-----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, Uzl+ZR09WqB6y9RT0vGxn9yJs1QeCAzYQeknKJPqLoG1WlQ4IdIqBFlIaDlpP3N0 fEpizGnG+Tm8zXzesRO96g== 0000950109-96-000575.txt : 19960207 0000950109-96-000575.hdr.sgml : 19960207 ACCESSION NUMBER: 0000950109-96-000575 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19960206 SROS: NYSE 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: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10328 FILM NUMBER: 96511568 BUSINESS ADDRESS: STREET 1: 250 BOYLSTON ST CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 6178674200 FORMER COMPANY: FORMER CONFORMED NAME: BRADLEY REAL ESTATE TRUST DATE OF NAME CHANGE: 19920703 10-Q/A 1 FORM 10-Q/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A-1* X Quarterly report pursuant to Section 13 or 15(d) of the Securities ---- Exchange Act of 1934 For the quarterly period ended September 30, 1995 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 1-10328 ------- BRADLEY REAL ESTATE, INC. ------------------------- (Exact name of registrant as specified in its charter) Maryland 04-6034603 -------- ---------- (State of Organization) (I.R.S. Identification No.) 699 Boylston Street, Boston, Massachusetts 02116 ------------------------------------------------ (Address of Registrant's Principal Executive Offices) Registrant's telephone number, including area code: (617) 867-4200 -------------- 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 ----- ----- Indicate the number of Shares outstanding of each class of Common Stock as of September 30, 1995: Shares of Common Stock, $.01 par value: 11,226,624 Shares. ___________________ * Part I, Items 1 and 2 of this report on Form 10-Q are hereby amended to provide in their entirety as set forth herein, as of the date of the original 10-Q. 1 PART 1 FINANCIAL INFORMATION Item 1 FINANCIAL STATEMENTS BRADLEY REAL ESTATE, INC. ------------------------- BALANCE SHEETS --------------
September 30, December 31, Assets 1995 1994 ------ ------------- ------------ (UNAUDITED) Real estate investments - at cost $187,418,000 $177,939,000 Accumulated depreciation and amortization 26,229,000 22,385,000 ------------ ------------ Net real estate investments 161,189,000 155,554,000 Other assets: Cash 982,000 193,000 Rents and other receivables, net of allowance for doubtful accounts of $632,000 for 1995 and $459,000 for 1994 7,680,000 5,776,000 Unamortized buyout of contract, net 4,670,000 - Deferred charges, net and prepaid expenses 4,334,000 5,056,000 ------------ ------------ $178,855,000 $166,579,000 ============ ============ Liabilities and Stockholders' Equity ------------------------------------ Mortgage loans $24,867,000 $27,748,000 Line of credit 9,800,000 39,000,000 Accounts payable and accrued expenses 8,033,000 5,252,000 ------------ ------------ 42,700,000 72,000,000 ------------ ------------ Stockholders' equity: Shares of preferred stock, par value $.01 per share: Authorized 20,000,000 shares; Issued and outstanding, 0 shares at September 30, 1995 and December 31, 1994; - - Shares of common stock, par value $.01 per share: Authorized 80,000,000 shares; Issued and outstanding, 11,226,624 at September 30, 1995 and 8,197,054 at December 31, 1994. 112,000 82,000 Shares of excess stock, par value $.01 per share: Authorized 50,000,000 shares; Issued and outstanding, 0 shares at September 30, 1995 and December 31, 1994 - - Additional paid-in capital 148,360,000 103,251,000 Distributions in excess of accumulated earnings (12,317,000) (8,754,000) ------------ ------------ 136,155,000 94,579,000 ------------ ------------ $178,855,000 $166,579,000 ============ ============
The accompanying notes are an integral part of the financial statements. -2- BRADLEY REAL ESTATE, INC. ------------------------- STATEMENTS OF INCOME -------------------- (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ---------------------------- ----------------------------- 1995 1994 1995 1994 ---- ---- ---- ---- Income: Rental income $9,396,000 $8,538,000 $26,697,000 $24,467,000 Other income 15,000 32,000 141,000 62,000 ---------- ---------- ----------- ----------- 9,411,000 8,570,000 26,838,000 24,529,000 Expenses: Operations, maintenance and management 1,573,000 1,341,000 4,235,000 3,854,000 Real estate taxes 2,375,000 2,112,000 6,380,000 6,304,000 Mortgage and other interest 843,000 1,227,000 3,826,000 3,100,000 Depreciation and amortization 1,851,000 1,365,000 5,413,000 3,692,000 Administrative and general 412,000 675,000 1,154,000 1,641,000 ---------- ---------- ----------- ----------- 7,054,000 6,720,000 21,008,000 18,591,000 ---------- ---------- ----------- ----------- Net income $2,357,000 $1,850,000 $5,830,000 $5,938,000 ========== ========== ========== ========== Per share data: Net income $0.21 $0.23 $0.62 $0.72 ========== ========== ========== ========== Weighted average shares outstanding 11,087,721 8,192,606 9,404,449 8,190,560 ========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements. -3- BRADLEY REAL ESTATE, INC. ------------------------- STATEMENTS OF CASH FLOWS ------------------------ (unaudited)
