<PAGE>
As filed with the Securities and Exchange Commission on December 17, 1999
Registration Statement No. _________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________
BRADLEY REAL ESTATE, INC.
(Exact name of Registrant as specified in its charter)
Maryland 04-6034603
(State 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:
Gilbert G. Menna, P.C.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
(617) 570-1000
_____________________________
Approximate date of commencement of proposed sale to the public: From time to
time after 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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Title of Securities Being Proposed Maximum Proposed Maximum Amount of
Registered Amount to be Registered Offering Price Per Aggregate Offering Registration Fee(2)
Share(1) Price(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01
per share 1,275,066 16.34 $20,834,578 $270
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) of the Securities Act of 1933, as amended, based
upon the average of the high and low sales prices on the New York Stock
Exchange on December 13, 1999.
(2) Pursuant to Rule 429 under the Securities Act of 1933, as amended, 931,330
shares covered by the earlier Registration Statement on Form S-3 (No. 333-
69131) are being carried forward and the corresponding registration fee of
$5,125 was previously paid at the time of filing and 281,300 shares covered
by the earlier Registration Statement on Form S-3 (No. 333-42357) are being
carried forward and the corresponding registration fee of $1,650 was
previously paid at the time of filing.
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.
===============================================================================
<PAGE>
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. December 17, 1999.
Prospectus
- ----------
1,275,066 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 1,275,066 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 partnership 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."
____________________
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.
____________________
The date of this prospectus is December ___, 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.
____________________
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 which are 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 1, 1999, we owned 98 properties in 15 states,
aggregating approximately 15.5 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, as
of December 1, 1999, the owner of approximately 83% 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 1,275,066 shares of common
stock that we may issue to holders of an aggregate of 1,275,066 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., Spring Mall Associates Limited
Partnership, the equity holders of Baken Park Partners Limited Partnership and
Maplewood Square I, Inc. in exchange for the contribution of their interests in
one of five properties to Bradley Operating Limited Partnership. In connection
with these property contributions, we entered into registration rights
agreements with each of these 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.
2
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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 of our 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.
3
<PAGE>
RISK FACTORS
Before you tender your units of limited partnership interest for redemption
you should be aware that, if Bradley opts to compensate you in the form of its
common stock, there are various risks, including those described below. You
should carefully consider these risk factors together with all of the
information included or incorporated by reference in this prospectus before you
decide to redeem your units. This section includes or refers to forward-looking
statements. You should refer to the explanation of the qualifications and
limitations on such forward-looking statements discussed on page 14.
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.
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 before the applicable date below, 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.
4
<PAGE>
Contributed Property Two Year Anniversaries
-------------------------------------------
Property Two Year Anniversary Date
-------- -------------------------
Roseville Center January 1, 1999
County Line Mall July 31, 1999
Spring Mall December 23, 1999
Baken Park December 31, 1999
Maplewood Square November 18, 2000
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. From January 1,
1999 to December 1, 1999, we acquired 4 properties aggregating 484,000 square
feet of gross leasable area for an aggregate acquisition price of approximately
$36.9 million. During this period, we also acquired the 50% non-owned portion
of two shopping centers held by our joint venture acquired in connection with
the merger acquisition of Mid-America, for a purchase price of approximately
$7,750,000.
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;
. 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
5
<PAGE>
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
10.00%. 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.
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.
6
<PAGE>
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;
. potential liability due to changes in environmental and other laws;
and
. 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.
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
7
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. 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. Bankruptcies
declared during 1999 having the largest adverse impact on revenues, net income
and cash available for distributions, included Discovery Zone, a tenant at four
of our centers and Hechinger Co., the owner of an 85,000 square foot
HomeQuarters store at one of our centers.
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 only be able to re-lease
it under less favorable terms. In such situations, we may be subject to
competitive and economic conditions over which we have no control. Accordingly,
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 below anticipated levels.
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. We have re-leased
the space to two tenants, Carson Pirie Scott, which commenced during 1999, and
HomeLife, which is expected to commence during the middle part of 2000.
Additionally, we are in the process of obtaining a replacement tenant for the
85,000 square foot HomeQuarters store, but do not expect to commence a new lease
prior to 2001.
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
8
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. 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 costs of investigation
and cleanup of hazardous or toxic substances on, in or from property can be
substantial. 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. The presence of hazardous or toxic substances on a property could
result in a claim by a private party for personal injury or a claim by a
neighboring property owner for property damage. Such costs or liabilities could
exceed the value of the affected real estate. Other federal, state and local
laws govern the removal or encapsulation of asbestos-containing material when
such material is in poor condition or in the event of building or remodeling,
renovation or demolition. Still other federal, state and local laws may require
the removal or upgrading of underground storage tanks that are out of service or
out of compliance. Non-compliance with environmental or health and safety
requirements may also result in the need to cease or alter operations at a
property, which could affect the financial health of a tenant and its ability to
make lease payments. Furthermore, if there is a violation of such requirement in
connection with a tenant's operations, it is possible that we, as the owner of
the property, could be held accountable by governmental authorities for such
violation and could be required to correct the violation.
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.
Moreover, no assurances can be given that future laws, ordinances or regulations
will not impose any material environmental liability or the current
environmental condition of the properties will not be affected by tenants and
occupants of the properties, by the condition of land or operations in the
vicinity of the properties, or by third parties unrelated 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.
9
<PAGE>
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.
We have undertaken a five-step program to achieve Year 2000 readiness,
including;
. Awareness - Education involving all levels of Bradley personnel
regarding Year 2000 implications.
. Inventory - Creating a checklist and conducting surveys to identify
Year 2000 compliance issues in all systems, including both mechanical
and information systems. The surveys were also designed to identify
critical outside parties such as banks, tenants, suppliers and other
parties with whom we do a significant amount of business, for purposes
of determining potential exposure in the event such parties are not
Year 2000 compliant.
. Assessment - Based upon the results of the inventory and surveys,
assessing the nature of identified Year 2000 issues and developing
strategies to bring our systems into substantial compliance with
respect to Year 2000.
. Correction and Testing - Implementing the strategy developed during
the assessment phase.
. Implementation - Incorporating repaired or replaced systems into our
systems environment.
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 Year 2000 ready. This assessment is based upon
installation and testing of upgraded software provided by software vendors, as
well as formal and informal communications with software vendors and literature
supplied with certain software.
Similarly, we evaluated the potential malfunction or failure of our
operating systems and believe them to be Year 2000 ready. 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 are aware that we may not, in fact, be Year 2000 ready by
January 1, 2000, at this time we have not adopted a contingency plan for the
conduct of our own operation because we expect to be Year 2000 ready in advance
of the advent of the Year 2000. However, we will continue to monitor our
progress and state of readiness, and will be prepared to adopt a contingency
plan with respect to areas in which evidence arises that we may not become Year
2000 ready in sufficient time.
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
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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 surveyed such parties to identify the
potential exposure in the event they are not Year 2000 compliant in a timely
manner. We are not aware of any party that is anticipating a material Year 2000
compliance issue. Although the investigations and assessments of possible Year
2000 issues are still ongoing, we do not anticipate a material impact on our
business, operations or financial condition even if one or more parties are not
Year 2000 ready in a timely manner, because the number and nature of our tenant
base are diverse, and because we do not rely on a concentration of suppliers and
other parties to conduct 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 cannot 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.
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
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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.
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. Please refer to the section entitled "Federal Income Tax Considerations
- -- Recently Enacted Legislation" for a discussion of new tax legislation
affecting REITs.
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.
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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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WHERE YOU MAY FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and we are required to file annual, quarterly and
special reports, proxy statements and other information with the Securities and
Exchange Commission. You may read and copy any of these reports, proxy
statements and information at the public reference facilities maintained by the
Securities and Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the Securities and Exchange
Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York, New
York 10048, and Citicorp Center, 500 W. Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. You may also obtain copies at the prescribed rates from the
Public Reference Section of the Securities and Exchange Commission at its
principal office in Washington, D.C. You may call the Securities and Exchange
Commission at 1-800-SEC-0330 for further information about the public reference
rooms. The Securities and Exchange Commission maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants, including Bradley, that file electronically with the Securities and
Exchange Commission. You may access the Securities and Exchange Commission's web
site at http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
This prospectus is part of a registration statement on Form S-3, number
________ that we have filed with the Securities and Exchange Commission 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 Securities and Exchange Commission.
