In accordance with the mortgage loan agreement in effect as of March 31, 2005 and December 31, 2004, all cash receipts of the Foothills Mall are deposited directly into restricted lockbox accounts. These receipts are then allocated and held in restricted cash accounts in accordance with the cash management agreements, which are part of the loan agreements. The loan is closed to prepayment during a lockout period until the first to occur of (i) three years following commencement of the loan or (ii) two years following the sale of the loan to a bondholder trust. After the end of the lockout period, the loan is open to prepayment by defeasance (providing treasury bonds as substitute collateral for the property) only. Therefore, the Company may not defease the loan until May 2006. Assuming no payments are made on the principal amount of this loan prior to November 1, 2008, the balance to be due at such date will be approximately $54,800.
As of December 31, 2003, $5,533 was included in due to affiliates in the accompanying condensed consolidated balance sheet for advances and related accrued interest due to Feldman Partners, LLC (an entity controlled by Larry Feldman and owned by him and his family), the majority owner of the Predecessor. The advances were made to fund the Predecessor’s investment in the Foothills Mall and to reimburse Feldman Partners, LLC for certain salary and overhead costs. These costs amounted to $131 for the three months ended March 31, 2004. The operating agreement of the Predecessor provided that such advances made by its members shall bear interest at a rate of 15% per annum, were unsecured and were to be repaid before any other distribution to any member. The interest expense on such advances amounted to $197 for the three months ended March 31, 2004. In December 2004, $4,000 of these advances were repaid and the balance was included in the total consideration received in the Formation Transactions.
Since September 2003, the Company provides certain property management, leasing and development services to its unconsolidated real estate partnership for an annual management fee of 3.5% of gross receipts, a construction management fee of 3% on the amount of capital improvements and customary leasing fees for a mall leasing agent, as defined by their agreement. In addition, the Company earns brokerage commission fees as a percentage of contractual rents on new leases and lease renewals. Total fees earned from such partnership aggregated $147 and $67 for the three months ended March 31, 2005 and 2004, respectively. These fees are recorded in management, leasing and development services on the accompanying condensed consolidated statements of operations.
Prior to being employed by the Company, an officer provided professional services to the Company and Predecessor. Fees charged by the officer to the Company for the three months ended March 31, 2004 were $4.
The Company receives rental income from the leasing of retail shopping center space under operating leases. The Company recognizes income from its tenant operating leases on a straight-line basis over the respective lease terms and, accordingly, rental income in a given period will vary from actual contractual rental amounts due as reduced by amortization of capitalized above-market lease values. Amounts included in tenant receivables based on recording lease income on the straight-line basis for the three months ended March 31, 2005 and 2004 were $128, and $120, respectively.
The minimum future base rentals under non-cancelable operating leases as of March 31, 2005 are as follows:
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FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES AND
FELDMAN EQUITIES OF ARIZONA, LLC AND SUBSIDIARIES (“PREDECESSOR”)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (CONTINUED)
March 31, 2005
(Dollar Amounts in Thousands, Except Share and Per Share Data)
5. Rentals Under Operating Leases – (Continued)
Minimum future rentals do not include amounts which are payable by certain tenants based upon certain reimbursable shopping center operating expenses. The tenant base includes national and regional chains and local retailers, and consequently, the Company’s credit risk is concentrated in the retail industry. One tenant (movie theatre), whose lease expires in 2017, accounted for more than 10% of the Company’s rental revenues during the three months ended March 31, 2004. Rental income collected from this tenant aggregated $208 for the three months ended March 31, 2004. For the three months ended March 31, 2005, no tenant exceeded 10% of rental revenues.
6. Due to Affiliates
At December 31, 2004, due to affiliates primarily reflects obligations to make payments to certain owners of the Predecessor in connection with the Formation Transactions. As part of the Formation Transactions, the owners of the Predecessor are entitled to the following:
Messrs. Feldman, Bourg and Jensen have the right to the receipt of funds totaling $7,594 at December 16, 2004 from certain restricted cash accounts, once these accounts are released to the Company. The owners were paid $3,700 of the restricted cash accounts prior to December 31, 2004 and are due $3,894 at March 31, 2005.
Messrs. Feldman, Bourg and Jensen have the right to receive additional OP units for ownership interests contributed as part of the Formation Transactions upon the achievement of a 15% internal rate of return from the Harrisburg joint venture on or prior to December 31, 2009. The right to receive such additional OP units is a financial instrument which is recorded as an obligation of the Company as of the Offering and adjusted to fair value each reporting period until the thresholds have been achieved and the OP Units have been issued. Based on the expected operating performance of the Harrisburg Mall, the fair value is estimated to be $5,122 and $5,047 and is included in due to affiliates at March 31, 2005 and December 31, 2004, respectively. The fair value of this obligation will be assessed by the Company’s management on a quarterly basis. The change in the fair value is included in interest expense in the accompanying condensed consolidated statements of operations.
In December 2004, the Predecessor agreed to make a distribution to its members in the amount of $4,000, which was unpaid and in due to affiliates at December 31, 2004. Such amount was paid in January 2005.
7. Stockholders’ Equity
The Company’s authorized capital stock consists of 250,000,000 shares, $.01 par value, including up to 200,000,000 shares of common stock, $.01 par value per share and up to 50,000,000 shares of preferred stock, $.01 par value per share. As of December 31, 2004, 10,789,895 shares of common stock was issued and outstanding. The Company has not issued any shares of preferred stock as of December 31, 2004. Subsequent to December 31, 2004, the Company issued 1,000 fully-vested shares of its common stock to each of its three independent directors.
In January 2005, the Company sold 1,600,000 shares of our common stock at a gross price of $13.00 per share. The net proceeds from this offering, after underwriting fees, were approximately $19,300.
As of March 31, 2005, 12,392,895 shares of common stock were issued and outstanding.
