RPT Realty (KIM+N) 10-Q 2005 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, 2005
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	(I.R.S. Employer
incorporation or organization)	Identification Number)
31500 Northwestern Highway	48334
Farmington Hills, Michigan	(Zip code)
(Address of principal executive offices)

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 July 28, 2005: 16,837,941

INDEX

		Page No.
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets — June 30, 2005 and December 31, 2004		3
	Consolidated Statements of Income and Comprehensive Income — Three Months and Six Months Ended June 30, 2005 and 2004		4
	Consolidated Statement of Shareholders’ Equity — Six Months Ended June 30, 2005		5
	Consolidated Statements of Cash Flows — Six Months Ended June 30, 2005 and 2004		6
	Notes to Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		23
Item 4.	Controls and Procedures		24
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings		25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		25
Item 3.	Defaults Upon Senior Securities		25
Item 4.	Submission of Matters to a Vote of Security Holders		25
Item 5.	Other Information		25
Item 6.	Exhibits		25
Letter of Agreement
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

2

PART I — FINANCIAL INFORMATION

Item 1 —Financial Statements

RAMCO-GERSHENSON PROPERTIES TRUST

CONSOLIDATED BALANCE SHEETS

			June 30,			December 31,
			2005			2004
			(Unaudited)
			(In thousands, except
			per share share amounts)
ASSETS
Investment in real estate, net			$	943,331		$	951,176
Cash and cash equivalents				18,805			15,045
Accounts receivable, net				29,324			26,845
Equity investments in unconsolidated entities				46,514			9,182
Note receivable from unconsolidated entity				7,047			—
Other assets, net				38,635			41,530
		Total Assets	$	1,083,656		$	1,043,778
LIABILITIES AND SHAREHOLDERS’ EQUITY
Mortgages and notes payable			$	678,648		$	633,435
Accounts payable and accrued expenses				34,086			30,003
Distributions payable				10,312			9,963
		Total Liabilities		723,046			673,401
Minority Interest				39,336			40,364
SHAREHOLDERS’ EQUITY
	Preferred Shares of Beneficial Interest, par value $.01, 10,000 shares authorized:
		9.5% Series B Cumulative Redeemable Preferred Shares; 1,000 shares issued and outstanding, liquidation value of $25,000		23,804			23,804
		7.95% Series C Cumulative Convertible Preferred Shares; 1,889 shares issued and outstanding, liquidation value of $53,837		51,741			51,741
	Common Shares of Beneficial Interest, par value $.01, 45,000 shares authorized; 16,838 and 16,829 issued and outstanding as of June 30, 2005 and December 31, 2004, respectively			168			168
	Additional paid-in capital			342,856			342,719
	Accumulated other comprehensive income			353			220
	Cumulative distributions in excess of net income			(97,648	)		(88,639	)
Total Shareholders’ Equity				321,274			330,013
		Total Liabilities and Shareholders’ Equity	$	1,083,656		$	1,043,778

See notes to consolidated financial statements.

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RAMCO-GERSHENSON PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

			For the Three Months						For the Six Months
			Ended June 30,						Ended June 30,
			2005			2004			2005			2004
						(Unaudited)
			(In thousands, except per share amounts)
REVENUES:
	Minimum rents		$	25,145		$	21,803		$	50,272		$	43,099
	Percentage rents			99			33			465			483
	Recoveries from tenants			9,549			7,734			20,393			16,460
	Fees and management income			1,521			146			2,738			613
	Other income			1,611			512			2,361			736
		Total revenues		37,925			30,228			76,229			61,391
EXPENSES:
	Real estate taxes			4,770			3,968			9,460			7,839
	Recoverable operating expenses			5,027			4,200			10,947			9,314
	Depreciation and amortization			8,800			6,497			16,495			12,798
	Other operating			412			406			882			764
	General and administrative			3,869			2,604			7,588			5,279
	Interest expense			10,803			8,041			21,134			15,796
		Total expenses		33,681			25,716			66,506			51,790
Income from continuing operations before loss on sale of real estate assets, minority interest and earnings from unconsolidated entities				4,244			4,512			9,723			9,601
Loss on sale of real estate assets				(1	)		(284	)		(4	)		(284	)
Minority interest in operating partnership				(751	)		(648	)		(1,600	)		(1,417	)
Earnings from unconsolidated entities				647			18			931			87
Income from continuing operations				4,139			3,598			9,050			7,987
Income from discontinued operations, net of minority interest				—			—			—			15
Net income				4,139			3,598			9,050			8,002
Preferred stock dividends				(1,664	)		(892	)		(3,328	)		(1,486	)
Net income available to common shareholders			$	2,475		$	2,706		$	5,722		$	6,516
Basic earnings per share:
	Income from continuing operations		$	0.15		$	0.16		$	0.34		$	0.39
	Income from discontinued operations			—			—			—			—
	Net income		$	0.15		$	0.16		$	0.34		$	0.39
Diluted earnings per share:
	Income from continuing operations		$	0.15		$	0.16		$	0.34		$	0.38
	Income from discontinued operations			—			—			—			—
	Net income		$	0.15		$	0.16		$	0.34		$	0.38
Basic weighted average shares outstanding				16,836			16,821			16,833			16,810
Diluted weighted average shares outstanding				16,880			16,999			16,878			17,016
COMPREHENSIVE INCOME
Net income			$	4,139		$	3,598		$	9,050		$	8,002
Other comprehensive income:
	Unrealized gains (losses) on interest rate swaps			(111	)		1,362			133			1,090
Comprehensive income			$	4,028		$	4,960		$	9,183		$	9,092

See notes to consolidated financial statements.

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RAMCO-GERSHENSON PROPERTIES TRUST

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

								Accumulated		Cumulative
				Common		Additional		Other		Distributions			Total
		Preferred		Stock Par		Paid-In		Comprehensive		in Excess of			Shareholders’
		Stock		Value		Capital		Income		Net Income			Equity
		(In thousands)
		(Unaudited)
Balance, January 1, 2005		$	75,545	$	168	$	342,719	$	220	$	(88,639	)	$	330,013
	Cash distributions declared										(14,731	)		(14,731	)
	Preferred shares dividends declared										(3,328	)		(3,328	)
	Stock options exercised						137							137
	Net income and comprehensive income								133		9,050			9,183
Balance, June 30, 2005		$	75,545	$	168	$	342,856	$	353	$	(97,648	)	$	321,274

See notes to consolidated financial statements.

