-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K2+pNUni/XF6xe57OsWx5Se/6SUHsRWE3ESFQ0+DO8pXDSGvaxOFDSlEUeSpnaD5 bmUbjQuNOe4TPJV4k0paLQ== 0000927016-98-003504.txt : 19980925 0000927016-98-003504.hdr.sgml : 19980925 ACCESSION NUMBER: 0000927016-98-003504 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980924 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980924 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRADLEY REAL ESTATE INC CENTRAL INDEX KEY: 0000013777 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 046034603 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10328 FILM NUMBER: 98713979 BUSINESS ADDRESS: STREET 1: 40 SKOKIE BLVD STE 600 CITY: NORTHBROOK STATE: IL ZIP: 60062-1626 BUSINESS PHONE: 8472729800 MAIL ADDRESS: STREET 1: 40 SKOKIE BOULEVARD SUITE 600 CITY: NORTHBROOK STATE: IL ZIP: 60062-1626 FORMER COMPANY: FORMER CONFORMED NAME: BRADLEY REAL ESTATE TRUST DATE OF NAME CHANGE: 19920703 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: September 24, 1998 Date of earliest event reported: February 13, 1998 ----------------------- BRADLEY REAL ESTATE, INC. (Exact name of Registrant as specified in its charter) MARYLAND 1-10328 04-6034603 (State or other jurisdiction (Commission File (I.R.S. Employer of incorporation) Number) Identification No.) 40 SKOKIE BOULEVARD, NORTHBROOK, ILLINOIS 60062 (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (847) 272-9800 Item 5. Other Events. ------------ Bradley Real Estate, Inc. (the "Company" or "Bradley") files this Form 8-K report that contains financial statements consistent with Regulation S-X, Rule 3-14 for properties accounting for over 50% of the aggregate acquisition costs of a series of properties acquired during the period January 1, 1998 through September 23, 1998 (the "Acquisition Properties"). The Acquisition Properties do not include properties which Bradley acquired August 6, 1998 pursuant to the Agreement and Plan of Merger dated May 30, 1998 between Bradley and Mid-America Realty Investments, Inc. (the "Mid-America Merger"). During the period January 1 through September 23, 1998, the Company acquired 19 shopping centers and two outlots adjacent to one of Bradley's existing centers at an aggregate cost of approximately $179.0 million. No one property or group of properties comprising the Acquisition Properties was in itself significant, but in the aggregate the costs exceed 10% of the total assets of the Company and its subsidiaries consolidated at December 31, 1997. The Acquisition Properties have been funded with borrowings under the Company's bank line of credit and through the assumption of existing mortgage indebtedness. The dates, shopping centers acquired and the approximate acquisition cost for the respective Acquisition Properties are as follows:
APPROXIMATE ACQUISITION DATE PROPERTY COST February 13, 1998 Kings Plaza, Richmond, IN $ 3,671,000 March 5, 1998 Sagamore Park, West Lafayette, IN 7,769,000 March 13, 1998 Oak Creek Centre, Oak Creek, WI 4,926,000 March 31, 1998 Midtown Mall, Ashland, KY 7,441,000 March 31, 1998 * Courtyard Shopping Center, Burton, MI 9,710,000 April 10, 1998 * Redford Plaza, Redford, MI 20,685,000 May 13, 1998 Butterfield Square, Libertyville, IL 13,008,000 May 13, 1998 * Plainview Village, Louisville, KY 12,100,000 May 13, 1998 * Camelot Shopping Center, Louisville, KY 8,645,000 May 13, 1998 Dixie Plaza, Louisville, KY 3,676,000 May 28, 1998 Bartonville, Peoria, IL 1,583,000 May 28, 1998 Sterling Outlots, Peoria, IL 525,000 June 10, 1998 Garden Plaza, Franklin, WI 5,346,000 June 23, 1998 Fox River, Burlington, WI 7,632,000 June 26, 1998 Lincoln Plaza, New Haven, IN 5,075,000 August 19, 1998 Midtown Plaza, Shawnee, KS 6,128,000 August 21, 1998 * Ellisville Square, St. Louis, MO 10,971,000 August 28, 1998 Doubletree Plaza, Winfield, IN 7,946,000 September 1, 1998 * Clock Tower Plaza, Lima, OH 14,774,000 September 4, 1998 * Salem Consumer Square, Dayton, OH 27,342,000 ------------ $178,953,000 ============
2 Properties designated with an asterisk (*) are properties included within the Acquisition Properties for which financial statements accompany this report or were previously filed on Form 8-K. (See Item 7.) None of the Acquisition Properties was or will be acquired from a related party of the Company or its consolidated subsidiaries. Factors considered by the Company in assessing the acquisition price for each of the Acquisition Properties included its location and tenant mix, including opportunities for retenanting and remodeling consistent with the Company's experience as a shopping center operator; its current net operating income and the prospect for increased income in the short and long range future; capitalization rates for shopping center properties of the type acquired, in the Midwest area of the United States generally and in the locality in which the property is located; current operating costs and the possibility of effecting property-level operating efficiencies as a result of the Company's ownership of a significant number of shopping centers in the Midwest; and the differential between the Company's cost of capital in acquiring the property and the property's current and potential net operating income. After reasonable inquiry, the Company is not aware of any material factors relating to any specific property included within the Acquisition Properties other than those discussed in the preceding sentence that would cause the reported financial information not to be necessarily indicative of future operating results. On June 18, 1998, the Company filed a Registration Statement on Form S-4 (Registration No. 333-57123) with the Securities and Exchange Commission relating to the 8.4% Series A Convertible Preferred Stock (the "Series A Preferred Stock") to be issued by the Company upon consummation of the Mid- America Merger (the "Merger Registration Statement"). Reference is made to the Merger Registration Statement for a description of the terms of the Mid-America Merger. The pro forma financial statements listed under Item 7 below reflect both (a) certain transactions of Bradley, as described within such financial statements (the "Prior Bradley Transactions"), other than the Mid-America Merger as well as (b) the Prior Bradley Transactions and the Mid-America Merger. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits ------------------------------------------------------------------ The following financial statements and pro forma financial information accompany this report: (a) Financial Statements - Acquisition Properties - Clock Tower Plaza Independent Auditors' Report For the Six Months Ended June 30, 1998 (unaudited) and the Year Ended December 31, 1997 Statement of Revenues and Certain Expenses Notes to Statement of Revenues and Certain Expenses 3 (b) Pro Forma Financial Information - Bradley Real Estate, Inc. Pro Forma Condensed Combined Balance Sheet as of June 30, 1998 (unaudited) Pro Forma Condensed Balance Sheet to reflect Prior Bradley Transactions as of June 30, 1998 (unaudited) Pro Forma Condensed Combined Statement of Income for the Six Months Ended June 30, 1998 (unaudited) Pro Forma Condensed Statement of Income to reflect Prior Bradley Transactions for the Six Months Ended June 30, 1998 (unaudited) Pro Forma Condensed Combined Statement of Income for the Year Ended December 31, 1997 (unaudited) Pro Forma Condensed Statement of Income to reflect Prior Bradley Transactions for the Year Ended December 31, 1997 (unaudited) (c) Exhibits Exhibit 23.1 Consent of KPMG Peat Marwick LLP 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BRADLEY REAL ESTATE, INC. By: /s/ Thomas P. D'Arcy ------------------------- Date: September 24, 1998 Thomas P. D'Arcy Chairman, President and Chief Executive Officer 5 INDEPENDENT AUDITORS' REPORT The Board of Directors of Bradley Real Estate, Inc. and Unit Holders of Bradley Operating Limited Partnership: We have audited the accompanying statement of revenues and certain expenses (defined as operating revenues less direct operating expenses) of Clock Tower Plaza for the year ended December 31, 1997. This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenues and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of revenues and certain expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the statement of revenues and certain expenses. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and for inclusion in a current report on Form 8-K of Bradley Real Estate, Inc. as described in Note 2. The presentation is not intended to be a complete presentation of Clock Tower Plaza's revenues and expenses. In our opinion, the statement of revenues and certain expenses referred to above presents fairly, in all material respects, the revenues and certain expenses described in Note 2, of Clock Tower Plaza for the year ended December 31, 1997, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Chicago, Illinois September 2, 1998 F-1 ACQUISITION PROPERTIES - CLOCK TOWER PLAZA Statement of Revenues and Certain Expenses Year ended December 31, 1997 and the Six Months ended June 30, 1998 (unaudited) - --------------------------------------------------------------------------------
Six Months Ended June 30, 1998 Year Ended (unaudited) December 31, 1997 - --------------------------------------------------------------------------------------- Revenues: - --------------------------------------------------------------------------------------- Base rental income $670,653 $1,323,751 Operating expense and real estate tax recoveries 82,310 194,434 Other income 220 830 - --------------------------------------------------------------------------------------- Total revenues 753,183 1,519,015 - --------------------------------------------------------------------------------------- Certain expenses: Real estate taxes 32,500 65,148 Operating expenses 27,141 105,135 Utilities 2,962 9,407 Insurance 7,260 14,520 Total expenses 69,863 194,210 - --------------------------------------------------------------------------------------- Excess of revenues over certain expenses $683,320 $1,324,805 - ---------------------------------------------------------------------------------------
See accompanying notes to statement of revenues and certain expenses. F-2 ACQUISITION PROPERTIES - CLOCK TOWER PLAZA Notes to Statement of Revenues and Certain Expenses Year ended December 31, 1997 and the Six Months ended June 30, 1998 (unaudited) - -------------------------------------------------------------------------------- (1) BACKGROUND The Statement of Revenues and Certain Expenses (Statement) has been included for Clock Tower Plaza which was acquired by Bradley Real Estate, Inc. through Bradley Operating Limited Partnership (the Operating Partnership) on September 1, 1998. Clock Tower Plaza is located in Lima, Ohio. It consists of approximately 238,000 square feet of gross leasable area and was approximately 95% occupied at December 31, 1997. (2) BASIS OF PRESENTATION The Statement has been prepared for the purpose of complying with Rule 3.14 of Regulation S-X of the Securities and Exchange Commission and for inclusion in a current report on Form 8-K of Bradley Real Estate, Inc. and is not intended to be a complete presentation of Clock Tower Plaza's revenues and expenses. The Statement has been prepared on the accrual basis of accounting and requires management of Clock Tower Plaza to make estimates and assumptions that affect the reported amounts of the revenues and expenses during the reporting period. Actual results may differ from those estimates. Certain expenses which may not be comparable to the expenses expected to be incurred in the proposed future operations of Clock Tower Plaza have been excluded from the Statement. Expenses excluded consist of interest, depreciation and amortization, professional fees, and management fees. Unaudited Interim Period ------------------------ The accompanying interim statement of revenues and certain expenses has been prepared without audit and in the opinion of management reflects all normal recurring adjustments necessary for a fair presentation of results for the unaudited interim period presented. Certain information in footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted. (3) REVENUES The property leases retail space under various lease agreements with its tenants. All leases are accounted for as operating leases. Certain of the leases include provisions under which the property is reimbursed for certain common area, real estate, and insurance costs. Operating expenses and real estate tax recoveries reflected on the statement of revenues and certain expenses include amounts due for 1997 expenses for which the tenants have not yet been billed. In addition, certain leases provide for payment of contingent rentals based on a percentage applied to the amount by which the tenant's sales, as defined, exceed predetermined levels. Certain leases contain renewal options for various periods at various rental rates. Base rentals are reported as income over the lease term as they become receivable under the provisions of the leases. However, when rentals vary from a straight-line basis due to short-term rent abatements or escalating rents during the lease term, the income is recognized based on effective rental rates. Related adjustments increased base rental income by approximately $52,000 for the year ended December 31, 1997. F-3 ACQUISITION PROPERTIES - CLOCK TOWER PLAZA Notes to Statement of Revenues and Certain Expenses Year ended December 31, 1997 and the Six Months ended June 30, 1998 (unaudited) - -------------------------------------------------------------------------------- Minimum rents to be received from tenants under operating leases in effect at December 31, 1997 are approximately as follows: - --------------------------------------------------------------------------------
Year Amount - -------------------------------------------------------------------------------- 1998 $1,293,572 1999 1,328,765 2000 1,168,169 2001 1,075,125 2002 965,064 Thereafter 7,499,130 - --------------------------------------------------------------------------------
F-4 BRADLEY REAL ESTATE, INC. PRO FORMA CONDENSED COMBINED BALANCE SHEET JUNE 30, 1998 (UNAUDITED) This unaudited Pro Forma Condensed Combined Balance Sheet is presented as if the Prior Bradley Transactions (see Note A) and the Mid-America Merger had been consummated on June 30, 1998. The Mid-America Merger has been accounted for under the purchase method of accounting in accordance with Accounting Principles Board Opinion No. 16. In the opinion of Bradley's management, all adjustments necessary to reflect the effects of this transaction have been made. The accompanying pro forma condensed combined financial statements have been prepared based on pro forma adjustments to pro forma and historical financial statements of Bradley and historical financial statements of Mid-America. This unaudited Pro Forma Condensed Combined Balance Sheet is presented for comparative purposes only and is not necessarily indicative of what the actual financial position of Bradley would have been at June 30, 1998, nor does it purport to represent the future financial position of Bradley. This unaudited Pro Forma Condensed Combined Balance Sheet should be read in conjunction with, and is qualified in its entirety by the Pro Forma Condensed Balance Sheet to reflect Prior Bradley Transactions and the respective historical financial statements and the notes thereto of Bradley and Mid-America.
