Exhibit 4
COMMERCIAL PROPERTY
PROPERTY MANAGEMENT AGREEMENT
This Agreement is made as of the 24th day of January, 1996, between the
undersigned BROOKWOOD VILLAGE JOINT VENTURE (the "Owner") and the undersigned
BERKSHIRE REALTY ENTERPRISES LIMITED PARTNERSHIP (the "Agent").
1. APPOINTMENT AND ACCEPTANCE. The Owner appoints the Agent as exclusive
agent for the management of the property described in Section 2 of this
Agreement, and the Agent accepts the appointment, subject to the terms and
conditions set forth in this Agreement.
2. DESCRIPTION OF THE PROJECT. The property (the "Project") to be managed
by the Agent under this Agreement is a shopping center consisting of the land,
buildings, and other improvements located in Birmingham, AL, and known as
BROOKWOOD VILLAGE MALL & SHOPPING CENTER, containing 473,248 square feet.
3. BASIC INFORMATION. The Agent will thoroughly familiarize itself with
the character, location, construction, layout plan and operation of the Project,
and especially the electrical, plumbing, air-conditioning and ventilating
systems, the elevators and all other mechanical equipment.
4. MARKETING. The Agent will carry out the marketing activities designed
to attract tenants.
5. RENTALS. The Agent will offer for rent and will rent the vacant units,
if any, in the Project. Incident thereto, the following provisions will apply:
a. The agent will show the Project to prospective tenants;
b. A current list of prospective tenants will be maintained.
c. The Agent will prepare all leases and related property documents,
and unless otherwise directed by the Owner, will execute the same in
its name, identifying itself thereon as agent for the Owner. Leases
will be in a form approved by the Owner;
d. The Owner will furnish the Agent with rent schedules, showing
contract rents for space, and other charges for facilities and
services. The Agent will periodically review such rent schedules and
make recommendations to the Owner with respect to changes thereto;
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e. The Agent will collect, deposit, and disburse security deposits,
if required, in accordance with the terms of each tenant's lease;
and
f. The Agent will perform periodic market surveys with respect to
the market area in which the Project is located.
6. COLLECTION OF RENTS AND OTHER RECEIPTS. The Agent will
collect, when due, all rents, charges and other amounts receivable for the
Owner's account in connection with the management and operation of the Project.
Such receipts will be deposited in an account, separate from all other accounts
and funds, with a bank whose deposits are insured by the Federal Deposit
Insurance Corporation. This account will be carried in the Owner's name and
designated of record as "Brookwood Village Joint Venture dba Brookwood Village"
(the "Project Rental Center Account"). Subject to compliance with Section II
hereof, the Agent is, however, hereby authorized to make deposits to and
withdrawals from the Project Rental Account as agent for the Owner.
7. ENFORCEMENT OF LEASES. The Agent will secure full compliance by each
tenant with the terms of such tenant's lease. Voluntary compliance will be
emphasized, but the Agent may lawfully terminate any tenancy when, in the
Agent's judgment, sufficient cause (including, but not limited to, non-payment
of rent) for such termination occurs under the terms of the tenant's lease. For
this purpose, the Agent is hereby authorized to consult with legal counsel to be
designated by the Owner, to bring actions for eviction against such tenants;
provided, however, that the Agent shall keep the Owner informed concerning such
actions and shall follow such instructions as the Owner may prescribe for the
conduct of any such action. Subject to the Owner's approval, attorney fees and
other necessary costs incurred in connection with such actions will be paid out
of the Project Rental Account as Project expenses.
8. MAINTENANCE AND REPAIR. The Agent will maintain the Project in good
repair, in compliance with local codes and in a condition at all times
acceptable to the Owner. Maintenance and repair includes, but is not limited to,
cleaning, painting, decorating, plumbing, carpentry, grounds care, and such
other maintenance, repair, remodeling and refurbishing work as may be necessary,
subject to any limitations imposed by the Owner in addition to those contained
herein. The Agent will also assist the Owner with respect to identifying and
implementing capital improvements to the Project.
The Agent will perform such periodic physical inspections as shall be
appropriate in connection with maintaining and repairing the shopping center in
compliance with this Agreement. Incident thereto, the following additional
provisions will apply:
a. Special attention will be given to preventive maintenance and, to
the extent feasible, the services or regular maintenance employees
will be used;
b. Subject to the Owner's prior approval, the Agent will negotiate,
review and sign, on behalf of the Owner, contracts with qualified
independent
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contractors for the maintenance and repair of heating and
air-conditioning systems and elevators, and for extraordinary
repairs to such items and other assets of the Project, which are
beyond the capability of regular maintenance employees;
c. The Agent will systematically and promptly receive and
investigate all service requests from tenants, take such action
thereon as may be justified, and will keep records of the same.