Our SEC file number is 001-10328. The Securities and Exchange Commission 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 Securities and Exchange Commission 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 Securities and Exchange Commission 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,
1998;
. our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999, June 30, 1999 and September 30, 1999;
. our Proxy Statement dated March 26, 1999 with respect to our Annual
Meeting of Stockholders on May 13, 1999;
. our current reports on Form 8-K filed on March 3, 1999, September 8,
1999 and November 24, 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 and
Secretary, Bradley Real Estate, Inc., 40 Skokie Boulevard, Suite 600,
Northbrook, Illinois 60062-1626, telephone (847) 272-9800.
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FORWARD-LOOKING STATEMENTS
Statements incorporated by reference or made under the captions "Risk
Factors" and elsewhere in 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 Securities and Exchange Commission and incorporate by reference into
this prospectus will contain forward-looking statements. When we use the words
"anticipate," "assume," "believe," "estimate," "expect," "intend" and other
similar expressions, they generally identify forward-looking statements.
Forward-looking statements include, for example, statements relating to
acquisitions and related financial information, development activities, business
strategy and prospects, future capital expenditures, sources and availability of
capital, environmental and other regulations and competition.
You should exercise caution in interpreting and relying on forward-looking
statements since they involve known and unknown risks, uncertainties and other
factors which are, in some cases, beyond our control and could materially affect
our actual results, performance or achievements. Some of the factors that could
cause our actual results, performance or achievements to differ materially from
those expressed or implied by forward-looking statements include, but are not
limited to, the following:
. we are subject to general risks affecting the real estate industry,
such as the need to enter into new leases or renew leases on favorable
terms to generate rental revenues, and dependence on our tenants'
financial condition;
. we may fail to identify, acquire, construct or develop additional
properties; we may develop properties that do not produce a desired
yield on invested capital; or we may fail to effectively integrate
acquisitions of properties or portfolios of properties;
. financing may not be available, or may not be available on favorable
terms;
. we need to make distributions to our stockholders for us to qualify as
a real estate investment trust, and if we need to borrow the funds to
make such distributions such borrowings may not be available on
favorable terms;
. we depend on the primary markets where our properties are located and
these markets may be adversely affected by local economic and market
conditions which are beyond our control;
. we are subject to potential environmental liabilities;
. we are subject to complex regulations relating to our status as a real
estate investment trust and would be adversely affected if we failed
to qualify as a real estate investment trust; and
. market interest rates could adversely affect the market prices for our
common stock, as well as our performance and cash flow.
We caution you that, while forward looking statements reflect our good
faith beliefs, they are not guarantees of future performance. 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.
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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 which are 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 1, 1999, we owned 98 properties in 15 states,
aggregating approximately 15.5 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, as of December 1,
1999, the owner of approximately 83% 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.
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, development, ownership and operation of retail properties. We
evaluate prospective acquisitions and developments 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. From January 1, 1999 to December 1, 1999, we acquired 4
properties aggregating 484,000 square feet of gross leasable area for an
aggregate acquisition price of approximately $36.9 million. During this period,
we also acquired the 50% non-owned portion of two shopping centers held by our
joint venture acquired in connection with the merger acquisition of Mid-America,
for a purchase price of approximately $7,750,000. In evaluating potential
acquisitions and developments, 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.
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DESCRIPTION OF SECURITIES TO BE REGISTERED
The description of our capital stock set forth below does not purport to be
complete. For such detailed, complete description, please see 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. As of December 1, 1999,
we had approximately 24.0 million shares of common stock issued and outstanding
and approximately 3.5 million shares of 8.4% Series A Convertible Preferred
Stock issued and outstanding. We have also authorized 2.0 million shares of
8.875% Series B Cumulative Redeemable Perpetual Preferred Stock and 1.0 million
shares of 8.875% Series C Cumulative Redeemable Perpetual Preferred Stock for
issuance upon the exchange of two classes of preferred units issued by Bradley
Operating Limited Partnership. In addition, Bradley Operating Limited
Partnership has approximately 1.3 million "common" units outstanding other than
those held directly by us, as well as 2.0 million shares of 8.875% Series B
Cumulative Redeemable Perpetual Preferred Units and 1.0 million shares of 8.875%
Series C Cumulative Redeemable Perpetual Preferred Units. If tendered to Bradley
Operating Limited Partnership for redemption, the "common" 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. The preferred units are
exchangeable into shares of our preferred stock.
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.
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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.
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. As of December 1, 1999,
3,478,219 shares remained outstanding. The Series A Convertible Preferred Stock
is the only series of our preferred stock that is outstanding as of the date of
this prospectus,
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although we have authorized 2.0 million shares of 8.875% Series B Cumulative
Redeemable Perpetual Preferred Stock and 1.0 million shares of 8.875% Series C
Cumulative Redeemable Perpetual Preferred Stock for possible future issuances.
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 but on parity with the Series B Preferred Stock and the Series C
Preferred Stock. The following are the principal terms of the Series A
Convertible 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.
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.
Series B Preferred Stock
On February 23, 1999, we authorized 2.0 million shares of Series B
Preferred Stock, which may be issued upon the exchange of a corresponding class
of preferred units issued by Bradley Operating Limited Partnership. No shares of
the Series B Preferred Stock are issued or outstanding as of the date of this
prospectus. The Series B Preferred Stock ranks senior to the common stock with
respect to dividend rights and distributions upon our liquidation, dissolution
and winding up but on parity with the Series A Convertible Preferred Stock and
the Series C Preferred Stock. The following are the principal terms of the
Series B Preferred Stock:
Dividends Cumulative fixed dividend of approximately $0.555
per share payable quarterly.
Liquidation Preference $25.00 per share plus an amount equal to
accumulated, accrued but unpaid dividends.
Redemption After February 23, 2004, we may redeem the Series
B Preferred Stock for $25.00 per share, plus any
accumulated, accrued and unpaid dividends.
Voting Rights Holders of two-thirds of the outstanding Series B
Preferred Stock must consent before we can:
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. create or increase any class or series of
preferred stock senior to the Series B
Preferred Stock,
. create or increase any class or series of
preferred stock ranking on parity with the
Series B Preferred Stock that is issued to
our affiliates on terms more favorable than
arm's length terms,
. consolidate, merge into or with, or transfer
our assets substantially as an entirety to,
any third party that does not exchange the
Series B Preferred Stock for a security with
substantially the same terms,
. amend our charter or bylaws in a manner that
materially and adversely affects the rights
of the holders of Series B Preferred Stock.
In addition, if we ever become delinquent with
respect to six quarterly dividend payments on the
Series B Preferred Stock, the holders of such
preferred stock would also have the right to elect
two separate directors.
Series C Preferred Stock
On September 7, 1999, we authorized 1.0 million shares of Series C
Preferred Stock, which may be issued upon the exchange of a corresponding class
of preferred units issued by Bradley Operating Limited Partnership. No shares of
the Series C Preferred Stock are issued or outstanding as of the date of this
prospectus. The Series C Preferred Stock ranks senior to the common stock with
respect to dividend rights and distributions upon our liquidation, dissolution
and winding up but on parity with the Series A Convertible Preferred Stock and
the Series B Preferred Stock. The following are the principal terms of the
Series C Preferred Stock:
Dividends Cumulative fixed dividend of approximately $0.555
per share payable quarterly.
Liquidation Preference $25.00 per share plus an amount equal to
accumulated, accrued but unpaid dividends.
Redemption After September 7, 2004, we may redeem the Series
C Preferred Stock for $25.00 per share, plus any
accumulated, accrued and unpaid dividends.
Voting Rights Holders of two-thirds of the outstanding Series C
Preferred Stock must consent before we can:
. create or increase any class or series of
preferred stock senior to the Series C
Preferred Stock,
. create or increase any class or series of
preferred stock ranking on parity with the
Series C Preferred Stock that is issued to
our affiliates on terms more favorable than
arm's length terms,
. consolidate, merge into or with, or transfer
our assets substantially as an entirety to,
any third party that does not exchange the
Series C Preferred Stock for a security with
substantially the same terms,
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. amend our charter or bylaws in a manner that
materially and adversely affects the rights
of the holders of Series C Preferred Stock.
In addition, if we ever become delinquent with
respect to six quarterly dividend payments on the
Series C 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 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, the Series
B Preferred Stock or the Series C Preferred Stock must be approved by the
holders of each of those series of 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 last half of its
taxable year, with the term "individuals" including for these purposes
a variety of tax exempt taxpayers and
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. 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.
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
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. 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:
. the provisions of the Internal Revenue Code applicable to REITs;
. the requirements of any taxing authority; or
. governmental agency.
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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.
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
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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 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.