BRADLEY PRIOR PRO FORMA PRO FORMA BRADLEY MID-AMERICA AS ADJUSTED PRO FORMA MID-AMERICA MERGER FOR THE TRANSACTIONS(A) HISTORICAL ADJUSTMENTS (B) MID-AMERICA MERGER --------------- ----------- --------------- ------------------ (IN THOUSANDS EXCEPT PER SHARE DATA) ASSETS Real estate investments, at cost................. $807,701 $153,014 $ (9,364) $951,351 Accumulated depreciation and amortization........ (48,813) (35,310) 35,310 (48,813) -------- -------- --------- -------- Net real estate investments.................... 758,888 117,704 25,946 902,538 Cash and cash equivalents........................ 1,695 -- -- 1,695 Rents and other receivables...................... 12,590 2,242 (1,108) (C) 13,724 Investment in partnership........................ -- 14,853 (1,597) 13,256 Deferred charges and other assets................ 19,956 3,941 (2,839) (D) 21,058 -------- -------- --------- -------- Total assets................................... $793,129 $138,740 $ 20,402 $952,271 ======== ======== ========= ======== LIABILITIES Mortgage loans................................... 68,266 49,341 (11,258) (E) 106,349 Unsecured notes payable.......................... 199,512 -- -- 199,512 Lines of credit.................................. 117,961 13,380 18,232 (F) 149,573 Accounts payable, accrued expenses and other liabilities............................... 27,642 2,401 41 30,084 -------- -------- --------- -------- Total liabilities.............................. 413,381 65,122 7,015 485,518 -------- -------- --------- -------- Minority interest................................ 20,846 -- -- 20,846 -------- -------- --------- -------- SHARE OWNERS' EQUITY Series A Preferred Stock and paid-in capital..... -- -- 87,005 (G) 87,005 Common stock at par.............................. 238 83 (83) (G) 238 Additional paid-in capital....................... 345,327 119,735 (119,735) (G) 345,327 Accumulated earnings in excess of distributions.. 13,337 (46,200) 46,200 (G) 13,337 -------- -------- --------- -------- Total share owners' equity..................... 358,902 73,618 13,387 445,907 -------- -------- --------- -------- Total liabilities and share owners' equity....................................... $793,129 $138,740 $ 20,402 $952,271 ======== ======== ========= ========
F-5 - --------------- Notes to Pro Forma Condensed Combined Balance Sheet (A) See page F-8 for the pro forma condensed balance sheet giving effect to Prior Bradley Transactions. (B) Represents adjustments to record the Mid-America Merger in accordance with the purchase method of accounting, based upon a purchase price of approximately $157.2 million, which assumes a value of $25 per share of Series A Preferred Stock, computed as follows (in thousands): Issuance of Series A Preferred Stock.......................... $87,005 Assumption of Mid-America liabilities......................... 65,122 Adjustment to increase mortgage debt to estimated fair value.. 2,124 Estimated costs of the Mid-America Merger..................... 4,850 -------- $159,101 ========
(C) Represents the write-off of the portion of the Mid-America accounts receivable representing deferred rents arising from Mid-America recognition of rental income on a straight-line basis in accordance with generally accepted accounting principles. Bradley, as the surviving corporation, will recognize rental income on a straight-line basis over the remaining terms of the Mid-America leases in accordance with generally accepted accounting principles. (D) Represents the adjustment of Mid-America's carrying value of deferred charges to the estimated fair values in accordance with the purchase method of accounting. Organization costs, leasing costs and management contracts of Mid-America were deemed to have no future value to Bradley and were written-off in accordance with the purchase method of accounting. Other assets were adjusted to the estimated fair values as of June 30, 1998. The amounts represented by these adjustments are summarized below (in thousands): Leasing costs........................................... $ 2,713 Decrease in value of TIF bonds.......................... 1,524 Loan costs.............................................. 1,319 Management contract..................................... 893 Other................................................... 394 Decrease in cash surrender value of executive benefits.. 22 Less accumulated amortization........................... (4,026) ------- Pro forma adjustment.................................... $ 2,839 =======
(E) Represents the prepayment of Mid-America mortgage debt funded with Bradley's line of credit, and the adjustment to the carrying value of the remaining Mid-America mortgage debt to the estimated fair values at June 30, 1998, as follows (in thousands): Amount of Mid-America mortgage debt prepaid..................... $(13,382) Adjustment to estimated fair value for remaining mortgage debt.. 2,124 -------- Pro forma adjustment............................................ $(11,258) ========
F-6 (F) Estimated payments for fees and expenses related to the Mid-America Merger are as follows (in thousands): Investment advisory fees................................... $ 1,770 Termination and severance.................................. 1,160 Legal and accounting....................................... 1,015 Real estate due diligence and closing costs................ 614 Other...................................................... 145 Printing and filing fees................................... 96 D&O insurance.............................................. 50 ------- 4,850 Expected amount of Mid-America mortgage debt prepaid with Bradley's line of credit.............................. 13,382 ------- Pro forma adjustment....................................... $18,232 =======
(G) To adjust Mid-America's capital accounts to reflect the issuance of 3,480,210 shares of Series A Preferred Stock in exchange for all of the outstanding shares of Mid-America Common Stock at an Exchange Ratio of 0.42 shares of Series A Preferred Stock for each outstanding share of Mid- America Common Stock, as follows (in thousands):
SERIES A PREFERRED STOCK AND COMMON PAID-IN DISTRIBUTION IN PAID-IN SHARES CAPITAL EXCESS OF EARNINGS CAPITAL ------- ---------- ------------------- --------- Issuance of Series A Preferred Stock.... $ -- $ -- $ -- $87,005 Mid-America's historical stockholders' equity............................... $ 83 119,735 (46,200) -- ----- --------- -------- ------- Pro forma adjustment $(83) $(119,735) $ 46,200 $87,005 ===== ========= ======== =======
F-7 BRADLEY REAL ESTATE, INC. PRO FORMA CONDENSED BALANCE SHEET TO REFLECT PRIOR BRADLEY TRANSACTIONS JUNE 30, 1998 (UNAUDITED) From July 1, 1998 through September 23, 1998, Bradley acquired an additional five shopping centers for an aggregate cost of approximately $67 million. On July 31, 1998, Bradley completed the sale of One North State for approximately $84.5 million. The net proceeds of approximately $83 million were used to pay down the line of credit. The unaudited Pro Forma Condensed Balance Sheet of Bradley is presented as if the acquisitions and the disposition, described above, had been consummated on June 30, 1998.
