[FELDMAN MALL
PROPERTIES, INC.
LOGO]
CONTACT: FELDMAN MALL PROPERTIES, INC.
Larry Feldman - Chairman & CEO
-or-
Thomas E. Wirth-EVP, Chief Financial Officer
(516) 684-1239
1010 Northern Blvd, Suite 314
Great Neck, NY 11021
FINANCIAL RELATIONS BOARD
Scott Eckstein
(212) 827-3766
seckstein@frbir.com
FELDMAN MALL PROPERTIES, INC. REPORTS THIRD QUARTER 2006 FINANCIAL RESULTS
***
Conference Call to Discuss Results Will Be Held at 2:00 PM EST,
Tuesday, November 7, 2006
Dial in: (800) 218-4007 or visit www.feldmanmall.com
GREAT NECK, N.Y.--NOVEMBER 7, 2006
RELEASE HIGHLIGHTS
o 3rd Quarter FFO was $0.21 per diluted share as compared to $0.25 per
diluted share in 3rd Quarter 2005
o Completed Colonie Center Mall joint venture agreement with Heitman
o Refinanced Colonie Center Mall with a $109.8 million construction loan
o Extended a 144,000 square foot JCPenney anchor lease at the Stratford
Square Mall through 2016
o Executed 15,000 square foot lease with SEGA Entertainment at the
Foothills Mall
FINANCIAL RESULTS
Feldman Mall Properties, Inc. (NYSE:FMP) today reported Funds From Operations
("FFO") totaling $3.0 million, or $0.21 per diluted share, for the third quarter
ended September 30, 2006 as compared to $3.5 million, or $0.25 per diluted
share, for the three months ended September 30, 2005. The Company's net loss for
the three months ended September 30, 2006 was $1.8 million, or $0.14 per share,
as compared to a loss of $1.1 million, or $0.09 per share, for the third quarter
of 2005. The Company had 14.7 and 14.1 million weighted average common shares
and operating partnership units outstanding during the third quarters ended
September 30, 2006 and 2005, respectively.
For the nine months ended September 30, 2006, FFO totaled $9.1 million, or $0.62
per diluted share, as compared to $8.8 million, or $0.63 per diluted share, for
the nine months ended September 30, 2005. Excluding the early extinguishment of
debt during the second quarter of 2006 totaling approximately $0.3 million, FFO
totaled $9.4 million, or $0.64 per diluted share. The Company's net income for
the nine months ended September 30, 2006 was $21.2 million, or $1.62 per diluted
share, as compared to a net loss of $0.6 million, or $0.05 per diluted share,
for the nine months ended September 30, 2005. The Company had 14.7 and 14.0
million weighted average common shares and operating partnership units
outstanding during the nine months ended September 30, 2006 and 2005,
respectively. The results for the nine months ended September 30, 2006 includes
a $29.4 million gain on the partial sale of the Foothills Mall.
MORE
FELDMAN MALL PROPERTIES, INC.
REAL ESTATE AND FINANCING ACTIVITY
COLONIE CENTER MALL JOINT VENTURE
On September 29, 2006, the Company completed its joint venture with a subsidiary
of Heitman LLC ("Heitman") in connection with the Colonie Center Mall located in
Albany, New York. Under the terms of the Contribution Agreement, the Company
contributed the property to FMP Colonie LLC, a new Delaware limited liability
company (the "Joint Venture"). Heitman's contribution to the venture represents
approximately 75% of the equity in the mall. The Company's contribution to the
venture was valued at approximately $15.7 million, representing 25% of the
equity in the property.
In connection with the transaction, the joint venture refinanced the property
with a new construction loan facility with a maximum capacity commitment of
$109.8 million. The mortgage loan bears interest at 180 basis points over LIBOR
and matures in October 2008. The loan may be extended beyond 2008, subject to
certain customary requirements for up to two additional years. In connection
with the loan, the joint venture entered into a two-year interest rate
protection agreement fixing the initial $50.7 million of the loan at an all-in
interest rate of 6.84%. There are no amortization payments required in
connection with this loan. The Company also repaid the existing $50.7 million
first mortgage bridge loan on the mall.
The loan will not be closed and funded until certain lender closing conditions
are satisfied and certain construction costs are confirmed. The lender has
placed $10.2 million of the Company's net proceeds into escrow until these
conditions are satisfied and the Company anticipates these conditions will be
satisfied within 90 days of the loan closing.
