HAAGEN ALEXANDER PROPERTIES INC, S-3/A, 1997-03-27

HAAGEN ALEXANDER PROPERTIES INC
S-3/A, 1997-03-27
REAL ESTATE INVESTMENT TRUSTS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 27, 1997
REGISTRATION NO. 333-07673

===============================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 1

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

ALEXANDER HAAGEN PROPERTIES, INC.
(Exact name of registrant as specified in its charter)

MARYLAND 95-4444963
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

3500 SEPULVEDA BOULEVARD
MANHATTAN BEACH, CALIFORNIA 90266
(310) 546-4520
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)

ALEXANDER HAAGEN, SR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ALEXANDER HAAGEN PROPERTIES, INC.
3500 SEPULVEDA BOULEVARD
MANHATTAN BEACH, CALIFORNIA 90266
(310) 546-4520
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
EDWARD SONNENSCHEIN, JR.
LATHAM & WATKINS
633 WEST FIFTH STREET, SUITE 4000
LOS ANGELES, CALIFORNIA 90071
(213) 485-1234

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement.

If the only securities being registered on this Form are to be
offered pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]

If any of the securities being registered on this From are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [ X ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=============================================================================================================
Proposed maximum Proposed maximum Amount of
Amount to be aggregate price aggregate offering registration
Title of shares to be registered registered per share (2) price (3) fee
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Common Stock, par value
$.01 per share . . . . . . . 5,953,122 (1) $14.375 $85,576,129 $14,125 (4)

=============================================================================================================
</TABLE>

(1) Includes 925,200 shares previously registered on Registration Statement
No. 33-89538, 5,371 shares previously registered on Registration Statement
No. 33-89540, 1,666,666 shares previously registered on Registration
Statement No. 33-89542, and 3,355,885 shares registered for the first time
by this Registration Statement; also includes an indeterminate number of
shares which may be issued by the Company with respect to such shares of
Common Stock by way of a stock dividend, stock split or in connection with
a combination of stock, recapitalization, merger, consolidation or
otherwise.

(2) Based upon the average of the high and low prices of the Common Shares
reported on the American Stock Exchange on March 26, 1997, pursuant to
Rule 457(f) of the Securities Act of 1933, as amended.

(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of the Securities Act of 1933, as amended.

(4) Registration fees totaling $14,424.29 with respect to 2,597,236 of the
2,710,743 shares registered hereby were previously paid upon the initial
registration of such shares. A registration fee of $510 was paid on July
3, 1996 with respect to 113,506 shares registered for the first time by
this Registration Statement, and pursuant to Rule 429(b) of the Securities
Act of 1933, as amended, the applicable registration fee of $14,125 with
respect to the additional 3,242,379 shares registered for the first time
by this Registration Statement is being paid herewith.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
===============================================================================
<PAGE> 2
ALEXANDER HAAGEN PROPERTIES, INC.

CROSS REFERENCE SHEET

CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING THE
LOCATION IN THE PROSPECTUS OF THE INFORMATION REQUIRED BY PART I OF FORM S-3.

<TABLE>
<CAPTION>
ITEMS IN FORM S-3 LOCATION OR HEADING IN PROSPECTUS
------------------ ---------------------------------
<S> <C> <C>
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus . . . . . . . . . . . . . Outside Front Cover Page
2. Inside Front and Outside Back Cover Inside Front Cover Page; Outside
Pages of Prospectus . . . . . . . . Back Cover Page
3. Summary Information, Risk Factors, Outside Front Cover Page; The
Ratio of Earnings to Fixed Charges . Company; Risk Factors
4. Use of Proceeds . . . . . . . . . . Not Applicable
5. Determination of Offering Price . . Not Applicable
6. Dilution . . . . . . . . . . . . . . Not Applicable
7. Selling Security Holders . . . . . . Selling Stockholders
8. Plan of Distribution . . . . . . . . Outside Front Cover Page; Plan of
Distribution
9. Description of Securities to Be
Registered . . . . . . . . . . . . . Description of Securities
10. Interests of Named Experts and
Counsel . . . . . . . . . . . . . . Not Applicable
11. Material Changes . . . . . . . . . . Financial Statements
12. Incorporation of Certain Information Incorporation of Certain
by Reference . . . . . . . . . . . . Information by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities . . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 3

PROSPECTUS SUBJECT TO COMPLETION, DATED MARCH 27, 1997

ALEXANDER HAAGEN PROPERTIES, INC.
5,371 SHARES OF COMMON STOCK

All of the shares of common stock, $.01 par value per share ("Common
Shares"), of Alexander Haagen Properties, Inc., a Maryland corporation (the
"Company"), offered hereby are being offered by certain stockholders of the
Company (the "Selling Stockholders") as described more fully herein. The
Company will not receive any of the proceeds from the sale of the shares
offered hereby. See "Selling Stockholders" and "Plan of Distribution."

The Company is a self-administered and self-managed real estate
investment trust (a "REIT") engaged in the ownership, management, leasing,
acquisition, development and redevelopment of retail shopping centers in
California and other western states. The Company currently owns 38 retail
shopping centers. The Company conducts all of its operations through Alexander
Haagen Properties Operating Partnership, L.P., a California limited partnership
(the "Operating Partnership"). The Company is the sole general partner of the
Operating Partnership and as of September 30, 1996 owned a 73.7% interest
therein.

The Company's Common Shares are traded on the American Stock Exchange
(the "AMEX") under the symbol "ACH." On March 26, 1997, the closing sale
price of the Common Shares as reported on the AMEX was $14.375 per share.

This Prospectus relates to the public offering and sale from time to
time by the Selling Stockholders of up to 5,371 Common Shares that may be
issued to the Selling Stockholders if, and to the extent that, such Selling
Stockholders exchange 5,371 units of limited partnership interest in the
Operating Partnership ("OP Units") held by them for an equivalent number of
Common Shares (the "Exchange Shares") pursuant to the provisions of the
Partnership Agreement of the Operating Partnership. Such 5,371 OP Units were
issued in connection with the acquisition of two retail shopping centers by the
Company in September 1994. The Company is registering the sale by the Selling
Stockholders of Exchange Shares, but the registration of such shares does not
necessarily mean that any of such shares will be offered or sold by the holders
thereof. The Selling Stockholders may from time to time offer and sell the
Exchange Shares held by them directly or through agents or broker-dealers on
terms to be determined at the time of sale. To the extent required, the names
of any agent or broker-dealer and applicable commissions or discounts and any
other required information with respect to any particular offer will be set
forth in an accompanying Prospectus Supplement. See "Plan of Distribution."
Each of the Selling Stockholders reserves the sole right to accept or reject,
in whole or in part, any proposed purchase of the Exchange Shares to be made
directly or through agents.

The Company will not receive any proceeds from the sale of Common
Shares offered hereby by the Selling Stockholders but has agreed to bear
certain expenses of registration of the Exchange Shares under Federal and state
securities laws (currently estimated to be approximately $150), other than
commissions and discounts of agents or broker-dealers and transfer taxes, if
any. The Company will acquire OP Units in the Operating Partnership in
exchange for any Exchange Shares that the Company may issue to OP Unit holders
pursuant to this Prospectus. See "Plan of Distribution."

The Selling Stockholders and any agents or broker-dealers that
participate with the Selling Stockholders in the distribution of Exchange
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), and any commissions received by
them and any profit on the resale of the Exchange Shares may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution."

SEE "RISK FACTORS" ON PAGE 3 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS IN THE COMMON SHARES.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON
OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.

THE DATE OF THIS PROSPECTUS IS __________, 1997

<PAGE> 4
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE> 5
AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus is a part) on
Form S-3 under the Securities Act, with respect to the securities offered
hereby. This Prospectus and any accompanying Prospectus Supplement do not
contain all of the information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the rules and regulations
of the Commission. Statements contained in this Prospectus as to the content
of any contract or other document are not necessarily complete, and in each
instance reference is made to the copy of the contract or other document filed
as an exhibit to the Registration Statement, each statement being qualified in
all respects by such reference and the exhibits and schedules thereto. For
further information regarding the Company and the Common Shares offered hereby,
reference is hereby made to the Registration Statement, including the exhibits
and schedules thereto, which may be inspected without charge at the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. and
copies of the Registration Statement or any part thereof may be obtained from
such office, upon payment of the fees prescribed by the Commission.

The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy and information statements and other
information with the Commission. The reports, proxy and information statements
and other information and the Registration Statement and the exhibits and
financial statement schedules thereto filed by the Company with the Commission
can be inspected and copied at prescribed rates at the Public Reference Section
of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
13th Floor, 7 World Trade Center, New York, New York 10048, and at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Electronic filings
made through the Electronic Data Gathering, Analysis and Retrieval System are
publicly available through the Commission's web site (http://www.sec.gov). The
Company's Common Shares are listed on the American Stock Exchange and the
reports, proxy and information statements and other information can also be
inspected at the offices of the American Stock Exchange, 86 Trinity Place, New
York, New York 10006.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents filed with the Commission pursuant to the
Exchange Act are incorporated herein by reference: (1) the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995; (2) the
Company's Quarterly Reports on Form 10-Q for the quarterly periods ended March
31, 1996, June 30, 1996 and September 30, 1996; (3) the Company's 1996 Proxy
Statement for its Annual Meeting of Shareholders; (4) the description of the
Company's common stock contained in the Company's Registration Statement on Form
8-A filed with the Commission on November 16, 1993; and (5) all other documents
filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the Offering made hereby.

Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed document which also
is or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any statement so modified shall not be deemed to constitute a
part of this Prospectus except as so modified, and any statement so superseded
shall not be deemed to constitute part of this Prospectus.

The Company undertakes to provide without charge to each person to whom
a copy of this Prospectus has been delivered, upon the written or oral request
of any such person, a copy of any or all documents which are incorporated herein
by reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests for such
copies should be directed to the Company, at its principal executive offices,
Attention: Steven M. Jaffe, Senior Vice President and General Counsel,
Alexander Haagen Properties, Inc., 3500 Sepulveda Boulevard, Manhattan Beach,
California 90266; telephone number (310) 546-4520.

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<PAGE> 6
THE COMPANY

The Company is a self-administered and self-managed real estate
investment trust ("REIT"), formed to continue and expand the business of The
Alexander Haagen Company, Inc., a California corporation ("AHC"), and certain
of its affiliates (the "Predecessor Affiliates"), and engages in the ownership,
management, leasing, acquisition, development and redevelopment of retail
shopping centers in California and other western states. The Company currently
owns 38 retail shopping centers (collectively, the "Properties").

The Properties consist of 14 neighborhood/community shopping centers,
14 single tenant centers, eight promotional/power centers and two regional
shopping malls, containing in the aggregate approximately 8.3 million square
feet of gross leasable area, approximately 6.6 million square feet of which is
owned by the Company and the balance of which is owned by certain anchor
retailers. Since 1963, the Company has owned and operated a total of 102
retail shopping centers (67 of which it developed), representing in the
aggregate approximately 12.2 million square feet of gross leasable area.

All of the Properties and other assets of the Company are held by, and
all of the Company's operations are conducted by, the Operating Partnership. The
Company is the sole general partner of the Operating Partnership and, as of
September 30, 1996, owned a 73.7% interest therein. The remaining interests
in the Operating Partnership are owned in the form of OP Units by the limited
partners of the Operating Partnership (the "OP Limited Partners").

The Company may from time to time issue up to 5,371 Exchange
Shares upon the acquisition of OP Units tendered for exchange by the Selling
Stockholders. The Company will acquire an OP Unit of the Selling Stockholders
in exchange for each Exchange Share that the Company issues in connection with
these acquisitions. Consequently, with each exchange of OP Units for Exchange
Shares, the Company's interest in the Operating Partnership will increase (all
other factors remaining unchanged), regardless of whether the Selling
Stockholders sell any of such shares pursuant to this offering or otherwise.

The Company was incorporated in Maryland in September 1993. The
principal executive offices of the Company and the Operating Partnership are
located at 3500 Sepulveda Boulevard, Manhattan Beach, California 90266 and
their telephone number is (310) 546-4520. Unless the context indicates
otherwise, all references to the Company's business and properties include the
business and properties of the Operating Partnership and Haagen Property
Management, Inc., a California corporation ("HPMI"), Alexander Haagen
Properties Finance, Inc., a Delaware corporation, and Alexander Haagen
Properties Finance Partnership, L.P., a California limited partnership.

RISK FACTORS

In addition to the other information contained or incorporated by
reference in this Prospectus or in an accompanying Prospectus Supplement,
prospective investors should carefully consider the following factors before
investing in the securities offered hereby.

GEOGRAPHIC CONCENTRATION OF PROPERTIES IN SOUTHERN CALIFORNIA

Twenty-eight of the Properties are located in Southern California and
thus the performance of the Company will be particularly influenced by
developments in this market area. Over the past few years, Southern California
has experienced an economic recession. This has resulted in a general increase
in vacancies and a general decrease in the rents commanded by commercial real
estate lessors. In addition, a number of the Properties are located in heavily
populated urban areas. Though this provides a substantial consumer population
for the Properties to service, such areas experience problems common to urban
centers generally.

ADVERSE CONSEQUENCES OF DEBT FINANCING

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the Operating Partnership (the "Exchangeable Debentures," and together with the
Convertible Debentures, the "Debentures"). In order to pursue most effectively
its operating and investment strategy, the Company intends to maintain a capital
structure with a ratio of long-term debt (excluding the Debentures) to total
market capitalization of less than 40%. As of September 30, 1996, the Company
had a ratio of long-term debt to total market capitalization of approximately
38% (or 62% including the Debentures outstanding as of September 30, 1996 as
part of long-term debt). The Board of Directors of the Company may change this
policy at any time, and there is no limit on the amount of debt that the Company
may incur. There are risks associated with any debt financing. Risks normally
associated with debt financing include the risk that funds from operations will
be insufficient to meet required payments of principal and interest and the risk
that interest rates may increase, which could adversely affect a corporation's
ability to make distributions. The Company will be required to make substantial
aggregate future principal payments on outstanding mortgage indebtedness
currently encumbering the Properties, including approximately $28.2 million in
1999, $18.6 million in 2002, $20.1 million in 2004 and $23.5 million in 2005.
If the Company is unable to meet its payment and other obligations with respect
to its Properties which are mortgaged to secure payment of indebtedness, one or
more of such properties could be foreclosed upon or otherwise transferred to the
mortgagee with a consequent loss of income and asset value to the Company. At
September 30, 1996, there were $41.2 million in borrowings under the Credit
Facility.

RISKS OF FLOATING-RATE INDEBTEDNESS

In May 1995, the Company entered into a $75 million credit facility
with National Westminster Bank Plc, which in December 1996 was increased to $90
million and provides for interest at a floating rate equal to LIBOR plus 1.5%.
As of September 30, 1996, there were outstanding borrowings of $41,200,000 under
such credit facility. Additional indebtedness the Company may in the future
incur may also bear interest at a floating rate. Accordingly, increases in
interest rates could increase the Company's interest expense, which could
adversely affect the Company's cash available for distribution to stockholders.

REAL ESTATE INVESTMENT TRUST AND PARTNERSHIP QUALIFICATION

The Company believes that it is organized and that it has operated in
a manner which will allow it to qualify as a REIT under the Internal Revenue
Code of 1986, as amended (the "Code") beginning with its taxable year ended
December 31, 1993, and the Company intends to continue to operate in such
manner, but no assurance can be given that it has operated or will continue to
operate in such manner so as to qualify or remain qualified. Qualification as
a REIT involves the application of highly technical and complex Code provisions
for which there are only limited judicial or administrative interpretations.
The complexity of these provisions and of the applicable income tax regulations
that have been promulgated under the Code (the "Treasury Regulations") is
greater in the case of a REIT that holds its assets in partnership form. The
determination of various factual matters and circumstances not entirely within
the Company's control may affect its ability to continue to qualify as a REIT.
In addition, no assurance can be given that legislation, new regulations,
administrative interpretations or court decisions will not significantly change
the tax laws with respect to qualification as a REIT or the federal income tax
consequences of such qualification. If the Company were to fail to qualify as
a REIT in any taxable year, the Company would not be allowed a deduction for
distributions to stockholders in computing taxable income and would be subject
to federal income tax on its taxable income at regular corporate rates. This
additional tax liability would reduce the amounts available for distribution by
the Company to stockholders. See "Federal Income Tax Considerations."

The Company believes that each of the Operating Partnership and
certain other partnerships through which the Company owns certain Properties
(the "Outside Partnerships") are properly treated as partnerships for federal
income tax purposes. If the Internal Revenue Service (the "IRS") were to
challenge successfully the tax status of the Operating Partnership or any of
the Outside Partnerships as a partnership for federal income tax purposes, such
partnership would be treated as an association taxable as a corporation. In
such event, the character of the Company's assets and items of gross income
would change and preclude the Company from satisfying the asset tests and
possibly the income tests imposed by the Code and, in turn, would prevent the
Company from qualifying as a REIT. In addition, the imposition of a corporate
tax on the Operating

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<PAGE> 8
Partnership or the Outside Partnerships would reduce the amount of funds from
operations available for distribution to the Company and its stockholders. See
"Federal Income Tax Considerations."

HISTORICAL OPERATING LOSSES OF THE PROPERTIES

Although the Properties have historically generated positive cash flow
after their construction and initial lease-up periods, the effect of
depreciation, amortization and other non-cash charges and interest on
indebtedness has resulted in net losses for financial reporting purposes in
fiscal year 1995 and in each of the five fiscal years prior to fiscal 1994.
Historical operating results of certain Properties may not be comparable to
future operating results of the Company because, prior to their transfer to the
Company on December 27, 1993, the Properties were encumbered with greater
levels of debt (which has the effect of reducing net income) than that with
which the Company operates and because certain significant Properties during
the periods presented had been in the development phase or had not completed
their leasing plan. In addition, the historical results of operations through
December 31, 1993 do not reflect the addition of two Properties acquired
concurrently with the consummation of the Company's initial public offering on
December 27, 1993 (the "Initial Offering"), the Properties acquired since the
Initial Offering (the "1994 Acquisition Properties") or the purchase of the
remaining 50% joint venture interest in one of the Properties concurrently with
the Initial Offering. However, there can be no assurance that the Company will
not experience losses in the future. While the Company had net income for the
year ended December 31, 1994, it posted a loss of $2,408,000 for the fiscal
year ended December 31, 1995.

DEPENDENCE ON KEY MANAGEMENT PERSONNEL

The executive officers of the Company, Alexander Haagen, Sr., Alexander
Haagen III, Fred W. Bruning, Charlotte Haagen, Stuart J. S. Gulland and Steven
Jaffe (collectively, the "Executive Officers"), have substantial experience in
owning, operating, managing, acquiring and developing shopping centers,
particularly in the southern California market. The Company believes that its
success will depend in large part upon the efforts of such persons. The Company
has entered into employment agreements with Alexander Haagen, Sr., Alexander
Haagen III and Charlotte Haagen which provide for their continued employment
with the Company for a renewable term ending December 31, 1997 and prevent them
from competing with the Company during such term of employment and for one year
thereafter. The Company also has an employment agreement with Fred Bruning
which expires in December 1997 with no restrictions thereafter.

ECONOMIC PERFORMANCE OF PROPERTIES

The revenue from a property may be adversely affected by many factors,
including tenant mix and the inability of the Company to collect rent from
tenants. From time to time the Company may experience delays in completing the
leasing plan for a specific property for various reasons. This could result in
operating losses from such property and have a negative impact on the results of
the Company. In the past, the Company has experienced a delay in completing its
leasing plan with respect to Baldwin Hills Crenshaw Plaza. As of September 30,
1996, Baldwin Hills Crenshaw Plaza was 94.1% leased. The Company believes that
as a result of revised leasing plans, the tenant mix at this Property has been
significantly upgraded.

CONFLICTS OF INTEREST

Certain ongoing arrangements between the Company, HPMI and affiliates
of AHC, which holds all of the outstanding shares of voting stock of HPMI and
the sole shareholders of which are certain Executive Officers, may lead to
conflicts of interest on the part of certain directors and officers of the
Company. Such transactions and arrangements include (i) the terms of the
transfers of 36 Properties (the "Original Properties") to the Company and the
Operating Partnership in December 1993; (ii) a lease between HPMI and a
partnership in which certain Executive Officers are partners, and HPMI's
subsequent sublease of certain space to the Company and the Operating
Partnership,

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<PAGE> 9

pursuant to which the Company, the Operating Partnership and HPMI occupy their
headquarters facility in Manhattan Beach, California; (iii) management
agreements between HPMI, the Company and the Operating Partnership and certain
affiliates of the Executive Officers with respect to HPMI's management of the
Properties and certain properties not owned by the Company; and (iv) the sale or
refinancing of certain Properties which may cause adverse tax consequences to
certain OP Limited Partners, including the Executive Officers. However, the
enforcement of such arrangements will be subject to oversight by the directors
of the Company who are not employed by the Company (the "Independent
Directors").

