<PAGE>
 
   As filed with the Securities and Exchange Commission on December 17, 1998

                                            REGISTRATION STATEMENT NO. _________
================================================================================


                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                           _________________________

                                   FORM S-3

                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
                           _________________________

                           BRADLEY REAL ESTATE, INC.
            (Exact name of Registrant as specified in its charter)
          MARYLAND                                         04-6034603
(State or other jurisdiction                               (I.R.S. Employer
of incorporation or organization)                          Identification No.)

                        40 SKOKIE BOULEVARD, SUITE 600
                        NORTHBROOK, ILLINOIS 60062-1626
                                (847) 272-9800
  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)
                        _______________________________

                               THOMAS P. D'ARCY
                CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
                           BRADLEY REAL ESTATE, INC.
                        40 SKOKIE BOULEVARD, SUITE 600
                       NORTHBROOK, ILLINOIS  60062-1626
                                (847) 272-9800
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                    copy to:

                             WILLIAM B. KING, P.C.
                         GOODWIN, PROCTER & HOAR  LLP
                                EXCHANGE PLACE
                       BOSTON, MASSACHUSETTS  02109-2881
                                (617) 570-1000
                         _____________________________

Approximate date of commencement of proposed sale to the public:  From time to
time after the effective date of this Registration Statement.

    If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

    If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]

    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

    If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]


                        CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
====================================================================================================================================

                                                             Proposed Maximum            Proposed Maximum                          
  Title of Securities Being                                 Offering Price Per         Aggregate Offering            Amount of     
        Registered              Amount to be Registered          Share(1)                    Price(1)           Registration Fee(2)
------------------------------------------------------------------------------------------------------------------------------------

<S>                             <C>                      <C>                        <C>                         <C>
Common Stock, par value $.01                                                                                                 
 per share                             1,212,630                  19.78                    $23,987,338                $5,125 
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee in
    accordance with Rule 457(c) of the Securities Act of 1933, as amended, based
    upon the average of the high and low sales prices on the New York Stock
    Exchange on December 11, 1998.
(2) Pursuant to Rule 429 under the Securities Act of 1933, as amended, 281,300
    shares covered by the earlier Registration Statement on Form S-3 (No. 333-
    42357) are being carried forward and the corresponding registration fee of
    $1,650 was previously paid at the time of filing.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.

================================================================================
<PAGE>
 
 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
 +                                                                            +
 +   The information in this prospectus is not complete and may be changed.   +
 +   We may not sell these securities until the registration statement filed  +
 +   with the Securities and Exchange Commission is effective. This           +
 +   prospectus is not an offer to sell these securities and it is not        +
 +   soliciting an offer to buy these securities in any state where the       +
 +   offer or sale is not permitted.                                          +
 +                                                                            +
 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++


                    Subject to Completion December 17, 1998

PROSPECTUS
----------
                                1,212,630 SHARES

                           BRADLEY REAL ESTATE, INC.

                                  COMMON STOCK
                                  ____________

    We are a fully integrated real estate investment trust that owns and
operates community and neighborhood shopping centers in the Midwest region of
the United States. We conduct substantially all of our business through Bradley
Operating Limited Partnership. We are the sole general partner of, and own
approximately 94% of the economic interests in this partnership.

    This Prospectus relates to 1,212,630 shares of common stock that we may
issue to certain holders of limited partnership units in Bradley Operating
Limited Partnership upon redemption of their units, as more fully described in
this Prospectus. Bradley Operating Limited Partnership originally issued the
units to these holders in exchange for the contribution of their interests in
certain properties to Bradley Operating Limited Partnership. We are filing the
registration statement of which this Prospectus is a part to fulfill our
contractual obligations to these holders and provide the holders of the shares
with freely tradable securities.

    Under the terms of the Second Restated Agreement of Limited Partnership of
Bradley Operating Limited Partnership, holders of limited partnership units have
the right to tender their units for cash, subject to certain restrictions. In
lieu of delivering cash, however, we may elect to issue shares of common stock
to any such holder in exchange for their limited partnership units on a one-for-
one basis, subject to certain adjustments. Whether we issue the shares offered
hereby depends on whether, and to what extent, these holders of up 1,212,630
partnership units tender their units for redemption and we elect to issue shares
rather than to pay cash. The registration of these shares does not necessarily
mean that the holders will tender their units or that, if they do, they will
offer or sell the shares.

    Our common stock trades on the New York Stock Exchange under the symbol
"BTR." To ensure that we maintain our qualification as a real estate investment
trust for federal income tax purposes, our charter generally limits ownership of
common stock by any person or affiliated group to 9.8% of the total common stock
by number or value, with certain exceptions. See "Restrictions on Transfers."

    We will not receive any proceeds from the issuance of the shares of common
stock offered hereby. We have also agreed to bear certain expenses of
registration of these shares under federal and state securities laws.

                              ____________________

    Investing in shares of our common stock involves various risks.  In
considering whether to redeem limited partnership units in Bradley Operating
Limited Partnership for shares of common stock, you should carefully consider
the matters discussed under "Risk Factors" beginning on page 5 of the
Prospectus.

    Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this Prospectus is truthful or complete. It is illegal for any person to tell
you otherwise.

                              ____________________

                The date of this Prospectus is December __, 1998
<PAGE>
 
                             AVAILABLE INFORMATION

    We file annual, quarterly and special reports, proxy statements and other
information electronically with the SEC. You may read and copy any of the
reports, statements or other information that we file with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, N.W., in Washington, D.C. Please call
the SEC at 1-800-SEC-0330 for further information on the Public Reference Room.
Our SEC filings are also available from the New York Stock Exchange, 20 Broad
Street, New York, NY 10005 and from the Internet site maintained by the SEC at
http://www.sec.gov.


                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

    This Prospectus is part of a registration statement we filed with the SEC to
register the shares offered in this Prospectus.  It does not repeat important
information that you can find in our registration statement or in the reports
and other documents that we file with the SEC.  The SEC allows us to
"incorporate by reference" the information we file with them. This means that we
can disclose important information to you by referring you to other documents
that are legally considered to be part of this Prospectus, and later information
that we file with the SEC will automatically update and supersede the
information in this Prospectus and the documents listed below.

    We incorporate by reference the documents listed below, and any future
filings made with the SEC under Section 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934 until we sell all the shares of common stock
offered in this Prospectus:

    .   the Company's Annual Report on Form 10-K for the fiscal year ended
        December 31, 1997;

    .   the Company's Quarterly Reports on Form 10-Q for the quarters ended
        March 31, 1998, June 30, 1998 and September 30, 1998;

    .   the Company's Proxy Statement dated March 31, 1998 with respect to its
        Annual Meeting of Stockholders on May 14, 1998;

    .   the Company's current reports on Form 8-K filed on January 28, 1998,
        February 20, 1998, June 2, 1998, June 17, 1998, June 24, 1998, August 7,
        1998, September 24, 1998, September 29, 1998 and December 16, 1998; and

    .   the description of the Company's Common Stock contained or incorporated
        by reference in the Company's Registration Statement on Form 8-A, filed
        August 8, 1994, including any amendments thereto.

    You may request a copy of these documents incorporated by reference, but not
the exhibits filed with these documents unless those exhibits are specifically
referred to, at no cost by writing or telephoning us at the following address:
attention: Ms. Marianne Dunn, Senior Vice President, Bradley Real Estate, Inc.,
40 Skokie Boulevard, Suite 600, Northbrook, Illinois 60062-1626, telephone (847)
272-9800.

                                       2
<PAGE>
 
                              PROSPECTUS SUMMARY

    This summary only highlights the more detailed information appearing
elsewhere in this Prospectus or incorporated herein by reference.  As this is a
summary, it may not contain all information that is important to you.  You
should read this entire Prospectus carefully before deciding whether to tender
your units of limited partnership interest for redemption.

    SOME IMPORTANT TERMS

    Although Bradley Real Estate, Inc., Bradley Operating Limited Partnership
and their subsidiaries and affiliated partnerships are separate legal entities,
for ease of reference, the terms "we," "us," and "ours" refer to the business
and properties of all of these entities, unless the context indicates otherwise.
For ease of reference and clarity, we sometimes refer to Bradley Real Estate,
Inc. and its predecessor, subsidiaries and affiliated partnerships as the
"Company" and Bradley Operating Limited Partnership and its subsidiaries and
affiliated partnerships as the "Operating Partnership."   References in this
Prospectus to "Units" refer to units of limited partner interest of Bradley
Operating Limited Partnership not designated as belonging to any specific class.
We sometimes refer to a real estate investment trust as a "REIT" in this
Prospectus.

                             ____________________

                                  THE COMPANY

    Bradley Real Estate, Inc. is a fully-integrated real estate operating
company that owns and operates community and neighborhood shopping centers in
the Midwest region of the United States.  As of December 1, 1998, the Company
owned 97 properties in 16 states, aggregating approximately 15.6 million square
feet of gross leasable area or GLA.  Title to such properties is held by or for
the benefit of the Operating Partnership.  The Company conducts substantially
all of its business through the Operating Partnership.  The Company is the sole
general partner and the owner of approximately 94% of the economic interests in
the Operating Partnership.

    The Company is incorporated under the laws of the State of Maryland.  Its
offices are located at 40 Skokie Boulevard, Suite 600, Northbrook, Illinois
60062-1626.  Its telephone number is (847) 272-9800.

                           SECURITIES TO BE OFFERED

    This Prospectus relates to the possible issuance of up to 1,212,630 shares
of common stock that may be issued by the Company to certain holders of an
aggregate of 1,212,630 Units upon redemption of their Units. The Operating
Partnership originally issued these Units to the equity holders of Lexington
Holding Company, Baken Park Partners Limited Partnership, County Line 31
Company, L.P. and Spring Mall Associates Limited Partnership in exchange for the
contribution of their interests in certain properties to the Operating
Partnership. In connection with these property contributions, the Company
entered into registration rights agreements with the contributors. The Company
is registering the shares covered by this Prospectus in order to fulfill its
contractual obligations under these agreements and provide the holders of the
shares with freely tradable securities. Registration of these shares does not
necessarily mean that all or any portion of the shares will be issued by the
Company.

    Pursuant to the Second Restated Agreement of Limited Partnership of the
Operating Partnership, Unitholders may tender their Units to the Operating
Partnership for cash equal to the value of an equivalent number of shares of
common stock (subject to certain adjustments to prevent dilution).  In lieu of
delivering cash, however, the Company may, at its option, choose to acquire any
Units so tendered by issuing shares of common stock in exchange for the Units.
The shares will be exchanged for Units on a one-for-one basis (subject to
certain adjustments to prevent dilution).

    The Company will not receive any cash proceeds from the issuance of any
shares of common stock offered under this Prospectus. With each such
acquisition, however, the Company's economic interest in the Operating
Partnership will increase.

                                       3
<PAGE>
 
                                 RISK FACTORS

    An investment in common stock involves various risks.  In considering
whether to redeem your Units, you should carefully consider the matters
discussed under "Risk Factors" which begins on page 5 of this Prospectus.

                           TAX STATUS OF THE COMPANY

    The Company has elected to qualify as a REIT under Sections 856 through 860
of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"),
in each year since its organization in 1961 and is the nation's oldest
continuously qualified REIT.  As long as it qualifies for taxation as a REIT,
the Company generally will not be subject to federal income tax on that portion
of its ordinary income and capital gains that is currently distributed to its
stockholders.  Even if we qualify for taxation as a REIT, we may be subject to
certain state and local taxes on its income and property and to federal income
and excise taxes on its undistributed income.  See "Risk Factors--Adverse
Consequences of Failure to Qualify as a REIT" and "Federal Income Tax
Considerations" for a more detailed explanation.

                                       4
<PAGE>
 
                                 RISK FACTORS

FORWARD LOOKING INFORMATION

    Statements made in this Prospectus or in the documents incorporated by
reference 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.  Also, documents we subsequently file with the Commission and incorporated
by reference will contain forward-looking statements.  These statements include,
among other things, statements regarding the intent, belief or expectations of
the Company and its directors and officers with respect to:

    .   the declaration or payment of distributions by the Company,

    .   potential acquisitions or dispositions of properties, assets or other
        public or private companies by the Company,

    .   the policies of the Company regarding investments, indebtedness,
        acquisitions, dispositions, financings, conflicts of interest and other
        matters,

    .   the Company's qualification as a REIT under the Internal Revenue Code,

    .   the retail industry and real estate markets in the Midwest and in
        general,

    .   the availability of debt and equity financing,

    .   interest rates,

    .   general economic conditions, and

    .   trends affecting the Company's financial condition or results of
        operations.

    You are cautioned that, while forward-looking statements reflect the
Company's good faith beliefs, they are not guarantees of future performance and
involve known and unknown risks and uncertainties, and that actual results may
differ materially from those in the forward-looking statements as a result of
various factors.  In addition, the Company disclaims any obligation to publicly
update or revise any forward-looking statement, whether as a result of new
information, future events or otherwise.

