<PAGE> 1
As filed with the Securities and Exchange Commission on May 30, 1997
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------
BRADLEY REAL ESTATE, INC.
(Exact name of Registrant as specified in its charter)
Maryland 04-6034603
(State of incorporation) (I.R.S. Employer Identification Number)
40 SKOKIE BOULEVARD, SUITE 600
NORTHBROOK, ILLINOIS 60062-1626
(847) 272-9800
(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.
40 Skokie Boulevard, Suite 600
Northbrook, Illinois 60062
(847) 272-9800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------------
With a copy to:
WILLIAM B. KING, P.C.
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 this Registration Statement becomes effective.
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, as amended, check the following box./X/
If this form is used 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 effective 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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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Title of Securities Being Registered Amount to be Proposed Maximum Offering Proposed Maximum Aggregate Amount of
Registered(1) Price Per Unit(2) Offering Price(3) Registration Fee(4)
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<S> <C> <C> <C> <C>
Common Stock(5)...............
Preferred Stock(6)............ $200,000,000 N.A. $200,000,000 $60,606
Depositary Shares representing
Preferred Stock(7).........
Warrants or Rights(8).........
Units of Securities...........
====================================================================================================================================
</TABLE>
(1) The amount to be registered consists of up to $234,460,000 of an
indeterminate amount of Common Stock, Preferred Stock, Depositary Shares
representing Preferred Stock, Warrants or Rights and/or Units of
Securities. Pursuant to Rule 429 under the Securities Act of 1933, as
amended, this amount includes $34,460,000 of securities being carried
forward from Registrant's earlier Registration Statement on Form S-3
(File No. 33-87084), which have not been sold.
(2) The proposed maximum offering price per unit has been omitted pursuant
to Securities Act Release No. 6964. The registration fee has been
calculated in accordance with Rule 457(o) under the Securities Act of
1933, as amended.
(3) Estimated solely for purposes of computing the registration fee. No
separate consideration will be received for shares of Common Stock
issued upon conversion of Preferred Stock.
(4) Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
amount of $34,460,000 of securities covered by Registrant's earlier
Registration Statement on Form S-3 (File No. 33-87084) is being carried
forward and the corresponding registration fee of $11,883 was previously
paid at the time of filing.
(5) There is also being registered hereunder such currently indeterminate
number of shares of Common Stock as may be issued upon conversion of the
Preferred Stock and/or upon the exercise of Warrants or Rights
registered hereby.
(6) There is also being registered hereunder such currently indeterminate
number of shares of Preferred Stock as shall be issuable upon conversion
or redemption of Depositary Shares and/or registered hereby and upon
exercise of Warrants or Rights registered hereby.
(7) There is also being registered hereunder such currently indeterminate
number of Depositary Shares representing Preferred Stock to be evidenced
by Depositary Receipts issued pursuant to a Deposit Agreement. In the
event the Registrant elects to offer to the public fractional interests
in shares of Preferred Stock registered hereunder, Depositary Receipts
will be distributed to those persons purchasing such fractional
interests, and shares of Preferred Stock will be issued to the
depositary under the Deposit Agreement.
(8) There is also being registered hereunder such currently indeterminate
amount and number of Warrants or Rights, representing rights to purchase
shares of Preferred Stock, Depositary Shares or shares of Common Shares
registered hereby.
The Prospectus contained in this Registration Statement relates to and
constitutes a Post-Effective Amendment to the Registration Statement on Form S-3
(File No. 33-87084) of the Registrant, and it is intended to be the combined
prospectus referred to in Rule 429 under the Securities Act of 1933, as amended.
<PAGE> 2
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell nor the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MAY 30, 1997
$234,460,000
BRADLEY REAL ESTATE, INC.
COMMON STOCK
PREFERRED STOCK
DEPOSITARY SHARES REPRESENTING PREFERRED STOCK
WARRANTS OR RIGHTS
UNITS OF SECURITIES
---------------
Bradley Real Estate, Inc. ("Bradley" or the "Company") may offer from
time to time in one or more series (i) shares of its common stock, $.01 par
value per share ("Common Stock"), (ii) shares of its preferred stock, $.01 par
value per share ("Preferred Stock" and, together with the Common Stock, the
"Capital Stock"), (iii) Preferred Stock represented by depositary shares
("Depositary Shares"), (iv) warrants or rights ("Warrants") for Common Stock
and/or Preferred Stock and (v) units ("Units") consisting of two or more of the
foregoing securities, with an aggregate public offering price of up to
$234,460,000 in amounts, at prices and on terms to be determined at the time of
offering. The Common Stock, Preferred Stock, Depositary Shares, Warrants and
Units (collectively, the "Securities") may be offered separately or together, in
separate series, in amounts, at prices and on terms to be set forth in one or
more supplements to this Prospectus (each a "Prospectus Supplement").
The specific terms of the Securities for which this Prospectus is being
delivered will be set forth in the applicable Prospectus Supplement and will
include, where applicable: (i) in the case of Common Stock, the offering price;
(ii) in the case of Preferred Stock, the specific designation and stated value
per share, any dividend, liquidation, redemption, conversion, voting and other
rights, and the offering price; (iii) in the case of Depositary Shares, the
fractional shares of Preferred Stock represented by each such Depositary Share;
(iv) in the case of Warrants, the number and terms thereof, any applicable
designation thereof, and the designation and the number of securities issuable
upon their exercise, the exercise price, the terms of the offering and sale
thereof and, where applicable, the duration and detachability thereof; and (v)
in the case of Units, a description of the securities comprising such Units and
the offering price thereof. In addition, such specific terms may include
limitations on direct or beneficial ownership and restrictions on transfer of
the Securities, in each case as may be consistent with the Company's Articles of
Amendment and Restatement (the "Charter"), or as otherwise appropriate to
preserve the status of the Company as a real estate investment trust ("REIT")
for federal income tax purposes.
The applicable Prospectus Supplement will also contain information,
where appropriate, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities covered
by such Prospectus Supplement.
The Securities may be offered directly by the Company, through agents
designated from time to time by the Company or to or through underwriters or
dealers. If any agents or underwriters are involved in the sale of any of the
securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them, will be set forth, or will be
calculable from the information set forth, in an accompanying Prospectus
Supplement. See "Plan of Distribution." No Securities may be sold without
delivery of a Prospectus Supplement describing the method and terms of the
offering of such Securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION 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.
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The date of this Prospectus is ____________, 1997.
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AVAILABLE INFORMATION
No person has been authorized to give any information or to make any
representation not contained or incorporated by reference in this Prospectus or
the accompanying Prospectus Supplement and, if given or made, such information
or representation must not be relied upon as having been authorized by the
Company or any underwriter, dealer or agent. Neither the delivery of this
Prospectus or the accompanying Prospectus Supplement nor any sale made hereunder
of thereunder shall, under any circumstances, create an implication that the
information contained herein or in the accompanying Prospectus Supplement is
correct as of any date subsequent to the date hereof or thereof or that there
has been no change in the affairs of the Company since the date hereof or
hereof. Neither this Prospectus nor the accompanying Prospectus Supplement
constitutes an offer to sell or a solicitation of an offer to buy Securities in
any jurisdiction in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so or
to any person to whom it is unlawful to make such offer or solicitation.
The 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, proxy statements and other information with
the Securities and Exchange Commission (the "SEC" or the "Commission"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices at 7 World Trade Center, 13th Floor, New York, New York 10048,
and Northwest Atrium Center, 500 W. Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials can be obtained upon written request
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, at prescribed rates. The Commission also
maintains a Web site that contains reports, proxy statements and other
information which the Company has filed electronically with the Commission. The
address of the Commission's Web site is: http://www.sec.gov. In addition, the
Common Stock is listed on the New York Stock Exchange (the "NYSE") under the
symbol "BTR," and such materials can be inspected and copied at the NYSE, 20
Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on
Form S-3 (No. 333- ) under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the Securities. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. The
Registration Statement, including exhibits thereto, may be inspected and copied
at the locations described above. Statements contained in this Prospectus as to
the contents of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. Pursuant to Rule
429 under the Securities Act, this Prospectus also relates to securities (which
are included within the Securities) registered by Registration Statement No.
33-87084.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the Exchange Act (Commission File No. 1-10328) are
incorporated in this Prospectus by reference: (i) the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996; (ii) the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; (iii) the
Company's Proxy Statement dated March 31, 1997 with respect to its Annual
Meeting of Stockholders on May 14, 1997; and (iv) the description of the
Company's Common Stock contained or incorporated by reference in the Company's
Registration Statement on Form 8-A, filed August 8, 1994, including any
amendments thereto.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of all Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
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Any statement contained herein or in a document incorporated or deemed
to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein (or in an applicable Prospectus Supplement) or in any
subsequently filed document that is incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed to constitute a part of this Prospectus or any Prospectus
Supplement, except as so modified or superseded.
The Company will provide, without charge, to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, at the request
of such person, a copy of any or all of the documents incorporated herein by
reference (other than exhibits thereto, unless such exhibits are specifically
incorporated by reference into such documents). Written requests for such copies
should be directed to Ms. Marianne Dunn, Senior Vice President, Bradley Real
Estate, Inc., Suite 600, 40 Skokie Boulevard, Northbrook, Illinois 60062-1626,
telephone (847) 272-9800.
THE COMPANY
Bradley Real Estate, Inc. is a fully-integrated real estate operating
company and a leading owner and operator of community and neighborhood shopping
centers in the Midwest region of the country. At the date of this Prospectus,
the Company owns 35 properties in 12 states, aggregating approximately 8
million square feet of gross leasable area ("GLA").
