<PAGE>
As filed with the Securities and Exchange Commission on February 19, 1999
Registration Statement No. 333-69131
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
AMENDMENT NO. 2
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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BRADLEY REAL ESTATE, INC.
(Exact name of Registrant as specified in its charter)
Maryland 04-6034603
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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
Chairman, President and Chief Executive Officer
Bradley Real Estate, Inc.
40 Skokie Boulevard, Suite 600
Northbrook, Illinois 60062-1626
(847) 272-9800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
copy to:
William B. King, P.C.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
(617) 570-1000
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Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier 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. [ ]
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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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion February 19, 1999
Prospectus
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1,212,630 Shares
BRADLEY REAL ESTATE, INC.
Common Stock
____________
Bradley Real Estate, Inc.
We own and operate shopping centers throughout the Midwest, which are
primarily anchored by grocery and drug stores used by members of the surrounding
community for their day-to-day living needs.
We are the sole general partner of, and conduct substantially all of our
business through Bradley Operating Limited Partnership.
The Offering
Those holders of limited partnership units in Bradley Operating Limited
Partnership specified in this prospectus may receive up to 1,212,630 shares of
Bradley Real Estate's common stock pursuant to this prospectus.
Bradley Real Estate will only issue these shares if:
. any of the specified holders exercise their right to tender their units to
Bradley Operating Limited Partnership for cash, and
. we exercise our right to issue shares of common stock to that holder
instead of cash.
We will not receive any cash proceeds if we issue shares of common stock to
redeem these limited partner units. Instead, we will acquire the units tendered
by the holder in exchange for any shares we issue.
Our common stock is listed on the New York Stock Exchange and
trades under the symbol BTR.
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Investing in shares of our common stock involves risk. In considering
whether to redeem limited partnership units in Bradley Operating Limited
Partnership for shares of common stock, you should carefully consider the
matters discussed under "Risk Factors" beginning on page 4 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. It is illegal for any person to tell
you otherwise.
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The date of this prospectus is February __, 1999
<PAGE>
PROSPECTUS SUMMARY
This summary only highlights the more detailed information appearing
elsewhere in this prospectus or incorporated herein by reference. As this is a
summary, it may not contain all information that is important to you. You
should read this entire prospectus carefully before deciding whether to tender
your units of limited partnership interest for redemption.
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Bradley Real Estate, Inc.
We are a real estate investment trust with internal property management,
leasing and development capabilities that owns and operates community and
neighborhood shopping centers in the Midwest region of the United States. Such
centers are typically anchored by grocery and drug stores complemented with
stores providing a wide range of other goods and services to shoppers. As a
result, the centers are used by members of the surrounding community for their
day-to-day living needs. Based on our past experience, we believe this type of
shopping center offers strong and predictable daily consumer traffic and is less
susceptible to downturns in the general economy than shopping centers whose
principal tenants are department stores or stores primarily selling apparel or
leisure items. As of December 31, 1998, we owned 98 properties in 16 states,
aggregating approximately 15.8 million square feet of gross leasable area.
Title to such properties is held by or for the benefit of Bradley Operating
Limited Partnership. We conduct substantially all of our business through
Bradley Operating Limited Partnership. We are the sole general partner and the
owner of approximately 94% of the economic interests in Bradley Operating
Limited Partnership.
We are incorporated under the laws of the State of Maryland. Our offices
are located at 40 Skokie Boulevard, Suite 600, Northbrook, Illinois 60062-1626.
Our telephone number is (847) 272-9800.
Securities to be Offered
This prospectus relates to the issuance of up to 1,212,630 shares of common
stock that we may issue to holders of an aggregate of 1,212,630 units if, and to
the extent that, these holders tender their units for redemption. Bradley
Operating Limited Partnership originally issued these units to Lexington Holding
Company,County Line 31 Company, L.P. and Spring Mall Associates Limited
Partnership and the equity holders of Baken Park Partners Limited Partnership in
exchange for the contribution of their interests in one of four properties to
Bradley Operating Limited Partnership. In connection with these property
contributions, we entered into registration rights agreements with the
contributors. We are registering the shares covered by this prospectus in order
to fulfill our contractual obligations under these agreements and provide the
holders of the shares with freely tradeable securities. Registration of these
shares does not necessarily mean that all or any portion of the shares will be
issued by us.
Pursuant to the Second Restated Agreement of Limited Partnership of Bradley
Operating Limited Partnership, unitholders may tender their units to Bradley
Operating Limited Partnership for cash equal to the value of an equivalent
number of shares of our common stock. The ratio of shares of common stock to
which the units are equated may be adjusted to prevent dilution. In lieu of
delivering cash, however, we may, at our option, choose to acquire any units so
tendered by issuing shares of common stock in exchange for the units. The
shares will be exchanged for units on a one-for-one basis. This one-for-one
exchange rate may be adjusted to prevent dilution.
We will not receive any cash proceeds from the issuance of any shares of
common stock offered under this prospectus. With each such acquisition,
however, our economic interest in Bradley Operating Limited Partnership will
increase because we will acquire the units tendered by the holder for
redemption.
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Tax Status of Bradley
We have elected to qualify as a REIT under Sections 856 through 860 of the
Internal Revenue Code in each year since our organization in 1961 and we are the
nation's oldest continuously qualified REIT. As long as we qualify for taxation
as a REIT, we generally will not be subject to federal income tax on that
portion ofour ordinary income and capital gains that is currently distributed to
our stockholders. Even if we qualify for taxation as a REIT, we may be subject
to state and local taxes on our income and property and to federal income and
excise taxes on our undistributed income.
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RISK FACTORS
We cannot guarantee that any forward looking information presented in this
prospectus will actually occur.
Statements made in this prospectus or in the documents incorporated by
reference into this prospectus include forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Also, documents we subsequently file with the
Commission and incorporate by reference into this prospectus will contain
forward-looking statements. These statements include, among other things,
statements regarding our intent, belief or expectations and those of our
directors and officers with respect to:
. our declaration or payment of distributions;
. our potential acquisitions or dispositions of properties, assets or
other public or private companies;
. our policies regarding investments, indebtedness, acquisitions,
dispositions, financings, conflicts of interest and other matters;
. our qualification as a REIT under the Internal Revenue Code;
. the retail industry and real estate markets in the Midwest and in
general;
. the availability of debt and equity financing;
. interest rates;
. general economic conditions; and
. trends affecting our financial condition or results of operations.
We caution you that, while forward-looking statements reflect our good faith
beliefs, they are not guarantees of future performance and involve known and
unknown risks and uncertainties, and that actual results may differ materially
from those in the forward-looking statements as a result of factors outside of
our control. In addition, we disclaim any obligation to publicly update or
revise any forward-looking statement, whether as a result of new information,
future events or otherwise.
The exchange of units by a holder may have adverse tax consequences to that
holder.
A unitholder who redeems units for common stock may have adverse tax
consequences.
If you redeem or exchange units for cash or shares of stock, you will
recognize gain or loss because the redemption and exchange are considered fully
taxable sales of your units. You will be treated as realizing for tax purposes
an amount equal to the sum of the cash received or the value of the shares
received in the exchange plus the amount of any Bradley Operating Limited
Partnership liabilities allocable to the exchanged units at the time of the
redemption or exchange. It is possible that the amount of gain recognized or
even the tax liability resulting from such gain could exceed the amount of cash
or the value of the shares received upon such disposition. For a more in-depth
explanation of the tax consequences to you of a redemption, you should carefully
consider the section entitled "Description of Units and Redemption of Units--Tax
Consequences of Redemption." In addition, your ability to sell a substantial
number of shares in order to raise cash to pay tax liabilities associated with
the redemption of your units may be limited as a result of fluctuations in the
market price of our common stock. The price you receive for such shares may not
equal the value of your units at the time of redemption or exchange.
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If we do not exercise our right to acquire units you have tendered for
redemption in exchange for shares of common stock, and such units are redeemed
by Bradley Operating Limited Partnership for cash, then the tax consequences may
differ. You may wish to consult your own tax advisor to discuss the
consequences prior to redeeming your units.
If a unitholder redeems units, the original receipt of the units may be
subject to tax.
Your original receipt of the units may be treated as a taxable sale under
the "disguised sale" rules of the Internal Revenue Code if you redeem your
units, particularly within two years of receiving them. Subject to several
exceptions, the tax law generally provides that a partner's contribution of
property to a partnership and a simultaneous or subsequent transfer of money or
other consideration from the partnership to the partner will be presumed to be a
taxable sale. In particular, if money or other consideration is transferred by
a partnership to a partner within two years of the partner's contribution of
property, the transactions are presumed to be a taxable sale of the contributed
property unless the facts and circumstances clearly establish that the transfers
are not a sale. On the other hand, if two years have passed between the
original contribution of property and the transfer of money or other
consideration, the transactions will not be presumed to be a taxable sale unless
the facts and circumstances clearly establish that they should be. Therefore, if
you redeem your units, the Internal Revenue Service may characterize your
initial contribution of property as a taxable sale, depending on the timing and
other facts and circumstances surrounding your redemption. The two year
threshold, which will determine whether your initial contribution is presumed to
be a taxable sale or not, will differ depending on when you received your units.
<TABLE>
<CAPTION>
Contributed Property Two Year Anniversary
-------------------- --------------------
<S> <C>
Roseville Center January 1, 1999
County Line Mall July 31, 1999
Spring Mall December 23, 1999
Baken Park December 31, 1999
</TABLE>
Please keep in mind that determinations under these tax rules depend
significantly on the specific facts surrounding your redemption and your own
personal tax situation. You should consult your own tax advisor regarding your
personal situation prior to tendering units for redemption.
Failures in achieving our objectives for growth could adversely affect our
operating results and financial condition.
We have grown aggressively over the past few years and continue to
experience growth. The failure to achieve our objectives in this growth could
have a material adverse effect on our operating results and financial condition.
During 1997, we acquired 25 shopping centers aggregating over 3.1 million square
feet of gross leasable area for an aggregate acquisition price of approximately
$189.3 million. On August 6, 1998, we completed the merger acquisition of Mid-
America Realty Investments, Inc., a real estate investment trust owning
interests in 25 properties aggregating approximately 3.3 million square feet
primarily located in the Midwest region of the United States. In addition to
property interests acquired in connection with the merger acquisition of Mid-
America Realty Investments, from January 1, 1998 through December 31, 1998, we
acquired 22 properties and two outlots adjacent to one of our existing
properties, aggregating 3.0 million square feet of gross leasable area for an
aggregate acquisition price of approximately $202.8 million.
Our objectives in pursuing growth through property acquisitions include:
. achieving economies of scale for property operations through the
management of several properties from a strategically located
management office;
5
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. bulk purchasing insurance and contracted services in order to reduce
the level of property expenses overall;
. maximizing the benefits from our relationships with tenants who have
stores located throughout the Midwest;
. reducing general and administrative expenses by eliminating duplicate
corporate level expenses in the case of growing the portfolio through
corporate merger acquisitions; and
. lowering our overall cost of equity and debt capital, enabling us to
acquire additional properties on more favorable terms.
As an important part of our business strategy, we continually look to
acquire additional shopping centers and portfolios of shopping centers.
Notwithstanding our adherence to our criteria for evaluation and due diligence
regarding potential acquisitions, we cannot guarantee that any acquisition that
is consummated will meet our expectations. We target shopping centers and
portfolios which we believe we might be able to purchase at 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 we have undertaken at some of our existing
properties. In executing our growth strategy, we may fail to achieve our
objectives with respect to any one property or with respect to our portfolio as
a whole. For example, the actual cost savings from an acquisition may not match
the level estimated at the time of acquisition, the overall cost of equity and
debt capital may not be reduced to expected levels, or the benefits of reducing
the cost of capital may be offset by an increase in prices of real estate due to
changing market conditions. Even after careful evaluation, we risk that our
investment will fail to generate expected returns or that our desired
improvement programs will cost more than expected. In addition, we cannot
guarantee that we will ultimately make any potential acquisition that we may
evaluate. The evaluation process involves non-recoverable costs in the case of
acquisitions which are not consummated.
