RPT Realty (KIM+N) 10-Q 2004 Q2 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

Form 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
	For the quarterly period ended June 30, 2004
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
	For the transition period from           to

Commission file number 1-10093

Ramco-Gershenson Properties Trust

(Exact name of registrant as specified in its charter)

Maryland	13-6908486
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
27600 Northwestern Highway, Suite 200, Southfield, Michigan (Address of principal executive offices)	48034 (Zip code)

248-350-9900

(Registrant’s telephone number, including area code)

          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

          Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes þ          No o

          Number of common shares of beneficial interest ($.01 par value) of the Registrant outstanding as of June 30, 2004: 16,821,841

Website access to Company’s Reports

          Ramco-Gershenson Properties Trust website address is www.rgpt.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) or 15 (d) of the Exchange Act are available free of charge through our website as soon as reasonably possible after they are electronically filed with, or furnished to, the Securities and Exchange Commission.

INDEX

		Page No.
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets — June 30, 2004 and December 31, 2003		2
	Consolidated Statements of Income and Comprehensive Income — Three Months and Six Months Ended June 30, 2004 and 2003		3
	Consolidated Statement of Shareholders’ Equity — Six Months Ended June 30, 2004		4
	Consolidated Statements of Cash Flows — Six Months Ended June 30, 2004 and 2003		5
	Notes to Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 4.	Controls and Procedures		20
PART II — OTHER INFORMATION
Item 4.	Submission of Matters to a Vote of Security Holders		22
Item 6.	Exhibits and Reports on Form 8-K		22
First Amendment to Employment Agreement
Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture
Fixed Rate Note Dated April 14, 2004
Mortgage Dated April 14, 2004
Fixed Rate Note Dated April 14, 2004
302 Certification of Chief Executive Officer
302 Certification of Chief Financial Officer
906 Certification of Chief Executive Officer and Chief Financial Officer

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PART I — FINANCIAL INFORMATION

Item 1 —Financial Statements

RAMCO-GERSHENSON PROPERTIES TRUST

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

			June 30,			December 31,
			2004			2003
Assets
Investment in real estate, net			$	775,419		$	736,753
Cash and cash equivalents				41,651			19,883
Accounts receivable, net				30,220			30,578
Equity investments in unconsolidated entities				7,502			9,091
Other assets, net				36,864			30,674
		Total Assets	$	891,656		$	826,979
Liabilities and Shareholders’ Equity
Mortgages and notes payable			$	475,988		$	454,358
Distributions payable				9,188			10,486
Accounts payable and accrued expenses				26,319			23,463
		Total Liabilities		511,495			488,307
Minority Interest				42,404			42,978
Shareholders’ Equity
	Preferred Shares of Beneficial Interest, par value $.01, 10,000 shares authorized:
		9.5% Series B Cumulative Redeemable Preferred Shares; 1,000 issued and outstanding, liquidation value of $25,000		23,804			23,804
		7.95% Series C Cumulative Convertible Preferred Shares; 1,755 issued and outstanding in 2004, none in 2003, liquidation value of $50,018		48,017			—
	Common Shares of Beneficial Interest, par value $.01, 30,000 shares authorized; 16,822 and 16,795 issued and outstanding, respectively			168			167
	Additional paid-in capital			342,595			342,127
	Accumulated other comprehensive loss			(8	)		(1,098	)
	Cumulative distributions in excess of net income			(76,819	)		(69,306	)
Total Shareholders’ Equity				337,757			295,694
		Total Liabilities and Shareholders’ Equity	$	891,656		$	826,979

See notes to consolidated financial statements.

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RAMCO-GERSHENSON PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except per share amounts)

(Unaudited)

			For the Three Months						For the Six Months
			Ended June 30,						Ended June 30,
			2004			2003			2004			2003
Revenues
	Minimum rents		$	21,837		$	17,756		$	43,143		$	35,120
	Percentage rents			33			115			483			756
	Recoveries from tenants			7,734			6,652			16,460			14,326
	Fees and management income			146			466			613			674
	Other income			512			239			736			718
		Total revenues		30,262			25,228			61,435			51,594
Expenses
	Real estate taxes			3,968			3,384			7,839			6,665
	Recoverable operating expenses			4,200			3,934			9,314			8,209
	Depreciation and amortization			6,521			5,579			12,890			10,664
	Other operating			406			3,271			764			3,654
	General and administrative			2,736			2,155			5,112			4,376
	Interest expense			8,041			7,118			15,796			14,458
		Total expenses		25,872			25,441			51,715			48,026
Operating income (loss)				4,390			(213	)		9,720			3,568
Earnings from unconsolidated entities				18			58			87			140
Income (Loss) from continuing operations before loss on sale of real estate and minority interest				4,408			(155	)		9,807			3,708
Loss on sale of real estate, net				(284	)		(527	)		(284	)		(527	)
Minority interest				(630	)		111			(1,435	)		(665	)
Income (Loss) from continuing operations				3,494			(571	)		8,088			2,516
Income from discontinued operations, net of minority interest				—			53			15			117
Net income (loss)				3,494			(518	)		8,103			2,633
Preferred stock dividends				(892	)		(594	)		(1,486	)		(1,188	)
Net income (loss) available to common shareholders			$	2,602		$	(1,112	)	$	6,617		$	1,445
Basic earnings per share:
	Income (loss) from continuing operations		$	0.15		$	(0.09	)	$	0.39		$	0.11
	Income from discontinued operations			—			—			—			0.01
	Net income (loss) available to common shareholders		$	0.15		$	(0.09	)	$	0.39		$	0.12
Diluted earnings per share:
	Income (loss) from continuing operations		$	0.15		$	(0.09	)	$	0.39		$	0.10
	Income from discontinued operations			—			—			—			0.01
	Net income (loss) available to common shareholders		$	0.15		$	(0.09	)	$	0.39		$	0.11
Basic weighted average shares outstanding				16,821			12,709			16,810			12,494
Diluted weighted average shares outstanding				16,999			12,889			17,016			12,655
Comprehensive Income
Net income (loss)			$	3,494		$	(518	)	$	8,103		$	2,633
Other comprehensive income :
	Unrealized gains (losses) on interest rate swaps			1,362			(626	)		1,090			35
Comprehensive income (loss)			$	4,856		$	(1,144	)	$	9,193		$	2,668

See notes to consolidated financial statements.

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RAMCO-GERSHENSON PROPERTIES TRUST

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)

								Accumulated
				Common		Additional		Other			Cumulative			Total
		Preferred		Stock Par		Paid-In		Comprehensive			Earnings/			Shareholders’
		Stock		Value		Capital		Loss			Distributions			Equity
Balance, January 1, 2004		$	23,804	$	167	$	342,127	$	(1,098	)	$	(69,306	)	$	295,694
	Cash distributions declared											(14,130	)		(14,130	)
	Preferred shares dividends declared											(1,486	)		(1,486	)
	Stock options exercised				1		468								469
	Issuance of Series C Preferred Shares		48,017												48,017
	Net income and comprehensive income								1,090			8,103			9,193
Balance, June 30, 2004		$	71,821	$	168	$	342,595	$	(8	)	$	(76,819	)	$	337,757

See notes to consolidated financial statements.