Bradley's strategic objective is to become the dominant owner of
grocery-anchored, open-air community and neighborhood shopping centers in the
10-state Midwest region consisting of Illinois, Indiana, Iowa, Minnesota,
Missouri, Nebraska, North Dakota, South Dakota and Wisconsin. The Company
currently owns properties in seven of the 10 states in this region. Through
past experience in this region as well as current research, the Company
believes that this Midwest region is economically strong and diverse and
provides a favorable investment environment with growth potential. The Company
evaluates both Metropolitan Statistical Areas and secondary markets within this
region that offer opportunities for long-term cash flow growth. The Company
favors grocery-anchored centers because, based on its past experience, such
properties offer strong and predictable daily consumer traffic and are less
susceptible to external economic factors than other shopping center
properties.
Bradley regularly evaluates, and engages in discussions with public and
private entities regarding, possible portfolio or asset acquisitions or business
combinations. During 1997, the Company has acquired four shopping centers which
meet its investment criteria and expects to complete additional acquisitions
during the year, although there can be no assurance that further acquisitions
will be made within its target markets. The Company seeks to create an income
stream sufficiently diversified across its Midwest markets to achieve
sustainable growth through varied economic conditions.
The Company has elected to qualify as a REIT for federal income tax
purposes since its organization in 1961. The Company believes that it is the
nation's oldest continually qualified REIT.
The Company is incorporated under the laws of the State of Maryland.
Its offices are located at Suite 600, 40 Skokie Boulevard, Northbrook,
Illinois 60062-1626. Its telephone number is (847) 272-9800.
Reference is made to the applicable Prospectus Supplement accompanying
this Prospectus for additional information concerning the Company as of the date
of such Prospectus Supplement.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of Securities primarily to
repay indebtedness incurred in connection with the acquisition or improvement of
shopping centers, to acquire additional shopping centers and to fund expansions
and/or improvements to such shopping centers or to certain shopping centers
already owned by the Company.
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Pending their use as described above, the net proceeds from the sale of
any Securities may be used for other general corporate purposes of the Company
or invested in short-term securities.
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the historical ratios of earnings to
fixed charges of the Company for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, QUARTER ENDED MARCH 31,
- ---------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1997
- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
1.16:1 2.72:1 2.70:1 2.55:1 2.92:1 3.39:1
</TABLE>
To date, the Company has not issued any shares of Preferred Stock.
Accordingly, the ratios of earnings to combined fixed charges and Preferred
Stock dividends are unchanged from the ratios shown above. For purposes of
computing these ratios, earnings have been calculated by adding fixed charges
(excluding capitalized interest) to income before income taxes and extraordinary
items. Fixed charges consist of interest costs, whether expensed or capitalized,
the interest component of rental expense, if any, and amortization of debt
discounts and issue costs, whether expensed or capitalized.
RISK FACTORS
GENERAL
As in every business, there are risk factors that face the Company and
its operations. By setting forth below some of the factors that could cause the
actual results of the Company's operations or plans to differ materially from
the Company's expectations as set forth in statements in this Prospectus or the
applicable Prospectus Supplement or in documents incorporated by reference
herein or therein that may be considered to be "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act, the Company seeks to avail itself of the "safe harbor" provided in
the Private Securities Litigation Reform Act of 1995.
SUBSTANTIAL DEBT OBLIGATIONS AND TERM OF DEBT
The Company's obligations for borrowed money aggregated approximately
$184.3 million at March 31, 1997 and $188.9 million at December 31, 1996, as
compared to $39.4 million at December 31, 1995. The percentage of debt to total
market capitalization of the Company was approximately 30% at March 31, 1997 and
32% at December 31, 1996, 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 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
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the ratio of debt to total market capitalization in evaluating the Company's
debt level will adequately protect it from being too highly leveraged.
A significant liability of the Company is a $100 million 7.3% mortgage
note (the "REMIC Note") secured by six of the Company's properties that matures
in September 2000. The Company has historically 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 refinance its indebtedness relating to the REMIC Note or any of its other
indebtedness on commercially reasonable or any other terms.
The Company's unsecured line of credit bears interest at a variable
rate. The balance outstanding under the line of credit at March 31, 1997 was
$55.3 million, and the Company may increase outstanding borrowings to $150
million. 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 67%
of the Company's outstanding balance under the line. The Company has entered
into an interest rate protection agreement with The First National Bank of
Boston (the "Bank") with respect to $57 million of indebtedness whereby the Bank
will reimburse the Company the amount by which the then applicable three month
LIBOR rate exceeds 7.5%. In addition, the Company has entered into an interest
rate swap agreement with the Bank with respect to $43 million, thereby fixing
the interest rate on $43 million through April 14, 1998. There can be no
assurance that these interest rate protection provisions will be effective.
The foregoing risks associated with the debt obligations of the Company
may adversely affect the market price of the Company's 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 indenture governing the REMIC Note (the
"REMIC Indenture"), the Company cannot prepay principal payments on the REMIC
Note, and the properties collateralizing the REMIC Note cannot be sold until
October 1997. If the Company wishes either to prepay 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 (x) 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 (y) certain debt service coverage ratios continue to be satisfied.
Fourteen of the Company's properties were acquired in March 1996 when
Tucker Properties Corporation ("Tucker"), another equity REIT, merged into the
Company (the "Tucker Acquisition"). Such properties were actually owned either
by Tucker Operating Limited Partnership, a Delaware limited partnership of which
Tucker was general partner and owner of more than 95% of the economic interest,
or by Tucker Financing Partnership, a general partnership of which Tucker and
Tucker Operating Limited Partnership were general partners. The Company
succeeded to Tucker's interest in each of these partnerships whose names were
respectively changed to Bradley Operating Limited Partnership ("BOLP" or the
"Operating Partnership") and Bradley Financing Partnership ("BFP").
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Pursuant to the terms of the Tucker Acquisition, the Company, as 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, until March 15, 1998. Thus the Company is restricted
from disposing of all or substantially all of the properties held by the
Operating Partnership.
To simplify the ownership structure of its properties, 18 of which are
currently directly owned by the Company, the Company is considering contributing
substantially all the properties directly owned by it to the Operating
Partnership and thereafter owning such properties through the Operating
Partnership. Prior to effecting such contribution, the Company would expect to
obtain the agreement of a majority in interest of the limited partners that no
further consent would be required for the subsequent disposition of any of the
contributed properties, but there can be no assurance that such agreement will
be obtained.
POTENTIAL ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS
Certain provisions contained in the Company's 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. With respect to clause (ii) in the preceding sentence, a
recent change in the Maryland General Corporation Law, under which the Company
is organized, authorizes the Directors of the Company to amend the Bylaws to
increase the number of outstanding shares of Common Stock required to call a
special meeting from 25% to a majority.
These provisions 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 of stockholders may have the effect of making it more difficult for a
third party to acquire control of the Company without the consent of its Board
of Directors, including certain acquisitions which stockholders deem to be in
their best interest. In addition, the ownership limits in the Charter may also
(x) deter certain tender offers for the shares of Common Stock which might be
attractive to certain stockholders, or (y) 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.
The provisions of the Maryland General Corporation Law relating to
certain "business combinations" and "control share" acquisitions involving
corporations organized under the laws of that state may also inhibit a change in
control of the Company.
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 and neighborhood 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
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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 shopping
centers catering to retail tenants. To the extent that the investing public may
have a negative perception of the retail sector, the value of shares of common
stock of the Company 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 income has been, and 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 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 right as lessor or sublessor
and may incur substantial costs and experience significant delays associated
with protecting its investment, including costs incurred in renovating and
releasing the property.
Potential Negative Effect of One North State Property
During 1996, more than 10% of the total revenue of the Company was
derived from rents and expense reimbursement from tenants of the Company's
mixed-use retail and office building located at One North State Street in
downtown Chicago, which is one of the properties securing the REMIC Note. The
total rents currently being paid by certain of this property's tenants may be in
excess of current market rates. The leases of these tenants begin to expire in
2001. One office tenant, Arthur Andersen, however, has exercised an option to
terminate its lease, effective as of April 1, 1998, and has paid the Company a
$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.
Vacancies and Lease Renewals
The Company is continually faced with expiring tenant leases at its
properties. Some 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. Accordingly, there is no assurance that the effects of possible
vacancies or lease renewals at such properties may not reduce the rental income,
net income, FFO and funds available for distribution below levels anticipated by
the Company.
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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
Company's properties, including those acquired in the Tucker Acquisition, have
been subjected to Phase I or similar environmental audits (which involve
inspection without soil sampling or ground water analysis) by independent
environmental consultants. Except as described below, these environmental audit
reports have not revealed any potential significant environmental liability, nor
is management aware of any environmental liability with respect to the
properties that it believes would have a material adverse effect on the
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 a prior owner of any such property did not
create a 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
groundwater of contaminants similar to those detected in the soil samples.
Environmental assessments of the property have also detected methane gas,
probably associated with the former use of the property as landfill. A regular
maintenance program was implemented by Tucker and is being continued by the
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 further
investigation to determine the source and vertical and horizontal extent of the
contamination. If any such investigation is required and confirms the existence
of contaminants at the levels disclosed in the Phase II site assessments, it is
possible that the relevant agency could require the 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
Tucker Acquisition, 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 the Individuals' aggregate liability for 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 of action
regarding such substances, materials, wastes or products, whether brought by a
governmental or regulatory authority or by a third party, that is initiated on
or before October 4, 2003, with respect to conditions or acts at the Commons of
Chicago Ridge which existed prior to October 4, 1993. In connection with this
indemnification obligation, the Company has agreed to keep the Individuals
reasonably informed of various activities relating to the property and to
consult with the Individuals with respect to any potential claims, settlements
and remediation which could trigger the indemnification obligations of the
Individuals. There can be no assurance that the Individuals will be in a
position to honor their indemnity obligations or that the liabilities may not
exceed the limit of their indemnity obligations. Regardless of such
indemnification, based
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on the information currently available, 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.
