Conference Call to Discuss Results Will Be Held at 1:00PM EST,
December 21, 2007 GREAT NECK, N.Y., Dec. 21 /PRNewswire-FirstCall/
-- RELEASE HIGHLIGHT -- 3rd quarter FFO was $0.04 per diluted share
as compared to $0.21 per diluted share in the 3rd quarter of 2006.
Financial Results Feldman Mall Properties, Inc. (NYSE:FMP) today
reported Funds From Operations ("FFO") totaling $0.6 million, or
$0.04 per diluted share, for the third quarter ended September 30,
2007 as compared to $3.0 million, or $0.21 per diluted share for
the three months ended September 30, 2006. The Company's net loss
for the three months ended September 30, 2007 was $3.1 million, or
$0.26 per share, as compared to a net loss of $1.8 million, or
$0.14 per diluted share for the third quarter of 2006. The Company
had 14.5 and 14.7 million weighted average common shares and
operating partnership units outstanding during the third quarters
ended September 30, 2007 and 2006, respectively. Third quarter
results were negatively impacted by a number of non-recurring
expenses, including professional fees, incurred in connection with
the strategic alternatives process. Management believes that these
non-recurring expenses will also impact the fourth quarter. The
sale of joint venture interests in the Foothills Mall and Colonie
Center during the second and third quarters of 2006, respectively,
while having a negative impact on year-over-year comparisons from
an operating income standpoint (as per the chart below), generated
$80.3 million in cash proceeds. The Company has redeployed those
proceeds into capital expenditures for the redevelopment of its
existing mall properties and believes that continued redevelopment
of its malls will lead to increased shop lease-up, increased
shopper traffic and consequently stronger revenues. Third quarter
results were positively impacted by a non-cash reduction in an
obligation to affiliates totaling $1.6 million. The following items
represent variances in income and expense that impacted the
Company's FFO results for the periods indicated compared to the
prior year periods (in millions): September 30, 2007 Three Nine
Months Months Property Level Net Operating Income ("NOI"): Higher
rental revenue $ 1.1 $ 0.7 Higher operating expenses (0.8) (2.2)
Same store NOI variance (1) 0.3 (1.5) G&A Expense: Executive
severance (non-recurring) - (0.6) Strategic alternative costs
(non-recurring) (0.3) (0.7) Other G&A expense (2) (1.5) (4.0)
Total G&A variance (1.8) (5.3) Effect of Sale to JVs: Colonie
& Foothills: Net operating income (1.6) (7.8) Decrease in
interest expense 0.6 3.5 Increase in management, leasing and
development fee income 0.9 2.4 Total effect of sale to joint
ventures (0.1) (1.9) Other: Three months Golden Triangle Mall NOI
(acquired 4/06) - 0.7 Decrease in Harrisburg earnout liability 0.4
2.8 Increase in interest expense (0.8) (1.1) Other income and
expense, net (0.2) (0.5) Preferred stock dividends (0.2) (0.4)
Decrease in FFO allocated to common stockholders $ (2.4) $ (7.2)
(1) The increase in NOI for properties that were wholly-owned
during both the three months ended September 30, 2007 and 2006
periods was due to (i) higher revenue ($1.1 million) primarily due
to the opening of a theater at the Stratford Square Mall, offset by
(ii) higher operating expenses ($0.8 million) primarily due to
higher salary, wages, provision for bad debt and professional fees.