TAX CONSEQUENCES OF EXCHANGE TO HOLDERS OF UNITS

    A Unitholder Who Redeems Units for Common Stock May Have Adverse Tax
Consequences

    If you redeem or exchange Units for cash or shares of stock, you will
recognize gain or loss because the redemption and exchange are considered fully
taxable sales of your Units.  You will be treated as realizing for tax purposes
an amount equal to the sum of the cash received or the value of the shares
received in the exchange plus the amount of any Operating Partnership
liabilities allocable to the exchanged Units at the time of the redemption or
exchange.  It is possible that the amount of gain recognized or even the tax
liability resulting from such gain could exceed the amount of cash and the value
of the shares received upon such disposition.  See "Description of Units and
Redemption of Units--Tax Consequences of Redemption."  In addition, your ability
to sell a substantial number of shares in order to raise cash to pay tax
liabilities associated with the redemption of your Units may be limited as a
result of fluctuations in the market price of our common stock.  The price you
receive for such shares may not equal the value of your Units at the time of
redemption or exchange.

                                       5
<PAGE>
 
    If we do not exercise our right to acquire Units tendered for redemption in
exchange for shares of common stock, and such Units are redeemed by the
Operating Partnership for cash, then the tax consequences may differ.  See
"Description of Units and Redemption of Units."

    If a Unitholder Redeems Units, the Original Receipt of the Units May Be
Subject to Tax

    Your original receipt of the Units may be treated as a taxable sale under
the "disguised sale" rules of the Internal Revenue Code if you redeem your
Units, particularly within two years of receiving them. Subject to several
exceptions, the tax law generally provides that a partner's contribution of
property to a partnership and a simultaneous or subsequent transfer of money or
other consideration from the partnership to the partner will be presumed to be a
taxable sale.  In particular, if money or other consideration is transferred by
a partnership to a partner within two years of the partner's contribution of
property, the transactions are presumed to be a taxable sale of the contributed
property unless the facts and circumstances clearly establish that the transfers
are not a sale.  On the other hand, if two years have passed between the
original contribution of property and the transfer of money or other
consideration, the transactions will not be presumed to be a taxable sale unless
the facts and circumstances clearly establish that they should be. You should
consult your own tax advisor regarding your personal situation prior to
tendering Units for redemption.

    Potential Change in Nature of Investment Upon Redemption of Units

    If you exercise your right to redeem all or a portion of your Units, then
you may receive cash or, at our option, shares of common stock in exchange for
your Units.  If you receive cash, then you will (except to the extent you do not
tender all of your Units):

    .   no longer have any interest in the Company;

    .   not benefit from any subsequent increases in the price of the Units or
        shares of our common stock; and

    .   not receive any future distributions from the Company.

    If you receive common stock, you will become a stockholder of the Company
rather than a holder of Units in the Operating Partnership.  Although
substantially economically similar, an investment in shares of common stock
differs in important ways from an investment in Units of the Operating
Partnership, such as, among other things, form of organization, management
structure, voting rights, liquidity and federal income taxation. These
differences, some of which may be material to investors, are discussed in
"Description of Units and Redemption of Units--Comparison of Ownership of Units
and Common Stock."

FAILURE TO EFFECTIVELY MANAGE GROWTH

    We have grown aggressively over the past few years and continue to
experience growth.  The failure to effectively manage such growth, or to
successfully integrate acquired properties into our operations, could have
material adverse effect on our operating results and financial condition.
During 1997, we acquired 25 shopping centers aggregating over 3.1 million square
feet of GLA for an aggregate acquisition price of approximately $189.3 million.
On August 6, 1998, we completed the merger acquisition of Mid-America Realty
Investments, Inc., a real estate investment trust owning interests in 25
properties aggregating approximately 3.3 million square feet primarily located
in the Midwest region of the United States.  In addition to property interests
acquired in connection with the merger acquisition of Mid-America Realty
Investments, from January 1, 1998 through December 1, 1998, we acquired 21
properties and two outlots adjacent to one of our existing properties,
aggregating 2.8 million square feet of GLA for an aggregate acquisition price of
approximately $198.9 million.  We have also entered into a contract to acquire
an additional shopping center representing approximately 186,000 square feet of
GLA, which we believe will close, for an estimated price of approximately 
$3.9 million.

                                       6
<PAGE>
 
UNCERTAINTY OF MEETING ACQUISITION OBJECTIVES; ACQUIRED PROPERTIES MAY NOT MEET
OUR EXPECTATIONS

    As an important part of our business strategy, we continually seek
prospective acquisitions of additional shopping centers and portfolios of
shopping centers.  Notwithstanding our adherence to our criteria for evaluation
and due diligence regarding potential acquisitions, we cannot guarantee that any
acquisition that is consummated will meet our expectations.  We target shopping
centers and portfolios which we believe can be purchased at attractive initial
yields and/or which demonstrate the potential for revenue and cash flow growth
through implementation of renovation, expansion, re-tenanting and re-leasing
programs similar to those undertaken with respect to some of our existing
properties.  When we acquire a shopping center, we expose ourselves to the risk
that our investment will fail to generate expected returns or that our desired
improvement programs will cost more than expected.  In addition, we cannot
guarantee that we will ultimately make any potential acquisition that we may
evaluate.  The evaluation process involves non-recoverable costs in the case of
acquisitions which are not consummated.

RISKS RELATED TO INDEBTEDNESS

    No Limitation on Debt

    Our organizational documents do not limit the amount of indebtedness that we
or the Operating Partnership may incur.  Although we attempt to maintain a
balance between total outstanding indebtedness and the value of our portfolio
(i.e., a ratio of debt and preferred stock to Real Estate Value of 50% or less,
with "Real Estate Value" defined as net operating income divided by 10.25%), we
could alter this balance at any time.  If we become more highly leveraged, then
the resulting increase in debt service could adversely affect our ability to
make expected distributions to our stockholders and make payments on our
outstanding indebtedness.  If we default on our obligations under any
outstanding indebtedness, we could lose our interest in any properties that
secure that indebtedness.

    Risk of Rising Interest Rate

    Our revolving credit facility carries a floating interest rate that will
rise if market interest rates rise. Any such increase in debt service
requirements will adversely affect our net income and cash available for
distribution to our stockholders.

    Effect on Stock Price and Ability to Raise Capital

    The foregoing risks associated with our debt obligations may also adversely
affect the market price of our common stock.  A decrease in the market price of
our common stock may inhibit our ability to raise capital and issue equity in
both the public and private markets and thereby adversely affect any plans for
future growth.

REAL ESTATE INVESTMENT CONSIDERATIONS

    General

    Real property investments are subject to varying types and degrees of risk
that may hinder or otherwise affect their ability to generate revenues.  As a
result, our cash flow and cash available for distributions to stockholders may
be adversely affected.  The following factors, among others, may adversely
affect real estate values and our ability to generate revenues:

    .   changes in the general economic climate;

    .   local conditions (such as an oversupply of space or a reduction in
        demand for real estate in an area);

                                       7
<PAGE>
 
    .   the quality and philosophy of management;

    .   competition from other available space;

    .   the ability of the owner to provide adequate maintenance;

    .   insurance and variable operating costs;

    .   government regulations;

    .   changes in interest rate levels;

    .   the availability of financing and

    .   potential liability due to changes in environmental and other laws.


    Illiquidity of Real Estate

    Real estate investments are relatively illiquid and therefore will tend to
limit our ability to react promptly in response to changes in economic or other
conditions.  In addition, the Internal Revenue Code limits a REIT's ability to
make sales of properties held for fewer than four years, which may affect our
ability to sell properties without adversely affecting returns to stockholders.

    Economic Trends in the Midwest and/or the Retail Industry May Affect Cash
    Available for Distribution

    Substantially all of our properties are located in the Midwestern region of
the United States.  Adverse economic developments in this area could adversely
impact the operations of our properties and therefore our profitability.  The
concentration of properties in one region may expose us to risks of adverse
economic developments which are greater than if our portfolio were more
geographically diverse.

    Our properties consist predominantly of community and neighborhood shopping
centers catering to retail tenants.  Our performance therefore is linked to
economic conditions in the market for retail space generally.  The market for
retail space has been or could be adversely affected by:

    .   the ongoing consolidation in the retail sector;

    .   the adverse financial condition of certain large companies in this
        sector;

    .   the excess amount of retail space in certain markets; and

    .   increasing consumer purchases through catalogues or the internet.

To the extent that these conditions impact the market rents for retail space, we
could experience a reduction of cash receipts and cash available for
distribution.  Such a reduction would have a corresponding effect on the amount
of distributions we can make to our stockholders.

    In addition, the value of our common stock may be negatively impacted to the
extent that the investing public has a negative perception of the retail sector.
As a result, our common stock may trade at a discount below the inherent value
of our assets as a whole.

                                       8
<PAGE>
 
    Financial Condition of Tenants May Affect Cash Available for Distribution;
    Tenants in Bankruptcy May Not Make Timely Rental Payments

    Our cash receipts and cash available for distribution would be adversely
affected if a significant number of tenants were unable to meet their
obligations to us.  A tenant may experience a downturn in its business which may
weaken its financial condition and result in a reduction or failure to make
rental payments when due.  If a lessee or sublessee defaults in its obligations
to us, then we may experience delays in being able to enforce our right as
lessor or sublessor.  In addition, we may incur substantial costs and experience
significant delays associated with protecting our investment, including costs
incurred in renovating and releasing the property.

    At any time, one or more of our tenants may seek the protection of the
bankruptcy laws, which could result in the rejection and termination of their
lease.  Such an event could cause a reduction of cash receipts and cash
available for distribution and thus affect the amount of distributions we can
make to our stockholders.  We are subject to risks that:

    .   any present tenant which has filed for bankruptcy protection will not
        continue making payments under its lease;

    .   any tenant may file for bankruptcy protection in the future; or

    .   any tenants that files for bankruptcy protection may not continue to
        make rental payments in a timely manner.

    Vacancies and Lease Renewals May Reduce Cash Available for Distribution

    We continually have tenant leases expiring at our properties.  Some lease
expirations provide us with the opportunity to increase rentals or to hold the
space available for a stronger long-term tenancy.  In other cases, the space may
not generate strong demand for tenancy.  As a result, the space may remain
vacant for a longer period than anticipated or may be able to be re-leased only
at less favorable rents.  In such situations, we may be subject to competitive
and economic conditions over which we have no control. Accordingly, we can give
no assurance that the effects of possible vacancies or lease renewals at such
properties will not reduce our rental income and cash available for distribution
below levels we anticipate.

    Development Activities

    To the extent that we enter into agreements to acquire newly developed
shopping centers when they are completed, or acquire newly developed shopping
centers, we will be subject to risks inherent in acquiring newly constructed
centers, which could carry a higher level of risk than the acquisition of
existing properties with a proven performance record.  These risks include,
among others:

    .   the risk that funds will be expended and management time will be
        devoted to projects which may not come to fruition;

    .   the risk that occupancy rates and rents at a completed project will be
        less than anticipated; and

    .   the risk that expenses at a completed development will be higher than
        anticipated.

    These risks may adversely affect our results of operations and ability to
make distributions to our stockholders.

                                       9
<PAGE>
 
    Possible Environmental Liabilities and Related Costs of Remediation May
    Reduce Cash Available for Distribution or Reduce Value of the Property

    Under various federal, state and local laws, ordinances and regulations,
current or former owners of real estate are liable for the costs of removal or
remediation of certain hazardous or toxic substances on or in such property.
Such laws often impose liability without regard to whether the owner knew of, or
was responsible for, the presence of such hazardous or toxic substances.  The
presence of such substances, or the failure to properly remediate such
substances, may adversely affect the owner's ability to sell or rent such
property or to use such property as collateral in its borrowings.  All of our
properties have been subjected to Phase I or similar environmental audits (which
involve inspection without soil sampling or ground water analysis) by
independent environmental consultants.  We are not aware of any environmental
liability with respect to our properties that we believe would have a material
adverse effect on our business, assets or results of operations taken as a
whole.  We have no assurance, however, that existing environmental studies with
respect to our properties revealed all environmental liabilities or that a prior
owner of any such property did not create any material environmental condition
not known to us.

    Possible Adverse Consequences of Limitations on Insurance

    We carry comprehensive general liability coverage and umbrella liability
coverage on all of our properties.  Our insurance has limits of liability which
we believe are customary for similar properties and adequate to insure against
liability claims and provide for cost of defense.  Similarly, we are insured
against the risk of direct physical damage in amounts we estimate to be adequate
to reimburse us on a replacement basis for costs incurred to repair or rebuild
each property, including loss of rental income during the reconstruction period.
Currently, we also insure the properties for loss caused by earthquake or flood
in the aggregate amount of $10 million per occurrence.  Because of the high cost
of this type of insurance coverage and the wide fluctuations in price and
availability, we determined that the risk of loss due to earthquake and flood
does not justify the cost to increase coverage limits any further under current
market conditions.  It is possible that we may experience losses which exceed
the limits of our insurance coverage or which may be uninsured.

COMPETITION COULD ADVERSELY AFFECT ABILITY TO RENT SPACE, AMOUNT OF RENTS
CHARGED OR DEVELOPMENT AND ACQUISITION OPPORTUNITIES

    Numerous other retail properties and real estate companies compete with us
for tenants, development and acquisition opportunities within the market area of
each of our properties.  Some of these competitors have greater resources than
we do.  The competition from these retail properties and real estate companies
in such areas could have a material effect on:

    .   our ability to rent space at our properties and the amount of rents
        charged; and

    .   our ability to take advantage of development and acquisition
        opportunities.

