<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: September 24, 1998
Date of earliest event reported: February 13, 1998
-----------------------
BRADLEY REAL ESTATE, INC.
(Exact name of Registrant as specified in its charter)
MARYLAND 1-10328 04-6034603
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
40 SKOKIE BOULEVARD, NORTHBROOK, ILLINOIS 60062
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(847) 272-9800
<PAGE>
Item 5. Other Events.
------------
Bradley Real Estate, Inc. (the "Company" or "Bradley") files this Form 8-K
report that contains financial statements consistent with Regulation S-X, Rule
3-14 for properties accounting for over 50% of the aggregate acquisition costs
of a series of properties acquired during the period January 1, 1998 through
September 23, 1998 (the "Acquisition Properties").
The Acquisition Properties do not include properties which Bradley acquired
August 6, 1998 pursuant to the Agreement and Plan of Merger dated May 30, 1998
between Bradley and Mid-America Realty Investments, Inc. (the "Mid-America
Merger").
During the period January 1 through September 23, 1998, the Company
acquired 19 shopping centers and two outlots adjacent to one of Bradley's
existing centers at an aggregate cost of approximately $179.0 million. No one
property or group of properties comprising the Acquisition Properties was in
itself significant, but in the aggregate the costs exceed 10% of the total
assets of the Company and its subsidiaries consolidated at December 31, 1997.
The Acquisition Properties have been funded with borrowings under the Company's
bank line of credit and through the assumption of existing mortgage
indebtedness.
The dates, shopping centers acquired and the approximate acquisition cost
for the respective Acquisition Properties are as follows:
<TABLE>
<CAPTION>
APPROXIMATE
ACQUISITION
DATE PROPERTY COST
<C> <S> <C>
February 13, 1998 Kings Plaza, Richmond, IN $ 3,671,000
March 5, 1998 Sagamore Park, West Lafayette, IN 7,769,000
March 13, 1998 Oak Creek Centre, Oak Creek, WI 4,926,000
March 31, 1998 Midtown Mall, Ashland, KY 7,441,000
March 31, 1998 * Courtyard Shopping Center, Burton, MI 9,710,000
April 10, 1998 * Redford Plaza, Redford, MI 20,685,000
May 13, 1998 Butterfield Square, Libertyville, IL 13,008,000
May 13, 1998 * Plainview Village, Louisville, KY 12,100,000
May 13, 1998 * Camelot Shopping Center, Louisville, KY 8,645,000
May 13, 1998 Dixie Plaza, Louisville, KY 3,676,000
May 28, 1998 Bartonville, Peoria, IL 1,583,000
May 28, 1998 Sterling Outlots, Peoria, IL 525,000
June 10, 1998 Garden Plaza, Franklin, WI 5,346,000
June 23, 1998 Fox River, Burlington, WI 7,632,000
June 26, 1998 Lincoln Plaza, New Haven, IN 5,075,000
August 19, 1998 Midtown Plaza, Shawnee, KS 6,128,000
August 21, 1998 * Ellisville Square, St. Louis, MO 10,971,000
August 28, 1998 Doubletree Plaza, Winfield, IN 7,946,000
September 1, 1998 * Clock Tower Plaza, Lima, OH 14,774,000
September 4, 1998 * Salem Consumer Square, Dayton, OH 27,342,000
------------
$178,953,000
============
</TABLE>
2
<PAGE>
Properties designated with an asterisk (*) are properties included within
the Acquisition Properties for which financial statements accompany this report
or were previously filed on Form 8-K. (See Item 7.) None of the Acquisition
Properties was or will be acquired from a related party of the Company or its
consolidated subsidiaries. Factors considered by the Company in assessing the
acquisition price for each of the Acquisition Properties included its location
and tenant mix, including opportunities for retenanting and remodeling
consistent with the Company's experience as a shopping center operator; its
current net operating income and the prospect for increased income in the short
and long range future; capitalization rates for shopping center properties of
the type acquired, in the Midwest area of the United States generally and in the
locality in which the property is located; current operating costs and the
possibility of effecting property-level operating efficiencies as a result of
the Company's ownership of a significant number of shopping centers in the
Midwest; and the differential between the Company's cost of capital in acquiring
the property and the property's current and potential net operating income.
After reasonable inquiry, the Company is not aware of any material factors
relating to any specific property included within the Acquisition Properties
other than those discussed in the preceding sentence that would cause the
reported financial information not to be necessarily indicative of future
operating results.
On June 18, 1998, the Company filed a Registration Statement on Form S-4
(Registration No. 333-57123) with the Securities and Exchange Commission
relating to the 8.4% Series A Convertible Preferred Stock (the "Series A
Preferred Stock") to be issued by the Company upon consummation of the Mid-
America Merger (the "Merger Registration Statement"). Reference is made to the
Merger Registration Statement for a description of the terms of the Mid-America
Merger.
The pro forma financial statements listed under Item 7 below reflect both
(a) certain transactions of Bradley, as described within such financial
statements (the "Prior Bradley Transactions"), other than the Mid-America
Merger as well as (b) the Prior Bradley Transactions and the Mid-America Merger.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
------------------------------------------------------------------
The following financial statements and pro forma financial information
accompany this report:
(a) Financial Statements - Acquisition Properties - Clock Tower Plaza
Independent Auditors' Report
For the Six Months Ended June 30, 1998 (unaudited) and the Year Ended
December 31, 1997
Statement of Revenues and Certain Expenses
Notes to Statement of Revenues and Certain Expenses
3
<PAGE>
(b) Pro Forma Financial Information - Bradley Real Estate, Inc.
Pro Forma Condensed Combined Balance Sheet as of June 30, 1998
(unaudited)
Pro Forma Condensed Balance Sheet to reflect Prior Bradley
Transactions as of June 30, 1998 (unaudited)
Pro Forma Condensed Combined Statement of Income for the Six Months
Ended June 30, 1998 (unaudited)
Pro Forma Condensed Statement of Income to reflect Prior Bradley
Transactions for the Six Months Ended June 30, 1998 (unaudited)
Pro Forma Condensed Combined Statement of Income for the Year Ended
December 31, 1997 (unaudited)
Pro Forma Condensed Statement of Income to reflect Prior Bradley
Transactions for the Year Ended December 31, 1997 (unaudited)
(c) Exhibits
Exhibit 23.1 Consent of KPMG Peat Marwick LLP
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BRADLEY REAL ESTATE, INC.
