<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
MARCH 15, 1996
BRADLEY REAL ESTATE, INC.
(Exact name of Registrant as specified in its charter)
MARYLAND 1-10328 04-6034603
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
699 BOYLSTON STREET, BOSTON, MASSACHUSETTS 02116
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(617) 867-4200
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
-------------------------------------
On March 15, 1996, pursuant to an Agreement and Plan of Merger dated as of
October 30, 1995 (the "Merger Agreement") between Bradley Real Estate, Inc., a
Maryland corporation ("Bradley") and Tucker Properties Corporation, a Maryland
corporation ("Tucker"), Tucker was merged with and into Bradley (the "Merger")
with Bradley as the surviving corporation in the Merger. The Merger and the
Merger Agreement were approved by the stockholders of Bradley and Tucker at
their respective Special Meetings of Stockholders held on March 14, 1996.
Pursuant to the Merger Agreement, the exchange ratio used in connection
with the Merger was determined by the average per share closing price of the
common stock, par value $.01 per share, of Bradley ("Bradley Common Stock") as
reported on the New York Stock Exchange ("NYSE") over the 20 trading days
immediately preceding the fifth day prior to the date of the closing of the
Merger (the "Closing Price"). Because the Closing Price was less than $15.50,
each issued and outstanding share of common stock, par value $.001 per share, of
Tucker ("Tucker Common Stock") was converted into .686 of a share of Bradley
Common Stock, less any fractional shares, at the effective time of the Merger.
In lieu of issuing fractional shares of Bradley Common Stock, the Merger
Agreement provided that a holder of Tucker Common Stock otherwise entitled to a
fractional share of Bradley Common Stock became entitled to receive an amount in
cash (without interest), rounded to the nearest cent, determined by multiplying
$13.96 by the fraction of a share of Bradley Common Stock to which such holder
would otherwise have been entitled. As a result of the exchange, Tucker
stockholders received approximately 7,428,202 shares of Bradley Common Stock in
connection with the Merger.
There was no material relationship between Tucker or its stockholders and
Bradley or any of its affiliates, directors or officers, or any associate of a
director or officer of Bradley, except as described under the captions
"SUMMARY--The Merger--Conflicts of Interest Arising from Benefits to Certain
Directors and Officers of Tucker," "RISK FACTORS--Conflicts of Interest Arising
from Benefits to Certain Tucker Directors and Officers," "THE MERGER--Conflicts
of Interest Arising from Benefits to Certain Directors and Officers of Tucker"
and "THE MERGER AGREEMENT--Indemnification" in Bradley's Registration Statement
on Form S-4 (No. 33-64811) effective February 15, 1996 (the "Registration
Statement").
Tucker, which had elected to qualify as a real estate investment trust
("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), was a
fully integrated real estate management and development company that owned,
managed and developed commercial real estate. Upon effectiveness of the Merger,
Bradley succeeded to Tucker's (a) 95.9% general partner interest in Tucker
Operating Limited Partnership, through which Tucker owned its properties and
conducted its business and (b) ownership of 100% of two insignificant corporate
subsidiaries, and thereby effectively acquired Tucker's 14 properties, primarily
community shopping centers, certain office equipment and other assets and the
ownership, management and development of commercial real estate, described in
the Registration Statement. Bradley intends to continue to use the acquired
assets in the same manner and to conduct the same type of business as Tucker did
prior to the Merger.
2
<PAGE> 3
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial statements of business acquired:
-----------------------------------------
TUCKER PROPERTIES CORPORATION
<TABLE>
Index to Financial Statements
Page
----
<S> <C>
Report of Independent Accountants 4
Consolidated Balance Sheets, December 31, 1995 and 1994 5
Consolidated Statements of Operations for the years ended December 31, 1995 and 1994 6
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1995 and 1994 7
Consolidated Statements of Cash Flows for the years ended December 31, 1995 and 1994 8
Notes to Consolidated Financial Statements 9
</TABLE>
3
<PAGE> 4
REPORTS OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Tucker Properties Corporation:
We have audited the consolidated balance sheets of Tucker Properties
Corporation and Subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Tucker Properties Corporation management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
As discussed in Note 11. Tucker Properties Corporation has entered into a
merger agreement, subject to shareholder ratification, that if approved, would
result in Tucker Properties Corporation being merged with and into Bradley Real
Estate, Inc.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Tucker
Properties Corporation and Subsidiaries as of December 31, 1995 and 1994, and
the consolidated results of their operations and their cash flows for the years
then ended, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 13, 1996
4
<PAGE> 5
TUCKER PROPERTIES CORPORATION
<TABLE>
CONSOLIDATED BALANCE SHEETS
As of December 31, 1995 and 1994
<CAPTION>
1995 1994
------------- ------------
<S> <C> <C>
Assets:
Properties, at cost:
Land..................................................... $ 63,132,436 $ 60,601,445
Buildings and improvements............................... 258,048,684 243,846,038
------------ ------------
321,181,120 304,447,483
Less accumulated depreciation............................ 26,354,532 16,939,008
------------ ------------
294,826,588 287,508,475
Construction in progress..................................... 3,044,788 8,295,828
Cash and cash equivalents.................................... 3,344,096 4,514,887
Tenant accounts receivable, net.............................. 12,113,006 12,596,993
Due from affiliates.......................................... 109,259 283,596
Deferred costs, net.......................................... 5,752,586 5,533,703
Other assets................................................. 3,771,494 3,559,060
------------ ------------
Total assets........................................ $322,961,817 $322,292,542
============ ============
Liabilities:
Mortgage notes payable and line of credit.................... $177,234,309 $164,412,573
Accounts payable............................................. 2,196,868 1,637,667
Accrued liabilities.......................................... 10,485,655 10,280,712
Distributions payable........................................ -- 4,063,356
Deferred revenue............................................. 1,960,898 --
Other liabilities............................................ 980,093 942,340
------------ ------------
Total liabilities................................... 192,857,823 181,336,648
------------ ------------
Minority interests................................................ 5,330,794 5,771,920
------------ ------------
Stockholders' equity:
Preferred stock, $.001 par value, 10 million
shares authorized, no shares issued...................... -- --
Common stock, $.001 par value, 90 million
shares authorized, 10,828,283 shares
issued and outstanding................................... 10,828 10,828
Paid-in capital.............................................. 155,224,309 155,224,309
Distributions in excess of accumulated earnings (30,461,937) (20,051,163)
------------ ------------
Total stockholders' equity............................... 124,773,200 135,183,974
------------ ------------
Total liabilities and stockholders' equity $322,961,817 $322,292,542
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
5
<PAGE> 6
TUCKER PROPERTIES CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 1995 and 1994
<CAPTION>
1995 1994
----------- -----------
Revenue:
<S> <C> <C>
Rental....................................................... $36,239,073 $34,723,119
Additional rents - expense reimbursements.................... 13,484,603 13,357,655
Other income................................................. 1,132,374 1,076,347
----------- -----------
Total revenue....................................... 50,856,050 49,157,121
----------- -----------
Expenses:
