<PAGE>
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ________________
Commission file number 1-12588
ALEXANDER HAAGEN PROPERTIES, INC.
(Exact name of registrant as specified in charter)
Maryland 95-4444963
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
3500 Sepulveda Boulevard
Manhattan Beach, California 90266
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 546-4520
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days. YES [X] NO [ ].
As of August 12, 1996, 12,024,042 shares of Common Stock, Par Value $.01
Per Share, were outstanding.
================================================================================
<PAGE>
ALEXANDER HAAGEN PROPERTIES, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1996
(unaudited) and December 31, 1995 3
Consolidated Statements of Operations (unaudited)
for the three months and six months ended June 30,
1996 and 1995 4
Consolidated Statements of Cash Flows (unaudited)
for the six months ended June 30, 1996 and 1995 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations 8
a
PART II OTHER INFORMATION 13
SIGNATURES 14
</TABLE>
2
<PAGE>
ALEXANDER HAAGEN PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
-------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Rental properties $663,102 $653,058
Accumulated depreciation and amortization (98,206) (90,478)
-------- --------
Rental properties, net 564,896 562,580
Cash and cash equivalents 3,221 3,687
Tenant receivables, net 5,060 11,616
Other receivables 3,013 2,338
Receivable from management company 1,403 1,215
Investment in management company 583 621
Restricted cash 3,172 4,185
Deferred charges, net 18,959 18,719
Other assets 1,159 816
-------- --------
TOTAL $601,466 $605,777
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Secured debt $239,399 $223,524
7 1/2% Convertible subordinated debentures 138,599 138,599
7 1/4% Exchangeable subordinated debentures 30,000 30,000
Accrued distributions 4,705 4,705
Accrued interest 5,500 5,608
Accounts payable and other accrued expenses 6,137 5,453
Accrued construction costs 3,229 6,498
Other liabilities - 5,000
Tenant security and other deposits 2,245 2,174
-------- --------
Total liabilities 429,814 421,561
-------- --------
MINORITY INTERESTS
Operating Partnership 13,326 14,604
Other minorities 2,075 2,161
-------- --------
Total minority interests 15,401 16,765
-------- --------
STOCKHOLDERS' EQUITY
Common stock ($.01 par value, 50,000,000 shares
authorized; 12,024,042 shares issued
and outstanding) 120 120
Additional paid-in capital 206,270 206,297
Accumulated distributions and deficit (50,139) (38,966)
-------- --------
Total stockholders' equity 156,251 167,451
-------- --------
TOTAL $601,466 $605,777
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
ALEXANDER HAAGEN PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Rental revenues $19,969 $19,012 $39,714 $37,291
Percentage rents 169 104 407 206
Other income 1,073 1,122 1,968 1,993
Gain on sale of rental property 2,502 - 2,502 -
------- ------- ------- -------
Total revenues 23,713 20,238 44,591 39,910
------- ------- ------- -------
EXPENSES:
Interest 8,869 7,988 17,723 15,922
Depreciation and amortization 4,060 4,894 8,497 9,732
Property Operating Costs:
Common Area 3,123 3,195 6,302 6,717
Property taxes 1,762 1,967 3,575 3,698
Leasehold rentals 400 409 807 801
Marketing 283 280 471 428
Other operating 433 630 781 1,087
Non-recurring provision for unbilled
deferred rent - - 6,900 -
General and administrative 1,225 1,366 2,389 2,759
------- ------- ------- -------
Total expenses 20,155 20,729 47,445 41,144
------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS 3,558 (491) (2,854) (1,234)
EQUITY IN LOSS
OF MANAGEMENT COMPANY (38) (12) (38) (213)
------- ------- ------- -------
INCOME (LOSS) BEFORE
MINORITY INTERESTS 3,520 (503) (2,892) (1,447)
MINORITY INTERESTS:
Operating Partnership (323) 43 525 123
Other minorities (81) (55) (149) (116)
------- ------- -------- -------
NET INCOME (LOSS) $ 3,116 $ (515) $ (2,516) $(1,440)
======= ======= ======== =======
NET INCOME (LOSS) PER SHARE $ 0.26 $ (0.04) $ (0.21) $ (0.12)
======= ======= ======== =======
Weighted average shares
outstanding 12,024 11,933 12,024 11,913
======= ======= ======== =======
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
ALEXANDER HAAGEN PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1996 1995
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ (2,516) $ (1,440)
Adjustment to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization of rental properties 8,497 9,732
