<PAGE> 1
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ____________
Commission file number 1-13092
MALAN REALTY INVESTORS, INC.
(Exact name of registrant as specified in charter)
Michigan 38-1841410
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
30200 Telegraph Rd., Ste. 105 48025
Birmingham, Michigan (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (810) 644-7110
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days. YES [X] NO [ ]
As of April 30, 1997, 3,464,622 shares of Common Stock, Par Value $.01 Per
share, were outstanding.
<PAGE> 2
MALAN REALTY INVESTORS, INC.
FORM 10-Q
INDEX
PAGE
----
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Balance Sheets as of March 31, 1997
(unaudited) and December 31, 1996 3
Statements of Operations (unaudited) for
the three months ended March 31, 1997 and 1996 4
Statements of Cash Flows (unaudited) for the
three months ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements (unaudited) 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-12
PART II OTHER INFORMATION 13
SIGNATURES 14
2
<PAGE> 3
MALAN REALTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
--------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
Real estate
Land, buildings and improvements $207,590 $207,590
Less: accumulated depreciation (12,135) (10,907)
--------------- --------------
195,455 196,683
Leasehold improvements and
equipment, net 40 47
Accounts receivable, net 2,228 1,332
Deferred financing and other 10,701 10,705
Cash and cash equivalents 2,901 6,966
Escrow deposits 1,662 2,119
--------------- --------------
Total Assets $212,987 $217,852
=============== ==============
LIABILITIES
Mortgages $82,331 $83,643
Convertible debentures 61,285 61,285
Convertible notes 27,000 27,000
Deferred income 1,994 2,493
Accrued distributions payable 1,472 1,472
Accounts payable and other 1,121 1,535
Accrued property taxes 2,045 1,157
Accrued interest payable 2,211 4,274
--------------- --------------
Total Liabilities 179,459 182,859
--------------- --------------
SHAREHOLDERS' EQUITY
Common stock ($.01 par value, 30 million shares
authorized, 3,464,622 and 3,463,684 shares
issued and outstanding at March 31, 1997 and
December 31, 1996, respectively) 35 35
Additional paid in capital 45,975 45,960
Accumulated distributions in excess of net income (12,482) (11,002)
--------------- --------------
Total shareholders' equity 33,528 34,993
--------------- --------------
Total Liabilities and
Shareholders' Equity $212,987 $217,852
=============== ==============
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 4
MALAN REALTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 1996
-------------- -------------
<S> <C> <C>
REVENUES
Minimum rent $5,983 $5,946
Percentage and overage rents 304 255
Recoveries from tenants 2,513 2,539
Interest and other income 87 179
-------------- -------------
Total Revenues 8,887 8,919
-------------- -------------
EXPENSES
Property operating and maintenance - recoverable 1,065 999
Other operating expenses 329 313
Real estate taxes 1,919 1,941
General and administrative 394 417
Depreciation and amortization 1,265 1,218
-------------- -------------
Total Operating Expenses 4,972 4,888
-------------- -------------
OPERATING INCOME 3,915 4,031
INTEREST EXPENSE 3,922 3,944
-------------- -------------
NET INCOME (LOSS) ($7) $87
============== =============
NET INCOME (LOSS) PER SHARE ($0.00) $0.03
============== =============
WEIGHTED AVERAGE SHARES
OUTSTANDING 3,470,556 3,475,367
============== =============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE> 5
MALAN REALTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) ($7) $87
--------- ---------
Adjustments to reconcile net income (loss) to
net cash flows used for operating activities:
Depreciation and amortization 1,265 1,218
Amortization of deferred financing costs 383 399
Amortization of deferred compensation expense 31
Directors compensation issued in stock 12 12
Change in operating assets and liabilities that
used cash:
Accounts receivable and other assets (1,307) (1,711)
Accounts payable, deferred income and
other accrued liabilities (2,087) (173)
---------- ---------
Total adjustments (1,734) (224)
---------- ---------
NET CASH FLOWS USED FOR
OPERATING ACTIVITIES (1,741) (137)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposits to escrow (3,408) (5,362)
Disbursements from escrow 3,865 4,053
---------- ---------
NET CASH FLOWS (PROVIDED BY) USED FOR
INVESTING ACTIVITIES 457 (1,309)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases of common stock (1,096)
Principal repayments on mortgages (1,312) (45)
Proceeds from stock options exercised 3
Distributions to shareholders (1,472) (1,509)
---------- ---------
NET CASH FLOWS USED FOR
FINANCING ACTIVITIES (2,781) (2,650)
---------- ---------
Net decrease in cash and cash equivalents (4,065) (4,096)
Cash and cash equivalents at beginning of
period 6,966 9,095
---------- ---------
Cash and cash equivalents at end of period $2,901 $4,999
========== =========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION-
CASH PAID FOR
INTEREST DURING THE PERIOD $5,601 $5,618
========== =========
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE> 6
MALAN REALTY INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation - The accompanying interim consolidated financial
statements and related notes of the Company are unaudited; however, they have
been prepared in accordance with generally accepted accounting principles for
interim financial reporting, the instructions to Form 10-Q and the rules and
regulations of the Securities and Exchange Commission. Accordingly, certain
information and footnote disclosures normally included in financial statements
prepared under generally accepted accounting principles have been condensed or
omitted pursuant to such rules. In the opinion of management, all adjustments
considered necessary for a fair presentation of the Company's consolidated
financial position, results of operations and cash flows have been included.