REAL ESTATE INVESTMENT CONSIDERATIONS

General Real Estate and Local Economic Conditions. Real property
investments are subject to varying degrees of risk. The yields available from
equity investments in real estate depend on the amount of income and capital
appreciation generated by the properties. If the Company's properties do not
generate sufficient income to meet operating expenses, including debt service,
lease payments, capital expenditures and tenant improvements, the Company's
income and ability to make distributions to its stockholders will be adversely
affected. Income from the Company's properties may be adversely affected by
the general economic climate, local economic conditions, and other location
conditions, such as oversupply of leasable commercial retail space or a
reduction in demand for such space, the attractiveness of the properties to
tenants, competition from other available space, the ability of the Company to
provide adequate maintenance and insurance and increased operating costs
(including real estate taxes). Income and real estate values may also be
adversely affected by such factors as applicable laws, including tax laws,
interest rate levels and the availability of financing.

Equity investments in real estate are relatively illiquid and,
therefore, the ability of the Company to vary its portfolio promptly in
response to changed conditions will be limited. While the Company is
authorized to invest in various types of income-producing real properties, its
current strategy is to concentrate on interests in retail shopping centers and
similar facilities. Consequently, the Company will be subject to the risks
associated with investments in a single industry.

Inability to Rent Unleased Space. The ability of the Company to rent
unleased space will be affected by many factors, including certain covenants
restricting the nature of tenants occupying other space at a property often
found in leases and reciprocal easement agreements with tenants in retail
shopping center properties. In addition, in the event of a default by a lessee
or sublessee in its obligations to the Company, the Company may experience
delays in enforcing its rights as lessor or sublessor and may incur substantial
costs and experience significant delays associated with protecting its
investment, including costs incurred in acquiring and making substantial
improvements or repairs to a property. Fifteen of the Properties are single
tenant centers, which may also require additional refurbishment in order to be
re-leased in the event of a vacancy.

Tenant Early Termination Rights. Certain leases at some Properties
have provisions which allow the lessee to terminate its lease prior to the end
of the original term thereof under certain conditions, including, for example,
the failure to achieve a stated minimum sales level, the failure to achieve or
maintain a stated minimum leasing level, or the closing of an anchor store and
its failure to reopen within a certain period of time.

Competition. There are numerous commercial developers and real estate
companies that compete with the Company in seeking land for development,
properties for acquisition and tenants for properties. There are numerous
shopping facilities that compete with the Properties in attracting retailers to
lease space. In addition, retailers at the Properties face increasing
competition from outlet malls, discount shopping clubs, direct mail and
telemarketing. Such competition may reduce properties available for
acquisition or development, reduce percentage rents payable to the Company and
may, through the introduction of competition, contribute to lease defaults or
insolvency of tenants.

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<PAGE> 10
be able to negotiate a new ground lease on terms consistent with or more
favorable than existing terms, which may result in increased rental expense to
the Company. Two of the Company's ground leases expire within the next 20
years. Ground leases with respect to certain Properties require participating
rent payments to the ground lessors, which may limit the potential revenues to
the Company from such Properties.

Uninsured Loss. The Company requires all of its lessees to maintain
casualty and liability insurance. The Properties also will be covered by
comprehensive liability, rental loss, all-risk (at full replacement cost) and
earthquake insurance with respect to its properties with policy specifications
and insured limits customarily carried for similar properties. There are,
however, certain types of losses which may be either uninsurable or not
economically insurable. Should an uninsured loss occur, the Company could lose
both its invested capital in and anticipated profits from the property.

GOVERNMENT REGULATIONS

Environmental Matters. Under various federal, state and local laws,
ordinances and regulations, an owner or operator of real property may become
liable for the costs of removal or remediation of certain hazardous or toxic
substances on or in its property. Such laws often impose such liability
without regard to whether the owner or operator knew of, or was responsible
for, the presence of such hazardous or toxic substances. The costs of
investigation, removal or remediation of such substances may be substantial,
and the presence of such substances, or the failure to properly remediate such
substances, may adversely affect the owner's ability to sell or develop such
real estate or to borrow using such real estate as collateral. In connection
with its ownership and operation of properties, the Company may be potentially
liable under such laws and may incur costs in responding to such liabilities.

All of the Properties (except for Montebello Town Square (Montebello,
CA) and Media City Center (Burbank, CA)) were subject to Phase I or similar
environmental assessments by independent environmental consultants
substantially concurrently with their transfer to the Company. Phase I
assessments are intended to discover information regarding, and to evaluate the
environmental condition of, the surveyed property and surrounding properties.
Phase I assessments generally include an historical review, a public records
review, a preliminary investigation of the surveyed site and surrounding
properties, and preparation and issuance of a written report, but do not
include soil sampling or subsurface investigations. Montebello Town Square and
Media City Center were subject to extensive environmental investigations in
connection with the construction of such Properties more comprehensive than
Phase I assessments.

Montebello Town Square is located over a former crude oil production
field and is near the Operating Industries, Inc. ("OII") Superfund site. The
prior owner and operator of the site, Chevron U.S.A., previously remediated
crude oil contamination on the site to a level acceptable to responsible
agencies. Potential methane gas migration from the OII site is controlled by a
methane gas venting system, a sub- floor gas barrier and certain monitoring
devices. Responsible governmental agencies have approved these measures. By
virtue of the measures taken and the creditworthiness of Chevron and the
responsible parties with respect to the OII site, the Company does not believe
that this matter will have a material adverse impact on its financial
condition, results of operations or business.

Media City Center is located within the San Fernando Valley Superfund
site. However, remediation of this Superfund site is being carried out to the
satisfaction of responsible governmental agencies by parties other than the
Company, including Lockheed Aeronautical Systems Company, which have been named
as responsible parties. By virtue of the Company's belief that Media City
Center complies with applicable law in all material respects and the active
remediation and creditworthiness of the responsible parties, the Company does
not believe that this matter will have a material adverse impact on its
financial condition, results of operations or business.

At Medford Center (Medford, OR) certain current or prior tenants
utilized hazardous materials in the normal course of their business. Possible
leakage of hazardous materials into the soil and groundwater is suspected to
have occurred from a drycleaner store and from underground storage tanks which
have been

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removed. In connection with the transfer of Medford Center to the Company, the
transferors provided to the Company $300,000, to be used to fund future
environmental remediation costs at Medford Center. The Company does not
believe that such remediation costs will exceed $300,000 and therefore does not
believe that this matter will have a material adverse impact on its financial
condition, results of operations or business.

At various Properties, some current or prior tenants, such as service
stations or drycleaners, store, sell or use hazardous materials in the conduct
of their businesses and a potential for contamination exists. Except as noted
below, contamination at levels requiring clean-up have not been detected except
in cases in which indicated remediation has occurred. Hydrocarbon
contamination has been detected in the soil and/or groundwater beneath ten of
the Properties on which service stations are presently or were previously
operated. At two of such Properties, primary responsibility for clean-up has
been assumed by the tenant, a major oil company which is dealing directly with
the responsible government agencies. At the other eight Properties, the
Company anticipates that remediation will be borne in significant part by the
prior owner, the prior service station operator and the current service station
operator (which filed for bankruptcy protection). The Company will ultimately
bear some financial responsibility for these matters. However, by virtue of
the indemnity agreements with the prior owner and the creditworthiness of the
prior owner and the indemnities from Predecessor Affiliates described below,
the Company does not believe that these matters will have a material adverse
impact on its financial condition, results of operations or business.

Except for the foregoing matters, the Company is not aware of any
non-compliance, liability or other claim in connection with any of the
Properties which the Company believes will have a material adverse effect on
the Company's financial condition, results of operations or business. However,
no assurance can be given that Phase I assessments and any other existing
environmental studies with respect to any of the Properties reveal all
environmental liabilities, that any prior owner or tenant of a Property did not
create any material environmental condition not known to the Company, that
future laws, ordinances or regulations will not impose any material
environmental liability, or that a material environmental condition does not
otherwise exist as to any one or more Properties.

Pursuant to an Environmental Indemnity Agreement, dated as of December
27, 1993, the transferors of the Original Properties have agreed to provide
certain indemnities to the Company for environmental liabilities that may arise
with respect to any contamination on or affecting the condition of the Original
Properties which was known as of December 27, 1993 or which becomes known after
December 27, 1993 as a result of additional environmental testing commenced
prior to December 27, 1993. Pursuant to the transfer documents with respect to
the 1994 Acquisition Properties, the transferors of such Properties will also
provide certain indemnities with respect to environmental liabilities to the
Company. The Company believes that such indemnities, taking into account the
financial resources of such parties, will be sufficient to satisfy the matters
described above. Because responsibility for such matters is being retained by
such parties, no liabilities will be recorded on the financial statements of
the Company in respect of such matters.

Costs of Compliance with Americans with Disability Act. Under the
Americans with Disability Act of 1990 (the "ADA"), all public accommodations
are required to meet certain federal requirements related to access and use by
disabled persons. These requirements became effective in 1992. Although the
Company believes that the Properties are substantially in compliance with the
present requirements under the ADA, the Company may in the future incur costs
of complying with additional requirements under the ADA. However, the Company
does not believe that such additional costs of compliance will have a material
effect on the Company.

OWNERSHIP LIMIT

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<PAGE> 12
rent is from a Related Party Tenant) apply in determining whether these
requirements are met. Accordingly, for the purpose of preserving the Company's
REIT qualification, the Company's Charter prohibits actual or constructive
ownership of more than 9.8% of the lesser of the number or value of outstanding
Common Shares by any person (the "Ownership Limit"). The constructive
ownership rules are complex and may cause Common Shares owned, actually or
constructively, by a group of related individuals and/or entities to be deemed
to be constructively owned by one individual or entity. As a result, the
acquisition of less than 9.8% of the lesser of the number or value of
outstanding Common Shares (or the acquisition of an interest in an entity which
owns Common Shares) by an individual or entity could cause that individual or
entity (or another individual or entity) to own constructively in excess of
9.8% of the outstanding Common Shares, and thus subject such Common Shares to
the Ownership Limit. See "Description of Securities--Restrictions on
Ownership." In addition, for these purposes, Common Shares that may be
acquired upon conversion or exchange of Debentures actually or constructively
held by an investor, but not Common Shares issuable with respect to Debentures
held by others, are deemed to be outstanding prior to their conversion or
exchange for purposes of determining the percentage of ownership of Common
Shares held by that investor. Actual or constructive ownership of Common
Shares in excess of the Ownership Limit would cause the violative transfer or
ownership to be void as to the transferee and would cause such shares (and
perhaps other Common Shares) to be converted into Excess Stock (as defined
below), which have limited economic rights. See "Description of
Securities--Restrictions on Ownership."

LIMITS ON ACQUISITIONS AND CHANGES IN CONTROL

Certain provisions of the Maryland General Corporation Law (the
"MGCL") and the Company's Charter and Bylaws could have the effect of delaying,
deferring or preventing a change in control of the Company or the removal of
existing management and, as a result, could prevent the stockholders of the
Company from being paid a premium for their Common Shares over then-prevailing
market prices.

Ownership Limit. The Ownership Limit set forth in the Charter may
have the effect of precluding acquisition of control of the Company by a third
party without consent of the Board of Directors even when a change in control
is in the interest of the stockholders.

Staggered Board. The Board of Directors of the Company has three
classes of directors. The terms of the first, second and third classes will
expire as of the date of the Company's annual stockholders' meeting in 1995,
1996 and 1997, respectively. Directors for each class are chosen for a
three-year term upon the expiration of the current class' term. The staggered
terms for directors may effect the stockholders' ability to change control of
the Company even where a change in control is in the interest of the
stockholders.

Preferred Stock. The Company's Charter authorizes the Board of
Directors to issue up to 5,000,000 shares of preferred stock and to establish
the preferences and rights (including the right to vote and the right to
convert into Common Shares) of any shares issued. The power to issue preferred
stock could have the effect of delaying or preventing a change in control of
the Company even where a change of control is in the stockholders' interest.

Control Shares. The MGCL provides certain restrictions upon the
voting rights of "control shares" in a Maryland corporation. "Control shares"
are voting shares of stock which, if aggregated with all other such shares of
stock previously acquired by the holder thereof, would entitle the acquiror to
exercise voting power in electing directors within one of the following ranges
of power: (i) one-fifth or more but less than one-third, (ii) one-third or
more but less than a majority, or (iii) a majority of all voting power. The
MGCL provides that "control shares" have no voting rights except to the extent
approved by an affirmative vote of two-thirds of the outstanding shares
entitled to vote on the matter, excluding shares held by the acquiror and the
officers and directors of the Company, subject to certain limitations. A
"control share acquisition" means the acquisition of control shares, subject to
certain exceptions. Pursuant to the statute, the Bylaws of the Company exempt
control share acquisitions involving the Executive Officers and certain
associates and affiliates of such persons, and, consequently, the prohibition
on voting control shares will not apply to such persons.

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Business Combinations. Under the MGCL, certain Business Combinations
(as defined) between a Maryland corporation and any person or affiliate thereof
who is the beneficial owner of 10% or more of the voting power of the
corporation's shares (an "Interested Stockholder") are prohibited for five
years after the most recent date on which the Interested Stockholder became an
Interested Stockholder. Thereafter, any such Business Combination must be
approved by the affirmative vote of at least (i) 80% of the votes entitled to
be cast by holders of outstanding voting shares of the Company and (ii) 66 2/3%
of the votes entitled to be cast by holders of outstanding voting shares held
by persons other than the Interested Stockholder with whom the Business
Combination is to be effected, subject to certain exceptions. Pursuant to the
statute, the Company has exempted any Business Combinations involving the
Executive Officers and certain associates and affiliates of such persons, and,
consequently, the five-year prohibition and the super-majority vote requirement
will not apply to Business Combinations between the Company and such persons.

CHANGES IN INVESTMENT AND FINANCING POLICIES

The Board of Directors determines the Company's and the Operating
Partnership's investment and financing policies and policies with respect to
certain other activities, including the growth, capitalization, distributions
and operating policies of the Company and the Operating Partnership. Although
the Board of Directors has no present intention to amend or revise these
policies, the Board of Directors may do so at any time without a vote of the
Company's stockholders.

TAX CONSEQUENCES OF SALE OR REFINANCING OF THE PROPERTIES

Since most of the Original Properties had unrealized gain attributable
to the difference between fair market value and adjusted tax basis in such
properties immediately prior to their contribution to the Operating
Partnership, the sale of any of such Original Properties may cause adverse tax
consequences to certain OP Limited Partners which received OP Units in
connection with the formation of the Company in December 1993 (the "Original OP
Limited Partners"), as compared to the effects on the Company. In addition, a
significant reduction in such Original Properties' debt could cause adverse tax
consequences to certain Original OP Limited Partners. As a result, certain
Executive Officers who were partners in the transferors of such Original
Properties might not favor such a sale of the Original Properties or a
significant reduction in debt even though such sale or debt reduction could be
beneficial to the Company. The decision as to whether to proceed with any such
sale or debt reduction would be made by the Board of Directors. In the event
of a sale of any property, the OP Limited Partners will have the right to
demand registration of such portion of their Common Shares which, when sold,
would generate funds sufficient to pay any taxes resulting from the sale of the
property and the exchange of OP Units for such Common Shares.

The Company is not required to distribute its net capital gains to
stockholders in order to retain its qualification as a REIT. However, the
Company would be subject to federal income tax (and in certain cases federal
excise tax) on its undistributed net capital gains. Accordingly, as the
managing general partner of the Operating Partnership, the Company will be
required to take such reasonable efforts, as determined by it in its sole
discretion, to cause the Operating Partnership to distribute sufficient amounts
to enable the payment of sufficient distributions by the Company to avoid any
federal income or excise tax at the Company level as a consequence of such
sale. This requirement may impact the ability of the Company to dispose of
properties in its portfolio.

In addition, the Company's share of any gain realized by the Operating
Partnership on the sale of any property held by the Operating Partnership as
inventory or other property held primarily for sale to customers in the
ordinary course of the Operating Partnership's trade or business will be
treated as income from a prohibited transaction that is subject to a 100%
penalty tax. See "Federal Income Tax Considerations." Currently, the Company
has no plans to offer any of its Properties for sale.

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RESTRICTIONS WITH RESPECT TO PARTIALLY-OWNED PROPERTIES

Two Properties, Kenneth Hahn Plaza and Vermont-Slauson Shopping Center
(the "Partially-Owned Properties") are currently owned by certain Outside
Partnerships consisting of affiliates of the Company and one or more partners
who have no interest in the Company. The Operating Partnership owns a 75%
managing general partnership interest in the limited partnership that owns
Kenneth Hahn Plaza and an 85% managing general partnership interest in
Haagen-Central Partnership, the general partnership which is the managing
general partner of, and holds a 40% interest in, the limited partnership that
owns Vermont-Slauson Shopping Center.

The Company has certain fiduciary responsibilities to the Outside
Partnerships which it will need to consider when making decisions relating to
the Partially-Owned Properties. The Company does not have sole control of
certain major decisions relating to the Partially-Owned Properties, including
certain decisions with respect to sales and refinancings of the Partially-Owned
Properties and the timing and amount of additional capital contributions
thereto. In addition, the sale or transfer of partnership interests in all of
the Outside Partnerships and Haagen-Central Partnership are subject to certain
rights of first refusal which generally require the partner desiring to sell
its interest to a third party to offer the interest first to the other partners
on the same terms and conditions offered by the third party. In addition to
such rights of first refusal, the sale, transfer, assignment or pledge of
partnership interests in certain Outside Partnerships require the prior written
consent of the other partners. Likewise, the consent of the other partners in
the Outside Partnerships would be required for any sale, transfer or
encumbrance of the Partially-Owned Properties. These limitations may result in
decisions by third parties with respect to such properties that do not fully
reflect the interests of the Company at such time.

FUTURE ISSUANCE OF ADDITIONAL OP UNITS AND SHARES

The future issuance of Common Shares upon exchange of Debentures could
have a dilutive effect on cash available for distribution on a per share basis
to holders of Common Shares (such dilution being currently estimated at $0.04
per share on an annual basis).

SHARES AVAILABLE FOR FUTURE SALE

No prediction can be made as to the effect, if any, that future sales
of shares, or the availability of shares for future sale, will have on the
market price of the Common Shares. Sales of a substantial number of Common
Shares (including shares issued upon exchange of OP Units or Exchangeable
Debentures or conversion of Convertible Debentures) or the perception that such
sales could occur, could adversely affect prevailing market prices for the
Common Shares. An aggregate of 4,286,456 additional Common Shares may be issued
to the OP Limited Partners (subject to the Ownership Limit) if they exchange all
of their OP Units for Common Shares. The Company has agreed to register Common
Shares issuable to OP Limited Partners upon exchange of their OP Units, subject
to contractual limitations on resale thereof which are substantially equivalent
to the volume limitations of Rule 144 promulgated under the Securities Act. As
of December 31, 1996, an aggregate of 9,366,611 additional Common Shares may be
issued to the holders of Debentures if such holders elect to convert or
exchange, as applicable, all outstanding Debentures for Common Shares, with no
restrictions as to the resale thereof. The Company has granted options for
604,268 Common Shares and reserved for issuance an additional 245,396 Common
Shares under the Company's 1993 Stock Incentive Plan, all of which the Company
has registered.

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<PAGE> 15
RISKS OF DEVELOPMENT ACTIVITIES

The Company may selectively pursue development projects, including the
expansion of certain Properties. Such projects generally require various
governmental and other approvals, the receipt of which cannot be assured. The
Company may incur certain risks in connection with development activities,
including the expenditure of funds on and devotion of management's time to
projects which may not come to fruition; the risk that construction costs of a
project may exceed original estimates, possibly making the project uneconomic;
and the risk that occupancy rates and rents at a completed project will not be
sufficient to make the project profitable.

DISTRIBUTIONS TO STOCKHOLDERS

Distributions by the Company to its stockholders will be based
principally on cash available for distribution from the properties in the
Company's portfolio. Increases in base rent and percentage rent under the
leases of the Properties or the payment of rent in connection with future
acquisitions will increase the Company's cash available for distribution.
However, in the event of a default or a lease termination by a lessee, there
could be a decrease or cessation of rental payments. In addition, the amount
available to make distributions may decrease if properties acquired in the
future yield lower than expected cash available for distribution. If the
Company incurs additional indebtedness in the future, it will require
additional funds to service such indebtedness and as a result amounts available
to make distributions may decrease. Distributions by the Company will also be
dependent upon a number of other factors, including the Company's financial
condition, any decision to reinvest funds rather than to distribute such funds,
capital expenditures, the annual distribution requirements under the REIT
provisions of the Code described below and such other factors as the Company
deems relevant. The possibility exists that future operating results of the
Company may differ from the assumptions used by the Board of Directors in
determining the current distribution rate. In such event, the trading price of
the Common Shares may be adversely affected.

To obtain the favorable tax treatment associated with REITs, the
Company generally will be required to distribute to its stockholders at least
95% of its net taxable income each year. In addition, the Company will be
subject to a 4% nondeductible excise tax on the amount, if any, by which
certain distributions paid by it with respect to any calendar year are less
than the sum of 85% of its ordinary income, 95% of its capital gain net income
and undistributed income from prior years.

The Company intends to make distributions to its stockholders to
comply with the 95% distribution requirements of the Code and to avoid the
nondeductible excise tax. Differences in timing between the receipt of income
and the payment of expenses in arriving at taxable income and the effect of
required debt amortization payments could require the Company to borrow funds
on a short-term basis to meet the distribution requirements that are necessary
to achieve the tax benefits associated with qualifying as a REIT.

