**FORM 10-Q**

** **

**QUARTERLY REPORTUNDER SECTION 13 OR 15 (d) OF**

**THE SECURITIESEXCHANGE ACT OF 1934**

** **

**UNITED STATES**

**SECURITIESAND 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 June 30, 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 markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15 (d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

ý      Yes      o      No

 

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

 

ý      Yes      o      No

 

As of August 4, 2003,18,082,582 common shares of beneficial interest of Mid-Atlantic Realty Trustwere outstanding.

 

 

----

 

**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 TRUSTAND SUBSIDIARIES**

**Consolidated Balance Sheets**

 
|                                                                                                                                                  |   | **As of**              |            |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------------|
|                                                                                                                                                  |   | **June 30, 2003** |            | **December 31,  2002** |   |
|                                                                                                                                                  |   | **(UNAUDITED)**        |            |   |   |
| **ASSETS**                                                                                                                                            |   |                   |            |   |   |
|                                                                                                                                                  |   |                   |            |   |   |
| **Properties:**                                                                                                                                       |   |                   |            |   |   |
| Operating properties                                                                                                                                  |   | **$**                  | **483,448,087** |   | 484,213,751 |   |
| Less accumulated  depreciation and amortization                                                                                                       |   | **94,210,938**         |            | 91,481,224 |   |
|                                                                                                                                                  |   | **389,237,149**        |            | 392,732,527 |   |
| Properties in  development                                                                                                                            |   | **17,544,170**         |            | 14,975,500 |   |
| Properties held for  development or sale                                                                                                              |   | **3,095,805**          |            | 3,288,171 |   |
|                                                                                                                                                  |   | **409,877,124**        |            | 410,996,198 |   |
|                                                                                                                                                  |   |                   |            |   |   |
| Cash and cash  equivalents                                                                                                                            |   | **4,154,426**          |            | 3,716,186 |   |
| Notes and accounts  receivable - tenants and other                                                                                                    |   | **4,754,790**          |            | 3,833,527 |   |
| Prepaid expenses and  deposits                                                                                                                        |   | **1,868,333**          |            | 3,497,749 |   |
| Deferred financing  costs, net                                                                                                                        |   | **2,875,734**          |            | 2,299,712 |   |
|                                                                                                                                                  |   | **$**                  | **423,530,407** |   | 424,343,372 |   |
|                                                                                                                                                  |   |                   |            |   |   |
| **LIABILITIES  AND SHAREHOLDERS’ EQUITY**                                                                                                        |   |                   |            |   |   |
|                                                                                                                                                  |   |                   |            |   |   |
| **Liabilities:**                                                                                                                                      |   |                   |            |   |   |
| Accounts payable and  accrued expenses                                                                                                                |   | **$**                  | **8,426,048**   |   | 8,891,268 |   |
| Notes payable                                                                                                                                         |   | **61,500,000**         |            | 25,500,000 |   |
| Construction loans  payable                                                                                                                           |   | **16,610,343**         |            | 20,414,330 |   |
| Mortgages payable                                                                                                                                     |   | **161,363,573**        |            | 193,157,288 |   |
| Convertible subordinated  debentures                                                                                                                  |   | **539,000**            |            | 959,000 |   |
| Deferred income                                                                                                                                       |   | **9,437**              |            | 9,437 |   |
|                                                                                                                                                  |   | **248,448,401**        |            | 248,931,323 |   |
|                                                                                                                                                  |   |                   |            |   |   |
| Minority interest in  consolidated joint ventures                                                                                                     |   | **32,165,210**         |            | 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, $.01 par value, authorized 100,000,000 shares, issued  and outstanding 18,082,217 and 17,971,818, respectively |   | **180,822**            |            | 179,718 |   |
| Additional paid-in  capital                                                                                                                           |   | **178,061,798**        |            | 177,257,630 |   |
| Distributions in excess  of accumulated earnings                                                                                                      |   | **(35,325,824**        | **)**           | (34,674,099 | ) |
|                                                                                                                                                  |   | **142,916,796**        |            | 142,763,249 |   |
|                                                                                                                                                  |   |                   |            |   |   |
|                                                                                                                                                  |   | **$**                  | **423,530,407** |   | 424,343,372 |   |

 

*Seeaccompanying notes to consolidated financial statements.*

 

3

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**MID-ATLANTIC REALTY TRUST AND SUBSIDIARIES**

**ConsolidatedStatements of Operations**

**(UNAUDITED)**

 
|                                                                            |   | **Three months ended June 30,** |           | **Six months ended June 30,** |       |
|---------------------------------------------------------------------------------|--------|--------------------------------------|----------------|------------------------------------|------------|
|                                                                            |   | **2003**                             |           | **2002**                           |       | **2003** |   | **2002** |   |
|                                                                            |   |                                 |           |                               |       |   |   |   |   |
| **REVENUES:**                                                                   |   |                                 |           |                               |       |   |   |   |   |
| Minimum rents                                                                   |   | **$**                                | **14,907,589** |                               | 13,952,481 | ** ** | **29,680,697** |   | 26,662,755 |   |
| Percentage rents                                                                |   | **314,222**                          |           | 341,844                            | ** ** | **713,357** |   | 698,576 |   |
| Tenant recoveries                                                               |   | **2,902,205**                        |           | 2,841,853                          | ** ** | **6,951,523** |   | 5,494,934 |   |
| Other                                                                           |   | **111,595**                          |           | 76,768                             | ** ** | **161,890** |   | 252,229 |   |
|                                                                            |   | **18,235,611**                       |           | 17,212,946                         | ** ** | **37,507,467** |   | 33,108,494 |   |
|                                                                            |   |                                 |           |                               |       |   |   |   |   |
| **EXPENSES:**                                                                   |   |                                 |           |                               |       |   |   |   |   |
| Interest                                                                        |   | **3,808,465**                        |           | 4,124,453                          | ** ** | **8,079,109** |   | 8,318,724 |   |
| Depreciation and  amortization of property and improvements                     |   | **2,808,535**                        |           | 2,982,990                          | ** ** | **5,606,922** |   | 5,889,459 |   |
| Operating                                                                       |   | **3,716,713**                        |           | 3,584,921                          | ** ** | **8,684,410** |   | 7,018,203 |   |
| General and  administrative                                                     |   | **1,655,521**                        |           | 974,482                            | ** ** | **2,597,315** |   | 1,693,396 |   |
| Other provisions and  losses                                                    |   | **—**                           |           | 108,953                            | ** ** | **—** |   | 108,953 |   |
|                                                                            |   | **11,989,234**                       |           | 11,775,799                         | ** ** | **24,967,756** |   | 23,028,735 |   |
|                                                                            |   |                                 |           |                               |       |   |   |   |   |
| **EARNINGS  FROM OPERATIONS BEFORE MINORITY INTEREST AND GAIN ON SALE OF LAND** |   | **6,246,377**                        |           | 5,437,147                          | ** ** | **12,539,711** |   | 10,079,759 |   |
|                                                                            |   |                                 |           |                               |       |   |   |   |   |
| Minority interest                                                               |   | **(984,673**                         | **)**          | (934,643                           | )          | **(2,008,161** | **)** | (1,799,115 | ) |
| Gain on sale of land                                                            |   | **—**                           |           | —                             | ** ** | **14,320** |   | — |   |
|                                                                            |   |                                 |           |                               |       |   |   |   |   |
| **NET  EARNINGS**                                                               |   | **$**                                | **5,261,704**  | ** **                         | 4,502,504  | ** ** | **10,545,870** |   | 8,280,644 |   |
|                                                                            |   |                                 |           |                               |       |   |   |   |   |
| **NET  EARNINGS PER SHARE - BASIC and DILUTED**                                 |   | **$**                                | **0.29**       |                               | 0.25       | ** ** | **0.58** |   | 0.49 |   |

 

*Seeaccompanying notes to consolidated financial statements.*

 