8. Minority Interest
As of March 31, 2005 minority interest relates to the interests in the Operating Partnership that are not owned by the Company, of approximately 11.4%. In conjunction with the formation of the Company, certain persons and entities contributing ownership interests in the Predecessor to the Operating Partnership received Units. Limited partners who acquired Units in the Formation Transactions have the right, commencing on or after December 16, 2005, to require the Operating Partnership to redeem part or all of their Units for cash, or an equivalent number of shares of the Company’s common stock at the time of the redemption. Alternatively, the Company may elect to acquire those Units in exchange for shares of our common stock on a one-for-one basis subject to adjustment in the event of stock splits, stock dividends, issuance of stock rights, specified extraordinary distributions and similar events.
Until December 15, 2004, the minority interest represented an unaffiliated investors’ interest in the Foothills Mall, which was acquired (see Note 2).
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FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES AND
FELDMAN EQUITIES OF ARIZONA, LLC AND SUBSIDIARIES (“PREDECESSOR”)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (CONTINUED)
March 31, 2005
(Dollar Amounts in Thousands, Except Share and Per Share Data)
8. Minority Interest
In connection with the Formation Transactions, the Operating Partnership issued 1,593,464 OP units to Messrs. Feldman (including members of his family), Bourg, Jensen and Erhart in exchange for approximately 89.4% of their combined interests in the Predecessor.
9. Commitment and Contingencies
In the normal course of business, the Company becomes involved in legal actions relating to the ownership and operations of its properties and the properties it manages for third parties. In management’s opinion, the resolutions of these legal actions are not expected to have a material adverse effect on the Company’s condensed consolidated financial position or results of operations.
In connection with the Company’s acquisition of the Colonie Center Mall, the purchase price is subject to increase up to an additional $9,000 if, prior to June 30, 2005, certain pending leases in negotiation at the time of acquisition are executed. The Company will disburse the additional purchase price once the tenants under such leases take occupancy and commence rental payments.
10. Investment in Unconsolidated Real Estate Partnerships
The Company has a 24% limited partnership interest and a 1% general partnership interest in Feldman Lubert Adler Harrisburg, LP (the “Partnership”). The Partnership purchased a 900,000 square foot regional mall in Harrisburg, Pennsylvania on September 30, 2003. Summarized financial information for this investment, which is accounted for by the equity method, is as follows:
| | | March 31,
2005 | | December 31,
2004 | |
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| Investment in real estate | | $ | 50,720 | | $ | 51,457 | |
| Receivables including deferred rents | | | 1,020 | | | 756 | |
| Other assets | | | 12,480 | | | 15,790 | |
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| Total assets | | $ | 64,220 | | $ | 68,003 | |
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| Loan payable | | $ | 43,060 | | $ | 44,298 | |
| Other liabilities | | | 1,984 | | | 4,352 | |
| Owners’ equity | | | 19,176 | | | 19,353 | |
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| Total liabilities and owners’ equity | | $ | 64,220 | | $ | 68,003 | |
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| The Company’s share of owners’ equity | | $ | 5,106 | | $ | 5,150 | |
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| | | Three Months Ended March 31, | |
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| | | 2005 | | 2004 | |
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| Revenue | | $ | 2,700 | | $ | 2,167 | |
| Operating and other expenses | | | (1,455 | ) | | (1,036 | ) |
| Interest expense (including the amortization of deferred financing costs) | | | (546 | ) | | (266 | ) |
| Depreciation and amortization | | | (876 | ) | | (339 | ) |
| Other | | | — | | | (200 | ) |
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| Net (loss) income | | $ | (177 | ) | $ | 326 | |
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| The Company’s and the Predecessor’s share of net (loss) income | | $ | (44 | ) | $ | 82 | |
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The Harrisburg Mall was purchased with (i) the proceeds of a mortgage loan, secured by the mall property and an assignment of rents and leases, and (ii) cash contributions from the Predecessor and its joint venture partner. The construction loan, as amended in December 2003, permitted the Partnership to draw up to $43,060, and was subsequently amended in October 2004 to increase the lender’s commitment by $3,815 to $46,875. The construction loan initially bore interest at LIBOR plus 3.25% per annum, until a certain anchor tenant occupied its space and began paying rent, at which time the spread became 2.5%. The effective rates on the loan at March 31, 2005 and December 31, 2004 were 5.27% and 5.67%, respectively. The loan is interest-only and matures on December 31, 2005.
Under certain circumstances, the Partnership may extend the maturity of the loan for three, one-year periods. The Partnership may prepay the loan at any time without incurring any prepayment penalty. The loan presently has a limited recourse of $10,000 of which our joint venture partner is liable for $6,300 or 63%, and the Company is liable for $3,700 or 37%.
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FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES AND
FELDMAN EQUITIES OF ARIZONA, LLC AND SUBSIDIARIES (“PREDECESSOR”)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (CONTINUED)
March 31, 2005
(Dollar Amounts in Thousands, Except Share and Per Share Data)
10. Investment in Unconsolidated Real Estate Partnerships – (Continued)
The balance outstanding under the loan was $43,060 and $44,298, as of March 31, 2005 and December 31, 2004, and the Partnership intends to continue to draw down the loan and use cash flow from property operations to fund its capital expenditure commitments, which were $1,058 at March 31, 2005. The loan has certain restrictions that prohibit cash distributions to the joint venture partners until the property’s operating cash flow funds a minimum of $5,800 of capital expenditures.
On July 19, 2004, the Predecessor entered into an agreement with its joint venture partner providing the Company with the option to purchase all of the partnership interests of its joint venture partner, at any time within one year, for an amount of $27,600 in cash. Currently, the Company does not anticipate exercising such option.
The joint venture agreement includes a “buy-sell” provision allowing either joint venture partner to acquire the interests of the other beginning on September 30, 2005. Either partner to the joint venture may initiate a “buy-sell” proceeding, which may enable it to acquire the interests of the other partner. However, the partner receiving an offer to be bought out will have the right to buy out such offering partner at the same price offered. The joint venture agreement does not limit the Company’s ability to enter into real estate ventures or co-investments with other third parties. However, the agreement restricts the Company’s ability to enter into transactions relating to the joint venture with the Company’s affiliates without the prior approval of this joint venture partner.