Amortization of deferred financing costs 1,028 876
Non-recurring provision for unbilled deferred rent 6,900 -
Gain on sale of rental property (2,502) -
Minority interests in operations (376) (7)
Equity in loss of management company 38 213
Net changes in operating assets and liabilities (925) (861)
-------- --------
Net cash provided by operating activities 10,144 8,513
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction and Development Costs (16,126) (14,666)
Proceeds from sale of rental property 3,300 -
-------- --------
Net cash used by investing activities (12,826) (14,666)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds received from mortgage financing - 56,900
Principal payments on mortgage financing (1,126) (881)
Borrowings on secured line of credit 18,500 5,550
Repayment of secured line of credit (1,500) (47,445)
Costs of obtaining financing - (1,325)
Decrease in restricted cash 1,013 2,945
Payment of other liabilities (5,000) -
Distributions paid to shareholders (8,657) (8,572)
Distributions to minority interests (1,014) (937)
-------- --------
Net cash provided by financing activities 2,216 6,235
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (466) 82
CASH AND CASH EQUIVALENTS, AT BEGINNING
OF PERIOD 3,687 4,526
-------- --------
CASH AND CASH EQUIVALENTS, AT END
OF PERIOD $ 3,221 $ 4,608
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
ALEXANDER HAAGEN PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying financial statements and related notes of Alexander Haagen
Properties, Inc. (the "Company") are unaudited; however, they have been
prepared in accordance with generally accepted accounting principles for
interim financial reporting and the instructions to Form 10-Q and the rules
and regulations of the Securities and Exchange Commission. Accordingly,
certain information and footnote disclosures normally included in financial
statements prepared under generally accepted accounting principles have been
condensed or omitted pursuant to such rule. In the opinion of management,
all adjustments considered necessary for fair presentation of the Company's
financial position, results of operations and cash flows have been included.
These financial statements should be read in conjunction with the Company's
Form 10-K for the year ended December 31, 1995.
2. INVESTMENT IN MANAGEMENT COMPANY
Equity in Income (Loss) of Management Company represents the Company's 95%
economic interest in Haagen Property Management, Inc. ("HPMI"). In
conjunction with the Initial Public Offering of the Company's common stock
and Debentures in December 1993 (the "IPO"), HPMI assumed all of the
property management functions for the Company's properties. Executive and
property management fees for the six months ended June 30, 1996 and 1995
totaled $1,907,000 and $1,802,000, respectively, and are included in general
and administrative expenses. In addition, HPMI provides leasing, legal and
construction services for the properties owned by the Company, such fees for
the six months ended June 30, 1996 and 1995 of $1,586,000 and $1,350,000,
respectively, were capitalized and are being amortized over the useful lives
of the related leases and/or properties.
As the OP owns a 95% economic interest in but does not control HPMI, the
investment is accounted for on an equity basis.
3. DEVELOPMENT PROPERTIES
Certain of the Properties had not completed their respective leasing plans
at the date of the IPO (the "Development Properties"). To facilitate
inclusion of the Development Properties in the Company's initial portfolio,
the partners of certain Predecessor Affiliates that transferred the
Development Properties to the Company had the right to receive additional OP
Units. In general, the number of additional OP Units issued was based on the
increase in net annualized cash flow from new leases signed through March
31, 1996 and in occupancy and paying rent by June 30, 1996. Such increase in
cash flow will not be fully realized until the third quarter of 1996.
On August 12, 1996, the Independent members of the Board of Directors
approved the issuance of 3,242,378 OP Units to the Predecessor Affiliates.
The market capitalization of the OP was thereby increased by $41.7 million
based upon the stock price as of August 12, 1996. The Predecessor
Affiliates' interest in the OP was thereby increased from 8% to
approximately 26% effective July 1, 1996. As a result of the issuance in the
third quarter of the 3,242,378 OP Units, minority interest will be increased
and additional paid-in capital decreased by approximately $31.0 million.