RISKS RELATING TO YEAR 2000 COMPLIANCE

    Many existing computer software programs and operating systems were designed
such that the year 1999 is the maximum date that many computer systems will be
able to process dates accurately.  In the conduct of our own operations, we rely
upon commercial computer software primarily provided by independent software
vendors, and have undertaken an assessment of our vulnerability to the so-called
"Year 2000 issue" with respect to our computer systems.  After an analysis of
our potential exposure, we believe that such commercial software is
substantially Year 2000 compliant and that such independent vendors will be able
to complete any additional work to ensure Year 2000 compliance in a timely
manner and without any material impact on our business, operations or financial
condition .  We can, however, give no assurance that any material impact on us
as a result of any noncompliance will not occur.  Our assessment is based upon
formal and informal communications with the software vendors, literature

                                       10
<PAGE>
 
supplied with the software, literature supplied in connection with maintenance
contracts, and test evaluations of the software.  At this time we are not aware
of any tenant, supplier or any other party with whom we do a significant amount
of business that we anticipate will have a Year 2000 compliance issue that will
have a materially adverse effect on us or our operations.  In the event that any
such tenant, supplier or other party does experience a Year 2000 compliance
issue, there may be a material impact on our business, operations or financial
condition.  Although we believe that we will be able to adopt appropriate
contingency plans to deal with any Year 2000 compliance issues that we or any
other party with whom we have significant relationships may experience as we
continue our Year 2000 assessment and testing, we can not be certain at this
time that our contingency plans will be effective.


CERTAIN PROVISIONS IN ORGANIZATIONAL DOCUMENTS MAY DISCOURAGE ACQUISITION
PROPOSALS

    Certain Provisions of Our Charter and Bylaws

    Certain provisions contained in our charter and bylaws may discourage third
parties from making proposals to acquire us, even if some of our stockholders
might consider the proposal to be in their best interest.  These provisions
include the following:

    .   Our charter provides for three classes of Directors with the term of
        office of one class expiring each year, commonly referred to as a
        "staggered board."  By preventing stockholders from voting on the
        election of more than one class of directors at any annual meeting of
        stockholders, this provision may have the effect of keeping the current
        members of our Board of Directors in control for a longer period of time
        than stockholders may desire.

    .   Our bylaws provide that the holders of not less than 25% of the
        outstanding shares of common stock may call a special meeting of our
        stockholders.  This provision could make it more difficult for a
        stockholder to call a meeting for the purposes of approving a change of
        control without the support of the Board of Directors.

    .   Our charter authorizes the Board to issue up to 20 million shares of
        preferred stock without stockholder approval and to reclassify any
        unissued shares of stock as a different class or series in the Board's
        discretion.  Our Board's ability to issue preferred stock without
        stockholder approval, and to establish the preferences and rights of any
        class or series issued, could allow the Board to issue one or more
        classes or series of preferred stock that would discourage or delay a
        tender offer or change in control.

    .   Our charter generally limits any holder from acquiring more than 9.8%
        of the value or number of our outstanding common stock.  While this
        provision is intended to assure our ability to remain a qualified REIT
        for income tax purposes, the ownership limits may also limit the
        opportunity for stockholders to receive a premium for their shares of
        common stock that might otherwise exist if an investor were attempting
        to assemble a block of shares in excess of 9.8% of the outstanding
        shares of common stock or otherwise effect a change in control.

ADVERSE CONSEQUENCE OF FAILURE TO QUALIFY AS A REIT AND OTHER TAX RISKS

    We Believe, But Cannot Guarantee, That We Qualify as a REIT

    We believe that we have operated in a manner that permits us to qualify as a
REIT under the Internal Revenue Code for each taxable year since our formation
in 1961.  Qualification as a REIT, however, involves the application of highly
technical and complex Internal Revenue Code provisions for which there are only
limited judicial or administrative interpretations.  In addition, REIT
qualification involves the determination of various factual matters and
circumstances not entirely within our control.  For example, in order to qualify
as a REIT, at least 95% of our gross income in any year must be derived from
qualifying 

                                       11
<PAGE>
 
sources and we must distribute annually to stockholders 95% of our REIT taxable
income (excluding net capital gains). As a result, although we believe that we
are organized and operating in a manner that permits us to remain qualified as a
REIT, we cannot guarantee that we will be able to continue to operate in such a
manner. In addition, if we are ever audited by the Internal Revenue Service with
respect to any past year, the IRS may challenge our qualification as a REIT for
such year.

    Similarly, no assurance can be given that new legislation, new regulations,
administrative interpretations or court decisions will not change the tax laws
with respect to qualification as a REIT or the federal income tax consequences
of such qualification.  We are not aware, however, of any currently pending tax
legislation that would adversely affect our ability to continue to operate as a
REIT.

    Our Failure to Qualify as a REIT Would Have Serious Adverse Consequences

    If we fail to qualify as a REIT, we will be subject to federal income tax
(including any applicable alternative minimum tax) on our taxable income at
regular corporate rates.  This additional tax could significantly reduce, or
possibly eliminate, the amount of cash we have available for investment or
distribution to stockholders because of the additional tax liability for the
year or years involved.  In addition, we will also be disqualified from
treatment as a REIT for the next four taxable years, unless we are entitled to
relief under certain statutory provisions.

    If we do not qualify as a REIT, we will no longer be required to make annual
distributions to stockholders.  To the extent that we made distributions to
stockholders in anticipation of our qualifying as a REIT, we might be required
to borrow funds or to liquidate certain of our investments to pay the applicable
tax.  Our failure to qualify as a REIT would also constitute a default under
certain of our debt obligations and could significantly reduce the market value
of our common stock.

    We May Need to Borrow Money to Qualify as a REIT

    Our ability to make distributions to stockholders could be adversely
affected by increased debt service obligations if we need to borrow money in
order to maintain our REIT qualification.  For example, differences in timing
between when we receive income and when we have to pay expenses could require us
to borrow money to meet the requirement that we distribute to our stockholders
at least 95% of our net taxable income (excluding net capital gain) each year.
The incurrence of large expenses also could cause us to need to borrow money to
meet this requirement.  We might need to borrow money for these purposes even if
we believe that market conditions are not favorable for such borrowings and
therefore we may borrow money on unfavorable terms.

    We are Subject To Some Taxes Even If We Qualify as a REIT

    Even if we qualify as a REIT, we are subject to some federal, state and
local taxes on our income and property.  For example, we pay tax on certain
income we do not distribute.  Also, our income derived from properties located
in certain states are subject to local taxes and, if we entered into certain
prohibited transactions, our net income from such transactions would be subject
to a 100% tax.

                                       12
<PAGE>
 
                                  THE COMPANY

    The Company is a fully-integrated real estate operating company that owns
and operates community and neighborhood shopping centers in the Midwest region
of the United States.  As of December 1, 1998, the Company owned 97 properties
in 16 states, aggregating approximately 15.6 million square feet of GLA. Title
to such properties is held by or for the benefit of the Operating Partnership.

    The Company conducts substantially all of its business through the Operating
Partnership.  The Company is the sole general partner and the owner of
approximately 94% of the economic interests in the Operating Partnership.

    The Company owns and operates and seeks to acquire grocery-anchored, open-
air community and neighborhood shopping centers in the Midwest, generally
consisting of the states of Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan,
Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Tennessee  and
Wisconsin.  The Company currently owns properties in thirteen states in this
region. Through past experience as well as current research, the Company
believes that this region is economically strong and diverse and provides a
favorable environment for the acquisition, ownership and operation of retail
properties. The Company evaluates prospective acquisitions in certain Midwest
markets which, based upon its research, demonstrate opportunities for favorable
investment returns and long-term cash flow growth.  The Company favors grocery-
anchored centers because, based on its past experience, such properties offer
strong and predictable daily consumer traffic and are less susceptible to
downturns in the general economy than apparel or leisure anchored shopping
center properties.

    As part of its ongoing business, the Company regularly evaluates, and
engages in discussions with public and private entities regarding possible
portfolio or asset acquisitions or business combinations. During 1997, we
acquired 25 shopping centers aggregating over 3.1 million square feet of GLA for
an aggregate acquisition price of approximately $189.3 million.  On August 6,
1998, we completed the merger acquisition of Mid-America Realty Investments,
Inc., a real estate investment trust owning interests in 25 properties
aggregating approximately 3.3 million square feet primarily located in the
Midwest region of the United States.  In addition to property interests acquired
in connection with the merger acquisition of Mid-America Realty Investments,
from January 1, 1998 through December 1, 1998, we acquired 21 properties and two
outlots adjacent to one of our existing properties, aggregating 2.8 million
square feet of GLA for an aggregate acquisition price of approximately $198.9
million.  We have also entered into a contract to acquire an additional shopping
center representing approximately 186,000 square feet of GLA, which we believe
will close, for an estimated price of approximately $3.9 million.  In evaluating
potential acquisitions, the Company focuses principally on community and
neighborhood shopping centers in its Midwest target market that are anchored by
strong national, regional and independent grocery store chains. The Company
seeks to create an income stream diversity across its Midwest markets in order
to insulate it from economic trends affecting any particular market.

    The Company has elected to qualify as a REIT for federal income tax purposes
since its organization in 1961 and is the nation's oldest continuously qualified
REIT.

    The Company is incorporated under the laws of the State of Maryland.  Its
offices are located at 40 Skokie Boulevard, Suite 600, Northbrook, Illinois
60062-1626.  Its telephone number is (847) 272-9800.

                                       13
<PAGE>
 
                  DESCRIPTION OF SECURITIES TO BE REGISTERED

    The description of the Company's capital stock set forth below does not
purport to be complete and is qualified in its entirety by reference to the
Company's charter and bylaws, each as amended and restated, copies of which are
exhibits to the registration statement of which this Prospectus is a part.  See
"Available Information."

GENERAL

    Under its charter, the Company has authority to issue up to 150 million
shares of stock, consisting of 80 million shares of common stock, 20 million
shares of preferred stock and 50 million shares of "Excess Stock" (as described
below).  Under Maryland law, stockholders generally are not responsible for a
corporation's debts or obligations.  As of the date of this Prospectus, Bradley
has approximately 23.8 million shares of Common Stock issued and outstanding and
approximately 3.5 million shares of 8.4% Series A Convertible Preferred Stock
("Series A Preferred Stock") issued and outstanding.  In addition, the Operating
Partnership has approximately 1.4 million Units outstanding (other than those
held directly by the Company).  If tendered to the Operating Partnership for
redemption, such Units may be exchanged for shares of common stock on a one-for-
one basis at the option of the Company, subject to certain adjustments to
prevent dilution and certain limitations imposed to protect the Company's status
as a REIT.

COMMON STOCK

    Distribution Rights.  As a holder of common stock, you will be entitled to
receive distributions on your shares if, as and when the Company's Board of
Directors authorizes and declares such distributions, subject to the provisions
of the Company's charter regarding Excess Stock.  A more detailed description of
Excess Stock may be found below under the heading "--Excess Stock."  Your right
to receive distributions, however, will be subordinated to the rights of holders
of Series A Preferred Stock and the holders of any other series of preferred
stock issued in the future.  See "--Series A Preferred Stock" for a description
of the rights of holders of Series A Preferred Stock and of any other preferred
stock that the Company may issue.

    Liquidation/Dissolution Rights.  In a liquidation or dissolution of the
Company, each share of common stock entitles its holder to share (based on the
percentage of shares held) in any assets that remain after the Company pays its
liabilities and any preferential distributions owed to the holders of Series A
Preferred Stock and any other series of preferred stock issued in the future.
The amount of the aggregate liquidation preference of the Series A Preferred
Stock will not be counted as a liability in determining whether the Company is
permitted under Maryland law to make a distribution (other than upon voluntary
or involuntary liquidation), by dividend, redemption, or other acquisition of
shares, or otherwise.

    Voting Rights.  Subject to the provisions of the Company's charter regarding
Excess Stock, each outstanding share of common stock entitles the holder to one
vote on all matters submitted to a vote of stockholders, including the election
of directors.  Except as otherwise required by law or except as provided with
respect to any other class or series of preferred stock issued in the future,
the holders of common stock and the holders of Series A Preferred Stock will
possess exclusive voting power.  The holders of Series A Preferred Stock have
the right to vote on all matters submitted to a vote of the holders of common
stock on an "as-converted" basis.  There is no cumulative voting in the election
of directors, which means that the holders of a majority of the votes cast for
directors can, subject to certain rights of holders of preferred stock, elect
all of the directors then standing for election, and the holders of the
remaining shares of voting stock will not be able to elect any directors.  The
Company has a "staggered" Board of Directors, which means that approximately
one-third of the Directors stand for re-election each year instead of the entire
Board.

    Restrictions on Transfer.  See "--Excess Stock" below for a description of
certain provisions of the Company's charter designed to preserve the Company's
status as a qualified REIT that limit the transfer of, 

                                       14
<PAGE>
 
and provide the Company with a right to redeem, shares of capital stock
(including shares of common stock) and that also provide for the conversion of
such stock into Excess Stock, in certain circumstances.