The Company has also agreed to a cost guarantee with the joint venture related
to certain costs of the mall's redevelopment project totaling approximately
$46.0 million. If required, the Company will fund these additional costs as an
additional capital contribution. We have committed to fund this guarantee
through preferred capital contributions up to approximately $6.5 million and any
additional required contributions will be made through subordinated capital
contributions.
Feldman Mall Properties is the managing member of the joint venture and is
responsible for the management, leasing and construction of the property and
will charge customary market fees for such services.
LEASING ACTIVITY
FOOTHILLS MALL
The Company announced on November 6th the signing of a 15,000 square foot lease
with SEGA Entertainment at the Foothills Mall. This is a 10-year lease for a
new, to-be-built, facility consisting of a bar, dining and high-tech gaming
facility. SEGA has chosen the Foothills Mall as its first location in the nation
for its new concept.
STRATFORD SQUARE MALL
The Company is also announcing today that it has extended the JCPenney anchor
lease at the Stratford Square Mall through 2016. The anchor lease, totaling
approximately 144,000 square feet, was scheduled to expire in 2008. In addition
to the lease extension, the Company received certain anchor pre-approvals that
allow for specific areas of the mall to be redeveloped.
MORE
FELDMAN MALL PROPERTIES, INC.
OTHER
The Company announced today that effective November 3, 2006, Jeff Erhart, the
Company's General Counsel, is no longer employed by the Company. Mr. Erhart has
served as the Company's General Counsel since January 2005 and the Company has
not yet named a replacement. In connection with Mr. Erhart's termination, Mr.
Erhart has forfeited his rights to receive any severance payment in exchange for
a buyback of his stock and OP Units in the Company, totaling approximately
179,000 shares and OP Units, at a price of $9.75 per share.
QUARTERLY GUIDANCE
The Company's third quarter 2006 FFO results of $0.21 per diluted share were in
line with its previous guidance of $0.21 to $0.24 per diluted share. The
Company's results were at the low end of its guidance due to the following:
- $0.9 million decrease because certain fees which have been billed and
collected in connection with the Company's Colonie Center joint
venture with Heitman which were included in our previous FFO guidance
were deferred and were not included in the Company's quarterly FFO
results. Although these fees have been billed and collected, the
Company will include the fees in its $3.9 million deferred capital
gain and therefore will not recognize the income as FFO. The Company
anticipates that the recurring fees that will be generated from the
ongoing service income will total approximately $0.5 million per
quarter.
- $1.2 million increase due to a reduction of a liability attributable
to the Harrisburg earnout. The earnout is the liability that was
originally recorded on the Company's books at the time of the IPO and
which would be potentially be due to the sponsors in the event that
the Company's returns exceeded a 15% IRR. The reduction in the
Harrisburg earnout liability in this quarter was caused by the
Company's reduction of the anticipated returns it will receive on the
project. The decrease in the Company's anticipated return is due to an
increase in the anticipated redevelopment costs and delays in the
timing of certain redevelopment plans. The new liability to the
sponsors (projected to be in excess of a 15% IRR to the Company) is
$4.1 million.
- $0.2 million decrease as interest expense was higher than anticipated
due to lower interest capitalization because of delays in
redevelopment activities.
- $0.2 million decrease in property-level NOI from higher seasonal costs
and lower cost reimbursement. The lower reimbursement revenue is due
to certain leases being renewed that now exclude reimbursement
provisions.
For the fourth quarter of 2006, the Company expects FFO to be in the range of
$0.18 to $0.20 per diluted share.
CONFERENCE CALL
The Company's executive management team, led by Larry Feldman, Chairman and CEO,
and Tom Wirth, EVP -CFO, will host a conference call and audio web cast on
Tuesday, November 7, 2006 at 2:00 p.m. 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 www.feldmanmall.com.
A replay of the call will be available for a limited time by dialing (800)
405-2236 and using the pass code 11074220, 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 (or 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.
MORE
FELDMAN MALL PROPERTIES, INC.
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 November 7, 2006 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
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 www.feldmanmall.com.
The Company's portfolio, including non-owned anchor tenants, consists of seven
regional malls aggregating approximately 7.1 million square feet of which the
Company owns approximately 4.7 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. 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.
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FELDMAN MALL PROPERTIES, INC.
