UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THEx
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-10660
Berkshire Realty Company, Inc.
Delaware 04-3086485
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
470 Atlantic Avenue, Boston, Massachusetts 02210
(Address of principal executive offices) (Zip Code)
(617) 423-2233
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
Real estate assets: (Note 3)
Multi-family apartment complexes, net of
accumulated depreciation $415,449,505 $324,752,425
Retail centers, net of accumulated depreciation 11,064,630 59,708,271
Investments in unconsolidated joint ventures
(Note 4) 40,768,457 41,689,843
Mortgage loans and other loans receivable,
net of purchase discounts (Note 5) 12,578,361 19,964,524
Land and construction in progress 8,562,035 3,744,124
Property held for sale, net of valuation
reserve. (Note 3) 39,591,814 -
Total real estate assets 528,014,802 449,859,187
Cash and cash equivalents 8,859,638 11,142,710
Mortgage-backed securities, net ("MBS") (Note 6) 9,604,899 11,576,326
Escrows 12,537,116 3,872,826
Deferred charges and other assets 12,260,865 10,517,138
Goodwill, net of amortization (Note 2) 12,663,231 -
Total assets $583,940,551 $486,968,187
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Credit agreements (Note 7) $144,110,000 $ 95,140,000
Mortgage notes payable (Note 3) 143,849,363 105,200,620
Repurchase agreements (Note 7) 9,300,000 10,950,000
Tenant security deposits, prepaid rents
and escrows held 2,534,459 2,043,792
Accrued real estate taxes, insurance and
other liabilities 11,375,209 7,845,744
Total liabilities 311,169,031 221,180,156
Minority Interest in Operating Partnership (Note 2) 36,916,731 5,000,414
Commitments and Contingencies
Shareholders' equity:
Preferred stock, $0.01 par value; 60,000,000
shares authorized, none issued - -
Common stock ("Shares"), $0.01 par value;
140,000,000 Shares authorized and
25,899,866 and 25,899,449 Shares issued,
respectively 258,998 258,994
Additional paid-in capital 245,137,211 262,271,698
Retained earnings (deficit) (7,798,345) -
Less common stock in treasury at cost
(506,497 Shares) (1,743,075) (1,743,075)
-2-
<PAGE>
Total shareholders' equity 235,854,789 260,787,617
Total liabilities and shareholders' equity $583,940,551 $486,968,187
</TABLE>
The accompanying notes are an
integral part of the financial statements.
-3-
<PAGE>
<TABLE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue:
Rental $24,511,073 $17,326,391 $65,106,795 $51,712,570
Interest from mortgage
loans (Note 5) 320,756 638,605 1,365,527 1,571,559
Joint venture net income
(Note 4) 485,591 358,407 1,143,224 1,161,285
Interest income from MBS 225,722 284,800 728,979 883,772
Other interest income 276,112 341,746 722,215 807,962
Total revenue 25,819,254 18,949,949 69,066,740 56,137,148
Expenses:
Property operating (including
reimbursements to affiliates
of $459,360, $375,429,
$1,233,527 and $999,901
respectively) 6,831,049 4,523,483 16,472,058 13,377,373
Repairs and maintenance 1,834,648 1,194,776 4,799,347 3,542,454
Real estate taxes 2,120,795 1,604,977 6,436,509 5,294,964
Property management fees to an
affiliate 1,190,521 823,047 3,142,998 2,513,522
Depreciation and amortization 8,300,721 5,541,908 21,734,762 15,963,996
Provision for losses on real
estate investments 7,500,000 - 7,500,000 -
General and administrative
(including fees and reim-
bursements to affiliates of
$196,045, $187,910 $512,774,
and $533,988, respectively)
(Note 2) 946,238 457,126 2,581,552 908,441
Interest (Note 7) 5,796,867 3,856,439 14,714,314 11,426,829
State and corporate franchise
taxes 89,648 124,500 263,429 (20,507)
Professional fees 34,195 (19,394) 150,787 208,854
Asset management fees to an
affiliate (Note 2) - 401,218 392,636 1,165,368
Total expenses 34,644,682 18,508,080 78,188,392 54,381,294
Income (loss) from operations (8,825,428) 441,869 (9,121,652) 1,755,854
Gains on sales of
properties and payoff of
mortgage loans 1,084,255 5,841,924 1,084,255 15,179,215
Income (loss) before non-
recurring charges, minority
interest, extraordinary item
and property valuation
provision (7,741,173) 6,283,793 (8,037,397) 16,935,069
Non-recurring charges (note 9) (287,059) - (287,059) (1,727,768)
-4-
<PAGE>
Minority interest 670,254 (90,216) 690,200 (150,481)
</TABLE>
Continued
-5-
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net income (loss) before
extraordinary item (7,357,978) 6,193,577 (7,634,256) 15,056,820
Extraordinary item (Note 3) (164,089) - (164,089)
(253,500)
Net income (loss) $(7,522,067) $ 6,193,577 $(7,798,345) $14,803,320
Per share:
Income (loss) before
extraordinary item $ (.29) $ .24 $ (.30) $ .59
Net income (loss) $ (.30) $ .24 $ (.31) $ .58
Weighted average Shares 25,393,299 25,392,774 25,393,072 25,392,513
</TABLE>
-6-
<PAGE>
The accompanying notes are an
integral part of the financial statements.
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Nine Months Ended September 30, 1996
(Unaudited)
<CAPTION>
Common Additional Retained Treasury
Stock Paid-in Earnings/ Stock
at Par Capital (Deficit) at Cost Total
<S> <C> <C> <C> <C> <C>
Balance,
December 31,
1995 $258,994 $262,271,698 $ - $(1,743,075) $260,787,617
Net loss - - (7,798,345) - (7,798,345)
Proceeds from
the exercise of
stock warrants 4 5,880 - - 5,884
Dividends - (17,140,367) - - (17,140,367)
Balance,
September 30,
1996 $258,998 $245,137,211 $(7,798,345) $(1,743,075) $235,854,789
</TABLE>
-8-
<PAGE>
The accompanying notes are an
integral part of the financial statements.
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Nine Months
Ended September 30,
1996 1995
<S> <C> <C>
Operating activities:
Net income/(loss) $(7,798,345) $14,803,320
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 20,950,314 15,963,996
Amortization of goodwill 784,448 -
Provision for losses on real estate
investments 7,500,000 -
Joint venture net income (1,143,224) (1,161,285)
Distributions received from joint ventures 2,064,610 2,078,062
Gain on sale of property (1,084,255) (15,179,215)
Discount amortization (398,226) (436,456)
Write-off of deferred financing costs 164,089 -
Amortization of deferred financing costs 679,691 1,087,468
Increase in operating escrows and other
assets (5,266,280) (1,581,543)
Increase in accrued real estate taxes,
insurance and other liabilities 3,529,465 1,702,532
Increase (decrease) in tenant security
deposits prepaid rents and escrows held 490,667 (341,996)
Minority interest in operating partnership (690,200) 150,481
Net cash provided by operating
activities 19,782,754 17,085,364
Investing activities:
Costs to acquire properties (34,529,783) (9,903,421)
Construction in progress (10,889,164) (16,199,960)
Rehabilitation and non-recurring capital (9,110,896) (6,206,365)
Recurring capital expenditures (2,899,807) (2,131,085)
Proceeds from sale of properties 11,209,673 61,080,095
Acquisition of mortgage loans - (27,830,889)
Proceeds from the payoff of mortgage loans 7,016,547 6,596,112
Principal collections on MBS 1,988,719 1,222,981
Principal collections on mortgage loans 750,550 151,296
Escrows for construction and replacement (5,033,055) 2,120,518
Cost to acquire advisory services business (447,679) -
Net cash (used for) provided by
investing activities (41,944,895) 8,899,282
Financing activities:
Payment of financing costs (985,253) (1,484,664)
Proceeds from repurchase agreement - 350,000
Payment on repurchase agreement (1,650,000) (500,000)
Proceeds from credit agreement 48,970,000 9,000,000
Repayment of credit agreement - (31,000,000)
Proceeds from mortgage notes payable - 17,800,000
-9-
<PAGE>
Principal payments on mortgage notes payable (8,212,625) (712,774)
Proceeds from the exercise of stock warrants 5,884 9,763
Dividends (17,140,367) (16,886,106)
Distribution to minority interest (1,108,570) (120,370)
Contribution from minority interest - 5,000
Net cash (used for) provided by
financing activities 19,879,069 (23,539,151)
Net (decrease) increase in cash and cash
equivalents (2,283,072) 2,445,495
Cash and cash equivalents, beginning of period 11,142,710 10,492,330
Cash and cash equivalents, end of period $ 8,859,638 $12,937,825
</TABLE>
Continued
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<CAPTION>
For the Nine Months
Ended September 30,
1996 1995
<S> <C> <C>
Supplemental cash flow disclosure:
Cash paid for interest during period $15,220,663 $12,218,290
Interest capitalized during period $ 366,971 $ 658,009
Supplemental disclosure of non-cash investing
activities:
Property contributed by minority interests $80,817,180 $10,500,000
Cash to minority contributors (18,796,019) -
Debt assumed from minority contributors (41,306,073) (5,417,735)
Increase in minority interest $20,715,088 $ 5,082,265
Reclassification of construction in progress to
multi-family apartment complexes $ 5,291,353 $20,861,964
Advisory Services Business contributed by
minority interest $13,000,000 $ -
</TABLE>
-10-
<PAGE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Significant Accounting Policies
These financial statements reflect the consolidated financial position,
results of operations, changes in shareholders' equity and cash flows
of the Company, its subsidiaries and the Operating Partnership
(collectively the "Company") using historical cost of assets,
liabilities and results of operations.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted in this report on
Form 10-Q pursuant to the Rules and Regulations of the Securities and
Exchange Commission. In the opinion of management, the disclosures
contained in this report are adequate to make the information presented
not misleading. See Notes to the Financial Statements included in the
Company's Annual Report on Form 10-K for the year ended December 31,
1995 for additional information relevant to significant accounting
policies followed by the Company.
In the opinion of the management, the accompanying unaudited financial
statements reflect all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the Company's financial position
as of September 30, 1996 and the results of its operations for the
three and nine months ended September 30, 1996 and 1995 and cash flows
for the nine months ended September 30, 1996 and 1995.
The results of operations for the nine months ended September 30, 1996
are not necessarily indicative of the results which may be expected for
the full year. See Management's Discussion and Analysis of Financial
Condition and Results of Operations included in this report.
2. Acquisition of Advisory Services Business
On February 28, 1996, the Board of Directors, acting on the
recommendation of a Special Committee comprised of the Independent
Directors, approved the acquisition via contribution of the advisory
and development services business ("Advisor Transaction") of The
Berkshire Companies Limited Partnership in exchange for 1,300,000 newly
issued Units of the Operating Partnership.
The contribution was completed on March 1, 1996. As of that date, all
charges and expenses associated with the Advisory Services Agreement
ceased and the Company became a "self-administered" REIT. The Company
began incurring general and administrative expenses for its acquired
management staff including salaries, benefits, and other overhead
expenses. The Company will outsource with affiliated companies of
certain directors and officers for certain administrative services such
as shareholder relations, computer systems and support, and human
resources. Property management services will continue to be performed
by Berkshire Property Management, an affiliated company of certain
directors and officers.
In conjunction with the Advisor Transaction, additional Units, up to a
total $7.2 million in value, may be issued to the contributor during a
six-year period if certain Share price benchmarks are achieved. The
benchmarks are achieved if the share price is equal to or greater than
-12-
<PAGE>
the benchmarks for any fifteen days during any twenty consecutive
trading days. There are six Share price benchmarks beginning at $11.00
and increasing every $1.00 up to a maximum of $16.00. Upon
satisfaction of each benchmark, the contributor will receive Units
equal to $1.2 million based on the benchmark price. As of September
30, 1996, no additional units have been issued.
The Advisor Transaction was accounted for under the purchase method of
accounting. The value of the transaction was based on 1,300,000 units
at a share price of $10, or $13,000,000 which was recorded as goodwill
and is being amortized on a straight-line method over a 10-year period.
Also, legal fees and professional services expenses associated with the
Advisor Transaction have been capitalized and will be amortized over
the same 10-year period.
3. Multi-Family and Retail Property
As of September 30, 1996, the Company had investments in 41 properties
in 9 states consisting of 34 apartment communities having 12,100 units
and 7 retail centers with a total of 1,678,105 square feet of leasable
space. Two retail centers (794,822 square feet) are owned through
joint venture investments.
The following summarizes the carrying value of the Company's multi-
family apartment complexes and retail centers, (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
<S> <C> <C>
Land $ 77,230 $ 67,976
Buildings and improvements 410,733 337,790
Appliances, carpeting and equipment 74,807 56,336
Total multi-family and retail property 562,770 462,102
Accumulated depreciation 96,664 77,641
$466,106 $384,461
</TABLE>
Acquisitions
On May 14, 1996 the Company acquired The Point Apartments, a 1,119-
unit high-rise apartment community located in Silver Springs,
Maryland, an asset majority-owned by certain Directors and an
Officer of the REIT. The Company acquired the property for $52.3
million in exchange for 1.6 million of Operating Partnership Units
to be issued over three years and the assumption of $35.5 million of
non-recourse indebtedness on the property. The debt has a fixed
rate of 7 5/8% and matures in 2029. Under the terms of the
contribution agreement, the Company may not sell The Point
Apartments for a period of five years following the closing date.
Also in the second quarter, the Company completed the acquisition of
five additional multi-family communities for a total of 1,422 units.
The properties are located in Dallas and Fort Worth, Texas. One
asset (318 units) was purchased with cash from an unrelated seller
for a purchase price of $8.7 million. The four remaining assets
(1,104 units) were acquired as a package from another unrelated
seller for a purchase price of $28.7 million which was acquired with
the assumption of $5.8 million in debt, $4.1 million in Operating
Partnership Units and the remainder in cash.
-14-
<PAGE>
In the third quarter, the Company acquired Hunters Glen Apartments,
a 276-unit apartment community located in Plano, Texas. The
purchase price was $10 million which included the assumption of $5.5
million in debt. The mortgage requires interest at a rate of 9% and
matures March 1, 2000.
Information on the seven apartment communities acquired in 1996 are
as follows:
<TABLE>
<CAPTION>
Number of
Name Units Location
<S> <C> <C>
Golf Side Apartments 402 Haltom City (Fort Worth), Texas
Benchmark Apartments 250 Irving, Texas
Pleasant Wood Apartments 208 Dallas, Texas
Providence Apartments 244 Dallas, Texas
Prescott Place Apartments 318 Mesquite (Dallas), Texas
Hunters Glen Apartments 276 Plano (Dallas), Texas
The Point Apartments 1,119 Silver Spring (D.C.), Maryland
2,817
</TABLE>
Development
The Company has substantially completed the construction of
Huntington Chase II, a 72-unit development project which is an
additional phase to an existing property owned by the Company in
Norcross, Georgia. The project is expected to cost approximately
$4.7 million. As of September 30, 1996 the project has incurred
$4.5 million of construction costs.
The Company is also building 96-units as an additional phase to
Brookfield Trace, an existing community in Mauldin (Greenville),
South Carolina. The phase is expected to cost approximately $7
million when completed. As of September 30, 1996, the project has
incurred $4.7 million of construction costs.
In the fourth quarter the Company is expected to begin construction
of a 296-unit apartment community in Durham, South Carolina. The
project is currently estimated to cost approximately $20.2 million.
The Company also owns two parcels of land located in Dallas, Texas
and Greenville, South Carolina. Development plans are under
consideration for these two sites.
Dispositions
On September 12, 1996, the Company sold Pointe West Apartments, a
223-unit apartment community located in Des Moines, Iowa for a sales
price of $11,225,000. The property had a depreciated cost basis of
$10,125,418 and the Company incurred closing costs of $15,327
resulting in a gain on the sale of $1,084,255. Proceeds from the
sale were used to payoff the debt which was collateralized by the
property for approximately $6.6 million which necessitated the
retirement of costs of $164,089. An additional $664,000 of proceeds
-16-
<PAGE>
were used to pay down a portion of the debt collateralized by four
separate multi-family communities which the Company owns. The
remaining proceeds, approximately $3.4 million, will be used to fund
development activity.
The decision to sell Pointe West Apartments is consistent with the
Company s strategy to exit a particular market when the property is
the only property in a market in which the Company does not plan to
expand. Pointe West Apartments was the only property remaining in
the Midwest.
-17-
<PAGE>
Impairment of Long-Lived Assets
Effective in 1996, the Company has adopted Financial Accounting
Standard 121, "Accounting for the Impairment of Long-Lived Assets".
This Statement requires that long-lived assets be held and used by
an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not
be recoverable.
As of September 30, 1996, the Company has recorded a $7,500,000
provision for losses on certain retail assets. In the third
quarter, the Company began actively marketing four of its wholly-
owned retail centers. As a result of these efforts, the Company has
reclassified these centers to assets held for sale and has
recorded a valuation reserve of $4,200,000 which represents the
difference between carrying value and estimated fair value less
cost to sell.
A fifth retail center, which is not currently for sale had a significant
lease restructuring during the third quarter. As a result of this
situation, the Company has recorded a provision for a loss of $3.3
million which represents the difference between carrying value and
estimated fair value. In management s estimation, there are no other
impairment adjustments necessary for the remainder of the real estate
portfolio at the present time.
4. Investments in Unconsolidated Joint Ventures
The Company holds a 50% interest in the Brookwood Village Joint Venture
and a 50.1% interest in Spring Valley Partnership. Condensed combined
financial statements for the Joint Ventures are as follows:
<TABLE>
CONDENSED COMBINED BALANCE SHEETS
Assets
<CAPTION>
September 30, December 31,
1996 1995
<S> <C> <C>
Property at cost $109,686,210 $108,888,115
Less accumulated depreciation (30,153,233) (27,248,453)
79,532,977 81,639,662
Other assets 2,599,390 2,034,197
Total assets $ 82,132,367 $ 83,673,859
Liabilities and Partners Equity
Liabilities $ 567,643 $ 267,707
-18-
Partners' equity:
The Company 40,768,457 41,689,843
Joint venture partner 40,796,267 41,716,309
Total partners' equity 81,564,724 83,406,152
Total liabilities and partners' equity $ 82,132,367 $ 83,673,859
</TABLE>
<TABLE>
CONDENSED COMBINED STATEMENTS OF OPERATIONS
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues $3,384,151 $3,059,497 $9,770,685 $9,319,864
Property operating
expenses (1,432,364) (1,286,875) (4,582,340) (4,035,491)
Depreciation (981,893) (1,056,687) (2,904,780) (2,964,670)
Net income $ 969,894 $ 715,935 $2,283,565 $2,319,703
Allocation of net
income:
The Company $ 485,591 $ 358,407 $1,143,224 $1,161,285
Joint venture
partner 484,303 357,528 1,140,341 1,158,418
$ 969,894 $ 715,935 $2,283,565 $2,319,703
</TABLE>
5. Mortgage Loans and Other Loans Receivable
As of September 30, 1996, the Company held two mortgage loans with an
aggregate principal balance of approximately $11,364,000 and a
promissory note with a principal balance of approximately $2,076,000.
One of the mortgage loans is collateralized by a 212-unit apartment
complex in Miami, Florida and the other mortgage loan is collateralized
by a 120-unit apartment complex in Palm Bay, Florida.
In May 1996, a mortgage loan receivable was paid off for $7,016,547
which was the principal balance as of the payoff date. The loan was
collateralized by a 185-unit apartment complex in Miami, Florida.
6. MBS
At September 30, 1996, the Company's MBS portfolio had an approximate
market value of $10,165,000 and gross unrealized gains of $560,000 with
maturity dates ranging from 2008 to 2021. Weighted average yield on the
portfolio is $9.1%. The Company does not expect to realize these gains
as it has the intention and ability to hold the MBS until maturity.
At December 31, 1995, the Company's MBS portfolio had a market value of
$12,372,000 against a carrying value of $11,576,000 and gross unrealized
gains of $796,000.
7. Debt Agreements
At September 30, 1996, the Company has two lines of credit to provide
for future acquisitions, development and general business obligations.
The Company also had in effect a Repurchase Agreement to provide for
short-term borrowings.