Real estate taxes............................................ 10,482,757 9,921,570
Repairs and maintenance...................................... 1,421,172 1,045,165
Other operating.............................................. 6,802,243 6,059,209
General and administrative................................... 3,066,362 3,017,610
Interest..................................................... 13,345,988 10,512,639
Bad debt expense............................................. 366,464 --
Provision for merger related expenses and write-downs........ 2,236,113 --
Depreciation and amortization................................ 11,458,170 10,356,658
----------- -----------
Total expenses...................................... 49,179,269 40,912,851
----------- -----------
Operating income.................................................. 1,676,781 8,244,270
Income allocated to minority interests............................ (68,161) (391,945)
----------- -----------
Net income........................................................ $ 1,608,620 $ 7,852,325
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE> 7
TUCKER PROPERTIES CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 1995 and 1994
<CAPTION>
Distributions
Common Stock In Excess of
------------ Paid-In Accumulated
Shares Dollars Capital Earnings
------ ------- ------- -------------
<S> <C> <C> <C> <C>
Balance, January 1, 1994.................... 10,828,283 $10,828 $156,251,818 $(12,094,195)
Offering costs.............................. (1,027,509)
Net Income.................................. 7,852,325
Distributions declared,
($1.46 per share)........................... (15,809,293)
---------- ------- ------------ ------------
Balance, December 31, 1994.................. 10,828,283 10,828 155,224,309 (20,051,163)
Net Income.................................. 1,608,620
Distributions declared
($1.11 per share)........................... (12,019,394)
---------- ------- ------------ ------------
Balance, December 31, 1995.................. 10,828,283 $10,828 $155,224,309 $(30,461,937)
========== ======= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
7
<PAGE> 8
TUCKER PROPERTIES CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995 and 1994
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................... $ 1,608,620 $ 7,852,325
Adjustments to reconcile net income to net cash
provided by operating activities:
Income allocated to minority interests................... 68,161 391,945
Depreciation and amortization............................ 11,458,170 10,356,658
Bad debt expense......................................... 366,464 --
Provision for merger related expenses and write-downs 2,236,113 --
Net changes in assets and liabilities:
Tenants accounts receivable.............................. (550,642) (2,540,819)
Due from affiliates...................................... 174,337 (37,942)
Other assets............................................. (1,780,382) (375,005)
Accounts payable......................................... 559,201 (1,004,891)
Accrued liabilities...................................... 204,943 2,007,775
Due to affiliates........................................ -- (121,757)
Other liabilities........................................ 398,651 (30,893)
------------ ------------
Net cash provided by operating activities........... 14,743,636 16,497,396
------------ ------------
Cash flows from investing activities:
Purchase of properties....................................... -- (18,372,428)
Additions to properties..................................... (4,246,416) (4,384,282)
Additions to deferred costs.................................. (1,060,650) (786,791)
Payment of development costs................................. (6,283,164) (7,926,231)
------------ -------------
Cash used in investing activities................... (11,590,230) (31,469,732)
------------ -------------
Cash flows from financing activities:
Payments of mortgage notes payable........................... (11,973,750) --
Proceeds from mortgage notes payable......................... 19,650,000 13,500,000
Principal payments on mortgage note payable.................. (70,064) --
Borrowings under line of credit.............................. 7,215,550 20,560,153
Repayments of lines of credit................................ (2,000,000) (4,000,000)
Payment of offering costs.................................... -- (502,509)
Distributions paid........................................... (15,917,576) (15,376,162)
Distributions paid to minority interests..................... (674,461) (710,391)
Additions to deferred loan costs............................. (553,896) (446,060)
------------ -------------
Net cash provided by financing activities........... (4,324,197) 13,025,031
------------ ------------
Decrease in cash and cash equivalents........................ (1,170,791) (1,947,305)
Cash and cash equivalents, beginning of period............... 4,514,887 6,462,192
------------ ------------
Cash and cash equivalents, end of period..................... $ 3,344,096 $ 4,514,887
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
8
<PAGE> 9
TUCKER PROPERTIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION AND BASIS OF PRESENTATION
Organization
Tucker Properties Corporation ("Tucker"), a Maryland corporation, was
formed May 28, 1993. Tucker completed a public offering of 10,720,000 shares of
common stock and through a wholly-owned subsidiary issued $100,000,000 of
mortgage notes payable (see Note 3) as of October 12, 1993 (the "Public
Offering"). Tucker is the successor entity to The Tucker Companies Inc. ("TTC"),
its affiliates and related real estate entities (together the "Predecessor
Business") and is engaged in the management, operation, leasing, acquisition,
development, investment in and disposition of neighborhood, community and
regional shopping centers. Tucker also owns and operates a mid-rise urban
mixed-use office and retail building and provides services for shopping centers
owned by third parties and affiliates.
The owners and certain employees of the Predecessor Business (the
"Predecessor Business Owners" or "Tucker Investors") who were general and
limited partners in the entities contributed their properties to an operating
partnership, Tucker Operating Limited Partnership ("TOLP"), at the time of the
public offering. The Predecessor Business Owners received 567,000 operating
partnership units ("OP Units") in return for the properties contributed to TOLP.
The OP Units are convertible into common shares of Tucker on a one-for-one
basis. Kenneth Tucker, Chairman of Tucker, immediately converted 108,183 OP
Units into shares of Tucker's common stock. After such conversion, there are
10,828,283 shares of Tucker's common stock outstanding and the Predecessor
Business Owners hold 458,817 OP Units or approximately 4.1% of the OP Units
outstanding. Tucker then purchased the sole general partner interests of
approximately 95.9% in TOLP utilizing the proceeds of the Public Offering.
Tucker has operated as a REIT for the years ended December 31, 1995 and 1994
under the Code.
Basis of Presentation
The consolidated financial statements of Tucker include the accounts and
operations of Tucker, TOLP, Tucker Financing Partnership ("TFP"), and its
general partnership interest in the joint venture that owns Williamson Square
Shopping Center which is held through TOLP. Due to Tucker's ability as general
partner to directly or indirectly control each of these subsidiaries, each is
consolidated for financial reporting purposes. TOLP and TFP together own six
properties formerly held by the Predecessor Business, the three properties
formerly held as equity investments, one property acquired at the time of the
Public Offering, two properties acquired in December 1993, one property acquired
in June 1994 and a property still under development, a portion of which was
opened in 1995.
Tucker provides leasing and management services to third parties through
its affiliate Tucker Management Limited Partnership ("TMLP"). Tucker holds a 40%
limited partnership interest in TMLP and Tucker Management Corp. ("TMC") holds a
60% general partnership interest. TOLP owns 8% of the voting common stock and
95% of the nonvoting preferred stock of TMC and Kenneth and Richard Tucker own
92% of the voting common stock and 5% of the nonvoting preferred stock. Tucker
accounts for its interests in TMLP and TMC on the equity basis with its income
from TMLP and TMC included in "Other Income" on the Statements of Operations.