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RAMCO-GERSHENSON PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

				For the Six Months
				Ended June 30,
				2005			2004
				(In thousands)
				(Unaudited)
Cash Flows from Operating Activities:
	Net income			$	9,050		$	8,002
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			16,495			12,798
		Amortization of deferred financing costs			1,016			1,036
		Loss on sale of real estate assets			4			284
		Earnings from unconsolidated entities			(931	)		(87	)
		Minority interest, continuing operations			1,600			1,417
		Minority interest, discontinued operations			—			2
		Distributions received from unconsolidated entities			67			323
		Changes in assets and liabilities that provided (used) cash:
			Accounts receivable		(2,407	)		(485	)
			Other assets		(899	)		(4,901	)
			Accounts payable and accrued expenses		4,163			3,604
Net Cash Provided by Operating Activities					28,158			21,993
Cash Flows from Investing Activities:
	Real estate developed or acquired, net of liabilities assumed				(13,782	)		(29,803	)
	Investment in unconsolidated entities				(36,768	)		(50	)
	Proceeds from sales of real estate				—			12,686
	Increase in note receivable from joint venture				(1,072	)		—
	Payments on note receivable from joint venture				2,300			—
Net Cash Used in Investing Activities					(49,322	)		(17,167	)
Cash Flows from Financing Activities:
	Cash distributions to shareholders				(14,434	)		(14,119	)
	Cash distributions to operating partnership unit holders				(2,511	)		(2,460	)
	Cash dividends paid on preferred shares				(3,328	)		(1,188	)
	Principal repayments on mortgages payable				(4,486	)		(46,662	)
	Payment of deferred financing costs				(88	)		(1,815	)
	Distributions to minority partners				(65	)		—
	Borrowings on secured credit facility, net				32,299			—
	Borrowings on unsecured revolving credit facility, net				17,400			—
	Net proceeds from issuance of preferred shares				—			48,017
	Proceeds from mortgages payable				—			34,700
	Proceeds from exercise of stock options				137			469
Net Cash Provided by Financing Activities					24,924			16,942
Net Increase in Cash and Cash Equivalents					3,760			21,768
Cash and Cash Equivalents, Beginning of Period					15,045			19,883
Cash and Cash Equivalents, End of Period				$	18,805		$	41,651
Supplemental Cash Flow Disclosure, including Non-Cash Activities:
	Cash paid for interest during the period			$	19,829		$	16,579
	Capitalized interest				273			231
	Assets contributed to joint venture entity				7,994			—
	Assumed debt of acquired property				—			33,592
	Increase (Decrease) in fair value of interest rate swaps				133			(1,090	)

See notes to consolidated financial statements.

6

RAMCO-GERSHENSON PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

1. Organization and Basis of Presentation

      Ramco-Gershenson Properties Trust, together with its subsidiaries, (the “Company”) is a real estate investment trust (“REIT”) engaged in the business of owning, developing, acquiring, managing and leasing community shopping centers, regional malls and single tenant retail properties. At June 30, 2005, we had a portfolio of 81 shopping centers, with more than 17,700,000 square feet of gross leasable area, located in the midwestern, southeastern and mid-Atlantic regions of the United States. Our centers are usually anchored by discount department stores or supermarkets and the tenant base consists primarily of national and regional retail chains and local retailers. Our credit risk, therefore, is concentrated in the retail industry.

      The consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with instructions to Form 10-Q and the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited interim consolidated 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, 2004. All adjustments which are, in the opinion of management, recurring and necessary for a fair presentation of the financial statements for the interim periods have been made. Operating results for six months ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

2. Recent Accounting Pronouncements

      In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”). This statement supersedes Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” and its related implementation guidance. SFAS 123(R) established standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. SFAS 123(R) focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS 123(R) is effective for fiscal years beginning after December 15, 2005. The adoption of SFAS 123(R) is not expected to have a material impact on our consolidated financial statements.

      In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections, a Replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS No. 154”). SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections, and is effective for fiscal years beginning after December 15, 2005. Early adoption is permitted. SFAS No. 154 is not expected to have a material impact on our consolidated financial statements.

3. Accounts Receivable — Net

      Accounts receivable at June 30, 2005 and December 31, 2004 include $3,390 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 a tax agreement that we entered into with Atlantic (the “Tax Agreement”), Atlantic assumed all of our liability for tax and interest arising out of that IRS examination. See Note 10.

      Accounts receivable includes $12,637 and $11,708 of unbilled straight-line rent receivables at June 30, 2005 and December 31, 2004, respectively.

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RAMCO-GERSHENSON PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      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 $981 and $1,143 at June 30, 2005 and December 31, 2004, respectively.

4. Investment in Real Estate

      Investment in real estate consists of the following:

	June 30, 2005			December 31, 2004
Land	$	135,291		$	141,736
Buildings and improvements		920,167			908,304
Construction in progress		14,794			16,215
		1,070,252			1,066,255
Less: accumulated depreciation		(126,921	)		(115,079	)
Investment in real estate — net	$	943,331		$	951,176

      Depreciation expense for the six months ended June 30, 2005 and the year ended December 31, 2004 was $13,671 and $22,567 respectively.

5. Investment in Unconsolidated Joint Venture

      In December 2004, we formed Ramco Lion/ Venture LP (the “Venture”) with affiliates of Clarion Lion Properties Fund (“Clarion”), a private equity real estate fund sponsored by ING Clarion Partners. We own 30% of the equity in the Venture and Clarion owns 70%. The Venture plans to acquire up to $450,000 of stable, well-located community shopping centers located in the southeast and midwestern United States. The Company and Clarion have committed to contribute to the Venture up to $54,000 and $126,000, respectively, of equity capital to acquire properties through June 2006. As of June 30, 2005, we have invested approximately $42,200 of our total commitment to the Venture and Clarion has contributed $98,400 of their commitment.