11. Fair Value of Financial Instruments
As of March 31, 2005 and December 31, 2004, the fair values of the Company’s mortgage and other loans payable, are approximately the carrying values as the terms are similar to those currently available to the Company for debt with similar risk and the same remaining maturities. The carrying amounts for cash and cash equivalents, restricted cash, rents and other receivables, due to affiliates, and accounts payable and other liabilities, approximate fair value because of the short-term nature of these instruments.
12. Financial Instruments: Derivatives and Hedging
The following summarizes the notional and fair value of our derivative financial instrument at March 31, 2005. The notional value is an indication of the extent of our involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks:
| | | Notional
Value | | Strike
Rate | | Effective
Date | | Expiration
Date | | Fair
Value | |
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| Interest Rate Swap | | $ | 75,000 | | | 3.75% | | | 2/2005 | | | 1/2008 | | $ | 928 | |
On March 31, 2005, the derivative instrument was reported as a net asset at a fair value of approximately $928. Over time, the realized and unrealized gains and losses held in Accumulated Other Comprehensive income will be reclassified into earnings as interest expense in the same periods in which the hedged interest payments affect earnings.
We are hedging exposure to variability in anticipated future interest payments on existing variable rate debt.
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FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES AND
FELDMAN EQUITIES OF ARIZONA, LLC AND SUBSIDIARIES (“PREDECESSOR”)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (CONTINUED)
March 31, 2005
(Dollar Amounts in Thousands, Except Share and Per Share Data)
13. Subsequent Events
| | Tallahassee Mall |
| | Tallahassee, Florida |
On May 5, 2005 the Company announced the signing of a purchase contract to acquire the Tallahassee Mall, a 963,000 square foot mall located in Tallahassee, the state capital of Florida. The purchase contract is subject to the completion of customary real estate contractual requirements. In addition, the purchase contract is subject to the approval of the assumption of the existing mortgage loan by the Company. The purchase price of $61,500 includes the assumption of the existing mortgage loan of approximately $45,300 plus cash in the amount of approximately $16,200. The property is subject to a long term ground lease that expires in the year 2063 (assuming the exercise of an extension option). The ground lease does not contain a purchase option.
On May 2, 2005, the Company announced the signing of a purchase contract to acquire Northgate Mall, a 1.1 million square foot mall located in the northwest suburbs of Cincinnati, Ohio. The purchase contract is subject to the completion of customary real estate contractual requirements and is also subject to the lender's consent of the Company’s assumption of an existing mortgage loan. The purchase price of $110,000 includes the assumption of the existing mortgage loan in the approximate amount of $79,600 plus cash in the amount of approximately $30,400. The first mortgage being assumed by the Company bears interest at a fixed rate of 6.60% and has a November 2012, maturity date.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a fully-integrated, self-administered and self-managed real estate company formed in July 2004 to continue the business of our predecessor to acquire, renovate and reposition shopping malls. Our investment strategy is to opportunistically acquire underperforming or distressed malls and transform them into physically attractive and profitable Class A or near Class A malls through comprehensive renovation and repositioning efforts aimed at increasing shopper traffic and tenant sales. Through these renovation and repositioning efforts, we expect to raise occupancy levels, rental income and property cash flow.
We derive revenues primarily from rent and reimbursement payments received by our operating partnership from tenants under existing leases at each of our properties. Our operating results, therefore, will depend materially on the ability of our tenants to make required payments and overall real estate market conditions.
On December 16, 2004, we completed our formation transactions and initial public offering and sold 10,666,667 shares of our common stock and contributed the net proceeds to our operating partnership. Subsequently, on January 11, 2005, we sold an additional 1,600,000 shares of our common stock to underwriters upon their full exercise of their over-allotment option.
Prior to the completion of the offering and formation transactions, our business was conducted by our predecessor, Feldman Equities of Arizona LLC, and its subsidiaries and affiliates. The condensed consolidated financial statements for the three months ended March 31, 2005 represent the results of our company and the condensed consolidated financial statements for the three months ended March 31, 2004 represent the results of our predecessor. Our predecessor was engaged in comprehensive mall renovation and repositioning projects. These projects included the Foothills Mall, which was acquired through a joint venture by our predecessor in April 2002, and the Harrisburg Mall, which was acquired through a joint venture by our predecessor in September 2003. Through December 15, 2004, our predecessor consolidated the financial results of the Foothills Mall and accounted for its investment in the Harrisburg Mall using the equity method of accounting.