Limitations on 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 cost 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 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.
UNCERTAINTY OF MEETING ACQUISITION OBJECTIVES
The Company continually seeks prospective acquisitions of additional
shopping centers and portfolios of shopping centers which the Company believes
can be purchased as attractive initial yields and/or which demonstrate the
potential for revenue and cash flow growth through implementation of renovation,
expansion, re-tenanting and re-leasing programs similar to those that the
Company has undertaken with respect to properties in its existing portfolio.
There can be no assurance that the Company will effect any potential acquisition
that it may evaluate. The evaluation process involves costs which are
non-recoverable in the case of acquisitions which are not consummated. In
addition, notwithstanding the Company's adherence to its criteria for evaluation
and due diligence regarding potential acquisitions, there can be no assurance
that any acquisition that is consummated will meet the Company's expectations.
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
retail 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 charged and (ii) development and acquisition opportunities. The
Company competes for tenants and acquisitions with others who have greater
resources than the Company.
ADVERSE CONSEQUENCE OF FAILURE TO QUALIFY AS A REIT AND OTHER TAX RISKS
The Company believes that it has operated in a manner that permits it to
qualify as a REIT under the Internal Revenue Code of 1986, as amended (the
"Code") for each taxable year since its formation in 1961. Although management
of the Company believes that the Company 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 distribute annually to stockholders 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.
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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, it 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, annual distributions to
stockholders would no longer be required. 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.
In connection with the Tucker Acquisition, Tucker represented to the
Company that, since its formation, it had operated so to qualify as a REIT under
the Code up to the time of the Tucker Acquisition. If, in fact, Tucker failed to
qualify as a REIT in any year in which it elected so to qualify, it would have
become liable to pay taxes as a regular non-REIT corporation, and the
liabilities of Tucker that the Company assumed upon effectiveness of the Tucker
Acquisition include such tax liability. Moreover, Tucker's failure to qualify as
a REIT could disqualify the Company as a REIT for the period following the
Tucker Acquisition. 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.
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.
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, each as amended and restated.
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), and 20 million shares of
Preferred Stock. Under Maryland law, stockholders generally are not responsible
for a corporation's debts or obligations. As of the date of this Prospectus,
there are approximately 21.7 million shares of Common Stock issued and
outstanding and no Preferred Stock is outstanding.
COMMON STOCK
All shares of Common Stock offered hereby have been duly authorized and
will, when issued and paid for as described in the applicable Prospectus
Supplement, be fully paid and nonassessable. Subject to the preferential rights
of any shares or series of Preferred 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, as and when authorized and
declared by the Board of Directors of the Company out of assets legally
available therefor and to share ratably 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
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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, subject to any rights of holders of
Preferred Stock, 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.
See "-- Restrictions on Transfer" below for a description of certain
provisions of the Company's Charter designed to preserve the status of the
Company as a qualified REIT that limit the transfer of, and provide the Company
with a right to redeem, shares of Capital Stock (including shares of Common
Stock) and that also provide for the conversion of such stock to Excess Stock,
in certain circumstances.
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 furnishes 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 Corporation 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, c/o Boston EquiServe, P.O. Box 8040, Boston, MA 02266.
PREFERRED STOCK
General. 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 terms or
conditions of redemption, as permitted by Maryland law. 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 the shares of
Common Stock might receive a premium for their shares over the then market price
of such shares of Common Stock.
Terms. The following description of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. The statements below describing the Preferred
Stock are in all respects subject to and qualified in their entirety by
reference to the applicable provisions of the Company's Charter and Bylaws and
any applicable amendment to the Charter designating terms of a series of
Preferred Stock (a "Designating Amendment").
Reference is made to the Prospectus Supplement relating to the Preferred
Stock offered thereby for specific terms, including:
(1) The title and stated value of such Preferred Stock;
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(2) The number of shares of such Preferred Stock offered, the
liquidation preference per share and the offering price of such
Preferred Stock;
(3) The dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred
Stock;
(4) The date from which dividends on such Preferred Stock shall
accumulate, if applicable;
(5) The voting rights, if any, of such Preferred Stock;
(6) The procedures for any auction and remarketing, if any, for such
Preferred Stock;
(7) The provision for a sinking fund, if any, for such Preferred
Stock;
(8) The provision for redemption, if applicable, of such Preferred
Stock;
(9) Any listing of such Preferred Stock on any securities exchange;
(10) If convertible, the terms and conditions upon which such
Preferred Stock will be convertible into Common Stock, including
the initial conversion price (or manner of calculation thereof)
and the conversion period;
(11) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock;
(12) Whether interests in such Preferred Stock will be represented by
Depositary Shares;
(13) A discussion of federal income tax considerations applicable to
such Preferred Stock;
(14) The relative ranking and preference of such Preferred Stock as
to dividend rights and rights upon liquidation, dissolution or
winding up of the affairs of the Company;
(15) Any limitations on issuance of any series of Preferred Stock
ranking senior to or on a parity with such series of Preferred
Stock as to dividend rights and rights upon liquidation,
dissolution or winding up of the affairs of the Company; and
(16) Any limitations on direct or beneficial ownership and
restrictions on transfer, in each case as may be appropriate to
preserve the status of the Company as a qualified REIT.
Rank. Unless otherwise specified in the Prospectus Supplement, the
Preferred Stock will, with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Company, rank (i) senior to all
classes or series of Common Stock of the Company, and to all equity securities
ranking junior to such Preferred Stock; (ii) on a parity with all equity
securities issued by the Company the terms of which specifically provide that
such equity securities rank on a parity with the Preferred Stock; and (iii)
junior to all equity securities issued by the Company the terms of which
specifically provide that such equity securities rank senior to the Preferred
Stock.
Dividends. Holders of the Preferred Stock of each series will be
entitled to receive, when, as and if declared by the Board of Directors of the
Company, out of assets of the Company legally available for payment, cash
dividends at such rates and on such dates as will be set forth in the applicable
Prospectus Supplement. Each such dividend shall be payable to holders of record
as they appear on the share transfer books of the Company on such record dates
as shall be fixed by the Board of Directors of the Company.
Dividends on any series of the Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth
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in the applicable Prospectus Supplement. If the Board of Directors of the
Company fails to declare a dividend payable on a dividend payment date on any
series of the Preferred Stock for which dividends are non-cumulative, then the
holders of such series of the Preferred Stock will have no right to receive a
dividend in respect of the dividend period ending on such dividend payment date,
and the Company will have no obligation to pay the dividend accrued for such
period, whether or not dividends on such series are declared payable on any
future dividend payment date.
If Preferred Stock of any series is outstanding, no dividends will be
declared or paid or set apart for payment on any capital stock of the Company of
any other series ranking, as to dividends, on a parity with or junior to the
Preferred Stock of such series for any period unless (i) if such series of
Preferred Stock has a cumulative dividend, full cumulative dividends have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof is set apart for such payment on the Preferred Stock of such
series for all past dividend periods and the then current dividend period or
(ii) if such series of Preferred Stock does not have a cumulative dividend, full
dividends for the then current dividend period have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
is set apart for such payment on the Preferred Stock of such series. When
dividends are not paid in full (or a sum sufficient for such full payment is not
so set apart) upon Preferred Stock of any series and the shares of any other
series of Preferred Stock ranking on a parity as to dividends with the Preferred
Stock of such series, all dividends declared upon Preferred Stock of such series
and any other series of Preferred Stock ranking on a parity as to dividends with
such Preferred Stock shall be declared pro rata so that the amount of dividends
declared per share of Preferred Stock of such series and such other series of
Preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Preferred Stock of such series (which shall
not include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Stock does not have a cumulative dividend) and such
other series of Preferred Stock bear to each other. No interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend payment or
payments on Preferred Stock of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
is set apart for payment for all past dividend periods and the then current
dividend period, and (ii) if such series of Preferred Stock does not have a
cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof is set apart for payment for the then current dividend
period, no dividends (other than in shares of Common Stock or other shares of
capital stock ranking junior to the Preferred Stock of such series as to
dividends and upon liquidation) shall be declared or paid or set aside for
payment nor shall any other distribution be declared or made upon the Common
Stock, or any other capital stock of the Company ranking junior to or on a
parity with the Preferred Stock of such series as to dividends or upon
liquidation, nor shall any shares of Common Stock, or any other shares of
capital stock of the Company ranking junior to or on a parity with the Preferred
Stock of such series as to dividends or upon liquidation be redeemed, purchased
or otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any such shares) by the
Company (except by conversion into or exchange for other capital stock of the
Company ranking junior to the Preferred Stock of such series as to dividends and
upon liquidation).
Any dividend payment made on shares of a series of Preferred Stock shall
first be credited against the earliest accrued but unpaid dividend due with
respect to shares of such series which remains payable.
Redemption. If so provided in the applicable Prospectus Supplement, the
Preferred Stock shall be subject to mandatory redemption or redemption at the
option of the Company, as a whole or in part, in each case upon the terms, at
the times and at the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Stock that
is subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an
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amount equal to all accrued and unpaid dividends thereon (which shall not, if
such Preferred Stock does not have a cumulative dividend, include any
accumulation in respect of unpaid dividends for prior dividend periods) to the
date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable Prospectus Supplement. If the
redemption price for Preferred Stock of any series is payable only from the net
proceeds of the issuance of shares of capital stock of the Company, the terms of
such Preferred Stock may provide that, if no such shares of capital stock shall
have been issued or to the extent the net proceeds from any issuance are
insufficient to pay in full the aggregate redemption price then due, such
Preferred Stock shall automatically and mandatorily be converted into the
applicable shares of capital stock of the Company pursuant to conversion
provisions specified in the applicable Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if a series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all shares of such
series of Preferred Stock shall have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for all past dividend periods and the then current dividend period, and
(ii) if a series of Preferred Stock does not have a cumulative dividend, full
dividends on all shares of the Preferred Stock of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for the then current dividend period, no
shares of such series of Preferred Stock shall be redeemed unless all
outstanding shares of Preferred Stock of such series are simultaneously
redeemed; provided, however, that the foregoing shall not prevent the purchase
or acquisition of Preferred Stock of such series to preserve the REIT status of
the Company or pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding shares of Preferred Stock of such series. In
addition, unless (i) if such series of Preferred Stock has a cumulative
dividend, full cumulative dividends on all outstanding shares of such series of
Preferred Stock have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for payment for all past
dividend periods and the then current dividend period, and (ii) if such series
of Preferred Stock does not have a cumulative dividend, full dividends on the
Preferred stock of such series have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for the then current dividend period, the Company shall not purchase or
otherwise acquire directly or indirectly any shares of Preferred Stock of such
series (except by conversion into or exchange for capital stock of the Company
ranking junior to the Preferred Stock of such series as to dividends and upon
liquidation); provided, however, that the foregoing shall not prevent the
purchase or acquisition of shares of Preferred Stock of such series to preserve
the REIT status of the Company or pursuant to a purchase or exchange offer made
on the same terms to holders of all outstanding shares of Preferred Stock of
such series.
If fewer than all of the outstanding shares of Preferred Stock of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares held
or for which redemption is requested by such holder (with adjustments to avoid
redemption of fractional shares) or by lot in a manner determined by the
Company.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of record of Preferred Stock
of any series to be redeemed at the address shown on the share transfer books of
the Company. Each notice shall state: (i) the redemption date; (ii) the number
of shares and series of the Preferred Stock to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates for such Preferred Stock are
to be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; and (vi) the
date upon which the holder's conversion rights, if any, as to such shares shall
terminate. If fewer than all the shares of Preferred Stock of any series are to
be redeemed, the notice mailed to each such holder thereof shall also specify
the number of shares of Preferred Stock to be redeemed from each such holder. If
notice of redemption of any Preferred Stock has been given and if the funds
necessary for such redemption have been set aside by the Company in trust for
the benefit of the holders of any Preferred Stock so called for redemption, then
from and after the redemption date dividends will cease to accrue on such
Preferred Stock, and all rights of the holders of such shares will terminate,
except the right to receive the redemption price.
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Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company, then, before any
distribution or payment shall be made to the holders of any Common Stock or any
other class or series of capital stock of the Company ranking junior to the
Preferred Stock in the distribution of assets upon any liquidation, dissolution
or winding up of the Company, the holders of each series of Preferred Stock
shall be entitled to receive out of assets of the Company legally available for
distribution to stockholders liquidating distributions in the amount of the
liquidation preference per share (set forth in the applicable Prospectus
Supplement), plus an amount equal to all dividends accrued and unpaid thereon
(which shall not include any accumulation in respect of unpaid noncumulative
dividends for prior dividend periods). After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Preferred
Stock will have no right or claim to any of the remaining assets of the Company.
In the event that, upon any such voluntary or involuntary liquidation,
dissolution or winding up, the available assets of the Company are insufficient
to pay the amount of the liquidating distributions on all outstanding shares of
Preferred Stock and the corresponding amounts payable on all shares of other
classes or series of capital stock of the Company ranking on a parity with the
Preferred Stock in the distribution of assets, then the holders of the Preferred
Stock and all other such classes or series of capital stock shall share ratably
in any such distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders
of Preferred Stock, the remaining assets of the Company shall be distributed
among the holders of any other classes or series of capital stock ranking junior
to the Preferred Stock upon liquidation, dissolution or winding up, according to
their respective rights and preferences and in each case according to their
respective number of shares. For such purposes, the consolidation or merger of
the Company with or into any other corporation, trust or entity, or the sale,
lease or conveyance of all or substantially all of the property or business of
the Company, shall not be deemed to constitute a liquidation, dissolution or
winding up of the Company.
Voting Rights. Holders of the Preferred Stock will not have any voting
rights, except as set forth below or as indicated in the applicable Prospectus
Supplement.
Whenever dividends on any shares of Preferred Stock shall be in arrears
for six or more consecutive quarterly periods, the holders of such shares of
Preferred Stock (voting separately as a class with all other series of Preferred
Stock upon which like voting rights have been conferred and are exercisable)
will be entitled to vote for the election of two additional directors of the
Company at a special meeting called by the holders of record of at least ten
percent (10%) of any series of Preferred Stock so in arrears (unless such
request is received less than 90 days before the date fixed for the next annual
or special meeting of the stockholders) or at the next annual meeting of
stockholders, and at each subsequent annual meeting until (i) if such series of
Preferred Stock has a cumulative dividend, all dividends accumulated on such
shares of Preferred Stock for the past dividend periods and the then current
dividend period shall have been fully paid or declared and a sum sufficient for
the payment thereof set aside for payment or (ii) if such series of Preferred
Stock does not have a cumulative dividend, four consecutive quarterly dividends
shall have been fully paid or declared and a sum sufficient for the payment
thereof set aside for payment. In such case, the entire Board of Directors of
the Company will be increased by two directors.
Unless provided otherwise for any series of Preferred Stock, so long as
any shares of Preferred Stock of a series remain outstanding, the Company will
not, without the affirmative vote or consent of the holders of at least a
majority of the shares of such series of Preferred Stock outstanding at the
time, given in person or by proxy, either in writing or at a meeting (such
series voting separately as a class), (i) authorize or create, or increase the
authorized or issued amount of, any class or series of capital stock ranking
prior to such series of Preferred Stock with respect to payment of dividends or
the distribution of assets upon liquidation, dissolution or winding up or
reclassify any authorized capital stock of the Company into such shares, or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares; or (ii) amend, alter or repeal
the provisions of the Company's Charter or the Designating Amendment for such
series of Preferred Stock, whether by merger, consolidation or otherwise (an
"Event"), so as to materially and adversely affect any right, preference,
privilege or voting power of such series of Preferred Stock or the holders
thereof; provided, however, with respect to the occurrence of any of the Events
set forth in (ii) above, so long
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as the Preferred Stock remains outstanding with the terms thereof materially
unchanged, taking into account that upon the occurrence of an Event the Company
may not be the surviving entity, the occurrence of any such Event shall not be
deemed to materially and adversely affect such rights, preferences, privileges
or voting power of holders of Preferred Stock and provided further that (a) any
increase in the amount of the authorized Preferred Stock or the creation or
issuance of any other series of Preferred Stock, or (b) any increase in the
amount of authorized shares of such series or any other series of Preferred
Stock, in each case ranking on a parity with or junior to the Preferred Stock of
such series with respect to payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up, shall not be deemed to materially
and adversely affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding shares of such series of Preferred Stock
shall have been redeemed or called for redemption and sufficient funds shall
have been set aside by the Company in trust for the benefit of the holders of
such shares to effect such redemption.
Conversion Rights. The terms and conditions, if any, upon which any
series of Preferred Stock is convertible into shares of Common Stock will be set
forth in the applicable Prospectus Supplement relating thereto. Such terms will
include the number of shares of Common Stock into which the shares of Preferred
Stock are convertible, the conversion price (or manner of calculation thereof),
the conversion period, provisions as to whether conversion will be at the option
of the holders of the Preferred Stock or the Company, the events requiring an
adjustment of the conversion price and provisions affecting conversion in the
event of the redemption of such series of Preferred Stock.
Restrictions on Ownership. As discussed below under "-- Restrictions on
Transfer," for the Company to qualify as a REIT under the Internal Revenue Code
of 1986, as amended (the "Code"), not more than 50% in value of its outstanding
capital stock may be owned, directly or indirectly, by five or fewer individuals
(as defined in the Code to include certain entities) during the last half of a
taxable year. To assist the Company in meeting this requirement, the Company may
take certain actions to limit the beneficial ownership, directly or indirectly,
by a single person of the Company's outstanding equity securities, including any
Preferred Stock of the Company. Therefore, the Designating Amendment for each
series of Preferred Stock may contain provisions restricting the ownership and
transfer of the Preferred Stock and/or providing for the automatic exchange of
shares of Preferred Stock into shares of Excess Stock in certain circumstances.
The applicable Prospectus Supplement will specify any additional ownership
limitation relating to a series of Preferred Stock.
Transfer Agent and Registrar. The transfer agent and registrar for the
Preferred Stock will be set forth in the applicable Prospectus Supplement.
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 capital stock 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 capital stock 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 preserve the status of
the Company as 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 person. 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
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"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 and if the Board of Directors decides
that such waiver is in the best interests of the Company.
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 not 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 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 at the time of such prohibited transfer) or
the market price of the capital stock on the date the Company exercises its
option 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
New York Stock Exchange or any other stock exchange on which capital stock of
the Company is listed. The foregoing restrictions on
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transferability and ownership also will not apply if the Board of Directors
determines that it is no longer in the best interests 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 offeror and/or its affiliates and associates) 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
purchase 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.
CERTAIN PROVISIONS OF MARYLAND LAW
The following summary of certain provisions of the MGCL does not purport
to be complete and is qualified in its entirety by reference to the MGCL.
Business Combinations. Under the MGCL, certain "business combinations"
(including a merger, consolidation, share exchange, or, in certain
circumstances, an asset transfer or issuance or reclassification of equity
securities) between a Maryland corporation and any person who beneficially owns
10% or more of the voting power of the corporation's shares of capital stock or
an affiliate of the corporation who, at any time within the two-year period
prior to the date in question, was the beneficial owner of 10% or more of the
voting power of the then-outstanding voting stock of the corporation (an
"Interested Stockholder") or an affiliate thereof are prohibited for five years
after the most recent date on which the Interested Stockholder becomes an
Interested Stockholder. Thereafter, any such business combination must be
recommended by the board of directors of the corporation and approved by the
affirmative vote of at least (i) 80% of the votes entitled to be cast by holders
of outstanding voting shares of the corporation and (ii) two-thirds of the votes
entitled to be cast by holders of outstanding voting shares of the corporation
other than shares held by the Interested Stockholder with whom (or with whose
affiliate) the business combination is to be effected, unless, among other
conditions, the corporation's common stockholders receive a minimum price (as
defined in the MGCL) for their shares and the consideration is received in cash
or in the same form as previously paid by the Interested Stockholder for its
shares. These provisions of Maryland law do not apply, however, to business
combinations that are approved or exempted by the board of directors of the
corporation prior to the time that the Interested Stockholder becomes an
Interested Stockholder.