(2) Other expenses for the three months ended September 30, 2007
increased $1.5 million due to (i) higher professional fees,
SOX-related fees, and construction management expense ($1.1
million), (ii) costs associated with special construction audits
and lease audits ($0.2 million) and (iii) higher personnel costs
($0.2 million). For the nine months ended September 30, 2007, FFO
totaled $1.9 million, or $0.13 per diluted share as compared to
$9.1 million, or $0.62 per diluted share for the nine months ended
September 30, 2006. The Company's net loss for the nine months
ended September 30, 2007 was $8.9 million, or $0.73 per share, as
compared to net income of $21.2 million, or $1.62 per diluted share
for the nine months ended September 30, 2006. The 2007 periods
include non-cash reductions in the Company's earnout obligation due
to affiliates, included in miscellaneous income in the first
quarter in the amount of $2.3 million and in the third quarter in
the amount of $1.6 million. The Company had 14.5 and 14.7 million
weighted average common shares and operating partnership units
outstanding during the nine months ended September 30, 2007 and
2006, respectively. OTHER Management Changes The Company is
concentrating on expense reduction both at the property and
corporate levels and has initiated programs including outsourcing
to achieve certain economies of scale. In conjunction with the
Company's continuing efforts to restructure, the Phoenix office
will be closed except for a minimal leasing staff. In addition,
Executive Vice President and Chief Operating Officer and Director,
James Bourg, announced that he will be leaving the Company. The
Company anticipates that Mr. Bourg's departure and the closure of
the Phoenix office will take place during the second quarter of
2008. In connection with Mr. Bourg's departure, the Company will
incur a one-time severance charge of approximately $1.3 million
that will be incurred in the fourth quarter of 2007. Strategic
Alternatives On June 5, 2007, the Company announced that it
retained Friedman, Billings, Ramsey & Co., Inc. to assist the
Company in exploring strategic alternatives in order to enhance
shareholder value. These strategic alternatives included the
raising of capital through the sale of assets of the Company, joint
ventures or strategic partnerships, selective acquisitions or
dispositions, and the combination, sale or merger of the Company
with another entity. While the Company remains committed to
exploring strategic alternatives, it does not believe that a sale,
merger or other strategic alternative is imminent under the current
market conditions. During the Company's third quarter conference
call management will update investors on the strategic alternative
process. CONFERENCE CALL The Company's executive management team
will host a conference call and audio web cast on December 21, 2007
at 1:00 PM EST to discuss the financial results. The conference
call may be accessed by dialing (800) 218-4007. No pass code is
required. The live conference will be simultaneously broadcast in a
listen-only mode on the Company's website at
http://www.feldmanmall.com/. A replay of the call will be available
through December 28, 2007 by dialing (800) 405-2236 using pass code
11105154, or individuals may access the replay via the Company's
web site. NON-GAAP FINANCIAL MEASURES Feldman Mall Properties,
Inc., consistent with real estate industry and investment community
preferences, uses FFO as a supplemental measure of operating
performance. The National Association of Real Estate Investment
Trusts (NAREIT) defines FFO as net income (loss) (computed in
accordance with Generally Accepted Accounting Principles (GAAP)),
excluding gains (or losses) from cumulative effects of accounting
changes, extraordinary items and sales of depreciable properties,
plus real estate related depreciation and amortization and after
adjustments for unconsolidated partnerships and joint ventures. The
Company considers FFO a supplemental measure for equity REITs and a
complement to GAAP measures because it facilitates an understanding
of the operating performance of the Company's properties. FFO does
not give effect to real estate depreciation and amortization since
these amounts are computed to allocate the cost of a property over
its useful life. Since values for well-maintained real estate
assets have historically increased or decreased based upon
prevailing market conditions, the Company believes that FFO
provides investors with a clearer view of the Company's operating
performance. In order to provide a better understanding of the
relationship with FFO and GAAP net income, a reconciliation of FFO
to GAAP net income has been provided on page 7 of this release. FFO
does not represent cash flow from operating activities in
accordance with GAAP, should not be considered as an alternative to
GAAP net income and is not necessarily indicative of cash available
to fund cash needs. During the December 21, 2007 conference call,
the Company may discuss non-GAAP financial measures as defined by
SEC Regulation G. In addition, the Company has used a non-GAAP
financial measure and the comparable GAAP financial measure (net
income/loss) can be found on page 7 of this release. *Financial
Tables Attached About Feldman Mall Properties Feldman Mall
Properties, Inc. acquires, renovates and repositions enclosed
regional shopping malls. Feldman Mall Properties Inc.'s investment
strategy is to opportunistically acquire underperforming malls and
transform them into physically attractive and profitable Class A
malls through comprehensive renovation and re-tenanting efforts
aimed at increasing shopper traffic and tenant sales. For more
information on Feldman Mall Properties Inc., visit the Company's
website at http://www.feldmanmall.com/. The Company's portfolio,
including non-owned anchor tenants, consists of seven regional
malls aggregating approximately 7.0 million square feet of which
the Company owns approximately 4.1 million square feet. To receive
the Company's latest news release and other corporate documents,
please contact the Company at (516) 684-1239. All releases and
supplemental data can also be downloaded directly from the Feldman
Mall Properties website at: http://www.feldmanmall.com/.
