<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q


 X    Quarterly report pursuant to Section 13 or 15(d) of the Securities
---
      Exchange Act of 1934 for the quarterly period ended March 31, 1997 or

---   Transition report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the transition period from _____to_____

Commission file number 1-10328

                           BRADLEY REAL ESTATE, INC.
             (Exact name of registrant as specified in its charter)

      Maryland                                               04-6034603
(State of Organization)                              (I.R.S. Identification No.)



                  40 Skokie Blvd., Northbrook, Illinois 60062
             (Address of Registrant's Principal Executive Offices)

Registrant's telephone number, including area code: (847) 272-9800

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

                                Yes  X   No 
                                    ---     ---
Indicate the number of shares outstanding of each class of Common Stock as of
March 31, 1997:

    Shares of Common Stock, $.01 par value:  21,669,569 shares outstanding.


                                       1



<PAGE>   2


                           BRADLEY REAL ESTATE, INC.
                          CONSOLIDATED BALANCE SHEETS
                   (Dollars in thousands, except share data)
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                              March 31,       December 31, 
ASSETS                                                          1997             1996
                                                              ---------       -----------
<S>                                                            <C>             <C>

Real estate investments-at cost                               $499,457           $490,133
Accumulated depreciation and amortization                      (33,561)           (30,670)
                                                              --------           --------
Net real estate investments                                    465,896            459,463   
                               
Real estate investments held for sale                            9,904             10,285 
                                                       
Other Assets:                                          
  Cash and cash equivalents                                      3,196              7,462   
  Rents and other receivables, net of allowance for             
    doubtful accounts of $2,124 for 1997 and $1,636 for       
    1996                                                        11,716              9,543   
  Deferred charges, net and other assets                        14,347             15,531 
                                                              --------           --------
Total assets                                                  $505,059           $502,284   
                                                             =========          =========     
LIABILITIES AND SHARE OWNERS' EQUITY                                                       
                                                           
Mortgage loans                                                 129,024            125,394                                     
Line of credit                                                  55,300             63,500     
Accounts payable, accrued expenses and other liabilities        19,666             19,505     
                                                              --------           --------
Total liabilities                                              203,990            208,399        
                                                              --------           --------      
Minority interest                                                8,010              4,160                                     
                                                              --------           --------      
Share Owners' equity:                                                                      
  Shares of preferred stock, par value $.01 per share:    
    Authorized 20,000,000 shares; 0 shares                  
    issued and outstanding                                           -                  -    
  Shares of common stock, par value $.01 per share:       
    Authorized 80,000,000 shares; Issued and              
    outstanding, 21,669,569 and 21,658,790, respectively           217                217   
  Shares of excess stock, par value $.01 per share:      
    Authorized 50,000,000 shares; 0 shares issued        
    and outstanding                                                  -                  -        
                                                            
Additional paid-in capital                                     300,434            298,875
Distributions in excess of accumulated earnings                 (7,592)            (9,367)   
                                                              --------           --------
Total share owners' equity                                     293,059            289,725                              
                                                              --------           --------
Total liabilities and share owners' equity                    $505,059           $502,284      
                                                              ========           ========                                         
</TABLE>    


      The accompanying notes are an integral part of these consolidated
      financial statements.


                                      2



<PAGE>   3


                           BRADLEY REAL ESTATE, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
                 (Dollars in thousands, except per share data)
                                  (UNAUDITED)


<TABLE>
<CAPTION>

                                                                         Quarter Ended
                                                                            March 31,
                                                                       1997          1996
                                                                       ----          ----
<S>                                                               <C>            <C>
Income:                                                           

    Rental income                                                      $22,855     $11,219
    Other income                                                           326         102  
                                                                    ----------  ----------                 
                                                                        23,181      11,321                 
                                                                    ----------  ----------                 

Expenses:                                                     
                                                              
