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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