**FORM 10-Q**

 

**QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OFTHE SECURITIES EXCHANGE ACT OF 1934**

 

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

 

| **(Mark  One)**                                                                                                                                                                                                                           |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **ý**                                                                                                                                                                                                                                | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934** |
|                                                                                                                                                                                                                                      |
| **For  the quarterly period ended  March 31,  2003**                                                                                                                                                                                 |
|                                                                                                                                                                                                                                      |
| **or**                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                      |
| o                                                                                                                                                                                                                                         | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE  SECURITIES EXCHANGE ACT OF 1934** |
|                                                                                                                                                                                                                                      |   |   |
| **For  the transition period from                  to                  ** |
|                                                                                                                                                                                                                                      |   |   |
| **Commission  file Number 1-12286**                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                      |   |   |
| **Mid-Atlantic  Realty Trust**                                                                                                                                                                                                            |
| (Exact Name of Registrant as Specified in its  Charter)                                                                                                                                                                                   |
|                                                                                                                                                                                                                                      |   |   |
| **Maryland**                                                                                                                                                                                                                              |   | **52-1832411** |
| (State or Other  Jurisdiction of Incorporation or Organization)                                                                                                                                                                           |   | (I.R.S. Employer  Identification No.) |
|                                                                                                                                                                                                                                      |   |   |
| **170 West  Ridgely Road, Suite 210 - Lutherville, Maryland**                                                                                                                                                                             |   | **21093** |
| (Address of Principal  Executive Offices)                                                                                                                                                                                                 |   | (Zip Code) |
|                                                                                                                                                                                                                                      |   |   |
| Registrant’s Telephone  Number, Including Area Code       **(410) 684-2000**                                                                                                                           |
|                                                                                                                                                                                                                                      |   |   |
|                                                                                                                                                                                                                                      |   |   |
| (Former Name, Former Address and Former Fiscal Year,  if Changed Since Last Report)                                                                                                                                                       |
|                                                                                                                                                                                                                                           |  |  |  |  |

 

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15 (d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

ý    Yes    o   No

 

Indicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12b-2 of the Act).

 

ý    Yes   o   No

 

As of April 23, 2003, 18,077,245 common shares of beneficial interestof Mid-Atlantic Realty Trust were outstanding.

 

 

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**MID-ATLANTIC REALTY TRUST**

**AND SUBSIDIARIES**

 
| **Part I.**  | **FINANCIAL INFORMATION** |
|--------------|---------------------------|
|         |                      |   |
|         | **Item  1.**              | **CONSOLIDATED  FINANCIAL STATEMENTS** |
|         |                      |   |
|         |                      | **CONSOLIDATED BALANCE SHEETS** |
|         |                      |   |
|         |                      | **CONSOLIDATED  STATEMENTS OF OPERATIONS** |
|         |                      |   |
|         |                      | **CONSOLIDATED  STATEMENTS OF CASH FLOWS** |
|         |                      |   |
|         |                      | **NOTES TO  CONSOLIDATED FINANCIAL STATEMENTS** |
|         |                      |   |   |
|         | **Item 2.**               | **MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |
|         |                      |   |
|         | **Item  3.**              | **QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** |
|         |                      |   |
|         | **Item 4.**               | **CONTROLS AND PROCEDURES** |
|         |                      |   |
| **Part II.** | **OTHER INFORMATION**     |
|         |                      |   |
|         | **Item 1.**               | **LEGAL PROCEEDINGS** |
|         |                      |   |
|         | **Item  2.**              | **CHANGES  IN SECURITIES AND USE OF PROCEEDS** |
|         |                      |   |
|         | **Item 3.**               | **DEFAULTS UPON  SENIOR SECURITIES** |
|         |                      |   |
|         | **Item  4.**              | **SUBMISSION  OF MATTERS TO A VOTE OF SECURITY HOLDERS** |
|         |                      |   |
|         | **Item  5.**              | **OTHER  INFORMATION** |
|         |                      |   |
|         | **Item 6.**               | **EXHIBITS AND REPORTS ON FORM 8-K** |
|              |                           |  |  |  |

 

2

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**MID-ATLANTIC REALTY TRUST AND SUBSIDIARIES**

**ConsolidatedBalance Sheets**

 
|                                                                                                                                                         |   | **As of**           |            |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-----------------|
|                                                                                                                                                         |   | **March 31,  2003** |            | **December 31, 2002** |   |
|                                                                                                                                                         |   | **(UNAUDITED)**     |            |   |   |
| **ASSETS**                                                                                                                                                   |   |                |            |   |   |
| *Properties:*                                                                                                                                                |   |                |            |   |   |
| Operating  properties                                                                                                                                        |   | **$**               | **485,536,530** | ** ** | 484,213,751 |   |
| Less  accumulated depreciation and amortization                                                                                                              |   | **94,279,611**      | ** **      | 91,481,224 |   |
|                                                                                                                                                         |   | **391,256,919**     |            | 392,732,527 |   |
| Properties  in development                                                                                                                                   |   | **16,643,095**      | ** **      | 14,975,500 |   |
| Properties  held for development or sale                                                                                                                     |   | **3,095,805**       | ** **      | 3,288,171 |   |
|                                                                                                                                                         |   | **410,995,819**     |            | 410,996,198 |   |
|                                                                                                                                                         |   |                | ** **      |   |   |
| Cash  and cash equivalents                                                                                                                                   |   | **23,279,411**      | ** **      | 3,716,186 |   |
| Notes  and accounts receivable - tenants and other                                                                                                           |   | **4,811,361**       | ** **      | 3,833,527 |   |
| Prepaid  expenses and deposits                                                                                                                               |   | **2,839,472**       | ** **      | 3,497,749 |   |
| Deferred  financing costs, net                                                                                                                               |   | **3,048,845**       | ** **      | 2,299,712 |   |
|                                                                                                                                                         |   | **$**               | **444,974,908** |   | 424,343,372 |   |
|                                                                                                                                                         |   |                | ** **      |   |   |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**                                                                                                                |   |                | ** **      |   |   |
| *Liabilities:*                                                                                                                                               |   |                | ** **      |   |   |
| Accounts  payable, accrued expenses and other liabilities                                                                                                    |   | **$**               | **9,696,647**   | ** ** | 8,891,268 |   |
| Notes  payable                                                                                                                                               |   | **44,500,000**      | ** **      | 25,500,000 |   |
| Construction  loans payable                                                                                                                                  |   | **22,324,214**      | ** **      | 20,414,330 |   |
| Mortgages  payable                                                                                                                                           |   | **192,329,282**     | ** **      | 193,157,288 |   |
| Convertible  subordinated debentures                                                                                                                         |   | **609,000**         | ** **      | 959,000 |   |
| Deferred  income                                                                                                                                             |   | **9,437**           | ** **      | 9,437 |   |
|                                                                                                                                                         |   | **269,468,580**     |            | 248,931,323 |   |
|                                                                                                                                                         |   |                | ** **      |   |   |
| Minority  interest in consolidated joint ventures                                                                                                            |   | **32,492,738**      | ** **      | 32,648,800 |   |
|                                                                                                                                                         |   |                | ** **      |   |   |
| *Shareholders’ equity:*                                                                                                                                 |   |                | ** **      |   |   |
| Preferred  shares of beneficial interest, $.01 par value, authorized 2,000,000 shares,  issued and outstanding, none                                         |   | **—**          | ** **      | — |   |
| Common  shares of beneficial interest, $.01 par value, authorized 100,000,000 shares,  issued and outstanding 18,074,865 and 17,971,818 shares, respectively |   | **180,749**         | ** **      | 179,718 |   |
| Additional  paid-in capital                                                                                                                                  |   | **177,815,002**     | ** **      | 177,257,630 |   |
| Distributions  in excess of accumulated earnings                                                                                                             |   | **(34,982,161**     | **)**           | (34,674,099 | ) |
|                                                                                                                                                         |   | **143,013,590**     |            | 142,763,249 |   |
|                                                                                                                                                         |   |                | ** **      |   |   |
|                                                                                                                                                         |   | **$**               | **444,974,908** |   | 424,343,372 |   |