Nine Months Ended September 30, ---------------------------------- 1995 1994 ---- ---- Cash flows from operating activities: Net income $5,830,000 $5,938,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,413,000 3,692,000 Change in operating assets and liabilities: Increase in rents and other receivables (1,904,000) (1,911,000) Increase in accounts payable and accrued expenses 2,446,000 2,073,000 (Increase) decrease in deferred charges 48,000 (2,591,000) --------------- --------------- Net cash provided by operating activities 11,833,000 7,201,000 --------------- --------------- Cash flows from investing activities: Additions to real estate investments (7,385,000) (32,612,000) Increase in unamortized buyout of contract (649,000) - --------------- --------------- Net cash used by investing activities (8,034,000) (32,612,000) --------------- --------------- Cash flows from financing activities: Net borrowings under line of credit 3,400,000 33,700,000 Net public offering proceeds 40,508,000 - Paydown line of credit with proceeds from offering (32,600,000) - Payoff Westwind mortgages with proceeds from offering (4,712,000) - Increase in accounts payable for construction 335,000 1,393,000 Distributions paid (9,393,000) (7,863,000) Exercise of employee stock options 128,000 - Principal payments on mortgage loans (263,000) (165,000) Reorganization costs (617,000) - Shares issued under dividend reinvestment plan 204,000 115,000 --------------- --------------- Net cash provided (used) by financing activities (3,010,000) 27,180,000 --------------- --------------- Net increase in cash 789,000 1,769,000 Cash and cash equivalents: Beginning of period 193,000 950,000 --------------- --------------- End of period $982,000 $2,719,000 =============== =============== Supplementary Information: Income taxes paid $106,000 $39,000 Interest paid, net of amount capitalized $3,812,000 $3,032,000
Supplemental schedule of noncash investing and financing activities: In January 1995, the Company issued 325,000 shares of Common Stock having a value of $4,916,000 in connection with the buyout of the contract with its former advisor. In April 1995, a property was purchased for $5,197,000 which included the Company's assumption of $2,094,000 in non-recourse mortgages. The accompanying notes are an integral part of the financial statements. -4- BRADLEY REAL ESTATE, INC. ------------------------- STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY -------------------------------------------- (unaudited)
Retained Earnings (Distributions Additional in Excess of Shares Paid-In Accumulated at par value Capital Earnings) ---------------- -------------- ------------------ Balance at December 31, 1994 $82,000 $103,251,000 ($8,754,000) Net income - - 1,835,000 Cash distributions ($.33 per share) - - (2,812,000) Dividend reinvestment participation - 119,000 - Shares issued in buyout of contract 3,000 4,913,000 - Reorganization costs - (617,000) - ---------------- -------------- ------------------ Balance at March 31, 1995 85,000 107,666,000 (9,731,000) Net income - - 1,638,000 Cash distributions ($.33 per share) - - (2,878,000) Dividend reinvestment participation - 39,000 - Shares issued to purchase property 2,000 3,101,000 - Stock options exercised - 128,000 - ---------------- -------------- ------------------ Balance at June 30, 1995 87,000 110,934,000 (10,971,000) Net income - - 2,357,000 Cash distributions ($.33 per share) - - (3,703,000) Dividend reinvestment participation - 46,000 - Issuance of shares net of offering costs of $2,595,000 25,000 37,380,000 - ---------------- -------------- ------------------ Balance at September 30, 1995 $112,000 $148,360,000 ($12,317,000) ================ ============== ==================
The accompanying notes are an integral part of the financial statements. -5- BRADLEY REAL ESTATE, INC. NOTES TO FINANCIAL STATEMENTS ----------------------------- (unaudited) NOTE 1 - BASIS OF PRESENTATION The accompanying interim financial statements have been prepared by the Company, without audit, and in the opinion of management reflect all normal recurring adjustments necessary for a fair presentation of results for the unaudited interim periods presented. Net income per share and weighted-average shares outstanding have been restated on the statements of income to reflect the one- for-two reverse share split, effective on October 17, 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto for the fiscal year ended December 31, 1994. NOTE 2 - STOCKHOLDERS' EQUITY On July 6, 1995, the Company completed a public share offering of 2,500,000 shares at a price of $16 per share. Net proceeds from the offering were approximately $37,405,000, of which $32,600,000 was used to pay down the Company's bank line of credit and $4,712,000 was used to pay off the non- recourse mortgages assumed in November 