    Other Terms.  Subject to the provisions of the Company's charter regarding
Excess Stock, all shares of common stock have equal dividend, distribution,
liquidation and other rights, which rights may, however, be subject to
preferential rights of shares of preferred stock.  Holders of shares of common
stock have no preference, conversion, sinking fund, redemption or exchange
rights or preemptive rights. A conversion feature is one where a stockholder has
the option to convert his shares to a different security, such as debt or
preferred stock. A sinking fund or redemption right is one where a stockholder
will have the right to redeem his shares (for cash or other securities) at some
point in the future. Sometimes a redemption right is paired with an obligation
of the company to create an account into which the company must deposit money to
fund redemption (i.e., a sinking fund). Preemptive rights are rights granted to
stockholders to subscribe for a percentage of any other securities we offer in
the future based on the percentage of shares owned.

    Information.  The Company furnishes its stockholders with annual reports
containing audited consolidated financial statements and an opinion thereon
expressed by an independent public accounting firm and quarterly reports for the
first three quarters of each fiscal year containing unaudited financial
information.

    Extraordinary Transactions.  Pursuant to Maryland law and the Company's
charter, the Company generally cannot dissolve, amend its charter, merge, sell
all or substantially all of its assets, engage in a share exchange or engage in
similar transactions outside the ordinary course of business unless approved by
the affirmative vote of holders of shares entitled to cast a majority of all the
votes entitled to be cast.  In addition, a number of other provisions of
Maryland law could significantly affect the shares of common stock and the
rights and obligations of its holders. See "--Certain Provisions of Maryland
Law."

SERIES A PREFERRED STOCK

    In connection with the Company's acquisition of Mid-America Realty
Investments, Inc. in August 1998, the Company issued 3,480,210 shares of Series
A Preferred Stock to the former stockholders of that company.  The Series A
Preferred Stock is the only series of preferred stock of the Company that is
outstanding as of the date of this Prospectus. The Series A Preferred Stock
ranks senior to the common stock with respect to dividend rights and
distributions upon liquidation, dissolution and winding up of the Company and
votes with the common stock on an "as converted" basis.  The following are the
principal terms of the Series A Preferred Stock:

   Dividends                  Cumulative fixed dividend of $0.525 per share
                              payable quarterly.

   Liquidation Preference     $25.00 per share plus an amount equal to
                              accumulated, accrued but unpaid dividends.

   Conversion Rights          The Series A Preferred Stock is convertible into
                              common stock at a conversion price of $24.49 per
                              share of common stock (equivalent to a conversion
                              rate of approximately 1.0208 shares of common
                              stock for each share of Series A Preferred),
                              subject to adjustment in certain circumstances to
                              prevent dilution.

   Redemption                 After August 6, 2003, the Company may redeem the
                              Series A Preferred Stock for $25.00 per share,
                              plus any accumulated, accrued and unpaid
                              dividends, so long as the common stock has traded
                              above the conversion price for at least twenty
                              days prior to redemption.

                                       15
<PAGE>
 
   Voting Rights              The holders of Series A Preferred Stock have the
                              right to vote with the common stock on each matter
                              coming before any meeting of the holders of common
                              stock, on an "as-converted" basis, that is, one
                              vote for each share of common stock into which the
                              holder's shares of Series A Preferred are then
                              convertible. If the Company ever becomes
                              delinquent with respect to six quarterly dividend
                              payments on the Series A Preferred Stock, the
                              holders of such preferred stock would also have
                              the right to elect two separate directors.

TRANSFER AGENT

    The transfer agent and registrar for the Company's common stock and its
Series A Preferred Stock is BankBoston, N.A., c/o Boston EquiServe, L.P., P.O.
Box 8040, Boston, Massachusetts 02266.

POWER TO ISSUE ADDITIONAL SHARES OF STOCK

    The charter grants the Board of Directors the power to authorize the
issuance of additional authorized but unissued shares of common stock and
preferred stock (including any unissued shares of any series of preferred stock,
to the extent permitted by the terms of these series). The Board of Directors
may also classify or reclassify unissued shares of common or preferred stock or
Excess Stock and authorize the issuance of these classified or reclassified
shares of stock. Under Maryland law and the charter, the Board of Directors is
required to fix the terms and conditions for each class or series, subject to
the provisions of the charter regarding Excess Stock, prior to the issuance of
the shares of each class or series of stock. These terms and conditions include
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms or
conditions of redemption.

    This power provides the Board of Directors with increased flexibility in
structuring possible future financings and acquisitions and in meeting other
needs which might arise. Unless stockholder action is required by applicable law
or the rules of any stock exchange or automated quotation system on which the
Company's securities may be listed or traded, the additional classes or series,
as well as the common stock, will generally be available for issuance without
further action by stockholders.  However, the issuance of additional series of
preferred stock with rights senior to the Series A Preferred Stock must be
approved by the holders of Series A Preferred Stock.  Although the Board of
Directors does not intend to do so at the present time, it could authorize the
issuance of a class or series that could delay, defer or prevent a change of
control or other transaction that holders of common stock might believe to be in
their best interests or in which holders of some, or a majority of, the common
stock might receive a premium for their shares over the then-current market
price.

EXCESS STOCK

    General.  As a protective measure, the Company's charter provides for the
issuance of a separate class of capital stock, referred to as Excess Stock, to
attempted transferees of common stock in transactions that may endanger the
Company's REIT qualification.  The specific terms of Excess Stock and the
conditions giving rise to its issuance are described in more detail below.

    Ownership Limit.  As a REIT, the Company is required to comply with a
variety of complicated rules under the Internal Revenue Code.  Among other
things, the Internal Revenue Code requires that, with certain limited
exceptions, REITs satisfy the following ownership limitations:

    .   not more than 50% in value of the REIT's outstanding capital stock may
        be owned, directly or indirectly after applying complex attribution
        rules, by five or fewer "individuals" (which phrase is defined to
        include a variety of tax exempt taxpayers) during the last half of its
        taxable year, and

                                       16
<PAGE>
 
    .   such capital stock must be beneficially owned by 100 or more persons
        during at least 335 days of each taxable year.

    In order to protect its status as a qualified REIT, the Company's charter
contains limitations on the amount of its capital stock that any one party may
hold. The Company's "Ownership Limit" prohibits any holder from owning, or being
deemed to own by virtue of the attribution provisions of the Internal Revenue
Code:

    .   more than 9.8% of the Company's outstanding common stock, or

    .   shares of Series A Preferred Stock that either (a) have a value in
        excess of 9.8% of the value of all outstanding shares of the Company's
        capital stock, or (b) when converted, would result in such holder being
        the beneficial holder of more than 9.8% of the total number of
        outstanding shares of the Company's common stock, after giving effect to
        such conversion.

    The charter deems holders to own all stock that they (1) actually own, 
(2) constructively own after applying the attribution rules specified in the
Internal Revenue Code, and (3) have the right to acquire upon exercise of any
rights, options or warrants or conversion of any convertible securities. Holders
may include natural persons, corporations, trusts, partnerships or other
entities. The fact that certain affiliated entities, such as separate mutual
funds advised by the same investment adviser, may own more than 9.8% of the
value of all outstanding capital stock in the aggregate will not of itself
result in the Ownership Limit being exceeded, even though that investment
advisor may be considered to be the "beneficial owner" of such stock for
purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended. 
In addition, the Board of Directors may waive the Ownership Limit if evidence
satisfactory to the Board of Directors and the Company's tax counsel is
presented that the changes in ownership will not then or in the future
jeopardize the Company's status as a REIT and if the Board of Directors decides
that such waiver is in the best interests of the Company.

    Violation of Ownership Limit.  The charter provides that any attempted
transfer of capital stock or any security convertible into capital stock is null
and void if it would result in a violation of the Ownership Limit or the
disqualification of the Company as a REIT.  These provisions include any
transfer that results in the Company being "closely held" within the meaning of
Section 856(h) of the Internal Revenue Code. In the event of such an attempted
transfer, the intended transferee will acquire no rights to the capital stock or
convertible securities attempted to be transferred.  Instead, the shares of
capital stock or convertible securities will automatically be exchanged for
shares of Excess Stock and these shares of Excess Stock will automatically be
transferred, by operation of law, to a trustee for the exclusive benefit of one
or more charitable beneficiaries designated from time to time by the Company
(except to the extent described below).  The trustee will be named by the Board
of Directors of the Company, but must be unaffiliated with the Company.

    Rights of Excess Stock.  The Excess Stock held in trust (a) will be
considered to be issued and outstanding shares of stock of the Company, (b) will
be entitled to receive distributions declared by the Company and (c) may be
voted by the trustee for the exclusive benefit of the charitable beneficiary.
The charter requires a purported transferee of Excess Stock to repay to the
Company any dividend or distribution which it receives prior to the discovery
that capital stock was transferred in violation of the Ownership Limit.  The
Company is then required to turn over the amount of the repayment to the
trustee. The charter also retroactively nullifies any votes cast by the
purported transferee prior to the discovery that a transfer violated the
Ownership Limit.  The charter does provide, however, that the retroactive
nullification of the vote cast with respect to the relevant shares of capital
stock will not adversely affect the rights of any third party who relied in good
faith upon the effectiveness of the matter that was the subject of the
stockholder action as to which such votes were cast.

    Transferability of Excess Stock.  As a general rule, holders may not
transfer Excess Stock.  Subject to the Company's redemption right described
below, the trustee may transfer the shares of Excess Stock to a 

                                       17
<PAGE>
 
purchaser who could own such shares without violating the Ownership Limit. Upon
such sale, the shares of Excess Stock automatically convert back into shares of
the class or series of capital stock or convertible security from which they
were originally converted.

    After Excess Stock is transferred in this way, the trustee must distribute
at least a portion of the sale proceeds to the attempted purchaser who
originally caused the Ownership Limit violation.  The original attempted
purchaser is only entitled to the proceeds until it recovers the price it paid
for the stock.  The trustee must distribute any proceeds in excess of the
original attempted purchase price to the charitable beneficiary.  If the
attempted purchaser received the Excess Stock by gift, devise or otherwise
without giving value for such stock, then it is only entitled to receive an
amount that does not exceed the market price for such stock at the time of the
prohibited transfer, as determined in the manner set forth in the charter.

    Redemption Right.  In addition to the transfer restrictions described above,
the Company has the right to purchase all or any portion of the Excess Stock
from the trustee for a period of 90 days from the time the Company receives
written notice of the prohibited transfer or other event resulting in the
exchange of capital stock for Excess Stock.  Under the charter, the purchase
price will be the lesser of (a) the price paid for the stock by the original
attempted transferee or (b) the market price of the stock on the date the
Company exercises its option to purchase. If the original attempted transferee
received such stock by gift, devise or otherwise without giving value for such
stock, the market price of the stock at the time of the prohibited transfer will
be used in lieu of the price paid.  Upon any such purchase by the Company, the
trustee must distribute the purchase price to the original attempted transferee.

    Additional Charter Provisions Regarding the Ownership Limit.  If the
Ownership Limit is determined to be void or invalid by virtue of any legal
decision, statute, rule or regulation, then the intended transferee of any
Excess Stock may be deemed, at the option of the Company, to have acted as an
agent on behalf of the Company in acquiring the Excess Stock and to hold the
Excess Stock on behalf of the Company.

    The Ownership Limit will not preclude settlement of transactions on the New
York Stock Exchange ("NYSE") or any other stock exchange on which capital stock
of the Company is listed. If the Board of Directors determines that it is no
longer in the best interests of the Company to continue to qualify as a REIT,
then these restrictions on transferability and ownership will not apply.

    Upon demand by the Company, each stockholder and each proposed transferee of
capital stock must disclose to the Company in writing any information with
respect to the direct, indirect and constructive ownership of shares of stock as
the Board of Directors deems necessary to comply with, or determine compliance
with, the provisions of the Internal Revenue Code applicable to REITs or the
requirements of any taxing authority or governmental agency.

    Effect on Potential "Change of Control" Transactions.  The Company's
Ownership Limit may have the effect of delaying, deferring or preventing the
acquisition of control of the Company.  The Ownership Limit, however, does not
apply to shares of capital stock acquired pursuant to an all cash tender offer
for all outstanding shares of capital stock in conformity with applicable laws
if the following conditions are met:

    .   At least two-thirds of the outstanding shares of capital stock are
        tendered and accepted pursuant to such tender offer. The securities held
        by the tender offeror and/or its affiliates and associates are not
        included in determining whether the two-thirds threshold has been met.

    .   The tender offeror commits to give any non-tendering stockholders a
        reasonable opportunity to put their capital stock to the tender offeror
        at a price not less than that paid pursuant to the tender offer if the
        offer is accepted by the holders of two-thirds of the outstanding stock.

                                       18
<PAGE>
 
CERTAIN PROVISIONS OF MARYLAND LAW

    Maryland Business Combination Statute

    Maryland law prohibits certain "business combinations," including mergers,
consolidations, share exchanges, certain asset transfers and certain issuances
of equity securities, between a Maryland corporation and any person or entity
that owns 10% or more of the voting power of the corporation's shares (an
"Interested Stockholder").  This prohibition exists for five years after the
most recent date on which the Interested Stockholder became an Interested
Stockholder.  Thereafter, any such business combination must be approved by the
affirmative vote of at least 80% of the votes entitled to be cast by holders of
outstanding voting shares of the corporation other than shares held by the
Interested Stockholder with whom the business combination is to be effected.
There is an exception to this rule when, among other things, the holders of the
corporation's shares receive a minimum price (as defined in Maryland law) for
their shares and the consideration is received in cash or in the same form as
previously paid by the Interested Stockholder for the shares that it owns.
However, these provisions of Maryland law do not apply to "business
combinations" with an Interested Stockholder that are approved or exempted by
the board of directors of the corporation before that Interested Stockholder
becomes an Interested Stockholder.