4

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**MID-ATLANTIC REALTY TRUST ANDSUBSIDIARIES**

**Consolidated Statements of Cash Flows**

**(UNAUDITED)**

 
|                                                                                 |   | **Six months ended June 30,** |           |
|--------------------------------------------------------------------------------------|--------|------------------------------------|----------------|
|                                                                                 |   | **2003**                           |           | **2002** |   |
|                                                                                 |   |                               |           |   |   |
| **CASH  FLOWS FROM OPERATING ACTIVITIES:**                                           |   |                               |           |   |   |
| Net earnings                                                                         |   | **$**                              | **10,545,870** |   | 8,280,644 |   |
| Adjustments to reconcile  net earnings to net cash provided by operating activities: |   |                               |           |   |   |
| Other provisions and  losses                                                         |   | **—**                         |           | 108,953 |   |
| Depreciation and  amortization                                                       |   | **5,606,922**                      |           | 5,889,459 |   |
| Minority interest in  earnings                                                       |   | **2,008,161**                      |           | 1,799,115 |   |
| Amortization of deferred  financing costs                                            |   | **576,192**                        |           | 295,422 |   |
| Gain on sale of land                                                                 |   | **(14,320**                        | **)**          | — |   |
| Changes in operating  assets and liabilities:                                        |   |                               |           |   |   |
| Decrease in assets                                                                   |   | **708,153**                        |           | 2,091,248 |   |
| Decrease in liabilities                                                              |   | **(465,220**                       | )              | (3,530,754 | ) |
| Other, net                                                                           |   | **262,323**                        |           | 173,715 |   |
| Total adjustments                                                                    |   | **8,682,211**                      |           | 6,827,158 |   |
| **NET  CASH PROVIDED BY OPERATING ACTIVITIES**                                       |   | **19,228,081**                     |           | 15,107,802 |   |
|                                                                                 |   |                               |           |   |   |
| **CASH  FLOWS FROM INVESTING ACTIVITIES:**                                           |   |                               |           |   |   |
| Additions to properties                                                              |   | **(4,589,595**                     | )              | (9,178,198 | ) |
| Proceeds from sale of  land                                                          |   | **206,686**                        |           | — |   |
| Payments to minority  partners                                                       |   | **(2,491,751**                     | **)**          | (2,221,627 | ) |
| **NET  CASH USED BY INVESTING ACTIVITIES**                                           |   | **(6,874,660**                     | **)**          | (11,399,825 | ) |
|                                                                                 |   |                               |           |   |   |
| **CASH  FLOWS FROM FINANCING ACTIVITIES:**                                           |   |                               |           |   |   |
| Proceeds from notes  payable                                                         |   | **110,500,000**                    |           | 49,500,000 |   |
| Principal payments on  notes payable                                                 |   | **(74,500,000**                    | **)**          | (60,000,000 | ) |
| Proceeds from mortgages  payable                                                     |   | **—**                         |           | 10,700,000 |   |
| Principal payments on  mortgages payable                                             |   | **(31,793,715**                    | **)**          | (19,464,328 | ) |
| Proceeds from  construction loans payable                                            |   | **4,794,565**                      |           | 2,868,477 |   |
| Principal payments on  construction loans payable                                    |   | **(8,598,552**                     | )              | (11,145,224 | ) |
| Deferred financing costs                                                             |   | **(1,153,217**                     | **)**          | (100,157 | ) |
| Proceeds from exercise  of share options                                             |   | **34,715**                         |           | 1,045,568 |   |
| Net proceeds from sale  of common shares                                             |   | —                             |           | 32,844,103 |   |
| Dividends paid                                                                       |   | **(11,197,595**                    | **)**          | (9,727,888 | ) |
| Other, net                                                                           |   | **(1,382**                         | **)**          | — |   |
| **NET  CASH USED BY FINANCING ACTIVITIES**                                           |   | **(11,915,181**                    | **)**          | (3,479,449 | ) |
|                                                                                 |   |                               |           |   |   |
| **NET  INCREASE IN CASH AND CASH EQUIVALENTS**                                       |   | **438,240**                        |           | 228,528 |   |
|                                                                                 |   |                               |           |   |   |
| **CASH  AND CASH EQUIVALENTS,**beginning of period                                   |   | **3,716,186**                      |           | 2,602,202 |   |
|                                                                                 |   |                               |           |   |   |
| **CASH  AND CASH EQUIVALENTS,**end of period                                         |   | **4,154,426**                      |           | 2,830,730 |   |
|                                                                                 |   |                               |           |   |   |
| **SCHEDULE  OF NONCASH INVESTING AND FINANCING ACTIVITIES**                          |   |                               |           |   |   |
| Conversion of  subordinated debentures, net of deferred financing costs              |   | **$**                              | **418,997**    |   | 1,985,397 |   |
| Conversion of Operating  Partnership Units                                           |   | **—**                         |           | 340,280 |   |
| Additional Operating  Partnership Units issued                                       |   | **—**                         |           | 281,612 |   |

 

*Seeaccompanying notes to consolidated financial statements.*

 

5

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## **MID-ATLANTICREALTY TRUST**

## **NotesTo Consolidated Financial Statemen**ts

**(UNAUDITED)**

 

**Organization**

Mid-Atlantic Realty Trustwas incorporated June 29, 1993, and commenced operations effective withthe completion of its initial public share offering on September 11,1993.  Mid-Atlantic Realty Trust qualifiesas a real estate investment trust (“REIT”) for Federal income tax purposes. Asused herein, the term “MART” or the “Company” refers to Mid-Atlantic RealtyTrust and entities owned or controlled by MART, including MART LimitedPartnership (the “Operating Partnership”).

 

**Description of Business**

The Company is a fullyintegrated, self-administered real estate investment trust which owns,acquires, develops, redevelops, leases and manages primarily neighborhood orcommunity shopping centers in the Middle Atlantic region of the United Statesof America.

 

The Company has an equityinterest in 41 operating shopping centers, 36 of which are wholly owned by theCompany and five in which the Company has interests ranging from 50% to 93%, aswell as other commercial properties, collectively the “Properties”.  The Company also owns approximately 78 acresof undeveloped land parcels varying in size from 3 to 29 acres.

 

All of MART’s interestsin properties are held directly or indirectly by, and all of its operationsrelating to the Properties are conducted through the OperatingPartnership.  Units of partnershipinterest in the Operating Partnership (“Units”) may be exchanged by the limitedpartners for cash or common shares of beneficial interest in MART at the optionof the Company on a one-for-one basis. MART controls the Operating Partnership as the sole general partner, andowns approximately 86% of the Units at June 30, 2003.

 

**Pending Merger with Kimco Realty Corporation**

OnJune 18, 2003, the Company and Kimco Realty Corporation (“Kimco”) announcedthat the two companies entered into a definitive merger agreement, which wasamended on July 14, 2003  (the“Merger Agreement”).    Under the termsof the Merger Agreement, which was unanimously approved by the Boards of bothcompanies, Kimco will acquire all of the outstanding shares of the Company for$21.00 per share in a cash transaction in which the Company will merge with andinto Kimco Acquisition Real Estate Investment Trust (“Kimco Acquisition”), aKimco subsidiary, with Kimco Acquisition as the surviving entity.

 

Themerger is subject to customary closing conditions and the approval of theCompany’s shareholders.  The merger iscurrently expected to close on or about (but in no event before)September 15, 2003.  The MergerAgreement provides that the quarterly dividend will be suspended; however, ifthe closing does not occur on September 15, 2003, the purchase price pershare will be increased by an amount equal to the current annual dividend pershare of $1.24, divided by 365, or $.0034 per day for each day followingSeptember 15, 2003 until the merger is closed.  The proposed merger, if consummated, would result in the Companyno longer being a publicly traded company.

 

Acopy of the Merger Agreement was included as an exhibit to a Form 8-K that theCompany filed with the SEC on July 15, 2003.

 

#### **Consolidated Financial Statements**

The accompanyingconsolidated financial statements have been prepared in accordance with theinstructions for Form 10-Q and, therefore, do not include all of the informationnecessary for a fair presentation of financial condition, results of operationsand cash flows in accordance with accounting principles generally accepted inthe United States of America.  Theconsolidated balance sheets as of June 30, 2003, the consolidatedstatements of operations for the three and six-month periods endedJune 30, 2003 and June 30, 2002 and the consolidated statements ofcash flows for the six-month periods ended June 30, 2003 and June 30,2002 have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include onlynormal recurring adjustments) necessary to present fairly the financialposition, results of operations and cash flows have been included.   The results of operations for the periodended June 30, 2003 are not necessarily indicative of the operatingresults for the full year.