EFFECT OF MARKET INTEREST RATES ON SHARE PRICE

One of the factors that may influence the price of the Common Shares
in public markets will be the amount of the annual distributions paid by the
Company relative to the price paid for Common Shares. As a result, an increase
in market interest rates could adversely affect the market price of the Common
Shares to the extent that the yield on those shares compares less favorably to
yields on fixed-income securities and other alternative investments.

BANKRUPTCY AND FINANCIAL CONDITION OF TENANTS

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in its business which may weaken its financial condition and result in a
reduction in the percentage rent paid by such tenant or in the failure to make
rental payments when due. If tenant leases are not affirmed following
bankruptcy or a tenant's financial condition weakens, the Company's income may
be adversely affected.

From 1989 to 1995, a period which management of the Company believes
was particularly challenging for retailers, Bullock's and Broadway were the
only anchor tenants at any of the Properties to file petitions in bankruptcy.
Bullock's (now Macy's), an anchor tenant at Media City Center, is a subsidiary
of R.H. Macy & Co., Inc., which has operated under bankruptcy protection since
January 27, 1992. Macy's has affirmed its lease at Media City Center.
Broadway, an anchor tenant at Baldwin Hills Crenshaw Plaza, was a subsidiary of
Carter Hawley Hale Stores, Inc. during its bankruptcy reorganization and
continued to operate at Baldwin Hills Crenshaw Plaza during and following the
pendency of such bankruptcy. In addition, other national retail tenants of the
Company, including Newberry's, Edison Brothers, Wherehouse, Petries Corp. and
Fabricland, have filed for bankruptcy in the last several years. A number of
leases have been rejected by such bankrupt tenants. Although the Company will
seek to re-lease such space, there can be no assurance as to when or on what
terms it will be able to do so.

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DESCRIPTION OF SECURITIES

GENERAL

Under the Company's Charter, the total number of shares of all classes
of stock that the Company has authority to issue is 80,000,000, consisting of
50,000,000 Common Shares, 25,000,000 shares of excess stock, par value $.01 per
share (the "Excess Stock"), and 5,000,000 shares of preferred stock, par value
$.01 per share (the "Preferred Stock").

The holders of Common Shares are entitled to one vote per share on all
matters voted on by stockholders, including elections of directors, and, except
as otherwise required by law or provided in any resolution adopted by the Board
of Directors with respect to any series of Preferred Stock establishing the
designation, powers, preferences and relative, participating, option or other
special rights and powers of such series of Preferred Stock, the holders of
Common Shares exclusively possess all voting power. The Charter does not
provide for cumulative voting in the election of directors. Subject to any
preferential rights of any outstanding series of Preferred Stock, the holders
of Common Shares are entitled to such distributions as may be declared from
time to time by the Board of Directors from funds available therefor, and upon
liquidation are entitled to receive pro rata all assets of the Company
available for distribution to such holders. All outstanding Common Shares are,
and all Common Shares issued in the Offering will be, fully paid and
nonassessable and the holders thereof do not have preemptive rights.

The Board of Directors is authorized to provide for the issuance of
shares of Preferred Stock in one or more series, to establish the number of
shares in each series and to fix the designation, powers, preferences and
rights of each such series and the qualifications, limitations or restrictions
thereof. The Company has no present intention to issue shares of Preferred
Stock.

CORPORATE GOVERNANCE

Transactions involving the Company and affiliates of AHC require the
approval of the Independent Directors. In addition, the Independent Directors
will be responsible for enforcement of the terms of the lease of the current
headquarters of the Company, the Operating Partnership and HPMI and will review
the issuance of additional OP Units with respect to the Development Properties
for compliance with the criteria therefor. Certain other significant actions
of the Company, including any transaction involving a Change of Control (as
defined) of the Company or the Operating Partnership, amendments to the
Company's Charter or the Bylaws (except for such amendments as may be necessary
to maintain the Company's status as a REIT) and any issuance by the Company of
securities or rights with certain special voting or other rights, require the
approval of a minimum of one more than a majority of all directors A "Change
of Control" of the Company or the Operating Partnership will generally be
deemed to have occurred upon the transfer of 20% or more of the combined voting
power of the Company or the Operating Partnership, as the case may be. In
addition, certain actions relating to the Operating Partnership and the
Company's interest therein require approval of the OP Limited Partners.

RESTRICTIONS ON OWNERSHIP

For the Company to qualify as a REIT under the Code, not more than 50%
in value of its outstanding Common Shares may be owned, actually or
constructively, by five or fewer individuals (as defined in the Code) during
the last half of a taxable year, and the Common Shares must be beneficially
owned by 100 or more persons during at least 335 days of a taxable year of 12
months (or during a proportionate part of a shorter taxable year). In
addition, rent from Related Party Tenants is not qualifying income for purposes
of the gross income tests under the Code. See "Federal Income Tax
Considerations." Because the Board of Directors believes it is essential for
the Company to continue to qualify as a REIT, the Board of Directors has
adopted a provision in the Charter restricting the ownership and transfer of
Common Shares (the "Ownership Limit Provision").

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The Ownership Limit Provision provides that, subject to certain
exceptions specified in the Charter, no stockholder may own, or be deemed to
own by virtue of the constructive ownership provisions of the Code, Common
Shares in excess of the Ownership Limit, which is equal to 9.8% (in value or in
number of shares, whichever is more restrictive) of the outstanding Common
Shares. The constructive ownership rules are complex and may cause Common
Shares owned actually or constructively by a group of related individuals
and/or entities to be deemed to be constructively owned by one individual or
entity. As a result, the acquisition of less than 9.8% of the Common Shares
(or the acquisition of an interest in an entity which owns Common Shares) by an
individual or entity could cause that individual or entity (or another
individual or entity) to own constructively in excess of 9.8% of the Common
Shares, and thus subject such Common Shares to the Ownership Limit. In
addition, for these purposes, Common Shares that may be acquired upon
conversion or exchange of Debentures actually or constructively held by an
investor, but not Common Shares issuable with respect to Debentures held by
others, are deemed to be outstanding prior to conversion or exchange, for
purposes of determining the percentage of ownership of Common Shares held by
that investor.

The Board of Directors may waive the Ownership Limit with respect to a
particular stockholder if evidence satisfactory to the Board of Directors and
the Company's tax counsel is presented that such ownership will not then or in
the future jeopardize the Company's status as a REIT. As a condition of such
waiver, the Board of Directors may require opinions of counsel satisfactory to
it and/or an undertaking from the applicant with respect to preserving the REIT
status of the Company.

If Common Shares in excess of the Ownership Limit, or shares which
would cause the Company to be beneficially owned by less than 100 persons, are
issued or transferred to any person, the Charter provides that such issuance or
transfer will be null and void ab initio as to the intended transferee and the
intended transferee will acquire no rights to or economic interests in the
stock. In addition, shares actually or constructively owned by a person in
excess of the Ownership Limit will be automatically converted into shares of
Excess Stock that will be transferred by operation of law to the Company as
trustee of a trust for the exclusive benefit of the transferee or transferees
to whom the shares are ultimately transferred (without violating the Ownership
Limit). While held in trust, the Excess Stock will not be entitled to vote, it
will not be considered for purposes of any stockholder vote or the
determination of a quorum for such vote, and it will not be entitled to
participate in any distributions made by the Company. The intended transferee
or owner may, at any time shares of Excess Stock are held by the Company in
trust, transfer such shares of Excess Stock at a price not to exceed the price
paid by the intended transferee or owner to any person whose ownership of such
Excess Stock would be permitted under the Ownership Limit Provision, at which
time such shares of Excess Stock would automatically be exchanged for Common
Shares. In addition, the Company would have the right, for a period of 90 days
during the time the Excess Stock is held by the Company in trust, to purchase
all or any portion of the Excess Stock from the intended transferee or owner at
a price equal to the lesser of the price paid for the stock by the intended
transferee or owner and the closing market price for the Common Shares on the
date the Company exercises its option to purchase the stock. This period
commences on the date of the violative transfer or ownership if the intended
transferee or owner gives notice of the transfer to the Company, or the date
the Board of Directors determines that a violative transfer or ownership has
occurred if no notice is provided.

The Ownership Limit Provision will not be automatically removed from
the Charter even if the REIT provisions of the Code are changed so as to no
longer contain any ownership concentration limitation or if the Board of
Directors and the stockholders of the Company determine that it is no longer in
the best interest of the Company to attempt to qualify, or to continue to
qualify, as a REIT. Except as otherwise described above, any change in the
Ownership Limit would require an amendment to the Charter. Amendments to the
Charter require the affirmative vote of holders owning 66 2/3% of the
outstanding Common Shares. In addition to preserving the Company's status as a
REIT, the Ownership Limit may have the effect of precluding an acquisition of
control of the REIT without the approval of the Board of Directors.

All certificates representing Common Shares bear a legend referring to
the restrictions described above.

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All persons who own a specified percentage (or more) of the
outstanding Common Shares must file an affidavit with the Company containing
information regarding their ownership of Common Shares as set forth in the
Treasury Regulations. Under current Treasury Regulations the percentage will
be set between one-half of one percent and five percent, depending on the
number of record holders of Common Shares. In addition, each stockholder shall
upon demand be required to disclose to the Company in writing such information
with respect to the direct, indirect, actual and constructive ownership of
shares as the Board of Directors deems necessary to comply with the provisions
of the Code applicable to a REIT or to comply with the requirements of any
taxing authority or governmental agency.

TRANSFER AGENT AND REGISTRAR

The First National Bank of Boston is the transfer agent and registrar
with respect to the Common Shares.

FEDERAL INCOME TAX CONSIDERATIONS

The following is a brief and general summary of certain provisions
that currently govern the federal income tax treatment of the Company and its
stockholders.

The Company believes it has operated, and the Company intends to
continue to operate, in such a manner as to qualify as a REIT under the Code,
but no assurance can be given that it will at all times so qualify. The
provisions of the Code pertaining to REITs are highly technical and complex.
For the particular provisions that govern the federal income tax treatment of
the Company and its stockholders, reference is made to Sections 856 through 860
of the Code and the regulations thereunder. The following summary is qualified
in its entirety by such reference.

Under the Code, if certain requirements are met in a taxable year, a
REIT generally will not be subject to federal income tax with respect to income
that it distributes to its stockholders. If the Company fails to qualify
during any taxable year as a REIT, unless certain relief provisions are
available, it will be subject to tax (including any applicable alternative
minimum tax) on its taxable income at regular corporate rates, which could have
a material adverse effect upon its stockholders.

In any year in which the company qualifies to be taxed as a REIT,
distributions made to its stockholders out of current or accumulated earnings
and profits will be taxed to stockholders as ordinary income, except that
distributions of net capital gains designated by the Company as capital gain
dividends will be taxed as long-term capital gain income to the stockholders.
To the extent that ordinary distributions exceed current and accumulated
earnings and profits, they will constitute a return of capital, rather than
dividend or capital gain income, and will reduce the stockholders' basis in its
Common Shares to the extent thereof. To the extent that such distributions
exceed such basis, such distributions will be taxable as capital gain (provided
that the Common Shares have been held as a capital asset).

Investors are urged to consult their own tax advisors with respect to
the appropriateness of an investment in the Common Shares and with respect to
the tax consequences arising under federal law and the laws of any state,
municipality or other taxing jurisdiction, including tax consequences resulting
from such investor's own tax characteristics. In particular, foreign investors
should consult their own tax advisors concerning (i) income taxes on
effectively connected income, (ii) withholding taxes on dividends or interest,
(iii) branch profit taxes, (iv) taxes imposed under the Foreign Investment in
Real Property Tax Act, and (v) other tax consequences that may arise under
federal, state or local law.

16
<PAGE> 20
SELLING STOCKHOLDERS

As described elsewhere herein, "Selling Stockholders" are only
those persons who may receive Exchange Shares upon exchange of their OP Units.
The following table provides the names of and the maximum number of Exchange
Shares to be offered by each potential Selling Stockholder. However, in no
event will the maximum number of Common Shares offered hereby exceed 5,371.

The Common Shares offered by this Prospectus may be offered
from time to time by the Selling Stockholders named below:
<TABLE>
<CAPTION>
Number of OP Units Maximum Number Common Shares Owned
Owned Prior to the of Exchange Shares Following the
Offering (a) Offered Hereby Offering (b)
------------------ ------------------ -------------------
<S> <C> <C> <C>
Donald Barclay 4,367 4,367 --
Marlyn Braceros 21 21 --
Michael Curran 83 83 --
Craig Edgecumbe 59 59 --
Michael Ferensowicz 59 59 --
David Georgeson 71 71 --
Maureen Hathoot 21 21 --
Alison Jenkins 21 21 --
Rosemary Kubeck 12 12 --
Kenneth Marks 59 59 --
Charles Martinez 379 379 --
C. Herb Ornelas 74 74 --
Richard Swanker 65 65 --
Marilyn Tsuge 12 12 --
John Vickery Trust 68 68 --
---- -- -----
Total 5,371 5,371 --
</TABLE>

(a) None of such Selling Stockholders owned any Common Shares prior to the
offering.
(b) Assumes all OP Units held by the Selling Stockholders are exchanged
for Exchange Shares in the Exchange Offer, and all such Exchange
Shares are resold pursuant to this Registration Statement. Also
assumes that no transactions with respect to Common Shares or OP Units
occur other than the transactions registered pursuant to this
Registration Statement.

None of such Selling Stockholders has had any position, office or
other material relationship with the Company or any of its predecessors or
affiliates within the past three years. Other than as set forth in the table
above, the Selling Stockholders do not own any securities of the Company.

17
<PAGE> 21
PLAN OF DISTRIBUTION

This Prospectus relates to the offer and sale from time to
time of up 5,371 Common Shares that may be issued to the Selling Stockholders
if, and to the extent that, such holders exchange up to an aggregate of 5,371
OP Units for Common Shares pursuant to the terms of the Operating Partnership
Agreement. The Company has registered the offer and sale by the Selling
Stockholders of the Exchange Shares, but registration of such Exchange Shares
does not necessarily mean that any of such shares will be offered or sold by
the holders thereof.

The Company will not receive any proceeds from the offering by
the Selling Stockholders. The Exchange Shares may be sold from time to time to
purchasers directly by any of the Selling Shareholders. Alternatively, the
Selling Stockholders may from time to time offer the Exchange Shares through
dealers or agents, who may receive compensation in the form of commissions from
the Selling Stockholders and/or the purchasers of Exchange Shares for whom they
may act as agent. The Selling Stockholders and any dealers or agents that
participate in the distribution of Exchange Shares may be deemed to be
"underwriters" within the meaning of the Securities Act and any profit on the
sale of Exchange Shares by them and any commissions received by any such
dealers or agents might be deemed to be underwriting commissions under the
Securities Act.

At a time a particular offer of Exchange Shares is made by the
Selling Stockholders, a Prospectus Supplement, if required, will be distributed
that will set forth the name and names of any dealers or agents and any
commissions and other terms constituting compensation from the Selling
Stockholders and any other required information. The Exchange Shares may be
sold from time to time at varying prices determined at the time of sale or at
negotiated prices.

In order to comply with the securities laws of certain states,
if applicable, the Exchange Shares may be sold by the Selling Stockholders only
through registered or licensed brokers or dealers. In addition, in certain
states, the Exchange Shares may not be sold unless they have been registered or
qualified for sale in such state or an exemption from such registration or
qualification requirement is available and is complied with.

LEGAL MATTERS

The legality of the issuance of the Exchange Shares will be passed
upon for the Company by Ballard, Spahr, Andrews & Ingersoll, Baltimore,
Maryland.

EXPERTS

The consolidated financial statements and the related financial
statement schedules incorporated in this prospectus by reference from the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report which is incorporated herein by reference, and has been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.

18
<PAGE> 22
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

SUMMARY TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Description of Securities . . . . . . . . . . . . . . . . . . . . . . . 14

Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . 16

Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . 17

Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 18

Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>

5,371 SHARES

ALEXANDER HAAGEN PROPERTIES, INC.

COMMON STOCK

PROSPECTUS

, 1997

<PAGE> 23

PROSPECTUS SUBJECT TO COMPLETION, DATED MARCH 27, 1997

ALEXANDER HAAGEN PROPERTIES, INC.

4,281,085 SHARES OF COMMON STOCK

Alexander Haagen Properties, Inc., a Maryland corporation (the
"Company"), is a self-administered and self-managed real estate investment
trust (a "REIT") engaged in the ownership, management, leasing, acquisition,
development and redevelopment of retail shopping centers in California and
other western states. The Company currently owns 38 retail shopping centers.
The Company conducts all of its operations through Alexander Haagen Properties
Operating Partnership, L.P., a California limited partnership (the "Operating
Partnership"). The Company is the sole general partner of the Operating
Partnership and as of September 30, 1996 owned a 73.7% interest therein.

This Prospectus relates to (i) the possible issuance by the Company of
up to 4,281,085 shares (the "Exchange Shares") of common stock, par value $.01
per share ("Common Shares"), of the Company if, and to the extent that, holders
of up to 4,281,085 units of limited partnership interest in the Operating
Partnership ("OP Units") tender such OP Units for exchange, and (ii) the offer
and sale from time to time of up to 4,281,085 Exchange Shares that may be
issued to such persons (the "Selling Stockholders"). Such 4,281,085 OP Units
were issued, and the Exchange Shares were reserved for issuance, in connection
with (i) the formation of the Company and the Operating Partnership in December
1993 or (ii) upon the fulfillment of certain conditions thereto relating to the
leasing of certain properties. The Company is registering the offer and sale
by the Selling Stockholders of Exchange Shares, but the registration of such
shares does not necessarily mean that any of such shares will be offered or
sold by the holders thereof.

The Company's Common Shares are traded on the American Stock Exchange
(the "AMEX") under the symbol "ACH." On March 26, 1997 the closing sale
price of the Common Shares as reported on the AMEX was $14.375 per share.

The Selling Stockholders may from time to time offer and sell the
Exchange Shares held by them directly or through agents or broker- dealers on
terms to be determined at the time of sale. To the extent required, the names
of any agent or broker-dealer and applicable commissions or discounts and any
other required information with respect to any particular offer will be set
forth in an accompanying Prospectus Supplement. See "Plan of Distribution."
Each of the Selling Stockholders reserves the sole right to accept or reject,
in whole or in part, any proposed purchase of the Exchange Shares to be made
directly or through agents.

The Company will not receive any proceeds from the issuance of the
Exchange Shares or the sale of such Exchange Shares by the Selling Stockholders
but has agreed to bear certain expenses of registration of the Exchange Shares
under Federal and state securities laws (currently estimated to be
approximately $28,740), other than commissions and discounts of agents or
broker-dealers and transfer taxes, if any. The Company will acquire OP Units
in the Operating Partnership in exchange for any Exchange Shares that the
Company may issue to OP Unit holders pursuant to this Prospectus.

SEE "RISK FACTORS" ON PAGE 3 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS IN THE COMMON SHARES.

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON
OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.

THE DATE OF THIS PROSPECTUS IS __________, 1997

<PAGE> 24
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE> 25
AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus is a part) on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the securities offered hereby. This Prospectus and any
accompanying Prospectus Supplement do not contain all of the information set
forth in the Registration Statement, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the content of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of the contract or other document filed as an exhibit to the
Registration Statement, each statement being qualified in all respects by such
reference and the exhibits and schedules thereto. For further information
regarding the Company and the Common Shares offered hereby, reference is hereby
made to the Registration Statement, including the exhibits and schedules
thereto, which may be inspected without charge at the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. and copies of the
Registration Statement or any part thereof may be obtained from such office,
upon payment of the fees prescribed by the Commission.

The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy and information statements and other
information with the Commission. The reports, proxy and information statements
and other information and the Registration Statement and the exhibits and
financial statement schedules thereto filed by the Company with the Commission
can be inspected and copied at prescribed rates at the Public Reference Section
of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at 13th Floor, 7 World Trade Center, New York, New York 10048, and at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Electronic filings
made through the Electronic Data Gathering, Analysis and Retrieval System are
publicly available through the Commission's web site (http://www.sec.gov). The
Company's Common Shares are listed on the American Stock Exchange and the
reports, proxy and information statements and other information can also be
inspected at the offices of the American Stock Exchange, 86 Trinity Place,
New York, New York 10006.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents filed with the Commission pursuant to the
Exchange Act are incorporated herein by reference: (1) the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995; (2) the
Company's Quarterly Reports on Form 10-Q for the quarterly periods ended March
31, 1996, June 30, 1996 and September 30, 1996; (3) the Company's Current Report
on Form 8-K filed with the Commission on April 17, 1995; (4) the Company's 1996
Proxy Statement for its Annual Meeting of Shareholders; (5) the description of
the Company's common stock contained in the Company's Registration Statement on
Form 8-A filed with the Commission on November 16, 1993; and (6) all other
documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the Offering made hereby.

The Company undertakes to provide without charge to each person to whom
a copy of this Prospectus has been delivered, upon the written or oral request
of any such person, a copy of any or all documents which are incorporated herein
by reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests for such
copies should be directed to the Company, at its principal executive offices,
Attention: Steven Jaffe, Senior Vice President and General Counsel, Alexander
Haagen Properties, Inc., 3500 Sepulveda Boulevard, Manhattan Beach, California
90266; telephone number (310) 546-4520.