FELDMAN MALL PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA) SEPTEMBER 30, 2006 DECEMBER 31, 2005
------------------ -----------------
Assets: (Unaudited)
Investments in real estate, net $ 310,265 $ 396,108
Investment in unconsolidated real estate partnerships 17,257 3,153
Cash and cash equivalents 37,071 14,331
Restricted cash 16,960 7,707
Rents, deferred rents and other receivables, net 5,027 5,763
Acquired below-market ground lease, net 7,708 7,811
Acquired lease rights, net 9,763 14,205
Acquired in-place lease values, net 8,965 19,098
Deferred charges, net 3,868 2,843
Other assets, net 4,443 4,466
-------------- ------------------
TOTAL ASSETS $ 421,327 $ 475,485
============== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Mortgage loans payable $ 212,757 $ 318,489
Junior subordinated debt obligation 29,380 --
Secured line of credit 4,000 --
Due to affiliates 4,067 5,303
Accounts payable, accrued expenses, and other liabilities 20,681 19,672
Dividends and distributions payable 3,347 3,331
Acquired lease obligations, net 7,418 11,612
Deferred gain on property sales 8,282 --
-------------- ------------------
Total liabilities 289,932 358,407
Minority interest 13,609 12,117
STOCKHOLDERS' EQUITY
Common stock ($0.01 par value, 200,000,000 shares authorized, 13,120,246 and
13,050,370 issued and outstanding at September 30, 2006 and December 31, 2005,
respectively) 131 131
Additional paid-in capital 120,259 119,643
Distributions in excess of earnings (3,650) (15,912)
Accumulated other comprehensive income 1,046 1,099
-------------- ------------------
Total Stockholders' Equity 117, 786 104,961
-------------- ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 421,327 $ 475,485
============== ==================
MORE
FELDMAN MALL PROPERTIES, INC.
FELDMAN MALL PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2006 2005 2006 2005
--------------------------- --------------------------
REVENUE:
Rental ......................................... $ 9,643 $ 11,068 $ 32,120 $ 23,648
Tenant reimbursements .......................... 4,030 5,095 15,695 12,047
Management, leasing, and development services .. 183 90 440 356
Interest and other income ...................... 1,532 120 2,301 746
--------------------------------------------------------------
Total Revenue ................................. 15,388 16,373 50,556 36,797
--------------------------------------------------------------
EXPENSES:
Rental property operating and maintenance ...... 5,023 5,155 16,248 11,538
Real estate taxes .............................. 1,661 1,907 6,231 4,423
Interest (including amortization of deferred
financing costs) ................................ 3,880 4,195 13,183 7,799
Loss from early extinguishment of debt ......... -- -- 357 --
Depreciation and amortization .................. 3,892 4,679 13,839 9,156
General and administrative ..................... 1,973 1,515 5,654 4,233
--------------------------------------------------------------
Total Expenses ................................ 16,429 17,451 55,512 37,149
Equity in loss of unconsolidated real estate
partnerships .................................... (370) (216) (654) (292)
(Loss) gain on partial sale of real estate ..... (571) -- 29,397 --
--------------------------------------------------------------
Income (loss) before minority interest ......... (1,982) (1,294) 23,787 (644)
Minority interest .............................. 214 147 (2,580) 73
--------------------------------------------------------------
NET INCOME (LOSS) ............................... ($ 1,768) ($ 1,147) $ 21,207 ($ 571)
==============================================================
Basic earnings per share ........................ ($ 0.14) ($ 0.09) $ 1.66 ($ 0.05)
==============================================================
Diluted earnings per share ...................... ($ 0.14) ($ 0.09) $ 1.62 ($ 0.05)
==============================================================
Basic weighted average common shares outstanding 12,811 12,410 12,804 12,316
==============================================================
Diluted weighted average common shares and
common share equivalents outstanding .......... 14,711 14,145 14,693 14,015
==============================================================
FUNDS FROM OPERATIONS (FFO) CALCULATION:
Net income (loss) ............................... ($ 1,768) ($ 1,147) $ 21,207 ($ 571)
ADD:
Depreciation and amortization ................... 3,892 4,679 13,839 9,156
Joint venture FFO adjustment .................... 651 202 1,039 513
Minority interest of income (loss) .............. (214) (147) 2,580 (73)
LESS:
Loss (gain) on partial sale of real estate ...... 571 -- (29,397) --
Depreciation of non-real estate assets .......... (113) (95) (201) (197)
--------------------------------------------------------------
FFO, diluted .................................... $ 3,019 $ 3,492 $ 9,067 $ 8,828
Debt extinguishment related to partial sale ..... -- -- 357 --
==============================================================
FFO, after debt extinguishment .................. $ 3,019 $ 3,492 $ 9,424 $ 8,828
==============================================================
FFO per share, diluted .......................... $ 0.21 $ 0.25 $ 0.62 $ 0.63
==============================================================
FFO per share, diluted, after debt extinguishment $ 0.21 $ 0.25 $ 0.64 $ 0.63
==============================================================
OWNERSHIP INTERESTS:
Weighted average REIT common shares for basic
net income per share ......................... 12,811 12,410 12,804 12,316
Weighted average common stock equivalents and
partnership units ............................ 1,900 1,735 1,889 1,699
--------------------------------------------------------------
Weighted average shares and units outstanding ... 14,711 14,145 14,693 14,015
==============================================================
MORE
FELDMAN MALL PROPERTIES, INC.