Tax Consequences of Redemption
The following discussion summarizes federal income tax considerations that
may be relevant to a unitholder who redeems his units. The discussion in this
section and any other section of this prospectus, however, 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.
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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 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
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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.
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
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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 partnership 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 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 you.
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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 change 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.
Form of Organization and Assets Owned
Bradley Operating Limited Partnership
-------------------------------------
Bradley Operating Limited Partnership is organized as a Delaware limited through
which we conduct substantially all of our business and own substantially all of
our assets either directly or indirectly through subsidiaries. Our Board of
Directors manages the affairs of Bradley Operating Limited Partnership by
directing our affairs.
Bradley
-------
We are a Maryland corporation which has elected to be taxed as a REIT under the
Internal Revenue Code and we intend to maintain our qualifications as a REIT. We
maintain a general partner interest in Bradley Operating Limited Partnership,
which gives us an indirect investment in those properties and other assets owned
by Bradley Operating Limited Partnership. As of December 1, 1999, we owned
approximately a 83% 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
-------------------------------------
Bradley Operating Limited Partnership has a stated termination date of December
31, 2050, although it may be terminated earlier under certain circumstances.
Bradley
-------
We have a perpetual term and intend to continue our operations for an indefinite
time period.
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Nature of Investment and Distribution Rights
Bradley Operating Limited Partnership
-------------------------------------
The units constitute equity interests entitling each unitholder to his pro rata
share of cash distributions made to the unitholders of Bradley Operating Limited
Partnership, including us. Because Bradley Operating Limited Partnership has
also issued three classes of "preferred units," distributions to unitholders are
subject to the prior distribution rights of such preferred units. In general,
Bradley Operating Limited Partnership is structured so that unitholders receive
distributions on their units equal to the dividend yield for the same period on
a share of our common stock.
As a partnership, Bradley Operating Limited Partnership is not subject 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. This 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 their investment in accordance with the rules governing
REITs.
Bradley
-------
The common stock constitutes an equity interest in us. We are entitled to
receive a portion of Bradley Operating Limited Partnership's operating cash flow
and capital cash flow sufficient to pay dividends to stockholders concurrently
with any distribution to the unitholders. Each stockholder will be entitled to
his pro rata share of any dividends or distributions paid with respect to common
stock. The dividends payable to the stockholders are not fixed in amount and are
only paid if, when and as declared by the Board of Directors. In order to
qualify as a REIT, we must distribute at least 95% of our taxable income,
excluding capital gains, and any taxable income, including capital gains, not
distributed will be subject to corporate income tax.
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Issuance of Additional Units
Bradley Operating Limited Partnership
-------------------------------------
Bradley Operating Limited Partnership is authorized to issue additional units
and such other partnership interests, including partnership interests of
different series or classes that may be senior to units, as we may determine in
our sole discretion as general partner. The relative rights, powers and duties
of such units or other interests will be determined by us in our sole
discretion. Bradley Operating Limited Partnership may issue units and other
partnership interests to us, as long as such interests are issued in connection
with a comparable issuance of our capital stock and proceeds raised in
connection with the issuance of such 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.
Bradley
-------
Our Board of Directors may issue, in its discretion, additional equity
securities consisting of common stock or any other series of capital stock so
long as the total number of shares issued does not exceed the authorized number
of shares of capital stock set forth in our charter. The capital stock may be
classified and issued as a variety of equity securities, including one or more
classes of common or preferred stock, in the discretion of the Board of
Directors. The issuance of additional shares of common stock, preferred stock or
other similar equity securities may result in the dilution of the interests of
the existing stockholders.
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Liquidity
Bradley Operating Limited Partnership
-------------------------------------
A unitholder may not transfer any portion of their units without the consent of
the general partner, subject to the following exceptions:
(a) transfers by will, the laws of intestacy or otherwise to the legal
representative or successor of the transferring unitholder who shall be
bound in all respects by the terms of Bradley Operating Limited
Partnership's partnership agreement;
(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 Bradley 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.
Bradley
-------
Our common stock is freely transferable subject to the requirements of the
Securities Act of 1933, as amended. The common stock is listed on the New York
Stock Exchange. The breadth and strength of this market will depend, most
significantly, upon the number of shares outstanding, our financial results and
prospects, the general interest in us and other real estate investments and our
dividend yield compared to that of other debt and equity securities.
Purchase and Permitted Investments
Bradley Operating Limited Partnership
-------------------------------------
Bradley Operating Limited Partnership's purpose is to conduct any business that
relates to the 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.
Bradley
-------
Under our charter, we may engage in any lawful activity permitted under Maryland
law.
Borrowing Policies
Bradley Operating Limited Partnership
-------------------------------------
Bradley Operating Limited Partnership has no restrictions on borrowings, and we,
as the general partner, have full power and authority to borrow money on behalf
of Bradley Operating Limited Partnership.
Bradley
-------
We are not restricted under our organizational documents from incurring
borrowings.
32
<PAGE>
Other Investment Restrictions
Bradley Operating Limited Partnership
-------------------------------------
Other than restrictions precluding investments by Bradley Operating Limited
Partnership that would 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.
Bradley
-------
Neither our charter nor our bylaws impose any restrictions upon the types of
investments made by us.
Management Control
Bradley Operating Limited Partnership
-------------------------------------
Generally, all management powers over the business and affairs of Bradley
Operating Limited Partnership are vested in us as general partner and no other
unitholder of Bradley Operating Limited Partnership has any right to participate
in or exercise control or management power over the business and affairs of
Bradley Operating Limited Partnership. Bradley Operating Limited Partnership's
partnership agreement provides that we shall be reimbursed for all expenses
incurred by us relating to the management and business of Bradley Operating
Limited Partnership.
Bradley
-------
The Board of Directors has exclusive control over our business and affairs
subject only to the restrictions in our charter and bylaws. The Board of
Directors is classified into three classes. At each annual meeting of
stockholders, the successors of the class of Directors whose terms expire at
that meeting will be elected. The policies adopted by the Board of Directors may
be altered or eliminated without advice of the stockholders. Accordingly, except
for their vote in the elections of Directors, stockholders have no control over
our ordinary business policies.
33
<PAGE>
Management Liability and Indemnification
Bradley Operating Limited Partnership
-------------------------------------
Bradley Operating Limited Partnership's partnership agreement generally provides
that the general partner and any person acting on its behalf will incur no
liability to Bradley Operating Limited Partnership or any unitholder for any act
or omission within the scope of the general partner's authorities, provided the
general partner's or such other person's action or omission to act was taken in
good faith and in the belief that such action or omission was in the best
interests of us and our affiliates, and provided further, that the general
partner's or such other person's actions or omissions shall not constitute
actual fraud or gross negligence or deliberately dishonest conduct.
Bradley Operating Limited Partnership's partnership agreement also provides for
the indemnification of the general partner and its affiliates and any individual
acting on their behalf from any loss, damage, claim or liability, including, but
not limited to, reasonable attorneys' fees and expenses, incurred by them by
reason of any act performed by them in accordance with the standards set forth
above or in enforcing the provisions of this indemnity.
Bradley
-------
Our charter eliminates, to the fullest extent permitted under Maryland law, the
personal liability of a director for monetary damages for breaches of such
director's duty of care or other duties as a director. The effect of this
provision in the charter is generally to eliminate our rights and the rights of
our stockholders who sue on behalf of us to recover monetary damages against a
director for breach of the fiduciary duty of care as a director. This limitation
includes suits alleging negligent or grossly negligent behavior on the part of a
director. This provision does not limit or eliminate our rights or the rights of
any stockholder to seek non-monetary relief such as an injunction or recession
in the event of a breach of a director's duty of care. These provisions will not
alter the liability of a director under federal securities laws.
Antitakeover Provisions
Bradley Operating Limited Partnership
-------------------------------------
Except in limited circumstances, the general partner has exclusive management
power over the business and affairs of Bradley Operating Limited Partnership.
The general partner may not be removed by the unitholders with or without cause.
Under the Bradley Operating Limited Partnership's partnership agreement, we may,
in our sole discretion, prevent a unitholder from 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.
Bradley
-------
Our charter and bylaws and Maryland law contain a number of provisions that may
have the effect of delaying or discouraging an unsolicited proposal to acquire
us or remove incumbent management. For the full discussion of these provisions,
please refer to the section entitled "Risk Factors--There are provisions in our
charter and bylaws that may discourage acquisition proposals."
34
<PAGE>
Voting Rights
Bradley Operating Limited Partnership
-------------------------------------
Holders of units have no right to elect or remove us as the general partner of
Bradley Operating Limited Partnership and generally have no other voting rights.