Although to date, we have largely been able to achieve our overall
objectives in growing through acquisitions, we cannot guarantee that we will be
able to continue to do so. The consistent failure to achieve our objectives
could have a material adverse effect on our operating results and financial
condition, and could adversely affect any plans for future growth. Although
these non-recoverable costs have historically been at or below 0.1% of the total
costs of acquisitions that were consummated, we cannot guarantee that we will be
able to maintain that level in the future.
Our use of third party indebtedness exposes us to the risks that may adversely
affect the amount of cash we have available for distribution to our
stockholders.
We could become too highly leveraged because our organizational documents
contain no limitation on debt and thereby may adversely affect our ability to
make expected distribution to stockholders.
Our organizational documents do not limit the amount of indebtedness that we
or Bradley Operating Limited Partnership may incur. Although we attempt to
maintain a balance between total outstanding indebtedness and the value of our
portfolio, we could alter this balance at any time. We try to maintain a ratio
of 50% or less of debt and preferred stock to net operating income divided by
10.25%. If we become more highly leveraged, then the resulting increase in debt
service could adversely affect our ability to make payments on our outstanding
indebtedness and expected distributions to our stockholders. If we default on
our obligations under any outstanding indebtedness, we could lose our interest
in any properties that secure that indebtedness.
Because part of our borrowings have floating rates, a general increase in
interest rates will adversely affect our net income and cash available for
distribution to stockholders.
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Our revolving credit facility carries a floating interest rate that will
rise if market interest rates rise. In that event, we will need to use more of
our revenue to pay the interest on our indebtedness. Any such increase in debt
service requirements would leave us with less cash available for distribution to
our stockholders.
An adverse market reaction to increased indebtedness could restrict our
ability to raise capital for future growth.
The foregoing risks associated with our debt obligations may also adversely
affect the market price of our common stock. A decrease in the market price of
our common stock may inhibit our ability to raise capital and issue equity in
both the public and private markets and thereby adversely affect any plans for
future growth.
The factors affecting real estate investments and our ability to manage these
investments may adversely affect an investment in our common stock.
As a real estate company, our ability to generate revenues is significantly
affected by the risks of owning real property investments.
We derive substantially all of our revenue from investments in real
property. Real property investments are subject to varying types and degrees of
risk that may adversely affect the value of our assets and our ability to
generate revenues. The factors that may adversely affect our revenues, net
income and cash available for distributions to stockholders include the
following:
. local conditions, such as an oversupply of space or a reduction in
demand for real estate in an area;
. competition from other available space;
. the ability of the owner to provide adequate maintenance;
. insurance and variable operating costs;
. government regulations;
. changes in interest rate levels;
. the availability of financing; and
. potential liability due to changes in environmental and other laws;
. changes in the general economic climate.
The illiquidity of real estate as an investment limits our ability to sell
properties quickly in response to market conditions.
Real estate investments are relatively illiquid and therefore cannot be
purchased or sold rapidly in response to changes in economic or other
conditions. In addition, the Internal Revenue Code limits our ability as a REIT
to make sales of properties held for fewer than four years, which may affect our
ability to sell properties in response to market conditions without adversely
affecting returns to stockholders.
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Our strategic focus on Midwest retail properties means that economic trends
in the Midwest and/or the retail industry may specifically affect our cash
available for distribution to stockholders.
Substantially all of our properties are located in the Midwestern region of
the United States. Adverse economic developments in this area could adversely
impact the operations of our properties and therefore our profitability. The
concentration of properties in one region may expose us to risks of adverse
economic developments which are greater than if our portfolio were more
geographically diverse.
Our properties consist predominantly of community and neighborhood shopping
centers catering to retail tenants. Our performance therefore is linked to
economic conditions in the market for retail space generally. The market for
retail space has been or could be adversely affected by:
. ongoing consolidation among retailing companies;
. weak financial condition of large major retailers;
. excess amount of retail space in some markets; and
. increasing consumer purchases through catalogues or the internet.
To the extent that these conditions impact the market rents for retail space, we
could experience a reduction of revenues, net income and cash available for
distribution.
In addition, the value of our common stock may be negatively impacted to the
extent that the investing public has a negative perception of the retail sector.
As a result, our common stock may trade at a discount below the underlying value
of our assets as a whole.
Tenants in or facing bankruptcy may not make timely rental payments.
Our revenues, net income and cash available for distribution would be
adversely affected if a significant number of our tenants were unable to meet
their obligations to us. A tenant may 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 us, then we may experience delays in being able to enforce our
right as lessor or sublessor. In addition, we may incur substantial costs and
experience significant delays associated with protecting our investment,
including costs incurred in renovating and releasing the property. During 1998,
store closings by two major tenants in bankruptcy, Montgomery Ward and Home
Place, adversely affected revenues, net income and cash available for
distribution.
Vacancies and lease renewals may also reduce revenues, net income and our
cash available for distribution.
We continually have tenant leases expiring at our properties. Some lease
expirations provide us with the opportunity to increase rentals or to hold the
space available for a stronger long-term tenancy. In other cases, the space may
not generate strong demand for tenancy. As a result, the space may remain
vacant for a longer period than anticipated or we may be able to be re-leased
only at less favorable rents. In such situations, we may be subject to
competitive and economic conditions over which we have no control. Although we
anticipate a level of vacancies consistent with our past experience, we can give
no assurance that the effects of possible vacancies or lease renewals at our
properties will not reduce our revenues, net income and cash available for
distribution.
In addition, vacancies relating to anchor tenant space are frequently more
difficult to re-lease and can have an adverse effect on the other stores in a
shopping center. For example, Montgomery Wards vacated its store at one of our
shopping centers in early 1998 after it declared bankruptcy. As of the date of
this
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prospectus, we have re-leased approximately one-half of the space previously
occupied by Montgomery Wards with the expectation of incurring significant
expenditures for store improvements for the new tenant.
If we develop new properties or acquire newly developed properties, our
ability to generate revenues will be affected by further risks.
To the extent that we enter into agreements to acquire newly developed
shopping centers when they are completed, or acquire newly developed shopping
centers, we will be subject to risks inherent in acquiring newly constructed
centers, which could carry a higher level of risk than the acquisition of
existing properties with a proven performance record. The most significant
risks include:
. the risk that funds will be expended and management time will be
devoted to projects which may not come to fruition;
. the risk that occupancy rates and rents at a completed project will be
less than anticipated; and
. the risk that expenses at a completed development will be higher than
anticipated.
These risks may adversely affect our revenues, net income and cash available
for distribution to stockholders.
Possible environmental liabilities at our properties and related costs of
remediation may reduce cash available for distribution or reduce value of that
property.
Under federal, state and local laws, ordinances and regulations, current or
former owners of real estate are liable for the costs of removal or remediation
of hazardous or toxic substances on or in such property. Such laws often impose
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 on any of our properties, or the failure to properly remediate such
substances, may adversely affect our ability to sell or rent such property or to
use such property as collateral in our borrowings. All of our properties have
been subjected to Phase I or similar environmental audits by independent
environmental consultants. Such environmental tests involve inspection without
soil sampling or ground water analysis. We are not aware of any environmental
liability with respect to our properties that we believe would have a material
adverse effect on our business, assets or results of operations taken as a
whole. We have no assurance, however, that existing environmental studies with
respect to our properties revealed all environmental liabilities or that a prior
owner of any such property did not create any material environmental condition
not known to us.
Limitations in our insurance could possibly have adverse consequences on the
amount of our cash available for distribution to our stockholders.
It is possible that we may experience losses which exceed the limits of our
insurance coverage or for which we may be uninsured. We carry comprehensive
general liability coverage and umbrella liability coverage on all of our
properties. Our insurance has limits of liability which we believe are
customary for similar properties and adequate to insure against liability claims
and provide for cost of defense. Similarly, we are insured against the risk of
direct physical damage in amounts we estimate to be adequate to reimburse us on
a replacement basis for costs incurred to repair or rebuild each property,
including loss of rental income during the reconstruction period. Currently, we
also insure 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, we determined 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.
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Year 2000 issues may result in a disruption of our operations and the ability of
our tenants and suppliers to meet their obligations.
Many existing computer software programs and operating systems were designed
such that the year 1999 is the maximum date that they will be able to process
accurately. This issue does not just affect software programs, but also affects
operating systems which contain embedded technology including those designed to
protect life and property. These operating systems include heating,
ventilation, air-conditioning, fire alarms, security, telephones and other
equipment. The failure of our computer software programs and operating systems
to process the change in calendar year from 1999 to 2000 may result in system
malfunctions or failures. Such an occurrence may affect our ability to
effectively manage and operate our properties. As a result of a failure of the
software or operations systems, we may suffer a disruption in our ability to
provide services we are contractually required to provide to our tenants which
may result in withholding of rents or suits for damages incurred by the tenants.
In the conduct of our own operations, we rely upon commercial computer
software primarily provided by independent software vendors, and have undertaken
an assessment of our vulnerability to the Year 2000 issue with respect to our
computer systems. After an analysis of our potential exposure, we believe that
such commercial software is substantially Year 2000 compliant and that such
independent vendors will be able to complete any additional work to ensure Year
2000 compliance in a timely manner and without any material impact on our
business, operations or financial condition.
Similarly, we evaluated the potential malfunction or failure of our
operating systems and believe them to be substantially Year 2000 compliant and
that any additional work to ensure Year 2000 compliance will be completed in a
timely manner and without any material impact on our business. We can, however,
give no assurance that any material impact on us as a result of any
noncompliance will not occur. Our assessment is based upon formal and informal
communications with the software vendors, literature supplied with the software,
literature supplied in connection with maintenance contracts, and test
evaluations of the software. Although we believe that we will be able to adopt
appropriate contingency plans to deal with our own Year 2000 compliance issues
that we experience as we continue our Year 2000 assessment and testing, we can
not be certain at this time that our contingency plans will be effective in
preventing a material impact on us.
The failure of our tenants' or suppliers' computer software programs and
operating systems to process the change in calendar year from 1999 to 2000 may
also result in system malfunctions or failures. Such an occurrence would
potentially affect the ability of the affected tenant or supplier to operate its
business and thereby raise adequate revenue to meet its contractual obligations
to us. As a result of such a software or operations systems failure among our
tenants or suppliers, we may not receive revenue or services we had otherwise
expected to receive pursuant to existing leases and contracts. We have
completed an inventory of the tenants, suppliers, and other parties with whom we
do a significant amount of business, and are in the process of surveying such
parties to identify the potential exposure in the event they are not Year 2000
compliant in a timely manner. We expect to have responses from such parties by
May 1999. However, at this time, we are not aware of any party that is
anticipating a material Year 2000 compliance issue. Although our investigations
and assessments of possible Year 2000 issues are still in a preliminary stage,
we do not anticipate a material impact on our business.
In the event that any such tenant, supplier or other party does experience a
Year 2000 compliance issue, it may have a material impact on our business,
operations or financial condition. It is possible that an aggregation of
tenants, suppliers and other parties who experience Year 2000 related system
malfunctions or failures may have a material impact on our business, operations
and financial condition. Although we believe that we will be able to adopt
appropriate contingency plans to deal with any Year 2000 compliance issues that
any other party, excluding public utilities, with whom we have significant
relationships may experience as we continue our Year 2000 assessment and
testing, we can not be certain at this time that our contingency plans will be
effective in limiting the harm caused by such third parties' system malfunctions
and failures.
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The reasonably likely worst case scenario that could affect our operations
would be a widespread prolonged power failure affecting a substantial portion of
the Midwestern states in which our shopping centers are located. In the event
of such a widespread prolonged power failure, a significant number of tenants
may not be able to operate their stores and, as a result, their ability to pay
rent could be substantially impaired. We are not aware of an economically
feasible contingency plan which we could implement to prevent such a power
failure from having a material adverse effect on our operations.
There are provisions in our charter and bylaws that may discourage acquisition
proposals.
Some provisions contained in our charter and bylaws may discourage third
parties from making proposals to acquire us, even if some of our stockholders
might consider the proposal to be in their best interest. These provisions
include the following:
. Our charter provides for three classes of Directors with the term of
office of one class expiring each year, commonly referred to as a
"staggered board." By preventing stockholders from voting on the
election of more than one class of directors at any annual meeting of
stockholders, this provision may have the effect of keeping the
current members of our Board of Directors in control for a longer
period of time than stockholders may desire.