    Maryland Control Share Acquisition Statute

    Maryland law provides that "control shares" of a Maryland corporation
acquired in a "control share acquisition" have no voting rights except to the
extent approved by a vote of two-thirds of the votes eligible under the statute
to be cast on that matter by stockholders.  "Control Shares" are voting shares
that, if aggregated with all other such shares of stock previously acquired by
the acquiror, would entitle the acquiror to exercise voting power in electing
directors within one of the following ranges of voting power:

        (1) one-fifth or more but less than one-third;

        (2) one-third or more but less than a majority, or

        (3) a majority of all voting power.

    Control Shares do not include shares the acquiring person is then entitled
to vote as a result of having previously obtained stockholder approval.  A
"control share acquisition" means the acquisition of Control Shares, subject to
certain expenses.

    If voting rights are not approved at a stockholder meeting or if the
acquiring person does not deliver an acquiring person statement as required by
the statute, then, subject to certain conditions and limitations, the
corporation may redeem any or all of the Control Shares (except those for which
voting rights have previously been approved) for fair value.  If voting rights
for Control Shares are approved at a stockholder meeting and the acquiror
becomes entitled to vote a majority of the shares entitled to vote, all other
stockholders may exercise appraisal rights.  The Company's bylaws contain a
provision exempting any and all acquisitions of the Company's capital stock from
the control shares provision of Maryland law.  Nothing prevents the Company's
Board of Directors from amending or repealing this provision in the future.

                                       19
<PAGE>
 
                  DESCRIPTION OF UNITS AND REDEMPTION OF UNITS

REDEMPTION OF UNITS

    Each Unitholder may, subject to certain limitations, require that the
Operating Partnership redeem all or a portion of such holder's Units by
delivering a notice to the Operating Partnership.  Upon redemption, a Unitholder
will receive, with respect to each Unit redeemed, cash in an amount equal to the
market value of one share of common stock (subject to certain adjustments to
prevent dilution) plus any distribution amount owed but not yet paid to the
Unitholder.  The market value of the Company's common stock for this purpose
will be equal to the average of the closing trading price of the common stock on
the NYSE for the ten trading days before the day on which the redemption notice
was received by the Operating Partnership. The Second Restated Agreement of
Limited Partnership of the Operating Partnership (the "Operating Partnership
Agreement") provides that if such trading information is not available, the
Company can use any other method to determine the value of the common stock as
it deems appropriate in its reasonable judgment.  The Operating Partnership
Agreement does not specify alternative methodologies.  The valuation methodology
to be used will depend on all the facts and circumstances at the time.

    In lieu of the Operating Partnership redeeming Units for cash, the Company,
as general partner of the Operating Partnership, has the right to elect to
acquire directly any Units tendered for redemption in exchange for either (1)
cash in the amount described above or (2) shares of common stock on a one-for
one basis (subject to certain adjustments to prevent dilution).  Any such
acquisition will result in the Company owning the tendered Units and thereby
increase its economic interest in the Operating Partnership.  An acquisition by
the Company will be treated as a sale of the Units to the Company for federal
income tax purposes.  See "--Tax Consequences of Redemption" below.  Upon any
redemption such Unitholder's right to receive distributions with respect to the
redeemed Units will cease.  If the Company elects to redeem the Units for shares
of common stock, the Unitholder will have all the rights of a stockholder of the
Company, including the right to receive dividends, from the time of its
acquisition of the shares.

    The Company anticipates that it generally will elect to acquire any Units
presented to the Operating Partnership for redemption by the issuance of shares
of its common stock.  However, the Company will make the determination whether
to pay cash or issue shares of common stock upon redemption of Units at the time
the Units are tendered for redemption.  Any such determination will be made
based on all of the facts and circumstances at the time, including the
availability of cash, whether the acquisition of Units for cash is a good
investment and the market price of the common stock.  In addition, under the
terms of the Operating Partnership Agreement, no redemption can occur if the
delivery of common stock would be prohibited under the provisions of the
Company's charter that protect the Company's qualification as a REIT or, in the
opinion of counsel, the Company would no longer qualify as a REIT.

TAX CONSEQUENCES OF REDEMPTION

    The following discussion summarizes certain federal income tax
considerations that may be relevant to a Unitholder who redeems his Units.

    Tax Treatment of Exchange or Redemption of Units

    If the Company elects to purchase Units tendered for redemption, the
Operating Partnership Agreement provides that the transaction will be treated as
a sale of Units by the Unitholder to the Company at the time of such redemption.
The sale will be fully taxable to the redeeming Unitholder and such redeeming
Unitholder will be treated as realizing for tax purposes an amount equal to the
sum of the cash value or the value of the shares of common stock received in the
exchange plus the amount of any Operating Partnership liabilities allocable to
the redeemed Units at the time of the redemption.  The determination of the
amount of gain or loss is discussed more fully below.  See "--Tax Treatment of
Disposition of Units by a Unitholder Generally" below.

                                       20
<PAGE>
 
    If the Company does not elect to purchase a Unitholder's Units tendered for
redemption and the Operating Partnership redeems such Units for cash that the
Company contributes to the Operating Partnership to effect such redemption, the
redemption likely would be treated for tax purposes as a sale of such Units to
the Company in a fully taxable transaction, although the matter is not free from
doubt.  In that event, the redeeming partner would be treated as realizing an
amount equal to the sum of the cash received in the exchange plus the amount of
any Operating Partnership liabilities allocable to the redeemed Units at the
time of the redemption.  The determination of the amount and character of gain
or loss in the event of such a sale is discussed more fully below.  See "--Tax
Treatment of Disposition of Units by a Unitholder Generally" below.

    If the Company does not elect to purchase Units tendered for redemption and
the Operating Partnership redeems a Unitholder's Units for cash that is not
contributed by the Company to effect the redemption, the tax consequences would
likely be the same as described in the previous paragraph, although not free
from doubt.  If the Operating Partnership redeems less than all of a
Unitholder's Units, however, the Unitholder would not be permitted to recognize
any loss occurring on the transaction and would recognize taxable gain only to
the extent that the cash, plus the amount of any Operating Partnership
liabilities allocable to the redeemed Units, exceeded the Unitholder's adjusted
basis in all of such Unitholder's Units immediately before the redemption.  This
result may differ if the Redemption were treated as a disguised sale.  See
"Potential Application of the Disguised Sale Regulations to a Redemption of
Units" below.

    If the Company contributes cash to the Operating Partnership to effect a
redemption, and the form of the transaction is respected for tax purposes so
that the redemption transaction is treated as the redemption of the Unitholder's
Units by the Operating Partnership rather than a sale of Units to the Company,
the income tax consequences to a Unitholder would be the same as described in
the preceding paragraph.

    Tax Treatment of Disposition of Units by a Unitholder Generally

    If a Unitholder disposes of a Unit in a manner that is treated as a sale of
the Unit, or a Unitholder otherwise disposes of a Unit, the determination of
gain or loss from the sale or other disposition will be based on the difference
between the amount considered realized for tax purposes and the tax basis in
such Unit.  See "--Basis of Units" below.  Upon the sale of a Unit, the "amount
realized" will be measured by the sum of the cash and fair market value of other
property (e.g., shares of common stock) received plus the amount of any
Operating Partnership liabilities allocable to the Units sold.  To the extent
that the amount of cash or property received plus the allocable share of any
Operating Partnership liabilities exceeds the Unitholder's basis for the Units
disposed of, such Unitholder will recognize gain.  It is possible that the
amount of gain recognized or even the tax liability resulting from such gain
could exceed the amount of cash and/or the value of any other property (e.g.,
shares of common stock) received upon such disposition.

    Except as described below, any gain recognized upon a sale or other
disposition of Units will be treated as gain attributable to the sale or
disposition of a capital asset.  To the extent, however, that the amount
realized upon the sale of a Unit attributable to a Unitholder's share of
"unrealized receivables" of the Operating Partnership (as defined in Section 751
of the Internal Revenue Code) exceeds the basis attributed to those assets, such
excess will be treated as ordinary income.  Unrealized receivables include, to
the extent not previously included in Operating Partnership income, any rights
to payment for services rendered or to be rendered.  Unrealized receivables also
include amounts that would be subject to recapture as ordinary income if the
Operating Partnership had sold its assets at their fair market value at the time
of the transfer of a Unit.

    Basis of Units

    In general, a Unitholder who acquired his Units by contribution of property
and/or money to the Operating Partnership had an initial tax basis in his Units
("Initial Basis") equal to the sum of (i) the amount of money contributed (or
deemed contributed as described below) and (ii)  his adjusted tax basis in any

                                       21
<PAGE>
 
other property contributed in exchange for such Units, and less the amount of
any money distributed (or deemed distributed, as described below) in connection
with the acquisition of the Units.   The Initial Basis of Units acquired by
other means would have been determined under the general rules of the Internal
Revenue Code, including the partnership provisions, governing the determination
of tax basis.  Other rules, including the "disguised sale" rules discussed
below, also may affect Initial Basis, and Unitholders are urged to consult their
own tax advisors regarding their Initial Basis.  A Unitholder's Initial Basis in
his Units generally is increased by (i) such Unitholder's share of Operating
Partnership taxable and tax-exempt income and (ii) increases in such
Unitholder's allocable share of liabilities of the Operating Partnership
(including any increase in his share of liabilities occurring in connection with
the acquisition of his Units). Generally, such Unitholder's basis in his Units
is decreased (but not below zero) by (i) such Unitholder's share of Operating
Partnership distributions, (ii) decreases in such Unitholder's allocable share
of liabilities of the Operating Partnership (including any decrease in his share
of liabilities of the Operating Partnership occurring in connection with the
acquisition of his Units), (iii) such Unitholder's share of losses of the
Operating Partnership and (iv) such Unitholder's share of nondeductible
expenditures of the Operating Partnership that are not chargeable to his capital
account.

    Potential Application of the Disguised Sale Regulations to a Redemption of
Units

    There is a risk that a redemption by the Operating Partnership of Units
issued in exchange for a contribution of property to the Operating Partnership
may cause the original transfer of property to the Operating Partnership in
exchange for Units to be treated as a "disguised sale" of property.  Section 707
of the Internal Revenue Code and the Treasury Regulations thereunder (the
"Disguised Sale Regulations") generally provide that, unless one of the
prescribed exceptions is applicable, a partner's contribution of property to a
partnership and a simultaneous or subsequent transfer of money or other
consideration (which may include the assumption of or taking subject to a
liability) from the partnership to the partner will be presumed to be a sale, in
whole or in part, of such property by the partner to the partnership.  Further,
the Disguised Sale Regulations provide generally that, in the absence of an
applicable exception, if money or other consideration is transferred by a
partnership to a partner within two years of the partner's contribution of
property, the transactions are presumed to be a sale of the contributed property
unless the facts and circumstances clearly establish that the transfers do not
constitute a sale.  The Disguised Sale Regulations also provide that if two
years have passed between the transfer of money or other consideration and the
contribution of property, the transactions will be presumed not to be a sale
unless the facts and circumstances clearly establish that the transfers
constitute a sale.

    Accordingly, if a Unit is redeemed by the Operating Partnership from a
Unitholder who holds Units that were issued in exchange for a contribution of
property to the Operating Partnership, the Internal Revenue Service (the "IRS")
could contend that the Disguised Sale Regulations apply because the Unitholder
will thus receive cash subsequent to a previous contribution of property to the
Operating Partnership.  In that event, the IRS could contend that the
contribution was taxable as a disguised sale under the Disguised Sale
Regulations.  Any gain recognized thereby may be eligible for installment
reporting under Section 453 of the Internal Revenue Code, subject to certain
limitations.  In addition, in such event, the Disguised Sale Regulations might
apply to cause a portion of the proceeds received by a redeeming Unitholder to
be characterized as original issue discount on a deferred obligation which would
be taxable as interest income in accordance with the provisions of Section 1272
of the Internal Revenue Code.  Each Unitholder is advised to consult its own tax
advisors to determine whether redemption of its Units could be subject to the
Disguised Sale Regulations.

COMPARISON OF OWNERSHIP OF UNITS AND COMMON STOCK

    The nature of any investment in the Company's common stock is generally
economically equivalent to an investment in Units in the Operating Partnership.
A holder of a share of common stock receives the same distribution that a holder
of a Unit receives and stockholders and Unitholders generally share in the risks
and rewards of ownership in the same enterprise.  There are, however,
differences between ownership of Units and ownership of common stock, some of
which may be material to investors.

                                       22
<PAGE>
 
    The information below highlights a number of significant differences between
the Operating Partnership and the Company relating to, among other things, form
of organization, permitted investments, policies and restrictions, management
structure, compensation and fees, investor rights and federal income taxation
and compares certain legal rights associated with the ownership of Units and
common stock, respectively.  These comparisons are intended to assist
Unitholders in understanding how their investment will be changed if their Units
are acquired for common stock.  This discussion is summary in nature and does
not constitute a complete discussion of these matters.  Holders of Units should
carefully review the balance of this Prospectus and the registration statement
of which this Prospectus is a part for additional important information about
the Company.

