible
for the dividends received deduction generally available to corporations. As
used herein, the term "U.S. stockholder" means a holder of Common Stock that for
U.S. federal income tax purposes is (i) a citizen or resident of the United
States, (ii) a corporation, partnership, or other entity created or organized in
or under the laws of the United States or of any political subdivision thereof,
or (iii) an estate or trust the income of which is subject to U.S. federal
income taxation regardless of its source. Distributions that are designated as
capital gain dividends will be taxed as long-term capital gains (to the extent
they do not exceed the Company's actual net capital gain for the taxable year)
without regard to the period for which the stockholder has held his Common
Stock. However, corporate stockholders may be required to treat up to 20% of
certain capital gain dividends as ordinary income. Distributions in excess of
current and accumulated earnings and profits will not be taxable to a
stockholder to the extent that they do not exceed the adjusted basis of the
stockholder's Common Stock, but rather will reduce the adjusted basis of such
stock. To the extent that such distributions in excess of current and
accumulated earnings and profits exceed the adjusted basis of a stockholder's
Common Stock, such distributions will be included in income as long-term capital
gain (or short-term capital gain if the Common Stock has been held for one year
or less) assuming the Common Stock is a capital asset in the hands of the
stockholder. In addition, any distribution declared by the Company in October,
November, or December of any year and payable to a stockholder of record on a
specified date in any such month shall be treated as both paid by the Company
and received by the stockholder on December 31 of such year, provided that the
distribution is actually paid by the Company during January of the following
calendar year.
Stockholders may not include in their individual income tax returns any net
operating losses or capital losses of the Company. Instead, such losses would be
carried over by the Company for potential offset against its future income
(subject to certain limitations). Taxable distributions from the Company and
gain from the disposition of the Common Stock will not be treated as passive
activity income and, therefore, stockholders generally will not be able to apply
any "passive activity losses" (such as losses from certain types of limited
partnerships in which the stockholder is a limited partner) against such income.
In addition, taxable distributions from the Company generally will be treated as
investment income for purposes of the investment interest limitations. Capital
gains from the disposition of Common Stock (or distributions treated as such)
will be treated as investment income only if the stockholder so elects, in which
case such capital gains will be taxed at ordinary income rates. The Company will
notify stockholders after the close of the Company's taxable year as to the
portions of the distributions attributable to that year that constitute ordinary
income, return of capital and capital gain.
22
<PAGE>
In general, any gain or loss realized upon a taxable disposition of the
Common Stock by a stockholder who is not a dealer in securities will be treated
as long-term capital gain or loss if the Common Stock has been held for more
than one year and otherwise as short-term capital gain or loss. However, any
loss upon a sale or exchange of Common Stock by a stockholder who has held such
stock for six months or less (after applying certain holding period rules), will
be treated as a long-term capital loss to the extent of distributions from the
Company required to be treated by such stockholder as long-term capital gain.
All or a portion of any loss realized upon a taxable disposition of the Common
Stock may be disallowed if other Common Stock is purchased within 30 days before
or after the disposition.
Investors are urged to consult their own tax advisors with respect to the
appropriateness of an investment in the shares of Common Stock offered hereby
and with respect to the tax consequences arising under federal law and the laws
of any state, municipality or other taxing jurisdiction, including tax
consequences resulting from such investor's own tax characteristics. In
particular, the foregoing discussion does not attempt to address tax
considerations of foreign investors, and foreign investors should consult their
own tax advisors concerning the tax consequences of an investment in the
Company, including the possibility of United States income tax withholding on
Company distributions.
USE OF PROCEEDS
The Company will not receive any proceeds in connection with the issuance of
the Redemption Shares offered hereby, although the Company will acquire Units in
exchange for any Redemption Shares it issues.
PLAN OF DISTRIBUTION
This Prospectus relates to the possible issuance by the Company of the
Redemption Shares if, and to the extent that, holders of the Units tender such
Units for redemption and the Company elects to acquire such tendered Units for
shares of Common Stock. The Company has registered the Redemption Shares for
sale pursuant to its obligations under the Registration Rights Agreement, but
registration of such shares does not necessarily mean that any of the Redemption
Shares will be issued by the Company. The Company will not receive any proceeds
from the issuance of Redemption Shares to Unitholders, although the Company will
acquire Units from such Unitholders in exchange for Redemption Shares.
The Company may from time to time issue up to 314,749 Redemption Shares
upon the acquisition of an equivalent number of Units tendered for exchange. The
Company will acquire one Unit in exchange for each Redemption Share that the
Company issues in connection with these acquisitions. Consequently, with each
exchange, the Company's interest in the Operating Partnership will increase.