      In 2004, the Venture acquired three shopping centers located in Florida with an aggregate purchase price of $48,000. During the first and second quarter of 2005, the Venture acquired the following seven shopping centers:

					Purchase		Debt
Acquisition Date	Property Name		Property Location		Price		Assumed
January		Oriole Plaza		Delray Beach, FL	$	23,200	$	12,334
February		Martin Square		Stuart, FL		23,200		14,364
February		West Broward Shopping Center		Plantation, FL		15,800		10,201
February		Marketplace of Delray		Delray Beach, FL		28,100		17,482
March		Winchester Square		Rochester, MI		53,000		31,189
March		Hunter’s Square		Farmington Hills, MI		75,000		40,450
May		Millennium Park		Livonia, MI		53,100		—
					$	271,400	$	126,020

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RAMCO-GERSHENSON PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Under terms of an agreement with the Venture, we are the manager of the Venture and its properties, earning fees for acquisitions, management, leasing and financing. We earned an acquisition fee of $1,153 during the six months ended June 30, 2005. We also have the opportunity to receive performance-based earnings through our interest in the Venture. We account for our interest in the Venture using the equity method. At June 30, 2005, the Venture had a $41,280 variable rate bridge loan, due September 30, 2005, which the Company and Clarion have guaranteed the loan in event of a default. If a default were to occur the Company and Clarion would have full recourse to the assets of the Venture. It is the Venture’s intention to replace the bridge loan with permanent financing. However, there can be no assurance that the Venture will be able to refinance the debt on commercially reasonable or any other terms.

      In March 2005, we formed Ramco Jacksonville, LLC (“Jacksonville”) to develop a shopping center in Jacksonville, Florida. We invested $929 for a 20% interest in Jacksonville and an unrelated party had committed to contribute capital of $3,715 for an 80% interest. We also transferred land and certain improvements to the joint venture in the amount of $7,994 and $1,072 of cash for a note receivable from the joint venture in the aggregate amount of $9,066. The note receivable bears interest at LIBOR plus 700 basis points and is due April 2008. On June 30, 2005, Jacksonville obtained a construction loan and mezzanine financing from a financial institution, in the amount of $58,772. On July 1, 2005 we received $5,000 as partial payment of the note receivable from the joint venture.

      We will not have a controlling interest in Jacksonville, and we will record our 20% share of the joint venture’s operating results using the equity method. Under terms of an agreement with Jacksonville, we are responsible for development, construction, leasing and management of the project, for which we will earn fees. Our maximum exposure to loss is our investment of $929 and the balance of the note receivable at June 30, 2005.

6. Other Assets

      Other assets consist of the following:

	June 30, 2005			December 31, 2004
Leasing costs	$	22,272		$	20,956
Prepaid expenses and other		18,893			18,201
Deferred financing costs		13,316			13,227
Intangible assets		9,738			9,693
		64,219			62,077
Less: accumulated amortization		(26,846	)		(23,507	)
		37,373			38,570
Proposed development and acquisition costs		1,262			2,960
Other assets — net	$	38,635		$	41,530

      Amortization expense for the six months ended June 30, 2005 and the year ended December 31, 2004 was $3,840 and $6,215, respectively.

      Intangible assets at June 30, 2005 include $6,662 of lease origination costs and $2,709 of favorable leases related to the allocation of the purchase prices for acquisitions made since 2002. These assets are being amortized over the lives of the applicable leases.

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RAMCO-GERSHENSON PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The weighted–average amortization period for intangible assets attributable to lease origination costs is 6.6 years and 6.0 years for favorable leases. The following table represents estimated aggregate amortization expense related to intangible assets as of June 30, 2005:

Year Ending December 31,
2005 (July 1 — December 31)		$	633
2006			1,190
2007			1,017
2008			894
2009			751
Thereafter			2,915
	Total	$	7,400

7.     Mortgages and Notes Payable

      Mortgages and notes payable consist of the following:

	June 30, 2005		December 31, 2004
Fixed rate mortgages with interest rates ranging from 4.8% to 8.8%, due at various dates through 2018	$	490,459	$	494,715
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, 2005 was 6.0% and at December 31, 2004 was 3.8%		5,240		5,470
Unsecured Revolving Credit Facility, with an interest rate at LIBOR plus 185 to 225 basis points, due December 2005, maximum borrowings of $40,000. The effective rate at June 30, 2005 was 5.2% and at December 31, 2004 was 4.7%		34,700		17,300
Secured Revolving Credit Facility, with an interest rate at LIBOR plus 115 to 155 basis points, due December 2005, maximum available borrowings of $160,000. The effective rate at June 30, 2005 was 5.1% and at December 31, 2004 was 4.1%		148,249		115,950
	$	678,648	$	633,435

      The mortgage notes are secured by mortgages on properties that have an approximate net book value of $733,792 as of June 30, 2005. The Secured Revolving Credit Facility is secured by mortgages on various properties that have an approximate net book value of $168,268 as of June 30, 2005.

      Borrowings under the $160,000 Secured Revolving Credit Facility bear interest between 115 and 155 basis points over LIBOR depending on certain of our leverage ratios. Using 140 basis points over LIBOR at June 30, 2005, the effective interest rate was 5.1% including the impact of interest rate swap agreements covering $75,000 of this variable rate debt. At our option, through October 2005, we can extend the terms of this facility for up to one year. We also have an option to increase our borrowings under this facility by $40.0 million, to a total of $200.0 million in available credit.

      Borrowing under the Unsecured Revolving Credit Facility bear interest between 185 and 225 basis points over LIBOR depending on certain debt ratios. Using 200 basis points over LIBOR at June 30, 2005, the effective interest rate was 5.2%.

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RAMCO-GERSHENSON PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      At June 30, 2005, outstanding letters of credit issued under the Secured Revolving Credit Facility, not reflected in the accompanying consolidated balance sheet, total approximately $2,110. At June 30, 2005, we also had other letters of credit outstanding of approximately $490. At June 30, 2005, 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, 2005, we were in compliance with the covenant terms under the facilities.

      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 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.

      The following table presents scheduled principal payments on mortgages and notes payable as of June 30, 2005:

Year Ended December 31,
2005 (July 1 — December 31)	$	187,751
2006		105,589
2007		62,213
2008		103,249
2009		48,524
Thereafter		171,322
Total	$	678,648

      It is our intention to refinance the various mortgages and the Secured Revolving Credit Facility and Unsecured Revolving Credit Facility that mature during 2005. However, there can be no assurance that we will be able to refinance our debt on commercially reasonable or any other terms.

