GREAT NECK, N.Y., May 14 /PRNewswire-FirstCall/ --
RELEASE HIGHLIGHTS -- 4th quarter FFO was $0.18 per diluted share -- Full year 2006 FFO was $0.80 per diluted share -- Completed an agreement to issue up to $50 million of 6.85% convertible preferred shares -- Completed unsecured credit agreement to borrow up to $25 million through a 7% promissory note -- Completed the refinancing of the Stratford Square Mall for $104.5 million -- Declared first quarter dividend of $0.2275 per share FINANCIAL RESULTS
For the year ended December 31, 2006, FFO totaled $11.7 million, or $0.80 per diluted share as compared to $10.9 million, or $0.78 per diluted share for the year ended December 31, 2005. Excluding the early extinguishment of debt during the second quarter of 2006 totaling approximately $0.4 million, FFO totaled $12.1 million, or $0.83 per diluted share. The Company's net income for the year ended December 31, 2006 was $20.2 million, or $1.54 per diluted share, as compared to a net loss of $2.6 million, or $0.21 per share for the year ended December 31, 2005. The Company had 14.7 and 14.1 million weighted average common shares and operating partnership units outstanding during the year ended December 31, 2006 and 2005, respectively. The results for the year ended December 31, 2006 includes a $29.4 million gain on the partial sale of the Foothills Mall.
REAL ESTATE AND FINANCING ACTIVITY $104.5 Million Stratford Square Refinancing
The Company announced today the refinancing of the Stratford Square Mall, located in Bloomingdale, Illinois. The $104.5 million first mortgage closed May 8, 2007 with an initial term of 36 months and bearing interest at a
floating rate of 115 basis points over LIBOR. The loan has two one-year extension options.
On the closing date, $75 million of the loan proceeds were used to retire Stratford Square's outstanding $75 million first mortgage. The balance of the proceeds was placed into escrow and will be released to the Company to fund the completion of its redevelopment project.
$50 Million of Convertible Preferred Shares
The Company intends to issue up to $50 million of convertible preferred stock through the private placement of 2 million shares of 6.85% Series A Cumulative Convertible Preferred Shares to Inland American Real Estate Trust, Inc., a public non-listed REIT sponsored by an affiliate of the Inland Real Estate Group of Companies. Pursuant to the terms of the agreement, the Company issued $15 million of preferred stock on April 30, 2007. The Company is required to issue a total of $50 million by the end of the 12 month period following the close of this transaction.
Under the terms of this transaction, and in accordance with New York Stock Exchange rules, the Company will seek shareholder approval to permit conversion of the preferred shares into common stock. Assuming an affirmative vote of Company shareholders, Inland American Real Estate Trust will have the option after June 30, 2009 to convert some or all of its outstanding preferred shares. Each preferred share is being issued at a price of $25.00 per share and, assuming an affirmative vote of Company shareholders, will be convertible, in whole or in part, at a conversion ratio of 1.77305 common shares to preferred shares. This conversion ratio is based upon a common share price of $14.10 per share. Assuming stockholder approval of convertibility, and if the preferred shareholders do not convert their shares to common stock, then commencing August of 2009, the Company may redeem the preferred shares without any redemption premium at the price of $25.00 per share. For more details regarding this transaction, please refer to the Company's 8-K filing dated April 16, 2006.
The Company intends to utilize the net proceeds from the offering to provide capital for the redevelopment of its mall assets, to repay borrowings under its line of credit and for general corporate purposes.
$25 Million Credit Agreement with an Affiliate of Kimco Realty Corporation
The Company has executed a promissory note (the "Note") providing for loans aggregating up to $25 million from Kimco Capital Corp. ("Kimco"). No amount has yet been borrowed under the Note.
Loan draws under the Note are optional on the part of the Company and will bear interest at the rate of seven percent per annum, payable monthly. Any outstanding principal amount will be due and payable on April 10, 2008, provided that the maturity of the Note may be extended to April 10, 2009 if the Company complies with certain performance criteria. The Company may prepay the outstanding principal amount under the Note in whole or in part at any time.
In addition to the interest on the Note, Kimco will be paid a variable fee equal to (i) $500,000, multiplied by (ii) (a) the volume weighted average price of the Company's common stock as of a five-day period chosen by Kimco, minus (b) $13.00 per common share. If Kimco does not select a date for determination of the fee prior to termination of the Note, the Company will instead pay to Kimco $250,000 in additional interest.
The Company intends to utilize the Kimco proceeds to provide capital for the redevelopment of its mall assets, to repay borrowings under its line of credit and for general corporate purposes.
OTHER Appointment of New Board Member
In connection with the Inland transaction, Mr. Thomas H. McAuley will be joining the Company's board of directors. Mr. McAuley, age 61, has been a Director of Inland Real Estate Corp. since 2004. Mr. McAuley is also currently the president of Inland Capital Markets Group, Inc., which is an advisor on real estate investments, including public REITs, to various entities within The Inland Real Estate Group of Companies, Inc.