Control Share Acquisitions. The MGCL provides that "control shares" of a
Maryland corporation acquired in a "control share acquisition" have no voting
rights except to the extent approved by a vote of two-thirds of the votes
entitled to be cast on the matter, excluding shares of stock owned by the
acquiror or by officers or directors who are employees of the corporation.
"Control shares" are voting shares of stock that, if aggregated with all other
shares of stock previously acquired by that person, or in respect of which the
acquiror is able to exercise or direct the exercise of voting power (except
solely by virtue of a revocable proxy), would entitle the acquiror to exercise
voting power in electing directors within one of the following ranges of voting
power: (i) one-fifth or more but less than one-third, or (ii) one-third or more
but less than a majority, or (iii) a majority of all voting power. Control
shares do not include shares the acquiring person is then entitled to vote as a
result of having previously obtained stockholder approval. A "control share
acquisition" means the acquisition of control shares, subject to certain
exceptions.
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A person who has made or proposes to make a control share acquisition,
upon satisfaction of certain conditions (including an undertaking to pay
expenses), may compel the board of directors to call a special meeting of
stockholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, the corporation may itself
present the question at any meeting of stockholders.
If voting rights are not approved at the meeting or if the acquiring
person does not deliver an acquiring person statement as required by the
statute, then, subject to certain conditions and limitations, the corporation
may redeem any or all of the control shares (except those for which voting
rights have been previously been approved) for fair value determined, without
regard to the absence of voting rights for the control shares, as of the date of
the last control share acquisition by the acquiror or of any meeting of
stockholders at which the voting rights of such shares are considered and not
approved. If voting rights for control shares are approved at a stockholders
meeting and the acquiror becomes entitled to vote a majority of the shares
entitled to vote, all other stockholders may exercise appraisal rights. The fair
value of the shares as determined for purposes of the appraisal rights may not
be less than the highest price per share paid by the acquiror in the control
share acquisition, and certain limitations and restrictions otherwise applicable
to the exercise of dissenters' rights do not apply in the context of a control
share acquisition.
The control share acquisition statute does not apply to shares acquired
in a merger, consolidation or share exchange if the corporation is a party to
the transaction, or to acquisitions approved or exempted by a corporation's
articles of incorporation or bylaws.
The Company's Bylaws contain a provision exempting any and all
acquisitions of the Company's shares of capital stock from the control shares
provision of the MGCL. The Board of Directors of the Company, without the
approval of the stockholders, and the holders of a majority of the outstanding
shares of Common Stock each have authority to amend the Bylaws, and there can be
no assurance that this provision will not be amended or repealed in the future.
DESCRIPTION OF DEPOSITARY SHARES REPRESENTING PREFERRED STOCK
GENERAL
The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest of a share of a
particular series of Preferred Stock, as specified in the applicable Prospectus
Supplement. Shares of Preferred Stock of each series represented by Depositary
Shares will be deposited under a separate Deposit Agreement (each, a "Deposit
Agreement") among the Company, the depositary named therein (the "Preferred
Shares Depositary") and the holders from time to time of the Depositary
Receipts. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Receipt will be entitled, in proportion to the fractional interest of
a share of a particular series of Preferred Stock represented by the Depositary
Shares evidenced by such Depositary Receipt, to all rights and preferences of
the Preferred Stock represented by such Depositary Shares (including dividend,
voting, conversion, redemption and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of the Preferred Stock by the Company to the Preferred Shares
Depositary, the Company will cause the Preferred Shares Depositary to issue, on
behalf of the Company, the Depositary Receipts. Copies of the applicable form of
Deposit Agreement and Depositary Receipt may be obtained from the Company upon
request, and the following summary of the form thereof filed as an exhibit to
the Registration Statement of which this Prospectus is a part is qualified in
its entirety by reference thereto.
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DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Shares Depositary will distribute all cash dividends or
other cash distributions received in respect of the Preferred Stock to the
record holders of Depositary Receipts evidencing the related Depositary Shares
in proportion to the number of such Depositary Receipts owned by such holders,
subject to certain obligations of holders to file proofs, certificates and other
information and to pay certain charges and expenses to the Preferred Shares
Depositary.
In the event of a distribution other than in cash, the Preferred Shares
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the Preferred Shares Depositary, unless the Preferred Shares
Depositary determines that it is not feasible to make such distribution, in
which case the Preferred Shares Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale to
such holders.
WITHDRAWAL OF SHARES
Upon surrender of the Depositary Receipts at the corporate trust office
of the Preferred Shares Depositary (unless the related Depositary Shares have
previously been called for redemption), the holders thereof will be entitled to
delivery at such office, to or upon such holder's order, of the number of whole
or fractional shares of Preferred Stock and any money or other property
represented by the Depositary Shares evidenced by such Depositary Receipts.
Holders of Depositary Receipts will be entitled to receive whole or fractional
shares of the related Preferred Stock on the basis of the proportion of
Preferred Stock represented by each Depositary Share as specified in the
applicable Prospectus Supplement, but holders of such shares of Preferred Stock
will not thereafter be entitled to receive Depositary Shares therefor. If the
Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
shares of Preferred Stock to be withdrawn, the Preferred Shares Depositary will
deliver to such holder at the same time a new Depositary Receipt evidencing such
excess number of Depositary Shares. The Company does not expect that there will
be any public market for shares of Preferred Stock that are withdrawn as
described in this paragraph.
REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems shares of Preferred Stock held by the
Preferred Shares Depositary, the Preferred Shares Depositary will redeem as of
the same redemption date the number of Depositary Shares representing the shares
of Preferred Stock so redeemed, provided the Company shall have paid in full to
the Preferred Shares Depositary the redemption price of the Preferred Stock to
be redeemed plus an amount equal to any accrued and unpaid dividends thereon to
the date fixed for redemption. The redemption price per Depositary Share will be
equal to the redemption price and any other amounts per share payable with
respect to the Preferred Stock. If fewer than all the Depositary Shares are to
be redeemed, the Depositary Shares to be redeemed will be selected pro rata (as
nearly as may be practicable without creating fractional Depositary Shares) or
by any other equitable method determined by the Company.
From and after the date fixed for redemption, all dividends in respect
of shares of Preferred Stock so called for redemption will cease to accrue, the
Depositary Shares so called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the Depositary Receipts evidencing
the Depositary Shares so called for redemption will cease, except the right to
receive any moneys payable upon such redemption and any money or other property
to which the holders of such Depositary Receipts were entitled upon such
redemption upon surrender thereof to the Preferred Shares Depositary.
VOTING
Upon receipt of notice of any meeting at which the holders of shares of
Preferred Stock are entitled to vote, the Preferred Shares Depositary will mail
the information contained in such notice of meeting to the record
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holders of the Depositary Receipts evidencing the Depositary Shares which
represent such shares of Preferred Stock. Each record holder of Depositary
Receipts evidencing Depositary Shares on the record date (which will be the same
date as the record date for the Preferred Stock) will be entitled to instruct
the Preferred Shares Depositary as to the exercise of the voting rights
pertaining to the amount of Preferred Stock represented by such holder's
Depositary Shares. The Preferred Shares Depositary will vote the amount of
Preferred Stock represented by such Depositary Shares in accordance with such
instructions, and the Company will agree to take all reasonable action which may
be deemed necessary by the Preferred Shares Depositary in order to enable the
Preferred Shares Depositary to do so. The Preferred Shares Depositary will
abstain from voting the amount of Preferred Stock represented by such Depositary
Shares to the extent it does not receive specific instructions from the holders
of Depositary Receipts evidencing such Depositary Shares. The Preferred Shares
Depositary shall not be responsible for any failure to carry out any instruction
to vote, or for the manner or effect of any such vote made, as long as any such
action or non-action is in good faith and does not result from negligence or
willful misconduct of the Preferred Shares Depositary.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of each Depositary
Receipt will be entitled to the fraction of the liquidation preference accorded
each share of Preferred Stock represented by the Depositary Share evidenced by
such Depositary Receipt, as set forth in the applicable Prospectus Supplement.
CONVERSION
The Depositary Shares, as such, are not convertible into shares of
Common Stock or any other securities or property of the Company. Nevertheless,
if so specified in the applicable Prospectus Supplement relating to an offering
of the Depositary Shares, the Depositary Receipts may be surrendered by holders
thereof to the Preferred Shares Depositary with written instructions to the
Preferred Shares Depositary to instruct the Company to cause conversion of the
Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipts into whole shares of Common Stock, other shares of Preferred
Stock of the Company or other shares of beneficial interest, and the Company has
agreed that, upon receipt of such instructions and any amounts payable in
respect thereof, it will cause the conversion thereof utilizing the same
procedures as those provided for delivery of shares of Preferred Stock to effect
such conversion. If the Depositary Shares evidenced by a Depositary Receipt are
to be converted in part only, a new Depositary Receipt will be issued for any
Depositary Shares not to be converted. No fractional shares of Common Stock will
be issued upon conversion, and if such conversion will result in a fractional
share being issued, an amount will be paid in cash by the Company equal to the
value of the fractional interest based upon the closing price of the Common
Stock on the last business day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares which
represent the Preferred Stock and any provision of the Deposit Agreement may at
any time be amended by agreement between the Company and the Preferred Shares
Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Receipts or that would be materially and
adversely inconsistent with the rights granted to the holders of the related
Preferred Stock will not be effective unless such amendment has been approved by
the existing holders of at least a majority of the Depositary Shares evidenced
by the Depositary Receipts then outstanding. No amendment shall impair the
right, subject to certain exceptions in the Deposit Agreement, of any holder of
Depositary Receipts to surrender any Depositary Receipt with instructions to
deliver to the holder the related Preferred Stock and all money and other
property, if any, represented thereby, except in order to comply with law. Every
holder of an outstanding Depositary Receipt at the time any such amendment
becomes effective shall be deemed, by continuing to hold such Depositary
Receipt, to consent and agree to such amendment and to be bound by the Deposit
Agreement as amended thereby.