A discussion of the results of operations of our predecessor and our company is set forth below. Upon completion of our initial public offering and the formation transactions, we have substantially enhanced our financial flexibility and access to capital compared to our predecessor, which should play an important role in allowing our company to implement our growth and business plan over time. For the following reasons, the results of operations of our predecessor and our company may not be indicative of the results of our future operations:
| • | Since our predecessor acquired its interests in the Foothills Mall in 2002 and in the Harrisburg Mall in 2003, these malls have undergone dramatic changes in architectural design and appearance, layout, square footage and tenant composition. We estimate that the redevelopment costs (excluding the costs of acquisition) for the renovation and repositioning of the Harrisburg Mall and Foothills Mall will total approximately $56.3 million and $11.0 million, respectively. These changes have already improved the performance of these properties. In the case of the Harrisburg Mall, leased square footage has grown from approximately 429,000 at acquisition to 798,000 as of December 31, 2004. In the case of the Foothills Mall, leased square footage as a percentage of total rentable area was maintained at approximately 90% throughout the renovation process which added approximately 27,000 square feet of rentable area. |
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| • | On December 30, 2004, we acquired the Stratford Square Mall located in Bloomingdale, Illinois for a base purchase price of $93.1 million. Located in rapidly growing and affluent DuPage County, a northwestern suburb of Chicago, the 1.3 million square foot mall has an overall occupancy of 90.4% with shop tenant occupancy of 69% (excluding temporary and anchor tenants). Including temporary tenants, the shop occupancy as of December 31, 2004 was 88%. Including anchor and temporary tenants, the mall’s overall occupancy was 96% at December 31, 2004. The mall boasts 6 non-owned anchor tenants including Kohl’s, Sears, Carson Pirie Scott (a unit of the Saks Department Store Group), Marshall Fields, JCPenney and Burlington Coat Factory. |
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| • | In January 2005, we completed a $75 million, 3-year first mortgage financing collateralized by the Stratford Square Mall. The mortgage bears interest at a rate of LIBOR plus 125 basis points and has two one-year extensions. The initial loan to cost is approximately 80%; however, once the intended capital improvements of approximately $20 million are complete, the total leverage is expected to decrease to approximately 65% of total anticipated cost. In connection with the Stratford Square Mall financing, during January 2005, the Company entered into a $75 million swap commencing February 2005 with an all-in-rate of 5% with a final maturity date in January 2008. The effect of the swap is to fix the interest rate on the Stratford Square Mall mortgage loan. |
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| • | In September 2004, we entered into a binding agreement to acquire the Colonie Center Mall, located in Albany, New York, for an initial purchase price of $82.2 million. The initial purchase price is subject to increase by up to an additional $9 million if certain pending leases in negotiation are executed as of June 30, 2005, and tenants under such leases, subsequently, take occupancy and commence rental payments. We acquired Colonie Center on February 1, 2005 and funded the purchase price of this acquisition using the net proceeds from a property-level financing of the Stratford Square Mall. We intend to commence the renovation and repositioning project for Colonie Center during 2005. We estimate that the total additional investment required to renovate and reposition this property, including tenant improvements and leasing commissions, will be approximately $22.0 million. |
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Critical Accounting Policies
A summary of the accounting policies that management believes are critical to the preparation of the condensed consolidated financial statements are set forth below. Certain of the accounting policies used in the preparation of these condensed consolidated financial statements are particularly important for an understanding of the financial position and results of operations presented in the condensed consolidated financial statements included in this quarterly report on Form 10-Q. These policies require the application of judgment and assumptions by management and, as a result, are subject to a degree of uncertainty. Actual results could differ from these estimates.
Rental revenues from rental retail property are recognized on a straight-line basis over the non-cancelable terms of the related leases. Deferred rent represents the aggregate excess of rental revenue recognized on a straight-line basis over cash received under applicable lease provisions. Rental revenue, which is based upon a percentage of the sales recorded by tenants, is recognized in the period such sales are earned by the respective tenants.
Reimbursements from tenants, computed as a formula related to real estate taxes, insurance and other shopping center operating expenses, are recognized as revenues in the period the applicable costs are incurred. Lease termination fees, which are included in interest and other income in the accompanying consolidated statements of operations, are recognized when the related leases are cancelled, the tenant surrenders the space, and we have no continuing obligation to provide services to such former tenants.
Additional revenue is derived from the provision of management services to third parties, including property management, brokerage, leasing and development. Management fees generally are a percentage of managed property cash receipts. Leasing and brokerage fees are earned upon the consummation of new leases. Development fees are earned over the time period of the development activity.
We must also make estimates related to the collectibility of our accounts receivable related to minimum rent, deferred rent, tenant reimbursements, lease termination fees, management and development fees and other income. We analyze accounts receivable and historical bad debts, tenant concentrations, tenant credit worthiness, and current economic trends when evaluating the adequacy of the allowance for doubtful accounts receivable. These estimates have a direct impact on net income, because a higher bad debt allowance would result in lower net income.
| | Principles of Consolidation and Equity Method of Accounting |
The accompanying condensed consolidated financial statements include all of the accounts of our company, our operating partnership and the wholly-owned subsidiaries of our operating partnership by our predecessor. Property interests contributed to our operating partnership in the formation transactions in exchange for OP units have been accounted for as a reorganization of entities under common control. Accordingly, the contributed assets and assumed liabilities were recorded at our predecessor’s historical cost basis. Prior to the formation transactions, our company and our operating partnership had no significant operations; therefore, the combined operations for the period prior to December 15, 2004, represent primarily the operations of our predecessor. The combination did not require any material adjustments to conform the accounting principles of the separate entities. The remaining interests, which were acquired for cash, have been accounted for as a purchase, and the excess of the purchase price over the related historical cost basis has been allocated to the assets acquired and the liabilities assumed.
Our company evaluates its investments in partially owned entities in accordance with FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, or FIN 46R. If the partially owned entity is a “variable interest entity,” or a “VIE,” and our company is the “primary beneficiary,” as defined in FIN 46R, we account for such investment as if it were a consolidated subsidiary.
For a joint venture investment, which is not a VIE or in which our company is not the primary beneficiary, we follow the accounting set forth in AICPA Statement of Position No. 78-9 – Accounting for Investments in Real Estate Ventures (“SOP 78-9”). In accordance with this pronouncement, investments in joint ventures are accounted for under the equity method when our ownership interest is less than 50% and we do not exercise direct or indirect control. Factors that we will consider in determining whether or not we exercise control include important rights of partners in significant business decisions, including dispositions and acquisitions of assets, financing and operating and capital budgets, board and management representation and authority and other contractual rights of our partners. To the extent that we are deemed to control these entities, these entities are consolidated.
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We have determined that the Foothills Mall and the Harrisburg Mall joint ventures are not VIEs. Our predecessor consolidated the joint venture owning the Foothills Mall as it is the majority owner that exercises control over all significant decisions. Our predecessor accounted and we account for our investments in the joint venture that owns the Harrisburg Mall under the equity method of accounting in view of the important rights (as defined in SOP 78-9) held by the other joint venture partners. This investment is recorded initially at cost and subsequently adjusted for equity in earnings or losses and cash contributions and distributions. We would expect the operations of the Harrisburg Mall to become consolidated with our company if we exercise the option we hold to acquire the remaining interests in the joint venture that owns this property.