All significant intercompany balances and transactions between Tucker and
its consolidated affiliates have been eliminated.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Tucker Properties Corporation is engaged in the ownership and operation of
thirteen community shopping centers which serve neighborhood and community
markets in Illinois, Indiana, Kentucky, Tennessee and Wisconsin, and one
mixed-use property in Chicago, Illinois. Property retail tenants typically sell
day-to-day and value-oriented merchandise rather than high-priced luxury items.
While no one tenant generates more than 11% of Tucker's total rental revenue,
Tucker remains susceptible to the level of retail sales and the general business
conditions and failures
9
<PAGE> 10
of its tenants. Significant reduction of sales could prove to have a material
affect on the tenant's ability to maintain financial stability which could lead
to a default of their leases.
Estimates and Assumptions
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results may vary from those estimates.
Properties
Properties are stated at the lower of cost or fair value. Costs are
capitalized as incurred for the acquisition, development, construction and
improvement of properties. Interest and real estate taxes incurred during
construction are capitalized and amortized on the same basis as the related
assets. Maintenance and repairs are charged to expense as incurred.
<TABLE>
Depreciation expense is computed principally using the straight-line method
over the original estimated useful lives:
<S> <C>
Buildings.......................... 31.5 years
Improvements....................... shorter of lease term of useful life
</TABLE>
In 1995, Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" was issued. SFAS No. 121, which establishes accounting standards
for the evaluation of potential impairment of such assets, was adopted by Tucker
as of January 1, 1995, and did not have a material impact on the financial
position or results of operations of Tucker. Properties are evaluated for
impairment when conditions exist, but not less than annually, which may indicate
that it is probable that the sum of expected future undiscounted cash flows from
a property are less than its cost. Upon determination that a permanent
impairment has occurred, properties are reduced to their fair value.
Deferred Costs
Deferred costs, consisting principally of financing fees and leasing
commissions, are amortized over the terms of the respective agreements.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments," requires disclosures about the fair value
of financial instruments whether or not such instruments are recognizable in the
balance sheet. Tucker's financial instruments include cash equivalents, tenant
accounts receivable, accounts payable, accrued liabilities, mortgage notes
payable, and line of credit. The fair values of these financial instruments were
not materially different from their carrying or contract value.
Revenue Recognition
Minimum rentals are recognized on a straight-line basis over the term of
the related leases. As of December 31, 1995 and 1994, the deferred and unbilled
rents included in tenant accounts receivable approximated $7,315,000 and
$6,903,000, respectively. Additional rents from expense reimbursements for
common area maintenance expenses and certain other expenses are recognized in
the period in which the related expenses are incurred. Percentage rent is
recognized on the accrual basis based on reported tenant sales. Percentage rent
for the years ended December 31, 1995 and 1994 was approximately $888,000 and
$614,000, respectively.
Beginning in 1995, Tucker began establishing an unallocated general reserve
to supplement specific reserves previously established. As a result of recording
this general reserve, Tucker recognized bad debt expense of $366,464 in 1995.
Accounts receivable in the accompanying balance sheets are shown net of an
allowance for doubtful accounts of $472,464 and $106,000 as of December 31, 1995
and 1994, respectively.
10
<PAGE> 11
Cash and Cash Equivalents
Tucker considers all demand and money market accounts with an original
maturity of three months or less when purchased to be cash equivalents. The
carrying amount of these items approximates their fair value due to the short
maturity of these investments.
Income Taxes
Tucker has operated as a REIT during 1995 and 1994 under the Code. As such,
no federal or state income taxes are payable by Tucker and none have been
provided for in the financial statements.
Minority Interests
The Predecessor Business Owners own an approximate 4.1% limited partnership
interest in TOLP, which either directly or through subsidiaries, owns and
operates the properties and other activities of Tucker. TOLP owns a 99% general
partnership interest in TFP and the other 1% general partnership interest in TFP
is held by Tucker Financing Corporation ("TFC"), a wholly-owned subsidiary of
Tucker. TOLP owns a 60% general partnership interest in the joint venture that
owns Williamson Square Shopping Center. The minority interests included in the
accompanying statements include the Predecessor Business Owners' approximate
4.1% interest in TOLP and the minority partner's 40% interest in Williamson
Square Shopping Center, which interests reflect the contributions and
distributions of capital or cash flows and profits or loss allocations
attributed to the respective minority owners.
Construction In Progress
Under the terms of a redevelopment agreement with the Village of Chicago
Ridge, in 1995 Tucker received title to certain land and a commitment from the
village to fund certain demolition and improvement costs related to the land.
The agreement requires Tucker to develop the land to include retail space and
related parking. Costs in excess of funds committed by the village will be paid
by Tucker. The land, as improved, has been recorded in construction in progress
at December 31, 1995 at its estimated fair value of $1.6 million and the related
revenue resulting from such contribution has been deferred and will be amortized
over the initial non-cancelable twenty-year term of the land lease with the
property's initial tenant.
Tucker capitalizes all costs incurred during development (including but not
limited to real estate taxes, insurance and interest) until the project is
completed. Construction in progress also includes a portion of the Rollins
Crossing property (approximately $.3 million) which is under development at
December 31, 1995 and certain of the Speedway Outlots (approximately $1.1
million) which are being held for future development.
Reclassifications
Certain reclassifications have been made to the previously presented 1994
financial statements to conform with the 1995 financial statement presentation.
These reclassifications did not change the 1994 operating results.
(3) MORTGAGE NOTES PAYABLE
As part of the Public Offering, TFP, a wholly-owned subsidiary of Tucker,
issued mortgage notes in the principal amount of $100.0 million. In June 1994,
TFP exchanged the original mortgage notes for mortgage notes of equal principal
amounts, which were issued pursuant to an Indenture dated as of June 1, 1994
between TFP, Bankers Trust Company, as initial servicer, and Bankers Trust
Company of California, N.A., as trustee (the "Tucker REMIC"). At the same time,
Kidder Peabody Acceptance Corporation I sold six classes of pass-through
certificates evidencing the entire beneficial ownership interest of a trust fund
consisting primarily of the mortgage notes and related instruments evidencing
the lender's security interest in the related collateral. The mortgage notes
mature in September 2000 and require monthly interest-only payments at 7.3% per
annum. The mortgage notes are recourse only to the assets of TFP and are
collateralized by separate cross-collateralized, cross-defaulted first mortgage
liens on each of the properties owned by TFP (Commons of Crystal Lake, Heritage
Square, Sheridan Village, Speedway SuperCenter, Washington-Lawndale Commons and
One North State) and by an assignment of all of TFP's interest in the rents and
the leases at each of these properties.