In order for the Company's Board of Directors to comply with the director independence rules of the New York Stock Exchange, Jim Bourg will resign his board seat prior to Mr. McAuley joining the Company's board. Jim Bourg will continue to be the Company's Chief Operating Officer and will attend all future board meetings.
First Quarter Dividend of $0.2275 Per Share
The Company announced that its Board of Directors has declared a quarterly dividend of $0.2275 per common share for the quarter ending March 31, 2007. The dividend is payable on May 25, 2007 to shareholders of record at the close of business on May 18, 2007.
Management's Internal Control Assessment
As of December 31, 2006, the Company's management has determined that its controls over financial reporting contained a material weakness. The Company lacked the sufficient number of personnel to ensure that the financial statements were prepared on a timely basis. As a result, the Company was unable to adequately complete its necessary procedures on time. The lack of sufficient personnel caused delays in the review and approval of supporting documents and journal entries necessary to prepare our financial statements on a timely basis in accordance with regulatory guidelines. At the beginning of 2007 management commenced hiring and training additional personnel to correct this material weakness.
CONFERENCE CALL/WEBCAST
A replay of the call will be available for a limited time by dialing (800) 405-2236 and using the pass code 11090288, 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 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 May 16, 2007 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
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 4.6 million square feet.
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. CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Data) December 31, December 31, 2006 2005 Assets: Investments in real estate, net $ 318,440 $ 396,108 Investment in unconsolidated real estate partnerships 33,150 3,153 Cash and cash equivalents 13,036 14,331 Restricted cash 8,159 7,707 Rents, deferred rents and other receivables, net 5,718 5,763 Acquired below-market ground lease, net 7,674 7,811 Acquired lease rights, net 9,262 14,205 Acquired in-place lease values, net 10,049 19,098 Deferred charges, net 3,284 2,843 Other assets, net 5,396 4,466 Total Assets $ 414,168 $ 475,485 Liabilities and Stockholders' Equity: Mortgage loans payable $ 211,451 $ 318,489 Junior subordinated debt obligation 29,380 - Due to affiliates 3,891 5,303 Accounts payable, accrued expenses, and other liabilities 25,832 19,672 Dividends and distributions payable 3,315 3,331 Acquired lease obligations, net 6,823 11,612 Deferred gain on partial sale of real estate 3,832 - Negative carrying value of investment in unconsolidated partnership 4,450 - Total liabilities 288,974 358,407 Minority interest 11,433 12,117 Stockholders' Equity Common stock ($0.01 par value, 200,000,000 shares authorized, 13,155,062 and 13,050,370 issued and outstanding at December 31, 2006 and 2005, respectively) 132 131 Additional paid-in capital 120,379 119,643 Distributions in excess of earnings (7,637) (15,912) Accumulated other comprehensive income 887 1,099 Total stockholders' equity 113,761 104,961 Total Liabilities and Stockholders' Equity $ 414,168 $ 475,485 FELDMAN MALL PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS-UNAUDITED (In Thousands, Except Per Share Data) Three Months Ended Twelve Months Ended December 31, December 31, 2006 2005 2006 2005 Revenue: Rental $8,984 $12,081 $41,104 $35,729 Tenant reimbursements 4,172 5,587 19,867 17,634 Management, leasing, and development services 870 114 1,310 470 Interest and other income 723 616 3,024 1,362 Total Revenue 14,749 18,398 65,305 55,195 Expenses: Rental property operating and maintenance 4,766 6,845 21,014 18,383 Real estate taxes 1,414 2,097 7,645 6,520 Interest (including amortization of deferred financing costs) 3,252 4,110 16,435 11,909 Loss from early extinguishment of debt - - 357 - Depreciation and amortization 3,555 4,227 17,394 13,383 General and administrative 3,003 3,278 8,657 7,511 Total Expenses 15,990 20,557 71,502 57,706 Equity in income (loss) of unconsolidated real estate partnerships 104 (162) (550) (454) Gain on partial sale of real estate - - 29,397 - Income (loss) before minority