Feldman Mall Properties, Inc. (NYSE:FMP) today reported Funds From Operations (“FFO”) totaling $2.9 million, or $0.21 per diluted share, for the second quarter ended June 30, 2005. The Company’s net income for the three months ended June 30, 2005 was $205,000 or $0.02 per diluted share. The Company had 14.15 million weighted average common shares and operating partnership units outstanding during the quarter.
For the six months ended June 30, 2005, FFO totaled $5.4 million, or $0.38 per diluted share. The Company’s net income for the six months ended June 30, 2005 was $575,000 or $0.05 per diluted share. The Company had 13.93 million weighted average common shares and operating partnership units outstanding during the period.
Shop occupancy, excluding temporary tenants and anchor tenants, increased from 88.0% at June 30, 2004 to 95.0% at June 30, 2005. Including temporary tenants, shop occupancy as of June 30, 2004 was 95.2% versus 99.0% as of June 30, 2005.
Average same store shop sales, for shop tenants with less than 10,000 square feet, for the trailing twelve-month period ended June 30, 2005 increased 3.8% to $272 per square foot as compared to $262 per square foot for the twelve month period ended June 30, 2004. Average same store shop sales increased 6.5% for the six months ended June 30, 2005. Total shop sales increased 31.1% and 22.5% for the three and six months ended June 30, 2005 as compared to the same periods in 2004. Average shop rents per square foot, excluding temporary tenants, increased 2.2% to $18.49 at June 30, 2005 as compared to $18.09 at June 30, 2004.
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Harrisburg Mall – Harrisburg, Pennsylvania (Joint Venture Investment)
Shop occupancy, excluding temporary tenants and anchor tenants, increased from 64.7% at June 30, 2004 to 67.5% at June 30, 2005. Including temporary tenants, shop occupancy as of June 30, 2004 was 80.8% versus 85.2% as of June 30, 2005.
Average same store shop sales period for the twelve month period ended June 30, 2005 increased 4.4% to $243 per square foot as compared to $232 per square foot for the twelve month period ended June 30, 2004. Average same store shop sales increased 6.5% for the six months ended June 30, 2005 as compared to 2004. Total shop sales increased 2.6% and 6.5% for the three and six months ended June 30, 2005 as compared to the same periods in 2004. Average shop rents, excluding temporary tenants, increased to $20.76 per square foot at June 30, 2005 from $16.44 per square foot at June 30, 2004.
Colonie Center Mall – Albany, New York
Shop occupancy, excluding temporary tenants and anchor tenants, was 74.3% at June 30, 2005. Including temporary tenants, shop occupancy as of June 30, 2005 was 86.4%. Average shop sales were $248 per square foot for the twelve month period ended June 30, 2005. Average shop rents, excluding temporary tenants, were $18.28 per square foot at June 30, 2005.
Stratford Square Mall – Bloomingdale, Illinois
Shop occupancy, excluding temporary tenants and anchor tenants, was 64.6% at June 30, 2005. Including temporary tenants, the occupancy as of June 30, 2005 was 81.4%. Average shop sales were $271 per square foot for the twelve month period ended June 30, 2005. Average shop rents, excluding temporary tenants, were $21.64 per square foot at June 30, 2005.
Real Estate Activity
Tallahassee Mall – Tallahassee, Florida
On June 28, 2005, the Company announced the purchase of the Tallahassee Mall, a 963,000 square foot enclosed regional mall located in Tallahassee, the state capital of Florida. The purchase price of $61.5 million includes the assumption of the existing mortgage loan of approximately $45.8 million plus cash in the amount of approximately $16.2 million. The first mortgage being assumed bears interest at 8.60% and has a July 2009 maturity date. The property is subject to a long term ground lease that expires in the year 2063 (assuming the exercise of all extension options).
The Company has acquired all of the shop anchors and tenant square footage. The Mall's four major anchor tenants are AMC Theaters, the only 20-screen stadium seating theater in the Tallahassee market, Dillard's, Parisian and Burlington Coat Factory. In addition, the Tallahassee Mall contains a strong roster of seven "big box" junior anchor tenants: Old Navy, Sports Authority, Goody's, Ross Dress for Less, Shoe Carnival, Barnes & Noble and Guitar Center.
At June 30, 2005, the shop occupancy, excluding temporary and anchor tenants, was 72.3%. Including temporary tenants, the shop occupancy was 92.9%. The sales trends at Tallahassee Mall are positive with shop sales growing approximately 6.0% per annum and averaging about $328 per square foot. Average shop rents, excluding temporary tenants, were $14.52 per square foot at June 30, 2005.