The following summarizes the Company's borrowings on the Master Credit
Facility with the Federal National Mortgage Association as of September
-20-
<PAGE>
30, 1996:
<TABLE>
<CAPTION>
Contract Contract
Start End Interest
Date Date(a) Rate Amount
<S> <C> <C> <C> <C>
Credit Facility - Revolver 07/03/96 12/03/96 6.190% $ 7,225,000
Credit Facility - Revolver 07/03/96 12/03/96 6.125% 19,400,000
Credit Facility - Revolver 09/03/96 12/03/96 5.9184% 8,140,000
Credit Facility - Fixed 09/03/96 11/20/03 7.540% 13,345,000
Credit Facility - Fixed 11/22/95 11/20/05 6.997% 50,000,000
$98,110,000
</TABLE>
The following summarizes the Company's borrowings on the Credit
Agreement with the Bank of Boston and Mellon Bank as of September 30,
1996:
<TABLE>
<CAPTION>
Contract Contract
Start End Interest
Date Date(a) Rate Amount
<S> <C> <C> <C>
Credit Agreement 08/01/96 10/30/96(b)7.4375% $17,000,000
Credit Agreement 08/26/96 11/25/96 7.1875% 20,000,000
Credit Agreement 09/30/96 12/30/96 7.3125% 9,000,000
$46,000,000
</TABLE>
The following summarizes the Company's borrowings on the Repurchase
Agreement with CS First Boston as of September 30, 1996:
<TABLE>
<CAPTION>
Contract Contract
Start End Interest
Date Date(a) Rate Amount
<S> <C> <C> <C> <C>
Repurchase Agreement 09/12/96 01/17/97 5.7% $9,300,000
</TABLE>
(a) On the Contract End Date, borrowings outstanding are repriced at
the then current interest rates.
(b) The Company renewed the balance at an interest rate of 7.25% on
October 0, 1996.
The Credit Agreement and the Master Credit Facility require the Company
to maintain certain debt service coverage ratios, liquidity and
collateral coverages as further defined in the loan documents, all of
which were met on September 30,1996.
In 1995 the Company entered into a five-year interest rate swap contract
with a bank as counterparty. Under the swap arrangement, the Company
will pay 6.06% on a $40 million notional amount and will receive LIBOR
(based on 90 day contracts). The swap arrangement is intended to
protect the Company from significant interest rate exposure on its
anticipated revolving facilities. The current swap amount will cover
floating rate debt under revolvers in the near term. The Company will
continually reassess its rate exposure relative to debt levels and will
execute additional interest rate protection as circumstances dictate.
8. Stock Option Plan
On May 2, 1996, the shareholders approved the 1996 Stock Option Plan
which provides for grants to non-employee directors and discretionary
awards of stock options to key employees and consultants of the Company.
Awards will be administered by the Compensation Committee which is
comprised of two independent directors appointed by the Board of
-21-
<PAGE>
Directors. The purpose of the plan is to stimulate efforts of key
employees and consultants on behalf of the Company and to attract and
retain the best available personnel for service as directors. There are
1,500,000 Shares of common stock authorized for non-qualified and
incentive stock option grants under the 1996 Plan. The plan will
continue in effect until all Shares of stock subject to options have
been acquired or until May 1, 2001, whichever is earlier. However,
unexercised options will continue in affect after the termination of the
plan.
The Company has adopted Financial Accounting Standard 123, Accounting
for Stock-Based Compensation . The Company will measure the
compensation cost of the plan by using the intrinsic value based method
prescribed by APB opinion No. 25 and will make pro forma disclosures
regarding the fair value based method of accounting. Information
regarding the Company s Stock Option Plan is summarized below:
<TABLE>
<CAPTION>
1996 Stock Option Exercise
Plan Price
<S> <C> <C> <S><C>
Options granted,
inception of Plan 835,000 $9.75 - $10.25
Options exercised -
Options canceled -
Options expired -
Balance September 30, 1996 835,000
Options available to grant at
September 30, 1996 665,000
</TABLE>
9. Litigation Settlement
In January, 1994 the Company sold Carrollwood Gables Apartments to an
unaffiliated buyer. Prior to the sale, the buyer engaged a third party
to report on the physical condition of the property. The physical
inspection estimated outstanding repairs of approximately $20,000 which
was satisfactory to the buyer. Subsequent to the sale, the buyer
claimed there were significant roof and window leakage and brought suit
against the Company, claiming that the Company concealed evidence of the
leaks and misrepresented to the buyer that no roof leaks existed at the
property.
On September 5, 1996 the two counts brought against the Company were
dismissed by the court. However, the buyer still had a number of
options, including appealing the order. On September 18, 1996, the
litigation was settled at mediation with the Company agreeing to pay a
cash settlement of $150,000 to the buyer. Although the Company is
confident there was no wrongdoing on its part and believes there was no
basis for litigation, the Company believed a settlement at this time was
a better option given the alternatives, which could have meant a
reversal of the dismissal and an expensive trial in the future, and in
any event the incurrence of additional costs of defense.
In addition to the $150,000 cash settlement, the Company has incurred
related costs of $137,059, primarily for legal fees. The total cash
settlement and related costs of $287,059 is recorded as a non-recurring
charge on the Consolidated Statement of Operations.
10.Pro Forma Results (unaudited):
The following unaudited pro forma operating results for the Company have
-22-
<PAGE>
been prepared as if the 1996 property acquisitions had occurred on
January 1, 1996. Unaudited pro forma financial information is presented
for informational purposes only and may not be indicative of what the
actual results of operations of the Company would have been had the
events occurred as of January 1, 1996, nor does it purport to represent
the results of operations for future periods. Comparisons are not made
to 1995 since the Company became an umbrella partnership real estate
investment trust ( UPREIT ) May 1, 1995.
Nine Months ended September 30, 1996 1996
Revenue $76,833
Net loss (7,144)
Net loss per weighted average share (.28)
11.Subsequent Event
On November 12, 1996, the Company purchased Merit Ridge Apartments, a
336-unit apartment community located in Mesquite, Texas for a purchase
price of $10,250,000.
-23-
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
A. Overview:
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto included elsewhere
herein.
On February 28, 1996, the Board of Directors, acting on the
recommendation of a Special Committee comprised of the Independent
Directors, approved the acquisition via contribution of the advisory and
development services business ("Advisor Transaction") of The Berkshire
Companies Limited Partnership in exchange for 1,300,000 newly issued Units
of the Operating Partnership.
The contribution was completed on March 1, 1996. As of that date, all
charges and expenses associated with the Advisory Services Agreement ceased
and the Company became a "self-administered" REIT. The Company began
incurring general and administrative expenses for its acquired management
staff including salaries, benefits, and other overhead expenses. The
Company will outsource with affiliated companies of certain directors and
officers for certain administrative services such as shareholder relations,
computer systems and support, and human resources. Property management
services will continue to be performed by Berkshire Property Management, an
affiliated company of certain directors and officers.
In conjunction with the Advisor Transaction, additional Units, up to a
total $7.2 million in value, may be issued to the contributor during a six-
year period if certain Share price benchmarks are achieved. (See Notes to
Consolidated financial statements for details.) As of September 30, 1996,
no additional units have been issued.
The Advisor Transaction was accounted for under the purchase method.
The value of the transaction was based on 1,300,000 units at a share price
of $10, or $13,000,000 which is being recorded as goodwill and being
amortized on a straight-line method over a 10-year period. Also, legal
fees and professional services expenses associated with the Advisor
Transaction will be amortized over the same 10-year period.
B. Results of Operations:
The results of operations from period to period are impacted by
acquisition and disposition activity within the portfolio. Comparisons
will be made with respect to the overall portfolio and constant properties.
The following analysis compares the results of operations for the nine and
three months ended September 30, 1996 and 1995.
Net income decreased by $22.6 million for the nine month period
primarily as a result of a $15.1 gain on the sale of seven multi-family
properties or 1,717 apartment units and the payoff of two mortgage loans
receivable in 1995. Net income decreased by $13.7 million for the quarter
ended September 30, 1996 as a result of a $5.8 million gain on the sale of
a multi-family property or 372 apartment units in the third quarter of
1995. In addition, in the third quarter of 1996, the Company recorded a
provision for losses on real estate investments of $7.5 million related to
an impairment in carrying value on its retail portfolio. (See notes to the
Consolidated Financial Statements for details.)
-24-
<PAGE>
Rental income increased $13.4 million or 26% for the nine month period.
Overall, the increase is primarily the result of higher weighted average
apartment units owned in 1996. The weighted average number of units
increased by 1,789, from 8,858 units in 1995 to 10,647 in 1996. Also,
growth in revenues from same-store apartment communities, which are the 19
apartment communities which are comparable for the periods presented,
increased approximately 8% year-to-date when compared to 1995. Rent growth
accounted for 4.6% of the increase and higher occupancies accounted for the
remainder.
B. Results of Operations: - Continued
For the third quarter, rental revenues increased $7.2 million or 41% for
the same reasons discussed in the year-to-date comparison. The weighted
average number of apartment units increased by 3,605 in 1996 along with
growth in revenues from same-store apartment communities increasing
approximately 7% when compared to the third quarter of 1995.
Property operating expenses increased $3 million and $2.3 million for
the nine month and three month period, respectively. Overall, the increase
was the result of higher weighted average units in 1996. Also, in 1995,
the Company recognized one-time savings in insurance and general and
administrative expenses which lowered 1995 expenses.
Repairs and maintenance increased $1.2 million for the nine months ended
September 30, 1996 due to higher weighted average apartment units.
Real estate taxes increased $1.1 million due to higher weighted average
apartment units owned in 1996.
Asset management fees were eliminated effective March 1, 1996 in
conjunction with the Advisor Transaction. (See Overview).
Depreciation and amortization increased 36% and 50% for the nine month
and three month periods, respectively, due to a higher property asset base
in 1996.
General and administrative expenses increased for both the three and
nine months ended September 30, 1996 compared to the same periods in 1995
as a result of becoming self-administered on March 1, 1996. These costs
include employee salaries along with various administrative and office
related expenses.
State and corporate franchise taxes increased in 1996 due to a one-time
reduction in 1995 for taxes pertaining to 1994. Corporate franchise taxes
are expected to remain stable for 1996.
Interest expense increased $3.3 million and $1.9 million for the nine
month and three month period, respectively due to higher average borrowings
under Credit Agreements and permanent financings offset by lower cost of
borrowings. The following table summarizes the weighted average debt and
interest expense for the three and nine months ended September 30, 1996 and
1995:
<TABLE>
<CAPTION>
Nine Months ended Three Months ended
September 30, September 30,
1996 1995 1996 1995
(Dollars in thousands)
<S> <C> <C> <C> <C>
Weighted average debt outstanding:
Fixed Rate $177,734 $ 88,849 $204,351 $ 94,115
Variable rate 73,540 94,350 96,869 95,721
251,274 183,199 301,220 189,836
Weighted average interest rates:
Fixed rate 7.65% 8.24% 7.62% 8.14%
Variable rate 6.67% 7.59% 6.60% 7.27%
</TABLE>
Gain on sales of properties and payoff of mortgage loans decreased for
the nine month period in 1996 due to a $15.1 million gain on the sales of
seven apartment complexes consisting of 1,717 units in 1995. The remainder
of the gain in 1995 was the result of the payoff of two mortgages that the
Company had previously purchased at a discount. In the third quarter of
1996, the Company recognized a $1.1 million gain on the sale of a 223-unit
apartment complex.
For the third quarter, gains on sales of properties and payoff of
mortgage loans decreased $4.8 million. In the third quarter of 1995, the
sale of a 372-unit apartment complex resulted in a gain of $5.8 million
compared to the $1.1 million gain mentioned above which occurred in the
third quarter of 1996.
Non-recurring changes decreased for the nine month period in 1996
compared to 1995. In 1995, the non-recurring charges related to the costs
associated with the restructuring of the Company to an UPREIT. In 1996,
the non-recurring charge relates to the settlement of litigation as
discussed in Note 9 to the Consolidated Financial Statements.
Extraordinary items decreased for the nine month period in 1996 compared
to 1995. In 1995, the Company paid a prepayment premium due to planned
modifications to the Company s debt structure. In 1996, the Company
retired costs associated with the payoff of debt as discussed in Note 3 to
the Consolidated Financial Statements.
C. Funds from Operations(fully adjusted for operating partnership units):
Industry analysts generally consider Funds from Operations (FFO) to be
an appropriate measure of the performance of an equity REIT. The
Company believes that in order to facilitate a clear understanding of
the operating results of the Company, FFO should be analyzed in
conjunction with the net income as presented in the consolidated
financial statements included elsewhere in this report. FFO is
determined in accordance with a resolution adopted by the Board of
Governors of the National Association of Real Estate Investment Trusts,
Inc. (NAREIT), and is defined as net income (loss) (computed in
accordance with generally accepted accounting principles), excluding
gains (or losses) from debt restructuring and sales of property, plus
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. FFO is calculated for the periods
presented as follows (dollars in thousands):
<TABLE>
Nine Months Ended September 30, 1996 compared to Nine Months Ended September 30,
1995
<CAPTION>
Nine Months ended September 30,
1996 1995
(Dollars in thousands)
<S> <C> <C>
Net income (loss) $ (7,798) $ 14,803
Depreciation (including depreciation
related to joint ventures 22,371 17,448
Amortization of goodwill 784 -
Minority interest (690) 151
Gains of sale of investments and
payoff of mortgage loans receivable (1,084) (15,179)
Non-recurring charges 287 1,728
Costs associated with the refinance of
debt 164 253
Valuation reserve 7,500 -
Funds from operations $ 21,534 $ 19,204
Weighted Average:
Shares 25,393,072 25,392,513
Units 2,241,607 299,821
27,634,679 25,692,334
</TABLE>
For the nine months ended September 30, 1996 FFO was $21,534,000 or
$0.78 per share, versus $19,204,000 or $.75 per share for the nine months
ended September 30, 1995.
Same-store Multi-family Communities
Nine Months Ended September 30,
Change 1996 1995 %
Revenues $36,391 $33,747 7.83%
Expenses 17,199 16,462 4.48%
Net operating income $19,192 $17,285 11.03%
Average occupancy 95.8% 92.2%
Average monthly rent
Per unit $630 $602
FFO for the same-store communities increased approximately 11% in the
first nine months of 1996 compared to 1995. Growth in same-store multi-
family revenues was approximately 8% year-to-date when compared to the
prior year period. Rent growth accounted for 4.6% of the increase and
higher occupancies contributed to the remainder. Occupancy at September
30, 1996 was 95.5%.
Expenses grew 4% year-to-date when compared to the prior year. In 1995,
the Company recorded one-time expense savings in insurance and general and
administrative expenses.
Same-store Retail Properties
Nine Months Ended September 30,
1996 1995 %Change
Revenues $10,697 $10,430 2.56%
Expenses 3,765 3,459 8.85%
Net operating income $ 6,932 $ 6,971 (0.56%)
Average occupancy 93.9% 95.5%
FFO for same-store retail decreased slightly in the first nine months of
1996 compared to 1995. Same-store retail revenues grew slightly in the
nine months ended September 30, 1996 when compared to the same period in
1995. Average occupancies have decreased in both periods as a result of
tenant losses in three retail assets and the closing of 10,000 square feet
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<PAGE>
of commercial office space at another property. The former office space
will be replaced with additional retail space that is currently in lease-
up.
Expenses are up as a result of increased real estate taxes and
inordinate snow removal expenses. Most of these expenses will be billed
back to tenants and are accrued in revenues. However, these revenues are
partially offset by the occupancy losses discussed above. Occupancy at
September 30, 1996 was 93%.
Berkshire, as previously announced, intends to prudently divest of its
retail assets over time and reinvest the proceeds into multi-family
communities. Growth in FFO from apartments has far outpaced growth from
the retail assets. Over the long term, a shift from retail to residential
should generate increased FFO and allow the Company to focus completely on
apartment communities.
The Company is actively marketing the sale of four if its wholly-owned
retail assets. If sold, the proceeds will fund the acquisition or
development of multifamily properties. As part of this divestiture
strategy, Berkshire has recorded a provision for losses of $7,500,000 for
what it considers to be the difference between the book value of its retail
portfolio and the expected eventual net sales prices. This adjustment does
not impact FFO.
D. Acquisitions and Development:
In 1996, the Company completed the acquisition of seven multi-family
communities for a total of 2,817 units. The first acquisition, The Point
Apartments, is a 1,119 unit high-rise property in Silver Springs, Maryland.
The property was contributed by a related party for $52.3 million. The
Company assumed $35.5 million in 30-year fixed financing at 7.58% and
issued non-voting Operating Partnership (OP) Units in exchange for the
asset. First year stabilized yield after an additional $11 million in
rehabilitation costs is expected to be 9.5%.
A second acquisition included five multi-family communities in Dallas
and Fort Worth, Texas. One asset (318 units) was purchased with cash from
an unrelated seller for $8.7 million and is expected to generate a 10.1%
yield upon stabilization. The four remaining assets (1,104 units) were
purchased as a package from another unrelated seller for $28.7 million
which was acquired with the assumption of $5.8 million in debt, $4.1
million in Operating Partnership Units and the remainder in cash. An
additional asset (336 units) in the package was closed in the fourth
quarter at a price of $10.25 million with the assumption of $6.3 million in
bond financing, the issuance of $1.3 million in OP units and cash. The
stabilized unleveraged yield on this package is expected to be 10%.
In the third quarter, the Company acquired Hunters Glen Apartments, a
276-unit apartment community in Plano, Texas. The purchase price was $10
million which included the assumption of $5.5 million in debt. The company
expects an unleveraged initial yield on this asset of 10%.
During the second quarter, the Company stabilized development properties
in Raleigh, North Carolina (272 units) and Atlanta, Georgia (112 units).
The property in Raleigh, North Carolina is 95% occupied with average rents
of $848 per unit while the property in Atlanta, Georgia is also 95%
occupied with average rents of $947 per unit. The Company has
substantially completed a 72-unit development project while an additional
96 units will be completed later this year. Both projects are additional
phases to two existing properties and will cost $11.3 million. The Company
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<PAGE>
is expected to begin an additional new development this year in Durham,
North Carolina.
E. Liquidity and Capital Resources:
Historically, operations, debt financing and sales of assets have been
the sources of capital employed by the Company. Operating cash flows are
earmarked for the payment of dividends as well as capital expenditures of a
recurring nature. Debt financing and proceeds from asset sales have been
used to finance acquisitions, development, and rehabilitation of apartment
communities.
The Company's policy is to pay dividends to investors as a percentage of
Funds from Operations ("FFO"). For the past three years, the Company has
paid between 85% and 88% of FFO in dividends, retaining the rest for
recurring capital expenditures and working capital. The Company expects to
increase both FFO and dividends in the future but will strive to gradually
reduce the payout ratio so as to utilize some internally generated funds
for growth. On November 5, 1996 the Board approved a dividend of $.225 per
share payable on February 15, 1997 to the shareholders of record on
February 1, 1997. Dividends paid were $.225 in the third quarters of 1995
and 1996.
The Company has a policy to maintain leverage at or below 50% of
reasonably estimated fair value of assets. By employing moderate leverage
ratios, the Company can continue to generate sufficient cash flows to
operate its business as well as sustain dividends to shareholders. Debt as
a percentage of fair value of real estate assets as estimated by management
was approximately 44% at September 30, 1996. Additionally, the Company s
debt service coverage is 2.4 to 1.
In 1995 the Company successfully completed the restructuring of its
balance sheet from mostly variable short-term debt to fixed rate long-term
debt and has taken advantage of very favorable interest rates over the
past two years. With regard to the variable rate debt, the Company entered
into a five year fixed interest rate swap agreement in 1995 with a bank for
a $40 million notional contract, thereby fixing variable rate exposure on
that amount at 6.06%. The swap arrangement is intended to protect the
Company from significant interest rate exposure on its anticipated
borrowing levels under revolvers in the near term. The Company will
continually reassess its rate exposure relative to debt levels and will
execute additional interest rate protection as circumstances dictate.
The Company conservatively manages both interest rate risk and maturity
risk. Through the use of the swap, the Company has hedged interest rate
risk on approximately 44% of its variable rate debt as of September 30,
1996 and has 17% of total indebtedness as unhedged variable rate debt.
Weighted average fixed debt maturities are 11.4 years as of September 30,
1996.
The Company has adequate sources of liquidity to meet its current cash
flow requirements including dividends, capital improvements as well as
planned acquisitions.
F. Business Conditions/Risks:
-29-
<PAGE>
The Company believes that favorable economic conditions exist in
substantially all of its real estate markets. For the Company's stabilized
apartment communities, physical occupancy was 95.5% as of September 30,
1996 which is at or above current market occupancies. In addition, the
Company continues to maintain competitive rental rates. The Company's
management team achieves this by superior service combined with well-
maintained assets which sets the Company apart from its competition.
Through this management effort, the Company expects to realize solid
performances from the real estate assets and to continue its favorable
rental conditions, however, no assurances can be made in this regard.