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RAMCO-GERSHENSON PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8. Earnings Per Share

      The following table sets 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,
	2005			2004			2005			2004
Numerator:
Net Income	$	4,139		$	3,598		$	9,050		$	8,002
Preferred stock dividends		(1,664	)		(892	)		(3,328	)		(1,486	)
Income available to common shareholders for basic and diluted EPS	$	2,475		$	2,706		$	5,722		$	6,516
Denominator:
Weighted-average common shares for basic EPS		16,836			16,821			16,833			16,810
Effect of dilutive securities:
Options outstanding		44			178			45			206
Weighted-average common shares for diluted EPS		16,880			16,999			16,878			17,016
Basic EPS	$	0.15		$	0.16		$	0.34		$	0.39
Diluted EPS	$	0.15		$	0.16		$	0.34		$	0.38

9. Leases

      Approximate future minimum revenues from rentals under noncancelable operating leases in effect at June 30, 2005, assuming no new or renegotiated leases nor option extensions on lease agreements, are as follows:

Year Ended December 31,
2005 (July 1 — December 31)		$	48,251
2006			91,180
2007			82,516
2008			72,009
2009			57,764
Thereafter			318,837
	Total	$	670,557

      We relocated our corporate offices during the third quarter of 2004 and have entered into a new ten year operating lease agreement that became effective August 15, 2004. Under terms of the agreement, our annual straight-line rent expense is approximately $754 million. We have an option to renew this lease for two consecutive periods of five years each.

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RAMCO-GERSHENSON PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Approximate future minimum rental payments under our noncancelable corporate office lease and two other office locations, assuming no option extensions, are as follows:

Year Ending December 31,
2005 (July 1 — December 31)		$	378
2006			771
2007			794
2008			815
2009			837
Thereafter			3,782
	Total	$	7,377

10. Commitments and Contingencies

Internal Revenue Service Examinations

IRS Audit Resolution for Years 1991 to 1995

      We were the subject of an IRS examination of our taxable years ended December 31, 1991 through 1995. We refer to this examination as the IRS Audit. On December 4, 2003, we reached an agreement with the IRS with respect to the IRS Audit. We refer to this agreement as the Closing Agreement. Pursuant to the terms of the Closing Agreement (i) our “REIT taxable income” was adjusted for each of 1991, 1992, and 1993; (ii) our election to be taxed as a REIT was terminated for 1994; (iii) we were not permitted to reelect REIT status for 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 1996 was treated, for all purposes of 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 million and $809,000 for our 1992 and 1993 taxable years respectively; (vii) we consented to the assessment and collection, by the IRS, of $770,000 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.

      In addition, because we lost our REIT status for 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 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, in May 1996, we entered into the Tax Agreement with Atlantic under which Atlantic assumed all of our tax liabilities 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. 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.

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RAMCO-GERSHENSON PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      On December 15, 2003, our Board of Trustees declared a cash dividend in the amount of $2.2 million, 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 million and $809,000 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 $2.2 million 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, or the SEC, for the quarter ended March 31,2005 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 $2.2 million 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.

Current IRS Examination

      The IRS is currently conducting an examination of us for our taxable years ended December 31, 1996 and 1997. We refer to this examination as the IRS Examination. On April 13, 2005, the IRS issued two examination reports to us with respect to the IRS Examination. The first examination report seeks to disallow certain deductions and losses we took in 1996 and to disqualify us as a REIT for the years 1996 and 1997. The second report also proposes to disqualify us as a REIT, but for our taxable years ended December 31, 1998 through 2000, years we had not previously been notified were under examination, and to not allow us to reelect REIT status for 2001 through 2004. Insofar as the reports seek to disqualify us as a REIT, we vigorously dispute the IRS’ positions, and we have been advised by legal counsel that the IRS’ positions set forth in the reports with respect to our disqualification as a REIT are unsupported by the facts and applicable law. We discuss this issue in greater detail below under the subheading “Disqualification as a REIT”. We dispute the disallowance of certain deductions and losses for 1996 and believe that amounts which may be assessed against us with respect to any such disallowance would constitute items covered under the Tax Agreement. We discuss this issue in greater detail below under the subheading “Disallowance of Certain Deductions and Losses”. We contested the reports by filing a protest with the Appeals Office of the IRS on May 31, 2005. Although Atlantic has filed a Form 8-K with the SEC stating that it has been advised by counsel that it would not have any obligation to indemnify us with respect to any tax, interest or penalty which may be assessed against us in connection with the IRS Examination, we disagree with such position and, if the need arises, intend to pursue collection of amounts related to the 1996 tax year from Atlantic under the Tax Agreement.

Disqualification as a REIT

      The examination reports propose to disqualify us as a REIT for our taxable years 1996 through 2000 for reasons relating to our ownership of stock in Ramco-Gershenson, Inc. and for our alleged failure to meet the requirement to demand from record holders of our shares certain information regarding the actual ownership of those shares. The reports also propose not to allow us to reelect REIT status for 2001 through 2004. As described below, we believe, and have been advised by legal counsel, that the positions set forth in the examination reports pursuant to which the IRS proposes to disqualify us as a REIT are unsupported by the facts and applicable law.

      First, the IRS asserts that a “commonality of interests and control” between us and certain trustees and members of our management who own voting stock in Ramco-Gershenson, Inc. resulted in our “deemed” prohibited ownership of more than 10% of the voting stock in Ramco-Gershenson, Inc. We have been advised by counsel that the structure of our ownership of stock in Ramco-Gershenson, Inc. and the governance

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RAMCO-GERSHENSON PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

thereof, is consistent with the form and structure of similar subsidiaries used by other large REITs and should not provide a valid basis for the disqualification of the Company as a REIT for any of the tax years covered by the examination reports.

      Secondly, the IRS proposes to disqualify us as a REIT for 1996 through 2000 for our alleged failure to meet the shareholder-record keeping requirement because we did not request certain information from holders of interests in our operating partnership. We have been advised by counsel that the IRS has erred in their determination that we were required to make such a demand from our partners merely by reason of their ownership of interests in our operating partnership.