2
<PAGE> 26
THE COMPANY

All of the Properties and other assets of the Company are held by, and
all of the Company's operations are conducted by, the Operating Partnership. The
Company is the sole general partner of the Operating Partnership and, as of
September 30, 1996, owned a 73.7% therein. The remaining interests
in the Operating Partnership are owned in the form of OP Units by the limited
partners of the Operating Partnership (the "OP Limited Partners").

The Company may from time to time issue up to 4,281,085
Exchange Shares upon the acquisition of the OP Units tendered for exchange by
the Original OP Limited Partners (as defined). The Company will acquire the
exchanging partner's OP Unit in exchange for each Exchange Share that the
Company issues in connection with these acquisitions. Consequently, with each
exchange of OP Units for Exchange Shares, the Company's interest in the
Operating Partnership will increase (all other factors remaining unchanged).

The Company was incorporated in Maryland in September 1993. The
principal executive offices of the Company and the Operating Partnership are
located at 3500 Sepulveda Boulevard, Manhattan Beach, California 90266 and
their telephone number is (310) 546-4520. Unless the context indicates
otherwise, all references to the Company's business and properties include the
business and properties of the Operating Partnership, Haagen Property
Management, Inc., a California corporation ("HPMI"), Alexander Haagen
Properties Finance, Inc., a Delaware corporation, and Alexander Haagen
Properties Finance Partnership, L.P., a California limited partnership.

RISK FACTORS

In addition to the other information contained or incorporated by reference
in this Prospectus or in an accompanying Prospectus Supplement, prospective
investors should carefully consider the following factors before investing in
the securities offered hereby.

TAX CONSEQUENCES OF EXCHANGE OF OP UNITS

The exercise by an OP Limited Partner of the right to exchange OP Units for
Exchange Shares will be treated for tax purposes as a sale of such OP Units by
such OP Limited Partner. Such a sale will be fully taxable to the OP Limited
Partner and such OP Limited Partner will be treated as recognizing gain or loss
for income tax purposes in an amount equal to the difference between the
"amount realized" by the OP Limited Partner in the exchange and the OP Limited
Partner's adjusted tax basis in the OP Units exchanged. Generally, the amount
realized by an OP Limited Partner on such an exchange will be equal to the fair
market value of the Exchange Shares received in the exchange plus any reduction
in the OP Limited Partner's share of liabilities of the Operating Partnership
as a result of the exchange. It is possible that the amount of gain recognized
or even the tax liability resulting from such gain could exceed the value of
the Exchange Shares received upon such exchange. In addition, the ability of
an OP Limited Partner to sell a substantial number of Exchange Shares in order
to raise cash to pay tax liabilities associated with the exchange of OP Units
may be restricted due to the Company's relatively low trading volume, and, as a
result of fluctuations in the stock

3
<PAGE> 27
price, the price such holder receives for such shares may not equal the value
of the OP Units at the time of exchange.

POTENTIAL CHANGE IN INVESTMENT UPON EXCHANGE OF OP UNITS

If an OP Limited Partner exchanges his or her OP Units for Exchange Shares,
such OP Limited Partner will become a stockholder of the Company rather than an
OP Limited Partner in the Operating Partnership. Although the nature of an
investment in Common Shares is similar in certain respects to an investment in
OP Units, there are also differences between ownership of OP Units and
ownership of Common Shares relating to, among other things, form of
organization, permitted investments, policies and restrictions, management
structure, compensation and fees, investor rights and federal income taxation.

GEOGRAPHIC CONCENTRATION OF PROPERTIES IN SOUTHERN CALIFORNIA

Twenty-eight of the Properties are located in Southern California and thus
the performance of the Company will be particularly influenced by developments
in this market area. Over the past few years, Southern California has
experienced an economic recession. This has resulted in a general increase in
vacancies and a general decrease in the rents commanded by commercial real
estate lessors. In addition, a number of the Properties are located in heavily
populated urban areas. Though this provides a substantial consumer population
for the Properties to service, such areas experience problems common to urban
centers generally.

ADVERSE CONSEQUENCES OF DEBT FINANCING

As of September 30, 1996, the Company had a total of approximately $414.4
million of indebtedness, comprised of $245.8 million of secured indebtedness
encumbering the Properties, approximately $138.6 million of 7 1/2% Convertible
Subordinated Debentures due 2001, Series A and B of the Company (the
"Convertible Debentures") and $30.0 million of 7 1/4% Exchangeable Subordinated
Debentures due 2003 of the Operating Partnership (the "Exchangeable
Debentures," and together with the Convertible Debentures, the "Debentures").
In order to pursue most effectively its operating and investment strategy, the
Company intends to maintain a capital structure with a ratio of long-term debt
(excluding the Debentures) to total market capitalization of less than 40%. As
of September 30, 1996, the Company had a ratio of long-term debt to total market
capitalization of approximately 38% (or 62% including the Debentures
outstanding as of September 30, 1996 as part of long-term debt). The Board of
Directors of the Company may change this policy at any time, and there is no
limit on the amount of debt that the Company may incur. There are risks
associated with any debt financing. Risks normally associated with debt
financing include the risk that funds from operations will be insufficient to
meet required payments of principal and interest and the risk that interest
rates may increase, which could adversely affect a corporation's ability to
make distributions. The Company will be required to make substantial aggregate
future principal payments on outstanding mortgage indebtedness currently
encumbering the Properties, including approximately $28.2 million in 1999,
$18.6 million in 2002, $20.1 million in 2004 and $23.5 million in 2005. If the
Company is unable to meet its payment and other obligations with respect to its
Properties which are mortgaged to secure payment of indebtedness, one or more
of such properties could be foreclosed upon or otherwise transferred to the
mortgagee with a consequent loss of income and asset value to the Company. At
September 30, 1996, there were $41.2 million in borrowings under the Credit
Facility.

RISKS OF FLOATING-RATE INDEBTEDNESS

In May 1995, the Company entered into a $75 million credit facility with
National Westminster Bank Plc, which in December 1996 was increased to $90
million and provides for interest at a floating rate equal to LIBOR plus 1.5%.
As of September 30, 1996, there were outstanding borrowings of $41,200,000 under
such credit facility. Additional indebtedness the Company may in the future
incur may also bear interest at a floating rate. Accordingly, increases in
interest rates could increase the Company's interest expense, which could
adversely affect the Company's cash available for distribution to stockholders.

4
<PAGE> 28
REAL ESTATE INVESTMENT TRUST AND PARTNERSHIP QUALIFICATION

The Company believes that it is organized and that it has operated in a
manner which will allow it to qualify as a REIT under the Internal Revenue Code
of 1986, as amended (the "Code") beginning with its taxable year ended December
31, 1993, and the Company intends to continue to operate in such manner, but no
assurance can be given that it has operated or will continue to operate in such
manner so as to qualify or remain qualified. Qualification as a REIT involves
the application of highly technical and complex Code provisions for which there
are only limited judicial or administrative interpretations. The complexity of
these provisions and of the applicable income tax regulations that have been
promulgated under the Code (the "Treasury Regulations") is greater in the case
of a REIT that holds its assets in partnership form. The determination of
various factual matters and circumstances not entirely within the Company's
control may affect its ability to continue to qualify as a REIT. In addition,
no assurance can be given that legislation, new regulations, administrative
interpretations or court decisions will not significantly change the tax laws
with respect to qualification as a REIT or the federal income tax consequences
of such qualification. If the Company were to fail to qualify as a REIT in any
taxable year, the Company would not be allowed a deduction for distributions to
stockholders in computing taxable income and would be subject to federal income
tax on its taxable income at regular corporate rates. This additional tax
liability would reduce the amounts available for distribution by the Company to
stockholders. See "Federal Income Tax Considerations".

The Company believes that each of the Operating Partnership and certain
other partnerships through which the Company owns certain Properties (the
"Outside Partnerships") are properly treated as partnerships for federal income
tax purposes. If the Internal Revenue Service (the "IRS") were to challenge
successfully the tax status of the Operating Partnership or any of the Outside
Partnerships as a partnership for federal income tax purposes, such partnership
would be treated as an association taxable as a corporation. In such event,
the character of the Company's assets and items of gross income would change
and preclude the Company from satisfying the asset tests and possibly the
income tests imposed by the Code and, in turn, would prevent the Company from
qualifying as a REIT. See "Federal Income Tax Considerations--Taxation of the
Company--Requirements for Qualification." In addition, the imposition of a
corporate tax on the Operating Partnership or the Outside Partnerships would
reduce the amount of funds from operations available for distribution to the
Company and its stockholders. See "Federal Income Tax Considerations--Tax
Aspects of the Operating Partnership and the Outside Partnerships.

HISTORICAL OPERATING LOSSES OF THE PROPERTIES

5
<PAGE> 29

DEPENDENCE ON KEY MANAGEMENT PERSONNEL

The executive officers of the Company, Alexander Haagen, Sr., Alexander
Haagen III, Fred W. Bruning, Charlotte Haagen, Stuart J. S.
Gulland and Steven Jaffe (collectively, the "Executive Officers"), have
substantial experience in owning, operating, managing, acquiring and developing
shopping centers, particularly in the southern California market. The Company
believes that its success will depend in large part upon the efforts of such
persons. The Company has entered into employment agreements with Alexander
Haagen, Sr., Alexander Haagen III, and Charlotte Haagen which
provide for their continued employment with the Company for a renewable term
ending December 31, 1997 and prevent them from competing with the Company
during such term of employment and for one year thereafter. The Company also
has an employment agreement with Fred Bruning which expires in December
1997 with no restrictions thereafter.

ECONOMIC PERFORMANCE OF PROPERTIES

The revenue from a property may be adversely affected by many factors,
including tenant mix and the inability of the Company to collect rent from
tenants. From time to time the Company may experience delays in completing the
leasing plan for a specific property for various reasons. This could result in
operating losses from such property and have a negative impact on the results
of the Company. In the past, the Company has experienced a delay in completing
its leasing plan with respect to Baldwin Hills Crenshaw Plaza. As of September
30, 1996, Baldwin Hills Crenshaw Plaza was 94.1% leased. The Company believes
that as a result of revised leasing plans, the tenant mix at this Property has
been significantly upgraded.

CONFLICTS OF INTEREST

Certain ongoing arrangements between the Company, HPMI and affiliates of The
Alexander Haagen Company, a California corporation ("AHC"), which holds all of
the outstanding shares of voting stock of HPMI and the sole shareholders of
which are certain Executive Officers, may lead to conflicts of interest on the
part of certain directors and officers of the Company. Such transactions and
arrangements include (i) the terms of the transfers of 36 Properties to the
Company and the Operating Partnership in December 1993 (the "Original
Properties"); (ii) a lease between HPMI and a partnership in which certain
Executive Officers are partners, and HPMI's subsequent sublease of certain space
to the Company and the Operating Partnership, pursuant to which the Company, the
Operating Partnership and HPMI occupy their headquarters facility in Manhattan
Beach, California; (iii) management agreements between HPMI, the Company and the
Operating Partnership and certain affiliates of the Executive Officers with
respect to HPMI's management of the Properties and certain properties not owned
by the Company; and (iv) the sale or refinancing of certain Properties which may
cause adverse tax consequences to certain OP Limited Partners, including the
Executive Officers. However, the enforcement of such arrangements will be
subject to oversight by the directors of the Company who are not employed by the
Company (the "Independent Directors").

REAL ESTATE INVESTMENT CONSIDERATIONS

6
<PAGE> 30
other available space, the ability of the Company to provide adequate
maintenance and insurance and increased operating costs (including real estate
taxes). Income and real estate values may also be adversely affected by such
factors as applicable laws, including tax laws, interest rate levels and the
availability of financing.

Equity investments in real estate are relatively illiquid and, therefore,
the ability of the Company to vary its portfolio promptly in response to
changed conditions will be limited. While the Company is authorized to invest
in various types of income-producing real properties, its current strategy is
to concentrate on interests in retail shopping centers and similar facilities.
Consequently, the Company will be subject to the risks associated with
investments in a single industry.

Tenant Early Termination Rights. Certain leases at some Properties have
provisions which allow the lessee to terminate its lease prior to the end of
the original term thereof under certain conditions, including, for example, the
failure to achieve a stated minimum sales level, the failure to achieve or
maintain a stated minimum leasing level, or the closing of an anchor store and
its failure to reopen within a certain period of time.

Ground Leases. Certain Properties are held under long-term ground leases.
A default by the Company under the terms of the applicable ground lease could
result in the loss of the Property subject to such ground lease. In addition,
upon expiration of an existing ground lease, there is no assurance that the
Company would be able to negotiate a new ground lease on terms consistent with
or more favorable than existing terms, which may result in increased rental
expense to the Company. Two of the Company's ground leases expire within the
next 20 years. Ground leases with respect to certain Properties require
participating rent payments to the ground lessors, which may limit the
potential revenues to the Company from such Properties.

GOVERNMENT REGULATIONS

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<PAGE> 31
owner or operator knew of, or was responsible for, the presence of such
hazardous or toxic substances. The costs of investigation, removal or
remediation of such substances may be substantial, and the presence of such
substances, or the failure to properly remediate such substances, may adversely
affect the owner's ability to sell or develop such real estate or to borrow
using such real estate as collateral. In connection with its ownership and
operation of properties, the Company may be potentially liable under such laws
and may incur costs in responding to such liabilities.

All of the Properties (except for Montebello Town Square (Montebello, CA)
and Media City Center (Burbank, CA)) were subject to Phase I or similar
environmental assessments by independent environmental consultants
substantially concurrently with their transfer to the Company. Phase I
assessments are intended to discover information regarding, and to evaluate the
environmental condition of, the surveyed property and surrounding properties.
Phase I assessments generally include an historical review, a public records
review, a preliminary investigation of the surveyed site and surrounding
properties, and preparation and issuance of a written report, but do not
include soil sampling or subsurface investigations. Montebello Town Square and
Media City Center were subject to extensive environmental investigations in
connection with the construction of such Properties that were more
comprehensive than Phase I assessments.

Montebello Town Square is located over a former crude oil production field
and is near the Operating Industries, Inc. ("OII") Superfund site. The prior
owner and operator of the site, Chevron U.S.A., previously remediated crude oil
contamination on the site to a level acceptable to responsible agencies.
Potential methane gas migration from the OII site is controlled by a methane
gas venting system, a sub- floor gas barrier and certain monitoring devices.
Responsible governmental agencies have approved these measures. By virtue of
the measures taken and the creditworthiness of Chevron and the responsible
parties with respect to the OII site, the Company does not believe that this
matter will have a material adverse impact on its financial condition, results
of operations or business.

Media City Center is located within the San Fernando Valley Superfund site.
However, remediation of this Superfund site is being carried out to the
satisfaction of responsible governmental agencies by parties other than the
Company, including Lockheed Aeronautical Systems Company, which have been named
as responsible parties. By virtue of the Company's belief that Media City
Center complies with applicable law in all material respects and the active
remediation and creditworthiness of the responsible parties, the Company does
not believe that this matter will have a material adverse impact on its
financial condition, results of operations or business.

At Medford Center (Medford, OR), certain current or prior tenants utilized
hazardous materials in the normal course of their business. Possible leakage
of hazardous materials into the soil and groundwater is suspected to have
occurred from a drycleaner store and from underground storage tanks which have
been removed. In connection with the transfer of Medford Center to the
Company, the transferors provided to the Company $300,000, to be used to fund
future environmental remediation costs at Medford Center. The Company does not
believe that such remediation costs will exceed $300,000 and therefore does not
believe that this matter will have a material adverse impact on its financial
condition, results of operations or business.

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from Predecessor Affiliates described below, the Company does not believe that
these matters will have a material adverse impact on its financial condition,
results of operations or business.

Pursuant to an Environmental Indemnity Agreement, dated as of December 27,
1993, the transferors of the Original Properties have agreed to provide certain
indemnities to the Company for environmental liabilities that may arise with
respect to any contamination on or affecting the condition of the Original
Properties which was known as of December 27, 1993 or which becomes known after
December 27, 1993 as a result of additional environmental testing commenced
prior to December 27, 1993. Pursuant to the transfer documents with respect to
the 1994 Acquisition Properties, the transferors of such Properties will also
provide certain indemnities with respect to environmental liabilities to the
Company. The Company believes that such indemnities, taking into account the
financial resources of such parties, will be sufficient to satisfy the matters
described above. Because responsibility for such matters is being retained by
such parties, no liabilities will be recorded on the financial statements of
the Company in respect of such matters.

OWNERSHIP LIMIT

In order for the Company to maintain its qualification as a REIT, not more
than 50% in value of its outstanding stock may be owned, actually or
constructively, by five or fewer individuals (as defined in the Code). In
addition, rent from Related Party Tenants (as defined below) is not qualifying
income for purposes of the gross income tests under the Code. See "Federal
Income Tax Considerations--Taxation of the Company." Two sets of constructive
ownership rules (one to determine whether a REIT is closely held and one to
determine whether rent is from a Related Party Tenant) apply in determining
whether these requirements are met. Accordingly, for the purpose of preserving
the Company's REIT qualification, the Company's Charter prohibits actual or
constructive ownership of more than 9.8% of the lesser of the number or value
of outstanding Common Shares by any person (the "Ownership Limit"). The
constructive ownership rules are complex and may cause Common Shares owned,
actually or constructively, by a group of related individuals and/or entities
to be deemed to be constructively owned by one individual or entity. As a
result, the acquisition of less than 9.8% of the lesser of the number or value
of outstanding Common Shares (or the acquisition of an interest in an entity
which owns Common Shares) by an individual or entity could cause that
individual or entity (or another individual or entity) to own constructively in
excess of 9.8% of the outstanding Common Shares, and thus subject such Common
Shares to the Ownership Limit. See "Description of Securities--Restrictions on
Ownership". In addition, for these purposes, Common Shares that may be
acquired upon conversion or exchange of Debentures actually or constructively
held by an investor, but not Common Shares issuable with respect to Debentures
held by others, are deemed to be outstanding prior to their conversion or
exchange for purposes of determining the percentage of ownership of Common
Shares held by that investor. Actual or constructive ownership of Common
Shares in excess of the Ownership Limit

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<PAGE> 33
would cause the violative transfer or ownership to be void as to the transferee
and would cause such shares (and perhaps other Common Shares) to be converted
into Excess Stock (as defined below), which have limited economic rights. See
"Description of Securities--Restrictions on Ownership."

LIMITS ON ACQUISITIONS AND CHANGES IN CONTROL

Certain provisions of the Maryland General Corporation Law (the "MGCL") and
the Company's Charter and Bylaws could have the effect of delaying, deferring
or preventing a change in control of the Company or the removal of existing
management and, as a result, could prevent the stockholders of the Company from
being paid a premium for their Common Shares over then-prevailing market
prices.

Ownership Limit. The Ownership Limit set forth in the Charter may have the
effect of precluding acquisition of control of the Company by a third party
without consent of the Board of Directors even when a change in control is in
the interest of the stockholders.

Staggered Board. The Board of Directors of the Company has three classes
of directors. The terms of the first, second and third classes will expire as
of the date of the Company's annual stockholders' meeting in 1995, 1996 and
1997, respectively. Directors for each class are chosen for a three-year term
upon the expiration of the current class' term. The staggered terms for
directors may affect the stockholders' ability to change control of the Company
even where a change in control is in the interest of the stockholders.

Preferred Stock. The Company's Charter authorizes the Board of Directors
to issue up to 5,000,000 shares of preferred stock and to establish the
preferences and rights (including the right to vote and the right to convert
into Common Shares) of any shares issued. The power to issue preferred stock
could have the effect of delaying or preventing a change in control of the
Company even where a change of control is in the stockholders' interest.

Control Shares. The MGCL provides certain restrictions upon the voting
rights of "control shares" in a Maryland corporation. "Control shares" are
voting shares of stock which, if aggregated with all other such shares of stock
previously acquired by the holder thereof, would entitle the acquiror to
exercise voting power in electing directors within one of the following ranges
of power: (i) one-fifth or more but less than one-third, (ii) one-third or
more but less than a majority, or (iii) a majority of all voting power. The
MGCL provides that "control shares" have no voting rights except to the extent
approved by an affirmative vote of two-thirds of the outstanding shares
entitled to vote on the matter, excluding shares held by the acquiror and the
officers and directors of the Company, subject to certain limitations. A
"control share acquisition" means the acquisition of control shares, subject to
certain exceptions. Pursuant to the statute, the Bylaws of the Company exempt
control share acquisitions involving the Executive Officers and certain
associates and affiliates of such persons, and, consequently, the prohibition
on voting control shares will not apply to such persons.

Business Combinations. Under the MGCL, certain Business Combinations (as
defined) between a Maryland corporation and any person or affiliate thereof who
is the beneficial owner of 10% or more of the voting power of the corporation's
shares (an "Interested Stockholder") are prohibited for five years after the
most recent date on which the Interested Stockholder became an Interested
Stockholder. Thereafter, any such Business Combination must be approved by the
affirmative vote of at least (i) 80% of the votes entitled to be cast by
holders of outstanding voting shares of the Company and (ii) 66 2/3% of the
votes entitled to be cast by holders of outstanding voting shares held by
persons other than the Interested Stockholder with whom the Business
Combination is to be effected, subject to certain exceptions. Pursuant to the
statute, the Company has exempted any Business Combinations involving the
Executive Officers and certain associates and affiliates of such persons, and,
consequently, the five-year prohibition and the super-majority vote requirement
will not apply to Business Combinations between the Company and such persons.