All expenses incident to the offering and sale of the Registered Shares,
other than commissions, discounts and fees of underwriters, broker-dealers or
agents, shall be paid by the Company.
EXPERTS
The financial statements of Bradley Real Estate, Inc. as of December 31,
1995 and 1994, and for each of the years in the three-year period ended December
31, 1995 and the financial statement schedule as of December 31, 1995,
incorporated by reference in this Prospectus, have been audited by KPMG Peat
Marwick LLP, independent certified public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing.
The financial statements of Tucker as of December 31, 1995 and 1994, and
for the years then ended, incorporated by reference in this Prospectus, have
been audited by Coopers & Lybrand L.L.P., independent certified public
accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing.
LEGAL MATTERS
The validity of the shares of the Common Stock offered hereby have been
passed upon for the Company by Goodwin, Procter & Hoar LLP, Boston,
Massachusetts. Certain tax matters discussed under "Description of Units and
Redemption of Units -- Tax Consequences of Redemption" have also been passed
upon for the Company by
23
<PAGE>
Goodwin, Procter & Hoar LLP. William B. King, whose professional corporation is
a partner in Goodwin, Procter & Hoar LLP, is Secretary of the Company and is the
beneficial owner of approximately 8,000 shares of Common Stock.
24
<PAGE>
================================================================================
No dealer, salesperson or other individual has been authorized to give any
information or make any representations not contained in this Prospectus. If
given or made, such information or representation must not be relied upon as
having been authorized by the Company. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, the Common Stock in any
jurisdiction where, or to any person to whom, 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 an implication that there has
not been any change in the facts set forth in this Prospectus or in the affairs
of the Company since the date hereof.
---------------------
SUMMARY TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... (ii)
Incorporation of Certain Documents by Reference........................... (ii)
Prospectus Summary........................................................ 1
Risk Factors.............................................................. 4
The Company............................................................... 10
Description of Capital Stock.............................................. 13
Description of Units and Redemption of Units.............................. 15
Registration Rights....................................................... 21
Federal Income Tax Considerations......................................... 22
Use of Proceeds........................................................... 23
Plan of Distribution...................................................... 23
Experts................................................................... 23
Legal Matters............................................................. 23
</TABLE>
---------------------
314,749
Shares
BRADLEY
REAL ESTATE, INC.
Common Stock
---------------------
PROSPECTUS
---------------------
April 12, 1996
================================================================================
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
-------------------------------------------
The expenses in connection with the issuance and distribution of the
securities that are registered for sale pursuant to the Prospectus in this
Amendment are set forth in the following table (all amounts except the
registration fee are estimated):
<TABLE>
<S> <C>
Registration fee -- Securities and Exchange Commission...... $ 1,365
Accountants' fees and expenses.............................. 1,500
Blue Sky fees and expenses.................................. --
Legal fees and expenses (other than Blue Sky)............... 7,500
Printing fees............................................... 500
Miscellaneous............................................... $ 1,000
TOTAL....................................................... $ 11,865
=======
</TABLE>
All expenses in connection with the issuance and distribution of the
securities being offered are being borne by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
The Maryland General Corporation Law ("MGCL") permits a Maryland
corporation to include in its charter a provision limiting the liability of its
directors and officers to the corporation and its stockholders for money damages
except for liability resulting from (i) actual receipt of an improper benefit or
profit in money, property or services or (ii) active and deliberate dishonesty
established by a final judgment as being material to the cause of action. The
Articles of Amendment and Restatement (the "Charter") of Bradley Real Estate,
Inc. (the "Company") contain such a provision which eliminates such liability to
the maximum extent permitted by Maryland law.
The Charter authorizes the Company, to the maximum extent permitted by
Maryland law, to obligate itself to indemnify and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to (i) any present or
former director, officer, agent, employee or plan administrator of the Company
or of its predecessor Bradley Real Estate Trust (the "Trust") or (ii) any
individual who, at the request of the Company, serves or has served in any of
these capacities with another corporation, partnership, joint venture, trust,
employee benefit plan or any other enterprise. The Bylaws of the Company
obligate the Company, to the maximum extent permitted by Maryland law, to
indemnify (i) any present or former director or officer of the Company, (ii) any
individual who, at the request of the Company, serves or has served another
corporation, partnership, joint venture, trust or other enterprise as a director
or officer, or (iii) any present or former trustee or officer of the Trust.
