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**SECURITIES AND EXCHANGECOMMISSION****Washington, D.C. 20549**

 

**FORM10-Q**

 
| **ý**                                        | **Quarterly  Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**  |
|---------------------------------------------------|-----------------------------------------------------------------------------------------------|
|                                              |                                                                                          |
| **For the quarterly period  ended June 30, 2001** |
|                                              |
| **OR**                                            |
|                                              |
| **o**                                             | **Transition  Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934** |
|                                              |                                                                                          |
| **Commission file number:  0-24123**         |

 

 

| **HORIZON GROUP PROPERTIES, INC.**                      |
|---------------------------------------------------------|
| ****                                                    |
| (Exact name of  Registrant as specified in its Charter) |

 

| **Maryland**                                                                       | **38-3407933**                       |
|------------------------------------------------------------------------------------|--------------------------------------|
| ****                                                                               | ****                                 |
| (State or other jurisdiction of incorporation  or organization)                    | (I.R.S. employer identification no.) |
|                                                                               |                                 |
| **77 West Wacker Drive, Suite 4200, Chicago, IL**                                  | **60601**                            |
| ****                                                                               | ****                                 |
| (Address of principal executive offices)                                           | (Zip Code)                           |
|                                                                               |                                 |
| **(312) 917-8870**                                                                 |
| ****                                                                               |
| (Registrant’s  telephone number, including area code)                         |
|                                                                               |
| **Not Applicable**                                                                 |
| ****                                                                               |
| Former name, former address and former fiscal  year, if changed since last report. |

 

 

Indicate bycheck mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

Yes  ý   No  o

Number of common shares outstanding at August 13, 2001     2,870,194

 

 

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HORIZON GROUP PROPERTIES, INC.Index to Form 10-QJune 30, 2001

| Part  I.      | Financial  Information:                                                                                                     |
|---------------|-----------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                        |
| Item  1.      | Financial  Statements (unaudited)                                                                                           |
|          |                                                                                                                        |
|          | Condensed  Consolidated Statements of Operations of the Company for the Three Months Ended  June 30, 2001 and June 30, 2000 |
|          |                                                                                                                        |
|          | Condensed  Consolidated Statements of Operations of the Company for the Six Months Ended  June 30, 2001 and June 30, 2000   |
|          |                                                                                                                        |
|          | Condensed  Consolidated Balance Sheets of the Company at June 30, 2001 and December 31,  2000                               |
|          |                                                                                                                        |
|          | Condensed  Consolidated Statements of Cash Flows of the Company for the Six Months Ended  June 30, 2001 and June 30, 2000   |
|          |                                                                                                                        |
|          | Notes  to Condensed Consolidated Financial Statements                                                                       |
|          |                                                                                                                        |
| Item  2.      | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                                 |
|          |                                                                                                                        |
| Item  3       | Quantitative  and Qualitative Disclosure of Market Risk                                                                     |
|          |                                                                                                                        |
| Part II.      | Other Information:                                                                                                          |
|          |                                                                                                                        |
| Item 1.  | Legal Proceedings                                                                                                           |
|          |                                                                                                                        |
| Item 2.  | Changes in Securities                                                                                                       |
|          |                                                                                                                        |
| Item 3.       |  Defaults Upon Senior Securities                                                                                       |
|          |                                                                                                                        |
| Item  4.      | Submission  of Matters to a Vote of Security Holders                                                                        |
|          |                                                                                                                        |
| Item 5.       | Other Information                                                                                                           |
|          |                                                                                                                        |
| Item 6.       | Exhibits or  Reports on Form 8-K                                                                                            |
|          |                                                                                                                        |
| Signatures    |                                                                                                                        |
|               |                                                                                                                             |  |  |

* *

| HORIZON  GROUP PROPERTIES, INC.                                           |                                    |
|---------------------------------------------------------------------------|-----------------------------------------|
| Condensed  Consolidated Statements of Operations                          |                                    |
| (unaudited)                                                               |                                    |
|                                                                      |                                    |   |   |   |
|                                                                      |                                    |   |   |   |
|                                                                      | Three  months ended                     |   | Three  months ended |   |
|                                                                      | June 30,  2001                          |   | June 30,  2000 |   |
|                                                                      |                                         |   |  |   |
|                                                                      | *(thousands, except per share amounts)* |   |
|                                                                      |                                    |   |
| **REVENUE**                                                               |                                    |   |   |   |
|                                                                      | Base rent                               | $ | 4,605 |   | $ | 5,339 |   |
|                                                                      | Percentage rent                         | 27 |   | 27 |   |
|                                                                      | Expense recoveries                      | 944 |   | 1,275 |   |
|                                                                      | Other                                   | 166 |   | 285 |   |
|                                                                      |                                    |  |   |  |   |
|                                                                      | Total revenue                           | 5,742 |   | 6,926 |   |
|                                                                      |                                         |   |  |   |
|                                                                      |                                    |   |   |   |
| **EXPENSES**                                                              |                                    |   |   |   |
|                                                                      | Property operating                      | 1,507 |   | 1,546 |   |
|                                                                      | Real estate taxes                       | 665 |   | 761 |   |
|                                                                      | Land leases and other                   | 332 |   | 177 |   |
|                                                                      | Depreciation and amortization           | 1,476 |   | 1,285 |   |
|                                                                      | General and administrative              | 1,105 |   | 874 |   |
|                                                                      | Interest                                | 2,174 |   | 2,569 |   |
|                                                                      |                                    |  |   |  |   |
|                                                                      | Total expenses                          | 7,259 |   | 7,212 |   |
|                                                                      |                                         |   |  |   |
|                                                                      |                                    |   |   |   |
| Loss before gain on sale of real estate and minority interests            | (1,517                                  | ) | (286 | ) |
|                                                                      |                                    |   |   |   |
| Gain on sale of real estate                                               | 913                                     |   | - |   |
|                                                                      |                                         |   |  |   |
|                                                                      |                                    |   |   |   |
| Loss before minority interests                                            | (604                                    | ) | (286 | ) |
|                                                                      |                                    |   |   |   |
| Minority interests                                                        | 96                                      |   | 52 |   |
|                                                                      |                                         |   |  |   |
|                                                                      |                                    |   |   |   |
| Net loss                                                                  | $                                       | (508 | ) | $ | (234 | ) |
|                                                                      |                                         |   |  |   |
|                                                                      |                                    |   |   |   |
| **Per Common Share  - Basic and Diluted -**                               |                                    |   |   |   |
|                                                                      | Net loss - basic and diluted            | $ | (0.18 | ) | $ | (0.08 | ) |
|                                                                      |                                    |  |   |  |   |
|                                                                      |                                    |   |   |   |   |
| Weighted average shares  outstanding:                                     |                                    |   |   |   |
|                                                                      | Basic                                   | 2,870 |   | 2,861 |   |
|                                                                      |                                    |  |   |  |   |
|                                                                      | Diluted                                 | 3,381 |   | 3,389 |   |
|                                                                      |                                         |   |  |   |
|                                                                      |                                    |   |   |   |
| *See accompanying notes to condensed consolidated financial  statements.* |                                    |
|                                                                           |                                         |  |  |  |  |  |  |  |

* *

 

| HORIZON  GROUP PROPERTIES, INC.                                           |
|---------------------------------------------------------------------------|
| Condensed  Consolidated Statements of Operations                          |
| (unaudited)                                                               |
|                                                                      |   |   |   |
|                                                                      |   |   |   |
|                                                                      | Six  months ended |   | Six  months ended |   |
|                                                                      | June 30,  2001 |   | June 30,  2000 |   |
|                                                                      |  |   |  |   |
|                                                                      | *(thousands, except per share amounts)* |
|                                                                      |   |
| **REVENUE**                                                               |   |   |   |
|                                                                      | Base rent | $ | 9,328 |   | $ | 10,397 |   |
|                                                                      | Percentage rent | 110 |   | 69 |   |
|                                                                      | Expense recoveries | 2,045 |   | 2,577 |   |
|                                                                      | Other | 370 |   | 658 |   |
|                                                                      |  |   |  |   |
|                                                                      | Total revenue | 11,853 |   | 13,701 |   |
|                                                                      |  |   |  |   |
|                                                                      |   |   |   |
| **EXPENSES**                                                              |   |   |   |
|                                                                      | Property operating | 3,074 |   | 3,120 |   |
|                                                                      | Real estate taxes | 1,360 |   | 1,109 |   |
|                                                                      | Land leases and other | 688 |   | 685 |   |
|                                                                      | Depreciation and amortization | 2,944 |   | 2,598 |   |
|                                                                      | General and administrative | 1,857 |   | 1,923 |   |
|                                                                      | Interest | 4,529 |   | 5,089 |   |
|                                                                      |   |  |   |  |
|                                                                      | Total expenses | 14,452 |   | 14,524 |   |
|                                                                      |  |   |  |
|                                                                      |   |   |   |
| Loss before gain on sale of real  estate and minority interests           | (2,599 | ) | (823 | ) |
|                                                                      |   |   |   |
| Net gain on sale of real estate                                           | 907 |   | - |   |
|                                                                      |  |   |  |   |
|                                                                      |   |   |   |
| Loss before minority interests                                            | (1,692 | ) | (823 | ) |
|                                                                      |   |   |   |
| Minority interests                                                        | 264 |   | 125 |   |
|                                                                      |  |   |  |   |
|                                                                      |   |   |   |
| Net loss                                                                  | $ | (1,428 | ) | $ | (698 | ) |
|                                                                      |  |   |  |   |
|                                                                      |   |   |   |
| **Per Common Share  - Basic and Diluted -**                               |   |   |   |
|                                                                      | Net loss - basic and diluted | $ | (0.50 | ) | $ | (0.24 | ) |
|                                                                      |   |  |   |  |   |
| Weighted average shares  outstanding:                                     |   |   |   |
|                                                                      | Basic | 2,870 |   | 2,855 |   |
|                                                                      |   |  |   |  |   |
|                                                                      | Diluted | 3,381 |   | 3,389 |   |
|                                                                      |  |   |  |   |
|                                                                      |   |   |   |
| *See accompanying notes to condensed consolidated financial  statements.* |
|                                                                           |  |  |  |  |  |  |  |  |