On a periodic basis, we assess whether there are any indicators that the value of an investment in unconsolidated joint ventures may be impaired. An investment’s value is impaired if management’s estimate of the fair value of the investment is less than the carrying value of the investment. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the estimated fair value of the investment.
| | Investments in Real Estate and Real Estate Entities |
Real estate is stated at historical cost, less accumulated depreciation. Improvements and replacements are capitalized when they extend the useful life or improve the efficiency of the asset. Repairs and maintenance are charged to expense as incurred.
The building and improvements thereon are depreciated on the straight-line basis over an estimated useful life of 39 years. Tenant improvements are depreciated on the straight-line basis over the shorter of the lease term or their estimated useful life. Equipment is being depreciated on an accelerated basis over the estimated useful lives of five to seven years.
It is our policy to capitalize interest and real estate taxes related to properties under redevelopment and to depreciate these costs over the life of the related assets.
In accordance with SFAS No. 144, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, investment properties are reviewed for impairment on a property-by-property basis at least annually or whenever events or changes in circumstances indicate that the carrying value of investment properties may not be recoverable. Impairment losses for investment properties are recorded when the undiscounted cash flows estimated to be generated by the investment properties during the expected hold period are less than the carrying amounts of those assets. Impairment losses are measured as the difference between the carrying value and the fair value of the asset. We are required to assess whether there are impairments in the values of our investments in real estate, including indirect investments in real estate through entities which we do not control and are accounted for using the equity method of accounting.
In connection with the formation transactions, we acquired our predecessor in exchange for the issuance of units in our operating partnership and shares of our common stock. This exchange has been accounted for as a reorganization of entities under common control; accordingly, we recorded the contributed assets and liabilities at our predecessor’s historical cost.
| | Purchase Price Allocation |
We allocate the purchase price of properties to tangible and identified intangible assets acquired based on their fair values in accordance with the provisions of SFAS No. 141, Business Combinations. In making estimates of fair values for the purpose of allocating purchase price, management utilized a number of sources. We also consider information about each property obtained as a result of our pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of tangible and intangible assets acquired.
We allocate a portion of the purchase price to tangible assets including the fair value of the building on an as-if vacant basis, and to land determined either by real estate tax assessments, third party appraisals or other relevant data.
A portion of the purchase price is allocated to above-market and below-market in-place lease values for acquired properties based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The capitalized above-market and below-market lease values are amortized as a reduction of or an addition to rental income over the remaining non-cancelable terms of the respective leases. Should a tenant terminate its lease, the unamortized portion of the lease intangibles would be charged or credited to income.
A portion of the purchase price is also allocated to the value of leases acquired, and management utilizes independent sources or management’s determination of the relative fair values of the respective in-place lease values. Our estimates of value are made using methods similar to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods, considering current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rental revenue during the expected lease-up periods based on current market demand. We also estimate costs to execute similar leases including leasing commissions, legal expenses and other related costs.
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Depreciation
The U.S. federal tax basis for the Foothills and Harrisburg malls, used to determine depreciation for U.S. federal income tax purposes, is the carryover basis for such malls. The tax basis for the Stratford Square Mall and Colonie Center Mall is our acquisition cost. For U.S. federal income tax purposes, depreciation with respect to the real property components of our malls (other than land) generally will be computed using the straight-line method over a useful life of 39 years.
Results of Operations
The discussion below relates to the results of operations of our company and our predecessor which, throughout the periods discussed below, was engaged in comprehensive mall renovation and repositioning projects, including the Foothills Mall, which was acquired through a joint venture by our predecessor in 2002 and the Harrisburg Mall, which was acquired through a joint venture by our predecessor in 2003. Subsequent to our initial public offering, our Company acquired the Stratford Square Mall (December 2004) and Colonie Center Mall (February 2005), collectively the “Acquisition Properties” which are included in our consolidated results for the three months ended March 31, 2005 and not included in our results for the three months ended March 31, 2004.
The results of operations for the three months ended March 31, 2005 and 2004 are the results of our company and our predecessor, respectively.
| | Comparison of the Three Months Ended March 31, 2005 to the Three Months Ended March 31, 2004 |
Rental revenues increased approximately $4.2 million, or 233%, to $6.0 million for the three months ended March 31, 2005 compared to $1.8 million for the three months ended March 31, 2004. The increase was primarily due to a $4.1 million increase from the Acquisition Properties and $0.1 million increase at the Foothills Mall primarily due to increased mall occupancy.
Revenues from tenant reimbursements increased $2.0 million, or 160%, to $3.2 million for the three months ended March 31, 2005 compared to $1.2 million for the three months ended March 31, 2004. The increase was primarily due to a $2.1 million increase from the Acquisition Properties and a $0.1 million decrease at the Foothills Mall due to lower real estate tax reimbursements.
Revenues from management, leasing and development services decreased $82,000, or 35.2%, to $151,000 for the three months ended March 31, 2005 compared to $233,000 for the three months ended March 31, 2004. The decrease was primarily due to the lower construction management fee revenues related to completion of construction at the Harrisburg Mall.
Interest and other income increased $101,000, or 55.5%, to $283,000 for the three months ended March 31, 2005 compared to $182,000 for the three months ended March 31, 2004. The increase was primarily due to $172,000 of interest income received in 2005 from cash on hand partially offset by a lease termination payment of $125,000 received in 2004.
Rental property operating and maintenance expenses increased $2.1 million, or 234%, to $3.0 million for the three months ended March 31, 2005 compared to $913,000 for the three months ended March 31, 2004. The increase was due to a $2.2 million increase from the Acquisition Properties partially offset by a $0.1 million decrease in expenses at the Foothills Mall.