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<PAGE> 12
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Mortgage notes payable..................................................... $100,000,000 $100,000,000
Non-recourse mortgage note payable collateralized by Williamson
Square in Franklin, Tennessee. In July 1995, the existing mortgage
note was refinanced with USG Annuity and Life Company. A
portion of the proceeds from the new $13,150,000 loan was used
to repay the existing mortgage note of $11,973,750. The new loan
bears interest at 8% per annum and requires monthly principal and
interest payments of $101,494 through maturity of August 1, 2005.
Fees of $216,758 incurred in connection with the refinancing are
being amortized over the term of the loan. Tucker, through
TOLP, holds a 60% interest in the Center through a joint venture
with a non-affiliated third party.......................................... 13,079,936 11,973,750
Non-recourse mortgage note payable collateralized by Mequon
Pavilions in Mequon, Wisconsin. The initial maturity date
of December 31, 1995 was extended to June 30, 1996.
Interest only is payable at LIBOR plus 2.75% through
June 30, 1996. The interest rate on the loan was 8.625%
at December 31, 1995....................................................... 13,500,000 13,500,000
Construction loan collateralized by the Rollins Crossing
development in Round Lake Beach, Illinois. Interest only is
payable at LIBOR plus 2.75% through August 31, 1997, the
maturity date of the loan. The maturity date may be extended
for two successive one-year periods to August 31, 1999. The
interest rate on the loan was 8.625% at December 31, 1995.
TOLP may borrow up to $12.5 million pursuant to the terms of
the loan under certain conditions. Tucker has guaranteed
repayment of amounts outstanding on this loan.............................. 6,500,000 N/A
------------ ------------
Total mortgage notes payable...................................... $133,079,936 $125,473,750
============ ============
</TABLE>
<TABLE>
Principal payments on the above described mortgage notes in each of the
five years subsequent to December 31, 1995 are approximately as follows:
<S> <C>
1996............................... $ 13,678,000
1997............................... 6,693,000
1998............................... 209,000
1999............................... 226,000
2000............................... 100,245,000
</TABLE>
Management has determined that the year-end carrying amounts of these
mortgage notes payable approximate their fair value given their terms and
maturities and the current rates available in the market to Tucker for
comparable debt.
(4) LINE OF CREDIT
TOLP has established a revolving line of credit with The First National
Bank of Boston ("FNBB") for a total commitment of $48.0 million. As of December
31, 1995 and 1994, approximately $44.2 and $38.9 million, respectively, has been
drawn on the line of credit. In addition, approximately $.579 million is
restricted to support a letter of credit which was issued in conjunction with
the Rollins Crossing development. Under the original agreement, interest only
was payable to the initial maturity on December 21, 1995. Interest is calculated
at the FNBB base rate plus .5% or the Eurodollar rate plus 2.25% as selected by
TOLP subject to certain restrictions. The interest rate on these borrowings at
December 31, 1995 was 8.19%. In addition to interest, an annual facility fee
shall be paid equal to .25% times the difference between the total commitment
and the outstanding line balance. Under the original
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<PAGE> 13
agreement, the maturity date could have been extended three years to December
21, 1998 subject to certain conditions including the payment of an extension fee
equal to .5% of the outstanding line balance at initial maturity with monthly
principal payments required equal to 1/300th of the prior month's outstanding
principal balance. On December 21, 1995, the agreement was amended to provide
for an initial extension to June 30, 1996 requiring interest only through such
date. If this line of credit cannot be renewed or replaced with another
financing source, there may be a disruptive effect on the operations of Tucker.
Tucker paid an extension fee of $62,500 and is obligated to pay an additional
$62,500 unless the line is repaid prior to March 31, 1996. The line of credit is
collateralized by the assets of TOLP. Borrowings under the line of credit are
subject to certain covenants the most restrictive of which require minimum
tangible net worth and working capital levels. Management has determined that
the year-end carrying amount drawn on the line of credit approximates the fair
value of such borrowings given the terms and maturity and the current rates
available in the market to Tucker for comparable debt.
As of December 31, 1995 Tucker was in default of one of the financial
covenants for the line of credit. Subsequent to year-end, Tucker received a
waiver from FNBB waiving the default of this covenant through March 31, 1996
subject to Tucker satisfying certain conditions.
(5) TRANSACTIONS WITH AFFILIATES
TMLP earns income from third party management and leasing contracts.
Under the terms of the management contract relating to Washington Square Mall
("WSM"), which is owned by affiliates of TTC, TMLP earned management and leasing
fees totaling approximately $216,000 in 1995 and approximately $473,000 in 1994.
The management contract relating to WSM ceased in September 1995. In addition,
Tucker previously had an option to acquire One Schaumburg Place ("OSP") but did
not exercise the option as the property did not meet Tucker's investment
criteria. In March 1995, OSP was taken back by the mortgage holder and
concurrently therewith, Tucker lost its purchase option and TMLP lost its
management and leasing contracts. Under the terms of the management contract
relating to OSP, TMLP earned management and leasing fees totaling approximately
$37,000 in 1995 and approximately $232,000 in 1994.
The income allocable to Tucker from its equity interests in TMLP and
TMC, aggregating $8,746 in 1995 and $168,876 in 1994, were recorded in Other
income in the 1995 and 1994 Statement of Operations, respectively.
<TABLE>
Net amounts due from affiliates as of December 31, 1995 and 1994 were as
follows:
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Due from affiliates............... $109,259 $283,596
======== ========
</TABLE>
TTC, the sole shareholder of which is Kenneth L. Tucker, was paid a fee
of $400,000 in April 1994 for efforts in reducing the cost of acquiring the land
for the Rollins Crossing development. This fee was capitalized as part of the
total land cost.
(6) RENTAL OPERATIONS
Space in the shopping centers and the mixed-use retail and office
building is leased to various tenants under operating leases which generally
provide tenant renewal options. The following table sets forth occupancy
percentages for the properties as of December 31, 1995:
13
<PAGE> 14
<TABLE>
<CAPTION>
Percentage of
Gross Leasable Area
Leased
Property Name (Unaudited)
------------- -------------------
<S> <C>
Commons of Chicago Ridge.......... 76%
Commons of Crystal Lake........... 98%
Heritage Square................... 100%
High Point Centre................. 100%
Meadows Town Mall................. 81%
Mequon Pavilions.................. 97%
One North State................... 95%
Rollins Crossing.................. 100%
Sheridan Village.................. 97%
Speedway SuperCenter and Outlots.. 98%
Village Shopping Center........... 98%
Washington-Lawndale Commons....... 99%
Stony Brook Shopping Center....... 96%
Williamson Square................. 89%
</TABLE>
<TABLE>
As of December 31, 1995, the approximate minimum future rentals to be
received under noncancelable leases are as follows:
<S> <C>
1996............................... $ 34,304,000
1997............................... 32,694,000
1998............................... 30,479,000
1999............................... 27,653,000
2000............................... 26,053,000
Thereafter......................... 113,093,000
------------
$264,276,000
============
</TABLE>
Minimum future rentals do not include amounts which may be received from
certain tenants based upon a percentage of their gross sales or as a
reimbursement of property operating expenses.