 

| HORIZON  GROUP PROPERTIES, INC.                                                                |
|------------------------------------------------------------------------------------------------|
| Condensed Consolidated  Balance Sheets                                                         |
| (unaudited)                                                                                    |
|                                                                                           |   |   |   |
|                                                                                           | June 30,  2001 |   | December  31, 2000 |   |
|                                                                                           |  |   |  |   |
|                                                                                           | *(thousands)* |
| **ASSETS**                                                                                     |   |   |   |
| Real estate - at cost:                                                                         |   |   |   |
| Land                                                                                           | $ | 9,742 |   | $ | 12,049 |   |
| Buildings and improvements                                                                     | 134,215 |   | 133,670 |   |
| Less accumulated depreciation                                                                  | (14,440 | ) | (11,916 | ) |
|                                                                                           |  |   |  |   |
|                                                                                           | Total net real estate | 129,517 |   | 133,803 |   |
|                                                                                           |   |   |   |
| Cash and cash equivalents                                                                      | 2,120 |   | 2,866 |   |
| Restricted cash                                                                                | 3,321 |   | 3,478 |   |
| Tenant accounts receivable                                                                     | 1,935 |   | 1,803 |   |
| Real estate held for sale                                                                      | 1,559 |   | 2,468 |   |
| Deferred costs (net of accumulated  amortization of $1,059 and $773, respectively)             | 1,880 |   | 1,987 |   |
| Other assets                                                                                   | 1,744 |   | 1,563 |   |
|                                                                                           |  |   |  |   |
|                                                                                           | Total assets | $ | 142,076 |   | $ | 147,968 |   |
|                                                                                           |  |   |  |   |
|                                                                                           |   |   |   |
|                                                                                           |   |   |   |
| **LIABILITIES AND  SHAREHOLDERS' EQUITY**                                                      |   |   |   |
| **Liabilities:**                                                                               |   |   |   |
| Mortgages and other debt                                                                       | $ | 100,493 |   | $ | 104,401 |   |
| Accounts payable and accrued  expenses                                                         | 4,484 |   | 4,916 |   |
| Prepaid rents and other tenant  liabilities                                                    | 1,482 |   | 1,313 |   |
| Other liabilities                                                                              | 817 |   | 845 |   |
|                                                                                           |  |   |  |   |
|                                                                                           | Total liabilities | 107,276 |   | 111,475 |   |
|                                                                                           |   |   |   |
|                                                                                           |   |   |   |
| **Minority  Interests**                                                                        | 5,236 |   | 5,505 |   |
|                                                                                           |   |   |   |
| **Shareholders' equity:**                                                                      |   |   |   |
| Common shares ($.01 par value,  50,000 shares authorized,  2,870  issued and outstanding) | 29 |   | 29 |   |
| Additional paid-in capital                                                                     | 34,409 |   | 34,406 |   |
| Accumulated deficit                                                                            | (4,874 | ) | (3,447 | ) |
|                                                                                           |  |   |  |   |
|                                                                                           | Total shareholders' equity | 29,564 |   | 30,988 |   |
|                                                                                           |   |  |   |  |   |
|                                                                                           | Total liabilities and  shareholders' equity | $ | 142,076 |   | $ | 147,968 |   |
|                                                                                           |  |   |  |   |
|                                                                                           |   |   |   |
| *See accompanying notes to condensed consolidated financial  statements.*                      |
|                                                                                                |  |  |  |  |  |  |  |  |  |

HORIZONGROUP PROPERTIES, INC.Condensed ConsolidatedStatements of Cash Flows(unaudited)

|                                          |                                                                                       | Six months  ended |   | Six  months ended |   |
|-----------------------------------------------|--------------------------------------------------------------------------------------------|-------------------|--------|-------------------|--------|
|                                          |                                                                                       | June 30,  2001    |   | June 30,  2000    |   |
|                                          |                                                                                       |                   |   |                   |   |
|                                          |                                                                                       | *(thousands)*     |   |
|                                          |                                                                                       |              |   |              |   |
| **Cash flows from operating activities:**     |                                                                                       |              |   |              |   |
|                                          | Net loss                                                                                   |              | $      | (1,428            | )      | $ | (698 | ) |
|                                          | Net gain on sale of real estate                                                            |              | (907   | )                 | -      |   |
|                                          | Adjustments to reconcile net loss  to net cash provided by/(used in) operating activities: |              |   |              |   |   |
|                                          | Minority interests in net loss                                                             |              | (264   | )                 | (125   | ) |
|                                          | Depreciation                                                                               |              | 2,599  |              | 2,560  |   |
|                                          | Amortization                                                                               |              | 429    |              | 129    |   |
| Changes in assets and liabilities:            |                                                                                       |              |   |              |   |
|                                          | Restricted cash                                                                            |              | 157    |              | (137   | ) |
|                                          | Tenant accounts receivable                                                                 |              | (132   | )                 | (723   | ) |
|                                          | Deferred costs and other assets                                                            |              | (462   | )                 | 192    |   |
|                                          | Accounts payable and accrued  expenses                                                     |              | (432   | )                 | (940   | ) |
|                                          | Other liabilities                                                                          |              | (28    | )                 | (28    | ) |
|                                          | Prepaid rents and other tenant  liabilities                                                |              | 169    |              | (187   | ) |
|                                          |                                                                                       |              |        |              |        |   |
|                                          | **Net cash provided by/(used in) operating  activities**                                   |              | (299   | )                 | 43     |   |
|                                          |                                                                                       |                   |   |                   |   |
|                                          |                                                                                       |              |   |              |   |
| **Cash flows from investing activities:**     |                                                                                       |              |   |              |   |
|                                          | Expenditures for real estate and  improvements                                             |              | (630   | )                 |   | (1,291 | ) |
|                                          | Proceeds from sale of real estate                                                          |              | 4,133  |              | -      |   |
|                                          |                                                                                       |              |        |              |        |   |
|                                          | **Net cash provided by/(used in) investing  activities**                                   |              | 3,503  |              | (1,291 | ) |
|                                          |                                                                                       |                   |   |                   |   |
|                                          |                                                                                       |              |   |              |   |
| **Cash flows from financing activities:**     |                                                                                       |              |   |              |   |
|                                          | Principal payments on mortgages  and other debt                                            |              | (7,408 | )                 |   | (1,375) |   |
|                                          | Proceeds from borrowings                                                                   |              | 3,500  |              | -      |   |
|                                          | Debt issue costs                                                                           |              | (42    | )                 | -      |   |
|                                          |                                                                                       |              |        |              |        |   |
|                                          | **Net cash used in financing activities**                                                  |              | (3,950 | )                 | (1,375 | ) |
|                                          |                                                                                       |              |        |              |        |   |
|                                          |                                                                                       |              |   |              |   |
| **Net decrease in cash and cash equivalents** |                                                                                       | (746              | )      | (2,623            | )      |
|                                          |                                                                                       |              |   |              |   |
| **Cash and cash equivalents:**                |                                                                                       |              |   |              |   |
|                                          | **Beginning of period**                                                                    |              | 2,866  |              | 4,955  |   |
|                                          |                                                                                       |              |        |              |        |   |
|                                          | **End of period**                                                                          |              | $      | 2,120             |   | $ | 2,332 |   |
|                                          |                                                                                       |                   |   |                   |   |
|                                               |                                                                                            |                   |        |                   |        |  |  |  |  |  |

 

*See accompanyingnotes to condensed consolidated financial statements.*

HORIZON GROUP PROPERTIES, INC.Notes to CondensedConsolidated Financial Statements(unaudited)

Note 1 - Formation of the Company

Horizon GroupProperties, Inc. (together with its subsidiaries “HGP” or the “Company”) is aself-administered and self-managed Maryland corporation that was established inconnection with the merger of Horizon Group, Inc., a Michigan corporation(“Horizon”) with and into Prime Retail, Inc., a Maryland corporation (“Prime”)which was consummated on June 15, 1998 (“the Merger”).

HGP’s initialportfolio consisted of 14 factory outlet centers and one power center locatedin 12 states. Twelve of the initial factory outlet centers and the power centerwere contributed to the Company by Horizon in connection with the consummationof the Merger pursuant to a Contribution Agreement entered into in connectionwith the Merger (the “Contribution Agreement”) and two factory outlet centerswere purchased by the Company from Prime immediately subsequent to theconsummation of the Merger.  As of June30, 2001, HGP’s portfolio consisted of 11 factory outlet centers and one powercenter located in 9 states.