Interest expense increased $566,000, or 52.3%, to $1.6 million for the three months ended March 31, 2005 compared to $1.1 million for the three months ended March 31, 2004. The increase was primarily due to $800,000 of interest associated with the mortgage on Stratford Square Mall and a $75,000 increase related to the Harrisburg earn-out accretion partially offset by the decrease in interest of $165,000 associated with the payoff of the mezzanine loan in December 2004 in connection with the Company’s initial public offering and a $197,000 decrease related to the 2004 payoff of the loan due to Larry Feldman.
Depreciation and amortization expense increased $1.5 million, or 371%, to $1.7 million for the three months ended March 31, 2005 compared to $399,000 for the three months ended March 31, 2004. The increase is primarily due to a $1.2 million increase in depreciation from the Acquisition Properties and a $0.3 million increase at the Foothills Mall due to the depreciation expense associated with the 2004 renovation improvements being placed into service.
General and administrative expenses increased $950,000, or 227%, to $1.4 million for the three months ended March 31, 2005 compared to $419,000 for the three months ended March 31, 2004. The increase was primarily due to (i) costs associated with increased overhead for both our company and predecessor related to a new office in Great Neck, New York and office expansion in Phoenix, Arizona, (ii) increase in personnel costs, and (iii) additional costs associated with being a publicly-traded REIT.
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Equity in (loss)/earnings of unconsolidated real estate partnership represents our share of the equity in the earnings of the joint venture owning the Harrisburg Mall. The equity in loss of unconsolidated real estate partnership totaled ($44,000) for the three months ended March 31, 2005 as compared to $82,000 of income for the three months ended March 31, 2004. The 2005 loss at the Harrisburg Mall is primarily due to increased depreciation resulting from the 2004 capital renovations and increased interest expenses due to increased loan balance.
Minority interest for the three months ended March 31, 2005 represents the unitholders in our operating partnership which represents 11.4% our company’s income. The minority interest of our predecessor for the three months ended March 31, 2004 represents a 33.3% ownership interest in the Foothills Mall.
Cash Flows
| | Comparison of the three months ended March 31, 2005 to the three months ended March 31, 2004 |
Cash and cash equivalents were $19.0 million and $2.7 million, respectively, at March 31, 2005 and March 31, 2004. The increase to cash is due to the following:
Cash from operating activities totaled $1.5 million for the three months ended March 31, 2005, as compared to $(106,000) for the three months ended March 31, 2004. The increase was due to higher net income despite higher depreciation expense, and changes in operating assets and liabilities, primarily increased accrued liabilities.
Net cash used in investing activities for the three months ended March 31, 2005 increased to $85.2 million and was primarily the result of (i) cash required for the acquisition of the Colonie Center Mall totaling $84.4 million, (ii) $596,000 paid for the renovation of the Foothills Mall, and (iii) an increase in restricted capital escrow accounts. This compares to $1.1 million of renovation cost during the three months ended March 31, 2004.
Net cash provided by financing activities totaled $87.1 million and reflect (i) net proceeds from the issuance of 1.6 million shares of common stock totaling $20.8 million, (ii) $75.0 million proceeds from our mortgage on Stratford Square Mall. The increases were partially off-set by a $4.0 million payment to affiliates and $895,000 paid for deferred financing costs.
Liquidity and Capital Resources
As of March 31, 2005, we had approximately $19.0 million in cash on hand, and also expect to be able to access additional funds through secured borrowings on the Colonie Center Mall, which we acquired in an all-cash transaction in February 2005. We also expect to substantially enhance our financial flexibility and access to capital compared to our predecessor, which should play an important role in allowing our company to implement its growth and business plan over time. This additional capital will allow us to acquire additional assets and complete significant redevelopment projects on our recently acquired assets. At March 31, 2005, our total consolidated indebtedness outstanding approximately $129.8 million, or 45.9% of our total assets.
We intend to maintain a flexible financing position by maintaining a prudent level of leverage consistent with the level of debt typical in the mall industry. We intend to finance our acquisition, renovation and repositioning projects with the most advantageous source of capital available to us at the time of the transaction including traditional floating rate construction financing. We expect that once we have completed our renovation and repositioning of a specific mall asset, we will replace construction financing with medium to long-term fixed rate financing.
| | Short Term Liquidity Requirements |
Our short term liquidity needs include funds to pay dividends to our stockholders required to maintain our REIT status, distributions to unitholders in our operating partnership funds for capital expenditures and, potentially, acquisitions. We expect to meet our short-term liquidity requirements generally through net cash provided by operations and our existing cash. Our properties require periodic investments of capital for tenant-related capital expenditures and for general capital improvements. As of March 31, 2005, we had commitments to make tenant improvements and other capital expenditures at our properties in the amount of approximately $1.0 million to be incurred during 2005, which we intend to fund from existing cash and cash from operating activities. We expect the cost of recurring capital improvements and tenant improvements for our properties to be approximately $2.1 million for the remainder of 2005. We believe that our net cash provided by operations and our available cash and restricted cash will be adequate to fund operating requirements, pay interest on our borrowings and fund distributions in accordance with the REIT requirements of the federal income tax laws.
In addition, as of March 31, 2005, the joint venture owning the Harrisburg Mall had commitments to make tenant improvements and other capital expenditures in the amount of $1.1 million to be incurred in 2005. The joint venture intends to fund these commitments from operating cash flow and available proceeds of the construction loan with Commerce Bank (approximately $2.6 million, as described under “–Harrisburg Mall Loan”) and approved state and local government grants and other economic incentives (approximately $8 million of which $1.0 million was received in 2004). Loan advances under the construction loan with Commerce Bank, however, are reduced by the amount of the Harrisburg Mall joint venture’s net cash flow after operating expenses and debt service. Accordingly, the Harrisburg Mall joint venture will not have cash from operations to distribute to the joint venture partners during the period that it is taking advances under this loan because any net cash flow will be used in lieu of the advances. The construction loan with Commerce Bank matures on December 31, 2005, and we expect that the construction project at the Harrisburg Mall will be completed by the fourth quarter of 2005. This loan can be repaid in whole or in part at any time without penalty and may be extended for up to three additional one-year periods. Our net cash provided by operations may, during the term of this loan, be reduced by the limitation on our joint venture’s ability to pay distributions to us and our operating partnership. We do not expect that this limitation will have a material impact on our ability to meet our short term liquidity requirements because, once the construction is completed, we expect the joint venture that owns the Harrisburg Mall to refinance this construction loan with alternative mortgage financing.