    Operations, maintenance and management                               3,333       2,085         
    Real estate taxes                                                    5,068       2,675                                
    Mortgage and other interest                                          3,650       1,385                                
    Administrative and general                                           1,105         555       
    Write-off of deferred financing and acquisition costs                    -         344       
    Depreciation and amortization                                        3,930       2,252    
                                                                    ----------  ----------                 
                                                                        17,086       9,296                 
                                                                    ----------  ----------                 
                                                                                                           
Income before gain on sale of property                                   6,095       2,025                 
Gain on sale of property                                                 3,073       9,379                 
                                                                    ----------  ----------                 
Income before allocation to minority interest                            9,168      11,404                            
Income allocated to minority interest                                     (244)        (29)                
                                                                    ----------  ----------                 
Net income                                                              $8,924     $11,375                 
                                                                    ==========  ==========                 
Net income per weighted average share outstanding                        $0.41       $0.91                 
                                                                    ==========  ==========                 
Weighted average shares outstanding                                 21,665,593  12,536,714                 
                                                                    ==========  ==========                      
                                                       
</TABLE>                           

        The accompanying notes are an integral part of these consolidated
        financial statements.

                                       3


<PAGE>   4


                           BRADLEY REAL ESTATE, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHARE OWNERS' EQUITY
                 (Dollars in thousands, except per share data)
                                  (UNAUDITED)



<TABLE>
<CAPTION>
                                                                      Retained
                                                                      Earnings
                                                                   (Distributions
                                                      Additional    in Excess of
                                         Shares        Paid-In      Accumulated
                                      at par value     Capital       Earnings)
                                     --------------  ------------  --------------
<S>                                    <C>              <C>               <C>
                                         
Balance at December 31, 1996              $217            $298,875        $(9,367)     
Net income                                   -                   -          8,924       
Cash distributions ($.33 per share)          -                   -         (7,149)     
Exercise of stock options                    -                 119              -      
Dividend reinvestment participation          -                  73              -      
Reallocation of minority interest            -               1,367              -      
                                        ------            --------        -------       
Balance at March 31, 1997                 $217            $300,434        $(7,592) 
                                        ======            ========        =======      
</TABLE>

        The accompanying notes are an integral part of these consolidated
        financial statements.


                                       4



<PAGE>   5


                           BRADLEY REAL ESTATE, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                For the quarter ended
                                                                      March 31,
                                                                  1997         1996
                                                               -----------  -----------
<S>                                                             <C>          <C>
Cash flows from operating activities:                  
  Net income                                                     $8,924      $11,375
  Adjustments to reconcile net income to net                
  cash provided by operating activities:                  
    Depreciation and amortization                                 3,930        2,252     
    Gain on sale of property                                     (3,073)      (9,379)   
    Write-off of deferred financing and acquisition costs             -          344 
    Income allocated to minority interest                           244           29 
  Changes in operating assets and liabilities (net of     
    the effect of the Tucker acquisition in 1996):        
    (Increase) decrease in rents and other receivables           (2,173)       1,010 
    Increase in accounts payable, accrued expenses                 
      and other liabilities                                         161          401 
    Increase in deferred charges                                   (626)        (279)    
                                                               -----------  -----------
  Net cash provided by operating activities                       7,387        5,753 
                                                               -----------  -----------

Cash flows from investing activities:                                            
  Expenditures for real estate investments                       (7,066)      (2,245)                
  Purchase of Tucker, net of cash acquired                            -       (2,337)                      
  Net proceeds from sale of property                             11,310            -                                     
  Excess proceeds from like-kind exchange of properties               -        4,145                            
                                                               -----------  -----------
  Net cash provided by (used in) investing activities             4,244         (437)                        
                                                               -----------  -----------

Cash flows from financing activities:                                                                                
  Borrowing from lines of credit                                  5,800      108,000
  Cost associated with modified line of credit                     (381)      (1,463)                                               
  Pay-off of secured mortgage loans with borrowings                    
    from lines of credit                                              -      (32,234)
  Payments under lines of credit                                (14,000)     (73,208)                         
  Distributions paid                                             (7,149)      (3,706)                         
  Distributions to minority interest holders                       (195)           -                                               
  Proceeds from shares issued under dividend reinvestment                                       
    plan                                                             73           35                            
  Proceeds from exercise of stock options                           119           17        
  Principal payments on mortgage loans                             (164)         (66) 
                                                               -----------  -----------
  Net cash used in financing activities                         (15,897)      (2,625)                                        
                                                               -----------  -----------

  Net increase (decrease) in cash and cash equivalents           (4,266)       2,691                           

Cash and cash equivalents:                                                                
  Beginning of period                                             7,462          697                          
                                                               -----------  -----------
  End of period                                                  $3,196       $3,388                           
                                                               ===========  ===========

Supplemental cash flow information:                     
  Interest paid, net of amount capitalized                       $3,641       $1,179           
                                                               ===========  ===========

</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.      
                                    
                                       5    



<PAGE>   6


                           BRADLEY REAL ESTATE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1997
                                  (UNAUDITED)


NOTE 1 - BASIS OF PRESENTATION

The accompanying interim financial statements have been prepared by the
Company, without audit, and in the opinion of management reflect all normal
recurring adjustments necessary for a fair presentation of results for the
unaudited interim periods presented.  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
It is suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto for the fiscal
year ended December 31, 1996.

NOTE 2 - AMENDED LINE OF CREDIT AGREEMENT

On March 28, 1997 the Company amended its $150 million unsecured revolving
credit facility, extending the maturity date to March 15, 1999 and reducing the
interest rate to the lower of the lead bank's base rate or 1.50% over LIBOR
from the lower of the bank's base rate or 1.75% over LIBOR.  The rates
available under the line become more favorable in the event the Company
receives an investment grade unsecured debt rating.  The facility is available
for the acquisition, development, renovation and expansion of new and existing
properties (including, but not limited to, capital improvements, tenant
improvements and leasing commissions), and for other working capital purposes.
The amended facility also liberalized various of the Company's financial and
operating covenants that, among other provisions, limit the amount of secured
and unsecured indebtedness the Company may have outstanding at any time to a
percentage of the Company's Consolidated Market Value as defined, and provide
for the maintenance of certain financial tests including minimum net worth and
debt service coverage requirements.

NOTE 3 - ACQUISITIONS AND DISPOSITIONS

On March 15, 1996, the Company acquired all of the assets of Tucker Properties
Corporation ("Tucker") in a merger transaction that involved the issuance of
7.4 million common shares of the Company valued at $13.96 per share, payment of
certain transaction costs and the assumption of all of Tucker's liabilities.
The acquisition was structured as a tax-free transaction, and was accounted for
using the purchase method of accounting.  Accordingly, the purchase price was
allocated to the assets purchased and the liabilities assumed based upon the
fair values at the date of acquisition, and the results of operations of Tucker
have been included in the Company's financial statements from March 15, 1996.

In separate transactions during January 1997, the Company acquired three
shopping centers located in Indiana, Iowa and Minnesota, aggregating 245,000
square feet for a total purchase price of approximately $16.2 million.  On
April 28, 1997, the Company completed the acquisition of an additional shopping
center located in Iowa for approximately $4.6 million.

On March 13, 1997, the Company completed the sale of Hood Commons located in
Derry, New Hampshire for a net sales price of $11.3 million, resulting in a
gain of approximately $3.1 million for financial reporting purposes.

As a result of these acquisition and disposition activities, the Company
currently owns 35 properties in 12 states, aggregating over 7.8 million square
feet of rentable space.


                                       6


<PAGE>   7

NOTE 4 - SUPPLEMENTAL CASH FLOW DISCLOSURE

In January 1997, a property was purchased for approximately $5.4 million which
included the issuance of limited partnership units ("OP Units") in Bradley
Operating Limited Partnership ("BOLP") which the holders may ultimately
exchange for 281,300 shares of the Company's common stock.  BOLP is a limited
partnership of which the Company owns a 92.6% general partner interest.