The Company's real estate investments are subject to some seasonal
fluctuations resulting from changes in utility consumption and seasonal
maintenance expenditures. Future performance of the Company may be
impacted by unpredictable factors which include general and local economic
and real estate market conditions, variable interest rates, environmental
concerns, energy costs, government regulations and federal and state income
tax laws. The requirements for compliance with federal, state and local
regulations to date have not had an adverse effect on the Company's
operations, and no adverse effects are anticipated in the future.
The Company is also involved in other legal actions and claims in the
ordinary course of its business. It is the opinion of management and its
legal counsel, that such litigation and claims should be resolved without
material effect on the Company's financial position.
-30-
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Response: None
Item 2. Change in Securities
Response: None
Item 3. Defaults upon Senior Securities
Response: None
Item 4. Submission of Matters to a Vote of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Credit Agreement
(10.1) Amendment No. 1 of Amended and Rested 1992 Credit
Agreement among the Company and The First National
Bank of Boston and NationsBank of Texas, N.A. as of
March 1, 1996.
(10.2) Amendment No. 2 of Amended and Rested 1992 Credit
Agreement among the Company and The First National
Bank of Boston and NationsBank of Texas, N.A. as of
March 1, 1996.
(10.3) Amendment No. 3 of Amended and Restated 1992 Credit
Agreement among the Company and The First National
Bank of Boston and Mellon Bank, N.A. as of June 26,
1996.
(10.4) Amendment No. 3 of Amended and Restated 1992 Credit
Agreement among the Company and The First National
Bank of Boston and Mellon Bank, N.A. as of July 16,
1996.
(10.5) First Amendment to Master Credit Facility Agreement
among BRI OP L.P., BRI River Oaks L.P., BRI Texas
Apartments L.P. and Hidden Oaks Partnership and
Washington Mortgage Financial Group, LTD and Federal
National Mortgage Association as of March, 1996.
(b) Report on Form 8-K
Date Event Reported Financial Statements
May 29, 1996 Property Acquisition None
Report on Form 8-K/A
Date Event Reported Financial Statements
July 29, 1996 Property Acquisition Yes
-32-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Berkshire Realty Company, Inc.
(Registrant)
BY: /s/Marianne Pritchard
Marianne Pritchard, Senior Vice
President and Chief Financial
Officer of Berkshire Realty
Company, Inc.
-33-
<PAGE>
DATE: November 13, 1996
-34-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet and Statement of Income and is qualified in its entirety by reference to
such financial statements
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 8,859,638
<SECURITIES> 9,604,899
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 528,014,802<F1>
<PP&E> 37,461,212<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 583,940,551
<CURRENT-LIABILITIES> 13,909,668
<BONDS> 297,259,363
0
0
<COMMON> 258,998
<OTHER-SE> 272,512,522<F3>
<TOTAL-LIABILITY-AND-EQUITY> 583,940,551
<SALES> 0
<TOTAL-REVENUES> 69,066,740
<CGS> 0
<TOTAL-COSTS> 55,974,078
<OTHER-EXPENSES> (690,200)<F4>
<LOSS-PROVISION> 7,500,000
<INTEREST-EXPENSE> 14,714,314
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,621,652)
<DISCONTINUED> 1,084,255<F5>
<EXTRAORDINARY> 451,148
<CHANGES> 0
<NET-INCOME> (7,798,345)
<EPS-PRIMARY> (.31)
<EPS-DILUTED> 0
<FN>
<F1>Book value of real estate assets less depreciation
<F2>Includes goodwill of 12,663,231
<F3>Includes minority interest of 36,916,731
<F4>Minority interest
<F5>Gain on sale of property
</FN>
</TABLE>
BRI OP LIMITED PARTNERSHIP
470 Atlantic Avenue
Boston, Massachusetts 02210
AMENDMENT NO. 1 OF
AMENDED AND RESTATED
1992 CREDIT AGREEMENT
As of March 1, 1996
THE FIRST NATIONAL BANK OF BOSTON,
for Itself and as Agent
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
NATIONSBANK OF TEXAS, N.A.
901 Main Street
51st Floor
Dallas, Texas 75202
Attn: Real Estate Loan Administration
Ladies and Gentlemen:
BRI OP Limited Partnership, a Delaware limited partnership (the
"Borrower"), hereby agrees with each of you as follows:
1. Reference to Credit Agreement and Definitions. Reference is made to
the Amended and Restated 1992 Credit Agreement dated as of November 21,
1995 (the "Credit Agreement"), among the Borrower, Berkshire Realty
Company, Inc., certain Guarantors named therein and each of you. Terms
defined in the Credit Agreement and not otherwise defined herein are used
herein with the meanings given to them in the Credit Agreement.
2. Request for Amendment. The Borrower has advised you that it desires to
acquire all of the assets and business of The Berkshire Companies Limited
Partnership, a Massachusetts limited partnership ("BCLP"), that relate to
certain advisory services and development and rehabilitation services in
exchange for units of the Borrower to be issued to BCLP and to terminate
the advisory services agreement between the REIT and Berkshire Realty
Advisors Limited Partnership, a Massachusetts limited partnership
("BRALP"). Section 12.1(p) of the Credit Agreement provides for an Event
of Default in the event that BRALP or another Subsidiary of BCLP shall
cease to be the Advisor to the REIT. Accordingly, the Borrower hereby
requests that the Credit Agreement be amended to delete section 12.1(p).
3. Amendment. On the basis of the representations and warranties of the
Borrower set forth herein, the Credit Agreement is hereby amended to delete
section 12.1(p) in its entirety and replace it with the words "[Intentionally
omitted]; or ".
4. Representations and Warranties. In order to induce you to enter into
this Amendment, the Borrower hereby represents and warrants as follows:
4.1. Contribution Agreement. The Borrower has provided each of you
with a draft of the Advisory and Development Services Business Contribution
Agreement to be executed and delivered by and among BCLP, the REIT and the
Borrower. Such draft is in substantially final form. Without limitation
of the foregoing, the consideration to be paid to BCLP under such Agreement
shall not exceed 1,300,000 partnership units of the Borrower plus up to
$7,200,000 in incentive compensation, as provided therein.
<PAGE>
4.2. Incorporation of Representations. Each of the representations
and warranties contained in section 6 of the Credit Agreement is true and
correct
on the date hereof, except that the Borrower has adopted an employee
benefit plan pursuant to section 401(k) of the Code. The Borrower agrees
to amend the Credit Agreement in an appropriate manner to reflect the
existence of this plan.
5. Miscellaneous. This Amendment may be executed in any number of
counterparts, which together shall constitute one instrument, shall be a
Loan Document, shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts (without giving effect to the
conflict of laws rules of any jurisdiction) and shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns,
including as such successors and assigns all holders of any Obligation.
If the foregoing corresponds with your understanding of our
agreement, please sign this letter and the accompanying copies thereof in
the appropriate space below and return the same to the undersigned. This
letter shall become a binding agreement among each of you and the Borrower
when both the Borrower and you shall have one or more copies hereof
executed by the Borrower, each of you and each of the Guarantors listed
below.
BRI OP LIMITED PARTNERSHIP
By Berkshire Realty Company, Inc.,
its General Partner
By:______________________________
Name:
Title:
The foregoing Amendment is
hereby agreed to.
THE FIRST NATIONAL BANK OF BOSTON,
for Itself and as Agent
By:____________________________
Name:
Title:
NATIONSBANK OF TEXAS, N.A.
By:____________________________
Name:
Title:
The foregoing Amendment is
hereby consented to.
BERKSHIRE REALTY COMPANY, INC.
By:____________________________
<PAGE>
Name:
Title:
BRI TEXAS APARTMENTS LIMITED
PARTNERSHIP
By BRI Texas Apartments-II, Inc., its
General Partner
By:____________________________
Name:
Title:
BRI RIVER OAKS LIMITED PARTNERSHIP
By BRI River Oaks-II, Inc., its General
Partner
By:____________________________
Name:
Title:
BRI SOUTHWEST APARTMENTS LIMITED
PARTNERSHIP
By BRI Southwest Apartments-II, Inc.,
its General Partner
By:____________________________
Name:
Title:
BRI GREENTREE CORPORATION
By:____________________________
Name:
Title:
BRI TEXAS APARTMENTS-II, INC.
By:____________________________
Name:
Title:
BRI RIVER OAKS-II, INC.
By:____________________________
Name:
Title:
BRI SOUTHWEST APARTMENTS-II, INC.
By:____________________________
Name:
Title:
<PAGE>
BRI OP LIMITED PARTNERSHIP
470 Atlantic Avenue
Boston, Massachusetts 02210
AMENDMENT NO. 2 OF
AMENDED AND RESTATED
1992 CREDIT AGREEMENT
As of March , 1996
THE FIRST NATIONAL BANK OF BOSTON,
for Itself and as Agent
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
NATIONSBANK OF TEXAS, N.A.
901 Main Street
51st Floor
Dallas, Texas 75202
Attn: Real Estate Loan Administration
Ladies and Gentlemen:
BRI OP Limited Partnership, a Delaware limited partnership (the
"Borrower"), hereby agrees with each of you as follows:
1. Reference to Credit Agreement and Definitions. Reference is made to
the Amended and Restated 1992 Credit Agreement dated as of November 21,
1995, as amended by Amendment No. 1 thereof dated as of March 1, 1996 (the
"Credit Agreement"), among the Borrower, Berkshire Realty Company, Inc.,
certain Guarantors named therein and each of you. Terms defined in the
Credit Agreement and not otherwise defined herein are used herein with the
meanings given to them in the Credit Agreement.
2. Request for Amendment. The Borrower has advised you that it has
established a benefit plan under section 401(k) of the Code and agreed to
make appropriate revisions to the Credit Agreement.
3. Amendment. On the basis of the representations and warranties of the
Borrower set forth herein, the Credit Agreement is hereby amended as
follows:
3.1. Section 1.1 of the Credit Agreement is amended by adding
thereto, in correct alphabetical order, a definition of the term
Accumulated Benefit Obligations, reading in its entirety as follows:
Accumulated Benefit Obligations. The actuarial present value
of the accumulated benefit obligations under any Plan, calculated in
accordance with Statement No. 87 of the Financial Accounting
Standards Board.
3.2. Section 1.1 of the Credit Agreement is further amended by
adding thereto, in correct alphabetical order, a definition of the
word Plan reading in its entirety as follows:
Plan. At any time, any pension benefit plan subject to Title
IV of ERISA maintained, or to which contributions have been made or
are required to be made, by the REIT, the Borrower or any ERISA
Affiliate within six years prior to such time.
<PAGE>
3.3. Section 6.16 of the Credit Agreement is amended to read
in its entirety as follows:
section 6.16. Pension Plans. Each Plan (other than a
Multiemployer
Plan) and, to the knowledge of the REIT and the Borrower, each
Multiemployer Plan is in material compliance with the applicable
provisions of ERISA and the Code. Each Multiemployer Plan and each
Plan that constitutes a defined benefit plan (as defined in ERISA)
are set forth in Schedule 6.16. The REIT, the Borrower and each
ERISA Affiliate have met all of the funding standards applicable to
all Plans that are not Multiemployer Plans, and no condition exists
which would permit the institution of proceedings to terminate any
Plan that is not a Multiemployer Plan under section 4042 of ERISA.
To the best knowledge of the REIT and the Borrower, no Plan that is a
Multiemployer Plan is currently insolvent or in reorganization or has
been terminated within the meaning of ERISA.
3.4. Section 8 of the Credit Agreement is amended by adding
thereto a new section 8.12 reading in its entirety as follows:
section 8.12. ERISA, etc. Each of the Borrower and the REIT
shall
comply, and shall cause all ERISA Affiliates to comply, in all
material respects, with the provisions of ERISA and the Code
applicable to each Plan. Each of the Borrower and the REIT shall
meet, and shall cause all ERISA Affiliates to meet, all minimum
funding requirements applicable to them with respect to any Plan
pursuant to section 302 of ERISA or section 412 of the Code, without
giving effect to any waivers of such requirements or extensions of
the related amortization periods which may be granted. At no time
shall the Accumulated Benefit Obligations under any Plan that is not
a Multiemployer Plan exceed the fair market value of the assets of
such Plan allocable to such benefits by more than $500,000. The
Borrower and the REIT shall not withdraw, and shall cause all other
ERISA Affiliates not to withdraw, in whole or in part, from any
Multiemployer Plan so as to give rise to withdrawal liability
exceeding $500,000 in the aggregate. At no time shall the actuarial
present value of unfunded liabilities for post-employment health care
benefits, whether or not provided under a Plan, calculated in a
manner consistent with Statement No. 106 of the Financial Accounting
Standards Board, exceed $500,000.
3.5. The Credit Agreement is further amended by adding thereto
a new Schedule 6.16 reading in its entirety in the form attached
hereto as Schedule 6.16.
4. Representations and Warranties. In order to induce you to enter into
this Amendment, the Borrower hereby represents and warrants that each of
the representations and warranties contained in section 6 of the Credit
Agreement
is true and correct on the date hereof, after giving effect to the
amendments effected hereby.
5. Miscellaneous. This Amendment may be executed in any number of
counterparts, which together shall constitute one instrument, shall be a
Loan Document, shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts (without giving effect to the
conflict of laws rules of any jurisdiction) and shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns,
including as such successors and assigns all holders of any Obligation.
If the foregoing corresponds with your understanding of our
agreement, please sign this letter and the accompanying copies thereof in
the appropriate space below and return the same to the undersigned. This
letter shall become a binding agreement among each of you and the Borrower
<PAGE>
when both the Borrower and you shall have one or more copies hereof
executed by the Borrower, each of you and each of the Guarantors listed
below.
BRI OP LIMITED PARTNERSHIP
By Berkshire Realty Company, Inc.,
its General Partner
By:______________________________
Name:
Title:
The foregoing Amendment is
hereby agreed to.
THE FIRST NATIONAL BANK OF BOSTON,
for Itself and as Agent
By:____________________________
Name:
Title:
NATIONSBANK OF TEXAS, N.A.
By:____________________________
Name:
Title:
The foregoing Amendment is
hereby consented to.
BERKSHIRE REALTY COMPANY, INC.
By:____________________________
Name:
Title:
BRI TEXAS APARTMENTS LIMITED
PARTNERSHIP
By BRI Texas Apartments-II, Inc., its
General Partner
By:____________________________
Name:
Title:
BRI RIVER OAKS LIMITED PARTNERSHIP
By BRI River Oaks-II, Inc., its General
Partner
<PAGE>
By:____________________________
Name:
Title:
BRI SOUTHWEST APARTMENTS LIMITED
PARTNERSHIP
By BRI Southwest Apartments-II, Inc.,
its General Partner
By:____________________________
Name:
Title:
BRI GREENTREE CORPORATION
By:____________________________
Name:
Title:
BRI TEXAS APARTMENTS-II, INC.
By:____________________________
Name:
Title:
BRI RIVER OAKS-II, INC.
By:____________________________
Name:
Title:
BRI SOUTHWEST APARTMENTS-II, INC.
By:____________________________
Name:
Title:
SCHEDULE 6.16
BENEFIT PLANS
[none applicable]
<PAGE>
BRI OP LIMITED PARTNERSHIP
470 Atlantic Avenue
Boston, Massachusetts 02210
AMENDMENT NO. 3 OF
AMENDED AND RESTATED
1992 CREDIT AGREEMENT
As of June 26, 1996
THE FIRST NATIONAL BANK OF BOSTON,
for Itself and as Agent
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
MELLON BANK, N.A.
1735 Market Street
Philadelphia, Pennsylvania 19103
Attn: Real Estate Finance
Ladies and Gentlemen:
Each of BRI OP Limited Partnership, a Delaware limited partnership
(the "Borrower") and Berkshire Realty Company Inc. (the "REIT"), hereby
agrees with each of you as follows:
1. Reference to Credit Agreement and Definitions. Reference is made to
the Amended and Restated 1992 Credit Agreement dated as of November 21,
1995, as amended by Amendment No. 1 thereof dated as of March 1, 1996 and
by Amendment No. 2 thereof dated as of March 1, 1996 (the "Credit
Agreement"), among the Borrower, Berkshire Realty Company, Inc., certain
Guarantors named therein and each of you. Capitalized terms defined in the
Credit Agreement and not otherwise defined herein are used herein with the
meanings given to them in the Credit Agreement.
2. Request for Amendment. The Borrower has advised you that it has
agreed to provide you with additional collateral for the Obligations and
has agreed to make appropriate revisions to the Credit Agreement.
3. Amendment. On the basis of the representations and warranties of the
Borrower set forth herein, the Credit Agreement is hereby amended as
follows:
3.1. The definition of "Advance Value" in Section 1.1 is amended to
read in its entirety as follows:
Advance Value. At the relevant time of reference
thereto, the sum of (a) for each item of Eligible Real Estate
included in the Mortgaged Property the product of (x) the Appraised
Value thereof as most recently determined as provided under section 5.2,
5.3(a)(i), 5.3(a)(ii) or 10.6 (except that determinations pursuant
to 5.3(a)(ii) shall be applicable to the determination of Advance
Value solely for the purpose of 5.4 and 5.5) times (y) 60%, plus
(b) the current value of cash and Eligible Short-term Investments, if
any, at the time pledged to the Agent as Collateral pursuant to a
Pledge Agreement, plus (c) the J.V. Advance Value then in effect
(subject to the limitation provided below in the definition of such
term), plus (d) the current value determined in a manner agreed to by
the Majority Banks of Collateral accepted by the Majority Banks under
clause (vi) of 5.1; provided that if and so long as any Security
<PAGE>
Document Event of Default shall have occurred and be continuing or if
any event described in 12.1(m) shall have occurred with respect to
any Security Document, then the Real Estate subject to such Security
Document or in the case of a Pledge Agreement the cash, Eligible
Short-term Investments or other property subject thereto shall not be
included for the purpose of calculating the Advance Value. To the
extent that any property referred to in the preceding sentence is
encumbered by any lien or encumbrance permitted under 8.2(ii)(B),
the amount of the Indebtedness secured by such lien or encumbrance
shall be deducted from the value determined in accordance with the
preceding sentence.
3.2. The definition of "Banks" in Section 1.1 of the Credit
Agreement is amended in its entirety to read as follows:
Banks. FNBB, Mellon Bank, N.A. and other lending
institutions listed on Schedule 1 hereto and any other Person who
becomes an assignee of any rights of a Bank pursuant to 18.
3.3. The definition of Business Day in Section 1.1 of the Credit
Agreement is amended in its entirety to read as follows:
Business Day. Any day on which banking institutions in both
Boston, Massachusetts and Philadelphia, Pennsylvania are open for the
transaction of banking business and, in the case of Eurodollar Rate
Loans, which also is a Eurodollar Business Day.
3.4. The definition of "Commitment" in Section 1.1 of the Credit
Agreement is amended to read in its entirety as follows:
Commitment. With respect to each Bank, the amount set forth on
Schedule 1 hereto as the amount of such Bank's Commitment to make or
maintain Loans and to participate in Letters of Credit to the
Borrower, as the same may be reduced from time to time.
3.5. Section 1.1 of the Credit Agreement is amended by adding
thereto, in correct alphabetical order, a definition of the term "Joint
Ventures", reading in its entirety as follows:
Joint Ventures. Both of (i) real estate investment activities
pursuant to that certain Brookwood Village Joint Venture Amended and
Restated Joint Venture Agreement dated as of June 25, 1991 as amended
by First Amendment to Brookwood Village Amended and Restated Joint
Venture Agreement dated as of June 1, 1996, as from time to time in
effect between Krupp Cash Plus-II Limited Partnership and its
successors and assigns and BRI Texas Apartments Limited Partnership
(the "Brookwood Village Joint Venture") and (ii) real estate
investment activities pursuant to that certain Spring Valley
Partnership Amended and Restated Partnership Agreement dated as of
June 25, 1991, as from time to time in effect between the REIT and
Krupp Cash Plus-V Limited Partnership ("KCP-V") and its successors
and assigns as amended by Assignment and First Amendment to Spring
Valley Partnership Amended and Restated Partnership Agreement dated
as of May 1, 1995 by and among the REIT, KCP-V, and BRI OP and as
amended by Assignment and Second Amendment to Spring Valley
Partnership Amended and Restated Partnership Agreement dated as of
May 3, 1996 by and among the REIT, KCP-V and BRI OP (the "Spring
Valley Partnership").
3.6. Section 1.1 of the Credit Agreement is amended by adding
thereto, in correct alphabetical order, a definition of the term "J.V.