<TABLE>
One major tenant individually accounted for more than 10% of Tucker's
total rental revenue for the years ended December 31, 1995 and 1994. In
addition, the same tenant accounted for more than 10% of Tucker's minimum future
rentals as of December 31, 1995.
<CAPTION>
Minimum
Future
1995 1994 Rentals
---- ---- --------
<S> <C> <C> <C>
Tenant A........................... 11% 12% 11%
</TABLE>
Approximately 4% of Tucker's total rental revenue for the year ended
December 31, 1995 was generated by the lease of one tenant at One North State.
The lease does not contain renewal options and the tenant has the right to
cancel the lease as of April 1, 1998, provided it gives notice by April 1, 1996,
pays all rent as it becomes due for the period April 1, 1996 to March 31, 1998,
and pays a specified cancellation fee of $1.8 million on April 1, 1996 to be
utilized for subsequent tenants' improvements. This tenant has indicated that it
will move out of this space prior to the expiration of the lease, but has not
yet specified whether or not it will exercise its early termination right.
(7) DEFERRED COSTS
Deferred costs, net as of December 31, 1995 and 1994, are summarized as
follows:
14
<PAGE> 15
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Deferred financing costs................... $ 3,915,238 $ 3,361,342
Deferred leasing commissions,
including those earned by TTC 4,347,002 3,577,090
Other...................................... 741,598 582,930
----------- -----------
9,003,838 7,521,362
Accumulated amortization................... (3,251,252) (1,987,659)
----------- -----------
$ 5,752,586 $ 5,533,703
=========== ===========
</TABLE>
Amortization of financing costs charged to expense in 1995 and 1994 was
$798,146 and $733,601, respectively, while amortization of leasing commissions
charged to expense in 1995 and 1994 was $450,368 and $463,366, respectively. The
amortization of other costs in 1995 and 1994 was $147,149 and $81,031,
respectively.
(8) SUPPLEMENTAL CASH FLOW DISCLOSURE
During 1994, $369,597 in pre-development costs associated with Rollins
Crossing were reclassified from other assets to construction in progress. This
reclassification had a non-cash effect on Tucker's balance sheet. Also during
1994, tenant improvement costs of $1,139,863 were funded from the tenant
improvement escrow which is classified as Other assets. This amount has been
offset against the additions to properties in the 1994 Statement of Cash Flows.
<TABLE>
During 1995, approximately $6.9 million of assets placed in service at
Rollins Crossing and Speedway Outlots were reclassified from construction in
progress to land, building and improvements. This reclassification had a
non-cash effect on Tucker's balance sheet.
<CAPTION>
Supplemental disclosure of cash flow information. 1995 1994
----------- -----------
<S> <C> <C>
Interest paid................................ $13,035,688 $10,346,488
=========== ===========
Interest capitalized......................... $ 321,739 $ 350,810
============ ===========
</TABLE>
(9) STOCK OPTION PLAN
Tucker has adopted the 1993 Share Option Plan (the "Plan") for the
purpose of attracting and retaining Tucker's directors, officers and other
employees. Originally, a maximum of 560,000 shares was reserved for issuance
under the Plan to allow for the grant of incentive and non-qualified options and
for the right of an option holder to elect to receive in cash or shares an
amount equal to the excess of the fair market value of the shares subject to an
incentive or non-qualified option over the exercise price of the shares, which
right can be exercised instead of (but not in addition to) its relative
incentive or non-qualified option.
Options are to be granted by the Compensation Committee of the Board of
Directors at an exercise of price of not less than 100% of the fair market value
of the common stock on the date of grant. The term of the option shall be fixed
by the Compensation Committee, but no option shall be exercisable more than 10
years after the date of grant.
In November 1993, following the Public Offering, executive officers and
directors of Tucker were granted incentive stock options to purchase 560,000
shares of common stock at $18 per share. The term of each option granted is ten
years from the date of grant. In 1995, 50,000 additional stock options were
granted pursuant to approval by the shareholders at the 1995 Annual Meeting of
Stockholders. At December 31, 1995, 610,000 options for shares were outstanding.
Pursuant to the terms of the merger agreement with Bradley as described in Note
11 below, these options will be terminated.
(10) CONTINGENCIES
Certain of the properties owned by Tucker underwent Phase I and Phase II
assessments in connection with the Public Offering. Tucker does not believe that
the results of any of these assessments indicate a material obligation of
Tucker. In addition, a Phase II assessment conducted in 1993 at the Commons of
Chicago Ridge indicated the
15
<PAGE> 16
presence of certain soil and ground water contaminants at levels that might
require some form of action in the future to remediate the contaminants. Tucker
is not presently able to determine the extent of the liability, if any related
to such remediation and as such no liability has been reflected in the financial
statements. Certain members of Tucker's management have also agreed to indemnify
Tucker with respect to any remediation at Chicago Ridge for ten years after the
Public Offering. Tucker has not recorded a receivable related to this guarantee.
(11) MERGER AGREEMENT AND PROVISION FOR MERGER RELATED EXPENSES AND
WRITE-DOWNS
On October 30, 1995, Tucker entered into an Agreement and Plan of Merger
(the "Agreement") with Bradley Real Estate, Inc. ("Bradley") and certain other
related agreements, providing for the merger (the "Merger") of Tucker with and
into Bradley and certain related transactions. The consummation of the Merger is
subject to certain conditions, including approval of the Merger by the
stockholders of Tucker and Bradley at separate special stockholder meetings on
March 14, 1996.
Pursuant to the Agreement, at the effective time of the Merger (the
"Effective Time"), if the average closing price of a share of common stock, par
value $.01 per share, of Bradley (the "Bradley Common Stock") over the 20
trading days immediately preceding the fifth day prior to the date of the
closing of the Merger (the "Bradley Closing Price") is $16 or greater, each
outstanding share of common stock, par value $.001 per share of Tucker, (the
"Tucker Common Stock") will be converted into the right to receive 0.665 of a
share of Bradley Common Stock. If the Bradley Closing Price, at the Effective
Time, is less than $16 per share but more than $15.50 per share, then each
outstanding share of Tucker Common Stock will be converted into the right to
receive the percentage of a share of Bradley Common Stock (determined to the
nearest one-thousandth of a share) as is determined by dividing $10.64 by the
Bradley Closing Price; and, in the event that at the Effective time, the Bradley
Closing Price is $15.50 per share or less, then each outstanding share of Tucker
Common Stock will be converted into the right to receive 0.686 of a share of
Bradley Common Stock.