Also in January 1997, a property was purchased for approximately $4.8 million
which included the Company's assumption of a $3.8 million non-recourse mortgage
note.

NOTE 5 - REAL ESTATE INVESTMENTS HELD FOR SALE

As of March 31, 1997, the Company is holding for sale Augusta Plaza, 585
Boylston Street and Village Shopping Center.  The net book value of these
properties, $9.9 million, has been reclassified on the balance sheet from "Real
estate investments" to "Real estate investments held for sale".  The balance as
of December 31, 1996, $10.3 million, included Hood Commons, which was sold in
March 1997 (see Note 3), and excluded Village Shopping Center, which was placed
for sale during March 1997.  The properties held for sale are no longer
depreciated for financial reporting purposes.


                                       7



<PAGE>   8



ITEM 2  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

RESULTS OF OPERATIONS

During the first quarter of 1997, the Company acquired three shopping centers
in separate transactions for a total purchase price of approximately $16.2
million, and sold one shopping center that had been held for sale for a net
sales price of approximately $11.3 million.  During the year ended December 31,
1996, the Company acquired sixteen properties, including fourteen properties in
connection with the acquisition of Tucker, and sold its interest in a ground
lease.  Including operations for the newly acquired properties and the gains on
sales of properties of $9.4 million in 1996 and $3.1 million in 1997, net
income decreased $2.5 million.  Excluding the gains on sales in both years,
however, net income per share increased 69% from $0.16 per share to $0.27 per
share.  Per share amounts reflect weighted average shares outstanding of
21,665,593 during the first quarter of 1997 and 12,536,714 during the first
quarter of 1996.  The increased number of shares outstanding was due primarily
to a 2,875,000 share public offering completed in November 1996 and the
issuance of 7,428,157 shares in connection with the Tucker acquisition on March
15, 1996.

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("Statement No.
128") which supersedes APB Opinion No. 15, "Earnings Per Share."  Statement No.
128 replaces the presentation of "primary EPS," which the Company has
historically presented, with a presentation of "basic EPS," and replaces the
presentation of "fully diluted EPS," which the Company has not been required to
present due to the immaterial difference from primary EPS, with "diluted EPS."
It also requires dual presentation of basic and diluted EPS on the face of the
income statement and requires a reconciliation of the numerator and denominator
of the basic EPS computation to the numerator and denominator of the diluted
EPS computation.  Basic EPS, unlike primary EPS, excludes dilution and is
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period.  Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock (e.g., stock options) were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity.  Statement No. 128 is effective for
financial statements for both interim and annual periods ending after December
15, 1997.  Management does not expect implementation of Statement No. 128 to
have a material effect on the financial statements of the Company because basic
EPS is not expected to differ from the primary earnings per share as previously
presented, and diluted EPS is not expected to be materially different from
basic EPS.

Acquisitions and Disposition Activities:


<TABLE>
<CAPTION>
       Acquisitions               Date
--------------------------  -----------------
<S>                         <C>
Tucker (14 properties)       March 15, 1996
Brookdale Square             March 26, 1996
Santa Fe Square              December 27, 1996
Roseville Center             January 1, 1997
Martin's Bittersweet Plaza   January 1, 1997
Warren Plaza                 January 21, 1997
</TABLE>

<TABLE>
<CAPTION>

       Dispositions               Date
--------------------------  -----------------
<S>                         <C>
Nicollet Avenue              March 26, 1996
Hood Commons                 March 13, 1997
</TABLE>

                                       8



<PAGE>   9



Property Specific Revenues And Expenses (in thousands of dollars):