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RAMCO-GERSHENSON PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

				For the Six Months
				Ended June 30,
				2004			2003
Cash Flows from Operating Activities:
	Net income			$	8,103		$	2,633
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			12,890			10,698
		Amortization of deferred financing costs			1,036			617
		Write-off of straight line rent receivable			—			2,982
		Loss on sale of real estate			284			527
		Earnings from unconsolidated entities			(87	)		(140	)
		Minority interest, continuing operations			1,435			691
		Minority interest, discontinued operations			2			—
		Changes in assets and liabilities that provided (used) cash:
			Accounts receivable		(529	)		(3,162	)
			Other assets		(4,901	)		69
			Accounts payable and accrued expenses		3,437			(1,867	)
Net Cash Flows Provided by Operating Activities					21,670			13,048
Cash Flows from Investing Activities:
	Real estate developed or acquired, net of liabilities assumed				(29,803	)		(34,286	)
	Investment in unconsolidated entities				(50	)		(936	)
	Proceeds from sales of real estate				12,686			8,500
	Distributions received from unconsolidated entities				323			31
Net Cash Flows Used in Investing Activities					(16,844	)		(26,691	)
Cash Flows from Financing Activities:
	Cash distributions to shareholders				(14,119	)		(10,318	)
	Cash distributions to operating partnership unit holders				(2,460	)		(2,461	)
	Cash dividends paid on preferred shares				(1,188	)		(594	)
	Repayment of unsecured revolving credit facility				(7,250	)		(31,300	)
	Principal repayments on mortgages payable				(46,662	)		(21,451	)
	Repayment of Credit Facility				(19,050	)		(24,098	)
	Payment of deferred financing costs				(1,815	)		(478	)
	Net proceeds from issuance of common shares				—			50,695
	Net proceeds from issuance of preferred shares				48,017			—
	Proceeds from mortgages payable				34,700			17,038
	Borrowings on Credit Facility				19,050			8,098
	Borrowings on unsecured revolving credit facility				7,250			31,300
	Proceeds from exercise of stock options				469			815
Net Cash Flows Provided by Financing Activities					16,942			17,246
Net Increase in Cash and Cash Equivalents					21,768			3,603
Cash and Cash Equivalents, Beginning of Period					19,883			9,974
Cash and Cash Equivalents, End of Period				$	41,651		$	13,577
Supplemental Disclosures of Cash Flow Information:
	Cash paid for interest during the period			$	16,579		$	14,535
Supplemental Disclosures of Noncash Items:
	Assumed debt of acquired property			$	33,592		$	4,161
	Increase in note receivable from joint venture				2,554			—
	(Decrease) Increase in fair value of interest rate swaps				(1,090	)		35

See notes to consolidated financial statements.

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RAMCO-GERSHENSON PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

1.     Basis of Presentation

     The accompanying interim financial statements and related notes of Ramco-Gershenson Properties Trust (the “Company”) are unaudited; however, they have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting, the instructions to Form 10-Q and the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared under accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules. The unaudited interim financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods have been made. The results for interim periods are not necessarily indicative of the results for a full year.

     Certain reclassifications have been made to the 2003 financial statements to conform to the 2004 presentation.

2.     Recent Accounting Pronouncements

     Consolidation of Variable Interest Entities — In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities.” This Interpretation was revised in December 2003. The objective of this Interpretation is to provide guidance on how to identify a variable interest entity (“VIE”) and determine when the assets, liabilities, non-controlling interests, and results of operations of a VIE need to be included in a company’s consolidated financial statements. A company that holds variable interests in an entity will need to consolidate the entity if the company’s interest in the VIE is such that the company will absorb a majority of the VIE’s expected losses and/or receive a majority of the entity’s expected residual returns, if they occur. FIN 46 also requires additional disclosure by primary beneficiaries and other significant variable interest holders. The disclosure provisions of this Interpretation became effective upon issuance in January 2003. The consolidation requirements of this Interpretation applied immediately to VIEs created after January 31, 2003 and no later than the first fiscal year or interim period ending after March 15, 2004 for public companies with non-special purpose entities that were created prior to February 1, 2003. The consolidation requirements of this Interpretation were applicable to special purpose entities no later than the end of the first fiscal year or interim period ending after December 15, 2003.

     We evaluated all of our pre-existing joint venture relationships and determined that either the entities are not VIEs or we concluded that we are not considered to be the primary beneficiary or we do not hold a significant variable interest. In June 2004, we formed Ramco Gaines LLC (“Gaines”) and invested $50 for a 10% interest in Gaines, and an unrelated party contributed $450 for a 90% interest. This entity intends to develop a shopping center located in Gaines Township, Michigan. Gaines has an investment in real estate of approximately $1.6 million, and current liabilities of $1.6 million, as of June 30, 2004. Under the terms of an agreement with Gaines, we are responsible for the predevelopment, construction, leasing and management of the project. We determined that Gaines is a VIE, but we are not the primary beneficiary. However, in accordance with other accounting pronouncements, we consolidated Gaines in our financial statements as of June 30, 2004.

     In March 2004, the Emerging Issues Task Force (“EITF”) reached a final consensus regarding Issue 03-6, “Participating Securities and the Two-Class Method under FAS 128”. The issue addresses a number of questions regarding the computation of earnings per share (“EPS”) by companies that have issued securities other than common stock that participate in dividends and earnings of the issuing entity. Such securities are contractually entitled to receive dividends when and if the entity declares dividends on common stock. The issue also provided further guidance in applying the two-class method of calculating EPS once it is

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determined that a security is participating. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participating rights in undistributed earnings. This consensus is effective for the period ended June 30, 2004 and should be applied by restating previously reported EPS. Issue 03-6 had no impact on our consolidated financial statements.

3.     Accounts Receivable — Net

     Accounts receivable at June 30, 2004 and December 31, 2003 included $3,390 and $5,180 due from Atlantic Realty Trust (“Atlantic”) for reimbursement of tax deficiencies and interest related to the Internal Revenue Service (“IRS”) examination of our taxable years ended December 31, 1991 through 1995. Under terms of the Tax Agreement, Atlantic assumed all of our liability for tax and interest arising out of the IRS examination. See Note 11.

     Accounts receivable include $11,978 and $11,857 of unbilled straight-line rent receivables at June 30, 2004 and December 31, 2003, respectively.