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CHANGES IN INVESTMENT AND FINANCING POLICIES

TAX CONSEQUENCES OF SALE OR REFINANCING OF THE PROPERTIES

Since most of the Original Properties had unrealized gain attributable to
the difference between fair market value and adjusted tax basis in such
properties immediately prior to their contribution to the Operating
Partnership, the sale of any of such Original Properties may cause adverse tax
consequences to certain OP Limited Partners that acquired OP Units or rights to
earn OP Units in connection with the formation of the Company in December 1993
(the "Original OP Limited Partners"), as compared to the effects on the
Company. In addition, a significant reduction in such Original Properties'
debt could cause adverse tax consequences to certain Original OP Limited
Partners. As a result, certain Executive Officers who were partners in the
transferors of such Original Properties might not favor such a sale of the
Original Properties or a significant reduction in debt even though such sale or
debt reduction could be beneficial to the Company. The decision as to whether
to proceed with any such sale or debt reduction would be made by the Board of
Directors. In the event of a sale of any property, the OP Limited Partners
will have the right to demand registration of such portion of their Common
Shares which, when sold, would generate funds sufficient to pay any taxes
resulting from the sale of the property and the exchange of OP Units for such
Common Shares.

In addition, the Company's share of any gain realized by the Operating
Partnership on the sale of any property held by the Operating Partnership as
inventory or other property held primarily for sale to customers in the
ordinary course of the Operating Partnership's trade or business will be
treated as income from a prohibited transaction that is subject to a 100%
penalty tax. See "Federal Income Tax Considerations-- Taxation of the
Company--Income Tests." Currently, the Company has no plans to offer any of
its Properties for sale.

RESTRICTIONS WITH RESPECT TO PARTIALLY-OWNED PROPERTIES

Two Properties, Kenneth Hahn Plaza and Vermont-Slauson Shopping Center (the
"Partially-Owned Properties") are currently owned by Outside Partnerships
consisting of affiliates of the Company and one or more partners who have no
interest in the Company. The Operating Partnership owns a 75% managing general
partnership interest in the limited partnership that owns Kenneth Hahn Plaza
and an 85% managing general partnership interest in Haagen-Central Partnership,
the general partnership which is the managing general partner of, and holds a
40% interest in, the limited partnership that owns Vermont-Slauson Shopping
Center.

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<PAGE> 35
respect to sales and refinancings of the Partially-Owned Properties and the
timing and amount of additional capital contributions thereto. In addition,
the sale or transfer of partnership interests in all of the Outside
Partnerships and Haagen-Central Partnership are subject to certain rights of
first refusal which generally require the partner desiring to sell its interest
to a third party to offer the interest first to the other partners on the same
terms and conditions offered by the third party. In addition to such rights of
first refusal, the sale, transfer, assignment or pledge of partnership
interests in certain Outside Partnerships require the prior written consent of
the other partners. Likewise, the consent of the other partners in the Outside
Partnerships would be required for any sale, transfer or encumbrance of the
Partially-Owned Properties. These limitations may result in decisions by third
parties with respect to such properties that do not fully reflect the interests
of the Company at such time.

FUTURE ISSUANCE OF ADDITIONAL OP UNITS AND SHARES

The future issuance of Common Shares upon exchange of Debentures could have
a dilutive effect on cash available for distribution on a per share basis to
holders of Common Shares (such dilution being currently estimated at $0.04 per
share on an annual basis).

SHARES AVAILABLE FOR FUTURE SALE

No prediction can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the market
price of the Common Shares. Sales of a substantial number of Common Shares
(including shares issued upon exchange of OP Units or Exchangeable Debentures or
conversion of Convertible Debentures) or the perception that such sales could
occur, could adversely affect prevailing market prices for the Common Shares. An
aggregate of 4,286,456 additional Common Shares may be issued to the OP Limited
Partners (subject to the Ownership Limit) if they exchange all of their OP Units
for Common Shares. The Company has agreed to register Common Shares issuable to
OP Limited Partners upon exchange of their OP Units, subject to contractual
limitations on resale thereof which are substantially equivalent to the volume
limitations of Rule 144 promulgated under the Securities Act. As of December
31, 1995, an aggregate of 9,366,611 additional Common Shares may be issued to
the holders of Debentures if such holders elect to convert or exchange, as
applicable, all outstanding Debentures for Common Shares, with no restrictions
as to the resale thereof. The Company has granted options for 604,268 Common
Shares and reserved for issuance an additional 245,396 Common Shares under the
Company's 1993 Stock Incentive Plan, all of which the Company has registered.

RISKS OF DEVELOPMENT ACTIVITIES

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<PAGE> 36
DISTRIBUTIONS TO STOCKHOLDERS

Distributions by the Company to its stockholders will be based principally
on cash available for distribution from the properties in the Company's
portfolio. Increases in base rent and percentage rent under the leases of the
Properties or the payment of rent in connection with future acquisitions will
increase the Company's cash available for distribution. However, in the event
of a default or a lease termination by a lessee, there could be a decrease or
cessation of rental payments. In addition, the amount available to make
distributions may decrease if properties acquired in the future yield lower
than expected cash available for distribution. If the Company incurs
additional indebtedness in the future, it will require additional funds to
service such indebtedness and as a result amounts available to make
distributions may decrease. Distributions by the Company will also be
dependent upon a number of other factors, including the Company's financial
condition, any decision to reinvest funds rather than to distribute such funds,
capital expenditures, the annual distribution requirements under the REIT
provisions of the Code described below and such other factors as the Company
deems relevant. The possibility exists that future operating results of the
Company may differ from the assumptions used by the Board of Directors in
determining the current distribution rate. In such event, the trading price of
the Common Shares may be adversely affected.

To obtain the favorable tax treatment associated with REITs, the Company
generally will be required to distribute to its stockholders at least 95% of
its net taxable income each year. In addition, the Company will be subject to
a 4% nondeductible excise tax on the amount, if any, by which certain
distributions paid by it with respect to any calendar year are less than the
sum of 85% of its ordinary income, 95% of its capital gain net income and
undistributed income from prior years.

The Company intends to make distributions to its stockholders to comply
with the 95% distribution requirements of the Code and to avoid the
nondeductible excise tax. Differences in timing between the receipt of income
and the payment of expenses in arriving at taxable income and the effect of
required debt amortization payments could require the Company to borrow funds
on a short-term basis to meet the distribution requirements that are necessary
to achieve the tax benefits associated with qualifying as a REIT.

EFFECT OF MARKET INTEREST RATES ON SHARE PRICE

One of the factors that may influence the price of the Common Shares in
public markets will be the amount of the annual distributions paid by the
Company relative to the price paid for Common Shares. As a result, an increase
in market interest rates could adversely affect the market price of the Common
Shares to the extent that the yield on those shares compares less favorably to
yields on fixed-income securities and other alternative investments.

BANKRUPTCY AND FINANCIAL CONDITION OF TENANTS

At any time, a tenant of the Company's properties may seek the protection
of the bankruptcy laws, which could result in the rejection and termination of
such tenant's lease and thereby cause a reduction in the cash flow available
for distribution by the Company. No assurance can be given that tenants will
not file for bankruptcy protection in the future or, if any tenants file, that
they will affirm their leases and continue to make rental payments in a timely
manner. In addition, a tenant from time to time may experience a downturn in
its business which may weaken its financial condition and result in a reduction
in the percentage rent paid by such tenant or in the failure to make rental
payments when due. If tenant leases are not affirmed following bankruptcy or a
tenant's financial condition weakens, the Company's income may be adversely
affected.

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<PAGE> 37
a subsidiary of Carter Hawley Hale Stores, Inc. during its bankruptcy
reorganization and continued to operate at Baldwin Hills Crenshaw Plaza during
and following the pendency of such bankruptcy. In addition, other national
retail tenants of the Company, including Newberry's, Edison Brothers,
Wherehouse, Petries Corp. and Fabricland, have filed for bankruptcy in the last
several years. A number of leases have been rejected by such bankrupt tenants.
Although the Company will seek to re-lease such space, there can be no
assurance as to when or on what terms it will be able to do so.

DESCRIPTION OF SECURITIES

GENERAL

Under the Company's Charter, the total number of shares of all classes of
stock that the Company has authority to issue is 80,000,000, consisting of
50,000,000 Common Shares, 25,000,000 shares of excess stock, par value $.01 per
share (the "Excess Stock"), and 5,000,000 shares of preferred stock, par value
$.01 per share (the "Preferred Stock").

The Board of Directors is authorized to provide for the issuance of shares
of Preferred Stock in one or more series, to establish the number of shares in
each series and to fix the designation, powers, preferences and rights of each
such series and the qualifications, limitations or restrictions thereof. The
Company has no present intention to issue shares of Preferred Stock.

CORPORATE GOVERNANCE

Transactions involving the Company and affiliates of AHC require the
approval of the Independent Directors. In addition, the Independent Directors
will be responsible for enforcement of the terms of the lease of the current
headquarters of the Company, the Operating Partnership and HPMI and will review
the issuance of additional OP Units with respect to the Development Properties
for compliance with the criteria therefor. Certain other significant actions
of the Company, including any transaction involving a Change of Control (as
defined) of the Company or the Operating Partnership, amendments to the
Company's Charter or the Bylaws (except for such amendments as may be necessary
to maintain the Company's status as a REIT) and any issuance by the Company of
securities or rights with certain special voting or other rights, require the
approval of a minimum of one more than a majority of all directors. A "Change
of Control" of the Company or the Operating Partnership will generally be
deemed to have occurred upon the transfer of 20% or more of the combined voting
power of the Company or the Operating Partnership, as the case may be. In
addition, certain actions relating to the Operating Partnership and the
Company's interest therein require approval of the OP Limited Partners. See
"Operating Partnership Agreement."

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RESTRICTIONS ON OWNERSHIP

For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding Common Shares may be owned, actually or
constructively, by five or fewer individuals (as defined in the Code) during
the last half of a taxable year, and the Common Shares must be beneficially
owned by 100 or more persons during at least 335 days of a taxable year of 12
months (or during a proportionate part of a shorter taxable year). In
addition, rent from Related Party Tenants is not qualifying income for purposes
of the gross income tests under the Code. See "Federal Income Tax
Considerations--Requirements for Qualification--Income Tests." Because the
Board of Directors believes it is essential for the Company to continue to
qualify as a REIT, the Board of Directors has adopted a provision in the
Charter restricting the ownership and transfer of Common Shares (the "Ownership
Limit Provision").

The Ownership Limit Provision provides that, subject to certain exceptions
specified in the Charter, no stockholder may own, or be deemed to own by virtue
of the constructive ownership provisions of the Code, Common Shares in excess
of the Ownership Limit, which is equal to 9.8% (in value or in number of
shares, whichever is more restrictive) of the outstanding Common Shares. The
constructive ownership rules are complex and may cause Common Shares owned
actually or constructively by a group of related individuals and/or entities to
be deemed to be constructively owned by one individual or entity. As a result,
the acquisition of less than 9.8% of the Common Shares (or the acquisition of
an interest in an entity which owns Common Shares) by an individual or entity
could cause that individual or entity (or another individual or entity) to own
constructively in excess of 9.8% of the Common Shares, and thus subject such
Common Shares to the Ownership Limit. In addition, for these purposes, Common
Shares that may be acquired upon conversion or exchange of Debentures actually
or constructively held by an investor, but not Common Shares issuable with
respect to Debentures held by others, are deemed to be outstanding prior to
conversion or exchange, for purposes of determining the percentage of ownership
of Common Shares held by that investor.

If Common Shares in excess of the Ownership Limit, or shares which would
cause the Company to be beneficially owned by less than 100 persons, are issued
or transferred to any person, the Charter provides that such issuance or
transfer will be null and void ab initio as to the intended transferee and the
intended transferee will acquire no rights to or economic interests in the
stock. In addition, shares actually or constructively owned by a person in
excess of the Ownership Limit will be automatically converted into shares of
Excess Stock that will be transferred by operation of law to the Company as
trustee of a trust for the exclusive benefit of the transferee or transferees
to whom the shares are ultimately transferred (without violating the Ownership
Limit). While held in trust, the Excess Stock will not be entitled to vote, it
will not be considered for purposes of any stockholder vote or the
determination of a quorum for such vote, and it will not be entitled to
participate in any distributions made by the Company. The intended transferee
or owner may, at any time shares of Excess Stock are held by the Company in
trust, transfer such shares of Excess Stock at a price not to exceed the price
paid by the intended transferee or owner to any person whose ownership of such
Excess Stock would be permitted under the Ownership Limit Provision, at which
time such shares of Excess Stock would automatically be exchanged for Common
Shares. In addition, the Company would have the right, for a period of 90 days
during the time the Excess Stock is held by the Company in trust, to purchase
all or any portion of the Excess Stock from the intended transferee or owner at
a price equal to the lesser of the price paid for the stock by the intended
transferee or owner and the closing market price for the Common Shares on the
date the Company exercises its option to purchase the stock. This period
commences on the date of the violative transfer or ownership if the intended
transferee or owner gives notice of the transfer to the Company, or the date
the Board of Directors determines that a violative transfer or ownership has
occurred if no notice is provided.

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<PAGE> 39
The Ownership Limit Provision will not be automatically removed from the
Charter even if the REIT provisions of the Code are changed so as to no longer
contain any ownership concentration limitation or if the Board of Directors and
the stockholders of the Company determine that it is no longer in the best
interest of the Company to attempt to qualify, or to continue to qualify, as a
REIT. Except as otherwise described above, any change in the Ownership Limit
would require an amendment to the Charter. Amendments to the Charter require
the affirmative vote of holders owning 66 2/3% of the outstanding Common
Shares. In addition to preserving the Company's status as a REIT, the
Ownership Limit may have the effect of precluding an acquisition of control of
the REIT without the approval of the Board of Directors.

All certificates representing Common Shares bear a legend referring to the
restrictions described above.

All persons who own a specified percentage (or more) of the outstanding
Common Shares must file an affidavit with the Company containing information
regarding their ownership of Common Shares as set forth in the Treasury
Regulations. Under current Treasury Regulations the percentage will be set
between one-half of one percent and five percent, depending on the number of
record holders of Common Shares. In addition, each stockholder shall upon
demand be required to disclose to the Company in writing such information with
respect to the direct, indirect, actual and constructive ownership of shares as
the Board of Directors deems necessary to comply with the provisions of the
Code applicable to a REIT or to comply with the requirements of any taxing
authority or governmental agency.

TRANSFER AGENT AND REGISTRAR

The First National Bank of Boston is the transfer agent and registrar with
respect to the Common Shares.

OPERATING PARTNERSHIP AGREEMENT
MANAGEMENT

The Operating Partnership is a California limited partnership. Pursuant to
the OP Partnership Agreement, the Company is the sole general partner of the
Operating Partnership and generally has full, exclusive and complete
responsibility and discretion in the management and control of the Operating
Partnership, including the ability to cause the Operating Partnership to enter
into certain major transactions including acquisitions, dispositions and
refinancings and to cause changes in the Operating Partnership's line of
business and distribution policies. Dispositions of properties are subject to
the condition that limitations (other than the Ownership Limit) on the sale of
Common Shares are removed and, to the extent necessary, registration rights are
granted to permit the sale of Common Shares exchanged for OP Units in an amount
sufficient to raise cash to pay taxes on the property disposition and the OP
Unit exchange.

The consent of a majority of the outstanding percentage interest of the OP
Limited Partners is required with respect to certain extraordinary actions
involving the Operating Partnership including (i) the amendment, modification
or termination of the OP Partnership Agreement, (ii) a general assignment for
the benefit of creditors or the appointment of a custodian, receiver or trustee
for any of the assets of the Operating Partnership, (iii) the institution of
any proceeding for bankruptcy of the Operating Partnership, (iv) the transfer
of any general partner interests in the Operating Partnership, including
through any merger, consolidation or liquidation of the Company and (v) the
admission of any additional or substitute general partner in the Operating
Partnership. In addition, unless the Company owns 90% or more of the total
percentage interest in the Operating Partnership, the consent of a majority at
the outstanding percentage interest of the OP Limited Partners will also be
required with respect to (a) the dissolution of the Operating Partnership, (b)
the sale or other transfer of all or substantially all of the assets of the
Operating Partnership and (c) any merger or consolidation of the Operating
Partnership involving a final disposition of the OP Limited Partners' interest
therein.

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TRANSFERABILITY OF OP UNITS

The OP Partnership Agreement provides that OP Limited Partners may transfer
their OP Units only to family members (or related trusts or estates),
affiliated entities, other original OP Limited Partners or certain bona fide
third party pledgees, subject to certain limitations.

EXCHANGE RIGHTS

The Original OP Limited Partners (other than Haagen family members, Seymour
Kreshek and related entities) have the right to exchange their OP Units for
Common Shares at any time since December 27, 1994 (subject to the Ownership
Limit and certain limitations on resale of shares) at an exchange ratio of one
Common Share for each OP Unit. Haagen family members, Seymour Kreshek and
certain related entities have the right to exchange their OP Units for Common
Shares beginning on such date but only once in any three-month period (subject
to the Ownership Limit and certain limitations on resale) at the above exchange
ratio. All subsequent OP Limited Partners may exchange their OP Units for
Common Shares and resell them, subject to certain securities laws restrictions,
at any time. The exchange ratio is subject to adjustment in the event of stock
splits, stock dividends, issuance of certain rights, certain extraordinary
distributions and similar events.

ISSUANCE OF ADDITIONAL OP UNITS

The Company, as the sole general partner of the Operating Partnership, has
the ability to cause the Operating Partnership to issue additional units of
general and limited partnership interests in the Operating Partnership.

FUNDING OF INVESTMENTS

The OP Partnership Agreement provides that if the Operating Partnership
requires additional funds to pursue its investment objectives, the Company may
fund such investments by raising additional equity capital and making a capital
contribution to the Operating Partnership or by borrowing such funds and
lending the net proceeds thereof to the Operating Partnership on the same terms
and conditions as are applicable to the Company's borrowing of such funds. The
Company's partnership interest in the Operating Partnership will be increased
based upon the amount of such additional capital contributions and the value of
the Operating Partnership at the time of such contributions.

TERM

The Operating Partnership will continue in full force and effect until
December 31, 2092, or until sooner dissolved pursuant to terms of the OP
Partnership Agreement.

EXCHANGE OF UNITS FOR COMMON SHARES

TERMS OF THE EXCHANGE

Original OP Limited Partners may exchange up to 4,281,085 OP Units of the
Operating Partnership for a like number of Exchange Shares. The Original OP
Limited Partners (other than Haagen family members, Seymour Kreshek and certain
related entities) have the right to exchange their OP Units for Exchange Shares
at any time (subject to certain conditions and certain limitations on the resale
thereof). Haagen family members, Seymour Kreshek and certain related entities
have the right to exchange their OP Units for Exchange Shares only once in any
three-month period. Such Exchange Shares may be resold, subject to certain
exceptions and volume limitations. The number of Exchange Shares for which the
OP Limited Partners may exchange their OP Units is subject to adjustment in the
event

17
<PAGE> 41
of stock splits, stock dividends, issuance of certain rights, certain
extraordinary distributions and similar events.

An OP Limited Partner effecting an exchange (a "Tendering Partner") must
deliver to the Company a Notice of Exchange, substantially in the form of
Exhibit B to the Operating Partnership Agreement. A Tendering Partner shall
have the right to receive, on the day of receipt by the Company of a Notice of
Exchange (the "Specified Exchange Date"), the number of Exchange Shares which
corresponds to the tendered OP Units. The Exchange Shares shall be delivered
as duly authorized, validly issued, fully paid and nonassessable shares, free
of any pledge, lien, encumbrance or restriction, other than those provided in
the Charter, the Bylaws of the Company, the Securities Act, relevant state
securities or blue sky laws and any applicable registration rights agreement
with respect to such Exchange Shares entered into by the Tendering Partner.
Notwithstanding any delay in such delivery, the Tendering Partner shall be
deemed the owner of such Exchange Shares and rights for all purposes, including
without limitation, rights to vote or consent, receive dividends, and exercise
rights, as of the Specified Exchange Date.

Each Tendering Partner shall continue to own all OP Units subject to any
exchange, and be treated as a Limited Partner with respect to such OP Units for
all purposes, until such OP Units are transferred to the Company and paid for
on the Specified Exchange Date. Until a Specified Exchange Date, the Tendering
Partner shall have no rights as a stockholder of the Company.

CERTAIN CONDITIONS TO THE EXCHANGE

The Company will issue Exchange Shares to a Tendering Partner promptly upon
receipt of a Notice of Exchange subject to the following conditions:

o In order to protect the Company's status as a REIT, no Tendering
Partner shall be entitled to effect an exchange, if such exchange
would cause such Tendering Partner or any other person to violate the
Ownership Limit Provision of the Company's Charter.

o No Tendering Partner may effect an exchange for less than 500 OP
Units, or if the Tendering Partner holds less than 500 OP Units, all
of the OP Units held by such Tendering Partner.

o No Tendering Partner may effect an exchange during the period after
the record date established by the Company for a distribution from the
Operating Partnership to the partners in the Operating Partnership and
prior to the record date established by the Company for a distribution
to its stockholders of some or all of its portion of such
distribution.