 

Thefinancial statements have been prepared using the accounting policies describedin the Company’s 2002 annual report on Form 10-K, except that effective January 1,2003, the Company began using the fair-value method to account for employeestock compensation awards.  The effectof the change was immaterial.

 

**New Accounting Standards**

In April 2002, the Financial Accounting Standards Board (“FASB”)issued Statement of Financial Accounting Standards (“SFAS”) No. 145,“Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB StatementNo. 13, and Technical Corrections.”  SFAS No. 145, requires the Company toapply the criteria in Accounting Principles Board (“APB”) Opinion No. 30,“Reporting the Results of Operations - Reporting the Effects of Disposal of aSegment of a Business, and Extraordinary, Unusual and Infrequently OccurringEvents and Transactions,” in determining the classification of gains and lossesresulting from the extinguishment of debt. The Company adopted the provisionsrelating to the rescission of SFAS No. 4 on January 1, 2003.  Upon adoption, the Company determined thatgains and losses on early extinguishment of debt previously recognized asextraordinary items were not extraordinary items.  Accordingly, the Company reclassified the extraordinary loss of$108,953 reported in the quarter ended June 30, 2002, to other provisionsand losses.

 

6

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InNovember 2002, the FASB issued Interpretation No. 45, “Guarantor’sAccounting and Disclosure Requirements for Guarantees, Including IndirectGuarantees of Indebtedness of Others.” For 2002, the Interpretation requiredcertain disclosures.  Effective in 2003,the Interpretation requires recognition of liabilities at their fair value fornewly issued guarantees.  The adoptionof Interpretation No. 45 had no effect on the financial statements, as theCompany has had no obligations within the scope of the Interpretation for theperiod ended June 30, 2003.

 

InJanuary 2003, the FASB issued Interpretation No. 46, “Consolidation ofVariable Interest Entities” (“VIEs”). This Interpretation addresses the consolidation of variable interestentities in which the equity investors lack one or more of the essentialcharacteristics of a controlling financial interest or where the equityinvestment at risk is not sufficient for the entity to finance its activitieswithout subordinated financial support from other parties.  The Interpretation applies to VIEs createdafter January 31, 2003 and to VIEs in which the Company acquires aninterest after that date.  EffectiveJuly 1, 2003, it also applies to VIEs in which the Company acquired aninterest before February 1, 2003. The adoption of Interpretation No. 46had no effect on the financial statements, as the Company has no VIEs as ofJune 30, 2003.

 

**Segment Information**

The Company’s onlyreportable segment is Shopping Centers. This segment includes the operation and management of shopping centerproperties, and revenues are derived primarily from rents and services totenants.  These properties are managedseparately from the other property types owned by the Company because theyrequire different operating strategies and management expertise.

 

Segment operating resultsare measured and assessed based on a performance measure known as Funds fromOperations (“FFO”).  FFO is defined bythe National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) asnet earnings (computed in accordance with accounting principles generallyaccepted in the United States of America), excluding cumulative effects ofchanges in accounting principles, extraordinary items and gains or losses fromsales of operating 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 ifthey do not define similarly entitled items exactly as the Company defines themor if they interpret the NAREIT definition differently.

 

Operating results for thesegments are summarized as follows for the three-month periods endedJune 30, 2003 and June 30, 2002:

 
|                                                                               |   | **Three months ended June 30,** |           |
|------------------------------------------------------------------------------------|--------|---------------------------------|----------------|
|                                                                               |   | **2003**                        |           | **2002** |   |
|                                                                               |   | **Shopping  Centers**           |           | **All  Other** |   | **Total** |   | **Shopping****Centers** |   | **All  Other** |   | **Total** |   |
| Revenues                                                                           |   | **$**                           | **17,640,559** | ** ** | **595,052** | ** ** | **18,235,611** |   | 16,599,256 |   | 613,690 |   | 17,212,946 |   |
|                                                                               |   |                            |           |   |   |   |   |   |   |   |   |   |   |
| Expenses, exclusive of depreciation and  amortization of property and improvements |   | **8,956,835**                   | ** **     | **223,864** | ** ** | **9,180,699** |   | 8,453,868 |   | 229,988 |   | 8,683,856 |   |
| Other provisions and losses                                                        |   | **—**                      | ** **     | **—** | ** ** | **—** |   | 108,953 |   | — |   | 108,953 |   |
| Minority interest                                                                  |   | **971,328**                     | ** **     | **13,345** | ** ** | **984,673** |   | 916,264 |   | 18,379 |   | 934,643 |   |
| FFO                                                                                |   | **$**                           | **7,712,396**  | ** ** | **357,843** | ** ** | **8,070,239** |   | 7,120,171 |   | 365,323 |   | 7,485,494 |   |

 

7

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A reconciliation of FFOreported above to net earnings in the financial statements is summarized asfollows:

 
|                                                       |   | **Three months ended June 30,** |          |
|------------------------------------------------------------|--------|---------------------------------|---------------|
|                                                       |   | **2003**                        |          | **2002** |   |
| Operating results:                                         |   |                            |          |   |   |
| FFO                                                        |   | **$**                           | **8,070,239** |   | 7,485,494 |   |
| Depreciation and amortization of property and improvements |   | **2,808,535**                   |          | 2,982,990 |   |
|                                                       |   |                            |          |   |   |
| Net earnings                                               |   | **$**                           | **5,261,704** |   | 4,502,504 |   |

 

Operating results for thesegments are summarized as follows for the six-month periods endedJune 30, 2003 and June 30, 2002:

 
|                                                                               |   | **Six months ended June 30,** |           |
|------------------------------------------------------------------------------------|--------|-------------------------------|----------------|
|                                                                               |   | **2003**                      |           | **2002** |   |
|                                                                               |   | **Shopping  Centers**         |           | **All  Other** |   | **Total** |   | **Shopping****Centers** |   | **All  Other** |   | **Total** |   |
| Revenues                                                                           |   | **$**                         | **36,319,230** | ** ** | **1,188,237** | ** ** | **37,507,467** |   | 31,937,926 |   | 1,170,568 |   | 33,108,494 |   |
|                                                                               |   |                          |           |   |   |   |   |   |   |   |   |   |   |
| Expenses, exclusive of depreciation and  amortization of property and improvements |   | **18,897,396**                | ** **     | **463,438** | ** ** | **19,360,834** |   | 16,592,054 |   | 438,269 |   | 17,030,323 |   |
| Other provisions and losses                                                        |   | **—**                    | ** **     | **—** | ** ** | **—** |   | 108,953 |   | — |   | 108,953 |   |
| Minority interest                                                                  |   | **1,973,288**                 | ** **     | **34,873** | ** ** | **2,008,161** |   | 1,762,511 |   | 36,604 |   | 1,799,115 |   |
| Gain on sale of land                                                               |   | **—**                    | ** **     | **14,320** | ** ** | **14,320** |   | — |   | — |   | — |   |
| FFO                                                                                |   | **$**                         | **15,448,546** | ** ** | **704,246** | ** ** | **16,152,792** |   | 13,474,408 |   | 695,695 |   | 14,170,103 |   |

 

A reconciliation of FFOreported above to net earnings in the financial statements is summarized asfollows:

 
|                                                       |   | **Six months ended June 30,** |           |
|------------------------------------------------------------|--------|-------------------------------|----------------|
|                                                       |   | **2003**                      |           | **2002** |   |
| Operating results:                                         |   |                          |           |   |   |
| FFO                                                        |   | **$**                         | **16,152,792** |   | 14,170,103 |   |
| Depreciation and amortization of property and improvements |   | **5,606,922**                 |           | 5,889,459 |   |
|                                                       |   |                          |           |   |   |
| Net earnings                                               |   | **$**                         | **10,545,870** |   | 8,280,644 |   |

 

8

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**Earnings Per Share**

Basic earnings per share(“EPS”) is computed by dividing earnings available to common shareholders bythe weighted average number of common shares outstanding.  Diluted EPS is computed after adjusting thenumerator and denominator of the basic EPS computation for the effects of alldilutive potential common shares outstanding during the period.  The dilutive effects of convertiblesecurities are computed using the “if-converted” method and the dilutiveeffects of options, warrants and their equivalents (including fixed awards andnonvested shares issued under share-based compensation plans) are computedusing the “treasury stock” method.