By: /s/ Thomas P. D'Arcy
-------------------------
Date: September 24, 1998 Thomas P. D'Arcy
Chairman, President and
Chief Executive Officer
5
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of Bradley Real Estate, Inc.
and Unit Holders of Bradley Operating Limited Partnership:
We have audited the accompanying statement of revenues and certain expenses
(defined as operating revenues less direct operating expenses) of Clock Tower
Plaza for the year ended December 31, 1997. This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues and
certain expenses. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall presentation of the statement of revenues and certain expenses. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission and for inclusion in a current report on Form 8-K of Bradley
Real Estate, Inc. as described in Note 2. The presentation is not intended to be
a complete presentation of Clock Tower Plaza's revenues and expenses.
In our opinion, the statement of revenues and certain expenses referred to above
presents fairly, in all material respects, the revenues and certain expenses
described in Note 2, of Clock Tower Plaza for the year ended December 31, 1997,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
September 2, 1998
F-1
<PAGE>
ACQUISITION PROPERTIES - CLOCK TOWER PLAZA
Statement of Revenues and Certain Expenses
Year ended December 31, 1997 and the
Six Months ended June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 1998 Year Ended
(unaudited) December 31, 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
- ---------------------------------------------------------------------------------------
Base rental income $670,653 $1,323,751
Operating expense and real estate tax recoveries 82,310 194,434
Other income 220 830
- ---------------------------------------------------------------------------------------
Total revenues 753,183 1,519,015
- ---------------------------------------------------------------------------------------
Certain expenses:
Real estate taxes 32,500 65,148
Operating expenses 27,141 105,135
Utilities 2,962 9,407
Insurance 7,260 14,520
Total expenses 69,863 194,210
- ---------------------------------------------------------------------------------------
Excess of revenues over certain expenses $683,320 $1,324,805
- ---------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to statement of revenues and certain expenses.
F-2
<PAGE>
ACQUISITION PROPERTIES - CLOCK TOWER PLAZA
Notes to Statement of Revenues and Certain Expenses
Year ended December 31, 1997 and the
Six Months ended June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
(1) BACKGROUND
The Statement of Revenues and Certain Expenses (Statement) has been
included for Clock Tower Plaza which was acquired by Bradley Real Estate,
Inc. through Bradley Operating Limited Partnership (the Operating
Partnership) on September 1, 1998.
Clock Tower Plaza is located in Lima, Ohio. It consists of approximately
238,000 square feet of gross leasable area and was approximately 95%
occupied at December 31, 1997.
(2) BASIS OF PRESENTATION
The Statement has been prepared for the purpose of complying with Rule 3.14
of Regulation S-X of the Securities and Exchange Commission and for
inclusion in a current report on Form 8-K of Bradley Real Estate, Inc. and
is not intended to be a complete presentation of Clock Tower Plaza's
revenues and expenses. The Statement has been prepared on the accrual basis
of accounting and requires management of Clock Tower Plaza to make
estimates and assumptions that affect the reported amounts of the revenues
and expenses during the reporting period. Actual results may differ from
those estimates.
Certain expenses which may not be comparable to the expenses expected to be
incurred in the proposed future operations of Clock Tower Plaza have been
excluded from the Statement. Expenses excluded consist of interest,
depreciation and amortization, professional fees, and management fees.
Unaudited Interim Period
------------------------
The accompanying interim statement of revenues and certain expenses has
been prepared without audit and in the opinion of management reflects all
normal recurring adjustments necessary for a fair presentation of results
for the unaudited interim period presented. Certain information in footnote
disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles has been condensed
or omitted.
(3) REVENUES
The property leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. Certain of the
leases include provisions under which the property is reimbursed for
certain common area, real estate, and insurance costs. Operating expenses
and real estate tax recoveries reflected on the statement of revenues and
certain expenses include amounts due for 1997 expenses for which the
tenants have not yet been billed. In addition, certain leases provide for
payment of contingent rentals based on a percentage applied to the amount
by which the tenant's sales, as defined, exceed predetermined levels.
Certain leases contain renewal options for various periods at various
rental rates.
Base rentals are reported as income over the lease term as they become
receivable under the provisions of the leases. However, when rentals vary
from a straight-line basis due to short-term rent abatements or escalating
rents during the lease term, the income is recognized based on effective
rental rates. Related adjustments increased base rental income by
approximately $52,000 for the year ended December 31, 1997.
F-3
<PAGE>
ACQUISITION PROPERTIES - CLOCK TOWER PLAZA
Notes to Statement of Revenues and Certain Expenses
Year ended December 31, 1997 and the
Six Months ended June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are approximately as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Amount
- --------------------------------------------------------------------------------
<S> <C>
1998 $1,293,572
1999 1,328,765
2000 1,168,169
2001 1,075,125
2002 965,064
Thereafter 7,499,130
- --------------------------------------------------------------------------------
</TABLE>
F-4
<PAGE>
BRADLEY REAL ESTATE, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1998
(UNAUDITED)
This unaudited Pro Forma Condensed Combined Balance Sheet is presented as
if the Prior Bradley Transactions (see Note A) and the Mid-America Merger had
been consummated on June 30, 1998. The Mid-America Merger has been accounted for
under the purchase method of accounting in accordance with Accounting Principles
Board Opinion No. 16. In the opinion of Bradley's management, all adjustments
necessary to reflect the effects of this transaction have been made. The
accompanying pro forma condensed combined financial statements have been
prepared based on pro forma adjustments to pro forma and historical financial
statements of Bradley and historical financial statements of Mid-America.
This unaudited Pro Forma Condensed Combined Balance Sheet is presented for
comparative purposes only and is not necessarily indicative of what the actual
financial position of Bradley would have been at June 30, 1998, nor does it
purport to represent the future financial position of Bradley. This unaudited
Pro Forma Condensed Combined Balance Sheet should be read in conjunction with,
and is qualified in its entirety by the Pro Forma Condensed Balance Sheet to
reflect Prior Bradley Transactions and the respective historical financial
statements and the notes thereto of Bradley and Mid-America.