The MGCL requires a corporation (unless its charter provides otherwise,
which the Charter does not) to indemnify a director or officer who has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he is made a party by reason of his service in that capacity. The MGCL
permits a corporation to indemnify its present and former directors and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities unless it is established that (a) the act or omission of the director
or officer was material to the matter giving rise to the proceeding and (i) was
committed in bad faith or (ii) was the result of active and deliberate
dishonesty; (b) the director or officer actually received an improper personal
benefit in money, property or services; or (c) in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that the act
or omission was unlawful. However, a Maryland corporation may not indemnify for
an adverse judgment in a suit by or in the right of the corporation. In
addition, the MGCL requires a Maryland corporation, as a condition to advancing
expenses, to obtain (i) a written affirmation by the director or officer of good
faith belief that he has met the standard of conduct necessary for
indemnification by the corporation as authorized by the corporation's bylaws and
(ii) a written statement by or on his behalf to repay the amount paid or
reimbursed by the corporation if it shall ultimately be determined that the
standard of conduct was not met.
II-1
<PAGE>
The Company has a claims-made directors and officers liability insurance
policy that insures the directors and officers of the Company against loss from
claimed wrongful acts and insures the Company for indemnifying the directors and
officers against such loss. The policy limit of liability is $5,000,000 each
policy year and is subject to a retention of $150,000 of loss by the Company.
ITEM 16. EXHIBITS.
--------
Number Description
- ------ -----------
2.1 Agreement and Plan of Merger (the "Merger Agreement"), dated as of
October 30, 1995, between Tucker Properties Corporation and Bradley
Real Estate, Inc. ("Bradley"), attached as Annex A to the Joint Proxy
Statement/Prospectus contained in the Registration Statement on
Form S-4 (No. 33-64811) dated February 15, 1996 filed by Bradley and
incorporated herein by reference. A list briefly identifying the
contents of all Exhibits to the Merger Agreement is incorporated by
reference to page iv of the Merger Agreement. Bradley agrees to
furnish supplementally to the Commission, upon request, a copy of any
omitted Exhibit. Pursuant to Item 601(b)(2) of Regulation S-K, the
Schedules to the Merger Agreement are omitted. Bradley hereby
undertakes to furnish supplementally a copy of any omitted Schedule to
the Commission upon request.
3.1 Articles of Amendment and Restatement of Bradley, incorporated by
reference to Exhibit 3.1 of Bradley's Current Report on Form 8-K dated
October 17, 1994.
3.2 By-laws of Bradley, incorporated by reference to Exhibit 3.3 of
Bradley's Current Report on Form 8-K dated October 17, 1994.
4.1 Specimen Certificate for shares of Common Stock, $.01 par value per
share, of Bradley, incorporated by reference to Exhibit 4.1 of
Bradley's Registration Statement on Form S-4 (No. 33-81888) dated July
22, 1994.
5.1 Opinion of Goodwin, Procter & Hoar llp as to legality of the
securities being offered./*/
8.1 Opinion of Goodwin, Procter & Hoar llp regarding tax consequences of
redemption of Units./*/
23.1 Consent of KPMG Peat Marwick LLP./*/
23.2 Consent of Coopers & Lybrand L.L.P./*/
23.3 Consents of Goodwin, Procter & Hoar llp (included in Exhibits 5.1 and
8.1)./*/
99.1 Amended and Restated Agreement of Limited Partnership of Bradley
Operating Limited Partnership, incorporated by reference to Exhibit
10.1 of Bradley's Current Report on Form 8-K dated November 3, 1995.
99.2 Registration Rights Agreement between Bradley Real Estate, Inc. and
each of the limited partners to the Amended and Restated Agreement of
Limited Partnership of Bradley Operating Limited Partnership
incorporated by reference to Exhibit 10.2 of the Registration
Statement on Form S-4 (No. 33-64811) dated February 15, 1996.
______________________
/*/ Filed herewith.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
------------
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made pursuant to this Registration Statement, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this Registration Statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information
in this Registration Statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Company hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Post-Effective
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, Commonwealth of
Massachusetts on the 12th day of April, 1996.
BRADLEY REAL ESTATE, INC.
By: /s/ THOMAS P. D'ARCY
----------------------------
Thomas P. D'Arcy
President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ THOMAS P. D'ARCY President, Chief Executive Officer April 12, 1996
- ------------------------------------------
THOMAS P. D'ARCY and Director
* Chief Financial Officer April 12, 1996
- ------------------------------------------
IRVING E. LINGO, JR.
* Director April 12, 1996
- ------------------------------------------
WILLIAM L. BROWN
* Director April 12, 1996
- ------------------------------------------
JOSEPH E. HAKIM
* Director April 12, 1996
- ------------------------------------------
JOHN B. HYNES III
* Director April 12, 1996
- ------------------------------------------
STEPHEN G. KASNET
* Director April 12, 1996
- ------------------------------------------
PAUL G. KIRK, JR.