 

The following table setsforth information relating to the computation of basic and diluted earnings pershare:

 
|                                                                                     |   | **Three months ended June 30,** |          | **Six months ended June 30,** |      |
|------------------------------------------------------------------------------------------|--------|---------------------------------|---------------|-------------------------------|-----------|
|                                                                                     |   | **2003**                        |          | **2002**                      |      | **2003** |   | **2002** |   |
|                                                                                     |   |                            | ** **    |                          |      |   | ** ** |   |   |
| Numerator:                                                                               |   |                            | ** **    |                          |      |   | ** ** |   |   |
| Net earnings                                                                             |   | **$**                           | **5,261,704** | ** **                    | 4,502,504 |   | **10,545,870** | ** ** | 8,280,644 |   |
| Dividends on unvested restricted share  awards                                           |   | **(65,905**                     | **)**         | (61,451                       | )         | **(132,403** | **)** | (123,971 | ) |
| Numerator for basic earnings per  share–earnings available to common shareholders   |   | **5,195,799**                   | ** **    | 4,441,053                     |      | **10,413,467** | ** ** | 8,156,673 |   |
| Interest on subordinated debentures                                                      |   | **10,779**                      | ** **    | 51,224                        |      | **30,653** | ** ** | 141,654 |   |
| Numerator for diluted earnings per  share–earnings available to common shareholders |   | **$**                           | **5,206,578** | ** **                    | 4,492,277 |   | **10,444,120** | ** ** | 8,298,327 |   |
|                                                                                     |   |                            | ** **    |                          |      |   | ** ** |   |   |
| Denominator:(1)                                                                          |   |                            | ** **    |                          |      |   | ** ** |   |   |
| Denominator for basic earnings per  share–weighted average shares outstanding       |   | **17,863,021**                  | ** **    | 17,501,026                    |      | **17,848,263** | ** ** | 16,470,129 |   |
| Effect of dilutive securities:                                                           |   |                            | ** **    |                          |      |   | ** ** |   |   |
| Debentures                                                                               |   | **55,753**                      | ** **    | 290,637                       |      | **69,070** | ** ** | 367,537 |   |
| Unvested portion of restricted share awards  and share options                           |   | **124,943**                     | ** **    | 93,448                        |      | **111,881** | ** ** | 88,404 |   |
| Denominator for diluted earnings per  share–adjusted weighted average shares        |   | **18,043,717**                  | ** **    | 17,885,111                    |      | **18,029,214** | ** ** | 16,926,070 |   |

 

----

(1)         *Effects ofpotentially dilutive securities are presented only in periods in which they aredilutive.  At June 30, 2003, theconvertible subordinated debentures, if converted, would produce an additional51,333 shares and the Units, if exchanged, would produce an additional3,020,776 shares.*

 

**Convertible Subordinated Debentures**

EffectiveSeptember 11, 1993, the Company issued $60,000,000 of convertiblesubordinated debentures at 7.625% scheduled to mature inSeptember 2003.  Interest on thedebentures is paid semi-annually on March 15 and September 15.  The debentures are convertible, unlesspreviously redeemed, at any time prior to maturity into common shares ofbeneficial interest of the Company at $10.50 per share, subject to certainadjustments. The balance of the debentures, at June 30, 2003, of $539,000,if fully converted, would produce an additional 51,333 shares.  The debentures are redeemable by the Companyat any time at 100% of the principal amount thereof, together with accruedinterest.  The debentures aresubordinate to all mortgages payable.

 

**Sale of Common Shares of BeneficialInterest**

OnMarch 12, 2002, the Company completed the public offering and sale of2,000,000 common shares of beneficial interest at a price of $15.10 per shareand on April 4, 2002, an additional 300,000 shares were sold at the sameprice upon exercise of the underwriters’ over-allotment option.  The net proceeds of the sales ofapproximately $32,843,000 were used to repay two mortgage loans and pay downthe unsecured line of credit.

 

**Share-Based Compensation Plans**

Through 2002, the Companyapplied the intrinsic value method of accounting prescribed by APB Opinion No.25, “Accounting for Stock Issued to Employees,” and related interpretations toaccount for share-based compensation plans. Under this method, compensation expense was recorded for awards of stockor options to employees only if the market price of the stock on the grant dateexceeded the amount the employee was required to pay to acquire the stock.  Effective January 1, 2003, the Companyadopted the fair-value based method of accounting for share-based compensationcosts.  The Company elected to use theprospective method of transition to the fair-value method provided in SFAS No.148 and, accordingly, the method is being applied for all employee stockcompensation awards granted, modified or settled on or after January 1,2003.

 

9

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The following tablesummarizes pro forma effects on net earnings and earnings per share if thefair-value method had been used to account for all stock-based compensationawards made since 1995:

 
|                                                                                                                   |                                                                         | **Three months ended June 30,** |          | **Six months ended June 30,** |       |
|------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------|---------------------------------|---------------|-------------------------------|------------|
|                                                                                                                   |                                                                         | **2003**                        |          | **2002**                      |       | **2003** |   | **2002** |   |
|                                                                                                                   |                                                                         |                            |          |                          |       |   |   |   |   |
| Net earnings, as reported                                                                                              |                                                                         | **$**                           | **5,261,704** |                          | 4,502,504  | ** ** | **10,545,870** |   |   | 8,280,644 |   |
| Add:                                                                                                                   | Share-based employee  compensation expense included in reported net earnings |                            | **116,787**   |                          | 78,192     | ** ** | **222,626** |   | 139,208 |   |
| Deduct:  Total share-based employee compensation  expense determined under fair-value based method for all awards |                                                                         | **165,856**                     |          | 127,261                       | ** ** | **320,764** |   | 237,346 |   |
|                                                                                                                   |                                                                         |                            |          |                          |       |   |   |   |   |
| Pro forma net earnings                                                                                                 |                                                                         | **$**                           | **5,212,635** |                          | 4,453,435  | ** ** | **10,447,732** |   | 8,182,506 |   |
|                                                                                                                   |                                                                         |                            |          |                          |       |   |   |   |   |
| Earnings per share:                                                                                                    |                                                                         |                            |          |                          |       |   |   |   |   |
| Basic:                                                                                                                 |                                                                         |                            |          |                          |       |   |   |   |   |
| As reported                                                                                                            |                                                                         | **$**                           | **0.29**      |                          | 0.25       | ** ** | **0.58** |   | 0.49 |   |
| Pro forma                                                                                                              |                                                                         | **$**                           | **0.29**      |                          | 0.25       | ** ** | **0.58** |   | 0.49 |   |
| Diluted:                                                                                                               |                                                                         |                            |          |                          |       |   |   |   |   |
| As reported                                                                                                            |                                                                         | **$**                           | **0.29**      |                          | 0.25       | ** ** | **0.58** |   | 0.49 |   |
| Pro forma                                                                                                              |                                                                         | **$**                           | **0.29**      |                          | 0.25       | ** ** | **0.57** |   | 0.48 |   |
|                                                                                                                        |                                                                              |                                 |               |                               |            |  |  |  |  |  |  |  |

 

10

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**Part I. FINANCIALINFORMATION**

**ITEM 2.**

 

**MID-ATLANTIC REALTY TRUST**

**Management’s Discussion And Analysis**

**Of Financial Condition And Results OfOperations**

 

**Pending Merger with Kimco Realty Corporation**

OnJune 18, 2003, the Company and Kimco Realty Corporation (“Kimco”)announced that the two companies entered into a definitive merger agreement,which was amended on July 14, 2003 (the “Merger Agreement”).   Under the terms of the Merger Agreement, which was unanimously approvedby the Boards of both companies, Kimco will acquire all of the outstandingshares of the Company for $21.00 per share in a cash transaction in which theCompany will merge with and into Kimco Acquisition Real Estate Investment Trust(“Kimco Acquisition”), a Kimco subsidiary, with Kimco Acquisition as thesurviving entity.