JUNE 30, 1998 ACQUISITION DISPOSITION HISTORICAL ADJUSTMENTS (A) ADJUSTMENTS (B) PRO FORMA -------------- --------------- --------------- ---------- (IN THOUSANDS EXCEPT PER SHARE DATA) ASSETS Real estate investments --at cost........... $740,540 $67,161 $ -- $807,701 Accumulated depreciation and amortization... (48,813) -- -- (48,813) -------- ------- -------- -------- Net real estate investments................. 691,727 67,161 -- 758,888 Real estate investments held for sale....... 52,702 (52,702) -- Other assets: Cash and cash equivalents.................. 1,695 -- -- 1,695 Rents and other receivables................ 14,361 -- (1,771) 12,590 Deferred charges, net and other assets..... 20,439 -- (483) 19,956 -------- ------- -------- -------- Total assets................................ $780,924 $67,161 $(54,956) $793,129 ======== ======= ======== ======== LIABILITIES AND SHARE OWNERS' EQUITY Mortgage loans.............................. 55,866 12,400 -- 68,266 Unsecured notes payable..................... 199,512 -- -- 199,512 Line of credit.............................. 146,200 54,761 (83,000) 117,961 Accounts payable, accrued expenses and other liabilities.......................... 31,574 -- (3,932) 27,642 -------- ------- -------- -------- Total liabilities........................... 433,152 67,161 (86,932) 413,381 -------- ------- -------- -------- Minority interest........................... 19,090 -- 1,756 20,846 -------- ------- -------- -------- Share owners' equity Common stock at par........................ 238 -- -- 238 Additional paid-in capital................. 345,327 -- -- 345,327 Accumulated earnings in excess of distributions.......................... (16,883) -- 30,220 13,337 -------- ------- -------- -------- Total share owners' equity.................. 328,682 -- 30,220 358,902 -------- ------- -------- -------- Total liabilities and share owners' equity.. $780,924 $67,161 $(54,956) $793,129 ======== ======= ======== ========
EXPLANATORY NOTES (A) Adjustments represent Acquisition Properties acquired subsequent to June 30, 1998. (B) Adjustments represent the sale of One North State for sales proceeds of approximately $84.5 million, and the application of the net proceeds to pay down Bradley's line of credit. F-8 BRADLEY REAL ESTATE, INC. PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) This unaudited Pro Forma Condensed Combined Statement of Income is presented as if the Mid-America Merger and all the Prior Bradley Transactions (see Note A) had been consummated on January 1, 1997 and with Bradley qualifying as a REIT, distributing all of its taxable income and, therefore, incurring no federal income tax expense during the period January 1, 1997 through June 30, 1998. The Mid-America Merger has been accounted for under the purchase method of accounting in accordance with Accounting Principles Board Opinion No. 16. In the opinion of Bradley's management, all adjustments necessary to reflect the effects of these transactions have been made. The accompanying Pro Forma Condensed Combined Statement of Income has been prepared based on pro forma adjustments to pro forma and historical financial statements of Bradley and historical financial statements of Mid-America. This unaudited Pro Forma Condensed Combined Statement of Income is presented for comparative purposes only and is not necessarily indicative of what the actual results of operations of Bradley would have been for the period presented, nor does it purport to represent the results to be achieved in future periods. This unaudited Pro Forma Condensed Combined Statement of Income should be read in conjunction with, and is qualified in its entirety by the Pro Forma Condensed Statement of Income to reflect Prior Bradley Transactions and the respective historical financial statements and the notes thereto of Bradley and Mid-America.
SIX MONTHS ENDED JUNE 30, 1998 ----------------------------------------------------------- BRADLEY PRO FORMA PRIOR PRO FORMA AS ADJUSTED BRADLEY MID-AMERICA FOR PRO FORMA MID-AMERICA MERGER MID-AMERICA TRANSACTIONS(A) HISTORICAL(B) ADJUSTMENTS MERGER --------------- -------------- ------------ ------------ (IN THOUSANDS EXCEPT PER SHARE DATA) Income: Rental income................................... $ 60,453 $11,187 $ -- $ 71,640 Other income.................................... 1,080 329 -- 1,409 ----------- ------- ----------- ----------- Total revenue................................. 61,533 11,516 -- 73,049 ----------- ------- ----------- ----------- Expenses: Operations, maintenance and management.......... 8,594 1,884 -- 10,478 Real estate taxes............................... 9,852 1,471 -- 11,323 Mortgage and other interest..................... 14,054 2,670 (273) (C) 16,451 General and administrative...................... 3,120 937 (663) (D) 3,394 Provision for merger related expenses........... -- 376 (376) -- Depreciation and amortization................... 11,835 2,495 (959) (E) 13,371 ----------- ------- ----------- ----------- Total expenses................................ 47,455 9,833 (2,271) 55,017 ----------- ------- ----------- ----------- Income before equity in earnings of partnership and allocation to minority interest............. 14,078 1,683 2,271 18,032 Equity in earnings of partnership................ -- 476 139 615 Income allocated to minority interest............ (792) -- -- (792) ----------- ------- ----------- ----------- Net income....................................... 13,286 2,159 2,410 17,855 Preferred share distributions.................... -- -- (3,654) (F) (3,654) ----------- ------- ----------- ----------- Net income attributable to common stock.......... $ 13,286 $ 2,159 $ (1,244) $ 14,201 =========== ======= =========== =========== Weighted average number of common shares outstanding-basic(G).............. 23,618,154 23,618,154 Basic net income per common share(G)................................. $ 0.56 $ 0.60 =========== ===========
F-9 - --------------- Notes to Pro Forma Condensed Combined Statement of Income (A) See page F-12 or the pro forma condensed statement of income giving effect to Prior Bradley Transactions. (B) Represents historical operating results as reported by Mid-America for the six months ended June 30, 1998. (C) Represents the net reduction in interest expense for the prepayment of certain Mid-America mortgage indebtedness with Bradley's line of credit at Bradley's current interest rate of 6.75%, combined with the reduction in interest expense to reflect the estimated market interest rate of approximately 7.25%, in accordance with the purchase method of accounting, partially offset by an increase in interest expense for the payment of fees and expenses related to the Mid-America Merger of approximately $4,850,000, at an interest rate of 6.75%, as follows (in thousands): Elimination of historical interest on mortgages expected to be prepaid... $(1,055) Interest on Bradley's line of credit expected to be used to prepay debt.. 903 Reduction of Mid-America interest to reflect a market rate............... (285) Interest on Bradley's line of credit for Mid-America Merger fees and expenses........................................................... 164 ------- Pro forma adjustment..................................................... $ (273) =======