Emergency requests will be received and serviced on a twenty-four
(24) hour basis. Complaints of a serious nature will be reported to
the Owner after investigation;
d. The Agent is authorized to purchase all materials, equipment,
tools, appliances, supplies and services necessary for proper
maintenance and repair; and
e. Notwithstanding any of the foregoing provisions, the prior
approval of the Owner will be required for any expenditure which
exceeds Five Thousand Dollars ($5,000) in any one instance for
labor, materials or otherwise, in connection with the maintenance
and repair of the Project, except for recurring expenses within the
limits of the operating budget and emergency repairs involving
danger to persons or property or required to avoid suspension of any
necessary service to the Project. In the latter event, the Agent
will inform the Owner of the facts as promptly as possible.
9. UTILITIES AND SERVICES. In accordance with the operating budget, the
Agent will make arrangements for water, electricity, gas, sewage and trash
disposal, vermin extermination, decorating, laundry facilities, and telephone
service. Subject to the Owner's prior approval, the Agent will make such
contracts as may be necessary to secure such utilities and services.
10. NONCUSTOMARY SERVICES. Notwithstanding any contrary provision in this
Agreement, the Owner shall cause any services, in connection with the rental of
the Project, that are not customarily furnished to tenants of comparable
buildings in the region (including, but not limited to, the provision of maid
service and the furnishing of parking facilities other than on a complimentary,
unreserved basis), to be performed by an entity qualifying as an independent
contractor under the Real Estate Investment Trust provisions of the Internal
Revenue Code of 1986, as amended.
11. EMPLOYEES. Except as otherwise agreed, all on-site personnel will be
employees of the Owner, for purposes of their compensation, and not the Agent,
but will be hired, paid, supervised, and discharged through the Agent, in the
Agent's sole discretion, subject to the following conditions:
a. The Regional Director will have duties of the type usually
associated with such position.
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b. Compensation (including fringe benefits) of bookkeeping,
clerical, and other managerial personnel will be within the Agent's
reasonable discretion, provided minimum wage standards are met;
c. The Owner will reimburse the Agent for compensation (including
fringe benefits) payable to the on-site management and maintenance
employees, and for all local, state and federal taxes and
assessments (including, but not limited to, Social Security taxes,
unemployment insurance, and Workman's Compensation insurance)
incident to the employment of such personnel. Such reimbursements
will be paid out of the Project Rental Account and will be treated
as Project expenses; and
d. Compensation (including fringe benefits) payable to the on-site
staff, and all bookkeeping, clerical and other managerial personnel,
plus all local state and federal taxes and assessments incident to
the employment of such personnel will be borne solely by the
Project, and will not be paid out of the Agent's management fee. The
rental value of any dwelling unit furnished rent-free to on-site
personnel will be treated as a cost of the Project.
12. DISBURSEMENTS FROM SHOPPING CENTER RENTAL ACCOUNT.
a. From the funds collected and deposited by the Agent in the
Project Rental Account, either the Owner or the Agent, as shall be
determined from time to time by the Owner, will make the following
disbursements when payable:
(1) Reimbursement to the Agent for compensation payable to the
employees specified in Section 10 above, and for the taxes and
assessments payable to local, state and federal governmental
agencies;
(2) All sums otherwise due and payable by the Owner as
expenses of the Project, including compensation payable to the
Agent for its services hereunder and expenses incurred by the
Agent in compliance with this Agreement.
(3) Any payment required to be made monthly by the Owner to
any mortgagee of the Project, including the amounts due under
the mortgage for principal amortization, interest, ground
rents, taxes and assessments, and fire and other hazard
insurance premiums; and
b. Except for the disbursements specified above, funds will be
disbursed or transferred from the Project Rental Account only at the
Owner's direction.
c. The Agent will inform the Owner if the balance in the Project
Rental Account is at any time insufficient to pay disbursements due
and payable under
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this Section 11. In no event will the Agent be required to use its
own funds to pay such disbursements.
13. RECORDS AND REPORTS. The Agent will have the following
responsibilities with respect to records and reports:
a. The Agent will establish and maintain a comprehensive system of
records, books and accounts, in a manner satisfactory to the Owner;
b. With respect to each fiscal year ending during the term of the
Agreement, the Agent will furnish an annual financial report
concerning the Project. The Agent will also prepare and review
budgets and cash flow projections for the Project in such manner and
at such times as may be agreed with the Owner;
c. The Agent will furnish such information (including occupancy
reports) as the Owner reasonably requests concerning the financial,
physical, or operating condition of the Project; and
d. By the twenty-fifth (25th) day of each month, the Agent will
furnish the Owner with a statement of receipts and disbursements
during the previous month, a schedule of accounts receivable and
payable and reconciled bank statements for the Project Rental
Account, as of the end of the previous month.
