FMP Feldman Mall Pptys

Conference Call to Discuss Results Scheduled for 2pm EDT, May 22, 2008 Dial in: (800)257-1836 or go to www.feldmanmall.com GREAT NECK, N.Y., May 22 /PRNewswire-FirstCall/ -- RELEASE HIGHLIGHTS -- 1st quarter FFO was $(0.09) per diluted share as compared to $0.20 per diluted share in the 1st quarter of 2007 -- Three new directors were appointed recently to the Board and a fourth is nominated for election FINANCIAL RESULTS Feldman Mall Properties, Inc. (NYSE:FMP) today reported Funds From Operations ("FFO") totaling $(1.33) million, or $(0.09) per diluted share, for the first quarter ended March 31, 2008 as compared to $2.97 million, or $0.20 per diluted share for the three months ended March 31, 2007. The Company's net loss for the three months ended March 31, 2008 was $5.0 million, or $(0.39) per share, as compared to a net loss of $0.9 million, or $(0.07) per diluted share for the first quarter ended March 31, 2007. As summarized in the table below, the Company's first quarter 2007 period results include a non-cash reduction in the Company's earnout obligation due to affiliates included in miscellaneous income in the amount of $2.3 million. The Company had 14.4 and 14.5 million weighted average common shares and operating partnership units outstanding during the quarters ended March 31, 2008 and 2007, respectively. The following items represent variances in income and expense that impacted the Company's FFO results for the first quarter 2008 compared to the prior year period (in millions): Three Months Ended March 31, 2008 (unaudited) Property Level Net Operating Income ("NOI"): Rental revenue $0.3 Higher operating expenses (0.2) Same store NOI variance (1) 0.1 G&A Expense: Restructuring expense (0.4) Other G&A expense (2) 0.2 Total G&A variance (0.2) Other: Change in fair value of Harrisburg earnout liability(3) (2.3) Other income and expense, net 0.1 Preferred stock dividends (0.8) Decrease in FFO allocated to common stockholders $(4.3) (1) The increase in NOI for properties that were wholly-owned during both the three months ended March 31, 2008 and 2007 periods was due to (i) higher rental revenues ($0.3 million) primarily due to rental revenue associated with the theater at the Stratford Square Mall and (ii) higher operating expenses ($0.2 million) primarily due to higher provision for bad debts ($0.3 million) and snow removal ($0.1 million) which were offset by a decrease in utilities ($0.1 million) and various other rental property operating and maintenance expenses ($0.1 million). (2) Other expenses for the three months ended March 31, 2008 increased $0.2 million primarily due to (i) third-party construction management expenses ($0.3 million), and (ii) restructuring costs related to the closing of the Phoenix office ($0.4 million); offset by a decrease in consulting, Sarbanes-Oxley related and other professional fees ($0.5 million). (3) The first quarter 2007 period results include a $2.3 million non-cash reduction in the Company's earnout obligation due to affiliates included in miscellaneous income. OTHER New Board Members and Board Nominees The Company recently welcomed three additional board members who will provide additional insight and business counsel. FMP announced that Inland American Real Estate Trust, Inc., a public non- listed real estate investment trust sponsored by an affiliated of the Inland Real Estate Group of Companies and the holder of 2,000,000 shares of 6.85% Contingently Convertible Series A Preferred Stock (the "Series A Preferred Stock") of the Company ("Inland American"), elected Thomas H. McAuley and Thomas McGuinness to serve as directors of the Company, pursuant to the terms of the Articles Supplementary relating to the Series A Preferred Stock. Messrs. McAuley and McGuinness are not expected to join any committees of the board of directors of the Company and are not required to stand for election as directors of the Company at its 2008 annual meeting of stockholders. FMP's board of directors elected Wendy Luscombe to serve as a director of the Company effective May 12, 2008. Ms. Luscombe fills the vacancy created by James C. Bourg, who did not stand for re-election as a director at the Company's 2007 annual meeting of stockholders. Ms. Luscombe will become a member of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee of the Company. Ms. Luscombe will be standing for election as a director of the Company at its 2008 annual meeting of stockholders. In addition, the Company nominated Jim Sight as an additional board member. Jim currently serves as a director of LSB Industries, a company listed on the American Stock Exchange. From 1995 to 2006, Mr. Sight has been a consultant at Westmoreland Coal and was active in its reorganization efforts. From 2001 to 2005, Mr. Sight served as a director of Programmers Paradise, a NASDAQ listed computer and software merchant. Prior to serving on the Board of Programmers Paradise, Mr. Sight also served as a director at various public companies, including Nevada Chemicals and U.S. Home Corporation. Mr. Sight holds a B.S. in Finance from the University of Pennsylvania Wharton School Of Economics. Mr. Sight is standing for election as a director of the Company at its 2008 annual meeting of stockholders. CONFERENCE CALL The Company's executive management team will host a conference call and audio web cast on May 22, 2008 at 2:00 PM EDT to discuss the financial results. The conference call may be accessed by dialing (800) 257-1836. No pass code is required. The live conference will be simultaneously broadcast in a listen-only mode on the Company's website at http://www.feldmanmall.com/. On the conference call, among other items, we will be discussing: 1. Current Liquidity Outlook 2. Property-level performance 3. A Harrisburg Mall update on the maturity of our mortgage loan, partnership disputes and tenant negotiations 4. An update on negotiations related to our hard cost guarantee at Colonie Center 5. The status of our debt covenants A replay of the call will be available through May 29, 2008 by dialing (800) 405-2236 using passcode 11114866, or individuals may access the replay via the Company's web site. NON-GAAP FINANCIAL MEASURES Feldman Mall Properties, Inc., consistent with real estate industry and investment community preferences, uses FFO as a supplemental measure of operating performance. The National Association of Real Estate Investment Trusts (NAREIT) defines FFO as net income (loss) (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from cumulative effects of accounting changes, extraordinary items and sales of depreciable properties, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. The Company considers FFO a supplemental measure for equity REITs and a complement to GAAP measures because it facilitates an understanding of the operating performance of the Company's properties. FFO does not give effect to real estate depreciation and amortization since these amounts are computed to allocate the cost of a property over its useful life. Since values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, the Company believes that FFO provides investors with a clearer view of the Company's operating performance. In order to provide a better understanding of the relationship with FFO and GAAP net income, a reconciliation of FFO to GAAP net income has been provided on page 10 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 May 22, 2008 conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used a non-GAAP financial measure and the comparable GAAP financial measure (net income/loss) can be found on pages 8 and 10 of this release. *Financial Tables Attached About Feldman Mall Properties Feldman Mall Properties, Inc. acquires, renovates and repositions enclosed regional shopping malls. Feldman Mall Properties Inc.'s investment strategy is to opportunistically acquire underperforming malls and transform them into physically attractive and profitable Class A malls or near Class A through comprehensive renovation and re-tenanting efforts aimed at increasing shopper traffic and tenant sales. The Company's portfolio, including non-owned anchor tenants, consists of seven regional malls aggregating