BINGHAM FARMS, Mich., Aug. 1 /PRNewswire/ -- Malan Realty Investors, Inc.
(NYSE: MAL), a self-administered real estate investment trust (REIT), today
announced financial results for the second quarter of 2001.
For the quarter ended June 30, 2001, funds from operations (FFO) was
$1.4 million or 27 cents per share vs. a deficit in FFO of $1.6 million or
31 cents per share for the quarter ended June 30, 2000. Cash available for
distribution (CAD) for the quarter ended June 30, 2001 was $1.2 million or
23 cents per share compared with a deficit of $2.0 million or 38 cents per
share for the quarter ended June 30, 2000. Total revenues, (excluding gains
on property sales) consisting primarily of rent and recoveries from tenants,
were $9.9 million in the second quarter of 2001 vs. $10.1 million in the
second quarter of 2000.
For the six months ended June 30, 2001, FFO was $3.4 million or 65 cents
per share vs. $986,000 or 19 cents per share for the six months ended June 30,
2000. CAD for the six months ended June 30, 2001 was $3.3 million or 63 cents
per share compared with $843,000 or 19 cents per share for the six months
ended June 30, 2000. Total revenues (excluding gains on property sales) were
$20.4 million for the first half of 2001 compared with $21.2 million in the
first half of 2000.
Results for the quarter and six-month periods ended June 30, 2000 were
impacted by nonrecurring expenses for a proxy contest and related change-in-
control costs. The company also revised its CAD estimate for 2001. Cash
available for distribution is now expected to range between $1.25 and $1.35
per share for the year.
During the second quarter of 2001, Malan recorded a loss on impairment of
real estate of $3.6 million, related primarily to the reduction of its
carrying value in Bricktown Square in Chicago, to its net realizable value in
accordance with Statement of Financial Accounting Standards (SFAS) No. 121.
The write-down does not affect the computation of either FFO or CAD.
Property Sales
Consistent with its strategic plan to divest itself of certain noncore
properties, Malan announced that it completed the sales of its properties in
Liberal, Kansas and Green Bay, Wisconsin during the second quarter of 2001.
Net proceeds from the sales of approximately $400,000 and $3.1 million,
respectively, were utilized to pay down debt and for general working capital
purposes. In July 2001, the company completed the sale of its Kmart shopping
centers on East Washington Street in Madison, Wisconsin, and in New Lenox,
Illinois for $1.6 million and $5.0 million, respectively, as part of a single
transaction with Kmart Corporation.
Farmington Hills Redevelopment
On July 20, 2001, Malan announced it had filed its response to a lawsuit
by Grand/Sakwa Acquisitions, LLC regarding the planned redevelopment of up to
90 acres at the intersection of Orchard Lake Road, Northwestern Highway and 14
Mile Road in Farmington Hills, Michigan. In its response, Malan denied
Grand/Sakwa's contention that the Joint Development Agreement signed by Malan
and Grand/Sakwa concerning the redevelopment is unenforceable. Malan also
filed a counterclaim seeking specific performance of the Joint Development
Agreement, alleging breach of contract and claiming a breach of duty by
Grand/Sakwa to negotiate in good faith.
Debt Restructuring
In May 2001, Malan entered into a $10 million loan agreement with Cohen
Financial Services to help fund its portion of the costs associated with Phase
I of the Farmington Hills Redevelopment. The loan is for a one-year term and
is collateralized by the company's shopping center development in Lawrence,
Kansas. Pending the outcome of the litigation with Grand/Sakwa, the company
has elected to utilize the proceeds of the initial draw on the loan to pay
down the outstanding balance on its lines of credit and to invest in short-
term money market funds in order to mitigate its interest costs on the loan.
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 60 properties located in nine
states that contains an aggregate of approximately 5.6 million square feet of
gross leasable area.
Safe Harbor Statement: This news release contains forward-looking
statements. Although the company believes that the statements and projections
are based on reasonable assumptions, actual results may differ from those
projected. Key factors that could cause actual results to differ materially
include litigation costs, development risks such as unanticipated costs,
economic downturns, bankruptcies and other financial difficulties of tenants,
and other risks associated with the commercial real estate business, and as
detailed in the company's filings from time to time with the Securities and
Exchange Commission. Many of these factors are beyond the control of the
company. Malan does not undertake to update these forward-looking statements.
News releases for Malan Realty Investors are available on the company's
web site at http://www.malanreit.com or through Company News On-Call by fax at
(800) 758-5804, ext. 114165, or http://www.prnewswire.com .