Under Bradley Operating Limited Partnership's partnership agreement, we as
general partner may take any action in a manner that we reasonably believe to be
in the best interests of our stockholders or complies with the REIT requirements
for us. Our ability to make amendments to Bradley Operating Limited
Partnership's partnership agreement is limited to the extent described below.
Bradley
-------
The Board of Directors directs our business and affairs. The Board consists of
three classes having staggered terms of office. Stockholders elect each class at
our annual meetings. All shares of common stock have one vote per share. The
charter permits the Board of Directors to classify and issue preferred stock in
one or more series having voting power which may differ from that of the common
stock.
Our stockholders have the right to vote, among other things, on a merger or sale
of all or substantially all 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.
Amendment of the Partnership Agreement or Our Charter
Bradley Operating Limited Partnership
-------------------------------------
Generally, Bradley Operating Limited Partnership's partnership agreement may be
amended by the general partner without the consent of the unitholders, except
that certain amendments which alter or change unitholders' distribution rights
or redemption rights requires the consent of the unitholders holding a majority-
in-interest of the outstanding units.
Bradley
-------
Amendments to the charter must be approved by the Board of Directors and
generally by the vote of a majority of the votes entitled to be cast at a
meeting of stockholders except as otherwise provided by law. The Board of
Directors may, however, amend the charter without any action of the stockholders
in certain respects to preserve our REIT qualification.
35
<PAGE>
Compensation, Fees and Distributions
Bradley Operating Limited Partnership
-------------------------------------
The general partner is not entitled to receive any compensation for its 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.
Bradley
-------
Our Directors receive compensation for their services.
Liability of Investors
Bradley Operating Limited Partnership
-------------------------------------
Under Bradley Operating Limited Partnership's partnership agreement and
applicable Delaware law, the 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.
Bradley
-------
Under the Maryland law, stockholders generally are not personally liable for our
debts or obligations.
36
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
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.
Recently Enacted Legislation
Recently enacted tax legislation alters the requirements for qualification
as a REIT. Among others, the newly passed legislation generally liberalizes,
from the perspective of our historic operations, the asset diversification
requirements applicable to REITs. Effective for tax years beginning after
December 31,
37
<PAGE>
2000, a REIT may own the securities of a "taxable REIT subsidiary" without
limitation on the REIT's voting control over the subsidiary, provided that not
more than 20% of the value of the REIT's total assets is represented by
securities of one or more taxable REIT subsidiaries. A taxable REIT subsidiary
of ours would include a corporation in which we directly or indirectly own stock
and which has elected to be treated as our taxable REIT subsidiary. The
definition of taxable REIT subsidiary in the Internal Revenue Code limits the
ability of corporations whose activities relate lodging or health care to be
taxable REIT subsidiaries.
Under current law, a REIT must distribute at least 95% of its real estate
investment trust taxable income to its stockholders. Effective for tax years
beginning after December 31, 2000, the recently enacted tax legislation reduces
the percent of a REIT's real estate investment trust taxable income that must be
distributed to 90%. Consequently, beginning with our 2001 tax year, we will have
the potential to retain a greater proportion of our real estate taxable income
than currently.
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%
38
<PAGE>
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.
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.
39
<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 1,275,066 shares
of common stock if, and to the extent that, certain holders of an aggregate of
1,275,066 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., Spring Mall Associates Limited
Partnership and Maplewood Square I, Inc. in exchange for the contribution of
their interests in one of five 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.
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.
EXPERTS
The consolidated balance sheets of Bradley as of December 31, 1998 and 1997,
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, 1998 and related schedule of real estate and accumulated
depreciation contained in Bradley's December 31, 1998 Annual Report on Form 10-K
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.
40
<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
Where You May Find More Information....................................... 14
Incorporation of Documents by Reference................................... 14
Forward-Looking Statements................................................ 15
Bradley Real Estate, Inc.................................................. 16
Description of Securities to be Registered................................ 17
Description of Units and
Redemption of Units...................................................... 25
Federal Income Tax Consequences........................................... 37
No Proceeds to Bradley.................................................... 40
Plan of Distribution...................................................... 40
Legal Matters............................................................. 40
Experts................................................................... 40
</TABLE>
________________
1,275,066 Shares
Bradley Real Estate, Inc.
Common Stock
_________________
Prospectus
_________________
December 17, 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.
Legal fees and expenses $ 20,000
Accounting fees and expenses 3,000
SEC Registration 270
Printing fees and expenses 1,000
Transfer and Agency fees 1,000
Miscellaneous 730
---------
TOTAL $ 26,000
=========
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 Articles Supplementary Establishing and Fixing the Rights and
Preferences of a Series of Shares of Preferred Stock for the 8.875%
Series B Cumulative Redeemable Perpetual Preferred Stock of Bradley
Real Estate, Inc., incorporated by reference to Exhibit 4.2 of
Bradley Operating Limited Partnership's Current Report on Form 8-K
dated March 3, 1999.
4.4 Articles Supplementary Establishing and Fixing the Rights and
Preferences of a Series of Shares of Preferred Stock for the 8.875%
Series C Cumulative Redeemable Perpetual Preferred Stock of Bradley
Real Estate, Inc., incorporated by reference to Exhibit 4.2 of
Bradley Operating Limited Partnership's Current Report on Form 8-K
dated September 8, 1999.
*4.5 Articles Supplementary dated October 22, 1999.
4.6 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.
4.7 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.
4.8 Amendment to Second Restated Agreement of Limited Partnership of
Bradley Operating Limited Partnership, dated July 31, 1998,
incorporated by reference to Exhibit 10.1.2 to Bradley's Form 10-K
for the year ended December 31, 1998.
4.9 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,
incorporated by reference to Exhibit 4.9 of Bradley's Current
Report on Form 8-K dated August 7, 1998.
4.10 Amendment to Second Restated Agreement of Limited Partnership of
Bradley Operating Limited Partnership, dated February 23, 1999,
designating the 8.875% Series B Cumulative Redeemable Perpetual
Preferred Units, incorporated by reference to Exhibit 4.1 of
Bradley Operating Limited Partnership's Current Report on Form 8-K
dated March 3, 1999.
4.11 Amendment to Second Restated Agreement of Limited Partnership of
Bradley Operating Limited Partnership, dated September 7, 1999,
designating the 8.875% Series C Cumulative Redeemable Perpetual
Preferred Units, incorporated by reference to Exhibit 4.1 of
Bradley Operating Limited Partnership's Current Report on Form 8-K
dated September 8, 1999.
*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.
23.3 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).
II-2
<PAGE>
99.2 Registration Rights Agreement, dated December 23, 1997, by and
between Bradley and Spring Mall Associates Limited Partnership,
incorporated by reference to Exhibit 99.2 of Bradley's Registration
Statement on Form S-3 (No. 333-69131).
99.3 Registration Rights Agreement, dated December 31, 1997, by and
between Bradley and Baken Park Partners Limited Partnership,
incorporated by reference to Exhibit 99.3 of Bradley's Registration
Statement on Form S-3 (No. 333-69131).
99.4 Registration Rights Agreement, dated September 25, 1998, by and
between Bradley and County Line 31 Company, L.P., incorporated by
reference to Exhibit 99.4 of Bradley's Registration Statement on Form
S-3 (No. 333-69131).
*99.5 Registration Rights Agreement, dated November 18, 1998, by and
between Bradley and Maplewood Square I, Inc.
______________________
* Filed herewith.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Securities Act")
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the undersigned registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that are incorporated by reference in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
II-3
<PAGE>
(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-4
<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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Northbrook, State of Illinois on December 17, 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
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated, each of whom also constitutes and
appoints Thomas P. D'Arcy and Irving E. Lingo, Jr., and each of them singly, his
true and lawful attorney-in-fact and agent, for him, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and a further registration statement filed conforming to Rule 462(b)
under the Securities Act of 1933, as amended, relating to securities of the same
class(es) registered under this Registration Statement and to file the same and
all exhibits thereto and any other documents in connection therewith with the
Securities and Exchange Commission, granting unto each attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that each
attorney-in-fact and agent or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
<TABLE>
<CAPTION>
Name Title Dated
- ---- ----- -----
<S> <C> <C>
/s/ Thomas P. D'Arcy Chairman, President, Chief Executive December 17, 1999
- ---------------------------
Thomas P. D'Arcy Officer and Director
/s/ Irving E. Lingo, Jr. Executive Vice President and Chief December 17, 1999
- ---------------------------
Irving E. Lingo, Jr. Financial Officer
/s/ David M. Garfinkle Controller December 17, 1999
- ---------------------------
David M. Garfinkle
/s/ Joseph E. Hakim Director December 17, 1999
- ---------------------------
Joseph E. Hakim
/s/ William L. Brown Director December 17, 1999
- ---------------------------
William L. Brown
/s/ Stephen G. Kasnet Director December 17, 1999
- ---------------------------
Stephen G. Kasnet
/s/ Paul G. Kirk, Jr. Director December 17, 1999
- ---------------------------
Paul G. Kirk, Jr.