<TABLE>
<CAPTION>

                       Three months ended
                           March 31,                             Acquisitions/       Properties Held
                        1997       1996        Difference        Dispositions          Both Years
                       ----------------        ----------        ------------        ---------------
<S>                     <C>         <C>        <C>               <C>                  <C>  

Rental income           $22,855    $11,219     $11,636            $11,477              $159
Operations,                                                                           
maintenance and                                                                       
  management              3,333      2,085       1,248              1,559              (311)
Real estate taxes         5,068      2,675       2,393              2,238               155
Depreciation and                                                                      
  amortization            3,930      2,252       1,678              1,542               136
</TABLE>

Results attributable to acquisition and disposition activities:

Rental income increased from $11,219,000 in the first quarter of 1996 to
$22,855,000 in the first quarter of 1997.  Approximately $11,807,000 of the
increase was attributable to the Company's acquisition activities, partially
offset by $330,000 attributable to disposition activities.

Operations, maintenance and management expense increased from $2,085,000 in the
first quarter of 1996 to $3,333,000 in the first quarter of 1997.
Approximately $1,559,000 of the increase was attributable to the Company's
acquisition and disposition activities.

Real estate taxes increased from $2,675,000 in the first quarter of 1996 to
$5,068,000 in the first quarter of 1997.  Approximately $2,238,000 of the
increase was attributable to the Company's acquisition activities.

Depreciation and amortization increased from $2,252,000 in the first quarter of
1996 to $3,930,000 in the first quarter of 1997.  Approximately $1,661,000 of
the increase was attributable to the Company's acquisition activities,
partially offset by $119,000 attributable to disposition activities.

Results for properties fully operating throughout both periods:

The remaining increase in rental income of approximately $159,000 represented
an increase of 2.0% over the first quarter of 1996.  The positive variance was
primarily due to an increase at Har Mar Mall resulting from successful leasing
activity during the second half of 1996, where leases were signed for
approximately 26,000 square feet, or 6% of the Center.  A decrease in rental
income at Grandview Plaza due to the vacancy of JC Penney in 1996 was offset by
an increase at Rivercrest Center due to an increase in average occupancy during
the first quarter of 1997 compared with the first quarter of 1996.

The remaining decrease in operations, maintenance and management expense of
$311,000, or 20% from the first quarter of 1996, was primarily attributable to
cost savings resulting from the completion of the internalization of the
property management function for the properties located in the Midwest.

The remaining increase in real estate taxes of $155,000, or 7% over the first
quarter of 1996, was primarily attributable to estimated increases in 1997 real
estate taxes at most of the Company's properties located in Minnesota.

The remaining increase in depreciation and amortization of $136,000 was
primarily a result of new construction and leasing at White Bear Hills, Har Mar
Mall and Burning Tree Plaza as well as new tenancies at various other
locations.


                                       9



<PAGE>   10




Non-Property Specific Expenses:

Mortgage and other interest expense increased to $3,650,000 for the quarter
ended March 31, 1997 from $1,385,000 during the same period in the prior year.
Debt assumed in the Tucker acquisition, consisting primarily of the $100
million REMIC mortgage note secured by six of the acquired Tucker properties,
accounted for a majority of the increase in interest expense.  Interest expense
of approximately $1,808,000 and $304,000 (sixteen days) for the three month
periods ended March 31, 1997, and 1996, respectively, related to the REMIC.  A
higher weighted average outstanding balance on the Company's line of credit
resulted in an increase in interest expense of approximately $467,000 for the
three month period ended March 31, 1997 compared with the same period in the
prior year.  Additionally, mortgage interest expense on the mortgage note
assumed in the acquisition of Martin's Bittersweet Plaza in January 1997
contributed approximately $88,000 to the increase during the first quarter of
1997 compared with the first quarter of 1996.  The Company's weighted average
interest rate for the three months ended March 31, 1997 was approximately
7.67%.