Advance Value", reading in its entirety as follows:
<PAGE>
J.V. Advance Value. An amount equal to 40% of the value of the
Joint Venture Collateral, as determined from time to time by the
Banks; provided, however, that the borrowing base availability
derived from the Joint Venture Collateral at no time shall exceed 37%
of the entire Advance Value then in effect. The determination of the
value of the Joint Venture Collateral shall be made on the basis of
MAI appraisals pursuant to Section 5.2(a) of the Credit Agreement as
amended.
3.7. Section 1.1 of the Credit Agreement is amended by adding
thereto, in correct alphabetical order, a definition of the term "Joint
Venture Collateral", reading in its entirety as follows:
Joint Venture Collateral. All right, title and interest to and
in the Joint Ventures pledged to the Agent for the benefit of the
Banks pursuant to the Joint Venture Pledge Agreement.
3.8. Section 1.1 of the Credit Agreement is amended by adding
thereto, in correct alphabetical order, a definition of the term "Joint
Venture Pledge Agreement", reading in its entirety as follows:
Joint Venture Pledge Agreement. The Pledge Agreement dated as
of June 26, 1996, as from time to time in effect, among the Borrower,
the REIT, BRI Texas Apartments Limited Partnership, BRI Texas
Apartments-II, Inc. and the Agent.
3.9. Section 1.1 of the Credit Agreement is amended by adding
thereto, in correct alphabetical order, a definition of the term "Joint
Venture Portion", reading in its entirety as follows:
Joint Venture Portion. On any date an amount equal to (a) the
sum of the total principal amount of Loans outstanding under the
Credit Agreement plus the Letter of Credit Exposure, minus (b) the
Advance Value of the Collateral excluding the J.V. Advance Value. To
the extent such calculation yields a negative number, the amount of
the Joint Venture Portion shall be deemed to be zero.
3.10. Section 1.1 of the Credit Agreement is amended by adding
thereto, in correct alphabetical order, a definition of the term "Letter of
Credit Exposure", reading in its entirety as follows:
Letter of Credit Exposure. On any date, the sum of (a) the
aggregate face amount of all drafts that may then or thereafter be
presented by beneficiaries under all Letters of Credit then
outstanding, plus (b) the aggregate face amount of all drafts that
the Agent has previously accepted under Letters of Credit but has not
paid. Letter of Credit Exposure shall be allocated to each Bank in
accordance with its Commitment Percentage.
3.11. The definition of "Loan Documents" in Section 1.1 of the
Credit Agreement is amended in its entirety to read as follows:
Loan Documents. This Agreement, the Notes, the Security
Documents, the Letters of Credit, each Qualified Hedge Agreement and
all amendments to the foregoing and other documents, instruments or
agreements executed or delivered by or on behalf of the Borrower or
any Nominee in connection with the Loans.
3.12. The definition of "Majority Banks" in Section 1.1 of the
Credit Agreement is amended to read in its entirety as follows:
Majority Banks. Both FNBB and Mellon Bank, N.A.
<PAGE>
3.13. The definition of "Major Tenants" in Section 1.1 of the Credit
Agreement is amended in its entirety to read as follows:
Major Tenants. (a) All tenants from time to time that
occupy more than 30,000 square feet of Gross Rentable Area of any
Mortgaged Property or any Real Estate owned by a Joint Venture or 15
percent (15%) or more of the Total Gross Rentable Area of the
Building or parcel of Real Estate included in any Mortgaged Property
or owned by a Joint Venture or generate 15 percent (15%) or more of
the gross revenues of the Building or parcel of Real Estate included
in any Mortgaged Property or owned by a Joint Venture, (b) each of
Belk-Gallant Company, Kmart Corporation, The Kroger Co. and Wetterau
Incorporated d/b/a IGA Food Store, whether or not included in (a)
above, and (c) such additional tenants as the Majority Banks shall
reasonably designate as material to the financial condition of any
Mortgaged Property or any item of Joint Venture Collateral.
3.14. The definition of "Mortgaged Property Cash Flow" in Section
1.1 of the Credit Agreement is amended to become a definition of "Mortgaged
Property and Joint Venture Cash Flow", reading in its entirety as follows:
Mortgaged Property and Joint Venture Cash Flow. (A)
With respect to each item of Mortgaged Property for any fiscal
period, an amount equal to the difference of (a) the Net Operating
Income attributable to such item of Mortgaged Property minus (b) an
amount equal to the greater of (i) all recurring capital expenditures
capitalized in accordance with generally accepted accounting
principles with respect to such item of Mortgaged Property incurred
during such period and (ii) an allowance for capital expenditure
requirements computed at the annual rate of $200 per unit for
multifamily housing projects and $0.25 per rentable square foot for
retail commercial projects, and (B) with respect to each Joint
Venture for any fiscal period, an amount equal to the product of (i)
the combined cash flow of the Real Estate owned by each Joint Venture
(determined as provided in clause (A) above but subject to such
additional reserves as the Banks may require) multiplied by (ii) the
percentage interest of the Obligors in such Joint Venture.
3.15. The definition of "NationsBank" in Section 1.1 of the Credit
Agreement is deleted in its entirety and all references in the Loan
Documents to NationsBank shall be deemed to refer to Mellon Bank, N.A.
3.16. The definition of "Obligations" in Section 1.1 of the Credit
Agreement is amended in its entirety to read as follows:
Obligations. All indebtedness, obligations and liabilities of
the Borrower and its Subsidiaries to any of the Banks and the Agent,
individually or collectively, under this Agreement or any of the
other Loan Documents or in respect of any of the Loans or the Notes
or the Letters of Credit, or other instruments at any time evidencing
any of the foregoing, whether existing on the date of this Agreement
or arising or incurred hereafter, direct or indirect, joint or
several, absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract, operation of
law or otherwise.
3.17. The definition of "Pro Forma Debt Service Charges" in Section
1.1 of the Credit Agreement is amended to read in its entirety as follows:
Pro Forma Debt Service Charges. On any date an amount equal to
the average annual debt service on an amount equal to the sum of (x)
the principal amount of the Loans outstanding hereunder, excluding
the Joint Venture Portion, if any, plus (y) if the Joint Venture
<PAGE>
Portion is greater than zero, an additional amount equal to 150% of
the Joint Venture Portion, where it is assumed (a) that interest and
principal will be payable in equal monthly installments over a period
of 25 years and (b) that the rate of interest shall be a fixed rate
of interest (calculated on the basis of a year of twelve 30-day
months) equal to the greater of (i) the highest rate of interest then
in effect with respect to the Loans and (ii) the sum of (A) the
current yield on United States Treasury securities maturing on the
date that is closest to the seventh anniversary of such date plus (B)
two percent (2%).
3.18. The definition of "Security Documents" in Section 1.1 of the
Credit Agreement is amended to read in its entirety as follows:
Security Documents. The Security Deeds, the Assignments of
Rents and Leases, the Assignments of Permits, Licenses and
Agreements, the Subordination, Attornment and Non-Disturbance
Agreements, the Joint Venture Pledge Agreement, each Pledge Agreement
and the Swap Assignment, including, without limitation, UCC-1
financing statements executed and delivered in connection therewith.
3.19. The heading "The Revolving Credit Facility" in Section 2 is
hereby amended to read in its entirety as follows:
2. "The Revolving Credit Facility and Letter of Credit
Facility"
3.20. Section 2.1 of the Credit Agreement "Commitment to Lend" is
amended to read in its entirety as follows:
2.1. Commitment to Lend. Subject to the terms and
conditions set forth in this Agreement, each of the Banks severally
agrees to lend to the Borrower, and the Borrower may borrow (and
repay and reborrow) from time to time between the Closing Date and
the Revolving Credit Maturity Date upon notice by the Borrower to the
Agent given in accordance with 2.6, such sums as are requested by
the Borrower for the purposes set forth in 7.11 up to a maximum
aggregate principal amount outstanding (after giving effect to all
amounts requested) at any one time equal to such Bank's Commitment
minus the portion of such Bank's Commitment allocated to Letter of
Credit Exposure; provided, that, in all events no Default or Event of
Default shall have occurred and be continuing and the Borrower's pro
forma financial statements as required pursuant to 2.6(iii) shall
demonstrate compliance with all covenants set forth therein; and
provided, further, that the sum of outstanding principal amount of
the Revolving Loans (after giving effect to all amounts requested)
plus Letter of Credit Exposure shall not at any time exceed either
(i) the Total Commitment or (ii) the Advance Value then in effect.
The Revolving Loans shall be made pro rata in accordance with each
Bank's Commitment Percentage. Each request for a Revolving Loan
hereunder shall constitute a representation and warranty by the
Borrower that all of the conditions set forth in 10 and 11, in the
case of the initial Revolving Loan, and 11, in the case of all other
Revolving Loans, have been satisfied on the date of such request.
3.21. Section 2.2 of the Credit Agreement "Facility Fee" is amended
to read in its entirety as follows:
2.2. Facility Fee. The Borrower agrees to pay to the Agent
for the accounts of the Banks in accordance with their respective
Commitment Percentages a facility fee calculated at the rate of the
Applicable Percentage per annum on the average daily amount by which
the Total Commitment exceeds the sum of the outstanding principal
<PAGE>
amount of Revolving Loans plus the Letter of Credit Exposure during
each calendar quarter or portion thereof commencing on the date
hereof and ending on the Revolving Credit Maturity Date. For each
such calendar quarter or portion thereof, the term "Applicable
Percentage" shall mean (i) if the average daily amount by which the
Total Commitment exceeded such sum during such period was greater
than 50% of the average Total Commitment during such period, one-
quarter of one percent (1/4%) and (ii) otherwise, one-eighth of one
percent (1/8%). The facility fee shall be payable quarterly in
arrears on the first day of each calendar quarter for the immediately
preceding calendar quarter or portion thereof, with a final payment
on the Revolving Credit Maturity Date or, as provided in 2.3, any
earlier date on which the Commitments shall be reduced or shall
terminate.
3.22. Section 2.3 of the Credit Agreement is further amended by
adding at the end of the first sentence thereof the following proviso:
provided, that no such reduction may reduce the Total Commitment to
an amount that is less than the sum of the principal amount of
Revolving Loans outstanding plus the Letter of Credit Exposure in
effect immediately after giving effect to such reduction.
3.23. Section 2.6 of the Credit Agreement "Requests for Revolving
Loans" is amended to read in its entirety as follows:
2.6. Requests for Revolving Loans. The Borrower shall notify
the Banks of a potential request for a Revolving Loan as soon as
possible but not less than three Business Days prior to the
Borrower's proposed Drawdown Date and shall give to the Banks written
notice in the form of Exhibit D hereto (or telephonic notice
confirmed in writing in the form of Exhibit D hereto) of each
Revolving Loan requested hereunder (a "Loan Request") no less than
three Business Days prior to the proposed Drawdown Date. Each such
notice shall specify with respect to the requested Revolving Loan the
proposed principal amount, Drawdown Date, Interest Period and Type.
Each such notice shall also contain (i) a calculation showing that
after giving effect to such advance the sum of the principal amount
of Revolving Loans to be outstanding plus the Letter of Credit
Exposure shall not exceed either the Total Commitment or the Advance
Value then in effect, (ii) a certification by the chief financial or
chief accounting officer of the REIT that the REIT and the Borrower
are and will be in compliance with all covenants under the Loan
Documents (except for any Security Document Event of Default
specified in such certification) after giving effect to the making of
such Revolving Loan, and (iii) a Compliance Certificate prepared on a
pro forma basis using the financial statements of the Borrower most
recently provided or required to be provided to the Banks under 6.4
or 7.4 adjusted in the best good faith estimate of the Borrower to
give effect to the proposed advance. Promptly upon receipt of any
such notice, the Agent shall notify each of the Banks thereof. Each
such notice shall be irrevocable and binding on the REIT and the
Borrower and shall obligate the Borrower to accept the Revolving Loan
requested from the Banks on the proposed Drawdown Date. Each Loan
Request shall be (a) for a Base Rate Revolving Loan in a minimum
aggregate amount of $1,000,000 or an integral multiple of $100,000 in
excess thereof, or (b) for a Eurodollar Rate Revolving Loan in a
minimum aggregate amount of $2,000,000 or an integral multiple of
$100,000 in excess thereof; provided, however, that there shall be no
more than five Eurodollar Rate Revolving Loans outstanding at any one
time.
3.24. Section 2 of the Credit Agreement is further amended by adding
<PAGE>
thereto the following paragraphs:
2.8. Issuance of Letters of Credit. Subject to all the terms
and conditions of this Agreement and so long as no Default exists, on
and after the effective date of Amendment No. 3 to this Agreement,
the Agent on behalf of the Banks will issue for the account of the
Borrower irrevocable standby letters of credit (the "Letters of
Credit") provided, however, that no more than three Letters of Credit
may be outstanding at any one time, that the Letter of Credit
Exposure in effect at any time shall never exceed $4,000,000 and that
at no time shall the sum of the Letter of Credit Exposure plus the
aggregate outstanding principal amount of Revolving Loans exceed the
lesser of the Total Commitment or the Advance Value.
2.9 Requests for Letters of Credit. The Borrower may from
time to time request a Letter of Credit to be issued by providing to
the Agent a notice which is actually received no less than five
Business Days prior to the requested closing date for such Letter of
Credit specifying (a) the amount of the requested Letter of Credit,
(b) the beneficiary thereof, (c) the requested closing date and (d)
the principal terms of the text for such Letter of Credit. Each
Letter of Credit will be issued by forwarding it to the Borrower or
to such other Person as directed in writing by the Borrower. In
connection with the issuance of any Letter of Credit, the Borrower
shall furnish to the Agent a certificate in substantially the form of
Exhibit D, the Compliance Certificate required by 11.5(b) and any
customary application forms required by the Agent.
2.10. Form and Expiration of Letters of Credit. Each Letter
of Credit to be issued under this Section 2 and each draft accepted
or paid under such Letters of Credit shall be issued, accepted or
paid, as the case may be, by the Agent at its principal office. No
Letter of Credit shall provide for the payment of drafts drawn
thereunder, and no draft shall be payable, at a date which is later
than the earlier of (a) the date twelve months after the date of
issuance or (b) the Revolving Credit Maturity Date. Each Letter of
Credit and each draft accepted under a Letter of Credit shall be in
such form and minimum amount, and shall contain such terms, as the
Agent and the Borrower may agree upon at the time such Letter of
Credit is issued, including a requirement of not less than three
Banking Days after presentation of a draft before payment must be
made thereunder.
2.11. Banks' Participation in Letters of Credit. Upon the
issuance of each Letter of Credit, a participation therein, in an
amount equal to each Bank's Commitment Percentage, shall
automatically be deemed granted by the Agent to each Bank on the date
of such issuance and each Bank shall automatically be obligated, to
reimburse the Agent to the extent of its Commitment Percentage for
all obligations incurred by the Agent to third parties in respect of
such Letters of Credit not reimbursed by the Borrower. The Agent
will send to each Bank on a monthly basis a confirmation regarding
the participation in Letters of Credit outstanding during such month.
2.12. Presentation. The Agent may accept or pay any draft
presented to it, regardless of when drawn and whether or not
negotiated, if such draft, the other required documents and any
transmittal advice are presented to the Agent and dated on or before
the expiration date of the Letter of Credit under which such draft is
drawn. Except insofar as instructions actually received may be given
by the Borrower in writing expressly to the contrary with regard to,
and prior to, the Agent's issuance of any Letter of Credit for the
account of the Borrower and such contrary instructions are reflected
<PAGE>
in such Letter of Credit, the Agent may honor as complying with the
terms of the Letter of Credit and with this Agreement any drafts or
other documents otherwise in order signed or issued by an
administrator, executor, conservator, trustee in bankruptcy, debtor
in possession, assignee for benefit of creditors, liquidator,
receiver or other legal representative of the party authorized under
such Letter of Credit to draw or issue such drafts or other
documents.
2.13. Payment of Drafts. At such time as the Agent makes any
payment on a draft presented or accepted under a Letter of Credit,
the Borrower will on demand pay to the Agent for the benefit of the
Banks in immediately available funds the amount of such payment.
Unless the Borrower shall otherwise pay to the Agent the amount
required by the foregoing sentence, such amount shall be considered a
Revolving Loan.
2.14. Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, and any subsequent revisions
thereof approved by a Congress of the International Chamber of
Commerce and adhered to by the Agent (the "Uniform Customs and
Practice"), shall be binding on the Borrower and the Agent except to
the extent otherwise provided herein, in any Letter of Credit or in
any other Loan Document. Anything in the Uniform Customs and
Practice to the contrary notwithstanding:
(a) Neither the Borrower nor any beneficiary of any Letter
of Credit shall be deemed an agent of the Agent.
(b) With respect to any Letter of Credit, neither the Agent
nor its correspondents shall be responsible for or shall have
any duty to ascertain:
(i) the genuineness of any signature;
(ii) the validity, form, sufficiency, accuracy,
genuineness or legal effect of any endorsements;
(iii) delay in giving, or failure to give, notice of
arrival, notice of refusal of documents or of discrepancies
in respect of which the Agent refuses the documents or any
other notice, demand or protest;
(iv) the performance by any beneficiary under any Letter
of Credit of such beneficiary's obligations to the Borrower;
(v) inaccuracy in any notice received by the Agent;
(vi) the validity, form, sufficiency, accuracy,
genuineness or legal effect of any instrument, draft,
certificate or other document required by such Letter of
Credit to be presented before payment of a draft, or the
office held by or the authority of any Person signing any of
the same; or
(vii) failure of any instrument to bear any reference or
adequate reference to such Letter of Credit, or failure of
any Person to note the amount of any instrument on the
reverse of such Letters of Credit or to surrender such
Letter of Credit or to forward documents in the manner
required by such Letter of Credit.
<PAGE>
(c) The occurrence of any of the events referred to in the
Uniform Customs and Practice or in the preceding clauses of
this Section 2.14 shall not affect or prevent the vesting of
any of the Agent's rights or powers hereunder or the Borrower's
obligation to make reimbursement of amounts paid under any
Letter of Credit or any draft accepted thereunder so long as
the Agent has acted without gross negligence or willful
misconduct.
(d) The Borrower will promptly examine (i) each Letter of
Credit (and any amendments thereof) sent to it by the Agent and
(ii) all instruments and documents delivered to it from time to
time by the Agent. The Borrower will notify the Agent of any
claim of noncompliance by notice actually received within three
Business Days after receipt of any of the foregoing documents,
the Borrower being conclusively deemed to have waived any such
claim against the Agent and its correspondents unless such
notice is given. The Agent shall have no obligation or
responsibility to send any such Letter of Credit or any such
instrument or document to the Borrower.
(e) In the event of any conflict between the provisions of
this Agreement and the Uniform Customs and Practice, the
provisions of this Agreement shall govern.
2.15. Subrogation. Upon any payment by the Agent under any
Letter of Credit and until the reimbursement of the Agent by the
Borrower with respect to such payment, the Agent shall be entitled to
be subrogated to, and to acquire and retain, the rights which the
Person to whom such payment is made may have against the Borrower,
all for the benefit of the Banks. The Borrower will take such action
as the Agent may reasonably request, including requiring the
beneficiary of any Letter of Credit to execute such documents as the
Agent may reasonably request, to assure and confirm to the Agent such
subrogation and such rights, including the rights, if any, of the
beneficiary to whom such payment is made in accounts receivable,
inventory and other properties and assets of any Obligor.
2.16. Modification, Consent, etc. If the Borrower requests or
consents in writing to any modification or extension of any Letter of
Credit, or waives any failure of any draft, certificate or other
document to comply with the terms of such Letter of Credit, and if
the Agent consents thereto, the Agent shall be entitled to rely on
such request, consent or waiver. This Agreement shall be binding
upon the Borrower with respect to such Letter of Credit as so
modified or extended, and with respect to any action taken or omitted
by the Agent pursuant to any such request, consent or waiver.
2.17. Letter of Credit Fees. The Borrower will pay to the
Agent customary service charges and expenses for its services in
connection with the Letters of Credit at the times and in the amounts
from time to time in effect in accordance with its general rate
structure, including fees and expenses relating to issuance,
amendment, negotiation, cancellation and similar operations. The
Borrower will also pay to the Agent for the benefit of the Banks a
fee equal to 175 basis points per annum payable quarterly in arrears
on the Letter of Credit Exposure, which fee shall be allocated among
the Banks in accordance with their Commitment Percentage.
3.25. Section 2.5 of the Credit Agreement is amended by adding
thereto the following new subparagraph (e) reading as follows:
(e) To the extent that the Joint Venture Portion on any date
<PAGE>
or for any period shall exceed zero, the rate of interest on such
date or during such period on each Eurodollar Rate Loan attributable
to the Joint Venture Portion shall be 200 basis points over the
Eurodollar Rate and the rate of interest on each Base Rate Revolving
Loan attributable to the Joint Venture Portion shall be 25 basis
points over the Base Rate. For the purpose of this subparagraph (e),
the Joint Venture Portion will be attributed first to any Eurodollar
Rate Loans then outstanding in the order in which they were advanced,
and then to the Base Rate Revolving Loans.