<TABLE> 
<CAPTION>
THE OPERATING PARTNERSHIP                            THE COMPANY
--------------------------------------  --------------------------------------
                     Form of Organization and Assets Owned
<S>                                     <C>
 The Operating Partnership is           The Company is a Maryland corporation
 organized as a Delaware limited        which has elected to be taxed as a
 partnership and is the entity          REIT under the Internal Revenue Code
 through which the Company conducts     and intends to maintain its
 substantially all of its business      qualifications as a REIT.  The
 and owns (either directly or           Company maintains a general partner
 indirectly through subsidiaries)       interest in the Operating
 substantially all of its assets.       Partnership, which gives the Company
 The Board of Directors of the          an indirect investment in those
 Company manages the affairs of the     properties and other assets owned by
 Operating Partnership by directing     the Operating Partnership. The
 the affairs of the Company.            Company currently owns approximately
                                        a 94% economic interest in the
                                        Operating Partnership, and such
                                        interest will increase as Units are
                                        redeemed for cash or acquired by the
                                        Company.
<CAPTION> 
                             Length of Investment
<S>                                     <C>
 
 The Operating Partnership has a        The Company has a perpetual term and
 stated termination date of December    intends to continue its operations
 31, 2050, although it may be           for an indefinite time period.
 terminated earlier under certain
 circumstances.

</TABLE> 
 

                                       23
<PAGE>
 
<TABLE> 
<CAPTION>
THE OPERATING PARTNERSHIP                            THE COMPANY
--------------------------------------  --------------------------------------
                  Nature of Investment and Distribution Rights
<S>                                     <C>
 The Units constitute equity interests  The common stock constitutes an
 entitling each Unitholder to his pro   equity interest in the Company.  The
 rata share of cash distributions       Company is entitled to receive a
 made to the Unitholders of the         portion of the Partnership's
 Operating Partnership, including the   operating cash flow and capital cash
 Company. Because the Company also      flow sufficient to pay dividends to
 holds "preferred units" of the         stockholders concurrently with any
 Operating Partnership with             distribution to the Unitholders has
 distribution rights equivalent to      been effected. Each stockholder will
 the Company's Series A Preferred       be entitled to his pro rata share of
 Stock, distributions to Unitholders    any dividends or distributions paid
 are subject to the prior               with respect to common stock.  The
 distribution rights of such            dividends payable to the stockholders
 preferred units.  In general, the      are not fixed in amount and are only
 Operating Partnership is structured    paid if, when and as declared by the
 so that Unitholders receive            Board of Directors.  In order to
 distributions on their Units equal     qualify as a REIT, the Company must
 to the dividend yield for the same     distribute at least 95% of its
 period on a share of the Company's     taxable income (excluding capital
 common stock.                          gains), and any taxable income
                                        (including capital gains) not
 As a partnership, the Operating        distributed will be subject to
 Partnership is not subject to          corporate income tax.
 federal income taxation.  In
 determining their federal income
 tax, partners of the Operating
 Partnership, including Unitholders,
 must take into account their
 allocable share of partnership
 income, gain, deduction and loss
 (regardless of whether distributed),
 and otherwise are subject to the
 rules governing the taxation of
 partnerships and partners.  By
 contrast, Unitholders who receive
 common stock upon exercise of their
 redemption rights will be taxed on
 such investment in accordance with
 the rules governing REITs.  See
 "Federal Income Tax Considerations."

</TABLE>

                                       24
<PAGE>
 
<TABLE> 
<CAPTION>
THE OPERATING PARTNERSHIP                            THE COMPANY
--------------------------------------  --------------------------------------
                         Issuance of Additional Units
<S>                                     <C>
 The Operating Partnership is           The Board of Directors of the Company
 authorized to issue additional Units   may issue, in its discretion,
 and such other partnership interests   additional equity securities consisting
 (including partnership interests of    of common stock or any other series of
 different series or classes that may   capital stock (which may be classified
 be senior to Units) as the Company     and issued as a variety of equity
 may determine in its sole discretion   securities, including one or more 
 as general partner.  The relative      classes of common or preferred stock,
 rights, powers and duties of such      in the discretion of the Board of
 Units or other interests will be       Directors) so long as the total number
 determined by the Company in its       of shares issued does not exceed the
 sole discretion. The Operating         authorized number of shares of capital
 Partnership may issue Units and        stock set forth in the Company's 
 other partnership interests to the     charter.  The issuance of additional 
 Company, as long as such interests     shares of common stock, preferred
 are issued in connection with a        stock or other similar equity
 comparable issuance of its capital     securities may result in the dilution
 stock and proceeds raised in           of the interests of the existing
 connection with the issuance of such   stockholders.
 capital stock are contributed to the  
 Operating Partnership. In addition,
 the Operating Partnership will issue
 additional Units upon exercise of
 the options granted pursuant to the
 Company's stock option plans.  The
 issuance of additional Units or
 other similar partnership interests
 may result in the dilution of the
 interests of the existing
 Unitholders.
 
<CAPTION> 
                                   Liquidity
<S>                                     <C>
 A Unitholder may not transfer any      The Company's common stock is freely
 portion of their Units without the     transferable subject to the
 consent of the general partner,        requirements of the Securities Act of
 subject to the following exceptions:   1933, as amended.  The common stock
                                        is listed on the NYSE.  The breadth
     (a) transfers by will, the laws    and strength of this market will
     of intestacy or otherwise to the   depend, among other things, upon the
     legal representative or            number of shares outstanding, the
     successor of the transferring      Company's financial results and
     Unitholder who shall be bound in   prospects, the general interest in
     all respects by the terms of the   the Company's and other real estate
     Operating Partnership Agreement;   investments and the Company's
                                        dividend yield compared to that of
     (b) inter vivos transfers for      other debt and equity securities.
     estate planning purposes;  or
 
     (c) pledges to secure the
     repayment of a loan.
 
 Subject to certain conditions, each
 Unitholder has the right to elect to
 have their Units redeemed by the
 Operating Partnership. Upon
 redemption, the Unitholder will
 receive, at the Company's election,
 either shares of common stock or the
 cash equivalent in exchange for such
 Units.

</TABLE>

                                       25
<PAGE>
 
<TABLE> 
<CAPTION>
THE OPERATING PARTNERSHIP                            THE COMPANY
--------------------------------------  --------------------------------------
                      Purchase and Permitted Investments
<S>                                     <C>
 The Operating Partnership's purpose    Under its charter, the Company may
 is to conduct any business that        engage in any lawful activity
 relates to the properties or           permitted under Maryland law.
 affiliated entities of the Operating
 Partnership, except that the
 Operating Partnership Agreement
 requires the business of the
 Operating Partnership to be
 conducted in a manner that permits
 the Company to be classified as a
 REIT for Federal income tax purposes
 and avoids any Federal income or
 excise tax liability.  The Operating
 Partnership may, subject to the
 foregoing limitation, invest or
 enter into partnerships, joint
 ventures or similar arrangements and
 may own interests in any other
 entity.

<CAPTION> 
                              Borrowing Policies
<S>                                     <C>
 The Operating Partnership has no       The Company is not restricted under
 restrictions on borrowings, and the    its organizational documents from
 Company as the general partner, has    incurring borrowings.
 full power and authority to borrow
 money on behalf of the Operating
 Partnership.

<CAPTION> 
                         Other Investment Restrictions
<S>                                     <C>
 Other than restrictions precluding     Neither the Company's charter nor its
 investments by the Operating           bylaws impose any restrictions upon
 Partnership that would adversely       the types of investments made by the
 affect the Company's qualification     Company.
 as a REIT, there are no restrictions
 upon the Operating Partnership's
 authority to enter into any
 transactions, including, among
 others, making investments, lending
 Operating Partnership funds, or
 reinvesting the Operating
 Partnership's cash flow and net sale
 or refinancing proceeds.

<CAPTION> 
                              Management Control
<S>                                     <C>
 Generally, all management powers over  The Board of Directors has exclusive
 the business and affairs of the        control over the Company's business
 Operating Partnership are vested in    and affairs subject only to the
 the Company as general partner and     restrictions in its charter and
 no other Unitholder of the Operating   bylaws.  The Board of Directors is
 Partnership has any right to           classified into three classes. At
 participate in or exercise control     each annual meeting of stockholders,
 or management power over the           the successors of the class of
 business and affairs of the            Directors whose terms expire at that
 Operating Partnership.  The            meeting will be elected.  The
 Operating Partnership Agreement        policies adopted by the Board of
 provides that the Company shall be     Directors may be altered or
 reimbursed for all expenses incurred   eliminated without advice of the
 by it relating to the management and   stockholders.  Accordingly, except
 business of the Operating              for their vote in the elections of
 Partnership.                           Directors, stockholders have no
                                        control over the ordinary business
                                        policies of the Company.
</TABLE>

                                       26
<PAGE>
 
<TABLE> 
<CAPTION>
THE OPERATING PARTNERSHIP                            THE COMPANY
--------------------------------------  --------------------------------------
                   Management Liability and Indemnification
<S>                                     <C>
 The Operating Partnership Agreement    The Company's charter eliminates, to
 generally provides that the general    the fullest extent permitted under
 partner and any person acting on its   Maryland law, the personal liability
 behalf will incur no liability to      of a director of the Company for
 the Operating Partnership or any       monetary damages for breaches of such
 Unitholder for any act or omission     director's duty of care or other
 within the scope of the general        duties as a director.  The effect of
 partner's authorities, provided the    this provision in the charter is
 general partner's or such other        generally to eliminate the rights of
 person's action or omission to act     the Company and its stockholders
 was taken in good faith and in the     (through stockholders' derivative
 belief that such action or omission    suits on behalf of the Company) to
 was in the best interests of the       recover monetary damages against a
 Company and its affiliates, and        director for breach of the fiduciary
 provided further, that the general     duty of care as a director (including
 partner's or such other person's       breaches resulting from negligent or
 actions or omissions shall not         grossly negligent behavior). This
 constitute actual fraud or gross       provision does not limit or eliminate
 negligence or deliberately dishonest   the rights of the Company or any
 conduct.                               stockholder to seek non-monetary
                                        relief such as an injunction or
 The Operating Partnership Agreement    recession in the event of a breach of
 also provides for the                  a director's duty of care.  These
 indemnification of the general         provisions will not alter the
 partner and its affiliates and any     liability of a director under federal
 individual acting on their behalf      securities laws.
 from any loss, damage, claim or
 liability, including, but not
 limited to, reasonable attorneys'
 fees and expenses, incurred by them
 by reason of any act performed by
 them in accordance with the
 standards set forth above or in
 enforcing the provisions of this
 indemnity.

<CAPTION> 
                            Antitakeover Provisions
<S>                                     <C>
 Except in limited circumstances, the   The Company's charter and bylaws and
 general partner has exclusive          Maryland law contain a number of
 management power over the business     provisions that may have the effect
 and affairs of the Operating           of delaying or discouraging an
 Partnership. The general partner may   unsolicited proposal to acquire the
 not be removed by the Unitholders      Company or remove incumbent
 with or without cause.  Under the      management.  See "Risk
 Operating Partnership Agreement, the   Factors--Certain Provisions in
 Company may, in its sole discretion,   Organizational Documents May
 prevent a Unitholder from              Discourage Acquisition Proposals."
 transferring their Units except in
 certain limited circumstances.
 Accordingly, the Company may
 exercise this right of approval to
 deter, delay or hamper attempts by
 persons to acquire a majority
 interest in the Operating
 Partnership.

</TABLE>

                                       27
<PAGE>
 
<TABLE> 
<CAPTION>
THE OPERATING PARTNERSHIP                            THE COMPANY
--------------------------------------  --------------------------------------
                                 Voting Rights
<S>                                     <C>
 Holders of Units have no right to      The Board of Directors directs the
 elect or remove the Company as the     Company's business and affairs.  The
 general partner of the Operating       Board consists of three classes
 Partnership and generally have no      having staggered terms of office.
 other voting rights.  Under the        Stockholders elect each class at
 Operating Partnership Agreement, the   annual meetings of the Company.  All
 Company as general partner may take    shares of common stock have one vote
 any action in a manner that it         per share.  The charter permits the
 reasonably believes to be in the       Board of Directors to classify and
 best interests of its stockholders     issue preferred stock in one or more
 or complies with the REIT              series having voting power which may
 requirements for the Company.  The     differ from that of the common stock.
 Company's ability to make amendments
 to the Operating Partnership           Stockholders of the Company have the
 Agreement is limited to the extent     right to vote, among other things, on
 described below.                       a merger or sale of all or
                                        substantially all of the assets of
                                        the Company, certain amendments to
                                        the charter and dissolution of the
                                        Company.  Under Maryland law and the
                                        charter, the sale of all or
                                        substantially all of the assets of
                                        the Company or any merger or
                                        consolidation of the Company requires
                                        the approval of the Board of
                                        Directors and holders of a majority
                                        of the outstanding shares of common
                                        stock.  No approval of the
                                        stockholders is required for the sale
                                        of less than all or substantially all
                                        of the Company's assets.  Under
                                        Maryland law and the charter and
                                        bylaws, the Board of Directors must
                                        obtain approval of holders of not
                                        less than a majority of all
                                        outstanding shares of the Company's
                                        capital stock in order to dissolve
                                        the Company.
<CAPTION> 
        Amendment of the Partnership Agreement or the Company's Charter
<S>                                     <C>
 Generally, the Operating Partnership   Amendments to the charter must be
 Agreement may be amended by the        approved by the Board of Directors
 general partner without the consent    and generally by the vote of a
 of the Unitholders, except that        majority of the votes entitled to be
 certain amendments which alter or      cast at a meeting of stockholders
 change Unitholders' distribution       except as otherwise provided by law.
 rights or redemption rights requires   The Board of Directors may, however,
 the consent of the Unitholders         amend the Charter without any action
 holding a majority-in-interest of      of the stockholders in certain
 the outstanding Units.                 respects to preserve the Company's
                                        REIT qualification.
</TABLE>

                                       28
<PAGE>
 
<TABLE> 
<CAPTION>
THE OPERATING PARTNERSHIP                            THE COMPANY
--------------------------------------  --------------------------------------
                     Compensation, Fees and Distributions
<S>                                     <C>
 The general partner is not entitled    The Directors of the Company receive
 to receive any compensation for its    compensation for their services.
 services as general partner of the
 Operating Partnership.  As a partner
 in the Operating Partnership,
 however, the general partner has the
 same right to allocations and
 distributions as other partners of
 the Operating Partnership.  In
 addition, the Operating Partnership
 will reimburse the general partner
 for administrative expenses incurred
 relating to the ongoing operation of
 the Company and certain other
 expenses arising in connection with
 its role as general partner.  All
 officers of the Company are
 employees of the Operating
 Partnership and receive compensation
 for their services as such.