. Our bylaws provide that the holders of not less than 25% of the
outstanding shares of common stock may call a special meeting of our
stockholders. This provision could make it more difficult for a
stockholder to call a meeting for the purposes of approving a change
of control without the support of the Board of Directors.
. Our charter authorizes the Board of Directors to issue up to 20
million shares of preferred stock without stockholder approval and to
reclassify any unissued shares of stock as a different class or series
in the Board of Directors' discretion. Our Board of Directors' ability
to issue preferred stock without stockholder approval, and to
establish the preferences and rights of any class or series issued,
could allow the Board of Directors to issue one or more classes or
series of preferred stock that would discourage or delay a tender
offer or change in control.
. Our charter generally limits any holder from acquiring more than 9.8%
of the value or number of our outstanding common stock. While this
provision is intended to assure our ability to remain a qualified REIT
for income tax purposes, the ownership limits may also 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 outstanding
shares of common stock or otherwise effect a change in control.
We would experience adverse consequences if we failed to qualify as a REIT.
Our failure to qualify as a REIT would have serious adverse financial
consequences.
We believe that we have operated in a manner that permits us to qualify as a
REIT under the Internal Revenue Code for each taxable year since our formation
in 1961. Qualification as a REIT, however, involves the application of highly
technical and complex Internal Revenue Code provisions for which there are only
limited judicial or administrative interpretations. In addition, REIT
qualification involves the determination of factual matters and circumstances
not entirely within our control. For example, in order to qualify as a REIT, we
must derive at least 95% of our gross income in any year from qualifying sources
and we must distribute annually to stockholders 95% of our REIT taxable income,
excluding net capital gains. As a result, although we believe that we are
organized and operating in a manner that permits us to remain qualified as a
REIT, we cannot guarantee that we will be able to continue to operate in such a
manner. In addition, if we are ever audited by the Internal Revenue Service
with respect to any past year, the IRS may challenge our qualification as a REIT
for such year.
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Similarly, 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. We are not aware, however, of any currently pending tax
legislation that would adversely affect our ability to continue to operate as a
REIT.
If we fail to qualify as a REIT, we will be subject to federal income tax,
including any applicable alternative minimum tax, on our taxable income at
regular corporate rates. This additional tax could significantly reduce, or
possibly eliminate, the amount of cash we have available for investment or
distribution to stockholders because of the additional tax liability for the
year or years involved. In addition, we will also be disqualified from
treatment as a REIT for the next four taxable years, unless we are entitled to
relief under statutory provisions.
If we do not qualify as a REIT, we will no longer be required to make annual
distributions to stockholders. To the extent that we made distributions to
stockholders in anticipation of our qualifying as a REIT, we may be required to
borrow funds or to liquidate some of our investments to pay the applicable tax.
Our failure to qualify as a REIT would also constitute a default under our
primary debt obligations and could significantly reduce the market value of our
common stock.
We may need to borrow money to qualify as a REIT.
Our ability to make distributions to stockholders could be adversely
affected by increased debt service obligations if we need to borrow money in
order to maintain our REIT qualification. For example, differences in timing
between when we receive income and when we have to pay expenses could require us
to borrow money to meet the requirement that we distribute to our stockholders
at least 95% of our net taxable income each year excluding net capital gains.
The incurrence of large expenses also could cause us to need to borrow money to
meet this requirement. We might need to borrow money for these purposes even if
we believe that market conditions are not favorable for such borrowings and
therefore we may borrow money on unfavorable terms.
We are subject to some taxes even if we qualify as a REIT.
Even if we qualify as a REIT, we are subject to some federal, state and
local taxes on our income and property. For example, we pay tax on certain
income we do not distribute. Also, our income derived from properties located
in some states are subject to local taxes and, if we were to enter into
transactions which the Internal Revenue Code labels as prohibited transactions,
our net income from such transactions would be subject to a 100% tax.
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AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information electronically with the SEC. You may read and copy any of the
reports, statements or other information that we file with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, N.W., in Washington, D.C. Please call
the SEC at 1-800-SEC-0330 for further information on the Public Reference Room.
Our SEC filings are also available from the New York Stock Exchange, 20 Broad
Street, New York, NY 10005 and from the Internet site maintained by the SEC at
http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
This prospectus is part of a registration statement on Form S-3, number
333-69131 that we have filed with the SEC to register the shares offered in this
prospectus. It does not repeat important information that you can find in our
registration statement or in the reports and other documents that we file with
the SEC. Our SEC file number is 001-10328. The SEC allows us to "incorporate by
reference" the information we file with them. This means that we can disclose
important information to you by referring you to other documents that are
legally considered to be part of this prospectus, and later information that we
file with the SEC will automatically update and supersede the information in
this prospectus and the documents listed below.
We incorporate by reference the documents listed below, and any future
filings made with the SEC under Section 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934 until we sell all the shares of common stock
offered in this prospectus:
. our Annual Report on Form 10-K for the fiscal year ended December 31,
1997;
. our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998;
. our Proxy Statement dated March 31, 1998 with respect to our Annual
Meeting of Stockholders on May 14, 1998;
. our current reports on Form 8-K filed on January 28, 1998, February
20, 1998, June 2, 1998, June 17, 1998, June 24, 1998, August 7, 1998,
September 24, 1998, September 29, 1998 and December 16, 1998 and our
current report of Form 8-K/A filed on February 4, 1999; and
. the description of our common stock contained or incorporated by
reference in our Registration Statement on Form 8-A, filed August 8,
1994, including any amendments thereto.
You may request a copy of these documents incorporated by reference, but not
the exhibits filed with these documents unless those exhibits are specifically
referred to, at no cost by writing or telephoning us at the following address:
attention: Ms. Marianne Dunn, Senior Vice President, Bradley Real Estate, Inc.,
40 Skokie Boulevard, Suite 600, Northbrook, Illinois 60062-1626, telephone (847)
272-9800.
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BRADLEY REAL ESTATE, INC.
We are a real estate investment trust with internal property management,
leasing and development capabilities that owns and operates community and
neighborhood shopping centers in the Midwest region of the United States. We
favor community and neighborhood shopping centers because such properties are
typically anchored by grocery and drug stores complemented with stores providing
a wide range of other goods and services to shoppers. As a result, the centers
are used by the members of the surrounding community for their day-to-day living
needs. Based on our past experience, we believe this type of shopping center
offers strong and predictable daily consumer traffic and is less susceptible to
downturns in the general economy than shopping centers whose principal tenants
are department stores or stores primarily selling apparel or leisure items. As
of December 31, 1998, we owned 98 properties in 16 states, aggregating
approximately 15.8 million square feet of gross leasable area. Title to such
properties is held by or for the benefit of Bradley Operating Limited
Partnership.
We conduct substantially all of our business through Bradley Operating
Limited Partnership. We are the sole general partner and the owner of
approximately 94% of the economic interests in Bradley Operating Limited
Partnership.
We own and operate and seek to acquire grocery-anchored, open-air community
and neighborhood shopping centers in the Midwest, generally consisting of the
states of Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota,
Missouri, Nebraska, North Dakota, Ohio, South Dakota, Tennessee and Wisconsin.
We currently own properties in thirteen states in this region. Through past
experience as well as current research, we believe that this region is
economically strong and diverse and provides a favorable environment for the
acquisition, ownership and operation of retail properties. We evaluate
prospective acquisitions in Midwest markets which, based upon our research,
demonstrate opportunities for favorable investment returns and long-term cash
flow growth.
As part of our ongoing business, we regularly evaluate, and engage in
discussions with public and private entities regarding possible portfolio or
asset acquisitions or business combinations. During 1997, we acquired 25
shopping centers aggregating over 3.1 million square feet of gross leasable area
for an aggregate acquisition price of approximately $189.3 million. On August
6, 1998, we completed the merger acquisition of Mid-America Realty Investments,
Inc., a real estate investment trust owning interests in 25 properties
aggregating approximately 3.3 million square feet primarily located in the
Midwest region of the United States. In addition to the Mid-America Realty
Investments properties, during 1998 we acquired 22 properties and two outlots
adjacent to one of our existing properties, aggregating 3.0 million square feet
of gross leasable area for an aggregate acquisition price of approximately
$202.8 million. In evaluating potential acquisitions, we focus principally on
community and neighborhood shopping centers in our Midwest target market that
are anchored by strong national, regional and independent grocery store chains.
We seek to create an income stream diversity across our Midwest markets in order
to insulate us from economic trends affecting any particular market.
DESCRIPTION OF SECURITIES TO BE REGISTERED
The description of our capital stock set forth below does not purport to be
complete and is qualified in its entirety by reference to our charter and
bylaws, each as amended and restated, copies of which are exhibits to the
registration statement of which this prospectus is a part.
General
Under our charter, we have authority to issue up to 150 million shares of
stock, consisting of 80 million shares of common stock, 20 million shares of
preferred stock and 50 million shares of excess stock. Under Maryland law,
stockholders generally are not responsible for a corporation's debts or
obligations. As of the date of this prospectus, we have approximately 24.0
million shares of common stock issued and
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outstanding and approximately 3.5 million shares of 8.4% Series A Convertible
Preferred Stock issued and outstanding. In addition, Bradley Operating Limited
Partnership has approximately 1.4 million units outstanding other than those
held directly by us. If tendered to Bradley Operating Limited Partnership for
redemption, such units may be exchanged for shares of common stock on a one-for-
one basis at our option. Such one-to-one ratio may be adjusted to prevent
dilution if we conduct a stock split or other similar change to our capital
structure.
Common Stock
Relationship with Excess Stock. In order to protect ourselves from losing
our qualification as a REIT our charter generally restricts the ability of any
stockholder to own or acquire in excess of 9.8% of the outstanding value or
number of common stock. Any ownership of common stock in excess of this limit
automatically converts into excess stock. If a stockholder attempts to transfer
common stock in a transaction that would violate these restrictions, the common
stock automatically converts into a separate class of stock known as excess
stock. Shares of excess stock do not have the same rights as shares of common
stock. When reading the following description of our common stock, you should
keep in mind that the description may no longer apply to shares which may be
converted into excess stock. Throughout the following description of common
stock, we have indicated specific rights that you will no longer have if your
shares are converted into excess stock. We recommend that you carefully read the
section entitled "--Excess Stock," which provides a detailed description of the
material terms of excess stock and of the terms of our charter that are designed
to preserve our REIT qualification.
Distribution Rights. As a holder of common stock, you will be entitled to
receive distributions on your shares if, as and when our Board of Directors
authorizes and declares such distributions, subject to the provisions of our
charter regarding excess stock. Your right to receive distributions, however,
will be subordinated to the rights of holders of Series A Convertible Preferred
Stock and the holders of any other series of preferred stock issued in the
future. Please read the section entitled "--Series A Convertible Preferred
Stock" for a description of the rights of holders of Series A Convertible
Preferred Stock and of any other preferred stock that we may issue.
Under Maryland law, we are restricted in our ability to pay dividends or
make other distributions if such dividend or other distribution would result in
our total liabilities exceeding our total assets. When evaluating whether a
dividend or other distribution may be paid in accordance with this rule, the
aggregate amount of the liquidation preference of the Series A Convertible
Preferred Stock will not be included in our total liabilities unless we have
entered into a voluntary or involuntary liquidation.
Liquidation/Dissolution Rights. In our liquidation or dissolution, each
share of common stock entitles its holder to share in any assets that remain
after we pay our liabilities and any preferential distributions owed to the
holders of Series A Convertible Preferred Stock and any other series of
preferred stock issued in the future. Such holder's share of the assets shall
be proportional to the number of shares of common stock which are owned by the
holder to all common stock outstanding.
Voting Rights. Subject to the provisions of our 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. Except as otherwise required by law or except as provided with
respect to any other class or series of preferred stock issued in the future,
the holders of common stock and the holders of Series A Convertible Preferred
Stock will possess exclusive voting power. The holders of Series A Convertible
Preferred Stock have the right to vote on all matters submitted to a vote of the
holders of common stock on what is commonly referred to as an "as-converted
basis," meaning that each share of Series A Convertible Preferred Stock is
entitled to cast the number of votes it would be entitled to cast if it had been
converted to shares of common stock on the record date. Therefore, as of the
date of this prospectus, holders of Series A Convertible Preferred Stock are
entitled to cast 1.0208 votes for each share they own.