interest (1,137) (2,321) 22,650 (2,965) Minority interest 111 259 (2,469) 332 Net Income (Loss) $(1,026) $(2,062) $20,181 $(2,633) Basic earnings (loss) $ (0.08) $ (0.17) $ 1.58 $ (0.21) per share Diluted earnings (loss) per share $(0.08) $(0.17) $ 1.54 $ (0.21) Basic weighted average common shares outstanding 12,821 12,466 12,808 12,363 Diluted weighted average common shares and common share equivalents outstanding 12,821 12,466 14,666 12,363 Funds From Operations (FFO) Calculation: Net income (loss) $(1,026) $(2,062) $20,181 $(2,633) Add: Depreciation and amortization 3,555 4,227 17,394 13,383 Joint venture FFO 337 216 1,377 729 adjustment Minority interest of income (loss) (111) (259) 2,469 (332) Less: Gain on partial sale of real estate - - (29,397) - Depreciation of non- real estate assets (78) (50) (280) (247) FFO, diluted $2,677 $2,072 $11,744 $10,900 Debt extinguishment related to partial sale - - 357 - FFO, before charges for debt extinguishment $2,677 $2,072 $12,101 $10,900 FFO per share $0.18 $0.15 $0.80 $0.78 FFO per share, before charges for debt extinguishment $0.18 $0.15 $0.83 $0.78 Ownership interests: Weighted average REIT common shares for basic net income per share 12,821 12,466 12,808 12,363 Weighted average common stock equivalents and partnership units 1,779 1,769 1,858 1,700 Weighted average shares and units outstanding 14,600 14,235 14,666 14,063 FELDMAN MALL PROPERTIES, INC. OPERATING STATISTICS December 31, 2006 Property Total Rentable Annualized (Ownership Square Square Total Mall Base Interest) Feet Feet (A) Occupancy(C) Rent Stratford Square (100%) 1,300,000 629,000 90.6% $5,990,680 Tallahassee Mall (100%) 966,000 966,000 96.0 7,249,332 Northgate Mall (100%) 1,100,000 577,000 90.9 7,804,935 Golden Triangle Mall (100%) 765,000 288,000 94.2 3,087,392 Foothills Mall (30.8%) 711,000 502,000 98.6 7,810,682 Colonie Center Mall (25.0%) 1,200,000 668,000 93.2 7,573,996 Harrisburg Mall (25.0%) 922,000 922,000 88.3 5,015,975 Total/Weighted Avg. 6,964,000 4,552,000 93.1% $44,532,992 Shop Shop Shop Tenant Property Tenant Tenants Base Rent (Ownership Square Percentage Per Leased Interest) Feet Leased (B) Sq. Ft. Stratford Square (100%) 485,000 66.4 % $24.81 Tallahassee Mall (100%) 204,000 79.0 22.60 Northgate Mall (100%) 315,000 67.6 23.55 Golden Triangle Mall (100%) 171,000 66.0 20.35 Foothills Mall (30.8%) 230,000 96.4 21.48 Colonie Center Mall (25.0%) 336,000 78.0 27.40 Harrisburg Mall (25.0%) 270,000 58.8 24.46 Total/Weighted Avg. 2,011,000 75.6 % $23.74 (A) - Represents owned square feet (B) - Excludes temporary tenants (C) - Includes temporary tenants % of Lease Number of Expiring Total Expiring Expiration Expiring Rentable Sq. Ft. Base Year Leases Area Expiring Rent 2007 69 183,373 5.33 % $290,317 2008 84 357,069 10.37 366,130 2009 68 181,626 5.28 314,725 2010 58 208,211 6.05 342,802 2011 63 251,885 7.32 425,246 2012 32 249,834 7.26 237,028 2013 35 326,337 9.48 325,143 2014 33 307,085 8.92 362,970 2015 22 90,651 2.63 147,337 2016 and thereafter 48 1,285,990 37.36 854,187 Total/Average 512 3,442,061 100.00 % $3,665,885 % of Expiring Lease Annualized Total Base Rent Expiration Base Base Per Sq. Year Rent Rent Ft. 2007 $3,483,808 7.92% $19.00 2008 4,393,557 9.99 12.30 2009 3,776,696 8.59 20.79 2010 4,113,622 9.35 19.76 2011 5,102,947 11.60 20.26 2012 2,844,337 6.47 11.38 2013 3,901,718 8.87 11.96 2014 4,355,638 9.90 14.18 2015 1,768,042 4.02 19.50 2016 and thereafter 10,250,239 23.30 7.97 Total/Average $43,990,604 100.0% $12.78 Same Store Sales Per Square Foot Trailing Twelve Months Ending 12/31/06 9/30/06 6/30/06 3/31/06 12/31/05 Stratford $284.31 $283.33 $282.70 $281.91 $278.58 Tallahassee 320.32 329.34 329.64 332.88 335.41 Northgate 308.42 309.63 308.27 306.13 306.55 Foothills 305.77 306.03 302.35 305.28 304.73 Colonie 308.02 299.71 299.95 301.10 302.62 Harrisburg 266.61 260.31 255.03 253.10 252.31 Total/Average $298.91 $298.06 $296.32 $296.73 $296.70 Golden Triangle is not included Same Store In-Line Occupancy with Temporary Tenants Trailing Twelve Months Ending 12/31/06 9/30/06 6/30/06 3/31/06 12/31/05 Stratford 82.3% 75.9% 73.7% 76.3% 80.3% Tallahassee 88.0 88.0 88.1 88.9 88.9 Northgate 90.2 90.1 84.7 85.4 87.1 Foothills 100.0 96.5 96.5 96.5 97.5 Colonie 89.2 90.4 88.9 88.9 89.3 Harrisburg 75.2 80.8 77.9 77.8 77.4 Total/Average 88.8% 85.8% 85.0% 85.7% 86.8%
Feldman Mall Properties, Inc.