      Finally, the IRS proposes not to allow us to reelect to be a REIT for 2001 through 2004 based on our alleged failure to qualify as a REIT for 2000. We believe, based on the advice of counsel, that we would be allowed to elect REIT status for our 2001 tax year.

Disallowance of Certain Deductions and Losses

      The examination reports also propose to disallow certain deductions and losses taken in 1996. We believe that, in many material respects, the positions based on which the IRS proposes to disallow such deductions and losses are unsupported by the facts and applicable law.

Protest; Potential Impact

      We have contested the positions taken in the examination reports through the filing of a protest with the Appeals Office of the IRS on May 31, 2005. Pursuant to such filing, we would expect to have a meeting with an Appeals Officer of the IRS sometime in the future. If we cannot obtain a satisfactory result through the administrative appeals process, we may pursue judicial review of the determination.

      If all of the positions taken (exclusive of the proposed revocation of our REIT status for 2001 through 2004) and adjustments proposed in the examination reports were sustained, then we would be liable for approximately $22.0 million in combined tax, penalties and interest (as calculated by the IRS through April 13, 2005). If we were successful in opposing the positions taken in the first examination report (which relates to 1996 and 1997), other than the proposed increase in our REIT taxable income resulting from disallowance of certain deductions for 1996, then we could avoid being disqualified as a REIT by paying a deficiency dividend in the amount (if any) necessary to satisfy the requirement that we distribute each year a certain minimum amount of our REIT taxable income for such year. In the event we were required to pay a deficiency dividend, such dividend would be treated as an addition to tax for the year to which it relates, and we would be subject to the assessment and collection by the IRS of interest on such addition to tax. The second examination report (which relates to 1998 through 2000) does not quantify our potential liability for combined tax, penalties and interest resulting from the proposed revocation of our REIT status for 2001 through 2004. Such potential liability could be substantial and could have a material adverse effect on our financial position, results of operations and cash flows.

      If we were to fail to qualify as a REIT for any taxable year, we would be subject to federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates for such year, and distributions to shareholders would not be deductible by us in computing our taxable income. Any such corporate tax liability could be substantial and, to the extent we were not indemnified against such liability by Atlantic under the Tax Agreement, would reduce the amount of our cash available for distribution to our shareholders, which in turn could have a material adverse impact on the value of, and trading prices for, our common shares. In addition, we would not be able to reelect REIT status until the fifth taxable year following the initial year of disqualification unless we were to qualify for relief under applicable provisions of the Code. Upon a new REIT election, we would be required to distribute any earnings and profits that we had accumulated during the taxable years in which we failed to qualify as a REIT. If we failed to qualify as a

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RAMCO-GERSHENSON PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

REIT for more than two taxable years, we would be subject to corporate level tax during the ten-year period beginning on the first day of our REIT year with respect to any built-in gain we recognize on the disposition of any asset held on such date.

Tax Agreement with Atlantic

      Certain tax deficiencies, interest, and penalties, which may be assessed against us in connection with the IRS Examination, may constitute covered items under the Tax Agreement. Atlantic has filed a Form 8-K in which it disclosed that it has been advised by counsel that it does not have any obligation to make any payment to or indemnify us in any manner for any tax, interest or penalty set forth in the examination report relating to 1996 and 1997. We disagree with this position and believe that some or all of the amounts which may be assessed against us with respect to the disallowance of certain deductions and losses for 1996 would constitute covered items under the Tax Agreement. If Atlantic prevails in its position that it is not required to indemnify us under the Tax Agreement with respect to liabilities we incur as a result of the IRS Examination, then we would be required to pay for such liabilities out of our own funds. Even if we prevail in our position that Atlantic is required to indemnify us under the Tax Agreement with respect to such liabilities, Atlantic may not have sufficient assets at the time to reimburse us for all amounts we must pay to the IRS, and we would be required to pay the difference out of our own funds. According to the quarterly report on Form 10-Q filed by Atlantic for the quarter ended March 31, 2005, Atlantic had net assets of approximately $80.8 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, particularly if we are required to distribute deficiency dividends to our shareholders and/or pay additional taxes, interest and penalties to the IRS in amounts that exceed any indemnification payments we receive from Atlantic.

Operating Partnership Examination Report

      In connection with an ongoing IRS examination of one of our operating partnerships we have also received an examination report, which relates to such partnership’s taxable year ended December 31, 1997, which proposes to increase the income of certain of the operating partnership’s partners other than us. As such, the proposed adjustments would not result in our being liable for additional tax, penalties or interest.

Construction Costs

      In connection with the development and expansion of various shopping centers as of June 30, 2005, we have entered into agreements for construction costs of approximately $23,753.

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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 (“REIT”) 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, 2005, our portfolio consisted of 81 shopping centers, of which thirteen are power centers and two are single tenant retail properties, as well as one enclosed regional mall, totaling approximately 17.7 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; and

•  A proactive approach to leasing vacant spaces and entering into new leases for occupied spaces when 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 through the refinancing of a portion of our variable rate debt with long-term fixed rate debt and one preferred stock offering. 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 principles generally accepted in the United States of America (“GAAP”). 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 our board of trustees. Actual results could differ from these estimates under different assumptions or conditions.

      Critical accounting policies are those that are both significant to the overall presentation of our financial condition and results of operations and require management to make difficult, complex or subjective judgments. For example, significant estimates and assumptions have been made with respect to useful lives of assets, capitalization of development and leasing costs, recoverable amounts of receivables and initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to property acquisitions. Our critical accounting policies as discussed in our Annual Report on Form 10-K for the year ended December 31, 2004 have not changed during the first six months of 2005.

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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 REIT requirements. We anticipate that cash on hand, borrowings under our existing credit facilities, the possible sale of existing assets, as well as other debt and additional equity offerings, will provide the necessary capital to achieve continued growth.

      We generated $28.2 million in cash flows from operating activities and $24.9 million from financing activities for the six months ended June 30, 2005. Our equity investment in the seven properties acquired by Ramco/ Lion Venture LP and our initial investment in Ramco Jacksonville LLC used $36.8 million during the six months ended June 30, 2005. Borrowings under our secured and unsecured revolving credit facilities provided $49.7 million. During the six months ended June 30, 2005, we repaid $4.5 million of mortgage obligations and paid $16.9 million in cash distributions to shareholders and holders of operating partnership units.