 

*See accompanying notes to consolidated financial statements.*

 

3

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**MID-ATLANTIC REALTY TRUST ANDSUBSIDIARIES**

**Consolidated Statements of Operations**

**(UNAUDITED)**

 
|                                                                            |   | **Three  months ended March 31,** |           |
|---------------------------------------------------------------------------------|--------|-----------------------------------|----------------|
|                                                                            |   | **2003**                          |           | **2002** |   |
|                                                                            |   |                              |           |   |   |
| **REVENUES:**                                                                   |   |                              |           |   |   |
| Minimum  rents                                                                  |   | **$**                             | **14,773,108** | ** ** | 12,710,274 |   |
| Percentage  rents                                                               |   | **399,135**                       | ** **     | 356,732 |   |
| Tenant  recoveries                                                              |   | **4,049,318**                     | ** **     | 2,653,081 |   |
| Other                                                                           |   | **50,295**                        | ** **     | 175,461 |   |
|                                                                            |   | **19,271,856**                    |           | 15,895,548 |   |
| **EXPENSES:**                                                                   |   |                              | ** **     |   |   |
| Interest                                                                        |   | **4,270,644**                     | ** **     | 4,194,271 |   |
| Depreciation  and amortization of property and improvements                     |   | **2,798,387**                     | ** **     | 2,906,469 |   |
| Operating                                                                       |   | **4,967,697**                     | ** **     | 3,433,282 |   |
| General  and administrative                                                     |   | **941,794**                       | ** **     | 718,914 |   |
|                                                                            |   | **12,978,522**                    |           | 11,252,936 |   |
|                                                                            |   |                              | ** **     |   |   |
| **EARNINGS FROM OPERATIONS BEFORE MINORITY INTEREST AND GAIN  ON SALE OF LAND** |   | **6,293,334**                     | ** **     | 4,642,612 |   |
|                                                                            |   |                              | ** **     |   |   |
| Minority  interest                                                              |   | **(1,023,488**                    | **)**          | (864,472 | ) |
| Gain  on sale of land                                                           |   | **14,320**                        | ** **     | — |   |
|                                                                            |   |                              | ** **     |   |   |
| **NET EARNINGS**                                                                |   | **$**                             | **5,284,166**  | ** ** | 3,778,140 |   |
|                                                                            |   |                              | ** **     |   |   |
| **NET EARNINGS PER SHARE - BASIC AND DILUTED**                                  |   | **$**                             | **0.29**       | ** ** | 0.24 |   |

 

*See accompanying notes to consolidated financial statements.*

 

4

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**MID-ATLANTIC REALTY TRUST ANDSUBSIDIARIES**

**Consolidated Statements of CashFlows**

**(UNAUDITED)**

 
|                                                                                 |   | **Three  months ended March 31,** |           |
|--------------------------------------------------------------------------------------|--------|-----------------------------------|----------------|
|                                                                                 |   | **2003**                          |           | **2002** |   |
| **CASH FLOWS FROM OPERATING ACTIVITIES:**                                            |   |                              | ** **     |   |   |
| Net  earnings                                                                        |   | **$**                             | **5,284,166**  | ** ** | 3,778,140 |   |
| Adjustments  to reconcile net earnings to net cash provided by operating activities: |   |                              | ** **     |   |   |
| Depreciation  and amortization                                                       |   | **2,798,387**                     | ** **     | 2,906,469 |   |
| Minority  interest in earnings                                                       |   | **1,023,488**                     | ** **     | 864,472 |   |
| Amortization  of deferred financing costs                                            |   | **321,795**                       | ** **     | 150,067 |   |
| Gain  on sale of land                                                                |   | **(14,320**                       | **)**          | — |   |
| Changes  in operating assets and liabilities:                                        |   |                              | ** **     |   |   |
| Decrease  (increase) in assets                                                       |   | **(319,557**                      | **)**          | 1,059,480 |   |
| Increase  (decrease) in liabilities                                                  |   | **805,379**                       | ** **     | (37,147 | ) |
| Other,  net                                                                          |   | **130,626**                       | ** **     | 91,796 |   |
| Total  adjustments                                                                   |   | **4,745,798**                     | ** **     | 5,035,137 |   |
| **NET CASH PROVIDED BY OPERATING ACTIVITIES**                                        |   | **10,029,964**                    | ** **     | 8,813,277 |   |
|                                                                                 |   |                              | ** **     |   |   |
| **CASH FLOWS FROM INVESTING ACTIVITIES:**                                            |   |                              | ** **     |   |   |
| Additions  to properties                                                             |   | **(2,941,136**                    | **)**          | (3,521,981 | ) |
| Proceeds  from sale of land                                                          |   | **206,686**                       | ** **     | — |   |
| Payments  to minority partners                                                       |   | **(1,179,550**                    | **)**          | (1,187,503 | ) |
| **NET CASH USED BY INVESTING ACTIVITIES**                                            |   | **(3,914,000**                    | **)**          | (4,709,484 | ) |
|                                                                                 |   |                              | ** **     |   |   |
| **CASH FLOWS FROM FINANCING ACTIVITIES:**                                            |   |                              | ** **     |   |   |
| Proceeds  from notes payable                                                         |   | **52,000,000**                    | ** **     | 30,000,000 |   |
| Principal  payments on notes payable                                                 |   | **(33,000,000**                   | **)**          | (50,500,000 | ) |
| Proceeds  from mortgages payable                                                     |   | **—**                        | ** **     | 10,700,000 |   |
| Principal  payments on mortgages payable                                             |   | **(828,006**                      | **)**          | (7,769,246 | ) |
| Proceeds  from construction loans payable                                            |   | **2,003,139**                     | ** **     | 2,800,000 |   |
| Principal  payments on construction loans payable                                    |   | **(93,255**                       | **)**          | (11,059,973 | ) |
| Deferred  financing costs                                                            |   | **(1,071,812**                    | **)**          | (18,472 | ) |
| Proceeds  from exercise of share options                                             |   | **30,805**                        | ** **     | 614,692 |   |
| Net  proceeds from sale of common shares                                             |   | **—**                        | ** **     | 28,584,817 |   |
| Dividends  paid                                                                      |   | **(5,592,228**                    | **)**          | (4,489,232 | ) |
| Other,  net                                                                          |   | **(1,382**                        | **)**          | — |   |
| **NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES**                                 |   | **13,447,261**                    | ** **     | (1,137,414 | ) |
|                                                                                 |   |                              | ** **     |   |   |
| **NET INCREASE IN CASH AND CASH EQUIVALENTS**                                        |   | **19,563,225**                    | ** **     | 2,966,379 |   |
|                                                                                 |   |                              | ** **     |   |   |
| **CASH AND CASH EQUIVALENTS,**beginning of  period                                   |   | **3,716,186**                     | ** **     | 2,602,202 |   |
|                                                                                 |   |                              |           |   |   |
| **CASH AND CASH EQUIVALENTS,**end of period                                          |   | **$**                             | **23,279,411** | ** ** | 5,568,581 |   |
|                                                                                 |   |                              | ** **     |   |   |
| **SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES**                           |   |                              | ** **     |   |   |
| Conversion  of subordinated debentures, net of deferred financing costs              |   | **$**                             | **349,116**    | ** ** | 257,982 |   |
| Conversion  of Operating Partnership****Units                                        |   | **—**                        | ** **     | 311,610 |   |