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There is no cumulative voting in the election of directors, which means that
the holders of a majority of the votes cast for directors can, subject to the
rights of holders of preferred stock, elect all of the directors then standing
for election, and the holders of the remaining shares of voting stock will not
be able to elect any directors. We have a "staggered" Board of Directors, which
means that approximately one-third of the Directors stand for re-election each
year instead of the entire Board.
Other Terms. Subject to the provisions of our charter regarding excess
stock, all shares of common stock have equal dividend, distribution, liquidation
and other rights, which rights may, however, be subject to preferential rights
of shares of preferred stock. Holders of shares of common stock have no
preference, conversion, sinking fund, redemption or exchange rights or
preemptive rights. A conversion feature is one where a stockholder has the
option to convert his shares to a different security, such as debt or preferred
stock. A sinking fund or redemption right is one where a stockholder will have
the right to redeem his shares for cash or other securities at some point in the
future. Sometimes a redemption right is paired with an obligation of the company
to create an account into which the company must deposit money to fund
redemption. Preemptive rights are rights granted to stockholders to subscribe
for a percentage of any other securities we offer in the future based on the
percentage of shares owned.
Information. We furnish our 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.
Extraordinary Transactions. Pursuant to Maryland law and our charter, we
generally cannot dissolve, amend our charter, merge, sell all or substantially
all of our 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. In addition, the business combination statute and the control share
acquisition statute under Maryland law could also significantly affect the
rights and obligations of holders of common stock in connection with an
extraordinary transaction. For your reference, these statutes are described in
the section entitled "--Certain Provisions of Maryland Law" below.
Series A Convertible Preferred Stock
In connection with our acquisition of Mid-America Realty Investments, Inc.
in August 1998, we issued 3,480,210 shares of Series A Convertible Preferred
Stock to the former stockholders of that company. The Series A Convertible
Preferred Stock is the only series of our preferred stock that is outstanding as
of the date of this prospectus. The Series A Convertible Preferred Stock ranks
senior to the common stock with respect to dividend rights and distributions
upon our liquidation, dissolution and winding up. The Series A Convertible
Preferred Stock votes with the common stock on an as-converted basis. The
following are the principal terms of the Series A Preferred Stock:
Dividends Cumulative fixed dividend of $0.525 per share
payable quarterly.
Liquidation Preference $25.00 per share plus an amount equal to
accumulated, accrued but unpaid dividends.
Conversion Rights The Series A Convertible Preferred Stock is
convertible into common stock at a conversion price
of $24.49 per share of common stock. Such conversion
price is equal to 1.0208 shares of common stock for
each share of Series A Convertible Preferred Stock.
This conversion price and conversion ratio is
subject to adjustment to prevent dilution.
Redemption After August 6, 2003, we may redeem the Series A
Convertible Preferred Stock for $25.00 per share,
plus any accumulated, accrued and unpaid dividends,
so long as the common stock has traded above the
conversion price for at least twenty days prior to
redemption.
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Voting Rights The holders of Series A Convertible Preferred Stock
have the right to vote with the common stock on each
matter coming before any meeting of the holders of
common stock, on an "as-converted basis," that is,
one vote for each share of common stock into which
the holder's shares of Series A Convertible
Preferred are then convertible. If we ever become
delinquent with respect to six quarterly dividend
payments on the Series A Convertible Preferred
Stock, the holders of such preferred stock would
also have the right to elect two separate directors.
Transfer Agent
The transfer agent and registrar for our common stock and our Series A
Convertible Preferred Stock is BankBoston, N.A., c/o Boston EquiServe, L.P.,
P.O. Box 8040, Boston, Massachusetts 02266.
Power To Issue Additional Shares Of Stock
The charter grants our Board of Directors the power to issue additional
authorized but unissued shares of common stock and preferred stock. The Board
of Directors may also classify or reclassify unissued shares of common or
preferred stock or excess stock and authorize the issuance of these classified
or reclassified shares of stock. Under Maryland law and the charter, the Board
of Directors is required to fix the terms and conditions for each class or
series of preferred stock, prior to the issuance of the shares of the class or
series of the preferred stock. These terms and conditions include preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications and terms or conditions of
redemption.
This power provides the Board of Directors with increased flexibility in
structuring possible future financings and acquisitions and in meeting other
needs which might arise. Unless stockholder action is required by applicable law
or the rules of any stock exchange or automated quotation system on which our
securities may be listed or traded, the additional classes or series, as well as
the common stock, will generally be available for issuance without further
action by stockholders. However, the issuance of additional series of preferred
stock with rights senior to the Series A Convertible Preferred Stock must be
approved by the holders of Series A Convertible Preferred Stock. Although the
Board of Directors does not intend to do so at the present time, it could
authorize the issuance of a class or series that could delay, defer or prevent a
change of control 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 common stock might receive a premium for their shares over the then-
current market price.
Excess Stock
General. As a protective measure, our charter provides for the issuance of
a separate class of capital stock, referred to as excess stock, to attempted
transferees of common stock in transactions that may endanger our REIT
qualification. The specific terms of excess stock and the conditions giving
rise to its issuance are described in more detail below.
Ownership Limit. As a REIT, we are required to comply with complicated
rules under the Internal Revenue Code. Among other things, the Internal Revenue
Code requires that, with limited exceptions, REITs satisfy the following
ownership limitations:
. not more than 50% in value of the REIT's outstanding capital stock may
be owned, directly or indirectly after applying complex attribution
rules, by five or fewer "individuals" during the
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last half of its taxable year, with the term "individuals" including
for these purposes a variety of tax exempt taxpayers and
. such capital stock must be beneficially owned by 100 or more persons
during at least 335 days of each taxable year.
In order to protect our status as a qualified REIT, our charter contains
limitations on the amount of our capital stock that any one party may hold. Our
ownership limit prohibits any holder from owning, or being deemed to own by
virtue of the attribution provisions of the Internal Revenue Code:
. more than 9.8% of our outstanding common stock, or
. shares of Series A Convertible Preferred Stock that either (a) have a
value in excess of 9.8% of the value of all outstanding shares of our
capital stock, or (b) when converted, would result in such holder
being the beneficial holder of more than 9.8% of the total number of
outstanding shares of our common stock, after giving effect to such
conversion.
The charter deems holders to own all stock that they:
. actually own;
. constructively own after applying the attribution rules specified in
the Internal Revenue Code; and
. have the right to acquire upon exercise of any rights, options or
warrants or conversion of any convertible securities.
Holders may include natural persons, corporations, trusts, partnerships or other
entities. 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, even though that investment
advisor may be considered to be the "beneficial owner" of such stock for
purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended.
In addition, the Board of Directors may waive the ownership limit if evidence
satisfactory to the Board of Directors and our tax counsel is presented that the
changes in ownership will not then or in the future jeopardize our status as a
REIT and if the Board of Directors decides that such waiver is in our best
interests.
Violation of Ownership Limit. The charter provides that any attempted
transfer of capital stock or any security convertible into capital stock is null
and void if it would result in a violation of the ownership limit or our
disqualification as a REIT. These provisions include any transfer that results
in us being "closely held" within the meaning of Section 856(h) of the Internal
Revenue Code. In the event of such an attempted transfer, the intended
transferee will acquire no rights to the capital stock or convertible securities
attempted to be transferred. Instead, the shares of capital stock or
convertible securities will automatically be exchanged for shares of excess
stock and these shares of excess stock will automatically be transferred, by
operation of law, to a trustee for the exclusive benefit of one or more
charitable organizations as the beneficiary under the trust. Under our charter,
an organization is not eligible to be named as such a charitable beneficiary
unless it is operated exclusively for religious, charitable, scientific,
literary or educational purposes within the meaning of Section 170(c) of the
Internal Revenue Code. Such charitable beneficiaries shall be designated from
time to time by our Board of Directors, except to the extent described below.
The trustee will be named by our Board of Directors, but must be unaffiliated
with us.
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Rights of Excess Stock. The excess stock held in trust:
. will be considered to be issued and outstanding shares of our stock;
. will be entitled to receive distributions declared by us; and
. may be voted by the trustee for the exclusive benefit of the
charitable beneficiary.
The charter requires a purported transferee of excess stock to repay to us any
dividend or distribution which it receives prior to the discovery that capital
stock was transferred in violation of the ownership limit. We are then required
to turn over the amount of the repayment to the trustee. The charter also
retroactively nullifies any votes cast by the purported transferee prior to the
discovery that a transfer violated the ownership limit. The charter does
provide, however, that the retroactive nullification of the vote cast with
respect to the relevant shares of capital stock will not adversely affect the
rights of any third party who 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.
Transferability of Excess Stock. As a general rule, holders may not
transfer excess stock. Subject to our redemption right described below, the
trustee may transfer the shares of excess stock to a purchaser who could own
such shares without violating the ownership limit. Upon such sale, the shares
of excess stock automatically convert back into shares of the class or series of
capital stock or convertible security from which they were originally converted.
After excess stock is transferred in this way, the trustee must distribute
at least a portion of the sale proceeds to the attempted purchaser who
originally caused the ownership limit violation. The original attempted
purchaser is only entitled to the proceeds until it recovers the price it paid
for the stock. The trustee must distribute any proceeds in excess of the
original attempted purchase price to the charitable beneficiary. If the
attempted purchaser received the excess stock by gift, devise or otherwise
without giving value for such stock, then it is only entitled to receive an
amount that does not exceed the market price for such stock at the time of the
prohibited transfer, as determined in the manner set forth in the charter.
Redemption Right. In addition to the transfer restrictions described above,
we have the right to purchase all or any portion of the excess stock from the
trustee for a period of 90 days from the time we receive written notice of the
prohibited transfer or other event resulting in the exchange of capital stock
for excess stock. Under the charter, the purchase price will be the lesser of
(a) the price paid for the stock by the original attempted transferee or (b) the
market price of the stock on the date we exercise our option to purchase. If the
original attempted transferee received such stock by gift, devise or otherwise
without giving value for such stock, the market price of the stock at the time
of the prohibited transfer will be used in lieu of the price paid. Upon any
such purchase by us, the trustee must distribute the purchase price to the
original attempted transferee.
Additional Charter Provisions Regarding the Ownership Limit. If the
ownership limit is 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 our option, to have acted as an agent on our
behalf of acquiring the excess stock and to hold the excess stock on our behalf.
The ownership limit will not preclude settlement of transactions on the New
York Stock Exchange or any other stock exchange on which our capital stock is
listed. If the Board of Directors determines that it is no longer in our best
interests to continue to qualify as a REIT, then these restrictions on
transferability and ownership will not apply.
Upon our demand, each stockholder and each proposed transferee of capital
stock must disclose to us 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, or determine compliance with:
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. the provisions of the Internal Revenue Code applicable to REITs;
. the requirements of any taxing authority; or
. governmental agency.
Potential Deterrent Effect on "Change of Control" Transactions.
Our ownership limit may have the effect of delaying, deterring or preventing
the acquisition of control of us. The ownership limit, however, does 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 if the
following conditions are met:
. At least two-thirds of the outstanding shares of capital stock are
tendered and accepted pursuant to such tender offer. The securities held
by the tender offeror and/or its affiliates and associates are not
included in determining whether the two-thirds threshold has been met.
. The tender offeror commits 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 if the offer
is accepted by the holders of two-thirds of the outstanding stock.
Provisions of Maryland Law Relating to Change of Control Transactions
Maryland Business Combination Statute
Maryland law prohibits certain "business combinations," including mergers,
consolidations, share exchanges, asset transfers and issuances of equity
securities, between a Maryland corporation and an interested stockholder. An
interested stockholder is a person or entity that owns 10% or more of the voting
power of the corporation's shares. This prohibition exists for five years after
the most recent date on which the interested stockholder became an interested
stockholder. Thereafter, any such business combination must be approved by the
affirmative vote of at least 80% 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 the business combination is to be effected.
There is an exception to this rule when, among other things, the holders of the
corporation's shares receive a minimum price for their shares and the
consideration is received in cash or in the same form as previously paid by the
interested stockholder for the shares that it owns. Such minimum price is
defined in Maryland law. However, these provisions of Maryland law do not apply
to "business combinations" with an interested stockholder that are approved or
exempted by the board of directors of the corporation before that interested
stockholder becomes an interested stockholder.