The results of such interim periods are not necessarily indicative of the
results of operations for the full year.
Principles of Consolidation - The accompanying consolidated financial
statements include the activity of the Company and its wholly owned
subsidiaries, Malan Mortgagor, Inc. and Malan Meadows, Inc. All significant
inter-company balances and transactions have been eliminated.
Reclassifications - Certain reclassifications have been made to the consolidated
financial statements for the three months ended March 31, 1996 to conform with
the consolidated financial statements for the three months ended March 31,
1997.
Management Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Impact of Recently Adopted Accounting Standards -In March 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share". This Statement establishes standards
for computing and presenting earnings per share ("EPS") and applies to all
entities with publicly-held common shares or potential common shares. SFAS No.
128 replaces the presentation of primary EPS and fully-diluted EPS with a
presentation of basic EPS and diluted EPS, respectively. Basic EPS excludes
dilution and is computed by dividing earnings available to common shareholders
by the
6
<PAGE> 7
weighted-average number of common shares outstanding for the period. Similar
to fully diluted EPS, diluted EPS reflects the potential dilution of securities
that could share in the earnings. SFAS No. 128 is effective for the
Company's financial statements for the year ending December 31, 1997 and is not
expected to have a material effect on the Company's reported EPS amounts.
2. COMPENSATION PLANS
The activity in the Directors Stock Compensation Plan for the three months
ended March 31, 1997 consisted of 704 shares issued at $17.00 per share.
Effective January 1, 1997, the Company established a 401(k) retirement
plan (the "Plan") covering substantially all of its employees. Under the Plan,
participants are able to defer, until termination of employment with the
Company, up to 20% of their annual compensation. The Company intends to match
a portion of the participants' contributions in an amount to be determined each
year by the Company's Board of Directors. No compensation expense was recorded
in connection with the Plan for the three months ended March 31, 1997.
3. MORTGAGES
In January 1997, the Company satisfied a $12.45 million mortgage loan that
was collateralized by The Shops at Fairlane Meadows ("Fairlane Meadows") with
proceeds received from an $11.2 million loan with Daiwa Finance Corporation
("Daiwa") and the balance from available cash reserves. The loan with Daiwa is
collateralized by a mortgage on Fairlane Meadows and calls for monthly payments
totaling $83,827 consisting of interest at the rate of 8.21% per annum and
principal amortized over a 30-year life. Real estate tax payments and an
annual replacement reserve of $17,157 are required to be escrowed monthly. The
loan matures on February 1, 2007, at which time a balloon payment of
approximately $9.9 million will be due. The loan also contains an earn-out
provision whereby the company can request at any time prior to January 1, 1998
that the property be revalued and that the loan be increased if the revised
valuation supports such an increase.
The Company established a line of credit (the "Line") with First Chicago
NBD totaling $2.5 million in January 1997. The line is collateralized by the
Company's interest in Orchard-14 Shopping Center in Farmington Hills, Michigan
and any proceeds received as a result of the earn-out provision contained in
the Daiwa loan and is subject to certain other restrictions as to its use. The
line is for a one-year period and decreases to $1 million the earlier of
September 30, 1997, or upon the receipt of any funds from the earn-out
provision and is extendable for a one-year period for a fee. Payments of
interest only at either the bank's prime rate, or the London Interbank Offering
Rate (LIBOR) plus 200 basis points, are due monthly until maturity.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31, 1997 to Three Months Ended March 31,
1996
Total revenue decreased approximately $32,000. This is primarily
attributable to a net increase in minimum rent, percentage rent and recoveries
from tenants of approximately $60,000 offset by a decrease in interest and
other income of approximately $92,000. The decrease in interest and other
income resulted primarily from a nonrecurring brokerage commission of $58,000
received in 1996 and from decreases in investment earnings on working capital
resulting from the utilization of $1.25 million of cash reserves to satisfy the
repayment of the balance on a mortgage collateralized by The Shops at Fairlane
Meadows ("Fairlane Meadows"). The resulting decrease in interest income is
partially offset by a decrease in interest expense on the mortgage.