<TABLE>
<CAPTION>
BRADLEY
PRIOR PRO FORMA PRO FORMA
BRADLEY MID-AMERICA AS ADJUSTED
PRO FORMA MID-AMERICA MERGER FOR THE
TRANSACTIONS(A) HISTORICAL ADJUSTMENTS (B) MID-AMERICA MERGER
--------------- ----------- --------------- ------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA)
ASSETS
Real estate investments, at cost................. $807,701 $153,014 $ (9,364) $951,351
Accumulated depreciation and amortization........ (48,813) (35,310) 35,310 (48,813)
-------- -------- --------- --------
Net real estate investments.................... 758,888 117,704 25,946 902,538
Cash and cash equivalents........................ 1,695 -- -- 1,695
Rents and other receivables...................... 12,590 2,242 (1,108) (C) 13,724
Investment in partnership........................ -- 14,853 (1,597) 13,256
Deferred charges and other assets................ 19,956 3,941 (2,839) (D) 21,058
-------- -------- --------- --------
Total assets................................... $793,129 $138,740 $ 20,402 $952,271
======== ======== ========= ========
LIABILITIES
Mortgage loans................................... 68,266 49,341 (11,258) (E) 106,349
Unsecured notes payable.......................... 199,512 -- -- 199,512
Lines of credit.................................. 117,961 13,380 18,232 (F) 149,573
Accounts payable, accrued expenses and
other liabilities............................... 27,642 2,401 41 30,084
-------- -------- --------- --------
Total liabilities.............................. 413,381 65,122 7,015 485,518
-------- -------- --------- --------
Minority interest................................ 20,846 -- -- 20,846
-------- -------- --------- --------
SHARE OWNERS' EQUITY
Series A Preferred Stock and paid-in capital..... -- -- 87,005 (G) 87,005
Common stock at par.............................. 238 83 (83) (G) 238
Additional paid-in capital....................... 345,327 119,735 (119,735) (G) 345,327
Accumulated earnings in excess of distributions.. 13,337 (46,200) 46,200 (G) 13,337
-------- -------- --------- --------
Total share owners' equity..................... 358,902 73,618 13,387 445,907
-------- -------- --------- --------
Total liabilities and share owners'
equity....................................... $793,129 $138,740 $ 20,402 $952,271
======== ======== ========= ========
</TABLE>
F-5
<PAGE>
- ---------------
Notes to Pro Forma Condensed Combined Balance Sheet
(A) See page F-8 for the pro forma condensed balance sheet giving effect to
Prior Bradley Transactions.
(B) Represents adjustments to record the Mid-America Merger in accordance with
the purchase method of accounting, based upon a purchase price of
approximately $157.2 million, which assumes a value of $25 per share of
Series A Preferred Stock, computed as follows (in thousands):
<TABLE>
<S> <C>
Issuance of Series A Preferred Stock.......................... $87,005
Assumption of Mid-America liabilities......................... 65,122
Adjustment to increase mortgage debt to estimated fair value.. 2,124
Estimated costs of the Mid-America Merger..................... 4,850
--------
$159,101
========
</TABLE>
(C) Represents the write-off of the portion of the Mid-America accounts
receivable representing deferred rents arising from Mid-America recognition
of rental income on a straight-line basis in accordance with generally
accepted accounting principles. Bradley, as the surviving corporation, will
recognize rental income on a straight-line basis over the remaining terms
of the Mid-America leases in accordance with generally accepted accounting
principles.
(D) Represents the adjustment of Mid-America's carrying value of deferred
charges to the estimated fair values in accordance with the purchase method
of accounting. Organization costs, leasing costs and management contracts
of Mid-America were deemed to have no future value to Bradley and were
written-off in accordance with the purchase method of accounting. Other
assets were adjusted to the estimated fair values as of June 30, 1998. The
amounts represented by these adjustments are summarized below (in
thousands):
<TABLE>
<S> <C>
Leasing costs........................................... $ 2,713
Decrease in value of TIF bonds.......................... 1,524
Loan costs.............................................. 1,319
Management contract..................................... 893
Other................................................... 394
Decrease in cash surrender value of executive benefits.. 22
Less accumulated amortization........................... (4,026)
-------
Pro forma adjustment.................................... $ 2,839
=======
</TABLE>
(E) Represents the prepayment of Mid-America mortgage debt funded with
Bradley's line of credit, and the adjustment to the carrying value of
the remaining Mid-America mortgage debt to the estimated fair values at
June 30, 1998, as follows (in thousands):
<TABLE>
<S> <C>
Amount of Mid-America mortgage debt prepaid..................... $(13,382)
Adjustment to estimated fair value for remaining mortgage debt.. 2,124
--------
Pro forma adjustment............................................ $(11,258)
========
</TABLE>
F-6
<PAGE>
(F) Estimated payments for fees and expenses related to the Mid-America Merger
are as follows (in thousands):
<TABLE>
<S> <C>
Investment advisory fees................................... $ 1,770
Termination and severance.................................. 1,160
Legal and accounting....................................... 1,015
Real estate due diligence and closing costs................ 614
Other...................................................... 145
Printing and filing fees................................... 96
D&O insurance.............................................. 50
-------
4,850
Expected amount of Mid-America mortgage debt prepaid with
Bradley's line of credit.............................. 13,382
-------
Pro forma adjustment....................................... $18,232
=======
</TABLE>
(G) To adjust Mid-America's capital accounts to reflect the issuance of
3,480,210 shares of Series A Preferred Stock in exchange for all of the
outstanding shares of Mid-America Common Stock at an Exchange Ratio of 0.42
shares of Series A Preferred Stock for each outstanding share of Mid-
America Common Stock, as follows (in thousands):
<TABLE>
<CAPTION>
SERIES A
PREFERRED
STOCK AND
COMMON PAID-IN DISTRIBUTION IN PAID-IN
SHARES CAPITAL EXCESS OF EARNINGS CAPITAL
------- ---------- ------------------- ---------
<S> <C> <C> <C> <C>
Issuance of Series A Preferred Stock.... $ -- $ -- $ -- $87,005
Mid-America's historical stockholders'
equity............................... $ 83 119,735 (46,200) --
----- --------- -------- -------
Pro forma adjustment $(83) $(119,735) $ 46,200 $87,005
===== ========= ======== =======
</TABLE>
F-7
<PAGE>
BRADLEY REAL ESTATE, INC.
PRO FORMA CONDENSED BALANCE SHEET
TO REFLECT PRIOR BRADLEY TRANSACTIONS
JUNE 30, 1998
(UNAUDITED)
From July 1, 1998 through September 23, 1998, Bradley acquired an
additional five shopping centers for an aggregate cost of approximately $67
million. On July 31, 1998, Bradley completed the sale of One North State for
approximately $84.5 million. The net proceeds of approximately $83 million were
used to pay down the line of credit.
The unaudited Pro Forma Condensed Balance Sheet of Bradley is presented as
if the acquisitions and the disposition, described above, had been consummated
on June 30, 1998.