14. ON-SITE MANAGEMENT FACILITIES. Subject to the further agreement of the
Owner and the Agent as to more specific terms, the Agent will maintain a
management office, within the Project, for the convenience of the Owner, for the
sole purpose of the Agent's performing its duties under this Agreement, and the
owner will make no rental charge for such office.
15. INSURANCE. The Owner will inform the Agent of insurance to be carried
with respect to the Project and its operations, and the Agent, when authorized
by the Owner, will cause such insurance to be placed and kept in effect at all
times. The Agent will pay insurance premiums out of the Project Rental Account.
All insurance will be placed with such companies, on such conditions, in such
amounts and with such beneficial interest appearing thereon as shall be
acceptable to the Owner and shall be otherwise in conformity with any mortgage
on the Project Center, provided that such insurance will include public
liability coverage, with the Agent designated as one of the insured, in amounts
acceptable to the Owner, Agent and any mortgagee of the Project. The Agent will
investigate and furnish the Owner with complete reports concerning all accident
claims and potential claims for damage relating to the Project and will
cooperate with the Owner's insurers in connection therewith.
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16. AGENT'S COMPENSATION. The Agent will be compensated for its services
under this Agreement by monthly fees to be paid out of the Project Rental
Account. Such fees will be treated as Project expenses. Such fees will be
payable monthly. Each such monthly fee will be in an amount equal to SIX PERCENT
(6%) of the gross receipts (including rentals and other operating income of the
Project) actually received during the preceding month. Such fee shall include,
with respect to the Project, payment for the negotiation and preparation of
leases and renewals thereof and the other leasing, re-leasing and leasing
related services and any fees paid to a non-related party for bookkeeping or
property management services, but shall exclude any fees paid to real estate
brokers which are not Affiliates of the Owner or the Agent in connection with
the procurement of tenants for the Project. In addition, the Agent shall receive
reimbursement for all expenditures, obligations and liabilities incurred by the
Agent in compliance with this Agreement. Such reimbursement shall be limited to
the actual cost of goods, services and materials used for or by the Project, and
in no event shall such reimbursement exceed the cost of such items if supplied
by persons or entities other than the Agent or its Affiliates. Such
reimbursement shall not include (i) reimbursement for costs of services rendered
by employees who are not employed in the operation of the Project, except that
employees servicing more than one property (whether or not owned by the Owner)
may have their costs prorated based upon the respective number of units or
square footage in each property or (ii) other expenses for which managing agents
of real estate would not customarily receive reimbursement in addition to stated
compensation.
17. INDEMNIFICATION BY THE OWNER. The Owner shall indemnify and hold
harmless the Agent, to the full extent permitted by the Delaware General
Corporation Law (in effect at the time indemnity is sought), from all liability,
claims, damages or loss arising out of the performance of its duties hereunder,
and related expenses, including reasonable attorneys' fees, to the extent such
liability, claims, damages or losses and related expenses are not fully
reimbursed by insurance; provided, however, that the Agent shall be entitled to
indemnification, under this Section 17, only if the Agent, in connection with
any liability, damages, claim or loss for which it seeks indemnity, acted in a
manner which would not constitute gross negligence or wilful misfeasance.
18. INDEMNIFICATION BY THE AGENT. The Agent shall indemnify and hold
harmless the Owner from contract or other liability, claims, damages, losses and
related expenses, including attorneys' fees, to the extent that such liability,
claims, damages, losses and related expenses are not fully reimbursed by
insurance and are incurred by the Owner by reason of the Agent's deliberate
dishonesty or gross negligence.
19. RIGHT TO ASSIGN. The Agent may assign some or all of its rights or
obligations under this Agreement, provided that the Agent remains principally
responsible hereunder, and the Owner is given notice of such assignment. The
Owner may assign its rights and obligations under this Agreement to any
successor in title to the Property, and upon any such assignment, the Owner
shall be relieved of all liability accruing after the effective date of such
assignment.
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20. TERM OF AGREEMENT. This Agreement shall be in effect for a period
commencing on the date hereof. This Agreement may be terminated, without
penalty, by written notice of either party to the other as of the end of any
calendar month, provided at least sixty (60) days advance written notice thereof
is given.
IN WITNESS WHEREOF, the parties hereto (by their duly authorized
representatives) have executed this Agreement as of the date first above
written.
OWNER: AGENT:
BROOKWOOD VILLAGE JOINT VENTURE BERKSHIRE REALTY ENTERPRISES
By: Krupp Cash Plus-II Limited Partnership LIMITED PARTNERSHIP
A General Partner
By: The Krupp Corporation,
A General Partner
By: /s/ Laurence Gerber By: /s/ Tom Austin
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Laurence Gerber, Tom Austin
President Vice President Operations
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