     We provide for bad debt expense based upon the reserve method of accounting. We continuously monitor the collectibility of our accounts receivable (billed, unbilled and straight-line) from specific tenants, analyze historical bad debts, customer credit worthiness, current economic trends and changes in tenant payment terms when evaluating the adequacy of the allowance for bad debts. When tenants are in bankruptcy, we make estimates of the expected recovery of pre-petition and post-petition claims. The ultimate resolution of these claims can exceed one year. Accounts receivable in the accompanying balance sheet is shown net of an allowance for doubtful accounts of $951 and $873 at June 30, 2004 and December 31, 2003, respectively.

4.     Investment in Real Estate

     Investment in real estate consists of the following:

	June 30, 2004			December 31, 2003
Land	$	102,565		$	108,170
Buildings and improvements		766,336			702,501
Construction in progress		15,556			20,122
		884,457			830,793
Less: accumulated depreciation		(109,038	)		(94,040	)
Investment in real estate — net	$	775,419		$	736,753

     Depreciation expense for the six months ended June 30, 2004 and the year ended December 31, 2003 was $10,324 and $18,048 respectively.

5.     Property Acquisitions and Dispositions

     In January 2004, we purchased Merchants’ Square shopping center located in Carmel, Indiana. The cost of this property was approximately $37,300, which included the assumption of fixed rate debt in the amount of $23,122 with an interest rate of 7.1%. The purchase price has been initially allocated to the assets acquired, including intangible assets, and liabilities assumed, based on their fair market values. We are in the process of gathering certain information to finalize the purchase price allocation.

     In December 2003, we sold Ferndale Plaza shopping center and included its operations in income from discontinued operations in the Consolidated Statements of Income for the three months and six months ended June 30, 2004 and 2003. During 2004, we recognized $15 of percentage rent revenues, net of minority interest.

     During June 2004, we sold land and a building at our Auburn Mile shopping center to an existing tenant. In addition, at our Cox Creek shopping center, we sold a portion of the existing shopping center and land

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located immediately adjacent to the center in June 2004, to a retailer that will construct its own store. The sale of these parcels resulted in a net loss of $290.

6.     Investment in Unconsolidated Joint Venture

     In March 2004, we formed Beacon Square Development LLC (“Beacon Square”) and invested $50 for a 10% interest in Beacon Square and an unrelated party contributed capital of $450 for a 90% interest. At June 30, 2004, we have a note receivable from the joint venture in the amount of $1,676, which bears interest at 11%, for advances paid by us on behalf of Beacon Square for the acquisition of land and construction in progress related to the development of Beacon Square shopping center located in Grand Haven, Michigan. In June 2004, Beacon Square obtained a construction loan from a financial institution, in an amount not to exceed $6,800, which loan is due in June 2006.

     Under the terms of an agreement with Beacon Square, we are responsible for the predevelopment, construction, leasing and management of the project, for which we earned a predevelopment fee of $125 and management fees of $191 as of June 30, 2004.

     The joint venture agreement includes a provision whereby we have the right, but not the obligation, to purchase the property during a two year period, commencing March 30, 2005. In the event that we do not exercise the purchase option, we are obligated to pay $45 to the unrelated joint venture partner.

     On May 14, 2004, we acquired an additional 27.9% interest in 28th Street Kentwood Associates for $1,300 in cash, increasing our ownership interest in this entity to 77.9%. The share of net income for the period January 1, 2004 through May 13, 2004 which relates to our 50% interest is included in earnings from unconsolidated entities in the Consolidated Statements of Income. The additional investment in 28th Street Kentwood Associates resulted in this entity being fully consolidated as of May 14, 2004.

7.     Other Assets

     Other assets consist of the following:

	June 30, 2004			December 31, 2003
Leasing costs	$	24,060		$	21,949
Prepaid expenses and other		14,910			13,529
Deferred financing costs		11,867			10,052
Intangible assets		5,644			3,015
		56,481			48,545
Less: accumulated amortization		(23,562	)		(21,348	)
		32,919			27,197
Proposed development and acquisition costs		3,945			3,477
Other assets — net	$	36,864		$	30,674

     Amortization expense for the six months ended June 30, 2004 and the year ended December 31, 2003 was $3,602 and $5,919, respectively.

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8.     Mortgages and Notes Payable

     Mortgages and notes payable consist of the following:

	June 30, 2004		December 31, 2003
Fixed rate mortgages with interest rates ranging from 4.76% to 8.81%, due at various dates through 2018	$	395,338	$	330,776
Floating rate mortgages at 75% of the rate of long-term Capital A rated utility bonds, due January 1, 2010, plus supplemental interest to equal LIBOR plus 200 basis points, if applicable. The effective rate at June 30, 2004 was 4.16% and at December 31, 2003 was 4.38%		5,650		5,830
Floating rate mortgage, with an interest rate at prime or LIBOR plus 200 basis points, paid in full in June 2004		—		21,000
Construction loan financing, with an interest rate at LIBOR plus 175 basis points, paid in full in June 2004		—		21,752
Unsecured Revolving Credit Facility, with an interest rate at LIBOR plus 325 to 375 basis points over LIBOR, due December 2005, maximum borrowings of $40,000, zero balance outstanding		—		—
Secured Revolving Credit Facility, with an interest rate at LIBOR plus 150 to 200 basis points, due December 2005, maximum available borrowings of $125,000. The effective rate at June 30, 2004 was 4.48% and at December 31, 2003 was 4.98%		75,000		75,000
	$	475,988	$	454,358

     The mortgage notes and construction loans are secured by mortgages on properties that have an approximate net book value of $583,499 as of June 30, 2004. The Secured Revolving Credit Facility is secured by mortgages on various properties that have an approximate net book value of $145,168 as of June 30, 2004.

     Borrowings under the $125,000 Secured Revolving Credit Facility bear interest between 150 and 200 basis points over LIBOR depending on certain ratios. Using 175 basis points over LIBOR at June 30, 2004, the effective interest rate was 4.5%, including the impact of interest rate swap agreements.

     Borrowing under the Unsecured Revolving Credit Facility bears interest between 325 and 375 basis points over LIBOR depending on certain debt ratios.

     In April 2004, we entered into two fixed rate mortgage loans amounting to $34,700, secured by two properties. These mortgage notes payable bear interest at 5.4% and are due May 2014. The new debt replaced $20,145 of previously variable rate loans.

     At June 30, 2004, outstanding letters of credit issued under the Secured Revolving Credit Facility, not reflected in the accompanying consolidated balance sheet, total approximately $1,976. At June 30, 2004, we also had other letters of credit outstanding of approximately $1,247. At June 30, 2004, we had no outstanding borrowings under any of our letters of credit.

     The Secured Revolving Credit Facility and the Unsecured Revolving Credit Facility contain financial covenants relating to loan to asset value, minimum operating coverage ratios, and a minimum equity value. As of June 30, 2004, we were in compliance with the covenant terms.

     The mortgage loans (other than our Secured Revolving Credit Facility) encumbering our properties, including properties held by our unconsolidated joint ventures, are generally non-recourse, subject to certain exceptions for which we would be liable for any resulting losses incurred by the lender. These exceptions vary from loan to loan but generally include fraud or a material misrepresentation, misstatement or omission by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss

9

to the lender, filing of a bankruptcy petition by the borrower, either directly or indirectly, and certain environmental liabilities. In addition, upon the occurrence of certain of such events, such as fraud or filing of a bankruptcy petition by the borrower, we would be liable for the entire outstanding balance of the loan, all interest accrued thereon and certain other costs, penalties and expenses.

     Under terms of various debt agreements, we are required to maintain interest rate swap agreements to reduce the impact of changes in interest rate on our floating rate debt. We have interest rate swap agreements with an aggregate notional amount of $75.0 million at June 30, 2004. Based on rates in effect at June 30, 2004, the agreements for notional amounts aggregating $75.0 million provide for fixed rates ranging from 4.4% to 4.7% and expire at various dates through December 2005. We are exposed to credit loss in the event of non-performance by the counter party to the interest rate swap agreements, however we do not anticipate non-performance by the counter party.

     The following table presents scheduled principal payments on mortgages and notes payable as of June 30, 2004:

Year Ended December 31,
2004 (July 1 — December 31)		$	3,741
2005			83,866
2006			105,144
2007			61,755
2008			18,990
Thereafter			202,492
	Total	$	475,988

9.     Earnings Per Share

     The following table set forth the computation of basic and diluted earnings per share (“EPS”) (in thousands, except per share data):

	Three Months Ended							Six Months Ended
	June 30,							June 30,
	2004			2003				2004			2003
Numerator:
Net Income (Loss)	$	3,494		$	(518	)		$	8,103		$	2,633
Preferred stock dividends		(892	)		(594	)			(1,486	)		(1,188	)
Income (Loss) available to common shareholders for basic and diluted EPS	$	2,602		$	(1,112	)		$	6,617		$	1,445
Denominator:							��
Weighted-average common shares for basic EPS		16,821			12,709				16,810			12,494
Effect of dilutive securities:
Options outstanding		178			180				206			161
Weighted-average common shares for diluted EPS		16,999			12,889				17,016			12,655
Basic EPS	$	0.15		$	(0.09	)		$	0.39		$	0.12
Diluted EPS	$	0.15		$	(0.09	)		$	0.39		$	0.11

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10.     Leases

     Approximate future minimum rentals under noncancelable operating leases in effect at June 30, 2004, assuming no new or renegotiated leases nor option extensions on lease agreements, are as follows:

Year Ended December 31,
2004 (July 1 — December 31)		$	42,301
2005			80,301
2006			72,806
2007			64,781
2008			55,337
Thereafter			312,326
	Total	$	627,852

     We lease office space for our corporate headquarters under an operating lease that expires on August 15, 2004. We anticipate that we will relocate our corporate offices during the third quarter of 2004 and have entered into a new ten year lease agreement that becomes effective August 15, 2004. Under terms of the agreement, our annual straight-line rent expense will be approximately $750, an increase of $387 over the existing operating lease.

11.     Commitments and Contingencies

     Internal Revenue Service Examination — We have been the subject of an Internal Revenue Service (“IRS”) examination of our taxable years ended December 31, 1991 through 1995 (the “IRS Audit”). On October 29, 2001, the IRS issued an examination report in connection with the IRS Audit wherein they proposed, among other things, to disqualify us as a REIT for the taxable year ended December 31, 1994 (the “IRS Report”). During the third quarter of 1994, we held more than 25% of the value of our total assets in short-term Treasury Bill reverse repurchase agreements, which could be viewed as non-qualifying assets for purposes of determining whether we qualify to be taxed as a REIT. We filed a formal protest with respect to the IRS Report on November 29, 2001, and subsequently participated in numerous meetings with the IRS appellate conferee. On December 4, 2003, we reached an agreement with the IRS with respect to the IRS Audit (the “Closing Agreement”).

     Pursuant to the terms of the Closing Agreement (i) our “REIT taxable income” was adjusted for each of the taxable years ended December 31, 1991, 1992, and 1993; (ii) our election to be taxed as a REIT was terminated for the taxable year ended December 31, 1994; (iii) we were not permitted to reelect REIT status for the taxable year ended December 31, 1995; (iv) we were permitted to reelect REIT status for taxable years beginning on or after January 1, 1996; (v) our timely filing of IRS Form 1120-REIT for the taxable year ended December 31, 1996 was treated, for all purposes of the Internal Revenue Code (the “Code”), as an election to be taxed as a REIT; (vi) the provisions of the Closing Agreement were expressly contingent upon our payment of “deficiency dividends” (that is, our declaration and payment of a distribution that is permitted to relate back to the year for which the IRS determines a deficiency in order to satisfy the requirement for REIT qualification that we distribute a certain minimum amount of our “REIT taxable income” for such year) in amounts not less than $1,387 and $809 for our 1992 and 1993 taxable years respectively; (vii) we consented to the assessment and collection, by the IRS, of $770 in tax deficiencies; (viii) we consented to the assessment and collection, by the IRS, of interest on such tax deficiencies and deficiency dividends; and (ix) we agreed that no penalties or other “additions to tax” would be asserted with respect to any adjustments to taxable income required pursuant to the Closing Agreement.

     As a consequence of losing our REIT status for the taxable year ended December 31, 1994, and reelecting REIT status for the taxable year which began January 1, 1996, we became subject to certain Treasury Regulations applicable to corporations qualifying as a REIT after being subject to tax under subchapter C of the Internal Revenue Code. Under these Treasury Regulations, a corporation which owns an asset on the day before, as well as the day of, the corporation’s qualification as a REIT recognizes gain

11

(subject to tax at the highest corporate income tax rate) as of the day before such qualification in an amount equal to the excess of (1) the fair market value of such assets on such date over (2) the corporation’s adjusted basis in such assets on such date. In lieu of this treatment, the corporation may elect, in respect of any asset it held on the day before, as well as on the first day, it qualified as a REIT, to recognize, on any taxable disposition of such asset during the ten-year period beginning on such date, gain which, to the extent of the excess of (1) the fair market value of the asset as of the beginning of such ten-year period over (2) the corporation’s adjusted basis in such asset as of the beginning of such ten-year period, is subject to tax at the highest corporate income tax rate.

     An exception to the Treasury Regulations described in the preceding paragraph applies to any re-election as a REIT by a corporation that, (1) immediately prior to qualifying as a REIT, was taxed as a subchapter C corporation for a period not exceeding two taxable years, and (2) immediately prior to being subject to tax as a subchapter C corporation, was taxed as a REIT for a period of at least one taxable year. Because we meet the requirements for this exception to apply, the rules in the Treasury Regulations do not apply to us.