 

Themerger is subject to customary closing conditions and the approval of theCompany’s shareholders.  The merger iscurrently expected to close on or about (but in no event before)September 15, 2003.  The MergerAgreement provides that the quarterly dividend will be suspended; however, ifthe closing does not occur on September 15, 2003, the purchase price pershare will be increased by an amount equal to the current annual dividend pershare of $1.24, divided by 365, or $.0034 per day for each day followingSeptember 15, 2003 until the merger is closed.  The proposed merger, if consummated, would result in the Companyno longer being a publicly traded company.

 

Acopy of the Merger Agreement was included as an exhibit to a Form 8-K that theCompany filed with the SEC on July 15, 2003.

 

**Critical Accounting Policies**

TheCompany’s consolidated financial statements have been prepared in accordancewith accounting principles generally accepted in the United States ofAmerica.  Preparation of thesestatements requires management to make certain estimates and judgments thataffect the Company’s financial position and results of operations.  A summary of significant accounting policiesand a description of accounting policies that are considered critical may befound in the Company’s Annual Report on Form 10-K for the fiscal year endedDecember 31, 2002, filed on March 13, 2003.  There have been no changes in the Company’s policies or estimatessince December 31, 2002, except that effective January 1, 2003, theCompany began using the fair-value method to account for employee stockcompensation awards. The effect of the change was immaterial.

 

**General**

The following discussion and analysis of operating results covers eachof the Company’s business segments for the three and six-month periods endedJune 30, 2003 and June 30, 2002.

 

Management believes thata segment analysis provides the most effective means of understanding thebusiness.  Segment data is reportedusing the accounting policies followed by the Company for internal reporting tomanagement.  These policies are the sameas those used for external reporting.

 

**Portfolio Changes**

The operating results of shopping center properties are affectedsignificantly by acquisition and openings of newly developed or redevelopedproperties.  Information related toshopping center acquisitions and developments/ redevelopments completed during2003 and 2002 is summarized in the following table:

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

 

11

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**Comparisonof three-months ended June 30, 2003 to three-months ended June 30,2002:**

 

**ShoppingCenter Properties**

 

Operating results are summarized as follows (inthousands):

 
|                                                                        |   | **Three months ended June 30,** |       |
|-----------------------------------------------------------------------------|--------|---------------------------------|------------|
|                                                                        |   | **2003**                        |       | **2002** |   |
| Revenues                                                                    |   | **$**                           | **17,641** |   | 16,599 |   |
| Operating and interest expenses, exclusive of depreciation and amortization |   | **8,957**                       |       | 8,454 |   |
| Depreciation and amortization                                               |   | **2,722**                       |       | 2,863 |   |
| Other provisions and losses                                                 |   | **—**                      |       | 109 |   |
| Minority interest                                                           |   | **972**                         |       | 916 |   |
| Earnings from operations                                                    |   | **$**                           | **4,990**  |   | 4,257 |   |

 

Revenuesfrom shopping centers increased by $1,042,000 in 2003 due primarily to theoperations of the property acquired and the development/redevelopment projectopened in 2002 ($674,000), the impact of recognizing rents due from tenantsunder leases on a straight-line basis ($455,000) and other net rental and occupancychanges, partially offset by lower termination fees from former tenants($499,000).

 

Operatingand interest expenses (exclusive of depreciation and amortization) for shoppingcenter properties increased by $503,000 in 2003.  Operating expenses for shopping centers increased by $135,000 dueprimarily to the operations of the property acquired and thedevelopment/redevelopment project opened in 2002 ($66,000); and general andadministrative expenses increased by $681,000 due primarily to increased costs relatingto the Merger Agreement. Interest expense decreased by $313,000 due primarilyto the repayment of two mortgages ($574,000) and one construction loan($105,000), partially offset by interest expense on debt related to theproperty acquired and the development/redevelopment property opened in 2002($219,000) and the net effects of debt borrowings and refinancings.

 

Depreciationand amortization expense decreased by $141,000 in 2003 due primarily to theeffects of fully depreciated assets ($305,000), partially offset by theacquisition and development/redevelopment project referred to above ($157,000).

 

Otherprovisions and losses of $109,000 relate to a prepayment penalty associatedwith the repayment of a mortgage prior to its scheduled maturity.

 

**All Other Properties**

 

Operating results are summarized as follows (inthousands):

 
|                                                                         |   | **Three months ended June 30,** |    |
|------------------------------------------------------------------------------|--------|---------------------------------|---------|
|                                                                         |   | **2003**                        |    | **2002** |   |
| Revenues                                                                     |   | **$**                           | **595** |   | 614 |   |
| Operating and interest expenses, exclusive of depreciation and  amortization |   | **224**                         |    | 230 |   |
| Depreciation and amortization                                                |   | **86**                          |    | 120 |   |
| Minority interest                                                            |   | **13**                          |    | 19 |   |
| Gain on sale of land                                                         |   | **—**                      |    | — |   |
| Earnings from operations                                                     |   | **$**                           | **272** |   | 245 |   |

 

Therewere no significant changes in the operating results of all other propertiesduring the period.

 

12

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**Comparisonof six-months ended June 30, 2003 to six-months ended June 30, 2002:**

 

**ShoppingCenter Properties**

 

Operating results are summarized as follows (inthousands):

 
|                                                                         |   | **Six months ended June 30,** |       |
|------------------------------------------------------------------------------|--------|-------------------------------|------------|
|                                                                         |   | **2003**                      |       | **2002** |   |
| Revenues                                                                     |   | **$**                         | **36,319** |   | 31,938 |   |
| Operating and interest expenses, exclusive of depreciation and  amortization |   | **18,897**                    |       | 16,592 |   |
| Depreciation and amortization                                                |   | **5,428**                     |       | 5,652 |   |
| Other provisions and losses                                                  |   | **—**                    |       | 109 |   |
| Minority interest                                                            |   | **1,973**                     |       | 1,762 |   |
| Earnings from operations                                                     |   | **$**                         | **10,021** |   | 7,823 |   |

 

Revenuesfrom shopping centers increased by $4,381,000 in 2003 due primarily to theoperations of the property acquired and the development/redevelopment projectopened in 2002 ($1,711,000), the impact of recognizing rents due from tenantsunder leases on a straight-line basis ($867,000), an increase in recoveryincome related to increased snowfall ($1,085,000) and other net rental andoccupancy changes, partially offset by lower termination fees from formertenants ($632,000).

 

Operating and interestexpenses (exclusive of depreciation and amortization) for shopping centerproperties increased by $2,305,000 in 2003. Operating expenses for shopping centers increased by $1,636,000 dueprimarily to increases in expenses related to increased snowfall ($1,167,000)and the operations of the property acquired and the development/redevelopmentproject opened in 2002 ($259,000); and general and administrative expensesincreased by $904,000 due primarily to increased costs relating to the MergerAgreement.  Interest expense decreasedby $235,000 due primarily to the repayment of two mortgages ($698,000) and oneconstruction loan ($111,000), partially offset by interest expense on debtrelated to the property acquired and the development/redevelopment propertyopened in 2002 ($473,000) and the net effects of debt borrowings andrefinancings.

 

Depreciation andamortization expense decreased by $224,000 in 2003 due primarily to the effectsof fully depreciated assets ($610,000), partially offset by the acquisition anddevelopment/redevelopment project referred to above ($333,000).

 

Otherprovisions and losses of $109,000 relate to a prepayment penalty associatedwith the repayment of a mortgage prior to its scheduled maturity.