3.26. Section 3.2 of the Credit Agreement is amended to read in its
entirety as follows:
3.2. Mandatory Prepayments. The Borrower promises to pay
principal of the Loans prior to stated maturity, as follows:
(a) If at any time the sum of the aggregate outstanding
principal amount of the Revolving Loans plus the Letter of Credit
Exposure exceeds either the Total Commitment or the Advance Value
then in effect, then the Borrower shall immediately pay the amount of
such excess to the Agent for the respective accounts of the Banks for
application to the Revolving Loans.
(b) Upon any sale or refinancing by Non-recourse Indebtedness
of any Mortgaged Property as permitted hereunder, the Borrower shall
immediately pay to the Agent for the respective accounts of the Banks
for application to the Revolving Loans the amount required to bring
the Loans into compliance with all covenants under the Loan
Documents, unless substitute Collateral shall have been provided to
the Agent in a form and amount satisfactory to the Majority Banks as
provided in 5.3.
3.27. Section 4.1(a) of the Credit Agreement is amended by adding at
the end thereof a new sentence reading in its entirety as follows:
The Agent shall notify the Banks promptly following its receipt of
such Conversion Request.
3.28. Section 4.5(a) of the Credit Agreement is amended to read in
its entirety as follows:
(a) All payments of principal, interest, Letter of
Credit reimbursement payments, facility fees, Agent's fees, closing
fees and any other amounts due hereunder or under any of the other
Loan Documents shall be made to the Agent, for the respective
accounts of the Banks and the Agent, as the case may be, at the
Agent's Head Office, in each case in immediately available funds.
The Agent is hereby authorized to charge the account of the Borrower
with FNBB, on the dates when the amount thereof shall become due and
payable, with the amounts of the principal of and interest on the
Loans, Letter of Credit reimbursement payments, and all fees,
charges, expenses and other amounts owing to the Agent and/or the
Banks under the Loan Documents.
3.29. Section 4.11 of the Credit Agreement is amended to read in its
entirety as follows:
4.11. Capital Adequacy. If any present or future law,
governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law) or the interpretation
thereof by a court or governmental authority with appropriate
jurisdiction affects the amount of capital required or expected to be
maintained by any Bank or any corporation controlling such Bank and
<PAGE>
such Bank reasonably determines that the amount of capital so
required or expected to be maintained is increased by or based upon
the existence of Loans or Letters of Credit made or deemed to be made
or committed to be made under this Agreement, then such Bank may
notify the Borrower of such fact, and the Borrower shall pay to such
Bank or the Agent from time to time on demand, as an additional fee
payable hereunder, such amount as such Bank shall determine in good
faith and certify in a notice to the Borrower in reasonable detail to
be an amount that will adequately compensate such Bank in light of
these circumstances for its increased costs of maintaining such
capital. Each Bank shall allocate such cost increases among its
customers in good faith and on an equitable basis.
3.30. Section 4.13 of the Credit Agreement is amended to read in its
entirety as follows:
4.13. Interest on Overdue Amounts; Late Charge. Overdue
principal, Letter of Credit reimbursement payments and (to the extent
permitted by applicable law) interest on the Loans and all other
overdue amounts payable hereunder or under any of the other Loan
Documents shall bear interest payable on demand at a rate per annum
equal to four and three-quarters percent (4 3/4%) above the Base Rate
until such amount shall be paid in full (after as well as before
judgment). In addition, the Borrower shall pay a Late Charge equal
to three percent (3%) of any amount of interest, Letter of Credit
reimbursement payments and/or principal payable on the Loans which is
not paid within ten days of the date when due.
3.31. Section 5.1 of the Credit Agreement is amended in its entirety
to read as follows:
5.1. Collateral. The Obligations shall be secured by (i)
a perfected first priority lien or security title to be held by the
Agent for the benefit of the Banks (subject only to Permitted Liens)
in the Mortgaged Property of the Borrower, pursuant to the terms of
the Security Deeds and in the Joint Venture Collateral, pursuant to
the Joint Venture Pledge Agreement, (ii) a perfected first priority
security interest to be held by the Agent for the benefit of the
Banks in the Leases pursuant to the Assignments of Rents and Leases,
(iii) a first lien collateral assignment of all licenses, permits,
contracts and agreements for the Mortgaged Properties, to be held by
the Agent for the benefit of the Banks pursuant to the Assignments of
Permits, Licenses and Agreements, (iv) a perfected first priority
lien to be held by the Agent for the benefit of the Banks in cash and
Eligible Short-term Investments of the Borrower from time to time
pledged to the Agent pursuant to one or more Pledge Agreements, (v)
perfected first priority liens in the rights of the Borrower under
interest rate protection arrangements provided under 8.10 and
10.6 and (vi) such additional collateral, if any, as the Agent for
the benefit of the Banks from time to time may accept as security for
the Obligations with the consent of the Majority Banks, which consent
may be given or withheld in the good faith judgment of the Majority
Banks. The Agent and the Majority Banks shall be entitled to charge
modification fees, in amounts satisfactory to the Agent and the
Majority Banks to be agreed between the Borrower, the Agent and the
Majority Banks, in connection with the taking or releasing of any
Collateral pursuant to this 5.1 or any other provision of the Loan
Documents.
3.32. Section 5.2 of the Credit Agreement is amended in its entirety
to read as follows:
5.2. MAI Appraisals.
<PAGE>
(a) The Agent shall require biennial MAI Appraisals of
each of the Mortgaged Properties and the Joint Venture Collateral,
which will be ordered, reviewed and approved by the appraisal
departments of the Majority Banks, in order to determine the current
Appraised Value of the Mortgaged Property and the Joint Venture
Collateral, and the Borrower shall pay to the Agent on demand all
reasonable costs of all such MAI Appraisals; provided, however, that
so long as no Default or Event of Default shall have occurred and be
continuing and regulatory requirements or internal policies of any
Bank generally applicable to real estate loans of the category made
under this Agreement shall not require more frequent MAI Appraisals,
the Borrower shall not be required to pay for an MAI Appraisal of
either any particular item of Mortgaged Property or any particular
item of Joint Venture Collateral more often than once in any 24-month
period. The MAI Appraisals of the Joint Venture Collateral shall be
made on the basis of MAI appraisals of the underlying Real Estate
owned by the Joint Ventures. Such MAI appraisals shall be adjusted
as the Banks shall determine. Each of the Banks represents that as
of the date of this Amendment No. 3 its internal policies, as applied
to the credit advanced under this Agreement and the Collateral
provided therefor, do not require MAI Appraisals either of the
Mortgaged Properties or the Joint Venture Collateral more frequently
than every 24 months.
(b) Notwithstanding the provisions of 5.2(a), in the
event that any Major Tenant shall take any action described in
12.1(i) or become the subject of any event described in 12.1(j) or
12.1(k) (reading 12.1(i), (j), and (k) as referring to such Major
Tenant in place of the Borrower), then at the request of any Bank an
MAI Appraisal of each item of Mortgaged Property and Joint Venture
Collateral in which such Major Tenant is a tenant shall be
commissioned by the Agent at the expense of the Borrower. If so
requested by the Borrower, the Agent also shall commission MAI
Appraisals of any or all of the remaining items of Mortgaged Property
and Joint Venture Collateral, in each case at the expense of the
Borrower.
3.33. Section 5.3 of the Credit Agreement is amended in its entirety
to read as follows:
5.3. Majority Bank Appraisals.
(a) Notwithstanding the provisions of 5.2, the Majority
Banks may perform Majority Bank Appraisals or internal studies
updating and revising prior Appraisals (i) annually with respect to
the Mortgaged Property and the Joint Venture Collateral or such
portion thereof as the Majority Banks shall determine, for the
purpose of determining the current Appraised Value of the Mortgaged
Property and the Joint Venture Collateral, and (ii) at the option of
the Majority Banks more frequently than annually in connection with
any request for a release of Collateral under 5.4 or 5.5. Majority
Bank Appraisals or updates performed under clause (ii) of the
preceding sentence shall be for the purpose of determining whether
the proposed release satisfies the conditions set forth in 5.4 or
5.5, as the case may be, and shall be limited to those Mortgaged
Properties and the Joint Venture Collateral with respect to which
there shall have occurred or arisen since the most recent prior
Appraisal any event or condition which, in the reasonable judgment of
the Majority Banks, constitutes a material adverse change with
respect to such Mortgaged Property and such Joint Venture Collateral
or presents a reasonable likelihood that such a change shall occur in
the future. The expense of Majority Bank Appraisals and updates
performed pursuant to clause (i) and clause (ii) of this 5.3(a)
<PAGE>
shall be borne by the Borrower as provided in 15.
(b) In the event that the Agent shall advise the Borrower,
on the basis of any Majority Bank Appraisal or update pursuant to
5.3(a)(ii), that a proposed release of Collateral under 5.4 or 5.5
does not satisfy the conditions set forth in 5.4 or 5.5, as the
case may be, then the Agent shall not be required to permit such
release.
(c) The provisions of 5.3(b) are subject, however, to
the right of the Borrower to contest such Majority Bank Appraisals or
updates, as provided in this 5.3(c). In the event that the Borrower
shall have been advised that such Majority Bank Appraisals or updates
shall have reduced the Advance Value, then (i) at the request of the
Borrower the Majority Banks shall identify those items of the
Mortgaged Property and the Joint Venture Collateral for which the
Appraised Value shall have been reduced from the prior Appraisals,
and (ii) if it disagrees with such conclusion, the Borrower may,
within ten days after receipt of such advice, by notice in writing
specifying the basis for such disagreement request that the Majority
Bank Appraisals or updates or any of them be reviewed. In this event
at the Borrower's expense the Majority Bank Appraisals or updates or
such of them as the Borrower may specify shall be submitted to the
independent appraisers who prepared the MAI Appraisals most recently
completed with respect to the Mortgaged Property and the Joint
Venture Collateral subject to such Majority Bank Appraisals or
updates or, if any such appraiser is not available to respond to such
submission on a timely basis, to another firm of MAI appraisers
selected by the Majority Banks. In the event that any such
independent appraiser shall advise the Majority Banks within 30 days
following such submission that a Majority Bank Appraisal or update
submitted to such independent appraiser is unreasonable in any of its
assumptions or methodology, then such Majority Bank Appraisal or
update shall be adjusted by the Majority Banks to change such
assumptions or methodology, as the case may be, to those which the
independent appraiser considers reasonable and the Advance Value
shall be adjusted accordingly. In the event that an independent
appraiser does not give such notice within such period with respect
to a Mortgaged Property or an item of Joint Venture Collateral, then
the applicable Majority Bank Appraisal or update shall remain in
effect.
(d) At the written request of the Borrower at any time (but
not more often than once in any period of six consecutive calendar
months) the Agent shall advise the Borrower of the current Appraised
Value of each of the Mortgaged Properties and each item of Joint
Venture Collateral.
3.34. Section 5.4 of the Credit Agreement is amended in its entirety
to read as follows:
5.4. Release of Real Estate Collateral. So long as no
Default or Event of Default has occurred and is continuing (or would
exist immediately after giving effect to the transactions
contemplated by this 5.4), then promptly following receipt by the
Agent of the Borrower's written request for a release of any of the
Mortgaged Property or any of the Joint Venture Collateral accompanied
by a Compliance Certificate prepared on a pro forma basis using the
financial statements of the Borrower most recently provided or
required to be provided under 6.4 or 7.4 adjusted in the best good-
faith estimate of the Borrower to give effect to such release and
demonstrating that no Default or Event of Default with respect to the
covenants referred to therein shall exist after giving effect to such
<PAGE>
release, the Agent shall release the lien securing the Obligations on
the Joint Venture Collateral or any Eligible Real Estate included in
the Mortgaged Property that, in either case, is sold or made subject
to Non-recourse Indebtedness by the Borrower, but only if and to the
extent that such lien is no longer required hereunder because of (i)
a reduction at the request of the Borrower of the Total Commitment,
(ii) the delivery by the Borrower to the Agent of replacement
Mortgaged Property, cash, Eligible Short-term Investments or other
Collateral referred to in clause (vi) of 5.1 or (iii) the Advance
Value of the Collateral remaining after giving effect to such release
equals or exceeds the Total Commitment. The Agent shall give each of
the Banks prior notice of any release of Collateral under this 5.4.
Any release by the Agent hereunder shall be without recourse or
warranty of any kind.
3.35. Section 5 of the Credit Agreement is amended by adding thereto
a new 5.7 reading in its entirety as follows:
5.7. Additional Collateral. The Obligations shall also be
secured by a perfected first priority lien to be held by the Agent
for the benefit of the Banks pursuant to a pledge of all right, title
and interest of the Obligors to and in (but none of their respective
obligations with respect to) the Joint Venture Collateral.
3.36. Section 6.22(d) of the Credit Agreement is amended by adding
at the end thereof a new sentence reading in its entirety as follows:
An asbestos operation and maintenance program must be
instituted and maintained for all asbestos-containing materials
located in such Mortgaged Property to the extent required by
applicable law or by the Environmental Engineer.
3.37. Section 6.22(e) of the Credit Agreement is amended by adding
at the end thereof a new sentence reading in its entirety as follows:
Such Mortgaged Property is not in violation of the federal
Americans with Disabilities Act, and the Borrower or its
Nominee has made reasonable efforts to comply with such Act
with respect to such Mortgaged Property.
3.38. Section 7.1 of the Credit Agreement is amended to read in its
entirety as follows:
7.1. Punctual Payment. The Borrower will duly and punctually
pay or cause to be paid the principal and interest on the Loans,
Letter of Credit reimbursement payments and all interest and fees
provided for in this Agreement, all in accordance with the terms of
this Agreement and the Notes as well as all other sums owing pursuant
to the Loan Documents.
3.39. Section 7.4(g) of the Credit Agreement is amended by adding in
the fourth line immediately after the reference to "9" the words "and
evidencing the nonexistence of an Event of Default under 12.1(r)".
3.40. Section 7 of the Credit Agreement is amended by adding a new
Section 7.16 to read in its entirety as follows:
7.16. Title to Assets of Joint Ventures. The Borrower shall
provide on or before September 30, 1996 evidence satisfactory to the
Majority Banks that the underlying assets of the Joint Ventures are
not subject to any liens or encumbrances except for liens and
encumbrances expressly permitted by the Joint Venture Pledge
Agreement. The Borrower shall also provide a status report to the
<PAGE>
Majority Banks on or before each of July 15, August 15 and September
15, 1996 describing its progress in arranging for the discharge and
release of matters described in Schedule 12.1(s) and other title
matters relating to the underlying assets of the Joint Ventures
reasonably objected to in writing by the Majority Banks. With
respect to any title matters raised by the Majority Banks, the
Majority Banks agree to reasonably consider any title clearing
arrangement (including bonding off of any lien) proposed by the
Borrower. Notwithstanding anything to the contrary in this
Agreement, failure by the Borrower to comply with the requirements of
this 7.16 shall cause the borrowing base availability derived from
the Joint Venture Collateral to be zero (0).
3.41. Section 8.1(m) of the Credit Agreement is amended to read in
its entirety as follows:
(m) only at such times as the Joint Venture Collateral is not
included in the Collateral, other Indebtedness for borrowed money
which does not exceed in aggregate principal amount outstanding at
any time the sum of $25,000,000; provided, that no Indebtedness
permitted under this subsection (m) which is secured by a single
parcel of Real Estate shall exceed in principal amount outstanding at
any time the sum of $15,000,000.
3.42. Section 9.5 of the Credit Agreement is amended to read in its
entirety as follows:
9.5 Mortgaged Property and Joint Venture Cash Flow. The
REIT and the Borrower will not permit (a) the combined Mortgage
Property and Joint Venture Cash Flow on all items of Mortgaged
Property and, if the Joint Venture Portion exceeds zero, all items of
Joint Venture Collateral included in the Collateral on the last day
of any fiscal quarter, computed for the period of four consecutive
fiscal quarters (treated as a single accounting period) ending on
such day, to be less than (b) 1.35 times the Pro Forma Debt Service
Charges as of such last day; provided, that if and so long as any
Security Document Event of Default shall have occurred and be
continuing or any event described in 12.1(m) shall have occurred
with respect to any Security Document, the Mortgaged Property and
Joint Venture Cash Flow of the item of Mortgaged Property or Joint
Venture Collateral, as the case may be, subject to such Security
Document shall not be included in clause (a) above for the purpose of
determining compliance with this 9.5; and provided, further, that in
the case of any item of Mortgaged Property or Joint Venture
Collateral, as the case may be, owned less than one year by the
Borrower, Mortgaged Property and Joint Venture Cash Flow shall be
measured after one fiscal quarter of ownership by multiplying the
Mortgaged Property and Joint Venture Cash Flow for that quarter times
four, after two fiscal quarters of ownership by multiplying the
Mortgaged Property and Joint Venture Cash Flow for the first and
second quarters times two, after three fiscal quarters of ownership
by multiplying the Mortgaged Property and Joint Venture Cash Flow for
the first three quarters times one and one-third and after four
fiscal quarters of ownership and thereafter as provided above.
3.43. The introductory paragraph to section 11 of the Credit
Agreement is amended in its entirety to read as follows:
The obligations of the Banks to make any Loan or to issue any
Letter of Credit, whether on or after the Closing Date, shall also be
subject to the satisfaction of the following conditions precedent:
3.44. Section 11.2 of the Credit Agreement is amended in its
<PAGE>
entirety to read as follows:
11.2. No Legal Impediment. No change shall have occurred in
any law or regulations thereunder or interpretations thereof that in
the reasonable opinion of any Bank would make it illegal for such
Bank to make such Loan or to issue any Letter of Credit.
3.45. Section 11.5 of the Credit Agreement is amended to read in its
entirety as follows:
11.5. Borrowing Documents. In the case of any request for a
Revolving Loan or Letter of Credit, each of the Banks shall have
received each of the following:
(a) the request for a Revolving Loan required by 2.6 or, as
the case may be, a request for a Letter of Credit required by 2.9,
in the form of Exhibit D hereto, fully completed; and
(b) the pro forma Compliance Certificate required by clause
(iii) of 2.6 or by 2.9, as the case may be, prepared in a manner
reasonably acceptable to the Agent.
3.46. Section 11.7 of the Credit Agreement is amended to read in its
entirety as follows:
11.7. Future Advances Tax Payment. As a condition precedent
to any Bank's obligations to make any Loans or incur Letter of Credit
Exposure in excess of an aggregate amount of $50,000,000 (calculated
as the sum of all Loans and Letters of Credit advanced hereunder
without deduction for any repayments of such Loans or Letters of
Credit and regardless of whether such Loans are outstanding at the
time of reference hereto), the REIT and the Borrower will pay to the
Agent any mortgage, recording, intangible, documentary stamp or other
similar taxes and charges which the Agent reasonably determines to be
payable to the State of Georgia or the State of Florida or any county
or municipality thereof and deliver to the Agent such affidavits or
other information which the Agent reasonably determines to be
necessary in connection with the payment of such tax, in order to
insure that the Security Deeds on Mortgaged Property located in
Georgia or Florida, as the case may be, secure the Borrower's
obligation with respect to the Loans or Letters of Credit then being
requested by the Borrower. The provisions of this 11.7 shall be
without limitation of the obligations of the REIT and the Borrower
under other provisions of the Loan Documents, including without
limitation 15 hereof.
3.47. Paragraph (a) of Section 12.1 of the Credit Agreement is
amended to read in its entirety as follows:
(a) the Borrower shall fail to pay any principal of the Loans
or reimbursement of payments under Letters of Credit when the same
shall become due and payable, whether at the stated date of maturity
or any accelerated date of maturity or at any other date fixed for
payment;
3.48. Section 12.1 of the Credit Agreement is further amended to add
new paragraphs (r) and (s) immediately after existing paragraph (q) to read
in their entirety as follows:
(r) the borrowing base availability derived from the Joint
Venture Collateral shall exceed 37% of the aggregate Advance Value;
(s) the Borrower shall fail to provide on or before September
<PAGE>
30, 1996 evidence satisfactory to the Banks of the discharge, release
and termination of the liens and encumbrances listed in Schedule
12.1(s) attached hereto.