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The Deposit Agreement may be terminated by the Company upon not less
than 30 days' prior written notice to the Preferred Shares Depositary if (i)
such termination is necessary to preserve the Company's status as a REIT or (ii)
at least two-thirds of each series of Preferred Stock affected by such
termination consents to such termination, whereupon the Preferred Shares
Depositary shall deliver or make available to each holder of Depositary
Receipts, upon surrender of the Depositary Receipts held by such holder, such
number of whole or fractional shares of Preferred Stock as are represented by
the Depositary Shares evidenced by such Depositary Receipts together with any
other property held by the Preferred Shares Depositary with respect to such
Depositary Receipt. The Company has agreed that, if the Deposit Agreement is
terminated to preserve the Company's status as a REIT, the Company will use its
best efforts to list the shares of Preferred Stock issued upon surrender of the
related Depositary Shares on a national securities exchange. In addition, the
Deposit Agreement will automatically terminate if (a) all outstanding Depositary
Shares shall have been redeemed or converted, or (b) there shall have been a
final distribution in respect of the related Preferred Stock in connection with
any liquidation, dissolution or winding up of the Company and such distribution
shall have been distributed to the holders of Depositary Receipts evidencing the
Depositary Shares representing such Preferred Stock.
CHARGES OF PREFERRED SHARES DEPOSITARY
The Company will pay all transfer and other taxes and governmental
charges arising solely from the existence of the Deposit Agreement. In addition,
the Company will pay the fees and expenses of the Preferred Shares Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay certain other transfer and
other taxes and governmental charges as well as the fees and expenses of the
Preferred Shares Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Shares Depositary may resign at any time by delivering to
the Company notice of its election to do so, and the Company may at any time
remove the Preferred Shares Depositary, any such resignation or removal to take
effect upon the appointment of a successor Preferred Shares Depositary. A
successor Preferred Shares Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Shares Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Shares Depositary with respect to the related Preferred Stock.
Neither the Preferred Shares Depositary nor the Company will be liable
if it is prevented from or delayed in, by law or any circumstances beyond its
control, performing its obligations under the Deposit Agreement. The obligations
of the Company and the Preferred Shares Depositary under the Deposit Agreement
will be limited to performing their duties thereunder in good faith and without
negligence or willful misconduct, and the Company and the Preferred Shares
Depositary will not be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Receipts, Depositary Shares or shares of Preferred
Stock represented thereby unless satisfactory indemnity is furnished. The
Company and the Preferred Shares Depositary may rely on written advice of
counsel or accountants, or information provided by persons presenting shares of
Preferred Stock represented thereby for deposit, holders of Depositary Receipts
or other persons believed in good faith to be competent to give such
information, and on documents believed in good faith to be genuine and signed by
a proper party.
In the event the Preferred Shares Depositary shall receive conflicting
claims, requests or instructions from any holders of Depositary Receipts, on the
one hand, and the Company, on the other hand, the Preferred Shares Depositary
shall be entitled to act on such claims, requests or instructions received from
the Company.
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<PAGE> 25
DESCRIPTION OF WARRANTS OR RIGHTS
The Company may issue warrants or rights (collectively, the "Warrants")
for the purchase of any series of Depositary Shares or shares of any class of
capital stock of the Company. Warrants may be issued independently or together
with any other Securities and may be attached to or separate from such
Securities. Each series of Warrants will be issued under a separate warrant
agreement or rights agreement (each, a "Warrant Agreement") to be entered into
between the Company and a warrant agent or rights agent ("Warrant Agent"). The
Warrant Agent will act solely as an agent of the Company in connection with the
Warrants of such series and will not assume any obligation or relationship of
agency or trust for or with any holders or beneficial owners of Warrants.
The applicable Prospectus Supplement will describe the following terms,
where applicable, of the Warrants in respect of which this Prospectus is being
delivered: (i) the title of such Warrants; (ii) the aggregate number of such
Warrants; (iii) the price or prices at which such Warrants will be issued; (iv)
the designation, aggregate principal amount and terms of the Securities
purchasable upon exercise of such Warrants; (v) the designation and terms of the
Securities, if any, with which such Warrants are issued and the number of such
Warrants issued with each such Security; (vi) if applicable, the date on and
after which such Warrants and the related Securities will be separately
transferable; (vii) the price at which the Securities purchasable upon exercise
of such Warrants may be purchased; (viii) the date on which the right to
exercise such Warrants shall commence and the date on which such right shall
expire; (ix) the minimum or maximum amount of such Warrants which may be
exercised at any one time; (x) information with respect to book-entry
procedures, if any; (xi) a discussion of certain applicable federal income tax
considerations; and (xii) any other terms of such Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such
Warrants.
DESCRIPTION OF UNITS OF SECURITIES
The Company may issue Units consisting of two or more other constituent
Securities, which Units may be issuable as, and for the period of time specified
therein may be transferable as, a single Security only, as distinguished from
the separate constituent Securities comprising such Units. Any such Units will
be offered pursuant to a Prospectus Supplement which will (i) identify and
designate the title of any series of Units; (ii) identify and describe the
separate constituent Securities comprising such Units; (iii) set forth the price
or prices at which such Units will be issued; (iv) describe, if applicable, the
date on and after which the constituent Securities comprising the Units will
become separately transferable; (v) provide information with respect to
book-entry procedures, if any; (vi) discuss certain applicable federal income
tax considerations relating to the Units; and (vii) describe any other terms of
the Units and their constituent Securities.
FEDERAL INCOME TAX CONSIDERATIONS
The Company has elected to qualify as a REIT under the Code. In the
opinion of Goodwin, Procter & Hoar LLP, the Company has been organized in
conformity with the requirements for qualification as a REIT under the Code, and
its manner of operation has met and will continue to meet the requirements for
qualification and taxation as a REIT under the Code. This opinion is based on
various assumptions and is conditioned upon representations made by the Company
as to factual matters and the continuation of such factual matters. Investors
should be aware, however, that opinions of counsel are not binding upon the
Internal Revenue Service or any court. Moreover, such qualification and taxation
as a REIT in any tax year depends upon the Company's ability to meet in its
actual results for the tax year the various source of income, ownership of
assets, distribution and diversity of ownership requirements of the Code for
qualification as a REIT, which results will not be reviewed by Goodwin, Procter
& Hoar LLP. Accordingly, no assurance can be given that the actual results of
the Company for any particular tax year will in fact satisfy the requirements
for qualification. Likewise, although the Company believes that it has operated
in a manner which satisfies the REIT qualification requirements under the Code
since its organization in 1961, no assurance can be given that the Company's
23
<PAGE> 26
qualification as a REIT will not be challenged by the Internal Revenue Service
for taxable years still subject to audit.
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. This discussion does not address
any state tax considerations or issues that arise as a result of an investor's
special circumstances or special status under the Code.
Under the Code, if certain requirements are met in a taxable year,
including the requirement that the REIT distribute to its stockholders at least
95% of its real estate investment trust taxable income for the taxable year, a
REIT generally will not be subject to federal income tax with respect to income
that it distributes to its stockholders. However, the Company may be subject to
federal income tax under certain circumstances, including taxes at regular
corporate rates on any undistributed REIT taxable income, the alternative
minimum tax on its items of tax preference, and taxes imposed on income and gain
generated by certain extraordinary transactions. 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. For additional discussion of
certain issues relating to the Company's qualification as a REIT that arise as a
result of the Tucker Acquisition, see "Risk Factors -- Adverse Consequences of
Failure to Qualify as a REIT and Other Tax Risks."
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 a 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 Untied States or 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 and (iv) not given special status under the
Code, such as a tax-exempt organization; provided, however, for taxable years
beginning after December 31, 1996 (or certain earlier periods if the trust so
elects) trusts are to be included as "U.S. Stockholders" only if a court within
the Untied States is able to exercise primary supervision over the
administration of the trust and one or more United States fiduciaries have
authority to control all substantial decisions of the trust. 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 distributions in excess of current and accumulated
earnings and profits exceed the adjusted basis of a stockholder's Common Stock,
the distribution 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 dividend declared by the Company in October, November or December
of any year and payable to a stockholder of record on a special 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.
Investors are urged to consult their own tax advisors with respect to
the appropriateness of an investment in the Securities 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, foreign
investors should consult their own tax advisors concerning the
24
<PAGE> 27
tax consequences of an investment in the Company, including the possibility of
United States income tax withholding on Company distributions.
PLAN OF DISTRIBUTION
The Company may sell Securities through underwriters or dealers,
directly to one or more purchasers, or through agents.
