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

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

As a result of the approval of a plan of complete liquidation by its shareholders, the company adopted the liquidation basis of accounting for all periods beginning after Sept. 30, 2002. On Sept. 30, 2002, in accordance with the liquidation basis of accounting, assets were adjusted to estimated net realizable value and liabilities were adjusted to estimated settlement amounts, including estimated costs associated with carrying out the liquidation. Accordingly, Malan no longer reports net income or funds from operations.