      At June 30, 2005, our market capitalization amounted to $1.3 billion. Market capitalization consisted of $678.6 million of debt, $26.4 million of our 9.5% Series B Cumulative Redeemable Preferred Shares, $59.0 million of our 7.95% Series C Cumulative Convertible Preferred Shares, and $578.8 million of our common shares and operating partnership units at market value. Our debt to total market capitalization was 50.5% at June 30, 2005, as compared to 46.5% at December 31, 2004. After taking into account the impact of converting our variable rate debt into fixed rate debt by use of interest rate swap agreements, our outstanding debt at June 30, 2005 had a weighted average interest rate of 6.2%, and consisted of $565.4 million of fixed rate debt and $113.2 million of variable rate debt.

      Our $160.0 million secured revolving credit facility bears interest between 1.15% and 1.55% over the London Interbank Offered Rate (“LIBOR”) depending on certain of our leverage ratios. Using 1.40% over LIBOR at June 30, 2005, the effective interest rate on our secured revolving credit facility was 5.1%, including the effect of interest rate swap agreements. The credit facility is due in December 2005. At our option through October 2005, we can extend the terms of this facility for up to one year. We also have an option to increase our borrowings under this facility by $40.0 million, to a total of $200.0 million in available credit.

      Our $40.0 million unsecured revolving credit facility bears interest between 1.85% and 2.25% over LIBOR depending on certain debt ratios. Using 2.00% over LIBOR at June 30, 2005, the effective interest rate on our unsecured revolving credit facility was 5.2%. This credit facility is due December 2005.

      Outstanding letters of credit issued under the secured revolving credit facility total approximately $2.1 million. At June 30, 2005, we also had other letters of credit outstanding of approximately $500,000.

      Under terms of various debt agreements, we may be 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, 2005. Based on rates in effect at June 30, 2005, the agreements for notional amounts aggregating $75.0 million provide for fixed rates ranging from 4.0% to 4.3% and expire in December 2005.

      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, 2005, our variable rate debt accounted for approximately $113.2 million of outstanding debt with a weighted average interest rate of 5.18%. Variable rate debt accounted for approximately 16.7% of our total debt and 8.4% of our total capitalization.

      The properties in which our operating partnership owns an interest and which are accounted for by the equity method of accounting are subject to non-recourse mortgage indebtedness. At June 30, 2005, our pro rata share of non-recourse mortgage debt on the unconsolidated properties (accounted for by the equity method) was $69.3 million with a weighted average interest rate of 7.2%. Fixed rate debt amounted to $53.0 million, or 76.5%, of our pro rata share. At June 30, 2005, we guaranteed the full $41.3 million bridge loan of Ramco/ Lion Venture LP, a 30% owned equity investment, and our joint venture partner has guaranteed 70% of the bridge loan.

18

      The mortgage loans (other than our secured revolving credit facility) encumbering our properties, including properties held by our unconsolidated joint ventures, except the bridge loan discussed above, are 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 a bankruptcy petition by the borrower, either voluntary or involuntary, 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.

      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, to continue currently planned capital programs and debt maturities and to make distributions to our shareholders in accordance with the requirements applicable to REITs under the Internal Revenue Code of 1986, as amended. Although we believe that the combination of factors discussed above will provide sufficient liquidity, no such assurance can be given.

Capitalization

      Our capital structure at June 30, 2005, includes property-specific mortgages, our unsecured revolving credit facility, our secured revolving credit facility, our 9.5% Series B Cumulative Redeemable Preferred Shares, our 7.95% Series C Cumulative Convertible Preferred Shares, our common shares and the minority interest in the operating partnership. At June 30, 2005, 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, 2005, the units in our operating partnership units (“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 OP Units, there would have been 19,767,203 of our common shares outstanding at June 30, 2005, with a market value of approximately $578.8 million (based on the closing price of $29.28 per share on June 30, 2005).

      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 disposing 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.

Comparison of Six Months Ended June 30, 2005 to Six Months Ended June 30, 2004

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

      Total revenues for the six months ended June 30, 2005 were $76.2 million, a $14.8 million increase over the comparable period in 2004. Minimum rents increased $7.2 million, to $50.3 million for the six months ended June 30, 2005 when compared to the same period in 2004. Acquisitions contributed $7.1 million of the increase in minimum rents for the six months ended June 30, 2005.

      Recoveries from tenants increased $3.9 million, or 23.9%, to $20.4 million as compared to $16.5 million for the same six months in 2004. Acquisitions contributed $2.4 million of the increase. The balance of the increase is primarily attributable to the increase in recoverable operating expenses for the six months ended June 30, 2005 when compared to the same period in 2004 and to redevelopment projects completed during 2004. The overall recovery ratio was 99.9% for the six months ended June 30, 2005, compared to 96.0% for the six months ended June 30, 2004. The increase in recovery percentage compared to the prior year period

19

reflects higher than expected year-end billings processed during the first quarter of 2005. We expect the recovery ratio to be between 96.5% and 98.0% for the twelve months ended December 31, 2005, compared to 94.1% for 2004. The forecasted increase is primarily related to the estimated completion of various redevelopment projects during 2005.

      Fees and management income was $2.1 million higher in 2005 when compared to the six months ended June 30, 2004. The increase is primarily due to acquisition fees earned from our joint venture, Ramco/ Lion Venture LP, of $1.2 million and an increase in management and development fees, including fees earned from our new joint venture, Jacksonville, which was formed in the first quarter of 2005. Other income increased $1.6 million to $2.4 million for the six months ended June 30, 2005, and the increase was primarily attributable to higher lease termination fees earned during the six months ended June 30, 2005, compared to the same period in 2004.

      Total expenses for the six months ended June 30, 2005 increased $14.7 million, or 28.4%, to $66.5 million as compared to $51.8 million for the six months ended June 30, 2004. The increase was primarily due to a $3.3 million increase in total recoverable expenses, including recoverable operating expenses and real estate taxes, a $3.7 million increase in depreciation expense, a $5.3 million increase in interest expense, and a $2.3 million increase in general and administrative expenses. Acquisitions accounted for $7.8 million of the increase in total expenses.