Total operating expenses increased approximately $84,000 from 1996 to
1997. Property operating and maintenance-recoverable and other operating
expenses increased a total of $82,000 primarily due to increased snow removal
costs. Depreciation and amortization increased approximately $47,000,
primarily related to depreciation on capitalized roof and parking lot
expenditures incurred in the second half of 1996. These increases were offset
by a decrease in general and administrative expenses of approximately $23,000,
primarily due to decreases in payroll costs and decreases in real estate taxes
of approximately $22,000.
Interest expense (including related amortization of deferred financing
costs) decreased approximately $22,000 primarily due to decreased debt levels
on mortgages collateralized by Fairlane Meadows, discussed above.
Overall, net income decreased approximately $94,000 primarily as a result
of increases in non-cash expenses such as depreciation and amortization of
approximately $47,000 and decreases in interest and other income of $92,000
partially offset by decreases in interest expense of approximately $22,000.
Impact of Recently Adopted Accounting Standards
In March 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share". This
Statement establishes standards for computing and presenting earnings per share
("EPS") and applies to all entities with publicly-held common shares or
potential common shares. SFAS No. 128 replaces the presentation of primary EPS
and fully-diluted EPS with a presentation of basic EPS and diluted EPS,
respectively. Basic EPS excludes dilution and is computed by dividing earnings
available to common shareholders by the weighted-average number of common
shares outstanding for the period. Similar to fully diluted EPS, diluted EPS
reflects the potential dilution of securities that could share in the earnings.
SFAS No. 128 is effective for the Company's financial statements for the year
ending December 31, 1997 and is not expected to have a material effect on the
Company's reported EPS amounts.
8
<PAGE> 9
FUNDS FROM OPERATIONS
Management considers Funds From Operations ("FFO") to be an appropriate
measure of performance of an equity real estate investment trust. The Company
calculates FFO as net income or (loss) excluding gains and losses from sales of
property, further adjusted for certain non-cash items including depreciation
and amortization and amortization of deferred financing costs included in
interest expense. It is the opinion of the management that reduction for, or
inclusion of these items, is not meaningful in evaluating income-producing real
estate which, in general, has historically not depreciated. FFO does not
represent cash generated from operating activities in accordance with generally
accepted accounting principles and is not necessarily indicative of cash
available to fund cash needs, including distributions. FFO should not be
considered as an alternative to net income as an indicator of the Company's
operating performance or as an alternative to cash flow as a measure of
liquidity or the ability to pay distributions but rather, as a supplemental
tool to be used in conjunction with these factors in analyzing the Company's
overall performance.
The Company is aware that there are variations between companies in the
REIT industry as to how FFO is calculated. In 1995, the National Association
of Real Estate Investment Trusts (NAREIT) issued an opinion paper (the "White
Paper") clarifying the definitions of certain components of FFO. The primary
differences between the method in which the Company computes FFO and the White
Paper definition is in the treatment of amortization of nonrecurring deferred
financing costs and certain depreciation expense. The following table shows the
components that comprise the Company's calculation of FFO for the three months
ended March 31, 1997 and 1996 (in thousands):
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
--------- -------
<S> <C> <C>
Net income (loss)......................................................... $ (7) $ 87
Depreciation & amortization:
Depreciation of buildings & improvements................................. 1,209 1,187
Amortization of tenant allowances & tenant improvements.................. 26 11
Amortization of leasing costs............................................ 23 5
Amortization of the nonrecurring settlement cost on hedging
contract................................................................ 109 109
----- ------
"White Paper" FFO 1,360 1,399
Depreciation of furniture, equipment & leasehold improvements.............. 8 16
Amortization of deferred financing costs included in interest expense:
Mortgages................................................................ 185 202
Convertible debt......................................................... 88 88
------ ------
Funds From Operations...................................................... $1,641 $1,705
====== ======
Additional information:
Weighted average shares outstanding:
Primary.................................................................. 3,471 3,475
====== ======
Fully diluted............................................................ 8,664 8,669
====== ======
Convertible debt interest excluding amortization of deferred financing
costs.................................................................... $2,029 $2,029
====== ======
</TABLE>
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
On March 31, 1997, the Company's lease with Kmart on its freestanding
store in North Aurora, Illinois expired. The building is currently vacant.