Forward-looking Information This press release contains
forward-looking statements that involve risks and uncertainties
regarding various matters, including, without limitation, the
success of our business strategy, including our acquisition,
renovation and repositioning plans; our ability to close pending
acquisitions and the timing of those acquisitions; our ability to
obtain required financing; our understanding of our competition;
market trends; our ability to implement our repositioning plans on
time and within our budgets; projected capital and renovation
expenditures; demand for shop space and the success of our lease-up
plans; availability and creditworthiness of current and prospective
tenants; and lease rates and terms. The forward-looking statements
are based on our assumptions and current expectations of future
performance. These assumptions and expectations may be inaccurate
or may change as a result of many possible events or factors, not
all of which are known to us. If there is any inaccuracy or change,
actual results may vary materially from our forward-looking
statements. FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and
per share data) September December 30, 2007 31, 2006 (Unaudited)
ASSETS: Investments in real estate, net $ 342,288 $ 318,440
Investment in unconsolidated real estate partnerships 37,931 32,833
Cash and cash equivalents 1,804 13,036 Restricted cash 21,136 8,159
Rents, deferred rents and other receivables, net 7,090 5,718
Acquired below-market ground lease, net 7,572 7,674 Acquired lease
rights, net 7,753 9,262 Acquired in-place lease values, net 7,030
10,049 Deferred charges, net 4,029 3,284 Other assets, net 4,507
5,396 Total Assets $ 441,140 $ 413,851 LIABILITIES AND
STOCKHOLDERS' EQUITY: Mortgage loans payable $ 234,099 $ 211,451
Junior subordinated debt obligation 29,380 29,380 Secured line of
credit 17,000 - Due to affiliates - 3,891 Accounts payable, accrued
expenses and other liabilities 22,366 25,832 Dividends and
distributions payable 259 3,315 Acquired lease obligations, net
5,458 6,823 Deferred gain on partial sale of real estate 3,515
3,515 Negative carrying value of investment in unconsolidated
partnership 4,450 4,450 Total liabilities 316,527 288,657 Minority
interest 10,409 11,649 Commitments and contingencies Stockholders'
Equity Series A 6.85% Cumulative Convertible Preferred Stock;
2,000,000 shares authorized; 600,000 shares issued and outstanding;
$25.00 liquidation preference 14,580 - Common stock ($0.01 par
value, 200,000,000 shares authorized, 13,034,331 and 13,155,062
issued and outstanding at September 30, 2007 and December 31, 2006,
respectively) 130 132 Additional paid-in capital 120,562 120,163
Distributions in excess of earnings (19,827) (7,637) Accumulated
other comprehensive income (loss) (1,241) 887 Total stockholders'
equity 114,204 113,545 Total Liabilities and Stockholders' Equity $
441,140 $ 413,851 FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except
per share data) (Unaudited) Three Months Ended Nine Months Ended
September 30, September 30, 2007 2006 2007 2006 Revenue: Rental $
7,898 $ 9,643 $ 23,294 $ 32,120 Tenant reimbursements 3,596 4,030
10,593 15,695 Management, leasing and development services 1,094
183 2,792 440 Interest and other income 2,285 1,532 5,390 2,301
Total revenue 14,873 15,388 42,069 50,556 Expenses: Rental property
operating and maintenance 4,595 5,023 13,388 16,248 Real estate
taxes 1,516 1,661 4,557 6,231 Interest (including amortization of
deferred financing costs) 4,114 3,880 10,754 13,183 Loss from early
extinguishment of debt - - 379 357 Depreciation and amortization
3,826 3,892 10,682 13,839 General and administrative 3,754 1,973
10,993 5,654 Total expenses 17,805 16,429 50,753 55,512 Equity in
loss of unconsolidated real estate partnerships (508) (370) (1,163)
(654) (Loss) gain on partial sale of real estate - (571) - 29,397
(Loss) income before minority interest (3,440) (1,982) (9,847)
23,787 Minority interest 311 214 919 (2,580) Net (loss) income
(3,129) (1,768) (8,928) 21,207 Less preferred stock dividends, net
of minority interest (233) - (391) - Net income (loss) available to
common shareholders' basic $ (3,362) $ (1,768) $ (9,319) $ 21,207
Basic (loss) earnings per share $ (0.26) $ (0.14) $ (0.73) $ 1.66
Diluted (loss) earnings per share $ (0.26) $ (0.14) $ (0.73) $ 1.62
Funds From Operations (FFO) Calculation: Net income (loss)
available to common shareholders $ (3,362) $ (1,768) $ (9,319) $
21,207 Add: Depreciation and amortization 3,826 3,892 10,682 13,839
Joint venture FFO adjustment 590 651 1,837 1,039 Minority interest
(311) (214) (919) 2,580 Less: Gain on partial sale of real estate -
571 - (29,397) Depreciation of non-real estate assets (135) (113)
(377) (201) FFO, diluted $ 608 $ 3,019 $ 1,904 $ 9,067 FFO per
share $ 0.04 $ 0.21 $ 0.13 $ 0.62 Ownership interests: Weighted
average REIT common shares for basic net income per share 12,868
12,811 12,864 12,804 Weighted average common stock equivalents and
partnership units 1,587 1,900 1,624 1,889 Weighted average shares
and units outstanding 14,455 14,711 14,488 14,693 FELDMAN MALL
PROPERTIES, INC. OPERATING STATISTICS September 30, 2007 Shop
Tenant Base Rent Shop Shop Per Property Total Rentable Annualized
Tenant Tenants Leased (Ownership Square Square Mall Base Square
Percentage Sq. Interest) Feet Feet Occupancy Rent Feet Leased (A)
Ft. Stratford Square (100%) 1,300,000 629,000 93.81% $8,058,324
383,614 66.49% $24.07 Tallahassee Mall (100%) 966,000 966,000
92.86% 7,418,237 204,000 74.19% 23.99 Northgate Mall (100%)
1,100,000 577,000 89.03% 8,038,751 315,000 74.15% 24.32 Golden
Triangle Mall (100%) 765,000 288,000 97.15% 3,023,115 171,000
68.71% 19.00 Foothills Mall (30.6%) 711,000 502,000 97.41%
8,215,865 230,000 91.80% 19.27 Colonie Center Mall (25%) 1,200,000
668,000 91.07% 6,797,747 36,000 69.35% 28.03 Harrisburg Mall (25%)
922,000 922,000 83.41% 5,237,889 270,000 56.63% 21.47 Total/
Weighted Avg. 6,964,000 4,552,000 92.11% $46,789,928 1,909,614
71.11% $22.88 (A) -- Excludes temporary tenants Expiring Lease % of
Base Expirat- Number of Expiring Total Expiring Annualized % of
Rent ion Expiring Rentable Sq. Ft. Base Base Total Per Sq. Year
Leases Area Expiring Rent Rent Base Rent Ft. 2007 46 124,180 3.48%
$179,346 $2,152,120 4.6% $17.33 2008 89 370,286 10.36% 363,142
4,357,676 9.3% $11.77 2009 68 184,352 5.16% 317,872 3,814,443 8.2%
$20.69 2010 66 226,780 6.35% 368,801 4,425,585 9.5% $19.51 2011 62
248,370 6.95% 414,223 4,970,690 10.6% $20.01 2012 40 285,993 8.00%
296,568 3,558,782 7.6% $12.44 2013 37 331,602 9.28% 346,426
4,157,045 8.9% $12.54 2014 34 308,510 8.63% 363,065 4,356,782 9.3%
$14.12 2015 22 90,651 2.54% 147,336 1,768,042 3.8% $19.50 2016 and
there- after 65 1,402,776 39.25% 1,102,403 13,228,763 28.3% $9.43
Port-folio Total 529 3,573,500 100.00% $3,899,182 $46,789,928 100%
$13.09 Sales Per Square Foot Trailing Twelve Months Ending
9/30/2007 6/30/2007 3/31/2007 12/31/2006 9/30/2006 Stratford Square
Mall $284.71 $286.93 288.77 284.51 283.33 Tallahassee Mall 315.13
325.00 327.45 320.32 329.34 Northgate Mall 323.48 317.56 320.38
308.42 309.63 Golden Triangle Mall 292.96 293.02 295.70 283.95
278.54 Foothills Mall 302.79 308.47 310.35 305.77 306.03 Colonie
Center Mall 305.31 303.43 303.33 308.02 299.71 Harrisburg Mall
269.73 270.44 269.92 266.61 260.31 Total/Weighted Average $299.16
$300.69 $302.27 $296.80 $295.27 Shop Occupancy with Temporary
Tenants Trailing Twelve Months Ending 9/30/2007 6/30/2007 3/31/2007
12/31/2006 9/30/2006 Stratford Square Mall 87.44% 82.74% 83.19%
82.28% 75.89% Tallahassee Mall 85.45 85.98 86.61 88.00 88.00
Northgate Mall 85.50 78.65 84.26 90.18 90.91 Golden Triangle Mall
87.90 91.76 95.26 95.63 78.41 Foothills Mall 93.89 91.80 92.71
100.00 96.50 Colonie Center Mall 87.90 87.10 87.18 89.19 90.46
Harrisburg Mall 77.88 77.03 80.72 75.15 80.80 Total/Weighted
Average 85.12% 84.38% 87.13% 88.63% 85.85% DATASOURCE: Feldman Mall
Properties, Inc. CONTACT: Thomas E. Wirth, President & Chief
Financial Officer, or Larry Feldman, Chairman, both of Feldman Mall
Properties, Inc., +1-516-684-1239; or Scott Eckstein of Financial
Relations Board, +1-212-827-3766, , for Feldman Mall Properties,
Inc. Web site: http://www.feldmanmall.com/
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