* Director April 12, 1996
- ------------------------------------------
W. NICHOLAS THORNDIKE
* Director April 12, 1996
- ------------------------------------------
A. ROBERT TOWBIN
</TABLE>
* By: /s/ Thomas P. D'Arcy
----------------------------------
Thomas P. D'Arcy
Attorney-in-Fact
II-4
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page/*/
- ---------- ----------- ----
2.1 Agreement and Plan of Merger, dated as of October 30, 1995, between
Tucker Properties Corporation and Bradley Real Estate, Inc. (the
"Merger Agreement"), attached as Annex A to the Joint Proxy
Statement/Prospectus contained in the Registration Statement on
Form S-4 (No. 33-64811) dated February 15, 1996 filed by Bradley Real
Estate, Inc. ("Bradley") and incorporated herein by reference. A list
briefly identifying the contents of all Exhibits to the Merger
Agreement is incorporated by reference to page iv of the Merger
Agreement. Bradley agrees to furnish supplementally to the Commission,
upon request, a copy of any omitted Exhibit. Pursuant to Item
601(b)(2) of Regulation S-K, the Schedules to the Merger Agreement are
omitted. Bradley hereby undertakes to furnish supplementally a copy of
any omitted Schedule to the Commission upon request.
3.1 Articles of Amendment and Restatement of Bradley Real Estate, Inc.,
incorporated by reference to Exhibit 3.1 of Bradley's Current Report
on Form 8-K dated October 17, 1994.
3.2 By-laws of Bradley Real Estate, Inc., incorporated by reference to
Exhibit 3.3 of Bradley's Current Report on Form 8-K dated October 17,
1994.
4.1 Specimen Certificate for shares of Common Stock, $.01 par value per
share, of Bradley Real Estate, Inc., incorporated by reference to
Exhibit 4.1 of Bradley's Registration Statement on Form S-4 (No. 33-
81888) dated July 22, 1994.
5.1 Opinion of Goodwin, Procter & Hoar LLP as to legality of the
securities being offered./*/
8.1 Opinion of Goodwin, Procter & Hoar LLP regarding tax consequences of
redemption of Units./*/
23.1 Consent of KPMG Peat Marwick LLP./*/
23.2 Consent of Coopers & Lybrand L.L.P./*/
23.3 Consents of Goodwin, Procter & Hoar LLP (included in Exhibits 5.1 and
8.1)./*/
99.1 Amended and Restated Agreement of Limited Partnership of Bradley
Operating Limited Partnership, incorporated by reference to Exhibit
10.1 of Bradley's Current Report on Form 8-K dated November 3, 1995.
99.2 Registration Rights Agreement between Bradley Real Estate, Inc. and
each of the limited partners to the Amended and Restated Agreement of
Limited Partnership of Bradley Operating Limited Partnership
incorporated by reference to Exhibit 10.2 of the Registration
Statement on Form S-4 (No. 33-64811) dated February 15, 1996.
________________________
* Filed herewith.
II-5
<PAGE>
EXHIBIT 5.1
[LETTER HEAD OF GOODWIN, PROCTER & HOAR LLP APPEAR HERE]
April 11, 1996
Bradley Real Estate, Inc.
699 Boylston Street
Boston, MA 02116
Re: Bradley Real Estate, Inc.--Post-Effective Amendment on Form S-3 to
Registration Statement on Form S-4 (File No. 33-64811) (the
"Registration Statement")
Dear Ladies and Gentlemen:
This opinion relates to shares of common stock, par value $.01 per share,
of Bradley Real Estate, Inc., a Maryland corporation (the "Company"), to be
issued upon the redemption of the outstanding partnership units of Bradley
Operating Limited Partnership, a Delaware limited partnership (the "Redemption
Shares"), which are the subject matter of the above-referenced Registration
Statement filed with the Securities and Exchange Commission (the "Commission").
We have acted as counsel to the Company in connection with the preparation
and filing with the Commission of the Registration Statement. For purposes of
this opinion we have reviewed the Company's Articles of Amendment and
Restatement and By-Laws and the Amended and Restated Agreement of Limited
Partnership of Bradley Operating Limited Partnership, each as amended to date.
We have also examined records of corporate proceedings of the Company and such
other certificates and documents as we have deemed necessary to enable us to
render this opinion.
We express no opinion herein concerning the laws of any jurisdictions other
than the laws of the United States of America and the General Corporation Law of
the State of Maryland as in effect on the date hereof.