## ** **

## ***See accompanying notes to consolidated financial statements.***

 

5

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## ** **

## **MID-ATLANTICREALTY TRUST**

## **Notes To ConsolidatedFinancial Statements**

**(UNAUDITED)**

 

**Organization**

Mid-Atlantic Realty Trust was incorporated June 29, 1993, and commencedoperations effective with the completion of its initial public share offeringon September 11, 1993.  Mid-AtlanticRealty Trust qualifies as a real estate investment trust (“REIT”) for Federalincome tax purposes. As used herein, the term “MART” or the “Company” refers toMid-Atlantic Realty Trust and entities owned or controlled by MART, includingMART Limited Partnership (the “Operating Partnership”).

 

**Descriptionof Business**

The Company is a fully integrated, self-administered real estateinvestment trust which owns, acquires, develops, redevelops, leases and managesprimarily neighborhood or community shopping centers in the Middle Atlanticregion of the United States of America.

The Company has an equity interest in 41 operatingshopping centers, 36 of which are wholly owned by the Company and five in whichthe Company has interests ranging from 50% to 93%, as well as other commercialproperties, collectively the “Properties”. The Company also owns approximately 78 acres of undeveloped land parcelsvarying in size from three to twenty-nine acres.

All of MART’s interests in properties are helddirectly or indirectly by, and all of its operations relating to the Propertiesare conducted through the Operating Partnership.  Units of partnership interest in the Operating Partnership(“Units”) may be exchanged by the limited partners for cash or common shares ofbeneficial interest in MART at the option of the Company on a one-for-onebasis.  MART controls the OperatingPartnership as the sole general partner, and owns approximately 86% of theUnits at March 31, 2003.

 

#### **Consolidated Financial Statements**

The accompanying consolidated financial statements have been preparedin accordance with the instructions for Form 10-Q and, therefore, do notinclude all of the information necessary for a fair presentation of financialcondition, results of operations and cash flows in accordance with accountingprinciples generally accepted in the United States of America.  The consolidated balance sheet as of March31, 2003, the consolidated statements of operations for the three-month periodsended March 31, 2003 and March 31, 2002 and the consolidated statements of cashflows for the three-month periods ended March 31, 2003 and March 31, 2002 havebeen prepared by the Company without audit. In the opinion of management, all adjustments (which include only normalrecurring adjustments) necessary to present fairly the financial position,results of operations and cash flows have been included.   The results of operations for the period endedMarch 31, 2003 are not necessarily indicative of the operating results for thefull year.

The financial statementshave been prepared using the accounting policies described in the Company’s2002 annual report on Form 10-K, except that effective January 1, 2003, theCompany began using the fair-value method to account for employee stockcompensation awards.  The effect of thechange was immaterial.

 

**NewAccounting Standards**

In April 2002, the Financial AccountingStandards Board (“FASB”) issued Statement of Financial Accounting Standards(“SFAS”) No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendmentof FASB Statement No. 13, and Technical Corrections.”  Upon adoption ofSFAS No. 145, the Company will be required to apply the criteria in AccountingPrinciples Board (“APB”) Opinion No. 30, “Reporting the Results of Operations -Reporting the Effects of Disposal of a Segment of a Business, andExtraordinary, Unusual and Infrequently Occurring Events and Transactions,” indetermining the classification of gains and losses resulting from theextinguishment of debt. The Company adopted the provisions relating to therescission of SFAS No. 4 on January 1, 2003 and determined that gains andlosses previously recognized as early extinguishment of debt were notextraordinary items under the criteria of APB No. 30; however, there were nogains and losses from extinguishment of debt during the three-month periodsended March 31, 2003 and 2002.

In November 2002, the FASBissued Interpretation No. 45, “Guarantor’s Accounting and DisclosureRequirements for Guarantees, Including Indirect Guarantees of Indebtedness ofOthers.” For 2002, the Interpretation required certain disclosures.  Effective in 2003, the Interpretationrequires recognition of liabilities at their fair value for newly issuedguarantees.  The adoption ofInterpretation No. 45 had no effect on the financial statements, as the Companyhas no obligations within the scope of the Interpretation as of March 31, 2003.

In December 2002, the FASBissued SFAS No. 148, “Accounting for Stock-Based Compensation - Transition andDisclosure.”  SFAS No. 148 amends SFASNo. 123, “Accounting for Stock-Based Compensation.”  SFAS No. 148 provides alternative methods of transition for avoluntary change to the fair value-based method of accounting for stock-basedcompensation and requires disclosure in both annual and interim financialstatements about the method of accounting for stock-based compensation and theeffect of the method used on reported results. Effective January 1, 2003, the Company adopted the fair-value basedmethod of accounting for stock-based compensation.  The Company elected to use the prospective method of transitionto the fair-value method provided in SFAS No. 148 and, accordingly, the methodis being applied for all employee stock compensation awards granted, modifiedor settled on or after January 1, 2003.

 

6

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**NewAccounting Standards (Continued)**

In January 2003, the FASB issued InterpretationNo. 46, “Consolidation of Variable Interest Entities” (“VIEs”).  This Interpretation addresses theconsolidation of variable interest entities in which the equity investors lackone or more of the essential characteristics of a controlling financial interestor where the equity investment at risk is not sufficient for the entity tofinance its activities without subordinated financial support from otherparties.  The Interpretation applies toVIEs created after January 31, 2003 and to VIEs in which the Company acquiresan interest after that date.  EffectiveJuly 1, 2003, it also applies to VIEs in which the Company acquired an interestbefore February 1, 2003. The Company does not expect that the adoption of InterpretationNo. 46 will have a material impact on the financial statements.

#### ** **

#### **Segment Information**

The Company’s only reportable segment is Shopping Centers.  This segment includes the operation andmanagement of shopping center properties, and revenues are derived primarilyfrom rents and services to tenants. These properties are managed separately from the other property typesowned by the Company because they require different operating strategies andmanagement expertise.

Segment operating results are measured and assessedbased on a performance measure known as Funds from Operations (“FFO”).  FFO is defined by the National Associationof Real Estate Investment Trusts, Inc. (“NAREIT”) as net earnings (computed inaccordance with accounting principles generally accepted in the United Statesof America), excluding cumulative effects of changes in accounting principles,extraordinary items and gains or losses from sales of operating properties,plus depreciation and amortization and after adjustments to recordunconsolidated partnerships and joint ventures on the same basis.  FFO does not represent cash flows fromoperations as defined by accounting principles generally accepted in the UnitedStates of America.  FFO is notindicative that cash flows are adequate to fund all cash needs and should not beconsidered as an alternative to cash flows as a measure of liquidity.  The Company’s FFO may not be comparable tothe FFO of other REIT’s if they do not define similarly entitled items exactlyas the Company defines them or if they interpret the NAREIT definitiondifferently.