<TABLE>
<CAPTION>
JUNE 30, 1998 ACQUISITION DISPOSITION
HISTORICAL ADJUSTMENTS (A) ADJUSTMENTS (B) PRO FORMA
-------------- --------------- --------------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
ASSETS
Real estate investments --at cost........... $740,540 $67,161 $ -- $807,701
Accumulated depreciation and amortization... (48,813) -- -- (48,813)
-------- ------- -------- --------
Net real estate investments................. 691,727 67,161 -- 758,888
Real estate investments held for sale....... 52,702 (52,702) --
Other assets:
Cash and cash equivalents.................. 1,695 -- -- 1,695
Rents and other receivables................ 14,361 -- (1,771) 12,590
Deferred charges, net and other assets..... 20,439 -- (483) 19,956
-------- ------- -------- --------
Total assets................................ $780,924 $67,161 $(54,956) $793,129
======== ======= ======== ========
LIABILITIES AND SHARE OWNERS' EQUITY
Mortgage loans.............................. 55,866 12,400 -- 68,266
Unsecured notes payable..................... 199,512 -- -- 199,512
Line of credit.............................. 146,200 54,761 (83,000) 117,961
Accounts payable, accrued expenses and
other liabilities.......................... 31,574 -- (3,932) 27,642
-------- ------- -------- --------
Total liabilities........................... 433,152 67,161 (86,932) 413,381
-------- ------- -------- --------
Minority interest........................... 19,090 -- 1,756 20,846
-------- ------- -------- --------
Share owners' equity
Common stock at par........................ 238 -- -- 238
Additional paid-in capital................. 345,327 -- -- 345,327
Accumulated earnings in excess
of distributions.......................... (16,883) -- 30,220 13,337
-------- ------- -------- --------
Total share owners' equity.................. 328,682 -- 30,220 358,902
-------- ------- -------- --------
Total liabilities and share owners' equity.. $780,924 $67,161 $(54,956) $793,129
======== ======= ======== ========
</TABLE>
EXPLANATORY NOTES
(A) Adjustments represent Acquisition Properties acquired subsequent to
June 30, 1998.
(B) Adjustments represent the sale of One North State for sales proceeds of
approximately $84.5 million, and the application of the net proceeds to pay
down Bradley's line of credit.
F-8
<PAGE>
BRADLEY REAL ESTATE, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
This unaudited Pro Forma Condensed Combined Statement of Income is
presented as if the Mid-America Merger and all the Prior Bradley Transactions
(see Note A) had been consummated on January 1, 1997 and with Bradley qualifying
as a REIT, distributing all of its taxable income and, therefore, incurring no
federal income tax expense during the period January 1, 1997 through June 30,
1998. The Mid-America Merger has been accounted for under the purchase method of
accounting in accordance with Accounting Principles Board Opinion No. 16. In the
opinion of Bradley's management, all adjustments necessary to reflect the
effects of these transactions have been made. The accompanying Pro Forma
Condensed Combined Statement of Income has been prepared based on pro forma
adjustments to pro forma and historical financial statements of Bradley and
historical financial statements of Mid-America.
This unaudited Pro Forma Condensed Combined Statement of Income is
presented for comparative purposes only and is not necessarily indicative of
what the actual results of operations of Bradley would have been for the period
presented, nor does it purport to represent the results to be achieved in future
periods. This unaudited Pro Forma Condensed Combined Statement of Income should
be read in conjunction with, and is qualified in its entirety by the Pro Forma
Condensed Statement of Income to reflect Prior Bradley Transactions and the
respective historical financial statements and the notes thereto of Bradley and
Mid-America.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1998
-----------------------------------------------------------
BRADLEY
PRO FORMA
PRIOR PRO FORMA AS ADJUSTED
BRADLEY MID-AMERICA FOR
PRO FORMA MID-AMERICA MERGER MID-AMERICA
TRANSACTIONS(A) HISTORICAL(B) ADJUSTMENTS MERGER
--------------- -------------- ------------ ------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Income:
Rental income................................... $ 60,453 $11,187 $ -- $ 71,640
Other income.................................... 1,080 329 -- 1,409
----------- ------- ----------- -----------
Total revenue................................. 61,533 11,516 -- 73,049
----------- ------- ----------- -----------
Expenses:
Operations, maintenance and management.......... 8,594 1,884 -- 10,478
Real estate taxes............................... 9,852 1,471 -- 11,323
Mortgage and other interest..................... 14,054 2,670 (273) (C) 16,451
General and administrative...................... 3,120 937 (663) (D) 3,394
Provision for merger related expenses........... -- 376 (376) --
Depreciation and amortization................... 11,835 2,495 (959) (E) 13,371
----------- ------- ----------- -----------
Total expenses................................ 47,455 9,833 (2,271) 55,017
----------- ------- ----------- -----------
Income before equity in earnings of partnership
and allocation to minority interest............. 14,078 1,683 2,271 18,032
Equity in earnings of partnership................ -- 476 139 615
Income allocated to minority interest............ (792) -- -- (792)
----------- ------- ----------- -----------
Net income....................................... 13,286 2,159 2,410 17,855
Preferred share distributions.................... -- -- (3,654) (F) (3,654)
----------- ------- ----------- -----------
Net income attributable to common stock.......... $ 13,286 $ 2,159 $ (1,244) $ 14,201
=========== ======= =========== ===========
Weighted average number of
common shares outstanding-basic(G).............. 23,618,154 23,618,154
Basic net income per
common share(G)................................. $ 0.56 $ 0.60
=========== ===========
</TABLE>
F-9
<PAGE>
- ---------------
Notes to Pro Forma Condensed Combined Statement of Income
(A) See page F-12 or the pro forma condensed statement of income giving effect
to Prior Bradley Transactions.
(B) Represents historical operating results as reported by Mid-America for the
six months ended June 30, 1998.