The distribution of the Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale or at prices related to such
prevailing market prices, or at negotiated prices.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company or from purchasers of Securities, for whom
they may act as agents, in the form of discounts, concessions, or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions, or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers, and agents that participate in the distribution
of Securities may be deemed to be underwriters, and any discounts or commissions
they receive from the Company, and any profit on the resale of Securities they
realize may be deemed to be underwriting discounts and commissions, under the
Securities Act. Any such underwriter or agent will be identified, and any such
compensation received from the Company will be described, in the applicable
Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, each
series of Securities will be a new issue with no established trading market,
other than the Common Stock which is listed on the NYSE. Any shares of Common
Stock sold pursuant to a Prospectus Supplement will be listed on the NYSE,
subject to official notice of issuance. The Company may elect to list any series
of Preferred Stock on an exchange, but is not obligated to do so. It is possible
that one or more underwriters may make a market in a series of Securities, but
will not be obligated to do so and may discontinue any market making at any time
without notice. Therefore, no assurance can be given as to the liquidity of, or
the trading market for, the Securities.
Under agreements into which the Company may enter, underwriters will be,
and dealers and agents who participate in the distribution of Securities may be,
entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, the Company in the ordinary course of
business.
If so indicated in the applicable Prospectus Supplement, the Company may
itself, or may authorize underwriters or other persons acting as the Company's
agents to solicit offers by certain institutions to purchase Securities from the
Company pursuant to contracts providing for payment and delivery on a future
date. Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the Securities shall not at the time of delivery be prohibited under the laws of
the jurisdiction to which such purchaser is subject. The underwriters and such
other agents will not have any responsibility in respect of the validity or
performance of such contracts.
In order to comply with the securities laws of certain states, if
applicable, the Securities offered hereby will be sold in such jurisdictions
only through registered or licensed brokers or dealers.
25
<PAGE> 28
LEGAL MATTERS
Certain legal matters, including the legality of the Securities,
will be passed upon for the Company by Goodwin, Procter & Hoar LLP, Boston,
Massachusetts. William B. King, whose professional corporation is a partner in
Goodwin, Procter & Hoar LLP, is Secretary of the Company and is the beneficial
owner of approximately 8,700 shares of Common Stock. In case of an underwritten
public offering, certain legal matters will be passed upon for the Underwriters
by legal counsel named in the applicable Prospectus Supplement.
EXPERTS
The consolidated financial statements and schedule of the Company
as of December 31, 1996 and 1995 and for each of the years in the three-year
period ended December 31, 1996 contained in the Company's Annual Report on
Form 10-K have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. To the extent
that KPMG Peat Marwick LLP audits and reports on financial statements of the
Company issued at future dates, and consents to the use of their report
thereon, such financial statements also will be incorporated by reference in
the Registration Statement in reliance upon their report and said authority.
26
<PAGE> 29
===============================================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
--------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information....................................................... 2
Incorporation of Certain
Documents by Reference.................................................... 2
The Company................................................................. 3
Use of Proceeds............................................................. 3
Ratios of Earnings to Combined Fixed Charges
and Preferred Stock Dividends.......................................... 4
Risk Factors................................................................ 4
Description of Capital Stock................................................ 10
Description of Depositary Shares representing
Preferred Stock........................................................ 19
Description of Warrants or Rights........................................... 23
Description of Units of Securities.......................................... 23
Federal Income Tax Considerations........................................... 23
Plan of Distribution........................................................ 25
Legal Matters............................................................... 26
Experts..................................................................... 26
</TABLE>
===============================================================================
===============================================================================
$234,460,000
BRADLEY REAL ESTATE, INC.
COMMON STOCK
PREFERRED STOCK
DEPOSITARY SHARES REPRESENTING
PREFERRED STOCK
WARRANTS OR RIGHTS
UNITS OF SECURITIES
--------------------------------------------
PROSPECTUS
--------------------------------------------
, 1997
===============================================================================
<PAGE> 30
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the approximate amount of the fees
and expenses (other than underwriting commissions and discounts) anticipated to
be paid by the Company in connection with the issuance and distribution of the
Securities.
<TABLE>
<CAPTION>
<S> <C>
SEC Registration fee $ 60,606
NASD fee 30,500
Legal fees and expenses 400,000
Blue Sky expenses 15,000
Accounting fees and expenses 150,000
Printing fees and expenses 300,000
Transfer and Agency fees 15,000
Miscellaneous 28,894
----------
TOTAL $1,000,000
==========
</TABLE>
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
charter of Bradley Real Estate, Inc. (the "Company") contains such a provision
which eliminates such liability to the maximum extent permitted by Maryland law.
The charter of the Company authorizes it, 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 it, to the maximum extent permitted by Maryland law, to
indemnify (a) any present or former director or officer of the Company, (b) 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 (c) any present or former Trustee or officer of the Trust.
The MGCL requires a corporation (unless its charter provides
otherwise, which the Company's 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 (i) the act or omission
of the director or officer was material to the matter giving rise to the
proceeding and (a) was committed in bad faith or (b) was the result of active
and deliberate dishonesty, (ii) the director or officer actually received an
improper personal benefit in money, property or services or (iii) 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 corporation as a condition to
advancing expenses, to obtain (x) a written affirmation by the director or
officer of his good faith belief that he has met the standard of conduct
necessary for indemnification by the corporation as authorized by the bylaws and
(y) 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> 31
The Company has claims-made directors and officers liability
insurance policies that insure the directors and officers of the Company against
loss from claimed wrongful acts and insure the Company for indemnifying the
directors and officers against such loss. The policy limits of liability are
$10,000,000 each policy year and are subject to a retention of $150,000 of loss
by the Company.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
**1.1 Form of Underwriting Agreement.
3.1 Articles of Amendment and Restatement of Bradley Real Estate, Inc., incorporated by reference
to Exhibit 3.1 of the Company's Current Report on Form 8-K dated October 17, 1994.
3.2 Articles of Merger between Bradley Real Estate Trust and Bradley Real Estate, Inc., incorporated
by reference to Exhibit 3.2 of the Company's Current Report on Form 8-K dated October 17, 1994.
3.3 By-laws of Bradley Real Estate, Inc., incorporated by reference to Exhibit 3.3 of the Company's
Current Report on Form 8-K dated October 17, 1994.
4.1 Articles VII and IX of the Charter of the Company (included in Exhibit 3.1 hereto).
4.2 Bylaws of the Company (included in Exhibit 3.3 hereto).
4.3 Form of Common Stock Certificate, incorporated by reference to Exhibit 4.1 of the Company's
Current Report on Form 8-K dated October 17, 1994.
4.4 Form of Warrant Agreement between Bradley Real Estate, Inc. and the warrant agent thereunder,
incorporated by reference to Exhibit 4.2 of the Company's Registration Statement on Form S-3 (File
No. 33-87084).
**4.5 Preferred Stock Terms as set forth in resolutions of the Board of Directors.
**4.6 Form of Preferred Stock Certificate.
**4.7 Form of Deposit Agreement (including Form of Depositary Receipt).
*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the Securities being registered.
*8.1 Opinion of Goodwin, Procter & Hoar LLP as to certain tax matters.
*12.1 Calculation of Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
*23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Goodwin, Procter & Hoar LLP (included in Exhibits 5.1 and 8.1 hereto).
24.1 Powers of Attorney (included in Part II of this registration statement).
</TABLE>
- ----------------------
* Filed herewith.
** To be filed by amendment or incorporated by subsequent reference.
II-2
<PAGE> 32
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, 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, as amended (the "Securities
Act")
(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 the
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or
high and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the 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 undersigned registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), that are
incorporated by reference in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, 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; and
(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 registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act that is incorporated by reference in the
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 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under Item 15 above, or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange
Commission (the "Commission") such indemnification is against
public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer, or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer
II-3
<PAGE> 33
or controlling person in connection with the securities being
registered, the registrant 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 Securities Act and
will be governed by the final adjudication of such issue.
II-4
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, 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
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago, State of Illinois on May 30, 1997.
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, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates indicated, each of whom also constitutes and
appoints Thomas P. D'Arcy and Irving E. Lingo, Jr., and each of them singly, his
true and lawful attorney-in-fact and agent, for him, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and a further registration statement filed conforming to Rule 462(b)
under the Act relating to securities of the same class(es) registered under this
Registration Statement and to file the same and all exhibits thereto and any
other documents in connection therewith with the Securities and Exchange
Commission, granting unto each attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each attorney-in-fact and agent
or his substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Thomas P. D'Arcy President, Chief Executive Officer May 30, 1997
- ---------------------------------- and Director
THOMAS P. D'ARCY
/s/ Irving E. Lingo, Jr. Senior Vice President and Chief May 30, 1997
- ---------------------------------- Financial Officer
IRVING E. LINGO, JR.
/s/ David M. Garfinkle Controller May 30, 1997
- ----------------------------------
DAVID M. GARFINKLE
/s/ Joseph E. Hakim Director, Chairman of the Board May 30, 1997
- ----------------------------------
JOSEPH E. HAKIM
/s/ William L. Brown Director May 30, 1997
- ----------------------------------
WILLIAM L. BROWN
/s/ Stephen G. Kasnet Director May 30, 1997
- ----------------------------------
STEPHEN G. KASNET
/s/ Paul G. Kirk, Jr. Director May 30, 1997
- ----------------------------------
PAUL G. KIRK, JR.
/s/ W. Nicholas Thorndike Director May 30, 1997
- ----------------------------------
W. NICHOLAS THORNDIKE
/s/ A. Robert Towbin Director May 30, 1997
- ----------------------------------
A. ROBERT TOWBIN
</TABLE>
II-5
<PAGE> 35
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
**1.1 Form of Underwriting Agreement.
3.1 Articles of Amendment and Restatement of Bradley Real Estate,
Inc., incorporated by reference to Exhibit 3.1 of the
Company's Current Report on Form 8-K dated October 17, 1994.
3.2 Articles of Merger between Bradley Real Estate Trust and
Bradley Real Estate, Inc., incorporated by reference to
Exhibit 3.2 of the Company's Current Report on Form 8-K dated
October 17, 1994.
3.3 By-laws of Bradley Real Estate, Inc., incorporated by
reference to Exhibit 3.3 of the Company's Current Report on
Form 8-K dated October 17, 1994.