/s/ W. Nicholas Thorndike Director December 17, 1999
- ---------------------------
W. Nicholas Thorndike
/s/ A. Robert Towbin Director December 17, 1999
- ---------------------------
A. Robert Towbin
</TABLE>
II-5
<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 Articles Supplementary Establishing and Fixing the Rights and
Preferences of a Series of Shares of Preferred Stock for the
8.875% Series B Cumulative Redeemable Perpetual Preferred Stock
of Bradley Real Estate, Inc., incorporated by reference to
Exhibit 4.2 of Bradley Operating Limited Partnership's Current
Report on Form 8-K dated March 3, 1999.
4.4 Articles Supplementary Establishing and Fixing the Rights and
Preferences of a Series of Shares of Preferred Stock for the
8.875% Series C Cumulative Redeemable Perpetual Preferred Stock
of Bradley Real Estate, Inc., incorporated by reference to
Exhibit 4.2 of Bradley Operating Limited Partnership's Current
Report on Form 8-K dated September 8, 1999.
*4.5 Articles Supplementary dated October 22, 1999.
4.6 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.
4.7 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.
4.8 Amendment to Second Restated Agreement of Limited Partnership of
Bradley Operating Limited Partnership, dated July 31, 1998,
incorporated by reference to Exhibit 10.1.2 to Bradley's Form
10-K for the year ended December 31, 1998.
4.9 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,
incorporated by reference to Exhibit 4.9 of Bradley's Current
Report on Form 8-K dated August 7, 1998.
4.10 Amendment to Second Restated Agreement of Limited Partnership of
Bradley Operating Limited Partnership, dated February 23, 1999,
designating the 8.875% Series B Cumulative Redeemable Perpetual
Preferred Units, incorporated by reference to Exhibit 4.1 of
Bradley Operating Limited Partnership's Current Report on Form 8-
K dated March 3, 1999.
4.11 Amendment to Second Restated Agreement of Limited Partnership of
Bradley Operating Limited Partnership, dated September 7, 1999,
designating the 8.875% Series C Cumulative Redeemable Perpetual
Preferred Units, incorporated by reference to Exhibit 4.1 of
Bradley Operating Limited Partnership's Current Report on Form 8-
K dated September 8, 1999.
*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.
23.3 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,
incorporated by reference to Exhibit 99.2 of Bradley's
Registration Statement on Form S-3 (No. 333-69131).
99.3 Registration Rights Agreement, dated December 31, 1997, by and
between Bradley and Baken Park Partners Limited Partnership,
incorporated by reference to Exhibit 99.3 of Bradley's
Registration Statement on Form S-3 (No. 333-69131).
<PAGE>
99.4 Registration Rights Agreement, dated September 25, 1998, by and
between Bradley and County Line 31 Company, L.P., incorporated by
reference to Exhibit 99.4 of Bradley's Registration Statement on Form
S-3 (No. 333-69131).
*99.5 Registration Rights Agreement, dated November 18, 1998, by and between
Bradley and Maplewood Square I, Inc.
______________________
* Filed herewith.
<PAGE>
EXHIBIT 4.5
BRADLEY REAL ESTATE, INC.
ARTICLES SUPPLEMENTARY
Bradley Real Estate, Inc., a Maryland corporation (the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Under a power contained in Section 7.5 of the Articles of Amendment
and Restatement of the Corporation (the "Charter"), the Board of Directors of
the Corporation (the "Board of Directors"), voted at a meeting held on September
14, 1999, to reclassify 200,000 shares (the "Shares") of 8.875% Series C
Cumulative Redeemable Perpetual Preferred Stock as 200,000 shares of
undesignated and unclassified Preferred Stock (as defined in the Charter), which
reclassification shall be reflected in Article VII of the Charter upon any
restatement of the Charter.
SECOND: The Shares have been reclassified by the Board of Directors under
the authority contained in the Charter.
THIRD: These Articles Supplementary have been approved by the Board of
Directors in the manner and by the vote required by law.
FOURTH: The undersigned President of the Corporation acknowledges these
Articles Supplementary to be the corporate act of the Corporation and, as to all
matters or facts required to be verified under oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary
to be executed under seal in its name and on its behalf by its President and
attested to by its Secretary on this 22nd day of October, 1999.
BRADLEY REAL ESTATE, INC.
By: /s/ Thomas P. D'Arcy
----------------------------------(SEAL)
Thomas P. D'Arcy, President
ATTEST:
/s/ Marianne Dunn
- ---------------------------
Marianne Dunn, Secretary
<PAGE>
EXHIBIT 5.1
GOODWIN, PROCTER & HOAR LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
December 17, 1999
Bradley Real Estate, Inc.
40 Skokie Boulevard, Suite 600
Northbrook, IL 60062
RE: Legality of Securities to be Registered under the Registration
Statement on Form S-3 (the "Registration Statement")
Dear Ladies and Gentlemen:
This opinion relates to up to 1,275,066 shares of common stock, par value
$.01 per share (the "Redemption Shares"), of Bradley Real Estate, Inc., a
Maryland corporation (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, a Delaware
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, which are the
subject matter of the above-referenced Registration Statement filed with the
Securities and Exchange Commission (the "Commission").
We have acted as counsel to the Company in connection with the preparation
and filing with the Commission of the Registration Statement. We have examined
such documents and made such other investigation as we have deemed appropriate
to render the opinions set forth below. As to matters of fact material to our
opinions, we have relied, without independent verification, on representations
made in certificates from, and other inquiries of, officers of the Company.
We express no opinion herein concerning the laws of any other jurisdictions
other than the laws of the United States of America and the General Corporation
Law of the State of Maryland as in effect on the date hereof, and also express
no opinion with respect to the blue sky or securities laws of any state,
including Maryland.
<PAGE>
Bradley Real Estate, Inc.
December 17, 1999
Page 2
Based upon the foregoing, and having regard for such legal considerations
as we have deemed relevant, it is our opinion that, when the Registration
Statement relating to the Redemption Shares has become effective under the
Securities Act of 1933, as amended, and the Redemption Shares have been duly
issued and exchanged for Units tendered to the Operating Partnership for
redemption in accordance with the provisions of the Operating Partnership
Agreement, the Redemption Shares will be duly authorized, validly issued, fully
paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to use in the prospectus contained
in such Registration Statement.
Very truly yours,
/s/ GOODWIN, PROCTER & HOAR LLP
GOODWIN, PROCTER & HOAR LLP
<PAGE>
Exhibit 8.1
GOODWIN, PROCTER & HOAR LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
December 17, 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 1,275,066 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.
December 17, 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 that the statements under the subsection "Description of
Units and Redemption of Units -- Tax Consequences of Redemption" and
under the heading "Federal Income Tax Consequences" relating to the
exchange or redemption of Units and the acquisition and ownership of the
Redemption Shares, to the extent such information constitutes matters of
law, summaries of legal matters, or legal conclusions, have been
reviewed by us and are accurate in all material respects.
<PAGE>
Bradley Real Estate, Inc.
December 17, 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 INDEPENDENT AUDITORS
-------------------------------
The Board of Directors of Bradley Real Estate, Inc.:
We consent to the use of our report dated January 22, 1999, except as to Note
14, which is as of February 23, 1999, relating to the consolidated balance
sheets of Bradley Real Estate, Inc. and subsidiaries as of December 31, 1998 and
1997, 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, 1998 and related schedule of real estate and accumulated
depreciation, which report appears in the December 31, 1998 Annual Report on
Form 10-K of Bradley Real Estate, Inc., incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
Chicago, Illinois
December 17, 1999
<PAGE>
EXHIBIT 99.5
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (this "Agreement") is entered into as of
November 18, 1998 by and between Bradley Real Estate, Inc., a Maryland
corporation (the "Company") and Maplewood Square I, Inc. ("Contributor").
WHEREAS, pursuant to an Amended and Restated Contribution Agreement dated
July 14, 1998 by and between Contributor and Bradley Operating Limited
Partnership (the "Operating Partnership"), Contributor will receive units of
limited partnership interest ("Units") in the Operating Partnership, which may
be redeemed for cash or, at the option of the Company, for the number of shares
of the Company's common stock, $.01 par value ("Common Stock"), issuable
pursuant to the Operating Partnership's Second Restated Agreement of Limited
Partnership (the "Partnership Agreement").
