EX-99.1 2 b415583ex99_1.txt EXHIBIT 99.1 [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. MORE 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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