(C) Represents the net reduction in interest expense for the prepayment of
certain Mid-America mortgage indebtedness with Bradley's line of credit at
Bradley's current interest rate of 6.75%, combined with the reduction in
interest expense to reflect the estimated market interest rate of
approximately 7.25%, in accordance with the purchase method of accounting,
partially offset by an increase in interest expense for the payment of fees
and expenses related to the Mid-America Merger of approximately $4,850,000,
at an interest rate of 6.75%, as follows (in thousands):
<TABLE>
<S> <C>
Elimination of historical interest on mortgages expected to be prepaid... $(1,055)
Interest on Bradley's line of credit expected to be used to prepay debt.. 903
Reduction of Mid-America interest to reflect a market rate............... (285)
Interest on Bradley's line of credit for Mid-America Merger fees
and expenses........................................................... 164
-------
Pro forma adjustment..................................................... $ (273)
=======
</TABLE>
(D) Represents general and administrative cost savings which have been
estimated based upon historical costs for those items which are expected to
be eliminated as a result of the Mid-America Merger, as follows (in
thousands):
<TABLE>
<S> <C>
Salaries and benefits............ $476
D&O insurance and director fees.. 87
Professional fees................ 64
Other............................ 36
----
Pro forma adjustment............. $663
====
</TABLE>
(E) Depreciation and amortization changes relate to recording Mid-America's
properties at Bradley's purchase price, the related depreciation utilizing
an estimated useful life of 39 years and a depreciable basis of
approximately $119,771,000, and the elimination of historical amortization
of Mid-America deferred assets in accordance with the purchase method of
accounting, as follows (in thousands):
<TABLE>
<S> <C>
Pro forma depreciation expense ($119,771 over 39 years)... $1,536
Mid-America depreciation and amortization................. (2,495)
------
Pro forma adjustment...................................... $ (959)
======
</TABLE>
The pro forma adjustment to the equity in earnings of partnership reflects
the adjustment to depreciation and amortization of the partnership
resulting from recording the investment in partnership at Bradley's
purchase price.
(F) Preferred share distributions are calculated using an annual dividend rate
of $2.10 per share for 3,480,210 shares of Series A Preferred Stock pro
rated for the period presented.
F-10
<PAGE>
(G) A reconciliation of the numerator and denominator used to compute basic
earnings per share ("EPS") to the numerator and denominator used to compute
diluted EPS is as follows:
<TABLE>
<CAPTION>
BRADLEY AS ADJUSTED FOR MID-AMERICA MERGER
NUMERATOR DENOMINATOR PER SHARE
-------------- ------------- -----------
<S> <C> <C> <C>
Basic EPS:
Net income attributable to common stock.. $14,201,000 23,618,154 $ 0.60
Effect of dilutive securities:
Dilutive options exercised............... -- 54,379
Conversion of LP Units................... 795,000 1,408,182
----------- ----------
Diluted EPS:
Net income attributable to common stock.. $14,996,000 25,080,715 $ 0.60
=========== ========== ===========
</TABLE>
F-11
<PAGE>
BRADLEY REAL ESTATE, INC.
PRO FORMA CONDENSED STATEMENT OF INCOME
TO REFLECT PRIOR BRADLEY TRANSACTIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
During the period from January 1, 1998 through September 23, 1998, Bradley
acquired 19 shopping centers and two outlots adjacent to one of Bradley's
existing centers at an aggregate cost of approximately $179.0 million (the
"Acquisition Properties"). Consideration paid for such acquisitions included
cash (provided primarily from the bank line of credit) and assumption of
mortgage indebtedness. The Prior Bradley Transactions do not include the Mid-
America Merger.
On January 28, 1998, Bradley, through the Operating Partnership, issued
$100 million of 7.2% ten-year unsecured Notes maturing January 15, 2008 (the
"January 1998 Debt Issuance"). The effective interest rate on the unsecured
Notes is approximately 7.61%. The issue was rated "BBB-" by Standard & Poor's
Investment Services and "Baa3" by Moody's Investor's Services. Proceeds from the
offering were used to reduce the outstanding borrowings under the line of
credit.
On February 18, 1998, Bradley issued 392,638 shares of common stock to a
unit investment trust at a price based upon the then market value of $20.375 per
share (the "February 1998 Stock Offering"). Net proceeds from the offering of
approximately $7.6 million were contributed to the Operating Partnership and
were used to reduce outstanding borrowings under the line of credit.
On July 31, 1998, Bradley completed the sale of One North State for
approximately $84.5 million. The net proceeds of approximately $83 million were
used to pay down the line of credit. In addition, in May 1998, Bradley sold
Holiday Plaza, a shopping center in Cedar Falls, Iowa, for approximately $1.9
million.
The unaudited Pro Forma Condensed Statement of Income of Bradley is
presented as if the acquisitions, the dispositions, the January 1998 Debt
Issuance, and the February 1998 Stock Offering, described above, had been
consummated on January 1, 1997, and with Bradley qualifying as a REIT and,
therefore, incurring no federal income tax expense during the period January 1,
1997 through June 30, 1998.
F-12
<PAGE>
<TABLE>
<CAPTION>
OTHER
ACQUISITION ACQUISITION DISPOSITION OTHER
HISTORICAL PROPERTIES (A) PROPERTIES (B) PROPERTIES(C) ADJUSTMENTS PRO FORMA
------------ --------------- -------------- ----------- ----------- ---------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income............. $ 59,337 $ 753 $7,771 $(7,408) $ -- $ 60,453
Other income.............. 1,059 -- 21 -- -- 1,080
----------- ------- ------ ------- ------- -----------
Total revenue........... 60,396 753 7,792 (7,408) -- 61,533
----------- ------- ------ ------- ------- -----------
Expenses:
Operations, maintenance
and management.......... 8,776 37 900 (1,119) -- 8,594
Real estate taxes......... 10,776 33 837 (1,794) -- 9,852
Mortgage and other
interest................. 12,143 -- -- -- 1,911 (D) 14,054
General and
administrative........... 3,120 -- -- -- -- 3,120
Depreciation and
amortization.......... 10,594 -- -- -- 1,241 (E) 11,835
----------- ------- ------ ------- ------- -----------
Total expenses.......... 45,409 70 1,737 (2,913) 3,152 47,455
----------- ------- ------ ------- ------- -----------
Income before provision
for loss on real estate
investment and minority
interest................. 14,987 683 6,055 (4,495) (3,152) 14,078
Provision for loss on real
estate investment......... (875) -- -- 875 -- --
----------- ------- ------ ------- ------- -----------
Income before allocation to
minority interest......... 14,112 683 6,055 (3,620) (3,152) 14,078
Income allocated to
minority interest......... (797) -- -- -- 5 (792)
----------- ------- ------ ------- ------- -----------
Net Income attributable
to common stock........... $ 13,315 $ 683 $6,055 $(3,620) $ (3,147) $ 13,286
=========== ======= ====== ======= ========= ===========
Weighted average common
shares outstanding
--basic(F)................ 23,503,183 23,618,154
Basic and diluted income
per common share: (F)..... $ 0.57 $ 0.56
=========== ===========
</TABLE>
EXPLANATORY NOTES
(A) Increase represents historical operating revenues and expenses of Clock
Tower Plaza for which financial statements are included in this Form 8-K,
for the period Bradley did not own such property.