WHEREAS, at certain times and under certain conditions the Contributor may
distribute such Units to (i) the individual partners of Contributor listed on
Schedule A attached hereto or (ii) the estates or beneficiaries of the estates
- ----------
of deceased partners of Contributor (each such holder of Units, including
Contributor, is individually referred to herein as a "Holder" and collectively
as the "Holders").
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Registration.
------------
(a) Registration Statement Covering Issuance of Common Stock. The Company
--------------------------------------------------------
will use its reasonable efforts to (i) file a registration statement with the
Securities and Exchange Commission (the "SEC") under Rule 415 under the
Securities Act of 1933 (the "Securities Act") relating to the issuance to the
Holders of all shares of Common Stock issuable upon the redemption or in
exchange for their Units (a "Shelf Registration Statement"), and (ii) cause such
Shelf Registration Statement to be declared effective by the SEC within thirty
(30) days after the first date upon which the Units may be redeemed. The Company
agrees to use its reasonable efforts to keep such Shelf Registration Statement
(or in the event such initial Shelf Registration Statement is withdrawn or
terminated for any reason, to keep a successor Shelf Registration Statement)
continuously effective until such time as all of the Units have been redeemed
for cash or, at the option of the Company, for the number of shares of Common
Stock issuable pursuant to the Partnership Agreement. In the event that the
Company is unable to cause such Shelf Registration Statement to be declared
effective by the
<PAGE>
SEC or is unable to keep such Shelf Registration Statement effective until such
time as all of the Units have been redeemed for cash or, at the option of the
Company, for the number of shares issuable pursuant to the Partnership
Agreement, then each Holder shall have the rights set forth in Section 1(b) and
1(c) below.
(b) Demand Registration.
-------------------
(i) After the first date upon which Units held by the Holders may
be redeemed until the date on which there are no Registrable Shares (as
hereinafter defined) remaining, subject to the conditions set forth in this
Agreement, including without limitation the conditions set forth in Section
1(b)(ii) below, any Holder or Holders may request that the Company cause to be
filed a registration statement (a "Demand Registration Statement") under Rule
415 under the Securities Act relating to the sale by such Holders of their
previously or concurrently issued Registrable Shares in accordance with the
terms hereof. As used in this Agreement, the term "Registrable Shares" means
shares of Common Stock issued or to be issued to the Holders upon redemption or
in exchange for their Units, excluding (A) Common Stock for which a Registration
Statement relating to the issuance or sale thereof shall have become effective
under the Securities Act and which have been issued or sold, as applicable,
under such Registration Statement, (B) Common Stock sold pursuant to Rule 144
under the Securities Act or (C) Common Stock which, together with all other
Registrable Shares held by such Holder and any other Holder whose sales of
Registrable Shares must be aggregated with sales of such Holder pursuant to Rule
144(e), is eligible for sale pursuant to Rule 144(e) under the Securities Act.
Upon receipt of any such request, the Company shall give written notice of such
proposed registration to all Holders of Units and Registrable Shares. Such
Holders shall have the right, by giving written notice to the Company within
fifteen (15) business days after such notice referred to in the preceding
sentence has been given by the Company to elect to have included in the Demand
Registration Statement such of their Registrable Shares as each Holder may
request in such notice of election. Thereupon, the Company shall use reasonable
efforts to cause such Demand Registration Statement to be filed and declared
effective by the SEC for all Registrable Shares which the Company has been
requested to register as soon as practicable thereafter. The Company agrees to
use reasonable efforts to keep the Demand Registration Statement continuously
effective until the earliest of (a) the date on which the Holders no longer hold
any Registrable Shares registered under the Demand Registration Statement, (b)
the date on which the Registrable Shares registered under the Demand
Registration Statement held by each Holder may, together with all other
Registrable Shares held by such Holder and any other Holder whose sales of
Registrable Shares must be aggregated with sales of such Holder pursuant to Rule
144(e), be sold by such Holder pursuant to Rule 144(e) under the Securities Act
or (c) the date which is twelve (12) months from the effective date of such
Demand Registration Statement. The Company shall not be required to file and
effect a new Demand Registration Statement pursuant to this Section 1(b) until a
period of twelve (12) months has elapsed from the termination of the
registration statement with respect to Registrable Shares covered by a prior
registration request.
2
<PAGE>
(ii) The Company shall have no obligation under Section 1(b)(i)
unless the following conditions are satisfied:
Any Holder who requests that the Company cause to be filed a Demand
Registration Statement pursuant to Section 1(b)(i) must provide to the Company a
certificate (the "Authorizing Certificate") that sets forth (i) the name and
address of the Holder, (ii) the number of Registrable Shares owned by such
Holder, and, if different, the number of Registrable Shares such Holder has
elected to have registered, (iii) the number of all shares of Common Stock of
the Company (including the Registrable Shares) owned by such Holder, (iv) the
number of shares of Common Stock if any of such Holder that are not being
registered and that will be owned by such Holder after the sale of all shares to
be registered, (v) a certification from each such Holder that it is requesting
the registration of only those shares of Common Stock received by such Holder
upon the redemption of its Units pursuant to the Partnership Agreement, and (vi)
such further information as the Company may reasonably request in connection
with such Registration Statement. If the Company determines that a Holder's
shares of Common Stock have become eligible for sale pursuant to Rule 144(e),
the Company shall, at the request of such Holder, deliver to such Holder an
opinion of counsel to such effect.
(c) Piggyback Registration. If at any time after the first date upon which
----------------------
Units held by the Holders may be redeemed and until the date on which there are
no Registrable Shares remaining the Company proposes to file a registration
statement under the Securities Act with respect to an offering of Common Stock
solely for cash (other than a registration statement (i) on Form S-8 or any
successor form or in connection with any employee or director welfare, benefit
or compensation plan, (ii) on Form S-4 or any successor form or in connection
with an exchange offer, (iii) in connection with a rights offering or a dividend
reinvestment and share purchase plan offered exclusively to existing holders of
Common Stock, (iv) in connection with an offering solely to employees of the
Company or its affiliates, (v) relating to a transaction pursuant to Rule 145 of
the Securities Act, or (vi) a shelf registration on Form S-3 or any successor
form), whether or not for its own account (a "Piggyback Registration
Statement"), the Company shall give to the Holders of Units and Registrable
Shares written notice of such proposed filing at least ten (10) business days
before filing. The notice referred to in the preceding sentence shall offer
Holders the opportunity to register such amount of Registrable Shares as each
Holder may request (a "Piggyback Registration"). Subject to the provisions of
Section 2 below, the Company shall include in such Piggyback Registration all
Registrable Shares requested to be included in the registration for which the
Company has received an Authorizing Certificate within five (5) business days
after the notice referred to above has been given by the Company to the Holders.
Holders of Registrable Shares shall be permitted to withdraw all or part of the
Registrable Shares from a Piggyback Registration at any time prior to the
effective date of such Piggyback Registration. If a Piggyback Registration is an
underwritten registration on behalf of the Company and the managing underwriter
advises the Company that the total number of shares of Common Stock requested to
be included in such registration exceeds the number of shares of Common Stock
which can be sold in such
3
<PAGE>
offering, the Company will include in such registration in the following
priority: (i) first, all shares of Common Stock the Company proposes to sell and
(ii) second, up to the full number of applicable Registrable Shares requested to
be included in such registration which, in the opinion of such managing
underwriter, can be sold without adversely affecting the price range or
probability of success of such offering, which shall be allocated among the
Holders requesting registration and all other stockholders requesting
registration on a pro rata basis. No Registrable Securities or other shares of
Common Stock requested to be included in a registration pursuant to demand
registration rights shall be excluded from the underwriting unless all
securities other than such securities are first excluded. Any Demand
Registration Statement, Piggyback Registration Statement or Shelf Registration
Statement is sometimes referred to as a "Registration Statement."
2. Registration Procedures.
-----------------------
(a) The Company shall notify each Holder of the effectiveness of any
applicable Registration Statement and shall furnish to each Holder with respect
to a Shelf Registration Statement, a copy of the prospectus included therein or,
with respect to a Demand Registration Statement or a Piggyback Registration
Statement, such number of copies of the Registration Statement (including any
amendments, supplements and exhibits), the prospectus contained therein
(including each preliminary prospectus), any documents incorporated by reference
in the Registration Statement and such other documents as such Holder may
reasonably request in order to facilitate its sale of the Registrable Shares in
the manner described in the Registration Statement.