1994 in connection with the Westwind Plaza purchase. NOTE 3 - UNAMORTIZED BUYOUT OF CONTRACT In January 1995, the Company acquired the REIT advisory business of its former advisor thereby enabling the Company to become a self-administered REIT. This transaction involved the Company's issuance of 325,000 shares of Common Stock to the owners of the former advisor. This acquisition has been accounted for using the purchase method. The purchase price, including related transaction costs, in excess of the fair market value of the net identifiable assets acquired, is approximately $5,565,000. This amount, recorded on the balance sheet as unamortized advisory contract costs, is being amortized using the straight-line method over 56 months. NOTE 4 - COMMITMENTS/SUBSEQUENT EVENTS On September 30, 1995, the Company had commitments of approximately $2,400,000 for tenant related capital improvements. Cash flow from operations and the Company's revolving bank line of credit are available to fund these improvements. 6 On October 30, 1995, the Company announced the execution of a definitive merger agreement pursuant to which the Company would acquire Tucker Properties Corporation, a real estate investment trust whose shares of Common Stock are traded on the New York Stock Exchange. Upon consummation of the transaction, the Company will own 31 properties aggregating 7.3 million leasable square feet in 11 states. Pursuant to the terms of the merger agreement, if the average closing price of the Company's Common Stock for the 20 trading days prior to the fifth day preceding the closing is $16.00 per share or more, each share of Tucker Common Stock will be exchanged for 0.665 of a share of the Company's Common Stock. If such average closing price is between $15.50 and $16.00 per share, the exchange ratio will be $10.64 divided by the average closing price. If the average closing price is $15.50 per share or less, the exchange ratio will be 0.686. The closing price for the Company's Common Stock on October 27, 1995, on the New York Stock Exchange was $15.00 per share. The average closing price for the Company's Common Stock for the 20 trading days ended October 27, 1995, was $15.89 per share. The merger is subject to various approvals by third parties and other closing conditions including approval by the stockholders of both companies. It is currently anticipated that the transaction will be closed in the first quarter of 1996. The merger has been structured as a tax-free transaction and will be treated as a purchase for financial reporting purposes. 7 Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- Rental income increased $858,000 or 10% from $8,538,000 for the three- months ended September 30, 1994 to $9,396,000 for the three-months ended September 30, 1995 and increased $2,230,000 or 9% from $24,467,000 for the nine months ended September 30, 1994 to $26,697,000 for the nine months ended September 30, 1995. During the three month period approximately $389,000 and during the nine month period approximately $1,862,000 of the increases reflect changes in the Company's property portfolio (the acquisitions of Rivercrest Center, Westwind Plaza and St. Francis Plaza on March 30, 1994, November 1, 1994, and April 18, 1995, respectively, offset by the sale of Spruce Tree Centre on November 1, 1994,); and approximately $471,000 and $424,000 of the increases resulted from net increased revenues of certain other properties in the Company's portfolio. The increase in other income from $62,000 during the nine months ended September 30, 1994 to $141,000 during 1995 reflect the Company's receipt of approximately $26,000 related to a tax abatement at one of its properties, approximately $29,000 in interest earned on funds from a tax escrow account and approximately $49,000 in termination fees from tenants during the first half of 1995. Total expenses increased $334,000 or 5% from $6,720,000 for the three month period ended September 30 1994 to $7,054,000 for the three-month period ended September 30, 1995 and $2,417,000 or 13% from $18,591,000 to $21,008,000 for the nine-month period then ended. Of the increased expenses, $100,000 and $703,000 for the three-month and nine-month periods, respectively, were attributable to the portfolio changes described in the preceding paragraph. Operations, maintenance and management increased $232,000 from $1,341,000 to $1,573,000 for the three-month period and $381,000 from $3,854,000 to $4,235,000 for the nine-month period. Real estate taxes increased $263,000 from $2,112,000 to $2,375,000 for the three-month period and increased $76,000 from $6,304,000 to $6,380,000 for the nine-month period. In the three-month period the increase was primarily due to tax rate increases at the Company's Illinois properties resulting in a tax increase of approximately $300,000, net of $22,000 in taxes capitalized in 1995. In the nine-month period the taxes increased by $136,000 due to the portfolio changes