(B) Increase represents historical operating revenues and expenses of the
Acquisition Properties for which financial statements are not included in
this Form 8-K, for the period Bradley did not own such properties.
(C) Decrease represents the elimination of historical operating revenues and
expenses of properties sold for the period Bradley owned such properties.
(D) Mortgage and other interest has been increased to reflect the pro forma
borrowings for property acquisitions for the period during which Bradley
did not own such properties, net of the reduction for the application of
net proceeds from the property dispositions and the February 1998 Stock
Offering to pay down the line of credit for the period during which Bradley
owned such properties, and for the period preceding the stock offering at
an interest rate of 6.75%, which was Bradley's approximate borrowing rate
at August 31, 1998. Mortgage and other interest has been increased for the
January 1998 Debt Issuance for the period preceding the issuance. A 0.125%
change in the variable rate would result in a change in the pro forma
interest adjustment of approximately $13,000.
<TABLE>
<S> <C>
Increase in interest expense attributable to
acquisition activities.......................... $ 4,777
Decrease in interest expense attributable to
disposition activities.......................... (2,849)
Decrease in interest expense attributable to
the February 1998 Stock Offering................ (64)
Net increase in interest expense attributable to
the January 1998 Debt Issuance.................. 47
-------
Pro forma adjustment.............................. $ 1,911
=======
</TABLE>
F-13
<PAGE>
(E) Depreciation and amortization has been increased to give effect to
recording the property acquisitions over a depreciable life of 39 years,
for the period which Bradley did not own such properties, net of the
reduction for properties sold for the period which Bradley owned such
properties, as follows:
<TABLE>
<S> <C>
Increase in depreciation and amortization
attributable to acquisition activities........ $1,335
Decrease in depreciation and amortization
attributable to disposition activities........ (94)
------
Pro forma adjustment............................ $1,241
======
</TABLE>
(F) A reconciliation of the numerator and denominator used to compute basic
earnings per share ("EPS") to the numerator and denominator used to compute
diluted EPS is as follows:
<TABLE>
<CAPTION>
BRADLEY HISTORICAL BRADLEY PRO FORMA
NUMERATOR DENOMINATOR PER SHARE NUMERATOR DENOMINATOR PER SHARE
----------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Net income attributable to
common stock................... $13,315,000 23,503,183 $ 0.57 $13,286,000 23,618,154 $0.56
Effect of dilutive securities:
Dilutive options exercised...... -- 49,450 -- 49,450
Conversion of LP Units.......... 797,000 1,408,182 792.000 1,408,182
----------- ---------- ----------- -----------
Diluted EPS:
Net income attributable to
common stock................ $14,112,000 24,960,815 $ 0.57 $14,078,000 25,075,786 $0.56
=========== ========== ======== =========== =========== =========
</TABLE>
F-14
<PAGE>
BRADLEY REAL ESTATE, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
The unaudited Pro Forma Condensed Combined Statement of Income is presented
as if the Mid-America Merger and all the Prior Bradley Transactions (see Note A)
had been consummated on January 1, 1997, and with Bradley qualifying as a REIT
and, therefore, incurring no federal income tax expense during the period
January 1, 1997 through December 31, 1997. The Mid-America Merger has been
accounted for under the purchase method of accounting in accordance with
Accounting Principles Board Opinion No. 16. In the opinion of Bradley's
management, all adjustments necessary to reflect the effects of these
transactions have been made. The accompanying Pro Forma Condensed Combined
Statement of Income has been prepared based on pro forma adjustments to pro
forma and historical financial statements of Bradley and historical financial
statements of Mid-America.
This unaudited Pro Forma Condensed Combined Statement of Income is
presented for comparative purposes only and is not necessarily indicative of
what the actual results of operations of Bradley would have been for the periods
presented, nor does it purport to represent the results to be achieved in future
periods. This unaudited Pro Forma Condensed Combined Statement of Income should
be read in conjunction with, and is qualified in its entirety by the Pro Forma
Condensed Statement of Income to reflect Prior Bradley Transactions and by the
respective historical financial statements and the notes thereto of Bradley and
Mid-America.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
------------------------------------------------------------------
BRADLEY
PRIOR PRO FORMA PRO FORMA
BRADLEY MID-AMERICA AS ADJUSTED FOR
PRO FORMA MID-AMERICA MERGER MID-AMERICA
TRANSACTIONS(A) HISTORICAL(B) ADJUSTMENTS MERGER
--------------- -------------- --------------- ----------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues:
Rental income................................. $ 117,146 $22,478 $ -- $ 139,624
Other income.................................. 1,628 787 -- 2,415
----------- ------- ----------- -----------
Total revenue............................... 118,774 23,265 -- 142,039
----------- ------- ----------- -----------
Expenses:
Operations, maintenance and
management.................................. 16,486 4,316 -- 20,802
Real estate taxes............................. 19,124 2,952 -- 22,076
Mortgage and other interest................... 27,559 5,539 (791)(C) 32,307
General and administrative.................... 5,123 1,985 (1,300)(D) 5,808
Non-recurring stock based
compensation................................ 3,415 -- -- 3,415
Depreciation and amortization................. 21,131 4,981 (1,910)(E) 24,202
----------- ------- ----------- -----------
Total expenses.............................. 92,838 19,773 (4,001) 108,610
----------- ------- ----------- -----------
Income before net gain on sale of properties,
equity in earnings of partnership and
minority interest............................. 25,936 3,492 4,001 33,429
Net gain on sale of properties................. -- 130 (130) --
Equity in earnings of partnership.............. -- 1,026 260(E) 1,286
Income allocated to minority
interest...................................... (1,588) -- -- (1,588)
----------- ------- ----------- -----------
Income from operations......................... 24,348 4,648 4,131 33,127
Preferred Share Distributions.................. -- -- (7,308)(F) (7,308)
----------- ------- ----------- -----------
Income from operations attributable to
common stock.................................. $ 24,348 $ 4,648 $ (3,177) $ 25,819
=========== ======= =========== ===========
Weighted average common shares
outstanding-basic(G).......................... 23,356,620 23,356,620
Basic and diluted income from operations
per common share(G)........................... $ 1.04 $ 1.11
=========== ===========
</TABLE>
F-15
<PAGE>
- ---------------
Notes to Pro Forma Condensed Combined Statement of Income
(A) See page F-17 for the pro forma condensed statement of income giving effect
to Prior Bradley Transactions.
(B) Represents historical operating results as reported by Mid-America for the
year ended December 31, 1997.