As a result of the Merger, Bradley will acquire the 95.9% general
partnership interest of Tucker in TOLP and will become the sole general partner
of TOLP. At the Effective Time, the Agreement of Limited Partnership of TOLP
will be amended and restated pursuant to the terms of the Agreement. In
connection with entering into the Agreement, Tucker adopted a severance plan for
certain of its employees and entered into severance agreements with certain of
its officers. Kenneth L. Tucker, President and Chairman of the Board of Tucker,
has agreed to enter into a consulting agreement with Bradley for a period of
three years pursuant to which Mr. Tucker will advise Bradley on retail real
estate matters. In connection with the merger, TFC, or its assets, will be
acquired by Bradley, or a wholly owned affiliate of Bradley, to be known as
Bradley Financing Corporation ("BFC"). In addition, TFP will change its name to
Bradley Financing Partnership, and will be owned 99% by Bradley Operating
Limited Partnership (the successor to TOLP) and 1% by BFC.
In conjunction with this announcement, Tucker recognized a provision for
merger related expenses and write-downs during 1995. This provision consists of
the write-off of certain costs incurred to-date related to the merger
(approximately $1.1 million), the write-off of capitalized costs related to
certain development projects which will not be pursued by the merged
organization (approximately $.5 million) and the write-off of certain
receivables (approximately $.6 million). The provision for these items totaled
approximately $2.2 million.
(12) PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
Due to the acquisition of Mequon Pavilions in June 1994, the historical
results for the year ended December 31, 1994 are not comparable to the current
period.
The following pro forma information was prepared as if the acquisition
of the Mequon Pavilions had occurred on January 1, 1994. The pro forma financial
information is based upon the historical consolidated financial statements and
is not necessarily indicative of the consolidated results which actually would
have occurred if the transaction had been consummated at the beginning of 1994
nor does it purport to represent the results of operations for future periods.
16
<PAGE> 17
<TABLE>
<CAPTION>
For the year ended
December 31, 1994
-----------------------------------------
(in thousands, except for per share data)
<S> <C>
Total revenues....................................... $50,564
-------
Expenses:
Operating expenses.............................. 16,467
Interest expense................................ 11,112
General and administrative...................... 4,013
Depreciation and amortization................... 10,607
-------
Total....................................... 42,199
-------
Income before minority interests allocation.......... 8,365
Income allocated to minority interests............... (397)
-------
Net income........................................... $ 7,968
=======
Net Income per share (A)............................. $ .74
=======
<FN>
(A) Based upon 10,828,283 common shares outstanding
</TABLE>
(13) SUBSEQUENT EVENT
On February 15, 1996, the Board of Directors declared a first quarter
distribution of $.25 per share payable March 13, 1996 to the holders of common
stock (or OP units) of record at the close of business on March 11, 1996.
17
<PAGE> 18
(b) Pro Forma financial information:
-------------------------------
BRADLEY REAL ESTATE, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
During the period from January 1, 1995 to December 31, 1995, Bradley
acquired one property. The acquisition was funded with the assumption of
approximately $2,100,000 of mortgage debt and the cash proceeds from the sale of
182,500 shares of Bradley Common Stock at a price of $17 per share to the former
owner of the property. Also during the period January 1, 1995 to December 31,
1995, Bradley acquired the REIT advisory business of its long-standing external
advisor and completed a public offering of 2,500,000 shares of Bradley Common
Stock (the "July Offering") at a price of $16 per share. Net proceeds from the
July Offering were approximately $37,405,000, of which $32,600,000 was used to
pay down Bradley's existing line of credit, $4,712,000 was used to pay off the
non-recourse mortgages assumed in November 1994 upon the acquisition of a
property and the balance was used for general business purposes.
This unaudited Pro Forma Condensed Statement of Operations is presented
as if the Bradley acquisitions described above, the July Offering and the Merger
had been consummated on January 1, 1995 and with Bradley qualifying as a REIT,
distributing all of its taxable income and, therefore, incurring no federal
income tax expense during the period January 1, 1995 through December 31, 1995.
The Merger has been accounted for under the purchase method of accounting in
accordance with Accounting Principles Board Opinion No. 16. In the opinion of
Bradley's management, all adjustments necessary to reflect the effects of these
transactions have been made.
This unaudited Pro Forma Condensed Statement of Operations is presented
for comparative purposes only and is not necessarily indicative of what the
actual results of operations of Bradley would have been for the period
presented, nor does it purport to represent the results to be achieved in future
periods.
References herein to the "Surviving Company" are to Bradley after the
consummation of the Merger.
18
<PAGE> 19
<TABLE>
Year Ended December 31, 1995
===================================================================
Pro Forma Bradley
Bradley Tucker Merger as
Pro Forma(A) Historical(B) Adjustments Adjusted
------------ ------------- ----------- --------
(In thousands except per share data)
<S> <C> <C> <C> <C>
Income:
Rental income.................... $36,898 $49,724 $ -- $86,622
Other income..................... 168 1,132 -- 1,300
------- ------- ------- -------
Total revenue.................. 37,066 50,856 -- 87,922
------- ------- ------- -------
Expenses:
Operations, maintenance
and management................. 5,869 8,590 -- 14,459
Real estate taxes................ 8,741 10,483 -- 19,224
Mortgage and other interest...... 3,579 13,346 147(C) 17,072
Depreciation and amortization.... 7,406 11,458 (4,672)(D) 14,192
Administrative and general....... 1,535 3,066 (1,400)(E) 3,201
Provision for merger related
expenses and write-downs....... -- 2,236 (1,568)(F) 668
------- ------- ------- -------
Total expenses................. 27,130 49,179 (7,493) 68,816
------- ------- ------- -------
Income before allocation to
minority interest................ 9,936 1,677 7,493 19,106
Income allocated to minority
interest......................... -- (68) -- (68)
------- ------- ------- -------
Net income............................ $ 9,936 $ 1,609 $ 7,493 $19,038
======= ======= ======= =======
Per share data:
Net income....................... $ .89 $ .15 $ 1.02
Weighted average number of
shares outstanding............. 11,167 10,828 18,595
<FN>
- -----------------
(A) See page 21 for computation of pro forma adjustments to reflect prior Bradley transactions.
(B) Represents historical operating results as reported by Tucker for the year ended December 31, 1995.
(C) Represents the result of interest on borrowings estimated for payment of fees and expenses related
to the Merger of approximately $8,500,000, at an interest rate of 7.25% which was Bradley's borrowing
rate at March 15, 1996, net of the accretion on a $2.2 million premium on the Tucker REMIC resulting
from the adjustment of the debt to fair value.