3.49. A portion of Section 12.1 following new paragraph (s) is
amended to read as follows:
then, and in any such event, so long as the same may be continuing,
the Agent may, and upon the request of the Majority Banks shall, by
notice in writing to the REIT and the Borrower declare all amounts
owing with respect to this Agreement, the Notes and the other Loan
Documents to be, and they shall thereupon forthwith become,
immediately due and payable and require the Borrower immediately to
deposit with the Agent in cash an amount equal to the then Letter of
Credit Exposure (which cash shall be held and applied to
reimbursement of Letter of Credit payments, in each case) without
presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Borrower; provided that in
the event of any Event of Default specified in 12(i), 12(j) or
12(k), all such amounts shall become immediately due and payable
automatically and without any requirement of notice from any of the
Banks or the Agent.
3.50. Section 12.2 of the Credit Agreement is amended to read in its
entirety as follows:
12.2 Termination of Commitments. If any one or more Events
of Default specified in 12(i), 12(j) or 12(k) shall occur, then
immediately and without any action on the part of the Agent or any
Bank any unused portion of the credit hereunder shall terminate and
the Banks shall be relieved of all obligations to make Loans or issue
Letters of Credit to the Borrower. If any other Event of Default
shall have occurred and be continuing, any Bank may by notice to the
REIT and the Borrower terminate its obligations to make Loans or
issue Letters of Credit to the Borrower. No termination under this
12.2 shall relieve the REIT or the Borrower of any of the
Obligations or any of its existing obligations to such Bank arising
under other agreements or instruments.
3.51. Section 14.5 of the Credit Agreement is amended by amending
the first sentence thereof to read in its entirety as follows:
A payment in immediately available funds by the REIT or the
Borrower to the Agent hereunder or under any of the other Loan
Documents for the account of any Bank shall constitute a
payment to such Bank.
3.52. Section 14.9 of the Credit Agreement is amended by amending
the fourth sentence thereof to read in its entirety as follows:
If no successor Agent shall have been so appointed by the
Majority Banks and shall have accepted such appointment within
30 days after the retiring Agent's giving of notice of
resignation, then the Banks other than the Agent may appoint a
successor Agent, which shall be a bank whose debt obligations
are rated not less than "A" or its equivalent by Moody's
Investors Service, Inc. or not less than "A" or its equivalent
by Standard & Poor's Ratings Group and which has total assets
in excess of $10 billion.
3.53. Section 18.1 of the Credit Agreement is amended to read in its
entirety as follows:
<PAGE>
18.1. Conditions to Assignment by Banks. Except as
provided herein, each Bank may assign to one or more Eligible
Assignees all or a portion of its interests, rights and obligations
under this Agreement (including all or a portion of its Commitment
Percentage and Commitment and the same portion of the Loans at the
time owing to it, and the Notes held by it and its share of Letter of
Credit Exposure); provided that (a) each of the Agent, the Majority
Banks, the REIT and the Borrower shall have given its prior written
consent to such assignment, which shall not unreasonably be withheld,
(b) each such assignment shall be of a constant, and not a varying,
percentage of all the assigning Bank's rights and obligations under
this Agreement, (c) each assignment shall be in an amount that is a
whole multiple of $1,000,000, (d) each Bank which is a Bank on the
date hereof shall retain, free of any such assignment, an amount of
its Commitment of not less than $15,000,000 and shall not make
assignments to more than one institution unaffiliated with such Bank
and (e) the parties to such assignment shall execute and deliver to
the Agent, for recording in the Register (as hereinafter defined), an
Assignment and Acceptance, substantially in the form of Exhibit F
hereto (an "Assignment and Acceptance"), together with any Notes
subject to such assignment. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at
least five Business Days after the execution thereof, (i) the
assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder, and (ii) the assigning Bank shall,
to the extent provided in such assignment and upon payment to the
Agent of the registration fee referred to in 18.3, be released from
its obligations under this Agreement.
3.54. Section 18.1A. of the Credit Agreement is amended to read in
its entirety as follows:
18.1A. Assignment Among Banks. Notwithstanding the
provisions of 18.1, in the event that the debt obligations of any
Bank shall be rated less than "Ba2" by Moody's Investors Service,
Inc. or less than "BB" by Standard & Poor's Ratings Group, each other
Bank party hereto or any two or more of them acting together shall be
entitled on ten Business Days' prior written notice to the Agent, the
REIT, the Borrower and such Bank to purchase the interest of such
Bank hereunder, in whole and not in part, at a purchase price equal
to the outstanding principal amount of such Bank's Commitment
Percentage in the Loans advanced hereunder and its share of Letter of
Credit Exposure plus accrued and unpaid interest thereon to the
purchase date, together with any fees or other amounts that may be
owing to such Bank hereunder, including without limitation additional
interest with respect to such Bank's Commitment Percentage in any
Eurodollar Rate Loan calculated as provided in 4.9. Such transfer
shall be effected by the execution and delivery of an Assignment and
Acceptance.
3.55. Amendment of Schedule 1. The Credit Agreement is amended by
amending Schedule 1 thereto to read in its entirety in the form of Schedule
1 attached to this Amendment.
3.56. Amendment of Schedule 2. The Credit Agreement is amended by
amending Schedule 2 thereto to read in its entirety in the form of Schedule
2 attached to this Amendment.
3.57. Amendment of Schedule 6.22. The Credit Agreement is amended
by amending Schedule 6.22 thereto to read in its entirety in the form of
Schedule 6.22 attached to this Amendment.
<PAGE>
3.58. Amendment of Exhibit D. The Credit Agreement is amended by
amending Exhibit D thereto to read in its entirety in the form of Exhibit D
attached to this Amendment.
3.59. Amendment of Exhibit E. The Credit Agreement is amended by
amending Exhibit E thereto to read in its entirety in the form of Exhibit E
attached to this Amendment.
3.60. Addition of New Schedule 12.1(s). The Credit Agreement is
amended by adding a new Schedule 12.1(s) to read in its entirety in the
form of Schedule 12.1(s) attached to this Amendment.
4. Conditions to Effectiveness of Amendment. Acceptance of the foregoing
amendments by the Agent on behalf of the Banks shall be subject, without
limitation, to the following conditions:
(a) All Real Estate owned by the Joint Ventures shall constitute
Eligible Real Estate, excluding compliance with subsection (a)
of the definition of "Eligible Real Estate" and compliance with
the requirements set forth in subsections (a), (b), (c), (d),
(e), (f), (g), (h), (i), (l), (n), (p), (r) of the definition
of "Eligible Real Estate Qualification Documents," provided
that the Majority Banks also shall receive satisfactory
evidence of title to such Real Estate.
(b) The Borrower shall have provided evidence that the underlying
assets of the Joint Ventures are not and will not be subject to
any liens or encumbrances except for liens and encumbrances
expressly permitted by the Joint Venture Pledge Agreement.
(c) The legal documentation of each Joint Venture shall be
satisfactory to the Banks and their counsel.
(d) The Agent shall have received a first prior perfected lien in
the Joint Venture Collateral in the form of a Joint Venture
Pledge Agreement attached hereto as Exhibit A, supported by
such legal documentation and opinions of legal counsel as shall
be satisfactory to the Banks and their counsel.
(e) The Joint Venture partners shall have consented to the pledges
by the Borrower of the Joint Venture Collateral. Such consents
will allow: (i) the assignment to the Agent for the benefit of
the Banks of the Joint Venture Collateral, (ii) the transfer of
full legal title in the Joint Venture Collateral to the Agent
for the benefit of the Banks upon election by the Agent after
the occurrence of an Event of Default, (iii) the Agent to
transfer the Joint Venture Collateral to a third party (subject
only to a right of first refusal on the part of the other joint
venturer) and (iv) the substitution of new management for the
Joint Ventures upon the occurrence of an Event of Default,
provided the new management is experienced, of good reputation
and comparable to the existing manager in terms of scope of
service and cost. The Banks shall receive a favorable legal
opinion of outside counsel as to the effectiveness of such
consents and the availability of remedies.
(f) The Indigo multifamily housing project shall have been removed
from the Collateral securing the Credit Agreement.
(g) New Revolving Credit Notes shall have been issued by the
Borrower to Mellon Bank, N.A. in the principal amount of
$25,000,000 and to FNBB in the principal amount of $25,000,000;
and the Agent shall promptly return to the Borrower for
<PAGE>
cancellation the Revolving Credit Notes initially delivered.
(h) Each of the Banks shall have received the opinion of Scott L.
Spelfogel, General Counsel to the Borrower, with respect to
this Amendment, the Joint Venture Pledge Agreement and other
documents required to be delivered in connection with this
Amendment, including without limitation, the consents referred
to in subparagraph (e) of this Section 4.
(i) Each of the Banks shall have received a Compliance Certificate
dated as of the date hereof demonstrating compliance with each
of the covenants calculated therein as of March 31, 1996.
(j) All proceedings in connection with the transactions
contemplated by this Amendment shall be reasonably satisfactory
in form and substance to the Majority Banks and the Agent's
Special Counsel, and the Agent shall have received all
information and such counterpart originals or certified copies
of such documents and such other Certificates, opinions or
documents as the Majority Banks and the Agent's Special Counsel
may reasonably require.
(k) Each of the Banks shall have received from the REIT and the
Borrower a copy, certified as of a date in 1995 or 1996 by the
appropriate officer of each State in which the REIT, the
Borrower or any Subsidiary or Nominee is organized and
certified by a duly authorized officer of the REIT to be true
and complete, of each amendment to the certificate of
incorporation of the REIT or the certificate of limited
partnership of the Borrower and of each organizational document
(or amendment thereto) of each Subsidiary and Nominee.
(l) All action on the part of the REIT, the Borrower and each
Subsidiary and Nominee necessary for the valid execution,
delivery and performance by each of the REIT, the Borrower and
such Subsidiary and Nominee of this Amendment No. 3 and the
other Loan Documents to which it is or is to become a party
shall have been duly and effectively taken, and evidence
thereof satisfactory to the Agent shall have been provided to
each of the Banks. Each of the Banks shall have received from
each of the REIT, the Borrower and each applicable Subsidiary
and Nominee true copies of its by-laws and the resolutions
adopted by its shareholders and board of directors, partners,
beneficiaries and trustees, as the case may be, authorizing the
transactions described herein, each certified by its clerk,
secretary, trustee or authorized partner as of a recent date to
be true and complete.
(m) Each of the Banks shall have received from the REIT, the
Borrower and each applicable Subsidiary and Nominee an
incumbency certificate, dated as of the effective date of this
Amendment No. 3, signed by a duly authorized officer of the
REIT or officer, trustee or partner of each applicable
Subsidiary and Nominee and giving the name and bearing a
specimen signature of each individual who shall be authorized:
(a) to sign, in the name and on behalf of the REIT, the
Borrower and each such Subsidiary and Nominee, each of the Loan
Documents to which the REIT, the Borrower or such Subsidiary or
Nominee is or is to become a party; (b) to make Loan and
Conversion Requests; and (c) to give notices and to take other
action on behalf of the REIT or the Borrower under the Loan
Documents.
<PAGE>
5. Modification Fees. Upon the execution of this Amendment No. 3, the
Borrower agrees to pay the Banks a fee, in accordance with their respective
Commitment Percentage, in the amount of one-half of one percent (1/2%) of the
Advance Value of the Joint Venture Collateral.
6. Representations and Warranties. In order to induce you to enter into
this Amendment, the Borrower hereby represents and warrants that each of
the representations and warranties contained in 6 of the Credit Agreement
is true and correct on the date hereof, after giving effect to the
amendments effected hereby.
7. Miscellaneous. This Amendment may be executed in any number of
counterparts, which together shall constitute one instrument, shall be a
Loan Document, shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts (without giving effect to the
conflict of laws rules of any jurisdiction) and shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns,
including as such successors and assigns all holders of any Obligation.
If the foregoing corresponds with your understanding of our
agreement, please sign this letter and the accompanying copies thereof in
the appropriate space below and return the same to the undersigned. This
letter shall become a binding agreement among each of you and the Borrower
when both the Borrower and you shall have one or more copies hereof
executed by the Borrower, each of you and each of the Guarantors listed
below.
BRI OP LIMITED PARTNERSHIP
By Berkshire Realty Company, Inc.,
its General Partner
By:______________________________
Name:
Title:
The foregoing Amendment is
hereby agreed to.
THE FIRST NATIONAL BANK OF BOSTON,
for Itself and as Agent
By:____________________________
Name:
Title:
MELLON BANK, N.A.
By:____________________________
Name:
Title:
The foregoing Amendment is
hereby consented to.
<PAGE>
BERKSHIRE REALTY COMPANY, INC.
By:____________________________
Name:
Title:
BRI TEXAS APARTMENTS LIMITED
PARTNERSHIP
By BRI Texas Apartments-II, Inc., its
General Partner
By:____________________________
Name:
Title:
BRI RIVER OAKS LIMITED PARTNERSHIP
By BRI River Oaks-II, Inc., its General
Partner
By:____________________________
Name:
Title:
BRI SOUTHWEST APARTMENTS LIMITED
PARTNERSHIP
By BRI Southwest Apartments-II, Inc.,
its General Partner
By:____________________________
Name:
Title:
BRI GREENTREE CORPORATION
By:____________________________
Name:
Title:
BRI TEXAS APARTMENTS-II, INC.
By:____________________________
Name:
Title:
BRI RIVER OAKS-II, INC.
By:____________________________
Name:
Title:
BRI SOUTHWEST APARTMENTS-II, INC.
<PAGE>
By:____________________________
Name:
Title:
SCHEDULE 1
BANKS AND COMMITMENTS
Name and
Address Commitment Commitment
Percentage
The First National Bank of
Boston
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Fax: (617) 434-7108 $25,000,000 50%
Eurodollar Lending Office:
Same as above
Mellon Bank, N.A.
1735 Market Street
Philadelphia, Pennsylvania
19103
Attn: Real Estate Finance
Attn: Real Estate Loan
Administration
Fax: (215) 553-3742 $25,000,000
50%
Eurodollar Lending
Office:
Attn:same as above
<PAGE>
___________
$50,000,000
AMEND1D.WPD
<PAGE>
____
100%
SCHEDULE 2
ELIGIBLE REAL ESTATE
Name of Facility Location Type
Banks Crossing Fayetteville, GA Shopping Center
Crossroads South Jonesboro, GA Shopping Center
Greentree Square Marlton, NJ Shopping Center
Stoneledge
Plantation Greenville, SC Multifamily Housing
Schedule 6.22
SERVICE CONTRACTS
Greentree Square:
Fire Alarm System
National Guardian
Fire Alarm
1816 West Point Pike
P.O. Box 26
West Point, PA
19486-0026
Landscaping
Exterior Maintenance
(1995 season)
P.O. Box 5843
Deptford, NJ 08096
Parking Lot Sweeping
Advanced Lot
Maintenance
Rubbish Removal
Five County Carting
Security
General Security
Systems
Snow Removal
Mecouch Bros.
Banks Crossing
Shopping Center:
Window
Washing/Rubbish
Removal
S.K. Scogin Irrigation/Sprinkler
s
Sweetwater
Irrigation
P.O. Box 1421
Norcross, GA 30091
Asphalt
Aaron Asphalt
4455-A Business Park
Court
Lilburn, GA 30147
Asphalt (repairs)
Classic Paint &
Construction
Concrete
Jimmy Kight
Fire Alarm/Sprinkler
Systems
Cobb Fire & Safety
3300 Cobb Parkway,
330-17
Acworth, GA 30101
Signs
Maltese Signs
5785 Peachtree
Industrial Boulevard
Atlanta, GA 30341
Towing
AMEND1D.WPD
<PAGE>
110 Paces Court
Fayetteville, GA
30214
Sweeping
Sparkling Clean
Parking Lot
Maintenance
P.O. Box 41
Jonesboro, GA 30237-
0041
Landscaping
Ivey Landscaping
500 Merroway Court
Alpharetta, GA 30202
Exterminating
Lanier Exterminating
P.O. Box 127
Cumming, GA 30130
Termite Bond
Arrow Exterminating
Fayetteville, GA
HVAC
Diversified
Mechanical
1755 Red Rose Lane
Loganville, GA 30149
Pressure Washing
J & M Truck Kleen
Plumbing
Blanton Plumbing
1788 Rock Ridge Dr.
Conyers, GA 30207
Locksmith
A H & H Locksmith
951 Pointe South
Parkway
Jonesboro, GA
Roof Repair
West Ga. Roofing
P.O. Box 767
Carrollton, GA 30339
Parking Lot Lights
Special Service Co.
133 Crestwood Road
Tyrone, GA 30290
Electrical
Special Service Co.
133 Crestwood Road
Tyrone, GA 30290
<PAGE>
Tara Wrecker, Inc.
8754 Roberts Road
Jonesboro, GA 30236
Glass
The Glass Doctor
Jonesboro, GA
Crossroads South
Shopping Center:
Window
Washing/Rubbish
Removal
S.K. Scogin
110 Paces Court
Fayetteville, GA
30214
Sweeping
Sparkling Clean
Parking Lot
Maintenance
P.O. Box 41
Jonesboro, GA 30237
Landscaping
Ivey Landscaping
500 Merroway Court
Alpharetta, GA 30202
Exterminating
Lanier Exterminating
P.O. Box 127
Cumming, GA 30130
Termite Bond
Arrow Exterminating
Fayetteville, GA
HVAC
Diversified
Mechanical
1755 Red Rose Lane
Loganville, GA 30249
Rubbish Removal
BFI Waste Systems
P.O. Box 93097
Atlanta, GA 30377
Pressure Washing
J & M Truck Kleen
Security
Roc s Protective
Service
Roof Repair
West Ga. Roofing
6.22-276.22-27
<PAGE>
P.O. Box 767
Carrollton, GA 30117
Plumbing
Blanton Plumbing
Parking Lot Lights
Special Service Co.
133 Crestwood Road
Tyrone, GA 30290
Electrical
Special Service Co.
133 Crestwood Road
Tyrone, GA
Locksmith
A H & H Locksmith
951 South Pointe
Parkway
Jonesboro, GA
Irrigation/Sprinklers
Sweetwater Irrigation
P.O. Box 1421
Norcross, GA 30091
Asphalt
Aaron Asphalt
4455-A Business Park
Court
Lilburn, GA 30247
Asphalt (repairs)
Classic Paint &
Construction
Concrete
Jimmy Kight
Fire Alarm/Sprinkler
Systems
Cobb Fire & Safety
3300 Cobb Parkway,
330-17
Acworth, GA 30101
Signs
Maltese Signs
5785 Peachtree
Industrial Boulevard
Atlanta, GA 30341
Towing
Tara Wrecker, Inc.
8754 Roberts Road
Jonesboro, GA 30236
Glass
The Glass Doctor
Jonesboro, GA
6.22-286.22-28
<PAGE>
SERVICE CONTRACTS (cont d)
Stoneledge Plantation
Apartments:
Landscaping
Sun Landscaping of
Greenville, Inc.
202 Tollgate Road
Simpsonville, SC
29681
Waste Removal
Waste Management of
South Carolina
P.O. Box 5349
Spartanburg, SC
29303
Note: Property is
missing TCI Cable
contract.
Schedule 12.1(s)
a. Mortgage by Robert Wylie Shepherd, Everett Shepherd, Jr., James W.
Shepherd, and Charles E. Sharp, to The First National Bank of
Birmingham, dated October 11, 1973 and recorded in The Probate
Office, Jefferson County, Alabama in Real Volume 1002, Page 450
(All "Real Volume" references pertain to documents recorded with
the Probate Office, Jefferson County, Alabama); as amended by Real
Volume 1125, Page 695; as further amended by Real Volume 1265,
Page 465, said amendment having been corrected and re-recorded in
Real Volume 1272, Page 78;
b. Notice of Lien against Applebee's of North Alabama (tenant) in
favor of Davis Designs, Inc., for $12,722.05 with interest from
September 11, 1989, recorded in Real Volume 3676, Page 5;
c. Notice of Lien against Krupp Asset Management Corp. (Brookwood
Village Joint Venture) in favor of The Finish Line Inc., for
$7,882.83 with interest from January 11, 1989, recorded in Real
6.22-296.22-29
<PAGE>
SERVICE CONTRACTS (cont d)
Volume 3596, Page 930 and Verified Claim of Lien recorded in Real
Volume 3596, Page 936;
EXHIBIT D
FORM OF LOAN OR CREDIT REQUEST
The First National Bank of Boston,
for itself and as Agent
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Mellon Bank, N.A.