ADD 6
FELDMAN MALL PROPERTIES, INC.
OPERATING STATISTICS
SEPTEMBER 30, 2006
SHOP
TENANT
SHOP SHOP BASE RENT
PROPERTY TOTAL RENTABLE ANNUALIZED TENANT TENANTS PER
(OWNERSHIP SQUARE SQUARE MALL BASE SQUARE PERCENTAGE LEASED
INTEREST) FEET FEET (A) OCCUPANCY RENT FEET LEASED (B) SQ. FT.
- --------------------------- ----------- ----------- ------------ ------------- ----------- ------------- -----------
Stratford Square (100%) 1,300,000 629,000 91.0% $5,990,680 485,000 60.5% $ 25.00
Tallahassee Mall (100%) 966,000 966,000 96.1 7,249,332 204,000 79.0 24.13
Northgate Mall (100%) 1,100,000 577,000 93.1 7,804,935 315,000 67.6 23.92
Golden Triangle Mall (100%) 765,000 288,000 93.5 3,087,392 171,000 61.2 20.49
Foothills Mall (30.6%) 711,000 502,000 98.5 7,810,682 230,000 92.8 18.53
Colonie Center Mall (25%) 1,200,000 668,000 92.9 7,573,996 336,000 76.3 25.44
Harrisburg Mall (25.0%) 922,000 922,000 92.4 5,015,975 270,000 65.3 24.20
----------- ----------- ------------ ------------- ----------- ------------- -----------
Total/Weighted Avg. 6,964,000 4,552,000 93.9% $44,532,992 2,011,000 71.8% $23.10
=========== =========== ============ ============= =========== ============= ===========
(A) - Represents owned square feet
(B) - Excludes temporary tenants
LEASE NUMBER OF EXPIRING % OF TOTAL EXPIRING ANNUALIZED EXPIRING
EXPIRATION EXPIRING RENTABLE SQ. FT. BASE BASE % OF TOTAL BASE RENT
YEAR LEASES AREA EXPIRING RENT RENT BASE RENT PER SQ. FT.
- ------------------------ ------------- ----------- ------------ ------------ --------------- ------------- --------------
2006 28 59,662 1.7% $137,436 $1,649,233 3.7% $ 27.64
2007 74 255,028 7.4% 376,076 4,512,917 10.1% $ 17.70
2008 84 395,490 11.5% 402,666 4,831,987 10.9% $ 12.22
2009 63 157,532 4.6% 301,917 3,623,003 8.1% $ 23.00
2010 56 210,637 6.1% 326,473 3,917,677 8.8% $ 8.60
2011 54 235,177 6.8% 386,866 4,642,394 10.4% $ 19.74
2012 28 239,010 7.0% 214,494 2,573,927 5.8% $ 10.77
2013 34 295,305 8.6% 296,712 3,560,548 8.0% $ 12.06
2014 31 271,936 7.9% 333,989 4,007,865 9.0% $ 14.74
2015 and thereafter 57 1,315,933 38.4% 934,454 11,213,441 25.2% $ 8.52
------------- ----------- ------------ ------------ --------------- ------------- --------------
Portfolio Total 509 3,435,710 100.0% $3,711,083 $44,532,992 100.0% $ 12.96
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