The operationsof the Company are primarily conducted through a subsidiary limitedpartnership, Horizon Group Properties, L.P. (“HGP LP”) of which the Company isthe sole general partner.  As of June30, 2001, HGP owned approximately 84.9% of the partnership interests (the“Common Units”) of HGP LP.  Common Unitsare exchangeable for shares of Common Stock on a one-for-one basis at any time(or for an equivalent cash amount at the Company’s election).

Note2 - Summary of Significant Accounting Policies

InterimPeriod Financial Presentation

The condensedconsolidated financial statements include the accounts of the Company’ssubsidiary, HGP LP, and other wholly owned subsidiaries.

Theaccompanying unaudited condensed consolidated financial statements are preparedin accordance with accounting principles generally accepted in the UnitedStates for interim financial information and with the instructions to Form 10-Qand Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotesrequired by accounting principles generally accepted in the United States forcomplete financial statements, and, therefore, should be read in conjunctionwith the Company’s Annual Report on Form 10-K for the year ended December 31,2000.

The financialstatements have been prepared in conformity with accounting principlesgenerally accepted in the United States, which require management to makeestimates and assumptions that affect the reported amounts of assets andliabilities (including disclosure of contingent assets and liabilities) at thedate of the financial statements and the reported amounts of revenues andexpenses during the reporting period. Actual results could differ from those estimates.

In the opinionof management, all adjustments necessary for a fair statement of the financialposition and results of operations for the interim periods presented have beenincluded in these financial statements and are of a normal and recurringnature.  Certain amounts in priorperiods have been reclassified to conform to the current presentation.

Operatingresults for the three and six months ended June 30, 2001 are not necessarilyindicative of the results that may be achieved in future periods.

RealEstate and Depreciation

Costs incurredfor the acquisition, development, construction and improvement of properties,as well as significant renovations and betterments to the properties, arecapitalized. Maintenance and repairs are charged to expense as incurred.Interest costs incurred with respect to qualified expenditures relating to theconstruction of assets are capitalized during the construction period.

Amountsincluded under buildings and improvements on the condensed consolidated balancesheets include the following types of assets and are depreciated on thestraight-line method over estimated useful lives which are:

| Buildings  and improvements       | 31.5  years                      |
|-----------------------------------|----------------------------------|
| Tenant  improvements              | 10  years or lease term, if less |
| Furniture,  fixtures or equipment | 3  - 7 years                     |

Periodically,in the course of reviewing the performance of its operating properties,management may determine that certain properties no longer meet the parametersset forth for its properties and accordingly, such properties will beclassified as held for sale.  As ofDecember 31, 2000, the Dry Ridge, Kentucky property was classified as held forsale and was sold in January 2001.  Asof June 30, 2001, no operating properties were classified as held for sale.

In addition,the Company owns parcels of land near several of its properties, which itreviews periodically in comparison with its business plans.  As of June 30, 2001, portions of this landwere classified as held for sale and one parcel was sold during the quarterended June 30, 2001.

CashEquivalents

The Companyconsiders all liquid investments with a maturity of three months or less whenpurchased to be cash equivalents.

RestrictedCash

Restricted cashconsists of amounts deposited in accounts with the Company’s primary lenders(see Note 5) and included $1.2 million in capital improvement and tenant allowancereserves, $1.5 million in real estate tax, insurance and ground lease escrows,and $.6 million for debt service and operating expenses at June 30, 2001.

DeferredCosts

Leasing anddeferred financing costs are capitalized at cost. Amortization of deferredleasing costs is recorded on the straight-line method over the life of thelease.  Amortization of deferredfinancing costs is recorded using a method that approximates the effectiveinterest method over the life of the related debt and is included as acomponent of interest expense.

IncomeTaxes

The Company haselected to be taxed as a REIT under Sections 856 through 860 of the InternalRevenue Code of 1986, as amended (the “Code”). A REIT is a legal entity that holds real estate interests, and receivesa deduction for dividends paid to its shareholders for federal income taxpurposes.  HGP intends to distribute itsREIT taxable income to its shareholders and satisfy certain other requirementsas defined in the Code so as to reduce or eliminate federal income taxliability.  Based on its taxable loss inthe current period and past fiscal years, the Company is not and has not beenobligated to make any dividend distributions to qualify as a REIT.

MinorityInterests

Minorityinterests represent the interests of unitholders of HGP LP, other than theCompany.  The unitholder minorityinterest is adjusted at the end of each period to reflect the ownership at thattime.  The unitholder minority interestin HGP was approximately 15.1% at June 30, 2001.  During the six months ended June 30, 2001, no units wereconverted into shares of common stock.

RevenueRecognition

Leases withtenants are accounted for as operating leases. Minimum annual rentals aregenerally recognized on a straight-line basis over the terms of the respectiveleases.  As a result of recording rentalrevenue on a straight-line basis, tenant accounts receivable included $852,000and $821,000 of accrued straight line rents at June 30, 2001 and December 31,2000, respectively, which are expected to be collected over the remaining livesof the leases.  Rents which representbasic occupancy costs, including fixed amounts and amounts computed as afunction of sales, are classified as base rent.  Amounts which may become payable in addition to base rent andwhich are computed as a function of sales in excess of certain thresholds areclassified as percentage rents. Percentage rents are accrued on the basis of reported tenant sales onlyafter the sales exceed the thresholds above which such rents are due. Expenserecoveries based on common area maintenance expenses and certain other expensesare accrued in the period in which the related expense is incurred.

OtherRevenue

Other revenueconsists primarily of interest income, income related to marketing servicesthat is recovered from tenants pursuant to lease agreements and income fromtenants with lease terms of less than one year.

ShareOptions

The Company haselected to follow Accounting Principles Board Opinion No. 25 “Accounting forStock Issued to Employees” (“APB 25”), in accounting for its options on commonshares.  Under APB 25, no compensationexpense is recognized because the exercise price of the Company’s employeeshare options equals or exceeds the market price of the underlying shares atthe date of grant.

LegalProceedings

In the ordinarycourse of business the company is subject to certain legal actions.  While any litigation contains an element ofuncertainty, management believes the losses, if any, resulting from suchmatters will not have a material adverse effect on the consolidated financialstatements of the Company.

Note3 - Earnings Per Share

The followingtable sets forth the computation of basic and diluted earnings per share:

|                                               |   | Three months  |   | Three months                                   |   | Six months    |   | Six months    |   |
|----------------------------------------------------|--------|---------------|--------|------------------------------------------------|--------|---------------|--------|---------------|--------|
|                                               |   | ended         |   | ended                                          |   | ended         |   | ended         |   |
|                                               |   | June 30, 2001 |   | June 30, 2000                                  |   | June 30, 2001 |   | June 30, 2000 |   |
|                                               |   | ****          |   | ****                                           |   | ****          |   | ****          |   |
|                                               |   |          |   | *(in thousands, except per share information)* |   |
|                                               |   |          |   |                                           |   |          |   |          |   |
| **Numerator:**                                     |   |          |   |                                           |   |          |   |          |   |
| Net loss – basic                              |   | $             | (508   | )                                              | $      | (234          | )      | $             | (1,428 | ) | $ | (698 | ) |
| Minority interests of unitholders                  |   | (96           | )      | (52                                            | )      | (264          | )      | (125          | )      |
|                                               |   |               |   |                                                |   |               |   |               |   |
| Net loss – diluted                            |   | $             | (604   | )                                              | $      | (286          | )      | $             | (1,692 | ) | $ | (823 | ) |
|                                               |   |               |   |                                                |   |               |   |               |   |
|                                               |   |          |   |                                           |   |          |   |          |   |
| **Denominator:**                                   |   |          |   |                                           |   |          |   |          |   |
| Weighted average shares outstanding – basic   |   | 2,870         |   | 2,861                                          |   | 2,870         |   | 2,855         |   |
| Effect of converting units to shares               |   | 511           |   | 528                                            |   | 511           |   | 534           |   |
|                                               |   |               |   |                                                |   |               |   |               |   |
| Weighted average shares outstanding – diluted |   | 3,381         |   | 3,389                                          |   | 3,381         |   | 3,389         |   |
|                                               |   |               |   |                                                |   |               |   |               |   |
|                                               |   |          |   |                                           |   |          |   |          |   |
| Net loss per share – basic and diluted        |   | $             | (0.18  | )                                              | $      | (0.08         | )      | $             | (0.50  | ) | $ | (0.24 | ) |
|                                               |   |               |   |                                                |   |               |   |               |   |

Outstandingstock options were excluded in computing diluted earnings per share because theeffect of such item was anti-dilutive for the periods presented.

Note4 - Long Term Stock Incentive Plan

The Company hasadopted the HGP 1998 Long Term Stock Incentive Plan (the “HGP Stock Plan”) toadvance the interests of the Company by encouraging and enabling theacquisition of a financial interest in the Company by key employees anddirectors of the Company and its subsidiaries through equity awards.  The Company reserved 338,900 common sharesfor issuance pursuant to the HGP Stock Plan.