Maryland Control Share Acquisition Statute
Maryland law 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 eligible under the statute
to be cast on that matter by stockholders. "Control shares" are voting shares
that, if aggregated with all other such shares of stock previously acquired by
the acquiror, would entitle the acquiror to exercise voting power in electing
directors within one of the following ranges of voting power:
(1) one-fifth or more but less than one-third;
(2) one-third or more but less than a majority; or
(3) a majority of all voting power.
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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 exemptions.
If voting rights are not approved at a stockholder 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 for fair value. An
exception to such rule is control shares for which voting rights have previously
been approved. If voting rights for control shares are approved at a stockholder
meeting and the acquiror becomes entitled to vote a majority of the shares
entitled to vote, all other stockholders may exercise appraisal rights. Our
bylaws contain a provision exempting any and all acquisitions of our capital
stock from the control shares provision of Maryland law. Nothing prevents our
Board of Directors from amending or repealing this provision in the future.
DESCRIPTION OF UNITS AND REDEMPTION OF UNITS
Redemption of Units
Each unitholder may, subject to limitations, require that Bradley Operating
Limited Partnership redeem all or a portion of such holder's units by delivering
a notice to Bradley Operating Limited Partnership. Upon redemption, a
unitholder will receive, with respect to each unit redeemed, cash in an amount
equal to the market value of one share of common stock plus any distribution
amount owed but not yet paid to the unitholder. Such one-for-one ratio is
subject to adjustment to prevent dilution. The market value of our common stock
for this purpose will be equal to the average of the closing trading price of
the common stock on the New York Stock Exchange for the ten trading days before
the day on which the redemption notice was received by Bradley Operating Limited
Partnership. Bradley Operating Limited Partnership's partnership agreement
provides that if such trading information is not available, we can use any other
method to determine the value of the common stock as we deem appropriate in our
reasonable judgment. Bradley Operating Limited Partnership's partnership
agreement does not specify alternative methodologies. The valuation methodology
to be used will depend on all the facts and circumstances at the time.
In lieu of Bradley Operating Limited Partnership redeeming units for cash,
we, as general partner of Bradley Operating Limited Partnership, have the right
to elect to acquire directly any units tendered for redemption in exchange for
either (1) cash in the amount described above or (2) shares of common stock on a
one-for-one basis. Such one-for-one ratio is subject to adjustment to prevent
dilution. Within five trading days of Bradley Operating Limited Partnership's
receipt of a redemption notice from a unitholder, we shall inform such
unitholder via facsimile, overnight courier or certified mail of our intent to
exercise our option to redeem units for cash or stock. Any such acquisition
will result in our owning the tendered units and thereby increase our economic
interest in Bradley Operating Limited Partnership. An acquisition by us will be
treated as a sale of the units to us for federal income tax purposes. Upon any
redemption such unitholder's right to receive distributions with respect to the
redeemed units will cease. If we elect to redeem the units for shares of common
stock, the unitholder will have all the rights of one of our stockholders,
including the right to receive dividends, from the time of our acquisition of
the shares.
We anticipate that we generally will elect to acquire any units presented to
Bradley Operating Limited Partnership for redemption by the issuance of shares
of our common stock. However, we will make the determination whether to pay
cash or issue shares of common stock upon redemption of units at the time the
units are tendered for redemption. Any such determination will be made based on
all of the facts and circumstances at the time, including the availability of
cash, whether the acquisition of units for cash is a good investment and the
market price of the common stock. In addition, under the terms of Bradley
Operating Limited Partnership's partnership agreement, no redemption can occur
if the delivery of common stock would be prohibited under the provisions of our
charter that protect our qualification as a REIT or, in the opinion of counsel,
we would no longer qualify as a REIT.
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Tax Consequences of Redemption
The following discussion summarizes federal income tax considerations that
may be relevant to a unitholder who redeems his units.
Tax Treatment of Exchange or Redemption of Units
If we elect to purchase units tendered for redemption, Bradley Operating
Limited Partnership's partnership agreement provides that the transaction will
be treated as a sale of units by the unitholder to us at the time of such
redemption. The sale will be fully taxable to the redeeming unitholder and such
redeeming unitholder will be treated as realizing for tax purposes an amount
equal to the sum of the cash value or the value of the shares of common stock
received in the exchange plus the amount of any Bradley Operating Limited
Partnership liabilities allocable to the redeemed units at the time of the
redemption. The determination of the amount of gain or loss is discussed more
fully below in the section entitled "--Tax Treatment of Disposition of Units by
a Unitholder Generally."
If we do not elect to purchase a unitholder's units tendered for redemption
and Bradley Operating Limited Partnership redeems such units for cash that we
contribute to Bradley Operating Limited Partnership to effect such redemption,
the redemption likely would be treated for tax purposes as a sale of such units
to us in a fully taxable transaction, although the matter is not free from
doubt. In that event, the redeeming partner would be treated as realizing an
amount equal to the sum of the cash received in the exchange plus the amount of
any Bradley Operating Limited Partnership liabilities allocable to the redeemed
units at the time of the redemption. The determination of the amount and
character of gain or loss in the event of such a sale is discussed more fully
below in the section entitled "--Tax Treatment of Disposition of units by a
Unitholder Generally."
If we do not elect to purchase units tendered for redemption and Bradley
Operating Limited Partnership redeems a unitholder's units for cash that is not
contributed by us to effect the redemption, the tax consequences would likely be
the same as described in the previous paragraph, although not free from doubt.
If Bradley Operating Limited Partnership redeems less than all of a unitholder's
units, however, the unitholder would not be permitted to recognize any loss
occurring on the transaction and would recognize taxable gain only to the extent
that the cash, plus the amount of any Bradley Operating Limited Partnership
liabilities allocable to the redeemed units, exceeded the unitholder's adjusted
basis in all of such unitholder's units immediately before the redemption. This
result may differ if the redemption were treated as a disguised sale. The
treatment of the redemption as a disguised sale is discussed more fully below in
the section entitled "Potential Application of the Disguised Sale Regulations to
a Redemption of Units."
If we contribute cash to Bradley Operating Limited Partnership to effect a
redemption, and the form of the transaction is respected for tax purposes so
that the redemption transaction is treated as the redemption of the unitholder's
units by Bradley Operating Limited Partnership rather than a sale of units to
us, the income tax consequences to a unitholder would be the same as described
in the preceding paragraph.
Tax Treatment of Disposition of Units by a Unitholder Generally
If a unitholder disposes of a unit in a manner that is treated as a sale of
the unit, or a unitholder otherwise disposes of a unit, the determination of
gain or loss from the sale or other disposition will be based on the difference
between the amount considered realized for tax purposes and the tax basis in
such unit. The tax basis of your units is discussed in greater detail in the
section entitled "--Basis of Units" below. Upon the sale of a unit, the "amount
realized" will be measured by the sum of the cash and fair market value of other
property received, including shares of common stock, plus the amount of any
Bradley Operating Limited Partnership liabilities allocable to the units sold.
To the extent that the amount of cash or property received plus the allocable
share of any Bradley Operating Limited Partnership liabilities exceeds the
unitholder's basis for the units disposed of, such unitholder will recognize
gain. It is possible that the amount of gain recognized or even the tax
liability resulting from such gain could exceed the amount of
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cash and/or the value of any other property received, including shares of common
stock, upon such disposition.
Except as described below, any gain recognized upon a sale or other
disposition of units will be treated as gain attributable to the sale or
disposition of a capital asset. To the extent, however, that the amount
realized upon the sale of a unit attributable to a unitholder's share of
"unrealized receivables" of Bradley Operating Limited Partnership exceeds the
basis attributed to those assets, such excess will be treated as ordinary
income. "Unrealized receivables" is defined in Section 751 of the Internal
Revenue Code. Unrealized receivables include, to the extent not previously
included in Bradley Operating Limited Partnership's income, any rights to
payment for services rendered or to be rendered. Unrealized receivables also
include amounts that would be subject to recapture as ordinary income if Bradley
Operating Limited Partnership had sold its assets at their fair market value at
the time of the transfer of a unit.
Basis of Units
In general, a unitholder who acquired his units by contribution of property
and/or money to Bradley Operating Limited Partnership had an initial tax basis
in his units equal to the sum of:
. the amount of money contributed or deemed contributed as described
below, and
. his adjusted tax basis in any other property contributed in exchange for
such units, and less the amount of any money distributed or deemed
distributed, as described below in connection with the acquisition of the
units.
The initial basis of units acquired by other means would have been determined
under the general rules of the Internal Revenue Code, including the partnership
provisions, governing the determination of tax basis. Other rules, including the
"disguised sale" rules discussed below, also may affect initial basis, and
unitholders are urged to consult their own tax advisors regarding their Initial
Basis. A unitholder's initial basis in his units generally is increased by:
. such unitholder's share of Bradley Operating Limited Partnership taxable
and tax-exempt income, and
. increases in such unitholder's allocable share of liabilities of Bradley
Operating Limited Partnership including any increase in his share of
liabilities occurring in connection with the acquisition of his units.
Generally, such unitholder's basis in his units is decreased, but not below
zero, by:
. such unitholder's share of Bradley Operating Limited Partnership
distributions;
. decreases in such unitholder's allocable share of liabilities of Bradley
Operating Limited Partnership including any decrease in his share of
liabilities of Bradley Operating Limited Partnership occurring in
connection with the acquisition of his units;
. such unitholder's share of losses of Bradley Operating Limited
Partnership, and
. such unitholder's share of nondeductible expenditures of Bradley Operating
Limited Partnership that are not chargeable to his capital account.
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Potential Application of the Disguised Sale Regulations to a Redemption of
Units
There is a risk that a redemption by Bradley Operating Limited Partnership
of units issued in exchange for a contribution of property to Bradley Operating
Limited Partnership may cause the original transfer of property to Bradley
Operating Limited Partnership in exchange for units to be treated as a
"disguised sale" of property. Section 707 of the Internal Revenue Code and the
Treasury Regulations thereunder, which we refer to collectively as the
"Disguised Sale Regulations", generally provide that, unless one of the
prescribed exceptions is applicable, a partner's contribution of property to a
partnership and a simultaneous or subsequent transfer of money or other
consideration, which may include the assumption of or taking subject to a
liability, from the partnership to the partner will be presumed to be a sale, in
whole or in part, of such property by the partner to the partnership. Further,
the Disguised Sale Regulations provide generally that, in the absence of an
applicable exception, if money or other consideration is transferred by a
partnership to a partner within two years of the partner's contribution of
property, the transactions are presumed to be a sale of the contributed property
unless the facts and circumstances clearly establish that the transfers do not
constitute a sale. The Disguised Sale Regulations also provide that if two
years have passed between the transfer of money or other consideration and the
contribution of property, the transactions will be presumed not to be a sale
unless the facts and circumstances clearly establish that the transfers
constitute a sale.
Accordingly, if a unit is redeemed by Bradley Operating Limited Partnership
from a unitholder who holds units that were issued in exchange for a
contribution of property to Bradley Operating Limited Partnership, the Internal
Revenue Service could contend that the Disguised Sale Regulations apply because
the unitholder will thus receive cash subsequent to a previous contribution of
property to Bradley Operating Limited Partnership. In that event, the IRS could
contend that the contribution was taxable as a disguised sale under the
Disguised Sale Regulations. Any gain recognized thereby may be eligible for
installment reporting under Section 453 of the Internal Revenue Code, subject to
certain limitations. In addition, in such event, the Disguised Sale Regulations
might apply to cause a portion of the proceeds received by a redeeming
unitholder to be characterized as original issue discount on a deferred
obligation which would be taxable as interest income in accordance with the
provisions of Section 1272 of the Internal Revenue Code. Each unitholder is
advised to consult its own tax advisors to determine whether redemption of its
units could be subject to the Disguised Sale Regulations.