Cash flows generated from the property during 1996 were approximately $126,000.
The Company is currently negotiating a lease that will involve the
redevelopment of the property and anticipates that the lease will be finalized
in the second quarter of 1997. Cash flows from the property will be diminished
temporarily between the termination date of the Kmart lease and the effective
date of any new lease agreement.
In March 1996, the Company entered into a sale and leaseback agreement
with an existing tenant at its Lawrence, Kansas shopping center. Under the
agreement, the tenant will construct a new theater on property located near the
shopping center. Upon completion, the Company will purchase the property for
approximately $4.2 million and will lease the theater back to the tenant for a
term of twenty years at a base rent of approximately $550,000 per year. The
Company anticipates the project to be completed in June 1997 and is currently
negotiating with several lenders to obtain long-term financing to complete the
sale.
In January 1997, the Company satisfied a $12.45 million mortgage loan
collateralized by Fairlane Meadows due September 15, 1997 using proceeds
received from a $11.2 million loan with Daiwa Finance Corporation ("Daiwa") and
available cash reserves for the balance. The loan with Daiwa is collateralized
by a mortgage on Fairlane Meadows and calls for monthly payments totaling
$83,827, consisting of interest at the rate of 8.21% per annum and principal
amortized over a 30-year life. Real estate tax payments and an annual
replacement reserve of $17,157 are required to be escrowed monthly. The loan
is due in full on February 1, 2007, at which time a balloon payment of
approximately $9.9 million will be due. The loan also contains an earn-out
provision whereby the Company can request at any time prior to January 1, 1998,
that the property be reappraised and that the loan be increased if the revised
valuation supports such an increase. The Company is currently negotiating with
a high quality retailer to lease a large vacant space within Fairlane Meadows
and believes that the value added to the shopping center by such tenant will be
sufficient to provide enough earn-out proceeds to replenish the cash reserves
utilized to extinguish the previous mortgage.
The Company established a line of credit ( the "Line") in January 1997
with First Chicago NBD totaling $2.5 million. The line is collateralized by
the Company's interest in Orchard-14 Shopping Center in Farmington Hills,
Michigan and any proceeds received as a result of the earn-out provision
contained in the Daiwa loan and is subject to certain other restrictions as to
its use. The line is for a one-year period and decreases to $1 million on the
earlier of September 30, 1997 or upon the receipt of any funds from the Daiwa
earn-out provision and is extendable for a one-year period for a fee. Payments
of interest only at either the bank's prime rate, or the London Interbank
Offering Rate (LIBOR) plus 200 basis points are due monthly until maturity.
10
<PAGE> 11
The Company incurs capital expenditures in the ordinary course of business
in order to maintain its properties. Such capital expenditures typically
include roof, parking lot and other structural repairs, some of which are
reimbursed by tenants. In 1997, the Company anticipates spending approximately
$1.3 million for capital expenditures to be funded primarily out of the Capital
Improvement/Replacement Reserve required for the Company's Securitized Mortgage
Loan financing and partially from operating cash flows.
Occasionally it is necessary for the Company to provide inducements such
as building allowances or space improvements and/or to pay leasing commissions
to outside brokers in order to procure new tenants or renegotiate expiring
leases with current tenants. The total cost of these expenditures in 1997 is
estimated to be approximately $300,000. These expenditures are generally
funded by operating cash flows and increased revenues resulting from such
expenditures.
The Company has entered into the following commitments:
<TABLE>
<CAPTION>
Anticipated
Approximate Funding
Amount Date
-------------- -------------
<S> <C> <C>
(in thousands)
Purchase and leaseback of 12-plex
theater complex - Lawrence, KS $4,200 6/97
Replacement of roofs on five retail
buildings 1,100 4/97 - 9/97
Payment of tenant construction
allowance on 10-plex theater complex-
Melrose Park, IL 3,640 3/98
------
Total $8,940 4/97 - 3/98
======
</TABLE>
In addition to these commitments and other potential uses of cash discussed
above, several other new developments and redevelopments are being contemplated
by the Company and may be completed within the next year. It is anticipated
that the additional revenue generated by these projects, as well as the
Company's existing equity in each, will create sufficient value so that each
project will fully fund itself using property specific financing and long-term
loans.