(b) The Company shall prepare and file with the SEC from time to time such
amendments and supplements to the Registration Statement and prospectus used in
connection therewith as may be necessary to keep the Registration Statement
effective and to comply with the provisions of the Securities Act with respect
to the issuance or disposition of all the Registrable Shares until the earlier
of (i) such time as all of the Registrable Shares have been issued or disposed
of in accordance with the intended methods of issuance by the Company, or
disposition by the Holders, as set forth in the Registration Statement or (ii)
the date on which the Registration Statement ceases to be effective in
accordance with the terms of Section 1. Upon ten (10) business days' notice, the
Company shall file any supplement or post-effective amendment to the
Registration Statement with respect to such Holder's interests in or plan of
distribution of Registrable Shares that is reasonably necessary to permit the
sale of the Holder's Registrable Shares pursuant to the Registration Statement
and the Company shall file any necessary listing applications or amendments to
the existing applications to cause the shares to be then listed or quoted on the
primary exchange or quotation system on which the Common Stock is then listed or
quoted. The Company agrees to deliver copies of the prospectus as contained in
such Registration Statement promptly following effectiveness thereof to the New
York Stock Exchange (or any other applicable national securities exchange) as
contemplated by SEC Rule 157.
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<PAGE>
(c) The Company shall promptly notify each Holder of, and confirm in
writing, any request by the SEC for amendments or supplements to the
Registration Statement or the prospectus related thereto or for additional
information. In addition, the Company shall promptly respond to such SEC
requests and shall promptly notify each Holder of, and confirm in writing, the
filing of the Registration Statement, any prospectus supplement related thereto
or any post-effective amendment to the Registration Statement and the
effectiveness of any post-effective amendment.
(d) The Company shall promptly notify each Holder, at any time when a
prospectus relating to the Registration Statement is required to be delivered
under the Securities Act, of the happening of any event as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. In such
event and subject to paragraph 7 of this Agreement, the Company shall promptly
prepare and furnish to each Holder a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of Registrable Shares, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading.
3. State Securities Laws. Subject to the conditions set forth in this
---------------------
Agreement, the Company shall, promptly upon the filing of a Registration
Statement including Registrable Shares, file such documents as may be necessary
to register or qualify the Registrable Shares under the securities or "Blue Sky"
laws of such states as any Holder may reasonably request to the extent that
registration or qualification under such laws is necessary in order that the
Registrable Shares may be legally sold in such states, and the Company shall use
reasonable efforts, in the case of a Demand Registration Statement or a
Piggyback Registration Statement, and best efforts, in the case of a Shelf
Registration Statement, to cause such filings to become effective; provided,
--------
however, that with respect to a Demand Registration Statement or a Piggyback
- -------
Registration Statement, the Company shall not be obligated to qualify as a
foreign corporation to do business under the laws of any such state in which it
is not then qualified or to file any general consent to service of process in
any such state. Once effective, the Company shall use reasonable efforts, in
the case of a Demand Registration Statement or a Piggyback Registration
Statement, and best efforts, in the case of a Shelf Registration Statement, to
keep such filings effective until the earlier of (a) such time as all of the
Registrable Shares have been issued by the Company, or disposed of in accordance
with the intended methods of disposition by the Holder, as set forth in the
Registration Statement, (b) in the case of a particular state, a Holder has
notified the Company that it no longer requires effective filing in such state
in accordance with its original request for filing or (c) the date on which the
Registration Statement ceases to be effective with the SEC. The Company shall
promptly notify each Holder of, and confirm in writing, the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Registrable Shares for sale
5
<PAGE>
under the securities or "Blue Sky" laws of any jurisdiction or the initiation or
threat of any proceeding for such purpose.
4. Expenses. The Company shall bear all expenses incurred in connection
--------
with the registration of the Registrable Shares pursuant to Section 1(a) and
Section 1(c) of this Agreement. In addition, the Company will pay all expenses
in connection with the registration of Registrable Shares pursuant to Section
1(b) of this Agreement provided that the registration is for One Million Dollars
or more of Registerable Shares. The Holders shall bear their ratable share of
all expenses incurred by the Company in connection with a registration in which
the Holders are included pursuant to Section 1(b) of this Agreement based on the
number of Registrable Shares included to the total number of shares of Common
Stock so registered for each Registration Statement registering less than the
applicable amount specified in the previous sentence for such Holder. Such
expenses shall include, without limitation, all printing, legal and accounting
expenses incurred by the Company and all registration and filing fees imposed by
the SEC, any state securities commission or the New York Stock Exchange or, if
the Common Stock is not then listed on the New York Stock Exchange, the
principal national securities exchange or national market system on which the
Common Stock is then traded or quoted. Holders shall be responsible for any
brokerage or underwriting commissions and taxes of any kind (including, without
limitation, transfer taxes) with respect to any disposition, sale or transfer of
Registrable Shares and for any legal, accounting and other expenses incurred by
them in connection with any Registration Statement.
5. Indemnification by the Company. In connection with any Demand
------------------------------
Registration Statement or any Piggyback Registration Statement, the Company
agrees to indemnify each of the Holders and their respective officers,
directors, employees, agents, representatives and affiliates, and each person or
entity, if any, that controls a Holder within the meaning of the Securities Act,
and each other person or entity, if any, subject to liability because of his,
her or its connection with a Holder, and any underwriter and any person who
controls the underwriter within the meaning of the Securities Act (an
"Indemnitee") against any and all losses, claims, damages, actions, liabilities,
costs and expenses (including without limitation reasonable attorneys' fees,
expenses and disbursements documented in writing), joint or several, arising out
of or based upon any untrue or alleged untrue statement of material fact
contained in the Registration Statement or any prospectus contained therein, or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as and
to the extent that such statement or omission arose out of or was based upon
information regarding the Indemnitee or its plan of distribution which was
furnished in writing by such Indemnitee to the Company expressly for use
therein, provided, further that the Company shall not be liable to any person
who participates as an underwriter in the offering or sale of Registrable Shares
or any other person, if any, who controls such underwriter within the meaning of
the Securities Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon (i) an untrue statement or alleged untrue statement or
omission or
6
<PAGE>
alleged omission made in such Registration Statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with information furnished in writing by such
Indemnitee to the Company expressly for use in connection with the Registration
Statement or the prospectus contained therein by such Indemnitee or (ii) such
Indemnitee's failure to send or give a copy of the final prospectus furnished to
it by the Company at or prior to the time such action is required by the
Securities Act to the person claiming an untrue statement or alleged untrue
statement or omission or alleged omission if such statement or omission was
corrected in such final prospectus. The obligations of the Company under this
Section 5 shall survive the completion of any offering of Registrable Shares
pursuant to a Registration Statement under this Agreement or otherwise and shall
survive the termination of this Agreement.
6. Covenants of Holders. Each of the Holders hereby agrees to cooperate
--------------------
with the Company and to furnish to the Company all such information in
connection with the preparation of the Registration Statement and any filings
with any state securities commissions as the Company may reasonably request. In
connection with any Demand Registration Statement or any Piggyback Registration
Statement, each Holder hereby agrees, (a) to the extent required by the
Securities Act, to deliver or cause delivery of the prospectus contained in the
Registration Statement to any purchaser of the shares covered by the
Registration Statement from the Holder, (b) to notify the Company of any sale of
Registrable Shares by such Holder and (c) to indemnify the Company, its
officers, directors, employees, agents, representatives and affiliates, and each
person, if any, who controls the Company within the meaning of the Securities
Act, and each other person, if any, subject to liability because of his
connection with the Company, against any and all losses, claims, damages,
actions, liabilities, costs and expenses arising out of or based upon (i) any
untrue statement or alleged untrue statement of material fact contained in
either the Registration Statement or the prospectus contained therein, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, if and to the extent
that such statement or omission arose out of or was based upon information
regarding the Holder or its plan of distribution which was furnished in writing
by such Indemnitee to the Company expressly for use therein, or (ii) the failure
by the Holder to deliver or cause to be delivered the prospectus contained in
the Registration Statement (as amended or supplemented, if applicable)
previously furnished by the Company to the Holder to any purchaser of the shares
covered by the Registration Statement from the Holder. Notwithstanding the
foregoing, (i) in no event will a Holder have any obligation under this Section
6 for amounts the Company pays in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder (which consent shall not be unreasonably withheld) and (ii) the total
amount for which a Holder shall be liable under this Section 6 shall not in any
event exceed the aggregate proceeds received by him or it from the sale of the
Holder's Registrable Shares in such registration. The obligations of the Holders
under this Section 6 shall survive the completion of any offering of Registrable
Shares pursuant to a Registration Statement under this Agreement or otherwise
and shall survive the termination of this Agreement.