(D) Represents general and administrative cost savings which have been estimated based upon historical costs for those items which are expected to be eliminated as a result of the Mid-America Merger, as follows (in thousands): Salaries and benefits............ $476 D&O insurance and director fees.. 87 Professional fees................ 64 Other............................ 36 ---- Pro forma adjustment............. $663 ====
(E) Depreciation and amortization changes relate to recording Mid-America's properties at Bradley's purchase price, the related depreciation utilizing an estimated useful life of 39 years and a depreciable basis of approximately $119,771,000, and the elimination of historical amortization of Mid-America deferred assets in accordance with the purchase method of accounting, as follows (in thousands): Pro forma depreciation expense ($119,771 over 39 years)... $1,536 Mid-America depreciation and amortization................. (2,495) ------ Pro forma adjustment...................................... $ (959) ======
The pro forma adjustment to the equity in earnings of partnership reflects the adjustment to depreciation and amortization of the partnership resulting from recording the investment in partnership at Bradley's purchase price. (F) Preferred share distributions are calculated using an annual dividend rate of $2.10 per share for 3,480,210 shares of Series A Preferred Stock pro rated for the period presented. F-10 (G) A reconciliation of the numerator and denominator used to compute basic earnings per share ("EPS") to the numerator and denominator used to compute diluted EPS is as follows:
BRADLEY AS ADJUSTED FOR MID-AMERICA MERGER NUMERATOR DENOMINATOR PER SHARE -------------- ------------- ----------- Basic EPS: Net income attributable to common stock.. $14,201,000 23,618,154 $ 0.60 Effect of dilutive securities: Dilutive options exercised............... -- 54,379 Conversion of LP Units................... 795,000 1,408,182 ----------- ---------- Diluted EPS: Net income attributable to common stock.. $14,996,000 25,080,715 $ 0.60 =========== ========== ===========
F-11 BRADLEY REAL ESTATE, INC. PRO FORMA CONDENSED STATEMENT OF INCOME TO REFLECT PRIOR BRADLEY TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) During the period from January 1, 1998 through September 23, 1998, Bradley acquired 19 shopping centers and two outlots adjacent to one of Bradley's existing centers at an aggregate cost of approximately $179.0 million (the "Acquisition Properties"). Consideration paid for such acquisitions included cash (provided primarily from the bank line of credit) and assumption of mortgage indebtedness. The Prior Bradley Transactions do not include the Mid- America Merger. On January 28, 1998, Bradley, through the Operating Partnership, issued $100 million of 7.2% ten-year unsecured Notes maturing January 15, 2008 (the "January 1998 Debt Issuance"). The effective interest rate on the unsecured Notes is approximately 7.61%. The issue was rated "BBB-" by Standard & Poor's Investment Services and "Baa3" by Moody's Investor's Services. Proceeds from the offering were used to reduce the outstanding borrowings under the line of credit. On February 18, 1998, Bradley issued 392,638 shares of common stock to a unit investment trust at a price based upon the then market value of $20.375 per share (the "February 1998 Stock Offering"). Net proceeds from the offering of approximately $7.6 million were contributed to the Operating Partnership and were used to reduce outstanding borrowings under the line of credit. On July 31, 1998, Bradley completed the sale of One North State for approximately $84.5 million. The net proceeds of approximately $83 million were used to pay down the line of credit. In addition, in May 1998, Bradley sold Holiday Plaza, a shopping center in Cedar Falls, Iowa, for approximately $1.9 million. The unaudited Pro Forma Condensed Statement of Income of Bradley is presented as if the acquisitions, the dispositions, the January 1998 Debt Issuance, and the February 1998 Stock Offering, described above, had been consummated on January 1, 1997, and with Bradley qualifying as a REIT and, therefore, incurring no federal income tax expense during the period January 1, 1997 through June 30, 1998. F-12
OTHER ACQUISITION ACQUISITION DISPOSITION OTHER HISTORICAL PROPERTIES (A) PROPERTIES (B) PROPERTIES(C) ADJUSTMENTS PRO FORMA ------------ --------------- -------------- ----------- ----------- --------- (IN THOUSANDS EXCEPT PER SHARE DATA) Revenues: Rental income............. $ 59,337 $ 753 $7,771 $(7,408) $ -- $ 60,453 Other income.............. 1,059 -- 21 -- -- 1,080 ----------- ------- ------ ------- ------- ----------- Total revenue........... 60,396 753 7,792 (7,408) -- 61,533 ----------- ------- ------ ------- ------- ----------- Expenses: Operations, maintenance and management.......... 8,776 37 900 (1,119) -- 8,594 Real estate taxes......... 10,776 33 837 (1,794) -- 9,852 Mortgage and other interest................. 12,143 -- -- -- 1,911 (D) 14,054 General and administrative........... 3,120 -- -- -- -- 3,120 Depreciation and amortization.......... 10,594 -- -- -- 1,241 (E) 11,835 ----------- ------- ------ ------- ------- ----------- Total expenses.......... 45,409 70 1,737 (2,913) 3,152 47,455 ----------- ------- ------ ------- ------- ----------- Income before provision for loss on real estate investment and minority interest................. 14,987 683 6,055 (4,495) (3,152) 14,078 Provision for loss on real estate investment......... (875) -- -- 875 -- -- ----------- ------- ------ ------- ------- ----------- Income before allocation to minority interest......... 14,112 683 6,055 (3,620) (3,152) 14,078 Income allocated to minority interest......... (797) -- -- -- 5 (792) ----------- ------- ------ ------- ------- ----------- Net Income attributable to common stock........... $ 13,315 $ 683 $6,055 $(3,620) $ (3,147) $ 13,286 =========== ======= ====== ======= ========= =========== Weighted average common shares outstanding --basic(F)................ 23,503,183 23,618,154 Basic and diluted income per common share: (F)..... $ 0.57 $ 0.56 =========== ===========