 

**All Other Properties**

 

Operating results are summarized as follows (inthousands):

 
|                                                                         |   | **Six months ended June 30,** |      |
|------------------------------------------------------------------------------|--------|-------------------------------|-----------|
|                                                                         |   | **2003**                      |      | **2002** |   |
| Revenues                                                                     |   | **$**                         | **1,188** |   | 1,171 |   |
| Operating and interest expenses, exclusive of depreciation and  amortization |   | **463**                       |      | 438 |   |
| Depreciation and amortization                                                |   | **179**                       |      | 238 |   |
| Minority interest                                                            |   | **35**                        |      | 37 |   |
| Gain on sale of land                                                         |   | **14**                        |      | — |   |
| Earnings from operations                                                     |   | **$**                         | **525**   |   | 458 |   |

 

Therewere no significant changes inthe operating results of all other properties during the period.

 

13

----

 

**Funds from 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, plusdepreciation and amortization and after adjustments to record unconsolidatedpartnerships and joint ventures on the same 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 ofliquidity.  The Company’s FFO may not becomparable to the FFO of other REIT’s if they do not define similarly entitleditems exactly as the Company defines them or if they interpret the NAREITdefinition differently.

 

FFO was $16,153,000 and$14,170,000 for the six-months ended June 30, 2003 and 2002,respectively.  The reasons forsignificant changes in revenues and expenses comprising FFO by segment aredescribed above.

 

**Liquidity and Capital Resources**

The Company had cash and cash equivalents of $4,154,000 atJune 30, 2003.

 

Net cash provided byoperating activities was $19,228,000 and $15,108,000 for the six-months endedJune 30, 2003 and 2002, respectively. The change in cash provided by operating activities was due in part tothe factors discussed above in the comparisons of operating results.  The level of net cash provided by operatingactivities is also affected by the timing of receipt of revenues and thepayment of operating and interest expenses.

 

Net cash used byinvesting activities decreased by $4,525,000 to $6,875,000 in 2003 from$11,400,000 in 2002.  The decrease wasdue primarily to lower costs incurred on development/redevelopment projects in2003.

 

Net cash used byfinancing activities increased by $8,436,000 to $11,915,000 in 2003 from$3,479,000 in 2002.  The change in cashflows from financing activities in 2003 is due primarily to net debt borrowingsof $402,000 in 2003 as compared to net repayments of $27,541,000 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, a decrease in proceeds from the exercise of share options, the netproceeds from the sale of common shares of beneficial interest ($32,843,000) in2002 and an increase in dividends paid ($1,470,000) in 2003 due to increases inthe number of common shares outstanding and the dividend per share.

 

**Cautionary Disclosure Relating toForward Looking Statements**

Statements made in thisdocument include forward looking statements under the federal securities laws.  Statements that are not historical innature, including the words “anticipate,” “estimate,” “should,” “expect,”“believe,” “intend” and similar expressions are intended to identify forwardlooking statements.  While thesestatements reflect the Company’s good faith beliefs based on currentexpectations, estimates and projections about (among other things) the industryand the markets in which the Company operates, they are not guarantees offuture performance, involve known and unknown risks and uncertainties thatcould cause actual results to differ materially from those in the forwardlooking statements, and should not be relied upon as predictions of futureevents.  Factors which could impactfuture results include (among other things) general economic conditions, localreal estate conditions, oversupply of available space, financial condition oftenants, timely ability to lease or re-lease space upon favorable economicterms, agreements with anchor tenants, interest rates, availability of financing,competitive factors and similar considerations.  The Company disclaims any obligation to publicly update or reviseany forward looking statement, whether as a result of new information, futureevents or otherwise.  For a discussionof risks and uncertainties that could cause actual results to differ materiallyfrom those contained in the forward looking statements, see “Real EstateInvestment Risks” filed as Exhibit 99.1 to the Company’s Form 10-K for the yearended December 31, 2002.

 

14

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

Therehave been no material changes in the Company’s market risk information sinceDecember 31, 2002, except that variable rate debt outstanding increased from$49,347,000 at December 31, 2002 to $78,110,000 at June 30,2003.  The June 30, 2003 balance includes an $18,500,000 draw on theunsecured line of credit for the repayment of the Harford Mall mortgage, whichwas paid in full on April 1, 2003, and an $8,500,000 draw for therepayment of the Lutherville Station construction loan, which was paid in fullon May 1, 2003.

 

15

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**Part I. FINANCIAL INFORMATION**

**Item4.**

 

**MID-ATLANTIC REALTY TRUST**

**Controls and Procedures**

 

(a)          **Evaluation of disclosurecontrols and procedures**.

The Company maintainsdisclosure controls and procedures that are designed to ensure that informationrequired to be disclosed in the Company’s reports filed under the SecuritiesExchange Act of 1934, such as this Quarterly Report, is recorded, processed,summarized and reported within the time periods specified in the Securities andExchange Commission rules and forms, and that such information is accumulatedand communicated to the Company’s management, including the President and ChiefExecutive Officer and Controller, as appropriate, to allow for timely decisionsregarding required disclosure.  Acontrol system, no matter how well conceived and operated, can provide onlyreasonable, not absolute, assurance that the objectives of the control systemare met.  Further, the design of acontrol system must reflect the fact that there are resource constraints, andthe benefits of controls must be considered relative to their costs.  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 of somepersons, by collusion of two or more people, or by management override of thecontrol.  The design of any system ofcontrols also is based in part upon certain assumptions about the likelihood offuture 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.

Anevaluation of the effectiveness of these disclosure controls, as of the end ofthe period covered by this Quarterly Report on Form 10-Q, was carried out underthe supervision and with the participation of the Company’s management,including the President and Chief Executive Officer and Controller.  Based on that evaluation, the Company’smanagement, including the President and Chief Executive Officer and Controller,has concluded that the Company’s disclosure controls and procedures areeffective.

 

(b) **Changes in internal control over financial reporting**.

Therewere no significant changes in our internal control over financial reporting orin other factors during our last fiscal quarter that have materially affected,or are reasonably likely to materially affect, our internal control overfinancial reporting.

 

16

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**Part II. OTHERINFORMATION**

 

**MID-ATLANTIC REALTY TRUST**

**Other Information**

 

**Item1.  Legal Proceedings —**On June 19, 2003, two putative class action complaints were filed in theCircuit Court for Baltimore County, Maryland against the Company, MART LimitedPartnership and each of the Company’s trustees.  One complaint, Case No. C-03-006687, is styled as *Lon C. Engel, Trustee of the Cindy Dubansky Trust, onbehalf of the Trust and all others similarly situated, vs. David F. Benson,Marc P. Blum, Robert A. Frank, LeRoy E. Hoffberger, F. Patrick Hughes, M.Ronald Lipman, Daniel S. Stone, MART Limited Partnership, and Mid-AtlanticRealty Trust*. The second complaint, as amended, Case No.C-03-006690, is styled as *Hercules Barberis,on behalf of himself and all others similarly situated, vs. David F. Benson,Marc P. Blum, Robert A. Frank, LeRoy E. Hoffberger, F. Patrick Hughes, M.Ronald Lipman, Daniel S. Stone, MART Limited Partnership, Mid-Atlantic RealtyTrust, and Kimco Realty Corporation*. On June 20, 2003, a thirdputative class action complaint was filed in the Circuit Court of BaltimoreCounty, Maryland, Case No. C-03-6740, styled as *Hilda Rosenberg, on behalf of himself and all others similarlysituated, vs. David F. Benson, Marc P. Blum, Robert A. Frank, LeRoy E.Hoffberger, F. Patrick Hughes, M. Ronald Lipman, Daniel S. Stone, MART LimitedPartnership, and Mid-Atlantic Realty Trust.*

 

                On July 29, 2003,the cases were consolidated, with the caption *InRe Mid-Atlantic Realty Trust Shareholders Litigation*.  On July 30, 2003, plaintiffs filed aConsolidated Amended Class Action Complaint, brought on behalf of the publicshareholders of the Company’s common stock, which asserts two causes of actionagainst the Company, MART Limited Partnership, each of the Company’s trustees,and Kimco Realty Corporation (“Kimco”). The first cause of action alleges breach of fiduciary duties to theCompany’s shareholders.  In support ofthis cause of action, plaintiffs allege that the Company’s trustees haveviolated their fiduciary duties of loyalty and/or due care, in that theyallegedly voted to enter into the Merger Agreement without due regard for theinterests of the Company’s public shareholders and because the Company’s trusteesthemselves will profit from the sale to Kimco, something they allegedly wouldnot do if the Company remained independent and allegedly would not do to thesame degree if the Company was sold to an entity other than Kimco at a higherprice.  Plaintiffs allege that, had theCompany’s trustees complied with their fiduciary duties, they would not haveagreed to sell the Company at this time, or would have fully and fairly shoppedthe Company and obtained a substantially higher price for the Company and itsshareholders.