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Northgate Mall – Cincinnati, Ohio
On July 12, 2005, the Company announced the purchase of the Northgate Mall, a 1.1 million square foot enclosed regional mall located in the northwest suburbs of Cincinnati, Ohio. The purchase price of $110.0 million includes the assumption of the existing mortgage loan in the approximate amount of $79.6 million plus cash in the amount of approximately $30.4 million dollars. The first mortgage being assumed bears interest at a fixed rate of 6.60% and has a November 2012 maturity date.
Northgate Mall, located in Colerain Township, features anchor tenants Macy's, Dillard's, Sears and JC Penney. Of the 1.1 million total square feet, approximately 577,000 square feet including the Macy's space are owned, with the remaining square footage belonging to the three other anchor tenants. Excluding anchor tenants and temporary tenants, the shop occupancy is 78.0%. Including temporary tenants the shop occupancy is 90.0%. Shop sales at Northgate Mall are currently about $300 per square foot.
Financing Activity
Bridge Loan Financing
During June 2005, the Company completed a $50.7 million six-month bridge financing collateralized by the Colonie Center Mall. The loan bears interest at a rate of LIBOR plus 140 basis points and matures in December 2005. The Company intends to re-finance the Colonie Center Mall with a three to five year first mortgage loan that will include a construction portion to the loan. The Company intends to replace the bridge loan financing prior to the maturity date with a first mortgage maturing in three to five years.
Harrisburg Refinancing
During July 2005, the Joint Venture which owns the Harrisburg Mall refinanced its first mortgage that increased the current mortgage from $43 million to $50.0 million and reduced the interest rate from LIBOR plus 2.5% to LIBOR plus 1.625% and the loan matures in 2008.
EARNINGS GUIDANCE
The Company’s second quarter FFO results of $0.21 per diluted share were at the high end of the Company’s previous guidance. Based on the completed acquisitions of Northgate and Tallahassee malls, the Company is guiding to a range of $0.27 to $0.29 per diluted share for the third quarter of 2005.
CONFERENCE CALL
The Company’s executive management team, led by Larry Feldman, Chief Executive Officer, will host a conference call and audio web cast on Thursday, August 11, 2005 at 2:00 p.m. EST to discuss the financial results. The conference call may be accessed by dialing (800) 406-5356. No pass code is required. The live conference will be simultaneously broadcast in a listen-only mode on the Company’s website at www.feldmanmall.com.
A replay of the call will be available through September 16, 2005 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.
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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 6 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 August 11, 2005 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) can be found on page 6 of this release.
*Financial Tables Attached
Feldman Mall Properties, Inc. acquires, renovates and repositions enclosed retail 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 or near 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 www.feldmanmall.com.
The Company's portfolio, including non-owned anchor tenants, consists of six regional malls aggregating approximately 6.2 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: 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. Theseassumptions 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.
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FELDMAN MALL PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| (Amounts In Thousands) | | June 30,
2005 | | December 31,
2004 | |
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| | | (unaudited) | | | |
| Assets: | | | | | | | |
| Investments in real estate, net | | $ | 289,435 | | $ | 143,653 | |
| Investment in unconsolidated real estate partnership | | | 5,074 | | | 5,150 | |
| Cash and cash equivalents | | | 45,734 | | | 15,607 | |
| Restricted cash | | | 7,863 | | | 4,555 | |
| Rents, deferred rents and other receivables, net | | | 4,174 | | | 1,921 | |
| Acquired lease rights, net | | | 8,194 | | | 4,167 | |
| Acquired in-place lease value, net | | | 17,078 | | | 11,504 | |
| Acquired below market ground lease | | | 7,879 | | | — | |
| Deferred charges, net | | | 2,515 | | | 675 | |
| Other assets | | | 5,601 | | | 1,551 | |
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| Total Assets | | $ | 393,547 | | $ | 188,783 | |
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| Liabilities and Stockholders' Equity: | | | | | | | |
| Mortgages payable | | $ | 232,897 | | $ | 54,750 | |
| Due to affiliates | | | 9,071 | | | 12,941 | |
| Accounts payable, accrued expenses and other liabilities | | | 8,769 | | | 7,862 | |