     In addition, because we lost our REIT status for the taxable year ended December 31, 1994, and reelected REIT status for the taxable year which began January 1, 1996, we were required to have distributed to our shareholders by the close of the taxable year which began January 1, 1996, any earnings and profits we accumulated as a subchapter C corporation for the taxable years ended December 31, 1994 and 1995. Because we did not accumulate (but rather distributed) any profits we earned during the taxable years ended December 31, 1994 and 1995, we did not have any accumulated earnings and profits that we were required to distribute by the close of the taxable year which began January 1, 1996.

     In connection with the incorporation and distribution of all of the shares of Atlantic Realty Trust (“Atlantic”) in May 1996, we entered into a tax agreement with Atlantic under which Atlantic assumed all of our tax liability arising out of the IRS’ then ongoing examination (which included, but is not otherwise limited to, the IRS Audit), excluding any tax liability relating to any actions or events occurring, or any tax return position taken after May 10, 1996, but including liabilities for additions to tax, interest, penalties and costs relating to covered taxes (the “Tax Agreement”). In addition, the Tax Agreement provides that, to the extent any tax which Atlantic is obligated to pay under the Tax Agreement can be avoided through the declaration of a “deficiency dividend”, we will make, and Atlantic will reimburse us for the amount of such deficiency dividend.

     On December 15, 2003, our Board of Trustees declared a cash dividend in the amount of $2,200, payable on January 20, 2004, to common shareholders of record on December 31, 2003. Immediately following the payment of such dividend, we timely filed IRS Form 976, Claim for Deficiency Dividends Deductions by a Real Estate Investment Trust, claiming deductions in the amount of $1,387 and $809 for our 1992 and 1993 taxable years respectively. Our payment of the deficiency dividend was both consistent with the terms of the Closing Agreement and necessary to retain our status as a REIT for each of the taxable years ended December 31, 1992 and 1993. On January 21, 2004, pursuant to the Tax Agreement, Atlantic reimbursed us $2,200 in recognition of our payment of the deficiency dividend.

     In the notes to the consolidated financial statements of Atlantic’s most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission for the quarter ended March 31, 2004, Atlantic has disclosed its liability under the Tax Agreement for the tax deficiencies, deficiency dividend, and interest reflected in the Closing Agreement. As discussed above, on January 21, 2004, Atlantic reimbursed us $2,200 in recognition of our payment of the deficiency dividend. Atlantic has also paid all other amounts, on behalf of the Company, assessed by the IRS to date. The IRS is currently conducting an examination of us for the taxable years ended December 31, 1996 and 1997, and of one of our subsidiary partnerships for the taxable years ended December 31, 1997, 1998, and 1999 (the “IRS Examination”).

     Certain tax deficiencies, interest, and penalties, which may be assessed against us in connection with the IRS Audit and the IRS Examination, may constitute covered items under the Tax Agreement. We expect to be reimbursed for covered items under the Tax Agreement, but there can be no assurance that we will receive payment from Atlantic or that Atlantic will have sufficient assets to reimburse us for all amounts we must pay to the IRS with respect to such covered items, and we would be required to pay the difference out of our own

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funds. According to the quarterly report on Form 10-Q filed by Atlantic for its quarter ended March 31, 2004, Atlantic had net assets of approximately $68.9 million (as determined pursuant to the liquidation basis of accounting). The IRS may also assess taxes against us that Atlantic is not required to pay. Accordingly, the ultimate resolution of any tax liabilities arising pursuant to the IRS Audit and the IRS Examination may have a material adverse effect on our financial position, results of operations and cash flows.

     Construction Costs — In connection with the development and expansion of various shopping centers as of June 30, 2004, we have entered into agreements for construction costs of approximately $6,204.

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Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements, including the respective notes thereto which are included in this Form 10-Q.

Overview

     We are a fully integrated, self-administered, publicly-traded real estate investment trust which owns, develops, acquires, manages and leases community shopping centers, single tenant retail properties and one regional mall, in the midwestern, southeastern and mid-Atlantic regions of the United States. At June 30, 2004, our portfolio consists of 65 shopping centers, of which eleven are power centers and two are single tenant properties, as well as one enclosed regional mall, totaling approximately 13.7 million square feet of gross leasable area.

     Our corporate strategy is to maximize total return for our shareholders by improving operating income and enhancing asset value. We pursue our goal through:

•  A proactive approach to redeveloping, renovating and expanding our shopping centers.

•  The acquisition of community shopping centers, with a focus on grocery and nationally-recognized discount department store anchor tenants.

•  The development of new shopping centers in metropolitan markets where we believe demand for a center exists.

•  A proactive approach to leasing vacant spaces and entering into new leases for occupied spaces where leases are about to expire.

     We have followed a disciplined approach to managing our operations by focusing primarily on enhancing the value of our existing portfolio through strategic sales and successful leasing efforts and by improving our capital structure during the last twelve months through the refinancing of a portion of our variable rate debt with long-term fixed rate debt and two public equity offerings. We continue to selectively pursue new acquisitions and development opportunities.

Critical Accounting Policies and Estimates

     Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principals generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Audit Committee of the Board of Trustees. Actual results could differ from these estimates under different assumptions or conditions.

     An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that are reasonably likely to occur could materially impact the financial statements. No material changes have occurred during the fiscal quarter ended June 30, 2004, to our critical accounting policies.

Liquidity and Capital Resources

     The principal uses of our liquidity and capital resources are for operations, acquisitions, development, redevelopment, including expansion and renovation programs, and debt repayment, as well as dividend payments in accordance with real estate investment trust (“REIT”) requirements. We anticipate that cash on

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hand, borrowings under our existing credit facilities, as well as other debt and additional equity offerings, will provide the necessary capital to achieve continued growth.

     We generated $21.7 million in cash flows from operating activities and $16.9 million from financing activities for the six months ended June 30, 2004. Real estate developed or acquired used $29.8 million during 2004. In June 2004, we issued 1,755,000 preferred shares and received net proceeds of $48.0 million. During the six months ended June 30, 2004, we repaid $46.7 million of mortgage obligations and paid $17.8 million in cash distributions to common and preferred shareholders and holders of operating partnership units.

     At June 30, 2004, our market capitalization amounted to $1.0 billion. Market capitalization consisted of $476.0 million of debt, $26.4 million of Series B Preferred Shares, $50.5 million of Series C Preferred Shares, and $478.6 million of Common Shares and Operating Partnership Units at market value. Our debt to total market capitalization was 46.2% at June 30, 2004, as compared to 43.7% at December 31, 2003. Our outstanding debt at June 30, 2004, had a weighted average interest rate of 6.6%, and consisted of $470.3 million of fixed rate debt and $5.7 million of variable rate debt.

     Our $125.0 million secured revolving credit facility bears interest between 150 and 200 basis points over LIBOR depending on certain of our leverage ratios. Using 175 basis points over LIBOR at June 30, 2004, the effective interest rate was 4.5%, including the impact of interest rate swap agreements. The credit facility is due in December 2005.

     Our unsecured revolving credit facility bears interest between 325 and 375 basis points over LIBOR depending on certain debt ratios. The credit facility is due in December 2005.