Based upon the foregoing, and having regard for such legal considerations
as we have deemed relevant, it is our opinion that, upon the issuance of the
certificates representing the Redemption Shares in accordance with the
provisions of the Amended and Restated Agreement
<PAGE>
GOODWIN, PROCTER & HOAR LLP
Bradley Real Estate, Inc.
April 11, 1996
Page 2
of Limited Partnership of Bradley Operating Limited Partnership, the Redemption
Shares will be duly authorized, validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the prospectus contained in
such Registration Statement.
Very truly yours,
/s/ GOODWIN, PROCTER & HOAR LLP
GOODWIN, PROCTER & HOAR LLP
<PAGE>
[LETTERHEAD OF GOODWIN, PROCTER & HOAR LLP APPEARS HERE]
EXHIBIT 8.1
As of April 12, 1996
Bradley Real Estate, Inc.
699 Boylston Street
Boston, MA 02116
Re: Certain Federal Income Tax Matters
Dear Sirs:
You have requested our opinion concerning the accuracy of the discussion
under the headings "DESCRIPTION OF UNTIS AND REDEMPTION OF UNITS--Tax
Consequences of Redemption," and "FEDERAL INCOME TAX CONSIDERATIONS" contained
in the Post-Effective Amendment No. 1 on Form S-3 to Registration Statement on
Form S-4, to be filed with the Securities and Exchange Commission on April 12,
1996 (No. 33-64811) (the "Registration Statement"),/1/ in connection with the
issuance of up to 314,749 shares of common stock (the "Redemption Shares"), par
value $.01 per share, by Bradley Real Estate, Inc., a Maryland real estate
investment trust ("Bradley").
In connection with rendering our opinion, we have reviewed the discussion
in the Registration Statement, under the headings "DESCRIPTION OF UNITS AND
REDEMPTION OF UNITS--Tax Consequences of Redemption," and "FEDERAL INCOME TAX
CONSIDERATIONS" as well as the partnership agreement of the Operating
Partnership. Our opinion is based on the correctness of the following specific
assumptions: (i) the conformity to the original of the partnership agreement of
the Operating Partnership submitted to us; and (ii) the Operating Partnership
has not made an election to be excluded from the provisions of Subchapter K of
the Internal Revenue Code of 1986, as amended (the "Code"). In addition, our
opinion is based upon the Code, the regulations promulgated thereunder (the
"Regulations"), and the administrative and judicial interpretations thereof, all
as they exist at the date of this letter. No assurance can therefore be given
that the federal income tax consequences described below will not be altered in
the future. With respect to the latter assumption, it should be noted that
statutes, regulations, judicial decisions, and administrative interpretations
are subject to change at any time and, in some circumstances, with retroactive
effect.
Based on the foregoing, we are of the opinion that, as of the date hereof,
the discussion in the Registration Statement under the headings "DESCRIPTION OF
UNITS AND REDEMPTION OF UNITS--Tax Consequences of Redemption," and "FEDERAL
INCOME TAX CONSIDERATIONS" to the extent that each constitutes matters of law or
legal conclusions, is correct in all material respects.
Other than as expressly stated above, we express no opinion on any issue
relating to Bradley or the Operating Partnership, or to any investment therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the use of our name in the Registration Statement
under the heading "Legal Matters."
Very truly yours,
/s/Goodwin, Procter & Hoar LLP
GOODWIN, PROCTER & HOAR LLP
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/1/ Unless otherwise specifically defined herein, all capitalized terms have the
meanings assigned to them in the Registration Statement.
<PAGE>
Exhibit 23.1
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CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Bradley Real Estate, Inc.:
We consent to incorporation by reference in the registration statement (No. 33-
64811) on Form S-3 of Bradley Real Estate, Inc. of our report dated February 19,
1996, except for note 10, which is as of March 15, 1996, relating to the balance
sheets of Bradley Real Estate, Inc. as of December 31, 1995 and 1994, and the
related statements of income, changes in stockholders' equity, and cash flows
for each of the years in the three-year period ended December 31, 1995, and the
related schedule, which report appears in the December 31, 1995 annual report on
Form 10-K of Bradley Real Estate, Inc.
KMPG Peat Marwick LLP
Boston, Massachusetts
April 11, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Bradley Real Estate, Inc.
We consent to the inclusion in this registration statement of Bradley Real
Estate, Inc., on Form S-3, to which this consent is filed as an exhibit, of our
report dated March 13, 1996 on our audit of the financial statements of Tucker
Properties Corporation and Subsidiaries. We also consent to the reference to
our firm under the caption "Experts".
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
April 10, 1996