<CAPTION> 
                            Liability of Investors
<S>                                     <C>
 Under the Operating Partnership        Under the Maryland law, stockholders
 Agreement and applicable Delaware      generally are not personally liable
 law, the liability of the limited      for the debts or obligations of the
 partners for the Operating             Company.
 Partnership's debts and obligations
 is generally limited to the amount
 of their investment in the Operating
 Partnership, together with any
 interest in any undistributed income.

</TABLE>

                                       29
<PAGE>
 
                       FEDERAL INCOME TAX CONSIDERATIONS

    As a REIT, the Company must comply with highly technical and complex
requirements under the Internal Revenue Code.  The following discussion
summarizes these requirements and their effect on the Company and its
stockholders.  The summary discussion is for general information only and is not
an exhaustive list of all tax considerations that may be material.  For example,
this discussion does not address any state, local or foreign tax considerations.
Also, this discussion does not address issues that arise as a result of your, or
any other investor's, special circumstances or special status under the Internal
Revenue Code.  The summary is qualified in its entirety by, and you should refer
to, Sections 856 through 860 of the Internal Revenue Code and the Treasury
Regulations thereunder, which set forth the particular provisions applicable to
REITs.

    The discussion in this section (and any other section of this Prospectus) is
not intended to be, nor should you construe it as, tax advice.  You are urged to
consult your own tax advisor to determine the impact of a redemption of your
Units and/or of owning the Company's common stock on your own personal
situation.  In particular, foreign investors should consult their own tax
advisors concerning the tax consequences of an investment in the Company,
including the possibility of United States income tax withholding on Company
distributions.

    General

    Under the Internal Revenue Code, if certain requirements are met in a
taxable year, including the requirement that the REIT distribute to its
stockholders at least 95% of its real estate investment trust taxable income for
the taxable year, a REIT generally will not be subject to federal income tax
with respect to income that it distributes to its stockholders.  For these
purposes, taxable income will be computed without regard to the dividends paid
deduction and the Company's net capital gain.  However, the Company may be
subject to federal income tax under certain circumstances, including taxes at
regular corporate rates on any undistributed REIT taxable income or net capital
gains, the alternative minimum tax on its items of tax preference, and taxes
imposed on income and gain generated by certain extraordinary transactions.  As
discussed below, however, for taxable years beginning after December 31, 1997,
stockholders may be credited for all or a portion of the taxes paid by the
Company on its retained net capital gains.  If the Company fails to qualify
during any taxable year as a REIT, unless certain relief provisions are
available, it will be subject to tax (including any applicable alternative
minimum tax) on its taxable income at regular corporate rates, which could have
a material adverse effect upon its stockholders.

    The Company Believes But Cannot Guarantee That It Qualifies as a REIT

    The Company has elected to qualify as a REIT under the Internal Revenue
Code.  In the opinion of Goodwin, Procter & Hoar LLP, the Company has been
organized in conformity with the requirements for qualification as a REIT under
the Internal Revenue Code, and its manner of operation has met and will continue
to meet the requirements for qualification and taxation as a REIT under the
Internal Revenue Code. This opinion is based on various assumptions and is
conditioned upon representations made by the Company as to factual matters and
the continuation of such factual matters.  You should be aware, however, that
opinions of counsel are not binding upon the IRS or any court.  Moreover, such
qualification and taxation as a REIT in any tax year depends upon the Company's
ability to meet the various source of income, ownership of assets, distribution
and diversity of ownership requirements of the Internal Revenue Code for
qualification as a REIT in its actual results each tax year, which results will
not be reviewed by Goodwin, Procter & Hoar  LLP.  Accordingly, no assurance can
be given that the actual results of the Company for any particular tax year will
in fact satisfy the requirements for qualification.  Likewise, although the
Company believes that it has operated in a manner which satisfies the REIT
qualification requirements under the Internal Revenue Code since its
organization in 1961, no assurance can be given that the Company's qualification
as a REIT will not be challenged by the IRS for taxable years still subject to
audit.

                                       30
<PAGE>
 
    Undistributed Long-Term Capital Gains

    The Company may elect to retain and pay income tax on its net long-term
capital gains received during the taxable year.  For taxable years beginning
after December 31, 1997, if the Company so elects for a taxable year, the
stockholders would include in income as long-term capital gains their
proportionate share of such portion of the Company's undistributed long-term
capital gains for the taxable year as the Company may designate.  A stockholder
would be deemed to have paid his share of the tax paid by the Company on such
undistributed capital gains, which would be credited or refunded to the
stockholder.  The stockholder's basis in his common stock would be increased by
the amount of undistributed long-term capital gains included in the
stockholder's long-term capital gains, less such stockholder's share of the
capital gains tax paid by the Company.

    Dividends Taxable as Ordinary Income

    As long as the Company qualifies as a REIT, distributions made to the
Company's taxable U.S. Stockholders out of current or accumulated earnings and
profits (and not designated as a capital gain dividends) will be taken into
account by such U.S. Stockholders as ordinary income and will not be eligible
for the dividends received deduction generally available to corporations.
Subject to the discussion below regarding the changes to the capital gains tax
rates, distributions that are designated as capital gains dividends will be
taxed as capital gains (to the extent they do not exceed the Company's actual
net capital gain for the taxable year) without regard to the period for which
the stockholder has held his or her common stock.  However, corporate
stockholders may be required to treat up to 20% of certain capital gain
dividends as ordinary income.  Capital gain dividends are not eligible for the
dividends-received deduction for corporations.

    As used herein, the term "U.S. Stockholder" means a holder of common stock
that for United States federal income tax purposes is:

    .   a citizen or resident of the United States, or
    .   a corporation, partnership or other entity created or organized in or
        under the laws of the United States or any political subdivision
        thereof, or
    .   an estate, the income of which is subject to United States federal
        income taxation regardless of its source, or
    .   a trust, if a court within the United States is able to exercise primary
        supervision over the administration of the trust and one or more United
        States persons have the authority to control all substantial decisions
        of the trust, and
    .   is not an entity that has a special status under the Internal Revenue
        Code (such as a tax-exempt organization or dealer in securities).

    Dividends Taxable as Capital Gain

    To the extent that the Company has net capital gain for a taxable year,
dividends paid during the year (or that are deemed paid) properly designated by
it as long-term capital gains will be treated as such for the taxable year
without regard to the period for which the stockholder has held his stock.  See
"Dividends Taxable as Ordinary Income" for the treatment of corporations.

    Other Dividends

    Distributions, other than capital gain dividends, in excess of current and
accumulated earnings and profits will not be taxable to a stockholder to the
extent that they do not exceed the adjusted basis of the stockholder's common
stock, but rather will reduce the adjusted basis of such stock.  To the extent
that distributions in excess of current and accumulated earnings and profits
exceed the adjusted basis of a stockholder's common stock, the distribution will
be treated as long-term capital gain or loss if the shares of common stock have
been held for more than 12 months and otherwise as short-term capital gain or
loss.  

                                       31
<PAGE>
 
In addition, any dividend declared by the Company in October, November or
December of any year and payable to a stockholder of record on a special date in
any such month shall be treated as both paid by the Company and received by the
stockholder on December 31 of such year, provided that the distribution is
actually paid by the Company during January of the following calendar year.

    Net Operating Losses

    Stockholders may not include in their individual income tax returns any net
operating losses or capital losses of the Company.  Instead, such losses would
be carried over by the Company for potential offset against its future income
(subject to certain limitations).  Taxable distributions from the Company and
gain from the disposition of common stock will not be treated as passive
activity income and, therefore, stockholders generally will not be able to apply
any "passive activity losses" (such as losses from certain types of limited
partnerships in which the stockholder is a limited partner) against such income.
In addition, taxable distributions from the Company generally will be treated as
investment income for purposes of the investment interest deduction limitations.
Capital gain distributions and capital gains from the disposition of common
stock (and distributions treated as such) will be treated as investment income
for purposes of the investment interest deduction limitations only if and to the
extent the stockholder so elects, in which case such capital gain distributions
and capital gains will be taxed at ordinary income rates to the extent of such
election.  The Company will notify stockholders after the close of the Company's
taxable year as to the portions of the distributions attributable to that year
that constitute ordinary income, return of capital, and capital gain.

                                       32
<PAGE>
 
                          NO PROCEEDS TO THE COMPANY

    The Company will not receive any proceeds in connection with the issuance of
the shares of common stock offered by this Prospectus.  The Company will acquire
Units in exchange for any shares it issues and its economic interest in the
Operating Partnership will increase accordingly.


                             PLAN OF DISTRIBUTION

    This Prospectus relates to the possible issuance by the Company of up to
1,212,630 shares of common stock if, and to the extent that, certain holders of
an aggregate of 1,212,630 Units tender such Units for redemption and the Company
elects to acquire such tendered Units for shares of common stock. See
"Description of Units and Redemption of Units."  The Operating Partnership
originally issued these Units to the equity holders of Lexington Holding
Company, Baken Park Partners Limited Partnership, County Line 31 Company, L.P.
and Spring Mall Associates Limited Partnership in exchange for the contribution
of their interests in certain properties to the Operating Partnership.  In
connection with these property acquisitions, the Company entered into
registration rights agreements with the contributors.  The Company is
registering the shares covered by this Prospectus in order to fulfill its
contractual obligations under these agreements and provide the holders of the
shares with freely tradable securities.  Registration of these shares does not
necessarily mean that all or any portion of the shares will be issued by the
Company.

    All expenses incident to the offering and sale of the shares offered hereby
will be paid by the Company, other than brokerage and underwriting commissions
and taxes of any kind and any legal, accounting and other expenses incurred by
the redeeming Unitholder.  The Company has agreed to indemnify these Unitholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.

                                 LEGAL MATTERS

    Certain legal matters, including the legality of the shares of common stock
offered hereby, will be passed upon for the Company by Goodwin, Procter & Hoar
LLP, Boston, Massachusetts.  William B. King, whose professional corporation is
a partner in Goodwin, Procter & Hoar  LLP, is Secretary of the Company and is
the beneficial owner of approximately 10,000 shares of common stock.


                                    EXPERTS

    The consolidated financial statements and schedule of the Company as of
December 31, 1997 and 1996 and for each of the years in the three-year period
ended December 31, 1997 contained in the Company's Annual Report on Form 10-K,
the statement of revenues and certain expenses of Redford Plaza for the year
ended December 31, 1997, the statement of revenues and certain expenses of
Courtyard Shopping Center for the year ended December 31, 1997, the combined
statement of revenues and certain expenses of Camelot Shopping Center and
Plainview Village for the year ended December 31, 1997, the statement of
revenues and certain expenses of Salem Consumer Square for the year ended
December 31, 1997, the statement of revenues and certain expenses of Holiday
Manor Shopping Center for the year ended December 31, 1997, the statement of
revenues and certain expenses of Ellisville Square for the year ended December
31, 1997, and the statement of revenues and certain expenses of Clock Tower
Plaza for the year ended December 31, 1997 have been incorporated by reference
herein and in the Registration Statement in reliance upon the reports of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing. To the extent that KPMG Peat Marwick LLP audits and reports on
financial statements of the Company issued at future dates, and consents to the
use of their report thereon, such financial statements also will be incorporated
by reference in the Registration Statement in reliance upon their report and
said authority.

                                       33
<PAGE>
 
================================================================================

    You should rely only on the information contained in this Prospectus,
incorporated herein by reference or contained in a Prospectus Supplement.  We
have not authorized anyone else to provide you with different or additional
information.  We are not making an offer of these securities in any state where
the offer is not permitted.  You should not assume that the information in this
Prospectus, and incorporated herein by reference or in any Prospectus Supplement
is accurate as of any date other than the date on the front of those documents.