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| | Long Term Liquidity Requirements |
Our long-term liquidity requirements consist primarily of funds necessary for acquisition, renovation and repositioning of new properties, non-recurring capital expenditures and payment of indebtedness at maturity. The Company expects to complete a financing of the Colonie Center Mall during 2005. We funded the acquisition of the Colonie Center Mall and related renovation costs out of existing cash and the first mortgage loan placed on the Stratford Square Mall in January 2005. We expect to meet our other long-term liquidity requirements through net cash from operations, existing cash, additional long-term secured and unsecured borrowings and the issuance of additional equity or debt securities.
We believe that the equity value on the Colonie Center Mall could be used to support a first mortgage. In the future, we may seek to increase the amount of our mortgages, negotiate credit facilities or issue corporate debt instruments. Any debt incurred or issued by us may be secured or unsecured, long-term or short-term, fixed or variable interest rate and may be subject to such other terms as we deem prudent.
While our charter does not limit the amount of debt we can incur, we intend to maintain a flexible financing position by maintaining a prudent level of leverage consistent with the level of debt typical in the mall industry. We will consider a number of factors in evaluating our actual level of indebtedness, both fixed and variable rate, and in making financial decisions. We intend to finance our acquisition, renovation and repositioning projects with the most advantageous source of capital available to us at the time of the transaction, including traditional floating rate construction financing. We expect that once we have completed our renovation and repositioning of a specific mall asset we will replace construction financing with medium to long-term fixed rate financing. In addition, we may also finance our activities through any combination of sales of common or preferred shares or debt securities, additional secured or unsecured borrowings and our proposed line of credit.
In addition, we may also finance our acquisition, renovation and repositioning projects through joint ventures with institutional investors. Through these joint ventures, we will seek to enhance our returns by supplementing the cash flow we receive from our properties with additional management, leasing, development and incentive fees from the joint ventures. We may also acquire properties in exchange for units in our operating partnership.
In connection with our company’s aquisition of the Colonie Center Mall, the purchase price is subject to increase up to an additional $9.0 million if, prior to June 30, 2005, certain pending leases in negotiation at the time of acquisition are executed. Our company will disburse the additional purchase price once the tenants under such leases take occupancy and commence rental payments.
We announced two separate agreements to acquire two malls for an aggregate purchase price of $171.5 million and are subject to customary real estate contractual closing requirements. We have made $8.0 million in cash deposits. Subject to approval, our company will assume $124.9 million in first mortgage loans and expect to fund the balance of the purchase prices totaling $38.6 million with cash on hand and net proceeds from the Colonie Center Mall loan financing.
We are currently in preliminary discussions with a number of potential sellers of mall properties. We currently have no agreement to invest in any property other than the properties we currently own and have announced to acquire. There can be no assurance that we will make any investments in any other properties that meet our investment criteria.
The joint venture that owns the Harrisburg Mall entered into a construction loan with Commerce Bank with a maximum funding commitment of $46.9 million, as amended in October 2004, of which the joint venture has borrowed $43.1 million as of March 31, 2005. The loan currently bears interest at a rate of LIBOR plus 250 basis points (5.67% at March 31, 2005). Interest on the outstanding principal balance of this loan is payable on the first day of each month. No payments of principal are required on this loan until December 31, 2005, at which time the entire principal balance together with any accrued interest thereon will be due. This loan can be repaid in whole or in part at any time without penalty and may be extended for up to three additional one year periods. This loan presently has a limited recourse of $10 million, of which affiliates of the Lubert Adler Funds are liable for $6.3 million, or 63%, and Larry Feldman is liable for $3.7 million, or 37%. In March 2005, we assumed Larry Feldman’s recourse liabilities under this loan. In addition, pursuant to the terms of this loan, at any time the joint venture is entitled to receive a loan advance, the lender shall reduce the amount of such advance by the amount of the joint venture’s net cash flow after operating expenses and debt service.
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Stratford Square Mall Loan
In January 2005, we completed a $75 million, 3-year first mortgage financing collateralized by the Stratford Square Mall. The mortgage bears interest at a rate of LIBOR plus 125 basis points and has two one-year extensions. The initial loan to cost is approximately 80%; however, once the intended capital improvements of approximately $20 million are complete, the total leverage is expected to decrease to approximately 65% of total anticipated cost.
We anticipate refinancing the construction loan prior to the loan’s expiration on December 31, 2005.
Capital Expenditures
We are required to maintain each retail property in good repair and condition and in conformity with applicable laws and regulations and in accordance with the tenant’s standards and the agreed upon requirements in our lease agreements. The cost of all such routine maintenance, repairs and alterations may be paid out of a capital expenditures reserve, which will be funded by cash flow. Routine repairs and maintenance will be administered by our subsidiary management company.
| | Off-Balance Sheet Arrangements |
See loan guarantees described on “Harrisburg Mall Loan” above.
In connection with the Stratford Square Mall mortgage financing, during January 2005, we entered into a $75 million swap commencing February 2005 with a final maturity date in January 2008. The effect of the swap is to fix the all-in interest rate of the Stratford Square mortgage loan at 5.0% per annum.
