BINGHAM FARMS, Mich., Jan. 28 /PRNewswire/ -- Malan Realty Investors, Inc.
(NYSE: MAL), a self-administered real estate investment trust (REIT), today
announced total funds from operations (FFO) increased 72 percent in the fourth
quarter of 1998 over the fourth quarter of 1997.  The increase, excluding an
accounting change, was 54 percent. FFO per basic share rose 30 percent in the
fourth quarter of 1998.
    For the quarter ended December 31, 1998, FFO was $2.6 million or 52 cents
per basic share vs. $1.5 million or 40 cents per share for the quarter ended
December 31, 1997.  FFO on a diluted basis (assuming conversion of convertible
debt securities and inclusion of other common stock equivalents) was
$4.4 million or 47 cents per share for the fourth quarter of 1998 vs.
$3.6 million or 41 cents per share in the fourth quarter of 1997.
    During the fourth quarter of 1998, the company reverted to its previous
method of recording revenue from percentage rents as provided for by the
withdrawal of consensus on Issue 98-9 by the Emerging Issues Task Force of the
Financial Accounting Standards Board.  FFO for the fourth quarter of 1998
includes the addition of $284,000 or 3 cents per diluted share from the
previous quarter as a result of this change.
    Effective beginning with the second quarter of 1998, Malan adopted the
method of calculating FFO as prescribed by the National Association of Real
Estate Investment Trusts (NAREIT), which utilizes net income, excluding gains
or losses from sales of property and debt restructuring, adjusted for certain
non-cash items, primarily depreciation and amortization of real estate assets.
All prior period information presented has been restated to conform to this
presentation.  Per share amounts reflect the issuance of 1.3 million shares of
common stock at the end of the second quarter of 1998.
    Total revenues, consisting primarily of rent and recoveries from tenants,
were $11.0 million in the fourth quarter of 1998, an increase of 25.1 percent
from $8.8 million in the fourth quarter of 1997.
    For the year ended Dec. 31, 1998, FFO was $8.1 million vs. $5.6 million
for the year ended Dec. 31, 1997.  FFO was $1.80 per basic share in 1998
vs. $1.56 per basic share for the year-ago period.  FFO on a diluted basis was
$15.7 million or $1.71 per share in 1998 vs. $13.8 million or $1.59 per share
in 1997.  Total revenues in 1998 rose 13.1 percent to $39.6 million from
$35.0 million in 1997.
    "Our improved financial results reflect the success of our long-term
growth strategy," said President and Chief Executive Officer Anthony S.
Gramer.  "The acquisition of the Wal-Mart anchored properties, redevelopment
of Pine Ridge Plaza, new cinema complexes and retenanting former Kmart
properties all strengthened and diversified our portfolio and contributed to
FFO growth.  The June public offering and the convertible debentures buyback
have improved our capital position."
    The company announced that its 1998 dividend distributions included a
69.1 percent return of capital for its shareholders.  The remaining
30.9 percent is ordinary taxable income for federal income tax purposes.
Malan paid an annual distribution of $1.70 per share for 1998.
    Malan reported it has completed the previously announced acquisition of a
shopping center in Decatur, Ill.  The center is anchored by Wal-Mart and Sam's
Club, which were not included in the acquisition.  Major tenants at the center
include Joann Fabrics, Play It Again Sports, Radio Shack and Sally Beauty
Supply.
    Staples Inc., one of the nation's leading retailers of office supplies,
furniture and technology, has leased the remaining 25,000 square feet at
Malan's Lincoln, Ill., property.  Staples joins Stage Stores, a leading
retailer of name-brand and designer-label apparel, accessories and footwear,
in the 40,000 square-foot building.  The Staples store is expected to open in
June.
    Malan's second state-of-the-art cinema complex in suburban Chicago is
scheduled to open in late February, the company said.  The Cinemark Theatre, a
58,000 square-foot, 10-plex at 1001 W. North Avenue in Melrose Park, will be
operated by Cinemark USA, Inc., the nation's sixth largest theater operator.
A new Ruby Tuesday restaurant is under construction adjacent to the theater.
It has a planned spring opening.
    "Our top priorities remain to diversify and enhance the value of the
portfolio through redevelopment and retenanting activities," Gramer said in
assessing the future.  "Several opportunities exist for expanding and
renovating properties in excellent locations with demographics that support
redevelopment.  Malan has strengthened its capital position, and we will
continue to allocate capital conservatively in order to achieve our long-term
growth objectives."