Any attempted exchange in violation of any of the foregoing conditions
shall be null and void ab initio and such Tendering Partner shall not acquire
any rights or economic interest in the Exchange Shares otherwise issuable upon
such exchange.

COMPARISON OF OWNERSHIP OF OP UNITS AND COMMON SHARES

Generally the nature of an investment in Common Shares is similar in
several respects to an investment in OP Units of the Operating Partnership.
Holders of Common Shares and holders of OP Units generally receive the same
distributions and shareholders and holders of OP Units generally share in the
risks and rewards of ownership in the enterprise being conducted by the Company
through the Operating Partnership. However, there are also differences between
ownership of OP Units and ownership of Common Shares, some of which may be
material to investors.

The information below highlights a number of the significant differences
between the Operating Partnership and the Company relating to, among other
things, form of organization, management control, voting rights, liquidity and
federal income tax considerations. These comparisons are intended to assist OP

18
<PAGE> 42
Limited Partners in understanding how their investment will be changed if they
exchange their OP Units for Exchange Shares. THIS DISCUSSION IS SUMMARY IN
NATURE AND DOES NOT CONSTITUTE A COMPLETE DISCUSSION OF THESE MATTERS, AND
HOLDERS OF OP UNITS SHOULD CAREFULLY REVIEW THE BALANCE OF THIS PROSPECTUS AND
THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART FOR ADDITIONAL
IMPORTANT INFORMATION ABOUT THE COMPANY.

FORM OF ORGANIZATION AND ASSETS OWNED

OPERATING PARTNERSHIP

The Operating Partnership is organized as a California limited partnership. The
Operating Partnership owns interests in the Properties and, through HPMI,
conducts the Company's management and leasing business. The Operating
Partnership's purpose is to conduct any business that may be lawfully conducted
by a limited partnership organized pursuant to the Act, provided that such
business is to be conducted in a manner that permits the Company to be
qualified as a REIT unless the Company ceases to qualify as REIT.

COMPANY

The Company is a Maryland corporation. The Company has elected to be taxed
as a REIT under the Code, commencing with its taxable year ending December
31, 1993, and intends to maintain its qualification as a REIT. The Company's
only substantial asset is its interest in the Operating Partnership, which gives
the Company an indirect investment in the Properties owned by the Operating
Partnership. Under its Charter, the Company may engage in any lawful activity
permitted by the General Corporation Law of Maryland.

19
<PAGE> 43
ADDITIONAL EQUITY

OPERATING PARTNERSHIP

The Operating Partnership is authorized to issue OP Units and other
partnership interests (including partnership interests of different series or
classes that may be senior to OP Units) as determined by the Company as
its general partner, in its sole discretion. The Operating Partnership may
issue OP Units and other partnership interests to the Company, as long as such
interests are issued in connection with a comparable issuance of shares of the
Company and proceeds raised in connection with the issuance of such shares are
contributed to the Operating Partnership.

COMPANY

The Board of Directors may issue, in its discretion, additional Common Shares or
shares of Preferred Stock; provided, that the total number of shares issued does
not exceed the authorized number of shares of capital stock set forth in the
Company's Charter. As long as the Operating Partnership is in existence, the
proceeds of all equity capital raised by the Company will be contributed to the
Operating Partnership in exchange for OP Units in the Operating Partnership.

MANAGEMENT CONTROL

OPERATING PARTNERSHIP

All management powers over the business and affairs of the Operating
Partnership are vested in the general partner, and no limited partner of the
Operating Partnership has any right to participate in or exercise control or
management power over the business and affairs of the Operating Partnership
except (1) the general partner of the Operating Partnership may not dispose
of all or substantially all of the Operating Partnership's assets without
the consent of the holders of two-thirds of the outstanding OP Units, (2)
there are certain limitations on the ability of the general partner of the
Operating Partnership to cause or permit the Operating Partnership to
dissolve. See "--Vote Required to Dissolve the Operating Partnership or the
Company" below. The general partner may not be removed by the OP Limited
Partners with or without cause.

COMPANY

The Board of Directors has exclusive control over the Company's business
affairs subject only to the restrictions in the Charter and Bylaws. The board
is classified into three classes of directors. At each annual meeting of
the stockholders, the successors of the class of directors whose terms
expire at that meeting will be elected. The policies adopted by the board of
directors may be altered or eliminated without a vote of the stockholders.
Accordingly, except for their vote in the elections of directors, stockholders
have no control over the ordinary business policies of the Company. The
Board of Directors cannot change the Company's policy of maintaining its
status as a REIT, however, without the approval of holders a majority of the
outstanding Common Shares.

FIDUCIARY DUTIES

OPERATING PARTNERSHIP

Under California law, the general partner of the Operating Partnership is
accountable to the Operating Partnership as a fiduciary and, consequently, is
required to exercise good faith and integrity in all of its dealings with
respect to partnership affairs. However, under the Operating Partnership
Agreement, the general partner is not liable for monetary damages for losses
sustained or liabilities incurred by partners as a result of errors of judgment
or of any act or omission, provided that the general partner has acted in good
faith.

COMPANY

Under Maryland law, the directors must perform their duties in good faith,
in a manner that they reasonably believe to be in the best interests of the
Company and with the care of an ordinarily prudent person in a like position.
Directors of the Company who act in such a manner generally will not be liable
to the Company for monetary damages arising from their activities.

20
<PAGE> 44
MANAGEMENT LIABILITY AND INDEMNIFICATION

OPERATING PARTNERSHIP

As a matter of California law, the general partner has liability for the payment
of the obligations and debts of the Operating Partnership unless limitations
upon such liability are stated in the document or instrument evidencing the
obligation. Under the Operating Partnership Agreement, the Operating
Partnership has agreed to indemnify the general partner and any director or
officer of the general partner from and against all losses, claims, damages,
liabilities, joint or several, expenses (including legal fees and expenses),
judgments, fines, settlements and other amounts incurred in connection with any
actions relating to the operations of the Operating Partnership in which the
general partner or such director or officer is involved, unless (1) the act was
in bad faith and was material to the action; (2) such party received an improper
personal benefit; or (3) in the case of any criminal proceeding, such party had
reasonable cause to believe the act was unlawful. The reasonable expenses
incurred by an indemnitee may be reimbursed by the Operating Partnership in
advance of the final disposition of the proceeding upon receipt by the Operating
Partnership of an affirmation by such indemnitee of his, her or its good faith
belief that the standard of conduct necessary for indemnification has been met
and an undertaking by such indemnitee to repay the amount if it is determined
that such standard was not met.

COMPANY

The Company's Charter provides that the liability of the Company's directors and
officers to the Company and its stockholders for money damages is limited to the
fullest extent permitted under Maryland law. The Charter and Maryland law
provide indemnification to directors and officers to the same extent that such
directors and officers have indemnification rights under the Operating
Partnership Agreement (as officers and directors of the general partner).

ANTITAKEOVER PROVISIONS

OPERATING PARTNERSHIP

Except in limited circumstances (See "Voting Rights" below), the general partner
of the Operating Partnership has exclusive management power over the business
and affairs of the Operating Partnership. The general partner may not be
removed by the Limited Partners with or without cause. Under the Operating
Partnership Agreement, the general partner may, in its sole discretion, prevent
a Limited Partner from transferring his interest or any rights as a limited
partner except in certain limited circumstances. The general partner may
exercise this right of approval to deter, delay or hamper attempts by persons to
acquire a controlling interest in the Operating Partnership.

COMPANY

The Charter and Bylaws of the Company contain a number of provisions that may
have the effect of delaying or discouraging an unsolicited proposal for the
acquisition of the Company or the removal of incumbent management. These
provisions include, among others: (1) a staggered board of directors; (2)
authorized capital stock that may be issued as Preferred Stock in the discretion
of the board of directors, with superior voting rights to the Common Stock; (3)
a requirement that directors may be removed only for cause and only by a vote of
holders of at least a majority of the outstanding Common Stock; and (4)
provisions designed to avoid concentration of share ownership in a manner that
would jeopardize the Company's status as a REIT under the Code. See
"Description of Securities--Restrictions on Ownership."

21
<PAGE> 45
VOTING RIGHTS

OPERATING PARTNERSHIP

Under the Operating Partnership Agreement, the Limited Partners have voting
rights only as to the dissolution of the Operating Partnership, the sale of all
or substantially all of the assets or merger of the Operating Partnership, and
amendments of the Operating Partnership Agreement, as described more fully
below. Otherwise, all decisions relating to the operation and management of the
Operating Partnership are made by the general partner. As of September 30,
1996, the Company held approximately 73.7% of the outstanding OP Units. As OP
Units are exchanged by OP Limited Partners, the Company's percentage ownership
of the OP Units will increase. If additional OP Units are issued to third
parties, the Company's percentage ownership of the OP Units will decrease.

COMPANY

The Company is managed and controlled by a Board of Directors consisting of
three classes having staggered terms of office. Each class is to be elected by
the stockholders at annual meetings of the Company. Maryland law requires that
certain major corporate transactions, including most amendments to the Charter,
may not be consummated without the approval of stockholders as set forth below.
All Common Shares have one vote per share, and the Charter permits the Board of
Directors to classify and issue Preferred Stock in one or more series having
voting power which may differ from that of the Common Shares. See "Description
of Securities."

The following is a comparison of the voting rights of the OP Limited
Partners of the Operating Partnership and the stockholders of the Company as
they relate to certain major transactions:

A. AMENDMENT OF THE OPERATING PARTNERSHIP AGREEMENT OR THE CHARTER.

OPERATING PARTNERSHIP

The Operating Partnership Agreement may be amended through a proposal by the
general partner or any Limited Partner holding 20% or more of the OP Units. Such
proposal, in order to be effective, must be approved by the general partner and
by the written vote of holders of at least a majority of the outstanding OP
Units. Certain amendments that affect that fundamental rights of an OP Limited
Partner must be approved by each affected Limited Partner. In addition, the
general partner may, without the consent of the OP Limited Partners, amend the
Operating Partnership Agreement as to certain ministerial matters.

COMPANY

Amendments to the Company's Charter must be approved by the Board of Directors
and by the vote of at least two-thirds of the votes entitled to be cast at a
meeting of stockholders.

B. VOTE REQUIRED TO DISSOLVE THE OPERATING PARTNERSHIP OR THE COMPANY.

OPERATING PARTNERSHIP

So long as OP Limited Partners hold, in the aggregate, at least a 10% interest
in the Operating Partnership, the general partner may not elect to dissolve the
Operating Partnership without the prior written consent of at least a majority
of the outstanding OP Units held by OP Limited Partners.

COMPANY

Under Maryland Law, the Board of Directors must obtain approval of holders of at
least two-thirds of the outstanding Common Stock in order to dissolve the
Company.

C. VOTE REQUIRED TO SELL ASSETS OR MERGE.

OPERATING PARTNERSHIP

Under the Operating Partnership Agreement, the sale, exchange, transfer or
other disposition of all or substantially all of the Operating Partnership's
assets or merger or consolidation of the Operating Partnership requires the
consent of the general partner and holders of at least a majority of the
outstanding OP Units held by OP Limited Partners so long as OP Limited Partners
hold, in the aggregate, at least a 10% interest in the Operating Partnership.

COMPANY

Under Maryland law, the sale of all or substantially all of the assets of the
Company or merger or consolidation of the Company requires the approval of the
Board of Directors and holders of two-thirds of the stockholders. No approval
of the stockholders is required for the sale of less than all or substantially
all of the Company's assets.

22
<PAGE> 46
COMPENSATION, FEES AND DISTRIBUTIONS

OPERATING PARTNERSHIP

The general partner does not receive any compensation for its services as
general partner of the Operating Partnership. As a partner in the Operating
Partnership, however, the general partner has the same right to allocations and
distributions as other partners of the Operating Partnership. In addition, the
Operating Partnership will reimburse the general partner for all expenses
incurred relating to the ongoing operation of the Company.

COMPANY

The directors and officers of the Company receive compensation for their
services.

LIABILITY OF INVESTORS

OPERATING PARTNERSHIP

Under the Operating Partnership Agreement and applicable California law, the
liability of the OP Limited Partners for the Operating Partnership's debts and
obligations is generally limited to the amount of their investment in the
Operating Partnership.

COMPANY

Under Maryland law, stockholders are not personally liable for the debts or
obligations of the Company.

LIQUIDITY

OPERATING PARTNERSHIP

OP Limited Partners cannot transfer their OP Units, except (1) to the general
partner, (2) to other OP Limited Partners, (3) to immediate family members, (4)
pursuant to an exchange for Exchange Shares, or (5) pursuant to a pledge to an
unaffiliated lending institution as collateral or security for a loan or other
extension of credit.

COMPANY

The Exchange Shares will be freely transferable as registered securities under
the Securities Act, subject to prospectus delivery and other requirements for
registered securities. The Common Shares are listed on the AMEX. The breadth
and strength of this secondary market will depend, among other things, upon the
number of shares outstanding, the Company's financial results and prospects, the
general interest in the Company's and other real estate investments, and the
Company's dividend yield compared to that of other debt and equity securities.

TAXES

OPERATING PARTNERSHIP

Income and loss from the Operating Partnership generally is subject to the
"passive activity" limitations. Under the "passive activity" rules, income and
loss from the Operating Partnership that is considered "passive income"
generally can be offset against income and loss from other investments that
constitute "passive activities".

The Operating Partnership is not subject to Federal income taxes. Instead, each
holder of OP Units includes its allocable share of the Operating Partnership's
taxable income or loss in determining its individual federal income tax
liability.

COMPANY

Dividends paid by the Company will be treated as "portfolio" income and cannot
be offset with losses from "passive activities."

23
<PAGE> 47
OPERATING PARTNERSHIP

Cash distributions from the Operating Partnership are generally not taxable to a
holder of OP Units except to the extent they exceed such holder's basis in its
interest in the Operating Partnership (which will include such holder's
allocable share of the Operating Partnership's nonrecourse debt).

Holders of OP Units are required, in some cases, to file state income tax
returns and/or pay state income taxes in the states in which the Operating
Partnership owns property, even if they are not residents of those states.

COMPANY

Distributions made by the Company to its taxable domestic stockholders out of
current or accumulated earnings and profits will be taken into account by them
as ordinary income. Distributions that are designated as capital gain dividends
generally will be taxed as long-term capital gain. Distributions in excess of
current or accumulated earnings and profits will be treated as a non-taxable
return of basis to the extent of a stockholder's adjusted basis in its Common
Stock, with the excess taxed as capital gain. See "Federal Income Tax
Considerations--Taxation of Shareholders."

Stockholders who are individuals generally will not be required to file state
income tax returns and/or pay state income taxes outside of their state of
residence with respect to the Company's operations and distributions. The
Company may be required to pay state income taxes in certain states.

FEDERAL INCOME TAX CONSIDERATIONS

The following is a brief and general summary of certain provisions
that currently govern the federal income tax treatment of the Company and its
stockholders.

24
<PAGE> 48
(iii) branch profit taxes, (iv) taxes imposed under the Foreign Investment in
Real Property Tax Act, and (v) other tax consequences that may arise under
federal, state or local law.

25
<PAGE> 49
SELLING STOCKHOLDERS

As described elsewhere herein, "Selling Stockholders" are only
those persons who may receive Exchange Shares upon exchange of OP Units. The
following table provides the names of and the maximum number of Exchange Shares
to be owned by each Selling Stockholder. The number of shares on the following
table represents the number of Exchange Shares into which OP Units held by the
person are exchangeable.

The Exchange Shares offered by this Prospectus may be offered
from time to time by the Selling Stockholders named below:

COMMON PERCENTAGE OF
SHARES/OP MAXIMUM OUTSTANDING
UNITS OWNED NUMBER OF COMMON SHARES COMMON SHARES
PRIOR TO THE EXCHANGE OWNED FOLLOWING OWNED FOLLOWING
NAME TITLE (A) OFFERING SHARES OFFERED THE OFFERING (b) THE OFFERING (b)
---- --------- --------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Alexander Haagen Chairman, CEO 1,676,223 (c) 1,419,642 256,581 (c) 1.3%

Charlotte Haagen Vice President 1,653,323 (c) 1,419,642 233,681 (c) 1.1%

Alexander Haagen III Vice Chairman 199,900 (c) 140,664 59,236 (c) *

Fred W. Bruning Senior Vice 310,458 (c) 262,333 48,125 (c) *
President-Leasing
and Development

Edward Krasnove Former Senior Vice 10,000 6,667 3,333 *
President, General
Counsel and
Secretary

Seymour Kreshek Former Senior Vice 576,229 (c) 416,993 159,236 (c) *
President-CFO and
Treasurer

Patricia DeAngelis(d) 8,811 (h) 8,247 564 (h) *

Russell Grosse(e) 159,523 159,523 -- *

Ernest Grossman 66,278 66,278 -- *

Tom Corley 3,810 3,810 -- *

Margaret Lewicki 28,405 28,405 -- *

Andrew Natker 19,546 19,546 -- *

Saul Kreshek (f) 15,140 15,140 -- *

Alex Kreshek Trust (f) 15,140 15,140 -- *

Charals Haagen (g) 299,055 299,055 -- *
---------- --------- ----------
Total 4,800,652 4,281,085 519,567

- ---------------------
</TABLE>

(a) See "Management" for a description of positions held by Selling
Stockholders price to the incorporation of the Company in December
1993.

(b) Assumes all OP Units held by the Selling Stockholders are exchanged
for Exchange Shares in the Exchange Offer, and all such Exchange
Shares are resold pursuant to this Registration Statement. Also
assumes that no transactions with respect to Common Shares or OP Units
occur other than the transactions registered pursuant to this
Registration Statement.

(c) Includes 48,125 in exercisable options.
(d) Ms. DeAngelis is employed by the Operating Partnership and is a
director of HPMI.
(e) Mr. Grosse is the manager of four of the Company's Properties.
(f) Saul Kreshek and Alex Kreshek are brothers of Seymour Kreshek, Former
Senior Vice President-Chief Financial Officer of the Company.
(g) Charals Haagen is the son of Alexander Haagen and Charlotte Haagen and
the brother of Alexander Haagen III.
(h) Includes 564 in exercisable options.

* Less than 1%.

26
<PAGE> 50

PLAN OF DISTRIBUTION

This Prospectus relates to (i) the possible issuance by the
Company of the Exchange Shares if, and to the extent that, holders of OP Units
tender such OP Units for exchange, and (ii) the offer and sale from time to
time of any Exchange Shares that may be issued to such OP Limited Partners.
The Company has registered the Exchange Shares for sale to provide the holders
thereof with freely tradeable securities, but registration of such Exchange
Shares does not necessarily mean that any of such shares will be offered or
sold by the holders thereof.

Pursuant to the terms of the Operating Partnership Agreement
and a Registration Rights Agreement dated December 27, 1993 between the Company
and the Original OP Limited Partners, the Selling Stockholders were not allowed
to sell any of the Exchange Shares offered hereby, except to other OP Limited
Partners, prior to December 27, 1995. Following such time, the Selling
Stockholders have the right to sell within any three-month period only such
number of Exchange Shares which will not exceed the greater of (i) 1% of the
number of then outstanding Common Shares or (ii) the average weekly trading
volume of Common Shares during the preceding four weeks, subject to certain
exceptions. All other OP Limited Partners may exchange their OP Units for
Exchange Shares and resell them, subject to certain securities laws
restrictions, at any time.

The Company will not receive any proceeds from the offering by
the Selling Stockholders or from the issuance of the Exchange Shares to holders
of OP Units upon receiving a notice of exchange (but it may acquire from such
holders the OP Units tendered). The Exchange Shares may be sold from time to
time to purchasers directly by any of the Selling Shareholders. Alternatively,
the Selling Stockholders may from time to time offer the Exchange Shares
through dealers or agents, who may receive compensation in the form of
commissions from the Selling Stockholders and/or the purchasers of Exchange
Shares for whom they may act as agent. The Selling Stockholders and any
dealers or agents that participate in the distribution of Exchange Shares may
be deemed to be "underwriters" within the meaning of the Securities Act and any
profit on the sale of Exchange Shares by them and any commissions received by
any such dealers or agents might be deemed to be underwriting commissions under
the Securities Act.

27
<PAGE> 51
LEGAL MATTERS

The legality of the issuance of the Exchange Shares will be passed
upon for the Company by Ballard, Spahr, Andrews & Ingersoll, Baltimore,
Maryland.

EXPERTS

The consolidated financial statements and the related financial
statement schedules incorporated in this prospectus by reference from the
Company's Annual Report on Form 10-K for the year ended December 31, 1995, have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and has been so included and
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.

28
<PAGE> 52
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

SUMMARY TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Description of Securities . . . . . . . . . . . . . . . . . . . . . . . 14

Operating Partnership Agreement . . . . . . . . . . . . . . . . . . . . 16

Exchange of Units for Common Shares . . . . . . . . . . . . . . . . . . 17

Federal Income Tax Considerations . . . . . . . . . . . . . . . . . . . 24

Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . 26

Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 27

Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>

4,281,085 SHARES

ALEXANDER HAAGEN PROPERTIES, INC.

