The once-troubled Alexander Haagen Properties Inc. has a new name, new management and a new outlook.

Now called CenterTrust Retail Properties Inc., the Manhattan Beach-based real estate investment trust's third-quarter results, released last week, demonstrate a marked improvement from a year ago.

Funds from operations the most common measurement of REIT performance were $13.1 million (35 cents per diluted share), a 9.4 percent increase from the like period a year ago.

Revenues also shot up for the quarter ended Sept. 30, reaching $34.2 million vs. $21.8 million for the year-ago period. Net income increased to $3.4 million, up from $600,000.

"It looks like the new management is turning things around," said Janet Campbell, an analyst at Sutro & Co.

But CenterTrust which primarily owns community shopping centers throughout the West needs "to keep going forward with the program in terms of disposing of assets and addressing capital issues," she said. "They have a good plan laid out and it's time to see them execute."

The work to be done, analysts say, includes increasing occupancies, which now average a relatively low 93 percent, and selling off assets that don't fit into the company's niche of community centers (typically smaller, open-air centers that often have supermarkets as tenants). CenterTrust expects to raise $200 million to $250 million by selling those assets, most of which are malls or single-tenant facilities. Among those being actively marketed are Media City Center in Burbank and another mall in San Francisco. Proceeds are going toward acquiring new properties and paying off debt from the sold-off assets.

"The advantage we have is, all assets are quality assets; they're just outside our niche," said Stuart Gulland, CenterTrust's chief financial officer.

The predecessor company had been performing poorly for years and had a track record of missing analysts' estimates, according to a report by Jefferies & Co. Inc. Its languishing stock price caused the company to become the subject of persistent takeover rumors.

The problems were related to poor financial and real estate management and troublesome centers. Specifically, Haagen was plagued by grocery store anchors moving out, tenant bankruptcies, exposure to variable-rate debt during periods of rising interest rates, and persistent low occupancy at certain centers, including Media City Center in Burbank.

CenterTrust still has a high debt level, but changes that started last year lead some analysts to believe it will become a leading community center owner/operator in the West.

A major catalyst came in June 1997, when an affiliate of New York investment bank Lazard Freres & Co. made a $235 million equity commitment, providing capital for expansion. This gives Lazard Freres a 49 percent ownership position once that commitment is fully invested.

Then last November, company founder Alexander Haagen stepped down as chairman and chief executive, and Edward D. Fox Jr. took over as CEO.

Fox is a real estate industry veteran, having been president of Maguire Thomas Partners and a senior partner at Commonwealth Partners. In addition to Fox, other senior managers have been hired to oversee acquisitions, development and leasing.

Fox said the latest quarterly results demonstrate that the new focus and strategy are working. CenterTrust has acquired $350 million worth of assets in the last year, and still has $34 million to draw on from Lazard Freres. It also has increased the percentage of community centers in its portfolio to 77 percent, up from 62 percent last year. In all, CenterTrust's assets have increased to $1 billion from $634 million a year ago.

"We're right on target," Fox said. "We do think it's a good time to stay active in the market."

Despite that growth, CenterTrust has not escaped the problems afflicting the real estate industry. REIT stock values have dropped 25 percent in the last nine months, and CenterTrust shares were trading at $11.50 last week, down from $16.75 a year ago.

Mark Benson, an analyst at Jefferies, estimates the shares are trading at a 20 percent discount to net asset value. Jefferies has an "accumulate" rating on the stock.

CenterTrust's board, agreeing that the company's stock is undervalued, has authorized the repurchase of up to $25 million of outstanding common shares over the next year.

Complicating the turnaround efforts has been the recent turmoil in the capital markets. The flight to quality has made it more difficult to sell off its lower-yielding assets, Benson said.

Those capital markets have been rebounding in recent weeks, however. Even if the economy were to head into recession, CenterTrust's portfolio is well positioned. "Convenience-based retailing is not as vulnerable to a downturn," Benson said.

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