Administrative and general expense increased from $555,000 during the quarter
ended March 31, 1996 to $1,105,000 during the quarter ended March 31, 1997.
Although the acquisition of Tucker created substantial operating efficiencies,
following the Tucker acquisition the Company reorganized its internal
operations to function by disciplines rather than geography.  The
reorganization included the addition of executive management for leasing, asset
management and acquisition activities, mostly during the second half of 1996.
Primarily as a result of the Tucker acquisition and the internal
reorganization, the Company has increased the number of employees, resulting in
an increase in payroll costs.

During the first quarter of 1996, the Company incurred a one-time charge of
$344,000 consisting of deferred financing costs related to the Company's former
bank line of credit and certain deferred acquisition costs related to
acquisitions which the Company chose not to pursue due to the efforts required
to finalize the Tucker transaction.

LIQUIDITY AND CAPITAL RESOURCES

General

The Company funds operating expenses and distributions primarily from operating
cash flows, although its bank line of credit may also be used for these
purposes.  The Company funds acquisitions and capital expenditures primarily
from the line of credit and, to a lesser extent, operating cash flows, as well
as through the issuance of securities.  The Company may also acquire properties
through the direct issuance of securities of the Company, or via Bradley
Operating Limited Partnership ("BOLP"), through the issuance of limited
partnership units in the Operating Partnership.  Additionally, the Company may
dispose of certain non-core properties, reinvesting the proceeds from such
dispositions in properties with higher growth potential and that are more
consistent with the Company's strategic focus.  In addition, the Company may
acquire partial interests in real estate assets through participation in joint
venture transactions.

The Company focuses its investment activities on community and neighborhood
shopping centers primarily in the Midwestern United States anchored by regional
and national grocery store chains.  The Company will continue to seek
acquisition opportunities of individual properties and property portfolios in
both primary and secondary Midwest markets where management can utilize its
extensive experience in shopping center renovation, expansion, re-leasing and
re-merchandising to achieve long-term cash flow growth and favorable investment
returns.

As of March 31, 1997, financial liquidity was provided by approximately
$3,196,000 in cash and cash equivalents and by the Company's unused balance on
the line of credit of $94,700,000.  In addition, the Company has an effective
"universal shelf" registration statement under which the Company may issue up
to $34,460,000 in debt or equity securities.

                                       10



<PAGE>   11


The Company expects to file further "universal shelf" registration
statements which will give it flexibility to issue additional debt or equity
securities from time to time when the Company determines that market conditions
and the opportunity to utilize the proceeds from the issuance of such securities
are favorable.

Operating Activities

Net cash flows provided by operating activities increased to $7,387,000 during
the first quarter of 1997, from $5,753,000 during the same period in 1996.  The
increase is primarily due to the growth of the Company's portfolio, from 17
properties at January 1, 1996, to 34 properties at March 31, 1997.

For the three months ended March 31, 1997, funds from operations ("FFO")
increased $5,474,000 or 134% from $4,083,000 to $9,557,000.  The Company
generally considers FFO to be a relevant and meaningful supplemental measure of
the performance of an equity REIT because it is predicated on a cash flow
analysis, contrasted with net income, a measure predicated on generally
accepted accounting principles which gives effect to non-cash items such as
depreciation.  FFO, as defined by the National Association of Real Estate
Investment Trusts ("NAREIT") and as followed by the Company, represents net
income (computed in accordance with generally accepted accounting principles),
excluding gains (or losses) from sales of property, plus depreciation and
amortization.  In computing FFO, the Company does not add back to net income
the amortization of costs incurred in connection with the Company's financing
activities or depreciation of non-real estate assets.  FFO does not represent
cash generated from operating activities in accordance with generally
accepted accounting principles and should not be considered as an alternative
to cash flow as a measure of liquidity.  Since the definition of FFO is a
guideline, computation of FFO may vary from one REIT to another.  FFO is not
necessarily indicative of cash available to fund cash needs.