    Statements in this news release regarding future revenues or expenses may
be considered forward looking within the meaning of the Securities Exchange
Act of 1934.  Such statements are subject to important factors that could
cause results to differ materially from those in the forward looking
statements, including the factors as detailed in the company's Annual Report
on Form 10-K for the year ended Dec. 31, 1997.
    Malan Realty Investors, Inc. owns, acquires, redevelops and manages
properties that are leased primarily to national and regional retail
companies.  The company owns a portfolio of 67 properties located in 10 states
that contains an aggregate of approximately 6.2 million square feet of gross
leasable area.  The company currently has 5.2 million common shares
outstanding.

                  MALAN REALTY INVESTORS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share amounts)
                                   (Unaudited)

                                 Three Months Dec. 31,  Twelve Months Dec. 31,
                                      1998       1997       1998       1997
    Revenues
    Minimum rent                    $7,641     $6,179     $28,084    $24,092
    Percentage and overage rents       589        277       1,215      1,177
    Recoveries from tenants          2,690      2,205       9,954      9,271
    Interest and other income           67        120         311        443
      Total Revenues                10,987      8,781      39,564     34,983
    Expenses
    Property operating and maintenance 737        580       2,876      2,867
    Other operating expenses           424        472       1,615      1,493
    Real estate taxes                2,257      2,006       8,134      7,891
    General and administrative         711        328       2,068      1,545
    Depreciation and amortization    1,518      1,270       5,633      5,068
    Loss on impairment of real estate   --         --         431         --
      Total Operating Expenses       5,647      4,656      20,757     18,864
    Operating Income                 5,340      4,125      18,807     16,119
    Interest Expense                 4,225      3,859      16,770     15,576
    Net Income before
      Extraordinary Item             1,115        266       2,037        543
    Extraordinary Item:
    Loss on extinguishment of debt     (35)        --        (191)        --
    Net Income                      $1,080       $266      $1,846       $543
    Earnings per share before
     Extraordinary Item:
       Basic                         $0.22      $0.07       $0.45      $0.15
       Diluted                       $0.22      $0.07       $0.45      $0.15
    Extraordinary Item:
      Basic                        ($0.01)         --     ($0.04)         --
      Diluted                      ($0.01)         --     ($0.04)         --
    Earnings per share:
      Basic                          $0.21      $0.07       $0.41      $0.15
      Diluted                        $0.21      $0.07       $0.41      $0.15
    FFO Adjustments:
    Depreciation and Amortization:
      Depreciation of buildings and
        improvements                $1,459     $1,211      $5,399     $4,845
    Amortization of tenant allowances
      and improvements                  28         25         113         97
    Amortization of leasing costs       29         27         114         96
    Loss on impairment of real estate   --         --         431         --
    Loss on extinguishment of debt      35         --         191         --
    Funds From Operations, Basic     2,631      1,529       8,094      5,581
    Interest expense on convertible
      securities                     1,652      1,936       7,287      7,916
    Amortization of deferred
      financing costs on convertible
      securities                        72         86         316        349
    Funds From Operations, Diluted  $4,355     $3,551     $15,697    $13,846
    Funds From Operations Per Share:
      Basic                          $0.52      $0.40       $1.80      $1.56
      Diluted                        $0.47      $0.41       $1.71      $1.59
    Weighted average shares
      outstanding:
        Basic                        5,168      3,735       4,507      3,546
        Diluted                      5,186      3,780       4,524      3,591
        Diluted, assuming conversion
          of convertible securities  9,444      8,705       9,206      8,704

    1997 information has been restated to conform with the 1998 presentation.

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