The issuance of such additional OP Units in the third quarter of 1996 is not
expected to have a dilutive effect on future net income per share or funds
from operations per share. Based upon the improvement in cash flows at the
Development Properties through June 30, 1996, an additional 700,000 OP Units
were accrued during the quarter for purposes of computing the minority
interest's share of net income. The number of OP Units as of June 30, 1996
was therefore 2,519,077, comprising 1,044,077 issued and outstanding and
1,475,000 accrued in connection with the lease-up of the Development
Properties.
6
<PAGE>
4. UNBILLED DEFERRED RENTS
During the first quarter of 1996 the Company reassessed the recoverability
of straight-line contractual rent increases as a result of the continuing
mergers and consolidations within the retail industry and the financial
difficulties of certain retailers. Accordingly, during the first quarter the
Company recorded a non-recurring non-cash charge of $6.9 million to increase
the reserve against the receivable for straight-line rents. Additionally,
the Company has fully reserved against unbilled deferred rents in 1996. The
company believes this to be an appropriate and conservative approach to
account for future contractual rent increases in the current retail
environment. Based upon current market conditions, it is expected that the
impact of this will be a reduction in revenues recognized in 1996 of
approximately $1.3 million or $325,000, or $.02 per share, per quarter.
5. DEPRECIATION OF RENTAL PROPERTIES
During the first quarter the Company reviewed the depreciable lives of its
properties. The Company concluded that in order to more appropriately align
the depreciable lives with the economic lives of the properties the lives
should generally be increased to 40 years from previously utilized lives
ranging from 20 to 31.5 years. The net impact of such change in lives was to
reduce the depreciation charge for the six months ended June 30, 1996 by
approximately $2.4 million.
6. DISTRIBUTIONS
Approximately 60% of the distributions to stockholders for the year ended
December 31, 1995 represented a return of capital.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The following discussion should be read in conjunction with the
accompanying consolidated financial statements and notes thereto.
HISTORICAL RESULTS OF OPERATIONS
Comparison of the six months ended June 30, 1996 to the six months
ended June 30, 1995.
Rental revenues increased by $2.4 million to $39.7 million for the six
months ended June 30, 1996 from $37.3 million for the six months ended June 30,
1995. The increase was primarily a result of the lease-up of the Development
Properties, comprising Media City Center, Empire Center and Baldwin Hills
Crenshaw Plaza. However, improvements in the economic performance of the
properties were mitigated by the Company recording reserves to offset the
straight-lining of contractual rent increases. Straight-line revenue recorded in
the six months ended June 30, 1996 was $0 compared to approximately $0.8 million
recorded in the six months ended June 30, 1995.
During the quarter ended June 30, 1996, the Company sold a Vons market
(a single tenant facility) in Ventura, California for $3.3 million in cash,
resulting in a gain on sale of $2.5 million.
Interest expense increased by $1.8 million from $15.9 million for the
six months ended June 30, 1995 to $17.7 million for the six months ended June
30, 1996. In March 1995 the Company obtained $56.9 million in long term
financing. Proceeds from such loan of $47 million were used to retire the then
outstanding balance on the credit facility and the balance was used for working
capital and to finance development activity. The remaining increase is
principally a function of borrowings on the Company's line of credit to finance
construction at various properties.
Depreciation and amortization expense decreased by $1.2 million from
$9.7 million for the six months ended June 30, 1995 to $8.5 million for the six
months ended June 30, 1996. Depreciation decreased by $2.4 million as a result
of a change in the depreciable lives of the properties. The Company concluded
that in order to more appropriately align the depreciable lives with the
economic lives of the properties the lives should generally be increased to 40
years from previously utilized lives ranging from 20 to 31.5 years. This
decrease was offset by a $1.2 million increase as a result of an overall
increase in investment in rental properties.
Property operating costs decreased by $0.8 million to $11.9 million
for the six months ended June 30, 1996 from $12.7 million for the six months
ended June 30, 1995. The decrease is a result of several factors including
additional bad debt expense recorded in 1995 at certain of the properties,
offset by an overall inflationary increase in operating costs at the Company's
properties.