      Total recoverable expenses, including real estate taxes, increased by $3.2 million, to $20.4 million as compared to $17.2 million for the six months ended June 30, 2004. The increase is attributable primarily to our Acquisitions.

      Depreciation and amortization expense increased $3.7 million, or 28.9%, to $16.5 million for the six months ended June 30, 2005. Depreciation expense related to our Acquisitions contributed $2.1 million of the increase. Depreciation expense also increased as a result of the write-off of $1.0 million of unamortized tenant improvement costs related to the termination of a tenant at the Tel-Twelve shopping center.

      General and administrative expenses increased $2.3 million to $7.6 million, as compared to $5.3 million for the six months ended June 30, 2004. The increase is principally attributable to increases in audit and tax fees, as well as increased salaries and benefits during the six months ended June 30, 2005, when compared to the same period in 2004. Contributing to the increase in salaries and benefits was the impact of a reduction in the capitalization of these costs as a result of more development projects with joint venture partners during the current year.

      Interest expense increased $5.3 million, from $15.8 million for the six months ended June 30, 2004, to $21.1 million during the first quarter of 2005. Average loan balances outstanding increased $175.5 million for the six months ended June 30, 2005 as compared to 2004. The higher average outstanding debt contributed $5.4 million to the increase in interest expense. Interest expense decreased by $608,000 during the six months ended June 30, 2005 as a result of lower interest rates, when compared to the same period in 2004. Interest costs capitalized, in conjunction with development and expansion projects, were $273,000 for the six months ended June 30, 2005, as compared to $419,000 for the same period in 2004. Increased amortization of debt service and the amortization of premium on debt related to purchase accounting for acquisitions increased interest expense by $471,000.

Comparison of Three Months Ended June 30, 2005 to Three Months Ended June 30, 2004

      Total revenues for the three months ended June 30, 2005 were $37.9 million, a $7.7 million increase over the comparable period in 2004. Minimum rents increased $3.3 million, to $25.1 million for the three months ended June 30, 2005 when compared to the same period in 2004. Acquisitions contributed $3.3 million to the increase in minimum rents for the three months ended June 30, 2005.

      Recoveries from tenants increased $1.8 million, or 23.5%, to $9.5 million as compared to $7.7 million for the same three months in 2004. Acquisitions contributed $1.3 million of the increase. The overall recovery ratio was 97.5% for the three months ended June 30, 2005, compared to 94.7% for the three months ended June 30, 2004.

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      Fees and management income were $1.4 million higher in 2005 when compared to the three months ended June 30, 2004. The increase is primarily due to an increase in management and acquisition fees from new joint ventures including Jacksonville and Ramco/ Lion. Other income increased $1.1 million to $1.6 million for the three months ended June 30, 2005, and the increase was primarily attributable to higher lease termination fees earned during the three months ended June 30, 2005, compared to the same period in 2004.

      Total expenses for the three months ended June 30, 2005 increased $8.0 million, or 31.0%, to $33.7 million as compared to $25.7 million for the three months ended June 30, 2004. The increase was due primarily to a $1.6 million increase in total recoverable expenses, including recoverable operating expenses and real estate taxes, a $2.3 million increase in depreciation expense, a $2.8 million increase in interest expense, and a $1.3 million increase in general and administrative expenses. Acquisitions accounted for $3.5 million of the increase in total expenses.

      Total recoverable expenses, including real estate taxes, increased by $1.6 million, to $9.8 million as compared to $8.2 million for the three months ended June 30, 2004. The increase is attributable primarily to our Acquisitions.

      Depreciation and amortization expense increased $2.3 million, or 35.4%, to $8.8 million for the three months ended June 30, 2005. Depreciation expense related to our Acquisitions contributed $1.0 million of the increase. Depreciation expense also increased as a result of the write-off of $1.0 million of unamortized tenant improvement costs related to the termination of a tenant at the Tel-Twelve shopping center.

      General and administrative expenses increased $1.3 million to $3.9 million, as compared to $2.6 million for the three months ended June 30, 2004. The increase is principally attributable to increases in audit and tax fees, as well as increased salaries and benefits during the three months ended June 30, 2005, when compared to the same period in 2004. Contributing to the increase in salaries and benefits was the impact of a reduction in the capitalization of these costs as a result of more development projects with joint venture partners during the current year.

      Interest expense increased $2.8 million, from $8.0 million for the three months ended June 30, 2004, to $10.8 million during the first quarter of 2005. Average loan balances outstanding increased $183.8 million for the three months ended June 30, 2005 as compared to 2004. The higher average outstanding debt contributed $2.8 million to the increase in interest expense. Interest expense decreased by $388,000 during the three months ended June 30, 2005 as a result of lower interest rates, when compared to the same period in 2004. Interest costs capitalized, in conjunction with development and expansion projects, were $116,000 for the three months ended June 30, 2005, as compared to $188,000 for the same period in 2004. Increased amortization of debt service and the amortization of premium on debt related to purchase accounting for acquisitions increased interest expense by $317,000.

Inflation

      Inflation has been relatively low in recent years and has not had a significant detrimental impact on our results of operations. Should inflation rates increase in the future, 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. We believe that any inflationary increases in our expenses should be substantially offset by increased expense reimbursements, contractual rent increases and/or increased receipts from percentage rents. Therefore, we expect the effects of inflation and other changes in prices would not have a material impact on the results of our operations.

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      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.

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 National Association of Real Estate Investment Trusts, or NAREIT, definition, FFO represents income before minority interest, excluding extraordinary items, as defined under 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 is intended to exclude GAAP historical cost depreciation and amortization of real estate investments, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions and many companies utilize different depreciable lives and methods. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from depreciable property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition and development activities and interest costs, which provides a perspective of our financial performance not immediately apparent from net income determined in accordance with GAAP. In addition, FFO does not include the cost of capital improvements, including capitalized interest.

      For the reasons described above we believe that FFO provides us and our investors with an important indicator of our operating performance. This measure of performance is used by us for several business purposes and for REITs it provides a recognized measure of performance other than GAAP net income, which may include non-cash items. Other real estate companies may calculate FFO in a different manner.