approximately 7.0 million square feet of which the Company owns approximately 4.1 million square feet. For more information on Feldman Mall Properties Inc., visit the Company's website at http://www.feldmanmall.com/. To receive the Company's latest news release and other corporate documents, please contact the Company at (516) 684-1239. All releases and supplemental data can also be downloaded directly from the Feldman Mall Properties website at: http://www.feldmanmall.com/. Forward-looking Information This press release contains forward-looking statements that involve risks and uncertainties regarding various matters, including, without limitation, the success of our business strategy, including our acquisition, renovation and repositioning plans; our ability to close pending acquisitions and the timing of those acquisitions; our ability to obtain required financing; our understanding of our competition; market trends; our ability to implement our repositioning plans on time and within our budgets; projected capital and renovation expenditures; demand for shop space and the success of our lease-up plans; availability and creditworthiness of current and prospective tenants; and lease rates and terms. The forward-looking statements are based on our assumptions and current expectations of future performance. These assumptions and expectations may be inaccurate or may change as a result of many possible events or factors, not all of which are known to us. If there is any inaccuracy or change, actual results may vary materially from our forward- looking statements. FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) March 31, December 31, 2008 2007 (Unaudited) ASSETS: Investments in real estate, net $343,682 $342,897 Investment in unconsolidated real estate partnerships 47,449 43,683 Cash and cash equivalents 15,605 27,976 Restricted cash 19,217 20,395 Rents, deferred rents and other receivables, net 5,332 5,545 Acquired below-market ground lease, net 7,503 7,538 Acquired lease rights, net 6,856 7,281 Acquired in-place lease values, net 5,978 6,437 Deferred charges, net 3,140 3,394 Other assets, net 3,463 4,048 Total Assets $458,225 $469,194 LIABILITIES AND STOCKHOLDERS' EQUITY: Liabilities Mortgage loans payable $231,652 $232,878 Junior subordinated debt obligations 29,380 29,380 Secured line of credit 17,500 17,500 Accounts payable, accrued expenses and other liabilities 25,696 27,211 Dividends and distributions payable 854 568 Acquired lease obligations, net 4,641 5,136 Deferred gain on partial sale of real estate 3,515 3,515 Negative carrying value of investment in unconsolidated partnership 4,450 4,450 Total liabilities 317,688 320,638 Minority interest 9,137 9,677 Commitments and contingencies Stockholders' Equity Series A 6.85% Cumulative Convertible Preferred Stock; 50,000,000 shares authorized; 2,000,000 shares issued and outstanding at March 31, 2008 and December 31, 2007; $25.00 liquidation preference 49,580 49,580 Common stock ($0.01 par value, 200,000,000 shares authorized, 13,001,537 and 13,018,831 issued and outstanding at March 31, 2008 and December 31, 2007, respectively) 130 130 Additional paid-in capital 120,732 120,542 Distributions in excess of earnings (32,670) (27,712) Accumulated other comprehensive loss (6,372) (3,661) Total stockholders' equity 131,400 138,879 Total Liabilities and Stockholders' Equity $458,225 $469,194 FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) Three Months Ended March 31, 2008 2007 (Unaudited) Revenue: Rental $7,991 $7,709 Tenant reimbursements 3,629 3,580 Management, leasing and development services 964 823 Interest and other income 249 2,648 Total revenue 12,833 14,760 Expenses: Rental property operating and maintenance 4,566 4,331 Real estate taxes 1,487 1,578 Interest (including amortization of deferred financing costs) 4,207 3,111 Depreciation and amortization 3,485 3,405 General and administrative 3,162 2,937 Total expenses 16,907 15,362 Equity in loss of unconsolidated real estate partnerships (579) (355) Loss before minority interest (4,653) (957) Minority interest 540 93 Net loss (4,113) (864) Less preferred stock dividends, net of minority interest (854) - Net loss available to common shareholders' basic $(4,967) $(864) Basic and diluted loss per share $(0.39) $(0.07) Funds From Operations (FFO) Calculation - unaudited: Net loss available to common shareholders $(4,967) $(864) Add: Depreciation and amortization 3,485 3,405 Joint venture FFO adjustment 819 625 Minority interest (540) (93) Less: Depreciation of non-real estate assets (131) (108) FFO, diluted $(1,334) $2,965 FFO per share $(0.09) $0.20 Ownership interests: Weighted average REIT common shares for basic net loss per share 12,892 12,857 Weighted average common stock equivalents and partnership units 1,527 1,671 Weighted average shares and units outstanding 14,419 14,528 Stages of Project Redevelopment We believe that a typical mall redevelopment project cycles through a five stage process. Stage one involves acquisition and planning. In this stage, if a mall is underperforming, we would expect its net operating income generally to be declining as new leasing and development opportunities are identified. Stage two involves preliminary redevelopment, which encompasses final financial analysis, architectural and engineering input, and the estimate of project and capital needs. During this stage, we expect further declines in net operating income as some existing tenants are relocated/terminated or converted to percentage rent leases. Stage three is the commencement of construction activity, primary leasing activity, which may include junior anchors and national tenants, and the completion of required financing. During this stage, we anticipate that net operating income will usually begin to stabilize. Stage four is the completion of development and delivery of space to junior and national tenants and the commencement of the leasing of the remainder of shop tenant space. During this stage, we anticipate net operating income will begin to increase. In the final stage, the renovation is completed and the project reaches the objective of 92% overall occupancy. Our properties are in various stages of the redevelopment process. There has been no change since our last press release and those stages are as follow: Stages of Development Stage Property 1 Tallahassee Mall and Golden Triangle Mall 2 Northgate Mall 3 Stratford Square Mall 4 Colonie Center and Harrisburg Mall 5 Foothills Mall FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES SUPPLEMENTAL PROPERTY LEVEL NET OPERATING INCOME INFORMATION UNAUDITED (All dollar amounts in thousands) Three Months Ended Vacant Shop Space March 31, March 31, 2008 2008 2007 (Square feet) Wholly-owned Cash NOI(1) (Unaudited) Stratford Square Mall $2,081 $1,681 127,104 Northgate Mall 1,757 1,755 103,005 Tallahassee Mall 1,110 1,197 47,736 Golden Triangle Mall 629 642 48,222 Total Wholly-Owned Cash NOI $5,577 $5,275 326,067 Total Joint Venture Cash NOI(2) $1,194 $955 239,964 (1) Wholly-owned cash NOI excludes management fee expense and recurring capital improvements. (2) Represents our pro-rata share of the cash NOI generated by our unconsolidated joint ventures. (3) The Company measures the net operating income for its properties. The Company believes that net operating income is commonly used in the real estate industry to measure the operating performance of a stabilized property. In addition, in a capitalization rate analysis, which is one of the valuation methodologies that is commonly deployed in the real estate industry to measure the value of a stabilized property, value is estimated by multiplying the annual net operating income of that property over a specific period by a selected capitalization rate. Net operating income is a supplemental measure of performance that does not give effect to real estate depreciation and amortization nor to any general and administrative expenses of the Company. In order to provide a better understanding of the relationship with net operating income and GAAP net income, reconciliation is provided below. Net operating income does not represent cash flow from operating activities in accordance with GAAP, and