Note5 - Mortgage Debt and Other Liabilities

*HGP Credit Facility*

On June 15,1998, certain wholly owned affiliates of the Company entered into a creditfacility (the “HGP Credit Facility”) with Nomura Asset Capital Corporation,succeeded by Capital Corporation of America, (“Nomura”) and subsequentlyacquired by CDC Mortgage Capital, Inc. (“CDC”), providing for initial borrowingsof $108.2 million.  On July 9, 1999, theCompany refinanced six of the centers originally securing the HGP CreditFacility and repaid $46.8 million of principal related to those centers withthe proceeds of such refinancing. The outstanding balance of the HGP CreditFacility was $48.4 million and $55.3 million as of June 30, 2001 and December31, 2000, respectively.  The HGP CreditFacility is guaranteed by HGP and HGP LP. The HGP Credit Facility matures in July 2001 and bears interest at the30-day LIBOR Rate (as defined in the HGP Credit Facility) plus 1.90% perannum.  The effective rate was 5.91% and8.63% as of June 30, 2001 and December 31, 2000, respectively.  The HGP Credit Facility is secured bycross-collateralized mortgages on six of the Company’s operating outlet centersand one power center.  The HGP CreditFacility requires monthly payments of interest. In addition, the HGP CreditFacility requires principal payments totaling $1.5 million, $1.5 million and$2.0 million during the first, second and third years, respectively, payable inequal monthly installments.  The Companyis recognizing repayment fees of 2% of the amount due under the HGP CreditFacility as an additional component of interest expense.  The HGP Credit Facility contains restrictionson the ability of HGP and HGP LP to incur additional indebtedness.  In connection with the HGP Credit Facility,the Company established certain escrow accounts and cash collection accounts,which are classified on the balance sheet of the Company as restricted cash(see Note 2).  In January 2001, theCompany sold the outlet center in Dry Ridge, Kentucky and the net proceeds wereused to partially repay the HGP Credit Facility.

On June 29,2001, the Company completed a $3.5 million refinancing of its outlet center inHolland, Michigan, with Republic Bank. The loan is for a term of five years, requires monthly debt servicepayments of $30,000 based on a twenty-year amortization schedule, and bearsinterest at a fixed rate of 8.21%.  Thenet proceeds from the loan were used to reduce the balance of the HGP CreditFacility.

On July 31,2001 the Company completed a $16 million refinancing of its power center inNorton Shores, Michigan, with Greenwich Capital Financial Products, Inc.(“Greenwich”).  The non-recourse loan isfor a term of ten years, requires monthly payments based on a 30-yearamortization schedule and bears interest at a fixed rate of 7.647%.  The net proceeds from the loan were used tofurther reduce the balance of the HGP Credit Facility.  In connection with the Greenwich loan, titleto Lakeshore Marketplace was transferred to a new entity, LakeshoreMarketplace, LLC.  Lakeshore MarketplaceLLC, and its managing member, Lakeshore Marketplace Finance Company, Inc., arerestricted from owning any assets other than Lakeshore Marketplace and may notincur additional liabilities, other than normal trade payables.  All of the assets of Lakeshore Marketplace,LLC are pledged as security for the Greenwich loan.

Also on July31, 2001, CDC extended the maturity date of the remaining outstanding balanceof the HGP Credit Facility to July 11, 2002. The principal balance at July 31, 2001 was  $33.5 million, which includes a 2% extension fee.  The extended loan bears interest at the30-day LIBOR rate (but not less than 4.1%) plus 395 basis points and requiresmonthly principal payments of $225,000. The loan is pre-payable at any time without penalty or fee.  The Company is restricted from payingdividends until the loan is repaid. This loan is secured by four outlet centers located in Laughlin, Nevada;Medford, Minnesota; Monroe, Michigan and Warrenton, Missouri and a pledge ofthe partnership interests in the entity owning those outlet centers.

Prime hasguaranteed $10.0 million of obligations under the HGP Credit Facility, and $2.5million of indebtedness related to the Company's corporate office building (the“Prime Guarantee”).  In connection withthe Prime Guarantee, HGP agreed to pay Prime a fee of $400,000 per annumthrough June 15, 2001.  In connectionwith the extension of the maturity date of the HGP Credit Facility, Primereaffirmed its obligations with respect to the Prime Guarantee.  Beginning on June 15, 2001, the Companyagreed to pay Prime an annual fee of $150,000, payable quarterly, for suchguarantee until the HGP Credit Facility is repaid in full.

*JP Morgan Loans*

On July 9, 1999the Company completed a $46.7 million debt financing with Morgan Guaranty TrustCompany of New York (the "JP Morgan Loans").  The JP Morgan Loans consist of (i)nonrecourse loans totaling $22.9 million secured by three factory outletcenters located in Daleville, Indiana, Somerset, Pennsylvania and Tulare,California and (ii) nonrecourse loans totaling $23.8 million secured by threefactory outlet centers located in Gretna, Nebraska, Sealy, Texas and TraverseCity, Michigan.  The total outstandingbalance of these loans was $45.6 million at June 30, 2001 and $45.9 million atDecember 31, 2000.  Each loan bearsinterest at a fixed rate of 8.46%, matures on August 1, 2009 and requires themonthly payment of interest and principal based on a 25-year amortizationschedule.  The proceeds from the loans,together with Company funds, were used to repay $46.8 million of indebtednessunder the HGP Credit Facility, as described above.  The Company has established certain escrow accounts in connectionwith this loan which are classified on the balance sheet of the Company asrestricted cash (see Note 2).

*Other Borrowings*

The Company hasa mortgage loan secured by the Company's corporate office building in NortonShores, Michigan.  The principal balanceon this loan was $2.5 million as of June 30, 2001 and December 31, 2000. Theloan matures in December 2002, bears an interest rate of LIBOR plus 2.50% perannum, and requires monthly debt service payments of $22,500.  The effective rate was 6.6% and 9.2% at June30, 2001 and December 31, 2000, respectively.

Portions ofapproximately 25 acres of undeveloped land owned by the Company in Muskegon,Michigan are subject to a land contract with a balance of $461,000 as of June30, 2001 and $465,000 at December 31, 2000. The interest rate is 9.5%. Monthly debt service payments total $4,200 through January 2002 with aballoon payment due on this date of $458,000. On May 17, 2001, an additional land contract with a balance of $125,000was paid off in connection with the sale of vacant land (see Note 8).

Note6 - Related Party Transactions

The Companyutilizes Thilman & Filippini as its agent for insurance and risk managementprograms.  E. Thomas Thilman is aDirector of the Company and a partner in Thilman & Filippini.  During the six months ended June 30, 2001and 2000, the Company paid premiums totaling approximately $154,000 and$168,000, respectively, on insurance policies placed by Thilman &Filippini.

The Companysub-leases office space on a month to month basis for its senior executives at77 W. Wacker, Chicago, Illinois from an affiliate of Michael W. Reschke, aDirector of the Company.  During the sixmonths ended June 30, 2001 and 2000, the Company incurred rent expense of$29,000 and $59,000, respectively.

Note7 - Segment Information

During the sixmonths ended June 30, 2001, and June 30, 2000, the Company operated twelveshopping centers located in nine states and thirteen shopping centers locatedin ten states, respectively.  TheCompany separately evaluates the performance of each of its centers.  However, because each of the centers hassimilar economic characteristics, facilities and/or tenants, the shoppingcenters have been aggregated into a single dominant shopping centersegment.  The Company evaluatesperformance and allocates resources primarily based on the Funds FromOperations (“FFO”) expected to be generated by an investment in each individualshopping center. FFO is a widely used measure of the operating performance ofREITs, which provides a relevant basis for comparison to other REITs.  FFO, as defined by the National Associationof Real Estate Investment Trusts (“NAREIT”), means net income excludingextraordinary items (as defined by accounting principles generally accepted inthe United States (“GAAP”)) and gains and losses from sales of depreciableoperating property, plus depreciation and amortization, and after adjustmentsfor unconsolidated partnerships and joint ventures.  FFO should not be considered as an alternative to net incomecomputed under accounting principles generally accepted in the UnitedStates.  A reconciliation of loss beforeminority interests to diluted FFO is as follows:

|                                                  | Six              |   | Six           |   |
|-------------------------------------------------------|------------------|--------|---------------|--------|
|                                                  | months ended     |   | months ended  |   |
|                                                  | June 30, 2001    |   | June 30, 2000 |   |
|                                                  |                  |   |               |   |
|                                                  | *(in thousands)* |   |
|                                                  |             |   |          |   |
| Loss  before minority interests                  | $                | (1,692 | )             | $      | (823 | ) |
| Adjustments  for depreciation and amortization   | 2,857            |   | 2,506         |   |
|                                                  |                  |   |               |   |
|                                                  |             |   |          |   |
| FFO                                              | $                | 1,165  |          | $      | 1,683 |   |
|                                                  |                  |   |               |   |

The line itementitled general and administrative expenses on the Company’s statements ofoperations represents corporate level general and administrative expenses.

Note8 – Property Dispositions

On January 26,2001, the Company sold its outlet center in Dry Ridge, Kentucky for $2.5million.  This center was classified asheld for sale on the Company’s balance sheet at December 31, 2000.  The net proceeds were used to pay down theoutstanding balance on the HGP Credit Facility (See Note 5).

On May 17, 2001,the Company sold 18.8 acres of vacant land in Norton Shores, Michigan.  The sales price was approximately $1.7million in cash and the assumption by the purchaser of approximately $100,000in special assessments.  A portion ofthe land sold was subject to a land contract totaling $125,000, which was paidoff at the time of the sale. The sale resulted in a gain of $913,000, which isincluded in the Statement of Operations for the three months ended June 30,2001.  The land was classified as heldfor sale on the Company’s balance sheet as of December 31, 2000.