| Dividends and distributions payable | | | 3,216 | | | — | |
| Acquired lease obligation, net | | | 17,720 | | | 4,737 | |
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| |
| Total liabilities | | | 271,673 | | | 80,290 | |
| | | | | | | | |
| Minority interest | | | 13,249 | | | 13,962 | |
| | | | | | | | |
| Stockholders' Equity | | | | | | | |
| Common stock | | | 125 | | | 108 | |
| Additional paid-in capital | | | 116,802 | | | 95,672 | |
| Unamortized deferred compensation expense | | | (1,609 | ) | | — | |
| Distributions in excess of earnings | | | (6,880 | ) | | (1,249 | ) |
| Accumulated other comprehensive income | | | 187 | | | — | |
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| |
| Total stockholders' equity | | | 108,625 | | | 94,531 | |
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| Total Liabilities and Stockholders' Equity | | $ | 393,547 | | $ | 188,783 | |
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FELDMAN MALL PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
| | | | Three Months Ended | | | Six Months Ended | |
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| | | | June 30, | | | June 30, | |
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| | | 2005 | | 2004 | | 2005 | | 2004 | |
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| | | (The Company) | | (The Predecessor) | | (The Company) | | (The Predecessor) | |
| Revenue: | | | | | | | | | | | | | |
| Rental | | $ | 6,630 | | $ | 1,482 | | $ | 12,580 | | $ | 3,266 | |
| Tenant reimbursements | | | 3,764 | | | 937 | | | 6,952 | | | 2,163 | |
| Management, leasing and development services | | | 115 | | | 218 | | | 266 | | | 451 | |
| Interest and other income | | | 343 | | | 13 | | | 626 | | | 195 | |
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| Total Revenue | | | 10,852 | | | 2,650 | �� | | 20,424 | | | 6,075 | |
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| Expenses: | | | | | | | | | | | | | |
| Rental property operating and maintenance | | | 3,336 | | | 947 | | | 6,384 | | | 1,860 | |
| Real estate taxes | | | 1,351 | | | 302 | | | 2,516 | | | 642 | |
| Interest | | | 1,928 | | | 1,092 | | | 3,604 | | | 2,175 | |
| Depreciation and amortization | | | 2,625 | | | 401 | | | 4,477 | | | 800 | |
| General and administrative | | | 1,349 | | | 378 | | | 2,718 | | | 797 | |
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| Total Expenses | | | 10,589 | | | 3,120 | | | 19,699 | | | 6,274 | |
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Equity in (loss)/earnings of unconsolidated
real estate partnership | | | (32 | ) | | 165 | | | (76 | ) | | 247 | |
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| Income before minority interest | | | 231 | | | (305 | ) | | 649 | | | 48 | |
| Minority interest | | | 26 | | | (88 | ) | | 74 | | | 96 | |
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| Net Income (Loss) | | $ | 205 | | $ | (217 | ) | $ | 575 | | $ | (48 | ) |
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| Basic and diluted income per share | | $ | 0.02 | | | | | $ | 0.05 | | | | |
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| | | | |
Basic weighted average common
shares outstanding | | | 12,409 | | | | | | 12,268 | | | | |
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| | | | |
Diluted weighted average common shares and
common share equivalents outstanding | | | 14,148 | | | | | | 13,934 | | | | |
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| Funds From Operations (FFO) Calculation: | | | | | | | | | | | | | |
| Net income | | $ | 205 | | | | | $ | 575 | | | | |
| | | | | | | | | | | | | | |
| Add: | | | | | | | | | | | | | |
| Minority interest | | | 26 | | | | | | 74 | | | | |
| Depreciation and amortization | | | 2,625 | | | | | | 4,477 | | | | |
| Joint venture FFO adjustment | | | 148 | | | | | | 312 | | | | |
| | | | | | | | | | | | | | |
| Less: | | | | | | | | | | | | | |
| Depreciation of non-real estate assets | | | (68 | ) | | | | | (102 | ) | | | |
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| FFO, diluted | | $ | 2,936 | | | | | $ | 5,336 | | | | |
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| FFO per share (diluted) | | $ | 0.21 | | | | | $ | 0.38 | | | | |
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| Ownership interests: | | | | | | | | | | | | | |
Weighted average REIT common shares for basic
net income per share | | | 12, 409 | | | | | | 12,268 | | | | |
Weighted average common stock equivalents and
partnership units | | | 1,739 | | | | | | 1,666 | | | | |
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| | | | |
| | | | |
| Weighted average shares and units outstanding | | | 14,148 | | | | | | 13,934 | | | | |
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| (A) – The 2004 results represents the operations of Feldman Equities of Arizona, LLC, the predecessor entity prior to the Company’s December 2004 initial public offering. | |