                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                        <C> 
 
Available Information....................................................   2
 
Incorporation of Certain Documents by Reference..........................   2
 
Prospectus Summary.......................................................   3
 
Risk Factors.............................................................   5
 
The Company..............................................................  13
 
Description of Securities to be Registered...............................  14
 
Description of Units and Redemption of Units.............................  20
 
Federal Income Tax Considerations........................................  30
 
No Proceeds to the Company...............................................  33
 
Plan of Distribution.....................................................  33
 
Legal Matters............................................................  33
 
Experts..................................................................  33
 
</TABLE>

================================================================================


                               1,212,630 SHARES



                           BRADLEY REAL ESTATE, INC.



                                 COMMON STOCK



                                  Prospectus



                               December __, 1998


================================================================================
<PAGE>
 
               PART II.  INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

    Set forth below is an estimate of the approximate amount of the fees and
expenses (other than underwriting commissions and discounts) anticipated to be
paid by the Company in connection with the issuance and distribution of the
Securities.
<TABLE>
<S>                                 <C>
    SEC Registration fee            $ 5,125
    Legal fees and expenses          20,000
    Accounting fees and expenses     10,000
    Printing fees and expenses        2,000
    Transfer and Agency fees          1,000
    Miscellaneous                     1,875
                                    -------
    TOTAL                           $40,000
                                    =======
</TABLE>

ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

    The Maryland General Corporation Law ("MGCL") permits a Maryland corporation
to include in its charter a provision limiting the liability of its directors
and officers to the corporation and its stockholders for money damages except
for liability resulting from (i) actual receipt of an improper benefit or profit
in money, property or services or (ii) active and deliberate dishonesty
established by a final judgment as being material to the cause of action.  The
charter of Bradley Real Estate, Inc. (the "Company") contains such a provision
which eliminates such liability to the maximum extent permitted by Maryland law.

    The charter of the Company authorizes it, to the maximum extent permitted by
Maryland law, to obligate itself to indemnify and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to (i) any present or
former director, officer, agent, employee or plan administrator of the Company
or of its predecessor Bradley Real Estate Trust (the "Trust") or (ii) any
individual who, at the request of the Company, serves or has served in any of
these capacities with another corporation, partnership, joint venture, trust,
employee benefit plan or any other enterprise.  The Bylaws of the Company
obligate it, to the maximum extent permitted by Maryland law, to indemnify 
(a) any present or former director or officer of the Company, (b) any individual
who, at the request of the Company, serves or has served another corporation,
partnership, joint venture, trust or other enterprise as a director or officer
or (c) any former trustee or officer of the Company's predecessor entity,
Bradley Real Estate Trust.

    The MGCL requires a corporation (unless its charter provides otherwise,
which the Company's charter does not) to indemnify a director or officer who has
been successful, on the merits or otherwise, in the defense of any proceeding to
which he is made a party by reason of his service in that capacity.  The MGCL
permits a corporation to indemnify its present and former directors and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities unless it is established that (i) the act or omission of the director
or officer was material to the matter giving rise to the proceeding and (a) was
committed in bad faith or (b) was the result of active and deliberate
dishonesty, (ii) the director or officer actually received an improper personal
benefit in money, property or services or (iii) in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that the act
or omission was unlawful.  However, a Maryland corporation may not indemnify for
an adverse judgment in a suit by or in the right of the corporation.  In
addition, the MGCL requires a corporation as a condition to advancing expenses,
to obtain (x) a written affirmation by the director or officer of his good faith
belief that he has met the standard of conduct necessary for indemnification by
the corporation as authorized by the bylaws and (y) a written statement by or on
his behalf to repay the amount paid or reimbursed by the corporation if it shall
ultimately be determined that the standard of conduct was not met.

                                      II-1
<PAGE>
 
    The Company has claims-made directors and officers liability insurance
policies that insure the directors and officers of the Company against loss from
claimed wrongful acts and insure the Company for indemnifying the directors and
officers against such loss.  The policy limits of liability are $10,000,000 each
policy year and are subject to a retention of $150,000 of loss by the Company.

ITEM 16.  EXHIBITS.

Exhibit 
  No.    Description 
  ---    -----------
  4.1  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.

  4.2  Articles Supplementary Establishing and Fixing the Rights and Preferences
       of a Series of Shares of Preferred Stock for the 8.4% Series A
       Convertible Preferred Stock of Bradley Real Estate, Inc. incorporated by
       reference to Annex B to the Proxy/Statement Prospectus included in Part I
       to the Company's Registration Statement on Form S-4 (No. 333-57123).

  4.3  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. 4.4 Form of Common Stock Certificate, incorporated by reference to
       Exhibit 4.1 of the Company's Current Report on Form 8-K dated October 17,
       1994.

  4.5  Second Restated Agreement of Limited Partnership of Bradley Operating
       Limited Partnership, dated as of September 2, 1997, incorporated by
       reference to the Operating Partnership's Registration Statement on 
       Form 10.

  4.6  Amendment to Second Restated Agreement of Limited Partnership of the
       Operating Partnership, dated August 6, 1998, designating the 8.4% Series
       A Convertible Preferred Units.

 *5.1  Opinion of Goodwin, Procter & Hoar  LLP as to the legality of the
       Securities being registered.

 *8.1  Opinion of Goodwin, Procter & Hoar  LLP as to certain tax matters.

*23.1  Consent of KPMG Peat Marwick LLP.

 23.2  Consent of Goodwin, Procter & Hoar  LLP (included in Exhibits 5.1 and
       8.1  hereto).

 24.1  Powers of Attorney (included on the signature page hereof).

 99.1  Registration Rights Agreement, dated January 1, 1997, by and between the
       Company and Lexington Holding Company, incorporated by reference to
       Exhibit 99.1 of the Company's Registration Statement on Form S-3 
       (No. 333-42357).

*99.2  Registration Rights Agreement, dated December 23, 1997, by and between
       the Company and Spring Mall Associates Limited Partnership.

*99.3  Registration Rights Agreement, dated December 31, 1997, by and between
       the Company and Baken Park Partners Limited Partnership.

*99.4  Registration Rights Agreement, dated September 25, 1998, by and between
       the Company and County Line 31 Company, L.P.

______________________

*     Filed herewith.

ITEM 17.  UNDERTAKINGS.

    (a) The undersigned registrant hereby undertakes:

            (1) To file, during any period in which offers or sales are being
    made, a post-effective amendment to this registration statement:

              (i) To include any Prospectus required by Section 10(a)(3) of the
            Securities Act of 1933, as amended (the "Securities Act")

              (ii) To reflect in the Prospectus any facts or events arising
    after the effective date of the registration statement (or the most recent
    post-effective amendment thereof) which, individually or in the aggregate,
    represent a fundamental change in the information set forth in the
    registration statement. Notwithstanding the foregoing, any

                                      II-2
<PAGE>
 
                increase or decrease in volume of securities offered (if the
                total dollar value of securities offered would not exceed that
                which was registered) and any deviation from the low or high and
                of the estimated maximum offering range may be reflected in the
                form of Prospectus filed with the Commission pursuant to Rule
                424(b) if, in the aggregate, the changes in volume and price
                represent no more than 20 percent change in the maximum
                aggregate offering price set forth in the "Calculation of
                Registration Fee" table in the effective registration statement;
                and

                     (iii) To include any material information with respect to
                the plan of distribution not previously disclosed in the
                registration statement or any material change to such
                information in the registration statement;

          provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
          apply if the information required to be included in a post-effective
          amendment by those paragraphs is contained in periodic reports filed
          by the undersigned registrant pursuant to Section 13 or Section 15(d)
          of the Securities Exchange Act of 1934, as amended (the "Exchange
          Act"), that are incorporated by reference in the registration
          statement;

              (2) That, for the purpose of determining any liability under the
          Securities Act, each such post-effective amendment shall be deemed to
          be a new registration statement relating to the securities offered
          therein, and the offering of such securities at that time shall be
          deemed to be the initial bona fide offering thereof; and

              (3) To remove from registration by means of a post-effective
          amendment any of the securities being registered which remain unsold
          at the termination of the offering.

     (b) The registrant hereby undertakes that, for purposes of determining any
          liability under the Securities Act each filing of the registrant's
          annual report pursuant to Section 13(a) or 15(d) of the Exchange Act
          that is incorporated by reference in the Registration Statement shall
          be deemed to be a new registration statement relating to the
          securities offered therein, and the offering of such securities at
          that time shall be deemed to be the initial bona fide offering
          thereof.

     (c) Insofar as indemnification for liabilities arising under the Securities
         Act may be permitted to directors, officers and controlling persons of
         the registrant pursuant to the provisions described under Item 15
         above, or otherwise, the registrant has been advised that in the
         opinion of the Securities and Exchange Commission (the "Commission")
         such indemnification is against public policy as expressed in the
         Securities Act and is, therefore, unenforceable. In the event that a
         claim for indemnification against such liabilities (other than the
         payment by the registrant of expenses incurred or paid by a director,
         officer, or controlling person of the registrant in the successful
         defense of any action, suit or proceeding) is asserted by such
         director, officer or controlling person in connection with the
         securities being registered, the registrant will, unless in the
         opinion of its counsel the matter has been settled by controlling
         precedent, submit to a court of appropriate jurisdiction the question
         whether such indemnification by it is against public policy as
         expressed in the Securities Act and will be governed by the final
         adjudication of such issue.



                                      II-3
<PAGE>
 
                                   SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Northbrook, State of Illinois on December 17, 1998.

                                     BRADLEY REAL ESTATE, INC.


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

    Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated, each of whom also constitutes and
appoints Thomas P. D'Arcy and Irving E. Lingo, Jr., and each of them singly, his
true and lawful attorney-in-fact and agent, for him, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and a further registration statement filed conforming to Rule 462(b)
under the Securities Act of 1933, as amended, relating to securities of the same
class(es) registered under this Registration Statement and to file the same and
all exhibits thereto and any other documents in connection therewith with the
Securities and Exchange Commission, granting unto each attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that each
attorney-in-fact and agent or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
<TABLE>
<CAPTION>
           Name                             Title                        Date
---------------------------  ------------------------------------  -----------------
<S>                          <C>                                   <C>
 
/s/ Thomas P. D'Arcy         Chairman, President, Chief Executive  December 17, 1998
---------------------------  Officer and Director
THOMAS P. D'ARCY                                 
 
/s/ Irving E. Lingo, Jr.     Executive Vice President and Chief    December 17, 1998
---------------------------  Financial Officer
IRVING E. LINGO, JR.                          
 
/s/ David M. Garfinkle       Controller                            December 17, 1998
---------------------------
DAVID M. GARFINKLE
 
/s/ Joseph E. Hakim          Director                              December 17, 1998
---------------------------
JOSEPH E. HAKIM
 
/s/ William L. Brown         Director                              December 17, 1998
---------------------------
WILLIAM L. BROWN
 
/s/ Stephen G. Kasnet        Director                              December 17, 1998
---------------------------
STEPHEN G. KASNET
 
/s/ Paul G. Kirk, Jr.        Director                              December 17, 1998
---------------------------
PAUL G. KIRK, JR.
 
/s/ W. Nicholas Thorndike    Director                              December 17, 1998
---------------------------
W. NICHOLAS THORNDIKE
 
/s/ A. Robert Towbin         Director                              December 17, 1998
---------------------------
A. ROBERT TOWBIN
</TABLE>

                                      II-4
<PAGE>
 
                                 EXHIBIT INDEX

Exhibit                     
  No.      Description 
-------    -----------
  4.1      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.

  4.2      Articles Supplementary Establishing and Fixing the Rights and
           Preferences of a Series of Shares of Preferred Stock for the 8.4%
           Series A Convertible Preferred Stock of Bradley Real Estate, Inc.
           incorporated by reference to Annex B to the Proxy/Statement
           Prospectus included in Part I to the Company's Registration Statement
           on Form S-4 (No. 333-57123).

  4.3      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. 4.4 Form of Common Stock Certificate, incorporated by
           reference to Exhibit 4.1 of the Company's Current Report on Form 8-K
           dated October 17, 1994.

  4.5      Second Restated Agreement of Limited Partnership of Bradley Operating
           Limited Partnership, dated as of September 2, 1997, incorporated by
           reference to the Operating Partnership's Registration Statement on
           Form 10.

  4.6      Amendment to Second Restated Agreement of Limited Partnership of the
           Operating Partnership, dated August 6, 1998, designating the 8.4%
           Series A Convertible Preferred Units.

 *5.1      Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
           Securities being registered.

 *8.1      Opinion of Goodwin, Procter & Hoar  LLP as to certain tax matters.

*23.1      Consent of KPMG Peat Marwick LLP.

 23.2      Consent of Goodwin, Procter & Hoar LLP (included in Exhibits 5.1 and
           8.1 hereto).

 24.1      Powers of Attorney (included on the signature page hereof).

 99.1      Registration Rights Agreement, dated January 1, 1997, by and between
           the Company and Lexington Holding Company, incorporated by reference
           to Exhibit 99.1 of the Company's Registration Statement on Form S-3
           (No. 333-42357).

*99.2      Registration Rights Agreement, dated December 23, 1997, by and
           between the Company and Spring Mall Associates Limited Partnership.

*99.3      Registration Rights Agreement, dated December 31, 1997, by and
           between the Company and Baken Park Partners Limited Partnership.

*99.4      Registration Rights Agreement, dated September 25, 1998, by and
           between the Company and County Line 31 Company, L.P.

______________________

*     Filed herewith.