Comparison of Ownership of Units and Common Stock
We operate our business through a structure commonly referred to as an
"umbrella partnership" REIT or "UPREIT." This structure generally consists of a
corporate REIT with publicly-traded shares of capital stock, like Bradley, and a
limited partnership, like Bradley Operating Limited Partnership, with both
entities coordinating to operate a single real estate business. The limited
partnership typically owns all or substantially all of the real estate
properties and the REIT controls the partnership's business activities as the
sole general partner. We have elected to use this structure because it provides
flexibility in structuring acquisitions and in raising capital that would not
otherwise be available if we operated solely as a corporate REIT or solely as a
limited partnership. If we operated solely as a corporate REIT then we would
not be able to offer potential sellers of properties the opportunity to
contribute their properties to us in a "tax-deferred" transaction resulting in
no current taxable event to the sellers. In general, a seller who contributes
his properties to a partnership in exchange for interests in that partnership is
not subject to current tax, as a seller of properties for cash or securities of
a corporation would be. If we operated solely as a limited partnership, we
would not have the same ability and flexibility in raising capital that we now
have when we issue common stock or other equity securities of the corporation in
the public markets.
Despite the fact that the structure consists of two separate legal entities,
both entities are operating in tandem to own and operate the same portfolio of
properties. Accordingly, the structure works most effectively if we only
operate through Bradley Operating Limited Partnership and if all of Bradley
Operating Limited Partnership's activities are conducted by us as general
partner.
As a result of the UPREIT structure, we have two different levels of
investors with ownership rights in our business. Currently, you own units of
limited partner interest in Bradley Operating Limited Partnership. The nature
of any investment in our common stock is generally economically equivalent to an
investment in units in Bradley Operating Limited Partnership. A holder of a
share of common stock
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receives the same distribution that a holder of a unit receives, and
stockholders and unitholders generally share in the risks and rewards of
ownership in the same enterprise. There are, however, differences between
ownership of units and ownership of common stock, some of which may be material
to investors.
The information below highlights a number of significant differences between
Bradley Operating Limited Partnership and Bradley relating to form of
organization, permitted investments, policies and restrictions, management
structure, compensation and fees, investor rights and federal income taxation
and compares certain legal rights associated with the ownership of units and
common stock, respectively. These comparisons are intended to assist you in
understanding how your investment will be changed if your units are acquired for
common stock. This discussion is summary in nature and does not constitute a
complete discussion of these matters. You should carefully review the balance
of this prospectus and the registration statement of which this prospectus is a
part for additional important information about us.
Bradley Operating Limited Partnership Bradley
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Form of Organization and Assets Owned
Bradley Operating Limited Partnership We are a Maryland corporation which
is organized as a Delaware limited has elected to be taxed as a REIT
partnership and is the entity under the Internal Revenue Code and
through which we conduct we intend to maintain our
substantially all of our business qualifications as a REIT. We
and own substantially all of our maintain a general partner interest
assets either directly or indirectly in Bradley Operating Limited
through subsidiaries. Our Board of Partnership, which gives us an
Directors manages the affairs of indirect investment in those
Bradley Operating Limited properties and other assets owned by
Partnership by directing our affairs. Bradley Operating Limited
Partnership. We currently own
approximately a 94% economic interest
in Bradley Operating Limited
Partnership, and such interest will
increase as units are redeemed for
cash or acquired by us.
Length of Investment
Bradley Operating Limited Partnership We have a perpetual term and intend
has a stated termination date of to continue our operations for an
December 31, 2050, although it may indefinite time period.
be terminated earlier under certain
circumstances.
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Bradley Operating Limited Partnership Bradley
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Nature of Investment and Distribution Rights
The units constitute equity interests The common stock constitutes an
entitling each unitholder to his pro equity interest in us. We are
rata share of cash distributions entitled to receive a portion of
made to the unitholders of Bradley Bradley Operating Limited
Operating Limited Partnership, Partnership's operating cash flow and
including us. Because we also hold capital cash flow sufficient to pay
"preferred units" of Bradley dividends to stockholders
Operating Limited Partnership with concurrently with any distribution to
distribution rights equivalent to the unitholders has been effected.
our Series A Convertible Preferred Each stockholder will be entitled to
Stock, distributions to unitholders his pro rata share of any dividends
are subject to the prior or distributions paid with respect to
distribution rights of such common stock. The dividends payable
preferred units. In general, to the stockholders are not fixed in
Bradley Operating Limited amount and are only paid if, when and
Partnership is structured so that as declared by the Board of
unitholders receive distributions on Directors. In order to qualify as a
their units equal to the dividend REIT, we must distribute at least 95%
yield for the same period on a share of our taxable income, excluding
of our common stock. capital gains, and any taxable
income, including capital gains, not
As a partnership, Bradley Operating distributed will be subject to
Limited Partnership is not subject corporate income tax.
to federal income taxation. In
determining their federal income
tax, partners of Bradley Operating
Limited Partnership, including
unitholders, must take into account
their allocable share of partnership
income, gain, deduction and loss,
and otherwise are subject to the
rules governing the taxation of
partnerships and partners. Such is
true regardless of whether
partnership income, gain, deduction
or loss is distributed by Bradley
Operating Limited Partnership. By
contrast, unitholders who receive
common stock upon exercise of their
redemption rights will be taxed on
such investment in accordance with
the rules governing REITs.
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Bradley Operating Limited Partnership Bradley
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Issuance of Additional Units
Bradley Operating Limited Partnership Our Board of Directors may issue, in
is authorized to issue additional its discretion, additional equity
units and such other partnership securities consisting of common stock
interests, including partnership or any other series of capital stock
interests of different series or so long as the total number of shares
classes that may be senior to units, issued does not exceed the authorized
as we may determine in our sole number of shares of capital stock set
discretion as general partner. The forth in our charter. The capital
relative rights, powers and duties stock may be classified and issued as
of such units or other interests a variety of equity securities,
will be determined by us in our sole including one or more classes of
discretion. Bradley Operating common or preferred stock, in the
Limited Partnership may issue units discretion of the Board of Directors.
and other partnership interests to The issuance of additional shares of
us, as long as such interests are common stock, preferred stock or
issued in connection with a other similar equity securities may
comparable issuance of our capital result in the dilution of the
stock and proceeds raised in interests of the existing
connection with the issuance of such stockholders.
capital stock are contributed to
Bradley Operating Limited
Partnership. In addition, our
Operating Limited Partnership will
issue additional units upon exercise
of the options granted pursuant to
our stock option plans. The
issuance of additional units or
other similar partnership interests
may result in the dilution of the
interests of the existing
unitholders.
Liquidity
A unitholder may not transfer any Our common stock is freely
portion of their units without the transferable subject to the
consent of the general partner, requirements of the Securities Act of
subject to the following exceptions: 1933, as amended. The common stock
is listed on the New York Stock
(a) transfers by will, the laws Exchange. The breadth and strength
of intestacy or otherwise to the of this market will depend, most
legal representative or significantly, upon the number of
successor of the transferring shares outstanding, our financial
unitholder who shall be bound in results and prospects, the general
all respects by the terms of interest in us and other real estate
Bradley Operating Limited investments and our dividend yield
Partnership's partnership compared to that of other debt and
agreement; equity securities.
(b) inter vivos transfers for
estate planning purposes; or
(c) pledges to secure the
repayment of a loan.
Subject to certain conditions, each
unitholder has the right to elect to
have their units redeemed by our
Operating Limited Partnership. Upon
redemption, the unitholder will
receive, at our election, either
shares of common stock or the cash
equivalent in exchange for such
units.
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Bradley Operating Limited Partnership Bradley
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Purchase and Permitted Investments
Bradley Operating Limited Under our charter, we may engage in
Partnership's purpose is to conduct any lawful activity permitted under
any business that relates to the Maryland law.
properties or affiliated entities of
Bradley Operating Limited
Partnership, except that Bradley
Operating Limited Partnership's
partnership agreement requires the
business of Bradley Operating
Limited Partnership to be conducted
in a manner that permits us to be
classified as a REIT for Federal
income tax purposes and avoids any
Federal income or excise tax
liability. Bradley Operating
Limited Partnership may, subject to
the foregoing limitation, invest or
enter into partnerships, joint
ventures or similar arrangements and
may own interests in any other
entity.
Borrowing Policies
Bradley Operating Limited Partnership We are not restricted under our
has no restrictions on borrowings, organizational documents from
and we, as the general partner, have incurring borrowings.
full power and authority to borrow
money on behalf of Bradley Operating
Limited Partnership.
Other Investment Restrictions
Other than restrictions precluding Neither our charter nor our bylaws
investments by Bradley Operating impose any restrictions upon the
Limited Partnership that would types of investments made by us.
adversely affect our qualification
as a REIT, there are no restrictions
upon Bradley Operating Limited
Partnership's authority to enter
into any transactions, including,
among others, making investments,
lending Bradley Operating Limited
Partnership funds, or reinvesting
Bradley Operating Limited
Partnership's cash flow and net sale
or refinancing proceeds.
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Bradley Operating Limited Partnership Bradley
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Management Control
Generally, all management powers over The Board of Directors has exclusive
the business and affairs of Bradley control over our business and affairs
Operating Limited Partnership are subject only to the restrictions in
vested in us as general partner and our charter and bylaws. The Board of
no other unitholder of Bradley Directors is classified into three
Operating Limited Partnership has classes. At each annual meeting of
any right to participate in or stockholders, the successors of the
exercise control or management power class of Directors whose terms expire
over the business and affairs of at that meeting will be elected. The
Bradley Operating Limited policies adopted by the Board of
Partnership. Bradley Operating Directors may be altered or
Limited Partnership's partnership eliminated without advice of the
agreement provides that we shall be stockholders. Accordingly, except
reimbursed for all expenses incurred for their vote in the elections of
by us relating to the management and Directors, stockholders have no
business of Bradley Operating control over our ordinary business
Limited Partnership. policies.
Management Liability and Indemnification
Bradley Operating Limited Our charter eliminates, to the
Partnership's partnership agreement fullest extent permitted under
generally provides that the general Maryland law, the personal liability
partner and any person acting on its of a director for monetary damages
behalf will incur no liability to for breaches of such director's duty
Bradley Operating Limited of care or other duties as a
Partnership or any unitholder for director. The effect of this
any act or omission within the scope provision in the charter is generally
of the general partner's to eliminate our rights and the
authorities, provided the general rights of our stockholders who sue on
partner's or such other person's behalf of us to recover monetary
action or omission to act was taken damages against a director for breach
in good faith and in the belief that of the fiduciary duty of care as a
such action or omission was in the director. This limitation includes
best interests of us and our suits alleging negligent or grossly
affiliates, and provided further, negligent behavior on the part of a
that the general partner's or such director. This provision does not
other person's actions or omissions limit or eliminate our rights or the
shall not constitute actual fraud or rights of any stockholder to seek
gross negligence or deliberately non-monetary relief such as an
dishonest conduct. injunction or recession in the event
of a breach of a director's duty of
Bradley Operating Limited care. These provisions will not
Partnership's partnership agreement alter the liability of a director
also provides for the under federal securities laws.
indemnification of the general
partner and its affiliates and any
individual acting on their behalf
from any loss, damage, claim or
liability, including, but not
limited to, reasonable attorneys'
fees and expenses, incurred by them
by reason of any act performed by
them in accordance with the
standards set forth above or in
enforcing the provisions of this
indemnity.
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Bradley Operating Limited Partnership Bradley
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Antitakeover Provisions
Except in limited circumstances, the Our charter and bylaws and Maryland
general partner has exclusive law contain a number of provisions
management power over the business that may have the effect of delaying
and affairs of Bradley Operating or discouraging an unsolicited
Limited Partnership. The general proposal to acquire us or remove
partner may not be removed by the incumbent management. For the full
unitholders with or without cause. discussion of these provisions,
Under the Bradley Operating Limited please refer to the section entitled
Partnership's partnership agreement, "Risk Factors-There are provisions in
we may, in our sole discretion, our charter and bylaws may discourage
prevent a unitholder from acquisition proposals."
transferring their units except in
limited circumstances. Accordingly,
we may exercise this right of
approval to deter, delay or hamper
attempts by persons to acquire a
majority interest in Bradley
Operating Limited Partnership.