During the first quarter of 1996, the Company reassessed the
recoverability of straight-line contractual rent increases as a result of the
continuing mergers and consolidations within the retail industry and the
financial difficulties of certain retailers. Accordingly, the Company recorded a
non-recurring non-cash charge of $6.9 million to increase the reserve against
the receivable for straight-line rents. Additionally, the Company did not record
straight-line rents in the first six months of 1996. The company believes this
to be an appropriate and conservative approach to account for the straight-
lining of contractual rent increases in the current retail environment. Based
upon current market conditions, it is expected that the impact of this change
will be a reduction in revenues recognized in 1996 of approximately $1.3
million.
General and administrative expenses declined by $0.4 million from $2.8
million for the first six months of 1995 to $2.4 million for the first six
months of 1996 principally as a result of the write-off in the first quarter of
1995 of $0.3 million in costs related to a potential secondary offering.
8
<PAGE>
Loss from operations increased by $1.7 million from a loss of $1.2
million for the six months ended June 30, 1995 to a loss of $2.9 million for the
six months ended June 30, 1996 for the reasons stated above.
On April 30, 1996, the Company received notice that the Sears store in
its Covina Town Square power center (Covina, California) will be exercising a
termination right in its lease and vacating the premises effective October 31,
1996. Sears will relocate to a former Broadway store in the Covina trade area,
acquired by Sears as a result of the consolidation occurring within Federated
Department Stores. Annual rental revenues received from Sears are $911,000, or
$5.50 per square foot. The Company is in discussions with certain potential
tenants for the Sears space; however, if the space is not re-leased the first
impact from the loss of the Sears revenues will be in the fourth quarter of 1996
of $.01 per share and up to $0.015 per share on a quarterly basis thereafter.
Covina Town Square is a 422,000 square foot power center; other tenants include
Home Depot, Petsmart and Staples.
Comparison of three months ended June 30, 1996 to the three months
ended June 30, 1995.
The principal reasons for fluctuations in the Company's results of
operations during the quarter are discussed above.
Selected Property Financial Information
Net operating income (defined as revenues, less gain on sale of
property and property operating costs) for the Company's properties is as
follows:
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
----------- -----------
<S> <C> <C>
Stabilized Properties (36) $20,663 $20,172
Development Properties:
Baldwin Hills Crenshaw Plaza 2,665 1,369
Media City Center 5,323 4,191
Empire Center 1,028 735
Redevelopment Property:
Medford Center 336 514
Other income 138 199
------- -------
Net Operating Income $30,153 $27,179
======= =======
</TABLE>
The following summarizes the percentage of leased GLA (excluding non-
owned GLA and GLA leased but not yet constructed) as of:
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Stabilized Properties (36) 97.3% 97.5%
Development Properties:
Baldwin Hills Crenshaw Plaza 93.8 89.7
Media City Center 91.4 86.6
Empire Center 90.3 83.3
Redevelopment Property:
Medford Center 97.1 97.8
Aggregate Portfolio 96.1% 95.3%
==== ====
</TABLE>
Certain of the Properties had not completed their respective leasing
plans at the date of the IPO (the "Development Properties"). To facilitate
inclusion of the Development Properties in the Company's initial portfolio, the
partners of certain Predecessor Affiliates that transferred the Development
Properties to the Company had the right to receive additional OP Units. In
general, the number of additional OP Units issued was based on the increase in
net annualized cash flow from new leases signed through March 31, 1996 and in
occupancy and paying rent by June 30, 1996. Such increase in cash flow will not
be fully realized until the third quarter of 1996.
9
<PAGE>
On August 12, 1996, the Independent members of the Board of Directors
approved the issuance of 3,242,378 OP Units to the Predecessor Affiliates. The
market capitalization of the OP was thereby increased by $41.7 million based
upon the stock price as of August 12, 1996. The Predecessor Affiliates' interest
in the OP was thereby increased from 8% to approximately 26% effective July 1,
1996.
The issuance of such additional OP Units in the third quarter of 1996
is not expected to have a dilutive effect on future net income per share or
funds from operations per share. Based upon the improvement in cash flows at the
Development Properties through June 30, 1996, an additional 700,000 OP Units
were accrued during the quarter. The number of OP Units as of June 30, 1996 was
therefore 2,519,077, comprising 1,044,077 issued and outstanding and 1,475,000
accrued in connection with the lease-up of the Development Properties.