In connection with the formation transactions, we entered into agreements with Messrs. Feldman, Bourg and Jensen that indemnify them with respect to certain tax liabilities intended to be deferred in the Formation Transactions, if those liabilities are triggered either as a result of a taxable disposition of a property by our company, or if our company fails to offer the opportunity for the contributors to guarantee or otherwise bear the risk of loss, with respect to certain amounts of our company’s debt for tax purposes (the “contributor-guaranteed debt”). With respect to tax liabilities arising out of property sales, the indemnity will cover 100% of any such liability until December 31, 2009, and will be reduced by 20% of the aggregate liability on each of the five following year ends thereafter.
We also agreed to maintain approximately $10 million of indebtedness, and to offer the contributors the option to guarantee $10 million of our operating partnership’s indebtedness, in order to enable them to continue to defer certain tax liabilities. Our obligation to maintain such indebtedness extends to 2013, but will be extended by an additional five years for any contributor that holds (together with his affiliates) at that time at least 25% of the initial ownership interest in our operating partnership issued to them in the Formation Transactions.
Our predecessor acquired an ownership interest in the Harrisburg Mall through a joint venture with affiliates of the Lubert Adler Funds in 2003. Our company has been granted an option, exercisable at any time prior to July 19, 2005, to purchase the remaining interest held by our joint venture partner for an aggregate of $27.6 million in cash. Currently, our company does not anticipate exercising such option.
Mortgage Recording Tax–Hypothecated Loan
The Company has a mortgage tax credit loan totaled approximately $50.8 million at March 31, 2005. The loan is collateralized by the mortgage encumbering the Company’s ownership interest in the Colonie Center Mall. The loan is also collateralized by an equivalent amount of the Company’s cash which was held by the lender and invested in overnight money market funds and US Treasury securities. Interest earned on the cash collateral was applied by the lender to service the loan with the lender. The Operating Partnership and lender each have the right of offset and therefore the loans and the cash collateral were presented on a net basis in the consolidated balance sheet at March 31, 2005.
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The purpose of the loan is to temporarily preserve mortgage recording tax credits for the future mortgage financing of the Colonie Center Mall which the company intends to finance during 2005 for which these credits would be applicable. At the same time, the underlying mortgage remains a bona-fide debt to the lender.
Funds From Operations
The revised White Paper on Funds From Operations, or FFO, approved by the Board of Governors of NAREIT in October 1999 defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring and sales of properties, plus real-estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We believe that FFO is helpful to investors as a measure of the performance of an equity REIT because, along with cash flow from operating activities, financing activities and investing activities, it provides investors with an indication of our ability to incur and service debt, to make capital expenditures and to fund other cash needs. We compute FFO in accordance with the current standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than us. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of our financial performance or to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.
FFO for the three months ended March 31, 2005 is as follows (in thousands):
| Net Income | | $ | 370 | |
| Add: | | | | |
| Depreciation and amortization | | | 1,878 | |
| Minority interest | | | 48 | |
| FFO contribution from unconsolidated joint venture | | | 164 | |
| Less: | | | | |
| Depreciation of non-real estate assets | | | (34 | ) |
| |
|
| |
| FFO available to common stockholders and OP Unit holders | | $ | 2,426 | |
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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Our future income, cash flows and fair values relevant to financial instruments depend upon interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates.
Market Risk Related to Fixed Rate Debt
We had approximately $129.8 million of outstanding indebtedness as of March 31, 2005, all of which matures during 2008 and bears interest at fixed rates ranging from 5.00% to 5.09%. Upon the maturity of our debt, there is a market rate risk as to the prevailing rates at the time of refinancing. Changes in market rates on our fixed-rate debt affects the fair market value of our debt but it has no impact on interest expense incurred or cash flow. A 100 basis point increase or decrease in interest rates on our fixed rate debt would increase or decrease our annual interest expense by approximately $1.3 million, as the case may be.
We currently have a $75 million swap contract and a 100 basis point increase in interest rates would increase the fair value of our swap by approximately $2.1 million and a 100 basis point decrease in interest rates would decrease the fair value of our swap by approximately $1.4 million.
Inflation
Most of our leases contain provisions designed to mitigate the adverse impact of inflation by requiring the tenant to pay its share of operating expenses, including common area maintenance, real estate taxes and insurance. The leases also include clauses enabling us to receive percentage rents based on gross sales of tenants, which generally increase as prices rise. This reduces our exposure to increases in costs and operating expenses resulting from inflation.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” (as defined in Rules 13a – 15(c) and 15d – 15(e) under the Exchange Act). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, we have investments in certain unconsolidated entities. As we do not control these entities, our disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those we maintain with respect to our consolidated subsidiaries.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There were no changes in our company’s internal controls over financial reporting (as such term is defined in Rule 13a – 15(f) and 15d – 15(f) under the Exchange Act) identified in connection with the evaluation of such internal controls that occurred during the quarter ended March 31, 2005 that have materially affected, or are reasonably likely to materially affect, our company’s internal controls over financial reports.
| ITEM 1. | LEGAL PROCEEDINGS |
| | None |
| | |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
| | |
On January 15, 2005, Friedman, Billings, Ramsey & Co., Inc., RBC Capital Markets Corporation and BB&T Capital Markets, a division of Scott & Stringfellow, Inc., the underwriters to our company’s initial public offering, exercised their over-allotment option in full to purchase an additional 1,600,000 shares of our common stock at $13.00 per share, resulting in additional gross proceeds to us of approximately $20.8 million and net proceeds of approximately $19.3 million.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
| | None |
| | |
| ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
| | None |
| | |
| ITEM 5. | OTHER INFORMATION |
| | None |
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| | | | |
| | 31.1 | Certification by the Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 202 filed herewith | |
| | | | |
| | 31.2 | Certification by the Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 202 filed herewith. | |
| | | | |
| | 32.1 | Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 202 filed herewith | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | FELDMAN MALL PROPERTIES |
| | | |
| | | |
| | By: | /s/ Thomas Wirth |
| | |
|
| | | Executive Vice President and Chief Financial Officer |
Date: May 13, 2005
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF