Alexander Haagen Properties Inc. announces commencement of redevelopment projects at its Medford Center in Oregon and Covina Town Square Property in Los Angeles.

MANHATTAN BEACH, Calif.--(BUSINESS WIRE)--March 3, 1997--Alexander Haagen, chairman, president and chief executive officer of Alexander Haagen Properties Inc. (ASE:ACH), reported: ``We are extremely pleased to formally announce the commencement of our redevelopment projects in Medford, Ore., and Covina, Calif.

``The two projects comprise over 840,000 square feet of total leasable area, approximately 10 percent of our total portfolio, and will be under construction during 1997. The full effect of these redevelopments will be seen in 1998 and will have a positive effect on both the quality of assets in the portfolio and on funds from operations per share.''

The Medford Center is located in Medford and currently consists of a small enclosed mall, anchored by Sears, and an adjacent market/ drug-anchored community center.

The redevelopment of this center is a de-malling project, according to Fred Bruning, senior vice president of leasing and development, and will consist of demolishing the existing mall-shop space and replacing the shops with an open-air power/entertainment center anchored by the existing Sears, which will be completely remodeled, a new 15-screen stadium-seating Cinemark movie theater and a Circuit City.

Noted Bruning, ``This redevelopment will reposition the property from a noncompetitive mall to the dominant entertainment and power center in a growing market.''

The company acquired the property in Medford in August 1994 for $7.3 million and will invest approximately an additional $14 million in the redevelopment. After the redevelopment, the company anticipates an initial overall yield of approximately 12 percent. Construction of the project is scheduled to be completed during the fourth quarter of 1997.

The Covina Town Square property is located in Los Angeles County and currently comprises a 422,000-square-foot power center anchored by Home Depot and, until recently, Sears. In the first quarter of 1996, the company received notice that Sears would be terminating its lease and relocating its store to a former Broadway store in the West Covina mall.

The company Monday announced that it has signed a lease with AMC Theatres to build a 30-screen stadium-seating movie theater at the property. ``This will reposition the property from a conventional shopping center to a power/entertainment center anchored by a Home Depot and the dominant movie theater in a five-mile radius,'' noted Bruning.

The redevelopment should also have a positive impact on shop-space leasing.

This redevelopment project includes demolishing the existing Sears so that the theater can be built on the existing Sears site. Redevelopment of the property will take approximately 12 months, and the theater should open by Christmas 1997.

The project will cost approximately $15 million and is anticipated to generate an initial yield of approximately 12 percent after replacement of the Sears rental revenue. Sears rental, prior to closure of the store at the end of October, was approximately $851,000 per year.

In addition to the above projects, construction continues on the expansion of the company's Fullerton Town Center. The existing AMC theater is being expanded from a 10-plex to a 20-plex featuring 10 new, stadium-seating screens. Construction continues as planned on this $5 million project, with a scheduled opening date of July 1997.

The initial yield on this project is also anticipated to be in the 12 percent range.

Each of these projects is being funded using the company's existing line of credit. In order to provide financial flexibility to the company and to ensure that funds are available for the redevelopments, the company Monday announced that it has negotiated an expansion of the line from $75 million to $90 million.

Interest costs on the line are at LIBOR plus 1.5 percent. The full impact of these three projects on funds from operations per share will be reflected by the second quarter of 1998.

Alexander Haagen Properties, a fully integrated, self-managed real estate investment trust, is a leading developer, owner and manager of retail shopping centers, primarily in Southern California. The company owns or controls 38 properties, including two regional malls, eight promotional/power centers, 14 neighborhood/ community shopping centers and 14 single-tenant facilities.

CONTACT: Alexander Haagen Properties Inc., Manhattan Beach

Fred Bruning or Stuart Gulland, 310/546-4520