 

                Specifically,plaintiffs allege that both the process used, and price agreed to, by theCompany’s trustees in connection with the Merger Agreement was intrinsicallyunfair and inadequate.  With respect tothe process used, plaintiffs allege that the Company’s trustees conducted aninadequate auction or full market check and failed to consider the value of theCompany as an independent entity, and that the Company’s trustees allegedlyfailed both to appoint an independent special committee and to retain anindependent financial advisor. Plaintiffs allege that an independent special committee was necessarydue to the alleged conflicts of interest created by compensation each of theCompany’s trustees will receive under the Merger Agreement, in the form of cashpayments for accelerated stock options, bonus plans and/or severanceagreements, as well as indemnification for their acts and omissions, all ofwhich the Company’s public shareholders will not receive.  Plaintiffs allege that this compensationwould not be made if the Company’s remained an independent company, and, withrespect to stock options and indemnification, allegedly would not be likely tooccur if the Company was sold to an entity other than Kimco.  Plaintiffs allege that this compensationmotivated the Company’s trustees to agree to sell the Company now rather thancontinue to operate the Company as an independent entity and/or seek a higherprice from other potential acquirors, and that the terms and timing of theMerger Agreement allegedly evidence the Company’s trustees’ failure to exerciseduties of due care and loyalty toward the Company’s shareholders.  Plaintiffs allege that Wachovia CapitalMarkets, LLC (“Wachovia Securities”) was incapable of providing independent anddisinterested financial advice because it allegedly had a disabling conflict ofinterest based on significant past and ongoing relationships it and itsaffiliates have with the Company and Kimco. Plaintiffs also allege that Wachovia Securities’ analysis was flawed forthe additional reason that it failed to determine the liquidation value of theCompany.  With respect to the priceagreed to by the Company’s trustees, plaintiffs allege that the considerationthe shareholders are to receive under the Merger Agreement is unfair andinadequate because the intrinsic value of the Company’s common shares isallegedly greater than the amount offered by Kimco, because the takeoverpremium plaintiffs will receive is somehow inadequate, and because only thelimited partners of MART Limited Partnership will allegedly be able to share inthe Company’s future growth.  Plaintiffsfurther allege that the unfairness of the Merger Agreement’s terms iscompounded by the alleged disparity in knowledge between the Company’s trusteesand plaintiffs, and that the Company’s trustees allegedly intend to takeadvantage of this disparity by inducing plaintiffs to relinquish their sharesof the Company.  Plaintiffs allege thatKimco’s liability arises from its alleged involvement and knowing participationin the breaches of fiduciary duty allegedly committed by the Company’strustees.  Plaintiffs allege that theyhave been damaged in that they will somehow not receive their fair proportionof the value of the Company’s assets and business, will be divested from theirright to share in the Company’s future growth, and will allegedly be preventedfrom obtaining a fair and adequate price for their common shares.

 

17

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                Plaintiffs’ secondcause of action alleges that the Company’s trustees have failed to adequatelydisclose to the Company’s public shareholders all allegedly material terms ofthe transaction, including: which trustee of the Company will be appointed toKimco’s board; the location of all 41 shopping centers in which the Company hasan equity interest; the Company’s process for choosing Wachovia Securities andthe factors the Company’s trustees considered in light of Wachovia Securities’and its affiliates’ business relationship with Kimco; the reasons for theCompany’s public offering in the first quarter of 2002 when it had previouslydetermined that such an offering would be excessively dilutive, and whether theCompany’s trustees or officers participated in the offering; the process bywhich the Company’s board determined in December 2002 to approach certainpotential business partners and eliminate others from consideration; whetherthe Company’s board preferred an all cash or combination of cash and stock bid,the reasons for this preference, and any steps the Company’s board took toinform themselves of the value of the stock of all potential bidders; whatanalysis the Company conducted in evaluating Kimco’s February 4, 2003 proposal;whether, after Kimco ceased negotiations in early March 2003, the Companyattempted to negotiate with any other bidders or instructed Wachovia Securitiesto shop the Company again; the reasons for Kimco’s renewed interest in theCompany in early May 2003; whether, after Kimco expressed renewed interest inthe Company, the Company’s board attempted to shop the Company again; whetherand to what extent the Company’s board considered the Company’s long-termprospects as a going concern; whether Wachovia Securities reviewed the July 14,2003 amended Merger Agreement, and whether this version differs from theversion on which Wachovia Securities’ fairness opinion is based in any materialrespects; whether Wachovia Securities ever conducted a liquidation analysis onthe Company; the terms of the Company and Kimco credit facilities with anaffiliate of Wachovia Securities, the value of these credit facilities toWachovia Securities, and whether Kimco intends to borrow funds from theircredit facility to finance the merger; the number, exercise price and option settlementamount for all accelerated options only for each of the Company’s trustees andexecutive officer; and the identity of MART Limited Partnership’s limitedpartners.  Plaintiffs allege that thesefailures to disclose constitute a breach, and/or aiding and abetting of abreach, of the Company’s trustees’ fiduciary duties to plaintiffs.  Plaintiffs allege that Kimco’s liabilityarises from its alleged involvement and knowing participation in the breachesof fiduciary duty allegedly committed by the Company’s trustees.

 

                The amendedcomplaint seeks, among other things, class action status, a court orderenjoining the sale of the Company, unspecified monetary damages, and payment ofattorney’s fees.  The Company believesthe allegations are without merit and intends to vigorously defend theaction.  The Company does not believethe outcome will have a material impact on the Company’s financial position orresults of operations.

 

                Because thecompletion of the merger is conditioned upon no temporary restraining order,ruling or preliminary or permanent injunction or other legal restraint being ineffect which prevents, materially delays or impairs the completion of thetransactions contemplated by the Merger Agreement, if the plaintiffs in thelitigation move for such relief, and such relief is granted, the merger may bedelayed or in some instances the Merger Agreement may be terminated.

 

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

 

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

 

**Item 4.  Submission of Matters to a Vote ofSecurity Holders –**The annual meeting of Shareholders was held on May 9, 2003.  Elected to serve as trustees for thefollowing year and until the election and qualification of their successorswere:  David F. Benson, Marc P. Blum,Robert A. Frank, LeRoy E. Hoffberger, F. Patrick Hughes, M. Ronald Lipman andDaniel S. Stone.

 
| **Matter Voted Upon**                                                                                                                                         |   | **For**    |   | **Against** |   | **Withheld** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|-------------|--------|--------------|--------|
|                                                                                                                                                          |   |       |   |        |   |         |   |
| a. Election  of Trustees:                                                                                                                                |   |       |   |        |   |         |   |
| David  F. Benson                                                                                                                                              |   | 16,567,091 |   | —      |   | 52,562       |   |
| Marc  P. Blum                                                                                                                                                 |   | 16,514,139 |   | —      |   | 105,514      |   |
| Robert  A. Frank                                                                                                                                              |   | 16,569,722 |   | —      |   | 49,931       |   |
| LeRoy  E. Hoffberger                                                                                                                                          |   | 16,508,562 |   | —      |   | 111,091      |   |
| F.  Patrick Hughes                                                                                                                                            |   | 16,518,534 |   | —      |   | 101,119      |   |
| M.  Ronald Lipman                                                                                                                                             |   | 16,569,748 |   | —      |   | 49,905       |   |
| Daniel  S. Stone                                                                                                                                              |   | 16,572,348 |   | —      |   | 47,305       |   |
|                                                                                                                                                          |   |       |   |        |   |         |   |
| b. Proposal  to approve the appointment of KPMG LLP as the independent certified public  accountants of MART for the year ending December 31, 2003: |   | 16,568,953 |   | 41,155      |   | 9,545        |   |

 

Because the matters voted upon at the meeting requiredthe approval of a majority of the votes cast at the meeting, votes withheld,abstentions, and broker non-votes had no effect upon the ultimate outcome ofthe vote.