      We recognize FFO’s limitations when compared to GAAP’s net income. FFO does not represent amounts available for needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. We do not use FFO as an indicator of our cash obligations and funding requirements for future commitments, acquisition or development activities. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs, including the payment of dividends. FFO should not be considered as an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity. FFO is simply used as an additional indicator of our operating performance.

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

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2005			2004			2005			2004
Net Income		$	4,139		$	3,598		$	9,050		$	8,002
Depreciation and amortization expense			9,326			6,518			17,157			12,850
Loss (Gain) on sale of depreciable property			2			1,403			(23	)		1,403
Minority interest in partnership:
	Continuing operations		751			648			1,600			1,417
	Discontinued operations		—			—			—			2
Funds from operations			14,218			12,167			27,784			23,674
Preferred stock dividends			(1,664	)		(892	)		(3,328	)		(1,486	)
Funds from operations available to common shareholders		$	12,554		$	11,275		$	24,456		$	22,188
Weighted average equivalent shares outstanding, diluted			19,809			19,928			19,808			19,945
Funds from operations available for common shareholders, per diluted share		$	0.63		$	0.57		$	1.23		$	1.11

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Capital Expenditures

      During the six months ended June 30, 2005, we spent approximately $4.2 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 $11.1 million. Revenue neutral capital expenditures, such as roof and parking lot repairs which are anticipated to be recovered from tenants, amounted to approximately $542,000.

Forward Looking Statements

      This Form 10-Q contains forward-looking statements with respect to the operation of certain of our properties. Forward-looking statements include statements regarding the intent, belief or current expectations of us or our officers, including statements preceded by, followed by or including forward-looking terminology such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate” “continue,” “predict,” or similar expressions with respect to various matters. 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 the following:

•  economic conditions generally and in the commercial real estate and finance markets specifically;

•  changes in governmental regulations, tax rates and similar matters;

•  our cost of capital, which depends in part on our asset quality, our relationships with lenders and other capital providers, our business prospects and outlook and general market conditions;

•  our continuing to qualify as a REIT;

•  our success or failure in implementing our business strategy; and

•  other factors discussed in this report and other reports we have filed with the Securities and Exchange Commission.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

      We have exposure 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, 2005, a 100 basis point change in interest rates would affect our annual earnings and cash flows by approximately $1.1 million. We believe that a 100 basis point change in interest rates would not have a material impact on the fair value of our total outstanding debt.

      Under the 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, 2005. Based on rates in effect at June 30, 2005, the agreements for notional amounts aggregating $75.0 million provide for fixed rates ranging from 4.0% to 4.3% and expire in December 2005.

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      The following table sets forth information as of June 30, 2005 concerning our long-term debt obligations, including principal cash flows by scheduled maturity, weighted average interest rates of maturing amounts and fair market value.

	2005			2006			2007			2008			2009			Thereafter			Total			Fair Value
Fixed-rate debt	$	79,562		$	105,109		$	61,733		$	102,769		$	48,084		$	168,202		$	565,459		$	591,350
Average interest rate		4.6	%		8.2	%		7.1	%		5.4	%		7.0	%		6.2	%		6.4	%		4.7	%
Variable-rate debt	$	108,189		$	480		$	480		$	480		$	440		$	3,120		$	113,189		$	113,189
Average interest rate		4.7	%		4.4	%		4.4	%		4.4	%		4.4	%		4.4	%		4.7	%		4.7	%

      We estimated the fair value of fixed rate mortgages using a discounted cash flow analysis, based on our incremental borrowing rates for similar types of borrowing arrangements with the same remaining maturity. Considerable judgment is required to develop estimated fair values of financial instruments. The fair value of our fixed rate debt is greater than the carrying amount, however settlement at the reported fair value may not be possible or may not be a prudent management decision. The estimates presented herein are not necessarily indicative of the amounts we could realize on disposition of the financial instruments.

Item 4. Controls and Procedures

Disclosures Controls and Procedures

      We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (“Exchange Act”), such as this report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the design control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

      We carried out an assessment as of June 30, 2005 of the effectiveness of the design and operation of our disclosure controls and procedures and our internal control over financial reporting. This assessment was done under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. We believe that these procedures are effective to ensure that we are able to record, process, summarize and report the information we are required to disclose in the report we file with the SEC within the required time period.

Internal Controls over Financial Reporting

      We maintain a system of internal controls designed to provide reasonable assurance that transactions are executed in accordance with management’s general and specific authorization. Transactions are recorded as necessary to (1) permit preparation of financial statements in conformity with GAAP and (2) maintain accountability for assets.

      During the year ended December 31, 2004, management of the Company identified a material weakness in our internal controls with respect to our accounting of bonus compensation. At the instruction of our audit committee, management has implemented certain corrective changes to the internal control procedures to improve the effectiveness of our internal control over financial reporting to reduce the likelihood of this error occurring in the future. We continue to monitor and test the operating effectiveness of these improvements.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

      There are no material pending legal or governmental proceedings, other than the IRS Examination and ordinary routine litigation incidental to our business, against or involving us or our properties. For a description of the IRS Examination, see Note 10 to the Notes to Consolidated Financial Statements.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

      Not applicable

Item 3. Defaults Upon Senior Securities

      Not applicable

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

      The Annual Meeting of the Shareholders of the Company was held on June 7, 2005.

      At the Annual Meeting, Arthur H. Goldberg and Mark K. Rosenfeld were re-elected as trustees of the Company to serve until 2008 Annual Meeting of the 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 person:

			Authority
Name	Votes For		Withheld
Arthur H. Goldberg		13,764,683		287,777
Mark K. Rosenfeld		13,251,939		800,521

Item 5. Other Information

      Not applicable

Item 6. Exhibits

      (a) Exhibits

Exhibit No.			Description
	10	.66	Letter of Agreement, dated June 1, 2005, between Ramco-Gershenson Properties Trust and Richard Gershenson.
	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 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
	32	.2	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

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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

Date: August 2, 2005	By: /s/  Dennis Gershenson Dennis Gershenson Chief Executive Officer
Date: August 2, 2005	By: /s/  Richard J. Smith Richard J. Smith Chief Financial Officer (Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit No.			Description
	10	.66	Letter of Agreement, dated June 1, 2005, between Ramco-Gershenson Properties Trust and Richard Gershenson.
	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 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
	32	.2	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.