COMMON STOCK

PROSPECTUS

__________________________, 1997

<PAGE> 53

PROSPECTUS SUBJECT TO COMPLETION, DATED MARCH 27, 1997

ALEXANDER HAAGEN PROPERTIES, INC.

1,666,666 SHARES OF COMMON STOCK

This Prospectus relates to the possible issuance by the Company of up
to 1,666,666 shares (the "Exchange Shares") of common stock, par value $.01 per
share ("Common Shares"), of the Company if, and to the extent that, holders of
up to $30,000,000 principal amount of 7 1/4% Exchangeable Subordinated
Debentures due 2003 (the "Exchangeable Debentures") of the Operating
Partnership, tender such Exchangeable Debentures for exchange. The
Exchangeable Debentures were issued, and the Exchange Shares were reserved for
issuance, in connection with the formation of the Company and the Operating
Partnership in December 1993.

The Company will not receive any proceeds from the issuance of the
Exchange Shares, but has agreed to bear certain expenses of registration of the
Exchange Shares under Federal and state securities laws (currently estimated to
be approximately $46,110). The Company will acquire OP Units in the Operating
Partnership in exchange for any Exchange Shares that the Company may issue to
the tendering holders of Exchangeable Debentures pursuant to this Prospectus.
See "Plan of Distribution."

SEE "RISK FACTORS" ON PAGE 3 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS IN THE COMMON SHARES.

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON
OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.

THE DATE OF THIS PROSPECTUS IS ___________, 1997

<PAGE> 54
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE> 55
AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus is a part) on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the securities offered hereby. This Prospectus and any
accompanying Prospectus Supplement do not contain all of the information set
forth in the Registration Statement, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the content of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of the contract or other document filed as an exhibit to the
Registration Statement, each statement being qualified in all respects by such
reference and the exhibits and schedules thereto. For further information
regarding the Company and the Common Shares offered hereby, reference is hereby
made to the Registration Statement, including the exhibits and schedules
thereto, which may be inspected without charge at the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. and copies of the
Registration Statement or any part thereof may be obtained from such office,
upon payment of the fees prescribed by the Commission.

The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy and information statements and other
information with the Commission. The reports, proxy and information statements
and other information and the Registration Statement and the exhibits and
financial statement schedules thereto filed by the Company with the Commission
can be inspected and copied at prescribed rates at the Public Reference Section
of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at 13th Floor, 7 World Trade Center, New York, New York 10048, and at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Electronic filings
made through the Electronic Data Gathering, Analysis and Retrieval System are
publicly available through the Commission's web site (http://www.sec.gov).
The Company's Common Shares are listed on the American Stock Exchange and the
reports, proxy and information statements and other information can also be
inspected at the offices of the American Stock Exchange, 86 Trinity Place,
New York, New York 10006.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The Company undertakes to provide without charge to each person to whom
a copy of this Prospectus has been delivered, upon the written or oral request
of any such person, a copy of any or all documents which are incorporated herein
by reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests for such
copies should be directed to the Company, at its principal executive offices,
Attention: Steven Jaffe, Senior Vice President and General Counsel, Alexander
Haagen Properties, Inc., 3500 Sepulveda Boulevard, Manhattan Beach, California
90266; telephone number (310) 546-4520.

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THE COMPANY

The Company may from time to time issue up to 1,666,666
Exchange Shares upon the acquisition of the Exchangeable Debentures tendered
for exchange by the holders of such Exchangeable Debentures. The Company will
contribute the Exchangeable Debentures so acquired to the Operating Partnership
for a number of OP Units equal to the number of Exchange Shares issued by the
Company in exchange therefor. Consequently, with each exchange of Exchangeable
Debentures for Exchange Shares, the Company's interest in the Operating
Partnership will increase (all other factors remaining unchanged).

RISK FACTORS

TAX CONSEQUENCES OF EXCHANGE OF EXCHANGEABLE DEBENTURES

The exercise by a holder of Exchangeable Debentures of the right to
exchange Exchangeable Debentures for Exchange Shares will be treated for tax
purposes as a sale of Exchangeable Debentures by such debentureholder. Such a
sale will be fully taxable to the tendering debentureholder and such
debentureholder will be treated as recognizing gain or loss for income tax
purposes in an amount equal to the difference between the value of the Exchange
Shares received in the exchange and such debentureholder's adjusted tax basis
in the Exchangeable Debentures so exchanged. The ability of a holder of
Exchangeable Debentures to sell a substantial number of Exchange Shares in
order to raise cash to pay tax liabilities associated with the exchange may be
restricted due to the Company's relatively low trading volume, and, as a result
of fluctuations in the stock price, the price such holder receives for such
shares may not equal the value of the Exchangeable Debentures at the time of
exchange.

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CHANGE IN INVESTMENT UPON EXCHANGE OF EXCHANGEABLE DEBENTURES

If a holder of Exchangeable Debentures exchanges Exchangeable
Debentures for Exchange Shares, such debentureholder will become a stockholder
of the Company rather than a holder of debt securities of the Operating
Partnership. The nature of an investment in Common Shares is substantially
different from an investment in the Exchangeable Debentures. Such differences
between ownership of Exchangeable Debentures and ownership of Common Shares
relate to, among other things, position in the capital structure of the
Company, receipt of interest and dividends, form of organization of the issuer
of such securities, certain policies and restrictions of the issuer, management
structure and federal income taxation.

GEOGRAPHIC CONCENTRATION OF PROPERTIES IN SOUTHERN CALIFORNIA

ADVERSE CONSEQUENCES OF DEBT FINANCING

As of September 30, 1996, the Company had a total of approximately
$414.4 million of indebtedness, comprised of $245.8 million of secured
indebtedness encumbering the Properties, approximately $138.6 million of 7 1/2%
Convertible Subordinated Debentures due 2001, Series A and B of the Company (the
"Convertible Debentures") and $30.0 million of 7 1/4% Exchangeable Subordinated
Debentures due 2003 of the Operating Partnership (the "Exchangeable Debentures,"
and together with the Convertible Debentures, the "Debentures"). In order to
pursue most effectively its operating and investment strategy, the Company
intends to maintain a capital structure with a ratio of long-term debt
(excluding the Debentures) to total market capitalization of less than 40%. As
of September 30, 1996, the Company had a ratio of long-term debt to total
market capitalization of approximately 38% (or 62% including the Debentures
outstanding as of September 30, 1996 as part of long-term debt). The Board of
Directors of the Company may change this policy at any time, and there is no
limit on the amount of debt that the Company may incur. There are risks
associated with any debt financing. Risks normally associated with debt
financing include the risk that funds from operations will be insufficient to
meet required payments of principal and interest and the risk that interest
rates may increase, which could adversely affect a corporation's ability to make
distributions. The Company will be required to make substantial aggregate
future principal payments on outstanding mortgage indebtedness currently
encumbering the Properties, including approximately $28.2 million in 1999, $18.6
million in 2002, $20.1 million in 2004 and $23.5 million in 2005. If the
Company is unable to meet its payment and other obligations with respect to its
Properties which are mortgaged to secure payment of indebtedness, one or more of
such properties could be foreclosed upon or otherwise transferred to the
mortgagee with a consequent loss of income and asset value to the Company. At
September 30, 1996, there were $41.2 million in borrowings under the Credit
Facility.

RISKS OF FLOATING-RATE INDEBTEDNESS

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REAL ESTATE INVESTMENT TRUST AND PARTNERSHIP QUALIFICATION

The Company believes that each of the Operating Partnership and
certain other partnerships through which the Company owns certain Properties
(the "Outside Partnerships") are properly treated as partnerships for federal
income tax purposes. If the Internal Revenue Service (the "IRS") were to
challenge successfully the tax status of the Operating Partnership or any of
the Outside Partnerships as a partnership for federal income tax purposes, such
partnership would be treated as an association taxable as a corporation. In
such event, the character of the Company's assets and items of gross income
would change and preclude the Company from satisfying the asset tests and
possibly the income tests imposed by the Code and, in turn, would prevent the
Company from qualifying as a REIT. See "Federal Income Tax Considerations."
In addition, the imposition of a corporate tax on the Operating Partnership or
the Outside Partnerships would reduce the amount of funds from operations
available for distribution to the Company and its stockholders. See "Federal
Income Tax Considerations."

HISTORICAL OPERATING LOSSES OF THE PROPERTIES

DEPENDENCE ON KEY MANAGEMENT PERSONNEL

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centers, particularly in the southern California market. The Company believes
that its success will depend in large part upon the efforts of such persons. The
Company has entered into employment agreements with Alexander Haagen, Sr.,
Alexander Haagen III, and Charlotte Haagen which provide for their continued
employment with the Company for a renewable term ending December 31, 1997 and
prevent them from competing with the Company during such term of employment and
for one year thereafter. The Company also has an employment agreement with Fred
Bruning which expires in December 1997 with no restrictions thereafter.

ECONOMIC PERFORMANCE OF PROPERTIES

The revenue from a property may be adversely affected by many factors,
including tenant mix and the inability of the Company to collect rent from
tenants. From time to time the Company may experience delays in completing the
leasing plan for a specific property for various reasons. This could result in
operating losses from such property and have a negative impact on the results
of the Company. In the past, the Company has experienced a delay in completing
its leasing plan with respect to Baldwin Hills Crenshaw Plaza. As of September
30, 1996, Baldwin Hills Crenshaw Plaza was 94.1% leased. The Company believes
that as a result of revised leasing plans, the tenant mix at this Property has
been significantly upgraded.

CONFLICTS OF INTEREST

Certain ongoing arrangements between the Company, HPMI and affiliates
of The Alexander Haagen Company, a California corporation ("AHC"), which holds
all of the outstanding shares of voting stock of HPMI and the sole shareholders
of which are certain Executive Officers, may lead to conflicts of interest on
the part of certain directors and officers of the Company. Such transactions
and arrangements include (i) the terms of the transfers of 36 Properties (the
"Original Properties") to the Company and the Operating Partnership in December
1993; (ii) a lease between HPMI and a partnership in which certain Executive
Officers are partners, and HPMI's subsequent sublease of certain space to the
Company and the Operating Partnership, pursuant to which the Company, the
Operating Partnership and HPMI occupy their headquarters facility in Manhattan
Beach, California; (iii) management agreements between HPMI, the Company and the
Operating Partnership and certain affiliates of the Executive Officers with
respect to HPMI's management of the Properties and certain properties not owned
by the Company; and (iv) the sale or refinancing of certain Properties which may
cause adverse tax consequences to certain OP Limited Partners, including the
Executive Officers. However, the enforcement of such arrangements will be
subject to oversight by the directors of the Company who are not employed by the
Company (the "Independent Directors").

REAL ESTATE INVESTMENT CONSIDERATIONS

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in retail shopping centers and similar facilities. Consequently, the Company
will be subject to the risks associated with investments in a single industry.

Ground Leases. Certain Properties are held under long-term ground
leases. A default by the Company under the terms of the applicable ground
lease could result in the loss of the Property subject to such ground lease.
In addition, upon expiration of an existing ground lease, there is no assurance
that the Company would be able to negotiate a new ground lease on terms
consistent with or more favorable than existing terms, which may result in
increased rental expense to the Company. Two of the Company's ground leases
expire within the next 20 years. Ground leases with respect to certain
Properties require participating rent payments to the ground lessors, which may
limit the potential revenues to the Company from such Properties.

GOVERNMENT REGULATIONS

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consultants substantially concurrently with their transfer to the Company.
Phase I assessments are intended to discover information regarding, and to
evaluate the environmental condition of, the surveyed property and surrounding
properties. Phase I assessments generally include an historical review, a
public records review, a preliminary investigation of the surveyed site and
surrounding properties, and preparation and issuance of a written report, but
do not include soil sampling or subsurface investigations. Montebello Town
Square and Media City Center were subject to extensive environmental
investigations in connection with the construction of such Properties that were
more comprehensive than Phase I assessments.

At Medford Center (Medford, OR), certain current or prior tenants
utilized hazardous materials in the normal course of their business. Possible
leakage of hazardous materials into the soil and groundwater is suspected to
have occurred from a drycleaner store and from underground storage tanks which
have been removed. In connection with the transfer of Medford Center to the
Company, the transferors provided to the Company $300,000, to be used to fund
future environmental remediation costs at Medford Center. The Company does not
believe that such remediation costs will exceed $300,000 and therefore does not
believe that this matter will have a material adverse impact on its financial
condition, results of operations or business.

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Pursuant to an Environmental Indemnity Agreement, dated as of December
27, 1993, the transferors of the Original Properties have agreed to provide
certain indemnities to the Company for environmental liabilities that may arise
with respect to any contamination on or affecting the condition of the Original
Properties which was known as of December 27, 1993 or which becomes known after
December 27, 1993 as a result of additional environmental testing commenced
prior to December 27, 1993. Pursuant to the transfer documents with respect to
the 1994 Acquisition Properties, the transferors of such Properties will also
provide certain indemnities with respect to environmental liabilities to the
Company. The Company believes that such indemnities, taking into account the
financial resources of such parties, will be sufficient to satisfy the matters
described above. Because responsibility for such matters is being retained by
such parties, no liabilities will be recorded on the financial statements of
the Company in respect of such matters.

OWNERSHIP LIMIT

In order for the Company to maintain its qualification as a REIT, not
more than 50% in value of its outstanding stock may be owned, actually or
constructively, by five or fewer individuals (as defined in the Code). In
addition, rent from Related Party Tenants (as defined below) is not qualifying
income for purposes of the gross income tests under the Code. See "Federal
Income Tax Considerations." Two sets of constructive ownership rules (one to
determine whether a REIT is closely held and one to determine whether rent is
from a Related Party Tenant) apply in determining whether these requirements
are met. Accordingly, for the purpose of preserving the Company's REIT
qualification, the Company's Charter prohibits actual or constructive ownership
of more than 9.8% of the lesser of the number or value of outstanding Common
Shares by any person (the "Ownership Limit"). The constructive ownership rules
are complex and may cause Common Shares owned, actually or constructively, by a
group of related individuals and/or entities to be deemed to be constructively
owned by one individual or entity. As a result, the acquisition of less than
9.8% of the lesser of the number or value of outstanding Common Shares (or the
acquisition of an interest in an entity which owns Common Shares) by an
individual or entity could cause that individual or entity (or another
individual or entity) to own constructively in excess of 9.8% of the
outstanding Common Shares, and thus subject such Common Shares to the Ownership
Limit. See "Description of Securities--Restrictions on Ownership." In
addition, for these purposes, Common Shares that may be acquired upon
conversion or exchange of Debentures actually or constructively held by an
investor, but not Common Shares issuable with respect to Debentures held by
others, are deemed to be outstanding prior to their conversion or exchange for
purposes of determining the percentage of ownership of Common Shares held by
that investor. Actual or constructive ownership of Common Shares in excess of
the Ownership Limit would cause the violative transfer or ownership to be void
as to the transferee and would cause such shares (and perhaps other Common
Shares) to be converted into Excess Stock (as defined below), which have
limited economic rights. See "Description of Securities--Restrictions on
Ownership."

LIMITS ON ACQUISITIONS AND CHANGES IN CONTROL

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Staggered Board. The Board of Directors of the Company has three
classes of directors. The terms of the first, second and third classes will
expire as of the date of the Company's annual stockholders' meeting in 1995,
1996 and 1997, respectively. Directors for each class are chosen for a
three-year term upon the expiration of the current class' term. The staggered
terms for directors may affect the stockholders' ability to change control of
the Company even where a change in control is in the interest of the
stockholders.

Business Combinations. Under the MGCL, certain Business Combinations
(as defined) between a Maryland corporation and any person or affiliate thereof
who is the beneficial owner of 10% or more of the voting power of the
corporation's shares (an "Interested Stockholder") are prohibited for five
years after the most recent date on which the Interested Stockholder became an
Interested Stockholder. Thereafter, any such Business Combination must be
approved by the affirmative vote of at least (i) 80% of the votes entitled to
be cast by holders of outstanding voting shares of the Company and (ii) 66 2/3%
of the votes entitled to be cast by holders of outstanding voting shares held
by persons other than the Interested Stockholder with whom the Business
Combination is to be effected, subject to certain exceptions. Pursuant to the
statute, the Company has exempted any Business Combinations involving the
Executive Officers and certain associates and affiliates of such persons, and,
consequently, the five-year prohibition and the super-majority vote requirement
will not apply to Business Combinations between the Company and such persons.

CHANGES IN INVESTMENT AND FINANCING POLICIES

TAX CONSEQUENCES OF SALE OR REFINANCING OF THE PROPERTIES

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such sale or debt reduction could be beneficial to the Company. The decision
as to whether to proceed with any such sale or debt reduction would be made by
the Board of Directors. In the event of a sale of any property, the OP Limited
Partners will have the right to demand registration of such portion of their
Common Shares which, when sold, would generate funds sufficient to pay any
taxes resulting from the sale of the property and the exchange of OP Units for
such Common Shares.

RESTRICTIONS WITH RESPECT TO PARTIALLY-OWNED PROPERTIES

FUTURE ISSUANCE OF ADDITIONAL OP UNITS AND SHARES

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SHARES AVAILABLE FOR FUTURE SALE

No prediction can be made as to the effect, if any, that future sales
of shares, or the availability of shares for future sale, will have on the
market price of the Common Shares. Sales of a substantial number of Common
Shares (including shares issued upon exchange of OP Units or Exchangeable
Debentures or conversion of Convertible Debentures) or the perception that such
sales could occur, could adversely affect prevailing market prices for the
Common Shares. An aggregate of 4,286,456 additional Common Shares may be issued
to the OP Limited Partners (subject to the Ownership Limit) if they exchange all
of their OP Units for Common Shares. The Company has agreed to register Common
Shares issuable to OP Limited Partners upon exchange of their OP Units, subject
to contractual limitations on resale thereof which are substantially equivalent
to the volume limitations of Rule 144 promulgated under the Securities Act. As
of December 31, 1995, an aggregate of 9,366,611 additional Common Shares may be
issued to the holders of Debentures if such holders elect to convert or
exchange, as applicable, all outstanding Debentures for Common Shares, with no
restrictions as to the resale thereof. The Company has granted options for
604,268 Common Shares and reserved for issuance an additional 245,396 Common
Shares under the Company's 1993 Stock Incentive Plan, all of which the Company
has registered.

RISKS OF DEVELOPMENT ACTIVITIES

DISTRIBUTIONS TO STOCKHOLDERS

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amortization payments could require the Company to borrow funds on a short-term
basis to meet the distribution requirements that are necessary to achieve the
tax benefits associated with qualifying as a REIT.

EFFECT OF MARKET INTEREST RATES ON SHARE PRICE

BANKRUPTCY AND FINANCIAL CONDITION OF TENANTS

At any time, a tenant of the Company's properties may seek the
protection of the bankruptcy laws, which could result in the rejection and
termination of such tenant's lease and thereby cause a reduction in the cash
flow available for distribution by the Company. No assurance can be given that
tenants will not file for bankruptcy protection in the future or, if any
tenants file, that they will affirm their leases and continue to make rental
payments in a timely manner. In addition, a tenant from time to time may
experience a downturn in its business which may weaken its financial condition
and result in a reduction in the percentage rent paid by such tenant or in the
failure to make rental payments when due. If tenant leases are not affirmed
following bankruptcy or a tenant's financial condition weakens, the Company's
income may be adversely affected.

From 1989 to 1995, a period which management of the Company believes
was particularly challenging for retailers, Bullock's and Broadway were the
only anchor tenants at any of the Properties to file petitions in bankruptcy.
Bullock's (now Macy's), an anchor tenant at Media City Center, is a subsidiary
of R.H. Macy & Co., Inc., which has been operating under bankruptcy protection
since January 27, 1992. Macy's has affirmed its lease at Media City Center.
Broadway, an anchor tenant at Baldwin Hills Crenshaw Plaza, was a subsidiary of
Carter Hawley Hale Stores, Inc. during its bankruptcy reorganization and
continued to operate at Baldwin Hills Crenshaw Plaza during and following the
pendency of such bankruptcy. In addition, other national retail tenants of the
Company, including Newberry's, Edison Brothers, Wherehouse, Petries Corp. and
Fabricland, have filed for bankruptcy in the last several years. A number of
leases have been rejected by such bankrupt tenants. Although the Company will
seek to re-lease such space, there can be no assurance as to when or on what
terms it will be able to do so.

DESCRIPTION OF SECURITIES

GENERAL

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The Board of Directors is authorized to provide for the issuance of
shares of Preferred Stock in one or more series, to establish the number of
shares in each series and to fix the designation, powers, preferences and
rights of each such series and the qualifications, limitations or restrictions
thereof. The Company has no present intention to issue shares of Preferred
Stock.

