-----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, NQ3rR7Y8osAV7vKOQZ61FjAT0Q27VEaHnieL4FQr/OUXdC1YG/lmpo4bSQ6YpQKj JfhwHusBEPHDX7Bc+BHBKQ== 0000869446-96-000015.txt : 19961118 0000869446-96-000015.hdr.sgml : 19961118 ACCESSION NUMBER: 0000869446-96-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERKSHIRE REALTY CO INC /DE CENTRAL INDEX KEY: 0000869446 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 043086485 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10660 FILM NUMBER: 96664848 BUSINESS ADDRESS: STREET 1: 470 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232233 MAIL ADDRESS: STREET 1: 470 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 10-Q 1 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 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS
September 30, December 31, 1996 1995 (Unaudited) 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- Total shareholders' equity 235,854,789 260,787,617 Total liabilities and shareholders' equity $583,940,551 $486,968,187
The accompanying notes are an integral part of the financial statements. -3- BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months For the Nine Months Ended September 30, Ended September 30, 1996 1995 1996 1995 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- Minority interest 670,254 (90,216) 690,200 (150,481)
Continued -5- BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months For the Nine Months Ended September 30, Ended September 30, 1996 1995 1996 1995 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
-6- The accompanying notes are an integral part of the financial statements. BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the Nine Months Ended September 30, 1996 (Unaudited)
Common Additional Retained Treasury Stock Paid-in Earnings/ Stock at Par Capital (Deficit) at Cost Total 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
-8- The accompanying notes are an integral part of the financial statements. BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Nine Months Ended September 30, 1996 1995 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- 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
Continued BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited)
For the Nine Months Ended September 30, 1996 1995 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 $ -
-10- The accompanying notes are an integral part of the financial statements. 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- 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):
September 30, December 31, 1996 1995 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
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- 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:
Number of Name Units Location 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
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- 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- 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: CONDENSED COMBINED BALANCE SHEETS Assets
September 30, December 31, 1996 1995 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
CONDENSED COMBINED STATEMENTS OF OPERATIONS
For the Three Months For the Nine Months Ended September 30, Ended September 30, 1996 1995 1996 1995 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
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- 30, 1996:
Contract Contract Start End Interest Date Date(a) Rate Amount 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
The following summarizes the Company's borrowings on the Credit Agreement with the Bank of Boston and Mellon Bank as of September 30, 1996:
Contract Contract Start End Interest Date Date(a) Rate Amount 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
The following summarizes the Company's borrowings on the Repurchase Agreement with CS First Boston as of September 30, 1996:
Contract Contract Start End Interest Date Date(a) Rate Amount Repurchase Agreement 09/12/96 01/17/97 5.7% $9,300,000
(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- 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:
1996 Stock Option Exercise Plan Price 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
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- 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- 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- 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:
Nine Months ended Three Months ended September 30, September 30, 1996 1995 1996 1995 (Dollars in thousands) 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%
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): Nine Months Ended September 30, 1996 compared to Nine Months Ended September 30, 1995
Nine Months ended September 30, 1996 1995 (Dollars in thousands) 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
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 -27- 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 -28- 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- 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- 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- 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- DATE: November 13, 1996 -34- EX-27 2
5 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 9-MOS DEC-31-1996 SEP-30-1996 8,859,638 9,604,899 0 0 0 528,014,802 37,461,212 0 583,940,551 13,909,668 297,259,363 0 0 258,998 272,512,522 583,940,551 0 69,066,740 0 55,974,078 (690,200) 7,500,000 14,714,314 0 0 (1,621,652) 1,084,255 451,148 0 (7,798,345) (.31) 0 Book value of real estate assets less depreciation Includes goodwill of 12,663,231 Includes minority interest of 36,916,731 Minority interest Gain on sale of property
EX-99 3 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. 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:____________________________ 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: EX-99 4 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. 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 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 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] EX-99 5 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 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: 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. 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 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 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 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 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. (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 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 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. (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) 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 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 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 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 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: 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. 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 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. 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. 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. 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 ___________ $50,000,000 AMEND1D.WPD ____ 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 SERVICE CONTRACTS (cont d) 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 $___________ $_____ $________ ___% $____ $____ __% ___% $____ Category B: $_________
* If applicable. C. Properties Undergoing Rehabilitation Capitali- Joint Four-Quarter Adjusted zation Gross Net BRI Venture Property End Date N.O.I. Rate Value Debt Value* Percentage* Discount* Value $______ ___% $____ $____ $____ ________% __________% $_______
E-11E-11 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 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 EX-99 6 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 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 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 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:______________________________ 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:____________________________ 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 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 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 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 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. Benchmark Apartments: [Not Available] Newport Commons Apartments: [Not Available] EX-99 7 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 "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 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] [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] [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 By: Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----