(C) Represents the net reduction in interest expense for the prepayment of
certain Mid-America mortgage indebtedness with Bradley's line of credit at
Bradley's current interest rate of 6.75%, combined with the reduction in
interest expense to reflect the estimated market interest rate of
approximately 7.25%, in accordance with the purchase method of accounting,
partially offset by an increase in interest expense for the payment of fees
and expenses related to the Mid-America Merger of approximately $4,850,000,
at an interest rate of 6.75%, as follows (in thousands):
<TABLE>
<S> <C>
Elimination of historical interest on mortgages expected to be prepaid... $(2,263)
Interest on Bradley's line of credit expected to be used to prepay debt.. 1,714
Reduction of Mid-America interest to reflect a market rate............... (569)
Interest on Bradley's line of credit for Mid-America Merger fees
and expenses......................................................... 327
-------
Pro forma adjustment..................................................... $ (791)
=======
</TABLE>
(D) Represents general and administrative cost savings which have been
estimated based upon historical costs for those items which are expected to
be eliminated as a result of the Mid-America Merger, as follows (in
thousands):
<TABLE>
<S> <C>
Salaries and benefits............ $ 906
D&O Insurance and director fees.. 230
Professional fees................ 136
Other............................ 28
------
Pro forma adjustment............. $1,300
======
</TABLE>
(E) Depreciation and amortization changes relate to recording Mid-America's
properties at Bradley's purchase price, and related depreciation utilizing
an estimated useful life of 39 years and a depreciable basis of
approximately $119,771,000, and the elimination of historical amortization
of Mid-America's deferred assets in accordance with the purchase method of
accounting, as follows (in thousands):
<TABLE>
<S> <C>
Pro forma depreciation expense ($119,771 over 39 years)... $ 3,071
Mid-America depreciation and amortization................. (4,981)
------
Pro forma adjustment...................................... $(1,910)
=======
</TABLE>
The pro forma adjustment to the equity in earnings of partnership reflects
the adjustment to depreciation and amortization of the partnership
resulting from recording the investment in partnership at Bradley's
purchase price.
(F) Preferred share distributions are calculated using an annual dividend rate
of $2.10 per share for 3,480,210 shares of Series A Preferred Stock.
(G) A reconciliation of the numerator and denominator used to compute basic
earnings per share ("EPS") to the numerator and denominator used to compute
diluted EPS is as follows:
<TABLE>
<CAPTION>
BRADLEY AS ADJUSTED FOR MID-AMERICA MERGER
NUMERATOR DENOMINATOR PER SHARE
-------------- ------------- -----------
<S> <C> <C> <C>
Basic EPS:
Income from operations attributable to
common stock.......................... $25,819,000 23,356,620 $1.11
Effect of dilutive securities:
Stock options........................... -- 42,451
Stock-based compensation................ -- 315
Conversion of LP Units.................. 1,588,000 1,523,587
----------- ----------
Diluted EPS:
Income from operations attributable to
common stock $27,407,000 24,922,973 $1.10
=========== ========== ===========
</TABLE>
F-16
<PAGE>
BRADLEY REAL ESTATE, INC.
PRO FORMA CONDENSED STATEMENT OF INCOME
TO REFLECT PRIOR BRADLEY TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
During 1997, Bradley acquired 25 shopping centers aggregating over 3.1
million square feet of GLA for an aggregate cost of approximately $189.3 million
and from January 1, 1998 through September 23, 1998, has acquired 19 properties
and two outlots adjacent to one of Bradley's existing centers aggregating 2.6
million square feet of GLA for an aggregate acquisition price of approximately
$179.0 million. Consideration paid for such acquisitions included cash
(provided primarily from the bank line of credit), assumption of mortgage
indebtedness and the issuance of Units of the Operating Partnership to
contributors of properties acquired. During the period from January 1, 1997
through September 23, 1998, Bradley sold six properties for net proceeds of
approximately $104.3 million utilizing the net proceeds to pay-down the line of
credit. The Prior Bradley Transactions do not include the Mid-America Merger.
In December 1997, Bradley entered into a new $200 million unsecured line of
credit facility with a syndicate of banks, replacing the previous $150 million
unsecured line of credit. The line of credit bears interest at a rate equal to
the lowest of (i) the lead bank's base rate, (ii) a spread over LIBOR ranging
from 0.70% to 1.25% depending on the credit rating assigned by national credit
rating agencies, or (iii) for amounts outstanding up to $100 million, a
competitive bid rate solicited from the syndicate of banks. Based on the
current credit rating assigned by Standard & Poor's and Moody's, the spread over
LIBOR is 1.00%, which represents a reduction in the spread over LIBOR from the
previous $150 million line of credit by 0.50%.
On November 26, 1997, Bradley prepaid a REMIC mortgage note (the "REMIC
Prepayment") primarily with the proceeds of an offering of $100 million of 7%
unsecured Notes due November 15, 2004 (the "November 1997 Debt Issuance"). The
effective interest rate on the unsecured Notes is approximately 7.19%. The issue
was rated "BBB-" by Standard & Poor's and "Baa3" by Moody's.
In December 1997, Bradley issued 1,290,000 shares of common stock pursuant
to two separate public offerings (the "December 1997 Stock Offerings"). Net
proceeds from the offerings, approximately $24.9 million, were contributed to
the Operating Partnership and were used to reduce outstanding borrowings under
the line of credit.
On January 28, 1998, Bradley' through the Operating Partnership issued $100
million, 7.2% ten-year unsecured Notes maturing January 15, 2008 (the "January
1998 Debt Issuance"). The effective interest rate on the unsecured Notes is
approximately 7.61%. The issue was rated "BBB-" by Standard & Poor's and "Baa3"
by Moody's. Proceeds from the issue were used to reduce the outstanding
borrowings under the line of credit.
On February 18, 1998, Bradley issued 392,638 shares of common stock to a
unit investment trust at a price based upon the then market value of $20.375 per
share (the "February 1998 Stock Offering"). Net proceeds from the offering of
approximately $7.6 million were contributed to the Operating Partnership and
were used to reduce outstanding borrowings under the line of credit.
The unaudited Pro Forma Condensed Statement of Income is presented as if
all of the acquisitions, the dispositions, the replacement of the previous line
of credit with the new line of credit, the REMIC Prepayment, the November 1997
Debt Issuance, the December 1997 Stock Offerings, the January 1998 Debt
Issuance, and the February 1998 Stock Offering, described above, had been
consummated on January 1, 1997, and with Bradley qualifying as a REIT and,
therefore, incurring no federal income tax expense during the period January 1,
1997 through December 31, 1997.