1735 Market Street
Philadelphia, Pennsylvania 19103
Attn: Real Estate Finance
Ladies and Gentlemen:
Pursuant to the provisions of 2.6 or 2.9 of the Amended and Restated
1992 Credit Agreement dated as of November 21, 1995, as amended by
Amendment No. 1 thereof dated as of March 1, 1996, by Amendment No. 2
thereof dated as of March 1, 1996 and by Amendment No. 3 thereof dated as
of June __, 1996 (the "Credit Agreement"), among BRI OP Limited Partnership
(the "Borrower"), Berkshire Realty Company, Inc., certain Guarantors named
therein, The First National Bank of Boston, for itself and as Agent, Mellon
Bank, N.A. and the other Banks from time to time party thereto, the
Borrower hereby requests and certifies as follows:
8. Revolving Loan. The Borrower hereby requests a Revolving Loan
under 2.1 of the Credit Agreement:
Principal Amount: $
Type (Eurodollar, Base Rate):
Drawdown Date: , 19
Interest Period:
by credit to the general account of the Borrower with the Agent at the
Agent's Head Office.
9. Letter of Credit. The Borrower hereby requests a Letter of Credit
under 2.9 of the Credit Agreement:
Stated Amount: $
Issue Date:
Termination Date:
Beneficiary:
Delivery Address:
6.22-30
<PAGE>
SERVICE CONTRACTS (cont d)
10. No Default. The undersigned chief financial or chief accounting
officer of the Borrower certifies that the Borrower is and will be in
compliance with all covenants under the Loan Documents (excluding, however,
such Security Document Events of Default as may be specified in a schedule
attached hereto) after giving effect to the making of the Revolving Loan or
the issuance of the Letter of Credit requested hereby. Attached to this
Loan or Credit Request is a Compliance Certificate prepared on a pro forma
basis using the financial statements of the Borrower most recently provided
or required to be provided under 6.4 or 7.4 of the Credit Agreement
adjusted in the best good-faith estimate of the Borrower to give effect to
the making of the Revolving Loan or the issuance of the Letter of Credit
requested hereby.
11. Representations True. Each of the representations and warranties
of the Borrower and its Subsidiaries contained in the Credit Agreement, in
the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with the Credit Agreement was true as of the
date as of which it was made and shall also be true at and as of the
Drawdown Date for the Revolving Loan or the date of issue of the Letter of
Credit requested hereby, with the same effect as if made at and as of such
Drawdown Date or date of issue (except to the extent of changes resulting
from transactions contemplated or permitted by the Credit Agreement and the
other Loan Documents and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, and
except to the extent that such representations and warranties relate
expressly to an earlier date) and no Default or Event of Default has
occurred and is continuing.
12. Other Conditions. All other conditions to the making of the
Revolving Loan or the issuance of the Letter of Credit requested hereby set
forth in 11 of the Credit Agreement have been satisfied. [Reference title
insurance "date down", if applicable.]
13. Drawdown Date. Except to the extent, if any, specified by notice
actually received by the Agent prior to the Drawdown Date specified above,
the foregoing representations and warranties shall be deemed to have been
made by the Borrower on and as of such Drawdown Date.
14. Definitions. Terms defined in the Credit Agreement are used
herein with the meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this ________ day of
_____, 199_.
BRI OP LIMITED PARTNERSHIP
By Berkshire Realty Company, Inc.,
its General Partner
By__________________________
Chief Financial or Chief
Accounting Officer
EXHIBIT E
FORM OF
COMPLIANCE CERTIFICATE
6.22-1
<PAGE>
SERVICE CONTRACTS (cont d)
The First National Bank of Boston,
for Itself and as Agent
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Mellon Bank, N.A.
1735 Market Street
Philadelphia, Pennsylvania 19103
Attn: Real Estate Finance
Ladies and Gentlemen:
Reference is made to the Amended and Restated 1992 Credit Agreement
dated as of November 21, 1995, as amended by Amendment No. 1 thereof dated
as of March 1, 1996, by Amendment No. 2 thereof dated as of March 1, 1996
and by Amendment No. 3 thereof dated as of June __, 1996 (the "Credit
Agreement") by and among BRI OP Limited Partnership, a Delaware limited
partnership (the "Borrower"), Berkshire Realty Company, Inc., a Delaware
corporation, certain Guarantors named therein, The First National Bank of
Boston, for itself and as Agent, Mellon Bank, N.A. and the other Banks from
time to time party thereto. Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as defined in the Credit
Agreement.
Pursuant to 6.4 or 7.4 of the Credit Agreement, the Borrower is
furnishing to you herewith [or has most recently furnished to you] the
financial statements of the Borrower and its Subsidiaries for the fiscal
period ended __________ (the "Balance Sheet Date"). Such financial
statements have been prepared in accordance with generally accepted
accounting principles and present fairly, in all material respects, the
financial position of the Borrower and the Subsidiaries covered thereby at
the date thereof and the results of their operations for the periods
covered thereby, subject in the case of interim statements only to normal
year-end audit adjustments and the addition of footnotes.
This certificate is submitted in compliance with the requirements of
2.6(iii), 5.4, 5.5, 7.4(g), 7.4(k) or 8.9 of the Credit Agreement.
If this certificate is provided under a provision other than 7.4(g), the
calculations provided below are made on a pro forma basis using the
financial statements of the Borrower and its Subsidiaries as of the Balance
Sheet Date adjusted in the best good-faith estimate of the Borrower to give
effect to the making of a Revolving Loan, release of Collateral or
acquisition or disposition of property that occasions the preparation of
this certificate; and the nature of such event and the Borrower's estimate
of its effects are set forth in reasonable detail in an attachment hereto.
The undersigned officer of the Borrower is its chief financial or chief
accounting officer.
The undersigned officer has caused the provisions of the Credit
Agreement to be reviewed and has no knowledge of any Default or Event of
Default. [Note: If the signer does have knowledge of any Default or Event
of Default, the form of certificate should be revised to specify the
Default or Event of Default, the nature thereof and the actions taken,
being taken or proposed to be taken by the Borrower with respect thereto.]
The Borrower is providing the following information to demonstrate
compliance as of the Balance Sheet Date with the following covenants:
E-2
<PAGE>
SERVICE CONTRACTS (cont d)
1. 8.3(j). Other Investments.
A. Consolidated Total Assets
Consolidated Total Assets (from Schedule 1, Part A) $__________
B. Other Investments (value to be calculated as
provided in the definition of "Consolidated Total
Assets" in 1.1 if applicable, otherwise at book value)
(i) Loans secured by mortgages or deeds of
trust on real property, referred to in
clause (i) of 8.3(j) (per balance sheet) $__________
(ii) Multifamily housing facilities "Under
Development" and raw land, referred to in
clause (ii) of 8.3(j) (per balance sheet) __________
(iii) "Other Investments" in Real Estate (per
balance sheet) __________
(iv) Investments in real estate companies other than
Subsidiaries __________
Total (i) through (iv) $__________
B divided by A equals (may not exceed 50%): ________%
Item B(i) divided by A equals (may not exceed 25%): ________%
Item B(ii) divided by A equals (may not exceed 25%): ________%
C. Raw Land
Aggregate value of raw land other than raw
land constituting part of Development Assets
permitted under clause (ii) of 8.3(j) (at book value)$__________
C divided by A equals (may not exceed 5%): ________%
D. Consolidated Development Assets (value to be calculated
as provided in the definition of "Consolidated Total Assets"
in 1.1 if applicable, otherwise at book value)
Multifamily housing facilities "Under Development" $__________
Amounts committed to costs of development, design,
construction and equipping __________
Total $__________
D divided by A equals (may not exceed 25%): ________%
2. 8.8. Borrower Distributions.
A. Consolidated Funds From Operations
Consolidated net income for most recent quarter
E-3E-3
<PAGE>
SERVICE CONTRACTS (cont d)
(per income statement) $__________
Minus gains (or losses) from debt restructuring and
sales of property (_________)
Plus depreciation and amortization __________
Adjustments for unconsolidated partnerships and
joint ventures __________
Subtotal for most recent quarter $__________
Consolidated Funds From Operations for
three prior quarters:
Quarter ended __________ __________
Quarter ended __________ __________
Quarter ended __________ __________
Total $__________
B. Distributions for Test Period
Subtotal for most recent quarter $__________
Distributions for three prior quarters:
Quarter ended __________ __________
Quarter ended __________ __________
Quarter ended __________ __________
Total $__________
B divided by A equals (may not exceed 92% except to extent
that Distributions are required to maintain REIT Status): _______%
3. 9.1. Liabilities to Worth Ratio.
A. Consolidated Total Indebtedness
Consolidated Total Indebtedness (per Schedule 1, Part B)$_________
B. Consolidated Total Assets
Consolidated Total Assets (per Schedule 1, Part A) __________
A divided by B (may not exceed 50%): ________%
4. 9.2. Cash and Cash Equivalents.
A. Cash and Equivalents
Cash $___________
Plus Eligible Short-term Investments ___________
E-4E-4
<PAGE>
SERVICE CONTRACTS (cont d)
Minus any amount included above that
is subject to a Pledge Agreement or
an Escrow Agreement or otherwise reserved,
escrowed or set aside as provided
in 9.2 (___________)
Total (must not be less than $5,000,000) $___________
5. 9.3. Interest Coverage.
A. Consolidated EBITDA for Test Period
Consolidated Net Income for
most recent quarter (per income statement) $____________
Plus depreciation and amortization ____________
Plus Interest Expense ____________
Plus taxes ____________
Plus extraordinary or nonrecurring losses ____________
Minus extraordinary or nonrecurring gains (__________)
Subtotal for most recent quarter $___________
Consolidated EBITDA for three prior quarters:
Quarter ended __________ ____________
Quarter ended __________ ____________
Quarter ended __________ ____________
Total $___________
B. Consolidated Interest Expense
Subtotal for most recent quarter (per income
statement) $___________
Consolidated Interest Expense for
three prior quarters:
Quarter ended __________ ___________
Quarter ended __________ ___________
Quarter ended __________ ___________
Total $___________
A divided by B equals (may not be less than 225%): _________%
6. 9.4. Debt Service Coverage.
A. Consolidated Operating Cash Flow
for Test Period
Consolidated net income for most
E-5E-5
<PAGE>
SERVICE CONTRACTS (cont d)
recent quarter (per income statement) $___________
Minus gains (or losses) from debt restructuring and
sales of property (__________)
Plus depreciation and amortization ___________
Adjustments for unconsolidated partnerships and
joint ventures ___________
Subtotal = Funds From Operations $___________
Plus Interest Expense ___________
Minus the greater of all capital expenditures and
an allowance for capital expenditure requirements
computed as provided in the definition of
"Operating Cash Flow" in 1.1 (_________)
Subtotal for most recent quarter $___________
Consolidated Operating Cash Flow
for three prior quarters:
Quarter ended __________ ___________
Quarter ended __________ ___________
Quarter ended __________ ___________
Total $___________
B. Actual Debt Service for Test Period
Consolidated Interest Expense for most recent quarter
(per income statements) $___________
Plus principal payments (excluding principal paid
from proceeds of permitted refunding debt) ___________
Subtotal for most recent quarter $___________
Actual Debt Service for three
prior quarters:
Quarter ended __________ ___________
Quarter ended __________ ___________
Quarter ended __________ ___________
Total $___________
A divided by B equals (may not be less than 190%): _________%
7. 9.5. Mortgaged Property and Joint Venture Cash Flow.
A. Mortgaged Property and Joint Venture Cash Flow
E-6E-6
<PAGE>
SERVICE CONTRACTS (cont d)
Total for most recent quarter (per Schedule 2,
attached) $___________
Mortgaged Property and Joint Venture Cash Flow for
three prior quarters:
Quarter ended __________ ___________
Quarter ended __________ ___________
Quarter ended __________ ___________
Total $___________
B. Pro Forma Debt Service Charges
Pro Forma Debt Service Charges (per Schedule 3,
attached) $___________
A divided by B equals (may not be less than 135%): _________%
8. 9.6. Minimum Consolidated Net Worth
A. Consolidated Net Worth
Consolidated total assets (per balance sheet) $____________
Minus consolidated total liabilities (per balance
sheet) (___________)
Total $____________
B. Increase in Consolidated Capital (since June 30, 1995)
Net amount realized from issuance of equity
securities $____________
Plus amount realized from receipt of
capital contributions ___________
Total $___________
A minus ($200,000,000 plus 90% of B) equals: ___________
(A must equal or exceed $200,000,000 plus 90% of B.)
9. 12.1(r). J.V. Advance Value
A. Advance Value
Mortgaged Properties
[itemize] $____________
Joint Venture Collateral
[itemize] $____________
Other
[itemize] $____________
Sum = Advance Value = $____________
E-7E-7
<PAGE>
SERVICE CONTRACTS (cont d)
B. Joint Venture Collateral
[itemize]
Sum = J.V. Advance Value = $____________
B divided by A (may not exceed 37%) = __________%
IN WITNESS WHEREOF, the undersigned officer of the Borrower has set
his or her hand and seal this ____ day of _________, 199_.
BRI OP LIMITED PARTNERSHIP
By Berkshire Realty Company, Inc.,
its General Partner
By:___________________________
Chief Financial or Chief
Accounting Officer
Compliance Certificate Schedule 1
Calculation of Consolidated Total Assets and
Consolidated Total Indebtedness as of
Balance Sheet Date
A. Consolidated Total Assets
1. Aggregate value of Real Estate owned
in fee (from Worksheet #1, attached): $___________
Plus
2. Aggregate value of Real Estate
owned by joint venture or
unconsolidated subsidiary
(from Worksheet #2, attached): $___________
Plus
3. Aggregate book value of mortgage loans
owned (excluding loans on properties
owned in fee by the Borrower or a
Consolidated Subsidiary) (from balance
sheet) $____________
Minus (without double counting)
related reserves ( __________ )
Total $____________
Plus
4. Aggregate book value of raw land and
construction work in progress (not
included above) (from balance sheet) $____________
E-8E-8
<PAGE>
SERVICE CONTRACTS (cont d)
Plus
5. Aggregate book value of other tangible
or financial assets (from balance
sheet) $____________
Minus (without double counting)
related reserves ( __________ )
Total $____________
Total of Items 1 through 5 $
B. Consolidated Total Indebtedness
All liabilities (from balance sheet) $____________
Minus minority interests recorded as
liabilities on the balance sheet of any
Subsidiary (___________)
Minus Indebtedness secured solely by
mortgage-
backed securities (___________)
Plus additional contingent liabilities not
included above _____________
Plus guarantees of debt of joint ventures
not included above _____________
Total $
Note: If any guarantee is valued at less than the full principal amount
thereof pursuant to the last sentence of the definition of
"Consolidated Total Indebtedness", provide a full explanation below
or on a separate sheet.
Compliance Certificate Schedule 1 -- Worksheet #1: Value of Real Estate
Owned in Fee
by Borrower or Consolidated
Subsidiary
A. Properties Held for More Than One Year
Name Adjusted N.O.I. Capitalization RateValue
$____________ ___%
$____
Total Value of
Category A:
$________
B. Properties Held for Less Than One Year
E-9E-9
<PAGE>
SERVICE CONTRACTS (cont d)
Cost
(including Actual
Annualized
Acquisition completed Adjusted
Adjusted Capitalization
Name Date improvements) N.O.I.
N.O.I. Rate Value
$___________ $______ $________
___% $____
Total Value of
Category B: $_________
C. Properties Undergoing Rehabilitation
Four-Quarter Adjusted Capitalization
Name End Date N.O.I. Rate
Value
$_______ ___% $____
Total Value of
Category C:
$___________
Total
Item 1: $
Compliance Certificate Schedule 1 -- Worksheet #2: Value of Real Estate
Owned in Part
by Joint Venture or
Unconsolidated Subsidiary
A. Properties Held for More Than One Year
Joint Adjusted Capitalization Gross Net BRI
Venture Property N.O.I. Rate Value Debt Value*
Percentage* Discount* Value
$______ ___% $____ $___ $____
___% ___% $____
Total Value of
Category A: $________
_______________
* If applicable.
B. Properties Held for Less Than One Year
E-10E-10
<PAGE>
SERVICE CONTRACTS (cont d)
<TABLE>
Cost
(including Actual Annualized
Capitali-
Joint Acquisition completed Adjusted Adjusted
zation Gross Net BRI
Venture Property Date improvements) N.O.I. N.O.I. Rate Value
Debt Value* %* Discount* Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$___________ $_____ $________ ___% $____ $____ __% ___% $____
Category B:
$_________
</TABLE>
* If applicable.
C. Properties Undergoing Rehabilitation
<TABLE>
Capitali-
Joint Four-Quarter Adjusted zation
Gross Net BRI
Venture Property End Date N.O.I. Rate Value Debt
Value* Percentage* Discount* Value
<S> <C> <C> <C> <C> <C>
$______ ___% $____ $____ $____ ________%
__________% $_______
</TABLE> E-11E-11
<PAGE>
SERVICE CONTRACTS (cont d)
Value of
C: $___________
2: $
_______________
* If applicable.
Compliance Certificate Schedule 2
Calculation of Mortgaged Property and Joint Venture Cash Flow
Greater of all
recurring capital
expenditures on
an allowance for Mortgaged
capital Property and
Mortgaged expenditure Joint Venture
Property NOI requirements1 Cash Flow2
Banks $_______ (__________) $________
Crossing
Crossroads $_______ (__________) $________
South
Greentree $_______ (__________) $________
Square
New Commons $_______ (__________) $________
Stoneledge $_______ (__________) $________
Plantation
Brookwood
Joint Venture3 $_______ (__________) $_________
Spring Valley
Joint Venture3 $_______ (__________) $_________
And, in the case of Joint Ventures, other reserves required
by Banks.
Provided that for any item of Mortgaged Property owned less than one
year, Mortgaged Property and Joint Venture Cash Flow shall be adjusted as
provided in 9.5.
Adjusted to reflect Obligors' percentage interest in Joint Venture.
E-12E-12
<PAGE>
SERVICE CONTRACTS (cont d)
Total4 = $
Compliance Certificate Schedule 3
Calculation of Pro Forma Debt Service Charges
Principal amount of Loans outstanding:
(a) Principal amount excluding
Joint Venture Portion $___________
(b) 150% of Joint Venture Portion ____________
Total $___________
Rate of interest assumed, equal to the greater of:
(a) highest rate of interest in effect
on Loans, and ____________%
(b) current yield on seven-year Treasuries
plus 2% ____________%
Annual debt service, assuming equal monthly installments
of principal and interest paid over 25 years
$____________
Excluding the Mortgaged Property and Joint Venture Cash Flow for any item
of Mortgaged Property with respect to which there shall have occurred and be
continuing any Security Document Event of Default or event described in
12.1(m).
E-13E-13
<PAGE>
BRI OP LIMITED PARTNERSHIP
470 Atlantic Avenue
Boston, Massachusetts 02210
AMENDMENT NO. 4 OF
AMENDED AND RESTATED
1992 CREDIT AGREEMENT
As of July 16, 1996
THE FIRST NATIONAL BANK OF BOSTON,
for Itself and as Agent
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
MELLON BANK, N.A.
1735 Market Street
Philadelphia, Pennsylvania 19103
Attn: Real Estate Finance
Ladies and Gentlemen:
Each of BRI OP Limited Partnership, a Delaware limited partnership
(the "Borrower") and Berkshire Realty Company Inc. (the "REIT"), and the
undersigned BRI Benchmark Limited Partnership, a Texas limited partnership
and BRI Commons Limited Partnership, a Texas limited partnership, hereby
agrees with each of you as follows:
1. Reference to Credit Agreement and Definitions. Reference is made to
the Amended and Restated 1992 Credit Agreement dated as of November 21,
1995, as amended by Amendment No. 1 thereof dated as of March 1, 1996, by
Amendment No. 2 thereof dated as of March 1, 1996 and by Amendment No. 3
thereof dated as of June 26, 1996 (the "Credit Agreement"), among the
Borrower, Berkshire Realty Company, Inc., certain Guarantors named therein
and each of you. Capitalized terms defined in the Credit Agreement and not
otherwise defined herein are used herein with the meanings given to them in
the Credit Agreement.
2. Request for Amendment. The Borrower has advised you that it has
agreed to provide you with additional collateral for the Obligations and
has agreed to make appropriate revisions to the Credit Agreement.