</TABLE>
<TABLE>
(D) Depreciation and amortization changes relate to recording Tucker's
properties at Bradley's purchase price, the related depreciation
utilizing an estimated useful life of 39 years and a depreciable basis
of approximately $235,000,000, and the elimination of historical
amortization of certain Tucker deferred assets in accordance with the
purchase method of accounting, as follows (in thousands):
<S> <C>
Pro forma depreciation expense
($235,000,000 over 39 years)................................ $ 6,034
Tucker depreciation........................................... (10,062)
Tucker amortization of deferred loan and organization......... (644)
--------
Pro forma adjustment.......................................... $ (4,672)
========
</TABLE>
(E) Represents general and administrative cost savings which have been
estimated based upon historical costs for those items which will be
eliminated as a result of the Merger, as follows (in thousands):
19
<PAGE> 20
<TABLE>
<S> <C>
Salaries and benefits.................................... $ 700
Professional fees........................................ 400
D&O insurance and director fees.......................... 200
Other.................................................... 100
------
Pro forma adjustment..................................... $1,400
======
</TABLE>
(F) Represents the elimination of the write-offs of approximately $1,069,000
representing costs incurred related to the Merger and approximately
$499,000 representing capitalized costs related to certain development
projects which will not be pursued by the Surviving Company.
20
<PAGE> 21
<TABLE>
PRO FORMA ADJUSTMENTS TO REFLECT PRIOR BRADLEY TRANSACTIONS:
Bradley
================================================================
Year Ended December 31, 1995
================================================================
(In thousands except per share data)
Acquisition Stock
Historical Adjustments(A) Offering Pro Forma
---------- -------------- -------- ---------
<S> <C> <C> <C> <C>
Income:
Rental income........................ $36,405 $493 $ -- $36,898
Other income......................... 167 1 -- 168
------- ---- ------ -------
Total revenue...................... 36,572 494 -- 37,066
------- ---- ------ -------
Expenses:
Operations, maintenance
and management..................... 5,858 11 -- 5,869
Real estate taxes.................... 8,726 15 -- 8,741
Mortgage and other interest.......... 4,705 168 (1,294)(B) 3,579
Depreciation and amortization 7,317 89 -- 7,406
Administrative and general........... 1,535 -- -- 1,535
------- ---- ------ -------
Total expenses..................... 28,141 283 (1,294) 27,130
------- ---- ----- -------
Net income................................ $ 8,431 $211 $1,294 $ 9,936
======= ==== ====== =======
Per share data:
Net income........................... $ .85 $ .89
Weighted average number of
shares outstanding................. 9,864 11,167
- -----------------
<FN>
(A) Increase represents historical operating revenues and expenses for the
year ended December 31, 1995 for the property acquired during 1995 for
the period during which Bradley did not own it.
(B) Decrease reflects the use of $32,600,000 of proceeds from the July
Offering applied to the line of credit at an interest rate of 7.938%, as
if the July Offering occurred on January 1, 1995.
</TABLE>
21
<PAGE> 22
BRADLEY REAL ESTATE, INC.
PRO FORMA CONDENSED BALANCE SHEET
DECEMBER 31, 1995
(UNAUDITED)
This unaudited Pro Forma Condensed Balance Sheet is presented as if the
Merger had been consummated on December 31, 1995. The Merger has been accounted
for under the purchase method of accounting in accordance with Accounting
Principles Board Opinion No. 16. In the opinion of Bradley's management, all
adjustments necessary to reflect the effects of this transaction have been made.
<TABLE>
This unaudited Pro Forma Condensed Balance Sheet is presented for
comparative purposes only and is not necessarily indicative of what the actual
financial position of Bradley would have been at December 31, 1995, nor does it
purport to represent the future financial position of Bradley.
<CAPTION>
Pro Forma Bradley
Bradley Tucker Merger As
Historical Historical Adjustments(A) Adjusted
----------- --------- ------------- -------
(In thousands except per share data)
Assets
------
<S> <C> <C> <C> <C>
Real estate investments, at cost $187,553 $321,181 $(26,367)(B) $482,367
Accumulated depreciation and
amortization...................... 27,591 26,354 (26,354)(B) 27,591
------- -------- -------- --------
Net real estate investments.......... 159,962 294,827 (13) 454,776
Construction in progress............. 1,852 3,045 -- 4,897
Cash and cash equivalents............ 697 3,344 -- 4,041
Rents and other receivables, net 8,671 12,113 (8,063)(C) 12,721
Unamortized buyout of contract, net 4,372 -- -- 4,372
Due from affiliates.................. -- 109 -- 109
Deferred charges and prepaid expenses,
net............................... 4,991 5,753 (3,979)(D) 6,765
Other assets......................... -- 3,771 (296)(E) 3,475
-------- -------- -------- --------
Total assets...................... $180,545 $322,962 $(12,351) $491,156
======== ======== ======== ========
Liabilities
-----------
Mortgage loans....................... $ 24,794 $133,080 2,231(F) $160,105
Lines of credit...................... 14,600 44,154 7,431(G) 66,185
Accounts payable and accrued liabilities 6,053 12,682 -- 18,735
Other liabilities.................... -- 2,942 -- 2,942
-------- -------- ------- --------
Total liabilities................. 45,447 192,858 9,662 247,967
-------- -------- -------- --------
Minority interests................... -- 5,331 (937)(H) 4,394
-------- -------- -------- --------
Stockholders' Equity
---------------------
Shares of common stock............... 112 11 63(I) 186
Paid-in capital...................... 148,407 155,224 (51,601)(I) 252,030
Distributions in excess of accumulated
earnings.......................... (13,421) (30,462) 30,462(I) (13,421)
-------- -------- -------- --------
Total stockholders' equity........ 135,098 124,773 (21,076) 238,795
-------- -------- -------- --------
Total liabilities and stockholders'
equity.......................... $180,545 $322,962 $(12,351) $491,156
======== ======== ======== ========
- -------------------
</TABLE>
22
<PAGE> 23
<TABLE>
(A) Represents adjustments to record the Merger in accordance with the
purchase method of accounting, based upon a purchase price of
approximately $305,056,000, which assumes a value of $13.96 per share of
Bradley Common Stock, computed as follows (in thousands):
<S> <C>
Issuance of Bradley Common Stock...................................... $103,698
Assumption of Tucker liabilities...................................... 192,858
Merger costs.......................................................... 8,500
--------
$305,056
========
</TABLE>
(B) Decrease in net book value of the Tucker real estate assets is based upon
Bradley's purchase price.
(C) Write-off of the portion of the Tucker accounts receivable primarily
representing deferred rents arising from Tucker's recognition of rental
income on a straight-line basis in accordance with generally accepted
accounting principles. The Surviving Company will recognize rental
income on a straight-line basis over the remaining terms of the Tucker
leases.
<TABLE>
(D) Represents the elimination of certain deferred charges in accordance
with the purchase method of accounting. In conjunction with Pro Forma
Merger Adjustment (F), the write-off of the deferred loan costs serves
to adjust the nominal interest rate on the remaining Tucker outstanding
debt to a current market rate as of December 31, 1995. Organization
costs which were deemed to have no future value to the Surviving Company
were also written-off in accordance with the purchase method of
accounting. The amounts represented by these adjustments are summarized
below (in thousands):
<S> <C>
Loan costs............................................................ $ 3,915
Organization costs.................................................... 142
Less accumulated amortization......................................... (1,389)
-------
2,668
Merger related costs paid to date by Bradley.......................... 1,311
-------
$ 3,979
=======
</TABLE>
(E) Represents capitalized costs related to a development project not
expected to be pursued by the Surviving Company.