 

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**Part II. OTHER INFORMATION**

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

 

The following table setsforth summary financial data, which has been prepared by the Company withoutaudit.  Management believes thefollowing data should be used as a supplement to the historical statements ofoperations.  The data should be read inconjunction with the historical financial statements and the notes thereto.

 

**MID - ATLANTIC REALTY TRUST**

**Selected Financial Data**

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

 
|                                                                           |   | **Three  months ended June 30,** |        | **Six  months ended June 30,** |       |
|--------------------------------------------------------------------------------|--------|----------------------------------|-------------|--------------------------------|------------|
|                                                                           |   | **2003**                         |        | **2002**                       |       | **2003** |   | **2002** |   |
|                                                                           |   |                             |        |                           |       |   |   |   |   |
| Revenues                                                                       |   | **$**                            | **18,236**  |                           | 17,213     | ** ** | **37,507** |   | 33,109 |   |
|                                                                           |   |                             |        |                           |       |   |   |   |   |
| Net earnings                                                                   |   | **$**                            | **5,262**   |                           | 4,502      | ** ** | **10,546** |   | 8,281 |   |
|                                                                           |   |                             |        |                           |       |   |   |   |   |
| Net earnings per share - basic and diluted                                     |   | **$**                            | **0.29**    |                           | 0.25       | ** ** | **0.58** |   | 0.49 |   |
|                                                                           |   |                             |        |                           |       |   |   |   |   |
| Total assets                                                                   |   |                             |        |                           |       | **$** | **423,530** |   | 391,160 |   |
|                                                                           |   |                             |        |                           |       |   |   |   |   |
| Indebtedness -                                                                 |   |                             |        |                           |       |   |   |   |   |
| Total mortgages, convertible debentures, construction loans and notes  payable |   |                             |        |                           |       | **$** | **240,013** |   | 212,509 |   |
|                                                                           |   |                             |        |                           |       |   |   |   |   |
| Funds From Operations (“FFO”)(1)                                     |   | **$**                            | **8,070**   |                           | 7,485      | ** ** | **16,153** |   | 14,170 |   |
|                                                                           |   |                             |        |                           |       |   |   |   |   |
| Net cash flow:                                                                 |   |                             |        |                           |       |   |   |   |   |
| Provided by operating activities                                               |   | **$**                            | **9,198**   |                           | 6,295      | ** ** | **19,228** |   | 15,108 |   |
| Used by investing activities                                                   |   | **$**                            | **(2,961**  | **)**                          | (6,691     | ) | **(6,875** | **)** | (11,400 | ) |
| Used by financing activities                                                   |   | **$**                            | **(25,362** | **)**                          | (2,342     | ) | **(11,915** | **)** | (3,479 | ) |
|                                                                           |   |                             |        |                           |       |   |   |   |   |
| Cash dividends paid per share                                                  |   | **$**                            | **0.310**   |                           | 0.295      | ** ** | **0.620** |   | 0.590 |   |
|                                                                           |   |                             |        |                           |       |   |   |   |   |
| Weighted average number of shares outstanding: EPS                             |   |                             |        |                           |       |   |   |   |   |
| Basic                                                                          |   | **17,863,021**                   |        | 17,501,026                     | ** ** | **17,848,263** |   | 16,470,129 |   |
| Diluted                                                                        |   | **18,043,717**                   |        | 17,885,111                     | ** ** | **18,029,214** |   | 16,926,070 |   |
|                                                                           |   |                             |        |                           |       |   |   |   |   |
| **RECONCILIATION OF NET EARNINGS TO FFO****(1)**                               |   |                             |        |                           |       |   |   |   |   |
|                                                                           |   |                             |        |                           |       |   |   |   |   |
| Net earnings                                                                   |   | **$**                            | **5,262**   |                           | 4,502      | ** ** | **10,546** |   | 8,281 |   |
| Depreciation                                                                   |   | **2,808**                        |        | 2,983                          | ** ** | **5,607** |   | 5,889 |   |
| FFO                                                                            |   | **$**                            | **8,070**   |                           | 7,485      | ** ** | **16,153** |   | 14,170 |   |

 

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(1)         The Company believesthat Funds from Operations (“FFO”) provides relevant and meaningful informationabout its operating performance that is necessary, along with net earnings, foran understanding of its operating results. Funds from operations 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, plusdepreciation and amortization and after adjustments to record unconsolidatedpartnerships and joint ventures on the same basis.  FFO does not represent cash flows from operations as defined byaccounting principles generally accepted in the United States of America.  FFO is not indicative that cash flows areadequate to fund all cash needs and should not be considered as an alternativeto cash flows as a measure of liquidity. The Company’s FFO may not becomparable to the FFO of other REIT’s if they do not define similarly entitleditems exactly as the Company defines them or if they interpret the NAREITdefinition differently.

 

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**Part II. OTHER INFORMATION**

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

**MID-ATLANTIC REALTY TRUST**

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

 
|     (a) | Exhibit No.                                                                                                                                                                                                                             |
|-----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                        |                                                                                                                                                                                                                                    |   |   |
|                        | 2(a)                                                                                                                                                                                                                                    |   | Amended Agreement and Plan of Merger dated  July 14, 2003 among Kimco Realty Corporation, Kimco Acquisition Real  Estate Investment Trust and MART (incorporated by reference to Exhibit 2.1 to  MART’s current report on Form 8-K filed July 15, 2003). |
|                        | 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). |
|                        | 31                                                                                                                                                                                                                                      |   | Certifications pursuant to Rule 13a-14(a) and Rule  15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.  (filed herewith). |
|                        | 32                                                                                                                                                                                                                                      |   | Certifications pursuant to 18 U.S.C. Section 1350,  as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.  (furnished herewith). |
|                        |                                                                                                                                                                                                                                    |   |   |
|     (b) | Form 8-K filed  June 19, 2003 under Items 5 and 7 reporting the Merger Agreement dated  June 18, 2003 among Kimco Realty Corporation, Kimco Acquisition Real  Estate Investment Trust and MART.                               |
|                        | Form 8-K filed  July 15, 2003 under Items 5 and 7 reporting the amended Merger Agreement  dated July 14, 2003 among Kimco Realty Corporation, Kimco Acquisition  Real Estate Investment Trust and MART and other information. |
|                        | Form 8-K filed  August 14, 2003, reporting selected financial information under Items 7  and 9.                                                                                                                                    |

 

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**MID-ATLANTIC REALTY TRUST AND SUBSIDIARIES**

##### **Signatures**

 

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 

 
|   |     | **MID-ATLANTIC REALTY TRUST AND SUBSIDIARIES** |
|--------|----------|------------------------------------------------|
|   |     | **(Registrant)**                               |
|   |     |                                           |
|   |     |                                           |
| Date:  | 08/14/03 |                                           |   | /s/ F. Patrick Hughes |   |
|   |     |                                           | F. Patrick Hughes |
|   |     |                                           | President and Chief  Executive Officer |
|   |     |                                           |   |
|   |     |                                           |   |
| Date:  | 08/14/03 |                                           |   | /s/ Deborah R. Cheek |   |
|   |     |                                           | Deborah R. Cheek |
|   |     |                                           | Controller |

 

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##### **EXHIBIT INDEX**

 
| **Exhibit No.** |   | **Description**                                                                                                                                                                                                                                                         |
|-----------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |   |                                                                                                                                                                                                                                                                    |
| 2(a)            |   | Amended Agreement and Plan of Merger dated  July 14, 2003 among Kimco Realty Corporation, Kimco Acquisition Real  Estate Investment Trust and MART (incorporated by reference to Exhibit 2.1 to  MART’s current report on Form 8-K filed July 15, 2003). |
| 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).                                                                     |
| 31              |   | Certifications pursuant to Rule 13a-14(a) and Rule  15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.  (filed herewith).                                                                                                                    |
| 32              |   | Certifications pursuant to 18 U.S.C. Section 1350,  as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.  (furnished herewith).                                                                                                                        |

 

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