HORIZON GROUPPROPERTIES, INC.Management's Discussion andAnalysis of Financial Conditionand Results of OperationsFor the three and six months ended June 30, 2001(unaudited)

Introduction

The followingdiscussion and analysis of the condensed consolidated financial condition andresults of operations of Horizon Group Properties, Inc. (together with itssubsidiaries “HGP” or the “Company”) should be read in conjunction with theCondensed Consolidated Financial Statements and Notes thereto. The Company’soperations are conducted primarily through a subsidiary limited partnership,Horizon Group Properties, L.P. (“HGP LP”). The Company is the sole general partner of HGP LP and, as of June 30,2001, owned approximately 84.9% of the HGP LP partnership interests (“CommonUnits”). Common Units of HGP LP are exchangeable for shares of Common Stock ona one-for-one basis at any time (or for an equivalent cash amount at theCompany’s election).  The Companycontrols HGP LP and is dependent on distributions or other payments from HGP LPto meet its financial obligations.

CautionaryStatements

The followingdiscussion in “Management’s Discussion and Analysis of Financial Condition andResults of Operations” contains certain forward-looking statements within themeaning of the Private Securities Litigation Reform Act of 1995 which reflectmanagement’s current views with respect to future events and financialperformance.  Such forward-lookingstatements are subject to certain risks and uncertainties; including, but notlimited to, the effects of future events on the Company’s financialperformance; the risk that the Company may be unable to finance its currentdebt as it matures; risks related to the retail industry in which the Company’soutlet centers compete, including the potential adverse impact of externalfactors, such as inflation, consumer confidence, unemployment rates andconsumer tastes and preferences; risks associated with the Company’s property acquisitions,such as the lack of predictability with respect to financial returns; risksassociated with the Company’s property development activities, such as thepotential for cost overruns, delays and the lack of predictability with respectto the financial returns associated with these development activities; the riskof potential increase in market interest rates from current levels; and risksassociated with real estate ownership, such as the potential adverse impact of changes in local economic climateon the revenues and the value of the Company’s properties.  For further information on factors whichcould affect the Company and the statements contained herein, reference is madeto the Company’s other filings with the Securities and Exchange Commission,including the Company’s Registration Statement on Form 10, as amended, dated asof June 4, 1998, with respect to the Company’s initial registration of itscommon stock under the Securities Exchange Act of 1934, as amended and the SkyMerger Corp. Registration Statement on Form S-4, as filed with the Securitiesand Exchange Commission on May 12, 1998 (Registration No. 333-51285).

GeneralOverview

The Company isa self-administered and self-managed corporation that was established inconnection with the merger of Horizon Group, Inc., a Michigan corporation(“Horizon”) with and into Prime Retail, Inc., a Maryland corporation (“Prime”)which was consummated on June 15, 1998 (“the Merger”).  As of June 30, 2001, HGP's portfolioconsisted of 11 factory outlet centers and one power center located in 9 statescomprising an aggregate of approximately 2.6 million square feet of grossleasable area (“GLA”).  Nine of thefactory outlet centers and the power center were contributed to the Company inconnection with the consummation of the Merger by Horizon pursuant to aContribution Agreement entered into in connection with the Merger (the“Contribution Agreement”) and two factory outlet centers were purchased by theCompany from Prime immediately subsequent to the consummation of the Merger.

Comparisonof the Three Months Ended June 30, 2001 to the Three Months Ended June 30, 2000

The net lossbefore minority interests was $604,000 for the three months ended June 30,2001, compared to $286,000 for the three months ended June 30, 2000.  The main components of this change werelower rents and increased general and administrative expenses, partially offsetby decreases in real estate tax expense, and the gain on the sale of vacant landlocated in Norton Shores, Michigan.

Total revenuesdecreased $1.2 million in the three months ended June 30, 2001, compared to thesame period in the prior year primarily as a result of a decrease in base rentsdue to a decline in occupancy and reductions in rental rates for severaltenants and a reduction in expense recoveries due to a decline in thepercentage of tenants subject to these charges.  Average occupancy for the six properties subject to the JP MorganLoans was 70.1% and 80.3% for the three-month periods ended June 30, 2001 and2000, respectively.  Total revenues forthose properties were $1.8 million and $2.5 million for the three month periodsended June 30, 2001 and 2000, respectively.  Average occupancy for the Company's other six properties (excluding DryRidge, Kentucky which was sold in January 2001) was 84.6% and 87.1% for thethree-month periods ended June 30, 2001 and 2000, respectively.  Total revenues for those properties were$3.9 million and $4.1 million for the three month periods ended June 30, 2001and 2000, respectively.

Real estate taxexpense decreased $96,000 in the three months ended June 30, 2001, compared tothe same period in the prior year mainly due to reductions in assessed valuesat two properties.

Landlease andother expenses increased $155,000 in the three months ended June 30, 2001,compared to the same period in the prior year. This increase is due to an increase in bad debt expense, partiallyoffset by a reduction in marketing landlord contributions in the currentperiod.

Depreciationand amortization expense increased $191,000 in the six months ended June 30,2001, compared to the same period in the prior year, principally related toinvestments in capital and tenant improvements, including Phase III Medford,Minnesota, depreciation on which began in the fourth quarter of 2000, andunamortized leasing fees which were charged to expense related to unscheduledtenant move-outs in 2001.

General andadministrative expenses increased $231,000 in the three months ended June 30,2001, compared to the same period in the prior year mainly as a result of legalfees associated with the proxy dispute between the Company and certainshareholders (see the Legal Proceedings section), partially offset by areduction in corporate staffing.

Interestexpense decreased $395,000 in the three months ended June 30, 2001, compared tothe same period in the prior year.  Theprimary factors causing the decrease were a reduction in LIBOR interest rateswhich affected the Company’s floating rate debt, the reduction in the outstandingbalance of the HGP Credit Facility due to scheduled principal payments and thesale of the outlet center in Dry Ridge, Kentucky (see Note 8 to the condensedconsolidated financial statements).

The effectiveinterest rate on the HGP Credit Facility was 6.45% and 8.24% for the threemonths ended June 30, 2001 and 2000, respectively.  The balance of the HGP Credit Facility was $48.4 million and$56.3 million as of June 30, 2001 and 2000, respectively.  The reduction in the principal balanceresulted from the paydown of $2.4 million in connection with the sale of thecenter in Dry Ridge, Kentucky, $3.4 million as a result of the refinancing ofthe center in Holland, Michigan, and monthly principal payments totaling $2.0million made during the period.  The totalprincipal balance of the JP Morgan loans was $45.6 million as of June 30, 2001and $46.1 million as of June 30, 2000, with interest at a fixed rate of 8.46%.

On May 17,2001, the Company sold 18.8 acres of vacant land in Norton Shores, Michigan, toa third party.  The purchase price wasapproximately $1.7 million in cash and the assumption by the purchaser ofapproximately $100,000 in special assessments. A portion of the land sold was subject to a land contract with a balanceof $125,000, which was paid off at the time of the sale.  The sale resulted in a gain of $913,000,which is included in the Statement of Operations for the three months endedJune 30, 2001.

Averageoccupancy for the Company’s total portfolio of properties for the three monthsended June 30, 2001 was 78.3% compared to 83.5% for the three months ended June30, 2000.  Occupancy of the Company’stotal portfolio at June 30, 2001 and 2000 was 77.1% and 83.2%, respectively.

Comparisonof the Six Months Ended June 30, 2001 to the Six Months Ended June 30, 2000

The net lossbefore minority interests was $1,692,000 for the six months ended June 30,2001, compared to $823,000 for the six months ended June 30, 2000.  The main components of the change were lowerrents and increased real estate tax expense, offset by a decrease in interestexpense and a gain on the sale of vacant land located in Norton Shores,Michigan.

Total revenuedecreased $1.8 million in the six months ended June 30, 2001, compared to thesame period in the prior year primarily as a result of a decrease in base rentsdue to a decline in occupancy, reductions in rental rates for several tenants,and a reduction in expense recoveries due to a decline in the percentage oftenants subject to these charges. Average occupancy for the six propertiessubject to the JP Morgan Loans was 70.9% and 80.6% for the six-month periodsended June 30, 2001 and 2000, respectively. Total revenues for those properties were $3.6 million and $4.9 millionfor the six month periods ended June 30, 2001 and 2000, respectively.   Average occupancy for the Company's othersix properties (excluding Dry Ridge, Kentucky which was sold in January 2001)was 85.3% and 87.0% for the six-month periods ended June 30, 2001 and 2000,respectively.  Total revenues for thoseproperties were $8.0 million and $8.1 million for the six month periods endedJune 30, 2001 and 2000, respectively.

Real estate taxexpense increased $251,000 in the six months ended June 30, 2001, compared tothe same period in the prior year mainly due to a refund in 2000 of a portionof the 1997 through 1999 taxes at the outlet center in Monroe, Michigan.

Depreciationand amortization expense increased $346,000 in the six months ended June 30,2001, compared to the same period in the prior year, principally related toinvestments in capital and tenant improvements, including Phase III Medford,Minnesota, depreciation on which began in the fourth quarter of 2000, andunamortized leasing fees which were charged to expense related to unscheduled tenantmove-outs in 2001.

Interestexpense decreased $560,000 in the six months ended June 30, 2001, compared tothe prior year.  The primary factorscausing the decrease were a reduction in LIBOR interest rates, which affectedthe Company’s floating rate debt, the reduction in the HGP Credit Facility as aresult of the sale of the outlet center in Dry Ridge, Kentucky and scheduledprincipal payments (see Note 8 to the condensed consolidated financialstatements).

The averageeffective interest rate on the HGP Credit Facility for the six months endedJune 30, 2001, was 7.05% compared to 8.04% for the six months ended June 30,2000.

On May 17,2001, the Company sold 18.8 acres of vacant land located in Norton Shores,Michigan, for $1.7 million, resulting in a gain on sale of $913,000.  This gain, along with a net loss of $6,000from the sale of the outlet center in Dry Ridge, Kentucky, is reflected on thestatement of operations for the six months ended June 30, 2001.

Liquidityand Capital Resources

As of June 30,2001, the aggregate amount of outstanding mortgages and other debt wasapproximately $100.5 million.  Of thatamount, $48.4 million matured in July of 2001. On July 31, 2001 the Companycompleted a $16 million refinancing of its power center in Norton Shores,Michigan and extended the maturity date of the HGP Credit Facility to July 11,2002.

The mortgageloan secured by the Company's power center in Norton Shores, Michigan was madeby Greenwich Capital Financial Products, Inc. (“Greenwich”).  The $16 million non-recourse loan has a termof ten years, requires monthly payments based on a 30-year amortizationschedule and bears interest at a fixed rate of 7.647%.  The net proceeds from the loan were used toreduce the balance of the HGP Credit Facility. In connection with the Greenwich loan, title to Lakeshore Marketplacewas transferred to a new entity, Lakeshore Marketplace, LLC.  Lakeshore Marketplace LLC, and its managingmember, Lakeshore Marketplace Finance Company, Inc., are restricted from owningany assets other than Lakeshore Marketplace and may not incur additionalliabilities, other than normal trade payables. All of the assets of Lakeshore Marketplace, LLC are pledged as securityfor the Greenwich loan.

The maturitydate of the HGP Credit Facility was extended to July 11, 2002.  The loan had an original maturity of July11, 2001. The principal balance as of July 31, 2001 was $33.5 million andincludes a 2% extension fee.  The loanbears interest at the 30-day LIBOR rate (but not less than 4.1%) plus 395 basispoints and requires monthly principal payments of $225,000.  The loan is pre-payable at any time withoutpenalty or fee.  The Company isrestricted from paying dividends until the loan is repaid.  This loan is secured by four centers locatedin Laughlin, Nevada; Medford, Minnesota; Monroe, Michigan and Warrenton,Missouri and a pledge of the partnership interests in the entity owning thoseoutlet centers.

The Companyalso has outstanding loans made by Morgan Guaranty Trust Company of New York(the "JP Morgan Loans").  TheJP Morgan Loans consist of (i) nonrecourse loans totaling $22.9 million securedby three factory outlet centers located in Daleville, Indiana, Somerset,Pennsylvania and Tulare, California and (ii) nonrecourse loans totaling $23.8million secured by three factory outlet centers located in Gretna, Nebraska,Sealy, Texas and Traverse City, Michigan. The outstanding balance was $45.6 million at June 30, 2001.  Each loan bears interest at a fixed rate of8.46%, matures on August 1, 2009 and requires the monthly payment of interestand principal based on a 25-year amortization schedule.  The JP Morgan Loans also require the monthlyfunding of escrow accounts for the payment of real estate taxes, insurance andcapital improvements.  Such escrowaccounts currently total $1.2 million for the JP Morgan Loans.

On June 29,2001, the Company completed a $3.5 million refinancing of its outlet center inHolland, Michigan, with Republic Bank. The loan is for a term of five years, requires monthly debt servicepayments of $30,000 based on a twenty year amortization schedule, and bearsinterest at a fixed rate of 8.21%.  Thenet proceeds from the loan were used to reduce the balance of the HGP Credit Facility.

The Company hasa mortgage loan secured by its corporate office building and related equipmentin Norton Shores, Michigan.  Theprincipal balance on this loan was $2.5 million on June 30, 2001 and December31, 2000.  The corporate office loanmatures in December 2002, bears an interest rate of LIBOR plus 2.50% per annum,and requires monthly debt service payments of $22,500.

Portions ofapproximately 25 acres of undeveloped land, which the Company owns in Muskegon,Michigan are subject to a land contract totaling $461,000 as of June 30, 2001.  The interest rates is 9.5%.  Monthly debt service payments total $4,200through January 2002 with a balloon payment due on this date of $458,000.  On May 17, 2001, an additional land contractof $125,000 was paid off in connection with the sale of vacant land in NortonShores, Michigan.

Prime hasguaranteed $10.0 million of obligations under the HGP Credit Facility, togetherwith other indebtedness (the “Prime Guarantee”).  In connection with the Prime Guarantee, HGP agreed to pay Prime afee of $400,000 per annum through June 15, 2001.  In connection with the extension of the maturity date of the HGPCredit Facility, Prime reaffirmed its obligations with respect to the PrimeGuarantee.  Beginning on June 15, 2001,the Company agreed to pay Prime an annual fee of $150,000, payable quarterly,for such guarantees until the HGP Credit Facility is repaid in full.

The Company isrequired to keep the properties in good general repair and to make capitalimprovements and repairs to certain of its outlet centers pursuant to the termsof the HGP Credit Facility and the JP Morgan loans.  At June 30, 2001 there was approximately $1.2 million depositedin escrows with Nomura and JP Morgan, which the Company believes is sufficientto fund its ongoing capital requirements. Any additional capital improvements are expected to be funded withadditional borrowings, existing cash balances or cash flow from operations.

The Company isrequired to make monthly deposits with Nomura and JP Morgan for future debtservice payments, real estate taxes, insurance, operating expenses and capitalexpenditures.  These deposits totaled$3.3 million as of June 30, 2001, including the capital improvement escrowsdescribed above.  Funds are dispersed toor on behalf of the Company for the above mentioned uses.  Funds in excess of those specified in theloan agreement with Nomura are dispersed to the Company monthly.

The Companyexpects to meet its short-term liquidity requirements generally through workingcapital and cash flows from operations. The Company expects to meet its long-term requirements, such as tenantallowances for new leases and capital improvements and expansions currentlybeing considered at its center in Tulare, California and Medford, Minnesota,through the use of working capital and cash flows from operations and, ifnecessary and available, the additional borrowing of long-term debt and thepotential offering of equity securities in the private or public capitalmarkets.

The Companysold its center in Dry Ridge, Kentucky in January 2001 and refinanced itscenter in Norton Shores, Michigan in July 2001.  It extended the maturity date of the HGP Credit Facility untilJuly 2002.  It is currently seekinglonger-term replacement financing for the HGP Credit Facility and has alsoexplored offers for the sale of some or all of its properties.  As a result of the Company’s leverage, theCompany’s ability to obtain additional financing is limited.  There can be no assurance that the Companywill be able to complete such refinancing or on what terms such refinancing maybe accomplished.

LegalProceedings

On April 25, 2001, the Company filed a lawsuit against Howard M.Amster, John C. Loring and Robert M. Schwartzberg, alleging, among otherthings, that they violated Federal securities laws in connection with thepurported nominations of Messrs. Loring and Schwartzberg for election to theCompany’s Board of Directors (the “Horizon Board”) and requesting other relief(the "Horizon Lawsuit").

On May 4, 2001, the parties entered into a Settlement Agreement(the “Settlement Agreement”) which provides, among other things, that (i)Messrs. Loring and Schwartzberg will withdraw their purported nominations forelection to the Horizon Board and Mr. Schwartzberg will terminate his proxysolicitation, (ii) following the Annual Meeting, the Company will amend itsby-laws to increase the size of the Horizon Board to six members and will causeMr. Amster to be appointed to the Horizon Board and to a newly-formed executivecommittee of the Horizon Board (the "Executive Committee") and(iii) there will be a "standstill" agreement covering Messrs.Amster, Loring and Schwartzberg until June 30, 2002 (subject to certainconditions) and, in the case of Mr. Amster, if longer, until the earlier ofJune 30, 2003 or the date that Mr. Amster no longer serves as a member of theHorizon Board.

Under the Settlement Agreement, the Company and Messrs. Amster,Loring and Schwartzberg agreed to release all claims against each other arisingprior to the date of the Settlement Agreement. The Company further agreed to dismiss the Horizon Lawsuit with prejudiceas a result of a mutual settlement, and Messrs. Amster, Loring and Schwartzbergrevoked any and all demands for the election of directors at the Annual Meetingwhich were previously delivered to the Company.

Pursuant to the Settlement Agreement, the Company reimbursedMessrs. Amster and Schwartzberg for $15,000 and $65,000, respectively for theirbona-fide legal fees and expenses. In addition, the Company incurred legalcosts associated with these matters totaling $301,000.

In the ordinarycourse of business the company is subject to certain legal actions.  While any litigation contains an element ofuncertainty, management believes the losses, if any, resulting from suchmatters will not have a material adverse effect on the consolidated financialstatements of the Company.

HORIZON GROUPPROPERTIES, INC.Quantitative and QualitativeDisclosure of Market Risk(unaudited)

The Company’sprimary market risk exposure is associated with the HGP Credit Facility.  This facility had a balance of $48.4 millionat June 30, 2001.  The facility maturedin July of 2001 and was subsequently extended to July of 2002. For the periodended June 30, 2001 the interest rate was set monthly at a rate equal to the 30day London Interbank Offered Rate (“LIBOR”) plus 190 basis points (395 basispoints during the extension).  Themonthly interest rates applicable from June 15, 1998 to June 30, 2001 rangedfrom 5.91% to 8.63%.  As of June 30, 2001,the effective rate was 5.91%.  TheCompany is currently seeking to mitigate this interest rate risk throughrefinancing the HGP Credit Facility with fixed rate, longer-term debt.  There can be no assurance that the Companywill be able to complete such refinancing or on what terms such refinancing maybe accomplished.

The followingtable shows sensitivity of annual interest expense and net income per share -diluted based on an increase in the effective interest rate of 1%.

| Principal Amount |   | Change in LIBOR Rate |   | Change in Interest Expense |   | Per Share - Diluted |
|------------------|--------|----------------------|--------|----------------------------|--------|---------------------|
|                  |   |                      |   |                            |   |                     |
|             |   |                 |   |                       |   |                |
| $48,400,000      |   | 1.0%                 |   | $484,000                   |   | $.14                |

Inflation

HGP’s leaseswith the majority of its tenants require the tenants to reimburse HGP for mostoperating expenses and increases in common area maintenance expense, whichreduces HGP’s exposure to increases in costs and operating expenses resultingfrom inflation.

HORIZON GROUPPROPERTIES, INC.Part II - Other Information
| Item 1.   Legal Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
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| On April 25, 2001, the Company filed a lawsuit against Messrs.  Amster, Loring and Schwartzberg, alleging, among other things, that they  violated Federal securities laws in connection with the purported nominations  of Messrs. Loring and Schwartzberg for election to the Company’s Board of Directors  (the “Horizon Board”) and requesting other relief (the "Horizon  Lawsuit").                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
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| On May 4, 2001, the parties entered into a Settlement Agreement  (the “Settlement Agreement”) which provides, among other things, that (i)  Messrs. Loring and Schwartzberg will withdraw their purported nominations for  election to the Horizon Board and Mr. Schwartzberg will terminate his proxy  solicitation, (ii) following the Annual Meeting, the Company will amend its  by-laws to increase the size of the Horizon Board to six members and will  cause Mr. Amster to be appointed to the Horizon Board and to a newly-formed  executive committee of the Horizon Board (the "Executive  Committee") and (iii) there will be a "standstill"  agreement covering Messrs. Amster, Loring and Schwartzberg until  June 30, 2002 (subject to certain conditions) and, in the case of Mr.  Amster, if longer, until the earlier of June 30, 2003 or the date that Mr.  Amster no longer serves as a member of the Horizon Board. |
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| Under the Settlement Agreement, the Company and Messrs. Amster,  Loring and Schwartzberg agreed to release all claims against each other  arising prior to the date of the Settlement Agreement.  The Company further agreed to dismiss the  Horizon Lawsuit with prejudice as a result of a mutual settlement, and  Messrs. Amster, Loring and Schwartzberg revoked any and all demands for the  election of directors at the Annual Meeting which were previously delivered  to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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| Pursuant  to the Settlement Agreement, the Company reimbursed Messrs. Amster and  Schwartzberg $15,000 and $65,000, respectively for their bona-fide legal fees  and expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| Item 2.   Changes in Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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| In  connection with the extension of the maturity date of the HGP Credit Facility  to July 11, 2002, the Company is restricted from paying dividends until the  HGP Credit Facility is repaid in full.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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| Item  3.  Defaults upon Securities - None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| Item 4.   Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
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| The  annual meeting of the shareholders of the Company was held on May 29,  2001.  At such meeting, the  shareholders of the Company elected Michael W. Reschke (for: 2,386,523  shares; withheld: 292,185 shares) and Gary J. Skoien (for: 2,386,564 shares;  withheld: 292,144 shares) as directors of the Company, each for a three year  term.  The shareholders also ratified  the appointment of Ernst & Young LLP (for: 2,673,217 shares; against:  3,505 shares; abstain: 1,986 shares) as the Company's independent auditors  for the fiscal year ending December 31, 2001.                                                                                                                                                                                                                                                                                                                                                                                |
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| Item  5.  Other Information - None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| Item 6.   Exhibits or Reports on Form 8-K |
|------------------------------------------------|
|                                           |   |
| (a)                                            | Exhibits |   |
|                                           |   |
| Exhibit  3(i)                                  | Articles  of Amendment and Restatement of Horizon Group Properties, Inc. (the  “Company”) (8) |
| Exhibit  3(ii)                                 | By-laws  of the Company (1) |
| Exhibit  3(iii)                                | Amendment  to By-laws of the Company dated March 17, 1999 (4) |
| Exhibit  3(iv)                                 | Amendment  to By-laws of the Company dated June 8, 2000 (12) |
| Exhibit  3(v)                                  | Amendment  to By-laws of the Company dated May 4, 2001 (12) |
| Exhibit  3 (vi)                                | Amendment  to By-laws of the Company dated May 29, 2001 (13) |
| Exhibit  4.1                                   | Specimen  certificate for common stock, $.01 par value per share, of the Company (1) |
| Exhibit  10.1                                  | Sky  Merger Corp. Registration Statement on Form S-4 (excluding exhibits thereto),  as filed with the Securities and Exchange Commission on May 12, 1998  (Registration No. 333-51285) (1) |
| Exhibit  10.2                                  | Amended  and Restated Agreement and Plan of Merger by and among Prime Retail, Inc.,  Prime Retail, L.P., Horizon Group, Inc., Sky Merger Corp., the Company,  Horizon Group Properties, L.P. and Horizon/Glen Outlet Centers Limited  Partnership dated as of February 1, 1998 (Incorporated by reference to  Exhibit 10(a) to Horizon Group, Inc.’s current report on Form 8-K dated  February 1, 1998 (SEC File No. 1-12424) (1) |
| Exhibit  10.3                                  | Form  of 1998 Stock Option Plan of the Company (1) |
| Exhibit  10.4                                  | Employment  Agreement between Gary J. Skoien and the Company (1) |
| Exhibit  10.5                                  | Employment  Agreement between David R. Tinkham and the Company (1) |
| Exhibit  10.6                                  | Form  of Indemnification Agreement for the Board of Directors of the Company (1) |
| Exhibit  10.7                                  | Form  of Registration Rights Agreement (1) |
| Exhibit  10.8                                  | Form  of Contribution Agreement (incorporated by reference to Appendix E to Exhibit  10.1) (1) |
| Exhibit  10.9                                  | Employment  Agreement between Richard Berman and the Company (3) |
| Exhibit  10.10                                 | Working  Capital Agreement with Prime Retail, Inc. (3) |
| Exhibit  10.11                                 | Loan  Agreement dated as of June 15, 1998 by and among Third Horizon Group Limited  Partnership, Nebraska Crossing Factory Shops, L.L.C., and Indiana Factory  Shops, L.L.C. and Nomura Asset Capital Corporation (2) |
| Exhibit  10.12                                 | Form  of Deed of Trust, Assignment of Leases and Rents and Security Agreement with  Nomura Asset Capital Corporation (2) |
| Exhibit  10.13                                 | Form  of Mortgage, Assignment of Leases and Rents and Security Agreement by and  between Horizon Group Properties, Inc. and Nomura Asset Capital Corporation  (2) |
| Exhibit  10.14                                 | Form  of Assignment of Leases and Rents by and between Horizon Group Properties,  Inc. and Nomura Asset Capital Corporation (2) |
| Exhibit  10.15                                 | Guaranty  dated as of June 15, 1998 by the Company and Horizon Group Properties, L.P.  to and for the benefit of Nomura Asset Capital Corporation (2) |
| Exhibit  10.16                                 | Guaranty  and Indemnity Agreement dated as of June 15, 1998 by and among the Company,  Horizon Group Properties, L.P., Prime Retail, Inc., and Prime Retail, L.P.  (2) |
| Exhibit  10.17                                 | Assignment  and Assumption Agreement, dated as of June 15, 1998 by and among Prime  Retail, Inc., Prime Retail, L.P., Indianapolis Factory Shops Limited  Partnership, and Indiana Factory Shops, L.L.C. (3) |
| Exhibit  10.18                                 | Assignment  and Assumption Agreement, dated as of June 15, 1998 by and among Prime  Retail, Inc., Prime Retail, L.P., Nebraska Factory Shops Limited Partnership,  and Nebraska Factory Shops L.L.C. (3) |
| Exhibit  10.19                                 | Form  of Option Agreement (3) |
| Exhibit  10.20                                 | Fixed  Rate Note dated as of July 9, 1999 between Gretna, Sealy, Traverse City  Outlet Centers, L.L.C. and Morgan Guaranty Trust Company of New York related  to the financing of the factory outlet center in Gretna, Nebraska (5) |
| Exhibit  10.21                                 | Deed  of Trust and Security Agreement for the benefit of Morgan Guaranty Trust  Company of New York, as lender, from Gretna, Sealy, Traverse City Outlet  Centers, L.L.C., as borrower, related to the financing of the factory outlet  center in Gretna, Nebraska (5) |
| Exhibit  10.22                                 | Guaranty  for the benefit of Morgan Guaranty Trust Company of New York by Horizon Group  Properties, Inc. related to the Gretna, Sealy and Traverse City loans (5) |
| Exhibit  10.23                                 | Agreement  between Andrew F. Pelmoter and the Company (6) |
| Exhibit  10.24                                 | Agreement  of Purchase and Sale and Escrow Instructions dated March 24, 2000 between  Third Horizon Group Limited Partnership and Triple Net Properties, LLC. (7) |
| Exhibit  10.25                                 | First  Amendment to Agreement of Purchase and Sale and Escrow Instructions between  Third Horizon Group Limited Partnership and Triple Net Properties, LLC, dated  as of April 21, 2000 (7) |
| Exhibit  10.26                                 | Second  Amendment to Agreement of Purchase and Sale and Escrow Instructions between  Third Horizon Group Limited Partnership and Triple Net Properties, LLC, dated  as of April 25, 2000 (7) |
| Exhibit  10.27                                 | Promissory  Note dated April 18, 2000, between Horizon Group Properties, LP as Lender and  Prime Outdoor Group, LLC as Borrower (7) |
| Exhibit  10.28                                 | Security  Agreement dated April 18, 2000, between Horizon Group Properties, LP and  Prime Outdoor Group, LLC (7) |
| Exhibit  10.29                                 | Pledge  Agreement by and among Horizon Group Properties, LP; Prime Group Limited  Partnership; Prime Group II, LP; Prime Group III, LP; Prime Group IV, LP;  Prime Group V, LP and Prime Financing Limited Partnership (7) |
| Exhibit  10.30                                 | Collateral  Assignment of Membership Interests dated April 18, 2000, between Horizon  Group Properties, LP and The Prime Group, Inc. (7) |
| Exhibit  10.31                                 | Guarantee  dated April 18, 2000, between Horizon Group Properties, LP; Prime Group  Limited Partnership; Prime Group II, LP; Prime Group III, LP; Prime Group IV,  LP; Prime Group V, LP and Prime Financing Limited Partnership (7) |
| Exhibit  10.32                                 | Letter  Agreement dated April 18, 2000, between Horizon Group Properties, Inc., Prime  Group, Inc. and Prime Outdoor Group, LLC (7) |
| Exhibit  10.33                                 | Agreement  between Andrew F. Pelmoter and the Company dated April 11, 2000. (7) |
| Exhibit  10.34                                 | Amendment  to Employment Agreement between Gary J. Skoien and the Company dated as of  August 29, 2000 (9) |
| Exhibit  10.35                                 | Amendment  to Employment Agreement between David R. Tinkham and the Company dated as of  August 29, 2000 (9) |
| Exhibit  10.36                                 | Amendment  to Employment Agreement between Andrew F. Pelmoter and the Company dated  October 9, 2000 (10) |
| Exhibit  10.37                                 | Amendment  to Employment Agreement between Thomas R. Rumptz and the Company dated  November 11, 2000 (10) |
| Exhibit  10.38                                 | Additional  Amendment to Employment Agreement between Andrew F. Pelmoter and the Company  dated April 26, 2001 (12) |
| Exhibit  10.39                                 | Additional  Amendment to Employment Agreement between Thomas R. Rumptz and the Company  dated April 3, 2001 (12) |
| Exhibit  10.40                                 | Settlement  Agreement, dated as of May 4, 2001, by and among the Company, Howard M.  Amster, John C. Loring and Robert M. Schwartzberg (11) |
| Exhibit  10.41                                 | Promissory  Note, dated as of July 30, 2001, between Lakeshore Marketplace, LLC and  Greenwich Capital Financial Products, Inc. (14) |
| Exhibit  10.42                                 | Mortgage,  dated as of July 30, 2001, between Lakeshore Marketplace, LLC and Greenwich  Capital Financial Products, Inc. (14) |
| Exhibit  10.43                                 | Collection  and Deposit Account Agreement, dated as of July 30, 2001, by and among  LaSalle Bank National Association, Lakeshore Marketplace, LLC and Greenwich  Capital Financial Products, Inc. (14) |
| Exhibit  10.44                                 | Second  Amended and Restated Note dated as of July 31, 2001 between Third Horizon  Group Limited Partnership and CDC Mortgage Capital, Inc. (14) |
| Exhibit  10.45                                 | Second  Amendment to Loan Agreement and Settlement Agreement dated as of July 31,  2001 by and among Third Horizon Group Limited Partnership, Horizon Group  Properties, Inc., Horizon Group Properties, LP and CDC Mortgage Capital, Inc.  (14) |
| Exhibit  10.46                                 | Reaffirmation  of Guaranty dated as of July 31, 2001 by Horizon Group Properties, Inc. and  Horizon Group Properties, LP (14) |
| Exhibit  10.47                                 | Reaffirmation  of Guaranty dated as of July 31, 2001 by Prime Retail, LP (14) |
| Exhibit  10.48                                 | Pledge  and Security Agreement dated as of July 31, 2001 by and among Horizon Group  Properties, LP, Third HGI, LLC and CDC Mortgage Capital, Inc. (14) |
| Exhibit  10.49                                 | Amended  and Restated Guaranty and Indemnity Agreement dated as of July 31, 2001 by  and among Horizon Group Properties, Inc., Horizon Group Properties, LP, Prime  Retail, Inc., and Prime Retail, LP (14) |
| Exhibit  99.1                                  | Press  release issued by the Company on May 4, 2001, regarding the settlement of a  lawsuit filed against Robert Schwartzberg, John Loring and Howard Amster and  an election contest for seats on the Board of Directors (11) |
| Exhibit  99.2                                  | Press  release issued by the Company on August 2, 2001, announcing the refinancing  of Lakeshore Marketplace and the extension of the CDC loan (14) |
|                                                |  |  |

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| 1      | Incorporated  by reference to the Company’s Registration Statement on Form 10, as amended,  dated as of June 4, 1998 |
|--------|---------------------------------------------------------------------------------------------------------------------------|
|   | (Commission  file no. 0-24123).                                                                                           |
| 2      | Incorporated  by reference to the Company’s Current Report on Form 8-K dated as of June 30,  1998                    |
|   | (Commission  file no. 0-24123).                                                                                           |
| 3      | Incorporated  by reference to the Company’s Form 10-Q dated as of August 14, 1998                                    |
|   | (Commission  file no. 0-24123).                                                                                           |
| 4      | Incorporated  by reference to the Company’s Form 10-Q dated as of May 17, 1999                                       |
|   | (Commission  file no. 0-24123).                                                                                           |
| 5      | Incorporated  by reference to the Company’s Current Report on Form 8-K dated as of August  3, 1999                   |
|   | (Commission  file no. 0-24123).                                                                                           |
| 6      | Incorporated  by reference to the Company’s Form 10-K dated as of  March 6, 2000                                |
|   | (Commission  file no. 0-24123).                                                                                           |
| 7      | Incorporated  by reference to the Company’s Form 10-Q dated as of May 15, 2000                                       |
|   | (Commission  file no. 0-24123)                                                                                            |
| 8      | Incorporated  by reference to the Company’s Definitive Proxy Statement dated as of July 12,  2000                    |
|   | (Commission  file no. 0-24123)                                                                                            |
| 9      | Incorporated  by reference to the Company’s Form 10-Q dated as of November 14, 2000                                  |
|   | (Commission  file no. 0-24123)                                                                                            |
| 10     | Incorporated  by reference to the Company’s Form 10-K dated as of March 23, 2001                                     |
|   | (Commission  file no. 0-24123)                                                                                            |
| 11     | Incorporated  by reference to the Company’s Current Report on Form 8-K dated as of May 4,  2001                      |
|   | (Commission  file no. 0-24123)                                                                                            |
| 12     | Incorporated  by reference to the Company’s Form 10-Q dated as of May 15, 2001                                       |
|   | (Commission  file no. 0-24123)                                                                                            |
| 13     | Incorporated  by reference to the Company’s Current Report on Form 8-K dated as of May 29,  2001                     |
|   | (Commission  file no. 0-24123)                                                                                            |
| 14     | Incorporated  by reference to the Company’s Current Report on Form 8-K dated as of August  13, 2001                  |
|   | (Commission  file no. 0-24123)                                                                                            |

 

| (a)    | Report  on Form 8-K                                                                                                                                                                                    |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                   |
|   | A  Form 8-K was filed on May 29, 2001, regarding the annual meeting held on May  29, 2001, the election of Mr. Howard Amster to the Board of Directors, and  amendments to the Company’s By-laws. |
|   |                                                                                                                                                                                                   |
|   | A  Form 8-K was filed on August 13, 2001, by the Company announcing the  refinancing of Lakeshore Marketplace and the extension of the portfolio loan  with CDC Mortgage Capital, Inc.                 |

 

SIGNATURES

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

|   |             |                                | HORIZON  GROUP PROPERTIES, INC. |
|--------|------------------|-------------------------------------|---------------------------------|
|   |             |                                | Registrant                      |
|   |             |                                |                            |
|   |             |                                |                            |
|   |             |                                |                            |
| Date:  | August  14, 2001 |                                | By:  /s/ Gary J. Skoien         |
|   |                  |                                |                                 |   |
|   |             | Gary  J. Skoien, President and      |
|   |             |                                | Chief  Executive Officer        |
|   |             |                                |                            |
|   |             |                                |                            |
|   |             |                                |                            |
| Date:  | August  14, 2001 |                                | By:  /s/ David R. Tinkham       |
|   |                  |                                |                                 |   |
|   |             | David  R. Tinkham, Chief Accounting |
|   |             |                                | and  Chief Financial Officer    |