EXPLANATORY NOTES (A) Increase represents historical operating revenues and expenses of Clock Tower Plaza for which financial statements are included in this Form 8-K, for the period Bradley did not own such property. (B) Increase represents historical operating revenues and expenses of the Acquisition Properties for which financial statements are not included in this Form 8-K, for the period Bradley did not own such properties. (C) Decrease represents the elimination of historical operating revenues and expenses of properties sold for the period Bradley owned such properties. (D) Mortgage and other interest has been increased to reflect the pro forma borrowings for property acquisitions for the period during which Bradley did not own such properties, net of the reduction for the application of net proceeds from the property dispositions and the February 1998 Stock Offering to pay down the line of credit for the period during which Bradley owned such properties, and for the period preceding the stock offering at an interest rate of 6.75%, which was Bradley's approximate borrowing rate at August 31, 1998. Mortgage and other interest has been increased for the January 1998 Debt Issuance for the period preceding the issuance. A 0.125% change in the variable rate would result in a change in the pro forma interest adjustment of approximately $13,000. Increase in interest expense attributable to acquisition activities.......................... $ 4,777 Decrease in interest expense attributable to disposition activities.......................... (2,849) Decrease in interest expense attributable to the February 1998 Stock Offering................ (64) Net increase in interest expense attributable to the January 1998 Debt Issuance.................. 47 ------- Pro forma adjustment.............................. $ 1,911 =======
F-13 (E) Depreciation and amortization has been increased to give effect to recording the property acquisitions over a depreciable life of 39 years, for the period which Bradley did not own such properties, net of the reduction for properties sold for the period which Bradley owned such properties, as follows: Increase in depreciation and amortization attributable to acquisition activities........ $1,335 Decrease in depreciation and amortization attributable to disposition activities........ (94) ------ Pro forma adjustment............................ $1,241 ======
(F) A reconciliation of the numerator and denominator used to compute basic earnings per share ("EPS") to the numerator and denominator used to compute diluted EPS is as follows:
BRADLEY HISTORICAL BRADLEY PRO FORMA NUMERATOR DENOMINATOR PER SHARE NUMERATOR DENOMINATOR PER SHARE ----------- ----------- --------- ----------- ----------- --------- Basic EPS: Net income attributable to common stock................... $13,315,000 23,503,183 $ 0.57 $13,286,000 23,618,154 $0.56 Effect of dilutive securities: Dilutive options exercised...... -- 49,450 -- 49,450 Conversion of LP Units.......... 797,000 1,408,182 792.000 1,408,182 ----------- ---------- ----------- ----------- Diluted EPS: Net income attributable to common stock................ $14,112,000 24,960,815 $ 0.57 $14,078,000 25,075,786 $0.56 =========== ========== ======== =========== =========== =========
F-14 BRADLEY REAL ESTATE, INC. PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997 (UNAUDITED) The unaudited Pro Forma Condensed Combined Statement of Income is presented as if the Mid-America Merger and all the Prior Bradley Transactions (see Note A) had been consummated on January 1, 1997, and with Bradley qualifying as a REIT and, therefore, incurring no federal income tax expense during the period January 1, 1997 through December 31, 1997. The Mid-America Merger has been accounted for under the purchase method of accounting in accordance with Accounting Principles Board Opinion No. 16. In the opinion of Bradley's management, all adjustments necessary to reflect the effects of these transactions have been made. The accompanying Pro Forma Condensed Combined Statement of Income has been prepared based on pro forma adjustments to pro forma and historical financial statements of Bradley and historical financial statements of Mid-America. This unaudited Pro Forma Condensed Combined Statement of Income is presented for comparative purposes only and is not necessarily indicative of what the actual results of operations of Bradley would have been for the periods presented, nor does it purport to represent the results to be achieved in future periods. This unaudited Pro Forma Condensed Combined Statement of Income should be read in conjunction with, and is qualified in its entirety by the Pro Forma Condensed Statement of Income to reflect Prior Bradley Transactions and by the respective historical financial statements and the notes thereto of Bradley and Mid-America.
YEAR ENDED DECEMBER 31, 1997 ------------------------------------------------------------------ BRADLEY PRIOR PRO FORMA PRO FORMA BRADLEY MID-AMERICA AS ADJUSTED FOR PRO FORMA MID-AMERICA MERGER MID-AMERICA TRANSACTIONS(A) HISTORICAL(B) ADJUSTMENTS MERGER --------------- -------------- --------------- ---------------- (IN THOUSANDS EXCEPT PER SHARE DATA) Revenues: Rental income................................. $ 117,146 $22,478 $ -- $ 139,624 Other income.................................. 1,628 787 -- 2,415 ----------- ------- ----------- ----------- Total revenue............................... 118,774 23,265 -- 142,039 ----------- ------- ----------- ----------- Expenses: Operations, maintenance and management.................................. 16,486 4,316 -- 20,802 Real estate taxes............................. 19,124 2,952 -- 22,076 Mortgage and other interest................... 27,559 5,539 (791)(C) 32,307 General and administrative.................... 5,123 1,985 (1,300)(D) 5,808 Non-recurring stock based compensation................................ 3,415 -- -- 3,415 Depreciation and amortization................. 21,131 4,981 (1,910)(E) 24,202 ----------- ------- ----------- ----------- Total expenses.............................. 92,838 19,773 (4,001) 108,610 ----------- ------- ----------- ----------- Income before net gain on sale of properties, equity in earnings of partnership and minority interest............................. 25,936 3,492 4,001 33,429 Net gain on sale of properties................. -- 130 (130) -- Equity in earnings of partnership.............. -- 1,026 260(E) 1,286 Income allocated to minority interest...................................... (1,588) -- -- (1,588) ----------- ------- ----------- ----------- Income from operations......................... 24,348 4,648 4,131 33,127 Preferred Share Distributions.................. -- -- (7,308)(F) (7,308) ----------- ------- ----------- ----------- Income from operations attributable to common stock.................................. $ 24,348 $ 4,648 $ (3,177) $ 25,819 =========== ======= =========== =========== Weighted average common shares outstanding-basic(G).......................... 23,356,620 23,356,620 Basic and diluted income from operations per common share(G)........................... $ 1.04 $ 1.11 =========== ===========