During the first six months of 1996 the Company signed leases for
approximately 162,000 square feet, including 114,000 square feet at its
Development Properties. Such signed leases resulted in an increase in the
overall rent per square foot of the Company's portfolio to $10.24 per square
foot at June 30, 1996 from $10.02 per square foot at December 31, 1995. Leased
space at the Company's properties increased to 96.1% at June 30, 1996 from 95.3%
at December 31, 1995. The majority of the leases signed during the six months,
and included in the 96.1%, commenced payment of rent in the second quarter.
Funds from Operations
The Company considers funds from operations ("FFO") to be an
alternative measure of the performance of an equity REIT since such measure does
not recognize depreciation and amortization expenses as operating expenses. FFO
was originally defined by the National Association of Real Estate Investment
Trusts ("NAREIT") as net income plus depreciation and amortization, less gains
on sales of properties. In a May 1995 White Paper, NAREIT adopted a revised
definition of FFO. The principal change is that the revised definition does not
permit depreciation or amortization of non real estate assets to be added back
in computing FFO. The Company historically added back amortization of deferred
financing costs in computing FFO. Additionally, the revised definition permits
FFO to be adjusted for significant non-recurring items.
The Company has adopted the revised definition of FFO effective
January 1, 1996. Previously the Company also adopted the additional disclosures
suggested by NAREIT in the White Paper. The Company has restated its FFO for
comparable periods as if the new definition had been adopted at that date.
Management concurs with NAREIT in believing that reductions for the depreciation
and amortization of real estate and its related costs are not meaningful in
evaluating income-producing real estate.
The Company computes FFO on both a primary and a fully diluted basis
and considers Operating Partnership Units as the equivalent of shares for the
purpose of these computations. The fully diluted basis assumes the conversion of
the convertible and exchangeable debentures into shares of common stock. In
computing fully-diluted FFO the Company adds back the amortization of deferred
financing costs related to the outstanding debentures, principally representing
the underwriting discount on the convertible debentures. The following table
summarizes the Company's computation of FFO and provides certain additional
disclosures (dollars in thousands, except per share amounts):
10
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
FUNDS FROM OPERATIONS
Net Income (Loss) $ 3,116 $ (515) $(2,516) $(1,440)
Adjustments to reconcile net income (loss)
to funds from operations:
Depreciation and Amortization:
Buildings and improvements 2,962 4,259 6,063 8,471
Tenant improvements and allowances 806 513 1,894 1,024
Leasing costs 277 122 511 224
Non-recurring provision for deferred rent - - 6,900 -
Gain on sale of rental property (2,502) - (2,502) -
Minority Interests 264 (126) (663) (290)
------- ------ ------- -------
Funds from Operations, primary 4,923 4,253 9,687 7,989
Debenture interest expense 3,142 3,142 6,284 6,285
Amortization of debenture financing costs 324 325 650 647
------- ------ ------- -------
Funds from operations, fully diluted $ 8,389 $7,720 $16,621 $14,921
======= ====== ======= =======
SUPPLEMENTAL DISCLOSURES
Capital expenditures:
Expansion of the Company's portfolio $ 8,035 $9,052 $10,280 $14,276
Releasing and maintenance of portfolio 265 32 337 140
------- ------ ------- -------
$ 8,300 $9,084 $10,617 $14,416
======= ====== ======= =======
Capitalized leasing costs:
Expansion of the Company's portfolio $ 767 $ 748 $ 1,623 $ 1,317
Releasing and maintenance of portfolio 6 52 143 96
------- ------ ------- -------
$ 773 $ 800 $ 1,766 $ 1,413
======= ====== ======= =======
Straight-line rental income $ - $ 420 $ - $ 846
======= ====== ======= =======
</TABLE>
The Company considers any space that was vacant or unbuilt at the date
of its initial public offering to be expansion of its portfolio.
Funds from operations, on a primary basis, increased to $9.7 million
for the six months ended June 30, 1996, as compared to $8.0 million for the same
period in 1995. On a fully diluted basis, assuming conversion of the debentures,
funds from operations increased to $16.6 million from $14.9 million. The
increase in funds from operations is principally a function of the improvements
in the operations of the Development Properties. However, improvements in the
economic performance of the properties were mitigated by the Company recording
reserves to offset the straight-lining of contractual rent increases. During the
first six months of 1996 the Company recorded a charge of $6.9 million to
increase the reserve against the receivable for straight-line rents and a gain
on sale of a property of $2.5 million. Such non-recurring items were not
included in the computation of FFO as the Company considers them to be
significant non-recurring events that if deducted would materially distort the
comparative measurement of Company performance. Additionally, the Company
recorded straight-line rents in the first six months of 1995 of approximately
$0.8 million which were not recorded in 1996.
Funds from operations do not represent cash flows from operations as
defined by Generally Accepted Accounting Principles and should not be considered
as an alternative to net income as an indicator of the Company's operating
performance or to cash flows as a measure of liquidity.
11
<PAGE>
CASH FLOWS
Net cash provided by operating activities increased $1.6 million from
the $8.5 million for the six months ended June 30, 1995 to $10.1 million for the
six months ended June 30, 1996, due, principally, to the reasons stated above
under results of operations.
Net cash used by investment activities decreased to $12.8 million for
the six months ended June 30, 1996 from $14.7 million for the six months ended
June 30, 1995. Net cash provided by financing activities decreased to $2.2
million for the six months ended June 30, 1996 from $6.2 million in the six
months ended June 30, 1995. The principal cause of the decrease in cash provided
by financing activities was the result of the long-term financing obtained in
March, 1995. The decrease in cash used by investment activities was caused by
increased development activity at the Company's properties offset by the
proceeds from the sale of Vons, Ventura.
LIQUIDITY SOURCES AND REQUIREMENTS
At June 30, 1996, outstanding debt (excluding the debentures)
increased by $15.9 million to $239.4 million from the $223.5 million outstanding
at December 31, 1995, as a result of additional borrowings on the Credit
Facility to fund development activity. At June 30, 1996 the Company had drawn
approximately $34.2 million against its $75 Million Credit Facility. Subsequent
to June 30, 1996, the Company has drawn an additional $9.5 million to fund
continuing development activity.
The Company anticipates investing approximately $26 million in
development and tenant improvements over the next fifteen months, principally to
fund development opportunities within the existing portfolio. The Company
anticipates that such capital improvement requirements will be funded from the
New Credit Facility.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
None
Item 2: Changes in Securities
None
Item 3: Defaults Upon Senior Securities
None
Item 4: Submission of Matters to a Vote of Security Holders
None
Item 5: Other Information
None
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
None
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ALEXANDER HAAGEN PROPERTIES, INC.
By: /s/ Seymour Kreshek
_______________________________________________
Seymour Kreshek
Senior Vice President,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
and Director
Dated: August 13, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> APR-01-1996 JAN-01-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 3,221 0
<SECURITIES> 0 0
<RECEIVABLES> 5,060 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 663,102 0
<DEPRECIATION> 98,206 0
<TOTAL-ASSETS> 601,466 0
<CURRENT-LIABILITIES> 0 0
<BONDS> 407,998 0
0 0
0 0
<COMMON> 120 0
<OTHER-SE> 156,131 0
<TOTAL-LIABILITY-AND-EQUITY> 601,466 0
<SALES> 0 0
<TOTAL-REVENUES> 23,713 44,591
<CGS> 0 0
<TOTAL-COSTS> 6,001 11,936
<OTHER-EXPENSES> 5,727 <F1> 10,548
<LOSS-PROVISION> 0 <F2> 6,900
<INTEREST-EXPENSE> 8,869 17,723
<INCOME-PRETAX> 3,116 (2,516)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,116 (2,516)
<EPS-PRIMARY> .26 (.21)
<EPS-DILUTED> 0 0
<FN>
<F1> Includes depreciation and amortization of $4,060 and $8,497 for the three
and six months ended June 30, 1996, respectively, and $404 and $(376) allocated
to minority interests, respectively.
<F2> Non-recurring charge to reserve against straight-line rents receivable.
</FN>
</TABLE>