Voting Rights
Holders of units have no right to The Board of Directors directs our
elect or remove us as the general business and affairs. The Board
partner of Bradley Operating Limited consists of three classes having
Partnership and generally have no staggered terms of office.
other voting rights. Under Bradley Stockholders elect each class at our
Operating Limited Partnership's annual meetings. All shares of
partnership agreement, we as general common stock have one vote per share.
partner may take any action in a The charter permits the Board of
manner that we reasonably believe Directors to classify and issue
to be in the best interests of our preferred stock in one or more series
stockholders or complies with the having voting power which may differ
REIT requirements for us. Our from that of the common stock.
ability to make amendments to
Bradley Operating Limited Our stockholders have the right to
Partnership's partnership agreement vote, among other things, on a merger
is limited to the extent described or sale of all or substantially all
below. of our assets, certain amendments to
our charter and dissolution. Under
Maryland law and the charter, the
sale of all or substantially all of
our assets or any merger or
consolidation involving us requires
the approval of the Board of
Directors and holders of a majority
of the outstanding shares of common
stock. No approval of the
stockholders is required for the sale
of less than all or substantially all
of our assets. Under Maryland law
and the charter and bylaws, the Board
of Directors must obtain approval of
holders of not less than a majority
of all outstanding shares of our
capital stock in order to dissolve us.
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Bradley Operating Limited Partnership Bradley
- -------------------------------------- --------------------------------------
Amendment of the Partnership Agreement or Our Charter
Generally, Bradley Operating Limited Amendments to the charter must be
Partnership's partnership agreement approved by the Board of Directors
may be amended by the general and generally by the vote of a
partner without the consent of the majority of the votes entitled to be
unitholders, except that certain cast at a meeting of stockholders
amendments which alter or change except as otherwise provided by law.
unitholders' distribution rights or The Board of Directors may, however,
redemption rights requires the amend the charter without any action
consent of the unitholders holding a of the stockholders in certain
majority-in-interest of the respects to preserve our REIT
outstanding units. qualification.
Compensation, Fees and Distributions
The general partner is not entitled Our Directors receive compensation
to receive any compensation for its for their services.
services as general partner of
Bradley Operating Limited
Partnership. As a partner in
Bradley Operating Limited
Partnership, however, the general
partner has the same right to
allocations and distributions as
other partners of Bradley Operating
Limited Partnership. In addition,
Bradley Operating Limited
Partnership will reimburse the
general partner for administrative
expenses incurred relating to our
ongoing operation and certain other
expenses arising in connection with
our role as general partner. All of
our officers are employees of
Bradley Operating Limited
Partnership and receive compensation
for their services as such.
Liability of Investors
Under Bradley Operating Limited Under the Maryland law, stockholders
Partnership's partnership agreement generally are not personally liable
and applicable Delaware law, the for our debts or obligations.
liability of the limited partners
for Bradley Operating Limited
Partnership's debts and obligations
is generally limited to the amount
of their investment in Bradley
Operating Limited Partnership,
together with any interest in any
undistributed income.
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FEDERAL INCOME TAX CONSIDERATIONS
As a REIT, we must comply with highly technical and complex requirements
under the Internal Revenue Code. The following discussion summarizes these
requirements and their effect on us and our stockholders. The summary
discussion is for general information only and is not an exhaustive list of all
tax considerations that may be material. For example, this discussion does not
address any state, local or foreign tax considerations. Also, this discussion
does not address issues that arise as a result of your, or any other investor's,
special circumstances or special status under the Internal Revenue Code.
The discussion in this section and any other section of this prospectus is
not intended to be, nor should you construe it as, tax advice. You are urged to
consult your own tax advisor to determine the impact of a redemption of your
units and/or of owning our common stock on your own personal situation. In
particular, foreign investors should consult their own tax advisors concerning
the tax consequences of an investment in us, including the possibility of United
States income tax withholding on distributions by us.
General
Under the Internal Revenue Code, if the 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. For these purposes, taxable
income will be computed without regard to the dividends paid deduction and our
net capital gain. However, we may be subject to federal income tax under
certain circumstances, including taxes at regular corporate rates on any
undistributed REIT taxable income or net capital gains, the alternative minimum
tax on its items of tax preference, and taxes imposed on income and gain
generated by some extraordinary transactions. As discussed below, however, for
taxable years beginning after December 31, 1997, stockholders may be credited
for all or a portion of the taxes paid by us on our retained net capital gains.
If we fail to qualify during any taxable year as a REIT, unless the relief
provisions are available, we will be subject to tax, including any applicable
alternative minimum tax, on our taxable income at regular corporate rates, which
could have a material adverse effect upon our stockholders.
We believe but cannot guarantee that we qualify as a REIT.
We have elected to qualify as a REIT under the Internal Revenue Code. In
the opinion of Goodwin, Procter & Hoar LLP, we have been organized in conformity
with the requirements for qualification as a REIT under the Internal Revenue
Code, and our manner of operation has met and will continue to meet the
requirements for qualification and taxation as a REIT under the Internal Revenue
Code. This opinion is based on various assumptions and is conditioned upon
representations made by us as to factual matters and the continuation of such
factual matters. You should be aware, however, that opinions of counsel are not
binding upon the IRS or any court. Moreover, such qualification and taxation as
a REIT in any tax year depends upon our ability to meet the various source of
income, ownership of assets, distribution and diversity of ownership
requirements of the Internal Revenue Code for qualification as a REIT in our
actual results each tax year, which results will not be reviewed by Goodwin,
Procter & Hoar LLP. Accordingly, no assurance can be given that our actual
results for any particular tax year will in fact satisfy the requirements for
qualification. Likewise, although we believe that we have operated in a manner
which satisfies the REIT qualification requirements under the Internal Revenue
Code since our organization in 1961, no assurance can be given that our
qualification as a REIT will not be challenged by the IRS for taxable years
still subject to audit.
32
<PAGE>
Undistributed Long-Term Capital Gains
We may elect to retain and pay income tax on our net long-term capital gains
received during the taxable year. For taxable years beginning after December
31, 1997, if we so elect for a taxable year, the stockholders would include in
income as long-term capital gains their proportionate share of such portion of
our undistributed long-term capital gains for the taxable year as we may
designate. A stockholder would be deemed to have paid his share of the tax paid
by us on such undistributed capital gains, which would be credited or refunded
to the stockholder. The stockholder's basis in his common stock would be
increased by the amount of undistributed long-term capital gains included in the
stockholder's long-term capital gains, less such stockholder's share of the
capital gains tax paid by us.
Dividends Taxable as Ordinary Income
As long as we qualify as a REIT, distributions made to our taxable United
States stockholders out of current or accumulated earnings and profits, and
which are not designated as a capital gain dividends, will be taken into account
by such United States stockholders as ordinary income and will not be eligible
for the dividends received deduction generally available to corporations.
A United States stockholder means a holder of common stock that, for United
States federal income tax purposes, is:
. a citizen or resident of the United States, or
. a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof,
or
. an estate, the income of which is subject to United States federal
income taxation regardless of its source, or
. a trust, if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of
the trust, and
. is not an entity that has a special status under the Internal Revenue
Code, such as a tax-exempt organization or dealer in securities.
Subject to the discussion below regarding the changes to the capital gains tax
rates, distributions that are designated as capital gains dividends will be
taxed as capital gains without regard to the period for which the stockholder
has held his or her common stock. This is true only to the extent they do not
exceed our actual net capital gain for the taxable year. Corporate stockholders
may be required, however, to treat up to 20% of certain capital gain dividends
as ordinary income. Capital gain dividends are not eligible for the dividends-
received deduction for corporations.
Dividends Taxable as Capital Gain
To the extent that we have net capital gain for a taxable year, dividends
paid during the year, or that are deemed paid, which are properly designated by
us as long-term capital gains, will be treated as such for the taxable year
without regard to the period for which the stockholder has held his stock.
To the extent a capital gain arises from the accumulated depreciation taken
on depreciable assets sold during the tax year, such capital gain is currently
taxed at a 25% capital gain rate.
33
<PAGE>
For financial reporting purposes, the method of depreciation to be used by
Bradley Operating Limited Partnership on its depreciable property will be the
straight-line method with useful lives ranging from 31.5 to 39 years for
buildings and 1 to 39 years for improvements and alterations. The useful lives
assigned to such property will depend upon the type and age of the asset
acquired.
Other Dividends
Distributions, other than capital gain dividends, 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 that 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 treated as long-term capital gain or loss if the shares of common stock have
been held for more than 12 months and otherwise as short-term capital gain or
loss. In addition, any dividend we declare 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 us and received by the stockholder on
December 31 of that year, provided that the distribution is actually paid by us
during January of the following calendar year.
Net Operating Losses
Stockholders may not include in their individual income tax returns any of
our net operating losses or capital losses. Instead, we will carry over such
losses for potential offset against our future income. Taxable distributions
from us and gain from the disposition of common stock will not be treated as
passive activity income and, therefore, stockholders generally will not be able
to apply any "passive activity losses" against such income. "Passive activity
income" and "passive activity losses" are generally income or losses, as
applicable, from a trade or business in which the taxpayer does not materially
participate or from rental activities. A limited partner's distributive share
of income and loss from a limited partnership that conducts a trade or business
is generally passive in nature. In addition, taxable distributions from us
generally will be treated as investment income for purposes of the investment
interest deduction limitations. Capital gain distributions and capital gains
from the disposition of common stock, as well as any other distributions treated
as such, will be treated as investment income for purposes of the investment
interest deduction limitations only if and to the extent the stockholder so
elects, in which case such capital gain distributions and capital gains will be
taxed at ordinary income rates to the extent of such election. We will notify
stockholders after the close of our taxable year as to the portions of the
distributions attributable to that year that constitute ordinary income, return
of capital, and capital gain.
34
<PAGE>
NO PROCEEDS TO BRADLEY
We will not receive any proceeds in connection with the issuance of the
shares of common stock offered by this prospectus. We will acquire units in
exchange for any shares we issue and our economic interest in Bradley Operating
Limited Partnership will increase accordingly.
PLAN OF DISTRIBUTION
This prospectus relates to our possible issuance of up to 1,212,630 shares
of common stock if, and to the extent that, certain holders of an aggregate of
1,212,630 units tender such units for redemption and we elect to acquire such
tendered units for shares of common stock. The terms of this redemption right
are described in the section entitled "Description of Units and Redemption of
Units." Bradley Operating Limited Partnership originally issued these units to
the equity holders of Lexington Holding Company, Baken Park Partners Limited
Partnership, County Line 31 Company, L.P. and Spring Mall Associates Limited
Partnership in exchange for the contribution of their interests in one of four
properties to Bradley Operating Limited Partnership. In connection with these
property acquisitions, we entered into registration rights agreements with the
contributors. We are registering the shares covered by this prospectus in order
to fulfill our contractual obligations under these agreements and provide the
holders of the shares with freely tradable securities. Registration of these
shares does not necessarily mean that all or any portion of the shares will be
issued by us.
All expenses incident to the offering and sale of the shares offered hereby
will be paid by us, other than brokerage and underwriting commissions and taxes
of any kind and any legal, accounting and other expenses incurred by the
redeeming unitholder. We have agreed to indemnify these unitholders against
losses, claims, damages and liabilities, including liabilities under the
Securities Act of 1933, as amended.
LEGAL MATTERS
Certain legal matters, including the legality of the shares of common stock
offered hereby, will be passed upon for us by Goodwin, Procter & Hoar LLP,
Boston, Massachusetts. William B. King, whose professional corporation is a
partner in Goodwin, Procter & Hoar LLP, is our Secretary and is the beneficial
owner of approximately 10,000 shares of common stock.
EXPERTS
The consolidated financial statements and schedule of Bradley as of December
31, 1997 and 1996 and for each of the years in the three-year period ended
December 31, 1997 contained in Bradley's Annual Report on Form 10-K, the
statement of revenues and certain expenses of Redford Plaza for the year ended
December 31, 1997, the statement of revenues and certain expenses of Courtyard
Shopping Center for the year ended December 31, 1997, the combined statement of
revenues and certain expenses of Camelot Shopping Center and Plainview Village
for the year ended December 31, 1997, the statement of revenues and certain
expenses of Salem Consumer Square for the year ended December 31, 1997, the
statement of revenues and certain expenses of Holiday Manor Shopping Center for
the year ended December 31, 1997, the statement of revenues and certain expenses
of Ellisville Square for the year ended December 31, 1997, and the statement of
revenues and certain expenses of Clock Tower Plaza for the year ended December
31, 1997 have been incorporated by reference herein and in the Registration
Statement in reliance upon the reports of KPMG 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 LLP audits
and reports on financial statements of Bradley 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.