(F) To reflect a premium adjustment to the Tucker outstanding debt to a
current market rate. The adjustment primarily reflects the effect of
adjusting the $100 million REMIC with a stated rate of 7.3% to an
effective rate of 6.75%.
<TABLE>
(G) Estimated payments for fees and expenses related to the Merger as follows
(in thousands):
<S> <C>
Legal and accounting.................................................. $ 2,400
Investment advisory fees.............................................. 2,025
Termination and severance............................................. 1,700
D&O insurance......................................................... 650
Real estate due diligence and closing costs........................... 425
Printing and filing fees.............................................. 350
Other................................................................. 950
-------
8,500
Less costs paid to date by Tucker..................................... (1,069)
-------
$ 7,431
=======
</TABLE>
23
<PAGE> 24
<TABLE>
(H) To reflect the adjustment of Tucker Operating Limited Partnership
("TOP") Units based upon an exchange ratio of .686 and a Bradley stock
price of $13.96 as follows:
<CAPTION>
TOP Minority
Units Interest
----- --------
(in thousands)
<S> <C> <C>
Issuance of TOP Units............................... 314,748 $ 4,394
Historical.......................................... (458,817) (5,331)
------- -------
(144,069) $ (937)
======= =======
</TABLE>
<TABLE>
(I) To adjust Tucker's capital accounts to reflect the issuance of 7,428,202
shares of Bradley Common Stock in exchange for all of the outstanding
shares of Tucker Common Stock at an Exchange Ratio of .686 shares of
Bradley Common Stock for each outstanding share of Tucker Common Stock,
as follows (in thousands):
<CAPTION>
Common Paid-In Distribution In
Shares Capital Excess of Earnings
------ ------- ------------------
<S> <C> <C> <C>
Issuance of Bradley
Common Stock....................... $ 74 $ 103,623 $ --
Tucker's historical stockholders'
equity............................. (11) (155,224) (30,462)
---- --------- --------
Merger adjustment.................... $ 63 $ (51,601) $ 30,462
==== ========= ========
</TABLE>
24
<PAGE> 25
<TABLE>
(c) Exhibits:
--------
<CAPTION>
Exhibit
No.
- -------
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
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. 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.
4.1 Articles of Merger between Tucker Properties Corporation and
Bradley Real Estate, Inc. dated March 15, 1996, incorporated
by reference to Exhibit 3.3 of Bradley's Form 10-K for the
fiscal year ended December 31, 1995.
4.2 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.
4.3 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.
23.1 Consent of Coopers & Lybrand L.L.P.*
99.1 Press Release announcing the consummation of the merger of
Bradley Real Estate, Inc. with Tucker Properties Corporation.*
99.2 The material contained under the captions "SUMMARY--The
Merger--Conflicts of Interest Arising from Benefits to Certain
Directors and Officers of Tucker," "RISK FACTORS--Conflicts of
Interest Arising from Benefits to Certain Tucker Directors and
Officers," "THE MERGER--Conflicts of Interest Arising from
Benefits to Certain Directors and Officers of Tucker" and "THE
MERGER AGREEMENT--Indemnification," incorporated herein by
reference to Bradley's Registration Statement on Form S-4 (No.
33-64811) dated February 15, 1996.
<FN>
- ----------------------
* Filed herewith.
</TABLE>
25
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 30, 1996 BRADLEY REAL ESTATE, INC.
By: /s/ THOMAS P. D'ARCY
------------------------------------
Thomas P. D'Arcy, President
26
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Bradley Real Estate, Inc.
We consent to the inclusion in this Form 8-K of Bradley Real Estate, Inc. 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.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
April 1, 1996
268389.cl
<PAGE> 1
NEWS EXHIBIT 99.1
BULLETIN
FROM:
FRB
Bradley Real Estate, Inc.
699 Boylston Street
Boston, MA 02116
NYSE: BTR
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The Financial Relations Board, Inc.
FOR FURTHER INFORMATION:
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
THOMAS D'ARCY JENIFER ESTABROOK
PRESIDENT AND CEO (312) 640-6787
(617) 867-4211
(617) 867-4200
FOR IMMEDIATE RELEASE
FRIDAY, MARCH 15, 1996
BRADLEY REAL ESTATE COMPLETES ACQUISITION OF TUCKER PROPERTIES
CORPORATION AND CLOSES $150 MILLION UNSECURED LINE OF CREDIT
BOSTON, MARCH 15, 1996 - BRADLEY REAL ESTATE, INC. (NYSE: BTR) announced that it
has completed the acquisition of TUCKER PROPERTIES CORPORATION (NYSE: TUC)
effective today. Completion of the transaction follows stockholder approval
yesterday at separate meetings of each company's stockholders. Of the total
voted shares from both companies, approximately 97 percent were voted in favor
of the merger.
Under the merger, when Tucker shares stop trading at the close of business
today, each share of Tucker's approximately 11 million shares has been exchanged
for 0.686 of a Bradley share, with cash to be paid in lieu of a fractional share
based upon a price of $13.96 for a full Bradley share. As a result of the
transaction, Bradley now has approximately 18.7 million shares outstanding. The
acquisition was structured as a tax-free statutory merger and is treated as a
purchase for accounting purposes.
Bradley also announced the closing today of a new $150 million unsecured
line of credit with the First National Bank of Boston.
"Bradley's acquisition of the Tucker properties represents the purchase of
a solid Midwest portfolio at a favorable price; and it provides substantial
financial and strategic benefits," commented Thomas P. D'Arcy, Bradley's
president and chief executive officer. "By more than doubling the size of our
portfolio and increasing our presence in our Midwest markets, we have
significantly strengthened our ability to compete in our targeted markets and
succeed in a challenging retail environment."
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Financial Relations Board, Inc. serves as financial relations
counsel to the company, acting on the company's behalf by issuing
this bulletin and receiving compensation therefor. The
information contained herein is furnished for information
purposes only and is not to be considered as an offer to buy
or sell securities.
<PAGE> 2
BRADLEY REAL ESTATE, INC.
ADD -1-
Bradley Real Estate, Inc. is one of the nation's oldest continuously
qualified real estate investment trusts (REITs) specializing in the ownership
and operation of income-producing commercial real estate, primarily community
shopping centers in the Midwest. With the acquisition of Tucker, Bradley now
owns 31 properties aggregating approximately 7.4 million square feet in 11
states.
To receive additional information on Bradley Real Estate free of charge via fax,
dial 1-800-PRO-INFO and enter "BTR."
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