     In April 2004, we entered into two fixed rate mortgage loans amounting to $34.7 million, secured by two properties. These mortgage notes payable bear interest at 5.4% and are due May 2014. The new debt replaced $20.1 million of previously variable rate loans.

     Outstanding letters of credit issued under our secured revolving credit facility, not reflected in the accompanying consolidated balance sheet, total approximately $2.0 million. At June 30, 2004, we also had other letters of credit outstanding of approximating $1.2 million.

     Under terms of various debt agreements, we are required to maintain interest rate swap agreements to reduce the impact of changes in interest rate on our floating rate debt. We have interest rate swap agreements with an aggregate notional amount of $75.0 million at June 30, 2004. Based on rates in effect at June 30, 2004, the agreements for notional amounts aggregating $75.0 million provide for fixed rates ranging from 4.4% to 4.7% and expire at various dates through December 2005. We are exposed to credit loss in the event of non-performance by the counter party to the interest rate swap agreements, however we do not anticipate non-performance by the counter party.

     After taking into account the impact of converting our variable rate debt into fixed rate debt by use of the interest rate swap agreements, at June 30, 2004, our variable rate debt accounted for approximately $5.7 million of outstanding debt with a weighted average interest rate of 4.2%. Variable rate debt accounted for approximately 1.2% of our total debt and 0.6% of our total capitalization.

     The properties in which Ramco-Gershenson Properties, L.P. (the “Operating Partnership”) owns an interest and which are accounted for on the equity method of accounting are subject to non-recourse mortgage indebtedness. At June 30, 2004, our pro rata share of non-recourse mortgage debt on the unconsolidated properties (accounted for on the equity method) was $16.4 million with a weighted average interest rate of 6.2%. Fixed rate debt amounted to $9.4 million, or 57.1%, of our pro rata share.

     The mortgage loans (other than our secured revolving credit facility) encumbering our properties, including properties held by our unconsolidated joint ventures, are generally non-recourse, subject to certain exceptions for which we would be liable for any resulting losses incurred by the lender. These exceptions vary from loan to loan, but generally include fraud or a material misrepresentation, misstatement or omission by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss to the lender, filing of bankruptcy petition by the borrower, either directly or indirectly, and certain environmental liabilities. In addition, upon the occurrence of certain of such events, such as fraud or filing of a

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bankruptcy petition by the borrower, we would be liable for the entire outstanding balance of the loan, all interest accrued thereon and certain other costs, penalties and expenses.

Capitalization

     Our capital structure at June 30, 2004, includes property-specific mortgages, our unsecured revolving credit facility, our secured revolving credit facility, our Series B Preferred Shares, our Series C Preferred Shares, our Common Shares and the minority interest in the Operating Partnership. At June 30, 2004, the minority interest in the Operating Partnership represented a 14.8% ownership in the Operating Partnership which, may under certain conditions, be exchanged for an aggregate of 2,929,000 Common Shares.

     As of June 30, 2004, the units in our Operating Partnership (“OP Units”) were exchangeable for our Common Shares on a one-for-one basis. We, as sole general partner of the Operating Partnership, have the option, but not the obligation, to settle exchanged OP Units held by others in cash based on the current trading price of our Common Shares. Assuming the exchange of all limited partnership interests in the Operating Partnership, there would have been 19,751,103 of our common shares outstanding at June 30, 2004, with a market value of approximately $478.6 million (based on the closing price of $24.23 per share on June 30, 2004).

     As part of our business plan to improve our capital structure and reduce debt, we will continue to pursue the strategy of selling fully-valued properties and to dispose of shopping centers that no longer meet the criteria established for our portfolio. Our ability to obtain acceptable selling prices and satisfactory terms will impact the timing of future sales. Net proceeds from the sale of properties are expected to reduce outstanding debt and to fund any future acquisitions.

     We anticipate that the combination of the availability under our two credit facilities, possible equity offerings, the sale of existing properties, and potential new debt will satisfy our expected working capital requirements through at least the next 12 months. We anticipate adequate liquidity for the foreseeable future to fund future developments, expansions, repositioning, and to continue currently planned capital programs, and to make distributions to our shareholders in accordance with the Code’s requirements applicable to REITs. Although we believe that the combination of factors discussed above will provide sufficient liquidity, no such assurance can be given.

Comparison of Six Months Ended June 30, 2004 to Six Months Ended June 30, 2003

     We made six acquisitions during 2003 and one acquisition in January 2004. In addition, we increased our partnership interest in 28th Street Kentwood Associates, which is now included in the consolidated financial statements. These eight properties are included as “Acquisitions” in the following discussion.

     Total revenues for the six months ended June 30, 2004, were $61.4 million, a $9.8 million increase over the comparable period in 2003. Minimum rents increased $8.0 million, to $43.1 million for the six months ended June 30, 2004 when compared to the same period in 2003. Acquisitions contributed $6.8 million of the increase in minimum rents for the six months ended June 30, 2004.

     Recoveries from tenants for the six months ended June 30, 2004, were $16.5 million, a $2.1 million increase over the comparable period in 2003. Acquisitions contributed $2.3 million of the increase in recoveries for the six months ended June 30, 2004. The overall recovery ratio was 96.0% for the six months ended June 30, 2004, compared to 96.3% for the six months ended June 30, 2003. We expect the recovery ratio to be approximately 96.0% for the twelve months ended December 31, 2004, compared to 93.1% for 2003. The forecasted increase is primarily related to the estimated completion of various redevelopment projects during 2004.

     Percentage rents decreased $273,000, from $756,000 for the six months ended June 30, 2003, to $483,000 for the same period in 2004. Upon lease renewal, we have converted percentage rents for several anchor tenants to fixed minimum rent.

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     Fees and management income decreased $61,000 from $674,000 for the six months ended June 30, 2003, to $613,000 for the same period in 2004. The decrease is primarily due to the loss of management fee income from a shopping center which the owners sold in September 2003. Other income increased $18,000 to $736,000 for the six months ended June 30, 2004, and the increase was primarily attributable to bankruptcy distributions received from Kmart, net of lower termination fees earned during the six months ended June 30, 2004, compared to the same period in 2003.

     Total expenses for the six months ended June 30, 2004, increased $3.7 million, or 7.7%, to $51.7 million as compared to $48.0 million for the six months ended June 30, 2003. The increase was due to a $2.3 million increase in total recoverable expenses, including recoverable operating expenses and real estate taxes, $2.2 million increase in depreciation expense, a $1.3 million increase in interest expense, a $736,000 increase in general and administrative expenses and a $2.9 million decrease in other operating expenses. Acquisitions accounted for $6.8 million of the increase in total expenses.

     Total recoverable expenses, including real estate taxes, for the six months ended June 30, 2004, increased by $2.3 million, to $17.2 million as compared to $14.9 million for the six months ended June 30, 2003. Acquisitions contributed $2.4 million of the increase in total recoverable expenses for the six months ended June 30, 2004.