7
<PAGE>
7. Suspension of Registration Requirement.
--------------------------------------
(a) The Company shall promptly notify each Holder of, and confirm in
writing, the issuance by the SEC of any stop order suspending the effectiveness
of any applicable Registration Statement or the initiation of any proceedings
for that purpose. The Company shall use reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the Registration
Statement as soon as practicable.
(b) Notwithstanding anything to the contrary set forth in this Agreement,
the Company's obligation under this Agreement to use reasonable efforts to cause
the Registration Statement and any filings with any state securities commission
to be made or to become effective or to amend or supplement the Registration
Statement shall be suspended in the event and during such period as the Chief
Executive Officer of the Company or its Board of Directors determines in good
faith that pending negotiations relating to, or consummation of, a transaction
or the occurrence of an event that would require additional disclosure of
material information by the Company in the Registration Statement or such filing
(such circumstances being hereinafter referred to as a "Suspension Event") that
would make it impractical or unadvisable to cause the Registration Statement or
such filings to be made or to become effective or to amend or supplement the
Registration Statement; provided, however, that such suspension shall continue
only as long as such event or its effect is continuing and has not otherwise
been publicly disclosed and in no event will that suspension exceed sixty (60)
days. The Company agrees not to exercise the rights set forth in this Section
7(b) more than twice in any twelve month period. The Company shall notify the
Holder of the existence of any Suspension Event.
(c) Each holder of Registrable Shares whose Registrable Shares are covered
by a Demand Registration Statement or a Piggyback Registration Statement filed
pursuant to Section 1 hereof agrees, if requested by the managing underwriter or
underwriters in an underwritten offering (an "Underwritten Offering"), not to
effect any public sale or distribution of any of the securities of the Company
of any class included in such Underwritten Offering, including a sale pursuant
to Rule 144 or Rule 144A under the Securities Act (except as part of such
Underwritten Offering), during the 15-day period prior to, and during the 90-day
period (or such longer period as may be required by the managing underwriter or
underwriters) beginning on, the date of pricing of each Underwritten Offering
(the "Underwritten Offering Period"), to the extent timely notified in writing
by the managing underwriters. The Company agrees that the rights set forth in
this Section 7(c) may not be exercised more than once in any six month period or
within six months of the Company exercising its rights under Section (7)(b)
above. Furthermore, notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to use reasonable
efforts to cause a Demand Registration Statement or a Piggyback Registration
Statement and any filings with any state securities commission in connection
therewith to be made or to become effective or to amend or supplement such
Registration Statement shall be suspended in the event and during such period as
the Company is proceeding with an Underwritten Offering if the Company is
advised
8
<PAGE>
by the underwriters that the sale of Registrable Shares under such Registration
Statement would have a material adverse effect on the Underwritten Offering.
8. Black-Out Period. Following the effectiveness of any Registration
----------------
Statement and the filings with any state securities commissions in connection
therewith, the Holders agree that they will not effect any sales of the
Registrable Shares pursuant to such Registration Statement or any such filings
at any time after they have received notice from the Company to suspend sales
(i) as a result of the occurrence or existence of any Suspension Event, (ii)
during the Underwritten Offering Period of any Underwritten Offering, or (iii)
so that the Company may promptly correct or update the Registration Statement or
such filing pursuant to Section 2(c) or 2(d). The Holder may recommence
effecting sales of the Registrable Shares pursuant to the Registration Statement
or such filings following further notice to such effect from the Company, which
notice shall be given by the Company not later than five (5) business days after
the conclusion of any such Suspension Event or Underwritten Offering Period or
the correction of the Registration Statement, as applicable.
9. Additional Shares. The Company, at its option, may register, under
-----------------
any Registration Statement and any filings with any state securities commissions
filed pursuant to this Agreement, any number of unissued shares of Common Stock
(including, without limitation, shares of Common Stock which may be issued to
any of the Holders of Units in the Operating Partnership) or any shares of
Common Stock owned by any other shareholder or shareholders of the Company.
10. Contribution. If the indemnification provided for in Sections 5 and 6
------------
is unavailable to an indemnified party with respect to any losses, claims,
damages, actions, liabilities, costs or expenses referred to therein or is
insufficient to hold the indemnified party harmless as contemplated therein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, actions, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and the Holder, on the other hand, in connection with
the statements or omissions which resulted in such losses, claims, damages,
actions, liabilities, costs or expenses as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Holder, on the other hand, shall be determined by reference to, among other
factors, whether the untrue or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the Company
or by the Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, however, that in no event shall the obligation of any indemnifying
- -------- -------
party to contribute under this Section 10 exceed the amount that such
indemnifying party would have been obligated to pay by way of indemnification if
the indemnification provided for under Sections 5 or 6 hereof had been available
under the circumstances.
The Company and the Holders agree that it would not be just and equitable
if
9
<PAGE>
contribution pursuant to this Section 10 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Section 10, no Holder shall be required to
contribute any amount in excess of the amount by which the gross proceeds from
the sale of the shares of Common Stock of such Holder exceeds the amount of any
damages that such Holder otherwise has been required to pay by reason of such
untrue or alleged untrue statement or omissions.
No indemnified party guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any indemnifying party who was not guilty of such fraudulent
misrepresentation.
11. No Other Obligation to Register. Except as otherwise expressly
-------------------------------
provided in this Agreement, the Company shall have no obligation to the Holders
to register the Registrable Shares under the Securities Act.
12. Amendments and Waivers. The provisions of this Agreement may not be
----------------------
amended, modified or supplemented without the prior written consent of the
Company and Holders holding in excess of 75% of the Registrable Shares (or
Partnership Units redeemable or exchangeable for Registrable Shares); and any
amendment, modification or supplement consented to by the Company and the
Holders of a majority of such registrable Shares (or of such Partnership Units)
shall bind all such Holders.
13. Notices. Except as set forth below, all notices and other
-------
communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by telex or
telecopier, registered or certified mail (return receipt requested), postage
prepaid or courier or overnight delivery service to the Company at the following
address and to the Holder at the address set forth on his or her signature page
to this Agreement (or at such other address for any party as shall be specified
by like notice, provided that notices of a change of address shall be effective
only upon receipt thereof), and further provided that in case of directions to
amend the Registration Statement pursuant to Section 2(b) or Section 6(b), a
Holder must confirm such notice in writing by overnight express delivery with
confirmation of receipt:
If to the Company: Bradley Real Estate, Inc.
40 Skokie Boulevard
Northbrook, IL 60062
Attn: Thomas P. D'Arcy
President
Telephone: (847) 272-9800
Telecopy: (847) 480-1893
10
<PAGE>
With a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: William B. King, P.C.
Telephone: (617) 570-1000
Telecopy: (617) 523-1231
In addition to the manner of notice permitted above, notices given pursuant to
Sections 1, 7 and 8 hereof may be effected telephonically and confirmed in
writing thereafter in the manner described above.
14. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the successors and assigns of the Company. This
Agreement may only be assigned to a transferee of all or a portion of the
Holder's Units in compliance with the Partnership Agreement or a transferee of
all or a portion of the Holder's Registrable Securities which constitute
"restricted securities" in the hands of such transferee, as defined in Rule 144
under the Securities Act. Any attempted assignment other than to a transferee of
all or a portion of a Holder's Units in compliance with the Partnership
Agreement or a transferee of all or a portion of the Holder's Registrable
Securities which constitute "restricted securities" in the hands of such
transferee, as defined in Rule 144 under the Securities Act, will be void and of
no effect and shall terminate all obligations of the Company hereunder with
respect to such Holder.
15. Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
16. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Maryland applicable to contracts made
and to be performed wholly within said State.
17. Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
18. Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be the complete and
exclusive statement of the
11
<PAGE>
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, with respect to
such subject matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
[Remainder of Page Intentionally Left Blank]
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
BRADLEY REAL ESTATE, INC.
By: /s/ Richard L. Heuer
---------------------------
Richard L. Heuer
Executive Vice President
13
<PAGE>
Registration Rights Agreement
Holder Signature Page
MAPLEWOOD SQUARE I, INC.
By: /s/ James G. Koman
----------------------------
James G. Koman, President
Address for Notice:
Koman Properties
One City Place Drive
Suite 950
St. Louis, MO 63141
Attn: James G. Koman, President
14