4.1 Articles VII and IX of the Charter of the Company (included in
Exhibit 3.1 hereto).
4.2 Bylaws of the Company (included in Exhibit 3.3 hereto).
4.3 Form of Common Stock Certificate, incorporated by reference to
Exhibit 4.1 of the Company's Current Report on Form 8-K dated
October 17, 1994.
4.4 Form of Warrant Agreement between Bradley Real Estate, Inc.
and the warrant agent thereunder, incorporated by reference to
Exhibit 4.2 of the Company's Registration Statement on Form
S-3 (File No. 33-87084).
**4.5 Preferred Stock Terms as set forth in resolutions of the Board
of Directors.
**4.6 Form of Preferred Stock Certificate.
**4.7 Form of Deposit Agreement (including Form of Depositary
Receipt).
*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of
the Securities being registered.
*8.1 Opinion of Goodwin, Procter & Hoar LLP as to certain tax
matters.
*12.1 Calculation of Ratios of Earnings to Combined Fixed Charges
and Preferred Stock Dividends.
*23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Goodwin, Procter & Hoar LLP (included in Exhibits
5.1 and 8.1 hereto).
24.1 Powers of Attorney (included in Part II of this registration
statement).
</TABLE>
- ----------------------
* Filed herewith.
** To be filed by amendment or incorporated by subsequent reference.
<PAGE> 1
EXHIBIT 5.1
GOODWIN, PROCTER & HOAR LLP
Exchange Place
Boston, MA 02109-2881
May 30, 1997
Bradley Real Estate, Inc.
40 Skokie Boulevard, Suite 600
Northbrook, IL 60062
Gentlemen:
Re: Legality of Securities to be Registered under
Registration Statement on Form S-3
This opinion is delivered in our capacity as counsel to Bradley
Real Estate, Inc. (the "Company") in connection with the Company's Registration
Statement on Form S-3 (the "Registration Statement") being filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
relating to an indeterminate amount of Common Stock, Preferred Stock, Depositary
Shares representing Preferred Stock, Warrants or Rights and Units consisting of
two or more of the foregoing securities, with an aggregate public offering price
of up to $200,000,000 (such securities hereinafter collectively the
"Securities"). The Registration Statement provides that the Securities may be
offered separately or together, in separate series, in amounts, at prices and on
terms to be set forth in one or more supplements (each a "Prospectus
Supplement") to the Prospectus contained in the Registration Statement.
We have examined the Charter of the Company (consisting of the
Articles of Incorporation of the Company as amended and restated to the date
hereof and on file with the Maryland State Department of Assessments and
Taxation), the Bylaws of the Company, such records of corporate proceedings of
the Company as we deem appropriate for the purposes of this opinion, the
Registration Statement and the exhibits thereto.
Based upon the foregoing, we are of the opinion that, when
specifically authorized for issuance by the Company's Board of Directors or an
authorized committee thereof (the "Authorizing Resolution") and when issued as
described in a Prospectus Supplement that is consistent with the Authorizing
Resolution, and upon receipt by the Company of the consideration provided for in
the Authorizing Resolution (which consideration is not less than the $.01 par
value
<PAGE> 2
Bradley Real Estate, Inc.
May 30, 1997
Page 2
per share in the case of Common Stock or Preferred Stock), the Common Stock or
Preferred Stock issued pursuant to the Authorizing Resolution will be legally
issued, fully paid and nonassessable.
We hereby consent to being named as counsel to the Company in the
Registration Statement, to the references therein to our firm under the caption
"Legal Matters" and to the inclusion of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Goodwin, Procter & Hoar LLP
<PAGE> 1
EXHIBIT 8.1
GOODWIN, PROCTER & HOAR LLP
Exchange Place
Boston, MA 02109-2881
May 30, 1997
Bradley Real Estate, Inc.
40 Skokie Boulevard, Suite 600
Northbrook, IL 60062
Ladies and Gentlemen:
Re: Certain Federal Income Tax Matters
This opinion is furnished to you in our capacity as counsel to
Bradley Real Estate, Inc. (the "Company", which word also refers as applicable
to its predecessor Bradley Real Estate Trust) in connection with the Company's
Form S-3 Registration Statement (the "Registration Statement") to be filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, relating to up to $200,000,000 of Securities of the Company that may
include Common Stock, Preferred Stock, Depositary Shares representing Preferred
Stock, Warrants or Rights and Units of Securities. This opinion relates to the
Company's qualification for federal income tax purposes as a real estate
investment trust ("REIT") under the Internal Revenue Code of 1986, as amended
(the "Code").
In rendering the following opinion, we have examined the
Registration Statement, the Company's Charter (including the Declaration of
Trust of Bradley Real Estate Trust) and Bylaws and such other records,
certificates and documents as we have deemed necessary or appropriate for
purposes of rendering the opinion set forth herein. We also have relied upon the
representations of the Company regarding the manner in which the Company has
been and will continue to be owned and operated. We have neither independently
investigated nor verified such representations, and we assume that such
representations are true, correct and complete and that all representations made
"to the best of the knowledge and belief" of any person(s) or party(ies) or with
similar qualification are and will be true, correct and complete as if made
without such qualification. We assume, and rely upon such assumption, that the
Company has been and will be operated in accordance with applicable laws and the
terms and conditions of applicable documents. In addition, we have relied on
certain additional facts and assumptions described below.
<PAGE> 2
Bradley Real Estate, Inc.
May 30, 1997
Page 2
In rendering the opinion set forth herein, we have assumed (i)
the genuineness of all signatures on documents we have examined, (ii) the
authenticity of all documents submitted to us as originals, (iii) the conformity
to the original documents of all documents submitted to us as copies, (iv) the
conformity of final documents to all documents submitted to us as drafts, (v)
the authority and capacity of the individual or individuals who executed any
such documents on behalf of any person (vi) the accuracy and completeness of all
records made available to us, and (vii) the factual accuracy of all
representations, warranties and other statements made by all parties. We also
have assumed, and rely upon such assumption, without investigation, that all
documents, certificates, warranties and covenants on which we have relied in
rendering the opinion set forth below and that were given or dated earlier than
the date of this letter continue to remain accurate, insofar as relevant to the
opinions set forth herein, from such earlier date, through and including the
date of this letter.
The discussion and conclusions set forth below are based upon the
Code, the Income Tax Regulations and Procedure and Administration Regulations
promulgated thereunder and existing administrative and judicial interpretations
thereof, all of which are subject to change. No assurance can therefore be given
that the federal income tax consequences described below will not be altered in
the future.
Based upon and subject to the foregoing, and provided that the
Company continues to meet the applicable asset composition, source of income,
shareholder diversification, distribution, recordkeeping and other requirements
of the Code necessary for a corporation to qualify as a REIT, we are of the
opinion that:
1. For all years as to which the Company's tax returns remain open for
adjustment by the Internal Revenue Service, the Company has been
organized in conformity with the requirements for qualification as a
"real estate investment trust" under the Code, and the Company's method
of operation, as described in the representations referred to above,
has been such as to enable it to meet, and to continue to meet, the
requirements for qualification and taxation as a "real estate
investment trust" under the Code.
2. The statements in the Registration Statement set forth under the
caption "Federal Income Tax Considerations", to the extent such
information constitutes matters of law, summaries of legal matters or
legal conclusions, have been reviewed by us and are accurate in all
material respects.
We express no opinion with respect to the transactions described
in the Registration Statement other than those expressly set forth herein. You
should recognize that our opinion is not binding on the Internal Revenue Service
and that the Internal Revenue Service may disagree
<PAGE> 3
Bradley Real Estate, Inc.
May 30, 1997
Page 3
with the opinion contained herein. Although we believe that our opinion will be
sustained if challenged, there can be no assurance that this will be the case.
The opinion expressed herein is based upon the law as it currently exists.
Consequently, future changes in the law may cause the federal income tax
treatment of the transactions described herein to be materially and adversely
different from that described above.
We consent to being named as counsel to the Company in the
Registration Statement, to the references in the Registration Statement to our
firm and to the inclusion of a copy of this opinion letter as an exhibit to the
Registration Statement.
Very truly yours,
Goodwin, Procter & Hoar LLP
<PAGE> 1
Exhibit 12.1
BRADLEY REAL ESTATE, INC.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
Quarter Ended Year Ended Year Ended Year Ended Year Ended Year Ended
3/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Pre tax income from
continuing operations $13,006,000 $41,626,000 $13,630,000 $13,559,000 $8,667,000 $4,482,000
----------- ----------- ----------- ----------- ---------- ----------
Fixed charges:
Interest expense 3,650,000 13,404,000 4,705,000 4,524,000 2,947,000 3,596,000
Interest capitalized
during the period 0 150,000 137,000 89,000 58,000 178,000
Amortization of deferred
debt issuance costs 188,000 715,000 494,000 408,000 185,000 99,000
----------- ----------- ----------- ----------- ---------- ----------
3,838,000 14,269,000 5,336,000 5,021,000 3,190,000 3,873,000
Ratio of earnings
to combined fixed
charges and preferred stock
dividends 3.39:1 2.92:1 2.55:1 2.70:1 2.72:1 1.16:1
====== ====== ====== ====== ====== ======
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF KPMG PEAT MARWICK LLP
--------------------------------
The Board of Directors
Bradley Real Estate, Inc.:
We consent to the use of our report dated January 24, 1997, except as to Note
10 which is as of March 13, 1997, on the consolidated financial statements and
schedule of Bradley Real Estate, Inc. as of December 31, 1996 and 1995, and for
each of the years in the three-year period ended December 31, 1996,
incorporated by reference herein, and to the reference to our Firm under the
heading "Experts".
KPMG Peat Marwick LLP
Chicago, Illinois
May 30, 1997