     Depreciation and amortization expense increased $2.2 million, or 20.9%, to $12.9 million for the six months ended June 30, 2004. Depreciation expense related to acquisitions made in 2003 and 2004 contributed $1.8 million of the increase. The balance of the increase is primarily attributable to redevelopment projects completed during 2003.

     Other operating expenses decreased $2.9 million to $764,000 for the six months ended June 30, 2004, from $3.7 million for the same period in 2003. The decrease is principally related to a lease assignment made by Kmart Corporation at our Tel-Twelve shopping center that was accounted for as a lease termination in 2003. As a result, the straight line rent receivable of approximately $3.0 million was written off in the second quarter of 2003.

     General and administrative expenses for the six months ended June 30, 2004, increased $736,000 to $5.1 million, as compared to $4.4 million for the six months ended June 30, 2003. The increase is principally attributable to increases in state and local taxes, as well as increased salaries and fringe benefits during the six months ended June 30, 2004, when compared to the same period in 2003.

     Interest expense increased $1.3 million, or 9.2% to $15.8 million for the six months ended June 30, 2004, from $14.5 million for the six months ended June 30, 2003. Average loan balances outstanding increased $53.5 million for the six months ended June 30, 2004 as compared to 2003. The higher average outstanding debt contributed $1.7 million to the increase in interest expense. Lower interest rates during the six months ended June 30, 2004, decreased interest expense by $176,000, when compared to the same period in 2003. Interest costs capitalized, in conjunction with development and expansion projects, were $419,000 for the six months ended June 30, 2004, as compared to $254,000 for the same period in 2003. Increased amortization of debt service and the amortization of premium on debt related to purchase accounting for acquisitions, offset the increase in interest expense by $79,000.

     The increase in minority interest is principally the result of higher income before minority interest for the six months ended June 30, 2004, when compared to same period in 2003.

     In December 2003, we sold Ferndale Plaza shopping center, and we have included its operations in income from discontinued operations in the Consolidated Statement of Income for the six months ended June 30, 2004 and 2003. During 2004, we recognized $15,000 of percentage rent revenues, net of minority interest, from a tenant located at this shopping center.

Comparison of Three Months Ended June 30, 2004 to Three Months Ended June 30, 2003

     Total revenues for the three months ended June 30, 2004, were $30.3 million, a $5.0 million increase over the comparable period in 2003. Minimum rents increased $4.1 million, to $21.8 million for the three months

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ended June 30, 2004, when compared to the same period in 2003. Acquisitions contributed $3.5 million of the increase in minimum rents for the three months ended June 30, 2004.

     Recoveries from tenants for the three months ended June 30, 2004, were $7.7 million, a $1.1 million increase over the comparable period in 2003. The increase in recoveries is primarily the result of Acquisitions. The overall recovery ratio was 94.7% for the three months ended June 30, 2004, compared to 90.9% for the three months ended June 30, 2003. We expect the recovery ratio to be approximately 96.0 % for the twelve months ended December 31, 2004, compared to 93.1% for 2003. The forecasted increase is primarily related to the estimated completion of various redevelopment projects during 2004.

     Percentage rents decreased $82,000, from $115,000 for the three months ended June 30, 2003, to $33,000 for the same quarter in 2004. Upon lease renewal, we have converted percentage rents for several anchor tenants to fixed minimum rent.

     Fees and management income were $320,000 lower for the three months ended June 30, 2004, when compared to the same quarter in 2003. The decrease is primarily due to predevelopment fees earned in the second quarter of 2003. Other income increased $273,000 to $512,000 for the three months ended June 30, 2004, and the increase was primarily attributable to bankruptcy distributions received from Kmart in the second quarter of 2004.

     Total expenses for the three months ended June 30, 2004, increased $431,000, or 1.7%, to $25.9 million as compared to $25.4 million for the three months ended June 30, 2003. The increase was due to $850,000 increase in total recoverable expenses, including recoverable operating expenses and real estate taxes, $942,000 increase in depreciation expense, a $923,000 increase in interest expense, a $581,000 increase in general and administrative expenses and a $2.9 million decrease in other operating expenses.

     Total recoverable expenses, including real estate taxes, for the three months ended June 30, 2004, increased by $850,000, to $8.2 million as compared to $7.3 million for the three months ended June 30, 2003. The increase is attributable primarily to shopping center acquisitions made in 2003 and 2004.

     Depreciation and amortization expense increased $942,000, or 16.9%, to $6.5 million for the three months ended June 30, 2004. Depreciation expense related to acquisitions made in 2003 and 2004 contributed $865,000 of the increase. The balance of the increase is primarily attributable to redevelopment projects completed during 2003.

     Other operating expenses decreased $2.9 million to $406,000 for the three months ended June 30, 2004, from $3.3 million for the same period in 2003. The decrease relates to a lease assignment made by Kmart Corporation at our Tel-Twelve shopping center that was accounted for as a lease termination in 2003. As a result, the straight line rent receivable of approximately $3.0 million was written off in the second quarter of 2003.

     General and administrative expenses for the three months ended June 30, 2004, increased $581,000 to $2.7 million, as compared to $2.2 million for the three months ended June 30, 2003. The increase is principally attributable to increases in state and local taxes, as well as increased salaries and fringe benefits during the three months ended June 30, 2004, when compared to the same period in 2003.

     Interest expense increased $923,000, or 13.0%, from $7.1 million for the three months ended June 30, 2003, to $8.0 million during the second quarter of 2004. Average loan balances outstanding increased approximately $59.8 million for the three months ended June 30, 2004 as compared to 2003. The higher average outstanding debt contributed $967,000 to the increase in interest expense. Interest costs capitalized, in conjunction with development and expansion projects, were $188,000 for the three months ended June 30, 2004, as compared to $206,000 for the same period in 2003. Increased amortization of debt service and the amortization of premium on debt related to purchase accounting for acquisitions, offset the increase in interest expense by $119,000.

     The increase in minority interest is principally the result of higher income before minority interest for the three months ended June 30, 2004, when compared to same period in 2003.

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Economic Conditions

     Substantially all of the leases at our properties provide for tenants to pay their pro rata share of operating expenses, including common area maintenance and real estate taxes, thereby reducing our exposure to increases in operating expenses resulting from inflation. Many of the tenants’ leases contain provisions designed to lessen the impact of inflation. Such provisions include the ability to receive percentage rentals based on a tenant’s gross sales, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. In addition, many of the leases are for terms of less than ten years, which may enable us to replace existing leases with new leases at a higher base and/or percentage rentals if rents of the existing leases are below the then existing market rate.

     The retail industry has experienced some financial difficulties during the past few years and certain local, regional and national retailers have filed for protection under bankruptcy laws. If this trend should continue, our future earnings performance could be negatively impacted.