F-15 - --------------- Notes to Pro Forma Condensed Combined Statement of Income (A) See page F-17 for the pro forma condensed statement of income giving effect to Prior Bradley Transactions. (B) Represents historical operating results as reported by Mid-America for the year ended December 31, 1997. (C) Represents the net reduction in interest expense for the prepayment of certain Mid-America mortgage indebtedness with Bradley's line of credit at Bradley's current interest rate of 6.75%, combined with the reduction in interest expense to reflect the estimated market interest rate of approximately 7.25%, in accordance with the purchase method of accounting, partially offset by an increase in interest expense for the payment of fees and expenses related to the Mid-America Merger of approximately $4,850,000, at an interest rate of 6.75%, as follows (in thousands): Elimination of historical interest on mortgages expected to be prepaid... $(2,263) Interest on Bradley's line of credit expected to be used to prepay debt.. 1,714 Reduction of Mid-America interest to reflect a market rate............... (569) Interest on Bradley's line of credit for Mid-America Merger fees and expenses......................................................... 327 ------- Pro forma adjustment..................................................... $ (791) =======
(D) Represents general and administrative cost savings which have been estimated based upon historical costs for those items which are expected to be eliminated as a result of the Mid-America Merger, as follows (in thousands): Salaries and benefits............ $ 906 D&O Insurance and director fees.. 230 Professional fees................ 136 Other............................ 28 ------ Pro forma adjustment............. $1,300 ======
(E) Depreciation and amortization changes relate to recording Mid-America's properties at Bradley's purchase price, and related depreciation utilizing an estimated useful life of 39 years and a depreciable basis of approximately $119,771,000, and the elimination of historical amortization of Mid-America's deferred assets in accordance with the purchase method of accounting, as follows (in thousands): Pro forma depreciation expense ($119,771 over 39 years)... $ 3,071 Mid-America depreciation and amortization................. (4,981) ------ Pro forma adjustment...................................... $(1,910) =======
The pro forma adjustment to the equity in earnings of partnership reflects the adjustment to depreciation and amortization of the partnership resulting from recording the investment in partnership at Bradley's purchase price. (F) Preferred share distributions are calculated using an annual dividend rate of $2.10 per share for 3,480,210 shares of Series A Preferred Stock. (G) A reconciliation of the numerator and denominator used to compute basic earnings per share ("EPS") to the numerator and denominator used to compute diluted EPS is as follows:
BRADLEY AS ADJUSTED FOR MID-AMERICA MERGER NUMERATOR DENOMINATOR PER SHARE -------------- ------------- ----------- Basic EPS: Income from operations attributable to common stock.......................... $25,819,000 23,356,620 $1.11 Effect of dilutive securities: Stock options........................... -- 42,451 Stock-based compensation................ -- 315 Conversion of LP Units.................. 1,588,000 1,523,587 ----------- ---------- Diluted EPS: Income from operations attributable to common stock $27,407,000 24,922,973 $1.10 =========== ========== ===========
F-16 BRADLEY REAL ESTATE, INC. PRO FORMA CONDENSED STATEMENT OF INCOME TO REFLECT PRIOR BRADLEY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (UNAUDITED) During 1997, Bradley acquired 25 shopping centers aggregating over 3.1 million square feet of GLA for an aggregate cost of approximately $189.3 million and from January 1, 1998 through September 23, 1998, has acquired 19 properties and two outlots adjacent to one of Bradley's existing centers aggregating 2.6 million square feet of GLA for an aggregate acquisition price of approximately $179.0 million. Consideration paid for such acquisitions included cash (provided primarily from the bank line of credit), assumption of mortgage indebtedness and the issuance of Units of the Operating Partnership to contributors of properties acquired. During the period from January 1, 1997 through September 23, 1998, Bradley sold six properties for net proceeds of approximately $104.3 million utilizing the net proceeds to pay-down the line of credit. The Prior Bradley Transactions do not include the Mid-America Merger. In December 1997, Bradley entered into a new $200 million unsecured line of credit facility with a syndicate of banks, replacing the previous $150 million unsecured line of credit. The line of credit bears interest at a rate equal to the lowest of (i) the lead bank's base rate, (ii) a spread over LIBOR ranging from 0.70% to 1.25% depending on the credit rating assigned by national credit rating agencies, or (iii) for amounts outstanding up to $100 million, a competitive bid rate solicited from the syndicate of banks. Based on the current credit rating assigned by Standard & Poor's and Moody's, the spread over LIBOR is 1.00%, which represents a reduction in the spread over LIBOR from the previous $150 million line of credit by 0.50%. On November 26, 1997, Bradley prepaid a REMIC mortgage note (the "REMIC Prepayment") primarily with the proceeds of an offering of $100 million of 7% unsecured Notes due November 15, 2004 (the "November 1997 Debt Issuance"). The effective interest rate on the unsecured Notes is approximately 7.19%. The issue was rated "BBB-" by Standard & Poor's and "Baa3" by Moody's. In December 1997, Bradley issued 1,290,000 shares of common stock pursuant to two separate public offerings (the "December 1997 Stock Offerings"). Net proceeds from the offerings, approximately $24.9 million, were contributed to the Operating Partnership and were used to reduce outstanding borrowings under the line of credit. On January 28, 1998, Bradley' through the Operating Partnership issued $100 million, 7.2% ten-year unsecured Notes maturing January 15, 2008 (the "January 1998 Debt Issuance"). The effective interest rate on the unsecured Notes is approximately 7.61%. The issue was rated "BBB-" by Standard & Poor's and "Baa3" by Moody's. Proceeds from the issue were used to reduce the outstanding borrowings under the line of credit. On February 18, 1998, Bradley issued 392,638 shares of common stock to a unit investment trust at a price based upon the then market value of $20.375 per share (the "February 1998 Stock Offering"). Net proceeds from the offering of approximately $7.6 million were contributed to the Operating Partnership and were used to reduce outstanding borrowings under the line of credit. The unaudited Pro Forma Condensed Statement of Income is presented as if all of the acquisitions, the dispositions, the replacement of the previous line of credit with the new line of credit, the REMIC Prepayment, the November 1997 Debt Issuance, the December 1997 Stock Offerings, the January 1998 Debt Issuance, and the February 1998 Stock Offering, described above, had been consummated on January 1, 1997, and with Bradley qualifying as a REIT and, therefore, incurring no federal income tax expense during the period January 1, 1997 through December 31, 1997. F-17