Investing Activities

Net cash flows from investing activities increased to a source of cash of
$4,244,000 during the first quarter of 1997, from a net use of cash of $437,000
during the same period of 1996.

During the first quarter of 1997, the Company acquired three shopping centers
in separate transactions for a total purchase price of approximately $16.2
million, and sold one property that had been held for sale for a net sales
price of approximately $11.3 million.  Subsequent to quarter-end, the Company
completed the acquisition of its second shopping center located in Iowa for
approximately $4.6 million.

Financing Activities

Net cash flows provided by financing activities declined to a net use of cash
of $15,897,000 during the first quarter of 1997 from a net use of cash of
$2,625,000 during the same period in 1996.  Distributions (treated as a
reduction in cash flows from financing activities in the Company's financial
statements) were $7,149,000 in the first quarter of 1997, and $3,706,000 in the
first quarter of 1996.

The three acquisitions completed during the first quarter of 1997 demonstrated
the important benefits of a flexible capital structure in executing the
Company's growth strategy.  Warren Plaza, a 90,000 square foot shopping center
located in Dubuque, Iowa, was acquired for cash with financing provided by the
Company's unsecured bank line of credit.  Martin's Bittersweet Plaza, an 80,000
square foot shopping center located in Mishawaka, Indiana, was acquired with
cash provided by the Company's unsecured bank line of credit and the assumption
of a $3,800,000 non-recourse mortgage note.  Roseville Center, a 75,000 square
foot shopping center located in Roseville, Minnesota, was the first property
acquired utilizing the Company's newly formed UPREIT structure, issuing limited
partnership

                                       11



<PAGE>   12


units in BOLP to the former owners of the Center which the holders
may ultimately exchange for 281,300 shares of the Company's common stock.

In March 1997, the Company completed the sale of Hood Commons located in Derry,
New Hampshire, for a net sales price of $11.3 million.  The net proceeds were
used to pay-down the Company's unsecured bank line of credit.  Although the
spread between the yield generated by Hood Commons and the interest rate
incurred on the line of credit is slightly dilutive to earnings in the near
term, the Company believes the proceeds can be better invested in properties
with higher growth potential and that are more in line with the Company's
strategic markets.  Almost half of the net proceeds were used to acquire Spring
Village, a 92,000 square foot shopping center located in Davenport, Iowa.  The
remaining proceeds are expected to be reinvested during the remainder of 1997.

Also in March 1997, the Company amended its $150 million unsecured revolving
credit facility, extending the maturity date to March 15, 1999, and reducing
the interest rate to the lower of the bank's base rate or 1.50% over LIBOR from
the lower of the bank's base rate or 1.75% over LIBOR, effectively lowering the
Company's cost of capital, a critical component of the Company's growth
strategy.  The amended line of credit agreement also provides more flexible
covenants compared with the previous agreement.

Capital Strategy

The Tucker liabilities assumed included a $100,000,000 mortgage note secured by
six properties.  The note had been issued to an entity qualifying as a real
estate mortgage investment conduit (REMIC) for federal income tax purposes.
The REMIC Note has a fixed, 7.3% rate of interest, with an effective rate of
7.23%, matures in September 2000 and becomes prepayable, with a significant
prepayment premium, in October 1997.  Management's objective is to obtain an
investment grade rating from one or more national rating agencies that will
further increase the Company's financial flexibility by permitting it to issue
fixed-rate unsecured debt on favorable terms.  Management believes that the
bank line of credit, as well as the current value of the Company's assets,
provide the Company with the necessary flexibility to refinance the REMIC Note,
as well as its other debt obligations when due, although there can be no 
assurance that refinancing terms at the time of maturity will be favorable.

Management believes that the Company's recent growth has enhanced the Company's
ability to raise further capital in the public markets and, as indicated above,
the Company intends to position itself to take advantage of favorable
opportunities by increasing the dollar amount of securities that it may issue
pursuant to a "universal shelf" registration statement.  While the public
capital markets have generally been favorable for selected REITs during the
past few years, there can be no assurance either that the public markets will
remain receptive to providing new capital to REITs or that the terms upon which
the Company may be able to raise funds will be attractive or favorable to the
Company or to its share owners.