 

7

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Operating results for the segments are summarized as follows for thethree-month periods ended March 31, 2003 and March 31, 2002:

 
|                                                                               |   | **Three months ended March  31,** |           |
|------------------------------------------------------------------------------------|--------|-----------------------------------|----------------|
|                                                                               |   | **2003**                          |           | **2002** |   |
|                                                                               |   | **Shopping  Centers**             |           | **All  Other** |   | **Total** |   | **Shopping  Centers** |   | **All  Other** |   | **Total** |   |
| Revenues                                                                           |   | **$**                             | **18,678,671** | ** ** | **593,185** | ** ** | **19,271,856** |   | 15,338,670 |   | 556,878 |   | 15,895,548 |   |
|                                                                               |   |                              |           |   |   |   |   |   |   |   |   |   |   |
| Expenses,  exclusive of depreciation and amortization of property and improvements |   | **9,940,563**                     | ** **     | **239,572** | ** ** | **10,180,135** |   | 8,138,186 |   | 208,281 |   | 8,346,467 |   |
| Minority  Interest                                                                 |   | **1,001,959**                     | ** **     | **21,529** | ** ** | **1,023,488** |   | 846,247 |   | 18,225 |   | 864,472 |   |
| Gain  on sale of land                                                              |   | **—**                        | ** **     | **14,320** | ** ** | **14,320** |   | — |   | — |   | — |   |
| FFO                                                                                |   | **$**                             | **7,736,149**  | ** ** | **346,404** | ** ** | **8,082,553** |   | 6,354,237 |   | 330,372 |   | 6,684,609 |   |

 

A reconciliation of FFO reported above to net earnings in the financialstatements is summarized as follows:

 
|                                                        |   | **Three months ended March  31,** |          |
|-------------------------------------------------------------|--------|-----------------------------------|---------------|
|                                                        |   | **2003**                          |          | **2002** |   |
| Operating results:                                          |   |                              |          |   |   |
| FFO                                                         |   | **$**                             | **8,082,553** |   | 6,684,609 |   |
| Depreciation and  amortization of property and improvements |   | **2,798,387**                     |          | 2,906,469 |   |
|                                                        |   |                              |          |   |   |
| Net earnings                                                |   | **$**                             | **5,284,166** |   | 3,778,140 |   |

 

8

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**Earnings Per Share**

Basic earnings per share (“EPS”) is computed by dividing earningsavailable to common shareholders by the weighted average number of commonshares outstanding.  Diluted EPS iscomputed after adjusting the numerator and denominator of the basic EPScomputation for the effects of all dilutive potential common shares outstandingduring the period.  The dilutive effectsof convertible securities are computed using the “if-converted” method and thedilutive effects of options, warrants and their equivalents (including fixedawards and nonvested shares issued under share-based compensation plans) arecomputed using the “treasury stock” method.

 

The following table sets forth information relating to the computationof basic and diluted earnings per share:

 
|                                                                                |   | **Three  months ended March 31,** |          |
|-------------------------------------------------------------------------------------|--------|-----------------------------------|---------------|
|                                                                                |   | **2003**                          |          | **2002** |   |
|                                                                                |   |                              |          |   |   |
| Numerator:                                                                          |   |                              |          |   |   |
| Net  earnings                                                                       |   | **$**                             | **5,284,166** | ** ** | 3,778,140 |   |
| Dividends  on unvested restricted share awards                                      |   | **(66,498**                       | **)**         | (62,519 | ) |
| Numerator  for basic earnings per share-earnings available to common shareholders   |   | **5,217,668**                     | ** **    | 3,715,621 |   |
| Interest  on subordinated debentures                                                |   | **19,874**                        | ** **    | 90,430 |   |
| Numerator  for diluted earnings per share-earnings available to common shareholders |   | **$**                             | **5,237,542** | ** ** | 3,806,051 |   |
|                                                                                |   |                              | ** **    |   |   |
| Denominator:(1)                                                                     |   |                              | ** **    |   |   |
| Denominator  for basic earnings per share-weighted average shares outstanding       |   | **17,853,035**                    | ** **    | 15,427,779 |   |
| Effect  of dilutive securities:                                                     |   |                              | ** **    |   |   |
| Debentures                                                                          |   | **64,604**                        | ** **    | 445,291 |   |
| Unvested  portion of restricted share awards and share options                      |   | **97,546**                        | ** **    | 114,720 |   |
| Denominator  for diluted earnings per share-adjusted weighted average shares        |   | **18,015,185**                    | ** **    | 15,987,790 |   |

 

----

*(1)Effects of potentially dilutive securities are presented only in periods inwhich they are dilutive.  At March 31,2003, the convertible subordinated debentures, if converted, would produce anadditional 58,000 shares and the Units, if exchanged, would produce anadditional 3,020,776 shares.*

## ** **

**Convertible Subordinated Debentures**

Effective September 11, 1993, the Company issued $60,000,000 ofconvertible subordinated debentures at 7.625% scheduled to mature in September2003.  Interest on the debentures ispaid semi-annually on March 15 and September 15.  The debentures are convertible, unless previously redeemed, atany time prior to maturity into common shares of beneficial interest of theCompany at $10.50 per share, subject to certain adjustments. The balance of thedebentures, at March 31, 2003, of $609,000, if fully converted, would producean additional 58,000 shares.  Thedebentures are redeemable by the Company at any time at 100% of the principalamount thereof, together with accrued interest.  The debentures are subordinate to all mortgages payable.

** **

**Sale of Common Shares of Beneficial Interest**

On March 12, 2002, the Company completed thepublic offering and sale of 2,000,000 common shares of beneficial interest at aprice of $15.10 per share and on April 4, 2002, an additional 300,000 shareswere sold at the same price upon exercise of the underwriters’ over-allotmentoption.  The net proceeds of the salesof approximately $32,836,000 were used to repay two mortgage loans and pay downthe unsecured line of credit.

 

9

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**Share-BasedCompensation Plans**

Through 2002, the Company applied the intrinsic value method ofaccounting prescribed by APB Opinion No. 25, “Accounting for Stock Issued toEmployees,” and related interpretations to account for share-based compensationplans.  Under this method, compensationexpense was recorded for awards of stock or options to employees only if the marketprice of the stock on the grant date exceeded the amount the employee wasrequired to pay to acquire the stock. Effective January 1, 2003, the Company adopted the fair-value basedmethod of accounting for share-based compensation costs.  The Company elected to use the prospectivemethod of transition to the fair-value method provided in SFAS No. 148 and,accordingly, the method is being applied for all employee stock compensationawards granted, modified or settled on or after January 1, 2003.