Sensitivity Analysis

     We are exposed to interest rate risk on our variable rate debt obligations. We are not subject to any foreign currency exchange rate risk or commodity price risk, or other material rate or price risks. Based on our debt and interest rates and the interest rate swap agreements in effect at June 30, 2004, a 100 basis point change in interest rates would affect our annual earnings and cash flows by approximately $56,500.

Funds from Operations

     We consider funds from operations, also known as “FFO,” an appropriate supplemental measure of the financial performance of an equity REIT. Under the NAREIT definition, FFO represents income before minority interest, excluding extraordinary items, as defined under accounting principles generally accepted in the United States of America (“GAAP”), gains and losses on sales of depreciable property, plus real estate related depreciation and amortization (excluding amortization of financing costs), and after adjustments for unconsolidated partnerships and joint ventures. FFO should not be considered an alternative to GAAP net income as an indication of our performance. We consider FFO to be a useful measure for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs. However, our computation of FFO may differ from the methodology for calculating FFO utilized by other real estate companies, and therefore, may not be comparable to these other real estate companies.

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     The following table illustrates the calculation of FFO (in thousands):

			Three Months Ended					Six Months Ended
			June 30,					June 30,
			2004		2003			2004		2003
Net income (loss) available to common shareholders			$	2,602	$	(1,112	)	$	6,617	$	1,445
Add:
	Depreciation and amortization expense			6,542		5,582			12,942		10,680
	Loss on sale of depreciable property			1,403		1,367			1,403		1,367
	Minority interest in partnership:
		Continuing operations		630		(111	)		1,435		665
		Discontinued operations		—		10			2		26
Funds from Operations — basic and diluted(1)			$	11,177	$	5,736		$	22,399	$	14,183
Weighted average equivalent shares outstanding(2)
	Basic			19,751		15,640			19,739		15,425
	Diluted			19,928		15,820			19,945		15,586
Supplemental disclosure:
	Straight-line rental income		$	504	$	431		$	1,152	$	1,037

(1)	Series B preferred shares are not convertible into common shares. Therefore they are excluded from the calculation. Series C preferred shares are convertible into common shares at a conversion price of $28.50 per share. The Series C preferred shares have been excluded from the weighted average equivalent total shares outstanding as they are antidilutive.
(2)	Basic weighted average shares outstanding represents the weighted average total shares outstanding, which includes common shares and assumes the redemption of all Operating Partnership Units for common shares. Diluted weighted average shares outstanding represents the basic weighted average common shares outstanding and the dilutive impact of in-the-money stock options.

Capital Expenditures

     During the six months ended June 30, 2004, we spent approximately $3.1 million on revenue-generating capital expenditures including tenant allowances, leasing commissions paid to third-party brokers, legal costs relative to lease documents, and capitalized leasing and construction costs. These types of costs generate a return through rents from tenants over the term of their leases. Revenue-enhancing capital expenditures, including expansions, renovations or repositionings, were approximately $7.9 million. Revenue neutral capital expenditures, such as roof and parking lot repairs which are anticipated to be recovered from tenants, amounted to approximately $1.1 million.

Forward Looking Statements

     This Form 10-Q contains forward-looking statements with respect to the operation of certain of our properties. We believe the expectations reflected in the forward-looking statements made in this document are based on reasonable assumptions. Certain factors could occur that might cause actual results to vary. These include general economic conditions, the strength of key industries in the cities in which our properties are located, the performance of tenants at our properties and elsewhere, and other factors discussed in this report and other reports we have filed with the Securities and Exchange Commission.

Item 4.     Controls and Procedures

     Our principal executive officer and principal financial officer have evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934, as

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amended (the “Act”), as of the end of the period covered by this report and have determined that such disclosure controls and procedures are effectively designed to ensure that required information disclosed by us in reports that we file or submit under the Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

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PART II — OTHER INFORMATION

Item 4.     Submission of Matters to a Vote of Security Holders

     The Annual Meeting of Shareholders of the Company was held on June 10, 2004.

     At the Annual Meeting, Joel D. Gershenson, Dennis E. Gershenson and Robert A. Meister were re-elected as trustees of the Company to serve until the 2007 Annual Meeting of Shareholders or until their successors are elected and qualified. The following votes were cast for or were withheld from voting with respect to the election of each of the following persons:

			Authority
Name	Votes For		Withheld
Joel D. Gershenson		14,706,103		148,088
Dennis E. Gershenson		14,706,414		147,777
Robert A. Meister		13,380,349		1,473,842

     There were no broker non-votes or abstentions in connection with the election of the trustees at the Annual Meeting.

     The following votes were cast for, against or withheld regarding the ratification of Deloitte & Touche LLP as the independent auditors for the Company for the fiscal year commencing January 1, 2004:

For		Against		Abstain
	14,737,151		96,407		20,633

Item 6.     Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit No.	Description
10.64	Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated April 14, 2004 between Ramco Auburn Crossroads SPE LLC, as Mortgagor and Citigroup Global Markets Realty Corp as Mortgagee in the amount of $26,960,000.
10.65	Fixed rate note dated April 14, 2004 between Ramco Auburn Crossroads SPE LLC as Maker and Citigroup Global Markets Realty Corp as payee in the amount of $26,960,000.
10.66	Mortgage dated April 14, 2004 between Ramco Auburn Crossroads SPE LLC, as Mortgagor and Citigroup Global Markets Realty Corp as Mortgagee in the amount of $7,740,000.
10.67	Fixed rate note dated April 14, 2004 between Ramco Auburn Crossroads SPE LLC as Maker and Citigroup Global Markets Realty Corp as payee in the amount of $7,740,000.
31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

     1. On June 2, 2004, the Company filed a Report on Form 8-K, dated May 26, 2004, reporting under Item 5 and 7.

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SIGNATURES

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

RAMCO-GERSHENSON PROPERTIES TRUST

By:  /s/ DENNIS GERSHENSON

Dennis Gershenson

Chief Executive Officer

Date: August 4, 2004

By:  /s/ RICHARD J. SMITH

Richard J. Smith

Chief Financial Officer

(Principal Accounting Officer)

Date: August 4, 2004

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EXHIBIT INDEX

Exhibit No.	Description
10.64	Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated April 14, 2004 between Ramco Auburn Crossroads SPE LLC, as Mortgagor and Citigroup Global Markets Realty Corp as Mortgagee in the amount of $26,960,000.
10.65	Fixed rate note dated April 14, 2004 between Ramco Auburn Crossroads SPE LLC as Maker and Citigroup Global Markets Realty Corp as payee in the amount of $26,960,000.
10.66	Mortgage dated April 14, 2004 between Ramco Auburn Crossroads SPE LLC, as Mortgagor and Citigroup Global Markets Realty Corp as Mortgagee in the amount of $7,740,000.
10.67	Fixed rate note dated April 14, 2004 between Ramco Auburn Crossroads SPE LLC as Maker and Citigroup Global Markets Realty Corp as payee in the amount of $7,740,000.
31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.