MALAN REALTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2001 2000 2001 2000
Revenues
Minimum rent $7,167 $7,455 $14,339 $14,916
Percentage and overage rents 123 165 536 684
Recoveries from tenants 2,450 2,401 5,365 5,188
Interest and other income 135 104 204 366
Gain on sale of real estate 768 3,170 768 3,170
Total Revenues 10,643 13,295 21,212 24,324
Expenses
Property operating and maintenance 692 682 1,842 1,626
Other operating expenses 400 452 775 832
Real estate taxes 2,114 2,099 4,169 4,173
General and administrative 804 634 1,479 1,156
Proxy contest and related change in
control costs 3,351 3,401
Depreciation and amortization 1,696 1,637 3,367 3,269
Impairment of real estate 3,591 3,591
Total Operating Expenses 9,297 8,855 15,223 14,457
Operating Income 1,346 4,440 5,989 9,867
Interest Expense 4,484 4,499 8,803 8,978
Income (loss) before extraordinary item
and cumulative change in accounting
principle (3,138) (59) (2,814) 889
Extraordinary Item:
Loss on extinguishment of debt (93) (93)
Income (loss) before extraordinary item
and cumulative change in accounting
principle (3,138) (152) (2,814) 796
Cumulative effect of change in
accounting principle (450)
Net Income (Loss) ($3,138) ($152) ($3,264) $796
Earnings per share before cumulative
effect of change in accounting principle:
Basic and diluted ($0.61) ($0.01) ($0.55) $0.17
Earnings per share:
Basic and diluted ($0.61) ($0.03) ($0.63) $0.15
Depreciation and Amortization:
Depreciation of buildings and
improvements $1,528 $1,546 $3,046 $3,091
Amortization of tenant allowances
and improvements 121 47 229 94
Amortization of leasing costs 38 43 76 82
Gain on sale of real estate (768) (3,170) (768) (3,170)
Loss on extinguishment of debt 93 93
Impairment of real estate 3,591 3,591
Cumulative effect of change in
accounting principle 450
Funds From Operations, Basic 1,372 (1,593) 3,360 986
Interest expense on convertible
securities 1,589 1,589 3,178 3,178
Amortization of deferred financing
costs on convertible securities 69 71 138 140
Funds From Operations, Diluted $3,030 $67 $6,676 $4,304
Funds From Operations Per Share:
Basic $0.27 ($0.31) $0.65 $0.19
Diluted $0.33 $0.01 $0.72 $0.46
Weighted average shares outstanding:
Basic 5,133 5,173 5,149 5,173
Diluted 5,133 5,173 5,149 5,175
Diluted, assuming conversion of
convertible securities 9,236 9,278 9,252 9,277
MALAN REALTY INVESTORS, INC. AND SUBSIDIARIES
ADDITIONAL INFORMATION
(in thousands, except for per square foot amounts and leases)
Three Months Six Months
Ended Ended
June 30, June 30,
2001 2000 2001 2000
Summary of Capital Expenditures Total Total Total Total
Gross Leasable Area of Portfolio 5,601 5,924 5,601 5,924
- New tenants 6 6 13 11
Square footage 52 41 94 54
- Renewal tenants 21 7 57 17
Square footage 99 18 327 41
New Tenants:
- Tenant improvements and tenant
allowances $152 $163 $160 $163
Per square foot $2.92 $3.98 $1.70 $3.02
- Leasing commissions $15 $107 $86 $125
Per square foot $0.29 $2.61 $0.91 $2.31
Renewal Tenants
- Tenant improvements and
allowances $- $- $- $-
- Leasing commissions $- $- $- $-
Corporate / administrative items:
- Computer equipment $- $- $46 $-
Existing Properties
- Capital maintenance $236 $405 $236 $405
Per square foot $0.38 $0.21 $0.38 $0.21
- Gross leasable area 619 1,924 619 1,924
Development Properties
- Building expansions $2,049 $- $2,049 $-
- Gross leasable area 58 - 58 -
Other Information
- Amortization of deferred
financing costs $344 $422 $689 $839
- Officer's compensation paid in
stock $- $- $70 $-
- Same store NOI 6,779 $7,243 $13,938 $14,928
- Leases signed 27 13 70 28
Square Footage 151 59 421 95
- Leases expiring 8 4 52 38
Square Footage 18 40 217 140
SOURCE Malan Realty Investors, Inc.
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Related links:
http://www.malanreit.com
CONTACT:
Michael K. Kaline, President of Malan Realty
Investors, Inc., +1-248-644-7110; Fred Nachman of Marjan
Communications Inc., +1-312-867-1771, for Malan Realty Investors,
Inc.
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