The following table summarizes pro forma effects onnet earnings and net earnings per share if the fair-value method had been usedto account for all stock-based compensation awards made since 1995:

 
|                                                                                                              |   | **Three months ended March  31,** |          |
|-------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------------|
|                                                                                                              |   | **2003**                          |          | **2002** |   |
|                                                                                                              |   |                              |          |   |   |
| Net earnings, as reported                                                                                         |   | **$**                             | **5,284,166** |   | 3,778,140 |   |
| Add: Share-based employee  compensation expense included in reported net earnings                                 |   | **105,839**                       |          | 61,016 |   |
| Deduct: Total share-based  employee compensation expense determined under fair-value based method for  all awards |   | **154,908**                       | ** **    | 110,085 | ** ** |
|                                                                                                              |   |                              |          |   |   |
| Pro forma net earnings                                                                                            |   | **$**                             | **5,235,097** | ** ** | 3,729,071 | ** ** |
|                                                                                                              |   |                              |          |   |   |
| Earnings per share:                                                                                               |   |                              |          |   |   |
| Basic:                                                                                                            |   |                              |          |   |   |
| As reported                                                                                                       |   | **$**                             | **0.29**      |   | 0.24 |   |
| Pro forma                                                                                                         |   | **$**                             | **0.29**      | ** ** | 0.24 | ** ** |
| Diluted:                                                                                                          |   |                              |          |   |   |
| As reported                                                                                                       |   | **$**                             | **0.29**      |   | 0.24 |   |
| Pro forma                                                                                                         |   | **$**                             | **0.29**      | ** ** | 0.23 | ** ** |

 

10

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**Part I.FINANCIAL INFORMATION**

**ITEM 2.**

 

**MID-ATLANTIC REALTY TRUST**

**Management’s Discussion And AnalysisOf Financial Condition And Results Of Operations**

 

The following discussion and analysis of operating results covers eachof the Company’s business segments for the three-month periods ended March 31,2003 and March 31, 2002.

Management believes that a segment analysis providesthe most effective means of understanding the business.  Segment data is reported using the accountingpolicies followed by the Company for internal reporting to management.  These policies are the same as those usedfor external reporting.

 

**PortfolioChanges**

The operating results of shopping center properties are affectedsignificantly by acquisition and disposition transactions and openings of newlydeveloped or redeveloped properties. Information related to shopping center acquisitions anddevelopments/redevelopments completed during 2003 and 2002 is summarized in thefollowing table:

 
| **Property**                           |   | **Transaction or  Opening Date** |
|----------------------------------------|--------|----------------------------------|
|                                   |   |                             |
| Acquisition                            |   |                             |
|                                   |   |                             |
| Greenbrier Shopping Center             |   | August 2002                      |
|                                   |   |                             |
| Development/Redevelopment              |   |                             |
|                                   |   |                             |
| Perry Hall Super Fresh Shopping Center |   | April 2002                       |

 

**Comparisonof three months ended March 31, 2003 to three months ended March 31, 2002:**

 

**ShoppingCenter Properties**

 

Operating results are summarized as follows (in thousands):

 
|                                                                         |   | **Three months ended March  31,** |       |
|------------------------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                                         |   | **2003**                          |       | **2002** |   |
| Revenues                                                                     |   | **$**                             | **18,679** |   | 15,339 |   |
| Operating and interest  expenses, exclusive of depreciation and amortization |   | **9,941**                         |       | 8,138 |   |
| Depreciation and  amortization                                               |   | **2,705**                         |       | 2,789 |   |
| Minority interest                                                            |   | **1,002**                         |       | 846 |   |
| Earnings from operations                                                     |   | **$**                             | **5,031**  |   | 3,566 |   |

 

Revenues from shoppingcenters increased by $3,340,000 in 2003 due primarily to the operations of theproperty acquired and the development/redevelopment project opened in 2002($1,037,000), the impact of recognizing rents due from tenants under leases ona straight-line basis ($413,000), a significant increase in recovery incomerelated to increased snowfall ($1,081,000) and other net rental and occupancychanges ($809,000).

Operating and interest expenses (exclusive ofdepreciation and amortization) for shopping center properties increased by$1,803,000 in 2003.  Operating expensesincreased by $1,534,000 due primarily to the operations of the propertyacquired and the development/redevelopment project opened in 2002 ($221,000)and a significant increase in expense related to increased snowfall($1,163,000).  Interest expense increased$269,000 due primarily to the property acquired and thedevelopment/redevelopment property opened in 2002 ($255,000), partially offsetby lower rates on variable rate debt and the effects of debt refinancings andretirements.  Depreciation and amortizationexpense decreased by $84,000 in 2003 due primarily to the effects of fullydepreciated assets ($328,000), partially offset by the acquisition anddevelopment/redevelopment project referred to above ($176,000).

 

11

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**AllOther Properties**

 

Operating results are summarized as follows (in thousands):

 
|                                                                         |   | **Three months ended March  31,** |    |
|------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                         |   | **2003**                          |    | **2002** |   |
| Revenues                                                                     |   | **$**                             | **593** |   | 557 |   |
| Operating and interest  expenses, exclusive of depreciation and amortization |   | **239**                           |    | 208 |   |
| Depreciation and  amortization                                               |   | **93**                            |    | 118 |   |
| Minority interest                                                            |   | **22**                            |    | 18 |   |
| Gain on sale of land                                                         |   | **14**                            |    | — |   |
| Earnings from operations                                                     |   | **$**                             | **253** |   | 213 |   |

 

There were no significantchanges in the operating results of all other properties during the period.

 

**Fundsfrom Operations**

The Company uses a supplemental performance measure along with netearnings to report its operating results. This measure is referred to as Fundsfrom Operations (“FFO”). FFO is defined by the National Association of RealEstate Investment Trusts, Inc. (“NAREIT”) as net earnings (computed inaccordance with accounting principles generally accepted in the United Statesof America), excluding cumulative effects of changes in accounting principles,extraordinary items and gains or losses on sales of properties, plus depreciationand amortization and after adjustments to record unconsolidated partnershipsand joint ventures on the same basis. FFO does not represent cash flows fromoperations as defined by accounting principles generally accepted in the UnitedStates of America.  FFO is notindicative that cash flows are adequate to fund all cash needs and should notbe considered as an alternative to cash flows as a measure of liquidity.  The Company’s FFO may not be comparable tothe FFO of other REIT’s if they do not define similarly entitled items exactlyas the Company defines them or if they interpret the NAREIT definitiondifferently.

FFO was $8,082,000 and $6,685,000 for the three-monthsended March 31, 2003 and 2002, respectively. The reasons for significant changes in revenues and expenses comprisingFFO by segment are described above.

###### ** **

###### **Liquidityand Capital Resources**

On March 12, 2002, the Company completed thepublic offering and sale of 2,000,000 common shares of beneficial interest at aprice of $15.10 per share and on April 4, 2002, an additional 300,000 shareswere sold at the same price upon exercise of the underwriters’ over-allotmentoption.  The net proceeds of the salesof approximately $32,836,000 were used to repay two mortgage loans and pay downthe unsecured line of credit.

The Company had cash and cash equivalents of$23,279,411 at March 31, 2003.  Includedin the balance is $18,500,000 for the repayment of the Harford Mall mortgage,which was paid in full on April 1, 2003.

Net cash provided by operating activities was$10,030,000 and $8,813,000 for the three-months ended March 31, 2003 and 2002,respectively.  The change in cashprovided by operating activities was due in part to the factors discussed abovein the comparisons of operating results. The level of net cash provided by operating activities is also affectedby the timing of receipt of revenues and the payment of operating and interestexpenses.

Net cash used by investing activities decreased by$795,000 to $3,914,000 in 2003 from $4,709,000 in 2002.  The decrease was due primarily to lowerlevels of development/redevelopment activity in 2003.

Net cash provided by financing activities was$13,447,000 in 2003 and net cash used by financing activities was $1,137,000 in2002.  The change in cash flows fromfinancing activities in 2003 is due primarily to net debt borrowings of$20,082,000 in 2003 as compared to net repayments of $25,829,000 in 2002,partially offset by an increase in deferred financing costs ($1,053,000)primarily related to the renegotiation of the terms of the unsecured line ofcredit, the net proceeds from the sale of common shares of beneficial interest($28,583,000) in 2002 and an increase in dividends paid ($1,103,000) due toincreases in the number of common shares outstanding and the dividend pershare.

 

12

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**Cautionary Disclosure Relating to Forward LookingStatements**

Statements made in this document include forward looking statementsunder the federal securities laws. Statements that are not historical in nature, including the words“anticipate,” “estimate,” “should,” “expect,” “believe,” “intend” and similarexpressions are intended to identify forward looking statements.  While these statements reflect the Company’sgood faith beliefs based on current expectations, estimates and projectionsabout (among other things) the industry and the markets in which the Companyoperates, they are not guarantees of future performance, involve known andunknown risks and uncertainties that could cause actual results to differmaterially from those in the forward looking statements, and should not berelied upon as predictions of future events. Factors which could impact future results include (among other things)general economic conditions, local real estate conditions, oversupply ofavailable space, financial condition of tenants, timely ability to lease orre-lease space upon favorable economic terms, agreements with anchor tenants,interest rates, availability of financing, competitive factors and similarconsiderations.  The Company disclaimsany obligation to publicly update or revise any forward looking statement,whether as a result of new information, future events or otherwise.  For a discussion of risks and uncertaintiesthat could cause actual results to differ materially from those contained inthe forward looking statements, see “Real Estate Investment Risks” filed asExhibit 99.1 to the Company’s Form 10-K for the year ended December 31, 2002.

 

**ITEM 3**.  **Quantitative andQualitative Disclosures About Market Risk**

There have been no materialchanges in the Company’s market risk information since December 31, 2002,except that variable rate debt outstanding increased from $49,347,000 atDecember 31, 2002 to $70,351,000 at March 31, 2003.  The March 31, 2003 balanceincludes an $18,500,000 draw on the unsecured line of credit for the repaymentof the Harford Mall mortgage, which was paid in full on April 1, 2003.

 

13

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**Part I.FINANCIAL INFORMATION**

**Item 4.**

 

**MID-ATLANTIC REALTY TRUST**

**Controls and Procedures**

 

(a)  **Evaluationof disclosure controls and procedures**.

Within the 90 days prior tothe date of this report, the Company carried out an evaluation, under thesupervision and with the participation of the Company’s management, includingthe Company’s President and Chief Executive Officer along with the Controller,of the effectiveness of the design and operation of the Company’s “disclosurecontrols and procedures” (“Disclosure Controls”) and its “internal controls andprocedures for financial reporting” (“Internal Controls”).

DisclosureControls are procedures that are designed with the objective of ensuring thatinformation required to be disclosed in our reports filed under the SecuritiesExchange Act of 1934 (“Exchange Act”), such as this quarterly report, isrecorded, processed, summarized and reported within the time periods specifiedin the Securities and Exchange Commission’s (“SEC”) rules and forms.  Disclosure Controls are also designed withthe objective of ensuring that such information is accumulated and communicatedto our management, including the President and Chief Executive Officer andController, as appropriate to allow timely decisions regarding requireddisclosure.  Internal Controls areprocedures which are designed with the objective of providing reasonableassurance that (1) our transactions are properly authorized; (2) our assets aresafeguarded against unauthorized or improper use; and (3) our transactions areproperly recorded and reported, all to permit the preparation of our financialstatements in conformity with accounting principles generally accepted in theUnited States of America.

 

(b)  **CEO andCFO certifications**.

Appearing immediatelyfollowing the Signatures section of this quarterly report there are“Certifications” of the President and Chief Executive Officer and theController.  The Certifications arerequired in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.  This section of the quarterly report whichyou are currently reading is the information concerning the Evaluation referredto in the above statement and this information should be read in conjunctionwith the Certifications for a more complete understanding of the topicspresented.

 

(c)  **Limitationsof the effectiveness of controls**.

The Company’s management,including the President and Chief Executive Officer and Controller, does notexpect that our Disclosure Controls or our Internal Controls will prevent allerror and all fraud.  A control system,no matter how well conceived and operated, can provide only reasonable, notabsolute, assurance that the objectives of the control system are met.  Further, the design of a control system mustreflect the fact that there are resource constraints, and the benefits ofcontrols must be considered relative to their costs.  Because of the inherent limitations in all control systems, noevaluation of controls can provide absolute assurance that all control issues andinstances of fraud, if any, within the Company have been detected.  These inherent limitations include therealities that judgments in decision-making can be faulty, and that breakdownscan occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts ofsome persons, by collusion of two or more people, or by management override ofthe control.  The design of any systemof controls also is based in part upon certain assumptions about the likelihoodof future events, and there can be no assurance that any design will succeed inachieving its stated goals under all potential future conditions; over time,control may become inadequate because of changes in conditions, or the degreeof compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in acost-effective control system, misstatements due to error or fraud may occurand not be detected.

 

(d)  **Conclusions**.

Based upon the Evaluation,the Company’s President and Chief Executive Officer along with the Controllerconcluded that the Company’s Disclosure Controls are effective in timelyalerting them to material information relating to the Company (including itsconsolidated subsidiaries) required to be included in the Company’s periodicSEC filings, and that our Internal Controls are effective to provide reasonableassurance that our financial statements are fairly presented in conformity withaccounting principles generally accepted in the United States of America.

 

(e)**  Changes inInternal Controls**.

There were no significantchanges in the Company’s Internal Controls or in other factors that couldsignificantly affect those Internal Controls, including any corrective actionswith regard to significant deficiencies and material weaknesses within the 90days prior to the date of this report.

 

14

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**Part II. OTHER INFORMATION**

 

**MID-ATLANTIC REALTY TRUST**

**Other Information**

 

###### **Item 1.  Legal Proceedings**

In the ordinary course of business, the Company isinvolved in legal proceedings.  However,there are no material legal proceedings pending against the Company.

 

#### **Item 2.  Changes in Securities and Use of Proceeds** - None

#### ** **

#### **Item 3.  Defaults upon Senior Securities**- None

 

**Item4.  Submission of Matters to a Vote ofSecurity Holders****-** None

 

 

15

----

 

**Part II.OTHER INFORMATION**

###### **Item5.  Other Information - SelectedFinancial Data**

 

The following table sets forth summary financial data, which has beenprepared by the Company without audit. Management believes the following data should be used as a supplement tothe historical statements of operations. The data should be read in conjunction with the historical financialstatements and the notes thereto.

