BIRMINGHAM, Mich., April 30 /PRNewswire/ -- Malan Realty Investors, Inc.
(NYSE: MAL), a self-administered real estate investment trust (REIT), today
announced total funds from operations (FFO) increased 25 percent and FFO per
share increased 15 percent in the first quarter of 1998.  The company also
announced it has signed a letter of intent with Stage Stores Inc. (NYSE: SGE)
for a Stage store scheduled to open this fall in a former Kmart building in
Lincoln, Illinois.
    For the quarter ended March 31, 1998, FFO was $2.1 million or 54 cents per
outstanding share vs. $1.6 million or 47 cents per share for the quarter ended
March 31, 1997.  Malan calculates FFO utilizing net income, excluding gains or
losses from sales of property, adjusted for certain non-cash items, primarily
depreciation and amortization (principally amortization of deferred financing
costs included in interest expense).
    Net income for the first quarter of 1998 was $299,000 or 8 cents per
diluted share vs. a net loss of $7,000 or virtually break even on a per
diluted share basis in the year-ago quarter.  Total revenues, consisting
primarily of rent and recoveries from tenants, increased to $9.1 million in
the first quarter of 1998 from $8.9 million in the first quarter of 1997.
    "We are pleased with the progress in our current redevelopment projects,
which will result in having a number of new properties on line by the end of
this year," said President and Chief Executive Officer Anthony S. Gramer.  "In
addition, the Stage store and the recent acquisition of Westland Shopping
Center will also initiate a positive impact on future operating results.
Stage has become a popular retailer in small towns in the Midwest by offering
an excellent selection of name-brand and designer-label apparel, accessories
and footwear, and we are pleased to add this fine company to our portfolio."
    Stage Stores, which operated 607 stores in 24 states at year-end 1997,
primarily under the Stage, Bealls and Palais Royal trade names, will lease
15,000 square feet in the 40,000-square-foot structure in Lincoln, Illinois,
which has been vacant since November 1995, when Malan received cash for
terminating the Kmart lease.  Malan is in discussions with other national and
regional retailers about leasing the remaining space, Gramer said.
    The redevelopment of Pine Ridge Plaza in Lawrence, Kansas, which will
expand the property to 255,000 square feet of gross leasable area (GLA) from
91,000 square feet, is moving forward.  Last month, Malan announced that
Kohl's Corporation will lease an 80,000-square-foot department store at the
shopping center, becoming the first Kohl's Department Store in the portfolio.
An October opening is planned.  Kmart is remodeling its current store into the
"Big Kmart" format, which will increase GLA to 117,000 square feet from 82,000
square feet.
    Two cinema complexes under construction in the Chicago area will open
during 1998, said Gramer.  Cinemark USA, one of the nation's largest theater
operators, will operate both facilities.  The 60,000-square-foot, 17-plex
theater complex in North Aurora, Illinois, is scheduled to open in early July.
The 58,000-square-foot, 10-plex cinema complex in Melrose Park, Illinois, is
scheduled for completion in November 1998.
    The Westland Shopping Center in suburban Detroit was acquired in February.
The 85,000-square-foot shopping center is anchored by Dick's Sporting Goods, a
leading discount sporting goods and sportswear retailer, and Med Max, Inc., a
home health care superstore.  Net operating income from the center is
anticipated to be approximately $893,000 annually, Gramer said.
    On March 31, 1998, Malan Realty Investors filed a Registration Statement
with the Securities and Exchange Commission relating to a proposed public
offering of 1.5 million shares of Common Stock.  Up to 225,000 additional
shares of Common Stock may be offered from the underwriters' overallotment
option.  The company intends to use funds from the offering to reduce
outstanding indebtedness, redevelop certain properties and for general
corporate purposes, including possible acquisitions of additional properties.
    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 December 31, 1997.
    Malan Realty Investors, Inc. owns and operates a portfolio of 54 shopping
centers, freestanding stores and entertainment facilities, primarily in the
Midwest.  The properties represent approximately 5.7 million square feet of
gross leasable area.

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

                                          Three Months March 31,
                                       1998                     1997
    Revenues
    Minimum rent                   $6,283                  $5,983
    Percentage and overage rents      301                     304
    Recoveries from tenants         2,399                   2,513
    Interest and other income          71                      87
      Total Revenues                9,054                   8,887

    Expenses
    Property operating and
      maintenance                     736                   1,065
    Other operating expenses          347                     329
    Real estate taxes               1,957                   1,919
    General and administrative        389                     394
    Depreciation and amortization   1,310                   1,265
      Total Operating Expenses      4,739                   4,972

    Operating Income                4,315                   3,915
    Interest Expense                4,016                   3,922

    Net Income                       $299                     ($7)

    Net Income Per Weighted Average
      Share:
      Basic                         $0.08                   $0.00
      Diluted                       $0.08                   $0.00

    FFO Adjustments:
    Depreciation and Amortization:
      Depreciation of buildings
        and improvements           $1,251                  $1,209
      Amortization of tenant
        allowances and improvements    29                      26
      Amortization of leasing costs    28                      23

    "White Paper" FFO               1,607                   1,251
    Depreciation of furniture,
      equipment and leasehold
      improvements                      2                       8
    Amortization of deferred financing
      costs included in
      interest expense:
       Mortgages                      363                     294
       Convertible debt                84                      88

    Funds From Operations          $2,056                  $1,641

    Funds From Operations Per
      Outstanding Share             $0.54                   $0.47

    Additional Information:
    Shares outstanding at end of
      period                        3,811                   3,465
    Weighted average shares
      outstanding:
       Basic                        3,784                   3,464
       Diluted                      3,828                   3,464
       Shares issuable upon debt
         conversions                4,877                   5,193
    Convertible debt interest,
     excluding amortization of
     deferred financing costs      $1,896                  $2,029

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

Link to this page: