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BINGHAM FARMS, MI-Malan Realty Investors Inc. has announced that net assets in liquidation for the third quarter ended Sept. 30, 2003, increased by $366,000 to $29 million from the second quarter ended June 30, 2003.

The increase is due largely to Malan’s sale of nine properties during the quarter and four additional properties subsequent to Sept. 30, 2003, at contract prices totaling $71.4 million. The company currently has seven operating properties and one vacant land parcel under contract for $29.3 million and 17 properties under letters of intent for $51.8 million. Certain letters of intent and options to purchase announced previously were terminated or expired without proceeding to contract.

For the third quarter of 2003, operating income, including income from properties and interest expense on corporate and property specific debt, was about $2.5 million. The estimated fair value on the remaining properties held for sale increased $1.4 million, based on executed contracts for sale. The realized loss from the sale of assets was about $720,000, and the reserve for estimated liquidation costs increased about $276,000, primarily due to increases in actual legal fees over what was previously projected. A distribution of $2.6 million to shareholders was made Sept. 30, 2003.

As a result of the approval of a plan of complete liquidation by its shareholders, the company adopted the liquidation basis of accounting for all periods beginning after Sept. 30, 2002. On Sept. 30, 2002, in accordance with the liquidation basis of accounting, 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. Accordingly, Malan no longer reports net income or funds from operations.

Malan continues to reduce debt in 2003. During the third quarter, the company retired its $27 million Secured Convertible Notes, paid off its loans with JDI Loans and Cohen Financial and extended its loan with Salomon Brothers Realty Corp for 12 months. The company also entered into a two-year, $20.5 million loan with UBS Warburg Real Estate Investments, collateralized by Bricktown Square in Chicago.

Proceeds of the loan were utilized to retire the Convertible Notes. In October 2003, Malan redeemed $10 million of its 9.5% Convertible Subordinated Debentures due July 15, 2004. The aggregate principal balance of the Debentures is currently $32.6 million. Subsequent to the end of the quarter, the company announced it is calling $13 million in Convertible Subordinated Debentures in December 2003.

Malan Realty Investors Inc. owns and manages properties that are leased primarily to national and regional retail companies. In August 2002, the company’s shareholders approved a plan of complete liquidation. The company owns a portfolio of 30 properties located in eight states that contains an aggregate of approximately 2.5 million sf of gross leasable area.

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