** **

**MID - ATLANTIC REALTY TRUST**

**Selected Financial Data**

**(In thousands, except share data and per share data)**

 
|                                                |   | **Three months ended March 31,** |             |
|-----------------------------------------------------|--------|----------------------------------|------------------|
|                                                |   | **2003**                         |             | **2002** |   |
|                                                |   |                             |             |   |   |
| Revenues                                            |   | **$**                            | ** 19,272** | ** ** | 15,896 |   |
|                                                |   |                             |             |   |   |   |
| Net earnings                                        |   | **$**                            | ** 5,284**  | ** ** | 3,778 |   |
|                                                |   |                             |             |   |   |   |
| Net earnings per share -  basic and diluted         |   | **$**                            | ** 0.29**   | ** ** | 0.24 |   |
|                                                |   |                             |             |   |   |   |
| Total assets                                        |   | **$**                            | **444,975**      | ** ** | 392,000 |   |
|                                                |   |                             |             |   |   |
| Indebtedness -                                      |   |                             | ** **       |   |   |
| Total mortgages,  convertible debentures,           |   |                             | ** **       |   |   |
| construction loans and  notes payable               |   | **$**                            | **259,762**      | ** ** | 215,852 |   |
|                                                |   |                             |             |   |   |
| Net cash flow:                                      |   |                             | ** **       |   |   |
| Provided by operating  activities                   |   | **$**                            | **10,030**       | ** ** | 8,813 |   |
| Used by investing  activities                       |   | **$**                            | **(3,914**       | **)** | (4,709 | ) |
| Provided (used) by  financing activities            |   | **$**                            | **13,447**       | ** ** | (1,137 | ) |
|                                                |   |                             |             |   |   |   |
| Cash dividends paid per  share                      |   | **$**                            | **0.310**        | ** ** | 0.295 |   |
|                                                |   |                             |             |   |   |
| Weighted average number  of shares outstanding: EPS |   |                             | ** **       |   |   |
| Basic                                               |   | **17,853,035**                   | ** **       | 15,427,779 |   |
| Diluted                                             |   | **18,015,185**                   | ** **       | 15,987,790 |   |
|                                                |   |                             | ** **       |   |   |
| **RECONCILIATION  OF NET EARNINGS TO FFO****(1)**   |   |                             | ** **       |   |   |
|                                                |   |                             |             |   |   |
| Net earnings                                        |   | **$**                            | **5,284**        | ** ** | 3,778 |   |
| Depreciation                                        |   | **2,798**                        | ** **       | 2,907 |   |
| FFO                                                 |   | **$**                            | **8,082**        | ** ** | 6,685 |   |
|                                                     |        |                                  |                  |  |  |  |  |

 

----

(1) The Company believes that Funds from Operations(“FFO”) provides relevant and meaningful information about its operatingperformance that is necessary, along with net earnings, for an understanding ofits operating results.  Funds from operationsis defined by the National Association of Real Estate Investment Trusts, Inc.(“NAREIT”) as net earnings (computed in accordance with accounting principlesgenerally accepted in the United States of America), excluding cumulativeeffects of changes in accounting principles, extraordinary items and gains orlosses on sales of properties, plus depreciation and amortization and afteradjustments to record unconsolidated partnerships and joint ventures on thesame basis.  FFO does not represent cashflows from operations as defined by accounting principles generally accepted inthe United States of America.  FFO isnot indicative that cash flows are adequate to fund all cash needs and shouldnot be considered as an alternative to cash flows as a measure of liquidity.The Company’s FFO may not be comparable to the FFO of other REIT’s if they donot define similarly entitled items exactly as the Company defines them or ifthey interpret the NAREIT definition differently.

 

16

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**Part II.OTHER INFORMATION**

###### **Item 6.**

 

**MID-ATLANTIC REALTY TRUST**

**Exhibits and Reports on Form 8-K**

 

(a)          Exhibit No.

 

3(a)                                        Declarationof Trust dated June 29, 1993 (incorporated by reference to Exhibit 3(a) toMART’s Registration Statement on Form S-11, File No. 33-66386).

3(b)                                       By-laws(incorporated by reference to Exhibit 3(b) to MART’s Registration Statement onForm S-11, File No. 33-66386).

3(c)                                        Amendmentto Declaration of Trust dated August 4, 1998 (incorporated by reference toExhibit 3(c) to MART’s Annual Report on Form 10-K for the year ended December31, 1998).

4(a)                                        Specimencertificate for Common Shares of Beneficial Interest (incorporated by referenceto Exhibit 4(a) to MART’s Registration Statement on Form S-11, File No.33-66386).

4(b)                                       TrustIndenture dated September 8, 1993, between MART and Security Trust Company,N.A. (incorporated by reference to Exhibit 4(b) to MART’s RegistrationStatement on Form S-11, File No. 33-66386).

10(a)                                  Mid-AtlanticRealty Trust 1993 Omnibus Share Plan, as amended through November 14, 1997 (incorporatedby reference to Exhibit 10(a) to MART’s Annual Report on Form 10-K for the yearended December 31, 1997).

10(b)                                 Mid-AtlanticRealty Trust 1995 Stock Option Plan (incorporated by reference to MART’sRegistration Statement on Form S-8, File No. 333-12161).

10(c)                                  EmploymentAgreement between BTR Realty, Inc., and F. Patrick Hughes (incorporated byreference to Exhibit 10(b) to MART’s Registration Statement on Form S-11, File No. 33-66386).

10(d)                                 EmploymentAgreement between BTR Realty, Inc., and Paul F. Robinson (incorporated byreference to Exhibit 10(c) to MART’s Registration Statement on Form S-11, FileNo. 33-66386).

10(e)                                  Amendmentdated December 1, 1995 to Employment Agreement between MART and F. PatrickHughes and MART and Paul F. Robinson (incorporated by reference to Exhibit10(e) to MART’s Annual Report on Form 10-K for the year ended December 31,1995).

10(f)                                    CommitmentLetter from First National Bank of Md. For Line of Credit to MART (incorporatedby reference to Exhibit 10(d) to MART’s Registration Statement on Form S-11,File No.33-66386).

10(f)(1)                      FinancingAgreement dated April 23, 1999 between MART and the Named Banks (incorporatedby reference to Exhibit 10(l) to MART’s Quarterly Report on Form 10-Q for thequarter ended March 31, 1999).

10(g)                                 Agreementfor Contribution of Interests dated April 1, 1997, among MART and theContributors named therein (incorporated by reference to Exhibit (c) 1 to Form8-K filed July 15, 1997).

10(h)                                 Agreementof Limited Partnership of MART Limited Partnership dated as of June 30, 1997(incorporated by reference to Exhibit (c) 2 to Form 8-K filed July 15, 1997).

10(i)                                     PartnershipPurchase and Sale Agreement among BTR Gateway, Inc., MART, and PrentissProperties Acquisition, L.P. (incorporated by reference to Exhibit (b) 1 toForm 8-K filed September 30, 1997).

10(j)                                     Mid-AtlanticRealty Trust Restricted Share Plan, adopted on November 14, 1997 (incorporatedby reference to Exhibit 10(j) to MART’s Annual Report on Form 10-K for the yearended December 31, 1997).

10(k)                                  Mid-AtlanticRealty Trust Non-Employee Trustee Deferred Compensation Plan, adopted onNovember 14, 1997 (incorporated by reference to Exhibit 10(k) to MART’s AnnualReport on Form 10-K for the year ended December 31, 1997).

10(l)                                     Financingagreement dated April 23,1999 with named banks (incorporated by reference toExhibit 10.1 to MART’s quarterly report on Form 10-Q for the quarter endedMarch 31, 1999).

 

(b)         Form 8-K filed April 30, 2003reporting selected financial information under Items 7 and 9.

 

17

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**MID-ATLANTIC REALTY TRUST AND SUBSIDIARIES**

##### **SIGNATURES**

 

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

 

 
|   | **MID-ATLANTIC  REALTY TRUST AND SUBSIDIARIES** |
|--------|-------------------------------------------------|
|   | **(Registrant)**                                |
|   |                                            |
|   |                                            |
| Date:  | 4/30/03                                         |   | /s/ F. Patrick Hughes |   |
|   |                                            | F. Patrick Hughes |
|   |                                            | President and Chief Executive Officer |
|   |                                            |   |
|   |                                            |
| Date:  | 4/30/03                                         |   | /s/ Deborah R. Cheek |   |
|   |                                            | Deborah R. Cheek |
|   |                                            | Controller |
|        |                                                 |  |  |  |  |

 

18

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##### **MID-ATLANTICREALTY TRUST AND SUBSIDIARIES**

##### **CERTIFICATIONS**

 

I, F. Patrick Hughes, President and ChiefExecutive Officer of Mid-Atlantic Realty Trust, certify that:

 

1.               I have reviewed this quarterly report onForm 10-Q of Mid-Atlantic Realty Trust;

 

2.               Based on myknowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this quarterly report;

 

3.               Based on myknowledge, the financial statements, and other financial information includedin this quarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this quarterly report;

 

4.               The registrant’s other certifying officerand I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and we have:

 

a)              designed suchdisclosure controls and procedures to ensure that material information relatingto the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which thisquarterly report is being prepared;

 

b)             evaluated theeffectiveness of the registrant’s disclosure controls and procedures as of adate within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

c)              presented in thisquarterly report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

 

5.               The registrant’s other certifying officerand I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of registrant’s board of directors (or personsperforming the equivalent function):

 

a)              all significantdeficiencies in the design or operation of internal controls which couldadversely affect the registrant’s ability to record, process, summarize andreport financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b)             any fraud, whether ornot material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and

 

6.               The registrant’sother certifying officer and I have indicated in this quarterly report whetheror not there were significant changes in internal controls or in other factorsthat could significantly affect internal controls subsequent to the date of ourmost recent evaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

 

 
| Date:  | 04/30/03                               |   | /s/ F. Patrick Hughes |   |
|--------|----------------------------------------|--------|-----------------------|--------|
|   | F. Patrick Hughes                      |
|   | President and Chief  Executive Officer |

 

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##### ** **

I, Deborah R. Cheek, Controller ofMid-Atlantic Realty Trust, certify that

 

1.               I have reviewed this quarterly report onForm 10-Q of Mid-Atlantic Realty Trust;

 

2.               Based on myknowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this quarterly report;

 

3.               Based on myknowledge, the financial statements, and other financial information includedin this quarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this quarterly report;

 

4.               The registrant’sother certifying officer and I are responsible for establishing and maintainingdisclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and15d-14) for the registrant and we have:

 

a)              designed such disclosurecontrols and procedures to ensure that material information relating to theregistrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which thisquarterly report is being prepared;

 

b)             evaluated theeffectiveness of the registrant’s disclosure controls and procedures as of adate within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

c)              presented in thisquarterly report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

 

5.               The registrant’s other certifying officerand I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of registrant’s board of directors (or personsperforming the equivalent function):

 

a)              all significantdeficiencies in the design or operation of internal controls which couldadversely affect the registrant’s ability to record, process, summarize andreport financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b)             any fraud, whether ornot material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and

 

6.               The registrant’sother certifying officer and I have indicated in this quarterly report whetheror not there were significant changes in internal controls or in other factorsthat could significantly affect internal controls subsequent to the date of ourmost recent evaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

 

 
| Date:  | 04/30/03         |   | /s/ Deborah R. Cheek |   |
|--------|------------------|--------|----------------------|--------|
|   | Deborah R. Cheek |
|   | Controller       |

 

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** **

**EXHIBIT INDEX**

 

 
| Exhibit No. |   | Description                                                                                                                                                                                                                                               |   |
|-------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|        |   |                                                                                                                                                                                                                                                      |
| 3(a)        |   | Declaration of Trust dated June 29, 1993  (incorporated by reference to Exhibit 3(a) to MART’s Registration Statement  on Form S-11, File No. 33-66386).                                                                                             |
| 3(b)        |   | By-laws (incorporated by reference to Exhibit 3(b)  to MART’s Registration Statement on Form S-11, File No. 33-66386).                                                                                                                               |
| 3(c)        |   | Amendment to Declaration of Trust dated August 4,  1998 (incorporated by reference to Exhibit 3(c) to MART’s Annual Report on  Form 10-K for the year ended December 31, 1998).                                                                      |
| 4(a)        |   | Specimen certificate for Common Shares of Beneficial  Interest (incorporated by reference to Exhibit 4(a) to MART’s Registration  Statement on Form S-11, File No. 33-66386).                                                                        |
| 4(b)        |   | Trust Indenture dated September 8, 1993, between  MART and Security Trust Company, N.A. (incorporated by reference to Exhibit  4(b) to MART’s Registration Statement on Form S-11, File No. 33-66386).                                               |
| 10(a)       |   | Mid-Atlantic Realty Trust 1993 Omnibus Share Plan,  as amended through November 14, 1997 (incorporated by reference to Exhibit  10(a) to MART’s Annual Report on Form 10-K for the year ended December 31,  1997).                                   |
| 10(b)       |   | Mid-Atlantic Realty Trust 1995 Stock Option Plan  (incorporated by reference to MART’s Registration Statement on Form S-8, File  No. 333-12161).                                                                                                     |
| 10(c)       |   | Employment Agreement between BTR Realty, Inc., and  F. Patrick Hughes (incorporated by reference to Exhibit 10(b) to MART’s  Registration Statement on Form S-11, File  No. 33-66386).                                                          |
| 10(d)       |   | Employment Agreement between BTR Realty, Inc., and  Paul F. Robinson (incorporated by reference to Exhibit 10(c) to MART’s  Registration Statement on Form S-11, File No. 33-66386).                                                                 |
| 10(e)       |   | Amendment dated December 1, 1995 to Employment  Agreement between MART and F. Patrick Hughes and MART and Paul F. Robinson  (incorporated by reference to Exhibit 10(e) to MART’s Annual Report on Form  10-K for the year ended December 31, 1995). |
| 10(f)       |   | Commitment Letter from First National Bank of Md.  For Line of Credit to MART (incorporated by reference to Exhibit 10(d) to  MART’s Registration Statement on Form S-11, File No.33-66386).                                                         |
| 10(f)(1)    |   | Financing Agreement dated April 23, 1999 between  MART and the Named Banks (incorporated by reference to Exhibit 10(l) to  MART’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999).                                               |
| 10(g)       |   | Agreement for Contribution of Interests dated April  1, 1997, among MART and the Contributors named therein (incorporated by  reference to Exhibit (c) 1 to Form 8-K filed July 15, 1997).                                                                |
| 10(h)       |   | Agreement of Limited Partnership of MART Limited  Partnership dated as of June 30, 1997 (incorporated by reference to Exhibit  (c) 2 to Form 8-K filed July 15, 1997).                                                                                    |
| 10(i)       |   | Partnership Purchase and Sale Agreement among BTR  Gateway, Inc., MART, and Prentiss Properties Acquisition, L.P. (incorporated  by reference to Exhibit (b) 1 to Form 8-K filed September 30, 1997).                                                     |
| 10(j)       |   | Mid-Atlantic Realty Trust Restricted Share Plan,  adopted on November 14, 1997 (incorporated by reference to Exhibit 10(j) to  MART’s Annual Report on Form 10-K for the year ended December 31, 1997).                                              |
| 10(k)       |   | Mid-Atlantic Realty Trust Non-Employee Trustee  Deferred Compensation Plan, adopted on November 14, 1997 (incorporated by  reference to Exhibit 10(k) to MART’s Annual Report on Form 10-K for the year  ended December 31, 1997).                   |
| 10(l)       |   | Financing agreement dated April 23,1999 with named  banks (incorporated by reference to Exhibit 10.1 to MART’s quarterly report  on Form 10-Q for the quarter ended March 31, 1999).                                                                 |

 

 

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