should not be considered as an alternative to GAAP net income. Three Months Ended (All dollar amounts in thousands) March 31, 2008 2007 (Unaudited) Loss before minority interest $(4,653) $(957) Add: Equity in loss of unconsolidated real estate partnerships 579 355 Interest (including amortization of deferred financing costs) 4,207 3,111 Depreciation and amortization 3,485 3,405 General and administrative 3,162 2,937 Less: Management, leasing and development services 964 823 Interest and other income 249 2,648 GAAP Net Operating Income ("NOI") 5,567 5,380 GAAP NOI Adjustments (1) 10 (105) Cash NOI $5,577 $5,275 (1) Primarily related to straight-line rents and capitalized costs. FELDMAN MALL PROPERTIES, INC. OPERATING STATISTICS UNAUDITED March 31, 2008 Property Total Rentable (Ownership Square Square Mall Interest) Feet Feet Occupancy Stratford Square (100%) 1,300,000 629,000 94.8% Tallahassee Mall (100%) 966,000 966,000 70.5 Northgate Mall (100%) 1,100,000 577,000 91.3 Golden Triangle Mall (100%) 765,000 288,000 97.6 Foothills Mall (30.6%) 711,000 502,000 97.4 Colonie Center Mall (25%) 1,200,000 668,000 88.5 Harrisburg Mall (25%) 922,000 922,000 88.7 Total/Weighted Avg. 6,964,000 4,552,000 89.6% Shop Shop Shop Tenant Property Annualized Tenant Tenants Base Rent (Ownership Base Square Percentage Per Leased Interest) Rent(B) Feet Leased(A) Sq. Ft. Stratford Square (100%) $8,779,718 384,000 66.90% $24.52 Tallahassee Mall (100%) 6,671,807 204,000 76.6 23.46 Northgate Mall (100%) 7,116,483 315,000 67.3 24.83 Golden Triangle Mall(100%) 2,934,665 171,000 71.8 20.50 Foothills Mall (30.6%) 7,989,076 230,000 86.2 21.33 Colonie Center Mall(25%) 7,472,916 336,000 76.6 26.45 Harrisburg Mall(25%) 6,089,423 270,000 52.0 24.61 Total/Weighted Avg. $47,054,088 1,910,000 70.3% $23.41 (A) - Excludes temporary tenants (B) - Based on in-place rents as of March 31, 2008 Lease Number of Expiring % of Total Expiration Expiring Rentable Sq. Ft. Year Leases Area Expiring 2008 73 118,456 93.4% 2009 77 202,482 5.8 2010 70 186,360 5.3 2011 68 271,196 7.8 2012 49 309,298 8.8 2013 38 333,330 9.5 2014 34 305,197 8.7 2015 21 83,551 2.4 2016 and thereafter 81 1,688,444 48.3 Portfolio Total 511 3,498,314 100.0% Lease Expiring Annualized Expiring Expiration Base Base % of Total Base Rent Year Rent Rent(B) Base Rent Per Sq. Ft. 2008 $269,925 $3,239,052 6.9% $27.34 2009 333,951 4,007,391 8.5 19.79 2010 350,118 4,201,371 8.9 22.54 2011 437,329 5,247,957 11.2 19.35 2012 332,033 3,984,367 8.5 12.88 2013 347,763 4,173,097 8.9 12.52 2014 367,126 4,405,513 9.4 14.43 2015 139,836 1,678,042 3.6 20.08 2016 and thereafter 1,343,114 16,117,298 34.3 9.55 Portfolio Total $3,921,195 $47,054,088 100.0% $13.45 Sales Per Square Foot Trailing Twelve Months Ending 03/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007 Stratford Square Mall $282.79 $285.38 $284.71 $286.93 $288.77 Tallahassee Mall 319.13 304.69 315.13 325.00 327.45 Northgate Mall 307.76 313.01 323.48 317.56 320.38 Golden Triangle Mall 288.20 290.35 292.96 293.02 295.70 Foothills Mall 296.56 301.56 302.79 308.47 310.35 Colonie Center Mall 320.70 322.77 305.31 303.43 303.33 Harrisburg Mall 262.80 275.28 269.73 270.44 269.92 Total/ Weighted Average $298.65 $299.01 $299.16 $300.69 $302.27 Shop Occupancy with Temporary Tenants Trailing Twelve Months Ending 03/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007 Stratford Square Mall 83.00% 85.42% 87.44% 82.74% 83.19% Tallahassee Mall 91.81 90.63 85.45 85.98 86.61 Northgate Mall 82.00 87.84 85.50 84.26 84.26 Golden Triangle Mall 92.49 94.61 87.90 91.76 95.26 Foothills Mall 91.38 99.28 93.89 91.80 92.71 Colonie Center Mall 84.83 89.74 87.90 87.10 87.18 Harrisburg Mall 66.82 77.43 77.88 77.03 80.72 Total/Weighted Average 83.64% 89.28% 85.12% 84.38% 87.13% DATASOURCE: Feldman Mall Properties, Inc. CONTACT: Thomas E. Wirth-President & Chief Financial Officer of Feldman Mall Properties, Inc., +1-516-684-1239; or Scott Eckstein of FINANCIAL RELATIONS BOARD, +1-212-827-3766, , for Feldman Mall Properties, Inc. Web site: http://www.feldmanmall.com/

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