F-17
<PAGE>
<TABLE>
<CAPTION>
OTHER
ACQUISITION ACQUISITION DISPOSITION OTHER
HISTORICAL PROPERTIES (A) PROPERTIES(B) PROPERTIES (C) ADJUSTMENTS PRO FORMA
------------ -------------- ------------- -------------- ------------ ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income......................... $ 96,115 $1,518 $37,078 $(17,565) $ -- $ 117,146
Other income.......................... 1,437 1 184 6 -- 1,628
----------- ------ ------- -------- -------- ----------
Total revenue....................... 97,552 1,519 37,262 (17,559) -- 118,774
----------- ------ ------- -------- -------- ----------
Expenses:
Operations, maintenance
and management...................... 14,012 129 5,201 (2,856) -- 16,486
Real Estate taxes..................... 18,398 65 5,281 (4,620) -- 19,124
Mortgage and other
interest............................ 16,562 -- -- -- 10,997(D) 27,559
General and administrative............ 5,123 -- -- -- -- 5,123
Non-recurring stock-based
compensation........................ 3,415 -- -- -- -- 3,415
Depreciation and
amortization........................ 16,606 -- -- -- 4,525(E) 21,131
----------- ------ ------- -------- -------- ----------
Total expenses........................ 74,116 194 10,482 (7,476) 15,522 92,838
----------- ------ ------- -------- -------- ----------
Income before net gain on sale of
properties and extraordinary
item................................ 23,436 1,325 26,780 (10,083) (15,522) 25,936
Net gain on sale of properties......... 7,438 -- -- (7,438) -- --
----------- ------ ------- -------- -------- ----------
Income before extraordinary item and
allocation to minority interest..... 30,874 1,325 26,780 (17,521) (15,522) 25,936
Income allocated to minority interest.. (1,116) -- -- -- (472) (1,588)
----------- ------ ------- -------- -------- ----------
Income before extraordinary item....... $ 29,758 $1,325 $26,780 $(17,521) $(15,994) $ 24,348
=========== ====== ======= ======== ======== ==========
Weighted average shares
outstanding -- basic(F)............. 21,776,146 23,356,620
Basic and diluted income per
common share:
Income before extraordinary item(F)... $ 1.36 $ 1.04
=========== ===========
</TABLE>
EXPLANATORY NOTES
(A) Increase represents historical operating revenues and expenses of Clock
Tower Plaza for which financial statements are included in this Form 8-K,
for the period Bradley did not own such property.
(B) Increase represents historical operating revenues and expenses of
Acquisition Properties, and properties acquired in 1997 for which financial
statements are not included in this Form 8-K, for the period Bradley did
not own such properties.
(C) Decrease represents the elimination of historical operating revenues and
expenses and net gain on sale of properties disposed of during 1997 and
1998 for the period during which Bradley owned such properties.
F-18
<PAGE>
(D) Mortgage and other interest has been increased to reflect the pro forma
borrowings for property acquisitions for the period during which Bradley
did not own such properties, net of the reduction for the application of
net proceeds from the property dispositions and the December 1997 and
February 1998 Stock Offerings to pay down the line of credit for the period
during which Bradley owned such properties, and for the period preceding
the Stock Offerings, at an interest rate of 6.75%, which was Bradley's
approximate borrowing rate at August 31, 1998. Mortgage and other interest
has been increased for the November 1997 and January 1998 Debt Issuances,
net of the reduction for the application of net proceeds of such Debt
Issuances to pay down the $100 million REMIC Note and the line of credit,
respectively, at the applicable effective interest rates. Mortgage and
other interest has been decreased by the net reduction in interest expense
resulting from the December 1997 paydown of the existing line of credit
facility with proceeds from the new line of credit facility. A 0.125%
change in the variable rate would result in a change in the pro forma
interest adjustment of approximately $32,000.
<TABLE>
<S> <C>
Increase in interest expense attributable to
acquisition activities.......................... $19,220
Decrease in interest expense attributable to
disposition activities.......................... (6,559)
Decrease in interest expense attributable to
the Stock Offerings............................. (2,063)
Net increase in interest expense attributable to
the Debt Issuances.............................. 843
Net decrease in interest expense attributable to
the paydown of the existing line of credit
facility with proceeds from the new line of
credit facility................................. (444)
-------
Pro forma adjustment.............................. $10,997
=======
</TABLE>
(E) Depreciation and amortization has been increased to give effect to
recording the property acquisitions over a depreciable life of 39 years,
for the period which Bradley did not own such properties, net of the
reduction for properties disposed for the period which Bradley owned such
properties, as follows:
<TABLE>
<S> <C>
Increase in depreciation and amortization
attributable to acquisition activities... $ 5,919
Decrease in depreciation and amortization
attributable to disposition activities... (1,394)
-------
Pro forma adjustment....................... $ 4,525
=======
</TABLE>
(F) A reconciliation of the numerator and denominator used to compute basic
earnings per share ("EPS") to the numerator and denominator used to compute
diluted EPS is as follows:
<TABLE>
<CAPTION>
BRADLEY HISTORICAL BRADLEY PRO FORMA
NUMERATOR DENOMINATOR PER SHARE NUMERATOR DENOMINATOR PER SHARE
----------- ----------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Income before extraordinary item.. $29,758,000 21,776,146 $ 1.36 $24,348,000 23,356,620 $ 1.04
Effect of dilutive securities:
Stock options..................... -- 42,451 -- 42,451
Stock-based compensation.......... -- 315 -- 315
Conversion of LP Units............ 1,116,000 799,938 1,588,000 1,523,587
----------- ---------- ---------- -----------
Diluted EPS:
Income before extraordinary item.. $30,874,000 22,618,850 $ 1.36 $25,936,000 24,922,973 $ 1.04
=========== ========== ========== =========== =========== =========
</TABLE>
F-19
<PAGE>
Exhibit 23.1
Consent of KPMG Peat Marwick LLP
--------------------------------
The Board of Directors of Bradley Real Estate, Inc.:
We consent to the use of our report dated September 2, 1998 related to the
statement of revenues and certain expenses of Clock Tower Plaza for the year
ended December 31, 1997, incorporated by reference in the registration
statements (Nos. 333-63707, 333-42357, 333-28167, 33-87084, 33-62200 and
33-64811) on Form S-3 of Bradley Real Estate, Inc., the registration statements
(No. 333-30587, 33-34884 and 33-65180) on Form S-8 of Bradley Real Estate, Inc.
and the registration statements (Nos. 333-36577 and 333-51675) on Form S-3 of
Bradley Operating Limited Partnership.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
September 24, 1998