and by $276,000 due to tax increases at various of the properties. These increases were offset by $163,000 in tax reductions at two properties due to tax abatements, $47,000 in tax expense reduction due to certain tenants paying the taxing authority directly in 1995 but not 1994 and a decrease of $120,000 due to capitalized taxes in 1995. Mortgage and other interest decreased $384,000 from $1,227,000 to $843,000 for the three-month period primarily due to the application of the net proceeds from the Company's July 1995 offering of $37,405,000 which reduced the line of credit by 8 $32,600,000 and paid off the Westwind property mortgages of $4,712,000. For the nine-month period, mortgage and other interest expense increased $726,000 from $3,100,000 to $3,826,000. Higher prevailing interest rates in 1995, additional borrowings under the line of credit to purchase Rivercrest ($24,000,000) and the assumption of $4,890,000 and $2,094,000 in mortgages in connection with the Westwind Plaza and St. Francis Plaza acquisitions, respectively, more than offset the reduction in the line of credit from the proceeds of the July 1995 offering. Depreciation and amortization increased $486,000 from $1,365,000 to $1,851,000 for the three-month period and increased $1,721,000 from $3,692,000 to $5,413,000 for the nine-month period primarily due to the acquisition of properties, other capital improvements to the Company's properties and to the amortization of the excess of the purchase price over the net assets acquired related to the Company's January 1995 acquisition of the REIT advisory business of the Company's former advisor; the Company is amortizing the excess amount at the rate of $299,000 per quarter. The $263,000 decrease in administrative and general from $675,000 to $412,000 for the three-month period and $487,000 from $1,641,000 to $1,154,000 for the nine-month period, primarily reflects savings from the Company being self-administered in 1995. The aggregate result for the three-month period was a $507,000 or 27% increase in net income from $1,850,000 ($.23 per share) in 1994 to $2,357,000 ($.21 per share) and for the nine-month period a $108,000 or 2% decrease in net income from $5,938,000 ($.72 per share) to $5,830,000 ($.62 per share). Per share amounts reflect weighted-average shares outstanding of 11,087,721 and 8,192,606, for the three months ended September 30, 1995 and September 30, 1994, respectively, and of 9,404,449 and 8,190,560 for the nine-months ended September 30, 1995 and 1994, respectively. Changes in Financial Condition - ------------------------------ As a qualified REIT, the Company distributes a substantial portion of its cash flow to its stockholders in the form of dividends. The Company funds these distributions primarily from operating cash flows, although its revolving line of credit may also be used. Net cash flows provided by operating activities increased to $11,833,000 during the first nine months of 1995 from $7,201,000 during the comparable 1994 period, while distributions (treated as a charge to cash flows from financing activities in the Company's financial statements) were $9,393,000 in 1995 compared with $7,863,000 in 1994. Funds from operations ("FFO") increased $993,000 or 31% from $3,215,000 to $4,208,000 for the three-month period ended September 30, 1995 and increased $1,613,000 or 17% from $9,630,000 to $11,243,000 for the nine-month period then ended, over the comparable periods in 1994. The Company generally considers FFO to be an appropriate supplemental measure of the performance of an equity REIT because it is predicated on a cash flow analysis, as opposed to a measure predicated on generally accepted accounting principles, which gives effect to non-cash items such as depreciation. 9 FFO, as defined by the National Association of Real Estate Investment Trusts and as followed by the Company, represents net income (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. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. Since the definition of FFO is a guideline, computation of FFO may vary from one REIT to another. FFO does not represent cash generated from operating activities in accordance with generally accepted accounting principles and should not be considered as an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flow as a measure of liquidity. In addition, FFO is not necessarily indicative of cash available to fund cash needs. On July 6, 1995, the Company completed a public share offering of 2,500,000 shares of Common Stock at a price of $16 per share. Net proceeds from the offering were approximately $37,405,000, of which $32,600,000 was used to pay down the Company's revolving bank line of credit and $4,712,000 was used to pay off the non-recourse mortgages assumed in November 1994 in connection with the acquisition of Westwind Plaza. Largely due to the offering, the Company's aggregate debt outstanding was reduced from $71,458,000 at June 30, 1995 to $34,667,000 at September 30, 1995. Adjustable rate debt as a percent of total market capitalization (defined as the percentage of (a) outstanding variable rate debt to (b) outstanding debt plus the market value of outstanding Common Stock (using the September 30, 1995 closing price of $16 per share)) was reduced from 19.8% to 4.6%, thereby greatly reducing the Company's exposure to the impact of increases in interest expense on earnings. At September 30, 1995, the Company had commitments of approximately $2,400,000 for tenant related capital improvements, approximately $1,400,000 of which relates to two additional major tenants at Har Mar Mall. The 45,000 square foot reconstruction of a new Barnes & Noble book store was completed as scheduled and the store opened for business June 15, 1995. The Company has incurred approximately $1,466,000 in costs related to this reconstruction and, upon submission of final construction documents by Barnes & Noble, is obligated to pay $750,000 for reimbursement of the tenant's capital improvements. Construction for the 54,500 square foot HOMEPLACE store, of which 27,000 square feet is new space, was completed in the third quarter, and HOMEPLACE opened for business in late September 1995. The Company has incurred approximately $1,800,000 in tenant capital improvements and upon submission of final construction documents is obligated to pay an additional $619,000. On October 30, 1995, the Company announced the execution of a definitive merger agreement pursuant to which the Company would acquire Tucker Properties Corporation, another real estate investment trust whose shares of Common Stock are traded on the New York Stock Exchange. Upon consummation of the transaction, the Company will own 31 properties aggregating 7.3 million leasable square feet in 11 states. 10 Pursuant to the terms of the merger agreement, if the average closing price of the Company's Common Stock for the 20 trading days prior to the fifth day preceding the closing is $16.00 per share or more, each share of Tucker Common Stock will be exchanged for 0.665 of a share of the Company's Common Stock. If such average closing price is between $15.50 and $16.00 per share, the exchange ratio will be $10.64 divided by the average closing price. If the average closing price is $15.50 per share or less, the exchange ratio will be 0.686. The closing price for the Company's Common Stock on October 27, 1995, on the New York Stock Exchange was $15.00 per share. The average closing price for the Company's Common Stock for the 20 trading days ended October 27, 1995, was $15.89 per share. The merger is subject to various approvals by third parties and other closing conditions including approval by the stockholders of both companies. It is currently anticipated that the transaction will be closed in the first quarter of 1996. The merger has been structured as a tax-free transaction and will be treated as a purchase for financial reporting purposes. At September 30, 1995, the Company had $982,000 in cash and $55.2 million available and unused under its bank line of credit. The Company expects to utilize undistributed net cash flow from operating activities as well as funds available under the bank line of credit to fund its existing commitments for capital improvements as well as any other property improvement commitments negotiated in connection with other new tenancies and fees and expenses incurred in connection with the Tucker acquisition. The line of credit is also available to fund other property acquisitions that the Company may make. The Company anticipates using the line of credit to pay off approximately $12,000,000 of mortgage debt (having a weighted-average rate of interest of 10.5%) upon the January 1, 1996 maturity of such debt. The Company is negotiating the refinancing of the bank line of credit with the current lender, among other things to increase the borrowing capacity under the line to include the outstanding bank line of credit borrowings of Tucker which the Company will assume at the time of the merger and to provide for additional borrowings for potential further expansion thereafter. Under a "universal" shelf registration statement in the original amount of $125,000,000 declared effective by the Security and Exchange Commission in January 1995, the Company may issue up to $81,897,500 of additional securities for cash. The Company's decision as to the timing and type of security that it might issue under the registration statement will depend upon a variety of factors including the availability of suitable investment opportunities and market conditions. 11 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to be signed on its behalf by the undersigned thereto duly authorized. Date: February 6, 1996 Bradley Real Estate, Inc. ------------------------- (Registrant) By: /s/ Irving E. Lingo, Jr. ------------------------ Irving E. Lingo, Jr. Chief Financial Officer 12 -----END PRIVACY-ENHANCED MESSAGE-----