35
<PAGE>
The consolidated financial statements and the related financial statement
schedule incorporated in this Registration Statement by reference from Mid-
America Realty Investments, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1997 have been audited by Deloitte & Touche, independent auditors,
as stated in their reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
36
<PAGE>
================================================================================
You should rely only on the information contained in this prospectus,
incorporated herein by reference or contained in a prospectus supplement. We
have not authorized anyone else to provide you with different or additional
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus, and incorporated herein by reference or in any prospectus supplement
is accurate as of any date other than the date on the front of those documents.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary......................................................... 2
Risk Factors............................................................... 4
Available Information...................................................... 13
Incorporation of Certain Documents by Reference............................ 13
Bradley Real Estate, Inc................................................... 14
Description of Securities to be Registered................................. 14
Description of Units and Redemption of Units............................... 21
Federal Income Tax Considerations.......................................... 32
No Proceeds to Bradley..................................................... 35
Plan of Distribution....................................................... 35
Legal Matters.............................................................. 35
Experts.................................................................... 35
</TABLE>
-------------------
================================================================================
================================================================================
1,212,630 Shares
Bradley Real Estate, Inc.
Common Stock
--------------
Prospectus
--------------
February __, 1999
================================================================================
<PAGE>
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 Bradley in connection with the issuance and distribution of shares of
common stock offered hereby.
<TABLE>
<CAPTION>
<S> <C>
Legal fees and expenses $60,000
Accounting fees and expenses 20,000
SEC Registration fee 5,125
Printing fees and expenses 5,000
Transfer and Agency fees 1,000
Miscellaneous 3,875
-------
TOTAL $95,000
=======
</TABLE>
Item 15. Indemnification of Directors and Officers.
The Maryland General Corporation Law 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. contains such a provision which eliminates such
liability to the maximum extent permitted by Maryland law.
The charter of Bradley 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 Bradley or of
its predecessor Bradley Real Estate Trust or (ii) any individual who, at the
request of Bradley, 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 Bradley obligate it, to the maximum extent
permitted by Maryland law, to indemnify (a) any present or former director or
officer of Bradley, (b) any individual who, at the request of Bradley, serves or
has served another corporation, partnership, joint venture, trust or other
enterprise as a director or officer or (c) any former trustee or officer of
Bradley's predecessor entity, Bradley Real Estate Trust.
The Maryland General Corporate Law requires a corporation, unless its
charter provides otherwise, which Bradley'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 Maryland General Corporate Law 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 Maryland General
Corporate Law 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>
Bradley has claims-made directors and officers liability insurance policies
that insure the directors and officers of Bradley against loss from claimed
wrongful acts and insure Bradley 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 Bradley.
Item 16. Exhibits.
Exhibit No. Description
4.1 Articles of Amendment and Restatement of Bradley Real Estate, Inc.,
incorporated by reference to Exhibit 3.1 of Bradley's Current Report
on Form 8-K dated October 17, 1994.
4.2 Articles Supplementary Establishing and Fixing the Rights and
Preferences of a Series of Shares of Preferred Stock for the 8.4%
Series A Convertible Preferred Stock of Bradley Real Estate, Inc.
incorporated by reference to Annex B to the Proxy/Statement
Prospectus included in Part I to Bradley's Registration Statement on
Form S-4 (No. 333-57123).
4.3 By-laws of Bradley Real Estate, Inc., incorporated by reference to
Exhibit 3.3 of Bradley's Current Report on Form 8-K dated October
17, 1994.
4.4 Form of Common Stock Certificate, incorporated by reference to
Exhibit 4.1 of Bradley's Current Report on Form 8-K dated October
17, 1994.
4.5 Second Restated Agreement of Limited Partnership of Bradley
Operating Limited Partnership, dated as of September 2, 1997,
incorporated by reference to Bradley Operating Limited Partnership
Registration Statement on Form 10.
4.6 Amendment to Second Restated Agreement of Limited Partnership of
Bradley Operating Limited Partnership, dated August 6, 1998,
designating the 8.4% Series A Convertible Preferred Units.
**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.
*23.1 Consent of KPMG LLP.
*23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Goodwin, Procter & Hoar LLP (included in Exhibits 5.1
and 8.1 hereto).
24.1 Powers of Attorney (included on the signature page hereof).
99.1 Registration Rights Agreement, dated January 1, 1997, by and
between Bradley and Lexington Holding Company, incorporated by
reference to Exhibit 99.1 of Bradley's Registration Statement on
Form S-3 (No. 333-42357).
**99.2 Registration Rights Agreement, dated December 23, 1997, by and
between Bradley and Spring Mall Associates Limited Partnership.
**99.3 Registration Rights Agreement, dated December 31, 1997, by and
between Bradley and Baken Park Partners Limited Partnership.
**99.4 Registration Rights Agreement, dated September 25, 1998, by and
between Bradley and County Line 31 Company, L.P.
- ---------------
* Filed herewith.
** Previously filed.
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-2
<PAGE>
(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 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-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Northbrook, State of Illinois on
February 19, 1999.
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
Amendment to the Registration Statement has been signed by the following persons
in the capacities and on February 19, 1999.
Name Title
---- -----
/s/ Thomas P. D'Arcy Chairman, President, Chief Executive
- ------------------------- Officer and Director
Thomas P. D'Arcy
* Executive Vice President
- -------------------------- and Chief Financial Officer
Irving E. Lingo, Jr.
* Controller
- --------------------------
David M. Garfinkle
* Director
- --------------------------
Joseph E. Hakim
* Director
- --------------------------
William L. Brown
* Director
- --------------------------
Stephen G. Kasnet
* Director
- --------------------------
Paul G. Kirk, Jr.
* Director
- --------------------------
W. Nicholas Thorndike
* Director
- --------------------------
A. Robert Towbin
By: /s/ Thomas P. D'Arcy
----------------------
Thomas P. D'Arcy
Attorney-in-fact for the persons marked
above with an asterisk
II-4
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
4.1 Articles of Amendment and Restatement of Bradley Real Estate, Inc.,
incorporated by reference to Exhibit 3.1 of Bradley's Current Report
on Form 8-K dated October 17, 1994.
4.2 Articles Supplementary Establishing and Fixing the Rights and
Preferences of a Series of Shares of Preferred Stock for the 8.4%
Series A Convertible Preferred Stock of Bradley Real Estate, Inc.
incorporated by reference to Annex B to the Proxy/Statement
Prospectus included in Part I to Bradley's Registration Statement on
Form S-4 (No. 333-57123).
4.3 By-laws of Bradley Real Estate, Inc., incorporated by reference to
Exhibit 3.3 of Bradley's Current Report on Form 8-K dated October
17, 1994.
4.4 Form of Common Stock Certificate, incorporated by reference to
Exhibit 4.1 of Bradley's Current Report on Form 8-K dated October
17, 1994.
4.5 Second Restated Agreement of Limited Partnership of Bradley
Operating Limited Partnership, dated as of September 2, 1997,
incorporated by reference to Bradley Operating Limited Partnership's
Registration Statement on Form 10.
4.6 Amendment to Second Restated Agreement of Limited Partnership of
Bradley Operating Limited Partnership, dated August 6, 1998,
designating the 8.4% Series A Convertible Preferred Units.
**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.
*23.1 Consent of KPMG LLP.
*23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Goodwin, Procter & Hoar LLP (included in Exhibits 5.1
and 8.1 hereto).
24.1 Powers of Attorney (included on the signature page hereof).
99.1 Registration Rights Agreement, dated January 1, 1997, by and
between Bradley and Lexington Holding Company, incorporated by
reference to Exhibit 99.1 of Bradley's Registration Statement on
Form S-3 (No. 333-42357).
**99.2 Registration Rights Agreement, dated December 23, 1997, by and
between Bradley and Spring Mall Associates Limited Partnership.
**99.3 Registration Rights Agreement, dated December 31, 1997, by and
between Bradley and Baken Park Partners Limited Partnership.
**99.4 Registration Rights Agreement, dated September 25, 1998, by and
between Bradley and County Line 31 Company, L.P.
- ------------
* Filed herewith.
** Previously filed.
<PAGE>
Exhibit 8.1
GOODWIN, PROCTER & HOAR LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
February 3, 1999
Bradley Real Estate, Inc.
40 Skokie Boulevard, Suite 600
Northbrook, IL 60062
Re: Federal Income Tax Matters
--------------------------
Ladies and Gentlemen:
This opinion is furnished to you in our capacity as counsel to Bradley Real
Estate, Inc. (the "Company"), a Maryland corporation, regarding the Company's
qualification for federal income tax purposes as a real estate investment trust
("REIT") within the meaning of Sections 856-860 of the Internal Revenue Code of
1986, as amended (the "Code"). This opinion is rendered in connection with the
filing of a registration statement on Form S-3 (the "Registration Statement")
relating to up to 1,212,630 shares of common stock, par value $.01 per share
(the "Redemption Shares"), of the Company that may be issued if, and to the
extent that, certain holders of limited partner units ("Units') representing
partnership interests of Bradley Operating Limited Partnership (the "Operating
Partnership") tender such Units to the Operating Partnership for redemption and
the Company exercises its contractual right to acquire such tendered Units for
Redemption Shares.
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>
Bradley Real Estate, Inc.
February 3, 1999
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 the assumptions, qualifications
and factual matters set forth in the Registration Statement, and provided that
the Company continues to meet the applicable asset composition, source of
income, shareholder diversification, distribution and other requirements of the
Code necessary for a corporation to qualify as a REIT, we:
1. Are of the opinion that 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; and
2. Hereby confirm the opinions of Goodwin, Procter & Hoar LLP set forth in
the prospectus contained in the Registration Statement under the
subsection "Description of Units and Redemption of Units -- Tax
Consequences of Redemption" and under the heading "Federal Income Tax
Considerations" relating to the exchange or redemption of Units and the
acquisition and ownership of the Redemption Shares.
<PAGE>
Bradley Real Estate, Inc.
February 3, 1999
Page 3
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 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 hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the prospectus contained in
such Registration Statement. In giving such consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ GOODWIN, PROCTER & HOAR LLP
GOODWIN, PROCTER & HOAR LLP
<PAGE>
EXHIBIT 23.1
Consent of KPMG LLP
-------------------
The Board of Directors of Bradley Real Estate, Inc.:
- ----------------------------------------------------
We consent to the use of our report dated January 28, 1998, relating to the
consolidated balance sheets of Bradley Real Estate, Inc. and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of income,
changes in share owners' equity and cash flows for each of the years in the
three-year period ended December 31, 1997 and related schedule, which report
appears in the December 31, 1997 Annual Report on Form 10-K of Bradley Real
Estate, Inc., our report dated April 9, 1998 related to the statement of
revenues and certain expenses of Redford Plaza for the year ended December 31,
1997, our report dated May 7, 1998 related to the statement of revenues and
certain expenses of Courtyard Shopping Center for the year ended December 31,
1997, our report dated May 7, 1998 related to the combined statement of revenues
and certain expenses of Camelot Shopping Center and Plainview Village for the
year ended December 31, 1997, our report dated May 29, 1998 related to the
statement of revenues and certain expenses of Salem Consumer Square for the year
ended December 31, 1997, our report dated May 29, 1998 related to the statement
of revenues and certain expenses of Holiday Manor Shopping Center for the year
ended December 31, 1997, our report dated June 1, 1998 related to the statement
of revenues and certain expenses of Ellisville Square for the year ended
December 31, 1997, and 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 herein by reference and to the reference
to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
Chicago, Illinois
February 19, 1999
<PAGE>
EXHIBIT 23.2
Independent Auditors' Consent
-----------------------------
We consent to the use in this current report on Form 8-K/A of Bradley Real
Estate, Inc. of our reports, dated January 28, 1998, on the consolidated
financial statements of Mid-America Realty Investments, Inc. for the year ended
December 31, 1997, and to the incorporation by reference of such current report
on Form 8-K and our report appearing therein in the registration statements
(Nos. 333-42357, 333-28167, 33-87084, 33-62200, 33-64811, 333-63707 and 333-
69131) on Form S-3 of Bradley Real Estate, Inc., the registration statements (
Nos. 333-30587, 33-34884 and 33-65180) on Form S-8 of Bradley Real Estate, Inc.,
the registration statement (No. 333-57123) on Form S-4 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/ Deloitte & Touche LLP
Omaha, Nebraska
February 19, 1999