OTHER ACQUISITION ACQUISITION DISPOSITION OTHER HISTORICAL PROPERTIES (A) PROPERTIES(B) PROPERTIES (C) ADJUSTMENTS PRO FORMA ------------ -------------- ------------- -------------- ------------ ---------- (IN THOUSANDS EXCEPT PER SHARE DATA) Revenues: Rental income......................... $ 96,115 $1,518 $37,078 $(17,565) $ -- $ 117,146 Other income.......................... 1,437 1 184 6 -- 1,628 ----------- ------ ------- -------- -------- ---------- Total revenue....................... 97,552 1,519 37,262 (17,559) -- 118,774 ----------- ------ ------- -------- -------- ---------- Expenses: Operations, maintenance and management...................... 14,012 129 5,201 (2,856) -- 16,486 Real Estate taxes..................... 18,398 65 5,281 (4,620) -- 19,124 Mortgage and other interest............................ 16,562 -- -- -- 10,997(D) 27,559 General and administrative............ 5,123 -- -- -- -- 5,123 Non-recurring stock-based compensation........................ 3,415 -- -- -- -- 3,415 Depreciation and amortization........................ 16,606 -- -- -- 4,525(E) 21,131 ----------- ------ ------- -------- -------- ---------- Total expenses........................ 74,116 194 10,482 (7,476) 15,522 92,838 ----------- ------ ------- -------- -------- ---------- Income before net gain on sale of properties and extraordinary item................................ 23,436 1,325 26,780 (10,083) (15,522) 25,936 Net gain on sale of properties......... 7,438 -- -- (7,438) -- -- ----------- ------ ------- -------- -------- ---------- Income before extraordinary item and allocation to minority interest..... 30,874 1,325 26,780 (17,521) (15,522) 25,936 Income allocated to minority interest.. (1,116) -- -- -- (472) (1,588) ----------- ------ ------- -------- -------- ---------- Income before extraordinary item....... $ 29,758 $1,325 $26,780 $(17,521) $(15,994) $ 24,348 =========== ====== ======= ======== ======== ========== Weighted average shares outstanding -- basic(F)............. 21,776,146 23,356,620 Basic and diluted income per common share: Income before extraordinary item(F)... $ 1.36 $ 1.04 =========== ===========
EXPLANATORY NOTES (A) Increase represents historical operating revenues and expenses of Clock Tower Plaza for which financial statements are included in this Form 8-K, for the period Bradley did not own such property. (B) Increase represents historical operating revenues and expenses of Acquisition Properties, and properties acquired in 1997 for which financial statements are not included in this Form 8-K, for the period Bradley did not own such properties. (C) Decrease represents the elimination of historical operating revenues and expenses and net gain on sale of properties disposed of during 1997 and 1998 for the period during which Bradley owned such properties. F-18 (D) Mortgage and other interest has been increased to reflect the pro forma borrowings for property acquisitions for the period during which Bradley did not own such properties, net of the reduction for the application of net proceeds from the property dispositions and the December 1997 and February 1998 Stock Offerings to pay down the line of credit for the period during which Bradley owned such properties, and for the period preceding the Stock Offerings, at an interest rate of 6.75%, which was Bradley's approximate borrowing rate at August 31, 1998. Mortgage and other interest has been increased for the November 1997 and January 1998 Debt Issuances, net of the reduction for the application of net proceeds of such Debt Issuances to pay down the $100 million REMIC Note and the line of credit, respectively, at the applicable effective interest rates. Mortgage and other interest has been decreased by the net reduction in interest expense resulting from the December 1997 paydown of the existing line of credit facility with proceeds from the new line of credit facility. A 0.125% change in the variable rate would result in a change in the pro forma interest adjustment of approximately $32,000. Increase in interest expense attributable to acquisition activities.......................... $19,220 Decrease in interest expense attributable to disposition activities.......................... (6,559) Decrease in interest expense attributable to the Stock Offerings............................. (2,063) Net increase in interest expense attributable to the Debt Issuances.............................. 843 Net decrease in interest expense attributable to the paydown of the existing line of credit facility with proceeds from the new line of credit facility................................. (444) ------- Pro forma adjustment.............................. $10,997 =======
(E) Depreciation and amortization has been increased to give effect to recording the property acquisitions over a depreciable life of 39 years, for the period which Bradley did not own such properties, net of the reduction for properties disposed for the period which Bradley owned such properties, as follows: Increase in depreciation and amortization attributable to acquisition activities... $ 5,919 Decrease in depreciation and amortization attributable to disposition activities... (1,394) ------- Pro forma adjustment....................... $ 4,525 =======
(F) A reconciliation of the numerator and denominator used to compute basic earnings per share ("EPS") to the numerator and denominator used to compute diluted EPS is as follows:
BRADLEY HISTORICAL BRADLEY PRO FORMA NUMERATOR DENOMINATOR PER SHARE NUMERATOR DENOMINATOR PER SHARE ----------- ----------- ---------- ----------- ----------- --------- Basic EPS: Income before extraordinary item.. $29,758,000 21,776,146 $ 1.36 $24,348,000 23,356,620 $ 1.04 Effect of dilutive securities: Stock options..................... -- 42,451 -- 42,451 Stock-based compensation.......... -- 315 -- 315 Conversion of LP Units............ 1,116,000 799,938 1,588,000 1,523,587 ----------- ---------- ---------- ----------- Diluted EPS: Income before extraordinary item.. $30,874,000 22,618,850 $ 1.36 $25,936,000 24,922,973 $ 1.04 =========== ========== ========== =========== =========== =========
F-19 EX-23.1 2 CONSENT OF KPMG PEAT MARWICK Exhibit 23.1 Consent of KPMG Peat Marwick LLP -------------------------------- The Board of Directors of Bradley Real Estate, Inc.: We consent to the use of our report dated September 2, 1998 related to the statement of revenues and certain expenses of Clock Tower Plaza for the year ended December 31, 1997, incorporated by reference in the registration statements (Nos. 333-63707, 333-42357, 333-28167, 33-87084, 33-62200 and 33-64811) on Form S-3 of Bradley Real Estate, Inc., the registration statements (No. 333-30587, 33-34884 and 33-65180) on Form S-8 of Bradley Real Estate, Inc. and the registration statements (Nos. 333-36577 and 333-51675) on Form S-3 of Bradley Operating Limited Partnership. /s/ KPMG Peat Marwick LLP Chicago, Illinois September 24, 1998 -----END PRIVACY-ENHANCED MESSAGE-----