At March 31, 1997, the Company was holding for sale its Augusta Plaza and 585
Boylston Street properties because such properties are not aligned with the
Company's strategic market focus.  The dispositions of these properties are
expected to be completed during 1997.  Additionally, during March 1997, the
Company placed for sale Village Shopping Center, one of the properties acquired
from Tucker, since such property is considered by management to be a non-core
property where the proceeds from a sale could be better invested in a property
or properties with higher growth potential.  Proceeds received from a sale of
any or all of these properties would provide additional liquidity to the
Company and may be applied in whole or in part to tax-deferred "like-kind"
exchange acquisitions of additional properties.

                                       12



<PAGE>   13





FORWARD LOOKING STATEMENTS

Statements made or incorporated in this Form 10-Q include "forward-looking"
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934.  The Company's actual
results could differ materially from those set forth in the forward-looking
statements.  Certain factors that might cause such a difference include those
factors discussed in the section entitled "Risk Factors" under the discussion
of the Company's business in Item 1 of the Company's Form 10-K for the year
ended December 31, 1996.


                                       13
<PAGE>   14

PART II - OTHER INFORMATION


Item 1.  LEGAL PROCEEDINGS
         Not applicable

Item 2.  CHANGES IN SECURITIES
         Not applicable

Item 3.  DEFAULTS UPON SENIOR SECURITIES
         Not applicable

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         Not applicable

Item 5.  OTHER INFORMATION
         Not applicable

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>

    (a)  Exhibit No.            Description                                            
         -----------------      ----------------------------------------------         
     <S>                        <C>                                                    
         3.1                    Articles of Amendment and Restatement of               
                                Bradley Real Estate, Inc., incorporated by             
                                reference to Exhibit 3.1 of the Company's              
                                Current Report on Form 8-K dated October 17, 1994.     
                                                                                       
                                                                                       
         3.2                    Articles of Merger between Bradley Real                
                                Estate Trust and Bradley Real Estate, Inc.,            
                                incorporated by reference to Exhibit 3.2 of the        
                                Company's Current Report on Form 8-K dated             
                                October 17, 1994.                                      
                                                                                       
         3.3                    Articles of Merger between Tucker Properties           
                                Corporation and Bradley Real Estate, Inc.              
                                incorporated by reference to Exhibit 3.3 of the        
                                Company's Annual Report on Form 10-K dated             
                                March 25, 1996.                                        
                                                                                       
                                                                                       
         3.4                   By-laws of Bradley Real Estate, Inc.,                   
                               incorporated by reference to Exhibit 3.3 of the         
                               Company's Current Report on Form 8-K dated              
                               October 17, 1994.                                       
                                                                                       
                                                                                       
        10.2.1                 First Amendment dated as of May 2, 1996 and             
                               Second Amendment dated as of March 28, 1997 to          
                               Revolving Credit Agreement by and among Bradley         
                               Real Estate, Inc., Bradley Operating Limited            
                               Partnership, The First National Bank of Boston          
                               and other banks.                                        
                                                                                       
        27                     Financial Data Schedule

</TABLE>

    (b)   Reports on Form 8-K

          The Registrant did not file any Form 8-K reports with respect to
          events occurring the quarter.


                                      14


<PAGE>   15


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.


Date:  May 13, 1997

  
                                  Bradley Real Estate, Inc.
                                           Registrant



                                  By: /s/ Thomas P. D'Arcy
                                     -----------------------
                                     Thomas P. D'Arcy
                                     President and CEO





                                  By: /s/ Irving E. Lingo, Jr.
                                     ----------------------------
                                     Irving E. Lingo, Jr.
                                     Chief Financial Officer
                                    (Principal Accounting Officer)



                                      15