3. Amendment. On the basis of the representations and warranties of the
Borrower set forth herein, the Credit Agreement is hereby amended as
follows:
3.1. The definition of "Advance Value" in Section 1.1 is amended to
read in its entirety as follows:
Advance Value. At the relevant time of reference
thereto, the sum of (a) for each item of Eligible Real Estate that is
multifamily housing included in the Mortgaged Property the product of
(x) the Appraised Value thereof as most recently determined as
provided under 5.2, 5.3(a)(i), 5.3(a)(ii) or 10.6 (except that
determinations pursuant to 5.3(a)(ii) shall be applicable to the
determination of Advance Value solely for the purpose of 5.4 and
5.5) times (y) 65%, plus (b) for each item of Eligible Real Estate
that is retail commercial space included in the Mortgaged Property
the product of (x) the Appraised Value thereof as most recently
determined as provided under 5.2, 5.3(a)(i), 5.3(a)(ii) or 10.6
(except that determinations pursuant to 5.3(a)(ii) shall be
<PAGE>
applicable to the determination of Advance Value solely for the
purpose of 5.4 and 5.5) times (y) 60%, plus (c) the current value
of cash and Eligible Short-term Investments, if any, at the time
pledged to the Agent as Collateral pursuant to a Pledge Agreement,
plus (d) the J.V. Advance Value then in effect (subject to the
limitation provided below in the definition of such term), plus (e)
the current value determined in a manner agreed to by the Majority
Banks of Collateral accepted by the Majority Banks under clause (vi)
of 5.1; provided that if and so long as any Security Document Event
of Default shall have occurred and be continuing or if any event
described in 12.1(m) shall have occurred with respect to any
Security Document, then the Real Estate subject to such Security
Document or in the case of a Pledge Agreement the cash, Eligible
Short-term Investments or other property subject thereto shall not be
included for the purpose of calculating the Advance Value. To the
extent that any property referred to in the preceding sentence is
encumbered by any lien or encumbrance permitted under 8.2(ii)(B),
the amount of the Indebtedness secured by such lien or encumbrance
shall be deducted from the value determined in accordance with the
preceding sentence.
3.2. Amendment of Schedule 2. The Credit Agreement is amended by
amending Schedule 2 thereto to read in its entirety in the form of Schedule
2 attached to this Amendment.
3.3. Amendment of Schedule 6.22. The Credit Agreement is amended by
amending Schedule 6.22 thereto to read in its entirety in the form of
Schedule 6.22 attached to this Amendment.
4. Conditions to Effectiveness of Amendment. Acceptance of the foregoing
amendments by the Agent on behalf of the Banks shall be subject, without
limitation, to the following conditions:
(a) The Agent shall have received all Eligible Real Estate
Qualification Documents with respect to the multifamily
apartment projects known as Benchmark Apartments located in
Irving, Texas ("Benchmark Apartments") and The Providence
Apartments formerly known as Newport Commons located in Dallas,
Texas ("Providence Apartments").
(b) Each of the Banks shall have received the opinion of Scott L.
Spelfogel, General Counsel to the Borrower, with respect to
this Amendment, the Security Documents for Benchmark Apartments
and Providence Apartments as contemplated by subparagraph (a)
of this Section 4 and other documents required to be delivered
in connection with this Amendment.
(c) Each of the Banks shall have received the opinion of Jackson &
Walker LLP with respect to the Security Documents for Benchmark
Apartments and Providence Apartments as contemplated by
subparagraph (a) of this Section 4.
(d) Each of the Banks shall have received a Compliance Certificate
dated as of the date hereof demonstrating compliance with each
of the covenants calculated therein as of June 30, 1996.
(e) All proceedings in connection with the transactions
contemplated by this Amendment shall be reasonably satisfactory
in form and substance to the Majority Banks and the Agent's
Special Counsel, and the Agent shall have received all
information and such counterpart originals or certified copies
of such documents and such other certificates, opinions or
documents as the Majority Banks and the Agent's Special Counsel
<PAGE>
may reasonably require.
(f) All action on the part of the REIT, the Borrower and each
Subsidiary and Nominee necessary for the valid execution,
delivery and performance by each of the REIT, the Borrower and
such Subsidiary and Nominee of this Amendment No. 4 and the
other Loan Documents to which it is or is to become a party
shall have been duly and effectively taken, and evidence
thereof satisfactory to the Agent shall have been provided to
each of the Banks. Each of the Banks shall have received from
each of the REIT, the Borrower and each applicable Subsidiary
and Nominee true copies of its by-laws and the resolutions
adopted by its shareholders and board of directors, partners,
beneficiaries and trustees, as the case may be, authorizing the
transactions described herein, each certified by its clerk,
secretary, trustee or authorized partner as of a recent date to
be true and complete.
(g) Each of the Banks shall have received from the REIT, the
Borrower and each applicable Subsidiary and Nominee an
incumbency certificate, dated as of the effective date of this
Amendment No. 4, signed by a duly authorized officer of the
REIT or officer, trustee or partner of each applicable
Subsidiary and Nominee and giving the name and bearing a
specimen signature of each individual who shall be authorized:
(a) to sign, in the name and on behalf of the REIT, the
Borrower and each such Subsidiary and Nominee, each of the Loan
Documents to which the REIT, the Borrower or such Subsidiary or
Nominee is or is to become a party; (b) to make Loan and
Conversion Requests; and (c) to give notices and to take other
action on behalf of the REIT or the Borrower under the Loan
Documents.
5. Modification Fees. Upon the execution of this Amendment No. 4, the
Borrower agrees to pay the Banks a fee, in accordance with their respective
Commitment Percentage, in the amount of three eighths of one percent (3/8%)
of the Advance Value of the Benchmark Apartments and Providence Apartments.
6. Representations and Warranties. In order to induce you to enter into
this Amendment, the Borrower hereby represents and warrants that each of
the representations and warranties contained in 6 of the Credit Agreement
is true and correct on the date hereof, after giving effect to the
amendments effected hereby.
7. Joinder. Pursuant to Section 5A.9 of the Credit Agreement, each of the
undersigned BRI Benchmark Limited Partnership and BRI Commons Limited
Partnership hereby joins the Credit Agreement as a Guarantor for all
purposes, including without limitation agreeing to observe and perform all
of the covenants of the Guarantors set forth in Section 5A of the Credit
Agreement. Each of BRI Benchmark Limited Partnership and BRI Commons
Limited Partnership acknowledges and confirms that all representations with
respect to the Guarantors set forth in the Credit Agreement are true with
respect to such new Guarantor. Each of the Obligors listed below hereby
consents to the joinder of BRI Benchmark Limited Partnership and BRI
Commons Limited Partnership.
8. Advance Value of Eligible Real Estate and Joint Venture Collateral. As
of the date hereof, the Borrower and the Majority Banks hereby confirm that
the Advance Value of the Eligible Real Estate and the J.V. Advance Value of
the Joint Venture Collateral is as follows:
Eligible Real Estate Appraised Value Advance Value
<PAGE>
Banks Crossing $12,200,000 x .60 $7,320,000
Crossroads South $11,100,000 x .60 $6,660,000
Greentree Square $ 9,500,000 x .60 $5,700,000
Stoneledge Plantation $11,200,000 x .65 $7,280,000
Benchmark Apartments $ 7,700,000 x .65 $5,005,000
Providence Apartments $ 6,100,000 x .65 $3,965,000
Joint Venture Collateral Appraised Value Advance Value
Brookwood Village $13,800,000 x.40 $5,520,000
Spring Valley
Partnership $20,000,000 x.40 $8,000,000
The Advance Value of the Eligible Real Estate and the J.V. Advance Value of
the Joint Venture Collateral is subject to change from time to time in
accordance with the terms and provisions of the Credit Agreement, as
amended.
9. Miscellaneous. This Amendment may be executed in any number of
counterparts, which together shall constitute one instrument, shall be a
Loan Document, shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts (without giving effect to the
conflict of laws rules of any jurisdiction) and shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns,
including as such successors and assigns all holders of any Obligation.
If the foregoing corresponds with your understanding of our
agreement, please sign this letter and the accompanying copies thereof in
the appropriate space below and return the same to the undersigned. This
letter shall become a binding agreement among each of you and the Borrower
when both the Borrower and you shall have one or more copies hereof
executed by the Borrower, each of you and each of the Guarantors listed
below.
BRI OP LIMITED PARTNERSHIP
By Berkshire Realty Company, Inc.,
its General Partner
By:______________________________
Name:
Title:
BRI BENCHMARK LIMITED PARTNERSHIP
By BRI Southwest Apartments-II, Inc.,
its General Partner
By:______________________________
Name:
Title:
BRI COMMONS LIMITED PARTNERSHIP
By BRI Southwest Apartments-II, Inc.,
its General Partner
By:______________________________
<PAGE>
Name:
Title:
The foregoing Amendment is
hereby agreed to.
THE FIRST NATIONAL BANK OF BOSTON,
for Itself and as Agent
By:____________________________
Name:
Title:
MELLON BANK, N.A.
By:____________________________
Name:
Title:
The foregoing Amendment is
hereby consented to.
BERKSHIRE REALTY COMPANY, INC.
By:____________________________
Name:
Title:
BRI TEXAS APARTMENTS LIMITED
PARTNERSHIP
By BRI Texas Apartments-II, Inc., its
General Partner
By:____________________________
Name:
Title:
BRI RIVER OAKS LIMITED PARTNERSHIP
By BRI River Oaks-II, Inc., its General
Partner
By:____________________________
Name:
Title:
BRI SOUTHWEST APARTMENTS LIMITED
PARTNERSHIP
By BRI Southwest Apartments-II, Inc.,
its General Partner
By:____________________________
<PAGE>
Name:
Title:
BRI GREENTREE CORPORATION
By:____________________________
Name:
Title:
BRI TEXAS APARTMENTS-II, INC.
By:____________________________
Name:
Title:
BRI RIVER OAKS-II, INC.
By:____________________________
Name:
Title:
BRI SOUTHWEST APARTMENTS-II, INC.
By:____________________________
Name:
Title:
SCHEDULE 2
ELIGIBLE REAL ESTATE
Name of Facility Location Type
Banks Crossing Fayetteville, GA Shopping Center
Crossroads South Jonesboro, GA Shopping Center
Greentree Square Marlton, NJ Shopping Center
Stoneledge
Plantation Greenville, SC Multifamily Housing
Benchmark Apartments Irving, TX Multifamily Housing
The Providence
Apartments (f/k/a
Newport Commons) Dallas, TX Multifamily Housing
Schedule 6.22
SERVICE CONTRACTS
Greentree Square:
Fire Alarm System
<PAGE>
National Guardian Fire Alarm
1816 West Point Pike
P.O. Box 26
West Point, PA 19486-0026
Landscaping
Exterior Maintenance (1995 season)
P.O. Box 5843
Deptford, NJ 08096
Parking Lot Sweeping
Advanced Lot Maintenance
Rubbish Removal
Five County Carting
Security
General Security Systems
Snow Removal
Mecouch Bros.
Banks Crossing Shopping Center:
Window Washing/Rubbish Removal
S.K. Scogin
110 Paces Court
Fayetteville, GA 30214
Sweeping
Sparkling Clean Parking Lot Maintenance
P.O. Box 41
Jonesboro, GA 30237-0041
Landscaping
Ivey Landscaping
500 Merroway Court
Alpharetta, GA 30202
Exterminating
Lanier Exterminating
P.O. Box 127
Cumming, GA 30130
Termite Bond
Arrow Exterminating
Fayetteville, GA
HVAC
Diversified Mechanical
1755 Red Rose Lane
Loganville, GA 30149
Pressure Washing
J & M Truck Kleen
Plumbing
Blanton Plumbing
1788 Rock Ridge Dr.
Conyers, GA 30207
<PAGE>
Locksmith
A H & H Locksmith
951 Pointe South Parkway
Jonesboro, GA
Roof Repair
West Ga. Roofing
P.O. Box 767
Carrollton, GA 30339
Parking Lot Lights
Special Service Co.
133 Crestwood Road
Tyrone, GA 30290
Electrical
Special Service Co.
133 Crestwood Road
Tyrone, GA 30290
Irrigation/Sprinklers
Sweetwater Irrigation
P.O. Box 1421
Norcross, GA 30091
Asphalt
Aaron Asphalt
4455-A Business Park Court
Lilburn, GA 30147
Asphalt (repairs)
Classic Paint & Construction
Concrete
Jimmy Kight
Fire Alarm/Sprinkler Systems
Cobb Fire & Safety
3300 Cobb Parkway, 330-17
Acworth, GA 30101
Signs
Maltese Signs
5785 Peachtree Industrial Boulevard
Atlanta, GA 30341
Towing
Tara Wrecker, Inc.
8754 Roberts Road
Jonesboro, GA 30236
Glass
The Glass Doctor
Jonesboro, GA
Crossroads South Shopping Center:
Window Washing/Rubbish Removal
S.K. Scogin
110 Paces Court
Fayetteville, GA 30214
<PAGE>
Sweeping
Sparkling Clean Parking Lot Maintenance
P.O. Box 41
Jonesboro, GA 30237
Landscaping
Ivey Landscaping
500 Merroway Court
Alpharetta, GA 30202
Exterminating
Lanier Exterminating
P.O. Box 127
Cumming, GA 30130
Termite Bond
Arrow Exterminating
Fayetteville, GA
HVAC
Diversified Mechanical
1755 Red Rose Lane
Loganville, GA 30249
Rubbish Removal
BFI Waste Systems
P.O. Box 93097
Atlanta, GA 30377
Pressure Washing
J & M Truck Kleen
Security
Roc s Protective Service
Roof Repair
West Ga. Roofing
P.O. Box 767
Carrollton, GA 30117
Plumbing
Blanton Plumbing
<PAGE>
Parking Lot Lights
Special Service Co.
133 Crestwood Road
Tyrone, GA 30290
Electrical
Special Service Co.
133 Crestwood Road
Tyrone, GA
Locksmith
A H & H Locksmith
951 South Pointe Parkway
Jonesboro, GA
Irrigation/Sprinklers
Sweetwater Irrigation
P.O. Box 1421
Norcross, GA 30091
Asphalt
Aaron Asphalt
4455-A Business Park Court
Lilburn, GA 30247
Asphalt (repairs)
Classic Paint & Construction
Concrete
Jimmy Kight
Fire Alarm/Sprinkler Systems
Cobb Fire & Safety
3300 Cobb Parkway, 330-17
Acworth, GA 30101
Signs
Maltese Signs
5785 Peachtree Industrial Boulevard
Atlanta, GA 30341
Towing
Tara Wrecker, Inc.
8754 Roberts Road
Jonesboro, GA 30236
Glass
The Glass Doctor
Jonesboro, GA
Stoneledge Plantation Apartments:
Landscaping
Sun Landscaping of Greenville, Inc.
202 Tollgate Road
Simpsonville, SC 29681
Waste Removal
Waste Management of South Carolina
P.O. Box 5349
Spartanburg, SC 29303
Note: Property is missing TCI Cable contract.
<PAGE>
Benchmark Apartments:
[Not Available]
Newport Commons Apartments:
[Not Available]
<PAGE>
FIRST AMENDMENT TO MASTER CREDIT FACILITY AGREEMENT
THIS FIRST AMENDMENT TO MASTER CREDIT FACILITY AGREEMENT (the
"First Amendment") is made as of the day of March, 1996, by
and among (I) BRI OP LIMITED PARTNERSHIP, a Delaware limited
partnership (the "Borrower"), (ii) BERKSHIRE REALTY COMPANY, INC.,
a Delaware corporation (the "REIT"), (iii) BRI RIVER OAKS LIMITED
PARTNERSHIP, a Delaware limited partnership (the "Existing
Subsidiary Guarantor"), BRI TEXAS APARTMENTS LIMITED PARTNERSHIP
and BRI HIDDEN OAKS PARTNERSHIP (collectively, with the Existing
Subsidiary Guarantor, the Subsidiary Guarantors"), (iv)
WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware corporation
(the "Lender") and (v) FEDERAL NATIONAL MORTGAGE ASSOCIATION, a
federally-chartered and stockholder-owned corporation organized and
existing under the Federal National Mortgage Association Charter
Act, 12 U.S.C. 1716 et seq. ("Fannie Mae").
RECITALS
A. The Borrower, the REIT, the Existing Subsidiary
Guarantor and the Lender are parties to that certain Master Credit
Facility Agreement, dated as of November 17, 1995 (as amended from
time to time, the "Master Agreement").
B. All of the Lender's right, title and interest in the
Master Agreement and the Loan Documents executed in connection with
the Master Agreement or the transactions contemplated by the Master
Agreement have been assigned to Fannie Mae pursuant to that certain
Assignment of Master Credit Facility Agreement and Other Loan
Documents, dated as of November 17, 1995 (the "Assignment").
Fannie Mae has not assumed any of the obligations of the Lender
under the Master Agreement or the Loan Documents as a result of the
Assignment. Fannie Mae has designated the Lender as the servicer
of the Advances contemplated by the Master Agreement, and the
Lender acts as Fannie Mae's agent with respect to the making of
certain decisions under the Master Agreement.
C. The parties are executing this First Amendment pursuant
to the Master Agreement to reflect a conversion of all or a portion
of a Revolving Facility Credit Commitment to the Base Facility
Credit Commitment.
NOW, THEREFORE, the parties hereto, in consideration of the
mutual promises and agreements contained in this First Amendment
and the Master Agreement, and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby agree as follows:
1. Conversion. The Revolving Facility Credit Commitment
shall be reduced by, and the Base Facility Credit Commitment shall
be increased by, $13,345,000, and the definitions of
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"Revolving Facility Credit Commitment" and "Base Facility Credit
Commitment" are hereby replaced in their entirety by the following
new definitions:
"Base Facility Credit Commitment" means an amount equal to
$63,345,000, or such greater amount, not to exceed the Maximum
Credit Commitment, as the Borrower may elect in accordance with,
and subject to, the provisions of Article V, Article VIII or
Section 9.06.
"Revolving Facility Credit Commitment" means an amount equal
to $36,655,000, or such lesser amount as the Borrower may elect
in accordance with, and subject to the provisions of, Article IX,
or such greater amount, not to exceed $68,655,000, as the
Borrower may elect in accordance with, and subject to, the
provisions of Article VIII.
2. Maturity Date of Base Facility Advances. Section
2.02(a)(3) of the Master Agreement is hereby replaced in its
entirety by the following new provision:
(3) Maturity Date of Base Facility Advances. Regardless of the
date on which a Base Facility Advance is made, the maturity date
of each Base Facility Advance shall be a date selected by the
Borrower in its Request for a Base Facility Advance, which date
shall occur (I) with respect to any Base Facility Advance made on
or before November 30, 1998, (a) on or after the date which
completes 84 full months after the Closing Date for the Base
Facility Advance, (b) on or before the Base Facility Termination
Date and (c)on a date which completes a full month after the
Closing Date for the Base Facility Advance, and (ii) with respect
to any Base Facility Advance made after November 30, 1998, the
Base Facility Termination Date. For these purposes, the year
shall be deemed to consist of 12 30-day months. For example, the
date which completes three full months after September 15 shall
be December 15; the date which completes three full months after
November 30 shall be February 28, etc.
3. Capitalized Terms. All capitalized terms used in this
First Amendment which are not specifically defined herein shall
have the respective meanings set forth in the Master Agreement.
4. Full Force and Effect. Except as expressly modified
by this First Amendment, all terms and conditions of the Master
Agreement shall continue in full force and effect.
5. Counterparts. This First Amendment may be executed in
counterparts by the parties hereto, and each such counterpart
shall be considered an original and all such counterparts shall
constitute one and the same instrument.
6. Subsidiary Guarantors. The Subsidiary Guarantors
other than the Existing Subsidiary Guarantor are not original
parties to the Master Agreement but are executing this Agreement
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to evidence their agreement to observe, and to be bound by, all
of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
Borrower
BRI OP LIMITED PARTNERSHIP
By: Berkshire Realty Company, Inc.,
General Partner
By:
Name: Marianne Pritchard
Title:Senior Vice President/
Chief Financial Officer
REIT
BERKSHIRE REALTY COMPANY,
INC.
By:
Name: Marianne Pritchard
Title:Senior Vice President/
Chief Financial Officer
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
Existing Subsidiary Guarantor
BRI RIVER OAKS LIMITED PARTNERSHIP
By: BRI River Oaks-II, Inc.,
General Partner
By:
Name: Marianne Pritchard
Title:Vice President and Treasurer
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
Subsidiary Guarantors
BRI HIDDEN OAKS PARTNERSHIP (formerly known as L & V Hidden Oaks
Partnership), a Texas general partnership
By: BRI Texas Apartments Limited Partnership, a
Delaware limited partnership, a General Partner
By: BRI Texas Apartments-II, Inc.,
an
Alabama corporation, General
Partner
By: (Seal)
Name: Marianne Pritchard
Title: Vice President and
Treasurer
BRI TEXAS APARTMENTS LIMITED PARTNERSHIP, a Delaware
limited partnership
By: BRI Texas Apartments-II, Inc., an Alabama
corporation, General Partner
By: (SEAL)
Name: Marianne Pritchard
Title: Vice President and
Treasurer
Lender
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD.
By:
Name:
Title:
Fannie Mae
FEDERAL NATIONAL MORTGAGE ASSOCIATION
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By:
Name:
Title:
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