BINGHAM FARMS, Mich., Nov. 14 /PRNewswire-FirstCall/ --
Malan Realty Investors, Inc. (NYSE: MAL), a self-administered real estate
investment trust (REIT), today announced operating results for the third
quarter of 2002.
For the quarter ended September 30, 2002, net loss was $1.3 million or 26
cents per share vs. net income of $2.1 million or 42 cents per share for the
quarter ended September 30, 2001. Total revenues from continuing operations
(excluding gains on property sales), consisting primarily of rent and
recoveries from tenants, were $8.0 million in the third quarter of 2002 vs.
$8.4 million in the third quarter of 2001.
For the nine months ended September 30, 2002, net loss was $7.2 million or
$1.41 per share vs. net loss of $1.1 million or 22 cents per share for the
nine months ended September 30, 2001. Total revenues from continuing
operations (excluding gains on property sales) were $25.0 million for the
first three quarters of 2002 compared with $26.3 million in the first three
quarters of 2001.
The results for 2002 include a provision for costs of investigation and
remediation of environmental issues at certain of the company's properties.
Total costs related to these issues are estimated to be approximately
$3.1 million of which $2.6 million was recorded in the third quarter of 2002.
Malan also announced it had reached a settlement with the City of Chicago
on its UDAG Loan, collateralized by Bricktown Square Shopping Center. Terms
of the agreement include a settlement payment of $1 million in full
satisfaction of all principal and interest outstanding on the loan and an
agreement that municipal transfer taxes would be paid on any subsequent
transfer of the property by the company. Prior to the settlement, the loan
had a principal balance outstanding of approximately $7.8 million, and the
company was in arrears approximately $740,000 in interest payments.
On August 28, 2002, Malan shareholders approved a plan of complete
liquidation of the company. The plan provides for the orderly sale of assets
for cash or other such form of consideration as may be conveniently
distributed to shareholders, payment of or establishing reserves for the
payment of liabilities and expenses, distribution of net proceeds of the
liquidation to common shareholders and wind up of operations and dissolution
of the company.
As a result of the adoption of the plan, the company adopted the
liquidation basis of accounting at September 30, 2002. Accordingly, at that
date, assets were adjusted to estimated net realizable value and liabilities
were adjusted to estimated settlement amounts, including estimated costs
associated with carrying out the liquidation. Net assets in liquidation,
including these costs but excluding any estimated future cash flows from
operations, was $31.7 million as of September 30, 2002. Also as a result of
adoption of the plan of liquidation, the company will no longer report funds
from operations or cash available for distribution, as it no longer believes
that these measures are meaningful to understanding its performance.
Malan said it currently has signed contracts for the sale of eight
properties, including the Orchard-14 Shopping Center in Farmington Hills,
Michigan. The contracts have scheduled closing dates within the next 90 days,
subject to due diligence by the acquirers. Net proceeds to the company are
estimated at approximately $12.5 million.
The company announced previously it has retained CB Richard Ellis, the
world's largest real estate services company, to sell its remaining
properties. Cohen Financial will continue to provide services for the
financing and refinancing of Malan's properties.
Malan Realty Investors, Inc. owns and manages properties that are leased
primarily to national and regional retail companies. The company owns a
portfolio of 52 properties located in nine states that contains an aggregate
of approximately 4.6 million square feet of gross leasable area.
Safe Harbor Statement: This news release may contain 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 uncertainties regarding the length of time required to sell the
company's properties and execute its plan of liquidation and expenses incurred
during the liquidation period, the cost of litigation in which the company is
involved, bankruptcies and other financial difficulties of tenants, including
the ultimate disposition of lease agreements with Kmart Corporation, the cost
of addressing environmental concerns, and other risks associated with the
commercial real estate business, 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 Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Revenues
Minimum rent $5,729 $5,924 $17,493 $18,250
Percentage and overage rents 158 290 633 805
Recoveries from tenants 2,047 2,061 6,697 6,888
Interest and other income 85 119 175 317
Gain on sale of real estate 2,840 3,608
Total Revenues 8,019 11,234 24,998 29,868
Expenses
Property operating and
maintenance 680 676 2,061 2,282
Other operating expenses 2,117 587 3,151 1,335
Real estate taxes 1,964 1,781 5,446 5,406
General and administrative 705 725 2,134 2,204
Depreciation and amortization 1,246 1,234 3,668 4,025
Impairment of real estate 228 5,793 3,819
Total Operating
Expenses 6,712 5,231 22,253 19,071
Operating Income 1,307 6,003 2,745 10,797
Interest Expense 4,001 4,256 11,467 12,921
Income (loss) from continuing
operations (2,694) 1,747 (8,722) (2,124)
Discontinued Operations:
Income (loss) from properties
sold or held for sale (1,312) 391 (1,498) 1,448
Gain on sale of properties sold 2,695 2,989
Income from discontinued
operations 1,383 391 1,491 1,448
Income (loss) before cumulative
effect of change in accounting
principle (1,311) 2,138 (7,231) (676)
Cumulative effect of change in
accounting principle (450)
Net income (loss) (1,311) 2,138 (7,231) (1,126)
Basic and diluted earnings (loss)
per share :
Earnings (loss) from continuing
operations ($0.53) $0.34 ($1.70) ($0.41)
Income from discontinued
operations 0.27 0.08 0.29 0.28
Cumulative effect of change in
accounting principle (0.09)
Net income (loss) ($0.26) $0.42 ($1.41) ($0.22)
Weighted average shares
outstanding:
Basic 5,121 5,133 5,121 5,149
Diluted 5,126 5,133 5,126 5,149
Net Assets in Liquidation
Reconciliation of Shareholders'
Equity at September 30, 2002
to Net assets in Liquidation:
Shareholders' Equity at
September 30, 2002 $12,685
Increase to reflect estimated
net realizable values of
certain real estate properties 25,030
Increase to adjust UDAG loan
and accrued interest to
settlement amount 7,957
Decrease to reflect net
realizable value of assets and
payment of contingent liabilities (6,488)
Reserve for estimated costs
during the period of liquidation (7,507)
Net Assets in Liquidation $31,677
SOURCE Malan Realty Investors, Inc.
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Related links:
http://www.malanreit.com
Company News On-Call:
http://www.prnewswire.com/comp/114165.html
CONTACT:
Elliott J. Broderick, Chief Financial Officer
of Malan Realty Investors, +1-248-644-7110; or Fred Nachman of
Marjan Communications Inc., +1-312-867-1771
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