CORPORATE GOVERNANCE

Transactions involving the Company and affiliates of AHC require the
approval of the Independent Directors. In addition, the Independent Directors
will be responsible for enforcement of the terms of the lease of the current
headquarters of the Company, the Operating Partnership and HPMI and will review
the issuance of additional OP Units with respect to the Development Properties
for compliance with the criteria therefor. Certain other significant actions
of the Company, including any transaction involving a Change of Control (as
defined) of the Company or the Operating Partnership, amendments to the
Company's Charter or the Bylaws (except for such amendments as may be necessary
to maintain the Company's status as a REIT) and any issuance by the Company of
securities or rights with certain special voting or other rights require the
approval of a minimum of one more than a majority of all directors,. A "Change
of Control" of the Company or the Operating Partnership will generally be
deemed to have occurred upon the transfer of 20% or more of the combined voting
power of the Company or the Operating Partnership, as the case may be. In
addition, certain actions relating to the Operating Partnership and the
Company's interest therein require approval of the OP Limited Partners. See
"Operating Partnership Agreement."

RESTRICTIONS ON OWNERSHIP

For the Company to qualify as a REIT under the Code, not more than 50%
in value of its outstanding Common Shares may be owned, actually or
constructively, by five or fewer individuals (as defined in the Code) during
the last half of a taxable year, and the Common Shares must be beneficially
owned by 100 or more persons during at least 335 days of taxable year of 12
months (or during a proportionate part of a shorter taxable year). In
addition, rent from Related Party Tenants is not qualifying income for purposes
of the gross income tests under the Code. See "Federal Income Tax
Considerations." Because the Board of Directors believes it is essential for
the Company to continue to qualify as a REIT, the Board of Directors has
adopted a provision in the Charter restricting the ownership and transfer of
Common Shares (the "Ownership Limit Provision").

The Ownership Limit Provision provides that, subject to certain
exceptions specified in the Charter, no stockholder may own, or be deemed to
own by virtue of the constructive ownership provisions of the Code, Common
Shares in excess of the Ownership Limit, which is equal to 9.8% (in value or in
number of shares, whichever is more restrictive) of the outstanding Common
Shares. The constructive ownership rules are complex and may cause Common
Shares owned actually or constructively by a group of related individuals
and/or entities to be deemed to be constructively owned by one individual or
entity. As a result, the acquisition of less than 9.8% of the Common Shares
(or the acquisition of an interest in an entity which owns Common Shares) by an
individual or entity could cause that individual or entity (or another
individual or entity) to own constructively in excess of 9.8% of the Common
Shares, and thus subject such Common Shares to the Ownership Limit. In
addition, for these purposes, Common Shares that may be acquired upon
conversion or exchange of Debentures actually or constructively held by an
investor, but not Common Shares issuable with respect to Debentures held by
others, are deemed to be outstanding prior to conversion or exchange, for
purposes of determining the percentage of ownership of Common Shares held by
that investor.

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such issuance or transfer will be null and void ab initio as to the intended
transferee and the intended transferee will acquire no rights to or economic
interests in the stock. In addition, shares actually or constructively owned
by a person in excess of the Ownership Limit will be automatically converted
into shares of Excess Stock that will be transferred by operation of law to the
Company as trustee of a trust for the exclusive benefit of the transferee or
transferees to whom the shares are ultimately transferred (without violating
the Ownership Limit). While held in trust, the Excess Stock will not be
entitled to vote, it will not be considered for purposes of any stockholder
vote or the determination of a quorum for such vote, and it will not be
entitled to participate in any distributions made by the Company. The intended
transferee or owner may, at any time shares of Excess Stock are held by the
Company in trust, transfer such shares of Excess Stock at a price not to exceed
the price paid by the intended transferee or owner to any person whose
ownership of such Excess Stock would be permitted under the Ownership Limit
Provision, at which time such shares of Excess Stock would automatically be
exchanged for Common Shares. In addition, the Company would have the right,
for a period of 90 days during the time the Excess Stock is held by the Company
in trust, to purchase all or any portion of the Excess Stock from the intended
transferee or owner at a price equal to the lesser of the price paid for the
stock by the intended transferee or owner and the closing market price for the
Common Shares on the date the Company exercises its option to purchase the
stock. This period commences on the date of the violative transfer or
ownership if the intended transferee or owner gives notice of the transfer to
the Company, or the date the Board of Directors determines that a violative
transfer or ownership has occurred if no notice is provided.

All certificates representing Common Shares bear a legend referring
to the restrictions described above.

All persons who own a specified percentage (or more) of the
outstanding Common Shares must file an affidavit with the Company containing
information regarding their ownership of Common Shares as set forth in the
Treasury Regulations. Under current Treasury Regulations the percentage will
be set between one-half of one percent and five percent, depending on the
number of record holders of Common Shares. In addition, each stockholder shall
upon demand be required to disclose to the Company in writing such information
with respect to the direct, indirect, actual and constructive ownership of
shares as the Board of Directors deems necessary to comply with the provisions
of the Code applicable to a REIT or to comply with the requirements of any
taxing authority or governmental agency.

TRANSFER AGENT AND REGISTRAR

The First National Bank of Boston is the transfer agent and registrar
with respect to the Common Shares.

EXCHANGE OF DEBENTURES FOR EXCHANGE SHARES

Holders of Exchangeable Debentures have the right, at any time before
the close of business on December 27, 2003, to exchange such debentures (in any
integral multiple of $100,000 principal amount) for Exchange Shares at an
exchange price of $18.00 per share (the "Exchange Price"). The Exchange Price
is subject to adjustment in the event of stock splits, stock dividends,
issuance of certain rights, certain extraordinary distributions and similar
events. A holder of Exchangeable Debentures effecting an exchange (a
"Tendering Holder") must surrender to the Company the principal amount of
Exchangeable Debentures being exchanged, along with an executed Exchange Notice
in the form attached to and made a part of the Exchangeable Debentures, along
with such other written instruments of transfer as may be required by the
Company. A

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Tendering Holder shall have the right to receive, upon receipt by the Company
of the exchanged debentures (the "Specified Exchange Date"), the applicable
whole number of Exchange Shares which corresponds to the tendered principal
amount of Exchangeable Debentures. No fractional Exchange Shares shall be
issued upon the exchange of Exchange Debentures, but the Company shall pay the
value of such fractional share to the Tendering Holder in cash. The Exchange
Shares shall be delivered as duly authorized, validly issued, fully paid and
nonassessable shares, free of any pledge, lien, encumbrance or restriction,
other than those provided in the Charter, the Bylaws of the Company, the
Securities Act, relevant state securities or blue sky laws and any applicable
registration rights agreement with respect to such Exchange Shares entered into
by the Tendering Holders. A Tendering Holder shall be deemed the owner of such
Exchange Shares and rights for all purposes, including without limitation,
rights to vote or consent, receive dividends, and exercise rights, upon the
surrender of the Exchangeable Debentures being exchanged.

In order to protect the Company's status as a REIT, no Tendering
Holder shall be entitled to effect an exchange if such exchange would cause
such Tendering Holder or any other individual (as defined in the Code) to
violate the Ownership Limit. Any attempted exchange in violation of the
foregoing condition shall be null and void ab initio and such Tendering Holder
shall not acquire any rights or economic interest in the Exchange Shares
otherwise issuable upon such exchange.

FEDERAL INCOME TAX CONSIDERATIONS

The following is a brief and general summary of certain provisions
that currently govern the federal income tax treatment of the Company and its
stockholders.

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PLAN OF DISTRIBUTION

This Prospectus relates to the possible issuance by the
Company of the Exchange Shares if, and to the extent that, holders of
Exchangeable Debentures tender such debentures for exchange on or prior to
December 27, 2003.

Pursuant to the terms of that certain Purchase Agreement and
that certain Registration Rights Agreement, each dated as of December 27, 1993,
among the Company, the Operating Partnership and holders of Exchangeable
Debentures are entitled to exchange their Exchangeable Debentures for Exchange
Shares at any time after June 27, 1995 and prior to December 27, 2003 (subject
to the Ownership Limit and certain limitations on resale) at an exchange price
of $18.00 per share. In connection with the original issuance of the
Exchangeable Debentures, the Company agreed to file and cause to be declared
effective the Registration Statement of which this Prospectus is a part. The
Company has also agreed to use its reasonable best efforts to keep the
Registration Statement effective until all of the Exchangeable Debentures have
been exchanged for Exchange Shares. No holders of Exchangeable Debentures are
employed by or otherwise affiliated with the Company or any of its predecessors
or affiliates.

LEGAL MATTERS

The legality of the issuance of the Exchange Shares will be passed
upon for the Company by Ballard, Spahr, Andrews & Ingersoll, Baltimore,
Maryland.

EXPERTS

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NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

SUMMARY TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Description of Securities . . . . . . . . . . . . . . . . . . . . . . . 13

Exchange of Debentures for Exchange Shares . . . . . . . . . . . . . . 15

Federal Income Tax Considerations . . . . . . . . . . . . . . . . . . . 16

Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 17

Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>

1,666,666 SHARES

ALEXANDER HAAGEN PROPERTIES, INC.

COMMON STOCK

PROSPECTUS

, 1997

<PAGE> 72

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table itemizes the expenses incurred by Alexander Haagen
Properties, Inc. (the "Registrant") in connection with the issuance and
registration of the shares of the Registrant's common stock, par value $.01 per
share ("Common Stock"), offered hereby. All amounts shown are estimates except
the Securities and Exchange Commission registration fee.

<TABLE>
<S> <C>
Registration Fee . . . . . . . . . . . . . . . . . . . $ 14,635
NASD Fee . . . . . . . . . . . . . . . . . . . . . . . --
AMEX Listing Fee . . . . . . . . . . . . . . . . . . . 10,000
Printing, Engraving and Edgarizing Expenses . . . . . . 5,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . 60,000
Accounting and Fees and Expenses . . . . . . . . . . .
Blue Sky Fees and Expenses . . . . . . . . . . . . . . 5,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 5,365
--------
Total . . . . . . . . . . . . . . . . . . . . $100,000
========
</TABLE>

All of the costs identified above will be paid by the Company.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's Charter limits the liability of the Company's directors
and officers to the Company and its shareholders to the fullest extent
permitted from time to time by Maryland law. Maryland law presently permits
the liability of directors and officers to a corporation or its shareholders
for money damages to be limited, except (i) to the extent that it is proved
that the director or officer actually received an improper benefit or profit or
(ii) if a judgment or other final adjudication is entered in a proceeding based
on a finding that the director's or officer's action, or failure to act, was
the result of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding. This provision does not limit the
ability of the Company or its shareholders to obtain other relief, such as an
injunction or rescission.

The Company's Charter and Bylaws require the Company to indemnify its
directors, officers and certain other parties to the fullest extent permitted
from time to time by Maryland law. The Maryland General Corporation Law
permits a corporation to indemnify its directors, officers and certain other
parties against judgments, penalties, fines, settlements and reasonable
expenses actually incurred by them in connection with any proceeding to which
they may be made a party by reason of their service to or at the request of the
corporation, unless it is established that the act or omission of the
indemnified party was material to the matter giving rise to the proceeding and
(i) was committed in bad faith or was the result of active and deliberate
dishonesty, (ii) the indemnified party actually received an improper personal
benefit or (iii) in the case of any criminal proceeding, the indemnified party
had reasonable cause to believe that the act or omission was unlawful.
Indemnification may be made against judgments, penalties, fines, settlements
and reasonable expenses actually incurred by the director or officer in
connection with the proceeding; provided, however, that if the proceeding is
one by or in the right of the corporation, indemnification may not be made with
respect to any proceeding in which the director or officer has been adjudged to
be liable on the basis that personal benefit was improperly received. The
termination of any proceeding by conviction, or upon a plea of nolo contendere
or its equivalent, or an entry of any order of probation prior to judgment,
creates a rebuttable presumption that the director or officer did not meet the
requisite standard of conduct required for

II-1
<PAGE> 73
indemnification to be permitted. It is the position of the Securities and
Exchange Commission that indemnification of directors and officers for
liabilities arising under the Securities Act is against public policy and is
unenforceable pursuant to Section 14 of the Securities Act.

The Agreement of Limited Partnership of the Operating Partnership (the
"OP Partnership Agreement") also provides for indemnification of the Company,
or any director or officer of the Company, in its capacity as general partner
of the Operating Partnership, from and against all losses, claims, damages,
liabilities, joint or several, expenses (including legal fees), fines,
settlements and other amounts incurred in connection with any actions relating
to the operations of the Operating Partnership as set forth in the OP
Partnership Agreement.

ITEM 16. EXHIBITS

See attached exhibit index.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;

provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or 15(d)j of the Securities Exchange
Act of 1934 that are incorporated be reference in the registration
statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the Registration statement shall
be deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3

II-2
<PAGE> 74
under the Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X are not set
forth in the prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Exchange Act of 1934, as amended, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Exchange Act of 1934, as
amended, and will be governed by the final adjudication of such issue.

II-3
<PAGE> 75
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Manhattan Beach, State of California, on the
27th day of March, 1997.

ALEXANDER HAAGEN PROPERTIES, INC.

By: /S/ ALEXANDER HAAGEN, SR.

-------------------------------------
Alexander Haagen, Sr.
Chairman of the Board of Directors,
Chief Executive Officer and President

Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed below by the following
persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board of March 27, 1997
- --------------------------- Directors, Chief Executive
Alexander Haagen, Sr. Officer and President

* Vice Chairman and Director March 27, 1997
- ---------------------------
Alexander Haagen III

* Senior Vice President--Chief March 27, 1997
- --------------------------- Financial Officer, Treasurer
Seymour Kreshek and Director (Principal
Accounting Officer)

* Senior Vice President--Leasing, March 27, 1997
- --------------------------- Acquisition and Development
Fred W. Bruning and Director

* Director March 27, 1997
- ---------------------------
R. Bruce Andrews

Director March 27, 1997
- ---------------------------
Tom Bradley

* Director March 27, 1997
- ---------------------------
Warren D. Fix

* Director March 27, 1997
- ---------------------------
Warner Heineman
</TABLE>

II-4
<PAGE> 76

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director March 27, 1997
- ---------------------------
Fred L. Riedman

*Power of Attorney by

/s/ ALEXANDER HAAGEN, SR.
- ---------------------------
Alexander Haagen, Sr.
Chairman of the Board of
Directors, Chief Executive
Officer and President
</TABLE>

II-5
<PAGE> 77
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT PAGE NUMBER OR
NUMBER DESCRIPTION INCORPORATION BY REFERENCE
- ------ ----------- --------------------------
<S> <C> <C>
4.1 Indenture, dated as of December 27, 1993, between Incorporated herein by reference to Exhibit
Alexander Haagen Properties, Inc. and The First National 4.1 to the Company's 1993 Form 10-K.
Bank of Boston as Trustee with respect to the 7 1/2%
Convertible Subordinated Debentures due 2001, Series A.

4.2 Specimen 7 1/2% Convertible Subordinated Debenture due Incorporated herein by reference to Exhibit
2001, Series A. 4.2 to the Company's 1993 Form 10-K.

4.3 Fiscal Agency Agreement, dated as of December 27, 1993, Incorporated herein by reference to Exhibit
between Alexander Haagen Properties, Inc. and The First 4.3 to the Company's 1993 Form 10-K.
National Bank of Boston as Fiscal Agent with respect to
the 7 1/2% Convertible Subordinated Debentures due 2001,
Series B.

4.4 Form of 7 1/2% Convertible Subordinated Debentures due Incorporated herein by reference to Exhibit
2001, Series B. 4.4 to the Company's 1993 Form 10-K.

4.5 Specimen Common Stock Certificate. Incorporated herein by reference to Exhibit
4.5 to the Company's 1993 Form 10-K.

4.6 Form of 7 1/4% Exchangeable Subordinated Debentures due Incorporated herein by reference to Exhibit
2003 of Alexander Haagen Properties, L.P. 4.6 to the Company's 1993 Form 10-K.

5.1 Opinion of Ballard, Spahr, Andrews & Ingersoll regarding
the validity of the Common Stock being registered.

23.1 Consent of Deloitte & Touche LLP.

23.2 Consent of Ballard, Spahr, Andrews & Ingersoll. Included within the exhibit 5.1 opinion.

24.1 Power of Attorney. Included on signature page.
</TABLE>

___________________

E-1

<PAGE> 1
EXHIBIT 5.1

BALLARD SPAHR ANDREWS & INGERSOLL
300 EAST LOMBARD STREET, 19TH FLOOR
BALTIMORE, MARYLAND 21202
410-528-5600
410-528-5650 FAX

March 27, 1997

Alexander Haagen Properties, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, California 90266

Re: Alexander Haagen Properties, Inc. - Registration Statement on
Form S-3 pertaining to: (i) 5,370 shares of common stock, par
value $0.01 per share (the "Common Stock"), issuable to certain
selling stockholders upon exchange of units of limited
partnership interest ("Units") in Alexander Haagen Properties
Operating Partnership, L.P., a Delaware limited partnership (the
"Operating Partnership"), and 4,281,085 shares of Common Stock
issuable to certain other selling shareholders in exchange for
Units in the Operating Partnership (collectively the "OP
Exchange Series"); and (ii) 1,666,666 shares of Common Stock
(the "Debenture Exchange Shares," and together with the OP
Exchange Shares, the "Shares") issuable in exchange for the
Operating Partnership's 7.25% Exchangeable Subordinated
Debentures due 2003 (the "Exchangeable Debentures")

Ladies and Gentlemen:

In connection with the registration of the Shares under the Securities
Act of 1933, as amended (the "Act"), by the Corporation on Form S-3 originally
;filed with the Securities and Exchange Commission (the "Commission") on or
about June 10, 1996 (the "Registration Statement") you have requested our
opinion with respect to the matter set forth below.

We have acted as special Maryland corporate counsel for the Corporation
in connection with the matter described herein. In our capacity as special
Maryland corporate counsel to the Corporation, we have reviewed and are
familiar with the proceedings taken by the Corporation in connection with the
authorization of the Shares. In addition we have relied upon certificates and

<PAGE> 2
Alexander Haagen Properties, Inc.
March 27, 1997
Page 2

advice from the officers of the Corporation upon which we believe we are
justified in relying and on various certificates from, and documents recorded
with, the State Department of Assessments and Taxation of Maryland (the
"SDAT"), including the charter of the Corporation (the "Charter"), consisting
of Articles of Incorporation of the Company filed with the SDAT on September
20, 1993 and Articles of Amendment and Restatement filed with the SDAT on
December 10, 1993. We have also examined the bylaws of the Corporation adopted
as of September 20, 1993 and amended and restated bylaws of the Corporation
adopted as of December 10, 1993, (the "Bylaws") and resolutions of the Board of
Directors adopted on or before the date hereof and in full force and effect on
the date hereof, and such laws, records, documents, certificates, opinions and
instruments as we deem necessary to render this opinion.

We have assumed the genuineness of all signatures and the authenticity
of all documents submitted to us as originals and the certified, photostatic or
conformed copies. In addition, we have assumed that each person executing any
instrument, document or certificate referred to herein on behalf of any party
is duly authorized to do so. We have also assumed that all certificates
submitted to us are true and correct, both when made and as of the date hereof,
and that the Shares will not be issued in violation of the provisions of
Article VII of the Charter of the Corporation captioned "Restrictions on
Ownership, Transfer and Redemption of Shares."

Based upon the foregoing and subject to the assumptions and
qualifications set forth herein, it is our opinion that, as of the date of this
letter: (i) all of the Shares have been duly authorized and reserved for
issuance; (ii) upon issuance and delivery upon exchange for Units in accordance
with and subject to the terms and conditions of the Agreement of Limited
Partnership of the Operating Partnership dated December 27, 1993 (the
"Partnership Agreement") and the Registration Statement, the OP Exchange Shares
will be validly issued, fully paid and nonassessable; and (iii) upon issuance
and delivery upon exchange for the Exchangeable Debentures, in accordance with
and subject to the terms and conditions of the Exchangeable Debentures, the
Registration Statement and the Purchase Agreement dated December 27, 1993 by
and among the Company, the Operating Partnership and the holders of Exchangeable
Debentures, the Debenture Exchange Shares will be validly issued, fully paid
and nonassessable.

We consent to your filing this opinion as an exhibit to the
Registration Statement, and further consent to the filing of this opinion as an
exhibit to the applications to Securities

<PAGE> 3
Alexander Haagen Properties, Inc.
March 27, 1997
Page 3

Commissioners for the various states of the United States for registration of
the Shares. We also consent to the identification of our firm as Maryland
counsel to the Company in the sections of the prospecti which are included in
the Registration Statement entitled "Legal Matters."

The opinions set forth herein are limited to the current laws of the
State of Maryland and we do not express any opinions herein concerning any laws
other than the laws of the State of Maryland. Furthermore, the opinions
presented in this letter are limited to the matters specifically set forth
herein and no other opinions shall be inferred beyond the matters expressly
stated.

The opinions expressed in this letter are solely for your use and may
not be relied upon by any other person without our prior written consent.

Very truly yours,

/s/ BALLARD SPAHR ANDREWS & INGERSOLL

<PAGE> 1
EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration
Statement of Alexander Haagen Properties, Inc. on Form S-3 of our report dated
February 23, 1996 appearing in the Annual Report on Form 10-K of Alexander
Haagen Properties, Inc. for the year ended December 31, 1995 and to the
reference to us under the heading "Experts" in the Prospectuses, which are part
of this Registration Statement.

DELOITTE & TOUCHE LLP

Los Angeles, California
March 25, 1997