The Company anticipates that its cash flow from operations will generally
be sufficient to fund its cash needs for payment of expenses, capital
expenditures (other than acquisitions) and distributions necessary to maintain
its status as a REIT for federal income tax purposes. The Company currently
has available borrowing of up to $1 million on its line of credit with First
Chicago NBD for temporary working capital needs and intends to enter into other
secured and unsecured financing agreements in the future as the need arises.
11
<PAGE> 12
Each of the above statements regarding future revenues or expenses may be
a "forward looking statement" within the meaning of the Securities Exchange Act
of 1934. Such statements are subject to important factors that could cause
actual results to differ materially from those in the forward looking
statement, including the factors set forth in the Management's Discussion and
Analysis of Financial Condition and Results of Operations.
INFLATION
The Company's long-term leases contain provisions to mitigate the adverse
impact of inflation on its results of operations. Such provisions include
clauses entitling the Company to receive (i) scheduled base rent increases and
(ii) percentage rents based upon tenants' gross sales, which generally increase
as prices rise. In addition, many of the Company's non-anchor leases are for
terms of less than ten years, which permits the Company to seek increases in
rents upon re-rental at then current market rates if rents provided in the
expiring leases are below then existing market rates. Most of the Company's
leases require tenants to pay a share of operating expenses, including common
area maintenance, real estate taxes, insurance and utilities, thereby reducing
the Company's exposure to increases in costs and operating expenses resulting
from inflation.
12
<PAGE> 13
MALAN REALTY INVESTORS, INC.
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
NONE
Item 2: Changes in Securities
NONE
Item 3: Defaults Upon Senior Securities
NONE
Item 4: Submission of Matters to a Vote of Security Holders
NONE
Item 5: Other Information
NONE
Item 6: Exhibits and Reports on Form 8-K
a) Exhibit Index:
11 Computation of Earnings Per Share Filed with
this document
27 Financial Data Schedule Filed with
this document
b) Reports on Form 8-K
NONE
13
<PAGE> 14
MALAN REALTY INVESTORS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MALAN REALTY INVESTORS, INC.
By: /s/ Anthony S. Gramer
-----------------------------
Anthony S. Gramer
Chief Executive Officer and President
By: /s/ Elliott J. Broderick
-----------------------------
Elliott J. Broderick
Chief Accounting Officer
Dated: April 30, 1997
14
<PAGE> 15
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
11 Computation of Earnings per Share
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 11
MALAN REALTY INVESTORS, INC. AND SUBSIDIARY
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT SHARE AND EARNINGS PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997 THREE MONTHS ENDED MARCH 31, 1996
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
-------------- -------------- -------------- --------------
INCOME
<S> <C> <C> <C> <C>
NET INCOME (LOSS) ($7) (7) $87 $87
INTEREST ON CONVERTIBLE
DEBT 2,117 2,117
---------- ---------- ---------- ---------
TOTAL ($7) $2,110 $87 $2,204
========== ========== ========== =========
NUMBER OF SHARES
WEIGHTED AVERAGE SHARES OUTSTANDING 3,463,806 3,463,806 3,475,367 3,475,367
OTHER COMMON STOCK EQUIVALENTS 6,750 7,380
SHARES ISSUED UPON CONVERSION
OF CONVERTIBLE DEBT 5,193,235 5,193,235
----------- ---------- ---------- ----------
TOTAL 3,470,556 8,664,421 3,475,367 8,668,602
=========== ========== ========== ==========
NET INCOME (LOSS) PER SHARE ($0.00) $0.24 $0.03 $0.25
======= ===== ===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,563
<SECURITIES> 0
<RECEIVABLES> 12,929
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,492
<PP&E> 207,630
<DEPRECIATION> 12,135
<TOTAL-ASSETS> 212,987
<CURRENT-LIABILITIES> 8,843
<BONDS> 170,616
0
0
<COMMON> 46,010
<OTHER-SE> (12,482)
<TOTAL-LIABILITY-AND-EQUITY> 212,987
<SALES> 0
<TOTAL-REVENUES> 8,887
<CGS> 0
<TOTAL-COSTS> 3,313
<OTHER-EXPENSES> 1,659
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,922
<INCOME-PRETAX> (7)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.24
</TABLE>
